<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 17, 1996;
REGISTRATION NO. 33-88588
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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DREXLER TECHNOLOGY CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 77-0176309
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1077 INDEPENDENCE AVENUE
MOUNTAIN VIEW, CALIFORNIA 94043-1601
(415) 969-7277
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
JEROME DREXLER Copy to:
PRESIDENT JERALD E. ROSENBLUM, ESQ.
DREXLER TECHNOLOGY CORPORATION BARRY LEE KATZMAN, ESQ.
1077 INDEPENDENCE AVENUE ROSENBLUM, PARISH & ISAACS, P.C.
MOUNTAIN VIEW, CALIFORNIA 94043-1601 160 W. SANTA CLARA STREET, SUITE 1500
(415) 969-7277 SAN JOSE, CALIFORNIA 95113
(Name, address, including zip code, (408) 280-2800
and telephone number, including area
code, of agent for service)
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Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this Registration Statement when warranted
by market conditions and other factors.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, check the following box.[ ]
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
CALCULATION OF REGISTRATION FEE
<TABLE>
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TITLE OF EACH CLASS AMOUNT TO BE PROPOSED PROPOSED MAXIMUM AMOUNT OF
OF SECURITIES TO BE REGISTERED MAXIMUM AGGREGATE OFFERING REGISTRATION
REGISTERED OFFERING PRICE PER PRICE (1) FEE (2)
SHARE (1)
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<S> <C> <C> <C> <C>
COMMON STOCK 150,000 SHARES $12.5625 $1,884,375.00 $653.39
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</TABLE>
(1) Estimated pursuant to Rule 457(c) solely for the purpose of calculating
the filing fee, based on the average of the high and low prices for the
Company's Common Stock as reported on the NASDAQ National Market System on
September 10, 1996.
(2) A filing fee in the amount of $547.68 was paid with the original filing on
January 17, 1995, based upon registration of 267,500 shares to be sold at
a maximum offering price of $5.9375 per share then in effect. An
additional filing fee of $105.71 was included with the filing of Amendment
No. 1 based upon the addition of 45,000 shares at the maximum offering
price per share of $6.8125 then in effect. The filing fee remains the
same despite an increase in the proposed maximum offering price per share
as a result of a decrease in the number of shares to be registered.
----------------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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DREXLER TECHNOLOGY CORPORATION
CROSS-REFERENCE SHEET PURSUANT TO
ITEM 501(b) OF REGULATION S-K
<TABLE>
<CAPTION>
ITEM CAPTION IN FORM S-3 LOCATION IN PROSPECTUS BY CAPTION
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<S> <C> <C>
1. Forepart of the Registration and Outside Front Facing Page; Cross-Reference Sheet; Outside
Cover Page of Prospectus Front Cover Page
2. Inside Front and Outside Back Cover Pages of Outside Front Cover Page; Inside Front Cover
Prospectus Page; Available Information; Incorporation of
Certain Documents by Reference
3. Summary Information, Risk Factors and Ratio of Risk Factors
Earnings to Fixed Charges
4. Use of Proceeds Not Applicable
5. Determination of Offering Price Not Applicable
6. Dilution Not Applicable
7. Selling Security Holders Inside Front Cover Page; Selling Stockholders
8. Plan of Distribution Outside Front Cover Page
9. Description of Securities to be Registered Not Applicable
10. Interests of Named Experts and Counsel Not Applicable
11. Material Changes Not Applicable
12. Incorporation of Certain Information by Incorporation of Certain Documents by Reference
Reference
13. Disclosure of Commission Position on Indemnification of Officers and Directors
Indemnification for Securities Act Liabilities
</TABLE>
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PROSPECTUS
DREXLER TECHNOLOGY CORPORATION
150,000 Shares Common Stock, $0.01 par value
All of the shares (the "Shares") of Common Stock offered hereby are being
offered for the account of the Selling Stockholders listed below. See "Selling
Stockholders." Drexler Technology Corporation (the "Company") will not receive
any of the proceeds from the sale of the Shares.
The Company's Common Stock is listed on The NASDAQ Stock Market National Market
System under the symbol "DRXR." On September 10, 1996, the last reported sale
price for the Common Stock on the NASDAQ NMS was $12.75 per share.
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS" FOR A
DISCUSSION OF CERTAIN MATERIAL RISKS THAT SHOULD BE CONSIDERED BY
PROSPECTIVE INVESTORS.
PLAN OF DISTRIBUTION
The Registration Statement covering the Shares offered hereby will be
maintained in effect, and the Shares may be sold thereunder by the Selling
Stockholders, until July 31, 1997 (the "Offering Period"). The Selling
Stockholders have advised the Company that they may sell the Shares, directly or
through brokers or dealers, from time to time during the Offering Period. Such
sales may be made at the market price in one or more transactions on The NASDAQ
Stock Market, or at privately negotiated prices in negotiated transactions, or
otherwise at prices and terms prevailing at the time of sale. At the end of the
Offering Period, Shares not sold by the Selling Stockholders during the Offering
Period will return to the status of restricted stock which may be sold at that
time pursuant to the provisions of Rule 144 under the Securities Act of 1933
(the "Act").
AVAILABLE INFORMATION
The Company is subject to the information requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports and other information with the Securities and
Exchange Commission (the "Commission"). Such reports and other information may
be inspected and copied at the public reference facilities maintained by the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, and at the regional offices of the Commission located at
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois and 75 Park Place, 14th Floor, New York, New York 10007. Copies of such
material can be obtained at prescribed rates from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. The
Company's Common Stock is listed on the National Association of Securities
Dealers' NASDAQ National Market System, and such reports and other information
concerning the Company also can be inspected at the offices of the NASD at 1735
K Street, N.W., Washington, D.C., 20006-1500.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS SEPTEMBER __, 1996.
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TABLE OF CONTENTS
<TABLE>
<S> <C>
PLAN OF DISTRIBUTION ................................................... 1
AVAILABLE INFORMATION .................................................. 1
SELLING STOCKHOLDERS ................................................... 2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE ........................ 2
RISK FACTORS ........................................................... 3
INDEMNIFICATION OF OFFICERS AND DIRECTORS .............................. 5
LEGAL MATTERS .......................................................... 6
EXPERTS ................................................................ 6
</TABLE>
SELLING STOCKHOLDERS
The Shares registered hereunder are being offered for the accounts of
the stockholders of the Company listed below (the "Selling Stockholders"). None
of the Selling Stockholders has held any office or other material relationship
or position with the Company or any of its predecessors or affiliates within the
past three years or holds more than 5% of the Company's outstanding stock.
<TABLE>
<CAPTION>
Number of No. of Shares
Shares Owned Number of Shares Owned After
Stockholder Prior to Offering To Be Offered Offering (1) % (2)
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<S> <C> <C> <C> <C>
Alphi Fund, L.P. 187,500 75,000 112,500 1.3%
Wasatch Mid-Cap Fund 85,000 75,000 10,000 0.1%
</TABLE>
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(1) Assumes all shares to be offered will be sold.
(2) Percentage of Common Stock outstanding estimated to be owned
after completion of the offering, based upon 8,900,624 shares
of Common Stock outstanding as of July 23, 1996.
The Selling Stockholders purchased the Shares to be offered by them in
private placements in December 1994 and March and June 1995, pursuant to
agreements with the Company which contained an undertaking of the Company to
include the Shares in the registration filing for this offering. The
transactions were exempt from registration under the Act pursuant to Section
4(6) of the Act and Rule 506 of Regulation D under the Act.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company has filed with the Commission a Registration Statement on
Form S-3 under the Securities Act of 1933 (the "Act") with respect to the Common
Stock offered pursuant to this Prospectus. This Prospectus omits certain
information contained in the Registration Statement, and reference is made to
the Registration Statement, including the exhibits thereto, for further
information with respect to the Company and the securities offered hereby.
Statements made in this Prospectus concerning the contents or provisions of any
agreement or other document referred to herein are not necessarily complete; and
each such statement is qualified in its entirety by, and reference is made to,
the copy of such agreement or other document filed as an exhibit or schedule to
the Registration Statement or incorporated therein by reference. For further
information, reference is made to the Registration Statement and to the exhibits
and schedules filed therewith, which are available for inspection without charge
at the principal office of the Commission in Washington, D.C. Copies of the
material containing this information may be obtained from the Commission upon
payment of the prescribed fee.
The following documents, all of which were previously filed with the
Commission pursuant to the Exchange Act, are hereby incorporated by reference in
this Prospectus: The Company's Annual Report on Form 10-K for the year ended
March 31, 1996 (as amended by form 10-K/A filed July 29, 1996) and the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1996. All documents
subsequently filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Exchange Act, prior to the termination of this Offering, also shall be
deemed to be incorporated by reference herein.
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Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that such statement is modified or superseded by a statement
contained in this Prospectus or in any other subsequently filed document that
also is or is deemed to be incorporated by reference into this Prospectus. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a
Prospectus has been delivered, upon the written request of any such person, a
copy of any or all of the documents referred to above that have been or may be
incorporated in this Prospectus by reference, other than exhibits to such
documents. Written requests for such copies should be directed to: Steven G.
Larson, Vice President and Chief Financial Officer, Drexler Technology
Corporation, 1077 Independence Avenue, Mountain View, CA 94043-1601.
RISK FACTORS
EARLY STAGE OF PRODUCT COMMERCIALIZATION. The Company has invested
considerable resources in the development of optical memory cards and related
equipment and software, which is the Company's sole product line. These products
have recently entered the commercial stage through the Company's VAR
(value-added reseller) network, which was initially launched in 1991, and
reached sales of approximately 420,000 optical memory cards in fiscal 1996.
During fiscal 1996, the Company sold optical memory cards and related equipment
and software through its subsidiary, LaserCard Systems Corporation, to
approximately 50 customers located in 8 states and 28 foreign countries.
However, high-volume orders for optical memory cards require the VAR companies
to develop customers and applications, or to obtain significant follow-on orders
from customers whose programs are already underway. Such orders cannot be
predicted as to timing and amount while the Company's VAR organization is
gaining more experience with optical memory card products and developing
customers and applications. The Company has not yet entered into any long-term
supply agreements with its customers and does not have a material order backlog,
as it generally fills orders within 30 days of receipt of a purchase or release
order. Until a material level of order backlog is established, the Company's
sales are subject to fluctuation.
UNPREDICTABLE LICENSE REVENUES. Historically, revenues from fees for
patent and distribution licenses have been an important part of the Company's
revenues, profits and financing. The Company is actively pursuing efforts to
generate additional license revenues. However, the Company's license sales are
sporadic and unpredictable as to timing and type of license.
LIQUIDITY; LIMITED CAPITAL RESOURCES. At the current level of product
sales, the Company does not generate net cash from operations after expenses. To
fund its operations, the Company requires either additional financing, sales of
additional patent and distribution licenses, or a substantial increase in the
level of orders for optical memory cards. Based on current raw material costs
and other expense calculations, the Company estimates that it will break even on
cash flow if it achieves annual sales in the range of 1.5 million optical memory
cards, along with sales of related hardware. Generally, the Company's products
are made to custom specifications which are specific to each customer, end user
or application, and the Company obtains advance payments, in whole or in part,
from customers at the time of accepting an order. Therefore, the Company
believes that, although working capital requirements should grow in proportion
to increased product order and shipment levels, the advance payments will reduce
the need for working capital financing. However, the Company has not established
a line of credit, and no assurance can be made that negotiations to obtain a
line of credit will be successful should it become necessary for the Company to
establish one. The Company currently makes and sells optical cards in limited
quantities, with orders typically ranging from 5,000 to 50,000 cards per order.
This volume is expected to increase as the market expands and/or when one or
more major customer programs require a very large initial quantity of cards. The
Company believes there are prospects for such programs and market expansion, but
cannot predict if or when larger orders will occur. Since the third quarter of
fiscal year 1995, the Company has generated cash through the sale of Common
Stock, a single-payment license fee on the sale of an optical memory card
distribution license to an overseas VAR, and the receipt of a license upgrade
fee payment. There can be no assurance that the Company will be able to meet its
future cash needs on a favorable basis.
HISTORICAL LOSSES. As of June 30, 1996, the Company had an accumulated
deficit of $25,859,000. The Company anticipates that the size of its losses will
decrease due to anticipated increases in sales of optical memory cards and
related products, except for possible quarterly fluctuations. However, if
increased commercialization is delayed
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and the Company does not realize such increased sales, its losses will continue,
except in the event of sporadic sales of licenses. The Company is relying upon
its optical card technology to generate future revenues, earnings and cash flow
when order volumes reach material levels. However, the Company has operated at a
loss during the last five years. The Company cannot predict when material sales
levels of its products will be achieved. Until commercialization matures, the
Company is dependent upon other sources of income, such as license fees, which
cannot be predicted as to timing or dollar amount. Delays in customers'
development of optical memory card based programs, and corresponding
commercialization of the Company's optical memory cards and related products,
combined with an absence of additional license sales or other revenues, could
extend continuing losses and result in the need for additional financing.
READER/WRITER AVAILABILITY. Optical card reader/writer availability is
essential for the viability and growth of the optical memory card business.
Nippon Conlux Co., Ltd., a Japanese company, is currently the only supplier in
commercial quantities of reader/writer equipment for DELA-standard format
cards, the type manufactured by the Company and a licensed second-source card
manufacturer, which comprise the majority of optical memory cards sold in the
world marketplace to date. Two other licensees of the Company have the
capability to produce reader/writers compatible with the Company's optical
memory cards, but are not manufacturing them at this time. If Nippon Conlux were
to curtail manufacture of reader/writers, the Company would allocate its
incoming shipments of such devices among incoming orders from established
customers. Nippon Conlux has not developed its own optical memory card, and is
not known to be doing so. Its customers continue to rely on cards manufactured
by the Company or, particularly with respect to Japanese customers, Optical
Memory Card Business Corporation ("OMCBC"), a Japanese licensee of the Company,
of which Nippon Conlux is a minority owner. The Company expects card-related
revenues to increase more rapidly if card reader/writers are produced and sold
in volume at lower prices than at present. However, the Company can give no
assurance that increased production will occur in the near term or that
high-volume sales and correspondingly lower prices will result. In addition, if
market demand increases sharply over a short period of time, an initial shortage
of reader/writers could result.
NASDAQ LISTING. Currently the Company's Common Stock is traded on the
NASDAQ National Market System of NASD (National Association of Securities
Dealers). In Fall 1994 this listing was briefly subject to an exception from
ordinary National Market System requirements, under which the Company was
required to, and did successfully, implement a plan to maintain its net tangible
assets at a minimum of $4,000,000. The Company's net tangible assets also fell
below that level during the fourth quarter of Fiscal Year 1995, but were
restored during the first quarter of Fiscal Year 1996 without action by NASD. If
the Company's net tangible assets should fall below $4,000,000, and if the NASD
does not allow another exception, the Common Stock would then be traded on the
NASDAQ Small Cap Market, rather than the National Market System, with some
possible reduction of market interest and liquidity. As of June 30, 1996, the
Company's net tangible assets (as defined by NASD for this purpose) were
$4,148,000.
STOCK PRICE VOLATILITY. The price of the Company's Common Stock is
subject to significant volatility due to fluctuations in revenues, earnings,
capitalization, liquidity, press coverage, and financial market interest. Some
of these factors may be exacerbated because the Company operates solely in the
optical memory card products industry, which is in the early stages of
commercialization.
COMPETITION. The Company's products compete with those of OMCBC and
Canon, two of its Japanese licensees, who also sell optical cards under
royalty-bearing licenses from the Company. Canon has introduced an optical card
under its own standard, called "SIOC." The Company's DELA format and the Canon
SIOC formats are not functionally compatible, although both card formats meet
the ISO Standard. The Company believes that the ISO/DELA format offers
performance advantages over the ISO/SIOC format in terms of flexibility and
durability, as well as competitive advantages in system integration, interface
software and customer support for a variety of applications and markets. In
addition, the Company has had the benefit of six years of successful customer
use of cards made at its production plant, whereas Canon's current cards have
had only two years of field trials. OMCBC produces optical memory cards using
the ISO/SIOC format, as well as cards using the ISO/DELA format, and cards
conforming to a third format, created by Olympus Optical Co., another licensee
of the Company, for its own reader/writers. The Company's current worldwide
market share for optical memory cards exceeds that of its competitors. However,
the Company expects several of its Japanese licensees to sell ISO/SIOC format
cards and reader/writers, and believes that if Canon and Olympus continue their
card marketing programs, they should begin to obtain material orders for cards
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<PAGE> 7
and equipment. The Company anticipates that insofar as many optical card
programs will be dedicated applications for defined groups of users, various
types of optical cards will coexist. However, the size, trade name recognition,
and marketing and development resources of Canon, Olympus and Dai Nippon
Printing Co. (the principal owner of OMCBC) are substantially greater than those
of the Company.
COMPETING TECHNOLOGICAL ADVANCES. The Company also competes in certain
applications with other portable data storage products, particularly chip
(integrated circuit/microprocessor or "IC") cards. IC cards which store three or
four pages of text compete directly with optical memory cards in applications
where the limited storage capacity of IC cards and higher cost per card, but
lower cost per reader/writer, will suffice. The advantages of the optical memory
card in storage capacity, durability, and low cost, make it better suited for
many potentially sizable applications, such as for patient records in health
care and for national identification card systems. However, the IC card has a
greater installed base worldwide at present. For card applications with
relatively low storage capacity and security requirements, such as electronic
banking/credit and pay telephone cards, the Company expects IC cards to be used
instead of optical memory cards.
PATENT PROTECTION. The Company's United States patents have expiration
dates ranging from 2002 to 2012, with the majority expiring during the first
half of this period. Counterpart patents in foreign countries also expire during
that period. Under its license agreement with the Company for manufacture of
optical memory cards, OMCBC's obligation to pay royalties to the Company for use
of the licensed patents ceases on December 31, 2003. Canon's royalty obligations
in connection with its licenses to manufacture optical memory cards and reading
and writing equipment expire on December 31, 2008. Other royalty-bearing
licenses sold by the Company related to equipment for reading and writing
optical cards provide for royalty payments to cease on the last expiration date
of the licensed patents. The Company is unable to determine whether there would
be a material, adverse effect on royalties in the event of expiration or
unenforceability of its patents, because the Company's royalty revenues are not
significant at this time. The Company also cannot predict whether the expiration
or invalidation of its patents would result in the introduction of competitive
products which would affect its future revenues adversely. The Company is not
aware of any optical memory card products which otherwise would infringe its
patents in countries where the Company might have difficulty enforcing its
patents or has no patent protection.
INTERNATIONAL SALES AND OPERATIONS. The Company does not believe that
there are substantial risks inherent in its international business as compared
to its domestic business, with the exception of export/import regulations
pertaining to doing business in specific countries. However, sales of its
products and licenses outside the United States have comprised 52%, 71%, and 42%
of net sales in the 1994, 1995, and 1996 fiscal years, respectively. The
Company believes that international sales will be an important component of its
sales growth potential.
FORWARD-LOOKING STATEMENTS. Certain statements made above relating to
plans, objectives and economic performance go beyond historical information and
may provide an indication of future results. To that extent, they are
forward-looking statements within the meaning of Section 27A of the Act, and
each is subject to factors that could cause actual results to differ from those
in the forward-looking statement. Such factors are described above and in the
documents filed by the Company from time to time with the Commission.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Company's Certificate of Incorporation and By-Laws provide for
indemnification of directors and officers to the full extent permitted or
authorized under the Delaware General Corporation Law, for expenses, liabilities
and losses actually and reasonably incurred as a result of any such director's
or officer's status as such, provided that the indemnitee acted in good faith
and in a manner he or she believed to be in or not to be opposed to the best
interest of the corporation. In addition, the Company has entered into an
Indemnification Agreement with each officer and director, which agreement
provides, among other things, for contractual rights of the indemnitee to
advancement of expenses prior to final disposition of an action provided that,
if required by Delaware law, the indemnitee agrees to repay such advance upon
the Company's request if it is ultimately determined that the indemnitee is not
entitled to indemnification.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling the
Company pursuant to the foregoing provisions, the Company has been informed that
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in the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is therefore unenforceable.
LEGAL MATTERS
The legality of the Common Stock offered hereby will be passed upon for
the Company by Rosenblum, Parish & Isaacs, PC of San Jose, California.
EXPERTS
The audited consolidated financial statements and schedules
incorporated by reference in this Prospectus and elsewhere in this Registration
Statement have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their reports with respect thereto; and are
included therein and incorporated herein by reference in reliance upon the
authority of such firm as experts in providing such reports.
------------------------------------
NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THIS OFFERING TO GIVE ANY
INFORMATION, OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS, AND
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER OF ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES OR AN OFFER TO ANY
PERSON IN ANY JURISDICTION WHERE SUCH AN OFFER WOULD BE UNLAWFUL, OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE AN IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS
OF ANY TIME SUBSEQUENT TO ITS DATE.
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PART II
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses in connection with
the sale and distribution of the Shares being registered, other than
underwriting discounts and commissions, if any, incurred by the Selling
Stockholders in sales of Shares effected through intermediaries. All of the
amounts shown are estimates except the Securities and Exchange Commission
registration fee.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee $ 653
Legal fees and expenses $20,000*
Accounting Fees $10,000*
Miscellaneous expenses $ 5,000*
</TABLE>
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*Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Pursuant to provisions of the Delaware General Corporation Law,
Registrant's Certificate of Incorporation includes a provision which eliminates
the personal liability of its directors to Registrant and its stockholders for
monetary damages for any breach of fiduciary duty as a director, except for: (i)
any breach of the duty of loyalty owed by the director to the Registrant or its
stockholders; (ii) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law; (iii) any liability for
declaration of unlawful dividends or unlawful stock repurchases or redemptions;
or (iv) any transaction from which a director received an improper personal
benefit.
This provision does not eliminate or limit liability of an officer for
any act or omission as an officer, notwithstanding the officer is also a
director or that his or her actions, if negligent or improper, have been
ratified by the Board of Directors. The provision also has no effect on claims
arising under federal or state securities laws and does not affect the
availability of injunctions and other equitable remedies which Registrant's
stockholders may pursue for any violation of a director's fiduciary duty to
Registrant or its stockholders. Although the validity and scope of the
legislation underlying the provision have not yet been interpreted to any
significant extent by the Delaware courts, the provision may relieve directors
of monetary liability for grossly negligent conduct, including conduct in
situations involving attempted acquisitions of Registrant.
Registrant's Certificate of Incorporation also includes a provision
entitling directors, officers, employees and other agents of Registrant to
indemnification to the fullest extent authorized by the Delaware General
Corporation Law, as well as a provision authorizing the Registrant to maintain
insurance to protect directors, officers, employees and agents against
liability, whether or not Registrant would have the power to indemnify such
person against the applicable liability.
Registrant maintains liability insurance pursuant to policies currently
in effect with two insurers, under which the insurers will pay on behalf of
directors and officers of Registrant certain losses incurred as a result of
defined acts for which the Company does not indemnify such persons, subject to
customary exclusions. In addition, the insurers will reimburse Registrant for
losses in excess of $100,000 incurred as a result of Registrant's
indemnification of an officer or director in connection with defined acts. The
aggregate liability of the insurers is limited to $2,000,000 for claims made
under the Executive Re Insurance , Inc., policy, and $3,000,000 for claims made
under the Reliance Insurance Company policy (in excess of the initial $2,000,000
covered under the Executive Re Insurance, Inc., policy), each of which policies
expires November 1, 1996.
The provisions of Section 145 of the Delaware General Corporation Law
that empower Registrant to indemnify its officers, directors and agents are
sufficiently inclusive to allow Registrant to indemnify such persons for
liabilities, including reimbursement of expenses incurred, arising under the
Securities Act of 1933, under certain circumstances.
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ITEM 16. EXHIBITS.
EXHIBIT INDEX
Exhibit Number Description
5 Opinion of Rosenblum, Parish & Isaacs, PC re Legality.
23(a) Consent of Arthur Andersen LLP
23(b) Consent of Rosenblum, Parish & Isaacs, PC (included in Exhibit 5).
24 Power of Attorney (included on Page II-4).
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of Registrant pursuant to the foregoing provisions, or otherwise,
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by Registrant of expenses
incurred or paid by a director, officer or controlling person of Registrant in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, Registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement;
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
II-2
<PAGE> 11
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the Registration Statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement;
provided, however, that paragraphs (i) and (ii)
above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed by Registrant pursuant to Section 13 or 15(d) of the Securities and
Exchange Act of 1934 that are incorporated by reference in the Registration
Statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
* * * * *
[The remainder of this page is intentionally blank.]
II-3
<PAGE> 12
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF MOUNTAIN VIEW, STATE OF CALIFORNIA, ON SEPTEMBER 17,
1996 .
DREXLER TECHNOLOGY CORPORATION
By /s/JEROME DREXLER
-------------------------------------
Jerome Drexler, President
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
Signature Title Date
--------- ----- ----
/s/JEROME DREXLER President and Chairman September 17, 1996
- ----------------------- of the Board of Directors
Jerome Drexler (Principal Executive Officer)
/s/STEVEN G. LARSON Vice President and September 17, 1996
- ----------------------- Treasurer
Steven G. Larson (Chief Financial and
Accounting Officer)
/s/STEVEN G. LARSON as
Attorney-in-Fact for Director September 17, 1996
- -----------------------
Arthur H. Hausman
/s/STEVEN G. LARSON as
Attorney-in-Fact for Director September 17, 1996
- -----------------------
William E. McKenna
II-4
<PAGE> 13
EXHIBIT INDEX
Exhibit Number Description
- -------------- -----------
5 Opinion of Rosenblum, Parish & Isaacs, PC, re Legality
23(a) Consent of Arthur Andersen LLP
<PAGE> 1
[EXHIBIT 5]
September 13, 1996
Drexler Technology Corporation
1077 Independence Avenue
Mountain View, California 94043-7277
Re: Proposed Registration of Shares of Common Stock
Ladies and Gentlemen:
We refer to the Registration Statement on Form S-3 to which this
letter will be attached as an exhibit, to be filed by Drexler Technology
Corporation (the "Company") with the Securities and Exchange Commission under
the Securities Act of 1933, relating to 150,000 shares of the Company's Common
Stock, $0.01 per share par value (the "Shares") to be offered for sale by
certain stockholders of the Company.
As counsel to the Company, we have examined such corporate records and
other documents and have made such legal examinations and factual inquiries as
we have considered necessary for the purpose of rendering this opinion. On the
basis of such examinations and inquiries, we are of the opinion that the Shares
are validly authorized, legally issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this firm under the heading
"Legal Matters" in the Prospectus contained therein. This consent is not to be
construed as an admission that we are a person whose consent is required to be
filed with the Registration Statement under the provisions of Section 7 of the
Securities Act of 1933.
ROSENBLUM, PARISH & ISAACS, PC
By /s/JERALD E. ROSENBLUM
----------------------------
Member of the Firm
<PAGE> 1
[EXHIBIT 23(A)]
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated April 26, 1996
included in Drexler Technology Corporation's Form 10-K for the year ended March
31, 1996 and to all references to our Firm included in this registration
statement.
/s/Arthur Andersen LLP
ARTHUR ANDERSEN LLP
San Jose, California
September 13, 1996
