EXHIBIT 4.1
WARRANT PURCHASE AGREEMENT
This WARRANT PURCHASE AGREEMENT is made as of December 16, 1996, by
and among SyQuest Technology, Inc., a Delaware corporation (the "Company"), and
Xxxx & Company, Inc., a Massachusetts corporation (the "Buyer"), with reference
to the following facts:
The Buyer has agreed to perform certain services for the Company as
described in a letter between the parties dated even date herewith (the
"Letter"), and, as consideration for such services, the Company has agreed to
deliver to Buyer common stock purchase warrants (the "Warrants") entitling Buyer
to purchase shares (the "Warrant Shares") of unissued common stock ("Common
Stock") of the Company, all on the terms and conditions herein. The purchases
and sales of the Warrants and the Warrant Shares are and will be effected in
reliance on the exemption from registration under the Securities Act of 1933, as
amended (the "1933 Act"), provided by Section 4(2) thereof and Rule 506 of
Regulation D ("Regulation D") promulgated thereunder by the United States
Securities and Exchange Commission (the "SEC"). Contemporaneously with the
execution and delivery of this Agreement, the parties hereto are executing and
delivering a Registration Rights Agreement (the "Registration Rights Agreement")
in substantially the form of Exhibit A attached hereto, pursuant to which the
Company has agreed to provide certain registration rights under the 1933 Act.
NOW, THEREFORE, the Company and the Buyer hereby agree as follows:
1. SALES OF WARRANTS.
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1.1 Purchase of Shares and Warrants. As full payment for the
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services described in the Letter, the Company shall issue to Buyer a total of
four (4) Warrants to acquire 320,000 Warrant Shares in the aggregate. Each of
the four (4) Warrants shall be in substantially the form of Exhibit B attached
hereto, shall entitle the holder to purchase 80,000 Warrant Shares and shall be
granted separately on the following dates (the "Grant Dates"): January 16, 1997;
February 16, 1997; March 16, 1997; and April 16, 1997. Notwithstanding the
foregoing, if the services of Buyer under the Letter are terminated (a
"Termination") by written notice prior to April 16, 1997, Buyer shall be
entitled to retain each Warrant relating to a Grant Date that precedes the date
of Termination, but shall receive no further Warrants other than a final Warrant
for a number of Warrant Shares equal to: (x) 80,000 multiplied by a fraction
equal to (y) (i) the number of calendar days elapsed between the Grant Date
preceding the date of Termination and the date of Termination (ii) divided by
thirty (30). Each Warrant will have an exercise price per Warrant Share equal to
the greater of (a) the arithmetic average of the closing sale prices per share,
or in the absence of a closing sale price on any day, the closing bid price per
share on that day, of the Common Stock, as reported by the Nasdaq National
Market for the five consecutive trading days preceding the Grant Date with
respect to such Warrant, and (b) the closing sale price per share, or in the
absence of a closing sale price, the closing bid price per share, of the Common
Stock, as so reported for the trading day preceding such Grant Date, minus
$0.10.
1.2 Deliveries. (a) The following documents shall be executed
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and delivered concurrently herewith:
(i) The parties shall deliver the executed
Registration Rights Agreement; and
(ii) The Company shall deliver copies of resolutions
adopted by the Board of Directors of the Company approving the transactions
contemplated by this Agreement certified by an officer of the Company.
(b) Furthermore, subject to the limitations described in
Section 1.1 in the event of a Termination of Buyer, a Warrant will be delivered
by the Company to Buyer on each Grant Date.
2. BUYER'S REPRESENTATIONS AND WARRANTIES. The Buyer hereby
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represents and warrants to the Company, and agrees with the Company that on and
as of the date of this Agreement:
2.1 Authorization; Enforcement. This Agreement is duly and
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validly authorized, executed and delivered by the Buyer and a valid and binding
agreement of the Buyer enforceable in accordance with its terms, subject as to
enforceability to general principles of equity and to bankruptcy, insolvency,
moratorium, and other similar laws affecting the enforcement of creditors'
rights generally.
2.2 Investment Purpose. This Agreement is entered with the
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Buyer in reliance upon the Buyer's representation that it is acquiring and will
acquire the Warrants and will purchase Warrant Shares (the Warrants and such
Warrant Shares being hereinafter collectively called the "Securities") for its
own account for investment only and not with a view towards, or for resale in
connection with, any public sale or distribution thereof, nor with any present
intention of distributing or selling the same except pursuant to effective
registrations under the 0000 Xxx. The Buyer is not acquiring the Securities for
the purpose of covering short sale positions in the Common Stock. The Buyer
represents that it has full power and authority to enter into this Agreement.
2.3 Accredited Investor Status. The Buyer is an "accredited
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investor" as that term is defined in Rule 501(a) of Regulation D promulgated by
the Securities and Exchange Commission under the 1933 Act (an "Accredited
Investor") and an "excluded purchaser" for the purpose of Section 25102(f) of
the California Corporate Securities Law of 1968, as amended (an "Excluded
Purchaser"). On delivery and exercise of the Warrants, the Buyer shall (or shall
cause a holder to whom such Warrants have been transferred to), if requested by
the Company, confirm in writing, in a form satisfactory to the Company, that the
Securities so purchased are being acquired solely for the holder's own account
and not as a nominee for any other party, for investment, and not with a view
toward distribution or resale and that such holder is an Accredited Investor and
an Excluded Purchaser. If such holder cannot make such representations because
they would be factually incorrect, it shall be a condition to such holder's
receipt and/or exercise of the Warrant that the Company receive such other
representations as the Company considers reasonably necessary to assure the
Company that the
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delivery of the Warrant and issuance of its securities on exercise of the
Warrant shall not violate any United States federal or state securities law.
2.4 Reliance on Exemptions. The Buyer understands that the
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Securities 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 upon the truth and accuracy of, and the
Buyer's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of the holder
to acquire the Securities.
2.5 Investment Experience. The Buyer is an investor in
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securities of comparable companies and acknowledges that it is able to fend for
itself, can bear the economic risk of its investment, and has such knowledge and
experience in financial or business matters that it is capable of evaluating the
merits and risks of the investment in the Securities.
2.6 Information. The Buyer has carefully reviewed the
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representations concerning the Company contained in this Agreement, and has made
detailed inquiry concerning the Company, its business, personnel and competitive
position. The Buyer further represents and warrants that in order to make an
informed decision in connection with the acquisition of the Securities:
(a) The Buyer has reviewed the merits and risks of an
investment in the Securities with its own tax and legal counsel, accounting firm
and with an investment advisor to the extent deemed advisable by the Buyer;
(b) The Buyer recognizes that an investment in the
Securities involves a high degree of risk, including, without limitation, the
risks arising from the facts that the Company incurred a loss for the quarter
and fiscal year ended September 30, 1996, and that no assurance can be given
that the Company will not incur continuing losses or will be profitable; and
(c) The Buyer: (x) has carefully reviewed the Company's
reports filed with the Securities and Exchange Commission including without
limitation the Annual Report on Form 10-K for the fiscal year ended September
30, 1996, the Proxy Statement for the Company's 1996 Annual Meeting of
Shareholders, the Proxy Statement for the Company's Special Meeting of
Shareholders held September 26, 1996 and all Form 8-Ks (and related amendments)
filed by the Company since September 30, 1996; (y) has been provided with such
additional information with respect to the Company as the Buyer or the Buyer's
agent or attorney has requested, and (z) has had the opportunity to discuss such
information with members of the management of the Company and any questions that
the Buyer had with respect thereto have been answered to the full satisfaction
of the Buyer.
2.7 No Governmental Review. The Buyer understands that no
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United States federal or state agency or any other government or governmental
agency has passed on
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or made any recommendation or endorsement of the Securities or the fairness or
suitability of the investment in the Securities nor have such authorities passed
upon or endorsed the merits of the offering of the Securities.
2.8 Transfer or Resale. Buyer understands that the sale of the
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Securities to Buyer is intended to be exempt from registration under the 1933
Act by virtue of Section 4(2) of the 1933 Act and applicable state securities
laws. Buyer will not sell, hypothecate or otherwise transfer any or all of the
Securities unless: (x) there is then in effect a registration statement under
the 1933 Act covering such proposed disposition and such disposition is made in
accordance with such registration statement; or (y) Buyer shall have notified
the Company of the proposed disposition and shall have furnished the Company
with a detailed statement of the circumstances surrounding the proposed
disposition, and, unless waived in writing by the Company, Buyer shall have
furnished the Company with an unqualified written opinion of counsel who shall
be reasonably satisfactory to the Company addressed to the Company and
reasonably satisfactory in form and substance to the Company's counsel to the
effect that the proposed transfer may be effected without registration under the
1933 Act, whereupon the holder of such Securities shall be entitled to transfer
such Securities in accordance with the terms of the notice delivered to the
Company.
2.9 Legends. The Buyer understands that certificates
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representing the Securities may bear one or all of the following restrictive
legends (and a stop-transfer order may be placed against transfer of such
certificates):
(a) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS. SUCH SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED, PLEDGED, HYPOTHECATED, ENCUMBERED OR OTHERWISE DISPOSED
OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL IN
FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO SYQUEST TECHNOLOGY,
INC. THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
APPLICABLE STATE SECURITIES LAWS OR SUCH DISPOSITION COMPLIES
WITH RULE 144 UNDER SAID ACT."
(b) Any legend required by the laws of the State of Delaware or the
State of California, including any legend required by the
California Department of Corporations.
The Company shall issue a certificate without such legend to represent
Securities that are lawfully sold (a) pursuant to an effective registration
statement under the 1933 Act, or (b) in
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accordance with an opinion of counsel, received by and in form and substance
reasonably acceptable to the Company, to the effect that public sale or transfer
of the Securities may be made without registration under the 1933 Act.
2.10 Brokers' Fees. The Buyer has not retained any broker or
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finder in connection with the transactions contemplated by this Agreement.
3. COMPANY'S REPRESENTATIONS AND WARRANTIES. Subject to and except
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as may be disclosed by the Company in Exhibit C, the Company represents and
warrants to the Buyer that on and as of the date of this Agreement:
3.1 Authorization; Enforcement; Compliance with Other
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Instruments. (i) The Company has the requisite corporate power and authority to
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enter into and perform this Agreement and to issue the Warrants and the Warrant
Shares in accordance with the terms hereof and of the Warrants, (ii) the
execution and delivery of this Agreement and the consummation by the Company of
the transactions contemplated hereby and the Exhibits hereto, including the
issuance of the Warrant Shares, have been duly authorized by the Company's Board
of Directors and no further corporate proceedings are required, (iii) this
Agreement has been duly executed and delivered by the Company, and (iv) this
Agreement constitutes a valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally, the enforcement
of creditors' rights and remedies or by other equitable principles of general
application.
3.2 Capitalization. As of the date of this Agreement, the
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authorized capital stock of the Company consists of (i) 60,000,000 shares of
Common Stock of which, as of the date of this Agreement, approximately
16,330,489 shares were issued and outstanding, and (ii) 4,000,000 shares of
preferred stock of which, as of the date of this Agreement there were
outstanding 45,560 shares. All of such outstanding shares have been validly
issued and are fully paid and nonassessable. 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 the Company's SEC Documents (defined below), as of the 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 any of its subsidiaries, or arrangements by which the Company or any
of its subsidiaries is or may become bound to issue additional shares of capital
stock of the Company or any of its subsidiaries, (ii) there are no outstanding
debt securities, and (iii) there are no agreements or arrangements under which
the Company or any of its subsidiaries is obligated to register the sale of any
of its or their securities under the 0000 Xxx.
3.3 Issuance of Warrant Shares. The Warrant Shares are duly
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authorized and, upon issuance in accordance with the terms hereof and the
Warrants, shall be
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validly issued, fully paid and non-assessable, and free from all taxes, liens
and charges with respect to the issue thereof.
3.4 SEC Documents, Financial Statements. Since September 30,
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1995, the Company has filed 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 (other than exhibits to incorporated
documents), being hereinafter referred to as the "SEC Documents"). The Company
has delivered or made available to Buyer or its representative true and complete
copies of the SEC Documents, except for such exhibits, schedules and
incorporated documents. As of their respective dates, the SEC Documents complied
in all material respects with the requirements of the 1934 Act 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).
4. COVENANTS.
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4.1 Form D. The Company agrees to file with the SEC a notice on
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Form D with respect to the Warrant Shares as required under Regulation D and to
provide a copy thereof to Buyer promptly after such filing.
4.2 Reporting Status. The Company shall file all reports
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required to be filed by it 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, prior to the earlier of (a) the date as of which
the Investors (as that term is defined in the Registration Rights Agreement) may
sell all of the Warrant Shares without restriction pursuant to Rule 144(k)
promulgated under the 1933 Act (or successor thereto), and (b) the date on which
the Investors shall have sold all of the Warrant Shares. The period from the
date of this Agreement to the earlier of such dates specified in the preceding
sentence is herein called the "Registration Period".
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4.3 Financial Information. The Company agrees to send the
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following reports to the Buyer during the Registration Period: (a) within five
days after the filing thereof with the SEC, a copy of its Annual Reports on Form
10-K, its Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K;
and (b) within one business day after release thereof, a copy of each press
release issued by the Company.
4.4 Reservation of Shares. The Company shall at all times have
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authorized and reserved for issuance a sufficient number of shares of Common
Stock to provide for the issuance of the Warrant Shares.
4.5 Listing. The Company shall use its best efforts promptly to
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secure the listing of the Warrant Shares, when issued, on each national
securities exchange or automated quotation system, if any, on which shares of
Common Stock are then listed (subject to official notice of issuance) and to
maintain, so long as any other shares of Common Stock shall be so listed, such
listing of all such Warrant Shares from time to time issuable under the
Warrants. The Company shall use its reasonable best efforts to maintain the
authorization of the Common Stock for quotation thereon.
5. TRANSFER AGENT INSTRUCTIONS. The Company shall instruct its
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transfer agent to issue certificates, bearing the restrictive legends specified
in Section 2.9, registered in the names of the Buyer, for the Warrant Shares
acquired on exercise of the Warrants as therein provided. The Company shall
provide instructions and opinions of counsel to its transfer agent in accordance
with the Registration Rights Agreement. The Company warrants that no
instruction regarding the Warrant Shares, other than the instructions referred
to in this Section 5 and stop transfer instructions to give effect to Section
2.8, will be given by the Company to its transfer agent and that the Warrant
Shares shall otherwise be freely transferable on the books and records of the
Company as and to the extent provided in this Agreement, the Registration Rights
Agreement and the Warrants. Nothing in this Section 5 shall affect in any way
the Buyer's obligation and agreement to comply with all applicable securities
laws on any resale of Warrants or Warrant Shares. If Buyer provides the Company
with an opinion of counsel, reasonably satisfactory in form and substance to the
Company, that registration of a resale by such Buyer of any Warrants or Warrant
Shares is not required under the 1933 Act, the Company shall permit the transfer
and promptly instruct its transfer agent to issue one or more certificates in
such name and in such denominations as may be specified by Buyer consistent with
such opinion.
6. GOVERNING LAW; MISCELLANEOUS.
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6.1 Governing Law. This Agreement shall be governed by and
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construed and interpreted in accordance with the laws of the State of California
without regard to the principles of conflict of laws.
6.2 Counterparts. This Agreement may be executed in two or more
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identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts shall have been signed by
each party and delivered to the
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other party. If any signature page is delivered by facsimile transmission, the
party using such means of delivery shall cause its originally executed signature
page to be physically delivered to the other party within five days of the
execution and delivery hereof.
6.3 Headings; References. The headings of this Agreement are
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for convenience of reference and are not part of this Agreement. References to
sections herein refer to sections of this Agreement, except as otherwise
indicated. The singular includes the plural and vice versa, as the context may
require.
6.4 Severability. If any provision of this Agreement shall be
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invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
6.5 Entire Agreement; Amendments. This Agreement, including the
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schedules and exhibits hereto, the Letter, the Warrants and the Registration
Rights Agreement together constitute the entire agreement of the parties and
supersede all prior or contemporaneous negotiations, correspondence,
understandings and agreements, written or oral, regarding the subject matter
hereof. Except as specifically set forth herein, neither the Company nor the
Buyer makes any representation, warranty, covenant or undertaking with respect
to the subject matter hereof. No provision of this Agreement may be waived or
amended other than by an instrument in writing signed by the party to be charged
with enforcement.
6.6 Notices. Any notice or other communication required or
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permitted to be given under this Agreement shall be in writing and shall be
deemed duly given and received when delivered personally, when transmitted by
facsimile if receipt is acknowledged by the addressee, one business day after
being deposited for next-day delivery with a nationally recognized overnight
delivery service, or three days after being deposited with the United States
Postal Service as first class mail, all charges and postage prepaid, properly
addressed as follows:
If to the Company:
00000 Xxxxxxx Xxxxxxx
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Chief Financial Officer
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With a copy to:
Shartsis, Xxxxxx & Xxxxxxxx, LLP
Xxx Xxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: M. Xxxx Xxxxx, Esq.
If to Buyer:
Xxxx & Company, Inc.
Xxx Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxx
Each party shall provide notice to the other party of any change in address.
6.7 Successors and Assigns. This Agreement shall bind and inure
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to the benefit of the parties and their respective successors and assigns.
Neither the Company nor Buyer shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other (which
consent shall not be unreasonably withheld).
6.8 No Third Party Beneficiaries. This Agreement is intended
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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.
6.9 Survival. The representations and warranties of the Company
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and the Buyer in Sections 2 and 3 and the agreements and covenants in Sections 4
and 5 and this Section 6 shall survive after the date of this Agreement.
6.10 Publicity. The Company and the Buyer shall have the right
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to approve before issuance any press release or other public statement with
respect to the transactions contemplated hereby; provided that the Company shall
be entitled, without the prior approval of Buyer, to make any press release or
other public disclosure with respect to such transactions as is required by
applicable law and regulations (although Buyer or its counsel shall be consulted
by the Company in connection with any such press release or other public
disclosure prior to its release and shall be provided with a copy thereof).
6.11 Further Assurances. Each party shall do and perform, or
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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
9
request to carry out the intent and accomplish the purposes of this Agreement
and the consummation of the transactions contemplated hereby.
IN WITNESS WHEREOF, the Buyer and the Company have caused this Warrant
Purchase Agreement to be duly executed as of the date first written above.
COMPANY: BUYER:
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SYQUEST TECHNOLOGY, INC. XXXX & COMPANY, INC.
By:____________________________ By:____________________________
Name:__________________________ Name:__________________________
Its:___________________________ Its:___________________________
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EXHIBIT A
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of
December 16, 1996, by and among SyQuest Technology, Inc., a Delaware corporation
(the "Company"), and Xxxx & Company, Inc. (the "Buyer"), with reference to the
following facts:
In connection with the Warrant Purchase Agreement by and among the parties
of even date herewith (the "Purchase Agreement"), the Company has agreed, on the
terms of the Purchase Agreement, to issue to the Buyer warrants (the "Warrants")
exercisable to acquire shares (the "Warrant Shares") of the Company's Common
Stock, par value $.001 per share. To induce the Buyer to execute and deliver the
Purchase Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the
"1933 Act"), and applicable state securities laws.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company and the Buyer hereby agree as
follows:
1. DEFINITIONS. Capitalized terms used and not otherwise defined herein
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have the meanings respectively ascribed to them in the Purchase Agreement. As
used in this Agreement, the following terms have the following meanings:
1.1 "Investor" means the Buyer and any holder of Warrants or
Registrable Securities to whom the registration rights conferred by this
Agreement have been transferred in accordance with Section 9.
1.2 "Register", "registered", and "registration" refer to a
registration effected by preparing and filing a Registration Statement or
Statements in compliance with the 1933 Act and pursuant to Rule 415 under the
1933 Act or any successor rule providing for offering securities on a continuous
basis ("Rule 415"), and the declaration or ordering of effectiveness of such
Registration Statement by the United States Securities and Exchange Commission
(the "SEC").
1.3 "Registrable Securities" means the Warrant Shares.
1.4 "Registration Expenses" means all expenses incurred in effecting
any registration pursuant to this Agreement, including, without limitation, all
registration, qualification and filing fees, printing expenses, escrow fees,
fees and disbursements of counsel for the Company, blue sky fees and expenses,
and expenses of any regular or special audits incident to or required by any
such registration, but shall not include Selling Expenses.
1.5 "Registration Statement" or "Registration Statements" means a
registration statement or statements of the Company filed with the SEC under the
0000 Xxx.
1.6 "Selling Expenses" means all underwriting fees, pro rata expenses,
and discounts, selling commissions and stock transfer taxes applicable to the
sale of Registrable Securities and fees and disbursements of counsel and other
advisers for any Investor.
2. REGISTRATION.
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2.1 Mandatory Registration. The Company shall use its reasonable
----------------------
efforts to prepare and, on or before June 1, 1997, file with the SEC a
Registration Statement on Form S-3 (or, if such form is unavailable for such a
registration, on such other form as is available for such a registration) (any
of which may contain a combined prospectus with other registrations by the
Company), covering the resale of the Registrable Securities. The Registration
Statement shall state that, in accordance with Rule 416 promulgated under the
1933 Act, such Registration Statement also covers such indeterminate number of
additional shares of Common Stock from or as may become issuable on exercise of
the Warrants due to stock splits, stock dividends or similar transactions. The
Company shall use reasonable efforts to have the Registration Statement declared
effective by the SEC promptly after filing. The Registration Statement (and each
amendment or supplement thereto, and each request for acceleration of
effectiveness thereof) shall be provided to and approved by the Buyer or its
legal counsel prior to its filing or other submission, which approval shall not
be unreasonably withheld and which shall be deemed to be received by the Company
if Buyer or its legal counsel makes no objection in writing within five calendar
days after such Registration Statement (or other submission) is delivered to
Buyer or its legal counsel.
2.2 Underwritten Offering. If the offering under the Registration
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Statement pursuant to Section 2.1 involves an underwritten offering, the
Investors who hold a majority of the Registrable Securities subject to such
underwritten offering shall have the right to select at their expense one legal
counsel and an investment banker or bankers and manager or managers to
administer their interest in the offering, which investment banker or bankers or
manager or managers shall be reasonably satisfactory to the Company.
2.3 Piggy-Back Registrations. If at any time prior to the expiration
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of the Registration Period (as hereinafter defined) the Company shall file with
the SEC a Registration Statement relating to an offering for its own account or
the account of others under the 1933 Act of any of its equity securities (other
than on Form S-4 or Form S-8 or their then equivalents relating to equity
securities to be issued solely in connection with any acquisition of any entity
or business or equity securities issuable in connection with stock option or
other employee benefit plans), the Company shall send to each Investor who is
entitled to registration rights under this Section 2.3 written notice of such
determination. If, within twenty days after receipt of such notice, such
Investor shall so request in writing, the Company shall include in such
Registration Statement all or any part of the Registrable Securities such
Investor requests to be registered, except that if, in connection with any
underwritten public offering for the account of the Company the managing
underwriter(s) thereof shall impose a limitation on the
2
number of shares of Common Stock that may be included in the Registration
Statement because, in such underwriter(s)' good faith judgment, marketing or
other factors dictate such limitation is necessary to facilitate public
distribution, then the Company shall be obligated to include in such
Registration Statement only such limited portion of the Registrable Securities
with respect to which such Investor has requested inclusion hereunder; provided
that no portion of the equity securities that the Company is offering for its
own account shall be excluded. Any exclusion of Registrable Securities shall be
made pro rata among the Investors seeking to include Registrable Securities, in
proportion to the number of Registrable Securities sought to be included by such
Investors; provided that the Company shall not exclude any Registrable
Securities unless the Company has first excluded all outstanding securities held
by persons that are not entitled to inclusion of such securities in such
Registration Statement or are not entitled to pro rata inclusion with the
Registrable Securities; and provided further that, after giving effect to the
preceding provision, any exclusion of Registrable Securities shall be made pro
rata with holders of other securities having the right to include such
securities in the Registration Statement other than holders of securities
entitled to inclusion of their securities in such Registration Statement by
reason of demand registration rights or whose registration rights existed prior
to the date hereof. No right to registration of Registrable Securities under
this Section 2.3 shall be construed to limit any registration required under
Section 2.1. The obligations of the Company under this Section 2.3 may be waived
by Investors holding a majority of the Registrable Securities. If an offering in
connection with which an Investor is entitled to registration under this Section
2.3 is an underwritten offering, each Investor whose Registrable Securities are
included in such Registration Statement shall, unless otherwise agreed by the
Company, offer and sell such Registrable Securities in such an underwritten
offering using the same underwriter or underwriters and, subject to all
provisions of this Agreement, shall enter an underwriting agreement on the same
terms and conditions as other shares of Common Stock included in such
underwritten offering.
2.4 Eligibility for Form S-3. The Company represents and warrants
------------------------
that it meets the requirements for the use of Form S-3 for registration of the
sale by the Investors of the Registrable Securities, and the Company shall file
all reports required to be filed by the Company with the SEC in a timely manner
to maintain such eligibility for the use of Form S-3. If Form S-3 is not
available for sale by the Investors of the Registrable Securities, the Company
shall register the sale on another appropriate form.
3. REGISTRATION OBLIGATIONS.
------------------------
3.1 Registration Statements. The Company shall use its best efforts
-----------------------
to keep the Registration Statement effective pursuant to Rule 415 at all times
until the earlier of (a) the date as of which the Investors may sell all of the
Registrable Securities without restriction pursuant to Rule 144(k) promulgated
under the 1933 Act (or successor thereto), or (b) the date on which the
Investors shall have sold all the Registrable Securities (the "Registration
Period"); provided that the Company shall have the right to deregister any of
the Registrable Securities at any time after they may be so sold pursuant to
Rule 144(k) or are sold in a registration under Section 2.3 and shall not
thereafter have any obligation whatsoever to register the Registrable Securities
so deregistered. Such Registration Statement (including any amendments or
3
supplements thereto and prospectuses contained therein) shall not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein, or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading.
3.2 Amendments and Supplements. The Company shall prepare and file
--------------------------
with the SEC such amendments (including post-effective amendments) and
supplements to the Registration Statement and the prospectus used in connection
with the Registration Statement as may be necessary to keep the Registration
Statement effective at all times during the Registration Period, and, during
such period, comply with the provisions of the 1933 Act with respect to the
disposition of all Registrable Securities of the Company covered by the
Registration Statement until such time as all of such Registrable Securities
shall have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof as set forth in the Registration
Statement.
3.3 Prospectus Delivery. The Company shall furnish to each Investor
-------------------
whose Registrable Securities are included in the Registration Statement (a) and
shall furnish to such Investor's legal counsel, promptly after the same is
prepared and publicly distributed, filed with the SEC or received by the
Company, one copy of the Registration Statement and any amendment thereto, each
preliminary prospectus and prospectus and each amendment or supplement thereto,
and (b) such number of copies of a prospectus, including a preliminary
prospectus, and all amendments and supplements thereto and such other documents
as such Investor may reasonably request to facilitate the disposition of the
Registrable Securities owned by such Investor.
3.4 Blue Sky Laws. The Company shall use reasonable efforts to (a)
-------------
register and qualify the Registrable Securities covered by the Registration
Statement under such other securities or "blue sky" laws of such jurisdictions
in the United States as the Investors who hold a majority of the Registrable
Securities being offered reasonably request (but in no event in more than five
states of the United States), (b) prepare and file in those jurisdictions such
amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (c) take such other
actions as may be necessary to maintain such registrations and qualifications in
effect at all times during the Registration Period, and (d) take all other
actions reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided that the Company shall not be required
in connection therewith or as a condition thereto to (1) qualify to do business
in any jurisdiction where it would not otherwise be required to qualify but for
this Section 3.4, (2) subject itself to general taxation in any such
jurisdiction, (3) file a general consent to service of process in any such
jurisdiction, (4) provide any undertakings that cause more than nominal expense
or burden to the Company, or (5) make any change in its certificate of
incorporation or bylaws, which the Board of Directors of the Company determines
to be contrary to the best interests of the Company.
3.5 Underwriting Agreement. If Investors who hold a majority of the
----------------------
Registrable Securities being offered in the offering select underwriters for the
offering, the
4
Company shall enter into and perform its obligations under an underwriting
agreement, in usual and customary form, including, without limitation, customary
indemnification and contribution obligations, with the underwriters of such
offering, but the Company shall not be required to pay any fees or expenses of
such underwriter relating to the Registrable Securities.
3.6 Corrections. The Company shall promptly notify each Investor and
-----------
its legal counsel of the happening of any event of which the Company has
knowledge, as a result of which the prospectus included in a Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, and shall use its best efforts promptly to prepare a
supplement or amendment to the Registration Statement to correct such statement
or omission, and deliver such number of copies of such supplement or amendment
to each Investor as such Investor may reasonably request.
3.7 Stop Orders. The Company shall use its best efforts to prevent
-----------
the issuance of any stop order or other suspension of effectiveness of a
Registration Statement, and, if such an order is issued, to obtain the
withdrawal of such order at the earliest possible moment and to notify each
Investor who holds Registrable Securities being sold (and, in the event of an
underwritten offering, the managing underwriters) of the issuance of such order
and the resolution thereof or its receipt of actual notice of the initiation or
threat of any proceeding for that purpose.
3.8 Selling Stockholders' Counsel. The Company shall deliver to a
-----------------------------
single firm of counsel, designated as selling stockholders' counsel by the
Investors who hold a majority of the Registrable Securities being sold, the
Registration Statement and all amendments and supplements thereto three (3)
business days prior to their filing with the SEC, and shall not file any
document in a form to which such counsel reasonably and timely objects.
3.9 Comfort Letter and Opinion. At the request of Investors who hold
--------------------------
a majority of the Registrable Securities being sold, the Company shall furnish
on one occasion only and at the expense of the Investors, on the date that
Registrable Securities are delivered to an underwriter, if any, for sale in
connection with the Registration Statement (a) if required by an underwriter, a
letter, dated such date, from the Company's independent certified public
accountants in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering,
addressed to the underwriters, and (b) an opinion, dated as of such date, of
counsel representing the Company for purposes of such Registration Statement, in
such form and substance as is customarily given in an underwritten public
offering, addressed to the underwriters and the Investors.
3.10 Due Diligence. The Company shall make available for inspection
-------------
by any Investor, any underwriter participating in any disposition pursuant to
the Registration Statement, one firm of attorneys and one firm of accountants or
other agents retained by the Investors, and one firm of attorneys retained by
all such underwriters (collectively, the "Inspectors"), all pertinent financial
and other records, and pertinent corporate documents and
5
properties of the Company (collectively, the "Records"), as shall be reasonably
deemed necessary by the Inspectors to enable the Inspectors to exercise their
due diligence responsibilities, and cause the Company's officers, directors and
employees to supply all information that the Inspectors may reasonably request
for purposes of such due diligence; provided that each Inspector shall hold in
strict confidence and shall not make any disclosure (except to an Investor) or
use of any Record or other information which the Company determines in good
faith to be confidential, and of which determination the Inspectors are so
notified, unless (a) the disclosure of such Records is necessary to avoid or
correct a misstatement or omission in any Registration Statement, (b) the
release of such Records is ordered pursuant to a final, non-appealable subpoena
or order from a court or government body of competent jurisdiction, or (c) the
information in such Records has been made generally available to the public
other than by disclosure in violation of this or any other agreement. The
Company shall not be required to disclose any confidential information in such
Records to any Inspector until and unless such Inspector shall have entered into
a confidentiality agreement (in form and substance satisfactory to the Company)
with the Company with respect thereto, consistent with and implementing the
confidentiality obligations of this Section 3.10. Each Investor agrees that it
shall, on learning that disclosure of such Records is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
notice to the Company and allow and cooperate with the Company, at its expense,
to undertake appropriate action to prevent disclosure of, or to obtain a
protective order for, the Records deemed confidential.
3.11 Investor Information. The Company shall hold in confidence and
--------------------
not make any disclosure of information concerning an Investor provided to the
Company otherwise than for inclusion in any Registration Statement or any
prospectus included in any Registration Statement, unless (a) disclosure of such
information is necessary to comply with federal or state securities laws, (b)
the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (c) the release of such
information is ordered pursuant to a subpoena or other final, non-appealable
order from a court or governmental body of competent jurisdiction, or (d) such
information has been made generally available to the public other than by
disclosure in violation of this or any other agreement. The Company agrees that
it shall, on learning that disclosure of such information concerning an Investor
is sought in or by a court or governmental body of competent jurisdiction or
through other means, give prompt notice to such Investor and allow such
Investor, at such Investor's expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, such information.
3.12 Listing. The Company shall use its best efforts to (a) cause all
-------
the Registrable Securities covered by a Registration Statement to be listed on
each national securities exchange on which the Common Stock is then listed, if
any, if the listing of such Registrable Securities is then permitted under the
rules of such exchange, or (b) secure designation and quotation of all the
Registrable Securities covered by the Registration Statement on the Nasdaq
National Market or (c) if, despite the Company's best efforts to satisfy the
preceding clause (a) or (b), the Company is unsuccessful in satisfying the
preceding clause (a) or (b), to secure the inclusion for quotation on the Nasdaq
SmallCap Market for such Registrable Securities and (d) without limiting the
generality of the foregoing, to arrange for at least two market makers to
6
register with the National Association of Securities Dealers, Inc. ("NASD") as
such with respect to such Registrable Securities.
3.13 Certificates. The Company shall cooperate with the Investors who
------------
hold Registrable Securities being offered and, to the extent applicable, any
managing underwriter or underwriters, to facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legend) representing the
Registrable Securities to be sold pursuant to a Registration Statement and
enable such certificates to be in such denominations or amounts, as the case may
be, as the managing underwriter or underwriters, if any, or, if there is no
managing underwriter or underwriters, the Investors may reasonably request and
registered in such names as the managing underwriter or underwriters, if any, or
the Investors may request. Not later than the date on which any Registration
Statement registering the resale of Registrable Securities is declared
effective, the Company shall deliver to its transfer agent instructions,
accompanied by any reasonably required opinion of counsel, that permit sales of
unlegended securities in a timely fashion that complies with then mandated
securities settlement procedures for regular way market transactions.
3.14 Other Action. The Company shall take all other reasonable
------------
actions necessary to expedite and facilitate disposition by the Investors of
Registrable Securities pursuant to the Registration Statement.
3.15 The Company shall make generally available to its security
holders as soon as practical, but not later than ninety days after the close of
the period covered thereby, an earnings statement (in form complying with the
provisions of Rule 158 under the 0000 Xxx) covering a twelve-month period
beginning not later than the first day of the Company's fiscal quarter next
following the effective date of the Registration Statement.
4. OTHER OBLIGATIONS OF THE INVESTORS.
----------------------------------
4.1 Investor Information. At least five days prior to the first
--------------------
anticipated filing date of the Registration Statement, the Company shall notify
each Investor of the information the Company requires from such Investor for
inclusion in the Registration Statement. It shall be a condition precedent to
the obligations of the Company to complete the registration pursuant to this
Agreement with respect to the Registrable Securities of an Investor that such
Investor shall furnish to the Company such information regarding itself, the
Registrable Securities held by it and the intended method of disposition of the
Registrable Securities held by it as shall be reasonably required to effect the
registration of such Registrable Securities and shall execute such documents in
connection with such registration as the Company may reasonably request.
4.2 Cooperation. Each Investor by such Investor's acceptance of the
-----------
Registrable Securities agrees to cooperate with the Company as reasonably
requested by the Company in connection with the preparation and filing of the
Registration Statement hereunder, unless such Investor has notified the Company
in writing of such Investor's election to exclude
7
all of such Investor's Registrable Securities from the Registration Statement,
in which event such Investor shall have no further rights under this Agreement.
4.3 Underwriting Agreement. If Investors holding a majority of the
----------------------
Registrable Securities being registered pursuant to the Registration Statement
determine to engage the services of an underwriter, each Investor agrees to
enter into and perform such Investor's obligations under an underwriting
agreement, in usual and customary form, including, without limitation, customary
indemnification and contribution obligations, with the managing underwriter of
such offering and take such other actions as are reasonably required to expedite
or facilitate the disposition of the Registrable Securities, unless such
Investor notifies the Company in writing of such Investor's election to exclude
all of such Investor's Registrable Securities from the Registration Statement.
4.4 Corrections. Each Investor agrees that, on receipt of any notice
-----------
from the Company of the happening of any event of the kind described in Section
3.6 or 3.7, such Investor will immediately discontinue disposition of
Registrable Securities pursuant to any Registration Statement covering such
Registrable Securities until such Investor's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3.6 or 3.7 and, if so
directed by the Company, such Investor shall deliver to the Company (at the
expense of the Company) or destroy (and deliver to the Company a certificate of
destruction) all copies in such Investor's possession, of the prospectus
covering such Registrable Securities current at the time of receipt of such
notice.
4.5 Underwriting Arrangements. No Investor may participate in any
-------------------------
underwritten registration hereunder, unless such Investor (a) agrees to sell
such Investor's Registrable Securities on the basis provided in any underwriting
arrangements approved by the Investors entitled hereunder to approve such
arrangements, (b) completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents reasonably required
under the terms of such underwriting arrangements, and (c) agrees to pay its pro
rata share of all underwriting fees, discounts, commissions and expenses.
5. EXPENSES OF REGISTRATION. Except as otherwise specifically provided
------------------------
herein, all Registration Expenses incurred in connection with the registrations,
filings or qualifications pursuant to Sections 2 and 3 shall be borne by the
Company.
6. INDEMNIFICATION. If any Registrable Securities are included in a
---------------
Registration Statement under this Agreement:
6.1 By the Company. To the extent permitted by law, the Company will
--------------
indemnify, hold harmless and defend each Investor, each director and officer of
and person, if any, who controls such Investor within the meaning of the 1933
Act or the 1934 Act, and each underwriter (as defined in the 0000 Xxx) for the
Investors, and each director and officer of, and each person, if any, who
controls, such underwriter within the meaning of the 1933 Act or the 1934 Act
(each, an "Indemnified Person"), against any losses, claims, damages,
liabilities or expenses (joint or several) (collectively, "Claims") to which any
of them may become subject
8
insofar as such Claims (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based on: (a) any untrue
statement or alleged untrue statement of a material fact in a Registration
Statement or the omission or alleged omission to state therein a material fact
required to be stated or necessary to make the statements therein not
misleading, (b) any untrue statement or alleged untrue statement of a material
fact contained in any preliminary prospectus if used prior to the effective date
of such Registration Statement, or contained in the final prospectus (as amended
or supplemented, if the Company files any amendment thereof or supplement
thereto with the SEC) or the omission or alleged omission to state therein any
material fact necessary to make the statements made therein, in light of the
circumstances under which the statements therein were made, not misleading, or
(c) any violation or alleged violation caused by the Company of the 1933 Act,
the 1934 Act, any state securities law, or any rule or regulation thereunder
relating to the offer or sale of the Registrable Securities pursuant to a
Registration Statement (the matters in the preceding clauses (a), (b) and (c)
being, collectively, "Violations"). Subject to the restrictions in Section 6.4
with respect to the number of legal counsel, the Company shall reimburse each
Indemnified Person promptly as such expenses are incurred and are due and
payable, for any legal fees or other reasonable expenses incurred by such
Indemnified Person in connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary herein, the indemnification agreement
in this Section 6.1: (1) shall not apply to a Claim arising out of or based on a
Violation that occurs in reliance on and in conformity with information
furnished in writing to the Company by, or caused by, any Indemnified Person or
underwriter for such Indemnified Person in connection with the preparation of
the Registration Statement or any such amendment thereof or supplement thereto,
if such prospectus was timely made available by the Company pursuant to Section
3.3; (2) with respect to any preliminary prospectus, shall not inure to the
benefit of any such person from whom the person asserting any such Claim
purchased the Registrable Securities that are the subject thereof (or to the
benefit of any person controlling such person) if the untrue statement or
omission of material fact contained in the preliminary prospectus was corrected
in the prospectus, as then amended or supplemented, if such prospectus was
timely made available by the Company pursuant to Section 3.3; (3) shall not be
available to the extent that such Claim is based on a failure of the Investor to
deliver or to cause to be delivered the prospectus made available by the
Company; and (4) shall not apply to amounts paid in settlement of any Claim if
such settlement is effected without the prior written consent of the Company,
which consent shall not be unreasonably withheld. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
the Indemnified Person and shall survive the transfer of the Registrable
Securities by the Investors pursuant to Section 9.
6.2 By the Investors. In connection with any Registration Statement
----------------
in which an Investor is participating, each such Investor agrees to indemnify,
hold harmless and defend, to the same extent and in the same manner as is set
forth in Section 6.1, the Company, each of its directors, each of its officers
who signs the Registration Statement, each person, if any, who controls the
Company within the meaning of the 1933 Act or the 1934 Act, any underwriter and
any other stockholder selling securities pursuant to the Registration Statement
or any of its directors or officers or any person who controls such stockholder
or underwriter within the meaning of the 1933 Act or the 1934 Act (collectively
and together with an Indemnified Person, an "Indemnified Party"), against any
Claim to which any of them may
9
become subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such
Claim arises out of or is based on any Violation, in each case to the extent
(and only to the extent) that such Violation occurs in reliance on and in
conformity with written information furnished to the Company by such Investor
expressly for use in connection with such Registration Statement or to the
extent such Claim is based on any violation or alleged violation by the Investor
of the 1933 Act, 1934 Act or any other law; and such Investor will reimburse any
legal or other expenses reasonably incurred by the Indemnified Parties in
connection with investigating or defending any such Claim; provided that the
indemnity agreement in this Section 6.2 shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of such Investor, which consent shall not be unreasonably withheld; and
provided further that the Investor shall be liable under this Section 6.2 for
only such amount of a Claim as does not exceed the net proceeds to such Investor
as a result of the sale of Registrable Securities pursuant to such Registration
Statement. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of such Indemnified Party and shall
survive the transfer of the Registrable Securities by the Investors pursuant to
Section 9.
6.3 By Others. The Company shall be entitled to receive indemnities
---------
from underwriters, selling brokers, dealer managers and similar securities
industry professionals participating in any distribution, to the same extent as
provided above, with respect to information such persons so furnished in writing
expressly for inclusion in the Registration Statement.
6.4 Procedures. Promptly after receipt by an Indemnified Person or
----------
Indemnified Party under this Section 6 of notice of the commencement of any
action (including any governmental action), such Indemnified Person or
Indemnified Party shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 6, deliver to the indemnifying party a
written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party, as the
case may be; provided that an Indemnified Person or Indemnified Party shall have
the right to retain its own counsel with the fees and expenses to be paid by the
indemnifying party, if, in the reasonable opinion of counsel retained by the
indemnifying party, the representation by such counsel of the Indemnified Person
or Indemnified Party and the indemnifying party would be inappropriate due to
actual or potential differing interests between such Indemnified Person or
Indemnified Party and any other party represented by such counsel in such
proceeding. The Company shall pay reasonable fees for only one separate legal
counsel for the Investors, and such legal counsel shall be selected by the
Investors holding a majority of the Registrable Securities included in the
Registration Statement to which the Claim relates. The failure to deliver
written notice to the indemnifying party within a reasonable time after the
threat or commencement of any such action shall not relieve such indemnifying
party of any liability to the Indemnified Person or Indemnified Party under this
Section 6, except to the extent that the indemnifying party is prejudiced in its
ability to defend such action. The indemnification required by this Section 6
shall be made by periodic payments of the amount
10
thereof during the course of the investigation or defense, as such expense,
loss, damage or liability is incurred and is due and payable.
7. CONTRIBUTION. To the extent that any indemnification by an
------------
indemnifying party is prohibited or limited by law, the indemnifying party
agrees to make the maximum contribution with respect to any amounts for which it
would otherwise be liable under Section 6 to the fullest extent permitted by
law; provided that (a) no contribution shall be made under circumstances where
the maker would not have been liable for indemnification under the fault
standards set forth in Section 6, (b) no seller of Registrable Securities guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the 0000
Xxx) shall be entitled to contribution from any seller of Registrable Securities
who was not guilty of fraudulent misrepresentation, and (c) contribution by any
seller of Registrable Securities shall be limited in amount to the net amount of
proceeds received by such seller from the sale of such Registrable Securities.
8. REPORTS UNDER THE 1934 ACT. With a view to making available to the
--------------------------
Investors the benefits of Rule 144 under the 1933 Act or any other similar rule
or regulation of the SEC that may at any time permit the investors to sell
securities of the Company to the public without registration ("Rule 144"), the
Company agrees to:
8.1 Information. Make and keep public information available, as
-----------
those terms are understood and defined in Rule 144;
8.2 Reports. File with the SEC in a timely manner all reports and
-------
other documents required of the Company under the 1933 Act and the 1934 Act so
long as the Company remains subject to such requirements (it being understood
that nothing herein shall limit the Company's obligations under Section 4.2 of
the Purchase Agreement) and the filing of such reports and other documents is
required for the applicable provisions of Rule 144; and
8.3 Confirmation. Furnish to each Investor so long as such
------------
Investor owns Registrable Securities, promptly on request, (a) a written
statement by the Company that it has complied with the reporting requirements of
Rule 144, the 1933 Act and the 1934 Act, (b) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company, and (c) such other information as may be reasonably requested to
permit the investors to sell such securities pursuant to Rule 144 without
registration.
9. ASSIGNMENT OF REGISTRATION RIGHTS. The rights to have the Company
---------------------------------
register Registrable Securities pursuant to this Agreement shall be
automatically assignable by an Investor to any transferee of Registrable
Securities if: (a) the Investor holds not less than 50,000 of the Registrable
Securities (or Warrants to acquire not less than 50,000 of the Registrable
Securities) and agrees in writing with the transferee or assignee to assign such
rights, and a copy of such agreement is furnished to the Company within a
reasonable time after such assignment, (b) the Company is, within a reasonable
time after such transfer or assignment, furnished with written notice of the
name and address of such transferee or assignee and the securities with respect
to which such registration rights are being transferred or assigned, (c)
11
immediately following such transfer or assignment the further disposition of
such securities by the transferee or assignee is restricted under the 1933 Act
and applicable state securities laws, (d) at or before the time the Company
receives the written notice contemplated by clause (b) of this sentence the
transferee or assignee agrees in writing with the Company to become a party to
and be bound by this Agreement, (e) such transfer shall have been made in
accordance with the applicable requirements of the Purchase Agreement, (f) such
transferee shall be an "accredited investor" as that term defined in Regulation
D under the 1933 Act, and (g) if the assignment occurs after the date of
effectiveness of the Registration Statement required to be filed pursuant to
Section 2.1, the transferee agrees to pay all reasonable expenses of amending or
supplementing such Registration Statement to reflect such assignment.
10. AMENDMENT OF REGISTRATION RIGHTS. This Agreement may be amended and
--------------------------------
the observance thereof may be waived (either generally or in a particular
instance and either retroactively or prospectively), with and only with the
written consent of the Company and Investors who hold a majority of the
Registrable Securities. Any amendment or waiver effected in accordance with
this Section 10 shall be binding on each Investor and the Company.
11. MISCELLANEOUS.
-------------
11.1 Holder. A person or entity is deemed to be a holder of
------
Registrable Securities whenever such person or entity owns of record such
Registrable Securities. If the Company receives conflicting instructions,
notices or elections from two or more persons or entities with respect to the
same Registrable Securities, the Company shall act on the basis of instructions,
notices or elections received from the registered owner of such Registrable
Securities.
11.2 Other Registration Rights Agreements. The parties acknowledge
------------------------------------
that the Company has entered into registration rights agreements similar to this
Agreement with other persons ("Other Purchasers") that have purchased shares of
the Company's capital stock. If the Company hereafter agrees with some or all of
the Other Purchasers to amend or otherwise change any of the terms or conditions
of the registration rights agreements with them, at the Company's election, in
its exclusive discretion, this Agreement shall thereupon be deemed amended or
otherwise changed in the same manner and in the same respects, and the Company
shall thereupon notify the Investors thereof.
11.3 Notices. Any notice or other communication required or permitted
-------
to be given under this Agreement shall be in writing and shall be deemed duly
given and received when delivered personally or by courier, when transmitted by
facsimile if receipt is acknowledged by the addressee, one business day after
being deposited for next-day delivery with a nationally recognized overnight
delivery service, or three days after being deposited with the United States
Postal Service as first class mail, all charges and postage prepaid, properly
addressed as follows:
12
If to the Company:
00000 Xxxxxxx Xxxxxxx
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Chief Financial Officer
With a copy to:
Shartsis, Xxxxxx & Xxxxxxxx
Xxx Xxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: M. Xxxx Xxxxx, Esq.
If to a Buyer, at its address set forth in the notice provision of the
Purchase Agreement.
Each party shall provide notice to the other party of any change in
address.
11.4 Governing Law. This Agreement shall be governed by and construed
-------------
and interpreted in accordance with the laws of the State of Delaware without
regard to the principles of conflict of laws.
11.5 Severability. If any provision of this Agreement shall be
------------
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
11.6 Entire Agreement. This Agreement, the Warrants, and the
----------------
Purchase Agreement together constitute the entire agreement of the parties and
supersede all prior or contemporaneous negotiations, correspondence,
understandings and agreements, written or oral, regarding the subject matter
hereof.
11.7 Successors and Assigns. Subject to Section 9, this Agreement
----------------------
shall inure to the benefit of and bind the parties hereto and their respective
permitted successors and assigns.
11.8 Headings; References. The headings in this Agreement are for
--------------------
convenience of reference only and are not part of this Agreement. References to
sections herein refer to sections of this Agreement, except as otherwise
indicated. The singular includes the plural and vice versa, as the context may
require.
13
11.9 Counterparts. This Agreement may be executed in two or more
------------
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party. If any signature page is delivered by
facsimile transmission, the party using such means of delivery shall cause its
originally executed signature page to be physically delivered to the other party
within five days of the execution and delivery hereof.
11.10 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 to carry out the intent and accomplish
the purposes of this Agreement and the consummation of the transactions
contemplated hereby.
11.11 Nonwaiver. Failure of any party to exercise any right or remedy
---------
under this Agreement or otherwise, or delay by a party in exercising such right
or remedy, shall not operate as a waiver thereof.
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of day and year first above written.
COMPANY: BUYER:
XXXX & COMPANY, INC. SYQUEST TECHNOLOGY, INC.
By:_____________________________ By:___________________________
Name:___________________________ Name:_________________________
Its:____________________________ Its:__________________________
14
EXHIBIT B
THE WARRANT AND ANY SHARES ACQUIRED UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS; AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED, ASSIGNED,
PLEDGED, HYPOTHECATED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL
IN FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO SYQUEST TECHNOLOGY, INC. THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS.
SYQUEST TECHNOLOGY, INC.
COMMON STOCK PURCHASE WARRANT
Warrant No.___________ Number of Shares: [80,000]
Date of Issuance: [______________ 16, 1997]
SyQuest Technology, Inc., a Delaware corporation (the "Company"),
hereby certifies that, Xxxx & Company, Inc., a Massachusetts corporation
("Holder"), the registered holder hereof, is entitled, subject to the terms and
conditions set forth below, to purchase from the Company, at the times and in
the manner described below, up to Eighty Thousand (80,000) fully paid and
nonassessable shares of Common Stock (as defined herein) of the Company (the
"Warrant Shares") at a purchase price of U.S. $[_____]/*/ per Warrant Share in
lawful money of the United States.
1. Definitions.
-----------
1.1 Defined Terms. The following terms as used in this Warrant
-------------
shall have the meanings indicated as follows:
"Common Stock" means (a) the Company's Common Stock and (b) any
------------
capital stock into which such Common Stock shall have been changed or any
capital stock resulting from a reclassification of such Common Stock.
"Convertible Securities" mean any securities issued by the
----------------------
Company which are convertible into or exchangeable for, directly or indirectly,
shares of Common Stock.
_________________
/*/ [Each Warrant will have an exercise price per Warrant Share equal to the
greater of (a) the arithmetic average of the closing sale price per share, or in
the absence of a closing sale price on any day, the closing bid price per share
on that day, of the Common Stock, as reported by the Nasdaq National Market for
the five consecutive trading days preceding the Grant Date with respect to such
Warrant, and (b) the closing sale price per share, or in the absence of a
closing sale price, the closing bid price per share, of the Common Stock, as so
reported for the trading day preceding such Grant Date, minus $0.10.]
"Exercise Price" shall be U.S. $_______ per Warrant Share.
--------------
"Expiration Date" means the date four years from the date of this
---------------
Warrant or, if such date falls on a Saturday, Sunday or other day on which banks
are required or authorized to be closed in the City and County of San Francisco,
State of California (a "Holiday"), the next preceding date that is not a
Holiday.
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"Transfer" shall include any disposition of any Warrants or
--------
Warrant Shares or any interest in either thereof that would constitute a sale
thereof within the meaning of the Securities Act or applicable securities laws
of any state.
"Warrant" shall mean this Warrant and all Warrants issued in
-------
exchange, transfer or replacement hereof or thereof.
1.2 Other Definitional Provisions.
-----------------------------
(a) Except as otherwise specified herein, all references
herein to the Company shall be deemed to include the Company's successors and to
any applicable law defined or referred to herein shall be deemed references to
such applicable law as the same may have been or may be amended or supplemented
from time to time.
(b) When used in this Warrant, the words "herein",
"hereof", and "hereunder", and words of similar import, shall refer to this
Warrant as a whole and not to any provision of this Warrant, and the words
"Section", "Schedule", and "Exhibit" shall refer, respectively, to sections of
and Schedules and Exhibits to this Warrant, unless otherwise specified.
(c) Whenever the context so requires, each gender includes
each other gender, and the singular number includes the plural and vice versa.
(d) References herein to the date of this Warrant mean the
date of issuance set forth above.
2. Exercise of Warrant.
-------------------
2.1 Vesting. Subject to the terms and conditions hereof, this
-------
Warrant may be exercised at any time during normal business hours on or after
the opening of business on the date hereof and prior to 5:00 P.M. on the
Expiration Date. The minimum number of shares of Common Stock that may be
purchased upon any partial exercise of the Warrant is ten thousand (10,000)
shares and the Warrant shall not be exercisable with respect to a fraction of a
share.
2.2 Manner of Exercise. The rights represented by this Warrant
------------------
may be exercised by the holder hereof then registered on the books of the
Company by (a) delivery of a written notice, in the form of the Subscription
Notice attached as Appendix I hereto, of such
2
holder's election to exercise this Warrant, which notice shall specify the
number of Warrant Shares to be purchased, (b) payment to the Company of an
amount in cash or by bank cashier's check in immediately available funds equal
to the Exercise Price multiplied by the number of Warrant Shares as to which the
Warrant is being exercised (plus payment in cash or by bank cashier's check of
any applicable issue or transfer taxes), for the number of Warrant Shares as to
which this Warrant shall have been exercised, and (c) the surrender of this
Warrant, properly endorsed, at the principal office of the Company (or at such
other agency or office of the Company as the Company may designate by notice to
the holder hereof); provided, that if such Warrant Shares are to be issued in
any name other than that of the registered holder of this Warrant, such issuance
shall be deemed a transfer and the provisions of Section 8 shall be applicable.
In the event of any exercise of this Warrant in compliance with this Section
2.2, a certificate or certificates for the Warrant Shares so purchased,
registered in the name of, or as directed by, the holder, shall be delivered to,
or as directed by, such holder within a reasonable time after such exercise.
2.3 Issuances. Unless this Warrant shall have expired or shall
---------
have been fully exercised, the Company shall issue a new Warrant identical in
all respects to the Warrant exercised, except (a) it shall represent rights to
purchase the number of Warrant Shares purchasable immediately prior to such
exercise under the Warrant exercised, less the number of Warrant Shares with
respect to which such Warrant is exercised, and (b) the holder thereof shall be
deemed to have become the holder of record of the Warrant Shares issuable on
such exercise immediately prior to the close of business on the date on which
such holder shall have complied with the requirements hereof with respect to
such exercise, irrespective of the date of delivery of such share certificate,
except that, if such date is a date when the stock transfer books of the Company
are properly closed, such person shall be deemed to have become the holder of
such Warrant Shares at the opening of business on the next succeeding date on
which the stock transfer books are open.
3. Covenants as to Common Stock. The Company covenants and agrees
----------------------------
that all Warrant Shares that may be issued on exercise of this Warrant will, on
issuance, be validly issued, fully paid and nonassessable and that, during the
period within which this Warrant may be exercised, the Company will at all times
have authorized and reserved a sufficient number of shares of Common Stock to
provide for the exercise of this Warrant and that the par value of such shares
will at all times be less than or equal to the applicable Exercise Price.
4. Taxes. The Company shall not be required to pay any tax or taxes
-----
attributable to the initial issuance of the Warrant Shares or any permitted
transfer involved in the issue or delivery of any certificates for Warrant
Shares in a name other than that of the registered holder hereof or upon any
transfer of this Warrant.
5. Warrant Holder Not Deemed a Stockholder. No holder, as such, of
---------------------------------------
this Warrant shall be entitled to vote or receive dividends or be deemed the
holder of shares of stock of the Company for any purpose, nor shall anything
contained in this Warrant be construed to confer on the holder hereof, as such,
any of the rights of a stockholder of the Company or any right to vote, give or
withhold consent to any corporate action (whether any reorganization, issue of
stock, reclassification of stock, consolidation, merger, conveyance or
otherwise), receive notice of meetings, receive dividends or subscription
rights, or otherwise. Notwithstanding the
3
foregoing, the Company will provide the holder of this Warrant with copies of
the same notices and other information given to the common stockholders of the
Company generally, contemporaneously with the giving thereof to such
stockholders.
6. No Limitation on Corporate Action. No provisions of this Warrant
---------------------------------
and no right or option granted or conferred hereunder shall in any way limit,
affect or abridge the exercise by the Company of any of its corporate rights or
powers to recapitalize, amend its Certificate of Incorporation, reorganize,
consolidate or merge with or into another corporation, or to transfer all or any
part of its property or assets, or the exercise of any other of its corporate
rights and powers.
7. Representations of Holder. The holder of this Warrant, by the
-------------------------
acceptance hereof, represents and warrants to the Company that on and as of the
date hereof and on the date of any issuance of the Warrant Shares:
7.1 Authorization; Enforcement. This Warrant is duly and
--------------------------
validly authorized, executed and delivered by the holder and a valid and binding
agreement of the holder enforceable in accordance with its terms.
7.2 Investment Purpose. This Warrant is entered with the holder
------------------
in reliance upon the holder's representation that it is acquiring this Warrant
and will purchase Warrant Shares (this Warrant and such Warrant Shares being
hereinafter collectively called the "Securities") for its own account for
investment only and not with a view towards, or for resale in connection with,
any public sale or distribution thereof, nor with any present intention of
distributing or selling the same except pursuant to effective registrations
under the Securities Act. The holder of this Warrant is not acquiring the
Securities for the purpose of covering short sale positions in the Common Stock.
The holder of this Warrant represents that it has full power and authority to
enter into this Warrant.
7.3 Accredited Investor Status. The holder is an "accredited
--------------------------
investor" as that term is defined in Rule 501(a) of Regulation D promulgated by
the Securities and Exchange Commission under the Securities Act (an "Accredited
Investor") and an "excluded purchaser" for the purpose of Section 25102(f) of
the California Corporate Securities Law of 1968, as amended (an "Excluded
Purchaser"). On exercise of this Warrant, the holder shall, if requested by the
Company, confirm in writing, in a form satisfactory to the Company, that the
Warrant Shares so purchased are being acquired solely for the holder's own
account and not as a nominee for any other party, for investment, and not with a
view toward distribution or resale and that such holder is an Accredited
Investor and an Excluded Purchaser. If such holder cannot make such
representations because they would be factually incorrect, it shall be a
condition to such holder's exercise of the Warrant that the Company receive such
other representations as the Company considers reasonably necessary to assure
the Company that the issuance of its securities on exercise of the Warrant shall
not violate any United States federal or state securities law.
7.4 Reliance on Exemptions. The holder of this Warrant
----------------------
understands that the Securities 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
4
is relying upon the truth and accuracy of, and the holder's compliance with, the
representations, warranties, agreements, acknowledgments and understandings of
the holder set forth herein in order to determine the availability of such
exemptions and the eligibility of the holder to acquire the Securities.
7.5 Investment Experience. The holder of this Warrant is an
---------------------
investor in securities of comparable companies and acknowledges that it is able
to fend for itself, can bear the economic risk of its investment, and has such
knowledge and experience in financial or business matters that it is capable of
evaluating the merits and risks of the investment in the Securities.
7.6 Information. The holder of this Warrant has made detailed
-----------
inquiry concerning the Company, its business, personnel and competitive
position. The holder of this Warrant further represents and warrants that in
order to make an informed decision in connection with the acquisition of the
Securities:
(a) The holder of this Warrant has reviewed the merits and
risks of an investment in the Securities with its own tax and legal counsel,
accounting firm and with an investment advisor to the extent deemed advisable by
the holder;
(b) The holder of this Warrant recognizes that an
investment in the Securities involves a high degree of risk, including, without
limitation, the risks arising from the facts that the Company incurred a loss
for the quarter and fiscal year ended September 30, 1996, and that no assurance
can be given that the Company will not incur continuing losses or will be
profitable; and
(c) The holder: (x) has carefully reviewed the Company's
reports filed with the Securities and Exchange Commission; (y) has been provided
with such additional information with respect to the Company as the holder or
the holder's agent or attorney has requested; and (z) has had the opportunity to
discuss such information with members of the management of the Company and any
questions that the holder had with respect thereto have been answered to the
full satisfaction of the holder of this Warrant.
7.7 No Governmental Review. The holder of this Warrant
----------------------
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 Securities or the fairness or suitability of the investment
in the Securities nor have such authorities passed upon or endorsed the merits
of the offering of the Securities.
8. Transfer; Opinions of Counsel; Restrictive Legends.
--------------------------------------------------
(a) The holder of this Warrant understands that (i) except
as provided in the Registration Rights Agreement, this Warrant and the Warrant
Shares have not been and are not being registered under the Securities Act or
any state securities laws, and may not be offered for sale, sold, assigned,
transferred, pledged, hypothecated, encumbered or otherwise disposed of, unless
(a) registered thereunder, or (b) such holder shall have delivered to the
Company an unqualified written opinion of counsel, reasonably satisfactory in
form and
5
substance to the Company, to the effect that the securities to be sold,
assigned, transferred, pledged, hypothecated, encumbered or otherwise disposed
of may be so disposed of pursuant to an exemption from such registration; (ii)
any sale of such securities made in reliance on Rule 144 promulgated under the
Securities Act may be made only in accordance with the terms of that Rule and,
if that Rule is not applicable, any resale of such securities under
circumstances in which the seller (or the person through whom the sale is made)
may be deemed to be an underwriter (as that term is defined in the Securities
Act) may require compliance with some other exemption under the Securities Act
or the rules and regulations of the Securities and Exchange Commission
thereunder; and (iii) neither the Company nor any other person is under any
obligation to register such securities (other than pursuant to the Registration
Rights Agreement) under the Securities Act or any state securities law or to
comply with the requirements and conditions for any exemption thereunder.
(b) The holder agrees and understands that the certificates
representing the Warrant Shares may bear one or all of the following restrictive
legends (and a stop-transfer order may be placed against transfer of such stock
certificates):
(1) "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS. THE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL
IN FORM, SUBSTANCE AND SCOPE REASONABLY ACCEPTABLE TO SYQUEST TECHNOLOGY, INC.
THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES
LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT. ANY SUCH OFFER, SALE,
ASSIGNMENT OR TRANSFER MUST ALSO COMPLY WITH APPLICABLE STATE SECURITIES LAWS."
(2) Any legend required by the laws of the State of
Delaware or the State of California, including any legend required by the
California Department of Corporations.
The Company shall issue a certificate without such legend to represent Warrant
Shares lawfully sold by the holder in accordance with this Warrant (a) pursuant
to an effective registration statement under the Securities Act, or (b) in
accordance with an opinion of counsel, received by and in form and substance
reasonably acceptable to the Company, to the effect that public sale or transfer
of the Warrant Shares may be made without registration under the Securities Act.
9. Adjustments.
-----------
9.1 Reclassification and Reorganization. In case of any
-----------------------------------
reclassification, capital reorganization or other change of outstanding shares
of the Common Stock, or in case of any consolidation or merger of the Company
with or into another corporation (other than a consolidation or merger in which
the Company is the continuing corporation and which does not result in any
reclassification, capital reorganization or similar change of outstanding shares
of
6
Common Stock), the Company shall cause effective provision to be made so that
the Holder shall have the right thereafter, by exercising this Warrant, to
purchase the kind and number of shares of stock or other securities or property
(including cash) receivable on such reclassification, capital reorganization or
other change, consolidation or merger by a holder of the number of shares of
Common Stock that could have been purchased on exercise of the Warrant
immediately prior to such reclassification, capital reorganization or other
change, consolidation or merger. Any such provision shall include provision for
adjustments that shall be as nearly equivalent as may be practicable to the
adjustments pursuant to this Section 9. The foregoing provisions shall similarly
apply to successive reclassifications, capital reorganizations and other changes
of outstanding shares of Common Stock and to successive consolidations or
mergers. If the consideration received by the holders of Common Stock is other
than cash, the value of such consideration shall be as determined by the Board
of Directors of the Company acting in good faith.
9.2 Dividends and Stock Splits. If and whenever the Company
--------------------------
shall effect a stock dividend, a stock split, a stock combination, or a reverse
stock split of the Common Stock, the number of Warrant Shares purchasable
hereunder and the Exercise Price shall be proportionately adjusted in the manner
determined by the Company's Board of Directors acting in good faith. The number
of shares, as so adjusted, shall be rounded down to the nearest whole number and
the Exercise Price shall be rounded to the nearest cent.
10. Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant is
--------------------------------------------
lost, stolen or destroyed, the Company shall, on receipt of an indemnification
undertaking reasonably satisfactory to the Company, issue a new Warrant of like
denomination and tenor as the Warrant so lost, stolen or destroyed. If this
Warrant is mutilated, the Company shall, on receipt of the mutilated Warrant,
issue a new Warrant of like tenor as the mutilated Warrant.
11. Notice. Any notice or other communication required or permitted
------
to be given under this Warrant shall be in writing and shall be deemed duly
given and received when delivered personally or by courier, when transmitted by
facsimile if receipt is acknowledged by the addressee, one business day after
being deposited for next-day delivery with a nationally recognized overnight
delivery service, or three days after being deposited with the United States
Postal Service as first class mail, all charges and postage prepaid, properly
addressed as follows:
If to the Company:
00000 Xxxxxxx Xxxxxxx
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Chief Financial Officer
7
With a copy to:
Shartsis, Xxxxxx & Xxxxxxxx, LLP
Xxx Xxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: M. Xxxx Xxxxx, Esq.
If to Holder, to it at its address set forth below its signature
hereon.
Each party shall provide notice to the other party of any change in address.
12. Miscellaneous. This Warrant and any term hereof may be changed,
-------------
waived, discharged, or terminated only by an instrument in writing signed by the
party or holder hereof against which enforcement of such change, waiver,
discharge or termination is sought. The headings in this Warrant are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof. This Warrant shall be governed by and construed and interpreted
in accordance with the laws of the State of Delaware without regard to the
principles of conflict of laws.
13. Survival. The provisions of Sections 7 and 8 shall survive any
--------
exercise hereof and the Expiration Date and continue in full force and effect as
to any Warrant Shares or other securities issued on the exercise of this
Warrant.
SYQUEST TECHNOLOGY, INC.
By:______________________________
Name:____________________________
Title:___________________________
ACCEPTED:
--------
XXXX & COMPANY, INC.
By:_______________________________
Name:_____________________________
Title:____________________________
Address:
One Embarcadero Center, Suite 3500
----------------------------------
Xxx Xxxxxxxxx, XX 00000
----------------------------------
8
APPENDIX I TO WARRANT
---------------------
SUBSCRIPTION FORM
TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS WARRANT
SYQUEST TECHNOLOGY, INC.
The undersigned hereby exercises the right to purchase the number
specified below, which shall not be less than 10,000, of the Warrant Shares
covered by this Warrant according to the conditions thereof and herewith makes
payment of U.S. $_______________, the product of the Exercise Price multiplied
by such number of Warrant Shares.
The undersigned further certifies that:
1. It is acquiring the Warrant Shares for its own account and not as
nominee for any other party, for investment and not with a view to, or sale in
connection with, any distribution thereof, nor with any present intention of
distributing any of the same; and
2. As of this date, it is an "accredited investor" as such term is
defined in Regulation D promulgated by the Securities and Exchange Commission
under the Securities Act and an "excluded purchaser" for purposes of section
25102(f) of the California Corporate Securities Law of 1968, as amended.
Dated:________________,______. ______________________________________
Name of Holder
By:___________________________________
Name:_________________________________
Title:________________________________
Address:______________________________
______________________________________
______________________________________
______________________________________
Number of Warrant Shares
Being Purchased:_____________________
9
