SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
August 4, 1997
SYQUEST TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
0-19674 94-2793941
(Commission File Number)(IRS Employer Identification No.)
47071 Bayside Parkway, Fremont, California 94538
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code
(510) 226-4000
Not Applicable
(Former name or former address, if changed since last
report.)
<PAGE>
INFORMATION TO BE INCLUDED IN THE REPORT
Item 5 Other Events
Sale of Equity Securities Pursuant to Regulation D
On or about August 4, 1997, pursuant to a series
of Securities Purchase Agreements (collectively, the
"Jayhawk Agreements"), Registrant issued and sold
shares of its common stock and issued warrants to
Jayhawk Investments, L.P. and Jayhawk Institutional
Partners, L.P. (collectively, "Jayhawk") in the
amounts set forth in the chart below:
Amount No. of
Date of of Common No. of
Name Agreement Investment Shares Warrants
Jayhawk Investments, L.P. 8-4-97 2,750,000 1,086,420 2,750,000
Jayhawk Institutional 8-4-97 750,000 296,296 750,000
Partners, L.P.
The Jayhawk Agreements prohibit the sale
by Jayhawk of the common stock purchased for a period
of 11 months from August 5, 1997. A copy of one of
the Jayhawk Agreements including the form of the
warrant certificate issued, which is representative of
the other (except for the amount of shares purchased,
the number of warrant shares granted, and other
differences noted in the chart above), is attached as
Exhibit 10.1 to this Form 8-K and incorporated herein
by this reference.
Warrants. The exercise price (the
"Exercise Price") of the warrants will be the greater
of the arithmetical average of the closing sales price
per share of common stock on the five consecutive
trading days preceding the delivery of the Exercise
Notice (as defined below) and 90% of such closing sale
price on the day immediately prior to the delivery of
the Exercise Notice, but in any event not greater than
$3.0469. The warrants issued to Jayhawk are not
exercisable until the lapse of a period ending on the
sixty-fifth day after such Purchaser delivers a notice
to Registrant designating an aggregate number of
warrant shares to be purchased. Once such notice is
given and the 65-day period has passed, Jayhawk may
exercise warrant up to the number of shares designated
in the 65-day notice by providing further notice to
Registrant that Jayhawk is exercising the warrant (the
"Exercise Notice"). The warrants expire on May 1,
2004. The number of warrant shares available to
Jayhawk will increase by 10% of the total warrant
shares initially granted for each month (prorated
daily for partial months), for every month after the
warrant shares have been registered that Registrant
fails to maintain such registration, provided
Registrant is required to maintain such registration.
Although shares of common stock have not been reserved
for the exercise of the warrants, the warrants require
the Registrant to use its best efforts to obtain
shareholder approval of an increase in the Company's
authorized common stock so that shares can be
reserved.
Registration Rights. The Jayhawk
Agreements provide that if Registrant registers
certain securities, Registrant will also be required
to register the common stock and the shares of common
stock into which the warrants are exercisable.
Registrant anticipates that it will undertake to
register those securities in connection with the
registration of the securities described in the
following section of this Report on Form 8-K captioned
"Additional Sales of Equity Securities Pursuant to
Regulation D."
THE FOREGOING DESCRIPTION OF THE JAYHAWK AGREEMENTS
AND THE WARRANT CERTIFICATES IS ONLY A BRIEF SUMMARY,
DOES NOT PURPORT TO BE COMPLETE AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO EXHIBIT 10.1 TO THIS
REPORT ON FORM 8-K, WHICH IS INCORPORATED HEREIN BY
THIS REFERENCE.
Additional Sales of Equity Securities Pursuant to
Regulation D
On or about September 3, 1997, pursuant to
a series of Securities Purchase Agreements
(collectively, the "Agreements" and individually, an
"Agreement"), Registrant issued and sold certain
shares of its Convertible Preferred Stock, Series
5,(the "Preferred Shares"), at a price of $1000 per
share, to the following entities (collectively, the
"Purchasers" and individually, a "Purchaser") in the
amounts set forth in the chart below:
No. of
Date of Amount of Preferred No. of
Name Agreement Investment Shares Warrants
Olympus Securities, Ltd. 5-3-97 4,125,000 4,125 2,887,500
Nelson Partners 5-3-97 3,375,000 3,375 2,362,500
RGL International 5-3-97 5,000,000 5,000 3,500,000
Investors, LDC
CC Investments, LDC 5-3-97 5,000,000 5,000 3,500,000
Capital Ventures 5-3-97 2,500,000 2,500 1,750,000
International
All Agreements contain a provision limiting to 4.9%
the amount of the Company's Common Stock the Purchaser
may beneficially own.
The rights, preferences and privileges of
the Preferred Shares, as summarized below, are set
forth in the Certificate of Designations,Preferences
and Rights of Convertible Preferred Stock, Series 5
(the "Certificate"), filed with the Delaware Secretary
of State on September 3, 1997. A copy of the Olympus
Securities, Ltd. Agreement, hich is representative of
all the other Agreements (except for the amount of
preferred shares purchased, the number of warrant
shares granted, and other differences noted in the
chart above), is attached as Exhibit 10.2 to this Form
8-K and incorporated herein by this reference.
Under each of the Agreements, the
purchaser also acquired a warrant (a "Warrant") to
purchase a number of shares (the "Warrant Shares") of
Common Stock, pursuant to a Warrant Certificate (a
"Warrant Certificate"), as set forth in chart, above.
Conversion; Registration. Subject to
certain conditions, the Preferred Shares are
convertible into shares (the "Conversion Shares") of
Registrant's Common Stock at any time at the option of
the holder of the Preferred Shares. The conversion
price is the greater of the arithmetical average of
the closing sale prices of the Common Stock for each
of the five consecutive trading days preceding the
conversion or 90% of the closing sale price the day
before the conversion, but in any event not greater
than $3.125.
The Preferred Shares cannot be converted
and the Warrants may not be exercised if such
conversion or exercise would require stockholder
approval under applicable Nasdaq National Market
rules, if such action would result in the Purchaser
acquiring more than 19.9% of the outstanding Common
Stock as of the date of any Purchaser's respective
Agreement, and if the price at which such Common Stock
is acquired is considered to be below market. In such
case, Registrant is required to use its best efforts
to seek stockholder approval of the transaction so
that the Purchaser can acquire greater than 19.9% of
the outstanding Common Stock. Although the Company
believes it currently has sufficient shares of common
stock reserved or otherwise available for conversion
of the Preferred Shares into common stock, if the
Company is nevertheless unable to issue common stock
to the Purchasers on conversion of the Preferred
Shares, the Company would be required to pay any such
Purchaser the stated value of $1,000 per Preferred
Share sought to be converted, plus twenty percent.
Dividends. There are no dividends on the
Preferred Shares.
Liquidation Preference. The Preferred
Shares have a liquidation preference as to
distributions and payments on liquidation, dissolution
or winding up of Registrant senior to Common Stock,
senior to other capital stock if permitted by the
terms of such other capital stock, in parity with such
capital stock if permitted by the terms of such
capital stock or, if not so permitted, junior to such
capital stock, and senior to all series of any class
of Registrant's capital stock to be issued in the
future, except for capital stock which may be issued
in the future to Beijing Legend Group, Ltd.
Non-Voting. The Preferred Stock is non-
voting, except as required by law.
Warrants. The exercise price (the
"Exercise Price") of the Warrants will be the greater
of the arithmetical average of the closing sales price
per share of common stock on the five consecutive
trading days preceding the delivery of the Exercise
Notice (as defined below) and 90% of such closing sale
price on the day immediately prior to the delivery of
the Exercise Notice, but in any event not greater than
$3.0469. The Warrants issued to the Purchasers are
not exercisable until the lapse of a period ending on
the sixty-fifth day after such Purchaser delivers a
notice to Registrant designating an aggregate number
of Warrant Shares to be purchased. Once such notice
is given and the 65-day period has passed, a Purchaser
may exercise its Warrant up to the number of shares
designated in the 65-day notice by providing further
notice to Registrant that the Purchaser is exercising
the Warrant (the "Exercise Notice"). The Warrants
expire on May 1, 2004. The number of Warrant Shares
available to each Purchaser will increase by 6.67% of
the total Warrant Shares initially granted for each
month (prorated daily for partial months), the
Registration Statement is not declared effective by
December 3, 1997 (provided that such condition need
not be satisfied if the Commission reviews the
Registration Statement). The Purchasers are
prohibited from exercising their warrants until
December 3, 1997 (or until 30 days thereafter if the
Commission reviews certain filings). Although shares
of common stock have not been reserved for the
exercise of the Warrants, the Agreements require the
Company to use its best efforts to obtain shareholder
approval of an increase in the Company's authorized
Common Stock so that shares can be reserved. If
shareholder approval of such an increase is not
obtained and the Company otherwise has insufficient
shares of Common Stock to issue upon the exercise of
the Warrants, the Company is required to pay the
difference between the exercise price and the market
value for any Warrants any Purchaser attempted to
exercise.
Registration Rights. The Agreement
provides that Registrant file a registration statement
on Form S-3 (the "Registration Statement") covering
resales of the Conversion Shares and the Warrant
Shares (collectively, the "Converted Securities") and
use its best efforts to have the Registration
Statement declared effective not later than December
3, 1997 (or 30 days thereafter, if the Commission
reviews the Registration Statement), and to keep the
Registration Statement effective until the earlier of
(a) the second anniversary of the issuance of the
Converted Securities, (b) such date as all of the
Converted Securities shall have been sold by Purchaser
or (c) such time as all of the Converted Securities
held by Purchaser can be sold by Purchaser or any of
its affiliates within a three month period without
compliance with the registration requirements of the
Securities Act pursuant to Rule 144 thereunder. A
penalty of 1% per month (pro rated on a daily basis
for partial months) of each Purchasers' Amount of
Investment will be incurred for each month that the
Registration Statement is not declared effective
according to that time schedule.
The Agreement, the Warrant and related
matters are also described in the press release
attached hereto as Exhibit 99.1 and incorporated
herein by this reference.
THE FOREGOING DESCRIPTION OF THE AGREEMENTS, THE
CERTIFICATE AND THE WARRANT CERTIFICATES IS ONLY A
BRIEF SUMMARY, DOES NOT PURPORT TO BE COMPLETE AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO EXHIBIT 10.1
TO THIS REPORT ON FORM 8-K, WHICH IS INCORPORATED
HEREIN BY THIS REFERENCE.
Item 7 Financial Statements Information and
Exhibits
10.1 Securities Purchase Agreement dated August 4,
1997, between Registrant and Jayhawk Investments,
L.P., including as Annex A thereto the form of Warrant
Certificate issued pursuant thereto, and as Annex B
thereto the form of Delivery Letter.
10.2 Securities Purchase Agreement dated September 3,
1997, between Registrant and Olympus Securities, Ltd.,
including as Exhibit A thereto the Certificate of
Designations, Preferences and Rights of Convertible
Preferred Stock, Series 5, as Exhibit B thereto the
form of Warrant Certificate issued pursuant thereto,
as Exhibit C thereto the form of Delivery Letter, and
as Exhibit D thereto the form of conversion notice.
99.1 Registrant's Press Release released September
11, 1997.
Pursuant to the requirements of the
Securities Exchange Act of 1934, Registrant has duly
caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SYQUEST TECHNOLOGY, INC.
(Registrant)
Dated:September 16, 1997 By /s/ Edwin L. Harper
Edwin L. Harper,
President and
Chief Executive Officer
Exhibit 10.1:
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (the
"Agreement") dated August 4, 1997, is entered into by
and between SyQuest Technology, Inc., a Delaware
corporation (together with its successors, "SyQuest"
or the "Company"), and Jayhawk Investments, L.P., a
Delaware limited partnership ("Jayhawk").
Unless otherwise defined herein,
capitalized terms used herein and not defined herein
shall have the meanings given to them in Regulation D
(as now if effect or as hereafter amended, "Regulation
D") under the Securities Act of 1933, as amended (the
"Securities Act").
The parties hereto agree as follows:
Purchase and Sale. In consideration of and upon the
basis of the representations, warranties and
agreements and subject to the terms and conditions set
forth in this Agreement:
Common Stock. SyQuest agrees to issue and sell
to Jayhawk, and Jayhawk agrees to purchase from
SyQuest, on the Closing Date specified in Section 2
hereof, Two Million-Seven Fifty Thousand Dollars
($2,750,000) of SyQuest's common stock at the August
1, 1997, closing sale price of $2.53125 per share for
a total of 1,086,420 shares of common stock (the
"Common Stock").
Warrant. In consideration of the purchase of
the Common Stock by Jayhawk, SyQuest will issue to
Jayhawk a warrant or warrants having the terms set
forth in the warrant certificate attached hereto as
Annex B (the "Warrant") to purchase up to 2,750,000
shares (subject to adjustment) of SyQuest's Common
Stock, which, subject to the terms and conditions of
this Agreement and the Warrant, will be freely
tradable. The shares of Common Stock issuable
pursuant to the Warrant are referred to herein as the
"Warrant Shares."
Converted Stock. The term "Converted Stock"
shall apply to any common stock issued or to be issued
to Jayhawk upon the exercise(s)of the Warrant.
Closing Date. Upon satisfaction or, if
applicable, waiver of the conditions set forth in
Sections 7 and 8 hereof, the delivery of the Common
Stock referred to in Section 1(a) and the Warrant
referred to in Section 1(b)(the "Closing") shall take
place within three days of August 5, 1997, or at such
other date and time as Jayhawk and SyQuest may agree
(such date being referred to herein as the "Closing
Date"), provided that the original certificates shall
be delivered via Federal Express to Jayhawk at the
address set forth in Section 13 hereof.
At the Closing, the following deliveries
shall be made:
Common Stock. SyQuest shall instruct its
transfer agent to issue the Common Stock in the name
of Jayhawk, against payment by Jayhawk of the purchase
price specified in Section 1(a) hereof in immediately
available funds to the following account:
Account Name: Bank of America,
1850 Gateway Blvd., 4th Floor,
Concord, California 94520,
Account No. 1233456287, ABA No. 121000358.
Warrant. SyQuest shall deliver the certificate
representing the Warrant to Jayhawk. Such certificate
shall be substantially in the form attached hereto as
Annex A.
Closing Documents. The closing documents
required by Sections 7 and 8 shall be delivered to
Jayhawk and SyQuest, respectively.
Delivery Notice. An executed copy of the
delivery notice in the form attached hereto as Annex B
shall be delivered to Jayhawk.
The foregoing deliveries shall be deemed
to occur simultaneously as part of a single
transaction, and no delivery shall be deemed to have
been made until all such deliveries have been made.
Representations and Warranties of SyQuest. Except
as disclosed in any report, form, schedule, statement
or other document (collectively, "SEC Filings") filed
by the Company prior to the date of this Agreement
with the SEC under the 1933 Act or the Securities
Exchange Act of 1934, as amended (the "1934 Act"), or
as disclosed in the Schedule of Exceptions attached
hereto, SyQuest hereby represents and warrants to
Jayhawk on the date hereof and on the Closing
Date, and on each Exercise Date (as defined in the
Warrant Certificate) as follows:
SyQuest has been duly incorporated and is
validly existing in good standing under the laws of
Delaware, or, after the Closing Date if another entity
has succeeded SyQuest in accordance with the terms
hereof, under the laws of one of the United States.
The execution, delivery and performance of this
Agreement and the Warrant Certificate by SyQuest have
been duly authorized by all requisite corporate action
and no further consent or authorization of SyQuest,
its Board of Directors or its stockholders is
required. This Agreement and the Warrant Certificate
have been duly executed and delivered by SyQuest and,
when duly authorized, executed and delivered by
Jayhawk, will be valid and binding agreements
enforceable against SyQuest in accordance with their
terms, subject to bankruptcy, insolvency,
reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors'
rights generally and to general principles of equity.
SyQuest has full corporate power and authority
necessary to execute and deliver this Agreement and
the Warrant Certificate and to perform its obligations
hereunder and thereunder.
No consent, approval, authorization or order of
any court, governmental agency or other body is
required for execution and delivery by SyQuest of this
Agreement and the Warrant Certificate or the
performance by SyQuest of any of its obligations
hereunder or thereunder, other than, with respect to
any Exercise Date, any consent, approval,
authorization or order which is received on or prior
to such date.
Neither the execution and delivery by SyQuest of
this Agreement and the Warrant Certificate nor the
performance by SyQuest of any of its obligations
hereunder or thereunder:
violates, conflicts with, results in a breach of, or
constitutes a default (or an event which with the
giving of notice or the lapse of time or both would be
reasonably likely to constitute a default) under (A)
the Certificate of Incorporation or by-laws of SyQuest
or any of its subsidiaries or any Certificate of
Designation relating to any securities of SyQuest or
any of its subsidiaries, (B) any decree, judgment,
order, law, treaty, rule, regulation or determination
of which SyQuest is aware (after due
inquiry) of any court, governmental agency or body, or
arbitrator having jurisdiction over SyQuest or any of
its subsidiaries or any of their respective properties
or assets, (C) the terms of any bond, debenture, note
or any other evidence of indebtedness, or any
agreement, stock option or other similar plan,
indenture, lease, mortgage, deed of trust or other
instrument to which SyQuest or any
of its subsidiaries is a party, by which SyQuest or
any of its subsidiaries is bound, or to which any of
the properties or assets of SyQuest or any of its
subsidiaries is subject, (D) the terms of any "lock-
up" or similar provision of any underwriting or
similar agreement to which SyQuest or any of its
subsidiaries is a party or (E) any rules of the
National Association of Securities Dealers, Inc.
applicable to SyQuest or the transactions contemplated
hereby; or
results in the creation or imposition of any lien,
charge or encumbrance upon (A) any Common Stock, the
Warrant or any Converted Stock or (B) any of the
properties or assets of SyQuest or any of its
subsidiaries.
When issued to Jayhawk against payment therefor
in accordance with the terms of this Agreement, the
Common Stock:
will have been duly and validly authorized, duly and
validly issued, fully paid and non-assessable;
will be free and clear of any security interests,
liens, claims or other encumbrances (other than those
resulting solely from actions by Jayhawk); and
will not have been issued or sold in violation of
any preemptive or other similar rights of the holders
of any securities of SyQuest.
Reserved.
On the Closing Date, there is no pending or, to
the best knowledge of SyQuest, threatened action,
suit, proceeding or investigation before any court,
governmental agency or body, or arbitrator having
jurisdiction over SyQuest or any of its affiliates
that would materially affect the execution by SyQuest
of, or the performance by SyQuest of its obligations
under, this Agreement or the Warrant Certificate,
provided, however, that the representations and
warranties contained in this Section 3(h) shall not
apply to any action, threatened action, suit,
proceeding or investigation initiated by Jayhawk.
SyQuest has timely filed all filings with the
United States Securities and Exchange Commission (the
"SEC") under the Securities Act or under Section 13(a)
or 15(d) of the Exchange Act (each, an "SEC Filing")
required to be filed by SyQuest pursuant to such acts
and no SEC Filing, or press release containing
information material to the business of SyQuest as a
whole, contained any untrue statement of a material
fact or omitted to state any material fact necessary
in order to make the statements, in the light of the
circumstances under which they were made, not
misleading.
Since the date of SyQuest's most recent SEC
Filing, there has not been, and SyQuest is not aware
of any, development that would require an amendment to
SyQuest's Registration Statement on Form S-3
(registration number 333-17119), as supplemented, in
order to permit public offers and sales of shares of
Common Stock thereunder.
The offer and sale of the Common Stock, the
Warrant and the Converted Stock to Jayhawk pursuant to
this Agreement and the Warrant Certificate will,
subject to compliance by Jayhawk with the applicable
representations and warranties contained in Section 4
hereof and with the applicable covenants and
agreements contained in Section 6 hereof, be made in
accordance with the provisions and requirements of
Regulation D and any applicable state law.
Capitalization. As of August 1, 1997, the
authorized capital stock of the Company consists of
(i) 120,000,000 shares of Common Stock of which
approximately 51.5 million shares were issued and
outstanding, and (ii) 4,000,000 shares of Preferred
Stock of which approximately 116,589 shares were
issued and outstanding. All of such outstanding shares
have been validly issued and are fully paid and
nonassessable. No shares of Common Stock are subject
to preemptive rights or any other similar rights or
any liens or encumbrances. As of August 1, 1997, (i)
there are no outstanding options, warrants, scrip,
rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or
rights convertible into, any shares of capital stock
of the Company or any of its subsidiaries, or
arrangements by which the Company or any of its
subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or
any of its subsidiaries, (ii) there are no outstanding
debt securities, and (iii) there are no agreements or
arrangements under which the Company or any of its
subsidiaries is obligated to register the sale of any
of its or their securities under the 1933 Act (except
the Registration Rights Agreement). The Company has
furnished to the Buyer true and correct copies of the
Company's Certificate of Incorporation, as amended, as
in effect on the date hereof ("Certificate of
Incorporation"), and the Company's By-laws, as in
effect on the date hereof (the "Bylaws").
3.A Registration Provisions.
a. If at any time or from time to
time, SyQuest shall determine to register any of its
securities, for its own account or the account of any
of its shareholders, other than a registration on Form
S-1 or S-8 relating solely to employee stock option or
purchase plans, or a registration on Form S-4 relating
solely to an SEC Rule 145 transaction, or a
registration on any other form (other than Form S-1,
S-2, S-3 or S-18, or their successor forms) or any
successor to such forms, which does not include
substantially the same information as would be
required to be included in registration statement
covering the sale of Common Stock or Converted Stock,
SyQuest will:
promptly give to Jayhawk written notice thereof
(which shall include a list of the jurisdictions in
which the Company intends to attempt to qualify such
securities under the applicable blue sky or other
state securities laws); and
include in such registration, and in any
underwriting involved therein, all Common Stock or
Converted Stock specified in a written request or
requests, made within 30 days after receipt of such
written notice from SyQuest, by Jayhawk.
Representations and Warranties of Jayhawk. Jayhawk
hereby represents and warrants to SyQuest on the date
hereof and on the Closing Date, and agrees with
SyQuest, as follows:
The execution, delivery and performance of this
Agreement by Jayhawk have been duly authorized by all
requisite corporate action and no further consent or
authorization of Jayhawk, its Board of Directors or
its stockholders is required. This Agreement has been
duly executed and delivered by Jayhawk and, when duly
authorized, executed and delivered by SyQuest, will be
a valid and binding agreement enforceable against
Jayhawk in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and
similar laws of general applicability relating to or
affecting creditors' rights generally and to general
principles of equity.
Jayhawk understands that no United States
federal or state agency has passed on, reviewed or
made any recommendation or endorsement of the Common
Stock or the Warrant.
In making the decision to purchase the Common
Stock or the Warrant in accordance with this
Agreement, Jayhawk has relied solely upon independent
investigations made by it and not upon any
representations made by SyQuest other than those made
in this Agreement.
Subject to Section 3A, Jayhawk understands that
the Common Stock, the Warrant and the Converted Stock
have not been registered under the Securities Act and
may not be reoffered or resold other than pursuant to
such registration or an available exemption therefrom.
Investment Purpose. Jayhawk is purchasing the
Common Stock and the Warrant for its own account for
investment only and not with a view to, or for resale
in connection with, the public sale or distribution
thereof except pursuant to sales registered under the
1933 Act. Jayhawk is not purchasing the Common Stock
or Warrant for the purpose of covering, and will not
use any Common Stock, Warrant or Converted Stock
(collectively, "Derivative Shares") to cover, any
short sale position in the common stock. Jayhawk
understands that it shall be a condition to the
issuance of any Derivative Shares that the
representations and warranties in this section 4 shall
be true and complete with respect to the Warrant and
such Derivative Shares.
Accredited Investor Status. Jayhawk is an
"accredited investor" as that term is defined in
Regulation D. Jayhawk is able to bear the economic
risk of Jayhawk's investment hereunder.
Reliance on Exemptions. Jayhawk understands
that the Derivative Shares are being or will be
offered and sold to it in reliance on specific
exemptions from the registration requirements of
United States federal and state securities laws and
that SyQuest is relying on the truth and accuracy of,
and Jayhawk's compliance with, the representations,
warranties, agreements, acknowledgments and
understandings of Jayhawk set forth herein in order to
determine the availability of such exemptions and the
eligibility of Jayhawk to acquire Derivative Shares.
Sophistication. A principal executive officer
or other representative of Jayhawk who is acting on
behalf of Jayhawk in connection with the transactions
contemplated hereby has such knowledge and experience
in financial and business matters that such officer is
capable of evaluating the merits and risks of the
investment by Jayhawk contemplated by this Agreement
and has the capacity to protect Jayhawk's interests.
Information. Jayhawk has been furnished with
all materials and information relating to the
business, management, properties, financial condition,
operations, affairs and prospects of SyQuest and all
materials and information relating to the offer and
sale of the Derivative Shares, as have been requested
by Jayhawk. Jayhawk has been afforded the opportunity
to ask all questions of SyQuest that the Jayhawk
considered appropriate or desirable to ask in
connection with this Agreement and has received
answers to such inquiries that Jayhawk considers
satisfactory. Jayhawk understands that its investment
in the Derivative Shares involves and will involve a
high degree of risk. Jayhawk has sought such
investment, accounting, legal and tax advice as it has
considered necessary to an informed investment
decision with respect to its acquisition of the
Derivative Shares.
Transfer or Resale. Jayhawk understands that
(i) except as otherwise provided in section 3.A, the
Derivative Shares have not been and are not being
registered under the 1933 Act or any state securities
laws, and may not be offered for sale, sold, assigned
or transferred unless (a) subsequently registered
thereunder, or (b) Jayhawk shall have delivered to
SyQuest an opinion of counsel, reasonably satisfactory
in form, scope and substance to SyQuest, 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 1933 Act ("Rule 144") may be
made only in accordance with the terms of Rule 144
and, if Rule 144 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 1933 Act) may require compliance with some
other exemption under the 1933 Act or the rules and
regulations of the SEC thereunder; and (iii) neither
SyQuest nor any other person is under any obligation
to register such securities (other than pursuant to
section 3.A) under the 1933 Act or any state
securities laws or to comply with the terms and
conditions of any exemption thereunder.
Covenants of SyQuest. Except as set forth in
the Schedule of Exceptions attached hereto, SyQuest
covenants and agrees with Jayhawk as follows:
For so long as any portion of the Warrant
remains outstanding, SyQuest will use its best efforts
to (i) maintain the eligibility of its common stock
for
quotation on NASDAQ or listing on a national
securities exchange (as defined in the Exchange Act)
and (ii) regain the eligibility of its common stock
for quotation on NASDAQ in the event that the common
stock is delisted by NASDAQ.
SyQuest will (i) provide Jayhawk with an
opportunity to review and comment on any public
disclosure by SyQuest of information regarding this
Agreement and the transactions contemplated hereby,
(ii) promptly notify Jayhawk if there is any public
disclosure by SyQuest of material information
regarding SyQuest or its financial condition,
prospects or results of operation and (iii) provide
Jayhawk with copies of all SEC Filings.
SyQuest will comply with the terms and
conditions of the Warrant as set forth in the Warrant
Certificate (as duly amended from time to time by the
parties hereto).
Covenants of Jayhawk. Jayhawk hereby covenants and
agrees with SyQuest as follows:
Neither Jayhawk nor any of its affiliates nor
any person acting on its or their behalf will (i) at
any time offer, transfer or sell any Common Stock,the
Warrant or any Converted Stock other than pursuant to
registration under the Securities Act or pursuant to
an available exemption therefrom, or (ii) prior to
July 4, 1998, offer, transfer or sell any Common
Stock, the Warrant or any Converted Stock.
6A. Legend. Jayhawk understands that
the certificates or other instruments representing the
Common Stock, the Warrant and, until such time as the
Derivative Shares shall have been sold pursuant to a
registration under the 1933 Act as contemplated by
this Agreement or an exemption therefrom, the stock
certificates representing the Derivative Shares shall
bear a restrictive legend in substantially the
following form (and a stop-transfer order may be
placed against transfer of such certificates or other
instruments):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE
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, AND 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.
The legend set forth above shall be removed and
SyQuest shall issue a certificate without such legend
to any holder of Derivative Shares if, unless
otherwise required by state securities laws, (a) the
same are sold pursuant to an effective registration
statement under the 1933 Act, or (b) in connection
with a sale transaction, such holder provides SyQuest
with an opinion of counsel, in form, substance and
scope reasonably acceptable to SyQuest, to the effect
that a public sale, assignment or transfer thereof may
be lawfully effected without registration under the
1933 Act, or (c) such holder provides SyQuest with
assurances reasonably satisfactory to SyQuest that the
same may be publicly sold pursuant to Rule 144 without
restriction.
Conditions Precedent to Jayhawk's Obligations. The
obligations of Jayhawk hereunder are subject to the
performance by SyQuest of its obligations hereunder
and to the satisfaction of the following additional
conditions precedent, unless expressly waived in
writing by Jayhawk:
On the Closing Date and on each Exercise Date
(as defined in the Warrant Certificate), (i)to the
extent provided in Section 3 hereof, the
representations and warranties made by SyQuest in this
Agreement shall be true and correct, and (ii) SyQuest
shall have complied fully with all the covenants and
agreements in this Agreement and the Warrant
Certificate; and Jayhawk shall have received on each
such date a certificate of the Chief Executive Officer
and the Chief Financial Officer of SyQuest dated such
date and to such effect.
On the Closing Date and on each Exercise Date,
SyQuest shall have delivered to Jayhawk an opinion of
counsel reasonably satisfactory to Jayhawk, dated the
date of delivery, confirming in substance the matters
covered in paragraphs (a), (b), (c), (d), (e), (f),
and (h) of Section 3 hereof; provided, however, that
no such opinion delivered in respect of any Exercise
Date shall be required to cover the matters set forth
in paragraph (h) of Section 3 hereof.
Reserved.
On the Closing Date, SyQuest shall have
delivered to Jayhawk the opinion of counsel reasonably
satisfactory to Jayhawk, dated the Closing Date, to
the effect that the offer and sale of the Common Stock
and the Warrant hereunder do not require registration
under the Securities Act.
As used herein the term "Business Day"
means any day on which banks in the City of New York
are open for business.
Conditions Precedent to SyQuest's Obligations. The
obligations of SyQuest hereunder are subject to the
performance by Jayhawk of its obligations hereunder
and to the satisfaction of the following additional
conditions precedent, unless expressly waived in
writing by SyQuest:
On the Closing Date and on each Exercise Date
(as defined in the Warrant Certificate), (i) the
representations and warranties made by Jayhawk in this
Agreement shall be true and correct, and (ii) Jayhawk
shall have complied fully with all the covenants and
agreements in this Agreement and the Warrant
Certificate; and SyQuest shall have received on each
such date a certificate of an appropriate officer of
Jayhawk dated such date and to such effect.
Fees and Expenses. SyQuest agrees to pay Jayhawk's
reasonable legal fees and costs actually incurred
incident to the preparation of this Agreement and
related documents up to $5,000.00 upon presentation of
evidence reasonably satisfactory to SyQuest that such
fees and costs were actually incurred.
Non-Performance.
If, on the date hereof, or otherwise when
required, SyQuest shall fail to deliver the Common
Stock, the Warrant or Converted Stock to Jayhawk for
any reason other than the failure of any condition
precedent to SyQuest's obligations hereunder or the
failure by Jayhawk to comply with its obligations
hereunder, then SyQuest shall:
hold Jayhawk harmless against any loss, claim or
damage (including without limitation, incidental and
consequential damages) arising from or as a result of
such failure by SyQuest; and reimburse Jayhawk for
all of its reasonable out-of-pocket expenses,
including fees and disbursements of its counsel,
incurred by Jayhawk in connection with this Agreement
and the Warrant and the transactions contemplated
herein and therein;
provided, however, that SyQuest shall then be under no
further liability to Jayhawk except as provided in the
Warrant Certificate, this Section 10 and Section 11
hereof.
Indemnification.
Indemnification of Jayhawk. SyQuest hereby
agrees to indemnify Jayhawk and each of its officers,
directors, employees, agents and affiliates and each
person that controls (within the meaning of Section 20
of the Securities Exchange Act of 1934, as amended)
any of the foregoing
persons (each a "Jayhawk Indemnified Party") against
any claim, demand, action, liability, damages, loss,
cost or expense (including, without limitation,
reasonable legal fees) (a "Proceeding"), that it may
incur in connection with any of the transactions
contemplated hereby arising out of or based upon:
any untrue or alleged untrue statement of a material
fact by SyQuest or any of its affiliates or any person
acting on its or their behalf or omission or alleged
omission to state any material fact necessary in order
to make the statements, in the light of the
circumstances under which they were made, not mis-
leading by SyQuest or any of its affiliates or any
person acting on
its or their behalf ;
any of the representations or warranties made by
SyQuest herein being untrue or incorrect; and
any breach or non-performance by SyQuest of any of
its covenants, agreements or obligations under this
Agreement and the Warrant Certificate;
and SyQuest hereby agrees to reimburse each Jayhawk
Indemnified Party for any reasonable legal or other
expenses incurred by such Jayhawk Indemnified Party in
investigating or defending any such Proceeding;
provided, however, that the foregoing indemnity shall
not apply to any Proceeding to the extent that it
arises out of or is based upon the gross negligence or
wilful misconduct of Jayhawk in connection therewith.
Indemnification of SyQuest. Jayhawk hereby
agrees to indemnify SyQuest and each of its officers,
directors, employees, agents and affiliates and each
person that controls (within the meaning of Section 20
of the Securities Exchange Act of 1934, as amended)
any of the foregoing persons (each a "SyQuest
Indemnified Party") against any Proceeding, that it
may incur in connection with any of the transactions
contemplated hereby arising out of or based upon:
any untrue or alleged untrue statement of a material
fact by Jayhawk or any of its affiliates or any person
acting on its or their behalf or omission or alleged
omission to state any material fact necessary in order
to make the statements, in the light of the
circumstances under which they were made, not mis-
leading by Jayhawk or any of its affiliates or any
person acting on its or their behalf:
any of the representations or warranties made by
Jayhawk herein being untrue or incorrect; and
any breach or non-performance by Jayhawk of any of
its covenants, agreements or obligations under this
Agreement and the Warrant Certificate;
and Jayhawk hereby agrees to reimburse each
SyQuest Indemnified Party for any reasonable legal or
other expenses incurred by such SyQuest Indemnified
Party in investigating or defending any such
Proceeding; provided, however, that the foregoing
indemnity shall not apply to any Proceeding to
the extent that it arises out of or is based upon the
gross negligence or wilful misconduct of SyQuest in
connection therewith.
Conduct of Claims.
Whenever a claim for indemnification shall arise
under this Section, the party seeking indemnification
(the "Indemnified Party"), shall notify the party from
whom such indemnification is sought (the "Indemnifying
Party") in writing of the Proceeding and the facts
constituting the basis for such claim in reasonable
detail;
Upon delivery of such notice, such Indemnified Party
shall have a duty to take all reasonable steps to
mitigate any losses, liabilities, costs, charges and
expenses relating to any such Proceeding;
Such Indemnifying Party shall have the right to
retain the counsel of its choice in connection with
such Proceeding and to participate at its own expense
in the defense of any such Proceeding; provided,
however, that counsel to the Indemnifying Party shall
not (except with the consent of the relevant
Indemnified Party) also be counsel to such Indemnified
Party. In no event shall the Indemnifying Party be
liable for fees and expenses of more than one counsel
(in addition to any local counsel) separate from its
own counsel for all Indemnified Parties in connection
with any one action or separate but similar or related
actions in the same jurisdiction arising out of the
same general allegations or circumstances; and
No Indemnifying Party shall, without the prior
written consent of the Indemnified Parties (which
consent shall not be unreasonably withheld), settle or
compromise or consent to the entry of any judgment
with respect to any litigation, or any investigation
or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever in
respect of which indemnification could be sought under
this Section unless such settlement, compromise or
consent (A) includes an unconditional release of each
Indemnified Party from all liability arising out of
such litigation, investigation, proceeding or claim
and (B) does not include a statement as to or an
admission of fault, culpability or a failure to act by
or on behalf of any Indemnified Party.
Survival of the Representations, Warranties, etc.
The respective representations, warranties, and
agreements made herein by or on behalf of the parties
hereto shall remain in full force and effect,
regardless of any investigation made by or on behalf
of the other party to this Agreement or any
officer, director or employee of, or person
controlling or under common control with, such party
and will survive delivery of and payment for the
Common Stock, the Warrant and any Converted Stock
issuable hereunder.
Notices. All communications hereunder shall be in
writing, and
if sent to Jayhawk, shall be delivered by hand,
sent by registered mail or transmitted and confirmed
by facsimile to Jayhawk at:
Jayhawk Invesments, L.P.
8201 Mission Road, Suite 110
Prairie Village, Kansas 66208
Attention: Kent McCarthy
Telephone: 913-642-2611
Facsimile: 913-642-8661
with a copy to:
Gardner, Carton & Douglas
321 N. Clark Street, Suite 3400
Chicago, Illinois 60610-4795
Attention: Fred White, Esq.
Telephone: 312-245-8476
Facsimile: 312-644-3381
if sent to SyQuest, shall be delivered by hand,
sent by registered mail or transmitted and confirmed
by facsimile to SyQuest at:
SyQuest Technology, Inc.
47071 Bayside Parkway
Fremont, CA 94538
Attention: Chief Financial Officer
Telephone: (510) 226-4000
Facsimile: (510) 226-4114
with a copy to:
Shartsis, Friese & Ginsburg LLP
One Maritime Plaza, 18th Floor
San Francisco, CA 94111
Attention: Steven O. Gasser
Telephone: (415) 421-6500
Facsimile: (415) 421-2922
Miscellaneous
This Agreement may be executed in one or more
counterparts and it is not necessary that signatures
of all parties appear on the same counterpart, but
such counterparts together shall constitute but one
and the
same agreement.
This Agreement and the Warrant shall inure to
the benefit of and be binding upon the parties hereto,
their respective successors and assigns and, with
respect to Section 11 hereof, their respective
officers, directors, employees, agents, affiliates and
controlling persons, and no other person shall have
any right or obligation hereunder. SyQuest may not
assign this Agreement or the Warrant Certificate.
This Agreement and the Warrant Certificate shall
be governed by, and construed in accordance with, the
internal laws of the State of California, and each of
the parties hereto hereby submits to the non-exclusive
jurisdiction of any State or Federal court in the City
of San Francisco and State of California and any court
hearing any appeal therefrom, over any suit, action or
proceeding against it arising out of or based upon
this Agreement and the Warrant (a "Related
Proceeding"). Each of the parties hereto hereby
waives any objection to any Related Proceeding in such
courts whether on the grounds of
venue, residence or domicile or on the ground that the
Related Proceeding has been brought in an inconvenient
forum.
The provisions of this Agreement and the Warrant
Certificate are severable, and if any clause or
provision hereof shall be held invalid, illegal or
unenforceable in whole or in part, such invalidity or
unenforceability shall not in any manner affect any
other clause or provision of this Agreement or the
Warrant Certificate.
The headings of the sections of this document
have been inserted for convenience of reference only
and shall not be deemed to be a part of this
Agreement.
This Agreement (including the Warrant)
constitutes the entire agreement and supersedes all
prior agreements and understandings, both written and
oral, between the parties hereto with respect to the
subject matter of this Agreement and the Warrant and
is not intended to confer upon any person other than
the parties hereto any rights or remedies hereunder or
under the terms of the warrant and term sheets between
such parties.
The term "affiliate" is used herein as defined
in Rule 144(a)(1) under the Securities Act.
Time of Essence. Time shall be of the essence in
this Agreement and the Warrant.
IN WITNESS WHEREOF, the parties hereto
have duly executed and delivered this Agreement, all
as of the day and year first above written.
SYQUEST TECHNOLOGY, INC.
By:
Name:
Title:
JAYHAWK INVESTMENTS, L.P.
By:
Name:
Title:
SCHEDULE OF EXCEPTIONS
Regarding section 3.h, Iomega Corporation
recently filed a lawsuit against SyQuest alleging both
patent and trademark infringement.
Regarding section 3.l, the number of shares of
common stock issuable on conversion of SyQuest's
outstanding (a) 7% Cumulative Convertible Preferred
Stock, Series 1, (b) 5% Cumulative Convertible
Preferred Stock, Series 3, and (c) 5% Cumulative
Convertible Preferred Stock, Series 4, may vary based
on the average closing prices of the Common Stock for
the five days preceding conversion. In addition, as
of August 1, 1997, there are: (i) stock options and
other commitments to employees to issue approximately
9.0 million shares of SyQuest's common stock; (ii)
warrants for the issuance of approximately 43.1
million shares of SyQuest's common stock; and (iii)
other commitments (principally for preferred stock
dividends) to issue approximately 300,000 shares of
SyQuest's common stock.
ANNEX A
THE SECURITIES REPRESENTED BY OR ISSUABLE ON
EXERCISE OF 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, AND 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.
Warrant No.
COMMON STOCK PURCHASE WARRANT
SYQUEST TECHNOLOGY, INC.
This Warrant certifies that ______________
("Holder"), or its registered assigns, is the
registered holder of one Warrant (the "Warrant")
expiring on May 1, 2004 (the "Termination Date") to
purchase shares of common stock, par value $.0001 per
share (the "Common Stock"), of SYQUEST TECHNOLOGY,
INC., a Delaware corporation (the "Issuer"). This
Warrant entitles the holder to purchase from the
Issuer up to _____________ Warrant Shares (as defined
below), subject to adjustment, at a per share Exercise
Price (as defined below). A "Warrant Share" initially
represents one fully paid and nonassessable share of
Common Stock, based upon an Exchange Rate (as defined
below) of one-for-one, subject to adjustment pursuant
to paragraph 10.
NOTWITHSTANDING ANY OTHER TERM IN THIS WARRANT
TO THE CONTRARY, THIS WARRANT SHALL NOT BE EXERCISABLE
UNTIL SUCH TIME AS ISSUER AMENDS ITS CERTIFICATE OF
INCORPORATION TO INCREASE THE NUMBER OF SHARES OF ITS
AUTHORIZED COMMON STOCK
TO 240,000,000.
This Warrant was issued on August 4, 1997 (the
"Closing Date"), pursuant to the Securities Purchase
Agreement dated August 4, 1997 (the "Purchase
Agreement-
"), between the Issuer and Holder, and is subject to
the terms and conditions thereof. Unless otherwise
defined herein, capitalized terms used herein have the
meanings respectively ascribed to them in the Purchase
Agreement. A copy of the Purchase Agreement may be
obtained by the registered holder hereof upon written
request to the Issuer.
The exercise price per Warrant Share (plus
transfer taxes, if applicable, the "Exercise Price")
shall be the greater of (a) 130 percent of the
arithmetical average of the closing sale prices per
share of Common Stock on the five consecutive trading
days preceding the delivery of any Exercise Notice (as
defined below) as reported by the Nasdaq National
Market (the "NNM") or, if the NNM is not then the
principal trading market for the Common Stock, on the
principal trading market for the Common Stock at that
time or, if there is then no such principal trading
market, the fair market value per share of Common
Stock during such period as determined in good faith
by the Board of Directors of the Issuer and (b) 130
percent of such closing sale price on the day
immediately preceding the delivery of the Exercise
Notice; provided that in no event shall the Exercise
Price exceed $3.0469. If the value of the Common
Stock is to be determined by the Board of Directors of
the Issuer and the holder of this Warrant disagrees
with said valuation, the value of the Common Stock
will be determined by binding arbitration in
accordance with the then prevailing commercial
arbitration rules of the American Arbitration
Association, and such arbitration shall proceed in San
Francisco, California, or at such other place as
agreed to in writing by the Issuer and the holder of
this Warrant. The Exercise Price multiplied by the
Exercise Amount (as defined below) at any Exercise
Date (as defined below) is referred to as a "Warrant
Purchase Price".
The number of Warrant Shares for which this
Warrant may be exercised will increase by 10% of the
then available Warrant Shares for each month (prorated
daily for partial months) for every month after the
Warrant Shares shall have been registered that Issuer
fails to maintain such registration, provided that
Issuer is otherwise required to maintain such
registration.
This Warrant shall have the following additional
terms:
This Warrant is not exercisable until the lapse of a
period ending on the 65th day (the "Notice Period")
after the holder delivers a notice (a "65 Day Notice")
to the Issuer designating an aggregate number of
Warrant Shares (the "Exercisable Number"). A 65 Day
Notice may be given at any time after the Closing
Date. If the initial 65 Day Notice does not designate
all of the Warrant Shares, this Warrant will become
exercisable for some or all of the remaining Warrant
Shares upon delivery of one or more 65 Day Notices
increasing the Exercisable Number after a further
Notice Period. From time to time following the Notice
Period, this Warrant may be exercised on any Business
Day prior to the Termination Date (an "Exercise Date")
for any quantity of Warrant Shares, such that the
aggregate number of Warrant Shares issued hereunder is
less than or equal to the Exercisable Number. To
exercise this Warrant, the registered holder must,
prior to the Termination Date, surrender this Warrant
to the Issuer at its principal office with the
Exercise Notice attached hereto (an "Exercise Notice")
duly completed and signed by the registered holder
hereof and stating the total number of Warrant Shares
in respect of which this Warrant is then exercised
(the "Exercise Amount") and tender the applicable
Warrant Purchase Price. This Warrant shall be
exercisable only in the minimum amount of 10,000
Warrant Shares and integral multiples of 10,000
Warrant Shares in excess thereof (or such lesser
amount as shall constitute the full amount remaining
of this Warrant). As used herein the term "Business
Day" means any day on which banks in the State of
California are open for business.
On the Business Day following an Exercise Date (an
"Issue Date"), the Issuer shall issue and cause to be
delivered to the registered holder hereof at such
address as such holder shall specify in the Exercise
Notice a certificate or certificates for the number of
full Warrant Shares issuable upon the exercise of this
Warrant, registered in such holder's name, together
with cash (if any) as provided in paragraph 4. Such
certificate or certificates shall be deemed to have
been issued and any person so designated to be named
therein shall be deemed to have become a holder of
record of such Warrant Shares as of such Exercise
Date.
If on such Issue Date the number of Warrant Shares to
be delivered shall be less than the total number of
Warrant Shares deliverable hereunder, there shall be
issued to the holder hereof or his assignee on such
Issue Date a new warrant substantially identical to
this Warrant, except that such new warrant shall
evidence the right to purchase the number of Warrant
Shares equal to (x) the total number of Warrant Shares
deliverable hereunder less (y) the number of Warrant
Shares so delivered.
The Issuer shall not be required to issue fractional
Warrant Shares on the exercise of this Warrant. The
number of full Warrant Shares which shall be issuable
upon the exercise of this Warrant shall be computed on
the basis of the aggregate number of Warrant Shares
purchasable on exercise of this Warrant so presented.
If any fraction of a Warrant Share would, except for
the provisions of this paragraph 4, be issuable on the
exercise of this Warrant, the Issuer shall pay an
amount in cash equal to the last per share sale price
of the Common Stock (on the NNM or the Principal
Market, as the case may be) on the day immediately
preceding the Exercise Date, multiplied by such
fraction (subject to adjustment pursuant to paragraph
10); provided that if at the time that the Exercise
Price is to be determined the NNM is not the principal
trading market for the Common Stock and there is no
Principal Market, then the amount of cash to be paid
per fractional Warrant Share shall be determined in
good faith by the Board of Directors of the Issuer.
If the holder of this Warrant disagrees with such
determination, the amount of cash to be paid per
fractional Warrant Share will be determined by binding
arbitration in accordance with the then prevailing
commercial arbitration rules of the American
Arbitration Association, and such arbitration shall
proceed in San Francisco, California, or at such other
place as agreed to in writing by the Issuer and the
holder of this Warrant.
Only after Issuer has amended its Certificate of
Incorporation to increase the number of shares of its
authorized Common Stock to 240,000,000, and for so
long as this Warrant has not been exercised in full or
the Termination Date has not occured, Issuer shall
reserve and keep available, free from preemptive
rights, out of its authorized but unissued Common
Stock, for issuance upon exercise of this Warrant, the
maximum number of shares of Common Stock and any other
Capital Stock (as defined below) then so issuable. In
the event the number of shares of Common Stock or
other securities issuable in respect of the Warrant
Shares exceeds the authorized number of shares of
Common Stock or other securities after Issuer has
amended its Certificate of Incorporation to increase
the number of shares of its authorized Common Stock to
240,000,000, the Issuer shall promptly take all
actions necessary to increase the authorized number of
its Common Stock, including causing its Board of
Directors to call a special meeting of stockholders
within thirty days of the date on which such excess
first existed and recommend such increase for approval
by the Issuer's stockholders. The Issuer shall use
its best efforts to obtain stockholder approval of the
increase to the authorized number of shares of Common
Stock.
By accepting delivery of this Warrant, the registered
holder hereof covenants and agrees with the Issuer not
to exercise or transfer this Warrant or any Warrant
Shares except in compliance with the Purchase
Agreement and this Warrant.
By accepting this Warrant, the registered holder
hereof covenants and agrees with the Issuer that this
Warrant may not be sold, assigned, conveyed,
encumbered, pledged, hypothecated or in any other
manner disposed of or transferred, as a whole or in
part, unless and until such holder shall deliver to
the Issuer (i) written notice of such transfer and of
the name and address of the transferee, (ii) a written
agreement, in form and substance reasonably
satisfactory to the Issuer, of the transferee to
comply with the applicable terms of the Purchase
Agreement and this Warrant and (iii) an opinion of
counsel for such holder, reasonably satisfactory to
the Issuer in form, scope and substance, that such
transaction will comply with all applicable securities
laws and regulations. If a portion of this Warrant is
transferred, all rights of the registered holder
hereunder may be exercised by the transferee (subject
to the requirement that such transferee shall provide
a like opinion of counsel in respect of the number of
Warrant Shares transferred with the portion of this
Warrant), provided that any registered holder of this
Warrant may deliver a 65 Day Notice, an Exercise
Notice or elect the form of consideration pursuant to
paragraph 10 only with respect to the Warrant Shares
subject to such holder's portion of this Warrant, and,
for purposes of paragraph 10(c), the calculation of
the Black-Scholes Warrant Value shall be made by the
registered holder(s) of a majority in interest of this
Warrant.
The Issuer will pay all documentary stamp taxes (if
any) attributable to the issuance of Warrant Shares
upon the exercise of this Warrant by the registered
holder hereof; provided that the Issuer shall not be
required to pay any tax or taxes which may be payable
in respect of any transfer involved in the
registration of this Warrant or any certificates for
Warrant Shares in a name other than that of the
registered holder of this Warrant surrendered upon the
exercise of this Warrant, and the Issuer shall not be
required to issue or deliver this Warrant or
certificates for Warrant Shares unless or until the
person or persons requesting the issuance thereof
shall have paid to the Issuer the amount of such tax
or shall have established to the satisfaction of the
Issuer that such tax has been paid.
In case this Warrant shall be mutilated, lost, stolen
or destroyed, the Issuer may in its discretion issue
in exchange and substitution for and upon cancellation
of the mutilated Warrant, or in lieu of and
substitution for the lost, stolen or destroyed
Warrant, a new Warrant of like tenor, but only upon
receipt of evidence reasonably satisfactory to the
Issuer of such loss, theft or destruction of such
Warrant and indemnity, if requested, reasonably
satisfactory to the Issuer. Applicants for a
substitute Warrant shall also comply with such other
reasonable regulations and pay such other reasonable
charges as the Issuer may prescribe.
The number of shares of Common Stock (and other
Capital Stock (as defined below) or property) (as
adjusted from time to time, the "Exchange Rate")
issuable upon the exercise of this Warrant and the
terms and conditions of this Warrant are subject to
adjustment by the Issuer, in consultation with the
holder hereof, from time to time as follows:
If the Issuer:
subdivides its outstanding shares of Common Stock into
a greater number of shares;
combines its outstanding shares of Common Stock into a
smaller number of shares; or
3. issues by reclassification of its
Common Stock any shares of its Capital Stock;
then the Exchange Rate in effect
immediately prior to such action shall be adjusted so
that the registered holder hereof shall thereafter be
entitled to receive upon exercise of this Warrant in
respect of each Warrant Share the number of shares of
Common Stock or other Capital Stock of the Issuer that
such holder would have received immediately following
such action if such holder had so exercised this
Warrant immediately prior to such action.
As used herein, the term "Capital Stock"
means, with respect to any corporation, any and all
shares, interests, rights to purchase, warrants,
options, participations or other equivalents of or
interests (however designated) in stock issued by that
corporation.
Such adjustment shall become effective
simultaneously with the effective date of any
subdivision, combination or reclassification.
If, after an adjustment, the registered
holder hereof would receive upon exercise shares of
two or more classes of Capital Stock of the Issuer,
the Exchange Rate shall thereafter be subject to
adjustment upon the occurrence of an action taken with
respect to each such class of Capital Stock as is
contemplated hereby with respect to the Common Stock,
on terms comparable to those applicable to Common
Stock hereunder.
Whenever any of the actions described in this
paragraph 10 are to be taken, the Issuer shall provide
the notices required by paragraph 11 hereof.
(A) The Issuer covenants and agrees with the
registered holder hereof not to consolidate or merge
with or into, or sell, transfer or lease all or
substantially all its assets to, or sell a majority of
its securities generally entitled to vote for the
election of directors of the Issuer ("Voting
Securities") to, any person, unless, and (B) if any
person consummates a tender offer for the purchase of
at least a majority of the Voting Securities (any of
which transactions described in clauses (A) and (B), a
"Transaction"), then, at the election of the
registered holder hereof (or if such holder does not
notify the Issuer of such election within twenty days
after being notified of the Transaction, at the
election of the Issuer), on the effective date of such
Transaction (the "Transaction Date") and as a
condition to the consummation of any Transaction
described in clause (A), either:
the Issuer shall have redeemed this Warrant by paying
to such holder, upon surrender of this Warrant, a cash
payment equal to the Black-Scholes value of the
unexercised portion of this Warrant from the effective
date of the Transaction until the Warrant Expiration
Date (the "Black-Scholes Warrant Value"), computed as
of such Transaction Date; or
a. such person shall expressly assume in writing
all of the obligations of the Issuer under the
Purchase Agreement and hereunder and deliver notice
thereof to the registered holder hereof; and
upon consummation of such Transaction, this Warrant
shall automatically become exercisable for the common
stock of the acquiror (without regard to the form of
acquisition consideration) with similar terms and at
an exercise price that would result in a Black-Scholes
Warrant Value of this Warrant computed immediately
after the Transaction equal to the Black-Scholes
Warrant Value of this Warrant computed immediately
before the Transaction.
For purposes of this paragraph 10(c), the
factors to be used in the calculation of the Black-
Scholes Warrant Value are as follows:
Stock Price: the last sales price of the
Common Stock reported by Bloomberg on the last Trading
Day prior to the Transaction Date (the "Last Trading
Day")
Time To Expiration: the number of Trading
Days between the Last Trading Day and the Termination
Date
Exercise Price: Exercise Price
Volatility: volatility shown by Bloomberg
for the past 260 days at close on the Last Trading
Day, unless the Time to Expiration is less than 260
Trading Days, in which case the volatility shown by
Bloomberg at close on the Last Trading Day for the
number of Trading Days from the Last Trading Day to
the Termination
Date
Risk-Free Interest Rate: closing yield as
of the Last Trading Day as quoted in the Wall Street
Journal for U.S. Treasury bond with a maturity date
closest to the Termination Date
Number of Shares
Outstanding: total number of shares of
Common Stock outstanding as of the Last Trading Day
Exercisable
Common Stock: the number of shares of
Common Stock exercisable under this Warrant as of the
Transaction Date
The Black-Scholes Warrant Value will be
calculated using the factors shown above. A
preliminary calculation of the Black-Scholes Warrant
Value, and, if applicable, the exercise price
contemplated by paragraph 10(c)2(b) hereof,(using
then-current values for each factor) will be delivered
by Holder to the Issuer not later than the tenth day
after it receives notice of a Transaction by the
Issuer.
The Issuer, in turn, will respond within five days
with any comments or questions and reach agreement
with Holder on the preliminary factors. On the
Transaction Date, Holder, in consultation with the
Issuer, will calculate the final Black-Scholes Warrant
Value using the then-current values for each factor;
such calculation will be used to compute the values
called for in paragraph 10(c). It shall be a
condition to any Transaction that the consideration
provided for herein shall be paid in full, in the case
of cash, or delivered, in the case of a warrant, all
in accordance with the terms hereof, immediately prior
to the consummation of the Transaction. As used
herein, the term "Trading Day" means any day on which
the Issuer's Common Stock is quoted on the NNM or, if
applicable, other national securities exchange. If
the factors shown above can not be determined because
the Issuer's Common Stock is not listed on any
national securities exchange or because Bloomberg does
not report the factors shown above, then the Issuer
and the holder of this Warrant shall agree on an
alternative calculation to satisfy the requirements of
this paragraph 10(c).
After an adjustment to the Exchange Rate hereunder,
any subsequent event requiring an adjustment hereunder
shall cause an adjustment to the Exchange Rate as so
adjusted.
Upon the issuance of any stock dividend or
distribution of Common Stock pro rata to all holders
of Common Stock, the Exchange Rate shall be adjusted
so that the registered holder hereof on the record
date for such distribution shall be entitled to
receive such dividend or distribution on the same
terms as the holders of Common Stock upon exercise
hereof.
Except as provided in the following paragraph, upon
any adjustment of the Exchange Rate pursuant to
paragraph 10, the Issuer shall promptly thereafter but
in any event within fifteen days following such
adjustment (i) cause to be delivered to the registered
holder hereof a certificate of its Chief Financial
Officer setting forth the Exchange Rate after such
adjustment and setting forth in reasonable detail the
method of calculation and the facts upon which such
calculations are based, which certificate shall be
conclusive evidence of the correctness of the matters
set forth therein, and (ii) cause to be delivered to
the registered holder hereof at its address appearing
on the Warrant Register written notice of such
adjustments by first-class mail, postage prepaid.
Where appropriate, such notice may be given in advance
and included as part of the notice required to be
mailed under the other provisions of this paragraph
11.
In case:
the Issuer shall authorize the issuance to all holders
of shares of Common Stock of rights, options or
warrants to subscribe for or purchase shares of Common
Stock or of any other subscription rights or warrants;
or
of any proposal for a consolidation or merger to which
the Issuer is a party, the sale or transfer of all or
substantially all of the assets of the Issuer, or any
reclassification or change of Common Stock issuable
upon exercise of this Warrant (other than a change in
par value, or from par value to no par value, or from
no par value to par value, or as a result of a
subdivision or combination), or of a tender offer or
exchange offer for shares of Common Stock; or
of the voluntary or involuntary dissolution,
liquidation or winding up of the Issuer; or
the Issuer proposes to take any action that would
require an adjustment of the Exchange Rate pursuant to
paragraph 10;
then the Issuer shall cause to be given to the
registered holder hereof at its address appearing on
the Warrant Register (as defined below), at least
twenty days (or ten days in any case specified in
clause (a) above) prior to the applicable record date
hereinafter specified, or promptly in the case of
events for which there is no record date, by first
class mail, postage prepaid, a written notice stating
(i) the date as of which the holders of record of
shares of Common Stock to be entitled to receive any
such rights, options, warrants or distribution are to
be determined, or (ii) the initial expiration date set
forth in any tender offer or exchange offer for shares
of Common Stock, or (iii) the date on which any such
reclassification, consolidation, merger, conveyance,
transfer, dissolution, liquidation or winding up is
expected to become effective or consummated, and the
date as of which it is expected that holders of record
of shares of Common Stock shall be entitled to
exchange such shares for securities or other property,
if any, deliverable upon such reclassification,
consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up.
The Issuer shall serve as warrant agent (the "Warrant
Agent") under this Agreement. The Warrant Agent
hereunder shall at all times maintain a register (the
"Warrant Register") of the holders of Warrants. Upon
thirty days' notice to the registered holder hereof,
the Issuer may appoint a new Warrant Agent. Such new
Warrant Agent shall be a corporation doing business
and in good standing under the laws of the United
States or any state thereof, and having a combined
capital and surplus of not less than $50,000,000. The
combined capital and surplus of any such new Warrant
Agent shall be deemed to be the combined capital and
surplus as set forth in the most recent annual report
of its condition published by such Warrant Agent prior
to its appointment; provided that such reports are
published at least annually pursuant to law or to the
requirements of a federal or state supervising or
examining authority. After acceptance in writing of
such appointment by the new Warrant Agent, it shall be
vested with the same powers, rights, duties and
responsibilities as if it had been originally
named herein as the Warrant Agent, without any further
assurance, conveyance, act or deed, but if for any
reason it shall be reasonably necessary or expedient
to execute and deliver any further assurance,
conveyance, act or deed, the same shall be done at the
expense of the Issuer and shall be legally and validly
executed and delivered by the Issuer.
Any corporation into which the Issuer or any new
Warrant Agent may be merged or any corporation
resulting from any consolidation to which the Issuer
or any new Warrant Agent shall be a party or any
corporation to which the Issuer or any new Warrant
Agent transfers substantially all of its corporate
trust or shareholders services business shall be a
successor Warrant Agent under this Agreement without
any further act; provided that such corporation (i)
would be eligible for appointment as successor to the
Warrant Agent under the provisions of this paragraph
12 or (ii) is a wholly owned subsidiary of the Warrant
Agent. Any such successor Warrant Agent shall
promptly cause notice of its succession as Warrant
Agent to be mailed (by first class mail, postage
prepaid) to the registered holder hereof at such
holder's last address as shown on the Warrant
Register.
This Warrant shall not be valid unless signed by
the Issuer.
IN WITNESS WHEREOF, SyQuest Technology, Inc. has
caused this Warrant to be signed by its duly
authorized officer.
Dated: August 4, 1997
SYQUEST
TECHNOLOGY, INC.
By:
_______________________
Name:
Title:
FORM OF EXERCISE NOTICE
(To Be Executed Upon Exercise of the Warrant)
[DATE]
SyQuest Technology, Inc.
47071 Bayside Parkway
Fremont, CA 94538
Attention: Chief Financial Officer
Re: Warrant No.
Ladies and Gentlemen:
The undersigned is the registered holder
of the above-referenced warrant (the "Warrant") issued
by SyQuest Technology, Inc., the original of which is
attached hereto, and hereby elects to exercise the
Warrant to purchase _________ Warrant Shares (as
defined in the Warrant) and herewith tenders
$_____________ by certified or official bank check to
the order of SyQuest Technology, Inc. as payment for
such Warrant Shares in accordance with the terms
of the Warrant and the Purchase Agreement (as defined
in the Warrant).
In accordance with the attached Warrant,
the undersigned requests that certificates for such
Warrant Shares be registered in the name of and
delivered to the undersigned at the following address:
________________________
________________________
________________________
[If the number of Warrant Shares to be
delivered is less than the total number of Warrant
Shares deliverable under the Warrant, insert the
following -- The undersigned requests that a new
warrant substantially identical to the attached
Warrant be issued to the undersigned evidencing the
right to purchase the number of Warrant Shares equal
to (x) the total number of Warrant Shares deliverable
under the Warrant less (y) the number of Warrant
Shares to be delivered in connection with this
exercise.]
NAME OF REGISTERED
HOLDER
[ADDRESS]
By:
_____________________________
Name:
Title:
ANNEX B
VIA FACSIMILE
Re: Stock Purchase Agreement (the
"Agreement") dated _______________, 1997, and related
documents
Ladies and Gentlemen:
Attached please find one copy of the (i)
the Warrant Certificate, (ii) the Securities Purchase
Agreement, and (iii) the Officers' Certificate. We
have the executed originals of the foregoing
documents. Upon our confirmation of the payment by
the _____ to SyQuest of the $____________ purchase
price on the Closing Date, we will instruct our
transfer agent to issue the Common Stock as set forth
in the Securities Purchase Agreement and we will send
the executed originals by overnight courier to the
following address:
Capitalized terms not otherwise defined in
this letter shall have the meanings ascribed in such
terms in the Securities Purchase Agreement.
Very truly yours,
SyQuest Technology, Inc.
By
Name: Thomas C. Tokos
Title: Vice President, General Counsel
and Secretary
Exhibit 10.2:
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (the
"Agreement") dated September 3, 1997, is entered into
by and between SyQuest Technology, Inc., a Delaware
corporation (together with its successors, "SyQuest"),
and Olympus Securities, Ltd., a Bermuda corporation
("Investor").
Unless otherwise defined herein,
capitalized terms used herein and not defined herein
shall have the meanings given to them in Regulation D
(as now if effect or as hereafter amended, "Regulation
D") under the Securities Act of 1933, as amended (the
"1933 Act").
The parties hereto agree as follows:
Purchase and Sale. In consideration of and upon the
basis of the representations, warranties and
agreements and subject to the terms and conditions set
forth in this Agreement:
Convertible Preferred Stock. SyQuest agrees to
issue
and sell to Investor, and Investor agrees to purchase
from SyQuest, on the Closing Date specified in Section
2 hereof, 4,125 shares of SyQuest's Convertible
Preferred Stock, Series 5, stated value $1,000 per
share (the "Preferred Shares"), having the terms and
conditions set forth in the Certificate of Designation
which is attached hereto as Exhibit A, at a purchase
price per share of $1,000, for an aggregate purchase
price of $4,125,000 (the "Purchase Price").
Warrant. In consideration of the purchase of
the Preferred Shares by Investor, SyQuest will issue
to Investor on the Closing Date specified in Section 2
hereof, a warrant or warrants having the terms set
forth in the warrant certificate attached hereto as
Exhibit B (the "Warrant") to purchase up to 2,887,500
shares (subject to adjustment) of SyQuest's Common
Stock, par value $.0001 per share (the "Common
Stock"). The shares of Common Stock issuable pursuant
to the Warrant are referred to herein as the "Warrant
Shares."
Converted Stock. The term "Converted Stock"
shall apply to any Common Stock issued or to be issued
upon conversion of the Preferred Shares pursuant to
the terms of this Agreement and the Certificate of
Designation or upon the exercises of the Warrant.
Closing Date. Upon satisfaction or, if
applicable, waiver of the conditions set forth in
Sections 7 and 8 hereof, the delivery of the Preferred
Shares referred to in Section 1(a) and the Warrant
referred to in Section 1(b) (the "Closing") shall take
place initially via facsimile at 2:00 p.m. (Pacific
Daylight Time) on September 4, 1997, or at such other
date and time as Investor and SyQuest may agree (such
date and time being referred to herein as
the "Closing Date"), provided that the original
certificates shall be delivered via Federal Express to
Investor at the address set forth in Section 13
hereof.
At the Closing, the following deliveries
shall be made:
Preferred Shares. SyQuest shall deliver the
certificate representing the Preferred Shares, duly
registered on the books of SyQuest in the name of
Investor, against payment by Investor by wire transfer
of the purchase price specified in Section 1(a) hereof
in immediately available funds to the following
account:
Account Name:
Bank of America,
1850 Gateway Blvd.
4th Floor, Concord, California 94520
Account No. 1233456287, ABA No. 121000358.
Warrant. SyQuest shall deliver the certificate
representing the Warrant to Investor. Such
certificate shall be substantially in the form
attached hereto as Exhibit B.
Closing Documents. The closing documents
required by Sections 7 and 8 shall be delivered to
Investor and SyQuest, respectively.
Delivery Notice. An executed copy of the
delivery notice in the form attached hereto as Exhibit
C shall be delivered to Investor.
The foregoing deliveries shall be deemed to
occur simultaneously as part of a single transaction,
and no delivery shall be deemed to have been made
until all such deliveries have been made.
Representations and Warranties of SyQuest.
Except as disclosed in any report, form, schedule,
statement or other document (collectively, "SEC
Filings") filed by the Company prior to the Closing
with the SEC under the 1933 Act or the Securities
Exchange Act of 1934, as amended (the "1934 Act"), or
as disclosed in the Schedule of Exceptions attached
hereto, SyQuest hereby represents and warrants to
Investor on the date hereof and on the Closing Date,
on the date any Preferred Share is converted (each a
"Conversion Date") and on each Exercise Date (as
defined in the Warrant) as follows:
SyQuest has been duly incorporated and is
validly existing in good standing under the laws of
State of Delaware, or, after the Closing Date if
another entity has succeeded SyQuest in accordance
with the terms hereof, under the laws of a state of
the United States.
The execution, delivery and performance of this
Agreement (including the issuance of the Preferred
Shares) and the Warrant by SyQuest have been duly
authorized by all requisite corporate action and no
further consent or authorization of SyQuest, its Board
of Directors or its stockholders is required. This
Agreement and the Warrant have been duly executed and
delivered by SyQuest and, when duly authorized,
executed and delivered by Investor, will be valid and
binding agreements, enforceable against SyQuest in
accordance with their terms, subject to bankruptcy,
insolvency, reorganization, moratorium and similar
laws of general applicability relating to or affecting
creditors' rights generally and to general principles
of equity.
SyQuest has full corporate power and authority
necessary to execute and deliver this Agreement and
the Warrant and to perform its obligations hereunder
(including the issuance of the Preferred Shares) and
thereunder.
No consent, approval, authorization or order of
any court, governmental agency or other body is
required for execution and delivery by SyQuest of this
Agreement and the Warrant or the performance by
SyQuest of any of its obligations hereunder (including
the issuance of the Preferred Shares) or thereunder,
other than, with respect to any Exercise Date, any
consent, approval, authorization or order which is
received on or prior to such date.
Neither the execution and delivery by SyQuest of
this Agreement and the Warrant nor the performance by
SyQuest of any of its obligations hereunder or
thereunder:
violates, conflicts with, results in a breach of, or
constitutes a default (or an event which with the
giving of notice or the lapse of time or both would be
reasonably likely to constitute a default) under (A)
the Certificate of Incorporation or by-laws of SyQuest
or any of its subsidiaries or any Certificate of
Designation relating to any securities of SyQuest or
any of its subsidiaries, (B) any decree, judgment,
order, law, treaty, rule, regulation or determination
of which SyQuest is aware (after due inquiry) of any
court, governmental agency or body, or arbitrator
having jurisdiction over SyQuest or any of its
subsidiaries or any of their respective properties or
assets, (C) the terms of any bond, debenture, note or
any other evidence of indebtedness, or any agreement,
stock option or other similar plan, indenture, lease,
mortgage, deed of trust or other instrument to which
SyQuest or any of its subsidiaries is a party, by
which SyQuest or any of its subsidiaries is bound, or
to which any of the properties or assets of SyQuest or
any of its subsidiaries is subject, (D) the terms of
any "lock-up" or similar provision of any underwriting
or similar agreement to which SyQuest or any of its
subsidiaries is a party or (E) any rules of the
National Association of Securities Dealers, Inc.
applicable to SyQuest or the transactions contemplated
hereby; or
results in the creation or imposition of any lien,
charge or encumbrance upon (A) any Preferred Share,
the Warrant or any Converted Stock or (B) any of the
properties or assets of SyQuest or any of its
subsidiaries.
SyQuest has validly reserved a total of 30,000
shares of its Convertible Preferred Stock, Series 5
for issuance pursuant to the terms hereof. SyQuest's
board of directors will recommend at its 1997 Special
Meeting of stockholders an amendment to SyQuest's
Certificate of Incorporation (the "Amendment") that
would increase the number of shares of Common Stock
authorized for issuance to 240,000,000, and if the
Amendment is approved SyQuest intends to reserve for
issuance to Investor the maximum number of shares of
Common Stock that may be issuable from time to time
upon conversion of the Preferred Shares and exercise
of the Warrant. When issued to Investor against
payment therefor in accordance with the terms of this
Agreement, the Certificate of Designation or the
Warrant, each share of Preferred Stock and Converted
Stock:
will have been duly and validly authorized, duly and
validly issued, fully paid and nonassessable;
will be free and clear of any security interests,
liens, claims or other encumbrances (other than those
resulting solely from actions by Investor); and
will not have been issued or sold in violation of
any preemptive or other similar rights of the holders
of any securities of SyQuest.
Reserved.
On the Closing Date, there is no pending or, to
the best knowledge of SyQuest, threatened action,
suit, proceeding or investigation before any court,
governmental agency, self regulatory agency, or body,
or arbitrator having jurisdiction over SyQuest or any
of its affiliates that would materially affect the
execution by SyQuest of, or the performance by SyQuest
of its obligations under, this Agreement or the
Warrant, provided, however, that the representations
and warranties contained in this Section
3.h shall not apply to any action, threatened action,
suit, proceeding or investigation initiated by
Investor.
SyQuest has timely filed all filings with the
United States Securities and Exchange Commission (the
"SEC") under the 1933 Act or under Section 13(a) or
15(d) of the 1934 Act (each, an "SEC Filing")required
to be filed by SyQuest pursuant to such Acts, and no
SEC Filing, or press release containing information
material to the business of SyQuest
as a whole, contained any untrue statement of a
material fact or omitted to state any material fact
necessary in order to make the statements, in the
light of the circumstances under which they were made,
not misleading.
Since the date of SyQuest's most recent SEC
Filing, there has not been, and SyQuest is not aware
of any development that would require an amendment to
SyQuest's Registration Statement on Form S-3
(registration number 333-28225) in order to permit
public offers and sales of shares of Common Stock
thereunder.
The offer and sale of the Preferred Shares, the
Warrant and the Converted Stock to Investor will,
subject to compliance by Investor with the applicable
representations and warranties contained in Section 4
hereof and with the applicable covenants and
agreements contained in Section 6 hereof, be made in
accordance with the provisions and requirements of
Regulation D and any applicable state law, provided,
however, that the representations and warranties
contained in this Section 3.k shall not be required to
be given in respect of any Exercise Date if the
provisions of Section 3A hereof are applicable and
SyQuest is in full compliance therewith and Investor
is permitted to resell the Common Stock thereunder.
Capitalization. As of August 22, 1997, the
authorized capital stock of the Company consisted of
(i) 120,000,000 shares of Common Stock of which
approximately 55.5 million shares were issued and
outstanding, and (ii) 4,000,000 shares of Preferred
Stock of which approximately 379,500 shares were
issued and outstanding. All such shares of Common
Stock are, and all shares which may be issued pursuant
to stock options, warrants or other convertible rights
will be, when issued and paid for in accordance with
the respective terms thereof, duly authorized, validly
issued, fully paid and nonassessable and free of any
preemptive rights in respect thereof. There are no
outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character
whatsoever granted or issued by the Company and
relating to, or securities or rights granted or issued
by the Company and convertible into, any shares of
capital stock of the Company or any of its
subsidiaries, or arrangements by which the Company or
any of its subsidiaries is or may become bound to
issue additional shares of capital stock of the
Company or any of its subsidiaries. There are no
outstanding debt securities issued by the Company.
There are no agreements or arrangements under which
the Company or any of its subsidiaries is obligated to
register the sale of any of its or their securities
under the 1933 Act (except this Agreement). The
Company has furnished to Investor true and correct
copies of the Certificate of Incorporation and the
Company's By-laws, as in effect on the date hereof
(the "Bylaws").
3A. Registration Provisions.
a. SyQuest shall, as promptly as
practicable hereafter and at its own expense, file a
registration statement (the "Registration Statement")
under the 1933 Act covering the sale or resale of the
maximum number of shares of Common Stock then issuable
upon conversion of the Preferred Shares and exercise
of the Warrant (each a "Covered Security"), shall use
its best efforts to cause such Registration Statement
to be declared effective not later than 90 days from
the Closing Date (or 120 days from the Closing Date if
the SEC reviews such Registration Statement) and shall
amend such Registration Statement from time to time
upon the request of Investor if the maximum number of
shares of Common Stock issuable upon conversion of the
Preferred Shares and exercise of the Warrant is
greater than the number of shares of Common Stock
registered pursuant to such Registration Statement,
unless an amendment is not required for the
registration and sale of such securities under such
Registration Statement pursuant to Rule 416 or any
other rule under the 1933 Act; provided that
Investor shall have provided such information and
cooperation in connection therewith as SyQuest may
reasonably request. A penalty of one percent (1%)
of the Purchase Price per month (prorated daily for
partial months) shall be imposed for each month that
the Registration Statement shall not be declared
effective as provided in this section 3A.a.
b. SyQuest will use its best efforts
to: (i) keep such registration effective until the
earlier of (A) the second anniversary of the issuance
of each Covered Security, (B) such date as all of the
Covered Securities shall have been sold by Investor or
(C) such time as all of the Covered Securities held by
Investor can be sold by Investor or any of its
affiliates within a three-month period without
compliance with the registration requirements of the
1933 Act pursuant to Rule 144 under the 1933 Act
("Rule 144"); (ii) prepare and file with the SEC such
amendments and supplements to the Registration
Statement and the prospectus used in connection with
the Registration Statement (as so amended and
supplemented from time to time, the "Prospectus") as
may be necessary to comply with the provisions of the
1933 Act with respect to the disposition of all
Covered Securities by Investor or any of its
affiliates; (iii) furnish such number of Prospectuses
and other documents incident thereto, including any
amendment of or supplement to the Prospectus, as
Investor from time to time may reasonably request;
(iv) cause all Covered Securities that are Common
Stock to be listed on each securities exchange and
quoted on each quotation service on which similar
securities issued by SyQuest are then listed or
quoted; (v) provide a transfer agent and registrar for
all Covered Securities and a CUSIP number for all
Covered Securities; (vi) otherwise use its best
efforts to comply with all applicable rules and
regulations of the SEC; and (vii) file the documents
required of SyQuest and otherwise use its best efforts
to obtain and maintain requisite blue sky clearance in
(A) all jurisdictions in which any of the Covered
Securities are originally sold and (B) all other
states specified in writing by Investor, provided,
however, that as to this clause (B), SyQuest shall not
be required to qualify to do business or consent to
service of process in any state in which it is not now
so qualified or has not so consented.
c. SyQuest shall furnish to Investor
upon request a reasonable number of copies of a
supplement to or an amendment of such Prospectus as
may be necessary in order to facilitate the public
sale or other disposition of all or any of the Covered
Securities by Investor or any of its affiliates
pursuant to the Registration Statement.
d. With a view to making available to
Investor and its affiliates the benefits of Rule 144
and Form S-3 under the 1933 Act, SyQuest covenants and
agrees to: (i) make and keep available adequate
current public information (within the meaning of Rule
144(c)) concerning SyQuest, until the earlier of (A)
the second anniversary of the issuance of each Covered
Security or (B) such date as all of the Covered
Securities shall have been resold by Investor or any
of its affiliates; (ii) maintain its status as a
Reporting Issuer and file with the SEC in a timely
manner all reports and other documents required of
SyQuest for use of Form S-3; and (iii) furnish to
Investor upon request, as long as Investor owns any
Covered Securities, (A) a written statement by SyQuest
that it has complied with the reporting requirements
of the 1933 Act and the 1934 Act, (B) a copy of the
most recent annual or quarterly report of SyQuest, and
(C) such other information as may be reasonably
requested in order to avail Investor and its
affiliates of Rule 144 or Form S-3 with respect to
such Covered Securities.
e. Notwithstanding anything else in
this Section 3A, if, at any time during which a
Prospectus is required to be delivered in connection
with the sale of any Covered Securities, SyQuest
determines in good faith that a development has
occurred or a condition exists as a result of which
the Registration Statement or the Prospectus contains
a material misstatement or omission, SyQuest will
immediately notify Investor thereof by telephone and
in writing. Upon receipt of such notification,
Investor and its affiliates will immediately suspend
all offers and sales of any Covered Securities
pursuant to the Registration Statement. In such
event, SyQuest will amend or supplement the
Registration Statement as promptly as practicable and
will take such other steps as may be required to
permit sales of the Covered Securities thereunder by
Investor and its affiliates in accordance with
applicable federal and state securities laws. SyQuest
will promptly notify Investor after it has determined
in good faith that such sales have become permissible
in such manner and will promptly deliver copies of the
Registration Statement and the Prospectus (as so
amended or supplemented) to Investor in accordance
with paragraph (b) of this Section 3A.
Notwithstanding the foregoing, (A) under no
circumstances shall SyQuest be entitled to exercise
its right to suspend sales of any Covered Securities
pursuant to the Registration Statement more than two
times in any twelve-month period, (B) the period
during which such sales may be suspended (each a
"Blackout Period") shall not exceed thirty days and
(C) no Blackout Period may commence less than thirty
days after the end of the preceding Blackout Period.
Upon the commencement of a Blackout Period
pursuant to this Section 3A, Investor will immediately
notify SyQuest of any contracts to sell any Covered
Securities (each a "Sales Contract") that Investor or
any of its affiliates has entered into prior to the
commencement of such Blackout Period and that would
require delivery of such Covered Securities during
such Blackout Period, which notice will contain the
aggregate sale price and volume of Covered Securities
pursuant to such Sales Contract. Upon receipt of such
notice, SyQuest will immediately notify Investor of
its election either (i) to terminate the Blackout
Period and, as promptly as practicable, amend or
supplement the Registration Statement or the
Prospectus in order to correct the material
misstatement or omission and deliver to Investor
copies of such amended or supplemented Registration
Statement and Prospectus in accordance with paragraph
(b) of this Section 3A or (ii)to continue the Blackout
Period in accordance with this paragraph. If SyQuest
elects to continue the Blackout Period, and Investor
or any of its affiliates is therefore unable to
consummate the sale of Covered Securities pursuant to
the Sales Contract (such unsold Covered Securities
being hereinafter referred to herein as the "Unsold
Securities"), SyQuest will promptly indemnify each
Investor Indemnified Party (as such term is defined in
Section 11.a below) against any Proceeding (as such
term is defined in Section 11.a below) that each
Investor Indemnified Party may incur arising out of or
in connection with Investor's breach or alleged breach
of any such Sales Contract, and SyQuest shall
reimburse each Investor Indemnified Party for any
reasonable costs or expenses (including reasonable
legal fees) incurred by such party in investigating or
defending any such Proceeding (collectively, the
"Indemnification Amount"); provided, however, that
each Investor Indemnified Party shall take all actions
reasonably necessary or appropriate to mitigate such
Indemnification Amount; and
provided further, however, that the Indemnification
Amount shall be reduced by an amount equal to the
number of Unsold Securities multiplied by the
difference between (x) the actual per share price
received by Investor or any of its affiliates upon the
sale of the Unsold Securities (if such sale occurs
within three Trading Days of the end of the Blackout
Period) or the closing sale price of the Common Stock
on the NASDAQ National Market ("NASDAQ") or other
national securities exchange on which the Common Stock
is then listed on the third Trading Day after the end
of the Blackout Period (if the Unsold Securities are
not sold by Investor or any of its affiliates within
three Trading Days of the end of the Blackout Period),
and (y) the per share sale price for the Unsold
Securities provided in the Sales Contract. As used
herein, the term "Trading Day" means any day on which
SyQuest's Common Stock is quoted on NASDAQ or, if
applicable, other national securities exchange.
f. From the date hereof through a
period of ninety (90)days following the date that the
Registration Statement is first declared effective,
SyQuest shall not register any securities other than
securities issued in connection with (1) the sale of
up to $20,000,000 of Preferred Shares and
corresponding warrants on substantially the same terms
as provided in this Agreement (including the Preferred
Shares and Warrant sold pursuant to this Agreement),
(2) the sale of up to an additional $5,000,000
of (i) Preferred Shares and warrants on substantially
the same terms as provided in this Agreement, (ii)
Common Stock plus warrants issued in connection
therewith, or (iii) any combination of the securities
described in section 3A.f(2)(i) and 3A.f(2)(ii)
hereof, (3) any exchange of indebtedness of SyQuest
for shares of stock of SyQuest, (4) any provision of
services or sale of goods to SyQuest, (5) any stock
option plan, stock purchase plan, stock bonus plan or
other plan for the benefit of employees, officers or
directors of SyQuest, (6) the exercise of any rights,
warrants or options heretofore granted or issued by
SyQuest for the acquisition of any securities, (7)
transactions disclosed in the Schedule of Exceptions,
or (8) any transaction not involving the receipt of
new consideration by SyQuest for securities hereafter
issued by SyQuest.
Representations and Warranties of Investor.
Investor hereby represents and warrants to SyQuest on
the date hereof and on the Closing Date, and agrees
with SyQuest, as follows:
The execution, delivery and performance of this
Agreement by Investor have been duly authorized by all
requisite corporate action and no further consent or
authorization of Investor, its Board of Directors or
its stockholders is required. This Agreement has been
duly executed and delivered by Investor and, when duly
authorized, executed and delivered by SyQuest, will be
a valid and binding agreement, enforceable against
Investor in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and
similar laws of general applicability relating to or
affecting creditors' rights generally and to general
principles of equity.
Investor understands that no United States
federal or state agency has passed on, reviewed or
made any recommendation or endorsement of the
Preferred Shares or the Warrant.
In making the decision to purchase the Preferred
Shares or the Warrant in accordance with this
Agreement, Investor has relied solely upon independent
investigations made by it and not upon any
representations made by SyQuest other than those made
in this Agreement.
Subject to Section 3A hereof, Investor
understands that the Preferred Shares, the Warrant and
the Converted Stock have not been registered under the
1933 Act and may not be re-offered or resold other
than pursuant to such registration or an available
exemption therefrom.
Investment Purpose. Investor is purchasing the
Preferred Shares and the Warrant for its own account
for investment only and not with a view to, or for
resale in connection with, the public sale or
distribution thereof except pursuant to sales
registered under the 1933 Act. Investor is not
purchasing the Preferred Shares or Warrant for the
purpose of covering, and will not use any Conversion
Shares, Dividend Shares or Warrant Shares
(collectively, "Derivative Shares") to cover, any
short sale position in the Common Stock. Investor
understands that it shall be a condition to the
issuance of any Derivative Shares that the
representations and warranties in this section 4 shall
be true and complete with respect to the Warrant and
such Derivative Shares.
Accredited Investor Status. Investor is an
"accredited investor" as that term is defined in
Regulation D. Investor is able to bear the economic
risk of Investor's investment hereunder.
Reliance on Exemptions. Investor understands
that the Preferred Shares, the Warrant and the
Derivative Shares are being or will be offered and
sold to it in reliance on specific exemptions from the
registration requirements of United States federal and
state securities laws and that SyQuest is relying on
the truth and accuracy of, and Investor's compliance
with, the representations, warranties, agreements,
acknowledgments and understandings of Investor set
forth herein in order to determine the availability of
such exemptions and the eligibility of Investor to
acquire Preferred Shares, the Warrant and Derivative
Shares.
Sophistication. A principal executive officer
of Investor, or Investor's agent, who is acting on
behalf of Investor in connection with the transactions
contemplated hereby has such knowledge and experience
in financial and business matters that such officer is
capable of evaluating the merits and risks of the
investment by Investor contemplated by this Agreement
and has the capacity to protect Investor's interests.
Information. Investor has been furnished with
all materials and information relating to the
business, management, properties, financial condition,
operations, affairs and prospects of SyQuest and all
materials and information relating to the offer and
sale of the Preferred Shares, the Warrant and the
Derivative Shares, as have been requested by Investor.
Investor has been afforded the opportunity to ask all
questions of SyQuest that Investor considered
appropriate or desirable to ask in connection with
this Agreement and has received answers to such
inquiries that Investor considers satisfactory.
Investor understands that its investment in the
Preferred Shares, the Warrant and Derivative Shares
involves and will involve a high degree of risk.
Investor has sought such investment, accounting, legal
and tax advice as it has considered necessary to an
informed investment decision with respect to its
acquisition of Preferred Shares, the Warrant and the
Derivative Shares.
Transfer or Resale. Investor understands that
(i)
except as otherwise provided in section 3A hereof, the
Preferred Shares, the Warrant and the Derivative
Shares have not been and are not being registered
under the 1933 Act or any state securities laws, and
may not be offered for sale, sold, assigned or
transferred unless (a) subsequently registered
thereunder, or (b) Investor shall have delivered to
SyQuest an opinion of counsel, reasonably satisfactory
in form, scope and substance to SyQuest, to the effect
that the securities to be so offered, sold, assigned
or transferred may be so offered, 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 1933 Act
("Rule 144") may be made only in accordance with the
terms of Rule 144 and, if Rule 144 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 1933 Act) may require
compliance with some other exemption under the 1933
Act or the rules and regulations of the SEC
thereunder; and (iii) neither SyQuest nor any other
person is under any obligation to register such
securities (other than pursuant to section 3A hereof)
under the 1933 Act or any state securities
laws or to comply with the terms and conditions of any
exemption thereunder.
Covenants of SyQuest. Except as set forth in
the Schedule of Exceptions attached hereto, SyQuest
covenants and agrees with Investor as follows:
For so long as any of the Preferred Shares or
any portion of the Warrant remains outstanding,
SyQuest will use its best efforts to (i) maintain the
eligibility of the Common Stock for quotation on
NASDAQ or listing on a national securities exchange
(as defined in the 1934 Act) and (ii) regain the
eligibility of the Common Stock for quotation on
NASDAQ in the event that the Common Stock is delisted
by NASDAQ.
SyQuest will (i) provide Investor with an
opportunity to review and comment on any public
disclosure by SyQuest of information regarding this
Agreement and the transactions contemplated hereby,
(ii) promptly notify Investor if there is any public
disclosure by SyQuest of material information
regarding SyQuest or its financial condition,
prospects or results of operation and (iii) provide
Investor with copies of all SEC Filings.
If the Amendment is not approved on or prior to
90 days from the Closing Date (or 120 from the Closing
Date if the Securities and Exchange Commission reviews
the proxy filing relative to the 1997 Special
Meeting), and Investor seeks to convert any Preferred
Shares or exercise the Warrant and SyQuest is unable
to deliver the Converted Stock, then within three
months of delivery of the applicable Conversion Notice
(as defined in the Certificate of Designation) or
Exercise Notice (as defined in the Warrant), as the
case may be, SyQuest must make a cash payment in lieu
of delivering the Converted Stock equal to the market
value of the Common Stock issuable pursuant to such
Conversion Notice or Exercise Notice calculated by
using (i) the closing price on NASDAQ as reported by
Bloomberg, L.P. on the date of delivery of the
Conversion Notice or Exercise Notice, or (ii) if
NASDAQ is not then the principal trading market for
the Common Stock, the closing price on the principal
trading market for the Common Stock at that time (the
"Principal Market"), as reported by
Bloomberg L.P. on the date of delivery of the
Conversion Notice or Exercise Notice, or (iii) if
NASDAQ is not then the principal trading market for
the Common Stock and there is no Principal Market, the
market value as determined in good faith by the Board
of Directors of SyQuest, in each such case plus
fifteen percent per annum interest for the period from
the date of delivery of the Conversion Notice or
Exercise Notice to the date the amount is paid in
full. If SyQuest is required to make payments to
Investor pursuant to this Section 5.c because of a
failure to deliver Converted Stock, the provisions of
Section 10 hereof shall not apply to such failure to
deliver Converted Stock. If the value of the Common
Stock is to be determined by the Board of Directors of
SyQuest and Investor disagrees with said valuation,
the value of the Common Stock will be
determined by binding arbitration in accordance with
the then prevailing commercial arbitration rules of
the American Arbitration Association, and such
arbitration shall proceed in San Francisco,
California, or at any other place approved in writing
by SyQuest and Investor.
SyQuest will comply with the terms and
conditions of the Preferred Shares and of the Warrant
as set forth in the Warrant (as duly amended from time
to time by the parties hereto).
From and after such time, if ever, as the
Amendment is approved and becomes effective and for so
long thereafter as any of the Preferred Shares or any
portion of the Warrant remains outstanding, SyQuest
shall at all times reserve and keep available, free
from preemptive rights, out of its authorized but
unissued Common Stock, for issuance upon
conversion of such Preferred Shares or exercise of
such Warrant, the maximum number of shares of
Converted Stock then so issuable. If at any time the
number of authorized but unissued shares of Common
Stock is not sufficient to effect the conversion of
all the outstanding Preferred Shares and the exercise
of the Warrant for all the Warrant Shares issuable
thereunder, SyQuest shall use its best efforts to
increase its number of authorized shares of Common
Stock to such number of shares as shall be sufficient
to effect such conversion and exercise, including
causing the SyQuest Board of Directors to call a
meeting of stockholders and recommend such increase,
and after obtaining any such approval SyQuest shall
reserve for issuance to Investor the number of shares
of Common Stock required to effect such conversion and
exercise. At the 1997 Special Meeting of SyQuest's
stockholders, SyQuest will recommend to its
stockholders that they adopt the Amendment, and
SyQuest shall use its best efforts to obtain
stockholder approval of the Amendment.
As soon as such information is available (but in
no event later than the date of filing of SyQuest's
annual report on Form 10-K for the fiscal year ending
September 30, 1997), SyQuest shall deliver to Investor
a written notice stating the number of outstanding
shares of Common Stock as of the Closing Date.
If the Amendment is approved by SyQuest's
stockholders, SyQuest will cause the Common Stock
issuable pursuant to conversion of the Preferred
Shares and exercise of the Warrant to be duly listed
and admitted for trading on NASDAQ or, if NASDAQ is
not then the principal trading market for the Common
Stock, on a national securities exchange (as defined
in the 1934 Act).
Covenants of Investor. Investor hereby covenants
and agrees with SyQuest, as follows:
Neither Investor nor any of its affiliates nor
any person acting on its or their behalf will at any
time offer or sell any Preferred Shares, the Warrant
or any Converted Stock other than pursuant to
registration under the 1933 Act or pursuant to an
available exemption therefrom.
Investor will agree not to convert its Preferred
Stock for a maximum period of sixty days following a
successful public offering of the Common Stock in
excess of $25,000,000 in a single transaction, if all
other convertible security holders are bound by the
same restriction.
Investor will not at any time prior to the
earlier of 90 days from the Closing Date (or 120 from
the Closing Date if the Securities and Exchange
Commission reviews the proxy filing relative to the
1997 Special Meeting), or SyQuest's 1997 Special
Stockholders Meeting exercise the Warrant. Investor
agrees that attempted exercise of the Warrant prior
to the earlier of 90 days from the Closing Date (or
120 from the Closing Date if the Securities and
Exchange Commission reviews the proxy filing relative
to the 1997 Special Meeting), or SyQuest's 1997
Special Stockholders meeting shall be null and void,
and (1) SyQuest shall be under no obligation to issue
any Warrant Shares, and (2) Investor shall not be
entitled to any damages or other relief resulting from
not receiving such Warrant Shares.
Investor will not offer, sell or otherwise
transfer any Converted Stock prior to January 10,
1998. Investor agrees that any attempted sale or
transfer shall be null and void, that SyQuest will
have no obligation whatsoever to assist Investor
complete any such offer, sale or other transfer of
Converted Stock, and that Investor shall not be
entitled to any damages or other relief resulting from
SyQuest's action (or inaction) in connection with any
such offer, sale or other transfer.
Investor shall use a form of notice in
substantially the same form as attached hereto as
Exhibit D in order to convert its Preferred Shares and
to provide notice of such conversion to SyQuest.
6A. Legend. Investor understands that
the certificates or other instruments representing the
Preferred Shares, the Warrant and, until such time as
the Derivative Shares shall have been sold pursuant to
a registration under the 1933 Act as contemplated by
this Agreement, the stock certificates representing
the Derivative Shares shall bear a restrictive legend
in substantially the following form (and a stop-
transfer order may be placed against transfer of such
certificates or other instruments):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE
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 SAID ACT AND
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.
The legend set forth above shall be removed and
SyQuest shall issue a certificate without such legend
to any holder of Preferred Shares, the Warrant or
Derivative Shares if, unless otherwise required by
state securities laws, (a) the same are sold pursuant
to an effective registration statement under the 1933
Act, or (b) in connection with a sale transaction,
such holder provides SyQuest with an
opinion of counsel, in form, substance and scope
reasonably acceptable to SyQuest, to the effect that a
public sale, assignment or transfer thereof may be
lawfully effected without registration under the 1933
Act, or (c) such holder provides SyQuest with
assurances reasonably satisfactory to SyQuest that the
same may be publicly sold pursuant to Rule 144 without
restriction.
Conditions Precedent to Investor's Obligations. The
obligations of Investor hereunder are subject to the
performance by SyQuest of its obligations hereunder
and to the satisfaction of the following additional
conditions precedent, unless expressly waived in
writing by Investor:
On the Closing Date, on each Conversion Date and
on each Exercise Date (as defined in the Warrant), (i)
to the extent provided in Section 3 hereof, the
representations and warranties made by SyQuest in this
Agreement shall be true and correct, and (ii) SyQuest
shall have complied fully with all the covenants and
agreements in this Agreement and the Warrant; and
Investor shall have received on each such date a
certificate of the Chief Executive Officer and the
Chief Financial Officer of SyQuest dated such date and
to such effect.
On the Closing Date, SyQuest shall have
delivered to Investor an opinion of counsel reasonably
satisfactory to Investor, dated the date of delivery,
confirming in substance the matters covered in
paragraphs a, b, c, d, e, f and h of Section 3 hereof.
Prior to the Closing, the Certificate of
Designation will have been accepted for filing with
the Secretary of State of the State of Delaware in
accordance with the Delaware General Corporation Law.
On the Closing Date, SyQuest shall have
delivered to Investor the opinion of counsel
reasonably satisfactory to Investor, dated the Closing
Date, to the effect that the offer and sale of the
Preferred Shares and the Warrant hereunder do not
require registration under the 1933
Act.
As used herein the term "Business Day"
means any day on which banks in the City of New York
are open for business.
Conditions Precedent to SyQuest's Obligations. The
obligations of SyQuest hereunder are subject to the
performance by Investor of its obligations hereunder
and to the satisfaction of the additional conditions
precedent, unless expressly waived in writing by
SyQuest, that on the Closing Date and on each Exercise
Date (as defined in the Warrant), (i) the
representations and warranties made by Investor in
this Agreement shall be true, complete and correct,
except for those which only speak to a specific date
or time, (ii) Investor shall have complied fully with
all the covenants and agreements in this Agreement and
the Warrant, and (iii) SyQuest shall have received on
each such date a certificate of an appropriate officer
or agent of Investor dated such date and to such
effect.
Fees and Expenses. SyQuest agrees to pay Investor's
reasonable legal fees and costs actually incurred
incident to the preparation of this Agreement and
related documents up to $5,000 upon presentation of
evidence reasonably satisfactory to SyQuest that such
fees and costs were actually incurred.
Non-Performance.
If, on the date hereof, on the Closing
Date, on any Conversion Date or on any Exercise Date,
SyQuest shall fail to deliver the Warrant, Preferred
Shares or Converted Stock to Investor required to be
delivered pursuant to this Agreement for any reason
other than the failure of any condition precedent to
SyQuest's obligations hereunder, the failure by the
stockholders of SyQuest to approve or adopt the
Amendment or the failure by Investor to comply with
its obligations hereunder, then SyQuest shall:
hold Investor harmless against any loss, claim or
damage (including without limitation, incidental and
consequential damages) arising from or as a result of
such failure by SyQuest; and
reimburse Investor for all of its reasonable out-of-
pocket expenses, including fees and disbursements of
its counsel, incurred by Investor in connection with
this Agreement and the Warrant and the transactions
contemplated herein and therein;
provided, however, that SyQuest shall then be under no
further liability to Investor except as provided in
the Warrant, this Section 10 and Section 11 hereof.
Indemnification.
Indemnification of Investor. SyQuest hereby
agrees to indemnify Investor and each of its officers,
directors, employees, agents and affiliates and each
person that controls (within the meaning of Section 20
of the 1934 Act) any of the foregoing persons (each an
"Investor Indemnified Party") against any claim,
demand, action, liability, damages, loss, cost or
expense (including, without limitation, reasonable
legal fees) (a "Proceeding"), that it may incur in
connection with any of the transactions contemplated
hereby arising out of or based upon:
any untrue or alleged untrue statement of a material
fact by SyQuest or any of its affiliates or any person
acting on its or their behalf or omission or alleged
omission to state any material fact necessary in order
to make the statements made, in the light of the
circumstances under which they were made, not
misleading by SyQuest or any of its affiliates or any
person acting on its or their behalf;
any of the representations or warranties made by
SyQuest herein being untrue or incorrect; and
any breach or non-performance by SyQuest of any of
its covenants, agreements or obligations under this
Agreement and the Warrant;
and SyQuest hereby agrees to reimburse each Investor
Indemnified Party for any reasonable legal or other
expenses incurred by such Investor Indemnified Party
in investigating or defending any such Proceeding;
provided, however, that the foregoing indemnity shall
not apply to any Proceeding to the extent that it
arises out of or is based upon the gross negligence or
wilful misconduct of Investor in connection therewith.
Indemnification of SyQuest. Investor hereby
agrees to indemnify SyQuest and each of its officers,
directors, employees, agents and affiliates and each
person that controls (within the meaning of Section 20
of the 1934 Act) any of the foregoing persons (each a
"SyQuest Indemnified Party") against any Proceeding,
that it may incur in connection with any of the
transactions contemplated hereby arising out of or
based upon:
any untrue or alleged untrue statement of a material
fact by Investor or any of its affiliates or any
person acting on its or their behalf or omission or
alleged omission to state any material fact necessary
in order to make the statements made, in the light of
the circumstances under which they were made, not
misleading by Investor or any of its affiliates or any
person acting on its or their behalf:
any of the representations or warranties made by
Investor herein being untrue or incorrect; and
any breach or non-performance by Investor of any of
its covenants, agreements or obligations under this
Agreement and the Warrant;
and Investor hereby agrees to reimburse each
SyQuest Indemnified Party for any reasonable legal or
other expenses incurred by such SyQuest Indemnified
Party in investigating or defending any such
Proceeding; provided, however, that the foregoing
indemnity shall not apply to any Proceeding to
the extent that it arises out of or is based upon the
gross negligence or wilful misconduct of SyQuest in
connection therewith.
Conduct of Claims.
Whenever a claim for indemnification shall arise
under this Section 11, the party seeking
indemnification (the "Indemnified Party"), shall
notify the party from whom such indemnification is
sought (the "Indemnifying Party") in writing of the
Proceeding and the facts constituting the basis for
such claim in reasonable detail;
Upon delivery of such notice, such Indemnified Party
shall have a duty to take all reasonable steps to
mitigate any losses, liabilities, costs, charges and
expenses relating to any such Proceeding;
Such Indemnifying Party shall have the right to
retain counsel of its choice in connection with such
Proceeding and to participate at its own expense in
the defense of any such Proceeding; provided, however,
that counsel for the Indemnifying Party shall not
(except with the consent of the relevant Indemnified
Party) also be counsel to such Indemnified Party. In
no event shall the Indemnifying Party be liable for
fees and expenses of more than one counsel separate
from its own counsel for all Indemnified Parties in
connection with any one action or separate but similar
or related actions in the same jurisdiction arising
out of the same general allegations or circumstances;
and
No Indemnifying Party shall, without the prior
written consent of the Indemnified Parties (which
consent shall not be unreasonably withheld), settle or
compromise or consent to the entry of any judgment
with respect to any litigation, or any investigation
or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever in
respect of which indemnification could be sought under
this Section 11 unless such settlement, compromise or
consent (A) includes an unconditional release of each
Indemnified Party from all liability arising out of
such litigation, investigation, proceeding or claim
and (B) does not include a statement constituting an
admission of fault, culpability or a failure to act by
or on behalf of any Indemnified Party.
Survival of the Representations, Warranties, etc.
The respective representations, warranties, and
agreements made herein by or on behalf of the parties
hereto shall remain in full force and effect,
regardless of any investigation made by or on behalf
of the other party to this Agreement or any
officer, director or employee of, or person
controlling or controlled by or under common control
with, such party and will survive delivery of and
payment for the Preferred Shares, the Warrant and any
Converted Stock issuable hereunder.
Notices. All communications hereunder shall be in
writing, and
if sent to Investor, shall be delivered by hand,
sent by registered mail or transmitted and confirmed
by facsimile to Investor at:
Olympus Securities, Ltd.
c/o Leeds Management Services
129 Front Street
Hamilton HM12
Bermuda
Attn: Anne Dupuy
Telephone: 441-295-8617
Facsimile: 441-292-2239
with a copy to:
Citadel Investment Group, L.L.C.
225 West Washington Street
Chicago, Illinois 60606
Attention: Kenneth C. Griffin
Kenneth A. Simpler
Telephone: 312-696-6125
Facsimile: 312-368-4347
with a copy to:
Katten Muchin & Zavis
525 West Monroe Street, Suite 1600
Chicago, IL 60661-3693
Attention: Robert J. Brantman
Telephone: 312-902-5289
Facsimile: 312-902-1061
//
if sent to SyQuest, shall be delivered by hand,
sent by registered mail or transmitted and confirmed
by facsimile to SyQuest at:
SyQuest Technology, Inc.
47071 Bayside Parkway
Fremont, CA 94538
Attention: Chief Financial Officer
Telephone: (510) 226-4000
Facsimile: (510) 226-4114
with a copy to:
Shartsis, Friese & Ginsburg LLP
One Maritime Plaza, 18th Floor
San Francisco, CA 94111
Attention: Steven O. Gasser
Telephone: (415) 421-6500
Facsimile: (415) 421-2922
Miscellaneous
This Agreement may be executed in one or more
counterparts and it is not necessary that signatures
of all parties appear on the same counterpart, but
such counterparts together shall constitute but one
and the same agreement.
This Agreement and the Warrant shall inure to
the benefit of and be binding upon the parties hereto,
their respective successors and assigns and, with
respect to Section 11 hereof, their respective
officers, directors, employees, agents, affiliates and
controlling persons, and no other person shall have
any right or obligation hereunder. SyQuest may not
assign this Agreement or the Warrant.
This Agreement and the Warrant shall be governed
by, and construed in accordance with, the internal
laws of the State of California, and each of the
parties hereto hereby submits to the non-exclusive
jurisdiction of any Federal court in the Northern
District of California or appropriate State court in
California and any court hearing any appeal therefrom,
over any suit, action or proceeding against it arising
out of or based upon this Agreement and the Warrant (a
"Related Proceeding"). Each of the parties hereto
hereby waives any objection to any Related Proceeding
in such courts whether on the grounds of venue,
residence or domicile or on the ground that the
Related Proceeding has been brought in an inconvenient
forum.
The provisions of this Agreement and the Warrant
are severable, and if any clause or provision hereof
shall be held invalid, illegal or unenforceable as a
whole or in part, such invalidity or unenforceability
shall not in any manner affect any other clause or
provision of this Agreement or the Warrant.
The headings of the sections of this Agreement
have been inserted for convenience of reference only
and shall not be deemed to be a part of this
Agreement.
This Agreement (including the Warrant and the
terms and conditions of the Certificate of
Designations relating to the Preferred Shares)
constitutes the entire agreement and supersedes all
prior agreements and understandings, written or oral,
between the parties hereto with respect to the subject
matter of this Agreement and the Warrant and is not
intended to confer upon any person other than the
parties hereto any rights or remedies hereunder or
under the terms of the Warrant and term sheets between
such parties.
The term "affiliate" is used herein as defined
in Rule 144(a)(1) under the 1933 Act.
Notwithstanding any provision of the Certificate
of Designations to the contrary, the Company may
hereafter authorize additional or other capital stock
for issuance to Beijing Legend Group Ltd. and its
affiliates that is senior, equal or junior to the
Preferred Shares, in respect of the preferences as to
dividends and distributions and payments on the
liquidation, dissolution and winding up of the
Company, provided that any such preference shall not
exceed Beijing Legend Group Ltd.'s investment in
SyQuest.
Notwithstanding anything to the contrary in the
Certificate of Designations or the Warrant, in no
event shall any holder of Preferred Shares or the
Warrant hereunder be entitled to convert its Preferred
Shares or exercise its Warrant if, after giving effect
to such conversion or exercise, the number of shares
of Common Stock beneficially owned by such holder and
all other persons whose holdings would be aggregated
with such holder for purposes of calculating
beneficial ownership in accordance with Sections 13(d)
and 16 of the 1934 Act, and the regulations
thereunder, including, without limitation, any person
serving as an adviser to such holder (collectively,
the "Related Persons"), would exceed four and nine-
tenths percent of the outstanding shares of Common
Stock. Common Stock issuable upon conversion of the
Preferred Shares or exercise of the Warrant shall not
be deemed to be beneficially owned by such holder or
the Related Persons for this purpose.
Time of Essence. Time shall be of the essence in
this Agreement and the Warrant.
//
IN WITNESS WHEREOF, the parties hereto
have duly executed and delivered this Agreement, all
as of the day and year first above written.
SYQUEST TECHNOLOGY, INC.
By:
Name:
Title:
OLYMPUS SECURITIES, LTD.
By:
Name:
Title:
SCHEDULE OF EXCEPTIONS
Regarding sections 3.b, 3.c, 3.d, 3.e and 3.f,
the Company will not have sufficient shares of Common
Stock available to issue upon conversion of the
Preferred Shares and exercise of the Warrant until
such time, if ever, as the Amendment is approved by
the Company's shareholders and becomes effective.
Regarding section 3.h, Iomega Corporation
recently filed a lawsuit against SyQuest alleging both
patent and trademark infringement.
Regarding section 3.l, the number of shares of
Common Stock issuable on conversion of SyQuest's
outstanding (a) 5% Cumulative Convertible Preferred
Stock, Series 3, and (b) 5% Cumulative Convertible
Preferred Stock, Series 4, may vary based on the
average closing prices of the Common Stock for the
five days preceding conversion. In addition, as of
August 22, 1997, there are: (i) stock options and
other commitments to employees to issue approximately
4.5 million shares of SyQuest's Common Stock; (ii)
warrants for the issuance of approximately 43 million
shares of SyQuest's Common Stock; and (iii) other
commitments (principally for preferred stock
dividends) to issue approximately 400,000 shares of
SyQuest's Common Stock. In connection with the
foregoing, SyQuest has granted or committed to grant
certain registration rights to (1) Jayhawk
Investments, L.P. and Jayhawk Institutional Partners,
L.P. to register a total of 4,882,716 shares of its
Common Stock, (2) to The Silikahn Route to register a
total of 132,923 shares of its Common Stock, (3)
Silicon Valley Bank to register a total of 166,667
shares of its Common Stock, (4) Greyrock Business
Credit to register a total of 333,333 shares of its
Common Stock, and (5) to CAM Advanced Technologies,
Inc. to register approximately 274,000 shares of its
Common Stock.
SyQuest has also committed to issue $600,000 of
shares similar in nature to the Preferred Shares and a
warrant for the purchase of 600,000 shares of Common
Stock to Bain & Co., Inc., and to register (a) the
Common Stock into which such preferred shares will be
convertible, and (b) the Common Stock into which such
warrant will be exercisable.
EXHIBIT A
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS OF
CONVERTIBLE PREFERRED STOCK, SERIES 5 OF
SYQUEST TECHNOLOGY, INC.
SyQuest Technology, Inc. (the "Company"), a
corporation organized and existing under the General
Corporation Law of the State of Delaware, does hereby
certify that, pursuant to authority conferred on the
Board of Directors of the Company by the Certificate
of Incorporation, as amended, of the Company, and
pursuant to Section 151 of the General Corporation Law
of the State of Delaware, the Board of Directors of
the Company at a meeting duly held, adopted
resolutions providing for the designations,
preferences and relative, participating, optional or
other rights, and the qualifications, limitations or
restrictions thereof, of thirty thousand (30,000)
shares of Convertible Preferred Stock, Series 5, of
the Company, as follows:
RESOLVED, that the Company is authorized
to issue 30,000 shares of Convertible Preferred Stock,
Series 5, $.001 par value (the "Series 5 Preferred
Shares"), which shall have the following powers,
designations, preferences and other special rights:
1. Reserved.
2. Conversion of Series 5 Preferred
Shares. The holders of the Series 5 Preferred Shares
shall have the right, at their option, but subject to
the terms of the purchase agreement with the Company
governing the terms of such holder's purchase of
Series 5 Preferred Shares (the "Purchase Agreement"),
to convert the Series 5 Preferred Shares into shares
of the common stock of the Company, $.0001 par value,
as such stock now exists or may be changed from time
to time hereafter ("Common Stock"), on the following
terms and conditions:
(a) Conversion Right. Any or all
of the Series 5 Preferred Shares shall be convertible
at any time (except as limited herein, the Purchase
Agreement or by other applicable law) into whole,
fully paid and nonassessable shares of Common Stock,
at the conversion price (the "Conversion Price") in
effect at the time of conversion determined as
hereinafter provided. Each Series 5 Preferred Share
shall have a stated value of $1,000 (the "Stated
Value") for the purpose of such conversion and
the number of shares of Common Stock issuable on
conversion of each Series 5 Preferred Share shall be
determined by dividing the Stated Value thereof by the
Conversion Price then in effect.
(b) Conversion Price. The
Conversion Price shall be the greater of (1) the
arithmetical average of the closing sale prices per
share of Common Stock on the five consecutive trading
days preceding the delivery of any Conversion Notice
(as that term is hereinafter defined), as reported by
the Nasdaq National Market (the "NNM"), or, if the NNM
is not then the principal trading market for the
Common Stock, on the principal trading market for the
Common Stock at that time, or, if there is then no
such principal trading market, the fair market value
per share of Common Stock during such period as
determined in good faith by the Board of Directors of
the Company, and (2) ninety percent of such closing
sale price on the day immediately preceding the
delivery of the Conversion Notice (as that term is
hereinafter defined); provided that the Conversion
Price shall not be greater than the closing sale price
per share of Common Stock as reported by the NNM on
the first business day prior to the first day that
Series 5 Preferred Shares are issued to the initial
holder thereof pursuant to such holder's Purchase
Agreement. If the value of the Common Stock is so to
be determined by the Board of Directors of the Company
and the holders of the Series 5 Preferred Shares
disagree with said valuation, the value of the Common
Stock will be determined by binding arbitration in
accordance with the Commercial Arbitration Rules then
prevailing of the American Arbitration Association,
and such arbitration shall proceed in San Francisco,
California, or at such other place as agreed to in
writing by the Company and the holders of the Series 5
Preferred Shares.
(c) Adjustment to Conversion
Price. In the event that the Company shall declare a
dividend or make a distribution on or with respect to
the outstanding shares of its Common Stock in shares
of its Common Stock, subdivide its outstanding shares
of Common Stock into a greater number of shares, or
combine its outstanding shares of Common Stock into a
smaller number of shares, then, in each such event,
the Conversion Price in effect at the time of the
record date for such dividend or distribution or the
effective date of such subdivision or combination
shall be proportionately adjusted, if necessary, as
determined in good faith by the Board of Directors of
the Company, so that the holder of any Series 5
Preferred Shares surrendered for conversion after such
time shall be entitled to receive the aggregate number
of shares of Common Stock that the holder would have
owned or been entitled to receive had such Series 5
Preferred Shares been converted immediately prior to
such record date or effective date and the resulting
Common Stock had been subject to such dividend,
distribution, subdivision or combination. Such
adjustment shall be made successively whenever any
event specified above shall occur.
(d) Conversion Notice. On
presentation and surrender to the Company (or at any
office or agency maintained for the transfer of the
Series 5 Preferred Shares) of the certificate(s)
("Preferred Stock Certificate(s)") for Series 5
Preferred Shares so to be converted, duly endorsed in
blank for transfer or accompanied by proper
instruments of assignment or transfer in blank and
written notice of conversion (a "Conversion Notice"),
the holder of such Series 5 Preferred Shares shall be
entitled, subject to the limitations herein contained,
to receive in exchange therefor a certificate or
certificates for whole, fully paid and nonassessable
shares of Common Stock, which certificates shall be
delivered by the fourth trading day after the date of
delivery of the Conversion Notice and Preferred Stock
Certificates for the Series 5 Preferred Shares being
converted, and cash for any fractional share of Common
Stock on the foregoing basis. If the Common Stock can
be issued without a restrictive legend pursuant to the
Purchase Agreement, on request made by the holders of
the Series 5 Preferred Shares in the Conversion
Notice, the Company will authorize and instruct its
transfer agent to issue the Common Stock
electronically. The Conversion Notice shall be deemed
delivered and received on the business day when it is
transmitted by facsimile if so transmitted by 5:00
p.m. California time and if the Company receives the
Preferred Stock Certificate(s) either (1) by 10:00
a.m. California time within the following two business
days, or (2) on the next business day after it is
deposited for next day delivery with a nationally
recognized overnight delivery service. The Series 5
Preferred Shares shall be deemed to have been
converted, and the person converting the same to have
become the holder of record of Common Stock, for all
purposes as of the date of delivery of the Conversion
Notice.
(e) Reservation of Shares. The
Company shall, as soon as practicable hereafter and
then for so long as any of the Series 5 Preferred
Shares are outstanding, reserve and keep available out
of its authorized and unissued Common Stock, solely
for the purpose of effecting the conversion of the
Series 5 Preferred Shares, such number of shares of
Common Stock as shall from time to time be sufficient
to effect the conversion of all of the Series 5
Preferred Shares then outstanding.
(f) Fractional Shares. The
Company shall not issue any fraction of a share of
Common Stock on any conversion, but shall pay cash
therefor at the Conversion Price then in effect
multiplied by such fraction.
(g) Taxes. The Company shall pay
any and all taxes that may be imposed on it with
respect to the issuance and delivery of Common Stock
on the conversion of Series 5 Preferred Shares as
herein provided. The Company shall not be required in
any event to pay any transfer or other taxes by reason
of the issuance of such Common Stock in names other
than those in which the Series 5 Preferred Shares
surrendered for conversion are registered on the
Company's records, and no such conversion or issuance
of Common Stock shall be made unless and until the
person requesting such issuance shall have paid to the
Company the amount of any such tax, or shall have
established to the satisfaction of the Company and its
transfer agent, if any, that such tax has been paid.
(h) The 19.9% Limit. If at the
time that the Company receives a Conversion Notice,
the aggregate number of shares of Common Stock
issuable pursuant to such Conversion Notice and all
other Conversion Notices received at that time (the
"Subject Conversion Notices"), when added to the
aggregate number of shares of Common Stock (1)
previously issued on conversion of Series 5 Preferred
Shares and the exercise of the Warrants to purchase
Common Stock (the "Warrants") issued by the Company to
the holders of the Series 5 Preferred Shares pursuant
to the Purchase Agreement on the date of initial
issuance of the Series 5 Preferred Shares and (2)
issuable on conversion of all remaining outstanding
Series 5 Preferred Shares (determining such number as
if such Series 5 Preferred Shares were converted as of
the Conversion Date relating to such Conversion
Notice) and (3) issuable on exercise of the Warrants
(determined based on the Exercise Price then in
effect, as defined in the Warrants) would exceed
nineteen and nine-tenths percent of the total number
of shares of Common Stock outstanding (adjusted to
reflect any split, subdivision, combination or
consolidation of the Common Stock, whether by
reclassification, distribution of a dividend with
respect to the outstanding Common Stock payable in
shares of Common Stock, or otherwise, or any
recapitalization of the Common Stock) on the date of
the first issuance of Series 5 Preferred Shares (the
"19.9% Limit") and such circumstance would require the
approval of the holders of the Common Stock pursuant
to the listing requirements of the NNM or the rules of
the National Association of Securities Dealers, Inc.
(or such stock exchange or other interdealer quotation
system that is then the Principal Market), the number
of Series 5 Preferred Shares identified in the Subject
Conversion Notices that, if converted into shares of
Common Stock, would equal or exceed the 19.9% Limit
(the "Excess Preferred Shares"), shall not be
converted unless and until the stockholder approval
referred to in section (2)(i) (the "Stockholder
Consent") is obtained or is no longer required. The
Excess Preferred Shares will be allocated among the
holders delivering Subject Conversion Notices on a pro
rata basis based on the relative number of Series 5
Preferred Shares identified in each such Subject
Conversion Notice on any given date. Any Excess
Preferred Shares shall not be converted into shares of
Common Stock until the later of the date on which the
Stockholder Consent is obtained and the Company
receives a subsequent Conversion Notice with respect
thereto. If the Company is not otherwise notified by
the NNM or the National Association of Securities
Dealers, Inc. that Stockholder Consent is necessary,
the Company will issue Common Stock to the holders of
the Series 5 Preferred Shares in excess of the 19.9%
Limit.
(i) Stockholder Approval. If
there are Excess Preferred Shares as described in
section (2)(i), the Company shall promptly use its
best efforts to obtain the Stockholder Consent,
including, without limitation, causing its Board of
Directors to call a special meeting of stockholders
and recommend such approval.
3. Voting Rights. Holders of Series 5
Preferred Shares shall have no voting rights, except
as required by law.
4. Liquidation, Dissolution, Winding
Up. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Company,
the holders of the Series 5 Preferred Shares shall be
entitled to receive in cash out of the assets of the
Company, whether from capital or from earnings
available for distribution to its stockholders (the
"Preferred Funds"), before any amount shall be paid to
the holders of the Common Stock, an amount equal to
the Stated Value per Preferred Share; provided that,
if the Preferred Funds are insufficient to pay the
full amount due to the holders of Series 5 Preferred
Shares and holders of shares of other classes or
series of preferred stock of the Company that are of
equal rank with the Series 5 Preferred Shares as to
payments of Preferred Funds (the "Pari Passu Shares"),
then each holder of Series 5 Preferred Shares and Pari
Passu Shares shall receive a percentage of the
Preferred Funds equal to the full amount of Preferred
Funds payable to such holder as a percentage of the
full amount of Preferred Funds payable to all holders
of Series 5 Preferred Shares and Pari Passu Shares.
The purchase or redemption by the Company of stock of
any class, in any manner permitted by law, shall not,
for the purposes hereof, be regarded as a liquidation,
dissolution or winding up of the Company. Neither the
consolidation or merger of the Company with or into
any other corporation or orporations, nor the sale or
transfer by the Company of less than substantially all
of its assets, shall, for the purposes hereof, be
deemed to be a liquidation, dissolution or winding up
of the Company. No holder of Series 5 Preferred
Shares shall be entitled to receive any amounts with
respect thereto on any liquidation, dissolution or
winding up of the Company other than the amounts
provided for herein.
5. Preferred Rank. With respect to
preferences as to payments on the liquidation,
dissolution or winding up of the Company, the Series 5
Preferred Shares shall rank (1) senior to the Common
Stock, (2) with respect to all other existing capital
stock of the Company, senior to such capital stock if
permitted by the terms of such capital stock or, if
not so permitted, on a parity with such capital stock
if permitted by the terms of such capital stock or, if
not so permitted, junior to such capital stock,
and (3) senior to all series of any class of the
Company's capital stock issued after the date of the
filing of this Certificate. So long as any of the
Series 5 Preferred Shares are outstanding, no Common
Stock and no other capital stock of the Company
ranking junior to the Series 5 Preferred Shares will
be redeemed, purchased or otherwise acquired for any
consideration by the Company (except by conversion
into or exchange for stock of the Company ranking
junior to the Series 5 Preferred Shares) unless in
each case the Company offers to redeem the Series 5
Preferred Shares on substantially the same terms
(provided that the redemption price shall not be less
than $1,000 per Series 5 Preferred Share).
Notwithstanding any provision hereof to the contrary,
the Company may hereafter authorize additional or
other capital stock for issuance to Beijing Legend
Group Ltd. and its affiliates that is senior, equal or
junior to the Series 5 Preferred Shares, in respect of
the preferences as to payments on the liquidation,
dissolution and winding up of the Company, but the
Company may not otherwise hereafter, for so long as
any Series 5 Preferred Shares are outstanding,
authorize additional or other capital stock that is of
senior or equal rank to the Series 5 Preferred Shares,
in respect of the preferences as to dividends and
distributions and payments on the liquidation,
dissolution and winding up of the Company. In the
event of the merger or consolidation of the Company
with or into another corporation, the Series 5
Preferred Shares shall maintain their relative powers,
designations and preferences provided herein.
6. Lost or Stolen Certificates. On
receipt by the Company of evidence satisfactory to it
of the loss, theft, destruction or mutilation of any
Preferred Stock Certificate, and (in the case of loss,
theft or destruction) of any indemnification
undertaking by the holder to the Company that is
reasonably satisfactory to the Company, and on
surrender and cancellation of such Preferred Stock
Certificate, if mutilated, the Company shall execute
and deliver a new Preferred Stock Certificate of like
tenor and date; provided that the Company shall not be
obligated to reissue any lost, stolen or destroyed
Preferred Stock Certificate if the holder thereof
complies with this Section 6 and contemporaneously
requests the Company to convert such Series 5
Preferred Shares into Common Stock.
7. Amendment. So long as any Series 5
Preferred Shares are outstanding, the Company shall
not, without first obtaining the approval by vote or
written consent, in the manner provided by law, of the
holders of at least a majority of the total number of
Series 5 referred Shares outstanding, voting
separately as a class, amend or repeal any provision
of, or add any provision to, the Company's Certificate
of Incorporation, if such action would alter or change
the preferences, rights, privileges or powers of, or
the restrictions provided for the benefit of, the
Series 5 Preferred Shares.
8. Company's Right to Redeem at Its
Election. At any time after the issuance of Preferred
Shares, the Company shall have the right, in its sole
discretion, to redeem (a "Redemption"), from time to
time, any or all of the Preferred Shares. If the
Company elects to redeem some, but not all, of the
Preferred Shares then outstanding, the Company shall
redeem a pro-rata amount (based on the number of
Preferred Shares then held by holders of the Preferred
Shares) from each holder of the Preferred Shares.
(a) Redemption Price. The
"Redemption Price" shall be an amount per Preferred
Share equal to one-hundred twenty percent (120%) of
the Stated Value.
(b) Mechanics of Redemption. The
Company shall effect each Redemption by delivering
written notice ("Notice of Redemption") to each holder
of the Preferred Shares at the address and facsimile
number of such holder appearing in the Company's
Preferred Share register. Such Notice of Redemption
shall be deemed to have been delivered and received
(i) on the day it is sent if delivered by facsimile so
as to be received prior to 5:00 p.m. local time at the
holder of Preferrred Shares' facsimile number as
listed in the Purchase Agreement, or one (1) business
day later if it is delivered so as to be received
after 5:00 p.m. local time at the holder of Preferred
Shares' facsimile number as listed in the Purchase
Agreement, (ii) one (1) business day, if delivery is
within the United States, after the Company's sending
(by overnight courier) of such Notice of Redemption,
or (iii) two (2) business days, if delivery is outside
the United States, after the Company's sending (by two
(2) day courier) of such Notice of Redemption. Such
Notice of Redemption shall indicate (y) the number of
Preferred Shares that have been selected for
redemption, and (z) the date that such redemption is
to become effective. Once the Notice of Redemption is
deemed to have been delivered and received, the
Preferred Shares designated for a Redemption may be
converted into shares of Common Stock if a Conversion
Notice is delivered in accordance with Section 2(d)
hereof within five business days of the date the
Notice of Redemption is deemed delivered and received.
After such five day period, any Preferred Shares
designated for Redemption not so converted shall no
longer be convertible into Common Stock, and such
Preferred Shares shall be delivered to the Company by
the seventh business day after the Notice of
Redemption is deemed delivered and received.
(c) Payment of Redemption Price.
Each holder submitting Preferred Shares being redeemed
under this Section (8) shall deliver such holder's
Preferred Stock Certificates so redeemed to the
Company, and the Company shall pay the applicable
Redemption Price to that holder within five (5)
business days after such holder's Preferred Stock
Certificates (or an indemnification undertaking
satisfactory to the Company with respect to such
shares in the case of their loss, theft or
destruction) are delivered
to the Company.
IN WITNESS WHEREOF, the Company has caused this
certificate to be signed by Bob L. Corey, its Chief
Financial Officer, as of September 3, 1997.
SYQUEST TECHNOLOGY, INC.
By:
Title: Chief Financial Officer
EXHIBIT B
THE SECURITIES REPRESENTED BY OR ISSUABLE ON
EXERCISE OF 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, AND 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.
Warrant No.
COMMON STOCK PURCHASE WARRANT
SYQUEST TECHNOLOGY, INC.
This Warrant certifies that ____________________
("Holder"), or its registered assigns, is the
registered holder of one Warrant (the "Warrant")
expiring on May 1, 2004 (the "Termination Date") to
purchase shares of common stock, par value $.0001 per
share (the "Common Stock"), of SYQUEST TECHNOLOGY,
INC., a Delaware corporation (the "Issuer"). This
Warrant entitles the holder to purchase from the
Issuer up to _____________ Warrant Shares (as defined
below), subject to adjustment, at a per share Exercise
Price (as defined below). A "Warrant Share" initially
represents one fully paid and nonassessable share of
Common Stock, subject to adjustment pursuant to
paragraph 10.
This Warrant was issued on September 3, 1997
(the "Closing Date"), pursuant to the Securities
Purchase Agreement dated September 3, 1997 (the
"Purchase Agreement"), between the Issuer and Holder,
and is subject to the terms and conditions thereof.
Unless otherwise defined herein, capitalized terms
used herein have the meanings respectively ascribed to
them in the Purchase Agreement. A copy of the
Purchase Agreement may be obtained by the registered
holder hereof upon written request to the Issuer.
The exercise price per Warrant Share (plus
transfer taxes, if applicable, the "Exercise Price")
shall be the greater of (a) 130 percent of the
arithmetical average of the closing sale prices per
share of Common Stock on the five consecutive trading
days preceding the delivery of any Exercise Notice (as
defined below) as reported by the Nasdaq National
Market (the "NNM") or, if the NNM is not then the
principal trading market for the Common Stock, on the
principal trading market for the Common Stock at that
time or, if there is then no such principal trading
market, the fair market value per share of Common
Stock during such period as determined in good faith
by the Board of Directors of the Issuer and (b) 130
percent of such closing sale price on the day
immediately preceding the delivery of the Exercise
Notice; provided that in no event shall the Exercise
Price exceed $3.0469. If the value of the Common
Stock is to be determined by the Board of Directors of
the Issuer and the holder of this Warrant disagrees
with said valuation, the value of the Common Stock
will be determined by binding arbitration in
accordance with the then prevailing commercial
arbitration rules of the American Arbitration
Association, and such arbitration shall proceed in San
Francisco, California, or at such other place as
agreed to in writing by the Issuer and the holder of
this Warrant. The Exercise Price multiplied by the
Exercise Amount (as defined below) at any Exercise
Date (as defined below) is referred to as a "Warrant
Purchase Price".
The number of Warrant Shares for which this
Warrant may be exercised will increase by 6.67% for
each month (prorated daily for partial months) that
either of the following conditions is not satisfied:
(i) the Registration Statement (as defined in the
Purchase Agreement) shall be effective not later than
90 days after the Closing Date (provided that such
condition need not be satisfied until 120 days after
the Closing Date if the Securities and Exchange
Commission reviews the Registration Statement), and
(ii) on the day after the Issuer's 1997 Special
Meeting of stockholders, but in any event not later
than 90 days after the Closing Date (provided that
such condition need not be satisfied until 120 days
after the Closing Date if the Securities and Exchange
Commission reviews the proxy filing) the Issuer shall
have the number of duly authorized shares of Common
Stock reserved for issuance to Holder equal to the
total number then issuable upon full exercise of this
Warrant and full conversion of the Preferred Shares
(as defined in the Securities Purchase Agreement) or
Issuer is otherwise able to deliver shares of Common
Stock upon such exercise or conversion.
This Warrant shall have the following additional
terms:
1. This Warrant is not exercisable until the lapse
of a period ending on the 65th day (the "Notice
Period") after the holder delivers a notice (a "65 Day
Notice") to the Issuer designating an aggregate number
of Warrant Shares (the "Exercisable Number"). A 65
Day Notice may be given at any time after the Closing
Date. If the initial 65 Day Notice does not designate
all of the Warrant Shares, this Warrant will become
exercisable for some or all of the remaining Warrant
Shares upon delivery of one or more 65 Day Notices
increasing the Exercisable Number after a further
Notice Period. From time to time following the Notice
Period, this Warrant may be exercised on any Business
Day prior to the Termination Date (an "Exercise Date")
for any quantity of Warrant Shares, such that the
aggregate number of Warrant Shares issued hereunder is
less than or equal to the Exercisable Number. To
exercise this Warrant, the registered holder must,
prior to the Termination Date, surrender this Warrant
to the Issuer at its principal office with the
Exercise Notice attached hereto (an "Exercise Notice")
duly completed and signed by the registered holder
hereof and stating the total number of Warrant Shares
in respect of which this Warrant is then exercised
(the "Exercise Amount") and tender the applicable
Warrant Purchase Price. This Warrant shall be
exercisable only in the minimum amount of 10,000
Warrant Shares and integral multiples of 10,000
Warrant Shares in excess thereof (or such lesser
amount as shall constitute the full amount remaining
of this Warrant). As used herein the term "Business
Day" means any day on which banks in the State of
California are open for business.
2. On the Business Day following an Exercise Date
(an "Issue Date"), the Issuer shall issue and cause to
be delivered to the registered holder hereof at such
address as such holder shall specify in the Exercise
Notice a certificate or certificates for the number of
full Warrant Shares issuable upon the exercise of this
Warrant, registered in such holder's name, together
with cash (if any) as provided in paragraph 4. Such
certificate or certificates shall be deemed to have
been issued and any person so designated to be named
therein shall be deemed to have become a holder of
record of such Warrant Shares as of such Exercise
Date. If the certificate or certificates for the
number of the Warrant Shares can be issued without a
restrictive legend pursuant to the Purchase Agreement,
on request made by the holders of the Warrant in the
Exercise Notice, the Company will authorize and
instruct its transfer agent to issue the such
certificate or certificates electronically.
3. If on such Issue Date the number of Warrant
Shares to be delivered shall be less than the total
number of Warrant Shares deliverable hereunder, there
shall be issued to the holder hereof or his assignee
on such Issue Date a new warrant substantially
identical to this Warrant, except that such new
warrant shall evidence the right to purchase the
number of Warrant Shares equal to (x) the total number
of Warrant Shares deliverable hereunder less (y) the
number of Warrant Shares so delivered.
4. The Issuer shall not be required to issue
fractional Warrant Shares on the exercise of this
Warrant. The number of full Warrant Shares which
shall be issuable upon the exercise of this Warrant
shall be computed on the basis of the aggregate number
of Warrant Shares purchasable on exercise of this
Warrant so presented. If any fraction of a Warrant
Share would, except for the provisions of this
paragraph 4, be issuable on the exercise of this
Warrant, the Issuer shall pay an amount in cash equal
to the last per share sale price of the Common Stock
(on the NNM or the Principal Market, as the case may
be) on the day immediately preceding the Exercise
Date, multiplied by such fraction (subject to
adjustment pursuant to paragraph 10); provided that if
at the time that the Exercise Price is to be
determined the NNM is not the principal trading market
for the Common Stock and there is no Principal Market,
then the amount of cash to be paid per fractional
Warrant Share shall be determined in good faith by the
Board of Directors of the Issuer. If the holder of
this Warrant disagrees with such determination, the
amount of cash to be paid per fractional Warrant Share
will be determined by binding arbitration in
accordance with the then prevailing commercial
arbitration rules of the American Arbitration
Association, and such arbitration shall proceed in San
Francisco, California, or at such other place as
agreed to in writing by the Issuer and the holder of
this Warrant.
5. Only after Issuer has amended its Certificate of
Incorporation to increase the number of shares of its
authorized Common Stock to 240,000,000, and for so
long as this Warrant has not been exercised in full,
the Issuer shall at all times prior to the Termination
Date reserve and keep available, free from preemptive
rights, out of its authorized but unissued Common
Stock, for issuance upon exercise of this Warrant, the
maximum number of shares of Common Stock then so
issuable. In furtherance of the foregoing, but
subject to adjustment pursuant to paragraph 10 and to
increase pursuant to the fourth paragraph hereof, the
Issuer shall reserve for issuance hereunder after
Issuer has amended its Certificate of Incorporation to
increase the number of shares of its authorized Common
Stock to 240,000,000, not less than __________ shares
of Common Stock. In the event the number of shares of
Common Stock or other securities issuable in respect
of the Warrant Shares exceeds the authorized number of
shares of Common Stock or other securities, the Issuer
shall promptly take all actions necessary to increase
the authorized number, including causing its Board of
Directors to call a special meeting of stockholders
within thirty days of the date on which such excess
first existed and recommend such increase for approval
by the Issuer's stockholders. The Issuer shall use
its best efforts to obtain stockholder approval of the
increase to the authorized number of shares of Common
Stock.
6. By accepting delivery of this Warrant, the
registered holder hereof covenants and agrees with the
Issuer not to exercise or transfer this Warrant or any
Warrant Shares except in compliance with the Purchase
Agreement and this Warrant.
7. By accepting this Warrant, the registered holder
hereof covenants and agrees with the Issuer that this
Warrant may not be sold, assigned, conveyed,
encumbered, pledged, hypothecated or in any other
manner disposed of or transferred, as a whole or in
part, unless and until such holder shall deliver to
the Issuer (i) written notice of such transfer and of
the name and address of the transferee, (ii) a written
agreement, in form and substance reasonably
satisfactory to the Issuer, of the transferee to
comply with the applicable terms of the Purchase
Agreement and this Warrant and (iii) an opinion of
counsel for such holder, reasonably satisfactory to
the Issuer in form, scope and substance, that such
transaction will comply with all applicable securities
laws and regulations. If a portion of this Warrant is
transferred, all rights of the registered holder
hereunder may be exercised by the transferee (subject
to the requirement that such transferee shall provide
a like opinion of counsel in respect of the number of
Warrant Shares transferred with the portion of this
Warrant), provided that any registered holder of this
Warrant may deliver a 65 Day Notice, or an Exercise
Notice subject to such holder's portion of this
Warrant.
8. The Issuer will pay all documentary stamp taxes
(if any) attributable to the issuance of Warrant
Shares upon the exercise of this Warrant by the
registered holder hereof; provided that the Issuer
shall not be required to pay any tax or taxes which
may be payable in respect of any transfer involved in
the registration of this Warrant or any certificates
for Warrant Shares in a name other than that of the
registered holder of this Warrant surrendered upon the
exercise of this Warrant, and the Issuer shall not be
required to issue or deliver this Warrant or
certificates for Warrant Shares unless or until the
person or persons requesting the issuance thereof
shall have paid to the Issuer the amount of such tax
or shall have established to the satisfaction of the
Issuer that such tax has been paid.
9. In case this Warrant shall be mutilated, lost,
stolen or destroyed, the Issuer may in its discretion
issue in exchange and substitution for and upon
cancellation of the mutilated Warrant, or in lieu of
and substitution for the lost, stolen or destroyed
Warrant, a new Warrant of like tenor, but only upon
receipt of evidence reasonably satisfactory to the
Issuer of such loss, theft or destruction of such
Warrant and indemnity, if requested, reasonably
satisfactory to the Issuer. Applicants for a
substitute Warrant shall also comply with such other
reasonable regulations and pay such other reasonable
charges as the Issuer may prescribe.
10. 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 Issuer with or into another
corporation (other than a consolidation or merger in
which the Issuer is the continuing corporation and
which does not result in any reclassification, capital
reorganization or other change of outstanding shares
of Common Stock), the Issuer 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.
11. If and whenever the Issuer 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 Exercise
Price shall be proportionately adjusted in the manner
determined by the Issuer'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 Exercise Price shall be rounded to the nearest
cent.
//
This Warrant shall not be valid unless signed by
the Issuer.
IN WITNESS WHEREOF, SyQuest Technology, Inc. has
caused this Warrant to be signed by its duly
authorized officer.
Dated: September 3, 1997
SYQUEST
TECHNOLOGY, INC.
By:
_______________________
Name:
Title:
FORM OF EXERCISE NOTICE
(To Be Executed Upon Exercise of the Warrant)
[DATE]
SyQuest Technology, Inc.
47071 Bayside Parkway
Fremont, CA 94538
Attention: Chief Financial Officer
Re: Warrant No.
Ladies and Gentlemen:
The undersigned is the registered holder
of the above-referenced warrant (the "Warrant") issued
by SyQuest Technology, Inc., the original of which is
attached hereto, and hereby elects to exercise the
Warrant to purchase _________ Warrant Shares (as
defined in the Warrant) and herewith tenders
$_____________ by certified or official bank check to
the order of SyQuest Technology, Inc. as payment for
such Warrant Shares in accordance with the terms of
the Warrant and the Purchase Agreement (as defined in
the Warrant).
In accordance with the attached Warrant,
the undersigned requests that certificates for such
Warrant Shares be registered in the name of and
delivered to the undersigned at the following address:
________________________
________________________
________________________
[If the number of Warrant Shares to be
delivered is less than the total number of Warrant
Shares deliverable under the Warrant, insert the
following -- The undersigned requests that a new
warrant substantially identical to the attached
Warrant be issued to the undersigned evidencing the
right to purchase the number of Warrant Shares equal
to (x) the total number of Warrant Shares deliverable
under the Warrant less (y) the number of Warrant
Shares to be delivered in connection with this
exercise.]
NAME OF REGISTERED
HOLDER
[ADDRESS]
By: _____________________________
Name:
Title:
EXHIBIT C
VIA FACSIMILE
Re: Stock Purchase Agreement (the
"Agreement") dated _______________, 1997, and related
documents
Ladies and Gentlemen:
Attached please find ___ copies of the
certificate representing the Preferred Shares, (ii)
the Warrant Certificate, (ii) the Securities Purchase
Agreement, and (iv) the Officers' Certificate. We
have the executed originals of the foregoing
documents. Upon our confirmation of the payment by
the _____ to SyQuest of the $____________ purchase
price on the Closing Date, we will send the executed
originals by overnight courier to the following
address:
Capitalized terms not otherwise defined in
this letter shall have the meanings ascribed in such
terms in the Agreement.
Very truly yours,
SyQuest Technology, Inc.
By
Name: Thomas C. Tokos
Title: Vice President, General Counsel
and Secretary
EXHIBIT D
SYQUEST TECHNOLOGY, INC.
NOTICE OF CONVERSION
Reference is made to the Certificate of Designations,
Preferences and Rights of Convertible Preferred Stock,
Series 5 of SyQuest Technology, Inc. (the
"Designation"). In accordance with and pursuant to
the Designation, the undersigned hereby elects to
convert the number of shares of Convertible Preferred
Stock, Series 5, par value $.001 (the "Preferred
Stock"), of SyQuest Technology, Inc., a Delaware
corporation (the "Company"), indicated below into
shares of Common Stock, par value $.0001 (the "Common
Stock"), of the Company by tendering the stock
certificate(s) representing the share(s) of the
Preferred Stock specified below as of the date
specified below:
Date of Conversion
Number of shares of the
Preferred Stock to be
converted:
Stock certificates no(s). of
the Preferred Stock to be
converted:
Please confirm the following
information:
Conversion Price:
Number of shares of Common
Stock to be issued:
Please issue the Common Stock into
which the shares of Preferred Stock
are being converted in the following
name and to the following address:
Issue to:
Name of converting holder:
Duly executed:
By
Name & Title:
Dated:
Exhibit 99.1:
Contact: Ray Aldrich
Miller Shandwick Technologies
(310)203-0550
FOR IMMEDIATE RELEASE
SYQUEST ADDS $20 MILLION IN LATEST INVESTMENT ROUND
FREMONT, Calif., September 11, 1997 -- SyQuestr
Technology, Inc. (NASDAQ:SYQT), the inventor of the
high-performance cartridge category, today announced
the completion of a $20 million private placement of
securities. Under the terms of the private placement,
the investors purchased shares of SyQuest convertible
preferred stock, Series 5, at $1,000 per share, for a
stated value of $20 million. The shares are
convertible into common stock at a price based on the
5-day average NASDAQ closing price prior to the
conversion, subject to a designated maximum exercise
price. No dividends are payable on the preferred
stock.
The investors also will receive seven-year
warrants to purchase 14 million shares of SyQuest
common stock, exercisable at a price equal to 130
percent of the five-day average NASDAQ closing price
prior to exercise, subject to a designated maximum
exercise price. Details of the private placement will
be disclosed in a Form 8K filed with the SEC.
"The completion of this round of financing
brings the company's total financing in the last 15
months to in excess of $145 million," said Edward
Marinaro, SyQuest chairman. "This placement will be
used for general corporate purposes, including the
financing of our aggressive marketing efforts in the
U.S. and abroad."
About SyQuest
Based in Fremont, Calif., SyQuest Technology,
Inc. invented the high performance cartridge category.
Since its inception in 1982, the company has shipped
more than 16 million cartridges which people use to
hold their ideas and creations. SyQuest (SYQT) is
publicly traded on the NASDAQ's National Market
System. SyQuest is located at 47071 Bayside Parkway,
Fremont, Calif. 94538-6517. Phone: (510) 226-4000.
URL: http://www.syquest.com/.
This news release contains forward-looking statements
that involve risks and uncertainties, including
competition in the marketplace for the company's
products, and other risks detailed from time to time
in the SEC reports filed by SyQuest including its most
recent reports on Forms 8K, 10K and 10Q.
# # #
SyQuest and the SyQuest logo are registered trademarks and SyJet is a
trademark of SyQuest Technology, Inc. All other brands or trade names
are the property of their respective companies.
