EXHIBIT 10.4
SECURITIES PURCHASE AGREEMENT
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THIS SECURITIES PURCHASE AGREEMENT (this "Agreement") is entered into as of
26 March 1997, by and between SyQuest Technology International ("Sub"), SYQUEST
TECHNOLOGY, INC., a Delaware corporation that owns all of the issued and
outstanding capital stock of Sub ("Parent"), and Tongkah Electronics Sdn.Bhd., a
Malaysia corporation ("Purchaser"), with reference to the following facts:
A. Sub has failed to make payments to Purchaser when due for products
manufactured and delivered by Purchaser pursuant to the purchase
orders and related invoices (the "Purchase Orders") listed on Schedule
A to this Agreement in the aggregate amount of $8,767,184.95 (the
"Purchaser Order Amount").
B. In consideration of cancellation of the amounts owed to Purchaser
equal to the sum of the Purchase Order Amount, Parent will issue to
Purchaser shares of the Common Stock of Parent, to repay the amounts
due to Purchaser with such shares, valued at the last sale price (the
"Closing Price") as reported in the Nasdaq National Market on the last
trading day preceding the date of this Agreement (the "Closing Date"),
but in no event shall Parent be obligated to issue hereunder in excess
of 3,506,874 of its Common Stock.
C. Parent will execute and deliver to Purchaser that certain Registration
Rights Agreement dated as of the date hereof (the "Registration Rights
Agreement") in further consideration of the agreements of Purchaser
herein.
In consideration of the premises and the mutual covenants and conditions
herein, the parties hereby agree as follows:
1. Purchase Order Amount. Sub acknowledges that Sub owes Purchaser
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the Purchase Order Amount shown on Schedule A attached hereto and
incorporated herein by reference, for products manufactured and
delivered by Purchaser to Sub in response to the Purchase Orders
issued by Sub to Purchaser, and that notwithstanding any payment or
credit term contained in the Purchase Orders, the Purchase Order
Amount is currently due and payable in full. If any such product
shipped to Sub is defective, Sub and Parent shall have the right to
return such product to and request delivery of substitute product from
Purchaser and if such substitute product is not delivered, the
Purchase Order Amount, to the extent not then paid or discharged
hereunder or otherwise, shall be reduced accordingly, or if the
Purchase Order Amount shall then have been paid or otherwise
discharged in full, the cost thereof shall forthwith be refunded by
Purchaser to Sub in cash.
2. Payment.
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(a) Issuance of Shares. Parent shall instruct its transfer
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agent to issue to Purchaser on the Closing Date the number of
shares of Parent's Common Stock equal to the quotient of the
Purchase Order Amount (as it shall then have been reduced under
section 1) divided by the Closing Price, rounded down to the
nearest lower whole number of shares, but in no event shall
Parent be required to issue hereunder in excess of 3,506,874
shares of its Common Stock. Such shares are hereinafter called
the "Shares".
(b) Payment of Balance. If Parent is unable to issue the full
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number of Shares necessary to repay the Purchase Order Amount due
to the limit on the number of Shares provided in section 2(a),
Parent shall pay the balance due (the "Balance"), to Purchaser as
follows:
(i) If the Balance is not more than $50,000, the full
amount of the Balance shall be paid by Sub to Purchaser
within ten (10) days of the Closing Date, by check or wire
transfer;
(ii) If the Balance is more than $50,000 but not more than
$100,000, the Balance shall be paid by Sub by check or
wire transfer to Purchaser in three equal installments of
principal and interest (at the annual rate of ten
percent), one such installment to be paid on each of ten
(10) days after the Closing Date, the 90th day after the
Closing Date, and the 150th day after the Closing Date;
and
(iii) If the Balance is more than $100,000, the Balance
shall be paid by Sub to Purchaser (with interest at the
annual rate of ten percent) over a period of not less than
twelve months, with the payment schedule to be determined
by mutual agreement of Parent and Purchaser.
(c) Extinguishment of Indebtedness. On the Closing Date,
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Parent and Sub shall be deemed to have paid and discharged all or
a portion of the Purchase Order Amount equal to the product of
the number of Shares multiplied by the Closing Price. Purchaser
agrees that, except to the extent of the unpaid Balance, if any,
Parent and Sub shall be deemed to have paid and discharged the
Purchase Order Amount in full on the Closing Date. If, after the
Closing Date, any Balance remains unpaid, Parent and Sub shall be
deemed to have paid and discharged the Purchase Order Amount in
full on payment of the final installment of the Balance.
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3. Limitation on Disposition. Purchaser shall not sell, assign or
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otherwise transfer any Shares received hereunder until such time as the Shares
become registered pursuant to an effective registration statement. Once the
Shares received hereunder are registered pursuant to an effective registration
statement, Purchaser shall not sell, assign or otherwise transfer more than
fifteen percent (15%) per month of such Shares originally received hereunder.
4. Representations and Warranties of Parent and Sub. Parent and Sub
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hereby represent and warrant to Purchaser as follows:
(a) Corporate Existence and Power. Parent is a corporation duly
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organized and existing, and in good standing, under the laws of
the State of Delaware and has all requisite corporate power to
execute and deliver this Agreement and the Registration Rights
Agreement, to issue the Shares pursuant hereto and otherwise to
carry out and perform its obligations under the terms of this
Agreement. To the best knowledge of the current executive
officers of Parent, without having conducted an investigation of
the records of Parent or Sub, Sub is a corporation duly organized
and existing under the laws of Singapore and in good standing
under such laws, and Sub has all requisite corporate power to
execute and deliver this Agreement and otherwise to carry out and
perform its obligations under this Agreement.
(b) Corporate Action; Enforceability. All corporate action on
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the part of Parent necessary for the execution, delivery and
performance of this Agreement and the Registration Rights
Agreement and the issuance of Shares pursuant hereto has been
taken, and this Agreement and the Registration Rights Agreement
constitute valid and binding obligations of Parent enforceable
against Parent in accordance with their respective terms. To the
best knowledge of the current executive officers of Parent,
without having conducted an investigation of the records of
Parent or Sub, all corporate action on the part of Sub necessary
for the execution, delivery and performance by Sub of this
Agreement has been taken, and this Agreement constitutes valid
and binding obligations of Sub enforceable against Sub in
accordance with its terms.
(c) Valid Issuance. The Shares, when issued in compliance with
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this Agreement, will be validly issued, fully paid, nonassessable
and free of any restrictions on transfer other than pursuant to
applicable state, federal and foreign securities laws.
(d) SEC Documents. Parent has furnished to Purchaser true and
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complete copies of its Annual Report on Form 10-K for the fiscal
year
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ended September 30, 1996, as amended on Form 10-K/A, its
Quarterly Reports on Form 10-Q for the quarters ended December
31, 1996, its Current Reports on Form 8-K, and its Form S-3 filed
on January 6, 1997, in each case as filed with the Securities and
Exchange Commission (the "SEC"). Such Reports are hereinafter
collectively called the "Reports". To the best knowledge of the
current executive officers of Parent, without having conducted an
investigation of the records of Parent or Sub, as of their
respective filing dates (except as thereafter amended), the
Reports complied in all material respects with the applicable
requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act").
(e) No Contravention. To the best knowledge of the current
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executive officers of Parent, without having conducted an
investigation of the records of Parent or Sub, neither the
execution and delivery of this Agreement by Parent or Sub nor the
consummation of the transactions contemplated hereby will (i)
conflict with, or result in any breach or violation of, any
provision of the certificate of incorporation or by-laws of
Parent or Sub; (ii) constitute, with or without notice or the
passage of time or both, a material breach, violation or default
under any order, writ, injunction, decree, law, statute, rule or
regulation, governmental permit or license of Parent or Sub or to
which either of their properties is subject; or (iii) except as
provided in the Registration Rights Agreement, require any
consent, approval or authorization of, notification to, or filing
with, any court, governmental agency or regulatory or
administrative authority on the part of Parent or Sub, except for
filings under the Securities Act of 1933, as amended (the
"Securities Act"), the Exchange Act and the Nasdaq National
Market rules.
(f) Exemption from Registration. Assuming the accuracy and
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completeness of the representations and warranties in section 4,
the offer, sale and issuance of the Shares as contemplated by
this Agreement are exempt from the registration requirements of
the Securities Act.
5. Representations and Warranties of Purchaser. Purchaser
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represents and warrants to Parent and Sub as follows:
(a) Authority. Purchaser has the full power and authority to
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execute and deliver this Agreement and the Registration Rights
Agreement and to perform its obligations hereunder and
thereunder.
(b) Enforceability. This Agreement and the Registration Rights
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Agreement are valid and binding agreements of Purchaser
enforceable against Purchaser in accordance with their respective
terms.
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(c) Securities Laws Representations. Purchaser is acquiring the
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Shares for Purchaser's own account and not with a view to or for
sale in connection with any distribution. Purchaser has such
knowledge and experience in financial and business matters that
Purchaser is capable of evaluating the merits and risks of its
investment in the Shares, is able to bear the economic risk of
such investment and is able to protect the Purchaser's own
interests in connection with this transaction. Purchaser
acknowledges having had access to such information concerning
Parent, Sub and their affiliates as Purchaser deems necessary to
enable Purchaser to make an informed decision concerning an
investment in the Shares. In entering into this Agreement and
consummating the transactions contemplated hereby, Purchaser is
relying solely on its own investigation of Parent, Sub and their
affiliates and their businesses, management, financial condition,
properties and prospects and the merits and risks of such
transactions. Purchaser is aware that the Shares have not been
registered under the Securities Act and the Shares may not be
transferred by Purchaser unless they are subsequently registered
under the Securities Act or an exemption from such registration
is available. The Shares shall not be transferred without
registration under the Securities Act or an applicable exemption
therefrom. Purchaser is an accredited investor as that term is
defined in Rule 501(a) of Regulation D promulgated by the SEC
under the Securities Act. Purchaser acknowledges that until the
Shares are sold pursuant to registration under the Securities Act
or an available exemption therefrom, all certificates
representing Shares shall bear the following legend:
THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT
AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR
HYPOTHECATED ABSENT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH
ACT AND APPLICABLE STATE SECURITIES LAWS, OR COMPLIANCE WITH RULE
144 PROMULGATED UNDER SUCH ACT AND EXEMPTION FROM ALL APPLICABLE
STATE SECURITIES LAWS, AS CONFIRMED BY THE OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY.
6. Additional Representation. Each of Parent and Sub jointly and
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severally represent and warrant to Purchaser and Purchaser represents
and warrants to Parent and Sub that it is the sole and lawful owner of
all right, title and interest in and to all of the claims related to
the Purchase Orders and that it has not heretofore
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voluntarily, by operation of law or otherwise, assigned or transferred
or purported to assign or transfer to any person whomsoever any such
claim.
7. Closing.
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(a) The issuance of the Shares shall take place as of the date
hereof, and shall be consummated by mail or otherwise in
accordance with arrangements reasonably acceptable to Parent and
Purchaser. Within ten (10) days of the Closing Date, Parent shall
deliver to Purchaser a certificate representing the Shares and a
check for all or part of the Balance, if any, to be paid on the
Closing Date pursuant to section 2(b) above, in payment,
discharge and cancellation of indebtedness equal to part or all
of the Purchase Order Amount as provided in section 2(c).
8. General Provisions.
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(a) Successors. This Agreement shall bind and inure to the
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benefit of the parties hereto and their respective successors and
assigns.
(b) Governing Law. Any action or proceeding to interpret,
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construe or enforce this Agreement may be instituted and
prosecuted only in a state court located in Alameda County, State
of California, or, if requisite jurisdiction exists, in the
United States District Court for the Northern District of
California. This Agreement shall be governed by and interpreted
and construed in accordance with the laws of the State of
California.
(c) Entire Agreement. This Agreement and Registration Rights
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Agreement constitute the entire agreement of the parties and
supersede all prior or contemporaneous agreements,
communications, negotiations and understandings, written or oral,
between the parties, regarding the subject matter hereof and
thereof.
(d) Waiver, Modification, or Amendment. No waiver,
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modification or amendment of this Agreement shall be enforceable
unless in writing and executed by the party against whom such
waiver, modification or amendment is claimed.
(e) Severability. If any provision of this Agreement is held
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to be illegal, invalid or unenforceable, the legality, validity
and enforceability of the remaining provisions shall not be
affected or impaired.
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(f) Attorneys' Fees. In the event of litigation or other
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proceedings in connection with or related to this Agreement, the
prevailing party in such litigation or proceedings shall be
entitled to reimbursement from the opposing party of all
reasonable expenses, including, without limitation, reasonable
attorneys' fees and expenses and expenses of investigation in
connection with such litigation or proceedings.
(g) Currency. All dollar amounts are expressed in U.S. Dollars.
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(h) Communications and Notices. All notices and other
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communications required or permitted hereunder shall be in
writing in the English language and shall be deemed duly
delivered and received when delivered personally, when
transmitted by facsimile if receipt is acknowledged by the
addressee, two days after being deposited for next-day or second-
day delivery with an internationally recognized overnight or two-
day delivery service, or four days after being deposited as first
class mail with the United States Postal Service, properly
addressed as follows:
If to Parent or Sub: SyQuest Technology, Inc.
0000 Xxxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Legal Department
Facsimile: (000) 000-0000
With a copy to: Xxxxxx X. Xxxxxx, Esq.
Shartsis, Xxxxxx & Xxxxxxxx
Xxx Xxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
If to Purchaser: _________________________________
_________________________________
_________________________________
_________________________________
Attention: ______________________
Facsimile: ______________________
Telephone: ______________________
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Any party may change its address or facsimile number set forth
above by giving written notice thereof to the other party in the
manner prescribed herein.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as the day and the year first
set forth above.
SYQUEST TECHNOLOGY, INC.
By: /s/ XXXXXXX XXXXXXX
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Name: Xxxxxxx Xxxxxxx
Title: Vice-President, Financial
Services and Treasurer
SYQUEST TECHNOLOGY INTERNATIONAL
By: /s/ XXXXXXX XXXXXXX
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Name: Xxxxxxx Xxxxxxx
Title: Director
TONGKAH ELECTRONICS SDN.BHD
By: /s/ XXXXXXX XXX
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Name: Xxxxxxx Xxx
Title: Managing Director
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REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of 26
March 1997, by and among SyQuest Technology, Inc., a Delaware corporation (the
"Company"), and Tongkah Electronics Sdn.Bhd., a Malaysia corporation (the
"Buyer"), with reference to the following facts:
In connection with the Securities Purchase Agreement by and among the
Buyer, the Company and a subsidiary of the Company of even date herewith (the
"Securities Purchase Agreement"), the Company has agreed, on the terms and
subject to the conditions of the Securities Purchase Agreement, to issue and
sell to the Buyer shares of the Company's Common Stock, par value $.001 per
share. To induce the Buyer to execute and deliver the Securities Purchase
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, the "1933 Act"), and
applicable state securities laws.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company and the Buyer hereby agree as
follows:
1. DEFINITIONS. Capitalized terms used and not otherwise defined herein
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have the respective meanings respectively ascribed to them in the Securities
Purchase Agreement. As used in this Agreement, the following terms have the
following meanings:
1.1 "Investor" means the Buyer and any transferee or assignee thereof
to whom the Buyer transfers or assigns this Agreement and who agrees to become a
party to and be bound by this Agreement in accordance with section 9.
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 Shares.
1.4 "Registration Statement" or "Registration Statements" means a
registration statement or statements of the Company filed under the 1933 Act.
2. REGISTRATION.
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2.1 Mandatory Registration. The Company shall use its best reasonable
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efforts to prepare and, on or before one hundred-twenty (120) days after the
date of the issuance of the Shares, file with the SEC a Registration Statement
or Registration Statements (as is necessary) on Form S-3 (or, if such form is
unavailable for such a registration, on such other form as is available for such
a registration) (any of which may contain a combined prospectus with other
registrations by the Company), covering the resale of the Registrable
Securities.
2.2 Suspension or Termination of S-3 Registration Statement. The
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Company may suspend or terminate any Registration Statement filed pursuant to
the provisions of section 2.1 if the Company determines in good faith that the
continued effectiveness of such Registration Statement might (a) interfere with
or affect the negotiation or completion of any transaction that is being
contemplated by the Company, (b) involve continuing disclosure obligations that
might not be in the best interest of the Company's shareholders or (c) be
seriously detrimental to the Company; provided that (1) any such suspension or
termination extends for no more than ninety (90) days, (2) the Company
undertakes no more than two (2) such suspensions or terminations in any one
calendar year, (3) the Company re-establishes the effectiveness of such
Registration Statement promptly following the cessation of the cause for such
suspension or termination, but in no event later than the expiration of such 90-
day period and (4) the Registration Period (as hereinafter defined) set forth in
section 3.1(b) shall, if applicable, be extended by the period of each such
suspension or termination.
2.3 Piggy-Back Registrations.
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(a) If at any time prior to the expiration of the Registration
Period the Company shall file with the SEC a Registration Statement relating to
an offering for its own account or the account of others under the 1933 Act of
any of its equity securities (other than on Form S-4 or Form S-8 or their then
equivalents relating to equity securities to be issued solely in connection with
any acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans or on any form that
does not permit secondary sales), the Company shall send to each Investor who is
entitled to registration rights under this section 2.3 written notice of such
determination and the Company shall use its best reasonable efforts to include
in such Registration Statement (and any qualification under "blue sky" laws or
other compliance), except as set forth in section 2.3(c) and in any underwriting
involved therein, all of the Registrable Securities specified in a written
request or requests made by such Investor and received by the Company within
(10) days after the written notice from the Company is mailed or delivered by
the Company. Such written request may specify all or part of an Investor's
Registrable Securities.
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(b) If the registration of which the Company gives notice is for
a registered public offering involving an underwriting, the Company shall so
advise the Investors as a part of the written notice given pursuant to section
2.3(a). In such event, the right of any Investor to registration pursuant to
this section 2.3 shall be conditioned upon such Investor's participation in such
underwriting and the inclusion of such Investor's Registrable Securities in the
underwriting to the extent provided herein. All Investors proposing to
distribute their securities through such underwriting shall (together with the
Company and the other holders of securities of the Company with registration
rights to participate therein (the "Other Stockholders") distributing their
securities through such underwriting) enter into any underwriting agreement in
customary form with the representative of the underwriter or underwriters
selected by the Company.
(c) Notwithstanding any other provisions of this section 2.3, if
the representative of the underwriters advises the Company in writing that
marketing or other factors require a limitation on the number of shares to be
underwritten, the representative may (subject to the limitations set forth
below) exclude all Registrable Securities from, or limit the number of
Registrable Securities to be included in, the registration and underwriting. The
Company shall so advise all holders requesting registration, and the number of
shares that are entitled to be included in the registration and underwriting
shall be allocated first to the Company for securities being sold for its own
account and thereafter allocated among the Investors and Other Stockholders
requesting inclusion of securities of the Company having registration rights
(the "Other Shares") pro rata on the basis of the number of shares of
Registrable Securities and Other Shares held by such Investors and Other
Stockholders; provided that the Company shall be entitled to exclude Registrable
Securities to the extent necessary to permit the inclusion of Other Shares of
Other Stockholders having registration rights pursuant to any agreement with the
Company entered into prior to the date hereof; and provided further that such
allocation shall not operate to reduce the aggregate number of Registrable
Securities and Other Shares to be included in such registration, and if any
Investor or Other Stockholder does not request inclusion of the maximum number
of Registrable Securities and Other Shares allocated to him, her or it pursuant
to the foregoing procedure, the remaining portion of his, her or its allocation
shall be reallocated among those requesting Investors and Other Stockholders
whose allocations do not satisfy their requests pro rata on the basis of the
number of Registrable Securities and Other Shares held by such Investors and
Other Stockholders, and this procedure shall be repeated until all of the
Registrable Securities and Other Shares that may be included in the registration
on behalf of the Investors and Other Stockholders shall have been so allocated.
The Company shall not limit the number of Registrable Securities to be included
in a registration pursuant to this Agreement in order to include securities held
by stockholders with no registration rights. If any person does not agree to the
terms of any such underwriting, such person shall be excluded therefrom by
written notice from the Company or the underwriter. Any Registrable Securities
or Other Shares excluded or withdrawn from such underwriting shall be withdrawn
from such
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registration. Nothing in this section 2.3 shall give Investors the right to
require the Company to commence such registration or complete it once the
process has commenced.
(d) No right to registration of Registrable Securities under
this section 2.3 shall be construed to limit any registration required under
section 2.1. The obligations of the Company under this section 2.3 may be waived
by Investors holding a majority of the Registrable Securities.
2.4 Eligibility for Form S-3. The Company represents and warrants
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that it meets the requirements for the use of Form S-3 for registration of the
sale by the Buyer and any other Investor of the Registrable Securities, and the
Company shall file all reports required to be filed by the Company with the SEC
in a timely manner to maintain such eligibility for the use of Form S-3. If Form
S-3 is not available for sale by the Investors of the Registrable Securities,
upon request of the Investors the Company shall register the sale on another
appropriate form. The Company shall have a reasonable period of time to complete
such registration.
2.5 Market Stand-Off Agreement. The Investors agree, without
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consent of managing underwriter(s), not to effect any sale or distribution of
Registrable Securities (other than in connection with the Investors' own
registration pursuant to section 2.3), including a disposition pursuant to Rule
144 of the 1933 Act, during the period beginning ten (10) days prior to the
Company's good faith estimate of the filing of, and ending on the date ninety
(90) days after the effective date of, a Company-initiated registration;
provided that the Company is actively employing in good faith all reasonable
efforts to cause such registration statement to become effective.
3. REGISTRATION OBLIGATIONS.
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3.1 Registration Statements. The Company shall use its best
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reasonable efforts to cause such Registration Statement(s) relating to
Registrable Securities to become effective as soon as possible after the filing
thereof and, subject to the provisions of section 2.2, keep the Registration
Statement(s) effective pursuant to Rule 415 at all times until the earliest of
(a) the date as of which the Investors may sell all of the Registrable
Securities without registration pursuant to Rule 144 promulgated under the 1933
Act, (b) the second anniversary of the date hereof (subject to extension in
accordance with the provisions of section 2.2), and (c) the date on which the
Investors shall have sold all the Registrable Securities (the "Registration
Period"). Such Registration Statement(s) (including any amendments or
supplements thereto and prospectuses contained therein) shall not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein, or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading.
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3.2 Amendments and Supplements. The Company shall prepare and file
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with the SEC such amendments (including post-effective amendments) and
supplements to the Registration Statement(s) and the prospectus(es) used in
connection with the Registration Statement(s) as may be necessary to keep the
Registration Statement(s) effective at all times during the Registration Period,
and, during such period, comply with the provisions of the 1933 Act with respect
to the disposition of all Registrable Securities of the Company covered by the
Registration Statement(s) until such time as all of such Registrable Securities
shall have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof as set forth in the Registration
Statement(s).
3.3 Prospectus Delivery. The Company shall furnish to each Investor
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whose Registrable Securities are included in the Registration Statement(s) and
its legal counsel (a) promptly after the same is prepared and publicly
distributed, filed with the SEC or received by the Company, one copy of the
Registration Statement and any amendment thereto, each preliminary prospectus
and prospectus and each amendment or supplement thereto, and (b) such number of
copies of a prospectus, including a preliminary prospectus, and all amendments
and supplements thereto and such other documents as such Investor may reasonably
request to facilitate the disposition of the Registrable Securities owned by
such Investor.
3.4 Blue Sky Laws. The Company shall use reasonable efforts to (a)
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register and qualify the Registrable Securities covered by the Registration
Statement(s) under such other securities or "blue sky" laws of such
jurisdictions in the United States as the Investors who hold a majority of the
Registrable Securities being offered reasonably request (but in no event in more
than five states of the United States), (b) prepare and file in those
jurisdictions such amendments (including post-effective amendments) and
supplements to such registrations and qualifications as may be necessary to
maintain the effectiveness thereof during the Registration Period, (c) take such
other actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period, and (d)
take all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions; provided that the Company
shall not be required in connection therewith or as a condition thereto to (1)
qualify to do business in any jurisdiction where it would not otherwise be
required to qualify but for this section 3.4, (2) subject itself to general
taxation in any such jurisdiction, (3) file a general consent to service of
process in any such jurisdiction, (4) provide any undertakings that cause more
than nominal expense or burden to the Company, or (5) make any change in its
certificate of incorporation or bylaws, which the Board of Directors of the
Company determines to be contrary to the best interests of the Company and its
stockholders.
3.5 Corrections. As promptly as practicable after becoming aware of
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such event, the Company shall notify each Investor selling Registrable
Securities of the happening of any event, of which the Company has knowledge, as
a result of which the prospectus included in a Registration Statement, as then
in effect, includes an untrue
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statement of a material fact or omission to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading or incomplete, and use
its best reasonable efforts promptly to prepare a supplement or amendment to the
Registration Statement to correct such untrue statement or omission, and deliver
such number of copies of such supplement or amendment to each Investor as such
Investor may reasonably request.
3.6 Stop Orders. Except as otherwise permitted by this Agreement,
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the Company shall use its best reasonable efforts to prevent the issuance of any
stop order or other suspension of effectiveness of a Registration Statement,
and, if such an order is issued, use its best reasonable efforts to obtain the
withdrawal of such order at the earliest possible moment and to notify each
Investor who holds Registrable Securities being sold (or, in the event of an
underwritten offering, the managing underwriters) of the issuance of such order
and the resolution thereof.
3.7 Selling Stockholders' Counsel. The Company shall permit a
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single firm of counsel, designated as selling stockholders' counsel by the
Investors who hold a majority of the Registrable Securities being sold and
compensated by such Investors, to review and comment on the Registration
Statement(s) (and all amendments and supplements thereto but only if they
directly relate to such Investors) a reasonable period prior to their filing
with the SEC, and shall not file any document in a form to which such counsel
reasonably objects. Failure to object in writing within three days shall be
deemed to be an approval of the Registration Statement (s).
3.8 Due Diligence. The Company shall make available for inspection
-------------
by one firm of attorneys and one firm of accountants or other agents retained by
the Investors at their expense (collectively, the "Inspectors") all pertinent
financial and other records, and pertinent corporate documents and properties of
the Company (collectively, the "Records"), as shall be reasonably deemed
necessary by such Inspector to enable such Inspector to exercise its due
diligence responsibility, and cause the Company's officers, directors and
employees to supply all information that any Inspector may reasonably request
for purposes of such due diligence; provided that each Inspector shall hold in
strict confidence and shall not make any disclosure (except to an Investor) or
use of any Record or other information which the Company determines in good
faith to be confidential, and of which determination the Inspectors are so
notified, unless (a) the disclosure of such Records is necessary to avoid or
correct a misstatement or omission in any Registration Statement, (b) the
release of such Records is ordered pursuant to a final, non-appealable subpoena
or order from a court or government body of competent jurisdiction, or (c) the
information in such Records has been made generally available to the public
other than by disclosure in violation of this or any other agreement. The
Company shall not be required to disclose any confidential information in such
Records to any Inspector until and unless such Inspector shall have entered into
confidentiality agreements (in form and substance satisfactory to the Company)
with the Company with respect thereto, consistent with and
6
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.
3.9 Listing. The Company shall use its best reasonable efforts
-------
either to (a) cause all the Registrable Securities covered by a Registration
Statement to be listed on each national securities exchange on which the Common
Stock is then listed, if any, if the listing of such Registrable Securities is
then permitted under the rules of such exchange, or (b) secure designation and
quotation of all the Registrable Securities covered by the Registration
Statement on the Nasdaq National Market or, if, despite the Company's best
efforts to satisfy the preceding clause (a) or (b), the Company is unsuccessful
in satisfying the preceding clause (a) or (b), to secure the inclusion for
quotation on the Nasdaq SmallCap Market or, on the Nasdaq Electronic Bulletin
Board.
3.10 Certificates. The Company shall cooperate with the Investors
------------
who hold Registrable Securities being offered and, to the extent applicable, any
managing underwriter or underwriters, to facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legend) representing the
Registrable Securities to be offered pursuant to a Registration Statement and
enable such certificates to be in such denominations or amounts, as the case may
be, as the managing underwriter or underwriters, if any, or, if there is no
managing underwriter or underwriters, the Investors may reasonably request and
registered in such names as the managing underwriter or underwriters, if any, or
the Investors may request.
3.11 Other Action. The Company shall take all other reasonable
------------
actions necessary to expedite and facilitate disposition by the Investors of
Registrable Securities pursuant to a 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 each such Investor
that elects to have any of such Investor's Registrable Securities included in
the Registration Statement. It shall be a condition precedent to the
obligations of the Company to complete the registration pursuant to this
Agreement with respect to the Registrable Securities of an Investor that such
Investor shall furnish to the Company such information regarding itself, the
Registrable Securities held by it and the intended method of disposition of the
Registrable Securities held by it as shall be reasonably required to effect the
registration of such
7
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(s) hereunder, unless such Investor has notified the
Company in writing of such Investor's election to exclude all of such Investor's
Registrable Securities from the Registration Statement.
4.3 Corrections. Each Investor agrees that, on receipt of any
-----------
notice from the Company of the happening of any event of the kind described in
section 2.2, 3.5 or 3.6, such Investor will immediately discontinue disposition
of Registrable Securities pursuant to the Registration Statement(s) covering
such Registrable Securities until such Investor's receipt of the copies of the
supplemented or amended prospectus contemplated by section 3.5 or 3.6 and, if so
directed by the Company, such Investor shall deliver to the Company (at the
expense of the Company) or destroy (and deliver to the Company a certificate of
destruction) all copies in such Investor's possession, of the prospectus
covering such Registrable Securities current at the time of receipt of such
notice.
4.4 Underwriting Arrangements. No Investor may participate in any
-------------------------
underwritten registration hereunder unless such Investor (a) agrees to sell such
Investor's Registrable Securities on the basis provided in any underwriting
arrangements, (b) completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents reasonably required
under the terms of such underwriting arrangements, and (c) agrees to pay its pro
rata share of all underwriting discounts, selling commissions and stock transfer
taxes applicable to the sale of Registrable Securities and fees and
disbursements of counsel and other advisers for any Investor (collectively,
"Selling Expenses").
5. EXPENSES OF REGISTRATION. All reasonable expenses, other than Selling
------------------------
Expenses, incurred in connection with registrations, filings or qualifications
pursuant to sections 2 and 3, including, without limitation, all registration,
listing and qualifications fees, printers and accounting fees, and fees and
disbursements of counsel for the Company, shall be borne by the Company.
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
8
each director and officer of, and each person, if any, who controls, such
underwriter within the meaning of the 1933 Act or the 1934 Act (each, an
"Indemnified Person"), against any losses, claims, damages, liabilities or
expenses (joint or several) (collectively, "Claims") to which any of them may
become subject insofar as such Claims (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based on: (a)
any untrue statement or alleged untrue statement of a material fact in a
Registration Statement or the omission or alleged omission to state therein a
material fact required to be stated or necessary to make the statements therein
not misleading, (b) any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus if used prior to the
effective date of such Registration Statement, or contained in the final
prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements therein were
made, not misleading, or (c) any violation or alleged violation caused by the
Company of the 1933 Act, the 1934 Act, any other law, including, without
limitation, any state securities law, or any rule or regulation thereunder
relating to the offer or sale of the Registrable Securities pursuant to a
Registration Statement (the matters in the preceding clauses (a), (b) and (c)
being, collectively, "Violations"). Subject to the restrictions in section 6.4
with respect to the number of legal counsel, the Company shall reimburse each
Indemnified Person promptly as such expenses are incurred and are due and
payable, for any legal fees or other reasonable expenses incurred by such
Indemnified Person in connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary herein, the indemnification agreement
in this section 6.1: (1) shall not apply to a Claim arising out of or based on a
Violation that occurs in reliance on and in conformity with information
furnished in writing to the Company by, or caused by, any Indemnified Person or
underwriter for such Indemnified Person in connection with the preparation of
the Registration Statement or any such amendment thereof or supplement thereto,
if such prospectus was timely made available by the Company pursuant to section
3.3; (2) with respect to any preliminary prospectus, shall not inure to the
benefit of any such person from whom the person asserting any such Claim
purchased the Registrable Securities that are the subject thereof (or to the
benefit of any person controlling such person) if the untrue statement or
omission of material fact contained in the preliminary prospectus was corrected
in the prospectus, as then amended or supplemented, if such prospectus was
timely made available by the Company pursuant to section 3.3; (3) shall not be
available to the extent that such Claim is based on a failure of the Investor to
deliver or to cause to be delivered the prospectus made available by the
Company; and (4) shall not apply to amounts paid in settlement of any Claim if
such settlement is effected without the prior written consent of the Company,
which consent shall not be unreasonably withheld. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
the Indemnified Person and shall survive the transfer of the Registrable
Securities by the Investors pursuant to section 9.
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 become subject, under the 1933 Act, the 1934 Act
or otherwise, insofar as such Claim arises out of or is based on any Violation,
in each case to the extent (and only to the extent) that such Violation occurs
in reliance on and in conformity with written information furnished to the
Company by such Investor expressly for use in connection with such Registration
Statement or to the extent such Claim is based on any violation or alleged
violation by the Investor of the 1933 Act, 1934 Act or any other law; and such
Investor will reimburse any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such Claim; provided that the
indemnity agreement in this section 6.2 shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of such Investor, which consent shall not be unreasonably withheld; and
provided further that the Investor shall be liable under this section 6.2 for
only such amount of a Claim as does not exceed the net proceeds to such Investor
as a result of the sale of Registrable Securities pursuant to such Registration
Statement. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of such Indemnified Party and shall
survive the transfer of the Registrable Securities by the Investors pursuant to
section 9. Notwithstanding anything to the contrary herein, the indemnification
agreement in this section 6.2 with respect to any preliminary prospectus shall
not inure to the benefit of any Indemnified Party if the untrue statement or
omission of material fact contained in the preliminary prospectus was corrected
on a timely basis in the prospectus, as then amended or supplemented.
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
10
indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified Person or
the Indemnified Party, as the case may be; provided that an Indemnified Person
or Indemnified Party shall have the right to retain its own counsel with the
fees and expenses to be paid by the indemnifying party, if, in the reasonable
opinion of counsel retained by the indemnifying party, the representation by
such counsel of the Indemnified Person or Indemnified Party and the indemnifying
party would be inappropriate due to actual or potential differing interests
between such Indemnified Person or Indemnified Party and any other party
represented by such counsel in such proceeding. The Company shall pay reasonable
fees for only one separate legal counsel for the Investors, and such legal
counsel shall be selected by the Investors holding a majority of the Registrable
Securities included in the Registration Statement to which the Claim relates.
The failure to deliver written notice to the indemnifying party within a
reasonable time after the threat or commencement of any such action shall not
relieve such indemnifying party of any liability to the Indemnified Person or
Indemnified Party under this section 6, except to the extent that the
indemnifying party is prejudiced in its ability to defend such action. The
indemnification required by this section 6 shall be made by periodic payments of
the amount thereof during the course of the investigation or defense, as such
expense, loss, damage or liability is incurred and is due and payable.
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
11
the Company remains subject to such requirements, and the filing of such reports
and other documents is required for the applicable provisions of Rule 144; and
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 cause the Company to
---------------------------------
register securities granted to an Investor by the Company pursuant to section 2
may not be transferred or assigned by an Investor except in a private sale to a
transferee or assignee of not less than 100,000 shares of the Registrable
Securities and: (a) the Investor agrees in writing with the transferee or
assignee to assign such rights, and a copy of such agreement is furnished to the
Company within a reasonable time after such assignment, (b) the Company is,
within a reasonable time after such transfer or assignment, furnished with
written notice of the name and address of such transferee or assignee and the
securities with respect to which such registration rights are being transferred
or assigned, (c) immediately following such transfer or assignment the further
disposition of such securities by the transferee or assignee is restricted under
the 1933 Act and applicable state securities laws, (d) at or before the time the
Company receives the written notice contemplated by clause (b) of this sentence
the transferee or assignee agrees in writing with the Company to become a party
to and be bound by this Agreement, (e) such transfer shall have been made in
accordance with the applicable requirements of the Securities Purchase
Agreement, (f) such transferee shall be an "accredited investor" as that term
defined in Rule 501 of Regulation D under the 1933 Act, and (g) if the
assignment occurs after the date of effectiveness of the Registration Statement
required to be filed pursuant to section 2.1, the transferee or assignee agrees
to pay all reasonable expenses of amending or supplementing such Registration
Statement to reflect such assignment. Any such transferee or assignee shall be
deemed to be an Investor hereunder, in the place and stead of the transferring
or assigning Investor with respect to the Registrable Securities so transferred
and assigned, from and after the effective date of such permitted transfer,
assignment and assumption.
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), 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.
-------------
12
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 Notices. Any notices or other communications required or
-------
permitted to be given under this Agreement shall be sent by registered or
certified mail, return receipt requested, or delivered personally or by
facsimile or courier and shall be effective five days after being placed in the
mail, if mailed, or on receipt, if delivered personally or by courier or
facsimile, in each case properly addressed to the party to receive such notice.
The addresses for such communications shall be:
If to the Company:
00000 Xxxxxxx Xxxxxxx
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Legal Department
With copy to:
Shartsis, Xxxxxx & Xxxxxxxx
Xxx Xxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
If to the Buyer, at the addresses on the signature page of this Agreement.
Each party shall provide notice to the other party of any change in
address.
11.3 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.
11.4 Severability. If any provision of this Agreement shall be
------------
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not
13
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.
11.5 Entire Agreement. This Agreement and the Securities Purchase
----------------
Agreement together constitute the entire agreement of the parties and supersede
all prior or contemporaneous negotiations, correspondence, understandings and
agreements, written or oral, regarding the subject matter hereof.
11.6 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.
11.7 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.
11.8 Counterparts. This Agreement may be executed in two or more
------------
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party. If any signature page is delivered by
facsimile transmission, the party using such means of delivery shall cause four
additional original executed signature pages to be physically delivered to the
other party within five days of the execution and delivery hereof.
11.9 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.
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of day and year first above written.
COMPANY:
SYQUEST TECHNOLOGY, INC.
By: /s/ XXXXXXX XXXXXXX
----------------------------
Name: Xxxxxxx Xxxxxxx
Its: Vice-President, Financial
Services and Treasurer
14
BUYER:
---------------------------------
By: /s/ XXXXXXX XXX
----------------------------
Name: XXXXXXX XXX
Its: MANAGING DIRECTOR
Address:
TONGKAH ELECTRONICS SDN.BHD
---------------------------------------------
XXXX 000, XX 00, XXXXX XXXXXX INDUSTRIAL PARK
---------------------------------------------
14000 SEBERANG PERAI TENGAH
---------------------------------------------
PENANG, MALAYSIA
---------------------------------------------
Attention: XXXXXXX XXX
---------------------
Facsimile: 60-4-5072266
---------------------
15
