<PAGE> 1
As filed with the Securities and Exchange Commission on December 19, 1996
Registration No. 33-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
-----------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------------
RAINBOW TECHNOLOGIES, INC.
(Exact Name of Registrant as Specified in Charter)
DELAWARE 95-3745398
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
------------------
50 TECHNOLOGY DRIVE
IRVINE, CALIFORNIA 92618
(714) 450-7300
(Address, including zip code, and telephone number, including area code of
registrant's principal executive offices)
------------------
WALTER W. STRAUB
C/O RAINBOW TECHNOLOGIES, INC.
50 TECHNOLOGY DRIVE
IRVINE, CALIFORNIA 92618
(714) 450-7300
(Name, address, including zip code, and telephone number, including area code of
agent for service)
------------------
Copies to:
JOHN J. HUGHES, JR., ESQ.
MOSKOWITZ ALTMAN & HUGHES LLP
11 EAST 44TH STREET
NEW YORK, NEW YORK 10017
(212) 953-1121
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: AS SOON AS
PRACTICABLE AFTER THE DATE THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
------------------
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 the delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
TITLE OF EACH CLASS PROPOSED PROPOSED MAXIMUM
OF SECURITIES TO BE AMOUNT TO BE MAXIMUM OFFERING AGGREGATE OFFERING AMOUNT OF
REGISTERED REGISTERED PRICE PER UNIT PRICE (1) REGISTRATION FEE
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
$.001 par value 336,511 $20.75 $6,982,603 $2,116
- -------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated in accordance with Rule 457(c) for the purpose of computing the
Registration Fee based on the average of the high and low prices of the
Common Stock on the NASDAQ National Market System on December 13, 1996.
<PAGE> 2
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 SECURITIES AND EXCHANGE COMMISSION (THE
"COMMISSION"), ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
--------------------------------
PROSPECTUS
--------------------------------
336,511 SHARES OF COMMON STOCK
RAINBOW TECHNOLOGIES, INC.
----------------------
The 336,511 shares of Common Stock of Rainbow Technologies, Inc. (the
"Company") being offered hereby are for the account of certain Selling
Shareholders. The Company will not receive any proceeds from the sale of shares
by the Selling Shareholders.
The Company's Common Stock is traded on the NASDAQ National Market System
under the symbol "RNBO." On December 13, 1996, the last reported sale price of
the Company's Common Stock on the NASDAQ National Market System was $20.875 per
share.
The shares of Common Stock offered hereby were issued by the Company in
connection with the Company's acquisition of Software Security, Inc. ("SSI").
The shares of Common Stock offered hereby represents approximately 4.3 percent
of the Company's currently outstanding Common Stock.
----------------------
SEE "INVESTMENT CONSIDERATIONS" FOR INFORMATION POTENTIAL
INVESTORS SHOULD CONSIDER CAREFULLY BEFORE PURCHASING
SHARES OF COMMON STOCK OFFERED HEREBY.
----------------------
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.
----------------------
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The date of this Prospectus is December 19, 1996
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "1934 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 filed by the Company can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the following regional offices of
the Commission: New York Regional Office, 7 World Trade Center, 13th Floor, New
York, New York 10048; and Chicago Regional Office, Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material can
also be obtained from the public reference section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates or may be
examined without charge at the public reference facilities maintained at the
principal office of the Commission.
This Prospectus constitutes a part of a Registration Statement on Form S-3
filed by the Company with the Commission under the Securities Act of 1933, as
amended (the "Securities Act"). This Prospectus omits information contained in
the Registration Statement in accordance with the rules and regulations of the
Commission. Reference is hereby made to the Registration Statement and related
exhibits for further information with respect to the Company and the securities
offered hereby. Statements contained herein concerning the provisions of any
documents are not necessarily complete and, in each instance, reference is made
to the copy of such document filed as an exhibit to the Registration Statement
or otherwise filed with the Commission. Each such statement is qualified in its
entirety by such reference. The Registration Statement, including the exhibits
and schedules thereto, may be inspected without charge at the Commission's
principal office, 450 Fifth Street, N.W., Washington, D.C. 20549, and copies of
all or any part thereof may be obtained from the Commission's public reference
section at prescribed rates.
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR A SOLICITATION IN
ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR
SOLICITATION IN WHICH SUCH OFFER IS UNLAWFUL. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE CIRCUMSTANCES OF THE COMPANY OR
THE FACTS HEREIN SET FORTH SINCE THE DATE HEREOF.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents which have been filed by the Company with the
Commission (File No. 0-16641) pursuant to the 1934 Act, are incorporated herein
by reference: the Company's Annual Report on Form 10-K for the year ended
December 31, 1995 and the Company's Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1996, June 30, 1996, and September 30, 1996.
All reports and other documents subsequently filed by the Company pursuant
to Sections 13(a) and 15(d) of the Exchange Act, prior to the termination of the
offering of the Shares pursuant to this Prospectus shall be deemed to be
incorporated by reference herein and to be a part hereof from the date of filing
of such reports and documents.
Any statement contained 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
modifies or supersedes such statement.
The Company will furnish without charge, to each person, including any
beneficial owners, to whom a copy of this Prospectus is delivered, upon the
written or oral request of such person, a copy of any or all of the foregoing
documents which have been incorporated herein by reference (other than exhibits
to such documents unless such exhibits are specifically incorporated by
reference into the document that this Prospectus incorporates by reference).
Requests for such copies should be directed to Ann Jones, Rainbow Technologies,
Inc., 50 Technology Drive, Irvine, California 92618; telephone number (714)
450-7300.
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements appearing elsewhere in this Prospectus or
incorporated by reference herein.
THE COMPANY
Rainbow Technologies, Inc. and its subsidiaries (the "Company") design,
develop and manufacture (i) software program protection products (the "Software
Protection Products"), which the Company markets to software developers and
information publishers worldwide, and (ii) products that provide secure voice
communication and data transmission using encryption technology (the
"Information Security Products") which the Company markets to organizations of
the United States Government, such as the Department of Defense and National
Aeronautics and Space Administration ("NASA"), and to contractors and
manufacturers in the aerospace and related industries.
In May 1995, the Company acquired Mykotronx, Inc. ("Mykotronx") in a
transaction accounted for as a pooling-of-interests. Located in Torrance,
California, Mykotronx is a leading supplier of information security products.
The Company's principal subsidiaries are located in California, the United
Kingdom, Germany and France. Unless the context otherwise requires, the term
"Company" refers to Rainbow Technologies, Inc. and its subsidiaries.
The Company markets its Software Protection Products worldwide to software
developers and information providers. The Company markets its Information
Security Products to various organizations of the U.S. Government, including the
Department of Defense, NASA and the United States Air Force, and contractors and
manufacturers in the aerospace and related industries. Approximately 67% of the
Company's revenues are derived from Software Protection Products and
approximately 33% of the Company's revenues are derived from Information
Security Products.
In October 1996, the Company acquired the business and operations of
Software Security Inc. ("SSI") in a transaction accounted for as a pooling of
interests. The Company issued 336,511 shares of its Common Stock in exchange for
all of the outstanding shares of SSI. SSI develops, manufactures and markets
software security products worldwide.
THE OFFERING
Common Stock offered by the Selling Shareholders 336,511
Common Stock to be outstanding after the Offering 7,760,117 Shares(1)
Use of Proceed The Company will not
receive any proceeds
from the sale of
Common Stock by the
Selling Shareholders
NASDAQ-NMS symbol RNBO
- ---------------
(1) Excludes 4,366 shares of Common Stock reserved for issuance upon the
exercise of stock options assumed by the Company in connection with its
acquisition of Software Security Inc.
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<PAGE> 7
RISK FACTORS
In addition to the other information contained in this Prospectus, the
following factors should be considered carefully before purchasing shares of
Common Stock offered by this Prospectus.
FLUCTUATIONS IN OPERATING RESULTS
The Company's future operating results could be subject to significant
fluctuations, particularly on a quarterly basis. The Company's quarterly
operating results may fluctuate due to numerous factors. Some of these factors
include significant changes or developments in the software or information
security industries, the commencement, delay or conclusion of significant
government contracts, changes in foreign currency exchange rates, and timing of
acquisitions and associated costs.
DEPENDENCE ON PROPRIETARY TECHNOLOGY
The Company's success is heavily dependent upon its proprietary
technology. The Company relies on a combination of contractual rights,
trademarks, trade secrets and copyright laws to establish or protect its
proprietary rights in its products. There can be no assurance that the steps
taken by the Company in this regard will be adequate to deter misappropriation
of its proprietary rights or independent third party development of functionally
equivalent technology. With regard to the technology controlled by the Company's
Mykotronx subsidiary, the U.S. Government retains ownership of substantially all
of the intellectual property, primarily algorithms, that the Company uses in its
products. The U.S. Government grants to the Company a non-exclusive license to
use the intellectual property created by Mykotronx in fulfilling contracts for
government agencies or contractors. The Company has no patents nor patent
applications pending. Mykotronx enters into confidentiality or license
agreements with its employees, distributors, customers and potential customers
and has limited access to and distribution of its software, documentation, and
other proprietary information. There can be no assurance, however, that these
measures have been adequate to prevent misappropriation of its proprietary
technology or that competitors will not independently develop technologies that
are substantially equivalent or superior to the Company's technology.
DEPENDENCE ON SOLE CHIP SUPPLIER
The Company currently has one supplier of the ASIC chip used in its
largest selling product. In addition, the ASIC chips used in the Company's other
products are generally manufactured by other individual suppliers. In the event
that such supplier is unable to fulfill the Company's requirements, the Company
may experience an interruption in the production of its largest selling product
until an alternative source of supply is developed. The Company maintains an
inventory of ASIC chips to limit the potential for such an interruption. The
Company believes that there are a number of companies capable of manufacturing
the ASIC chips within approximately six months of such an interruption.
The VLSI chips used by the Company's Mykotronx subsidiary are processed
to the specifications of the U.S. Government and Mykotronx by VLSI Technologies.
This supplier is the only supplier capable of meeting the U.S. Government's
specifications for the VLSI chips. In the event that such supplier is unable to
fulfill the production requirements of the Company or otherwise halts its
production of the VLSI chips, the Company may experience an
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interruption in the production of VLSI chips until an alternative source of
supply is developed. Any such interruption in the availability of the VLSI chips
could have a material adverse effect on the operations of the Company.
NEW PRODUCTS AND TECHNOLOGICAL CHANGE
The software program and information protection market is subject to
frequent and rapid changes in technology. There is a risk that any given
technology in the industry, including the technology of the Company, will be
rendered obsolete or non-competitive by future discoveries and developments. As
a result, the Company's growth and future financial performance depend upon its
ability to introduce new products and enhance existing products that accommodate
the latest technological advances and customer requirements. There can be no
assurance that any such products will be successfully introduced or achieve
market acceptance. Any failure by the Company to anticipate or respond
adequately to changes in technology and customer preferences, or any significant
delays in product development or introduction, could have a material adverse
effect on its business.
U.S. GOVERNMENT BUSINESS
The Company's Mykotronx subsidiary receives the majority of its revenue
from contracts with U.S. Government agencies or contractors hired by the U.S.
Government. To secure additional contracts, Mykotronx is often required to
submit bids to other agencies and contractors in response to "requests for
proposal" published by such agency or contractor. In either case, Mykotronx'
contracts with the U.S. Government agencies may be terminated, in whole or in
part, at the convenience of the customer (as well as in the event of default).
In addition, government funding for programs supporting Mykotronx' contracts is
generally provided on a government fiscal year basis and is subject to the
continuing availability of congressional appropriations. Termination or
substantial curtailment of the U.S. Government programs supporting Mykotronx
contracts would have a material adverse effect on the operations of the Company.
LIMITED MARKET FOR MYKOTRONX PRODUCTS AND SERVICES
The principal market for the products of the Company's Mykotronx
subsidiary has been agencies of the U.S. Government and its products have not
been generally offered in the commercial marketplace. The Company intends to
introduce Mykotronx' products and expertise to the commercial marketplace.
However, there, can be no assurance that a commercial product for Mykotronx
information and data security products will be developed, or, even if developed,
that a market will exist and that Mykotronx would be able to successfully offer
its products. In addition, Mykotronx' current products require government
approval for such products to be offered in foreign markets. In the event the
Company seeks such approval, there can be no assurance that such approval will
be granted or that the Company could successfully sell Mykotronx products in
foreign markets.
NO ASSURANCE OF SUCCESSFUL DEVELOPMENT AND COMMERCIALIZATION OF PRODUCTS
The Company is currently developing technology to create new products
for introduction in future periods. These new products are being developed to
make the Company more
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competitive in the industries in which it will compete. Product development
involves a high degree of risk. Significant research and development relating to
the creation of new products or the enhancement of current products is required
prior to commercialization. There can be no assurance that the new products will
be brought to market, or successful if they are brought to market, primarily due
to increasing technological change and evolving customer demands.
DEPENDENCE ON SUPPLIERS
The Company manufactures its Software Protection Products on the basis
of its forecast of near-term demand and maintains inventory in advance of
receipt of firm customer orders. Orders from software publishers are generally
placed on an "as needed" basis and are usually shipped by the Company within one
week after receipt of the order. On time delivery of the Company's Software
Protection Products is dependent upon the availability of quality components
used by the Company in such products. A significant interruption in the delivery
of such items could have a material adverse effect on the Company's results of
operations.
INTERNATIONAL SALES
The Company markets its Software Protection Products worldwide to
software developers and information providers. In 1995, approximately 46% of the
Company's sales of Software Protection Products were made internationally. The
Company expects that international sales will continue to represent a
significant portion of the Company's Software Protection Products revenues and
that the Company will be subject to the normal risks of international sales,
such as export laws, currency fluctuations, longer payment cycles, greater
difficulties in accounts receivable collection and the requirement of complying
with a wide variety of foreign laws. Although the Company has not previously
experienced any difficulties under foreign law in exporting its products to
other countries, there can be no assurance that the Company will not experience
such difficulties in foreign countries in the future. Any such difficulties
would have a material adverse effect on the Company's international sales. In
addition, Mykotronx current products require government approval for such
products to be offered in foreign markets. In the event the Company seeks such
approval, there can be no assurance that such approval will be granted or that
the Company could successfully sell Mykotronx products in foreign markets. In
addition, the laws of some foreign countries do not protect proprietary rights
to the same extent as do the laws of the United States, see "Dependence on
Proprietary Technology."
CURRENCY FLUCTUATIONS
The Company prices its international products in the currency of the
country in which the product is sold. Accordingly, the prices of such products
in dollars will vary as the value of the dollar fluctuates against such
currencies. There can be no assurance that there will not be increases in the
value of the dollar against such currencies that will reduce the dollar return
to the Company on the sale of its products in such countries.
COMPETITION
As to its Software Protection Products, the Company operates in highly
competitive and rapidly changing markets and competes with a variety of
companies that offer certain of the products and services offered by the
Company. The Company competes with a number of
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relatively small companies. Although certain of the Company's competitors offer
lower prices which has resulted in the Company lowering prices on certain of its
products, the Company believes that its technical support services and ease of
implementation of its products distinguish the Company from its competitors.
However, there can be no assurance that the Company will be able to continue to
compete successfully with its existing competitors or will be able to compete
successfully with new competitors.
As to its Information Security Products, the Company believes that in
markets in which it competes there are some participants that have greater
financial, technical and marketing resources than the Company. There can be no
assurance that the Company will be able to continue to compete successfully with
their existing competitors or will be able to compete successfully with new
competitors.
KEY PERSONNEL
The Company's success depends to a significant degree upon the continued
contributions of the Company's key management, marketing, product development
and operational personnel. The success of the Company will depend to a large
extent upon its ability to retain and continue to attract highly skilled
personnel. Competition for employees in the computer and information security
industry 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
grows, it may become increasingly difficult for it to hire, train and assimilate
the new employees needed. If the Company is unable to retain and attract key
employees there could be a material adverse effect on the Company's product
development and results of operations.
The Company's ability to secure contracts with agencies and contractors
of the U.S. Government depends on the Company retaining personnel with
appropriate U.S. Government security clearance. The Company currently has
employees with the appropriate authorization to address national security issues
with agencies and contractors of the U.S. Government. The success of the
Company's Mykotronx subsidiary depends to a significant degree upon the
continued contribution of these employees. However, there can be no assurance
that employees who possess such authorization will remain with the Company, and
no assurance that others who can obtain the appropriate authorization will be
available for employment with the Company. The failure to have personnel with
such authorization could have an adverse material effect on the operations of
the Company.
EFFECT OF ANTITAKEOVER PROVISIONS OF DELAWARE LAW AND THE COMPANY'S CHARTER
DOCUMENTS
Certain provisions of Delaware law and the charter documents of the
Company may have the effect of delaying, deferring or preventing changes in
control or management of the Company. The Company is subject to the provisions
of Section 203 of the Delaware General Corporation Law, which has the effect of
restricting changes in control of a company. The effect of the antitakeover
protections of Delaware law and the Company's charter documents could make it
more difficult for a third party to acquire, or could discourage a third party
from acquiring, a majority of the outstanding stock of the Company.
POSSIBLE VOLATILITY OF RAINBOW STOCK PRICE
The prices for the Company's Common Stock have fluctuated in the past.
The
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management of the Company believes that such fluctuations may have been caused
by announcements of new products, quarterly fluctuations in the results of
operations and other factors, including changes in conditions of the software
program and information protection market in general. Stock markets have
experienced extreme price volatility in recent years. This volatility has had a
substantial effect on the market prices of securities issued by the Company and
other high technology companies, often for reasons unrelated to the operating
performance of the specific companies. The Company anticipates that prices for
the Company's Common Stock may continue to be volatile.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of Common Stock
by the Selling Shareholders.
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SELLING SHAREHOLDERS
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock of the Selling Shareholders
as of December 13, 1996, as adjusted to reflect the sale of the shares of Common
Stock offered hereby by the Selling Shareholders. The Company will not receive
any proceeds from the sale of the Shares of Common Stock.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO SHARES BEING OWNED AFTER
NAME OFFERING OFFERED OFFERING
- ---- -------- ------- --------
<S> <C> <C> <C>
Margaret Chou 129,832 129,832 0
Richard Erett 129,315 129,315 0
Frederik Engel 65,174 65,174 0
Hendrik Vermeulen 2,758 2,758 0
Joseph M. Kulinets 1,293 1,293 0
Martin Wargon 1,293 1,293 0
Surin Banta 862 862 0
Wallace Collins 862 862 0
William Gaillard 862 862 0
Laszlo Elteto 517 517 0
Patricia Erett 517 517 0
Leonid Grinshpan 517 517 0
Eleanor Boekman 258 258 0
Raymond M. Grant 258 258 0
William G. Helmke, Jr. 258 258 0
Anatoli Levine 258 258 0
Joan Piorkowski 258 258 0
Robert D. Tyska 258 258 0
Cindy Vilics 258 258 0
Tamara Dolinskaya 172 172 0
Debra Cajigas 129 129 0
Maureen Humphrey 129 129 0
Mary Jane Kreusser 129 129 0
Jeanne M. Urso 129 129 0
Autumn Worthington 129 129 0
Leonid Epshteyn 43 43 0
Georgianna Muha 43 43 0
All Selling Shareholders
as a group (27 persons) 336,511 336,511 0
</TABLE>
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Certain of the Selling Shareholders may be deemed to be "affiliates" of
the Company, as that term is defined under the Securities Act. The Selling
Shareholders acquired the shares offered hereby in private transactions which
were not registered under the Act. Consequently, in connection with this
offering certain of the Selling Shareholders may be deemed to be an
"underwriter" of the Company's Common Stock offered hereby, as that term is
defined under the Act. The Selling Shareholders intend to sell the shares
offered hereby from time to time for their own respective accounts in the open
market at the prices prevailing therein or in individually negotiated
transactions at such prices as may be agreed upon. Although there are no current
arrangements therefor, commissions equal to or in excess of normal brokerage
commissions may be paid to brokerage firms in connection with such sales. Each
Selling Shareholder will bear all expenses with respect to the offering of
shares by him except that the Company will pay the costs associated with
registering the shares under the Act and preparing this Prospectus.
DESCRIPTION OF CAPITAL STOCK
The Company is authorized by its Certificate of Incorporation to issue
20,000,000 shares of Common Stock, par value $.001 per share. The holders of
Common Stock of the Company are entitled, among other things, (i) to share
ratably in dividends, if, when, and as declared by the Board of Directors out of
funds legally available therefor, (ii) to one vote for each share held of record
on all matters at all meetings of shareholders, and (iii) in the event of
liquidation, dissolution or winding-up of the Company, to share ratably in the
distribution of assets remaining after payment of debts and expenses. Holders of
shares of Common Stock have no cumulative voting rights or preemptive rights to
subscribe for or purchase any additional shares of capital stock issued by the
Company. All issued and outstanding shares of Common Stock are validly issued,
fully paid and non-assessable. The Company's transfer agent and registrar is
U.S. Stock Transfer Corporation.
PLAN OF DISTRIBUTION
The shares being registered hereby for the account of the Selling
Shareholders will be offered for sale by such holders from time to time in the
public marketplace. None of the securities offered by the Selling Shareholder
are being offered through underwriters and no arrangements have been made with
any outside broker, dealer or underwriter for the resale of such securities, all
of which may be offered for sale from time to time in the public market.
LEGAL PROCEEDINGS
The Company believes that there are no legal proceedings, pending or
contemplated, to which the Company, or any of its subsidiaries, is the subject
or to which the Company or any of its subsidiaries is a party. The Company also
knows of no material legal proceedings, pending or threatened, or judgments
entered against any director or executive officer of the Company or any of its
subsidiaries in his/her capacity as such where the position of any such director
or executive officer is adverse to the Company or any of its subsidiaries.
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LEGAL MATTERS
Certain legal matters in connection with this offering are being passed
upon for the Company by its securities counsel, Moskowitz Altman & Hughes LLP,
New York, New York.
EXPERTS
The consolidated financial statements and schedule of the Company
included in its Annual Report on Form 10-K for the year ended December 31, 1995
have been audited by Ernst & Young LLP, independent auditors, as stated in their
report which is incorporated herein by reference. Such consolidated financial
statements and schedule have been incorporated herein by reference in reliance
upon such report given upon the authority of such firm as experts in accounting
and auditing.
PROSPECTUS
--------------------------------
336,511 SHARES OF COMMON STOCK
RAINBOW TECHNOLOGIES, INC.
----------------------
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses payable by Registrant in connection with the
securities being registered are estimated as follows:
<TABLE>
<S> <C>
Securities and Exchange Commission
Registration Fee $ 2,116
Legal Fees and Expenses 10,000
Accounting Fees 10,000
------
Total 22,116
------
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law authorizes
corporations organized thereunder, such as the Company, to indemnify directors
and officers against liabilities which they may incur in their capacities as
such, including judgments, fines, expenses and amounts paid in settlement of
litigation. Said section provides that the indemnification authorized thereby is
not exclusive of any other rights to which a director or officer may be entitled
under any by-law, agreement, vote of shareholders or otherwise. The Company's
by-laws provide for indemnification of the Company's directors and officers to
the fullest extent permitted by law against any liabilities they may incur in
their capacities as such.
The Company also maintains a directors' and officers' liability
insurance policy insuring directors and officers of the Company for covered
losses as defined in the policy.
ITEM 16. EXHIBITS
The following exhibits are incorporated herein by reference to the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1995:
Exhibit No. Description
- ----------- -----------
5 Opinion of Moskowitz Altman & Hughes LLP
23.(a) Consent of Ernst & Young LLP
(b) Consent of Moskowitz Altman & Hughes LLP
ITEM 17. UNDERTAKINGS
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 provisions described under Item 15 above, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
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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.
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; (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 in the Registration Statement. Notwithstanding the forgoing, any
increase or decrease in volume of securities offered (if the total dollar value
of securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range may
be reflected in the form of prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and price represent no
more than a 20 percent change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective Registration
Statement; and (iii) 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; provided,
however, that (i) and (ii) do not apply if the information required to be
included in a post-effective amendment thereby is contained in periodic reports
filed with or furnished to the Commission by the Registrant pursuant to Section
13 or Section 15(d) of the Exchange Act that are incorporated by reference in
the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, 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.
(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 this
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.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
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 Irvine, State of California, on the 18th day of
December, 1996.
RAINBOW TECHNOLOGIES, INC.
REGISTRANT
By: /s/ Walter W. Straub
------------------------------------
Walter W. Straub,
President, Chief Executive Officer
and Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
/s/ Walter W. Straub December 18, 1996
- ---------------------------------
Walter W. Straub,
President, Chief Executive
Officer and Chairman of the Board
/s/ Peter M. Craig December 18, 1996
- ---------------------------------
Peter M. Craig,
Executive Vice President,
Secretary and Director
/s/ Alan K. Jennings December 18, 1996
- ---------------------------------
Alan K. Jennings,
Director
/s/ Patrick E. Fevery December 18, 1996
- ---------------------------------
Patrick E. Fevery,
Vice President and Chief
Financial Officer
/s/ Richard P. Abraham December 18, 1996
- ---------------------------------
Richard P. Abraham,
Director
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/s/ Marvin Hoffman, December 18, 1996
- ---------------------------------
Marvin Hoffman,
Director
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OPINION OF COUNSEL
Moskowitz Altman & Hughes LLP has acted as counsel to Rainbow
Technologies Inc., a Delaware corporation (the"Company"), in the preparation of
a Registration Statement on Form S-3 to be filed by the Company with the
Securities and Exchange Commission (the "SEC") on or about December 19, 1996
(the "Registration Statement") in connection with the registration under the
Securities Act of 1933, as amended, of up to 336,511 shares of the Company
Common Stock (the "Shares"), all of which are issued, outstanding and held by
certain stockholders named in the Registration Statement.
As counsel to the Company, we have examined the proceedings taken
by the Company in connection with the issuance of the Shares. It is our opinion
that the Shares are legally issued, fully paid and nonassessable.
MOSKOWITZ ALTMAN & HUGHES LLP
By: /s/ John J. Hughes
---------------------------------
John J. Hughes, Jr. Esq.,
a Partner
New York, New York
December 18, 1996
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CONSENT OF 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 Rainbow
Technologies, Inc. for the registration of 336,511 shares of its common stock
and to the incorporation by reference therein of our report dated February 16,
1996, with respect to the consolidated financial statements and schedule of
Rainbow Technologies, Inc. included in its Annual Report on Form 10-K for the
year ended December 31, 1995 filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Orange County, California
December 18, 1996
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CONSENT OF COUNSEL
Moskowitz Altman & Hughes LLP hereby consents to the use of its
name under the caption "Legal Matters" in the Prospectus forming a part of the
Registration Statement and in any amendment thereto.
MOSKOWITZ ALTMAN & HUGHES LLP
By: /s/ John J. Hughes
------------------------------
John J. Hughes, Jr. Esq.,
a Partner
New York, New York
December 18, 1996
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