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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 9, 1997
REGISTRATION NO. 333-_______
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
RASTER GRAPHICS, INC.
(Exact Name of Company as Specified in Its Charter)
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DELAWARE 3577 94-3046090
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation Industrial Classification Identification
or organization) Code Number) Number)
3025 ORCHARD PARKWAY
SAN JOSE, CA 95134
(408) 232-4000
(Address, Including Zip Code, and Telephone Number, Including Area
Code, of Company's Principal Executive Offices)
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RAKESH KUMAR
PRESIDENT AND CHIEF EXECUTIVE OFFICER
3025 ORCHARD PARKWAY
SAN JOSE, CA 95134
(408) 232-4000
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
----------
COPIES TO:
MICHAEL W. HALL
EDMUND S. RUFFIN, JR.
JOHN MCINTIRE
Venture Law Group, A Professional Corporation
A Professional Corporation
2800 Sand Hill Road
Menlo Park, CA 94025
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
NOVEMBER 1, 1997
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If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please 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]
If this form is filed to register additional securities for an Offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same Offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same Offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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TITLE OF EACH CLASS OF AMOUNT TO PROPOSED MAXIMUM PROPOSED MAXIMUM
SECURITIES TO BE BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
REGISTERED REGISTERED UNIT(1) PRICE (1) REGISTRATION FEE
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Common Stock, par value
$0.001 73,475 shares $8.00 $587,800.00 $178.00
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(1) Estimated solely for the purpose of computing the amount of the registration
fee, based on the average of the high and low prices for the Company's Common
Stock as reported on the Nasdaq National Market on October 3, 1997 in accordance
with Rule 457 under the Securities Act of 1933, as amended.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE COMPANY 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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NOTE: INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
PROSPECTUS SUBJECT TO COMPLETION OCTOBER 9, 1997
RASTER GRAPHICS, INC.
73,475 SHARES
COMMON STOCK
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The Common Stock offered hereby involves a high degree of risk. See
"Risk Factors," beginning on page 7, for information that should be considered
by prospective investors.
This Prospectus covers 73,475 shares of Common Stock, $0.001 par value
(the "Common Stock" or the "Shares"), of Raster Graphics, Inc. ("RGI" or the
"Company"), which may be offered from time to time by one or all of the selling
stockholders named herein (the "Selling Stockholders"). The Company will receive
no part of the proceeds of such sales.
The Shares were issued to the Selling Stockholders in connection with
the acquisition of ColourPass Limited, a business in the United Kingdom, by the
Company on March 18, 1997 (the "Acquisition"). For additional information
concerning the Acquisition, see "Issuance of Common Stock to Selling
Stockholders." The Selling Stockholders intend to sell the shares offered hereby
from time to time on the Nasdaq National Market in regular brokerage
transactions, in transactions directly with market makers or in individually
negotiated transactions at such prices as may be agreed upon or a combination of
such methods of sale, during a thirty-day period immediately following the
effective date of this Prospectus. The Company will bear all expenses with
respect to the offering of the Common Stock (estimated to be approximately
$24,000.00) except any selling commissions, stock transfer taxes, or fees and
disbursements of counsel for the Selling Stockholders. Each Selling Stockholder
has advised the Company that no sale or distribution other than as disclosed
herein will be effected until after this Prospectus shall have been
appropriately amended or supplemented, if required, to set forth the terms
thereof.
The Company's Common Stock is traded on the Nasdaq National Market under
the symbol RGFX. The last reported sales price of the Common Stock on the Nasdaq
National Market on October 3, 1997 was $8.00 per share.
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SEE "RISK FACTORS," BEGINNING ON PAGE 7, FOR
INFORMATION THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
--------------------------------------
The Selling Stockholders and any broker executing selling orders on
behalf of the Selling Stockholders may be deemed to be an "underwriter" within
the meaning of the Securities Act of 1933, as amended (the "Securities Act").
Commissions received by any such broker may be deemed to be underwriting
commissions under the Securities Act. See "Plan of Distribution" for information
relating to indemnification of the Selling Stockholders.
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 COMMIS-
SION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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UNDERWRITING
DISCOUNTS AND PROCEEDS TO
PRICE TO PUBLIC COMMISSION SELLING STOCKHOLDERS
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Per Share...........
Total............... See Text Above See Text Above See Text Above
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THE DATE OF THIS PROSPECTUS IS OCTOBER 9, 1997
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No person is authorized in connection with any offering made hereby 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 or the Selling Stockholders. This
Prospectus does not constitute an offer to sell or a solicitation of an offer to
buy any security other than the shares of Common Stock offered hereby, nor does
it constitute an offer to sell or a solicitation of an offer to buy any of the
shares offered hereby to any person in any jurisdiction in which it is unlawful
to make such an offer or solicitation. Neither the delivery of this Prospectus
nor any sale made hereunder shall under any circumstances create any implication
that the information contained herein is correct as of any time subsequent to
the date hereof.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Judiciary Plaza, Room 1024, Washington, D.C. 20549, and at the Commission's
following Regional Offices: Northwest Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661; and Seven World Trade Center, 13th Floor,
New York, New York 10048. Copies of such material can be obtained at prescribed
rates from the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Judiciary Plaza, Washington, D.C. 20549. The Company's Common Stock is
traded on the Nasdaq National Market, and reports, proxy statements and other
information concerning the Company also may be inspected at the offices of the
National Association of Securities Dealers, Inc., 1735 K Street, N.W.,
Washington, D.C. 20006. The Commission maintains a Web site that contains
reports, proxy and information statements and other information regarding
Companies, such as the Company, that file electronically with the Commission at
http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, filed with the Commission under the Exchange
Act, are hereby incorporated by reference into this Prospectus:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996;
(b) The Company's Quarterly Report on Form 10-Q, for the quarters ended
March 31, 1997 and June 30, 1997;
(c) The Company's definitive Proxy Statement dated April 30, 1997, filed
in connection with the Company's June 3, 1997 Annual Meeting of Stockholders;
and
(d) The description of the Company's Common Stock set forth in its
Registration Statement on Form 8-A filed with the Commission on June 25, 1996,
including any amendment or report filed for the purpose of updating such
description.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the Offering shall be deemed to be incorporated by reference
herein and to be a part hereof from the date of filing of such documents. Any
statement contained in this Prospectus or in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any subsequently-filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. 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 additional charge to each person,
including any beneficial owner, to whom this Prospectus is delivered, upon
written or oral request of such person, a copy of any and all of the documents
that have been incorporated by reference herein (not including exhibits to such
documents unless such
<PAGE> 4
exhibits are specifically incorporated by reference herein or into such
documents). Such request may be directed to Raster Graphics, Inc., Attention:
Investor Relations, 3025 Orchard Parkway, San Jose, California 95134, (408)
232-4000.
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial data appearing elsewhere in this Prospectus, and in
the documents incorporated herein by reference. Except for the historical
information contained herein, the discussion in this Prospectus contains
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, that involve risks and uncertainties. The Company's
actual results could differ materially from those discussed here.
THE COMPANY
Raster Graphics was established in 1987 initially to develop low-cost
electrostatic raster printers for the computer-aided design ("CAD") market.
Raster Graphics commenced shipments of its first printer, a 22-inch printer, in
1989, followed by a 24-inch printer in 1990 and a 36-inch printer in 1992.
In 1993, the Company identified the on-demand production large format
digital printing ("LFDP") market as a new opportunity to develop a product based
on its proprietary high-speed printhead technology. As a result, in 1993 the
Company shifted its product focus and began to develop the DCS 5400 specifically
for the LFDP market. The Company began shipping the DCS 5400 in July 1994. Since
the Company began commercial production of the DCS 5442 in January 1996 as a
second generation to the DCS 5400, this line has represented an increasing
percentage of the Company's product shipments and, by September 1996,
substantially replaced the DCS 5400. In December 1996, the Company introduced
the PiezoPrint(TM) 1000, an inkjet printer manufactured by a third party, that
is targeted at the lower priced entry level production market. In March 1997,
the Company introduced the PiezoPrint(TM) 5000 as a mid-range, price/performance
product to complement the affordable PiezoPrint(TM) 1000 inkjet printer and the
high volume DCS 5442. Although the Company has no current plans to replace any
printer in its current line of products, the future success of the Company will
likely depend on its ability to develop and market new products that offer
different levels of performance for the production segment of the LFDP market.
In order to provide a complete digital printing solution to its
customers, the Company began shipping Onyx's image processing software with its
digital printers in July 1994. Onyx develops and markets image processing
software for the Company's digital printers as well as printers manufactured by
companies such as CalComp, Encad, Hewlett-Packard and ColorgrafX. In August
1995, the Company acquired Onyx. Onyx supplies its software to Raster Graphics
and also sells its software products to OEMs, VARs, systems integrators and
other printer manufacturers. Onyx's current image processing software product,
PosterShop, was introduced in April 1996 as a replacement for Onyx's Imagez
image processing software product, which Onyx had been shipping since May 1991.
Although the Company has no current plans to replace its PosterShop product, the
Company will likely introduce new versions of its image processing software in
the future.
Raster Graphics also sells related consumables, including specialized
inks and papers that it acquires from third party suppliers and resells under
the Raster Graphics name for use in the Company's digital printers. The sale of
consumables generates recurring revenues, which the Company believes will
continue to increase to the extent that the installed base of printing systems
expands. As the Company develops new printers, it may need to develop new
consumables to be used by its new printer products.
In the United States, Raster Graphics also derives revenues from
maintenance contracts of installed systems and printers, including the Company's
installed base of 22-inch, 24-inch and 36-inch printers. Revenue is also
generated from the sale of spare parts.
Raster Graphics' end user customers, OEMs, VARs, and international
distributors submit purchase orders that generally require product shipment
within two to eight weeks from receipt of order. Accordingly, the Company does
not use order backlog as a primary basis for management planning for longer
periods. Revenues are recognized upon shipment if there are no contingencies. If
contingencies exist, revenues are recognized only when such contingencies are
removed by the customer.
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The Company is in the process of setting up a customer finance program,
Raster Graphics Financial Services ("RGFS"), a division of Raster Graphics,
Inc., to provide customers with financing options for Raster Graphics printing
systems. The programs is expected to be fully operational by October 1997.
Raster Graphics, Inc. was incorporated on August 8, 1996. The Company's
principal executive offices are located at 3025 Orchard Parkway, San Jose,
California 95134. Its phone number at that location is (408) 232-4000
4
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RISK FACTORS
PRODUCT COMPETITION. The recent introduction of the new line of
PiezoPrint inkjet printers may adversely impact sales of the Company's DCS 5442
printer to the extent that future purchasers favor the lower priced inkjet
alternatives. Accordingly, there can be no assurance that revenue generated by
sales of the Company's inkjet products will compensate for the decrease in
revenue resulting from declining sales of its electrostatic products. The
corresponding decrease in total revenue would have a material adverse effect
upon the Company's business, financial condition and results of operations.
LIMITED HISTORY OF PROFITABILITY AND UNCERTAINTY OF FUTURE FINANCIAL
RESULTS. The Company had an accumulated deficit as of June 30, 1997 of
approximately $13.1 million. The Company has a limited history of profitability.
There can be no assurance that sales of the Company's products will generate
significant revenues or that the Company can sustain profitability on a
quarterly or annual basis in the future.
The Company expects to expand its manufacturing and administrative
capabilities, technical and other customer support, research and product
development activities. The anticipated increase in the Company's operating
expenses caused by this expansion could have a material adverse effect on the
Company's operating results if revenues do not increase at an equal or greater
rate. Also, the Company's expenses for these and other activities are based in
significant part on its expectations regarding future revenues and are fixed to
a large extent in the short term. The Company may be unable to adjust spending
in a timely manner to compensate for any unexpected revenue shortfall, which
would have a material adverse effect on the Company's business, financial
condition and results of operations.
SIGNIFICANT FLUCTUATIONS IN QUARTERLY RESULTS. The Company's quarterly
operating results have varied significantly in the past and are likely to vary
significantly in the future based upon a number of factors including general
economic conditions, the introduction or market acceptance of new products
offered by the Company and its competitors, changes in the pricing policies of
the Company or its competitors, the volume and timing of customer orders, the
level of product and price competition, the relative proportion of printer and
consumables sales, the continued availability of sole source components, the
continued availability of consumables from independent vendors, fluctuations in
research and development expenditures, the impact of future Company
acquisitions, the continued availability of financing arrangements for certain
of the Company's customers, the Company's success in expanding its direct sales
force and indirect distribution channels and the risks related to international
operations, as well as other factors. Additionally, because the purchase of a
digital printer or printing system involves a significant capital commitment,
the Company's printer and printing system sales cycle is susceptible to delays
and lengthy acceptance procedures associated with large capital expenditures.
Moreover, due to the Company's high average sales price and low unit volume per
month, a delay in the sale of a few units could have a material adverse effect
on the results of operations for a financial quarter.
Quarterly revenues and operating results depend primarily on the volume,
timing, shipping and acceptance of orders during the quarter, which are
difficult to forecast due to the length of the sales cycle. A significant
portion of the Company's operating expenses are relatively fixed in the short
term, and planned expenditures are based on sales forecasts. If revenue levels
are below expectations, net income, if any, may be disproportionately affected
because only a small portion of the Company's expenses vary with revenue in the
short term, which could have a material adverse effect on the Company's
business, financial condition and results of operations. Although the Company
has experienced growth in revenue in recent years, there can be no assurance
that the Company will sustain such revenue growth or be profitable on an
operating basis in any future period. For the foregoing reasons, the Company
believes that period-to-period comparisons of its results are not necessarily
meaningful and should not be relied upon as indications of future performance.
Further, it is likely that in some future quarter the Company's revenues or
operating results will be below the expectations of public market analysts and
investors. In such event, the price of the Common Stock could be materially
adversely affected.
DEPENDENCE ON A SINGLE PRODUCT LINE. Substantially all of the Company's
sales are derived from its printing systems, printers and related software and
consumables, such as specialized inks, varnish, vinyls and papers. The Company
anticipates that it will continue to derive substantially all of its revenues in
the next several
5
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years from sales of this product line. Dependence on a single product line makes
the Company particularly vulnerable to the successful introduction of competing
products. The Company's inability to generate sufficient sales of the product
line and to achieve profitability due to competitive factors, manufacturing
difficulties, or other reasons, would have a material adverse effect on its
business, financial condition and results of operations. Moreover, some of the
Company's printing system and printer customers have purchased and will continue
to purchase consumables such as ink and paper from suppliers other than the
Company. If a significant number of current or future purchasers of the
Company's printing systems were to purchase consumables from suppliers other
than the Company, the Company's business would be materially adversely affected.
COMPETITION. The market for printing equipment and related software and
consumables is extremely competitive. Suppliers of equipment for the LFDP market
compete on the basis of speed, print quality, price and the ability to provide
complete solutions, including service. Certain of the Company's competitors are
developing or have introduced products to address the LFDP market. Among these
companies are 3M Commercial Graphics, a division of Minnesota Mining and
Manufacturing Company ("3M"), Xerox ColorgrafX Systems, a subsidiary of Xerox
Corporation, ("ColorgrafX"), Encad, Inc. ("Encad"), Hewlett-Packard Corporation
("Hewlett-Packard") and LaserMaster Technologies, Inc. ("LaserMaster"), which
manufacture LFDP printers, and Cactus, Star Technologies, Inc. ("Star") and
Visual Edge Technology Digital Printing Systems ("Visual Edge"), which develop
LFDP image processing software. A variety of potential actions by any of the
Company's competitors, especially those with substantial market presence such as
ColorgrafX, could have a material adverse effect on the Company's business,
financial condition and results of operations. Such actions may include
reduction of product prices, increased promotion, announcement or accelerated
introduction of new or enhanced products, product giveaways, product bundling or
other competitive actions. In addition, companies that are currently targeting
the photographic enlargement, screen and offset printing markets may enter the
LFDP market in the future or may increase the performance or lower the costs of
such alternate printing processes in a manner that would allow them to compete
more directly with the Company for LFDP customers. Furthermore, companies that
supply consumables, such as ink and paper, to the Company could compete with the
Company by not selling such consumables to the Company or by widely selling such
consumables directly or through other channels to the Company's customers. Such
competition would have a material adverse effect on the Company's business,
financial condition and results of operations.
Many of the companies that currently compete with the Company or that
may compete with the Company in the future have longer operating histories and
significantly greater financial, technical, sales, marketing and other
resources, as well as greater name recognition and a larger customer base, than
the Company. As a result, these competitors may be able to respond more quickly
and/or effectively to new or emerging technologies and changes in customer
requirements or to devote greater resources to the development, promotion, sale
and support of their products than the Company. Consequently, the Company
expects to continue to experience increased competition, which could result in
significant price reductions, loss of market share and lack of acceptance of new
products, any of which could have a material adverse effect on the Company's
business, financial condition and results of operations. There can be no
assurance that the Company will be able to compete against current or future
competitors successfully or that competitive pressures faced by the Company will
not have a material adverse effect upon its business, financial condition and
results of operations.
RELIANCE ON THIRD-PARTY DISTRIBUTION. The Company relies heavily on
original equipment manufacturers ("OEMs"), value added resellers ("VARs") and a
network of distributors for both domestic and international sales. In
particular, OEM sales to Oce Graphics France S.A. ("Oce") accounted for 4.8%
and 10.9% of the Company's revenue in 1996 and 1995, respectively. While the
total percentage of Company revenue represented by sales to Oce has been reduced
significantly in recent years, as the Company has expanded its distribution
channels, Oce remains one of the Company's largest single customers. Under the
terms of the agreement with Oce, Oce has a worldwide non-exclusive right to sell
the Company's DCS printers. Further, the Company is required to escrow
technology associated with qualified products under the agreement, to which Oce
has a non-exclusive manufacturing license in the event of the Company's
bankruptcy, insolvency, general assignment of debts or failure to deliver such
products or spare parts. The agreement expires in October 1997. There can be no
assurance that the Company will continue to sell substantial quantities of its
products to Oce or that, upon any termination of the Company's relationship with
Oce, the Company will be able to obtain suitable distribution of its products in
Europe
6
<PAGE> 9
through alternate distributions channels. Such failure would have a material
adverse effect on the Company's business, financial condition and results of
operations.
The Company also currently maintains OEM, VAR and distribution
agreements for its printing systems and printers with 3M Commercial Graphics, a
division of Minnesota Mining and Manufacturing Company ("3M"), Cactus, C-4
Network, Inc., Management Graphics Inc. and Ahearn & Soper Inc. for distribution
of its products in North America; Sumisho Electronics Ltd. ("Sumisho"),
Sumitomo-3M Ltd. ("Sumitomo-3M"), Marubeni Electronics Co. Ltd. ("Marubeni") and
Kimoto Co., Ltd. ("Kimoto") for distribution of its products in Japan; and Oce,
Sign-Tronic ("Sign-Tronic") and CIS Graphik for distribution of its products in
Europe. During 1996, the Company began selling its DCS printing system directly
to end-users and through its German subsidiary. In addition, the Company
distributes its image processing software products through a number of domestic
and international OEMs, VARs and distributors such as CIS Graphik and
Bildverarbeitung GmbH, The David Group, Access Graphics and Encad. Either party
may terminate this agreement without cause upon 180 days written notice. There
can be no assurance that the Company's independent OEMs, VARs and distributors
will maintain their relationships with the Company or that the Company will be
able to recruit additional or, if necessary, replacement OEMs, VARs or
distributors. The loss of one or more of the Company's OEMs, VARs or
distributors could have a material adverse effect on the Company's business,
financial condition and results of operations.
In general, the Company's agreements with its OEMs, VARs and
distributors are not exclusive, and each of the Company's OEMs, VARs and
distributors can cease marketing the Company's products with limited notice and
with little or no penalty. Some of the Company's OEMs, VARs and distributors
offer competitive products manufactured by third parties. In addition, some of
these customers may consider Onyx's products to be competitive offerings and, as
a result, there can be no assurance that such customers will continue marketing
the Company's products. Further, there can be no assurance that the Company's
OEMs, VARs and distributors will give a high priority to the marketing of the
Company's products as compared to competitors' products or alternative solutions
or that such OEMs, VARs and distributors will continue to offer the Company's
products. Any reduction or delay in sales of the Company's products by its OEMs,
VARs or distributors could have a material adverse effect on the Company's
business, financial condition and results of operations.
Although the Company seeks information from foreign customers that
purchase products from the Company's OEMs, VARs and distributors, it generally
does not deal directly with them and cannot directly observe their experience
with the Company's products. The Company also does not have direct control over
the marketing and support efforts of its OEMs, VARs and distributors in foreign
countries. This may result in the inability of the Company to identify potential
opportunities with these customers and a potential delay by the Company in the
recognition and correction of any problems with such OEM, VAR or distributor
sales or support organizations. Failure of the Company to respond to customer
preferences or experience with its products or the failure of OEM, VAR or
distributor supported customers to market and support the Company's products
successfully, could have a material adverse effect on the Company's business,
financial condition and results of operations. Further, third-party distribution
provides the Company with less information regarding the amount of inventory
that is in the process of distribution. This lack of information can reduce the
Company's ability to predict fluctuations in revenues resulting from a surplus
or a shortage in its distribution channels and contribute to volatility in the
Company's financial results, cash flow, and inventory balances.
LIMITED HISTORY OF PRODUCT MANUFACTURING AND USE; PRODUCT DEFECTS. The
Company's printers are based on relatively new technology, are complex and must
be reliable and durable. Companies engaged in the development and production of
new, complex technologies and products often encounter difficulties and delays.
The Company began commercial production of the DCS 5400 in June 1994 and the DCS
5442 in January 1996. Since its introduction as a second generation to the DCS
5400, the DCS 5442 has represented an increasing percentage of the Company's
shipments, and by September 1996, substantially replaced the DCS 5400.
In December 1996, the Company introduced its first inkjet printer, the
PiezoPrint 1000, which is targeted at the lower priced entry level production
market. In March, 1997, the PiezoPrint 5000 joined the Raster Graphics product
line of printers as a mid-range price/performance product which complements the
Company's affordable PiezoPrint 1000 inkjet printer and the high-volume DCS
5442.
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<PAGE> 10
The Company is continuing to make upgrades and improvements in the
features of the DCS 5442 and its PiezoPrint line of printers. Despite extensive
research and testing, the Company's experience with volume production of its
printers and with their reliability and durability during customer use is
limited. Consequently, customers may experience reliability and durability
problems that arise only as the product is subjected to extended use over a
prolonged period of time. The Company and certain users have encountered some
operational problems which the Company believes it has successfully addressed.
However, there can be no assurance that the Company has successfully resolved
these operational issues or that the Company will successfully resolve any
future problem in the manufacture or operation of RGI's printers or any new
product. Failure by the Company to resolve manufacturing or operational problems
with RGI's printers or any new product in a timely manner would have a material
adverse effect on the Company's business, financial condition and results of
operations.
The Company's image processing software products are extremely complex
as a result of such factors as advanced functionality, the diverse operating
environments in which they may be deployed, the need for interoperability, the
multiple versions of such products that must be supported for diverse operating
systems and languages and the underlying technological standards. These products
may contain undetected errors or failures when first introduced or as new
versions are released. There can be no assurance that, despite testing by the
Company and by current and potential customers, errors will not be found in new
software products after commencement of commercial shipments, resulting in loss
of or delay in market acceptance. Such loss or delay would likely have a
material adverse effect on the Company's business, financial condition and
results of operations.
SUSCEPTIBILITY OF CERTAIN CUSTOMERS TO ECONOMIC AND FINANCING
CONDITIONS. Many of the Company's end user customers are small businesses that
are more susceptible than large businesses to general downturns in the economy.
In some cases, these customers finance the purchase of the Company's products
through third-party financing arrangements. To the extent that such customers
are unable to obtain acceptable financing terms or to the extent that a rise in
interest rates makes financing arrangements generally unattractive, these
factors would impact adversely sales of the Company's products. Consequently,
the Company's access to a significant portion of its present customer base would
be limited. Moreover, competitors, such as ColorgrafX, that have significantly
greater financial resources than the Company may be able to provide more
attractive financing terms to potential customers than those available through
the Company or through third parties. There can be no assurance that the
Company's small business customers will, if necessary, be able to obtain
acceptable financing terms or that the Company will be able to offer financing
terms that are competitive with those offered by the Company's competitors. The
Company's inability to continue to generate sufficient levels of product revenue
from sales to such customers due to the unavailability of financing arrangements
or due to a general economic downturn would have a material adverse effect on
the Company's business, financial condition and results of operations.
UNCERTAINTY REGARDING DEVELOPMENT OF LFDP MARKET; UNCERTAINTY REGARDING
MARKET ACCEPTANCE OF NEW PRODUCTS. The LFDP market is relatively new and
evolving. The Company's future financial performance will depend in large part
on the continued growth of this market and the continuation of present large
format printing trends such as use and customization of large format
advertisements, use of color, transferring of color images onto a variety of
substrates, point-of-purchase printing, in-house graphics design and production
and the demand for limited printing runs of less than 200 copies. The failure of
the LFDP market to achieve anticipated growth levels or a substantial change in
large format printing customer preferences would have a material adverse effect
on the Company's business, financial condition and results of operations.
Additionally, in a new market, customer preferences can change rapidly and new
technology can quickly render existing technology obsolete. Failure by the
Company to respond effectively to changes in the LFDP market, to develop or
acquire new technology or to successfully conform to industry standards would
have a material adverse effect on the business, financial condition and results
of operations of the Company.
The Company's products currently target the high-performance production
segment of the LFDP market. The future success of the Company will likely depend
on its ability to develop and market new products that provide superior
performance at acceptable prices within this segment and to introduce lower-cost
products aimed at a broader segment of the LFDP market. Also, as the Company
develops new printers, it may need to develop new
8
<PAGE> 11
consumables to be used by its new printer products. Any quality, durability
or reliability problems with such new products, regardless of materiality, or
any other actual or perceived problems with new Company products, could have a
material adverse effect on market acceptance of such products. There can be no
assurance that such problems or perceived problems will not arise or that, even
in the absence of such problems, new Company products will receive market
acceptance. A failure of future Company products to receive market acceptance
for any reason would have a material adverse effect on the Company's business,
financial condition and results of operations. In addition, the announcement by
the Company of new products and technologies could cause customers to defer
purchases of the Company's existing products, which would have a material
adverse effect on the Company's business, financial condition and results of
operations.
INTERNATIONAL REVENUES. The Company's international revenues accounted
for approximately 55.8%, 51.3% and 55.9% of the Company's revenues in 1996, 1995
and 1994, respectively. The Company makes a material amount of sales to third
party distributors based in Japan, France and Germany. However, the Company
believes that sales to its European distributors are resold throughout Europe.
The Company expects that international sales will continue to account for a
significant portion of its total revenues in future periods. International sales
are subject to certain inherent risks, including unexpected changes in
regulatory requirements and tariffs, government controls, political instability,
longer payment cycles, increased difficulties in collecting accounts receivable
and potentially adverse tax consequences. The Company's inability to obtain
foreign regulatory approvals on a timely basis could have a material adverse
effect on the Company's business, financial condition and results of operations.
Sales from the Company's German and UK subsidiaries are denominated in local
currencies. Accordingly, fluctuations in currency exchange rates could cause the
Company's products to become relatively more expensive to end users in a
particular country, leading to a reduction in sales in that country. To date,
the Company has not found it appropriate to hedge the risks associated with
fluctuations in exchange rates of local currency sales from the Company's German
and UK subsidiaries. However, it is possible that the Company may undertake such
transactions in the future. Purchases of the PiezoPrint 1000 from the Company's
sole source supplier are denominated in Japanese Yen and have resulted in some
foreign currency exchange rate fluctuation exposure. As a result the Company has
utilized Japanese Yen forward exchange contracts to manage some of its
PiezoPrint 1000 firm purchase commitments. There can be no assurance that any
hedging techniques implemented by the Company would be successful or that the
Company's results of operations will not be materially adversely affected by
exchange rate fluctuations. In general, certain seasonal factors and patterns
impact the level of business activities at different times in different regions
of the world. For example, sales in Europe are adversely affected in the third
quarter of each year as many customers and end users reduce their business
activities during the summer months. These seasonal factors and currency
fluctuation risks could have a material adverse effect on the Company's
quarterly results of operations. Further, because the Company has operations in
different countries, the Company's management must address differences in
regulatory environments and cultures. Failure to address these differences
successfully could be disruptive to the Company's operations.
DEPENDENCE ON SOLE SOURCE SUBCONTRACTORS AND SUPPLIERS. The Company
relies on subcontractors and suppliers to manufacture, subassemble, and perform
first-stage testing of its printer components and may, in the future, rely on
third parties to develop or provide printer components, some of which are, or
may be, critical to the operation of the Company's products. The Company relies
on single suppliers for certain critical components, such as the printhead for
the PiezoPrint 5000, rubber drive rollers, electrostatic writing head circuit
boards, and application-specific integrated circuits. In particular, the
Company's PiezoPrint 1000 inkjet printer is originally manufactured by a third
party. The Company also relies on limited source suppliers for consumables, such
as specialized inks, varnish, vinyls and papers, that the Company sells under
the Raster Graphics brand name. The Company's agreements with its subcontractors
and suppliers are not exclusive, and each of the Company's subcontractors and
suppliers can cease supplying printing system components or consumables with
limited notice and with little or no penalty. In the event it becomes necessary
for the Company to replace a key subcontractor or supplier, the Company could
incur significant manufacturing set-up costs and delays while new sources are
located and alternate components and consumables are integrated into the
Company's manufacturing process. There can be no assurance that the Company will
be able to maintain its present subcontractor and supplier relationships or that
the Company will be able to find suitable replacement subcontractors and
suppliers, if necessary. Further, there can be no assurance that the Company's
present subcontractors and suppliers will continue to provide sufficient
quantities of suitable quality product components and consumables at acceptable
prices. The loss of subcontractors
9
<PAGE> 12
or suppliers or the failure of subcontractors or suppliers to meet the Company's
price, quality, quantity and delivery requirements would have a material adverse
effect on the Company's business, financial condition and results of operations.
RISKS ASSOCIATED WITH INTELLECTUAL PROPERTY. As of June 30, 1997, the
Company had seven pending patent applications and has been awarded 10 United
States patents covering technical features and fabrication methods used in
Raster Graphics' printers and color rendering techniques used by its image
processing software. Despite the Company's precautions, it may be possible for a
third party to copy or otherwise obtain and use the Company's technologies
without authorization or to develop competing technologies independently.
Furthermore, the laws of certain countries in which the Company does business,
including countries in which the Company does a significant amount of business,
such as France, Germany and Japan, may not protect the Company's software and
intellectual property rights to the same extent as do the laws of the United
States. There can be no assurance that the Company's means of protecting its
proprietary rights will be adequate or that the Company's competitors will not
independently develop similar technology. If unauthorized copying or misuse of
the Company's products were to occur to any substantial degree, or if a
competitor of the Company were to effectively duplicate the Company's
proprietary technology, the Company's business, financial condition and results
of operations would be materially adversely affected.
Although the Company has not received notices from third parties
alleging infringement claims that the Company believes would have a material
adverse effect on the Company's business, there can be no assurance that third
parties will not claim that the Company's current or future products or
manufacturing processes infringe the proprietary rights of others. Any such
claim, with or without merit, could result in costly litigation or might require
the Company to enter into royalty or licensing agreements. Such royalty or
licensing agreements, if required, may not be available on terms acceptable to
the Company, or at all, which could have a material adverse effect upon the
Company's business, financial condition and results of operations.
DIFFICULTIES IN MANAGING GROWTH. The Company has experienced significant
growth in recent years which has placed demands on the Company's administrative,
operational and financial personnel and systems, manufacturing operations,
research and development, technical support and financial and other resources.
Certain of the Company's officers have recently joined the Company, and the
Company anticipates further increases in the number of its senior managers.
Failure to manage these changes and to expand effectively any of these areas
would have a material adverse effect on the Company's business, financial
condition and results of operations.
NEED TO ATTRACT AND RETAIN HIGHLY SKILLED PERSONNEL. The success of the
Company depends to a large extent upon its ability to retain and continue to
attract highly skilled personnel. The Company believes that the loss of its
Chief Executive Officer could have a material adverse effect on the Company's
business, financial condition or results of operations. Competition for
employees in the high technology sector in general, and in the LFDP industry in
particular, is intense, and there can be no assurance that the Company will be
able to attract and retain enough qualified employees. If the business of the
Company increases, it may become increasingly difficult to hire, train and
assimilate the new employees needed. With the exception of employment agreements
containing initial compensation terms and severance obligations with respect to
the Company's Chief Executive Officer and Chief Financial Officer, the Company
has not entered into employment agreements with any of its key personnel.
Additionally, the Company has not required its key personnel to enter into
non-competition agreements with the Company. The Company has not procured key
man insurance for any of its employees. The Company's inability to retain and
attract key employees would have a material adverse effect on the Company's
business, financial condition and results of operations.
ENVIRONMENTAL. The Company is subject to local laws and regulations
governing the use, storage, handling and disposal of the inks, varnishes and
finishing solutions sold for use with the Company's printers. Although the
Company believes that its safety procedures for handling and disposing of such
materials comply with the standards prescribed by such laws and regulations, and
while the Company is not aware of any notice or complaint alleging any violation
of such laws or regulations, risk of accidental contamination, improper disposal
or injury from these materials cannot be completely eliminated. In the event of
such an accident, the Company could be held liable for any damages that result
and any such liability could have a material adverse effect on the
10
<PAGE> 13
Company's business, financial condition and results of operations. In addition,
there can be no assurance that the Company will not be required to incur
significant costs to comply with environmental laws and regulations in the
future.
CONCENTRATION OF STOCK OWNERSHIP. As of June 30, 1997, the directors and
officers and their affiliates beneficially owned approximately 26.0% of the
outstanding Common Stock. As a result, these stockholders are able to exercise
significant influence over all matters requiring stockholder approval, including
the election of directors and approval of significant corporate transactions.
Such concentration of ownership may have the effect of delaying or preventing a
change in control of the Company.
POSSIBLE VOLATILITY OF STOCK PRICE; BENEFITS TO EXISTING STOCKHOLDERS.
In recent years, the stock market in general, and the stock prices of technology
companies in particular, have experienced extreme price fluctuations, sometimes
without regard to the operating performance of particular companies. Factors
such as quarterly variation in actual or anticipated operating results, changes
in earnings estimates by analysts, market conditions in the industry,
announcements by competitors, regulatory actions and general economic conditions
may have a significant effect on the market price of the Common Stock. Following
fluctuations in the market price of a corporation's securities, securities class
action litigation has often resulted. There can be no assurance that such
litigation will not occur in the future with respect to the Company. Such
litigation could result in substantial costs and a diversion of management's
attention and resources, which could have a material adverse effect on the
Company's business, financial condition and results of operations.
BLANK CHECK PREFERRED STOCK; ANTI-TAKEOVER PROVISIONS. The Company's
Board of Directors has the authority to issue up to 2,000,000 shares of
Preferred Stock and to determine the price, rights, preferences and privileges
of those shares without any further vote or action by the stockholders. The
rights of the holders of Common Stock will be subject to, and may be adversely
affected by, the rights of the holders of any Preferred Stock that may be issued
in the future. The issuance of Preferred Stock may have the effect of delaying,
deterring or preventing a change of control of the Company without further
action by the stockholders and may adversely affect the voting and other rights
of the holders of Common Stock. The Company has no present plans to issue shares
of Preferred Stock. The Company's Certificate of Incorporation and Bylaws
provide for, among other things, the prospective elimination of cumulative
voting with respect to the election of directors, the elimination of actions to
be taken by written consent of the Company's stockholders and certain procedures
such as advance notice procedures with regard to the nomination, other than by
or at the direction of the Board of Directors, of candidates for election as
directors. In addition, the Company's charter documents provide that the
Company's Board of Directors be divided into three classes, each of which serves
for a staggered three-year term. The foregoing provisions could have the effect
of making it more difficult for a third party to effect a change in the control
of the Board of Directors. In addition, these provisions could have the effect
of making it more difficult for a third party to acquire, or of discouraging a
third party from attempting to acquire, or of making the Company less attractive
to a potential acquiror of, a majority of the outstanding voting stock of the
Company, and may complicate or discourage a takeover of the Company. The
foregoing provisions may also result in the Company's stockholders receiving
less consideration for their shares than might otherwise be available in the
event of a takeover attempt of the Company.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of Common Stock
by the Selling Stockholders in the offering.
11
<PAGE> 14
SELLING STOCKHOLDERS
The following table sets forth certain information known to the Company
with respect to beneficial ownership of the Company's Common Stock as of October
6, 1997 by each Selling Stockholders.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED SHARES BENEFICIALLY OWNED
PRIOR TO THE OFFERING(1) AFTER THE OFFERING(2)
------------------------ SHARES ---------------------
SELLING STOCKHOLDERS SHARES PERCENT(3) OFFERED SHARES PERCENT(3)
- --------------------- ------ ---------- ------- ------ ----------
<S> <C> <C> <C> <C> <C>
Iain France 44,085 * 14,695 29,390 *
8 Coster Cottages
Hedsor Road
Bourne End
Buckinghamshire, UK
Marc Willard 176,341 * 58,780 117,581 *
Froma
Marlow Road
Bourne End
Buckinghamshire, UK
</TABLE>
* Less than one percent of the Company's outstanding Common Stock.
(1) Information with respect to beneficial ownership is based upon information
obtained from the Company's transfer agent and certain of the Selling
Stockholders.
(2) Assumes that each Selling Stockholders will sell all of the Shares set forth
above under "Shares Offered." There can be no assurance that the Selling
Stockholders will sell all or any of the Shares offered hereunder.
(3) Based on 9,554,558 shares outstanding at September 19, 1997.
12
<PAGE> 15
ISSUANCE OF COMMON STOCK TO SELLING STOCKHOLDERS
On March 18, 1997, the Company acquired ColourPass pursuant to a Merger
Agreement dated March 18, 1997 (the "Merger Agreement") among the Company,
ColourPass and Raster Graphics Systems Limited, a wholly-owned subsidiary of the
Company (the "Sub"). Pursuant to the Merger Agreement, the Sub merged with and
into ColourPass, and all outstanding shares of ColourPass capital stock and
options to purchase ColourPass capital stock were converted into shares of the
Company's Common Stock (the "Consideration Shares"). An aggregate of 220,426
Consideration Shares were issued pursuant to the terms of the Merger Agreement.
Under the terms of the Merger Agreement, the Company has agreed to file a
Registration Statement on Form S-3 covering one-third of the Merger Shares on or
before November 1, 1997, February 1, 1998 and November 1, 1998, respectively,
and continue the effectiveness of each registration statement for 30 days
thereafter.
PLAN OF DISTRIBUTION
Shares of Common Stock covered hereby may be offered and sold from time
to time by the Selling Stockholders. The Selling Stockholders will act
independently of the Company in making decisions with respect to the timing,
manner and size of each sale. The Selling Stockholders may sell the Shares being
offered hereby: (i) on the Nasdaq National Market, or otherwise at prices and at
terms then prevailing or at prices related to the then current market price; or
(ii) in private sales at negotiated prices directly or through a broker or
brokers, who may act as agent or as principal or by a combination of such
methods of sale. The Selling Stockholders and any underwriter, dealer or agent
who participate in the distribution of such shares may be deemed to be
"underwriters" under the Securities Act, and any discount, commission or
concession received by such persons might be deemed to be an underwriting
discount or commission under the Securities Act. The Company has agreed to
indemnify the Selling Stockholders against certain liabilities arising under the
Securities Act.
Any broker-dealer participating in such transactions as agent may
receive commissions from the Selling Stockholders (and, if acting as agent for
the purchaser of such shares, from such purchaser). Usual and customary
brokerage fees will be paid by the Selling Stockholders. Broker-dealers may
agree with the Selling Stockholders to sell a specified number of shares at a
stipulated price per share, and, to the extent such a broker-dealer is unable to
do so acting as agent for the Selling Stockholders, to purchase as principal any
unsold shares at the price required to fulfill the broker-dealer commitment to
the Selling Stockholders. Broker-dealers who acquire shares as principal may
thereafter resell such shares from time to time in transactions (which may
involve crosses and block transactions and which may involve sales to and
through other broker-dealers, including transactions of the nature described
above) in the over-the-counter market, in negotiated transactions or by a
combination of such methods of sale or otherwise at market prices prevailing at
the time of sale or at negotiated prices, and in connection with such resales
may pay to or receive from the purchasers of such shares commissions computed as
described above.
The Company has advised the Selling Stockholders that the
anti-manipulation rules under the Exchange Act may apply to sales of Shares in
the market and to the activities of the Selling Stockholders and their
affiliates. The Selling Stockholders have advised the Company that during such
time as the Selling Stockholders may be engaged in the attempt to sell shares
registered hereunder, they will: (i) not engage in any stabilization activity in
connection with any of the Company's securities; (ii) cause to be furnished to
each person to whom Shares included herein may be offered, and to each
broker-dealer, if any, through whom Shares are offered, such copies of this
Prospectus, as supplemented or amended, as may be required by such person; (iii)
not bid for or purchase any of the Company's securities or any rights to acquire
the Company's securities, or attempt to induce any person to purchase any of the
Company's securities or rights to acquire the Company's securities other than as
permitted under the Exchange Act; and (iv) not effect any sale or distribution
of the Shares until after the Prospectus shall have been appropriately amended
or supplemented, if required, to set forth the terms thereof.
The Selling Stockholders may indemnify any broker-dealer that
participates in transactions involving the sale of the shares against certain
liabilities, including liabilities arising under the Securities Act. Any
commissions paid or any discounts or concessions allowed to any such
broker-dealers, and any profits received on the resale of such shares, may be
deemed to be underwriting discounts and commissions under the Securities Act if
any such broker-dealers purchase shares as principal.
13
<PAGE> 16
The Company has agreed to maintain the effectiveness of this
Registration Statement until the earlier of the sale of all of the shares of
Common Stock offered hereunder or November 30, 1997. No sales may be made
pursuant to this Prospectus after such date unless the Company amends or
supplements this Prospectus to indicate that it has agreed to extend such period
of effectiveness. There can be no assurance that the Selling Stockholders will
sell all or any of the shares of Common Stock offered hereunder.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed
upon by Venture Law Group, A Professional Corporation, Menlo Park, California,
counsel to the Company.
EXPERTS
The consolidated financial statements and schedule of Raster Graphics
Inc. incorporated by reference in the Company's Annual Report (Form 10-K) for
the year ended December 31, 1996, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such consolidated financial statements and
schedule are incorporated herein by reference in reliance upon such reports
given upon the authority of such firm as experts in accounting and auditing.
ADDITIONAL INFORMATION
This Prospectus constitutes a part of the Registration Statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") filed by the Company with the Securities and Exchange
Commission (the "Commission") under the Securities Act. This Prospectus does not
contain all of the information set forth in the Registration Statement, certain
parts of which are omitted in accordance with the rules and regulations of the
Commission. For further information with respect to the Company and the shares
of Common Stock offered hereby, reference is hereby made to the Registration
Statement. Statements contained herein concerning the provisions of any document
are not necessarily complete, and each such statement is qualified in its
entirety by reference to the copy of such document filed with the Commission.
14
<PAGE> 17
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The Registrant will bear no expenses in connection with any sale or
other distribution by the Selling Stockholders of the shares being registered
other than the expenses of preparation and distribution of this Registration
Statement and the Prospectus included in this Registration Statement. Such
expenses are set forth in the following table. All of the amounts shown are
estimates except the Securities and Exchange Commission ("SEC") registration
fee.
<TABLE>
<S> <C>
SEC registration fee $ 178
Legal fees and expenses $15,000
Accounting fees and expenses $ 7,000
Miscellaneous expenses $ 2,000
Total $24,178
</TABLE>
Item 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law ("DGCL") provides a
detailed statutory framework covering indemnification of officers and directors
against liabilities and expenses arising out of legal proceedings brought
against them by reason of their being or having been directors or officers.
Section 145 generally provides that a director or officer of a corporation (i)
shall be indemnified by the corporation for all expenses of such legal
proceedings when he is successful on the merits, (ii) may be indemnified by the
corporation for the expenses, judgments, fines and amounts paid in settlement of
such proceedings (other than a derivative suit), even if he is not successful on
the merits, if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful, and (iii) may be indemnified by the corporation for the
expenses of a derivative suit (a suit by a stockholder alleging a breach by a
director or officer of a duty owed to the corporation), even if he is not
successful on the merits, if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation. No indemnification may be made under clause (iii) above, however,
if the director or officer is adjudged liable for negligence or misconduct in
the performance of his duties to the corporation, unless a corporation
determines that, despite such adjudication, but in view of all the
circumstances, he is entitled to indemnification. The indemnification described
in clauses (ii) and (iii) above may be made only upon a determination that
indemnification is proper because the applicable standard of conduct has been
met. Such determination may be made by a majority of a quorum of disinterested
directors, independent legal counsel, the stockholders or a court of competent
jurisdiction.
Section 102(b)(7) of the DGCL permits a corporation to provide in its
certificate of incorporation that a director of the corporation shall not be
personally liable to the corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, except for liability (i) for any
breach of the director's duty of loyalty to the corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL,
or (iv) for any transaction from which the director derived an improper personal
benefit. Section 10 of the Registrant's Amended and Restated Certificate of
Incorporation and Article IV of the Registrant's Bylaws provide for
indemnification of its directors, officers, employees and other agents to the
maximum extent permitted by law. In addition, the Registrant has entered into
Indemnification Agreements with its officers and directors pursuant to which the
Company has agreed to indemnify such individuals to the fullest extent permitted
by Delaware law, and maintains director and officer liability insurance.
In addition, the Registrant carries director and officer liability
insurance in the amount of $10 million.
II-1
<PAGE> 18
In connection with this offering, the Selling Stockholders have agreed
to indemnify the Registrant, its directors and officers and each such person who
controls the Registrant, against any and all liability arising from inaccurate
information provided to the Registrant by the Selling Stockholders and contained
herein.
Item 16. EXHIBITS.
<TABLE>
<CAPTION>
Exhibits.
---------
<S> <C>
5.1 Opinion of Venture Law Group, A Professional Corporation
23.1 Consent of Ernst & Young LLP, Independent Auditors
23.2 Consent of Venture Law Group, A Professional Corporation (included in
Exhibit 5.1)
24.1 Power of Attorney (see page II-3)
</TABLE>
Item 17. UNDERTAKINGS.
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
to include any material information with respect to the plan of
distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each 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 this offering.
(4) That, for purposes of determining any liability under the
Securities Act, each filing of the Registrant's annual report
pursuant to Section 13(a) or Section 15(d) of the Exchange Act
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 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the 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, the 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 Securities Act and will be governed by the final
adjudication of such issue.
II-2
<PAGE> 19
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Raster
Graphics, Inc. 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 San Jose, State of California, on October 8,
1997.
RASTER GRAPHICS, INC.
By: /s/ Dennis Mahoney
----------------------------------
Dennis Mahoney
Chief Financial Officer (Principal
Financial and Accounting Officer)
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Rakesh Kumar and Dennis Mahoney, jointly
and severally, his attorneys-in-fact, each with the power of substitution, for
him or her in any and all capacities, to sign any amendments to this Report on
Form 10-K, and to file the same, with exhibits thereto and other documents in
connection therewith with the Securities and Exchange Commission, hereby
ratifying and confirming all that each of said attorneys-in-fact, or his
substitute or substitutes may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1933,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------------------------------------------------
<S> <C> <C>
/s/ Rakesh Kumar President, Chief Executive Officer October 8, 1997
- ------------------------------ and Chairman of the Board
Rakesh Kumar (Principal Executive Officer)
/s/ Dennis R. Mahoney Vice President and Chief Financial October 8, 1997
- ------------------------------ Officer (Principal Financial and
Dennis R. Mahoney Accounting Officer)
Director and President of Onyx
- ------------------------------
Chuck Edwards
Director
- ------------------------------
Promod Haque
/s/ Lucio L. Lanza Director October 8, 1997
- ------------------------------
Lucio L. Lanza
/s/ Delbert W. Yocam Director October 8, 1997
- ------------------------------
Delbert W. Yocam
</TABLE>
II-3
<PAGE> 20
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Number Description
-------------- -----------
<S> <C>
5.1 Opinion of Venture Law Group, A Professional Corporation
23.1 Consent of Ernst & Young LLP, Independent Auditors
23.2 Consent of Counsel (included in Exhibit 5.1)
24.1 Power of Attorney (see page II-3)
</TABLE>
<PAGE> 1
EXHIBIT 5.1
October 7, 1997
Raster Graphics, Inc.
3025 Orchard Parkway
San Jose, CA 95134
REGISTRATION STATEMENT ON FORM S-3
----------------------------------
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-3 to be filed by
you with the Securities and Exchange Commission on or about October 7, 1997 (the
"Registration Statement") in connection with the registration under the
Securities Act of 1933, as amended, of a total of 73,475 shares of your Common
Stock (the "Shares"), to be sold by certain stockholders listed in the
Registration Statement (the "Selling Stockholders"). As your legal counsel, we
have examined the proceedings taken and are familiar with the proceedings
proposed to be taken by you in connection with the sale of the Shares by the
Selling Stockholders in the manner set forth in the Registration Statement in
the section entitled "Plan of Distribution."
It is our opinion that the Shares, when sold by the Selling Stockholders
in the manner referred to in the Registration Statement, will be legally and
validly issued, fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to the use of our name wherever it appears in the
Registration Statement and any amendments to it.
Sincerely,
VENTURE LAW GROUP
A Professional Corporation
/s/ VENTURE LAW GROUP
<PAGE> 1
EXHIBIT 23.1
RASTER GRAPHICS, INC.
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
the Registration Statement (Form S-3) and related Prospectus of Raster
Graphics, Inc. for the registration of 73,475 shares of its common stock and to
the incorporation by reference therein of our report dated January 24, 1997
(except for Note 13, as to which the date is March 18, 1997) with respect to
the consolidated financial statements and schedule of Raster Graphics, Inc.
included in its Annual Report (Form 10-K) for the year ended December 31, 1996,
filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
/s/ Ernst & Young LLP
San Jose, California
October 8, 1997
