EXHIBIT 10.3
WARRANT EXERCISE AGREEMENT
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This Warrant Exercise Agreement (the "Agreement") dated as of April 1, 1998
is entered into by and between SyQuest Technology, Inc., a Delaware corporation
(together with its successors, "SyQuest"), and ▇▇▇▇▇▇▇▇ International Limited, a
company organized under the laws of the Cayman Islands (together with its
successors, "▇▇▇▇▇▇▇▇").
The parties hereto agree as follows:
1. Warrant Exercise. In consideration of and upon the basis of the
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representations, warranties and agreements and subject to the terms and
conditions set forth in this Agreement:
a. Warrant Exercise. At the Closing (as defined below), ▇▇▇▇▇▇▇▇
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shall exercise Warrant No. 59 (the "1997 Warrant") issued by SyQuest to
▇▇▇▇▇▇▇▇ pursuant to that certain Subscription Agreement dated March 31,
1997 (the "1997 Agreement") with respect to 5,000,000 shares of Common
Stock (collectively, the "1997 Warrant Shares"), par value $.0001 per
share, of SyQuest (the "Common Stock"), by delivery of the certificate
representing the 1997 Warrant (the "1997 Warrant Certificate"), together
with the warrant exercise notice (the "1997 Warrant Exercise Notice"). The
Exercise Price (as defined in the ▇▇▇▇ ▇▇▇▇▇▇▇) per share is $2.34375, and
the aggregate warrant exercise price (the "1997 Warrant Price") is
$11,718,750.
b. Incentives. In order to cause ▇▇▇▇▇▇▇▇ to exercise the 1997
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Warrant, effective at the Closing, SyQuest agrees (i) to issue and sell to
▇▇▇▇▇▇▇▇, and ▇▇▇▇▇▇▇▇ agrees to purchase from SyQuest 1,696,429 newly
issued shares of Common Stock (collectively, the "Incentive Shares", and
together with the 1997 Warrant Shares, the "Initial Shares") at a price per
share equal to the par value of such shares (aggregating $169.64 (the
"Incentive Share Price")) , (ii) that, notwithstanding anything to the
contrary contained in Warrant No. 6 (the "1996 Warrant") issued by SyQuest
to ▇▇▇▇▇▇▇▇ pursuant to that certain Subscription Agreement dated November
12, 1996 (the "1996 Agreement"), the Exercise Price as defined in the 1996
Warrant shall be $3.09375, the last sales price of the Common Stock as
reported by Bloomberg, L.P. on April 1, 1998, and (iii) to provide the
other rights set forth herein.
2. Closing. Upon satisfaction or, if applicable, waiver of the
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conditions set forth in Sections 8 and 9 hereof, the deliveries set forth below
(the "Closing") shall take place initially via facsimile at 1:00 p.m. (New York
time) on April 1, 1998, or at such other date and time as ▇▇▇▇▇▇▇▇ and SyQuest
may agree (such date and time being referred to herein as the "Closing Date"),
provided that SyQuest shall deliver the original stock
certificates via Federal Express to the address specified in the 1997 Warrant
Exercise Notice and ▇▇▇▇▇▇▇▇ shall deliver the original certificate representing
the 1997 Warrant via Federal Express to SyQuest at the address set forth in
Section 14 hereof.
At the Closing, the following deliveries shall be made:
a. Initial Shares. SyQuest shall deliver 14 certificates
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representing the Initial Shares, duly registered on the books of SyQuest in
the name of ▇▇▇▇▇▇▇▇, against payment as soon as practicable by ▇▇▇▇▇▇▇▇ of
the 1997 Warrant Price and the Incentive Share Price to the following
account: Account Name: Bank of America, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Account No. 1233456287, ABA No. ▇▇▇▇▇▇▇▇▇.
b. 1997 Warrant Notice and Certificate. ▇▇▇▇▇▇▇▇ shall deliver
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the 1997 Warrant Exercise Notice and the 1997 Warrant Certificate to
SyQuest.
c. Closing Documents. The closing documents required by
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Sections 8 and 9 shall be delivered to ▇▇▇▇▇▇▇▇ and SyQuest, respectively.
e. Delivery Notice. An executed copy of the delivery notice
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in the form attached hereto as Annex B shall be delivered to ▇▇▇▇▇▇▇▇.
The foregoing deliveries shall be deemed to occur simultaneously as
part of a single transaction, and no delivery shall be deemed to have been made
until all such deliveries have been made.
3. Representations and Warranties of SyQuest. In addition to, and
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without limitation of, any representations and warranties required to be made by
SyQuest in connection with the exercise of the 1997 Warrant, SyQuest hereby
represents and warrants to ▇▇▇▇▇▇▇▇ on the date hereof, on the Closing Date, and
on each Issue Date, as follows:
a. SyQuest has been duly incorporated and is validly existing in
good standing under the laws of Delaware, or after the Closing Date, if
another entity has succeeded SyQuest in accordance with the terms hereof,
under the laws of one of the United States.
b. The execution, delivery and performance of this Agreement
(including the issuance of the Initial Shares) by SyQuest have been duly
authorized by all requisite corporate action and no further consent or
authorization of SyQuest, its Board of Directors or its stockholders is
required. This Agreement has been duly executed and delivered by SyQuest
and, when this Agreement is duly authorized, executed and delivered by
▇▇▇▇▇▇▇▇, will be a valid and binding agreement enforceable
against SyQuest in accordance with their terms, subject to bankruptcy,
insolvency, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights generally and to
general principles of equity.
c. SyQuest has full corporate power and authority necessary to
execute and deliver this Agreement and to perform its obligations hereunder
(including the issuance of the Initial Shares).
d. No consent, approval, authorization or order of any court,
governmental agency or other body is required for execution and delivery by
SyQuest of this Agreement or the performance by SyQuest of any of its
obligations hereunder.
e. Neither the execution and delivery by SyQuest of this
Agreement nor the performance by SyQuest of any of its obligations
hereunder:
(1) violates, conflicts with, results in a breach of, or
constitutes a default (or an event which with the giving of notice or
the lapse of time or both would be reasonably likely to constitute a
default) under (A) the Certificate of Incorporation or by-laws of
SyQuest or any of its subsidiaries or any Certificate of Designation
relating to any securities of SyQuest or any of its subsidiaries, (B)
any decree, judgment, order, law, treaty, rule, regulation or
determination of which SyQuest is aware (after due inquiry) of any
court, governmental agency or body, or arbitrator having jurisdiction
over SyQuest or any of its subsidiaries or any of their respective
properties or assets, (C) the terms of any bond, debenture, note or
any other evidence of indebtedness, or any agreement, stock option or
other similar plan, indenture, lease, mortgage, deed of trust or
other instrument to which SyQuest or any of its subsidiaries is a
party, by which SyQuest or any of its subsidiaries is bound, or to
which any of the properties or assets of SyQuest or any of its
subsidiaries is sub subject, (D) the terms of any "lock-up" or similar
provision of any underwriting or similar agreement to which SyQuest
or any of its subsidiaries is a party or (E) any rules of the
National Association of Securities Dealers, Inc. ("NASD") or the
NASDAQ National Market applicable to SyQuest or the transactions
contemplated hereby; or
(2) results in the creation or imposition of any lien,
charge or encumbrance upon (A) any Incentive Share or any Adjustment
Shares or (B) any of the properties or assets of SyQuest or any of
its subsidiaries.
f. SyQuest has validly reserved for issuance to ▇▇▇▇▇▇▇▇ (i)
6,696,429 shares of Common Stock for issuance at the Closing (ii) 1,875,000
shares of Common Stock for issuance under the 1996 Warrant, and (iii) 10
million shares of Common Stock that may be issuable from time to time as
Adjustment Shares. When issued to ▇▇▇▇▇▇▇▇ against payment therefor in
accordance with the terms of this Agreement, each Initial Share and each
Adjustment Share (as defined below):
(1) will have been duly and validly authorized, duly and
validly issued, fully paid and non-assessable;
(2) will be free and clear of any security interests, liens,
claims or other encumbrances (other than those resulting solely from
actions by ▇▇▇▇▇▇▇▇); and
(3) will not have been issued or sold in violation of any
preemptive or other similar rights of the holders of any securities of
SyQuest.
g. SyQuest satisfies all quantitative maintenance criteria of
the NASDAQ National Market. Following the Closing, the Incentive Shares
and the Adjustment Shares (once issued) will be duly listed and admitted
for trading on the principal exchange or market for the Common Stock.
h. Other than as set forth in any report, form, schedule,
statement or other document filed by SyQuest prior to the date of this
Agreement with the Securities and Exchange Commission under the Securities
Act of 1933, as added, or the Securities Exchange Act of 1934, as amended
(the "SEC Filings"), on the Closing Date, there is no pending or, to the
best knowledge of SyQuest, threatened action, suit, proceeding or
investigation before any court, governmental agency or body, or arbitrator
having jurisdiction over SyQuest or any of its affiliates that would
materially affect the execution by SyQuest of, or the performance by
SyQuest of its obligations under, this Agreement, provided, however, that
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the representations and warranties contained in this Section 3(h) shall not
apply to any action, threatened action, suit, proceeding or investigation
initiated by ▇▇▇▇▇▇▇▇.
i. SyQuest has timely filed all filings with the United States
Securities and Exchange Commission (the "SEC") under the Securities Act or
under Section 13(a) or 15(d) of the Exchange Act (each, an "SEC Filing")
required to be filed by SyQuest pursuant to such acts and no SEC Filing, or
press release containing information material to the business of SyQuest as
a whole, contained any untrue statement of a material fact or omitted to
state any material fact necessary in order to make the statements, in the
light of the circumstances under which they were made, not misleading.
j. Since the date of SyQuest's most recent SEC Filing, there has not
been, and SyQuest is not aware of any development that would require an
amendment to SyQuest's Registration Statement on Form S-3 (registration
number 333-40329), as supplemented (the "Warrant Registration Statement"),
in order to permit public offers and sales of shares of Common Stock
thereunder.
k. The offer and sale of the Initial Shares to ▇▇▇▇▇▇▇▇ pursuant
to this Agreement will, subject to compliance by ▇▇▇▇▇▇▇▇ with the
applicable representations and warranties contained in Section 4 hereof and
with the applicable covenants and agreements contained in Section 7 hereof,
be made in accordance with the provisions and requirements of Regulation D
promulgated under the Securities Act of 1933, as amended (the "Securities
Act") and any applicable state law.
l. Reserved.
m. Capitalization. As of the date hereof, the authorized
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capital stock of SyQuest consists of 240,000,000 shares of Common Stock,
and 4,000,000 shares of Preferred Stock, par value $.0001 per share, of
SyQuest ("Preferred Stock"). As of March 30, 1998, (i) not less than
78,600,000 shares of Common Stock (including the treasury shares described
in clause (iii) below) and approximately 111,000 shares of Preferred Stock
were issued and outstanding, (ii) approximately 88,500,00 shares of Common
Stock were reserved for issuance upon exercise of outstanding stock
options, convertible Preferred Stock, warrants or other rights and (iii)
1,225,000 shares of Common Stock were held in the treasury of SyQuest. As
of March 30, 1998, all the outstanding shares of Common Stock are, and all
shares which may be issued pursuant to stock options, warrants or other
convertible rights will be, when issued and paid for in accordance with the
respective terms thereof, duly authorized, validly issued, fully paid and
non-assessable and free of any preemptive rights in respect thereof. As of
the date hereof, except as set forth above or in SyQuest's Registration
Statement on Form S-3 (registration number 333-40329), as supplemented to
the date hereof, and except for shares of Common Stock or other securities
issued upon conversion, exchange, exercise or purchase associated with the
securities, options, warrants, rights and other instruments referenced
above from March 30, 1998 to the date hereof, (i) no shares of capital
stock or other voting securities of SyQuest were outstanding, (ii) no
equity equivalents, interests in the ownership or earnings of SyQuest or
other similar rights were outstanding and (iii) there were no existing
options, warrants, calls, subscriptions or other rights or agreements or
commitments relating to the capital stock of SyQuest or any of its
subsidiaries or obligating SyQuest or any of its subsidiaries to issue,
transfer, sell or redeem any shares of
capital stock, or other equity interest in, SyQuest or any of its
subsidiaries or obligating SyQuest or any of its subsidiaries to grant,
extend or enter into any such option, warrant, call, subscription or other
right, agreement or commitment.
n. The parties hereto acknowledge that ▇▇▇▇▇▇▇▇ has neither
requested of nor received from SyQuest any non-public information relating
to SyQuest or the business affairs or business prospects of SyQuest and
without limiting ▇▇▇▇▇▇▇▇'▇ reliance on any of the representations,
warranties, covenants and agreements of SyQuest contained herein, ▇▇▇▇▇▇▇▇
assumes the risk that the knowledge of any of the non-public information
described in this Section 3(n) might have materially influenced ▇▇▇▇▇▇▇▇'▇
decision to enter into and perform this Agreement.
3.A Registration Provisions.
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a. SyQuest shall, as promptly as practicable here after, and at
its own expense, file a registration statement (the "Registration
Statement") under the Securities Act cover covering the sale or resale of
the sum of (i) all Incentive Shares, and (ii) all Adjustment Shares
(which Adjustment Shares for such purposes shall be deemed to be not less
than 10 million) (each, a "Covered Security"), shall use its best efforts
to cause such Registration Statement to be declared effective not later
than September 10, 1998 and shall promptly amend such Registration
Statement from time to time if the maximum number of Adjustment Shares is
greater than the number of shares of Common Stock registered pursuant to
such Registration Statement unless it is reasonably determined by SyQuest
based upon the written advice of outside counsel that an amendment is not
required for the registration and sale of such securities under such
Registration Statement pursuant to Rule 416 or any other rule under the
Securities Act; provided that ▇▇▇▇▇▇▇▇ shall have provided such
information and cooperation in connection therewith as SyQuest may
reasonably request. Upon the effectiveness of such Registration Statement
and at ▇▇▇▇▇▇▇▇'▇ request, if applicable, SyQuest shall issue such
securities to ▇▇▇▇▇▇▇▇ in accordance with the terms hereof. The
Measurement Price shall be permanently increased at a rate of 15% per
year (1.25% per month) pro rata for any period in which the Registration
Statement is not effective from September 10, 1998. In the event the
Measurement Price shall have been increased as a result of the preceding
sentence or pursuant to Section 5.d. to $3.12 or more, at ▇▇▇▇▇▇▇▇'▇
option (the "Note Option"), any Covered Securities which are not then
registered and any shares of Common Stock issuable to ▇▇▇▇▇▇▇▇ as
Adjustment Shares but for which there is insufficient authorized shares
to permit issuance shall be converted into a note (the "Note") of SyQuest
in favor of ▇▇▇▇▇▇▇▇ as liquidated damages in an amount equal to the
Market Value of all such shares of Common Stock as the date of exercise of
such Note Option, bearing interest at a rate of 15% per annum. SyQuest
agrees that such Note shall be repaid in full immediately out of any and
all proceeds of SyQuest's financings following exercise of the Note Option.
b. SyQuest will use its best efforts to: (i) keep such
registration effective until the earlier of (A) the second anniversary of
the issuance of each Covered Security, (B) the later of the date all of the
Covered Securities shall have been sold by ▇▇▇▇▇▇▇▇ and the date ▇▇▇▇▇▇▇▇'▇
rights to acquire additional Covered Securities hereunder shall have
expired or (C) such time as all of the Covered Securities held by ▇▇▇▇▇▇▇▇
can be sold by ▇▇▇▇▇▇▇▇ or any of its affiliates within a three-month
period without compliance with the registration requirements of the
Securities Act pursuant to Rule 144 under the Securities Act ("Rule 144");
(ii) prepare and file with the SEC such amendments and supplements to the
Registration Statement and the prospectus used in connection with the
Registration Statement (as so amended and sup supplemented from time to
time, the "Prospectus") as may be necessary to comply with the provisions
of the Securities Act with respect to the disposition of all Covered
Securities by ▇▇▇▇▇▇▇▇ or any of its affiliates; (iii) furnish such
number of Prospectuses and other documents incident thereto, including
any amendment of or supplement to the Prospectus, as ▇▇▇▇▇▇▇▇ from time
to time may reasonably request; (iv) cause all Covered Securities that
are Common Stock to be listed on each securities exchange and quoted on
each quotation service on which similar securities issued by SyQuest are
then listed or quoted; (v) provide a transfer agent and registrar for all
Covered Securities and a CUSIP number for all Covered Securities; (vi)
otherwise use its best efforts to comply with all applicable rules and
regulations of the SEC; and (vii) file the documents required of SyQuest
and otherwise use its best efforts to obtain and maintain requisite blue
sky clear clearance in (A) all jurisdictions in which any of the Covered
Securities are originally sold and (B) all other states specified in
writing by ▇▇▇▇▇▇▇▇, provided, however, that as to this clause (B),
SyQuest shall not be required to qualify to do business or consent to
service of process in any state in which it is not now so qualified or
has not so consented.
c. SyQuest shall furnish to ▇▇▇▇▇▇▇▇ upon request a reasonable
number of copies of a supplement to or an amend amendment of such
Prospectus as may be necessary in order to facilitate the public sale or
other disposition of all or any of the Covered Securities by ▇▇▇▇▇▇▇▇ or
any of its affiliates pursuant to the Registration Statement.
d. With a view to making available to ▇▇▇▇▇▇▇▇ and its
affiliates the benefits of Rule 144 and Form S-3 under the Securities Act,
SyQuest covenants and agrees to: (i) make and keep available adequate
current public information (within the
meaning of Rule 144(c)) concerning SyQuest, until the earlier of (A) the
third anniversary of the issuance of each Covered Security or (B) such date
as all of the Covered Securities shall have been resold by ▇▇▇▇▇▇▇▇ or any
of its affiliates; (ii) maintain its status as a Reporting Issuer and file
with the SEC in a timely manner all reports and other documents required of
SyQuest for use of Form S-3; and (iii) furnish to ▇▇▇▇▇▇▇▇ upon request, as
long as ▇▇▇▇▇▇▇▇ owns any Covered Securities, (A) a written statement by
SyQuest that it has complied with the reporting requirements of the
Securities Act and the Exchange Act, (B) a copy of the most recent annual
or quarterly report of SyQuest, and (C) such other information as may be
reasonably requested in order to avail ▇▇▇▇▇▇▇▇ and its affiliates of Rule
144 or Form S-3 with respect to such Covered Securities.
e. Notwithstanding anything else in this Section 3A, if, at any
time during which a Prospectus is required to be delivered in connection
with the sale of any Covered Securities, SyQuest determines in good faith
that a development has occurred or a condition exists as a result of which
the Registration Statement or the Prospectus contains a material
misstatement or omission, SyQuest will immediately notify ▇▇▇▇▇▇▇▇ thereof
by telephone and in writing. Upon receipt of such notification, ▇▇▇▇▇▇▇▇
and its affiliates will immediately suspend all offers and sales of any
Covered Securities pursuant to the Registration Statement. In such event,
SyQuest will amend or supplement the Registration Statement as promptly
as practicable and will take such other steps as may be required to
permit sales of the Covered Securities thereunder by ▇▇▇▇▇▇▇▇ and its
affiliates in accordance with applicable federal and state securities
laws. SyQuest will promptly notify ▇▇▇▇▇▇▇▇ after it has determined in
good faith that such sales have become permissible in such manner and
will promptly deliver copies of the Registration Statement and the
Prospectus (as so amended or supplemented) to ▇▇▇▇▇▇▇▇ in accordance with
paragraph (b) of this Section 3A. Notwithstanding the foregoing, (A)
under no circumstances shall SyQuest be entitled to exercise its right to
suspend sales of any Covered Securities pursuant to the Registration
Statement more than two times in any twelve-month period, (B) the period
during which such sales may be suspended (each a "Blackout Period") shall
not exceed thirty days and (C) no Blackout Period may commence less than
30 days after the end of the preceding Blackout Period.
Upon the commencement of a Blackout Period pursuant to this Section
3A, ▇▇▇▇▇▇▇▇ will immediately notify SyQuest of any contracts to sell any
Covered Securities (each a "Sales Contract") that ▇▇▇▇▇▇▇▇ or any of its
affiliates has entered into prior to the commencement of such Blackout
Period and that would require delivery of such Covered Securities during
such Blackout Period, which notice will contain the aggregate sale price
and volume of Covered Securities pursuant to such
Sales Contract. Upon receipt of such notice, SyQuest will immediately
notify ▇▇▇▇▇▇▇▇ of its election either (i) to terminate the Blackout Period
and, as promptly as practicable, amend or supplement the Registration
Statement or the Prospectus in order to correct the material misstatement
or omission and deliver to ▇▇▇▇▇▇▇▇ copies of such amended or supplemented
Registration Statement and Prospectus in accordance with paragraph (b) of
this Section 3A or (ii) to continue the Blackout Period in accordance with
this paragraph. If SyQuest elects to continue the Blackout Period, and
▇▇▇▇▇▇▇▇ or any of its affiliates is therefore unable to consummate the
sale of Covered Securities pursuant to the Sales Contract (such unsold
Covered Securities being hereinafter referred to herein as the "Unsold
Securities"), SyQuest will promptly indemnify each ▇▇▇▇▇▇▇▇ Indemnified
Party (as such term is defined in Section 12(a) below) against any
Proceeding (as such term is defined in Section 12(a) below) that each
▇▇▇▇▇▇▇▇ Indemnified Party may incur arising out of or in connection with
▇▇▇▇▇▇▇▇'▇ breach or alleged breach of any such Sales Contract, and SyQuest
shall reimburse each ▇▇▇▇▇▇▇▇ Indemnified Party for any reasonable costs or
expenses (including reasonable legal fees) incurred by such party in
investigating or defending any such Proceeding (collectively, the
"Indemnification Amount"); provided, however, that each ▇▇▇▇▇▇▇▇
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Indemnified Party shall take all actions reasonably necessary or
appropriate to mitigate such Indemnification Amount; and provided further,
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however, that the Indemnification Amount shall be reduced by an amount
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equal to the number of Unsold Securities multiplied by the difference
between (x) the actual per share price received by ▇▇▇▇▇▇▇▇ or any of its
affiliates upon the sale of the Unsold Securities (if such sale occurs
within three Trading Days of the end of the Blackout Period) or the closing
sale price of the Common Stock on the NASDAQ National Market or other
national securities exchange on which the Common Stock is then listed on
the third Trading Day after the end of the Blackout Period (if the Unsold
Securities are not sold by ▇▇▇▇▇▇▇▇ or any of its affiliates within three
Trading Days of the end of the Blackout Period), and (y) the per share sale
price for the Unsold Securities provided in the Sales Con tract. As used
herein, the term "Trading Day" means any day on which SyQuest's Common
Stock is quoted on the NASQAQ National Market or, if applicable, other
national securities exchange.
4. Representations and Warranties of ▇▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇▇ hereby
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represents and warrants to SyQuest on the date hereof, on the Closing Date, and
on each Issue Date, as follows:
▇. ▇▇▇▇▇▇▇▇ has been duly incorporated and is validly existing in
good standing under the laws of the Cayman Islands, or after the Closing
Date, under the laws of the jurisdiction of its organization.
b. The execution, delivery and performance of this Agreement by
▇▇▇▇▇▇▇▇ have been duly authorized by all requisite corporate action and no
further consent or authorization of ▇▇▇▇▇▇▇▇, its Board of Directors or its
stockholders is required. This Agreement has been duly executed and
delivered by ▇▇▇▇▇▇▇▇ and, when duly authorized, executed and delivered by
SyQuest, will be a valid and binding agreement enforceable against ▇▇▇▇▇▇▇▇
in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights generally and to general
principles of equity.
▇. ▇▇▇▇▇▇▇▇ understands that no United States federal or state
agency has passed on, reviewed or made any recommendation or endorsement of
the Initial Shares.
d. In making the decision to purchase the Initial Shares in
accordance with this Agreement, ▇▇▇▇▇▇▇▇ has relied solely upon independent
investigations made by it and not upon any representations made by SyQuest
other than those made in this Agreement.
e. Subject to Section 3A hereof, ▇▇▇▇▇▇▇▇ understands that the
Incentive Shares and the Adjustment Shares have not been registered under
the Securities Act and may not be re-offered or resold other than pursuant
to registration thereunder or an available exemption therefrom.
▇. ▇▇▇▇▇▇▇▇ is an "accredited investor" as such term is defined
in Regulation D promulgated under the Securities Act.
▇. ▇▇▇▇▇▇▇▇ is purchasing the Incentive Shares and the
Adjustment Shares for its own account for investment only and not with a
view to, or for resale in connection with, the public sale or distribution
thereof, except pursuant to sales registered under the Securities Act.
▇. ▇▇▇▇▇▇▇▇ understands that the Incentive Shares and the
Adjustment Shares are being or will be offered and sold to it in reliance
on specific exemptions from the registration requirements of United States
federal and state securities laws and that SyQuest is relying on the truth
and accuracy of, and ▇▇▇▇▇▇▇▇'▇ compliance with, the representations,
warranties, agreements, acknowledgments and understandings of ▇▇▇▇▇▇▇▇ set
forth herein in order to determine the availability of such exemptions and
the eligibility of ▇▇▇▇▇▇▇▇ to acquire Incentive Shares and the Adjustment
Shares.
▇. ▇▇▇▇▇▇▇▇ has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of
the investment by ▇▇▇▇▇▇▇▇
contemplated by this Agreement and has the capacity to protect ▇▇▇▇▇▇▇▇'▇
interests. ▇▇▇▇▇▇▇▇ has been furnished with all materials and information
relating to the business, management, properties, financial condition,
operations, affairs and prospects of SyQuest and all materials and
information relating to the offer and sale of the Incentive Shares and the
Adjustment Shares, as have been requested by ▇▇▇▇▇▇▇▇, provided that the
parties hereto agree that ▇▇▇▇▇▇▇▇ has neither requested nor received any
non-public information from or relating to SyQuest. ▇▇▇▇▇▇▇▇ has been
afforded the opportunity to ask all questions of SyQuest that ▇▇▇▇▇▇▇▇
considered appropriate or desirable to ask in connection with this
Agreement and has received answers to such questions that ▇▇▇▇▇▇▇▇
considers satisfactory. ▇▇▇▇▇▇▇▇ understands that its investment in the
Incentive Shares and the Adjustment Shares involves and will involve a high
degree of risk.
j. Transfer or Resale. ▇▇▇▇▇▇▇▇ understands that (i) except as
------------------
otherwise provided in section 3A hereof, the Incentive Shares and the
Adjustment Shares have not been and are not registered under the Securities
Act or any state securities laws, and may not be offered for sale, sold,
assigned or transferred unless (a) subsequently registered thereunder, (b)
▇▇▇▇▇▇▇▇ shall have delivered to SyQuest either (I) a certificate or (II)
an opinion of counsel, in either case, reasonably satisfactory in form,
scope and substance to SyQuest, to the effect that the securities to be so
offered, sold, assigned or transferred may be so offered, sold, assigned or
transferred pursuant to an exemption from such registration or (c) pursuant
to Rule 144; (ii) any sale of such securities made in reliance on Rule 144
may be made only in accordance with the terms of Rule 144 and, if Rule 144
is not applicable, any resale of such securities under circumstances in
which the seller (or the person through whom the sale is made) may be
deemed to be an underwriter (as that term is defined in the Securities Act)
may require compliance with some other exemption under the Securities Act
or the rules and regulations of the SEC thereunder; and (iii) neither
SyQuest nor any other person is under any obligation to register such
securities (other than pursuant to section 3A hereof) under the Securities
Act or any state securities laws or to comply with the terms and conditions
of any exemption thereunder.
5. Adjustment Right.
----------------
▇. ▇▇▇▇▇▇▇▇ shall have the right (the "Adjustment Right") at
any time prior to April 2, 2004 to declare any Business Day to be a
"Measurement Date", provided that, subject to Section 5.h. and 5.i., ▇▇▇▇▇▇▇▇
may exercise not more than two Adjustment Rights. To exercise the Adjustment
Right, ▇▇▇▇▇▇▇▇ must deliver to SyQuest at its principal office an Adjustment
Notice in the form attached hereto (an "Adjustment Notice") duly completed and
signed by ▇▇▇▇▇▇▇▇ which declares a Measurement Date (which date shall not
precede the date of delivery of the Adjustment Notice) and stating the total
number of Adjustment Shares issuable as a result of the exercise of the
Adjustment Right. The Adjustment Notice shall be deemed delivered and received
on the Business Day when it is transmitted by facsimile if so transmitted by
5:00 p.m. California time. The Adjustment Shares (as defined below) shall be
deemed to have been issued, and ▇▇▇▇▇▇▇▇ shall be deemed to have become the
holder of record of such Adjustment Shares, for all purposes as of the date of
delivery of the Adjustment Notice. As used herein the term "Business Day" means
any day on which banks in the City of New York and the State of California are
open for business.
b. On the Business Day following a Measurement Date (an "Issue
Date"), SyQuest shall issue and cause to be delivered to ▇▇▇▇▇▇▇▇, against
payment of the par value thereof, at such address as ▇▇▇▇▇▇▇▇ shall specify in
the Adjustment Notice a certificate or certificates for the number of shares of
Common Stock (collectively, "Adjustment Shares") with an aggregate Market Value
(as defined below) equal to the difference between (X) the product of (i) the
positive difference between (a) $3.09375 (as such may be adjusted, the
"Measurement Price") and (b) the Market Value of a share of Common Stock on the
Measurement Date, and (ii) 6,696,429, less (Y) the product of (i) the Market
Value of a share of Common Stock on such Measurement Date and (ii) the number of
Adjustment Shares, if any, issued prior to such Measurement Date; together with
cash (if any) as provided in Section 5.e. SyQuest shall not alter the par value
of the Common Stock without ▇▇▇▇▇▇▇▇'▇ express written consent.
For purposes of this Section 5.b., the market value per share of
Common Stock (the "Market Value") shall be the greater of (a) the arithmetic
average of the closing sale prices per share of Common Stock on the five
consecutive trading days preceding the Measurement Date (as defined below) as
reported by the NASDAQ National Market or (ii) if the NASDAQ National Market is
not then the principal trading market for the Common Stock, on the principal
trading market for the Common Stock at that time or, if there is then no such
principal trading market, the fair market value per share of Common Stock during
such period as determined in good faith by the Board of Directors of SyQuest and
(b) 90% of such closing sale price on the day immediately preceding the delivery
of the Measurement Date. If the value of the Common Stock is to be determined
by the Board of Directors of SyQuest and ▇▇▇▇▇▇▇▇ disagrees with said valuation,
the value of the Common Stock will be determined by binding arbitration in
accordance with the then prevailing commercial arbitration rules of the American
Arbitration Association, and such arbitration shall proceed in Chicago, Illinois
or at such other place as agreed to in writing by ▇▇▇▇▇▇▇▇ and SyQuest.
c. The aggregate number of Adjustment Shares issuable immediately
upon exercise of an Adjustment Right, together with all Adjustment Shares
previously issued, shall be less than or equal to the Exercisable Number. Any
Adjustment Shares not issued as a
result of the previous sentence shall be issuable when and to the extent the
Exercisable Number is thereafter increased. The "Exercisable Number" is
initially 1,620,000 and thereafter may be increased upon expiration of a sixty-
five day period (the "Notice Period") after either (i) ▇▇▇▇▇▇▇▇ delivers a
notice (a "65 Day Notice") to SyQuest designating an aggregate number of shares
of Common Stock in excess of the then existing Exercisable Number, or (ii)
SyQuest delivers a notice (an "Increase Notice") stating the increase, if any,
in the aggregate number (the "Increased Number") of shares of Common Stock
outstanding as of the last day of the preceding month over the number
outstanding as of the last day of the second preceding month, in which event the
Exercisable Number shall be increased by the number which is 9.75% of the
Increased Number. A 65 Day Notice may be given at any time. Unless expressly
waived by ▇▇▇▇▇▇▇▇, SyQuest shall deliver an Increase Notice to ▇▇▇▇▇▇▇▇ on or
before the 10/th/ day of each month from and after May 1, 1998. One or more 65
Day Notice(s) may be given from time to time at any time after the Closing Date,
provided that any increase in the Exercisable Number designated by any 65 Day
Notice or Issue Notice shall be effective only upon expiration of the Notice
Period with respect to such 65 Day Notice or Issue Notice, as the case may be.
d. SyQuest shall, as soon as practicable hereafter and then for so
long as any Adjustment Right exists, reserve and keep available out of its
authorized and unissued Common Stock, free from preemptive rights, solely for
the purpose of effecting the exercise of the Adjustment Rights, such number of
shares of Common Stock as shall from time to time be sufficient to effect the
issuance of all Adjustment Shares then issuable, and in any event not less than
the Exercisable Number. If at any time the number of authorized but unissued
shares of Common Stock is not sufficient to effect the exercise of Adjustment
Rights, SyQuest shall use its best efforts to increase its number of authorized
shares of Common Stock to such number of shares as shall be sufficient to effect
such exercise, including causing the SyQuest Board of Directors to call a
special meeting of stockholders and recommend such increase, and after obtaining
any such approval SyQuest shall reserve for issuance to ▇▇▇▇▇▇▇▇ the number of
shares of Common Stock required to effect such exercise. The Measurement Price
shall be permanently increased at a rate of 15% per year (1.25% per month) pro
rata for any period in which the number of authorized but unissued shares of
Common Stock shall at any time be insufficient to effect the issuance of all
Adjustment Shares then issuable.
e. SyQuest shall not issue any fraction of a share of Common Stock
on any exercise, but shall pay in cash therefor at the Market Value then in
effect multiplied by such fraction. SyQuest shall pay any and all taxes that
may be imposed on it with respect to the issuance and delivery of Common Stock
on the issuance of Adjustment Shares as herein provided.
f. SyQuest agrees to use its best efforts to obtain stockholder
approval (the "Stockholder Consent") of the
transactions contemplated hereby pursuant to the listing requirements of the
NASDAQ National Market, including by causing its Board of Directors to recommend
such approval at its next meeting of stockholders. Unless such Stockholder
Consent shall have been obtained, if at the time that SyQuest receives an
Adjustment Notice, the aggregate number of shares of Common Stock issuable
pursuant to such Adjustment Notice, when added to the aggregate number of (i)
Incentive Shares, (ii) Adjustment Shares previously issued and (iii) any other
shares of Common Stock required to be included, would exceed nineteen and
ninety-nine-one-hundredths percent of the total number of shares of Common Stock
outstanding (adjusted to reflect any split, subdivision, combination or
consolidation of the Common Stock, whether by reclassification, distribution of
a dividend with respect to the outstanding Common Stock payable in shares of
Common Stock, or otherwise, or any recapitalization of the Common Stock) on the
Closing Date (the "19.99% Limit") and such circumstance would require
Stockholder Consent pursuant to the listing requirements of the NASDAQ National
Market or the rules of NASD (or such stock exchange or other interdealer
quotation system that is then the Principal Market), the number of Adjustment
Shares issuable in respect of such Adjustment Notice which would equal or exceed
the 19.99% Limit (the "Excess Shares"), shall not be issued unless and until the
Stockholder Consent is obtained or is no longer required. SyQuest represents
and warrants that, to the best of its knowledge, immediately after the Closing,
not less than seven million shares of Common Stock could be issued pursuant to
this Agreement without Stockholder Consent.
g. If the Stockholder Consent is not obtained on or prior to June 1,
1998 and ▇▇▇▇▇▇▇▇ seeks to exercise the Adjustment Right and SyQuest is unable
to deliver the Adjustment Shares, then within three months of delivery of the
applicable Adjustment Notice, SyQuest must make a cash payment as liquidated
damages for failure to deliver the Adjustment Shares equal to the market value
of the Common Stock issuable pursuant to such Adjustment Notice calculated by
using (i) the closing price on the NASDAQ National Market as reported by
Bloomberg, L.P. on the date of delivery of the Adjustment Notice, or (ii) if the
NASDAQ National Market is not then the principal trading market for the Common
Stock, the closing price on the principal trading market for the Common Stock at
that time (the "Principal Market"), as reported by Bloomberg L.P. on the date of
delivery of the Adjustment Notice, or (iii) if the NASDAQ National Market is not
then the principal trading market for the Common Stock and there is no Principal
Market, the market value as determined in good faith by the Board of Directors
of SyQuest, in each such case plus 15% per annum interest for the period from
the date of delivery of the Adjustment Notice to the date the amount is paid in
full. If the value of the Common Stock is to be determined by the Board of
Directors of SyQuest and ▇▇▇▇▇▇▇▇ disagrees with said valuation, the value of
the Common Stock will be determined by binding arbitration in accordance with
the then prevailing commercial arbitration rules of the American Arbitration
Association, and such arbitration shall proceed in Chicago,
Illinois or at such other place as agreed to in writing by SyQuest and ▇▇▇▇▇▇▇▇.
h. Following the date (the "Qualifying Date") of the first public
announcement by SyQuest of a Qualifying Offering (as defined below), including
by filing a registration statement with respect thereto, ▇▇▇▇▇▇▇▇ may exercise
an Adjustment Right if the Measurement Date is not more than seven trading days
following receipt on a Business Day of written notice by SyQuest of such public
announcement. In the event, SyQuest does not consummate a Qualifying Offering
within sixty calendar days following the Qualifying Date, the limitation on
▇▇▇▇▇▇▇▇'▇ right to exercise an Adjustment Right shall terminate and, if
▇▇▇▇▇▇▇▇ exercised an Adjustment Right in accordance with the preceding
sentence, such Adjustment Right shall not count as one of ▇▇▇▇▇▇▇▇'▇ two
Adjustment Rights. A "Qualifying Offering" shall mean a single registered
public offering or sale, as applicable, of Common Stock (i) with an aggregate
value of not less than $20 million, (ii) at a price of not less than $5.00 per
share of Common Stock (adjusted as necessary from time to time to account for
any recapitalization, reverse stock split or similar transaction) and (iii)
underwritten by a nationally recognized investment bank pursuant to a standard
underwriting agreement.
i. If ▇▇▇▇▇▇▇▇ exercises an Adjustment Right following the public
announcement of a transaction (a "Qualifying Transaction") which, if
consummated, would result in SyQuest's Common Stock being deregistered under the
Securities Exchange Act of 1934, as amended, and SyQuest does not consummate
such Qualifying Transaction within ninety calendar days following such
announcement, then such Adjustment Right shall not count as one of ▇▇▇▇▇▇▇▇'▇
two Adjustment Rights.
6. Covenants of SyQuest. SyQuest covenants and agrees with ▇▇▇▇▇▇▇▇
--------------------
as follows:
a. For so long as ▇▇▇▇▇▇▇▇ owns any Initial Shares or Adjustment
Shares or any Adjustment Rights exist, and in any case for a period of 90
days thereafter, SyQuest will use its best efforts to (i) maintain the
eligibility of the Common Stock for quotation on the NASDAQ National Market
or listing on a national securities exchange (as defined in the Exchange
Act) and (ii) regain the eligibility of the Common Stock for quotation on
the NASDAQ National Market in the event that the Common Stock is delisted
by the NASDAQ National Market.
b. Beginning on the date hereof and for so long as any
Adjustment Rights exist, and in any case for a period of 90 days
thereafter, SyQuest will (i) provide ▇▇▇▇▇▇▇▇ with an opportunity to review
and comment on any public disclosure by SyQuest of information regarding
this Agreement and the transactions contemplated hereby, (ii) promptly
notify ▇▇▇▇▇▇▇▇ if there is any public disclosure by SyQuest of material
information regarding SyQuest or its financial
condition, prospects or results of operation and (iii) provide ▇▇▇▇▇▇▇▇
with copies of all SEC Filings.
c. As soon as such information is available (but in no event
later than April 15, 1998), SyQuest shall deliver to ▇▇▇▇▇▇▇▇ a written
notice stating the number of outstanding shares of Common Stock as of March
31, 1998.
d. SyQuest will make all filings required by law with respect to
the transactions contemplated hereby.
e. SyQuest will cause the Common Stock issuable as Adjustment
Shares to be duly listed and admitted for trading on the NASDAQ National
Market or, if the NASDAQ National Market is not then the principal trading
market for the Common Stock, on a national securities exchange (as defined
in the Securities Exchange Act of 1934, as amended (the "Exchange Act")) or
the principal exchange or market for the Common Stock.
f. On April 2, 1998 SyQuest will make the appropriate filing for
the Incentive Shares to become duly listed and admitted for trading on the
NASDAQ National Market and thereafter SyQuest shall use its best efforts to
ensure that the Incentive Shares become listed and admitted for trading as
soon as practicable.
7. Covenants of ▇▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇▇ hereby covenants and agrees with
---------------------
SyQuest as follows:
a. Neither ▇▇▇▇▇▇▇▇ nor any of its affiliates nor any person
acting on its or their behalf will at any time offer or sell any Initial
Shares or any Adjustment Shares other than pursuant to registration under
the Securities Act or pursuant to an available exemption therefrom.
▇. ▇▇▇▇▇▇▇▇ will not sell any Initial Shares prior to April 9,
1998.
7.A. Legend. Subject to Section 3.A., ▇▇▇▇▇▇▇▇ understands that
------
the certificates or other instruments representing the Incentive Shares and
the Adjustment Shares shall bear a restrictive legend in substantially the
following form (and a stop transfer order may be placed against transfer of
such certificates or other instruments):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANS FERRED OR ASSIGNED
IN THE ABSENCE OF AN EFFECTIVE REGIS TRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, OR UNLESS
SOLD
PURSUANT TO RULE 144 UNDER SAID ACT, OR AN OPINION OF COUNSEL IN FORM,
SUBSTANCE AND SCOPE REASONABLY ACCEPT ABLE TO THE ISSUER THAT REGISTRATION
IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS.
The legend set forth above shall be removed and SyQuest shall issue a
certificate without such legend to any holder of Incentive Shares or Adjustment
Shares if, unless otherwise required by state securities laws, (a) such shares
are sold pursuant to an effective registration statement under the Securities
Act, or (b) in connection with a sale transaction, such holder provides SyQuest
with an opinion of counsel, in form, substance and scope reasonably acceptable
to SyQuest, to the effect that a public sale, assignment or transfer thereof may
be lawfully effected without registration under the Securities Act, or (c) such
holder provides SyQuest with assurances reasonably satisfactory to SyQuest that
such shares may be publicly sold pursuant to Rule 144 (or similar regulation
hereinafter adopted) without restriction.
7.B. Adjustments. In the event that SyQuest shall declare a dividend
-----------
or make a distribution on or with respect to the outstanding shares of its
Common Stock in shares of its Common Stock, subdivide its outstanding shares of
Common Stock into a greater number of shares, or combine its outstanding shares
of Common Stock into a smaller number of shares, then, in each such event, the
number of shares issuable and the per share price stated in this Agreement in
effect at the time of the record date for such dividend or distribution or the
effective date of such subdivision or combination shall be proportionately
adjusted, if necessary, as determined in good faith by the Board of Directors of
SyQuest, so that ▇▇▇▇▇▇▇▇ shall be entitled to receive the aggregate number of
shares of Common Stock that ▇▇▇▇▇▇▇▇ would have received immediately following
such action if ▇▇▇▇▇▇▇▇ had exercised its rights immediately prior to such
action. Such adjustment shall be made successively whenever any event specified
above shall occur.
8. Conditions Precedent to ▇▇▇▇▇▇▇▇'▇ Obligations. The obligations
----------------------------------------------
of ▇▇▇▇▇▇▇▇ hereunder are subject to the performance by SyQuest of its
obligations hereunder and to the satisfaction of the following additional
conditions precedent, unless expressly waived in writing by ▇▇▇▇▇▇▇▇:
a. On the Closing Date and each Issue Date, (i) to the extent
provided in Section 3 hereof, the representations and warranties made by
SyQuest in this Agreement shall be true and correct, and (ii) SyQuest shall
have complied fully with all the covenants and agreements in this
Agreement; and ▇▇▇▇▇▇▇▇ shall have received on each such date a certificate
of the Chief Executive Officer and the Chief Financial Officer of SyQuest
dated such date and to such effect.
b. On the Closing Date and each Issue Date, SyQuest shall have
delivered to ▇▇▇▇▇▇▇▇ an opinion of counsel
reasonably satisfactory to ▇▇▇▇▇▇▇▇, dated the date of delivery, confirming
in substance the matters covered in paragraphs (a), (b), (c), (d), (e),
(f), and (h) of Section 3 hereof; provided, however, that no such opinion
-------- -------
delivered in respect of any Issue Date shall be required to cover the
matters set forth in paragraph (h) of Section 3 hereof.
c. On the Closing Date, SyQuest shall have delivered to ▇▇▇▇▇▇▇▇
an opinion of counsel reasonably satisfactory to ▇▇▇▇▇▇▇▇, dated the date
of delivery, to the effect that the offer and sale of the Initial Shares
hereunder do not require registration under the Securities Act.
d. On each Issue Date, SyQuest shall have delivered to ▇▇▇▇▇▇▇▇
an opinion of counsel reasonably satisfactory to ▇▇▇▇▇▇▇▇, dated the date
of delivery, to the effect that the offer and sale of the Adjustment Shares
to ▇▇▇▇▇▇▇▇ do not require registration under the Securities Act.
9. Conditions Precedent to SyQuest's Obligations. The obligations of
---------------------------------------------
SyQuest hereunder are subject to the performance by ▇▇▇▇▇▇▇▇ of its obligations
hereunder and to the satisfaction of the following additional conditions
precedent, unless expressly waived in writing by SyQuest:
a. On the Closing Date and each Issue Date, (i) the
representations and warranties made by ▇▇▇▇▇▇▇▇ in this Agreement shall be
true and correct, and (ii) ▇▇▇▇▇▇▇▇ shall have complied fully with all the
covenants and agreements in this Agreement; and SyQuest shall have received
on each such date a certificate of an appropriate officer of ▇▇▇▇▇▇▇▇ dated
such date and to such effect.
10. Fees and Expenses. Each of ▇▇▇▇▇▇▇▇ and SyQuest agrees to pay
-----------------
its own expenses incident to the performance of its obligations hereunder,
including, but not limited to the fees, expenses and disbursements of such
party's counsel, except as is otherwise expressly provided in this Agreement.
11. Non-Performance.
---------------
If, on the date hereof, on the Closing Date, or on any Issue Date,
SyQuest shall fail to deliver the Initial Shares or Adjustment Shares to
▇▇▇▇▇▇▇▇ required to be delivered pursuant to this Agreement for any reason
other than the failure of any condition precedent to SyQuest's obligations
hereunder or the failure by ▇▇▇▇▇▇▇▇ to comply with its obligations hereunder,
then SyQuest shall:
(1) hold ▇▇▇▇▇▇▇▇ harmless against any loss, claim or damage
(including without limitation, incidental and consequential damages)
arising from or as a result of such failure by SyQuest; and
(2) reimburse ▇▇▇▇▇▇▇▇ for all of its reasonable out-of-pocket
expenses, including fees and disbursements of its counsel, incurred by
▇▇▇▇▇▇▇▇ in connection with this Agreement and the transactions
contemplated herein and therein;
provided, however, that SyQuest shall then be under no further liability to
-------- -------
▇▇▇▇▇▇▇▇ except as provided in this Section 11 and Section 12 hereof.
12. Indemnification.
---------------
a. Indemnification of ▇▇▇▇▇▇▇▇. SyQuest hereby agrees to
---------------------------
indemnify ▇▇▇▇▇▇▇▇ and each of its officers, directors, employees, agents
and affiliates and each person that controls (within the meaning of Section
20 of the Securities Exchange Act of 1934, as amended) any of the foregoing
persons (each a "▇▇▇▇▇▇▇▇ Indemnified Party") against any claim, demand,
action, liability, damages, loss, cost or expense (including, without
limitation, reasonable legal fees) (a "Proceeding"), that it may incur in
connection with any of the transactions contemplated hereby arising out of
or based upon:
(1) any untrue or alleged untrue statement of a material
fact by SyQuest or any of its affiliates or any person acting on its
or their behalf or omission or alleged omission to state any material
fact necessary in order to make the statements, in the light of the
circumstances stances under which they were made, not misleading by
SyQuest or any of its affiliates or any person acting on its or
their behalf ;
(2) any of the representations or warranties made by
SyQuest herein being untrue or incorrect; and
(3) any breach or non-performance by SyQuest of any of its
covenants, agreements or obligations under this Agreement;
and SyQuest hereby agrees to reimburse each ▇▇▇▇▇▇▇▇ Indemnified Party for any
reasonable legal or other expenses incurred by such ▇▇▇▇▇▇▇▇ Indemnified Party
in investigating or defending any such Proceeding;
provided, however, that the foregoing indemnity shall not apply to any
-----------------
Proceeding to the extent that it arises out of or is based upon the gross
negligence or wilful misconduct of ▇▇▇▇▇▇▇▇ in connection therewith.
b. Indemnification of SyQuest. ▇▇▇▇▇▇▇▇ hereby agrees to
--------------------------
indemnify SyQuest and each of its officers, directors , employees, agents
and affiliates and each person that controls (within the meaning of Section
20 of the Securities
Exchange Act of 1934, as amended) any of the foregoing persons (each a
"SyQuest Indemnified Party") against any Proceeding, that it may incur in
connection with any of the transactions contemplated hereby arising out of
or based upon:
(1) any untrue or alleged untrue statement of a material
fact by ▇▇▇▇▇▇▇▇ or any of its affiliates or any person acting on its
or their behalf or omission or alleged omission to state any material
fact necessary in order to make the statements, in the light of the
circum stances under which they were made, not misleading by ▇▇▇▇▇▇▇▇
or any of its affiliates or any person acting on its or their behalf:
(2) any of the representations or warranties made by
▇▇▇▇▇▇▇▇ herein being untrue or incorrect; and
(3) any breach or non-performance by ▇▇▇▇▇▇▇▇ of any of its
covenants, agreements or obligations under this Agreement;
and ▇▇▇▇▇▇▇▇ hereby agrees to reimburse each SyQuest Indemnified Party for
any reasonable legal or other expenses incurred by such SyQuest Indemnified
Party in investigating or defending any such Proceeding;
provided, however, that the foregoing indemnity shall not apply to any
-----------------
Proceeding to the extent that it arises out of or is based upon the gross
negligence or wilful misconduct of SyQuest in connection therewith.
c. Conduct of Claims.
-----------------
(1) Whenever a claim for indemnification shall arise under
this Section, the party seeking indemnification (the "Indemnified
Party"), shall notify the party from whom such indemnification is
sought (the "Indemnifying Party") in writing of the Proceeding and the
facts constituting the basis for such claim in reasonable detail;
(2) Upon delivery of such notice, such Indemnified Party
shall have a duty to take all reasonable steps to mitigate any losses,
liabilities, costs, charges and expenses relating to any such
Proceeding;
(3) Such Indemnifying Party shall have the right to retain
the counsel of its choice in connection with such Proceeding and to
participate at its own expense in the defense of any such Proceeding;
provided, however, that counsel to the Indemnifying Party shall not
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(except with the consent of the relevant Indemnified Party) also be
counsel to such Indemnified Party. In no
event shall the Indemnifying Party be liable for fees and expenses of
more than one counsel (in addition to any local counsel) separate from
its own counsel for all Indemnified Parties in connection with any one
action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or
circumstances; and
(4) No Indemnifying Party shall, without the prior written
consent of the Indemnified Parties (which consent shall not be
unreasonably withheld), settle or compromise or consent to the entry
of any judgment with respect to any litigation, or any investigation
or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever in respect of which
indemnification could be sought under this Section unless such
settlement, compromise or consent (A) includes an unconditional
release of each Indemnified Party from all liability arising out of
such litigation, investigation, proceeding or claim and (B) does not
include a statement as to or an admission of fault, culpability or a
failure to act by or on behalf of any Indemnified Party.
13. Survival of the Representations, Warranties, etc. The respective
------------------------------------------------
representations, warranties, and agreements made herein by or on behalf of the
parties hereto shall remain in full force and effect, regardless of any
investigation made by or on behalf of the other party to this Agreement or any
officer, director or employee of, or person controlling or under common con trol
with, such party and will survive delivery of and payment for any Adjustment
Shares issuable hereunder.
14. Notices. all communications hereunder shall be in writing, and
-------
a. if sent to ▇▇▇▇▇▇▇▇, shall be delivered by hand, sent by
registered mail or transmitted and confirmed by facsimile to ▇▇▇▇▇▇▇▇ at:
▇▇▇▇▇▇▇▇ International Limited
c/▇ ▇▇▇▇▇▇▇▇ Asset Management
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇)▇▇▇-▇▇▇▇
b. if sent to SyQuest, shall be delivered by hand, sent by
registered mail or transmitted and confirmed by facsimile to SyQuest at:
SyQuest Technology, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Shartsis, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
15. Miscellaneous
-------------
a. This Agreement may be executed in one or more counterparts
and it is not necessary that signatures of all parties appear on the same
counterpart, but such counterparts together shall constitute but one and the
same agreement.
b. This Agreement shall inure to the benefit of and be binding
upon the parties hereto, their respective successors and assigns and, with
respect to Section 12 hereof, their respective officers, directors, employees,
agents, affiliates and controlling persons, and no other person shall have any
right or obligation hereunder. SyQuest may not assign this Agreement.
c. This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of Delaware, and each of the
parties hereto hereby submits to the non-exclusive jurisdiction of any State or
Federal court in the State of Delaware and any court hearing any appeal
therefrom, over any suit, action or proceeding against it arising out of or
based upon this Agreement (a "Related Proceeding"). Each of the parties hereto
hereby waives any objection to any Related Proceeding in such courts whether on
the grounds of venue, residence or domicile or on the ground that the Related
Proceeding has been brought in an inconvenient forum.
d. As soon as practicable following the Closing Date, SyQuest
shall file a Report on Form 8-K with the SEC describing all material aspects of
the transactions contemplated hereby.
e. The headings of the sections of this document have been inserted
for convenience of reference only and shall not be deemed to be a part of this
Agreement.
f. This Agreement constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and oral, between the
parties hereto with respect to the subject matter of this Agreement; provided
that except as expressly provided herein, the 1996 Agreement and the 1996
Warrant shall remain in full force and effect. Nothing in this Agreement
modifies or otherwise alters the terms of the 1997 Agreement or the 1997
Warrant. This Agreement is not intended to confer upon any person other than
the parties hereto any rights or remedies hereunder or under the terms of the
term sheets between such parties.
g. The term "affiliate" is used herein as defined in Rule
144(a)(1) under the Securities Act.
16. Time of Essence. Time shall be of the essence in this Agreement.
---------------
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement, all as of the day and year first above written.
SYQUEST TECHNOLOGY, INC.
By: ______________________________
Name: ____________________________
Title: ___________________________
▇▇▇▇▇▇▇▇ INTERNATIONAL LIMITED
By: ______________________________
Name: ____________________________
Title: ___________________________
By: ______________________________
Name: ____________________________
Title: ___________________________
