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Exabyte and Ecrix Sign Definitive Merger Agreement(August 23, 2001)
Under the terms of the merger agreement, Exabyte will issue 10 million shares of common stock in exchange for all of the outstanding equity of Ecrix. Additionally, certain Ecrix investors and persons related to them will invest $9.4 million in new Exabyte Series H preferred stock at $1.00 per share at the time of closing. The preferred stock will be convertible into common stock on a share-for-share basis.
The transaction has been approved by both boards of directors and is subject only to the approval of both companies' shareholders and other closing conditions. The merger is expected to close by the end of 2001.
William L. Marriner, Chairman, President and Chief Executive Officer of Exabyte, stated, "I am extremely excited about the benefits to our two companies from this merger and the prospects for our combined enterprise. Ecrix's VXA tape drive technology has the price, capacity, performance and reliability to satisfy the very large installed base of DDS users that are searching for a migration path forward. Ecrix announced last week that Compaq has selected both the SCSI and IDE versions of VXA-1 for their commercial desktop and workstation product lines, with initial shipments anticipated to begin within 30 days. I expect this pivotal win to lead to other OEM opportunities as well as expansion of business through our reseller channels. Leveraging Exabyte's name recognition, sales channels, and sales and support infrastructure, we see an excellent opportunity to capture significant share in this market with VXA-1 and VXA-2, an 80 gigabyte drive which is expected to ship to OEMs in late fourth quarter of this year."
Mr. Marriner further commented, "Ecrix's balance sheet and the infusion of $9.4 million of new equity capital will significantly improve our cash position. We also expect to negotiate with our senior lender the restructuring of our revolving credit agreement at the time of closing. I am particularly pleased with the quality of our new investors. Meritage Private Equity Fund, Centennial Ventures, and Valley Ventures have considerable knowledge and impressive track records in the data storage area and I am looking forward to working closely with them."
"It will be a pleasure to be reunited with Juan Rodriguez, who will be joining the board of directors and serving as the company's chief technologist. Juan is one of the most successful entrepreneurs in the tape industry, having successfully co-founded StorageTek, Exabyte and Ecrix. This will be our third opportunity to work together and I know our individual strengths will complement each other nicely. Juan will play an instrumental role in working with me to keep Exabyte at the forefront of technology," said Mr. Marriner.
Mr. Rodriguez commented, "This merger represents an opportunity to further accelerate the acceptance of VXA technology by leveraging Exabyte's supply chain partnerships, distribution channels, and brand awareness. In my mind the primary benefit of this merger is how complementary our two companies are. We share some common partners with very little overlap in our combined product offerings. The result is we can leverage each other's strengths and benefit from a more efficient organization."
"Additionally, a great synergy is available when our drive technologies are merged," continued Mr. Rodriguez. "The combination of VXA's packet technology and non-tracking format with Mammoth 2's high performance read and write technology enable a foundation for some very exciting products."
"I have nothing but fond memories of my earlier years with Exabyte," added Mr. Rodriguez, "and I'm thrilled to participate in this next phase of the company and ensure it sustains the entrepreneurial spirit required to take advantage of a rapidly changing storage market."
Jack Tankersley and William Almon, Sr. will be joining Mr. Rodriguez on a newly constituted seven-member Exabyte board of directors at the time of closing. Mr. Tankersley co-founded The Centennial Funds in 1981 and the Meritage Private Equity Fund in 1998. Mr. Almon spent 30 years with IBM, served as President of Conner Peripherals, founded StorMedia, Inc. and is currently Chairman of Ecrix's Executive Committee of the Board.
Upon closing of the merger later this year, the company will operate as Exabyte Corporation and will continue to utilize both the MammothTape and VXA brands. Additionally, the new equity investment will allow the company to capitalize on its strengths in tape automation and to further broaden its portfolio of tape libraries utilizing MammothTape(TM), VXA(TM), LTO(TM) Ultrium(TM), SDLT(TM) and Advanced Intelligent Tape(TM) drive technologies and media.
Mr. Marriner further stated, "We began early this year to assess strategic options to strengthen Exabyte's business and to seek value for our shareholders. After examining several possibilities with the help of our financial advisors, I am very pleased with this outcome. We are merging companies with complementary technologies, products and cultures. We provide each other with opportunities to capture new OEMs and new reseller partners, to share suppliers and leverage our purchasing power, and to reduce operating and facilities costs."
Broadview International LLC served as financial advisor to Exabyte and The Wallach Company, a Division of McDonald Investments Inc., provided the financial advisory services for Ecrix.
Exabyte has filed an 8-K Report with the Securities and Exchange Commission regarding the proposed merger with Ecrix Corporation. Additional information is available in the 8-K Report.
A conference call has been scheduled for 10:30 a.m. MDT (12:30 p.m. EDT) on Thursday, August 23rd to discuss the merger. The conference call will be available live via webcast on Exabyte's website at www.exabyte.com/company. The call will also be available via telephone at 1-800-540-0559 with the code "EXABYTE." Webcast replays of the conference call will be available for 90 days after completion of the call.
For more information, visit www.exabyte.com and www.ecrix.com.
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