EXHIBIT 4.18
SUBSCRIPTION AGREEMENT
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This Subscription Agreement (the "Agreement") dated November 12, 1996 is
entered into by and between SyQuest Technology, Inc., a Delaware corporation
(together with its successors, "SyQuest"), and Xxxxxxxx International Limited, a
company organized under the laws of the Cayman Islands (together with its
successors, "Xxxxxxxx").
Unless otherwise defined herein, capitalized terms used herein and not
defined herein shall have the meanings given to them in Regulation S
("Regulation S") under the United States Securities Act of 1933, as amended (the
"Securities Act").
The parties hereto agree as follows:
1. Purchase and Sale. In consideration of and upon the basis of the
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representations, warranties and agreements and subject to the terms and
conditions set forth in this Agreement:
a. Common Stock. SyQuest agrees to issue and sell to Xxxxxxxx,
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and Xxxxxxxx agrees to purchase from SyQuest, on the Closing Date specified
in Section 2 hereof, 1,500,000 newly issued shares of SyQuest common stock,
par value $.001 per share (the "Common Stock"), at a purchase price equal
to FIVE and 68.75/100 DOLLARS ($5.6875) per share (the "Purchase Price",
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the last sales price of the Common Stock as reported by Bloomberg L.P.
("Bloomberg") for the date hereof. The shares of Common Stock purchased
pursuant to this Section 1.a are referred to herein as the "Initial
Shares."
b. Warrant. In consideration of the purchase of the Initial
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Shares by Xxxxxxxx, SyQuest will issue to Xxxxxxxx on the Closing Date a
warrant (the "Warrant") having the terms set forth in the Warrant
Certificate attached hereto as Annex A to purchase shares of Common Stock
(the "Warrant Certificate"). The shares of Common Stock issuable pursuant
to the Warrant are referred to herein as the "Warrant Shares."
2. Closing. The delivery of the Initial Shares referred to in
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Section 1.a and the delivery of the Warrant referred to in Section 1.b (the
"Closing") shall take place via facsimile at 2:00 p.m. (New York time) on
November 13, 1996, or at such other date and time as Xxxxxxxx and SyQuest may
agree in writing (such date and time being referred to herein as the "Closing
Date").
At the Closing, the following deliveries shall be made:
a. Initial Shares Certificate. SyQuest shall deliver the
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certificate representing the Initial Shares to Xxxxxxxx.
b. Warrant. SyQuest shall deliver the Warrant Certificate to
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Xxxxxxxx.
c. Closing Documents. The closing documents required by Sections
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7 and 8 shall be delivered to Xxxxxxxx and SyQuest, respectively.
d. Purchase Price. Xxxxxxxx shall cause to be wire transferred
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to SyQuest, in accordance with instructions furnished by SyQuest at least
one day prior to the Closing, an amount, in immediately available United
States dollars, equal to the product of the Purchase Price multiplied by
1,500,000.
The foregoing deliveries shall be deemed to occur simultaneously as
part of a single transaction, and no delivery shall be deemed to have been made
until all such deliveries have been made.
3. Representations and Warranties of SyQuest. Except as set forth in
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the Schedule of Exceptions attached hereto, SyQuest hereby represents and
warrants to Xxxxxxxx on the date hereof and on the Closing Date and on each
Warrant Exercise Date (as defined in the Warrant Certificate) as follows:
a. SyQuest has been duly incorporated and is validly existing in
good standing under the laws of Delaware, or, after the Closing Date if
another entity has succeeded SyQuest in accordance with the terms hereof,
under the laws of one of the United States.
b. The execution, delivery and performance of this Agreement and
the Warrant Certificate by SyQuest have been duly authorized by all
requisite corporate action and no further consent or authorization of
SyQuest, its Board of Directors or its stockholders is required. This
Agreement and the Warrant Certificate have been duly executed and delivered
by SyQuest and, when duly authorized, executed and delivered by Xxxxxxxx,
will be valid and binding agreements enforceable against SyQuest in
accordance with their terms, subject to bankruptcy, insolvency, reorgani-
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zation, moratorium and similar laws of general applicability relating to or
affecting creditors' rights generally and to general principles of equity.
c. SyQuest has full corporate power and authority necessary to
execute and deliver this Agreement and the Warrant Certificate and to
perform its obligations hereunder and thereunder.
d. No consent, approval, authorization or order of any court,
governmental agency or other body is required for execution and delivery by
SyQuest of this Agreement and the Warrant Certificate or the performance by
SyQuest of any of its obligations hereunder or thereunder, other than, with
respect to any Warrant Exercise Date, any consent, approval, authorization
or order which has been received on or prior to such date.
e. Neither the execution and delivery by SyQuest of this
Agreement and the Warrant Certificate nor the performance by SyQuest of any
of its obligations hereunder or thereunder:
(1) violates, conflicts with, results in a breach of, or
constitutes a default (or an event which with the giving of notice or
the lapse of time or both would be reasonably likely to constitute a
default) under (A) the Certificate of Incorporation or by-laws of
SyQuest or any of its subsidiaries or any Certificate of Designation
relating to any securities of SyQuest or any of its subsidiaries, (B)
any decree, judgment, order, law, treaty, rule, regulation or
determination of which SyQuest is aware (after due inquiry) of any
court, governmental agency or body, or arbitrator having jurisdiction
over SyQuest or any of its subsidiaries or any of their respective
properties or assets, (C) the terms of any bond, debenture, note or
any other evidence of indebtedness, or any agreement, stock option or
other similar plan, indenture, lease, mortgage, deed of trust or other
instrument to which SyQuest or any of its subsidiaries is a party, by
which SyQuest or any of its subsidiaries is bound, or to which any of
the properties or assets of SyQuest or any of its subsidiaries is
subject, (D) the terms of any "lock-up" or similar provision of any
underwriting or similar agreement to which SyQuest or any of its
subsidiaries is a party or (E) any rules of the National Association
of Securities Dealers, Inc. applicable to SyQuest or the transactions
contemplated hereby; or
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(2) results in the creation or imposition of any lien,
charge or encumbrance upon (A) any Initial Share, the Warrant or any
Warrant Share or (B) any of the properties or assets of SyQuest or any
of its subsidiaries.
f. SyQuest has validly reserved 1,875,000 shares for issuance
pursuant to the Warrant. When issued to Xxxxxxxx against payment therefor
in accordance with the terms of this Agreement and the Warrant Certificate,
each Initial Share, the Warrant and each Warrant Share:
(1) will have been duly and validly authorized, duly and
validly issued, fully paid and non-assessable;
(2) will be free and clear of any security interests,
liens, claims or other encumbrances (other than those resulting solely
from actions by Xxxxxxxx); and
(3) will not have been issued or sold in violation of any
preemptive or other similar rights of the holders of any securities of
SyQuest.
g. The Initial Shares have been, and upon notice of issuance the
Warrant Shares will be, duly listed and admitted for trading on the NASDAQ
National Market ("NASDAQ") or, following the Closing Date, listed and
registered on a national securities exchange (as defined in the United
States Securities Exchange Act of 1934, as amended (the "Exchange Act")).
On the Closing Date, SyQuest shall continue to satisfy all quantitative
maintenance criteria of the NASDAQ.
h. SyQuest is a Reporting Issuer within the meaning of
Regulation S, provided, however, that the representations and warranties
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contained in this Section 3(h) shall not be required to be given in respect
of any Warrant Exercise Date if the provisions of Section 3A are applicable
and SyQuest is in full compliance therewith and Xxxxxxxx is permitted to
resell the Common Stock thereunder.
i. On the Closing Date, there is no pending or, to the best
knowledge of SyQuest, threatened action, suit, proceeding or investigation
before any court, governmental agency or body, or arbitrator having
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jurisdiction over SyQuest or any of its affiliates that would materially
affect the execution by SyQuest of, or the performance by SyQuest of its
obligations under, this Agreement or the Warrant Certificate, provided,
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however, that the representations and warranties contained in this Section
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3(i) shall not apply to any action, threatened action, suit, proceeding or
investigation initiated by Xxxxxxxx.
j. SyQuest has timely filed all filings with the United States
Securities and Exchange Commission (the "SEC") under the Securities Act or
under Section 13(a) or 15(d) of the Exchange Act (each, an "SEC Filing")
required to be filed by SyQuest pursuant to such acts and no SEC Filing, or
press release containing information material to the business of SyQuest as
a whole, contains any untrue statement of a material fact or omits to state
any material fact necessary in order to make the statements, in the light
of the circumstances under which they were made, not misleading.
k. Since the date of SyQuest's most recent SEC Filing, there has
not been, and SyQuest is not aware of any development that might be
reasonably likely to result in, any material adverse change in the
condition, financial or otherwise, or in the business affairs or business
prospects of SyQuest, whether or not arising in the ordinary course of
business, except as disclosed in such SEC Filing, provided, however, that
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the representations and warranties contained in this Section 3(k) shall not
be required to be given in respect of any Warrant Exercise Date; and
provided further that (i) the parties hereto acknowledge that Xxxxxxxx has
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neither requested of nor received from SyQuest any non-public information
relating to SyQuest or the business affairs or business prospects of
SyQuest and (ii) without limiting Xxxxxxxx'x reliance on any of the
representations, warranties, covenants and agreements of SyQuest contained
herein, Xxxxxxxx assumes the risk that the knowledge of any of the non-
public information described in proviso (i) of this Section 3(k) might have
materially influenced Xxxxxxxx'x decision to enter into and perform this
Agreement. As of the Closing Date, SyQuest is not aware of any
development that might result in SyQuest not satisfying all quantitative
maintenance criteria of the NASDAQ.
l. The offer and sale of the Initial Shares, the Warrant and the
Warrant Shares to Xxxxxxxx pursuant to this Agreement and the Warrant
Certificate will, subject to compliance by Xxxxxxxx with the applicable
representations and warranties contained in Section 4 hereof and with the
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applicable covenants and agreements contained in Section 6 hereof, be made
in accordance with the provisions and requirements of Regulation S and any
applicable state law, provided, however, that the representations and
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warranties contained in this Section 3(l) shall not be required to be given
in respect of any Warrant Exercise Date if the provisions of Section 3A are
applicable and SyQuest is in full compliance therewith and Xxxxxxxx is
permitted to resell the Common Stock thereunder.
m. Neither SyQuest nor any of its affiliates nor any person
acting on its or their behalf has engaged or will engage in any Directed
Selling Efforts with respect to the Initial Shares, the Warrant or the
Warrant Shares, and all such persons understand and have complied and will
otherwise comply with the requirements of Regulation S.
n. The transactions contemplated by this Agreement and the
Warrant are not part of a plan or scheme on the part of SyQuest, any of its
subsidiaries or any person acting on its or their behalf to evade the
registration provisions of the Securities Act.
o. Reserved.
p. Except for securities proposed to be sold for an aggregate
purchase price of approximately $20 million to Beijing Legend Group Ltd.
and its affiliates (the "BLC Transaction"), on the Closing Date, neither
SyQuest nor any of its affiliates has offered to sell or sold any Common
Stock or any securities convertible into or exchangeable or exercisable for
Common Stock in reliance upon Regulation S at any time during the past 12
months and there are no outstanding convertible or exchangeable securities
that have been offered or sold in reliance upon Regulation S, except, in
each case the Initial Shares, the Warrant and the Warrant Shares sold
pursuant hereto.
q. Capitalization. As of the date hereof, the authorized
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capital stock of SyQuest consists of 60,000,000 shares of Common Stock, and
4,000,000 shares of Preferred Stock, par value $.001 per share, of SyQuest
("Preferred Stock"). As of October 31, 1996, (i) 13,867,370 shares of
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Common Stock and 48,956 shares of Preferred Stock were issued and
outstanding, (ii) 16,903,356 shares of Common Stock were reserved for
issuance upon exercise of outstanding stock options, convertible Preferred
Stock, warrants or other rights (based, with respect to 12,468,118 shares
of Common Stock, on a conversion price of $5.7503 per share of Common
Stock) and (iii) 1,225,000 shares of Common Stock were held in the treasury
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of SyQuest. All the outstanding shares of Common Stock are, and all shares
which may be issued pursuant to stock options, warrants or other
convertible rights will be, when issued and paid for in accordance with the
respective terms thereof, duly authorized, validly issued, fully paid and
nonassessable and free of any preemptive rights in respect thereof. As of
the date hereof, except as set forth above, and except for shares of Common
Stock or other securities issued upon conversion, exchange, exercise or
purchase associated with the securities, options, warrants, rights and
other instruments referenced above from October 31, 1996 to the date
hereof, (i) no shares of capital stock or other voting securities of
SyQuest were outstanding, (ii) no equity equivalents, interests in the
ownership or earnings of SyQuest or other similar rights were outstanding
and (iii) there were no existing options, warrants, calls, subscriptions or
other rights or agreements or commitments relating to the capital stock of
SyQuest or any of its subsidiaries or obligating SyQuest or any of its
subsidiaries to issue, transfer, sell or redeem any shares of capital
stock, or other equity interest in, SyQuest or any of its subsidiaries or
obligating SyQuest or any of its subsidiaries to grant, extend or enter
into any such option, warrant, call, subscription or other right, agreement
or commitment. In October 1996, SyQuest issued and sold 30,000 shares of
its Preferred Stock substantially on the terms set forth in the
Certificates of Designation and securities purchase agreements filed with
SyQuest's Current Report on Form 8-K/A filed by SyQuest with the SEC on
November 1, 1996, including the payment to an escrow account for the
benefit of SyQuest of an aggregate of $30 million in cash.
3A. Registration Provisions.
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a. If, at any time after the date hereof, there is any
determination of application of, or change in, any law or regulation
relating to the issuance and resale of the Initial Shares, the Warrant or
the Warrant Shares, including any interpretation or revision by the SEC or
action by the United States government relating to Regulation S or any
successor or revision to Regulation S, and such determination, change,
interpretation, successor provision or revision imposes a Restricted Period
applicable to any security issued or issuable hereunder or under the
Warrant that is greater than that in effect on the date of this Agreement,
or would materially impair the ability of Xxxxxxxx or any of its affiliates
to offer, sell or otherwise dispose of any such security pursuant to
Regulation S as contemplated hereby, or requires any such offer, sale or
other disposition to be registered under the Securities Act, then upon the
written request of Xxxxxxxx (a "Registration Request"), SyQuest shall, as
promptly as practicable thereafter and at its own expense, file a
registration statement (the "Registration Statement") under the Securities
Act covering the
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sale or resale of all such securities (each a "Covered Security") and shall
use its best efforts to cause such registration statement to be declared
effective as promptly as possible; provided that Xxxxxxxx shall have
provided such information and cooperation in connection therewith as
SyQuest may reasonably request. Upon the ef-fectiveness of such
Registration Statement (A) SyQuest shall issue such securities to Xxxxxxxx
in accordance with the terms hereof and (B) the provisions of Sections
3(l), (m) and (o), 4(e), (f), (g), (h), (i) and (j), 5(a), (b), (c) and
(d), 6 (collectively, the "Specified Provisions"), 7(a) and (b) (to the
extent applicable to the Specified Provisions), 8(b), (c) and (d) (to the
extent applicable to the Specified Provisions) shall thereafter be of no
force and effect with respect to the issuance of such Covered Securities.
b. In the case of the registration effected by SyQuest pursuant
to this Section 3A registration provisions, SyQuest will use its best
efforts to: (i) keep such registration effective until the earlier of (A)
the third anniversary of the issuance of each Covered Security, (B) such
date as all of the Covered Securities shall have been sold by Xxxxxxxx or
(C) such time as all of the Covered Securities held by Xxxxxxxx can be sold
by Xxxxxxxx or any of its affiliates within a three-month period without
compliance with the registration requirements of the Securities Act
pursuant to Rule 144 under the Securities Act ("Rule 144"); (ii) prepare
and file with the SEC such amendments and supplements to the Registration
Statement and the prospectus used in connection with the Registration
Statement (as so amended and supplemented from time to time, the
"Prospectus") as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all Covered Securities by
Xxxxxxxx or any of its affiliates; (iii) furnish such number of
Prospectuses and other documents incident thereto, including any amendment
of or supplement to the Prospectus, as Xxxxxxxx from time to time may
reasonably request; (iv) cause all Covered Securities that are Common Stock
to be listed on each securities exchange and quoted on each quotation
service on which similar securities issued by SyQuest are then listed or
quoted; (v) provide a transfer agent and registrar for all Covered
Securities and a CUSIP number for all Covered Securities; (vi) otherwise
use its best efforts to comply with all applicable rules and regulations of
the SEC; and (vii) file the documents required of SyQuest and otherwise use
its best efforts to obtain and maintain requisite blue sky clearance in (A)
all jurisdictions in which any of the Covered Securities are originally
sold and (B) all other states specified in writing by Xxxxxxxx, provided,
however, that as to this clause (B), SyQuest shall not be required to
qualify to do business or consent to service of process in any state in
which it is not now so qualified or has not so consented.
c. SyQuest shall furnish to Xxxxxxxx upon request a reasonable
number of copies of a supplement to or an amendment of such
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Prospectus as may be necessary in order to facilitate the public sale or
other disposition of all or any of the Covered Securities by Xxxxxxxx or
any of its affiliates pursuant to the Registration Statement.
d. With a view to making available to Xxxxxxxx and its affiliates
the benefits of Rule 144 and Form S-3 under the Securities Act, SyQuest
covenants and agrees to: (i) make and keep available adequate current
public information (within the meaning of Rule 144(c)) concerning SyQuest,
until the earlier of (A) the third anniversary of the issuance of each
Covered Security or (B) such date as all of the Covered Securities shall
have been resold by Xxxxxxxx or any of its affiliates; (ii) maintain its
status as a Reporting Issuer and file with the SEC in a timely manner all
reports and other documents required of SyQuest for use of Form S-3; and
(iii) furnish to Xxxxxxxx upon request, as long as Xxxxxxxx owns any
Covered Securities, (A) a written statement by SyQuest that it has complied
with the reporting requirements of the Securities Act and the Exchange Act,
(B) a copy of the most recent annual or quarterly report of SyQuest, and
(C) such other information as may be reasonably requested in order to avail
Xxxxxxxx and its affiliates of Rule 144 or Form S-3 with respect to such
Covered Securities.
e. Notwithstanding anything else in this Section 3A, if, at any
time during which a Prospectus is required to be delivered in connection
with the sale of any Covered Securities, SyQuest determines in good faith
that a development has occurred or a condition exists as a result of which
the Registration Statement or the Prospectus contains a material
misstatement or omission, SyQuest will immediately notify Xxxxxxxx thereof
by telephone and in writing. Upon receipt of such notification, Xxxxxxxx
and its affiliates will immediately suspend all offers and sales of any
Covered Securities pursuant to the Registration Statement. In such event,
SyQuest will amend or supplement the Registration Statement as promptly as
practicable and will take such other steps as may be required to permit
sales of the Covered Securities thereunder by Xxxxxxxx and its affiliates
in accordance with applicable federal and state securities laws. SyQuest
will promptly notify Xxxxxxxx after it has determined in good faith that
such sales have become permissible in such manner and will promptly deliver
copies of the Registration Statement and the Prospectus (as so amended or
supplemented) to Xxxxxxxx in accordance with paragraph (b) of this Section
3A. Notwithstanding the foregoing, (A) under no circumstances shall
SyQuest be entitled to exercise its right to suspend sales of any Covered
Securities pursuant to the Registration Statement more than two times in
any twelve-month period, (B) the period during which such sales may be
suspended (each a "Blackout Period") shall not exceed thirty days and (C)
no Blackout Period may commence less than 30 days after the end of the
preceding Blackout Period.
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Upon the commencement of a Blackout Period pursuant to this Section
3A, Xxxxxxxx will immediately notify SyQuest of any contracts to sell any
Covered Securities (each a "Sales Contract") that Xxxxxxxx or any of its
affiliates has entered into prior to the commencement of such Blackout
Period and that would require delivery of such Covered Securities during
such Blackout Period, which notice will contain the aggregate sale price
and volume of Covered Securities pursuant to such Sales Contract. Upon
receipt of such notice, SyQuest will immediately notify Xxxxxxxx of its
election either (i) to terminate the Blackout Period and, as promptly as
practicable, amend or supplement the Registration Statement or the
Prospectus in order to correct the material misstatement or omission and
deliver to Xxxxxxxx copies of such amended or supplemented Registration
Statement and Prospectus in accordance with paragraph (b) of this Section
3A or (ii) to continue the Blackout Period in accordance with this
paragraph. If SyQuest elects to continue the Blackout Period, and Xxxxxxxx
or any of its affiliates is therefore unable to consummate the sale of
Covered Securities pursuant to the Sales Contract (such unsold Covered
Securities being hereinafter referred to herein as the "Unsold
Securities"), SyQuest will promptly indemnify each Xxxxxxxx Indemnified
Party (as such term is defined in Section 11(a) below) against any
Proceeding (as such term is defined in Section 11(a) below) that each
Xxxxxxxx Indemnified Party may incur arising out of or in connection with
Xxxxxxxx'x breach or alleged breach of any such Sales Contract, and SyQuest
shall reimburse each Xxxxxxxx Indemnified Party for any reasonable costs or
expenses (including reasonable legal fees) incurred by such party in
investigating or defending any such Proceeding (collectively, the
"Indemnification Amount"); provided, however, that each Xxxxxxxx
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Indemnified Party shall take all actions reasonably necessary or
appropriate to mitigate such Indemnification Amount; and provided further,
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however, that the Indemnification Amount shall be reduced by an amount
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equal to the number of Unsold Securities multiplied by the difference
between (x) the actual per share price received by Xxxxxxxx or any of its
affiliates upon the sale of the Unsold Securities (if such sale occurs
within three Trading Days of the end of the Blackout Period) or the closing
sale price of the Common Stock on NASDAQ or other national securities
exchange on which the Common Stock is then listed on the third Trading Day
after the end of the Blackout Period (if the Unsold Securities are not sold
by Xxxxxxxx or any of its affiliates within three Trading Days of the end
of the Blackout Period), and (y) the per share sale price for the Unsold
Securities provided in the Sales Contract. As used herein, the term
"Trading Day" means any day on which SyQuest's Common Stock is quoted on
NASDAQ or, if applicable, other national securities exchange.
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4. Representations and Warranties of Xxxxxxxx. Xxxxxxxx hereby
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represents and warrants to SyQuest on the date hereof and on the Closing Date,
and agrees with SyQuest, as follows:
x. Xxxxxxxx has been duly incorporated and is validly existing
in good standing under the laws of the Cayman Islands.
b. The execution, delivery and performance of this Agreement by
Xxxxxxxx have been duly authorized by all requisite corporate action and no
further consent or authorization of Xxxxxxxx, its Board of Directors or its
stockholders is required. This Agreement has been duly executed and
delivered by Xxxxxxxx and, when duly authorized, executed and delivered by
SyQuest, will be a valid and binding agreement enforceable against Xxxxxxxx
in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights generally and to general
principles of equity.
x. Xxxxxxxx understands that no United States federal or state
agency has passed on, reviewed or made any recommendation or endorsement of
the Initial Shares, the Warrant or the Warrant Shares.
d. In making the decision to purchase the Initial Shares, the
Warrant and the Warrant Shares in accordance with this Agreement, Xxxxxxxx
has relied solely upon independent investigations made by it and not upon
any representations made by SyQuest other than those made in this
Agreement.
x. Xxxxxxxx understands that the Initial Shares, the Warrant and
the Warrant Shares have not been and , subject to Section 3A, will not be
registered under the Securities Act and may not be reoffered or resold
other than pursuant to such registration or an available exemption
therefrom.
x. Xxxxxxxx is not a U.S. Person and is not acquiring the
Initial Shares, the Warrant or any Warrant Shares for the account or
benefit of any U.S. Person, and Xxxxxxxx is not an affiliate of SyQuest.
g. At the time the buy orders for the Initial Shares and the
Warrant (and any Warrant Shares to be issued during the Restricted Period)
were originated, Xxxxxxxx was located outside the United States.
h. Neither Xxxxxxxx nor any of its affiliates nor anyone acting
on its or their behalf has engaged or will engage in any Directed Selling
Efforts with respect to the Initial Shares, the Warrant or any Warrant
Shares,
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and all such persons understand and have complied and will otherwise comply
with the requirements of Regulation X.
x. Xxxxxxxx:
(1) will not, during the Restricted Period applicable to the
Initial Shares, the Warrant and the Warrant Shares, offer or sell any
of the foregoing securities (or create or maintain any derivative
position equivalent thereto) in the United States, to or for the
account or benefit of a U.S. Person or other than in accordance with
Regulation S; and
(2) will, after the expiration of the applicable Restricted
Period, offer, sell, pledge or otherwise transfer the Initial Shares,
the Warrant or any Warrant Shares (or create or maintain any
derivative position equivalent thereto) only pursuant to registration
under the Securities Act or an available exemption therefrom and, in
any case, in accordance with applicable state securities laws; and
(3) will not, for a period of 90-days following the Closing
Date, offer or sell the Initial Shares, the Warrant, the Warrant
Shares or any other shares of Common Stock (or create or maintain any
derivative position equivalent thereto, except for stock index
derivatives or derivatives of a group of securities), provided,
however, that the parties hereto expressly agree that Xxxxxxxx may
pledge the Initial Shares, the Warrant, the Warrant Shares or any
other shares of Common Stock pursuant to a bona fide pledge securing a
full recourse debt or other obligation and that, subject to compliance
with the Securities Act and any other applicable securities law, such
a pledgee will have the right to exercise all remedies under such
pledge, including a right to foreclose upon the Initial Shares, the
Warrant, the Warrant Shares or any other shares of Common Stock, as
the case may be.
x. Xxxxxxxx is purchasing the Initial Shares, the Warrant and
the Warrant Shares for its own account, for the purpose of investment and
not with a view to a distribution thereof.
k. The transactions contemplated by this Agreement and the
Warrant Certificate are not part of a plan or scheme on the part of
Xxxxxxxx, any of its affiliates or any person acting on its or their behalf
to evade the registration requirements of the Securities Act.
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5. Covenants of SyQuest. SyQuest covenants and agrees with Xxxxxxxx
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as follows:
a. For so long as any portion of the Warrant remains
outstanding, and in any case for a period of 40 days thereafter, SyQuest
will continue to be a Reporting Issuer within the meaning of Regulation S
and will maintain the eligibility of the Common Stock for quotation on
NASDAQ or listing on a national securities exchange (as defined in the
Exchange Act).
b. Except with the written consent of Xxxxxxxx, for a period of
six months following the date of this Agreement, SyQuest will not offer or
sell any Common Stock or any securities convertible into or exchangeable
into Common Stock in reliance upon Regulation S, other than the BLC
Transaction, and in any event will not take any action which would extend
the Restricted Period hereunder.
c. For so long as any portion of the Warrant remains
outstanding, and in any case for a period of 40 days thereafter, neither
SyQuest nor any of its affiliates nor any person acting on its or their
behalf will engage in any Directed Selling Efforts with respect to the
Warrant or any Warrant Shares.
d. For so long as any portion of the Warrant remains
outstanding, and in any case for a period of 40 days thereafter, SyQuest
will ensure that all applicable Offering Restrictions with respect to the
Warrant and the Warrant Shares are thoroughly complied with and satisfied.
e. Beginning on the date hereof and for so long as any portion
of the Warrant remains outstanding, and in any case for a period of 40 days
thereafter, SyQuest will promptly notify Xxxxxxxx if there is any public
disclosure by SyQuest of material information regarding SyQuest or its
financial condition, prospects or results of operation and provide Xxxxxxxx
with copies of all SEC Filings.
f. Reserved.
g. SyQuest will comply with the terms and conditions of the
Warrant as set forth in the Warrant Certificate (as duly amended from time
to time by the parties hereto).
h. For so long as any portion of the Warrant remains
outstanding, SyQuest shall at all times reserve and keep available, free
from preemptive rights, out of its authorized but unissued Common Stock,
for
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issuance upon exercise of such Warrant, the maximum number of Warrant
Shares then so issuable.
6. Covenants of Xxxxxxxx. Xxxxxxxx hereby covenants and agrees with
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SyQuest as follows:
a. During any Restricted Period applicable to the Initial
Shares, the Warrant or the Warrant Shares, neither Xxxxxxxx nor any of its
affiliates nor any person acting on its or their behalf will:
(1) offer or sell such initial Shares, Warrant or Warrant
Shares other than in an Offshore Transaction;
(2) engage in any Directed Selling Efforts with respect to
such Initial Shares, Warrant or Warrant Shares;
(3) offer or sell such Initial Shares, Warrant or Warrant
Shares other than: (A) in accordance with Rule 903 or Rule 904 of
Regulation S; (B) pursuant to registration under the Securities Act or
(C) pursuant to an available exemption therefrom; or
(4) offer or sell such Initial Shares, Warrant or Warrant
Shares, to any U.S. Person or for the account or benefit of any U.S.
Person.
b. Neither Xxxxxxxx nor any of its affiliates nor any person
acting on its or their behalf will at any time offer or sell any Initial
Shares, the Warrant or any Warrant Shares other than pursuant to
registration under the Securities Act or pursuant to an available exemption
therefrom.
6A. Legend. The term "Restricted Period," with respect to any
------
security, shall mean the Restricted Period then applicable to such security
pursuant to Regulation S (or any applicable successor thereto), provided that,
the parties agree that, absent an intervening change in the applicable law, the
Restricted Period with respect to the Initial Shares, the Warrant and the
Warrant Shares will expire on the 40th day after the Closing Date. SyQuest
shall place the following legend on the certificate representing the Initial
Shares:
The securities represented by this certificate were issued
on November 13 , 1996 (the "Closing Date") pursuant to the
Subscription Agreement dated November 12, 1996 between
SyQuest Technology, Inc. ("SyQuest") and Xxxxxxxx International
Limited. The
14
securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended
(the "Securities Act"), and have been sold in reliance on
the exemption from registration provided by Regulation S
under the Securities Act ("Regulation S"). Prior to the
expiration of a 40-day restricted period beginning on the
Closing Date (the "Restricted Period"), the securities
represented by this certificate may not be offered or sold,
directly or indirectly, within the United States (as defined
in Regulation S under the Securities Act), to a U.S. Person
(as defined in Regulation S under the Securities Act) or for
the account or benefit of a U.S. Person. After the
Restricted Period, such securities may be resold in the
United States or to a U.S. Person only if they are
registered under the Securities Act or an exemption from
registration is available.
At any time after the expiration of the Restricted Period in
connection with the sale or pledge of any of the Initial Shares, upon the
written request of Xxxxxxxx accompanied by either (i) a certification of an
appropriate officer of Xxxxxxxx that in the case of a sale, the proposed
purchaser is not a U.S. Person or, in the case of a pledge, such Initial Shares
are being pledged pursuant to a bona fide pledge securing a full recourse debt
or other obligation, or, (ii) at SyQuest's option, an opinion of counsel
reasonably satisfactory to SyQuest to the effect that it is not necessary in
connection with the reoffer and resale, or pledge, as the case may be, of such
Initial Shares to register such Initial Shares under the Securities Act, SyQuest
shall, or shall cause its transfer agent (if any) to, (i) accept from Xxxxxxxx
the legended certificates representing such Initial Shares and deliver in their
place unlegended certificates therefor, unless such legend is required by law
and (ii) release, and not subsequently issue, any stop transfer order or other
order impeding such sale and delivery of such Initial Shares. At any time after
the expiration of the Restricted Period with respect to the Warrant,
certificates for any Warrant Shares issued or in respect of transferred shares
of Common Stock will not be legended unless required by law, upon satisfaction
of the conditions set forth in Section 8 and, if applicable, in the Warrant
Certificate.
7. Conditions Precedent to Xxxxxxxx'x Obligations. The obligations
----------------------------------------------
of Xxxxxxxx hereunder are subject to the performance by SyQuest of its
obligations hereunder and to the satisfaction of the following additional
conditions precedent, unless expressly waived in writing by Xxxxxxxx:
a. On the Closing Date and on each Warrant Exercise Date (as
defined in the Warrant Certificate), (i) the representations and warranties
15
made by SyQuest in this Agreement shall be true and correct, and (ii)
SyQuest shall have complied fully with all the covenants and agreements in
this Agreement and the Warrant Certificate; and Xxxxxxxx shall have
received on each such date a certificate of the Chief Executive Officer and
the Chief Financial Officer of SyQuest dated such date and to such effect.
b. On the Closing Date and on each Warrant Exercise Date (as
defined in the Warrant Certificate), SyQuest shall have delivered to
Xxxxxxxx an opinion of counsel reasonably satisfactory to Xxxxxxxx, dated
the date of delivery, confirming in substance the matters covered in
paragraphs (a), (b), (c), (d), (e), (f), (g), (h) and (i) of Section 3
hereof; provided, however, that no such opinion delivered in respect of any
-------- -------
Warrant Exercise Date shall be required to cover the matters set forth in
paragraph (i) of Section 3 hereof.
c. On the Closing Date, SyQuest shall have delivered to Xxxxxxxx
the opinion of counsel reasonably satisfactory to Xxxxxxxx, dated the
Closing Date, to the effect that the offer and sale of the Initial Shares
and the Warrant hereunder do not require registration under the Securities
Act.
8. Conditions Precedent to SyQuest's Obligations. The obligations of
---------------------------------------------
SyQuest hereunder are subject to the performance by Xxxxxxxx of its obligations
hereunder and to the satisfaction of the following additional conditions
precedent, unless expressly waived in writing by SyQuest:
a. On the Closing Date and on each Warrant Exercise Date (as
defined in the Warrant Certificate), (i) the representations and warranties
made by Xxxxxxxx in this Agreement shall be true and correct, and (ii)
Xxxxxxxx shall have complied fully with all the covenants and agreements in
this Agreement and the Warrant Certificate; and SyQuest shall have received
on each such date a certificate of an appropriate officer of Xxxxxxxx dated
such date and to such effect.
b. On the Closing Date, Xxxxxxxx shall have delivered to SyQuest
a written certification of an appropriate officer of Xxxxxxxx dated such
date stating that Xxxxxxxx is not a U.S. Person.
c. On each Warrant Exercise Date, Xxxxxxxx shall have delivered
to SyQuest a written certification of an appropriate officer of Xxxxxxxx
dated such date stating that Xxxxxxxx is not a U.S. Person.
d. On the date of any transfer by Xxxxxxxx of the Warrant or any
Common Stock during the applicable Restricted Period, Xxxxxxxx shall
16
have delivered to SyQuest a written certification of an appropriate officer
of Xxxxxxxx dated such date stating that Xxxxxxxx is not a U.S. Person and
that the Warrant is not being exercised on behalf of a U.S. Person.
e. On the Closing Date, Xxxxxxxx shall have delivered to SyQuest
the opinion of counsel substantially in the form attached hereto, dated the
Closing Date, to the effect that the offer and sale of the Initial Shares
and the Warrant hereunder do not require registration under the Securities
Act.
9. Fees and Expenses. Each of Xxxxxxxx and SyQuest agrees to pay its
-----------------
own expenses incident to the performance of its obligations hereunder,
including, but not limited to the fees, expenses and disbursements of such
party's counsel, except as is otherwise expressly provided in this Agreement and
the Warrant Certificate.
10. Non-Performance.
---------------
If, on any Warrant Exercise Date, SyQuest shall fail to deliver
the Warrant Shares required to be delivered pursuant to this Agreement and
the Warrant Certificate for any reason other than the failure of any
condition precedent to SyQuest's obligations hereunder or the failure by
Xxxxxxxx to comply with its obligations hereunder, then SyQuest shall:
(1) hold Xxxxxxxx harmless against any loss, claim or damage
arising from or as a result of such failure by SyQuest; and
(2) reimburse Xxxxxxxx for all of its reasonable out-of-pocket
expenses, including fees and disbursements of its counsel, incurred by
Xxxxxxxx in connection with this Agreement and the Warrant and the
transactions contemplated herein and therein;
provided, however, that SyQuest shall then be under no further liability to
-------- -------
Xxxxxxxx except as provided in this Section 10 and Section 11 hereof.
11. Indemnification.
---------------
a. Indemnification of Xxxxxxxx. SyQuest hereby agrees to
---------------------------
indemnify Xxxxxxxx and each of its officers, directors, employees, agents
and affiliates and each person that controls (within the meaning of Section
20 of the Securities Exchange Act of 1934, as amended) any of the foregoing
persons (each a "Xxxxxxxx Indemnified Party") against any claim, demand,
action, liability, damages, loss, cost or expense (including, without
limitation, reasonable legal fees) (a "Proceeding"), that it may incur in
connection with any of the transactions contemplated hereby arising out of
or based upon:
17
(1) any untrue or alleged untrue statement of a material
fact by SyQuest or any of its affiliates or any person acting on its
or their behalf or omission or alleged omission to state any material
fact necessary in order to make the statements, in the light of the
circumstances under which they were made, not misleading by SyQuest or
any of its affiliates or any person acting on its or their behalf ;
(2) any of the representations or warranties made by
SyQuest herein being untrue or incorrect; and
(3) any breach or non-performance by SyQuest of any of its
covenants, agreements or obligations under this Agreement and the
Warrant Certificate;
and SyQuest hereby agrees to reimburse each Xxxxxxxx Indemnified Party for any
reasonable legal or other expenses incurred by such Xxxxxxxx Indemnified Party
in investigating or defending any such Proceeding;
provided, however, that the foregoing indemnity shall not apply to any
-----------------
Proceeding to the extent that it arises out of or is based upon the gross
negligence or wilful misconduct of Xxxxxxxx in connection therewith.
b. Indemnification of SyQuest. Xxxxxxxx hereby agrees to
--------------------------
indemnify SyQuest and each of its officers, directors, employees, agents
and affiliates and each person that controls (within the meaning of Section
20 of the Securities Exchange Act of 1934, as amended) any of the foregoing
persons (each a "SyQuest Indemnified Party") against any Proceeding, that
it may incur in connection with any of the transactions contemplated hereby
arising out of or based upon:
(1) any untrue or alleged untrue statement of a material
fact by Xxxxxxxx or any of its affiliates or any person acting on its
or their behalf or omission or alleged omission to state any material
fact necessary in order to make the statements, in the light of the
circumstances under which they were made, not misleading by Xxxxxxxx
or any of its affiliates or any person acting on its or their behalf:
(2) any of the representations or warranties made by
Xxxxxxxx herein being untrue or incorrect; and
(3) any breach or non-performance by Xxxxxxxx of any of its
covenants, agreements or obligations under this Agreement and the
Warrant Certificate;
18
and Xxxxxxxx hereby agrees to reimburse each SyQuest Indemnified Party for
any reasonable legal or other expenses incurred by such SyQuest Indemnified
Party in investigating or defending any such Proceeding;
provided, however, that the foregoing indemnity shall not apply to any
-----------------
Proceeding to the extent that it arises out of or is based upon the gross
negligence or wilful misconduct of SyQuest in connection therewith.
c. Conduct of Claims.
-----------------
(1) Whenever a claim for indemnification shall arise under
this Section, the party seeking indemnification (the "Indemnified
Party"), shall notify the party from whom such indemnification is
sought (the "Indemnifying Party") in writing of the Proceeding and the
facts constituting the basis for such claim in reasonable detail;
(2) Upon delivery of such notice, such Indemnified Party
shall have a duty to take all reasonable steps to mitigate any losses,
liabilities, costs, charges and expenses relating to any such
Proceeding;
(3) Such Indemnifying Party shall have the right to retain
the counsel of its choice in connection with such Proceeding and to
participate at its own expense in the defense of any such Proceeding;
provided, however, that counsel to the Indemnifying Party shall not
-------- -------
(except with the consent of the relevant Indemnified Party) also be
counsel to such Indemnified Party. In no event shall the Indemnifying
Party be liable for fees and expenses of more than one counsel (in
addition to any local counsel) separate from its own counsel for all
Indemnified Parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the
same general allegations or circumstances; and
(4) No Indemnifying Party shall, without the prior written
consent of the Indemnified Parties (which consent shall not be
unreasonably withheld), settle or compromise or consent to the entry
of any judgment with respect to any litigation, or any investigation
or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever in respect of which
indemnification could be sought under this Section unless such
settlement, compromise or consent (A) includes an unconditional
release of each Indemnified Party from all liability arising out of
such litigation, investigation, proceeding or claim and (B) does not
include a statement
19
as to or an admission of fault, culpability or a failure to act by or
on behalf of any Indemnified Party.
12. Survival of the Representations, Warranties, etc. The respective
------------------------------------------------
representations, warranties, and agreements made herein by or on behalf of the
parties hereto shall remain in full force and effect, regardless of any
investigation made by or on behalf of the other party to this Agreement or any
officer, director or employee of, or person controlling or under common control
with, such party and will survive delivery of and payment for the Initial
Shares, the Warrant and any Warrant Shares.
13. Notices. all communications hereunder shall be in writing, and
-------
a. if sent to Xxxxxxxx, shall be delivered by hand, sent by
registered mail or transmitted and confirmed by facsimile to Xxxxxxxx at:
Xxxxxxxx International Limited
c/o Midland Bank Trust Corporation (Cayman) Limited
X.X. Xxx 0000, Xxxx Xxxxxx
Xxxxx Xxxxxx, Xxxxxx Xxxxxxx
Xxxxxxx Xxxx Indies
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
0000 Xxx Xxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
b. registered mail or transmitted and confirmed by facsimile to
SyQuest at: if sent to SyQuest, shall be delivered by hand, sent by
SyQuest Technology, Inc.
00000 Xxxxxxx Xxxxxxx
Xxxxxxx, XX 00000
Attention: Chief Financial Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
20
with a copy to:
Shartsis, Xxxxxx & Xxxxxxxx LLP
Xxx Xxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
14. Miscellaneous
-------------
a. This Agreement may be executed in one or more counterparts
and it is not necessary that signatures of all parties appear on the same
counterpart, but such counterparts together shall constitute but one and the
same agreement.
b. This Agreement and the Warrant shall inure to the benefit of
and be binding upon the parties hereto, their respective successors and assigns
and, with respect to Section 11 hereof, their respective officers, directors,
employees, agents, affiliates and controlling persons, and no other person shall
have any right or obligation hereunder. SyQuest may not assign this Agreement
or the Warrant Certificate.
c. This Agreement and the Warrant Certificate shall be governed
by, and construed in accordance with, the internal laws of the State of New
York, and each of the parties hereto hereby submits to the non-exclusive
jurisdiction of any State or Federal court in the Borough of Manhattan in the
City and State of New York and any court hearing any appeal therefrom, over any
suit, action or proceeding against it arising out of or based upon this
Agreement and the Warrant (a "Related Proceeding"). Each of the parties hereto
hereby waives any objection to any Related Proceeding in such courts whether on
the grounds of venue, residence or domicile or on the ground that the Related
Proceeding has been brought in an inconvenient forum.
d. The provisions of this Agreement and the Warrant Certificate
are severable, and if any clause or provision hereof shall be held invalid,
illegal or unenforceable in whole or in part, such invalidity or
unenforceability shall not in any manner affect any other clause or provision of
this Agreement or the Warrant Certificate.
e. The headings of the sections of this document have been
inserted for convenience of reference only and shall not be deemed to be a part
of this Agreement.
21
f. This Agreement, including the Warrant Certificate, constitutes
the entire agreement, and supersedes all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter of
this Agreement and the Warrant Certificate and is not intended to confer upon
any person other than the parties any rights or remedies hereunder.
g. The term "affiliate" is used herein as defined in Rule
144(a)(1) under the Securities Act.
15. Time of Essence. Time shall be of the essence in this Agreement
---------------
and the Warrant.
22
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement, all as of the day and year first above written.
SYQUEST TECHNOLOGY, INC.
By: /s/ XXXXXX X. XXXXXXXX
---------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Chairman of the Board
XXXXXXXX INTERNATIONAL LIMITED
By: /s/ XXXX X. XXXXXXXX
---------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Vice Chairman
SCHEDULE OF EXCEPTIONS
ANNEX A
(Form of Warrant Certificate)
The Warrant represented by this certificate was issued on November 13,
1996 (the "Closing Date) pursuant to the Subscription Agreement dated
November 12, 1996 between SyQuest Technology, Inc. and Xxxxxxxx
International Limited. Neither the Warrant represented by this
certificate nor the securities issuable upon exercise hereof have been
registered under the Securities Act of 1933, as amended (the "Act").
The Warrant represented by this certificate may not be exercised by or
on behalf of any U.S. Person (as defined in Regulation S under the Act
("Regulation S")) unless the securities issuable upon exercise hereof
are registered under the Act or an exemption from such registration is
available. The Warrant represented hereby has been issued and sold in
reliance on the exemption from registration provided by Regulation S.
Warrant No. __________
Warrant Certificate
SYQUEST TECHNOLOGY, INC.
This Warrant Certificate certifies that XXXXXXXX INTERNATIONAL LIMITED
("Xxxxxxxx"), or its registered assigns, is the registered holder of one Warrant
(the "Warrant") expiring on November 13, 2001 (the "Termination Date") to
purchase shares of common stock, par value $.001 per share (the "Common Stock"),
of SYQUEST TECHNOLOGY, INC., a Delaware corporation (the "Issuer"). The Warrant
entitles the holder to purchase from the Issuer up to the Maximum Amount (as
defined below) of Warrant Shares (as defined below) at a per share Exercise
Price (as defined below). A "Warrant Share" initially represents one fully paid
and nonassessable share of Common Stock, based upon an Exchange Rate
(as defined below) of one-for-one, subject to adjustment pursuant to Section 10
hereof.
The Warrant represented hereby was issued on November 13, 1996 (the
"Closing Date") pursuant to the Subscription Agreement dated November 12, 1996
(the "Subscription Agreement"), between the Issuer and Xxxxxxxx, and is subject
to the terms and conditions thereof. Unless otherwise defined herein,
capitalized terms used herein shall have the meanings set forth in the
Subscription Agreement. A copy of the Subscription Agreement may be obtained by
the registered holder hereof upon written request to the Issuer.
The initial number of Warrant Shares will equal:
[ 8 ]
1,500,000 x [ ------ 1.35 ]
[ X 1.15 ]
where X represents the average of the daily volume-weighted average prices
of the Common Stock as reported by Bloomberg, L.P. ("Bloomberg") for the
eight-month period beginning on the Closing Date and ending on July 12,
1997 (the "Initial Period"); provided that the number of Warrant Shares
will not be greater than 1,875,000 or be less than 375,000; provided
further that if, on the last date of the Initial Period, Xxxxxxxx owns at
least 750,000 shares of Common Stock, then the number of Warrant Shares
shall be 1,875,000. If a third party merges or consolidates with, or
acquires all or substantially all the assets of, the Issuer during the
Initial Period, the number of Warrant Shares shall equal 1,875,000. The
number of Warrant Shares issuable hereunder as determined in this paragraph
is referred to herein as the "Maximum Amount". If the Exchange Rate of
each Warrant Share is adjusted as provided in Section 10, the total number
of shares of Common Stock issuable hereunder may be greater or fewer than
the Maximum Amount.
The exercise price per Warrant Share shall be $5.6875, the last sales price
of the Common Stock as reported by Bloomberg on November 12, 1996 (plus transfer
taxes, if applicable, the "Exercise Price"). The Exercise Price multiplied by
the Exercise Amount (as defined below) at any Exercise Date (as defined below)
is referred to as a "Warrant Purchase Price".
The Warrant represented hereby shall have the following additional terms:
2
1. The Warrant is not exercisable until 65 days (the "Notice Period") after
the holder delivers a notice (a "65 Day Notice") to the Issuer designating
an aggregate number of Warrant Shares (the "Exercisable Number"). A 65 Day
Notice may be given at any time after the Closing Date, provided that the
Exercisable Number may not exceed 375,000 during the Initial Period,
except, if, during the Initial Period, a third party merges or consolidates
with, or acquires all or substantially all the assets of, the Issuer, in
which case the Exercisable Number shall equal 1,875,000. If the initial 65
Day Notice does not designate all of the Warrant Shares, the Warrant will
become exercisable for some or all of the remaining Warrant Shares upon
delivery of one or more 65 Day Notices increasing the Exercisable Number
after a further Notice Period. From time to time following the Notice
Period, the Warrant represented hereby may be exercised on any Business Day
prior to the Termination Date (an "Exercise Date") for any quantity of
Warrant Shares, such that the aggregate number of Warrant Shares issued
hereunder is less than or equal to the Exercisable Number. To exercise the
Warrant, the registered holder must, prior to the Termination Date,
surrender this Warrant Certificate to the Issuer at its principal office
with the Exercise Notice attached hereto (an "Exercise Notice") duly
completed and signed by the registered holder hereof and stating the total
number of Warrant Shares in respect of which the Warrant is then exercised
(the "Exercise Amount") and tender the applicable Warrant Purchase Price.
In order to exercise the Warrant, the registered holder hereof is required
to give written certification that it is not a U.S. Person (as defined in
Regulation S) and the Warrant is not being exercised on behalf of a U.S.
Person or, at the Issuer's option, deliver an opinion of counsel to the
effect that the Warrant and the Warrant Shares have been registered under
the Act or are exempt from registration thereunder. The Warrant shall be
exercisable only in the minimum amount of 10,000 Warrant Shares and
integral multiples of 10,000 Warrant Shares in excess thereof (or such
lesser amount as shall constitute the full amount remaining of this
Warrant). As used herein the term "Business Day" means any day on which
banks in the City of New York and the State of California are open for
business.
2. On the Business Day following an Exercise Date (an "Issue Date"), the
Issuer shall issue and cause to be delivered to the registered holder
hereof at such address as such holder shall specify in the Exercise Notice
a certificate or certificates for the number of full Warrant Shares
issuable upon the exercise of such Warrant, registered in such holder's
name, together with cash (if any)
3
as provided in paragraph 4. Such certificate or certificates shall be
deemed to have been issued and any person so designated to be named therein
shall be deemed to have become a holder of record of such Warrant Shares as
of such Exercise Date.
3. If on such Issue Date the number of Warrant Shares to be delivered shall be
less than the total number of Warrant Shares deliverable hereunder, there
shall be issued to the holder hereof or his assignee on such Issue Date a
new warrant certificate substantially identical to this Warrant
Certificate, except that such new warrant certificate shall evidence the
right to purchase the number of Warrant Shares equal to (x) the total
number of Warrant Shares deliverable hereunder less (y) the number of
Warrant Shares so delivered.
4. The Issuer shall not be required to issue fractional Warrant Shares on the
exercise of the Warrant represented hereby. The number of full Warrant
Shares which shall be issuable upon the exercise of the Warrant shall be
computed on the basis of the aggregate number of Warrant Shares purchasable
on exercise of the Warrant so presented. If any fraction of a Warrant
Share would, except for the provisions of this paragraph 4, be issuable on
the exercise of the Warrant, the Issuer shall pay an amount in cash equal
to the last per share sale price of the Common Stock on the day immediately
preceding the date the Warrant is presented for exercise, multiplied by
such fraction (subject to adjustment pursuant to Section 10).
5. For so long as the Warrant represented hereby has not been exercised in
full, the Issuer shall at all times prior to the Termination Date reserve
and keep available, free from pre-emptive rights, out of its authorized but
unissued Common Stock, for issuance upon exercise of the Warrant
represented hereby, the number of shares of Common Stock and any other
Capital Stock (as defined below) then so issuable. In furtherance of the
foregoing, subject to adjustment pursuant to Section 10, the Issuer shall
reserve for issuance hereunder, not less than 1,875,000 shares of Common
Stock during the Initial Period, and not less than the Maximum Amount
thereafter. In the event the number of shares of Common Stock or other
securities issuable in respect of the Warrant Shares exceeds the authorized
number of shares of Common Stock or other securities, the Issuer shall
promptly take all actions necessary to increase the authorized number,
including causing its Board of Directors to call a special meeting of
stockholders and recommend such increase.
4
6. By accepting delivery of this Warrant Certificate, the registered holder
hereof covenants and agrees with the Issuer not to exercise or transfer the
Warrant or any Warrant Shares except in compliance with the terms of the
Subscription Agreement and this Warrant Certificate.
7. By accepting delivery of this Warrant Certificate, the registered holder
hereof covenants and agrees with the Issuer that the Warrant may not be
sold, assigned, conveyed, encumbered, pledged, hypothecated or in any other
manner disposed of or transferred, in whole or in part, unless and until
such holder shall deliver to the Issuer (i) written notice thereof and of
the name and address of the transferee, (ii) a written agreement, in form
and substance reasonably satisfactory to the Issuer, of the transferee to
comply with the applicable terms of the Subscription Agreement and this
Warrant Certificate and (iii) a written certification of appropriate
officers of the transferee that such transferee is not a U.S. Person (as
defined in Regulation S) or any person holding on behalf of any U.S. Person
or, at the Issuer's option, an opinion of counsel to the effect that such
transfer of the Warrant is exempt from registration under the Act. If a
portion of the Warrant is transferred, all rights of the registered holder
hereunder may be exercised by the transferee (subject to the requirement
that such transferee shall (i) be neither a U.S. Person nor exercising on
behalf of a U.S. Person or (ii) otherwise provide an opinion of counsel to
the effect that the Warrant and the Warrant Shares have been registered
under the Act or are exempt from registration thereunder) in respect of the
number of Warrant Shares transferred with the portion of the Warrant,
provided that any registered holder of the Warrant may deliver a 65 Day
Notice, an Exercise Notice or elect the form of consideration pursuant to
Section 10 only with respect to the Warrant Shares subject to such holder's
portion of the Warrant, and, for purposes of paragraph 10(d), the
calculation of the Black-Scholes Warrant Value shall be made by the
registered holder(s) of a majority in interest of the Warrant.
8. The Issuer will pay all documentary stamp taxes (if any) attributable to
the issuance of Warrant Shares upon the exercise of the Warrant by the
registered holder hereof; provided, however, that the Issuer shall not be
-------- -------
required to pay any tax or taxes which may be payable in respect of any
transfer involved in the registration of the Warrant Certificate or any
certificates for Warrant Shares in a name other than that of the registered
holder of the Warrant Certificate surrendered upon the exercise of a
Warrant, and the Issuer shall not be required to issue or deliver the
Warrant Certificate or certificates for
5
Warrant Shares unless or until the person or persons requesting the
issuance thereof shall have paid to the Issuer the amount of such tax or
shall have established to the satisfaction of the Issuer that such tax has
been paid.
9. In case this Warrant Certificate shall be mutilated, lost, stolen or
destroyed, the Issuer may in its discretion issue in exchange and
substitution for and upon cancellation of the mutilated Warrant
Certificate, or in lieu of and substitution for the lost, stolen or
destroyed Warrant Certificate, a new Warrant Certificate of like tenor, but
only upon receipt of evidence reasonably satisfactory to the Issuer of such
loss, theft or destruction of such Warrant Certificate and indemnity, if
requested, reasonably satisfactory to the Issuer. Applicants for a
substitute Warrant Certificate shall also comply with such other reasonable
regulations and pay such other reasonable charges as the Issuer may
prescribe.
10. The number of shares of Common Stock (and other Capital Stock or property)
(as adjusted from time to time, the "Exchange Rate") issuable in respect of
each Warrant Share upon the exercise of the Warrant and the terms and
conditions of the Warrant are subject to adjustment by the Issuer, in
consultation with the holder hereof, from time to time as follows:
(a) If the Issuer:
1. subdivides its outstanding shares of Common Stock into a greater
number of shares;
2. combines its outstanding shares of Common Stock into a smaller
number of shares; or
3. issues by reclassification of its Common Stock any shares of its
Capital Stock;
then the Exchange Rate in effect immediately prior to such action
shall be adjusted so that the registered holder hereof shall
thereafter be entitled to receive upon exercise of the Warrant in
respect of each Warrant Share the number of shares of Common Stock or
other Capital Stock of the Issuer that such holder would have received
immediately following such action if such holder had so exercised the
Warrant immediately prior to such action.
6
As used herein, the term "Capital Stock" means, with respect to any
corporation, any and all shares, interests, rights to purchase,
warrants, options, participations or other equivalents of or interests
(however designated) in stock issued by that corporation.
Such adjustment shall become effective simultaneously with the
effective date of any subdivision, combination or reclassification.
If, after an adjustment, the registered holder hereof would receive
upon exercise shares of two or more classes of Capital Stock of the
Issuer, the Exchange Rate shall thereafter be subject to adjustment
upon the occurrence of an action taken with respect to each such class
of Capital Stock as is contemplated hereby with respect to the Common
Stock, on terms comparable to those applicable to Common Stock
hereunder.
(b) Whenever any of the actions described in this Section 10 are to be
taken, the Issuer shall provide the notices required by paragraph 12
hereof.
(c) Reserved.
(d) The Issuer covenants and agrees with the registered holder hereof not
to consolidate or merge with or into, or sell, transfer or lease all
or substantially all its assets to, any person (any of which, a
"Transaction"), unless, at the election of the registered holder
hereof (or if such holder does not notify the Issuer of such election
within 20 days after being notified of the Transaction, at the
election of the Issuer) on the effective date of such Transaction (the
"Transaction Date"), either:
1. the Issuer shall have redeemed the Warrant represented hereby by
paying to such holder, upon surrender of this Warrant
Certificate, a cash payment equal to the Black-Scholes value of
the unexercised portion of the Warrant from the effective date of
the Transaction until the Warrant Expiration Date (the "Black-
Scholes Warrant Value"), computed as of such Transaction Date; or
7
2. (a) such person shall expressly assume in writing all of
the obligations of the Issuer under the Subscription
Agreement and hereunder and deliver notice thereof to the
registered holder hereof; and
(b) upon consummation of such Transaction, the Warrant shall
automatically become exercisable for the common stock of the
acquiror (without regard to the form of acquisition
consideration) with similar terms and at an exercise price
that would result in a Black-Scholes Warrant Value of the
Warrant computed immediately after the Transaction equal to
the Black-Scholes Warrant Value of the Warrant computed
immediately before the Transaction.
For purposes of this paragraph 10(d), the factors to be used in the
calculation of the Black-Scholes Warrant Value are as follows:
Stock Price: the last sales price of the Common Stock reported
by Bloomberg on the last Trading Day prior to the
Transaction Date (the "Last Trading Day")
Time To Expiration: the number of Trading Days between the Last
Trading Day and the Termination Date
Exercise Price: Exercise Price
Volatility: volatility shown by Bloomberg for the past 260
days at close on the Last Trading Day, unless the
Time to Expiration is less than 260 Trading Days,
in which case use volatility shown by Bloomberg
at close on the Last Trading Day for the number
of Trading Days from the Last Trading Day to the
Termination Date
Risk-Free closing yield as of the Last Trading Day as
Interest Rate: quoted in the Wall Street Journal for U.S.
Treasury bond with a maturity date closest
to the Termination Date
8
Number of Shares
Outstanding (N): total number of shares of Common Stock
outstanding as of the Last Trading Day
Exercisable
Common Stock (n): the number of shares of Common Stock exercisable
under the Warrant as of the Transaction Date
The Black-Scholes Warrant Value will be calculated using the factors
shown above. A preliminary calculation of the Black-Scholes Warrant
Value, and, if applicable, the exercise price contemplated by
paragraph 10(d)2.(b) hereof, (utilizing then-current values for each
factor) will be delivered by Xxxxxxxx to SyQuest not later than the
tenth day after it receives notice of a Transaction by SyQuest.
SyQuest, in turn, will respond within five days with any comments or
questions and reach agreement with Xxxxxxxx on the preliminary
factors. On the Transaction Date, Xxxxxxxx, in consultation with
SyQuest, will calculate the final Black-Scholes Warrant Value
utilizing the then-current values for each factor; such calculation
will be utilized to compute the values called for in paragraph 10(d).
It shall be a condition to any Transaction that the consideration
provided for herein shall be paid in full, in the case of cash, or
delivered, in the case of a warrant, all in accordance with the terms
hereof, immediately prior to the consummation of the Transaction. As
used herein, the term "Trading Day" means any day on which SyQuest's
Common Stock is quoted on NASDAQ or, if applicable, other national
securities exchange.
(e) After an adjustment to the Exchange Rate hereunder, any subsequent
event requiring an adjustment hereunder shall cause an adjustment to
the Exchange Rate as so adjusted.
(f) Upon the issuance of any stock dividend or distribution of Common
Stock pro rata to all holders of Common Stock, the Exchange Rate shall
be adjusted so that the registered holder hereof on the record date
for such distribution shall be entitled to receive such dividend or
distribution on the same terms as the holders of Common Stock upon
exercise hereof.
11. Reserved.
9
12. Except as provided in the following paragraph, upon any adjustment of the
Exchange Rate pursuant to paragraph 10, the Issuer shall promptly
thereafter but in any event within 15 days following such adjustment (i)
cause to be delivered to the registered holder hereof a certificate of its
Chief Financial Officer setting forth the Exchange Rate after such
adjustment and setting forth in reasonable detail the method of calculation
and the facts upon which such calculations are based, which certificate
shall be conclusive evidence of the correctness of the matters set forth
therein, and (ii) cause to be delivered to the registered holder hereof at
its address appearing on the Warrant Register written notice of such
adjustments by first-class mail, postage prepaid. Where appropriate, such
notice may be given in advance and included as part of the notice required
to be mailed under the other provisions of this paragraph 12.
In case:
(a) the Issuer shall authorize the issuance to all holders of shares of
Common Stock of rights, options or warrants to subscribe for or
purchase shares of Common Stock or of any other subscription rights or
warrants; or
(b) of any proposal for a consolidation or merger to which the Issuer is a
party, the sale or transfer of all or substantially all of the assets
of the Issuer, or any reclassification or change of Common Stock
issuable upon exercise of the Warrant (other than a change in par
value, or from par value to no par value, or from no par value to par
value, or as a result of a subdivision or combination), or of a tender
offer or exchange offer for shares of Common Stock; or
(c) of the voluntary or involuntary dissolution, liquidation or winding up
of the Issuer; or
(d) the Issuer proposes to take any action which would require an
adjustment of the Exchange Rate pursuant to paragraph 10;
then the Issuer shall cause to be given to the registered holder hereof at
his or her address appearing on the Warrant Register (as defined below), at
least 20 days (or 10 days in any case specified in clause (a) above) prior
to the applicable record date hereinafter specified, or promptly in the
case of events for which there is no record date, by first class mail,
postage prepaid, a
10
written notice stating (i) the date as of which the holders of record of
shares of Common Stock to be entitled to receive any such rights, options,
warrants or distribution are to be determined, or (ii) the initial
expiration date set forth in any tender offer or exchange offer for shares
of Common Stock, or (iii) the date on which any such reclassification,
consolidation, merger, conveyance, transfer, dissolution, liquidation or
winding up is expected to become effective or consummated, and the date as
of which it is expected that holders of record of shares of Common Stock
shall be entitled to exchange such shares for securities or other property,
if any, deliverable upon such reclassification, consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up.
13. The Issuer shall serve as warrant agent (the "Warrant Agent") under this
Agreement. The Warrant Agent hereunder shall at all times maintain a
register (the "Warrant Register") of the holders of Warrants. Upon 30
days' notice to the registered holder hereof, the Issuer may appoint a new
Warrant Agent. Such new Warrant Agent shall be a corporation doing
business and in good standing under the laws of the United States or any
state thereof, and having a combined capital and surplus of not less than
$50,000,000. The combined capital and surplus of any such new Warrant
Agent shall be deemed to be the combined capital and surplus as set forth
in the most recent annual report of its condition published by such Warrant
Agent prior to its appointment; provided that such reports are published at
--------
least annually pursuant to law or to the requirements of a federal or state
supervising or examining authority. After acceptance in writing of such
appointment by the new Warrant Agent, it shall be vested with the same
powers, rights, duties and responsibilities as if it had been originally
named herein as the Warrant Agent, without any further assurance,
conveyance, act or deed; but if for any reason it shall be reasonably
necessary or expedient to execute and deliver any further assurance,
conveyance, act or deed, the same shall be done at the expense of the
Issuer and shall be legally and validly executed and delivered by the
Issuer.
Any corporation into which the Issuer or any new Warrant Agent may be
merged or any corporation resulting from any consolidation to which the
Issuer or any new Warrant Agent shall be a party or any corporation to
which the Issuer or any new Warrant Agent transfers substantially all of
its corporate trust or shareholders services business shall be a successor
Warrant Agent under this Agreement without any further act; provided that
--------
such corporation (i) would be eligible for appointment as successor to the
Warrant Agent under the provisions of this paragraph 13 or (ii) is a wholly
owned subsidiary of the Warrant Agent. Any such successor Warrant Agent
shall promptly cause notice of its succession as Warrant Agent to be mailed
(by first class mail,
11
postage prepaid) to the registered holder hereof at such holder's last
address as shown on the Warrant Register.
This Warrant Certificate shall not be valid unless signed by the Issuer.
12
IN WITNESS WHEREOF, SyQuest Technology, Inc. has caused this Warrant
Certificate to be signed by its duly authorized officer.
Dated: November 13, 1996
SYQUEST TECHNOLOGY, INC.
By: /s/ XXXXX X. XXXXXX
----------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: President and Chief Executive Officer
FORM OF EXERCISE NOTICE
(To Be Executed Upon Exercise of the Warrant)
[DATE]
SyQuest Technology, Inc.
00000 Xxxxxxx Xxxxxxx
Xxxxxxx, XX 00000
Attention: Chief Financial Officer
Re: Warrant No.
---------------------------
Ladies and Gentlemen:
The undersigned is the registered holder of the above-referenced
warrant (the "Warrant") issued by SyQuest Technology, Inc., evidenced by the
Warrant Certificate attached hereto, and hereby elects to exercise the Warrant
to purchase _________ Warrant Shares (as defined in such Warrant Certificate)
and herewith tenders $_____________ by certified or official bank check to the
order of SyQuest Technology, Inc. as payment for such Warrant Shares in
accordance with the terms of such Warrant Certificate and the Subscription
Agreement (as defined in the Warrant Certificate). The undersigned either (i)
hereby certifies that it is not a "U.S. Person" (as defined in Regulation S
under the Securities Act of 1933, as amended (the "Act")), it is not exercising
this Warrant on behalf of any U.S. Person and the Warrant is not being exercised
within the United States, or (ii) at the Issuer's option, delivers herewith an
opinion of counsel to the effect that the Warrant and the Warrant Shares have
been registered under the Act or are exempt from registration thereunder. This
exercise notice is accompanied by the certificates required to be delivered
pursuant to Section 8 of the Subscription Agreement.
In accordance with the terms of the attached Warrant Certificate, the
undersigned requests that certificates for such Warrant Shares be registered in
the name of and delivered to the undersigned at the following address:
________________________
________________________
________________________
By providing the above address, the undersigned confirms that, upon
exercise of the Warrant, the Warrant Shares will not be delivered within the
United States (as defined in Regulation S under the Act) unless (i) in an
offering deemed to meet the definition of "offshore transaction" pursuant to
paragraph (i)(3) of Rule 902 under the Act or (ii) an opinion of counsel has
been provided to the effect that the
Warrant and the Warrant Shares have been registered under the Act or an
exemption from such registration is available.
[IF THE NUMBER OF WARRANT SHARES TO BE DELIVERED IS LESS THAN THE
TOTAL NUMBER OF WARRANT SHARES DELIVERABLE UNDER THE WARRANT, INSERT THE
FOLLOWING -- The undersigned requests that a new warrant certificate
substantially identical to the attached Warrant Certificate be issued to the
undersigned evidencing the right to purchase the number of Warrant Shares equal
to (x) the total number of Warrant Shares deliverable under the Warrant less (y)
the number of Warrant Shares to be delivered in connection with this exercise.]
NAME OF REGISTERED HOLDER
[ADDRESS]
By:
--------------------------------
Name:
Title:
