SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 30,
1997
SYQUEST TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
0-19674 94-2793941
(Commission File Number) (IRS Employer Identification No.)
47071 Bayside Parkway, Fremont, California 94538
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code
(510) 226-4000
Not Applicable
(Former name or former address, if changed since last report.)
<PAGE>
INFORMATION TO BE INCLUDED IN THE REPORT
Item 5 Other Events
Exchange of Debt for Equity Pursuant to Regulation D
On April 15, 1997, Registrant exchanged $1,712.509.19
of its trade debt owed to Jardine Matheson & Co. Ltd. (the
"Creditor") for 564,582 shares (the "Shares") of Registrant's
common stock (the "Common Stock") pursuant to Rule 506 of
Regulation D under the Securities Act of 1933, as amended (the
"Securities Act").
On April 25, 1997, Registrant exchanged $1,500,000 of its trade
debt owed to Nidec Corporation (the "Creditor") for 600,000
shares (the "Shares") of Registrant's common stock (the "Common
Stock") pursuant to Rule 506 of Regulation D under the Securities
Act of 1933, as amended (the "Securities Act").
The documentation for both of these debt to equity
exchanges is substantially similar except for the amount of the
debt exchange, the number of shares of common stock issued, and
other creditor specific information. Accordingly, the
documentation for only the Jardine Matheson & Co. Ltd. exchange
is included as an exhibit to this report.
The Creditor has warranted to Registrant that it is
an accredited investor under Regulation D. Registrant entered
into a registration rights agreement with the Creditor, whereby
Registrant is required to register such Shares for resale.
THE FOREGOING DESCRIPTION OF THE DEBT TO EQUITY EXCHANGE 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 ARE INCORPORATED HEREIN BY THIS REFERENCE.
Sale of Equity Securities Pursuant to Regulation D
During the period of May 1, 1997, through May 11,
1997, pursuant to a series of Securities Purchase Agreements
(collectively, the "Agreements" and individually, an
"Agreement"), Registrant issued and sold its certain shares of
its 5% Cumulative Convertible Preferred Stock, Series 4, par
value $.001 per share (the "Preferred Shares"), at a price of
$100 per share, to the following entities (collectively, the
"Purchasers" and individually, a "Purchaser") in the amounts set
forth in the chart below:
Date of Amount of Preferred No.
Name Agreement Investment Shares Warra
New Enterprises 5-1-97* $5,000,000 50,000 5,000,
Associates VII, L.P.
Combination, Inc. 5-5-97 8,500,000 85,000 8,500,
Olympus Securities, 5-6-97 2,000,000 20,000 2,000,
Ltd.
Nelson Partners 5-6-97 2,000,000 20,000 2,000,
RGL International 5-6-97 3,000,000 30,000 3,000,
Investors, LDC
CC Investments, LDC 5-6-97 3,000,000 30,000 3,000,
Gross Foundation, 5-7-97 500,000 5,000 500,00
Inc.
Capital Ventures 5-7-97 1,000,000 10,000 1,000,
International
Tail Wind Fund 5-7-97 750,000 7,500 750,00
Southbrook 5-9-97 1,250,000 12,500 1,250,
International Investments, Ltd.
Millenco, LP 5-11-97 1,000,000 10,000 1,000,
*All Agreements other than this Agreement 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 5%
Cumulative Convertible Preferred Stock, Series 4 (the
"Certificate"), filed with the Delaware Secretary of State on
April 1, 1997, as corrected on May 7, 1997. A copy of one of the
Agreements, which is representative of all the other Agreements
(except for the date of the purchase, 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 $2.3438.
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.
Dividends. Cumulative dividends accrue on the
Preferred Shares at an annual rate of 5%. Such dividends are
payable quarterly in cash, or, at Registrant's option, in
additional Preferred Shares. Dividends may not be paid in
Preferred Shares if the conversion price of the Preferred Shares
would constitute a below market issuance of Common Stock and to
do so would violate the 19.9% limitation described above.
Liquidation Preference. The Preferred Shares have a
liquidation preference as to dividends, 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
issued after April 28, 1997, 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 seven years
from the date of each Purchaser's respective Agreement as set
forth in the chart above. The number of Warrant Shares available
to each Purchaser will increase by 10% of the total Warrant
Shares initially granted for each month (prorated daily for
partial months), the Registration Statement is not declared
effective by July 1, 1997 (provided that such condition need not
be satisfied until August 1, 1997, if the Commission reviews the
Registration Statement).
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 July 1, 1997 (or
August 1, 1997, 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.
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 ARE ONLY A BRIEF SUMMARY, DOES NOT
PURPORT TO BE COMPLETE AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO EXHIBIT 10.2 TO THIS REPORT ON FORM 8-K, WHICH IS
INCORPORATED HEREIN BY THIS REFERENCE.
Increase in the number of authorized shares
On May 6, 1997, at the Company's annual meeting
shareholders approved an amendment to the Company's certificate
of incorporation to increase the number of authorized shares of
common stock from 60 million to 120 million, and to restate the
par value from $0.001 to $0.0001. The amendment was filed with
the Delaware Secretary of State on May 20, 1997.
Item 7 Financial Statements, Pro Forma Financial Information
and Exhibits
10.1 Securities Purchase Agreement dated as of April 15, 1997,
between Registrant and Jardine Matheson & Company, Ltd.,
including the exhibit form of Registration Rights
Agreement.
10.2 Securities Purchase Agreements dated May 1, 1997, between
Registrant and New Enterprises Associates VII, L.P.,
including as Annex A thereto the Certification of
Designations, Preferences and Rights of 5% Cumulative
Convertible Preferred Stock, Series 4, as Annex B thereto
the form of Warrant Certificate issued pursuant thereto, as
Annex C thereto the form of Delivery Letter, and as Annex D
thereto the corrections to be made to the Certificate of
Destinations.
99.1 Registrant's Press Release released May 8, 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: May 30, 1997 By /s/ Edwin L. Harper
Edwin L. Harper,
President and Chief Executive
Exhibit 10.1
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "Agreement") is
entered into as of April 15, 1997, by and between SyQuest
Technology International ("SyQuest Singapore") and SyQuest
Technology (M) SDN.BHD. ("SyQuest Malaysia") (collectively
SyQuest Singapore and SyQuest Malaysia are referred herein to as
"Sub"), SYQUEST TECHNOLOGY, INC., a Delaware corporation that
owns all of the issued and outstanding capital stock of Sub
("Parent"), and Jardine Matheson & Co., Limited, a Hong Kong
corporation ("Purchaser"), with reference to the following facts:
Sub has failed to make payments to Purchaser when due for
services provided by Purchaser in the aggregate amount of
$1,270,311.54 (the "Outstanding Debt Amount"), represented
by invoices dated on or before August 21, 1996.
In consideration of cancellation of the amounts owed to Purchaser
equal to the sum of the Outstanding Debt Amount, Parent
will issue to Purchaser shares of the Common Stock of
Parent, to repay the amounts due to Purchaser with such
shares, valued at the last sale price (the "Closing Price")
as reported in the Nasdaq National Market on the last
trading day preceding the date of this Agreement, but in no
event shall Parent be obligated to issue hereunder in
excess of 640,000 of its Common Stock. The date of this
Agreement shall be deemed the "Closing Date."
Parent will execute and deliver to Purchaser that certain
Registration Rights Agreement dated as of the date hereof
(the "Registration Rights Agreement") in further
consideration of the agreements of Purchaser herein.
In consideration of the premises and the mutual covenants
and conditions herein, the parties hereby agree as follows:
Purchase Order Amount. Sub acknowledges that Sub
owes Purchaser the Outstanding Debt Amount, and Purchaser
acknowledges that the Outstanding Debt Amount relates to charges
for invoices outstanding dated on or before August 21, 1996.
Payment.
Issuance of Shares. Parent shall instruct its
transfer agent to issue to Purchaser on the
Closing Date the number of shares of Parent's
Common Stock equal to the quotient of the
Outstanding Debt Amount (as it shall then have
been reduced under section 1) divided by the
Closing Price, rounded down to the nearest
lower whole number of shares, but in no event
shall Parent be required to issue hereunder in
excess of 640,000 shares of its Common Stock.
Such shares are hereinafter called the
"Shares".
Payment of Balance. If Parent is unable to issue the
full number of Shares necessary to repay the
Outstanding Debt Amount due to the limit on the
number of Shares provided in section 2(a),
Parent shall pay the balance due (the
"Balance"), to Purchaser as follows:
If the Balance is not more than $50,000, the
full amount of the Balance shall be paid
by Sub to Purchaser within ten (10) days
of the Closing Date, by check or wire
transfer;
If the Balance is more than $50,000 but not
more than $100,000, the Balance shall be
paid by Sub by check or wire transfer to
Purchaser in three equal installments of
principal and interest (at the annual
rate of ten percent), one such
installment to be paid on each of ten
(10) days after the Closing Date, the
90th day after the Closing Date, and the
150th day after the Closing Date; and
If the Balance is more than $100,000, the
Balance shall be paid by Sub to Purchaser
(with interest at the annual rate of ten
percent) over a period of not less than
twelve months, with the payment schedule
to be determined by mutual agreement of
Parent and Purchaser.
Extinguishment of Indebtedness. On the Closing Date,
Parent and Sub shall be deemed to have paid and
discharged all or a portion of the Outstanding
Debt Amount equal to the product of the number
of Shares multiplied by the Closing Price.
Purchaser agrees that, except to the extent of
the unpaid Balance, if any, Parent and Sub
shall be deemed to have paid and discharged the
Outstanding Debt Amount in full on the Closing
Date. If, after the Closing Date, any Balance
remains unpaid, Parent and Sub shall be deemed
to have paid and discharged the Outstanding
Debt Amount in full on payment of the final
installment of the Balance.
Limitation on Disposition.
Transfer or Resale. The Buyer understands that
(i) except as provided in the Registration Rights Agreement, the
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) the Buyer shall have delivered to
the Company an opinion of counsel, reasonably satisfactory in
form, scope and substance to the Company, to the effect that the
securities to be sold, assigned or transferred may be sold,
assigned or transferred pursuant to an exemption from such
registration; (ii) any sale of such securities made in reliance
on Rule 144 promulgated under the 1933 Act may be made only in
accordance with the terms of said Rule and further, if said Rule
is not applicable, any resale of such securities under
circumstances in which the seller (or the person through whom the
sale is made) may be deemed to be an underwriter (as that term is
defined in the 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 the Company nor any other
person is under any obligation to register such securities (other
than pursuant to the Registration Rights Agreement) under the
1933 Act or any state securities laws or to comply with the terms
and conditions of any exemption thereunder.
Sales Cap. Notwithstanding the foregoing
paragraph 3(a), Purchaser shall not sell, assign or otherwise
transfer more than fifteen percent (15%) per month of such Shares
originally received hereunder.
Representations and Warranties of Parent and Sub. Parent
and Sub hereby represent and warrant to Purchaser as
follows:
Corporate Existence and Power. Parent is a
corporation duly organized and existing, and in
good standing, under the laws of the State of
Delaware and has all requisite corporate power
to execute and deliver this Agreement and the
Registration Rights Agreement, to issue the
Shares pursuant hereto and otherwise to carry
out and perform its obligations under the terms
of this Agreement. SyQuest Malasia is an
entity duly organized and existing under the
laws of Malasia and SyQuest Singapore is an
entity duly organized and existing under the
laws of Singapore, and are both in good
standing under such laws, and Sub has all
requisite corporate power to execute and
deliver this Agreement and otherwise to carry
out and perform its obligations under this
Agreement.
Corporate Action; Enforceability. All corporate
action on the part of Parent necessary for the
execution, delivery and performance of this
Agreement and the Registration Rights Agreement
and the issuance of Shares pursuant hereto has
been taken, and this Agreement and the
Registration Rights Agreement constitute valid
and binding obligations of Parent enforceable
against Parent in accordance with their
respective terms. To the best knowledge of the
current executive officers of Parent, without
having conducted an investigation of the
records of Parent or Sub, all corporate action
on the part of Sub necessary for the execution,
delivery and performance by Sub of this
Agreement has been taken, and this Agreement
constitutes valid and binding obligations of
Sub enforceable against Sub in accordance with
its terms.
Valid Issuance. The Shares, when issued in
compliance with this Agreement, will be validly
issued, fully paid, nonassessable and free of
any restrictions on transfer other than
pursuant to applicable state, federal and
foreign securities laws.
SEC Documents. Parent has furnished to Purchaser
true and complete copies of its Annual Report
on Form 10-K for the fiscal year ended
September 30, 1996, as amended on Form 10-K/A,
its Quarterly Reports on Form 10-Q for the
quarters ended December 31, 1996, its Current
Reports on Form 8-K, and its Form S-3 filed on
January 6, 1997, in each case as filed with the
Securities and Exchange Commission (the "SEC").
Such Reports are hereinafter collectively
called the "Reports". To the best knowledge of
the current executive officers of Parent,
without having conducted an investigation of
the records of Parent or Sub, as of their
respective filing dates (except as thereafter
amended), the Reports complied in all material
respects with the applicable requirements of
the Securities Exchange Act of 1934, as amended
(the "Exchange Act").
No Contravention. The execution and delivery of this
Agreement by Parent or Sub or the consummation
of the transactions contemplated hereby will
not conflict with, or result in any breach or
violation of, any provision of the certificate
of incorporation or by-laws of Parent or Sub.
To the best knowledge of the current executive
officers of Parent, without having conducted an
investigation of the records of Parent or Sub,
neither the execution and delivery of this
Agreement by Parent or Sub nor the consummation
of the transactions contemplated hereby will
(i) constitute, with or without notice or the
passage of time or both, a material breach,
violation or default under any order, writ,
injunction, decree, law, statute, rule or
regulation, governmental permit or license of
Parent or Sub or to which either of their
properties is subject; or (ii) except as
provided in the Registration Rights Agreement,
require any consent, approval or authorization
of, notification to, or filing with, any court,
governmental agency or regulatory or
administrative authority on the part of Parent
or Sub, except for filings under the Securities
Act of 1933, as amended (the "Securities Act"),
the Exchange Act and the Nasdaq National Market
rules.
Exemption from Registration. Assuming the accuracy
and completeness of the representations and
warranties in section 4, the offer, sale and
issuance of the Shares as contemplated by this
Agreement are exempt from the registration
requirements of the Securities Act.
Representations and Warranties of Purchaser. Purchaser
represents and warrants to Parent and Sub as follows:
Authority. Purchaser has the full power and
authority to execute and deliver this Agreement
and the Registration Rights Agreement and to
perform its obligations hereunder and
thereunder.
Enforceability. This Agreement and the Registration
Rights Agreement are valid and binding
agreements of Purchaser enforceable against
Purchaser in accordance with their respective
terms.
Securities Laws Representations. Purchaser is
acquiring the Shares for Purchaser's own
account and not with a view to or for sale in
connection with any distribution. Purchaser
has such knowledge and experience in financial
and business matters that Purchaser is capable
of evaluating the merits and risks of its
investment in the Shares, is able to bear the
economic risk of such investment and is able to
protect the Purchaser's own interests in
connection with this transaction. Purchaser
acknowledges having had access to such
information concerning Parent, Sub and their
affiliates as Purchaser deems necessary to
enable Purchaser to make an informed decision
concerning an investment in the Shares. In
entering into this Agreement and consummating
the transactions contemplated hereby, Purchaser
is relying solely on its own investigation of
Parent, Sub and their affiliates and their
businesses, management, financial condition,
properties and prospects and the merits and
risks of such transactions. Purchaser is aware
that the Shares have not been registered under
the Securities Act and the Shares may not be
transferred by Purchaser unless they are
subsequently registered under the Securities
Act or an exemption from such registration is
available. The Shares shall not be transferred
without registration under the Securities Act
or an applicable exemption therefrom.
Purchaser is an accredited investor as that
term is defined in Rule 501(a) of Regulation D
promulgated by the SEC under the Securities
Act. Purchaser acknowledges that until the
Shares are sold pursuant to registration under
the Securities Act or an available exemption
therefrom, all certificates representing Shares
shall bear the following legend:
THE SHARES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS.
THE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT
AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED,
PLEDGED OR HYPOTHECATED ABSENT AN EFFECTIVE
REGISTRATION THEREOF UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS, OR COMPLIANCE
WITH RULE 144 PROMULGATED UNDER SUCH ACT AND
EXEMPTION FROM ALL APPLICABLE STATE SECURITIES
LAWS, AS CONFIRMED BY THE OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY.
Additional Representation.
(a) Purchaser represents and warrants that it has
the authority to enter into this agreement for its self and its
affiliates, subsidiaries and operating divisions, and that
references to Purchaser herein also refer to its affiliates,
subsidiaries and operating divisions.
(b) Each of Parent and Sub jointly and severally
represent and warrant to Purchaser and Purchaser represents and
warrants to Parent and Sub that it is the sole and lawful owner
of all right, title and interest in and to all of the claims
related to the Outstanding Debt Amount and that it has not
heretofore voluntarily, by operation of law or otherwise,
assigned or transferred or purported to assign or transfer to any
person whomsoever any such claim.
Closing.
The issuance of the Shares shall take place as of the
date hereof, and shall be consummated by mail
or otherwise in accordance with arrangements
reasonably acceptable to Parent and Purchaser.
Within ten (10) days of the Closing Date,
Parent shall deliver to Purchaser a certificate
representing the Shares and a check for all or
part of the Balance, if any, to be paid on the
Closing Date pursuant to section 2(b) above, in
payment, discharge and cancellation of
indebtedness equal to part or all of the
Outstanding Debt Amount as provided in
section 2(c).
General Provisions.
Successors. This Agreement shall bind and inure to
the benefit of the parties hereto and their
respective successors and assigns.
Governing Law. Any action or proceeding to
interpret, construe or enforce this Agreement
may be instituted and prosecuted only in a
state court located in Alameda County, State of
California, or, if requisite jurisdiction
exists, in the United States District Court for
the Northern District of California. This
Agreement shall be governed by and interpreted
and construed in accordance with the laws of
the State of California.
Entire Agreement. This Agreement and Registration
Rights Agreement constitute the entire
agreement of the parties and supersede all
prior or contemporaneous agreements,
communications, negotiations and
understandings, written or oral, between the
parties, regarding the subject matter hereof
and thereof.
Waiver, Modification, or Amendment. No waiver,
modification or amendment of this Agreement
shall be enforceable unless in writing and
executed by the party against whom such waiver,
modification or amendment is claimed.
Severability. If any provision of this Agreement is
held to be illegal, invalid or unenforceable,
the legality, validity and enforceability of
the remaining provisions shall not be affected
or impaired.
Attorneys' Fees. In the event of litigation or other
proceedings in connection with or related to
this Agreement, the prevailing party in such
litigation or proceedings shall be entitled to
reimbursement from the opposing party of all
reasonable expenses, including, without
limitation, reasonable attorneys' fees and
expenses and expenses of investigation in
connection with such litigation or proceedings.
Currency. All dollar amounts are expressed in U.S.
Dollars.
Communications and Notices. All notices and other
communications required or permitted hereunder
shall be in writing in the English language and
shall be deemed duly delivered and received
when delivered personally, when transmitted by
facsimile if receipt is acknowledged by the
addressee, two days after being deposited for
next-day or second-day delivery with an
internationally recognized overnight or two-day
delivery service, or four days after being
deposited as first class mail with the United
States Postal Service, properly addressed as
follows:
If to Parent or Sub:
SyQuest Technology,
Inc.
4701 Bayside Parkway
Fremont, California
94538
Attention: Legal Department
Facsimile: (510) 226-4091
With a copy to: Steven O. Gasser, Esq.
Shartsis, Friese & Ginsburg
One Maritime Plaza,18th floor
San Francisco, CA 94111
Facsimile: (415) 421-2922
If to Purchaser:
JARDINE TRANSPORT SERVUCES
24th Floor, Devon House
979 King's Road
Hong Kong
Attention: Ben Williams
Facsimile: 852-285 69635
Telephone: 852-257-92937
Any party may change its address or facsimile
number set forth above by giving written notice
thereof to the other party in the manner
prescribed herein.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized representatives
as the day and the year first set forth above.
SYQUEST TECHNOLOGY,
INC.
By: /s/
Name: Michael Clemens
Title: Vice-President, Financial Services and Treasurer
SYQUEST TECHNOLOGY
INTERNATIONAL
By:/s/
Name: Michael Clemens
Title: Director
SYQUEST TECHNOLOGY (M)
SDN.BHD.
By: /s/
By:/s/
Name: N.B. Venter
Title: Director
JARDINE MATHESON & CO.,
LIMITED
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement")
is made as of April 15, 1997, by and among SyQuest Technology,
Inc., a Delaware corporation (the "Company"), and Jardine
Matheson & Co., Limited, a Hong Kong corporation (the "Buyer"),
with reference to the following facts:
In connection with the Securities Purchase Agreement
by and among the Buyer, the Company and two subsidiaries of the
Company of even date herewith (the "Securities Purchase
Agreement"), the Company has agreed, on the terms and subject to
the conditions of the Securities Purchase Agreement, to issue and
sell to the Buyer shares of the Company's Common Stock, par value
$.001 per share. To induce the Buyer to execute and deliver the
Securities Purchase Agreement, the Company has agreed to provide
certain registration rights under the Securities Act of 1933, as
amended, and the rules and regulations thereunder, or any similar
successor statute (collectively, the "1933 Act"), and applicable
state securities laws.
NOW, THEREFORE, in consideration of the premises and
the mutual covenants herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Buyer hereby agree as follows:
DEFINITIONS. Capitalized terms used and not
otherwise defined herein have the respective meanings
respectively ascribed to them in the Securities Purchase
Agreement. As used in this Agreement, the following terms have
the following meanings:
"Investor" means the Buyer and any
transferee or assignee thereof to whom the Buyer transfers or
assigns this Agreement and who agrees to become a party to and be
bound by this Agreement in accordance with section 9.
"Register", "registered", and
"registration" refer to a registration effected by preparing and
filing a Registration Statement or Statements in compliance with
the 1933 Act and pursuant to Rule 415 under the 1933 Act or any
successor rule providing for offering securities on a continuous
basis ("Rule 415"), and the declaration or ordering of
effectiveness of such Registration Statement by the United States
Securities and Exchange Commission (the "SEC").
"Registrable Securities" means the
Shares.
"Registration Statement" or "Registrati
Statements" means a registration statement or statements of the
Company filed under the 1933 Act.
REGISTRATION.
Mandatory Registration. The Company
shall use its best reasonable efforts to prepare and, on or
before July 1, 1997, file with the SEC a Registration Statement
or Registration Statements (as is necessary) on Form S-3 (or, if
such form is unavailable for such a registration, on such other
form as is available for such a registration) (any of which may
contain a combined prospectus with other registrations by the
Company), covering the resale of the Registrable Securities.
2.2 Suspension or Termination of S-3
Registration Statement. The Company may suspend or terminate any
Registration Statement filed pursuant to the provisions of
section 2.1 if the Company determines in good faith that the
continued effectiveness of such Registration Statement might (a)
interfere with or affect the negotiation or completion of any
transaction that is being contemplated by the Company, (b)
involve continuing disclosure obligations that might not be in
the best interest of the Company's shareholders or (c) be
seriously detrimental to the Company; provided that (1) any such
suspension or termination extends for no more than ninety (90)
days, (2) the Company undertakes no more than two (2) such
suspensions or terminations in any one calendar year, (3) the
Company re-establishes the effectiveness of such Registration
Statement promptly following the cessation of the cause for such
suspension or termination, but in no event later than the
expiration of such 90-day period and (4) the Registration Period
(as hereinafter defined) set forth in section 3.1(b) shall, if
applicable, be extended by the period of each such suspension or
termination.
2.3 Piggy-Back Registrations.
(a) If at any time prior to the
expiration of the Registration Period the Company shall file with
the SEC a Registration Statement relating to an offering for its
own account or the account of others under the 1933 Act of any of
its equity securities (other than on Form S-4 or Form S-8 or
their then equivalents relating to equity securities to be issued
solely in connection with any acquisition of any entity or
business or equity securities issuable in connection with stock
option or other employee benefit plans or on any form that does
not permit secondary sales), the Company shall send to each
Investor who is entitled to registration rights under this
section 2.3 written notice of such determination and the Company
shall use its best reasonable efforts to include in such
Registration Statement (and any qualification under "blue sky"
laws or other compliance), except as set forth in section 2.3(c)
and in any underwriting involved therein, all of the Registrable
Securities specified in a written request or requests made by
such Investor and received by the Company within (10) days after
the written notice from the Company is mailed or delivered by the
Company. Such written request may specify all or part of an
Investor's Registrable Securities.
(b) If the registration of which th
Company gives notice is for a registered public offering
involving an underwriting, the Company shall so advise the
Investors as a part of the written notice given pursuant to
section 2.3(a). In such event, the right of any Investor to
registration pursuant to this section 2.3 shall be conditioned
upon such Investor's participation in such underwriting and the
inclusion of such Investor's Registrable Securities in the
underwriting to the extent provided herein. All Investors
proposing to distribute their securities through such
underwriting shall (together with the Company and the other
holders of securities of the Company with registration rights to
participate therein (the "Other Stockholders") distributing their
securities through such underwriting) enter into any underwriting
agreement in customary form with the representative of the
underwriter or underwriters selected by the Company.
(c) Notwithstanding any other
provisions of this section 2.3, if the representative of the
underwriters advises the Company in writing that marketing or
other factors require a limitation on the number of shares to be
underwritten, the representative may (subject to the limitations
set forth below) exclude all Registrable Securities from, or
limit the number of Registrable Securities to be included in, the
registration and underwriting. The Company shall so advise all
holders requesting registration, and the number of shares that
are entitled to be included in the registration and underwriting
shall be allocated first to the Company for securities being sold
for its own account and thereafter allocated among the Investors
and Other Stockholders requesting inclusion of securities of the
Company having registration rights (the "Other Shares") pro rata
on the basis of the number of shares of Registrable Securities
and Other Shares held by such Investors and Other Stockholders;
provided that the Company shall be entitled to exclude
Registrable Securities to the extent necessary to permit the
inclusion of Other Shares of Other Stockholders having
registration rights pursuant to any agreement with the Company
entered into prior to the date hereof; and provided further that
such allocation shall not operate to reduce the aggregate number
of Registrable Securities and Other Shares to be included in such
registration, and if any Investor or Other Stockholder does not
request inclusion of the maximum number of Registrable Securities
and Other Shares allocated to him, her or it pursuant to the
foregoing procedure, the remaining portion of his, her or its
allocation shall be reallocated among those requesting Investors
and Other Stockholders whose allocations do not satisfy their
requests pro rata on the basis of the number of Registrable
Securities and Other Shares held by such Investors and Other
Stockholders, and this procedure shall be repeated until all of
the Registrable Securities and Other Shares that may be included
in the registration on behalf of the Investors and Other
Stockholders shall have been so allocated. The Company shall not
limit the number of Registrable Securities to be included in a
registration pursuant to this Agreement in order to include
securities held by stockholders with no registration rights. If
any person does not agree to the terms of any such underwriting,
such person shall be excluded therefrom by written notice from
the Company or the underwriter. Any Registrable Securities or
Other Shares excluded or withdrawn from such underwriting shall
be withdrawn from such registration. Nothing in this section 2.3
shall give Investors the right to require the Company to commence
such registration or complete it once the process has commenced.
(d) No right to registration of
Registrable Securities under this section 2.3 shall be construed
to limit any registration required under section 2.1. The
obligations of the Company under this section 2.3 may be waived
by Investors holding a majority of the Registrable Securities.
2.4 Eligibility for Form S-3. The Company
represents and warrants that it meets the requirements for the
use of Form S-3 for registration of the sale by the Buyer and any
other Investor of the Registrable Securities, and the Company
shall file all reports required to be filed by the Company with
the SEC in a timely manner to maintain such eligibility for the
use of Form S-3. If Form S-3 is not available for sale by the
Investors of the Registrable Securities, upon request of the
Investors the Company shall register the sale on another
appropriate form. The Company shall have a reasonable period of
time to complete such registration.
2.5 Market Stand-Off Agreement. The
Investors agree, without consent of managing underwriter(s), not
to effect any sale or distribution of Registrable Securities
(other than in connection with the Investors' own registration
pursuant to section 2.3), including a disposition pursuant to
Rule 144 of the 1933 Act, during the period beginning ten (10)
days prior to the Company's good faith estimate of the filing of,
and ending on the date ninety (90) days after the effective date
of, a Company - initiated registration; provided that the Company
is actively employing in good faith all reasonable efforts to
cause such registration statement to become effective.
REGISTRATION OBLIGATIONS.
Registration Statements. The Company
shall use its best reasonable efforts to cause such Registration
Statement(s) relating to Registrable Securities to become
effective as soon as possible after the filing thereof and,
subject to the provisions of section 2.2, keep the Registration
Statement(s) effective pursuant to Rule 415 at all times until
the earliest of (a) the date as of which the Investors may sell
all of the Registrable Securities without registration pursuant
to Rule 144 promulgated under the 1933 Act, (b) the second
anniversary of the date hereof (subject to extension in
accordance with the provisions of section 2.2), and (c) the date
on which the Investors shall have sold all the Registrable
Securities (the "Registration Period"). Such Registration
Statement(s) (including any amendments or supplements thereto and
prospectuses contained therein) shall not contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein, or necessary to make the
statements therein, in light of the circumstances in which they
were made, not misleading.
Amendments and Supplements. The Compan
shall prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration
Statement(s) and the prospectus(es) used in connection with the
Registration Statement(s) as may be necessary to keep the
Registration Statement(s) effective at all times during the
Registration Period, and, during such period, comply with the
provisions of the 1933 Act with respect to the disposition of all
Registrable Securities of the Company covered by the Registration
Statement(s) until such time as all of such Registrable
Securities shall have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof
as set forth in the Registration Statement(s).
Prospectus Delivery. The Company shall
furnish to each Investor whose Registrable Securities are
included in the Registration Statement(s) and its legal counsel
(a) promptly after the same is prepared and publicly distributed,
filed with the SEC or received by the Company, one copy of the
Registration Statement and any amendment thereto, each
preliminary prospectus and prospectus and each amendment or
supplement thereto, and (b) such number of copies of a
prospectus, including a preliminary prospectus, and all
amendments and supplements thereto and such other documents as
such Investor may reasonably request to facilitate the
disposition of the Registrable Securities owned by such Investor.
Blue Sky Laws. The Company shall use
reasonable efforts to (a) register and qualify the Registrable
Securities covered by the Registration Statement(s) under such
other securities or "blue sky" laws of such jurisdictions in the
United States as the Investors who hold a majority of the
Registrable Securities being offered reasonably request (but in
no event in more than five states of the United States), (b)
prepare and file in those jurisdictions such amendments
(including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain
the effectiveness thereof during the Registration Period, (c)
take such other actions as may be necessary to maintain such
registrations and qualifications in effect at all times during
the Registration Period, and (d) take all other actions
reasonably necessary or advisable to qualify the Registrable
Securities for sale in such jurisdictions; provided that the
Company shall not be required in connection therewith or as a
condition thereto to (1) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify
but for this section 3.4, (2) subject itself to general taxation
in any such jurisdiction, (3) file a general consent to service
of process in any such jurisdiction, (4) provide any undertakings
that cause more than nominal expense or burden to the Company, or
(5) make any change in its certificate of incorporation or
bylaws, which the Board of Directors of the Company determines to
be contrary to the best interests of the Company and its
stockholders.
Corrections. As promptly as practicabl
after becoming aware of such event, the Company shall notify each
Investor selling Registrable Securities of the happening of any
event, of which the Company has knowledge, as a result of which
the prospectus included in a Registration Statement, as then in
effect, includes an untrue statement of a material fact or
omission to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading or
incomplete, and use its best reasonable efforts promptly to
prepare a supplement or amendment to the Registration Statement
to correct such untrue statement or omission, and deliver such
number of copies of such supplement or amendment to each Investor
as such Investor may reasonably request.
Stop Orders. Except as otherwise
permitted by this Agreement, the Company shall use its best
reasonable efforts to prevent the issuance of any stop order or
other suspension of effectiveness of a Registration Statement,
and, if such an order is issued, use its best reasonable efforts
to obtain the withdrawal of such order at the earliest possible
moment and to notify each Investor who holds Registrable
Securities being sold (or, in the event of an underwritten
offering, the managing underwriters) of the issuance of such
order and the resolution thereof.
Selling Stockholders' Counsel. The
Company shall permit a single firm of counsel, designated as
selling stockholders' counsel by the Investors who hold a
majority of the Registrable Securities being sold and compensated
by such Investors, to review and comment on the Registration
Statement(s) (and all amendments and supplements thereto but only
if they directly relate to such Investors) a reasonable period
prior to their filing with the SEC, and shall not file any
document in a form to which such counsel reasonably objects.
Failure to object in writing within three days shall be deemed to
be an approval of the Registration Statement (s).
Due Diligence. The Company shall make
available for inspection by one firm of attorneys and one firm of
accountants or other agents retained by the Investors at their
expense (collectively, the "Inspectors") all pertinent financial
and other records, and pertinent corporate documents and
properties of the Company (collectively, the "Records"), as shall
be reasonably deemed necessary by such Inspector to enable such
Inspector to exercise its due diligence responsibility, and cause
the Company's officers, directors and employees to supply all
information that any Inspector may reasonably request for
purposes of such due diligence; provided that each Inspector
shall hold in strict confidence and shall not make any disclosure
(except to an Investor) or use of any Record or other information
which the Company determines in good faith to be confidential,
and of which determination the Inspectors are so notified, unless
(a) the disclosure of such Records is necessary to avoid or
correct a misstatement or omission in any Registration Statement,
(b) the release of such Records is ordered pursuant to a final,
non-appealable subpoena or order from a court or government body
of competent jurisdiction, or (c) the information in such Records
has been made generally available to the public other than by
disclosure in violation of this or any other agreement. The
Company shall not be required to disclose any confidential
information in such Records to any Inspector until and unless
such Inspector shall have entered into confidentiality agreements
(in form and substance satisfactory to the Company) with the
Company with respect thereto, consistent with and implementing
the confidentiality obligations of this section 3.10. Each
Investor agrees that it shall, on learning that disclosure of
such Records is sought in or by a court or governmental body of
competent jurisdiction or through other means, give prompt notice
to the Company and allow and cooperate with the Company, at its
expense, to undertake appropriate action to prevent disclosure
of, or to obtain a protective order for, the Records deemed
confidential.
Listing. The Company shall use its bes
reasonable efforts either to (a) cause all the Registrable
Securities covered by a Registration Statement to be listed on
each national securities exchange on which the Common Stock is
then listed, if any, if the listing of such Registrable
Securities is then permitted under the rules of such exchange, or
(b) secure designation and quotation of all the Registrable
Securities covered by the Registration Statement on the Nasdaq
National Market or, if, despite the Company's best efforts to
satisfy the preceding clause (a) or (b), the Company is
unsuccessful in satisfying the preceding clause (a) or (b), to
secure the inclusion for quotation on the Nasdaq SmallCap Market
or, on the Nasdaq Electronic Bulletin Board.
Certificates. The Company shall
cooperate with the Investors who hold Registrable Securities
being offered and, to the extent applicable, any managing
underwriter or underwriters, to facilitate the timely preparation
and delivery of certificates (not bearing any restrictive legend)
representing the Registrable Securities to be offered pursuant to
a Registration Statement and enable such certificates to be in
such denominations or amounts, as the case may be, as the
managing underwriter or underwriters, if any, or, if there is no
managing underwriter or underwriters, the Investors may
reasonably request and registered in such names as the managing
underwriter or underwriters, if any, or the Investors may
request.
Other Action. The Company shall take a
other reasonable actions necessary to expedite and facilitate
disposition by the Investors of Registrable Securities pursuant
to a Registration Statement.
OTHER OBLIGATIONS OF THE INVESTORS.
Investor Information. At least five da
prior to the first anticipated filing date of the Registration
Statement, the Company shall notify each Investor of the
information the Company requires from each such Investor that
elects to have any of such Investor's Registrable Securities
included in the Registration Statement. It shall be a condition
precedent to the obligations of the Company to complete the
registration pursuant to this Agreement with respect to the
Registrable Securities of an Investor that such Investor shall
furnish to the Company such information regarding itself, the
Registrable Securities held by it and the intended method of
disposition of the Registrable Securities held by it as shall be
reasonably required to effect the registration of such
Registrable Securities and shall execute such documents in
connection with such registration as the Company may reasonably
request.
Cooperation. Each Investor by such
Investor's acceptance of the Registrable Securities agrees to
cooperate with the Company as reasonably requested by the Company
in connection with the preparation and filing of the Registration
Statement(s) hereunder, unless such Investor has notified the
Company in writing of such Investor's election to exclude all of
such Investor's Registrable Securities from the Registration
Statement.
Corrections. Each Investor agrees that
on receipt of any notice from the Company of the happening of any
event of the kind described in section 2.2, 3.5 or 3.6, such
Investor will immediately discontinue disposition of Registrable
Securities pursuant to the Registration Statement(s) covering
such Registrable Securities until such Investor's receipt of the
copies of the supplemented or amended prospectus contemplated by
section 3.5 or 3.6 and, if so directed by the Company, such
Investor shall deliver to the Company (at the expense of the
Company) or destroy (and deliver to the Company a certificate of
destruction) all copies in such Investor's possession, of the
prospectus covering such Registrable Securities current at the
time of receipt of such notice.
Underwriting Arrangements. No Investor
may participate in any underwritten registration hereunder unless
such Investor (a) agrees to sell such Investor's Registrable
Securities on the basis provided in any underwriting
arrangements, (b) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such
underwriting arrangements, and (c) agrees to pay its pro rata
share of all underwriting discounts, selling commissions and
stock transfer taxes applicable to the sale of Registrable
Securities and fees and disbursements of counsel and other
advisers for any Investor (collectively, "Selling Expenses").
EXPENSES OF REGISTRATION. All reasonable
expenses, other than Selling Expenses, incurred in connection
with registrations, filings or qualifications pursuant to
sections 2 and 3, including, without limitation, all
registration, listing and qualifications fees, printers and
accounting fees, and fees and disbursements of counsel for the
Company, shall be borne by the Company.
INDEMNIFICATION. If any Registrable Securities
are included in a Registration Statement under this Agreement:
By the Company. To the extent permitte
by law, the Company will indemnify, hold harmless and defend each
Investor, each director and officer of and person, if any, who
controls such Investor within the meaning of the 1933 Act or the
1934 Act, and each underwriter (as defined in the 1933 Act) for
the Investors, and each director and officer of, and each person,
if any, who controls, such underwriter within the meaning of the
1933 Act or the 1934 Act (each, an "Indemnified Person"), against
any losses, claims, damages, liabilities or expenses (joint or
several) (collectively, "Claims") to which any of them may become
subject insofar as such Claims (or actions or proceedings,
whether commenced or threatened, in respect thereof) arise out of
or are based on: (a) any untrue statement or alleged untrue
statement of a material fact in a Registration Statement or the
omission or alleged omission to state therein a material fact
required to be stated or necessary to make the statements therein
not misleading, (b) any untrue statement or alleged untrue
statement of a material fact contained in any preliminary
prospectus if used prior to the effective date of such
Registration Statement, or contained in the final prospectus (as
amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or
alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances
under which the statements therein were made, not misleading, or
(c) any violation or alleged violation caused by the Company of
the 1933 Act, the 1934 Act, any other law, including, without
limitation, any state securities law, or any rule or regulation
thereunder relating to the offer or sale of the Registrable
Securities pursuant to a Registration Statement (the matters in
the preceding clauses (a), (b) and (c) being, collectively,
"Violations"). Subject to the restrictions in section 6.4 with
respect to the number of legal counsel, the Company shall
reimburse each Indemnified Person promptly as such expenses are
incurred and are due and payable, for any legal fees or other
reasonable expenses incurred by such Indemnified Person in
connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary herein, the
indemnification agreement in this section 6.1: (1) shall not
apply to a Claim arising out of or based on a Violation that
occurs in reliance on and in conformity with information
furnished in writing to the Company by, or caused by, any
Indemnified Person or underwriter for such Indemnified Person in
connection with the preparation of the Registration Statement or
any such amendment thereof or supplement thereto, if such
prospectus was timely made available by the Company pursuant to
section 3.3; (2) with respect to any preliminary prospectus,
shall not inure to the benefit of any such person from whom the
person asserting any such Claim purchased the Registrable
Securities that are the subject thereof (or to the benefit of any
person controlling such person) if the untrue statement or
omission of material fact contained in the preliminary prospectus
was corrected in the prospectus, as then amended or supplemented,
if such prospectus was timely made available by the Company
pursuant to section 3.3; (3) shall not be available to the extent
that such Claim is based on a failure of the Investor to deliver
or to cause to be delivered the prospectus made available by the
Company; and (4) shall not apply to amounts paid in settlement of
any Claim if such settlement is effected without the prior
written consent of the Company, which consent shall not be
unreasonably withheld. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf
of the Indemnified Person and shall survive the transfer of the
Registrable Securities by the Investors pursuant to section 9.
By the Investors. In connection with a
Registration Statement in which an Investor is participating,
each such Investor agrees to indemnify, hold harmless and defend,
to the same extent and in the same manner as is set forth in
section 6.1, the Company, each of its directors, each of its
officers who signs the Registration Statement, each person, if
any, who controls the Company within the meaning of the 1933 Act
or the 1934 Act, any underwriter and any other stockholder
selling securities pursuant to the Registration Statement or any
of its directors or officers or any person who controls such
stockholder or underwriter within the meaning of the 1933 Act or
the 1934 Act (collectively and together with an Indemnified
Person, an "Indemnified Party"), against any Claim to which any
of them may become subject, under the 1933 Act, the 1934 Act or
otherwise, insofar as such Claim arises out of or is based on any
Violation, in each case to the extent (and only to the extent)
that such Violation occurs in reliance on and in conformity with
written information furnished to the Company by such Investor
expressly for use in connection with such Registration Statement
or to the extent such Claim is based on any violation or alleged
violation by the Investor of the 1933 Act, 1934 Act or any other
law; and such Investor will reimburse any legal or other expenses
reasonably incurred by them in connection with investigating or
defending any such Claim; provided that the indemnity agreement
in this section 6.2 shall not apply to amounts paid in settlement
of any Claim if such settlement is effected without the prior
written consent of such Investor, which consent shall not be
unreasonably withheld; and provided further that the Investor
shall be liable under this section 6.2 for only such amount of a
Claim as does not exceed the net proceeds to such Investor as a
result of the sale of Registrable Securities pursuant to such
Registration Statement. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on
behalf of such Indemnified Party and shall survive the transfer
of the Registrable Securities by the Investors pursuant to
section 9. Notwithstanding anything to the contrary herein, the
indemnification agreement in this section 6.2 with respect to any
preliminary prospectus shall not inure to the benefit of any
Indemnified Party if the untrue statement or omission of material
fact contained in the preliminary prospectus was corrected on a
timely basis in the prospectus, as then amended or supplemented.
By Others. The Company shall be entitl
to receive indemnities from underwriters, selling brokers, dealer
managers and similar securities industry professionals
participating in any distribution, to the same extent as provided
above, with respect to information such persons so furnished in
writing expressly for inclusion in the Registration Statement.
Procedures. Promptly after receipt by
Indemnified Person or Indemnified Party under this section 6 of
notice of the commencement of any action (including any
governmental action), such Indemnified Person or Indemnified
Party shall, if a Claim in respect thereof is to be made against
any indemnifying party under this section 6, deliver to the
indemnifying party a written notice of the commencement thereof,
and the indemnifying party shall have the right to participate
in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory
to the indemnifying party and the Indemnified Person or the
Indemnified Party, as the case may be; provided that an
Indemnified Person or Indemnified Party shall have the right to
retain its own counsel with the fees and expenses to be paid by
the indemnifying party, if, in the reasonable opinion of counsel
retained by the indemnifying party, the representation by such
counsel of the Indemnified Person or Indemnified Party and the
indemnifying party would be inappropriate due to actual or
potential differing interests between such Indemnified Person or
Indemnified Party and any other party represented by such counsel
in such proceeding. The Company shall pay reasonable fees for
only one separate legal counsel for the Investors, and such legal
counsel shall be selected by the Investors holding a majority of
the Registrable Securities included in the Registration Statement
to which the Claim relates. The failure to deliver written
notice to the indemnifying party within a reasonable time after
the threat or commencement of any such action shall not relieve
such indemnifying party of any liability to the Indemnified
Person or Indemnified Party under this section 6, except to the
extent that the indemnifying party is prejudiced in its ability
to defend such action. The indemnification required by this
section 6 shall be made by periodic payments of the amount
thereof during the course of the investigation or defense, as
such expense, loss, damage or liability is incurred and is due
and payable.
CONTRIBUTION. To the extent that any
indemnification by an indemnifying party is prohibited or limited
by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would
otherwise be liable under section 6 to the fullest extent
permitted by law; provided that (a) no contribution shall be made
under circumstances where the maker would not have been liable
for indemnification under the fault standards set forth in
section 6, (b) no seller of Registrable Securities guilty of
fraudulent misrepresentation (within the meaning of section 11(f)
of the 1933 Act) shall be entitled to contribution from any
seller of Registrable Securities who was not guilty of fraudulent
misrepresentation, and (c) contribution by any seller of
Registrable Securities shall be limited in amount to the net
amount of proceeds received by such seller from the sale of such
Registrable Securities.
REPORTS UNDER THE 1934 ACT. With a view to
making available to the Investors the benefits of Rule 144 under
the 1933 Act or any other similar rule or regulation of the SEC
that may at any time permit the investors to sell securities of
the Company to the public without registration ("Rule 144"), the
Company agrees to:
Information. Make and keep public
information available, as those terms are understood and defined
in Rule 144;
Reports. File with the SEC in a timely
manner all reports and other documents required of the Company
under the 1933 Act and the 1934 Act so long as the Company
remains subject to such requirements, and the filing of such
reports and other documents is required for the applicable
provisions of Rule 144; and
Confirmation. Furnish to each Investor
so long as such Investor owns Registrable Securities, promptly on
request, (a) a written statement by the Company that it has
complied with the reporting requirements of Rule 144, the 1933
Act and the 1934 Act, (b) a copy of the most recent annual or
quarterly report of the Company and such other reports and
documents so filed by the Company, and (c) such other information
as may be reasonably requested to permit the investors to sell
such securities pursuant to Rule 144 without registration.
ASSIGNMENT OF REGISTRATION RIGHTS. The rights
to cause the Company to register securities granted to an
Investor by the Company pursuant to section 2 may not be
transferred or assigned by an Investor except in a private sale
to a transferee or assignee of not less than 100,000 shares of
the Registrable Securities and: (a) the Investor agrees in
writing with the transferee or assignee to assign such rights,
and a copy of such agreement is furnished to the Company within a
reasonable time after such assignment, (b) the Company is, within
a reasonable time after such transfer or assignment, furnished
with written notice of the name and address of such transferee or
assignee and the securities with respect to which such
registration rights are being transferred or assigned, (c)
immediately following such transfer or assignment the further
disposition of such securities by the transferee or assignee is
restricted under the 1933 Act and applicable state securities
laws, (d) at or before the time the Company receives the written
notice contemplated by clause (b) of this sentence the transferee
or assignee agrees in writing with the Company to become a party
to and be bound by this Agreement, (e) such transfer shall have
been made in accordance with the applicable requirements of the
Securities Purchase Agreement, (f) such transferee shall be an
"accredited investor" as that term defined in Rule 501 of
Regulation D under the 1933 Act, and (g) if the assignment occurs
after the date of effectiveness of the Registration Statement
required to be filed pursuant to section 2.1, the transferee or
assignee agrees to pay all reasonable expenses of amending or
supplementing such Registration Statement to reflect such
assignment. Any such transferee or assignee shall be deemed to
be an Investor hereunder, in the place and stead of the
transferring or assigning Investor with respect to the
Registrable Securities so transferred and assigned, from and
after the effective date of such permitted transfer, assignment
and assumption.
AMENDMENT OF REGISTRATION RIGHTS. This
Agreement may be amended and the observance thereof may be waived
(either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of
the Company and Investors who hold a majority of the Registrable
Securities. Any amendment or waiver effected in accordance with
this section 10 shall be binding on each Investor and the
Company.
MISCELLANEOUS.
Holder. A person or entity is deemed t
be a holder of Registrable Securities whenever such person or
entity owns of record such Registrable Securities. If the
Company receives conflicting instructions, notices or elections
from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act on the basis of
instructions, notices or elections received from the registered
owner of such Registrable Securities.
Notices. Any notices or other
communications required or permitted to be given under this
Agreement shall be sent by registered or certified mail, return
receipt requested, or delivered personally or by facsimile or
courier and shall be effective five days after being placed in
the mail, if mailed, or on receipt, if delivered personally or by
courier or facsimile, in each case properly addressed to the
party to receive such notice. The addresses for such
communications shall be:
If to the Company:
47071 Bayside Parkway
Fremont, CA 94538
Telephone: (510) 226-4000
Facsimile: (510) 226-4091
Attention: Legal Department
With copy to:
Shartsis, Friese & Ginsburg
One Maritime Plaza, 18th Floor
San Francisco, CA 94111
Telephone: (415) 421-6500
Facsimile: (415) 421-2922
Attention: Steven O. Gasser, Esq.
If to the Buyer, at the addresses on the signature
page of this Agreement.
Each party shall provide notice to the other party of
any change in address.
Governing Law. This Agreement shall be
governed by and construed and interpreted in accordance with the
laws of the State of Delaware without regard to the principles of
conflict of laws.
Severability. If any provision of this
Agreement shall be invalid or unenforceable in any jurisdiction,
such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision
of this Agreement in any other jurisdiction.
Entire Agreement. This Agreement and t
Securities Purchase Agreement together constitute the entire
agreement of the parties and supersede all prior or
contemporaneous negotiations, correspondence, understandings and
agreements, written or oral, regarding the subject matter hereof.
Successors and Assigns. Subject to
section 9, this Agreement shall inure to the benefit of and bind
the parties hereto and their respective permitted successors and
assigns.
Headings; References. The headings in
this Agreement are for convenience of reference only and are not
part of this Agreement. References to sections herein refer to
sections of this Agreement, except as otherwise indicated. The
singular includes the plural and vice versa, as the context may
require.
Counterparts. This Agreement may be
executed in two or more identical counterparts, all of which
shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and
delivered to the other party. If any signature page is delivered
by facsimile transmission, the party using such means of delivery
shall cause four additional original executed signature pages to
be physically delivered to the other party within five days of
the execution and delivery hereof.
Further Assurances. Each party shall d
and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as the other
party may reasonably request to carry out the intent and
accomplish the purposes of this Agreement and the consummation of
the transactions contemplated hereby.
IN WITNESS WHEREOF, the parties have caused this
Registration Rights Agreement to be duly executed as of day and
year first above written.
COMPANY:
SYQUEST TECHNOLOGY,
INC.
By:/s/
Name: Michael Clemens
Its: Vice-President,
Financial
Services and Treasurer
BUYER:
JARDINE MATHESON & CO.,
LIMITED
By: /s/
Name: N.B. Venter
Its: Director
Address:
JARDINE TRANSPORT
SERVICES
24th Floor, Devon House
979 King's Road
Hong Kong
Attention: Ben Williams
Facsimile: 852-285
69635
Telephone: 852
92937
Exhibit 10.2
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (the "Agreement")
dated May 1, 1997, is entered into by and between SyQuest
Technology, Inc., a Delaware corporation (together with its
successors, "SyQuest"), and New Enterprises Associates VII L.P.,
a Delaware limited partnership, (together with its successors,
"NEA").
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:
5% Convertible Preferred Stock. SyQues
agrees to issue and sell to NEA, and NEA agrees to purchase
from SyQuest, on the Closing Date specified in Section 2
hereof, 50,000 shares of SyQuest's 5% Cumulative
Convertible Preferred Stock, Series 4, stated value $100
per share (the "Preferred Shares"), having the terms and
conditions set forth in the Certificate of Designation
which is attached hereto as Annex A at a purchase price per
share equal to one hundred dollars ($100), for an aggregate
purchase price of $5,000,000.
Warrant. In consideration of the
purchase of the Preferred Shares by NEA, SyQuest will issue
to NEA on the Closing Date specified in Section 2 hereof, a
warrant having the terms set forth in the warrant
certificate attached hereto as Annex B (the "Warrant") to
purchase up to 5,000,000 shares (subject to adjustment) of
SyQuest's Common Stock, par value $.001 per share (the
"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 NEA 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 May 1, 1997, or at such other date and
time as NEA 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
NEA at the address set forth in Section 13 hereof.
At the Closing, the following deliveries shall be
made:
Preferred Shares. SyQuest shall delive
the certificate representing the Preferred Shares, duly
registered on the books of SyQuest in the name of NEA,
against payment by NEA 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 NEA. Such
certificate shall be substantially in the form attached
hereto as Annex B.
Closing Documents. The closing documen
required by Sections 7 and 8 shall be delivered to NEA and
SyQuest, respectively.
Delivery Notice. An executed copy of t
delivery notice in the form attached hereto as Annex C
shall be delivered to NEA.
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 NEA 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 Certificate) as follows:
SyQuest has been duly incorporated and
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 (including the issuance of the Preferred
Shares) 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 NEA, 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 (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 Certificate 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 Certificate nor
the performance by SyQuest of any of its obligations
hereunder or thereunder:
violates, conflicts with, results in
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 subsid-
iaries 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 Asso-
ciation 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 400,000
Preferred Shares for issuance pursuant to the terms hereof.
SyQuest has recommended at its 1997 Annual 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
120,000,000, and if the Amendment is approved SyQuest
intends to reserve for issuance to NEA 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 NEA 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
non-assessable;
will be free and clear of any securit
interests, liens, claims or other encumbrances (other
than those resulting solely from actions by NEA); 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 pendin
or, to the best knowledge of SyQuest, threatened action,
suit, proceeding or investigation before any court, gov-
ernmental 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 NEA.
SyQuest has timely filed all filings wi
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 Preferred
Shares, the Warrant and the Converted Stock to NEA pursuant
to this Agreement and the Warrant Certificate will, subject
to compliance by NEA 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 are applicable and SyQuest is in full compliance
therewith and NEA is permitted to resell the Common Stock
thereunder.
Capitalization. The authorized, issued
and outstanding capital stock of the Company were as of the
dates set forth in the Proxy Statement as described in the
Proxy Statement, and as of the date hereof is substantially
the same. As of March 3, 1997, all the outstanding shares
of Commons 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 NEA
true and correct copies of the Certificate of Incorporation
and the Company's By-laws, as in effect on the date hereof
(the "Bylaws").
3.A Registration Provisions.
a. SyQuest shall, as promptly as
practicable hereafter and at its own expense, file a reg-
istration statement (the "Registration Statement") under
the Securities 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 July 1, 1997 (or August 1, 1997,
if the SEC reviews such Registration Statement) and shall
amend such Registration Statement from time to time upon
the request of NEA 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 Securities Act; provided that NEA
shall have provided such information and cooperation in
connection therewith as SyQuest may reasonably request.
b. SyQuest will use its best efforts to: (
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 NEA or (C) such time as all of the
Covered Securities held by NEA can be sold by NEA or any of
its affiliates within a three-month period without
compliance with the registration requirements of the
Securities Act pursuant to Rule 144 under the Securities
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 Securities Act with respect to the
disposition of all Covered Securities by NEA 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 NEA 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 NEA, 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 NEA upon reque
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 NEA or any of its
affiliates pursuant to the Registration Statement.
d. With a view to making available to NEA
and its affiliates the benefits of Rule 144 and Form S-3
under the Securities 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 third anniversary of
the issuance of each Covered Security or (B) such date as
all of the Covered Securities shall have been resold by NEA
or any of its affiliates; (ii) maintain its status as a Re-
porting 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 NEA upon request, as long as
NEA owns any Covered Securities, (A) a written statement by
SyQuest that it has complied with the reporting re-
quirements of the Securities Act and the Exchange 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 NEA and its affili-
ates 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 NEA thereof by telephone and in writing.
Upon receipt of such notification, NEA 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 Regis-
tration Statement as promptly as practicable and will take
such other steps as may be required to permit sales of the
Covered Securities thereunder by NEA and its affiliates in
accordance with applicable federal and state securities
laws. SyQuest will promptly notify NEA 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 NEA 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 30 days after the
end of the preceding Blackout Period.
Upon the commencement of a Blackout Period pursuant
to this Section 3A, NEA will immediately notify SyQuest of
any contracts to sell any Covered Securities (each a "Sales
Contract") that NEA 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 NEA 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 NEA 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 NEA 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 NEA 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 NEA
Indemnified Party may incur arising out of or in connection
with NEA's breach or alleged breach of any such Sales
Contract, and SyQuest shall reimburse each NEA Indemnified
Party for any reasonable costs or expenses (including
reasonable legal fees) incurred by such party in investi-
gating or defending any such Proceeding (collectively, the
"Indemnification Amount"); provided, however, that each NEA
Indemnified Party shall take all actions reasonably
necessary or appropriate to mitigate such Indemnification
Amount; and provided further, however, that the Indem-
nification 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 NEA 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 NEA or any of its affiliates
within three Trading Days of the end of the Blackout Peri-
od), 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.
Representations and Warranties of NEA. NEA 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 NEA have been duly authorized by all
requisite corporate action and no further consent or
authorization of NEA, its Board of Directors or its
stockholders is required. This Agreement has been duly
executed and delivered by NEA and, when duly authorized,
executed and delivered by SyQuest, will be a valid and
binding agreement enforceable against NEA 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.
NEA 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, NEA 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, NEA understands
that the Preferred Shares, 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. NEA 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.
NEA 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. NEA 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. NEA is an
"accredited investor" as that term is defined in Regulation
D. NEA is able to bear the economic risk of NEA's
investment hereunder.
Reliance on Exemptions. NEA understand
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 NEA's compliance with, the representations,
warranties, agreements, acknowledgments and understandings
of NEA set forth herein in order to determine the
availability of such exemptions and the eligibility of NEA
to acquire Preferred Shares, the Warrant and Derivative
Shares.
Sophistication. A principal executive
officer of NEA who is acting on behalf of NEA 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 NEA contemplated by this
Agreement and has the capacity to protect NEA's interests.
Information. NEA has been furnished wi
all materials and information relating to the business,
management, properties, financial condition, operations,
affairs and prospects of the 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 NEA. NEA has been afforded the opportunity to
ask all questions of the SyQuest that NEA considered
appropriate or desirable to ask in connection with this
Agreement and has received answers to such inquiries that
NEA considers satisfactory. NEA understands that its
investment in the Preferred Shares, the Warrant and
Derivative Shares involves and will involve a high degree
of risk. NEA 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. NEA understands th
(i) except as otherwise provided in section 3.A, 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) NEA shall have
delivered to the SyQuest an opinion of counsel, reasonably
satisfactory in form, scope and substance to the 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 the 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 NEA 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 Exchange 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 NEA 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 NEA
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 NEA
with copies of all SEC Filings.
If the Amendment is not approved on or
prior to July 1, 1997, and NEA 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 Certificate), 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 15% 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 NEA pursuant to this
Section 5(c) because of a failure to deliver Converted
Stock, the provisions of Section 10 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 NEA 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 SyQuest and NEA.
SyQuest will comply with the terms and
conditions of the Preferred Shares and of the Warrant as
set forth in the Warrant Certificate (as duly amended from
time to time by the parties hereto).
After the Amendment is approved and for
so long 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 NEA the number of shares of
Common Stock required to effect such conversion and
exercise. At the 1997 Annual Meeting of SyQuest's
stockholders, SyQuest will recommend to its stockholders
the Amendment, and SyQuest shall use its best efforts to
obtain stockholder approval of the Amendment.
As soon as such information is availabl
(but in no event later than the date of filing of SyQuest's
quarterly report on Form 10-Q for the period ended March
31, 1997), SyQuest shall deliver to NEA a written notice
stating the number of outstanding shares of Common Stock as
of March 31, 1997.
SyQuest shall not issue any Preferred
Shares to any person other than NEA except that SyQuest may
issue Preferred Shares pursuant to the Certificate of
Designations if issued within 34 days from the date the
Certificate of Designations is filed with the Delaware
Secretary of State, except that SyQuest may issue Preferred
Shares as dividends as provided in the Certificate of
Designations.
If the Amendment is approved by SyQuest
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 Securities Exchange Act of
1934, as amended (the "Exchange Act")).
Covenants of NEA. NEA hereby covenants and
agrees with SyQuest as follows:
Neither NEA nor any of its affiliates n
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 Securities Act or pursuant to an available exemption
therefrom.
NEA will agree not to convert its Pre-
ferred Stock for a maximum period of 60 days following a
successful public offering of the Common Stock in excess of
$25 million in a single transaction, if all other convert-
ible security holders are bound by the same restriction.
6A. Legend. NEA 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 SECURI-
TIES 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
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 the SyQuest with an opinion of counsel, in form,
substance and scope reasonably acceptable to the 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 the SyQuest with assurances reasonably
satisfactory to the SyQuest that the same may be publicly sold
pursuant to Rule 144 without restriction.
Conditions Precedent to NEA's Obligations. The
obligations of NEA 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 NEA:
On the Closing Date, on each Conversion
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 NEA 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, on each Conversion
Date and on each Exercise Date, SyQuest shall have
delivered to NEA an opinion of counsel reasonably
satisfactory to NEA, 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 and
paragraph (h) of Section 5 hereof (provided that the
opinion delivered on the Closing Date need not confirm the
matters covered in paragraph (h) of Section 5 hereof);
provided, however, that no such opinion delivered in
respect of any Exercise Date or Conversion Date shall be
required to cover the matters set forth in paragraph (h) of
Section 3 hereof.
Prior to the Closing, the Certificate o
Designation will have been filed 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 NEA the opinion of counsel reasonably satis-
factory to NEA, 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 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 NEA 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 Exercis
Date (as defined in the Warrant Certificate), (i) the
representations and warranties made by NEA in this
Agreement shall be true and correct, and (ii) NEA 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 NEA dated such date and to such
effect.
Fees and Expenses. SyQuest agrees to pay NEA'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, on the Closing Date, on any
Conversion Date or any Exercise Date, SyQuest shall fail to
deliver the Warrant, Preferred Shares or Converted Stock to NEA
required to be delivered pursuant to this Agreement for any
reason other than the failure of any condition precedent to
SyQuest's obligations hereunder or the failure by NEA to comply
with its obligations hereunder, then SyQuest shall:
hold NEA 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 NEA for all of its reasonable out-
of-pocket expenses, including fees and disbursements
of its counsel, incurred by NEA 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 NEA except as provided in the Warrant Certificate,
this Section 10 and Section 11 hereof.
Indemnification.
Indemnification of NEA. SyQuest hereby
agrees to indemnify NEA 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 "NEA 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 statemen
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 misleading by SyQuest or
any of its affiliates or any person acting on its or
their behalf ;
any of the representations or warran-
ties made by SyQuest herein being untrue or incor-
rect; and
any breach or non-performance by
SyQuest of any of its covenants, agreements or obli-
gations under this Agreement and the Warrant
Certificate;
and SyQuest hereby agrees to reimburse each NEA Indemnified Party
for any reasonable legal or other expenses incurred by such NEA
Indemnified Party in investigating or defending any such Pro-
ceeding; 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 willful misconduct of
NEA in connection therewith.
Indemnification of SyQuest. NEA 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 statemen
of a material fact by NEA 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 misleading by NEA or any of its affiliates
or any person acting on its or their behalf:
any of the representations or
warranties made by NEA herein being untrue or
incorrect; and
any breach or non-performance by NEA
any of its covenants, agreements or obligations under
this Agreement and the Warrant Certificate;
and NEA 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 willful 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 th
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 In-
demnifying 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 state-
ment 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 Preferred Shares, the Warrant and any Converted Stock
issuable hereunder.
Notices. all communications hereunder shall be in
writing, and
if sent to NEA, shall be delivered by
hand, sent by registered mail or transmitted and confirmed by
facsimile to NEA at:
New Enterprises Associates VII, L.P.
2490 Sand Hill Road
Menlo Park, California 94025
Attention: Mark Perry
Telephone: (415) 854-9499
Facsimile: (415) 854-9397
with a copy to:
Wilson, Sonsini, Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304
Attention: Robert Latta
Telephone: (415) 493-9300
Facsimile: (415) 493-6811
if sent to SyQuest, shall be delivered
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: Douglas L. Hammer
Telephone: (415) 421-6500
Facsimile: (415) 421-2922
Miscellaneous
This Agreement may be executed in one o
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 th
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 a
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,
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.
On or before May 7, 1997, SyQuest shall
file a certificate of correction (without further consent by or
agreement from NEA) to correct errors to the Certificate of
Designations as set forth in Annex D hereto.
At SyQuest discretion, it may take
whatever steps it deems necessary to amend (without further
consent by or agreement from NEA) the Certificate of Designations
to increase the number of authorized shares of 5% Cumulative
Convertible Preferred Stock, Series 4 from four hundred thousand
(400,000) shares to six hundred thousand (600,000) shares.
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 Series 4 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, provided
further that Company may not otherwise hereafter, for so long as
any Series 4 Preferred Shares are outstanding, authorize
additional or other capital stock that is of senior or equal rank
to the Series 4 Preferred Shares, in respect of the preferences
as to dividends and distributions and payments on the
liquidation, dissolution and winding up of the Company.
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:
/s/_________________________________________
Name: Edward L. Marinaro
Title: Chairman of the Board
NEW ENTERPRISES ASSOCIATES VII
By: /s/
Name: Mark Perry
Title: General Partner
SCHEDULE OF EXCEPTIONS
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, and (b) 5% Cumulative
Convertible Preferred Stock, Series 3, may vary based on the
average closing prices of the Common Stock for the five days
preceding conversion. In addition to the issued and outstanding
Common Stock listed in section 3.l., as of the following dates,
the Company is deemed to have issued shares of its Common Stock
to the following entities in connection with their agreement to
exchange certain trade debt for such Common Stock and have agreed
to register such Common Stock:
NO. OF
NAME DATE OF EXCHANGE SHARES
Seksun Precision March 19, 1997 141,957
Engineering Limited
Tongkah Electronics March 26, 1997 3,506,874
SDN.BHD.
Silicon Systems, Inc. March 26, 1997 811,017
The Company is also committed to issue and additional 564,582
shares of Common Stock to Jardine Matheson & Co. and an
additional 600,000 shares of Common Stock to NIDEC Corporation in
connection with the exchange by those entities of debt for Common
Stock.
Annex D
The Certificate of Designations shall be corrected by the
filing of a certificate of correction:
To substitute a comma in place of the semicolon in third
sentence of Paragraph 1.
To revise the sentence beginning Paragraph 2 to read as
follows: "The holders of the Series 4 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 4 Preferred Shares (the "Purchase
Agreement"), to convert the Series 4 Preferred Shares into shares
of the common stock of the Company, $.001 par value, as such
stock now exists or may be changed from time to time hereafter
("Common Stock"), on the following terms and conditions:"
To change reference in Paragraph 2(h) to the singular
"warrant" to the plural "warrants" and to delete the words "that
certain" with regard to the warrant, to substitute for the word
"Fletcher" the phrase "holders of Series 4 Preferred Shares", to
substitute the word "Purchase" for the word "Subscription" and to
change the reference to paragraph 2(j) to 2(i). Paragraph 2(h)
shall thereafter read as follows:
(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 4 Preferred Shares and the
exercise of the Warrants to purchase Common Stock (the
"Warrants") issued by the Company to the holders of the
Series 4 Preferred Shares pursuant to the Purchase
Agreement on the date of initial issuance of the Series 4
Preferred Shares and (2) issuable on conversion of all
remaining outstanding Series 4 Preferred Shares
(determining such number as if such Series 4 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 4 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 Nasdaq Stock Market 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 4
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 4
Preferred Shares identified in each such Subject Conversion
Notice. 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
Nasdaq Stock Market 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 4 Preferred Shares in excess of the
19.9% Limit.
May 30, 1997
Combination, Inc.
c/o ISSC
310 Madison Avenue
New York, New York 10017
Attention: Moishe. Bodner
Re: SyQuest Technology, Inc.
Ladies and Gentlemen:
We have acted as counsel for SyQuest Technology,
Inc., a Delaware corporation (the "Company"), in connection with
the Securities Purchase Agreement dated May 5, 1997 (the
"Agreement"), between you and the Company and the transactions
contemplated thereby. The Agreement, the schedules and exhibits
attached to the Agreement, the Certificate of Designations,
Preferences and Rights of 5% Cumulative Convertible Preferred
Stock, Series 4 (the "Certificate of Designations") of the
Company (in the form attached to the Agreement as Annex A), and
the Warrant Certificate (in the form attached to the Agreement as
Annex B) are collectively called herein the "Documents."
Capitalized terms used and not otherwise defined herein have the
respective meanings ascribed to such terms in the Documents.
This opinion is furnished to you pursuant to sections 7.b and 7.d
of the Agreement.
For purposes of rendering this opinion, we have
examined the following documents:
Restated Certificate of Incorporation of the
Company filed with the Delaware Secretary of State on January 24,
1992, and an amendment thereof so filed on September 27, 1996
(together with the Certificates described in the following
paragraphs 2, 3, 4, 5 and 6, the "Certificate of Incorporation");
Certificate of Designations, Preferences and
Rights of 7% Cumulative Convertible Preferred Stock, Series 1,
filed with the Delaware Secretary of State on June 7, 1996, and
Certificates of Correction thereof filed with the Delaware
Secretary of State on June 10 and 14, 1996;
Certificate of Designations, Preferences and
Rights of Convertible Preferred Stock, Series 1, filed with the
Delaware Secretary of State on October 9, 1996, and Amendments
thereof filed with the Delaware Secretary of State on October 15
and 31 and November 1, 1996;
Certificate of Designations, Preferences and
Rights of 5% Cumulative Convertible Preferred Stock, Series 2,
filed with the Delaware Secretary of State on October 9, 1996;
Certificate of Designations, Preferences and
Rights of 5% Cumulative Convertible Preferred Stock, Series 3,
filed with the Delaware Secretary of State on April 1, 1997;
Certificate of Designations, Preferences and
Rights of 5% Cumulative Convertible Preferred Stock, Series 4,
filed with the Delaware Secretary of State on April 28, 1997;
The Bylaws of the Company, as amended to date
(the "Bylaws");
Pertinent minutes of the meetings and
resolutions of the Board of Directors the Company;
The Documents, as executed by the Company;
Certificate of Status-Foreign Corporation,
dated April 28, 1997, issued by the California Secretary of State
for the Company;
Letter of Tax Status, dated April 28, 1997,
issued by the California Franchise Tax Board for the Company;
Certificate of Good Standing, dated April 28,
1997, issued by the Delaware Secretary of State for the Company;
and
The leases and other agreements filed with the
SEC with the Company's annual report on Form 10-K for the year
ended September 30, 1996, or with any subsequent SEC Filing, as
listed on the list enclosed herewith.
We have also made such legal and factual inquiries
and examinations of documents, certificates, records and matters
of law as we have deemed necessary as a basis for our opinion set
forth below. We have assumed the genuineness and authenticity of
all signatures and the authenticity of all documents submitted to
us as originals, the conformity to the authentic originals of all
documents submitted to us as copies and the accuracy,
completeness and authenticity of certificates of public officials
and of all corporate records and information made available to us
by the Company. For purposes of rendering the opinion expressed
herein, we have also relied generally upon certificates of public
officials and statements and certificates of officers of the
Company, and we have assumed that any certificates dated as of an
earlier date continue to be accurate as of the date of this
opinion.
In making our examination of agreements executed by
parties other than the Company, we have assumed that each such
party has complied with all legal requirements that are
applicable to it and that each such party has complied with all
legal requirements pertaining to its status as such status
relates to its rights to enforce such agreements against the
other parties thereto. We have also assumed that any natural
person who is involved on behalf of the Company has sufficient
legal capacity to enter into and perform the Documents or to
carry out such person's role in the transactions contemplated by
the Documents.
In rendering the following opinion, we have assumed,
without verification, the following:
All representations, warranties and covenants
in the Documents are accurate and complete, except that we have
not assumed the accuracy and completeness of any statement of law
set forth in a representation or warranty in any of the
Documents.
There are no agreements or understandings
between the parties, written or oral, other than the Documents,
and there is no usage of trade or course of prior dealing between
the parties, that would, in any case, define, supplement or
qualify any provision of the Documents.
Combination, Inc., a company organized under
the laws of the Turks and Caicos ("Combination") has duly
authorized, executed and delivered the Agreement and will comply
with the obligations under the Documents.
The parties to the Documents and any agent
acting for either of them in connection with the transactions
contemplated by the Documents have acted in good faith and
without notice of any defense against the enforcement of any
rights created by, or created as a part of, the transactions
contemplated by the Documents.
Combination will act in accordance with, and
will not take, suffer or permit any action that is prohibited by,
the terms and conditions of the Documents.
There has not been any mutual mistake of fact,
misunderstanding, fraud, duress or undue influence.
The conduct of the parties to the Documents and
the transactions contemplated thereby have complied with all
requirements of good faith, fair dealing and conscionability.
The execution, delivery and performance of the
Documents do not and will not constitute or result in a change in
control of the Company as that term is used in Rule 4460(i)(1)(B)
of the Rules of the National Association of Securities Dealers,
Inc.
The execution, delivery and performance of the
Documents do not and will not constitute or result in an issuance
of Common Stock for less than the greater of book or market value
of the Common Stock as those terms are used in Rule 4460(i)(1)(D)
of the Rules of the National Association of Securities Dealers,
Inc.
The Common Stock is and will continue to be
qualified in all respects for listing and trading on, and will
continue to be duly listed and traded on, the Nasdaq National
Market.
Notwithstanding that the Agreement provides
that the Documents are to be governed by and construed in
accordance with the internal laws of the State of California, a
court nevertheless would apply the internal laws of the State of
California and the Delaware General Corporation Law.
Although we have acted as counsel for the Company in
connection with the negotiation, preparation and execution of the
Documents, we have only recently been engaged by the Company and
we are not familiar with all of the agreements and contracts of
the Company. Whenever any statement herein is qualified by
"known to us," "to the best of our knowledge" or any similar
phrase, it is intended to indicate that during the course of our
representation of the Company, no information that would give us
current actual knowledge of the inaccuracy of such statement has
come to the attention of those attorneys in the firm who have had
an active involvement in rendering the legal services undertaken
by this firm in representing the Company in connection with the
negotiation, preparation and execution of the Documents. We have
not, however, undertaken any independent investigation to
determine the accuracy of any of such statements, and any limited
inquiry undertaken by us during the preparation of this opinion
should not be regarded as such an investigation; no inference as
to our knowledge of any matters bearing on the accuracy of any of
such statements should be drawn from the fact of our
representation of the Company.
Based on the foregoing, and subject to the
assumptions and qualifications set forth below, we are of the
opinion that, except as set forth in the Schedule of Exceptions:
The Company has been duly incorporated and is validly
existing in good standing under the laws of Delaware.
The execution, delivery and performance of the
Documents by the Company have been duly authorized by all
requisite corporate action and no further consent or
authorization of the Company, its Board of Directors or its
stockholders is required, except that the Company can not validly
reserve for issuance or issue all of the Converted Stock unless
and until an amendment (the "Amendment") to the Company's
Certificate of Incorporation, sufficiently increasing the
authorized number of shares of Common Stock, is approved by the
Board of Directors and the stockholders of the Company and all
appropriate or necessary actions are taken to cause such
amendment to become effective. The Documents have been duly
executed and delivered by the Company and will be valid and
binding and enforceable against the Company in accordance with
their respective terms, except that the Company can not validly
reserve for issuance or issue all of the Converted Stock unless
and until the Amendment becomes effective.
The Company has full corporate power and authority
necessary to execute and deliver the Documents and to perform its
obligations thereunder, except that the Company can not validly
reserve for issuance or issue all of the Converted Stock unless
and until the Amendment becomes effective.
No consent, approval, authorization or order of any
court, governmental agency or other body is required for
execution and delivery by the Company of the Documents or the
performance by the Company of any of its obligations thereunder,
except that (i) the Company can not validly reserve for issuance
or issue all of the Converted Stock unless and until the
Amendment becomes effective, and (ii) we express no opinion on
the securities or blue sky laws of any state or territory of the
United States or any jurisdiction outside the United States or as
to Delaware Organizations not governed by the Delaware General
Corporation or Partnership Law.
Other than the Company not being able validly to
reserve for issuance or issue all of the Converted Stock unless
and until the Amendment becomes effective, neither the execution
and delivery by the Company of the Documents nor the performance
by the Company of any of its obligations 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 (i) the
Certificate of Incorporation or the Bylaws, (ii) any
decree, judgment, order or determination known to us of any
court, governmental agency or body, or arbitrator having
jurisdiction over the Company or any of its properties or
assets, (iii) any law, treaty, rule or regulation of any
governmental agency or body having jurisdiction over the
Company or any of its properties or assets, (iv) the terms
of any bond, debenture, note or other evidence of
indebtedness known to us, or any agreement, stock option or
other similar plan, indenture, lease, mortgage, deed of
trust or other instrument known to us (except that we
express no opinion with regard to the terms of section 4(i)
of that certain Securities Purchase Agreement dated as of
May 31, 1996, by and between the Company and GFL
Performance Fund Ltd., GFL Advantage Fund Ltd. and GFL
Portfolio B), to which the Company is a party, by which the
Company is bound, or to which any of the properties or
assets of the Company is subject, or (v) any rules of the
National Association of Securities Dealers, Inc. applicable
to the Company or the transactions contemplated by the
Agreement; or
results in the creation or imposition of any
lien, charge or encumbrance on any Preferred Shares, the
Warrant, any Warrant Shares or any Converted Stock or any
of the properties or assets of the Company.
The Company has validly reserved 400,000 Preferred
Shares for issuance pursuant to the Certificate of Designations,
and at such time, if ever, as the Amendment becomes effective,
the Company has been authorized by its Board of Directors to
reserve such number of shares of Common Stock as the Company may
be required to issue pursuant to the Certificate of Designations
and 5,000,000 shares of Common Stock for issuance pursuant to the
Warrant. Each Preferred Share, and at such time, if ever, as the
Amendment becomes effective, each share of Converted Stock when
issued to Combination in accordance with the Documents:
will have been duly and validly authorized and
issued and will be fully paid and nonassessable;
to the best of our knowledge, will be free and
clear of any security interests, liens, claims or other
encumbrances suffered or permitted by the Company; and
to the best of our knowledge, will not have
been issued or sold in violation of any preemptive or other
similar rights of the holders of any securities of the
Company.
To the best of our knowledge, except as disclosed in
the Documents or the SEC Filings, there is no pending or
threatened action, suit, proceeding or investigation before any
court, governmental agency or body, or arbitrator having
jurisdiction over the Company that would materially affect the
execution by the Company of the Documents or the performance by
the Company of its obligations under the Documents.
The Preferred Shares and the Warrant may be issued to
you pursuant to the Agreement without registration under the 1933
Act, subject to the filing of Form D pursuant to Regulation D
under the 1933 Act with the Securities and Exchange Commission,
and the Converted Stock may be issued to you without registration
under the 1933 Act in accordance with the Certificate of
Incorporation and the Certificate of Designations.
In rendering the foregoing opinion, we make no
representations and express no opinion as to:
The enforceability of indemnification
provisions which purport to indemnify any party against, or to
exonerate or release any party from, (a) liability for said
party's wrongful or negligent acts, (b) liability for attorneys'
fees and expenses arising from or related to such liability or
actions or (c) liability under the Securities Act or any other
state, Federal or foreign securities law. In this regard, we
note that California law and Federal securities laws may prohibit
such indemnification or exoneration.
Compliance by the Company with applicab
disclosure requirements and anti-fraud provisions of the
Securities Act, the Exchange Act and any applicable state or
foreign securities law.
The enforceability of any choice of law
choice of forum or choice of venue provision in the Documents.
The foregoing opinion is further qualified to the
extent that the validity or enforceability of any provision of
the Documents is subject to or affected by:
general principles of equity (regardless of
whether such enforceability is considered in a proceeding in
equity or at law), including, without limitation, judicial
principles limiting the availability of specific performance,
injunctive relief and other equitable remedies;
bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting creditors'
rights, including, without limitation, laws relating to
fraudulent transfers or conveyances, preferences and equitable
subordination;
limitations on the enforceability of contracts
or obligations by entities (other than the Company) deemed to be
doing business in the State of California that have failed to
qualify to do business in the State of California or have failed
to file tax returns required to be filed with, or pay taxes
required to be paid to, the California Franchise Tax Board or
whose authority to conduct business in the State of California
has been suspended, forfeited or otherwise restricted;
limitations on the enforceability of a
requirement that any provision of the Documents may be amended or
waived only in writing, to the extent that an oral agreement
modifying provisions of such agreement has been performed;
limitations on the effectiveness of
"severability" provisions depending on the materiality of an
unenforceable provision to the Documents as a whole and to the
undertakings of the parties thereunder;
the effect of judicial decisions that have held
that certain provisions of agreements are unenforceable where a
party's enforcement of such provisions under the circumstances
would violate that party's implied covenant of good faith and
fair dealing; and
the effect of judicial decisions interpreting
contract terms that provide for repayment of, or indemnification
for, attorneys' fees in a manner that could limit recovery to
fees reasonable under the circumstances and to allow recovery of
fees by the prevailing party.
The opinion set forth herein is as of the date of
this opinion and we disclaim any undertaking to update this
opinion based on any changes in fact or law of which we may
become aware.
We are admitted to practice law only in the State of
California. We express no opinion on any laws (including any
laws relating to conflicts of laws) other than the Federal laws
of the United States of America, the Delaware General Corporation
Law and the laws of the State of California. The foregoing
opinion is based solely on such laws.
This opinion is for your benefit and may not be
relied on by any other person or organization, or by you in any
other context or for any other purpose, nor may copies hereof be
delivered or anything herein otherwise be communicated to any
other person, other than your legal counsel, without our prior
written consent.
Very truly your
SHARTSIS, FRIESE
& GINSBURG LLP
By
Steven
ANNEX 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 _, 2004 (the
"Termination Date") to purchase shares of common stock, par value
$.001 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 Five
Million 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.
This Warrant was issued on May _, 1997 (the "Closing
Date"), pursuant to the Securities Purchase Agreement dated May
_, 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 _________ 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 July 1,
1997 (provided that such condition need not be satisfied until
August 1, 1997 if the Securities and Exchange Commission reviews
the Registration Statement), and (ii) on the day after the
Issuer's 1997 Annual Meeting of stockholders, but in any event
not later than June 1, 1997, the Issuer shall have the number of
duly authorized shares of Common Stock reserved for issuance to
Fletcher equal to the total number then issuable upon full
exercise of this Warrant and full conversion of the Preferred
Shares (as defined in the Subscription Agreement) and otherwise
is able to deliver shares of Common Stock upon such exercise or
conversion.
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 Exer-
cisable 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.
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 and any other Capital Stock (as
defined below) 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, not less
than 5,000,000 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.
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 Transac-
tion 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 Transac-
tion.
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 Expira-
tion 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 Commo
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 Transac-
tion 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: May 5, 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 HOLD
[ADDRESS]
By:
_____________________________
Name:
Title:
May _, 1997
ANNEX 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 99.1
CONTACT:
Henry Montgomery
Chief Financial Officer
SyQuest Technology, Inc.
510/226-4000
FOR IMMEDIATE RELEASE:
SYQUEST ADDS $24.5 MILLION IN NEW INVESTMENTS
FREMONT, Calif., May 8, 1997 -- SyQuest Technology Inc.,
(NASDAQ:SYQT), today announced that it has concluded agreements
for the investment of $24.5 million by current and new investors,
including $5 million from New Enterprise Associates (NEA), one of
the world's leading venture capital firms.
Under the terms of the NEA round of financing, the
investors are purchasing shares of SyQuest's five percent
cumulative convertible preferred stock, Series 4, at $100 per
share. The shares are convertible into SyQuest common stock at a
price equal to the 5-day average NASDAQ closing price prior to
the conversion, subject to designated cap and floor prices.
As part of the transaction, the company also will issue
seven-year warrants to purchase 24.5 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 designated cap and floor prices.
"NEA was the original lead venture capital investor when
SyQuest was formed in 1982," said Edward Marinaro, chairman of
the board. "We are particularly pleased to see NEA investing in
SyQuest again."
During the past year, SyQuest has concluded agreements
raising in excess of $112 million of additional equity, which
include $25.7 million of debt-to-equity conversion and $84.3
million of new cash investments.
Additionally, as of May 8, 1997, SyQuest had 43.5 million
shares of common stock issued and outstanding. Assuming
conversion of all preferred stock, exercise of existing warrants,
and fulfillment of other existing commitments, the company has
total stock obligations of 114.9 million common shares.
About SyQuest
SyQuest Technology, Inc., is a world leader in removable
cartridge hard drives. Founded in 1982, the company has an
installed base of more than three million drives and 16 million
cartridges worldwide. SyQuest is headquartered in Fremont,
California, and maintains manufacturing facilities in Fremont,
California, and Penang (Malaysia) with additional facilities in
Colorado, California, Europe and Asia. The company offers
removable cartridge hard drives for Windows, MS-DOS, PC-DOS,
UNIX, SGI, Sun OS and Apple Macintosh platforms. SyQuest (SYQT)
is publicly traded on NASDAQ's National Market System. See
SyQuest on the World Wide Web at 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 of
SyQuest Technology, Inc. All other brands or tradenames are the
property of their respective companies.
CONTACT:
Henry Montgomery
Chief Financial Officer
SyQuest Technology, Inc.
510/226-4000
FOR IMMEDIATE RELEASE:
SYQUEST CONCLUDES FINAL $8.5 MILLION FINANCING ROUND,
COMPLETING RECENT $33 MILLION FUND-RAISING EFFORT
Company Also Converts Additional $2.8 Million of Debt to
Equity
FREMONT, Calif., May 27, 1997 -- SyQuest Technology, Inc.
(NASDAQ:SYQT) today announced it has concluded an $8.5 million
round of financing, the final portion of a recent fund-raising
effort that has brought in $33 million from current and new
investors, including New Enterprise Associates. The round
completes a year-long refinancing that has raised a total of $120
million of new equity for the company.
The terms of the incremental $8.5 million are identical to
those associated with the now-completed $24.5 million in
financing announced May 8, 1997. The investors have purchased
shares of SyQuest's 5% Cumulative Convertible Preferred Stock,
Series 4, at $100 per share. These are convertible into SyQuest
common stock at a price equal to the five-day average of the
NASDAQ closing price prior to conversion, subject to designated
cap and floor prices. The company has also issued seven-year
warrants to purchase 7.5 million shares of SyQuest common stock,
exercisable at a price equal to 130% of the five-day average
NASDAQ closing price prior to exercise, subject to designated cap
and floor prices.
SyQuest also said that it has converted an additional $2.8
million of vendor indebtedness owed to two vendors into common
stock at the NASDAQ closing price on the dates of the
conversions. This raises the total of SyQuest's debt-to-equity
conversions in the past year to $28.5 million.
"We are highly gratified by the support of our investors
and vendors," said Edward Marinaro, SyQuest chairman of the
board. "We will now be turning our attention aggressively to the
next phase of our turnaround program."
About SyQuest
SyQuest Technology, Inc. is one of the world's leading
suppliers of removable cartridge hard drives. Headquartered in
Fremont, California, the company maintains manufacturing plants
in Fremont, Calif., and Penang, Malaysia, with additional
facilities in Colorado, California, Europe and Asia. SyQuest
offers removable cartridge hard drives for Apple, Windows, MS-
DOS, PC-DOS, UNIX, SGI and Sun OS platforms. The company's stock
is traded on NASDAQ's National Market System. See SyQuest on the
World Wide Web at 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 reports filed by SyQuest with the SEC,
including the reports on Forms 10-Q and 10-K.
###
SyQuest and the SyQuest logo are registered trademarks of SyQuest
Technology, Inc. All other brands or tradenames are the property
of their respective companies..
