<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
JTS
(Name of Issuer)
Common Stock
(Title of Class of Securities)
465940104
(CUSIP Number)
Mehul Patel
Cooley Godward LLP
Five Palo Alto Square, 3000 El Camino Real
Palo Alto, CA 94306-2155
(650) 843-5763
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
September 26, 1997
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with this statement [ ].
(A fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent of
the class of securities described in Item 1; and (2) has filed no amendment
subsequent thereto reporting beneficial ownership of five percent or less of
such class. (See Rule 13d-7).
Note: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom copies
are to be sent.
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter the disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") or otherwise subject to the
liabilities of that section of the Exchange Act but shall be subject to all
other provisions of the Exchange Act.
(Continued of following page(s))
Page 1 of 19 pages
<PAGE> 2
SCHEDULE 13D
CUSIP No. 465940104 PAGE 2 OF 19 PAGES
- --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
HELEN TRAMIEL
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
00
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 11,597,315
OWNED BY ----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 11,597,315
PERSON ----------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11,597,315 shares
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.32
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTION BEFORE FILLING OUT!
<PAGE> 3
SCHEDULE 13D
CUSIP No. 465940104 PAGE 3 OF 19 PAGES
- --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
JACK TRAMIEL
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 6,832,611
OWNED BY ----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 6,830,611
PERSON ----------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6,832,611
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
4.31
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTION BEFORE FILLING OUT!
<PAGE> 4
SCHEDULE 13D
CUSIP No. 465940104 PAGE 4 OF 19 PAGES
- --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
DAVID T. MITCHELL
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 4,607,696 INCLUDES 1,187,500 SHARES OF ISSUERS COMMON
OWNED BY STOCK EXCERCISABLE WITHIN 60 DAYS
EACH ----------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 4,607,696 INCLUDES 1,187,500 SHARES OF ISSUERS COMMON
WITH STOCK EXCERCISABLE WITHIN 60 DAYS
----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,607,696 INCLUDES 1,187,500 SHARES OF ISSUERS COMMON STOCK EXCERCISABLE
WITHIN 60 DAYS
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2.90
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTION BEFORE FILLING OUT!
<PAGE> 5
SCHEDULE 13D
CUSIP No. 465940104 PAGE 5 OF 19 PAGES
- --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
ALTA V LIMITED PARTNERSHIPS
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
00
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 3,896,550
OWNED BY ----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 3,896,550
PERSON ----------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,896,550
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2.46
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
- --------------------------------------------------------------------------------
*SEE INSTRUCTION BEFORE FILLING OUT!
<PAGE> 6
SCHEDULE 13D
CUSIP No. 465940104 PAGE 6 OF 19 PAGES
- --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
JEAN DELEAGE, GENERAL PARTNER OF ALTA V MANAGEMENT PARTNERS L.P.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
00
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 3,896,550
OWNED BY ----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 3,896,550
PERSON ----------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,896,550
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2.46
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
- --------------------------------------------------------------------------------
*SEE INSTRUCTION BEFORE FILLING OUT!
<PAGE> 7
SCHEDULE 13D
CUSIP No. 465940104 PAGE 7 OF 19 PAGES
- --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
SIRJANG L. TANDON
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 5,080,000
OWNED BY ----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 5,080,000
PERSON ----------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,080,000
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
3.20
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTION BEFORE FILLING OUT!
<PAGE> 8
SCHEDULE 13D
CUSIP No. 465940104 PAGE 8 OF 19 PAGES
- --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
LUNENBURG SA
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
00
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
California
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 1,911,673
OWNED BY ----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 1,911,673
PERSON ----------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,911,673
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.20
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
- --------------------------------------------------------------------------------
*SEE INSTRUCTION BEFORE FILLING OUT!
<PAGE> 9
SCHEDULE 13D
CUSIP No. 465940104 PAGE 9 OF 19 PAGES
- --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
D & U TANDON
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
00
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
California
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 1,013,336
OWNED BY ----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 1,013,336
PERSON ----------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,013,336
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
.64
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
00
- --------------------------------------------------------------------------------
*SEE INSTRUCTION BEFORE FILLING OUT!
<PAGE> 10
SCHEDULE 13D
CUSIP No. 465940104 PAGE 10 OF 19 PAGES
- --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
TANDON FAMILY PARTNERSHIP
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
00
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
California
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 4,350,000
OWNED BY ----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 4,350,000
PERSON ----------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,350,000
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2.74
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
- --------------------------------------------------------------------------------
*SEE INSTRUCTION BEFORE FILLING OUT!
<PAGE> 11
SCHEDULE 13D
CUSIP No. 465940104 PAGE 11 OF 19 PAGES
- --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
SIRJANG L. TANDON - GENERAL PARTNER OF TANDON FAMILY PARTNERSHIP
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
00
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
California
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 4,350,000
OWNED BY ----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 4,350,000
PERSON ----------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,350,000
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2.74
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
- --------------------------------------------------------------------------------
*SEE INSTRUCTION BEFORE FILLING OUT!
<PAGE> 12
SCHEDULE 13D
CUSIP No. 465940104 PAGE 12 OF 19 PAGES
- --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
J & S TANDON
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
00
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
California
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF ----------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 1,013,335
OWNED BY ----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 1,013,335
PERSON ----------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,013,335
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
.64
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
00
- --------------------------------------------------------------------------------
*SEE INSTRUCTION BEFORE FILLING OUT!
<PAGE> 13
SCHEDULE 13D
CUSIP No. 465940104 PAGE 13 OF 19 PAGES
- --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
LUNENBURG SA
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
00
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
California
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 500,000
OWNED BY ----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 500,000
PERSON ----------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
500,000
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
.31
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
00
- --------------------------------------------------------------------------------
*SEE INSTRUCTION BEFORE FILLING OUT!
<PAGE> 14
This Schedule 13D (the "Schedule 13D") is being filed by Helen Tramiel, Jack
Tramiel, David T. Mitchell, Alta V Management Partnership, Lunenburg SA, D&U
Tandon LLC, Sirjang L. Tandon, Tandon Family Partnership, J&S Tandon, LLC and
Lunenburg SA (the "Reporting Persons") who entered into a Stockholder's
Agreement dated as of September 25, 1997 in connection with a Securities
Purchase Agreement (the "Securities Purchase Agreement" dated as of September
25, 1997) between JTS Corporation (the "Company" as the "Issuer") and Amber
Arbitrage LDC, Jack Tramiel, Sirjang L. Tandon and David T. Mitchell (the
"Investors") relating to a proposed financing (the "Transaction") of the
Company, consisting of an aggregate of 28,802 shares of Series D Convertible
Preferred Stock (collectively the "Series D Shares" and each a "Series D Share")
of the Company. Amber Arbitrage is a private investment fund ("Amber"), Jack
Tramiel, David T. Mitchell, Sirjang L. Tandon are the management investors (the
"Management Investors").
ITEM 1. SECURITY AND ISSUER
Class of Securities: Common Stock
Issuer: JTS Corporation
Principal Address: 166 Baypointe Parkway
San Jose, CA 95134
Telephone: (408) 468-1800
ITEM 2. IDENTITY AND BACKGROUND
(a) Reporting Persons
i. Helen Tramiel ("HT")
ii. Jack Tramiel ("JT")
iii. David T. Mitchell ("DTM")
iv. Alta V Limited Partnership ("Alta V")
v. Sirjang L. Tandon (SLT)
vi. Lunenburg SA ("L1")
vii. D & U Tandon ("D&U")
viii. Tandon Family Partnership (Tandon)
ix. J & S Tandon "(J&S")
x. Lunenburg SA ("L2")
(b) Principal Business Address
i. 18331 Lexington Drive, Monte Sereno, CA 95030
ii. 18331 Lexington Drive, Monte Sereno, CA 95030
iii. JTS Corporation, 166 Baypointe Pkwy, San Jose, CA 95134
iv. One Embarcadero Ctr. Ste 4050, San Francisco, CA 94111
v. Tandon Associates, 2125-B Madera Rd, Simi Valley, CA 93036
vi. Tandon Associates, 2125-B Madera Rd, Simi Valley, CA 93065
vii. Tandon Associates, 2125-B Madera Rd, Simi Valley, CA 93065
viii. Tandon Associates, 2125-B Madera Rd, Simi Valley, CA 93065
ix. Tandon Associates, 2125-B Madera Rd, Simi Valley, CA 93065
x. Tandon Associates, 2125-B Madera Rd, Simi Valley, CA 93065
(c) Principal Occupation/Principal Business
i. Affiliate Spouse
ii. Director of JTS Corporation
iii. President/CEO of JTS Corporation
iv. Investments
<PAGE> 15
v. Investments
vi. Investments
vii. Investments
viii. Investments
ix. Investments
x. Investments
(d) None
(e) None
(f) i. United States of America
ii. United States of America
iii. United States of America
iv. California
v. United States of America
vi. California
vii. California
viii. California
ix. California
x. California
ITEM 3 SOURCE AND AMOUNT OF FUNDS OR FUNDS OR OTHER CONSIDERATION
The shares of Common Stock of Issuer reported as beneficially owned by
HT in Item 5 have been purchased with personal funds as the spouse of an
affiliate. HT beneficially owned a total of 11,597,315 shares of the Common
Stock of Issuer as of the date of this transaction.
The shares of Common Stock of Issuer reported as beneficially owned by
JT in Item 5 have been purchased with personal funds. JT has paid a total of
$3,000,375 for an aggregate of 3,429 shares of Series D Preferred Stock
convertible into an aggregate of 17,145,000 shares of Common Stock. JT
beneficially owns a total of 12,602,713 of common stock at the time of this
transaction. JT disclaims beneficial ownership of all but 707,611.
The shares of Common Stock of Issuer reported as beneficially owned by
DTM in Item 5 have been purchased with personal funds. DTM has paid a total of
$200,375 for an aggregate of 229 shares of Series D Preferred Stock convertible
into an aggregate of 1,145,000 shares of Common Stock. DTM beneficially owned a
total of 4,010,196 shares (includes 1,187,500 shares of Issuer's Common Stock
exercisable within 60 days of the date of this transaction) of the Common Stock
of Issuer before this transaction.
The shares of Common Stock of Issuer reported as beneficially owned by
Alta V in Item 5 have been purchased with working capital. Alta V beneficially
owned 3,896,550 shares of the Common Stock of the Issuer as of the date of this
transaction.
The shares of Common Stock of Issuer reported as beneficially owned by
SLT in Item 5 have been purchased with personal funds. SLT has paid a total of
$2,000,255 for an aggregate of 2,286 shares of Series D Preferred Stock
convertible into an aggregate of 11,430,000 shares of Common Stock (includes
1,000,000 shares of Issuer's Common Stock exercisable within 60 days of the date
of this transaction).
The shares of Common Stock of Issuer reported as beneficially owned by
L1 in Item 5 have been purchased with working capital. L1 beneficially owned
1,911,673 shares of the Common Stock of the Issuer as of the date of this
transaction.
The shares of Common Stock of Issuer reported as beneficially owned by
D&U in Item 5 have been purchased with working capital. D&U beneficially owned
1,013,336 shares of the Common Stock of the Issuer as of the date of this
transaction.
<PAGE> 16
The shares of Common Stock of Issuer reported as beneficially owned by
Tandon in Item 5 have been purchased with working capital. Tandon beneficially
owned 4,350,000 shares of the Common Stock of the Issuer as of the date of this
transaction.
The shares of Common Stock of Issuer reported as beneficially owned by
J&S in Item 5 have been purchased with working capital. J&S beneficially owned
1,013,335 shares of the Common Stock of the Issuer as of the date of this
transaction.
The shares of Common Stock of Issuer reported as beneficially owned by
L2 in Item 5 have been purchased with working capital. L2 beneficially owned
500,000 shares of the Common Stock of the Issuer as of the date of this
transaction.
ITEM 4. PURPOSE OF TRANSACTION
On September 25, 1997, the Investors and the Company entered into a securities
purchase agreement (the "Securities Purchase Agreement") relating to a proposed
financing (the "Transaction") of the Company, consisting of an aggregate of
28,802 Series D Shares of the Company at an aggregate purchase price of
$25,201,750. Each Series D Share is convertible by the holder thereof into 5,000
shares of Common Stock by the payment of additional consideration equal to
$.65265 per share of Common Stock issuable upon such conversion, subject to
adjustment for stock splits and similar events.
On September 26, 1997, the closing of the Transaction occurred, pursuant to
which the purchase price for the Series D Shares as well as certificates
representing the Series D Shares were placed in escrow (the "Escrow") with
Cooley Godward, LLP, as escrow agent (the "Escrow Agent"), pursuant to an Escrow
Agreement (the "Escrow Agreement") among the Investors, such other investors,
the Company and the Escrow Agent. Pursuant to the Escrow Agreement, the funds in
the Escrow are the property of the Investors and the other purchasers and the
Series D Shares in the Escrow are the property of the Company, in each case
until delivered pursuant to the Escrow Agreement by the Escrow Agent upon the
instruction of a representative designated by a majority in interest of the
purchasers, who shall have sole discretion to cause the delivery of such funds
and shares at any time until May 31, 1998. Notwithstanding the foregoing, prior
to the expiration or early termination of the statutory waiting period under the
Hart Scott Rodino Antitrust Improvements Act of 1976 with respect to the
purchase and sale contemplated in the Securities Purchase Agreement, the Escrow
Agent shall not be permitted to release to the Company any of the funds or
release to the purchasers any of the shares unless there remains in the Escrow
an aggregate of $6,714,750 and 7,674 Series D Shares. Immediately after the
entering into of the Escrow Agreement $9,000,250 aggregate amount of purchase
price was delivered to the Company from the Escrow, of which $1,857,625 was
attributable to Amber and 10,286 Series D Shares were delivered from the Escrow,
of which 2,123 Series D Shares were delivered to the Management Investors.
The Management Investors acquired the Series D Shares of the Company reported
herein as being owned by it for investment purposes. Depending upon market
conditions and other factors that the Management Investors may deem material to
its investment decision, the Management Investors may purchase securities of the
Company in the open market or in private transactions, or may dispose of all or
a portion of the Series D Shares or other securities of the Company that it now
owns or hereafter may acquire, subject to restrictions on transfer under the
securities laws and under the documents pursuant to which such securities were
purchased.
Pursuant to the terms of conversion set forth in Paragraph 1, the Series D
Shares subject to the Securities Purchase Agreement are convertible into an
aggregate of 144,010,000 shares of Common Stock, of which the Series D Shares
purchased and to be purchased by the Management Investors are convertible into
29,720,000 shares of Common Stock. The Company has informed the Investors that
as of September 26, 1997, there were only 63,295,773 shares of Common Stock
available for issuance upon conversion of Series D Shares. Pursuant to the
Securities Purchasing Agreement, the Company agreed to hold its 1998 annual
meeting of stockholders no later than July 9, 1998 and to hold a special meeting
of stockholders by November 30, 1997 (unless the proxy statement relating to
such meeting is reviewed by the Securities and Exchange Commission, in which
case the length of time of such review shall be added to the above date) and to
propose at such special meeting and every special or annual meeting thereafter
until adopted, an amendment (the "Amendment") to the Certificate of
Incorporation of the Company, raising the number of authorized shares of Common
Stock to at least the number of shares of Common Stock issuable upon conversion
of the Series D Shares. In addition, the Amendment will permit holders of not
less than 25% of the outstanding voting power of the Company to call a special
meeting of stockholders. The Company agreed that it would not submit any other
proposals
<PAGE> 17
for stockholder approval until the Amendment is approved, unless upon the advice
of counsel the Company determines that it is obligated to do so under the
Company's charter documents, by law or judicial order, or in order to discharge
its fiduciary obligations. The Company agreed that it would not issue any
additional equity securities or securities exercisable to purchase or
convertible into or exchangeable for equity securities until the Amendment is
approved, other than the securities reserved for issuance pursuant to the
Securities Purchase Agreement. The Company further agreed that any additional
equity securities issued after approval of the Amendment which have a
liquidation preference senior to the Series D Preferred Shares shall be subject
to a right of first refusal in favor of the Investors.
The Reporting Persons are holders of an aggregate of 40,802,516 shares of Common
Stock of the Company entered into a Stockholders Agreement, dated September 25,
1997, pursuant to which the Reporting Persons agreed to vote their shares of
Common Stock in favor of the Amendment at any and all meetings of stockholders
of the Company until such Amendment is adopted or September 25, 2018, if
earlier. In addition, the Reporting Persons gave their proxy to a designee of
AMBER in order to vote in favor of the Amendment.
The Investors entered into a Sale Lock-up Agreement dated September 25, 1997,
pursuant to which they agreed that without the prior written consent of the
Company, for a period of one year from the date of such Sale Lock-up Agreement,
such purchasers would not offer, sell, or otherwise dispose of more than 50% of
the Series D Shares or Common Stock issuable upon conversion of such 50% of the
Series D Shares, subject to certain exceptions.
In conjunction with the Securities Purchase Agreement, the Company, the
Management Investors and the other purchasers of the Series D Shares entered
into a Registration Rights Agreement pursuant to which the Company agreed to
file a registration statement on Form S-3 on or before October 15, 1997 with
respect to the shares of Common Stock issuable upon conversion of the Series D
Shares and use its best efforts to cause such registration statement to be
declared effective on or before January 15, 1998.
A copy of the Stockholder Agreement is attached as Exhibit 7.1 to this
statement, and is incorporated herein by reference. The description of the
Stockholder Agreement herein is not complete and is qualified in its entirety by
reference to the Stockholder Agreement.
ITEM 5. INTEREST IN THE SECURITIES OF THE ISSUER
<TABLE>
<CAPTION>
HT JT DTM ALTA V SLT
---------- ---------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
Common Beneficial 11,597,315 6,832,611 4,607,696 3,896,550 5,080,000
Owner
Percentage of Class 7.32 4.31 2.90 2.46 3.20
Sole Voting Power -0- -0- -0- -0- -0-
Shared Voting Power 11,597,315 17,852,611 5,342,696 3,896,550 12,430,000
Sole Disposition 11,597,315 17,852,611 5,342,696 3,896,550 12,430,000
Power
Shared Disposition -0- -0- -0- -0- -0-
Power
</TABLE>
<PAGE> 18
<TABLE>
<CAPTION>
L-1 D&U TANDON J&S L2
--------- --------- --------- --------- -------
<S> <C> <C> <C> <C> <C>
Common Beneficial 1,911,673 1,013,336 4,350,000 1,013,335 500,000
Owner
Percentage of Class 1.20 .64 2.74 .64 .31
Sole Voting Power -0- -0- -0- -0- -0-
Shared Voting Power 1,911,673 1,013,336 4,350,000 1,013,335 500,000
Sole Disposition 1,911,673 1,013,336 4,350,000 1,013,335 500,000
Power
Shared Disposition -0- -0- -0- -0- -0-
Power
</TABLE>
On September 29, 1997, pursuant to the Securities Purchase Agreement, the
Management Investors purchased the below mentioned Series D Shares.
<TABLE>
<CAPTION>
JT DTM ST
----- --- -----
<S> <C> <C> <C>
Series D Beneficial 3,429 229 2,286
Owner
Percentage of Class 11.9 .79 7.9
Sole Voting Power 3,429 229 2,286
Shared Voting Power -0- -0- -0-
Sole Disposition 3,429 229 2,286
Power
Shared Disposition -0- -0- -0-
Power
Series D Purchased 1,225 82 816
</TABLE>
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER.
See Item 4 for a description of the Securities Purchase Agreement and the
Stockholder Agreement. See Item 7 for exhibit references to the Securities
Purchase Agreement and the Stockholder Agreement.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
1. Stockholder Agreement, dated September 25, 1997, by and between JTS
and the Reporting Persons.
2. Securities Purchase Agreement, dated September 25, 1997, by and
between JTS and the Investors.
3. Lock Up Agreement, dated September 25, 1997, by and between the
Investors.
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
October 6, 1997 /s/ Helen Tramiel
-------------------------------
HELEN TRAMIEL
<PAGE> 19
/s/Jack Tramiel
-------------------------------
JACK TRAMIEL
/s/David T. Mitchell
-------------------------------
DAVID T. MITCHELL
/s/Alta V. Limited Partnership
-------------------------------
ALTA V LIMITED PARTNERSHIP by
ALTA V MANAGEMENT PARTNERSHIP
/s/Sirjang L. Tandon
-------------------------------
SIRJANG L. TANDON
/s/Lunenburg SA
-------------------------------
LUNENBURG SA
/s/D & U Tandon LLC
-------------------------------
D & U TANDON LLC
/s/Tandon Family Partnership
-------------------------------
TANDON FAMILY PARTNERSHIP
/s/J & S Tandon LLC
-------------------------------
J & S TANDON LLC
/s/Lunenburg SA
-------------------------------
LUNENBURG SA
<PAGE> 1
JTS CORPORATION
STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT (the "Agreement") is made and entered into
this 25th day of September, 1997, by and among Amber Arbitrage LDC, a Cayman
Islands corporation ("Amber"), and those certain undersigned holders of the
Common Stock of JTS Corporation, a Delaware corporation (the "Company"), listed
on Exhibit A hereto (the "Key Stockholders").
WITNESSETH:
WHEREAS, the Company proposes to sell shares of its Series D Preferred
Stock (the "Series D Preferred Stock") to certain investors (the "Series D
Investors") pursuant to the Securities Purchase Agreement (the "Purchase
Agreement") of even date herewith by and among the Company and the Series D
Investors (the "Financing");
WHEREAS, in connection with the consummation of the Financing, the Key
Stockholders have agreed to vote their shares of the Company's capital stock as
set forth below;
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 1
VOTING
1.1 COMMON SHARES.
1.1.1 Amber and each of the Key Stockholders each agrees to hold all
shares of voting capital stock of the Company registered in their respective
names or beneficially owned by them as of the record date of any meeting of the
Company's stockholders covered by this Agreement (hereinafter collectively
referred to as the "Common Shares") subject to, and to vote the Common Shares in
accordance with, the provisions of this Agreement.
1.2 VOTING. Amber and the Key Stockholders hereby covenant and agree that,
prior to the Expiration Date (as defined below) at any and all meetings of
stockholders of the Company (each a "Meeting") at which an amendment to the
Company's Certificate of Incorporation (i) increasing the Company's authorized
number of shares of Common Stock to cover at least the number of shares of
Common Stock issuable upon conversion of the Series D Preferred Stock and (ii)
authorizing holders of not less than twenty-five percent (25%) of the
outstanding voting capital stock of the Company to call a special meeting of
stockholders (the "Amendment") is submitted for a vote of the Company's
stockholders, to vote their respective shares of the Company's voting stock in
favor of the Amendment. In the event that at such Meeting, the Amendment is not
passed, the obligations of this Section 1.2 shall continue at each subsequent
meeting of stockholders until the Amendment is passed. The Key Stockholders each
1.
<PAGE> 2
agree not to convert any of the Series D Preferred Stock registered in their
respective names or beneficially owned by each of them as of the date hereof
until the Amendment is approved; provided, however, that Amber shall be able to
convert the number of its shares of Series D Preferred Stock into the maximum
number of shares of Common Stock that are authorized and reserved as of the date
hereof for such conversion subject to restrictions imposed by the Lock Up
Agreement executed by Amber of even date herewith. As used in this Stockholders
Agreement, the term "Expiration Date" shall mean the earlier of the date the
Amendment is approved or September 25, 2018.
1.3 PROXY; FURTHER ASSURANCES. Contemporaneously with the execution of
this Stockholders Agreement, each of the Key Stockholders shall deliver to Amber
a proxy in the form attached hereto as Exhibit B, which shall be irrevocable to
the fullest extent permitted by law, with respect to the respective shares (the
"Proxy"). Each of the Key Stockholders shall perform such further acts and
execute such further documents and instruments as may reasonably be required to
vest in a designee of Amber the power to carry out and give effect to the
provisions of this Stockholders Agreement. Amber hereby agrees that it will vote
all of its Common Shares in the same manner as it will vote the Proxies and that
the Proxies shall become null and void at the time Amber breaches the terms of
this covenant.
1.4 OTHER RIGHTS. Except as provided by this Agreement, each of Amber and
the Key Stockholders shall be entitled to exercise the full rights of a
stockholder with respect to the Common Shares, including without limitation the
right to buy or sell Common Shares, provided such sales are made in the open
market.
ARTICLE 2
TERMINATION
2.1 This Agreement shall continue in full force and effect from the date
hereof through the earlier of the day after the date of the annual or special
meeting of stockholders of the Company in which the Amendment is approved or
September 25, 2018. On such day the Agreement shall terminate in its entirety.
ARTICLE 3
MISCELLANEOUS
3.1 OWNERSHIP. Each of Amber and the Key Stockholders represents and
warrants to all other parties to this Agreement that he, or she or it (a) now
owns the Common Shares, free and clear of liens or encumbrances, and has not,
prior to or on the date of this Agreement and other than as contemplated hereby,
executed or delivered any proxy or entered into any other voting agreement or
similar arrangement other than one which has expired or terminated prior to the
date hereof, and (b) has full power and capacity to execute, deliver and perform
this Agreement, which has been duly executed and delivered by, and evidences the
valid and binding obligation of, such party enforceable in accordance with its
terms.
2.
<PAGE> 3
3.2 GOVERNING LAW. This Agreement, and the rights of the parties hereto,
shall be governed by and construed in accordance with the General Corporation
Law of the State of Delaware.
3.3 AMENDMENT. This Agreement may be amended only by an instrument in
writing signed by Amber and a majority in interest of the Key Stockholders.
Notwithstanding the foregoing, the consent of a Key Stockholder shall be
required for any amendment or waiver of this Agreement which materially
increases either such Key Stockholder's obligations or diminishes such Key
Stockholder's rights under this Agreement (other than on a pro rata basis
including Amber).
3.4 SEVERABILITY. Any term or provision of this Stockholders Agreement
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Stockholders Agreement or affecting the validity or
enforceability of any of the terms or provisions of this Stockholders Agreement
in any other jurisdiction so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner adverse to any
party. If any provision of this Stockholders Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable.
3.5 SUCCESSORS. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs, successors, assigns,
administrators, executors and other legal representatives.
3.6 ADDITIONAL SHARES. In the event that subsequent to the date of this
Agreement any shares or other securities (other than any shares or securities of
another corporation issued to the Company's Stockholders pursuant to a plan of
merger) are issued on, or in exchange for, any of the Common Shares by reason of
any stock dividend, stock split, consolidation of shares, reclassification or
consolidation involving the Company, such shares or securities shall be deemed
to be Common Shares, for purposes of this Agreement.
3.7 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original but all of which together
shall constitute one and the same agreement.
3.8 WAIVER. No waivers of any breach of this Agreement extended by any
party hereto to any other party shall be construed as a waiver of any rights or
remedies of any other party hereto or with respect to any subsequent breach.
3.9 ATTORNEY'S FEES. In the event that any suit or action is instituted to
enforce any provision in this Agreement, the prevailing party shall be entitled
to all costs and expenses of maintaining such suit or action, including
reasonable attorneys' fees.
3.
<PAGE> 4
3.10 ENTIRE AGREEMENT. This Agreement and the Exhibits hereto, along with
the Purchase Agreement and each of the Exhibits thereto, constitute the full and
entire understanding and agreement between the parties with regard to the
subjects hereof and thereof and no party shall be liable or bound to any other
in any manner by any representations, warranties, covenants and agreements
except as specifically set forth herein and therein.
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have executed this Stockholders
Agreement as of the date first above written.
<TABLE>
<S> <C>
KEY STOCKHOLDERS: AMBER ARBITRAGE LDC
/s/ HELEN TRAMIEL c/o Custom House Fund
- ------------------------------ Management Limited
Helen Tramiel 31 Kildare Street
Dublin 2, Ireland
/s/ JACK TRAMIEL
- ------------------------------
Jack Tramiel
/s/ DAVID T. MITCHELL /s/ JOHN BENDER
- ------------------------------ --------------------------------
David T. Mitchell By: John Bender
Title: Trading Manager
/s/ J. DELEAGE
- ------------------------------
Alta V Limited Partnership
/s/ JAWAHAR L. TANDON
- ------------------------------
Lunenburg S A
/s/ DEVINDER L. TANDON
- ------------------------------
D & U Tandon LLC
/s/ SIRJANG LAL TANDON
- ------------------------------
Sirjang Lal Tandon
/s/ SIRJANG LAL TANDON
- ------------------------------
Tandon Family Partnership
/s/ JAWAHAR L. TANDON
- ------------------------------
J & S Tandon, LLC
/s/ JAWAHAR L. TANDON
- ------------------------------
Lunenburg S A
</TABLE>
SHAREHOLDERS AGREEMENT
<PAGE> 6
EXHIBIT A
LIST OF KEY STOCKHOLDERS
Helen Tramiel
Jack Tramiel
David T. Mitchell
Alta V Limited Partnership
Lunenburg S A
D & U Tandon LLC
Sirjang Lal Tandon
Tandon Family Partnership
J & S Tandon, LLC
Lunenburg S A
<PAGE> 7
EXHIBIT B
IRREVOCABLE PROXY
Each of the undersigned stockholders of JTS Corporation, a Delaware
corporation (the "Company"), hereby irrevocably (to the fullest extent permitted
by law) appoints and constitutes John Bender ("Bender") as attorney and proxy of
the undersigned with full power of substitution and resubstitution, to the full
extent of the undersigned's rights with respect to the shares of capital stock
of the Company owned by the undersigned as of the record date of any meeting of
the stockholders of the Company to which this proxy pertains. (The shares of the
capital stock of the Company referred to in the immediately preceding sentence
are referred to as the "Shares.") Upon the execution hereof, all prior proxies
given by the undersigned with respect to any of the Shares are hereby revoked,
and no subsequent proxies will be given with respect to any of the Shares for as
long as this Proxy remains in effect.
This proxy is irrevocable and is coupled with an interest. This proxy is
granted in connection with the Stockholders Agreement of even date herewith
between Amber Arbitrage LDC ("Amber") and each of the undersigned (the
"Stockholders Agreement") and in consideration of Amber entering into the
Securities Purchase Agreement of even date herewith among the Company, Amber and
certain investors (the "Purchase Agreement") and in consideration of the
benefits accruing to the undersigned by virtue of Amber entering into the
Securities Purchase Agreement. Capitalized terms used but not otherwise defined
in this proxy have the meanings assigned to such terms in the Stockholders
Agreement.
The attorney and proxy named above will be empowered, and may exercise
this proxy, to vote the Shares at any meeting of the stockholders of the Company
in favor of an amendment to the Company's Certificate of Incorporation (the
"Amendment") to (i) increase the Company's authorized number of shares of Common
Stock to cover at least the number of shares of Common Stock issuable upon
conversion of the Series D Preferred Stock (as defined in the Stockholders
Agreement) and (ii) authorizing holders of not less than twenty-five percent
(25%) of the outstanding voting capital stock of the Company to call a special
meeting of stockholders. This proxy shall terminate and have no further effect
following the earlier to occur of (x) the approval by the stockholders of the
Amendment or (y) September 25, 2018.
This proxy shall be binding upon the heirs, successors and assigns of the
undersigned (including any transferee of any of the Shares, except for
transferees of the undersigned in open market transactions).
Dated: September 25, 1997
/s/ HELEN TRAMIEL
-------------------------------------------
Name: Helen Tramiel
--------------------------------
Number of Shares of Company Common
<PAGE> 8
Stock: 11,597,325
----------------------------------
/s/ JACK TRAMIEL
-----------------------------------------
Name: Jack Tramiel
----------------------------------
Number of Shares of Company Common
Stock: 707,611
----------------------------------
/s/ DAVID T. MITCHELL
-----------------------------------------
Name: David T. Mitchell
----------------------------------
Number of Shares of Company Common
Stock: 4,010,196
----------------------------------
/s/ ALTA V. MANAGEMENT PARTNERSHIP, L.P.
-----------------------------------------
Name: Alta V. Management Partnership L.P.
-----------------------------------
Number of Shares of Company Common
Stock: 3,896,550
-----------------------------------
/s/ LUNENBURG S.A.
-----------------------------------------
Name: Lunenburg S.A.
-----------------------------------
Number of Shares of Company Common
Stock: 1,911,673
-----------------------------------
/s/ Da V. TANDON LLC
-----------------------------------------
Name: Da V. Tandon LLC
-----------------------------------
Number of Shares of Company Common
Stock: 1,013,336
-----------------------------------
/s/ SIRJANG L. TANDON
-----------------------------------------
Name: Sirjang L. Tandon
-----------------------------------
Number of Shares of Company Common
Stock: 1,000,000
-----------------------------------
/s/ TANDON FAMILY PARTNERSHIP
-----------------------------------------
Name: Tandon Family Partnership
-----------------------------------
Number of Shares of Company Common
Stock: 4,350,000
-----------------------------------
<PAGE> 9
/s/ JO S. TANDON
-------------------------------------------
Name: Jo S. Tanden
--------------------------------
Number of Shares of Company Common
Stock: 1,013,335
--------------------------------
/s/ LUNDENBURG SA
-------------------------------------------
Name: Lundenburg SA
--------------------------------
Number of Shares of Company Common
Stock: 500,000
--------------------------------
-------------------------------------------
Name:
--------------------------------
Number of Shares of Company Common
Stock:
--------------------------------
<PAGE> 1
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the "Agreement"), dated as of September 25,
1997, by and among JTS CORPORATION, a Delaware corporation, with headquarters
located at 166 Baypointe Parkway, San Jose, California 95134 (the "Company"),
and the investors listed on the Schedule of Investors attached hereto
(individually, a "Buyer" and collectively, the "Buyers").
WHEREAS:
A. The Company and the Buyers are executing and delivering this Agreement
in reliance upon the exemption from securities registration afforded by Rule 506
of Regulation D ("Regulation D") as promulgated by the United States Securities
and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended
(the "1933 Act");
B. The Company has authorized the following new series of its Preferred
Stock, $.001 par value per share (the "Preferred Stock"): the Company's Series D
Convertible Preferred Stock (the "Series D Preferred Shares"), which shall be
convertible into shares of the Company's Common Stock, $.001 par value per share
(the "Common Stock") (as converted, the "Conversion Shares"), in accordance with
the terms of the Company's Certificate of Designations, Preferences and Rights
of the Series D Preferred Shares, substantially in the form attached hereto as
Exhibit A (the "Certificate of Designations");
C. The Buyers wish to purchase, upon the terms and conditions stated in
this Agreement, an aggregate of up to 28,802 shares of Series D Preferred Shares
in the respective amounts set forth opposite each Buyer's name on the Schedule
of Investors; and
D. Contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement
substantially in the form attached hereto as Exhibit B (the "Registration Rights
Agreement") pursuant to which the Company has agreed to provide certain
registration rights under the 1933 Act and the rules and regulations promulgated
thereunder, and applicable state securities laws, a Lock-Up Agreement (the
"Lock-Up Agreement") substantially in the form attached hereto as Exhibit C
pursuant to which the Buyers have agreed to restrict sale of fifty percent (50%)
of the Series D Preferred Shares and the Conversion Shares and an Escrow
Agreement (the "Escrow Agreement") substantially in the form attached hereto as
Exhibit D pursuant to which the Buyers and the Company have agreed to establish
an escrow account in connection with the purchase and sale of the Series D
Preferred Shares contemplated hereby.
E. Contemporaneously with the execution and delivery of this Agreement,
the Buyers and certain shareholders of the Company are executing a stockholders
agreement in the form of Exhibit E (the "Stockholders Agreement").
NOW THEREFORE, the Company and the Buyers hereby agree as follows:
1.
<PAGE> 2
1. PURCHASE AND SALE OF SERIES D PREFERRED SHARES.
a. PURCHASE OF SERIES D PREFERRED SHARES. Subject to the
satisfaction (or waiver) of the conditions set forth in Sections 5 and 6 below,
the Company shall deposit in the escrow account the number of shares of Series D
Preferred Shares and the Buyers shall deposit the dollar amount stated in the
Escrow Agreement (the "Closing"). Subject to the terms of the Escrow Agreement,
the Escrow Agent (as that term is defined in the Escrow Agreement) shall release
to the Buyers any or all of the Series D Preferred Shares and to the Company the
corresponding dollar amount from each Buyer from time to time. The per share
purchase price (the "Purchase Price") of the Series D Preferred Shares shall be
$875.00.
b. CLOSING DATE. The date and time of the Closing (the "Closing
Date") shall be at 6:00 p.m. Pacific Standard Time on Thursday, September 25,
1997 or at such other time and place as the Company and the Buyers shall
mutually agree. The Closing shall occur on the Closing Date at the offices of
Cooley Godward LLP, Five Palo Alto Square, Palo Alto, California 94306.
c. FORM OF PAYMENT. On the Closing Date, (i) each Buyer shall
deposit the Purchase Price with the Escrow Agent for the Series D Preferred
Shares to be issued and sold to such Buyer, by wire transfer of immediately
available funds in accordance with the Escrow Agent's written wire instructions,
and (ii) as soon thereafter as practicable, the Company shall deposit with the
Escrow Agent, a stock certificate representing such number of the Series D
Preferred Shares which such Buyer is purchasing (as indicated opposite such
Buyer's name on the Schedule of Investors), duly executed on behalf of the
Company and registered in the name of such Buyer or its designee (the "Stock
Certificates").
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
Each Buyer represents and warrants with respect to only itself that:
a. INVESTMENT PURPOSE. Such Buyer (i) is acquiring the Series D
Preferred Shares and (ii) upon conversion of the Series D Preferred Shares, will
acquire the Conversion Shares then issuable, for its own account for investment
only, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof. By executing this Agreement, each Buyer
further represents that such Buyer does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any of the
Series D Preferred Shares or the Conversion Shares.
b. ACCREDITED INVESTOR STATUS. Such Buyer is an "accredited
investor" as that term is defined in Rule 501(a)(3) of Regulation D.
2.
<PAGE> 3
c. CERTAIN PROVISIONS UNDER 16 C.F.R. RULE 802.64. Consistent with
Rule 802.64(b), Amber Arbitrage LDC ("Amber") is acquiring the Series D
Preferred Shares "solely for the purposes of investment" as that term is defined
in Rule 801.1(i)(1). Amber is an "Institutional Investor" for the purposes of
16.C.F.R. Rule 802.64(a).
d. RELIANCE ON EXEMPTIONS. Such Buyer understands that the Series D
Preferred Shares and the Conversion Shares are being offered and sold to it in
reliance on specific exemptions from the registration requirements of United
States federal and state securities laws and that the Company is relying in part
upon the truth and accuracy of, and such Buyer's compliance with, the
representations, warranties, agreements, acknowledgments and understandings of
such Buyer set forth herein in order to determine the availability of such
exemptions and the eligibility of such Buyer to acquire the Series D Preferred
Shares and the Conversion Shares.
e. INFORMATION. Such Buyer and its advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Series D
Preferred Shares and the Conversion Shares which have been requested by such
Buyer. Such Buyer and its advisors, if any, have been afforded the opportunity
to ask questions of the Company. Neither such inquiries nor any other due
diligence investigations conducted by such Buyer or its advisors, if any, or its
representatives shall modify, amend or affect such Buyer's right to rely on the
Company's representations and warranties contained in Section 3 below. Such
Buyer understands that its investment in the Series D Preferred Shares and the
Conversion Shares involves a high degree of risk. Such Buyer has sought such
accounting, legal and tax advice as it has considered necessary to make an
informed investment decision with respect to its acquisition of the Series D
Preferred Shares and the Conversion Shares.
f. NO GOVERNMENTAL REVIEW. Such Buyer understands that no United
States federal or state agency or any other government or governmental agency
has passed on or made any recommendation or endorsement of the Series D
Preferred Shares or the Conversion Shares or the fairness or suitability of the
investment in the Series D Preferred Shares or the Conversion Shares nor have
such authorities passed upon or endorsed the merits of the offering of the
Series D Preferred Shares or the Conversion Shares.
g. TRANSFER OR RESALE. Such Buyer understands that except as
provided in the Registration Rights Agreement: (i) the Series D Preferred Shares
and the Conversion Shares have not been and are not being registered under the
1933 Act or any state securities laws, and may not be sold, assigned or
transferred unless (A) subsequently registered thereunder, (B) such Buyer shall
have delivered to the Company an opinion of counsel, in a generally acceptable
form, to the effect that such securities to be sold, assigned or transferred may
be sold, assigned or transferred pursuant to an exemption from such
registration, or (C) such Buyer provides the Company with reasonable assurance
that such securities can be sold, assigned or transferred
3.
<PAGE> 4
pursuant to Rule 144 promulgated under the 1933 Act (or a successor rule
thereto); (ii) any sale of such securities made in reliance on Rule 144
promulgated under the 1933 Act (or a successor rule thereto) ("Rule 144") may be
made only in accordance with the terms of Rule 144 and further, 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 Company nor any other person is under any
obligation to register such securities under the 1933 Act or any state
securities laws or to comply with the terms and conditions of any exemption
thereunder.
h. LEGENDS. Such Buyer understands that the certificates or other
instruments representing the Series D Preferred Shares and, until such time as
the sale of the Conversion Shares have been registered under the 1933 Act as
contemplated by the Registration Rights Agreement, the stock certificates
representing the Conversion Shares, shall bear a restrictive legend in
substantially the following form (and a stop-transfer order may be placed
against transfer of such stock certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY
NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF
COUNSEL, ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT
TO RULE 144 UNDER SAID ACT.
Such Buyer also understands that pursuant to the Lock-Up Agreement, certificates
or other instruments representing fifty percent (50%) of the Series D Preferred
Shares and the stock certificates representing the Conversion Shares issuable
upon conversion of such fifty per cent (50%) of the Series D Preferred Shares
shall bear a restrictive legend in substantially the following form (and a
stop-transfer order may be placed against transfer of such stock certificates):
UNTIL SEPTEMBER 25, 1998, THE SALE, TRANSFER OR ASSIGNMENT OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS OF AN
AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED HOLDER OR HIS PREDECESSOR
IN INTEREST. COPIES OF SUCH AGREEMENT MAY BE OBTAINED BY
4.
<PAGE> 5
WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE
SECRETARY OF THE COMPANY.
i. AUTHORIZATION; ENFORCEMENT. This Agreement has been duly and
validly authorized, executed and delivered on behalf of such Buyer and is a
valid and binding agreement of such Buyer enforceable in accordance with its
terms, subject as to enforceability to general principles of equity and to
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and
other similar laws relating to, or affecting generally, the enforcement of
applicable creditors' rights and remedies.
j RESIDENCY. Such Buyer is a resident of that country specified in
its address on the Schedule of Investors.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the Buyers that:
a. ORGANIZATION AND QUALIFICATION. The Company and its significant
subsidiaries (as defined in Rule 1-02 (w) of Regulation S-X promulgated by the
SEC under the 1933 Act and which are set forth in Schedule 3(a)) (the
"Significant Subsidiaries") are corporations duly organized and validly existing
in good standing under the laws of the jurisdictions in which they are
incorporated, and have the requisite corporate power to own their properties and
to carry on their business as now being conducted. Each of the Company and its
subsidiaries is duly qualified as a foreign corporation to do business and is in
good standing in every jurisdiction in which the nature of the business
conducted by it makes such qualification necessary, except to the extent that
the failure to be so qualified or be in good standing would not have a material
adverse effect on the Company and its subsidiaries taken as a whole. As used in
this Section 3, the term "Company" shall include all of its Significant
Subsidiaries.
b. AUTHORIZATION; ENFORCEMENT; COMPLIANCE WITH OTHER INSTRUMENTS.
(i) The Company has the requisite corporate power and authority to enter into
and perform this Agreement, the Registration Rights Agreement, the Certificate
of Designations of the Series D Preferred Shares (the "Certificate of
Designations") and the Escrow Agreement (the "Transaction Documents"), and to
issue the Series D Preferred Shares and, upon authorization in the Certificate
of Incorporation, the Conversion Shares in accordance with the terms hereof and
thereof, (ii) the execution and delivery of the Transaction Documents by the
Company and the consummation by it of the transactions contemplated hereby and
thereby, including without limitation the issuance of the Series D Preferred
Shares and the reservation for issuance and the issuance of the Conversion
Shares issuable upon conversion thereof, have been duly authorized by the
Company's Board of Directors and no further consent or authorization is required
by the Company, its Board of Directors or its stockholders other than the
amendment of the Certificate of Incorporation to increase the authorized number
of shares of Common Stock of the Company to cover the issuance of the Conversion
Shares, (iii) the Transaction Documents have been duly
5.
<PAGE> 6
executed and delivered by the Company, (iv) this Agreement, the Registration
Rights Agreement, and the Escrow Agreement constitute the valid and binding
obligations of the Company enforceable against the Company in accordance with
their terms, except as such enforceability may be limited by general principles
of equity or applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally, the enforcement
of creditors' rights and remedies, and (v) prior to the Closing Date, the
Certificate of Designations has been filed with the Secretary of State of the
State of Delaware and will be in full force and effect, enforceable against the
Company in accordance with its terms. The Buyers have brought the Stockholders
Agreement to the attention of the Company, and the Company agrees not to take
any actions not consistent with the intent of the Stockholders Agreement.
c. CAPITALIZATION. As of the date hereof, the authorized capital
stock of the Company consists of 250,000,000 shares of Common Stock, of which
158,283,990 shares are issued and outstanding, and 10,000,000 shares of
Preferred Stock, of which 4,600 shares of Series C Convertible Preferred Stock
(the "Series C Preferred Shares") are issued and outstanding. All of such
outstanding shares have been validly issued and are fully paid and
nonassessable. Except as disclosed in Schedule 3(c), no shares of Common Stock
or Preferred Stock are subject to preemptive rights or any other similar rights
or any liens or encumbrances suffered or permitted by the Company. Except as
disclosed in Schedule 3(c), as of the effective date of this Agreement, (i)
there are no outstanding options, warrants, scrip, rights to subscribe to, calls
or commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company, or contracts,
commitments, understandings 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 or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of the
Company, (ii) there are no outstanding debt securities and (iii) there are no
agreements or arrangements under which the Company or any of its subsidiaries is
obligated to register the sale of any of their securities under the 1933 Act
(except the Registration Rights Agreement). There are no securities or
instruments containing anti- dilution or similar provisions that will be
triggered by the issuance of the Series D Preferred Shares or the Conversion
Shares as described in this Agreement.
d. ISSUANCE OF SECURITIES. The Series D Preferred Shares are duly
authorized and, upon issuance in accordance with the terms hereof, shall be (i)
validly issued, fully paid and non-assessable, (ii) free from all taxes, liens
and charges with respect to the issue thereof and (iii) entitled to the rights
and preferences set forth in the Certificate of Designations. Upon authorization
in the Certificate of Incorporation of not less than an additional 81,000,000
shares of Common Stock, the Conversion Shares issuable upon conversion of the
Series D Preferred Shares will have been duly authorized and reserved for
issuance and upon conversion or exercise in accordance with the Certificate of
Designations will be validly issued, fully paid
6.
<PAGE> 7
and nonassessable and free from all taxes, liens and charges with respect to the
issue thereof, with the holders being entitled to all rights accorded to a
holder of Common Stock.
e. NO MATERIAL ADVERSE CHANGE. Since May 4, 1997, there has been no
material adverse change and no material adverse development in the business,
properties, operations, financial conditions, results of operations or prospects
of the Company, except as disclosed in the SEC reports (including the Form 10-Q
for the quarter ended August 3, 1997, which Form 10-Q has been disclosed to the
Buyers).
f. SEC DOCUMENTS; FINANCIAL STATEMENTS. Since September 25, 1996,
the Company has filed timely all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the "1934 Act")
(all of the foregoing filed prior to the date hereof and all exhibits included
therein and financial statements and schedules thereto and documents
incorporated by reference therein and the Company's Registration Statements on
Form S-4 filed on June 24, 1996, as amended, and on Form S-1's filed on November
29, 1996 and February 14, 1997 and all prospectuses related thereto, all
exhibits included therein and financial statements and schedules thereto and
documents incorporated by reference therein, being hereinafter referred to as
the "SEC Documents"). The Company has delivered to the Buyer or its
representative true and complete copies of the SEC Documents. As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of the Securities Act of 1933, as amended (the "1933 Act") and the
1934 Act, as applicable, and the rules and regulations of the SEC promulgated
thereunder applicable to the SEC Documents, and none of the SEC Documents, at
the time they were filed with the SEC, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. As of their respective
dates, the financial statements of the Company included in the SEC Documents
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto. Such financial statements have been prepared in accordance with
generally accepted accounting principles, consistently applied, during the
periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they may exclude footnotes or may be condensed or
summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). No other
information provided by or on behalf of the Company to the Buyer which is not
included in the SEC Documents, including, without limitation, information
referred to in Section 2(d) of this Agreement, contains any untrue statement of
a material fact or omits to state any material fact necessary in order to make
the statements therein, in the light of the circumstance under which they are or
were made, not misleading.
7.
<PAGE> 8
g. OFFERING VALID. Assuming the accuracy of the representations and
warranties of the Buyers contained in Section 2 hereof, the offer, sale and
issuance of the Shares and the Conversion Shares will be exempt from the
registration requirements of the Securities Act of 1933, as amended (the "Act")
upon the filing of a Form D under the Act and will have been registered or
qualified (or are exempt from registration and qualification) under the
registration, permit or qualification requirements of all applicable state
securities laws. Neither the Company nor any agent on its behalf has solicited
or will solicit any offers to sell or has offered to sell or will offer to sell
all or any part of the Shares to any person or persons so as to bring the sale
of such Shares by the Company within the registration provisions of the Act or
any state securities laws.
h. ABSENCE OF LITIGATION. There is no action, suit, proceeding,
inquiry or investigation before or by any court, public board, government
agency, self-regulatory organization or body pending or, to the knowledge of the
Company, threatened against or affecting the Company, the Preferred Stock, the
Common Stock or any of the Company's subsidiaries, wherein an unfavorable
decision, ruling or finding would (i) have a material adverse effect on the
transactions contemplated hereby (ii) adversely affect the validity or
enforceability of, or the authority or ability of the Company to perform its
obligations under, this Agreement or any of the documents contemplated herein or
(iii), except as expressly set forth in Schedule 3(h), have a material adverse
effect on the business, operations, properties, financial condition or results
of operation of the Company and its subsidiaries taken as a whole.
i. NO CONFLICTS. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated thereby will not (i) result in a violation of the
Certificate of Incorporation or Bylaws or (ii) conflict with, or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any material agreement, indenture or instrument
to which the Company or any of its subsidiaries is a party, or result in a
violation of any law, rule, regulation, order, judgment, decree, license or
permit (including federal and state securities laws and regulations and the
rules and regulations of the principal market or exchange on which the Common
Stock is traded or listed) applicable to the Company or any of its subsidiaries
or by which any property or asset of the Company or any of its subsidiaries is
bound or affected. The Company is not in violation of any term of or in default
under its Certificate of Incorporation or By-laws, or any material contract,
agreement, mortgage, indebtedness, indenture, instrument, judgment, decree or
order or any statute, rule or regulation applicable to the Company. The business
of the Company is not being conducted, and shall not be conducted so long as the
Buyers hold any Series D Preferred Shares or Conversion Shares, in violation of
any law, ordinance, or regulation of any governmental entity. Except as
specifically contemplated by this Agreement, including, but not limited to
Section 4(e), and as required under the 1933 Act and any applicable state
securities laws, the Company is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental agency or any third party in order for it to execute, deliver or
perform any of its
8.
<PAGE> 9
obligations under or contemplated by the Transaction Documents in accordance
with the terms hereof or thereof.
j. TEN LARGEST STOCKHOLDERS. The list of stockholders of the Company
attached hereto as Exhibit E constitute the ten (10) largest holders of the
Company's Common Stock as of the date hereof who are affiliated with the
Company.
k. NO GENERAL SOLICITATION. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D under the 1933 Act) in connection with the offer or sale of the
Series D Preferred Shares or the Conversion Shares.
4. COVENANTS.
a. FORM D. The Company agrees to file a Form D with respect to the
Series D Preferred Shares and the Conversion Shares as required under Regulation
D and to provide a copy thereof to each Buyer promptly after such filing. The
Company shall, on or before the Closing Date, take such action as the Company
shall reasonably determine is necessary to qualify the Series D Preferred Shares
and the Conversion Shares for, or obtain exemption for the Series D Preferred
Shares and the Conversion Shares, for sale to the Buyers at the Closing pursuant
to this Agreement under applicable securities or "Blue Sky" laws of the states
of the United States, and shall provide evidence of any such action so taken to
the Buyers on or prior to the Closing Date.
b. REPORTING STATUS. Until the earlier of (i) the date as of which
the Holders (as that term is defined in the Registration Rights Agreement) may
sell all of the Conversion Shares without restriction pursuant to Rule 144(k)
promulgated under the 1933 Act (or successor thereto), or (ii) the date on which
the registration rights expire pursuant to the Registration Rights Agreement
(the "Registration Period"), the Company shall, on a timely basis, file all
reports required to be filed with the SEC pursuant to the 1934 Act, and the
Company shall not terminate its status as an issuer required to file reports
under the 1934 Act even if the 1934 Act or the rules and regulations thereunder
would permit such termination.
c. USE OF PROCEEDS. The Company will use the proceeds from the sale
of the Series D Preferred Shares for the Company's internal working capital
purposes and to make outstanding payments to certain vendors expected, on a
commercially reasonable basis, to be approximately $4,000,000 at Closing and
approximately $2,750,000 per month thereafter.
d. RESERVATION OF SHARES. The Company shall have taken all actions
necessary to authorize and reserve 63,295,773 shares of Common Stock available
at the time of the Closing for issuance upon conversion of the Series D
Preferred Shares held by Amber.
9.
<PAGE> 10
e. LISTING. The Company shall promptly secure the listing of the
Conversion Shares upon each national securities exchange or automated quotation
system, if any, upon which shares of Common Stock are then listed (subject to
official notice of issuance) and shall maintain, so long as any other shares of
Common Stock shall be so listed, such listing of all Conversion Shares from time
to time issuable under the terms of this Agreement and the Registration Rights
Agreement. The Company shall maintain the Common Stock's authorization for
quotation on AMEX, the Nasdaq National Market, or The New York Stock Exchange,
Inc. The Company shall promptly provide to each Buyer copies of any notices it
receives from AMEX regarding the continued eligibility of the Common Stock for
listing on AMEX. The Company has not received any notice that the Common Stock
is not eligible for continued listing on AMEX.
f. ANNUAL MEETING; INCREASE IN AUTHORIZED COMMON STOCK. The Company
agrees that it will hold the 1998 Annual Meeting of Stockholders (the "1998
Meeting") of the Company no later than July 9, 1998. At the 1998 Meeting or at
any special meeting called on or before the 1998 Meeting, pursuant to Section
6(h) or otherwise, the Company shall propose an amendment to the Company's
Certificate of Incorporation increasing the Company's authorized number of
shares of Common Stock to cover at least the number of shares of Common Stock
issuable upon conversion of the Series D Preferred Shares and to permit holders
of not less than 25% of the outstanding voting power of the Company to call a
special meeting of stockholders (the "Amendment"). In the event the Amendment is
not approved in the 1998 Meeting, the Company agrees that it will continue to
propose the Amendment at subsequent annual meetings of stockholders or special
meetings of stockholders until the Amendment is approved. The Company agrees
that it will not submit any other proposals for stockholder approval until the
Amendment is approved, unless upon the advice of counsel, the Company determines
that it is obligated to do so under the Company's charter documents, by law or
judicial order or in order to discharge its fiduciary obligations.
g. FURTHER EQUITY ISSUANCES; RIGHT OF FIRST REFUSAL. The Company
agrees that it shall not issue any additional equity securities or securities
exercisable to purchase, or convertible into, or exchangeable for, equity
securities until the Amendment is approved, other than securities reserved for
issuance as of the Closing. The Company further agrees that any additional
equity securities issued after approval of the Amendment which have a
liquidation preference senior to the Series D Preferred Shares (the "Additional
Equity Securities") shall be subject to a right of first refusal in favor of the
Buyers (the "Right"). Pursuant to the Right, each Buyer shall have the right to
agree to purchase up to its pro rata share based on its proportionate investment
in the Series D Preferred Shares, of the Additional Equity Securities within
five (5) days of receipt of written notice from the Company of its intent to
issue the Additional Equity Securities. If any Buyer fails to give notice of its
intent to purchase its pro rata share of the Additional Equity Securities within
such five (5) day period, the Company shall thereafter sell the Additional
Equity Securities in respect of which the Right was not exercised, at a price
and upon general terms and conditions materially no more favorable to the
purchasers thereof than specified in the Company's notice to the Buyers pursuant
to this section.
10.
<PAGE> 11
h. RIGHT OF ACCESS TO BOOKS AND RECORDS. The Company agrees to
provide each Buyer with access to the books and records of the Company;
provided, however, that such Buyer shall exercise such right upon reasonable
notice to the Company, at a reasonable time, and with reasonable frequency and
shall execute a confidentiality agreement reasonably acceptable in form to the
Company prior to the exercise of such right. The right shall not be assignable
and shall not apply in instances of contested takeovers in which the requesting
Buyer is a participant or has announced in a Schedule 13D that it is
contemplating participating; provided, however, that the Company agrees that in
no event will the Company provide less information to the Buyers than is
available to other contestants.
i. BOARD OF DIRECTORS. The Company agrees that the authorized size
of the Board of Directors of the Company shall be seven directors. The Board
shall initially be comprised of Tom Mitchell, Roger Johnson, Jack Tramiel, Jugi
Tandon, Jean Deleage, and Lip-Bu Tan and a seventh member to be designated by a
majority in interest of the Buyers.
5. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The obligation of the Company hereunder to deposit with the Escrow
Agent the Series D Preferred Shares at the Closing is subject to the
satisfaction, at or before the Closing Date, of each of the following
conditions, provided that these conditions are for the Company's sole benefit
and may be waived by the Company at any time in its sole discretion:
a. Such Buyer shall have executed each of the Transaction Documents
and delivered the same to the Company.
b. Such Buyer shall have deposited with the Escrow Agent (i) the
Purchase Price for the Series D Preferred Shares to be purchased by such Buyer
by wire transfer of immediately available funds pursuant to the wire
instructions provided by the Escrow Agent and (ii) an executed Lock-Up
Agreement.
c. The representations and warranties of such Buyer shall be true
and correct in all material respects as of the date when made and as of the
Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date), and such Buyer shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by such Buyer at or prior to the Closing Date.
6. CONDITIONS TO EACH BUYER'S OBLIGATION TO PURCHASE.
The obligation of each Buyer hereunder to deposit with the Escrow
Agent the purchase price for the Series D Preferred Shares at the Closing is
subject to the satisfaction, at or before the Closing Date, of each of the
following conditions, provided that these conditions are for each Buyer's sole
benefit and may be waived by such Buyer at any time in its sole discretion:
11.
<PAGE> 12
a. The Company shall have executed each of the Transaction
Documents, and delivered the same to such Buyer.
b. The Certificate of Designations, shall have been filed with the
Secretary of State of the State of Delaware, and a copy thereof certified by
such Secretary of State shall have been delivered to such Buyer.
c. The representations and warranties of the Company shall be true
and correct in all material respects (except to the extent that any of such
representations and warranties is already qualified as to materiality in Section
3 above, in which case, such representations and warranties shall be true and
correct without further qualification) as of the date when made and as of the
Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date) and the Company shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Company at or prior to the Closing Date. Such Buyer
shall have received a certificate, executed by the Chief Executive Officer of
the Company, dated as of the Closing Date, to the foregoing effect and as to
such other matters as may be reasonably requested by such Buyer including,
without limitation, an update as of the Closing Date regarding the
representation contained in Section 3(c) above.
d. Such Buyer shall have received the opinion of the Company's
counsel dated as of the Closing Date, in form, scope and substance reasonably
satisfactory to such Buyer and in substantially the form of Exhibit F attached
hereto.
e. The Company shall have executed and delivered to the Escrow Agent
the Stock Certificates (in such denominations as such Buyer shall request) for
the Series D Preferred Shares being purchased by such Buyer.
f. The Board of Directors of the Company shall have adopted the
resolutions in substantially the form of Exhibit G attached hereto.
g. The Company shall have taken all actions necessary to authorize
and reserve the 63,295,773 shares of Common Stock available as of the date
hereof for the issuance upon conversion of the Series D Preferred Shares held by
Amber Arbitrage.
h. As of the Closing Date, such Buyer shall have received a copy of
letter agreements (the "Stockholders Agreement") executed by the ten (10)
largest stockholders of the Company as of the Closing Date that are affiliated
with the Company's officers or directors (collectively, the "Approving
Stockholders") to the effect that each of the Approving Stockholders, as common
stockholders of the Company, covenants to vote such Approving Stockholder's
shares of Common Stock in favor of amending the Company's Certificate of
12.
<PAGE> 13
Incorporation to increase the number of authorized shares of Common Stock to
cover the number of shares of Common Stock issuable upon conversion of the
Series D Preferred Shares at the Company's next special or annual meeting of
stockholders, which meeting the Company agrees to hold by November 30, 1997
(unless the proxy statement relating to such meeting is reviewed by the SEC, in
which case the length of time of such review shall be added to the above date),
and at any subsequent meeting until the Amendment is approved.
i. A total of $5,000,000 shall have been deposited with the Escrow
Agent by Buyers other than Amber.
7. INDEMNIFICATION. In consideration of each Buyer's execution and
delivery of this Agreement and acquiring the Series D Preferred Shares and
Conversion Shares hereunder and in addition to all of the Company's other
obligations under this Agreement, the Company shall defend, protect, indemnify
and hold harmless each Buyer and each other holder of Series D Preferred Shares
and Conversion Shares and all of their officers, directors, employees and agents
(including, without limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the "Indemnitees")
from and against any and all actions, causes of action, suits, claims, losses,
costs, penalties, fees, liabilities and damages, and expenses in connection
therewith (irrespective of whether any such Indemnitee is a party to the action
for which indemnification hereunder is sought), and including reasonable
attorneys' fees and disbursements (the "Indemnified Liabilities'), incurred by
the Indemnitees or any of them as a result of, or arising out of, or relating to
(a) any misrepresentation or breach of any representation or warranty made by
the Company in this Agreement, the Certificate of Designations or the
Registration Rights Agreement or any other certificate, instrument or document
contemplated hereby or thereby, (b) any breach of any covenant, agreement or
obligation of the Company contained in this Agreement, the Certificate of
Designations or the Registration Rights Agreement or any other certificate,
instrument or document contemplated hereby or thereby, or (c) any cause of
action, suit or claim brought or made against such Indemnitee and arising out of
or resulting from the execution, delivery, performance or enforcement of this
Agreement or any other instrument, document or agreement executed pursuant
hereto by any of the Indemnitees, any transaction financed or to be financed in
whole or in part, directly or indirectly, with the proceeds of the issuance of
the Series D Preferred Shares or the status of such Buyer or holder of the
Series D Preferred Shares or the Conversion Shares as an investor in the
Company. To the extent that the foregoing undertaking by the Company may be
unenforceable for any reason, the Company shall make the maximum contribution to
the payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law.
8. GOVERNING LAW; MISCELLANEOUS.
a. GOVERNING LAW. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of California without
regard to the principles of conflict of laws.
13.
<PAGE> 14
b. 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. In the event any signature page is
delivered by facsimile transmission, the party using such means of delivery
shall cause four (4) additional original executed signature pages to be
physically delivered to the other party within five (5) days of the execution
and delivery hereof; provided, however, that the failure to so deliver shall not
invalidate the Agreement.
c. HEADINGS. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
d. SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provision of this Agreement in any other jurisdiction so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner adverse to any party. If any provision of this Agreement is so broad as
to be unenforceable, the provision shall be interpreted to be only so broad as
is enforceable.
e. ENTIRE AGREEMENT; AMENDMENTS. This Agreement supersedes all other
prior oral or written agreements between the Buyers, the Company, their
affiliates and persons acting on their behalf with respect to the matters
discussed herein, and this Agreement and the instruments referenced herein
contain the entire understanding of the parties with respect to the matters
covered herein and therein and, except as specifically set forth herein or
therein, neither the Company nor any Buyer makes any representation, warranty,
covenant or undertaking with respect to such matters. No provision of this
Agreement may be waived or amended other than by an instrument in writing signed
by the Company if the Company is to be charged with enforcement and/or, as the
case may be, a majority in interest of the Buyers to be charged with
enforcement.
f. NOTICES. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by confirmed facsimile,
provided a copy is mailed by U.S. certified mail, return receipt requested;
(iii) five (5) days after being sent by U.S. certified mail, return receipt
requested, or (iv) one (1) day after deposit with a nationally recognized
overnight delivery service, in each case properly addressed to the party to
receive the same. The addresses and facsimile numbers for such communications
shall be:
If to the Company:
14.
<PAGE> 15
166 Baypointe Parkway
San Jose, California 95134
Telephone: (408) 468-1800
Facsimile: (408) 468-1619
Attention: President
With a copy to:
Cooley Godward LLP
3000 El Camino Real
Five Palo Alto Square
Palo Alto, California 94306
Telephone: (650) 843-5000
Facsimile: (650) 843-5048
Attention: Andrei Manoliu, Esq.
If to a Buyer, to its address and facsimile number on the Schedule of
Investors, with copies to such Buyer's counsel as set forth on the Schedule of
Investors. Each party shall provide ten (10) days' prior written notice to the
other party of any change in address or facsimile number.
g. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns.
Neither party shall assign this Agreement or any rights or obligations hereunder
without the prior written consent of the other party, except as specifically set
forth in the documents delivered herewith. A Buyer may assign its rights
hereunder without the consent of the Company, provided, however, that any such
assignment shall not release such Buyer from its obligations hereunder unless
such obligations are assumed by such assignee and the Company has consented to
such assignment and assumption.
h. NO THIRD PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
i. SURVIVAL. The representations and warranties of the Company and
the Buyers contained in Sections 2 and 3, the agreements and covenants set forth
in Sections 4, 7 and this Section 8(i), shall survive the Closing. Each Buyer
shall be responsible only for its own representations, warranties, agreements
and covenants hereunder.
j. FURTHER ASSURANCES. Each party shall do 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
15.
<PAGE> 16
in order to carry out the intent and accomplish the purposes of this Agreement
and the consummation of the transactions contemplated hereby.
k. PLACEMENT AGENT. The Company and the Buyers shall each indemnify
the other for any broker's or finder's fees for which such indemnifying party is
responsible.
L. NO STRICT CONSTRUCTION. The language used in this Agreement will
be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party.
16.
<PAGE> 17
IN WITNESS WHEREOF, the Buyers and the Company have caused this Securities
Purchase Agreement to be duly executed as of the date first written above.
COMPANY BUYERS
JTS CORPORATION AMBER ARBITRAGE LDC
By: /s/ DAVID T. MITCHELL By: /s/ JOHN BENDER
---------------------------------- ----------------------------------------
Name: David T. Mitchell Name: John Bender
Its: President and Chief Its: Trading Manager
Executive Officer
/s/ JACK TRAMIEL
-------------------------------------------
Jack Tramiel
/s/ SIRJANG LAL TANDON
-------------------------------------------
Sirjang Lal Tandon
/s/ DAVID T. MITCHELL
-------------------------------------------
David T. Mitchell
17.
<PAGE> 18
EXHIBIT A
SCHEDULE OF INVESTORS
<TABLE>
<CAPTION>
NUMBER OF
SERIES D
PREFERRED
INVESTOR NAME & ADDRESS INVESTMENT SHARES
- ----------------------- ------------ -----------
<S> <C> <C>
Amber Arbitrage $20,000,750 22,858
c/o Custom House Fund
Management Limited
31 Kildare Street
Dublin 2, Ireland
cc: Tenzer Greenblatt LLP
Attn: Robert Mittman, Esq.
405 Lexington Avenue
New York, NY 10174-0208
Jack Tramiel $ 3,000,375 3,429
18331 Lexington Drive
Monte Sereno, CA 95030
David T. Mitchell $ 200,375 229
JTS Corporation
166 Baypointe Parkway
San Jose, CA 95134
Sirjang L. Tandon $ 2,000,250 2,286
Tandon Associates
2125-B Madera Road
Simi Valley, CA 93065
----------- ------
TOTAL $25,201,750 28,802
=========== ======
</TABLE>
<PAGE> 1
JTS CORPORATION
SALE LOCK-UP AGREEMENT
September 25, 1997
JTS Corporation
166 Baypointe Parkway
San Jose, CA 95134
Ladies and Gentlemen:
Each of the undersigned desires to purchase shares of Series D Convertible
Preferred Stock ("Series D Preferred") of JTS Corporation (the "Company")
pursuant to the Securities Purchase Agreement dated of even date herewith (the
"Purchase Agreement").
In consideration of the foregoing, and as a condition to such purchase,
each of the undersigned hereby irrevocably agrees that he, she or it will not,
without the prior written approval of the Company, for a period of one year (the
"Full Lock-up Period") from the date hereof, offer, sell, contract to sell, make
any short sale (including, but not limited to, a "short against the box"),
pledge, or otherwise dispose of directly or indirectly, more than fifty percent
(50%) of the shares of Series D Preferred or Common Stock issuable upon
conversion of such fifty percent (50%) of the shares of Series D Preferred (such
fifty percent (50%) being referred to herein as the "Securities") which he, she
or it may own directly or indirectly or beneficially (as defined by the
Securities Exchange Act of 1934 and the rules and regulations thereunder);
provided however, that this Agreement shall terminate, and the foregoing
restriction shall be of no further force and effect, in the case of (i) an
Acquisition or Asset Transfer (both as defined in the Certificate of Designation
of the Series D Preferred), (ii) the Company's failure to obtain timely SEC
effectiveness of the Form S-3 registration statement pursuant to Section 2.2(a)
of the Registration Rights Agreement of even date herewith, (iii) the
commencement by the Company of bankruptcy proceedings, or (iv) an involuntary
bankruptcy proceeding which the Company has not succeeded in dismissing within
sixty (60) days of its commencement.
The foregoing restriction is expressly agreed to preclude each holder of
Securities from engaging in any hedging or other transaction that is designed to
or reasonably expected to lead to, or result in, a disposition of Securities
during the Lock-Up Period even if such Securities would be disposed of by any of
the undersigned subsequent to the Lock-up Period or by someone other than one of
the undersigned. Nothing herein shall prevent the undersigned from engaging in
direct sales through the American Stock Exchange of Common Stock owned by the
undersigned prior to September 25, 1997.
<PAGE> 2
Notwithstanding the foregoing, any transfer of Securities which either (i)
will not result in any change in beneficial ownership, including, but not
limited to, pro rata partnership distributions and transfers into trusts for the
benefit of the original holder, or (ii) constitute bona fide gifts of such
shares, will not require your consent provided that the transferee enters into a
lock-up agreement in substantially the form hereof covering the remainder of the
Lock-up Period under this Agreement.
Each of the undersigned confirms that he, she or it understands that the
Company will rely upon the representations set forth in this Agreement in
proceeding with purchase and sale of the Series D Preferred pursuant to the
Purchase Agreement. Each of the undersigned understands that this Agreement is
irrevocable and shall be binding on the undersigned and his, her or its
respective successors, heirs, personal representatives and assigns. Each of the
undersigned agrees and consents to the entry of stop transfer instructions with
the Company's transfer agent against the transfer of the Securities except in
compliance with this Agreement.
Amber Arbitrage LDC
By: /s/ JOHN BENDER
---------------------------------------
Name: John Bender
Its: Trading Manager
/s/ JACK TRAMIEL
--------------------------------------------
Jack Tramiel
/s/ SIRJANG LAL TANDON
--------------------------------------------
Sirjang Lal Tandon
/s/ DAVID T. MITCHELL
--------------------------------------------
David T. Mitchell
