Filed Pursuant to Rules 424(b)(3)
Registration Statement No. 333-19119
RAMTRON INTERNATIONAL CORPORATION
COMMON STOCK
19,591,852 Shares of Common Stock
The Date of this Prospectus is May 6, 1998
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This Prospectus relates to 19,591,852 shares of Common Stock, par value $0.01
per share (the "Shares"), of Ramtron International Corporation (the "Company"
or "Ramtron") to be offered and sold from time to time by certain stockholders
of the Company (the "Selling Security Holders"). The Shares consist of (i)
6,989,701 shares of Common Stock issuable upon exercise of certain warrants
(the "Warrants") and such additional number of shares of Common Stock as may
become issuable pursuant to the anti-dilution provisions of the Warrants
(collectively, the "Warrant Shares") and (ii) 12,602,151 shares of Common
Stock, including 2,857 shares of Common Stock issuable upon exercise of
certain outstanding options (the "Options"). See "Selling Security Holders."
The Warrants and 8,772,761 shares of the Common Stock offered hereby by the
Selling Security Holders were issued by the Company in a private debt
conversion transaction in 1995 in reliance on available exemptions under the
Securities Act of 1933, as amended (the "Securities Act"). In the debt
conversion transaction, the Company granted certain registration rights for
the benefit of Oren L. Benton ("Mr. Benton"), the National Electrical Benefit
Fund (the "Fund") and BEA Associates, Inc. ("BEA") as the holders of the
Warrants, the Warrant Shares and the shares of Common Stock issued in the
transaction. The filing of the Registration Statement of which this
Prospectus is a part is intended to satisfy the Company's obligations with
respect to those registration rights, as well as the Company's obligations
with respect to certain of the registration rights granted by the Company to
the holder of an additional 3,826,533 shares of Common Stock offered hereby,
which shares were acquired by the holder thereof between March 1989 and June
1993 in private transactions in reliance on available exemptions under the
Securities Act. The remaining 2,857 shares of the Common Stock offered hereby
are shares issuable upon the exercise of options, which options were issued by
the Company in 1987 in reliance on available exemptions under the Securities
Act.
The Warrants are presently exercisable and will expire on August 31, 2000.
Each Warrant entitles the holder thereof to purchase one share of Common Stock
at an exercise price of $4.15 per share. The exercise price per share and the
number of shares of Common Stock issuable upon exercise of the Warrants are
subject to certain anti-dilution adjustments.
The Company may from time to time sell the Warrant Shares to the registered
holders of the Warrants in accordance with the terms thereof, if and when such
holders exercise the Warrants. The Selling Security Holders may from time to
time sell all or a portion of the shares of the Common Stock offered hereby in
transactions at prevailing market prices on The Nasdaq Stock Market, in
privately negotiated transactions at negotiated prices, or in a combination of
such methods of sale. The Selling Security Holders may effect such
transactions by selling the Shares to or through broker-dealers, and such
broker-dealers may receive compensation in the form of discounts or
commissions from the Selling Security Holders and/or the purchasers of the
Shares for whom such broker-dealers may act as agents or to whom they sell as
principal, or both (which compensation as to a particular broker-dealers may
be in excess of customary commissions). See "Plan of Distribution." The
Selling Security Holders and any brokers, dealers or agents who participate in
the sale of the Shares may be deemed to be "underwriters" within the meaning
of Section 2(11), and the commissions paid or discounts allowed to any such
brokers, dealers or agents, in addition to any profits received on resale of
the Common Stock, if any such broker, dealer or agent should purchase any
Common Stock as a principal, may be deemed to be underwriting discounts or
commissions under the Securities Act.
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The Company will receive no proceeds from the sale of the Shares by the
Selling Security Holders. The Company has agreed to pay all expenses (other
than selling commissions and fees and expenses of counsel and other advisers
to the Selling Security Holders), estimated to be approximately $65,000, of
registration of the Shares under federal securities laws. The Common Stock
trades on the Nasdaq National Market tier of the Nasdaq Stock Market under the
symbol "RMTR." On December 30, 1996, the last reported sale price for the
Common Stock as reported on the Nasdaq Stock Market was $6.313 per share.
The Shares have not been registered for sale by the Selling Security Holders
under the securities laws of any state as of the date of this Prospectus.
However, since the Shares are listed securities on the Nasdaq National Market
of the Nasdaq Stock Market, they are exempt from state securities registration
and fee requirements pursuant to Section 18 of the Securities Act of 1933, as
amended by the Capital Markets Efficiency Act of 1996.
-------------------------
THE SECURITIES OFFERED HEREBY INVOLVE
A HIGH DEGREE OF RISK. SEE "RISK FACTORS"
COMMENCING ON PAGE 4 OF THIS PROSPECTUS.
-------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION
NOR HAS THE COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE
The date of this Prospectus is May 6, 1998
No person is authorized to give any information or to make any representations
not contained in this Prospectus and any information or representation not
contained herein must not be relied upon as having been authorized by the
Company. This Prospectus does not constitute an offer of any securities other
than the registered securities to which it relates or an offer to any person
in any jurisdiction where such an offer would be unlawful. Neither the
delivery of this Prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that there has been no change in the
affairs of the Company since 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 periodic reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports,
proxy statements and other information may be inspected and copied at the
public reference facilities maintained by the Commission at Room 1024,
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Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and will also
be available for inspection and copying at the regional offices of the
Commission located at Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661 and at Seven World Trade Center, 13th
Floor, New York, New York 10048. Copies of such material may also be obtained
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. The Company is an electronic
filer and the Commission maintains a Web site that contains reports, proxy and
information statements and other information that the Company files
electronically with the Commission. The address of such Web site is
http://www.sec.gov. The Company's Common Stock is traded on the Nasdaq
National Market tier of the Nasdaq Stock Market. Reports, proxy statements
and other information concerning the Company may also be inspected at the
offices of Nasdaq Operations, 1735 K Street, N.W., Washington, D.C. 20006.
ADDITIONAL INFORMATION
The Company has filed with the Commission a Registration Statement on Form S-3
under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the shares of Common Stock offered hereby. This Prospectus does
not contain all of the information set forth in the Registration Statement and
the exhibits and schedules thereto. For further information with respect to
the Company and the Common Stock offered hereby, reference is made to the
Registration Statement and the exhibits and schedules filed therewith. The
Registration Statement may be inspected without charge at the offices of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and copies of
all or any part thereof may be obtained from such office upon the payment of
the fees prescribed by the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated herein by reference: (1) the Company's Annual Report on Form 10-K
for the year ended December 31, 1995; (2) the Company's quarterly report on
Form 10-Q for the quarters ended March 31, 1996, June 30, 1996 and
September 30, 1996; (3) the Company's Current Report on Form 8-K dated
January 23, 1996; and (4) the description of the Company's Common Stock as set
forth in Item 11 of the Company's Registration Statement on Form 10, as
amended (Registration No. 0-17739). Reference is also made to the
"Description of Capital Stock" in this Prospectus for a current description of
the Company's Common Stock.
All documents filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date hereof
and prior to the termination of the offering of the Common Stock registered
hereby shall be deemed to be incorporated by reference into this Prospectus
and to be a part hereof from the date of filing such documents. Any statement
contained in a document incorporated or deemed to be incorporated herein by
reference shall be deemed modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
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The Company will provide without charge to each person to whom this Prospectus
is delivered, upon written or oral request of such person, a copy of any or
all of the documents incorporated by reference into this Prospectus (other
than exhibits to such documents, unless such exhibits are specifically
incorporated by reference into such documents). Requests for such copies
should be directed to Ramtron International Corporation, 1850 Ramtron Drive,
Colorado Springs, Colorado 80921, Attention: Chief Executive Officer
(Telephone: (719) 481-7000).
THE COMPANY
The Company was incorporated under the name "Amtec Securities Corporation" in
January 1984 and changed its name to "Ramtron International Corporation" in
January 1988. The Company designs, develops, manufactures and markets high-
performance semiconductor memory devices. The Company has two product lines,
ferroelectric nonvolatile random access memory (FRAM (registered trademark))
products and high-speed dynamic random access memory products, called
Enhanced-DRAM (EDRAM) products. The Company's executive offices are located
at 1850 Ramtron Drive, Colorado Springs, Colorado 80921, and its telephone
number is (719) 481-7000.
RISK FACTORS
An investment in the Shares offered hereby involves a high degree of risk.
The following factors, together with the other information set forth or
incorporated by reference in this Prospectus, should be considered carefully
in evaluating the Company and its business before investing in the Shares
offered hereby. Certain terms used in the Prospectus are defined in the
Glossary on Page 19.
SUBSTANTIAL WORKING CAPITAL NEEDS; DEPENDENCE ON STOCKHOLDER FINANCING. Since
its inception, because revenues generated from operations and licensing have
been insufficient to fund operations, the Company has depended for funding
principally on its stockholders, and in particular from 1989 until February
1995 on Oren L. Benton ("Benton"), a former principal stockholder and
director and the former Chief Executive Officer of the Company, and since 1989
on the National Electrical Benefit Fund (the "Fund"), a principal
stockholder of the Company. Benton and the Fund financed the Company's cash
flow requirements through equity investments and loans, most of which were
subsequently converted into equity. As a result of Benton's bankruptcy in
1995, the Company ceased to rely on Benton as a source of financing. The
Company also raised funds through the private placement of convertible
preferred stock in 1993, all of which has been converted into Common Stock.
In 1995, the Company entered into a Debt Conversion Agreement providing for
(i) the conversion into equity of an aggregate of approximately $24 million of
the Company's outstanding debt held collectively by Benton, the Fund and BEA
Associates, Inc. ("BEA") (as the holder by assignment of a note issued by
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the Company to Benton in 1992 in the original principal amount of $12
million), and (ii) a new loan facility between the Company and the Fund (the
"Fund Credit Facility") of up to $12 million (which included $3 million made
available under a credit facility the Fund had provided to the Company in
March 1995). In December 1995, additional outstanding debt of the Company
held by Benton in the amount of approximately $2.7 million was also converted
into equity pursuant to the Debt Conversion Agreement. During 1996 and 1997,
the Company's borrowings under the Fund Credit Facility increased to a total
principal and accrued interest amount outstanding on December 31, 1997, of
approximately $6.5 million. In December 1997, the Company sold approximately
$4 million of Common Stock, and in February 1998, the Company raised
approximately $20 million from the sale of 17,425 shares of Series A
Convertible Preferred Stock (the "Series A Preferred"), to certain
institutional investors in a private placement by the Company (the "Preferred
Stock Private Placement") in order to obtain funds for working capital and
general corporate purposes.
Based on the Company's capital resources as of December 31, 1997, and the
proceeds from the recent sale of Series A Preferred, and expected operating
costs and cash flows from product sales and licensing revenues, the Company
expects to be able to fund its operations through at least year-end 1998. All
amounts outstanding under the Fund Credit Facility, repayment of which is
secured by liens on the Company's facility and certain other of its assets,
are due and payable on June 30, 1998. The Company has requested an extension
of the payment date or conversion into equity of amounts outstanding under the
Fund Credit Facility. If such extension is not granted and the conversion
into equity is not made by the Fund, the Company will have to repay all
principal and accrued interest under the Fund Credit Facility, which will use
a substantial portion of the Company's capital resources. In view of the
Company's expected future working capital requirements in connection with the
manufacturing, production and sale of its FRAM and EDRAM products, the
Company's projected continuing research and development expenditures and the
current repayment requirements of the Fund Credit Facility, the Company may be
required to seek additional equity or debt financing after 1998. There is no
assurance, however, that the Company will be able to obtain such financing on
terms acceptable to the Company, or that the Fund will agree to an extension
of the payment date, or conversion into equity of amounts owed, under the Fund
Credit Facility. Any issuance by the Company of common or preferred stock in
order to obtain additional funding could result in the further dilution of
existing stockholders' interests in the Company. If the Company requires
additional financing in the future and if financing acceptable to the Company
is not available, the Company would not be able to implement its current
business strategy and the Company's business, operating results and financial
condition would be materially adversely affected.
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HISTORY OF LOSSES; ANTICIPATED LOSSES. The Company has been engaged in the
research and development of its ferroelectric technology and FRAM products
since 1984 and has had since its inception only limited revenues related to
such technology and products, principally from development and license
agreements. In 1996 and 1997, the Company generated most of its product
revenues from the sale of its EDRAM products, which do not utilize the
Company's ferroelectric technology. As a result of its limited revenues and
the substantial ongoing product research and development costs associated with
the Company's efforts to develop commercial manufacturing capabilities for its
FRAM products and the design and development of its EDRAM products, the
Company has incurred significant losses. The Company incurred a net loss for
1996 and 1997 of $5.7 million and $8.9 million, respectively. As of
December 31, 1997, the Company had an accumulated deficit of $138.8 million.
There can be no assurance that the Company will achieve or sustain
profitability in the future. The Company's future revenues and its potential
profitability will depend on various factors, some of which are outside the
Company's control, including (i) the timely completion of the development and
qualification for manufacturing of the Company's higher-density FRAM products
(i.e., FRAM products with memory capacities of 256-kilobits and greater);
(ii) wider customer acceptance of its EDRAM and FRAM products; (iii) the
Company's ability to manufacture its FRAM products on a cost-effective and
timely basis at its own facility and through alliance foundry operations and
its ability to obtain sufficient cost-effective manufacturing capacity for its
EDRAM products from its contract manufacturers; (iv) the availability and
related costs of future financing; and (v) factors not directly related to the
Company, such as market conditions, competition, technological developments,
product obsolescence and changing needs of potential customers in the
semiconductor industry in general. The semiconductor memory products market
has a history of declining average unit sales prices. Although the Company's
EDRAM products in 1996 and 1997 have not been subject to the extent or
rapidity of the price decline of standard memory products such as DRAMs,
future declines in average selling prices of the Company's EDRAM products may
surpass the rate at which the Company can reduce per unit manufacturing costs,
which could materially adversely affect its cash flows, results of operations
and financial condition.
The Company has historically experienced significant quarterly fluctuations in
revenues and operating results and anticipates that such fluctuations will
continue. The Company attributes these fluctuations in part to unpredictable
product order flows, variations in the timing and receipt of license fees
(which depend on, among other factors, the Company and its licensees achieving
certain technological milestones) and the lead time required for the Company's
products to be incorporated in customers' product designs and for such
products to achieve market penetration.
<PAGE>
LIMITED MARKET ACCEPTANCE OF PRODUCTS; EDRAM CUSTOMER CONCENTRATION. Assuming
that the Company can generate cash flows from product sales and licensing
revenues and, if required, can continue to obtain financing on acceptable
terms sufficient to meet its working capital requirements, of which there can
be no assurance, the Company's success will be dependent on the extent to
which its FRAM and EDRAM products are accepted in the marketplace and the time
required to achieve such acceptance. As with other new products designed to
replace existing products and change product designs, potential customers may
be reluctant to integrate the Company's products into their systems unless the
products are proven to be both reliable and available at a competitive price
and in an assured quantity, preferably from multiple sources. Even assuming
product acceptance, certain of the Company's customers may be required to
redesign their systems to use the Company's products effectively. The time
necessary for such redesign (which in some instances can be substantial and is
not subject to the Company's control) could delay or prevent substantial
market acceptance of the Company's products. A lack of, or delay in, market
acceptance of one or more of the Company's products could adversely affect the
Company's cash flow, operating results and financial condition. The Company's
product sales in 1996 were $1.9 million from FRAM products and $16 million
from EDRAM products. For 1997, the Company's product sales were $1.6 million
from FRAM products and $13 million from EDRAM products. The Company cannot
give assurance of the flow or size of future product orders or when revenues
from any such sales will be recognized. More than 50% of the Company's EDRAM
product sales in 1997 were to the Company's top three customers. As a result
of the concentration of the Company's EDRAM customer base, any substantial
reduction or cancellation of business from any of those customers or any
significant decrease in the prices of EDRAM products sold to them could have a
material adverse effect on the Company's cash flow, operating results and
financial condition.
DEPENDENCE ON SUCCESSFUL DEVELOPMENT OF COMMERCIAL PRODUCTS. As indicated
above, the Company has two lines of products, consisting of its FRAM products
and its EDRAM products, and its success will depend on its ability to develop,
manufacture and market FRAM and EDRAM products that address customer
requirements and compete effectively on the basis of price, performance and
reliability. This is especially true with respect to the development of the
Company's FRAM products. The Company faces substantial product-related risks,
including the risk that commercially acceptable new FRAM products cannot be
successfully or timely developed and produced and that significant delays and
increased costs will be encountered in manufacturing such products in
commercial volumes. The development of new products by the Company and their
"design-in" to customers' systems can be both time consuming and costly. New
product development requires a long-term forecast of market trends and
customer needs and often a substantial commitment of capital resources with no
assurance that such products will be commercially viable.
<PAGE>
The Company has experienced significant obstacles in producing acceptable
product yields from the integration of its ferroelectric technology with wafer
underlayers using the CMOS process technology. The Company therefore has
entered into strategic alliances with companies with advanced semiconductor
manufacturing processes and facilities to help overcome these obstacles. To
date, the Company is producing in commercial quantities eight versions of
4-kilobit and 16-kilobit FRAM products and three custom radio frequency
identification device ("RF/ID") FRAM products ranging in densities from one to
sixteen kilobits. The Company and its strategic licensees are continuing
their efforts to obtain acceptable manufacturing product yields of, and to
qualify for production in commercial volumes, additional FRAM products. The
Company is also working to qualify for commercial production by its strategic
licensees certain of the Company's existing FRAM products that it currently
manufactures at its Colorado Springs facility. Based on the information
available to it, the Company believes that its strategic licensees are
continuing efforts to develop and qualify, and are at various stages of
development and qualification of, lower-density and higher-density FRAM
products for commercial production. The Company cannot, however, provide any
assurance regarding dates of final qualification or of commercial production
of such products due to uncertainties in the qualification and production
processes relating to both its own and its strategic licensees' manufacture of
the Company's FRAM products. The Company's inability to develop and
commercialize high-density FRAM products, or to overcome other obstacles it
may encounter in FRAM product development, may significantly limit the
commercial potential of FRAM products given the rapid technological progress
in the development of competing products having substantially higher densities
than the Company's FRAM products.
New designs, materials development and process technology will be required to
achieve higher-density FRAM products. The Company's current low-density FRAM
products are designed and manufactured at the Company's Colorado Springs
facility using a 1.0 micron manufacturing process. To achieve memory
capacities of 256-kilobits and greater, the Company and its strategic
licensees will have to make a transition to sub-micron designs. The Company
believes that its transition to smaller design parameters will be important
for it to produce FRAM products meeting marketplace demands. To the extent
this transition cannot be successfully implemented or is substantially
delayed, the Company's operating results could be materially adversely
affected. The Company's existing manufacturing equipment is not capable of
producing sub-micron designed, high-density products. Therefore, the Company
must rely solely on its existing and future alliance partners' manufacturing
facilities to produce such sub-micron FRAM products on behalf of the Company.
All FRAM products to be manufactured by the Company's existing alliance
partners will be manufactured using sub-micron designs, although no such
products have been manufactured in commercial quantities to date. There can
be no assurance that the Company will be able to find additional alliance
partners on acceptable terms. There also can be no assurance that the Company
or its alliance partners will be able to develop and produce higher-density
FRAM products profitably and, if so, when such products will be available in
commercial quantities.
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The Company's success in increasing sales of its EDRAM products depends
principally on the products continuing to meet customer requirements and to
provide price-performance advantages over competing products. Manufacturers
of such competitive semiconductor memory products, many of which have
substantially greater financial, engineering, manufacturing and marketing
capabilities than the Company, regularly announce new, more advanced
competitive products. The Company's continued ability to generate revenues
from the sale of EDRAM products will depend on its successful development,
manufacture and marketing of new EDRAM products with improved price-
performance characteristics and the reduction of its EDRAM product
manufacturing costs, of which there can be no assurance.
MANUFACTURING CAPABILITY. The Company's revenues, as well as its ability to
achieve profitability over the next few years, will depend substantially on
its and its outside manufacturers' abilities to manufacture products cost-
effectively and on the Company's ability to obtain from its outside
manufacturers sufficient commercial volumes of products to fulfill customers'
orders timely and profitably. Even if the Company's FRAM and EDRAM products
currently in development are developed to a point of commercialization, of
which there can be no assurance, the Company does not anticipate that it will
have sufficient capital resources in the near-term to construct fabrication
facilities for the manufacture of higher-density FRAM products or any EDRAM
products in commercial volumes. The Company will therefore be dependent on
its strategic licensees, its current outside manufacturers, and any future
contract manufacturers it may be able to retain, to develop and make available
to the Company adequate product manufacturing capability on terms acceptable
to the Company and consistent with the Company's license agreements with such
licensees. Manufacture of the Company's FRAM products is highly complex and
extremely sensitive to many factors, including the level of contaminants in
the manufacturing environment, impurities in the materials used and the
performance of personnel, materials and equipment involved with the production
process. Often, new semiconductor product manufacturing processes experience
low production yields for a significant period of time, and the Company and
its licensees have experienced substantial production delays and difficulties
in achieving acceptable FRAM product production yields and product output.
The Company and its strategic licensees must continue to improve production
yields in order to decrease production costs to a level that permits the
Company's FRAM products to be sold at a price that is both competitive and
profitable. To the extent the Company and its outside manufacturers,
including its licensees, are not able to achieve consistently acceptable
manufacturing yields, of which there can be no assurance, the Company's
ability to market and sell its products and its cash flow, operating results
and financial condition will be materially adversely affected.
<PAGE>
DEPENDENCE ON SUPPLIERS AND THIRD-PARTY MANUFACTURERS. For its internal
lower-density FRAM product manufacturing needs, the Company currently obtains
CMOS silicon wafer underlayers from a single supplier. The Company intends to
rely for high-volume manufacturing of FRAM products on the advanced
semiconductor manufacturing processes and facilities of companies with which
it has entered into strategic alliances, including Rohm Company Limited
("Rohm"), Hitachi Ltd. ("Hitachi"), Toshiba Corporation ("Toshiba") and
Fujitsu Limited ("Fujitsu"). Although the Company believes that development
and qualification of FRAM products for commercial production is progressing
with each of its current strategic alliance partners, significant delays in
commencement of commercial production of FRAM products and difficulties in
obtaining acceptable product yields have been encountered by its current
strategic alliance partners and there is no assurance that any of these
strategic alliance partners will commence volume manufacturing of FRAM
products for the Company or alternatively be a long-term supplier of FRAM
products to the Company for resale. Existing agreements with the Company's
alliance partners do not require them to manufacture FRAM products in any
specified or minimum quantities. The Company has not yet entered into a
foundry supply agreement with Hitachi, Toshiba or Fujitsu, although certain
parameters of such supply agreements are set forth in the Company's license
agreements with those companies, and the Company believes that such parameters
could be helpful to the Company in negotiating the specific terms of the
supply agreements. In the case of Toshiba, a foundry supply agreement was
previously expected to be entered into by August 1996; however, that time
frame was extended by the parties, and the Company expects discussions to
continue once Toshiba further develops its product specification and
manufacturing plan. In the case of Hitachi and Fujitsu, discussions regarding
foundry supply agreements are expected to commence once engineering samples of
FRAM products are available for shipping. The Company has placed an initial
production order with Rohm for delivery of lower-density FRAM products
produced in Rohm's manufacturing facility, and the Company expects deliveries
in fulfillment of that order to begin in 1998. No assurance can be given by
the Company with respect to the terms of the supply of products, or the timing
thereof, that will be made available to the Company under any foundry supply
agreements ultimately entered into with its strategic licensees.
Because the Company does not purchase underlayers in large volumes for its
internal production of lower-density FRAM products, the Company is subject to
higher prices, limits on the availability of manufacturing capacity and less
reliable delivery schedules than high-volume purchasers and therefore the cost
of the Company's FRAM products continues to be high compared to competing
products. The Company has been, and expects for the near-term future to
continue to be, limited in its ability to market to high volume users of
nonvolatile memory storage devices in the absence of a second-source
manufacturer and as a result of the current cost of the Company's currently
available FRAM products. The Company's current internal manufacturing low
volume requirements, coupled with the costs associated with developing the
maskwork to qualify additional wafer suppliers, limits the ability of the
Company to expand its wafer supply resources in the near term in order to
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reduce the per unit cost of manufacturing its FRAM products. When wafers or
other raw materials are not available in sufficient amounts or of adequate
quality, the Company has experienced, and could experience in the future,
delays, expenses and lost sales while it locates and qualifies alternative
suppliers. During 1997, the Company's results of operations and level of its
sales of low-density FRAM products were not materially adversely affected as a
result of any delays, expenses or lost sales due to a scarcity of foundry
services, the need to qualify additional wafer suppliers or a lack of wafers
or other raw materials, although the Company believes that further delay in
its strategic licensees' commencement of manufacturing of FRAM products for
supply to the Company could have material adverse effects on the development
of a viable market for the Company's FRAM products. As a result of the
Company's relatively low levels of FRAM product sales, it has had to pay, and
until its FRAM products are manufactured in significantly higher volumes
expects to continue to pay, relatively high prices for the assembly and
testing of its FRAM products.
Nippon Steel Semiconductor Co. Ltd. ("Nippon Steel") and IBM Corporation
("IBM") are currently the only manufacturers commercially producing EDRAM
products for the Company. The Company holds EDRAM products produced by Nippon
Steel and IBM in inventory, which it uses to fulfill commercial orders from
its customers. Nippon Steel produces only 4-megabit EDRAM products, the
market demand for which has declined as higher-density competitive products
have become generally available. To date, the Company has qualified only IBM
to manufacture its 16-megabit EDRAM products, and the Company does not expect
to qualify Nippon Steel for manufacture of such products. During 1997, the
Company was able to fulfill all of the commercial demand for its 4-megabit
EDRAM products with products supplied by Nippon Steel and IBM. Due to the
high capital costs and manufacturing complexities associated with commercial
production of specialty semiconductor products, the Company expects to be
dependent in the foreseeable future on outside manufacturers for both its FRAM
and EDRAM products, except for the limited volume of low-density FRAM products
it intends to continue to produce at its Colorado Springs facility. The
Company's reliance upon outside suppliers and manufacturers involves several
risks, including reduced control over the availability of products, delivery
schedules, pricing and quality.
PATENT INTERFERENCE PROCEEDING. A patent interference proceeding, which was
declared in 1991 in the United States Patent and Trademark Office (the "Patent
Office") between the Company, National Semiconductor Corporation ("National")
and the Department of the Navy in regard to one of the Company's issued United
States patents, is continuing. The Patent involved covers a basic
ferroelectric memory cell design invention the Company believes is of
fundamental importance to its FRAM business in the United States. An
interference is declared in the Patent Office when two or more parties each
claim to have made the same invention. The interference proceeding is
therefore conducted to determine which party is entitled to the patent rights
covering the invention. In the present interference contest, the Company is
the "senior" party, which means that it is in possession of the issued
United States Patent and retains all rights associated with such patent. The
other two parties involved in the interference are the "junior" parties, and
each has the burden of proof of convincing the Patent Office by a
preponderance of the evidence that it was the first to invent the subject
matter of the invention and thus is entitled to the corresponding patent
rights. Only the Company and National filed briefs in this matter. Oral
arguments were presented before the Patent Office on March 1, 1996.
<PAGE>
The Patent Office decided the interference on May 6, 1997, holding that all of
the claims were patentable to National, one of the "junior" parties. The
other "junior" party, the Department of the Navy, was not granted any patent
claims pursuant to the interference proceedings. On June 20, 1997, the
Company filed a Request for Reconsideration with the Patent Office concerning
the interference decision. Pursuant to the Request for Reconsideration, the
Company requested that four separate issues be reconsidered because, from the
Company's perspective, they were either ignored or misconstrued in the
original decision. A decision on the Request for Reconsideration is expected
in the near future. The Company has the right to appeal, and plans to appeal,
any adverse decision of the Patent Office to the Federal District Court and
then, if necessary, to the Court of Appeals for the Federal Circuit. The
Company remains in possession of the issued United States Patent and retains
all rights associated with such patent while it pursues its appeal options.
The "junior" party has received no rights associated with this patent
decision and will not receive any such rights as long as the appeal process
continues.
If the Company's patent rights which are the subject of the interference
proceeding are ultimately lost or significantly compromised, the Company would
be precluded from producing FRAM products in the United States using the
Company's existing design architecture, absent being able to obtain a suitable
license to exploit such rights. If such patent rights are ultimately awarded
to National, and if a license to such rights is not subsequently entered into
by the Company with National, National could use the patent to prevent the
manufacture, use or sale by the Company within the United States of any
products that come within the scope of such patent rights, which would include
all FRAM products as currently designed, and which would materially adversely
affect the Company. The Company has vigorously defended its patent rights in
this interference contest and will continue such efforts. The Company is
uncertain as to the ultimate outcome of the interference proceeding, as well
as to the resulting effects upon the Company's financial position or results
of operations.
LITIGATION. The Company is a defendant in a lawsuit filed in October 1997, by
the Trustee of the NTC Liquidating Trust against Brown Brothers Harriman,
Citibank, N.A., the Company's transfer agent, and the Company in the Benton
Bankruptcy Court proceedings. The Trustee's claim seeks damages in the amount
of $4.9 million and, alternatively, 523,127 shares of Common Stock. Summarily
stated, the Trustee's claim is based on allegations that Benton and affiliated
persons caused shares of Common Stock to be converted, concealed, or wrongly
transferred in violation of the automatic stay in effect as a result of the
Benton bankruptcy filing. The Company believes that it was not involved in
the disputed transfer or concealment, has no direct liability to the NTC
Trustee, and that it has adequate defenses to any liability as indemnitor of
its transfer agent in the circumstances. The Company has moved to have the
NTC Trustee's claim dismissed. If the NTC Trustee's claim were to result in a
judgment against, or is ultimately required to be satisfied by, the Company,
the payment of damages could have a materially adverse effect on the Company
or the issuance of shares of Common Stock in the amount sought could
materially dilute the Company's common stockholders.
<PAGE>
COMPETITION. The semiconductor industry is intensely competitive. The
Company's FRAM and EDRAM products experience intense competition from numerous
domestic and foreign companies. The Company may be at a disadvantage in
competing with many of these competitors having significantly greater
financial, technical, manufacturing and marketing resources, as well as more
diverse product lines that can provide cash flows counter cyclical to
fluctuations in semiconductor memory operations, than the Company. The
Company considers its FRAM products to be competitive with existing
nonvolatile memory products such as EEPROM, Battery Backed Static RAM
("BBSRAM") and Nonvolatile RAM ("NVRAM") products in low density applications.
Although nonvolatile Flash memory products are important in the high-density
memory product market, the Company's products do not currently compete in
that market. Both low-density and high-density nonvolatile memory products
are manufactured and marketed by major corporations possessing worldwide wafer
manufacturing and integrated circuit production facilities (e.g., SGS-Thomson
Microelectronics NV, Motorola, Inc. and Hitachi) and by specialized product
companies (e.g., Dallas Semiconductor, Atmel Corp., Microchip Technology Inc.,
Xicor Inc., Rohm and Benchmarq Microelectronics Inc.).
Numerous companies, including major corporations possessing worldwide wafer
manufacturing and integrated circuit production facilities, manufacture DRAM
products. Because the Company's EDRAM products have certain higher
performance characteristics than standard DRAM products, however, the Company
considers only high-speed "specialty" DRAM products (such as SDRAM, CDRAM,
RDRAM, fast SRAM, VCRAM and MDRAM products manufactured by companies such as
Fujitsu, Mitsubishi Electric Corporation, Rambus (through licensees), LG
Semicon Co. Ltd., NEC Corporation and Micron Technology, Inc.) to be
competitive with the Company's EDRAM products. The Company also considers its
EDRAM products to be competitive in certain applications with SRAM products,
which are manufactured by major corporations, including Alliance Semiconductor
Corporation, Cypress Semiconductor Corporation, Integrated Device Technology,
Inc., Motorola, Inc., Hitachi, SGS-Thomson Microelectronics NV, Toshiba,
Fujitsu, Samsung Electronics Co. Ltd., Hyundai Electronics Industries Co.
Ltd., Mosel-Vitelic Corporation and LG Semicon Co. Ltd.
The Company's licensees may market products which compete with the Company's
FRAM and EDRAM products. Most of the Company's strategic alliance partners
have the right to manufacture and sell FRAM or EDRAM products for their own
account with or without the payment of royalties, depending upon the terms of
their agreements with the Company. For example, as part of its agreements
with Hitachi, Rohm, Toshiba and Fujitsu, the Company granted each of those
companies a royalty-bearing nonexclusive license to the Company's FRAM
technology and know-how, which license includes the right to manufacture and
sell products using FRAM technology. The Company has also granted IBM a
nonexclusive license to manufacture, produce and sell EDRAM products in
unlimited quantities, which license is royalty-free for internal consumption
of EDRAM products and royalty-free for external sales up to two times the
Company's total sales of EDRAM products. Most of these license agreements
provide for the continuation of the licensed rights to Ramtron's FRAM or EDRAM
<PAGE>
technology and know-how after expiration or termination of the agreements on a
royalty-bearing or royalty-free basis. In addition, Racom Systems, Inc. and
Intag International Ltd. of Australia, both licensees of the Company's
ferroelectric technology for use in RF/ID applications, could compete with the
Company for portions of the RF/ID market. To the extent that any of the
Company's products achieve market acceptance, there can be no assurance that
the Company's competitors will not be able to develop and offer competitive
products or implement pricing strategies for FRAM and EDRAM products that
could adversely affect the Company's business and operating results. The
Company's ability to compete successfully depends on its ability to develop
low-cost volume production of its products permitting its products to be sold
at a price that is both competitive and profitable to the Company and on its
ability to design products which successfully address customer requirements.
The Company's ability to compete successfully also depends on factors beyond
its control, including the rate at which customers incorporate the Company's
products into their own products, the success of such customers in selling
their products, the success of the Company's protection of its intellectual
property, the success of competitors' products and general market and economic
conditions. Many companies are researching and developing semiconductor
memory technologies and product configurations that could reduce or eliminate
any future competitive advantages of the Company's products. There can be no
assurance that the Company's ferroelectric technology will not be supplanted
in the future by competing technology or that the Company will have the
technical capability or financial resources to be competitive in the
semiconductor industry with respect to the design, development or manufacture
of either FRAM or EDRAM products.
NATURE OF THE SEMICONDUCTOR INDUSTRY. The semiconductor industry is
characterized by rapid technological changes and product obsolescence, price
erosion and variations in manufacturing yields and efficiencies. The industry
has also experienced wide fluctuations of product supply and demand. During
growth periods, there is likely to be a shortage of wafer supply and of
product assembly and testing capacity. The industry has recently been
allocating significant capital resources to construction of new, and expansion
of existing, semiconductor manufacturing facilities. The industry has at
times experienced significant downturns, some lasting more than a year,
resulting in diminished product demand and decreased prices for semiconductor
products, and such downturns may occur in the future as additional production
facilities are placed into operation. The semiconductor industry has
experienced growth in the past several years, however the demand for
semiconductor memory products began to soften dramatically starting in mid-
1996 as additional supply came into the market, resulting in a widespread
decline in average selling prices which continued throughout 1997. The
economic and financial turbulence, including unprecedented currency
depreciations, experienced in Asia during the fourth quarter of 1997 and early
1998 could, if such crisis continues or worsens, not only depress market
demand for the Company's products generally, but result in delayed payment of,
or failure to pay, licensing fees receivables by the Company's licensees and
in the delay or cancellation of FRAM product development programs by the
Company's strategic licensees, with the consequent delay or loss of the
Company's expected access to a portion of the foundry capacity of such
licensees. Such delay or cancellation of one or more FRAM product development
programs could have a material adverse impact on the Company's business,
operating results and financial condition.
<PAGE>
PATENTS; RELIANCE ON INTELLECTUAL PROPERTY PROTECTION. The Company relies
heavily on its patents and trade secrets as a defense against competitors
introducing infringing products that will compete with the Company's FRAM and
EDRAM products. Although the Company intends to enforce its patents and trade
secrets aggressively, there can be no assurance that such protection will be
available or be enforceable in any particular instance or that the Company
will have the financial resources necessary to adequately enforce its patent
and trade secret rights, and the unavailability or unenforceability of such
protection or the inability to enforce adequately such rights could materially
adversely affect the Company's business and operating results. In addition to
its strategic licensees discussed above, the Company has also granted
worldwide licenses to its ferroelectric technology to Seiko Epson Corporation
of Japan and Intermetall, Halbleiterwerk der Deutsche ITT Industries GmbH, a
subsidiary of ITT Corporation, although the Company has no indication that
those licensees are currently pursuing development of FRAM products. Those
companies, together with the Company's strategic alliance partners, have
access to the Company's proprietary FRAM technology and know-how and have the
right, on a royalty-paying or royalty-free basis, to manufacture and sell
ferroelectric products. The Company does not license from others any material
right covering its ferroelectric technology and does not believe its
technology infringes any known patents, subject to final determination of the
patent interference proceeding described above. The Company has, however,
entered into a cross license agreement with Symetrix Corporation ("Symetrix")
for the use by the Company of certain ferroelectric technology that may have
been developed by Symetrix, which is not used in the Company's FRAM products.
The Company is aware, because others have obtained patents covering numerous
semiconductor designs or processes, that the Company operates in a competitive
environment in which it would not be unlikely for a third party to claim that
certain of the Company's present or future products may infringe the patents
or rights of such third parties. If any such infringements exist or arise in
the future, the Company may be exposed to liability for damages and may need
to obtain licenses relating to third-party technology incorporated into the
Company's products. The Company's inability to obtain such licenses on
acceptable terms or the occurrence of related litigation could materially
adversely affect the Company. The Company was recently granted a patent the
Company believes is fundamental in covering the basic architecture and method
of operation of its EDRAM products, and the Company has other patents and
patent applications involving its EDRAM technology pending.
DEPENDENCE ON KEY PERSONNEL. The Company's future success depends in large
part on the continued service of its key technical and management personnel
and on its ability to continue to attract and retain qualified employees,
particularly the highly skilled design, process, materials and test engineers
involved in the development and manufacture of its products and processes.
The competition for such personnel is intense, and the loss of key employees
(including executive officers), none of whom has a post-employment
noncompetition agreement, could have an adverse effect on the Company. The
Company requires its employees to execute confidentiality and non-disclosure
agreements when they begin employment with the Company. None of the Company's
employees other than L. David Sikes, the Company's Chief Executive Officer,
Greg Jones, the Company's President, and Richard L. Mohr, the Company's Chief
Financial Officer, has an employment agreement with the Company, and, although
the Company has such agreements with such employees, there can be no assurance
that the Company can retain them in the future. During 1997, the number of
people employed by the Company increased by approximately 14% over 1996.
<PAGE>
ENVIRONMENTAL REGULATION. Federal, state and local regulations impose various
environmental controls on the discharge of chemicals and gases used in the
Company's manufacturing processes. The Company believes that it has taken all
necessary steps to ensure that its activities comply with all applicable
environmental rules and regulations. Although the Company's operations have
not been materially impacted by the cost of environmental compliance, there
can be no assurance that changes in such environmental rules and regulations
will not require additional investments in capital equipment and the
implementation of compliance programs in the future. Any failure by the
Company to comply with such environmental rules and regulations regarding the
discharge of hazardous substances could subject it to serious liabilities and
could materially adversely affect its manufacturing operations.
CURRENT MARKET FOR COMMON STOCK. The Company's Common Stock currently trades
on the Nasdaq National Market tier of the Nasdaq Stock Market under the symbol
"RMTR." Although for a period during 1995 the Company did not satisfy the net
tangible assets requirement for continued listing on the Nasdaq Stock Market,
the Company has since September 1995 maintained compliance with such
requirement. If the Company's Common Stock is not traded on the Nasdaq Stock
Market or listed on a national securities exchange, a security holder's
ability to effectively trade such securities may be limited. During 1997, the
Company's stock price experienced significant fluctuations, ranging from a per
share high of $9.50 on August 25, 1997 to a low of $4.438 on May 22, 1997.
The Company believes that such volatility may be caused in part by factors
unrelated to the Company's operating performance, including stock market
conditions affecting stocks of technology companies generally and the number
of shares of the Company's Common Stock available for sale by existing
stockholders. The Company expects that such factors, as well as the Company's
success in implementing its strategic and business plans and operating
results, could continue to affect the market price of its Common Stock in the
future.
CONTROL BY EXISTING STOCKHOLDERS; CHANGE IN CONTROL. The Fund, the NTC
Liquidating Trust and the Benton Liquidating Trust (successors to Benton) and
certain affiliated investors advised by BEA (the "BEA Holders") are the
three largest stockholders of the Company. Based on information available to
the Company, as of March 15, 1995, the Fund, the NTC and Benton Liquidating
Trusts and the BEA Holders beneficially owned or controlled approximately
21.6%, 17.7% and 10.1%, respectively, of the Company's issued and
outstanding shares of Common Stock. Benton, the Fund, BEA and the Company
have also agreed that, for as long as any of Benton, the Fund or BEA
beneficially owns 5% or more of the issued and outstanding shares of Common
Stock of the Company, the Company and the other two of such stockholders will
use their best efforts to cause a designee of each such 5% stockholder to
serve on the Company's Board of Directors. Although the Company is not aware
of any agreement among the NTC and Benton Liquidating Trusts, the Fund and BEA
to act together (other than as set forth in the immediately preceding
sentence), if the NTC and Benton Liquidating Trusts, the Fund and BEA were to
act together, they would be able to elect the Company's entire Board of
<PAGE>
Directors and would have the ability to control the Company and direct its
business and affairs. The concentration of ownership of the Company may have
the effect of delaying, deferring or preventing a change in control of the
Company or, if such shares are sold, may effect a change in control of the
Company. The resolution of Benton's bankruptcy case resulted in the trustee
of the NTC and Benton Liquidating Trusts holding shares of the Company
formerly owned by Benton. The trustee has described the business of the
trusts as being the liquidation of the trusts' assets in order to distribute
the proceeds of such liquidation to the trusts' beneficiaries. Any program by
the NTC and Benton Liquidating Trusts to dispose of a substantial amount of
their shares of the Company's Common Stock in the open market could have an
adverse impact on the market for such Common Stock, as discussed below under
"Securities Eligible for Future Sale."
SECURITIES ELIGIBLE FOR FUTURE SALE. Sales of substantial amounts of the
Company's securities in the public market after the date of this Prospectus,
or the availability of such securities for sale in the public market, could
materially adversely affect prevailing market prices for the Company's
securities, including its Common Stock. As of April 29, 1998, the
Company had 37,953,772 shares of Common Stock issued and outstanding. Of
these shares, excluding the Shares offered hereby, approximately 19,401,300
shares were either freely tradable without restriction or could be sold
pursuant to an effective registration statement under the Securities Act, and
approximately 4,538,100 shares (most of which were held by "affiliates" who
are subject to Rule 144 notice requirements and volume restrictions) could be
publicly sold under Rule 144 promulgated under the Securities Act. As long as
the Registration Statement of which this Prospectus is a part remains
effective, 12,599,294 shares, (excluding shares issuable upon exercise of the
Warrants and certain options) may be sold by the holders thereof from time to
time for any reasons so long as such registration statement remains effective.
In addition, pursuant to a registration statement filed by the Company on
March 10, 1998, (i) 800,000 shares of Common Stock may be sold by the holders
thereof from time to time for any reason; (ii) 80,000 shares of Common Stock
may be sold by the holders thereof upon exercise of Common Stock Purchase
Warrants to purchase 80,000 shares of Common Stock (the "Common Stock
Warrants"); (iii) an indeterminate number of shares of Common Stock issuable
upon conversion of 17,425 five-year Preferred Stock Purchase Warrants (the
"Series A Preferred Warrants") at conversion rates to be determined by
reference to the prices of the Common Stock at future dates may be sold by the
holders thereof, and (iv) an indeterminate number of shares issuable upon
exercise of 1,742 Series A Preferred Warrants and conversion of the Series A
Preferred issuable upon exercise at conversion rates to be determined by
reference to the prices of the Common Stock at a future date may be sold by
the holders thereof pursuant to such registration statement. As of
April 29, 1998, approximately 1,701,038 shares of Common Stock were
subject to issuance upon exercise of outstanding and exercisable options
granted under the Company's stock option plans and, except to the extent that
shares issued upon exercise of such options are held by affiliates (who, as
noted above, are subject to Rule 144 notice requirements and volume
<PAGE>
restrictions), will be eligible for immediate resale in the public market upon
exercise of such options. As of April 29, 1998, in addition to the
Common Stock Warrants, and 1,742 Series A Preferred Warrants, approximately
6,989,701 shares of Common Stock were subject to issuance upon exercise of
other outstanding and exercisable warrants, all of which are held by
affiliates. Subject to the Rule 144 notice requirements and volume
restrictions, the shares of Common Stock issuable upon exercise of such
warrants will be eligible for immediate resale in the public market upon
exercise of such options. In addition, the Company has agreed to use its best
efforts to register for resale under the Securities Act any shares of Common
Stock issued upon conversion of the indebtedness outstanding under the Fund
Credit Facility, if such indebtedness is, at the Fund's option, converted (as
Of April 29, 1998, 635,019 shares were issuable upon conversion of such
indebtedness).
ISSUANCE OF COMMON STOCK. In November 1996, the Company's authorized number
of shares of Common Stock was increased from 50,000,000 to 75,000,000. Each
additional share of Common Stock authorized by such amendment has the same
rights and privileges as each previously authorized share of Common Stock. As
of April 29, 1998, 37,953,772 shares were outstanding and 12,199,303
were reserved for issuance pursuant to outstanding warrants, options and
conversion of the Fund's indebtedness. The issuance of any newly authorized
shares will dilute a stockholder's proportionate equity interest in the
Company's Common Stock.
ISSUANCE OF PREFERRED STOCK. The Company has the authority to issue up to
10,000,000 shares of Preferred Stock in one or more series and to fix the
voting powers, designations, preferences and relative rights, qualifications,
limitations or restrictions of the Preferred Stock, without any vote or action
by the Company's stockholders. As of April 29, 1998, 17,425 shares of
Series A Preferred were outstanding and 1,742 were reserved for issuance
pursuant to the Series A Preferred Warrants. The issuance of additional
shares of Preferred Stock by the Company could further affect the rights of
the holders of Common Stock. For example, such issuance could result in a
class of securities having preferential voting, dividend or liquidation rights
or having (upon conversion or otherwise) all of the rights appurtenant to
Common Stock. Additionally, the Company's authority to issue Preferred Stock
could be used to discourage attempts by others to obtain control of or acquire
the Company by making such attempts more difficult or costly to achieve.
CERTAIN EFFECTS OF CONVERSION OF SERIES A PREFERRED; POTENTIAL COMMON STOCK
ADJUSTMENT. In February 1998, the Company completed a private placement of
17,425 shares of Series A Preferred, which entitle the holders thereof to
convert such shares into shares of Common Stock. The exact number of shares
of Common Stock issuable upon conversion of the Series A Preferred cannot
currently be estimated, but such number will vary inversely with the market
price of the Common Stock. The holders of Common Stock will be subject to
dilution upon conversion of the Series A Preferred. The extent of such
dilution will depend on, among other things, the future market prices of the
<PAGE>
Common Stock and the decisions by holders of shares of Series A Preferred as
to when to convert such shares, which will affect, among other things, the
number of shares of Series A Preferred issuable as dividends on the Series A
Preferred (and ultimately the number of shares of Common Stock issuable upon
conversion of all the Series A Preferred). Until the last day of the sixth
full calendar month after the date of issuance of the Series A Preferred, the
conversion price of such shares is $10 per share. The conversion price of the
Series A Preferred as of any date after the six full calendar month period
following the date of issuance shall be the lowest trading price of the Common
Stock during the twenty-two (22) consecutive trading days immediately
preceding the date of conversion, reduced by the "Applicable Percentage." The
"Applicable Percentage" is dependent upon the time which has passed from
original issuance to the date of measurement, being 7.0% starting on the
first day of the seventh month and increasing by one percent in each
subsequent month to 15% starting on the first day of the fifteenth month after
the date of issuance and continuing until the Series A Preferred is converted.
On March 2, 1998, the last reported sales price of the Common Stock on the
NASDAQ Stock Market was $5.125 per share. If such market price per share were
used to determine the number of shares of Common Stock issuable upon
conversion of all the outstanding shares of Series A Preferred (including the
shares of Series A Preferred issued or issuable upon exercise of the Series A
Preferred Warrants) on a date, after the six full calendar month period
following the date of issuance, on which the "Applicable Percentage"
discount were 15 %, the Company would issue a total of approximately 4,399,885
shares of Common Stock in respect of the Series A Preferred issued in the
Preferred Stock Private Placement. The number of shares of Common Stock
issuable upon conversion of the Series A Preferred will increase as the market
price of the Common Stock decreases (and decrease as such market price
increases). Thus, to the extent the market price per share of Common Stock
following such six full calendar month period is lower or higher than $5.125
as of any date on which shares of Series A Preferred are converted, the
Company would issue greater or fewer shares of Common Stock than reflected in
such estimate, and such difference could be material. The terms of the Series
A Preferred do not provide for any limit on the number of shares of Common
Stock which the Company may be required to issue in respect thereof. Stock
market volatility, whether related to the stock market generally or the
Company specifically, and if coincident in time with conversions of Series A
Preferred, could impact directly the number of shares of Common Stock issuable
upon conversion thereof. Subject to certain exclusions, if the Company issues
any shares of Common Stock upon conversion of the Series A Preferred for a
conversion price per share which shall be lower than the $4.93 per share
purchase price of the Shares sold in a private placement of 800,000 shares of
the Company's Common Stock in December 1997 (the " Common Stock Private
Placement") (such lower price being the "Reset Price"), then the $4.93 per
share purchase price of the Shares will be adjusted downward so as to equal
the Reset Price by issuance of such additional number of shares of Common
Stock as is necessary to reduce the effective purchase price of said Shares to
the Reset Price. Under certain conditions the Company has the right or the
obligation to satisfy conversions of Series A Preferred by payment of cash
amounts in lieu of issuance of Common Stock. In such event, there can be no
assurance that the Company will have sufficient available cash flow to fund
any cash redemption of, or cash conversion in respect of, the Series A
Preferred. See "Description of Capital Stock -- Preferred Stock."
<PAGE>
Following conversion of the Series A Preferred into shares of Common Stock,
the holders of such shares of Common Stock will be subject to limits on re-
sales of such shares to the greatest of: (i) 10% of the average daily trading
volume of the Common Stock for the five trading days preceding any such sale
date; (ii) 20,000 shares; and (iii) 10% of the trading volume for the Common
Stock on the date of any such sale. Such limitations on transfer would limit
the ability of an investor to sell shares of Common Stock received upon
conversion of the Series A Preferred in excess of such levels in one
transaction and delay the time over which an investor could sell its entire
holdings of such shares of Common Stock, which could have the effect of
depressing the price of Common Stock during such period. See "Description of
Capital Stock -- Preferred Stock."
CERTAIN ACCOUNTING EFFECTS OF ISSUANCE OF SERIES A PREFERRED. As indicated
above, the Conversion Price of the Series A Preferred as of any date during
the six full calendar month period following the date of issuance through
August 31, 1998 shall be $10.00. The Conversion Price as of any date after
the six full calendar month period following the date of issuance shall be the
lowest trading price of the Common Stock during the twenty-two (22)
consecutive trading days immediately preceding the date of conversion, reduced
by the "Applicable Percentage." The "Applicable Percentage" is dependent upon
the time which has passed from original issuance to the date of measurement,
being 7.0% starting on the first day of the seventh month and increasing by
one percent in each subsequent month to 15% starting on the first day of the
fifteenth month after the date of issuance, provided that the maximum
Conversion Price shall be the lesser of: (i) 85% of the average of the daily
low trade prices of the Common Stock for the fifteenth calendar month after
the date of issuance, (ii) 85% of the average of the daily low trade prices of
the Common Stock for the twenty-first calendar month after the date of
issuance, and (iii) 85% of the average of the daily low trade prices of the
Common Stock for the twenty-seventh calendar month after the date of issuance,
with the provisions of clauses (i), (ii) and (iii) becoming effective at the
end of the fifteenth, twenty-first and twenty-seventh, respectively, calendar
months following said date of issuance.
The conversion discount of the Series A Preferred (represented by the
effective "Applicable Percentage" described above) is considered to be an
additional preferred stock dividend. The maximum discount of 15% (the
"guaranteed return") of $3,075,007 is initially recorded as a reduction of
preferred stock and an increase to additional paid-in capital. The guaranteed
return reduction to preferred stock is accreted, as additional dividends, over
15 months by recording a charge to income available to Common Stockholders and
an increase to preferred stock. If conversion occurs before the guaranteed
return has been recorded to the income statement, no further income statement
charge is necessary. The Company will also record cumulative dividends of $60
per outstanding Series A Preferred share per annum ($1,034,700 annually
assuming 17,425 Series A Preferred shares outstanding) as a reduction of
income available to Common Stockholders. The earnings per share calculation
will show the effect of the add back of the guaranteed return (recorded as
additional dividends) and annual cumulative dividends recorded to net income
available for Common Stockholders.
<PAGE>
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the shares
of Common Stock offered hereby by the Selling Security Holders.
SELLING SECURITY HOLDERS
The following table sets forth: (i) the number of shares of Common Stock
beneficially owned by each Selling Security Holder as of April 29, 1998,
(ii) the number of shares of Common Stock to be offered hereby by each Selling
Security Holder, and (iii) the number of shares of Common Stock and the
percentage of the outstanding shares of Common Stock to be beneficially owned
by each Selling Security Holder after completion of the offering.
<TABLE>
<CAPTION>
No. of Shares
Beneficially Owned Shares Beneficially
Prior to Offering No. of Owned After Offering(1)
Name of Selling --------------------- Shares -----------------------
Security Holder Number % Offered Number %
- --------------- ---------- ----- -------- --------- -----
<S> <C> <C> <C> <C> <C>
NTC Liquidating 7,589,390(2) 18.5% 2,973,821(3) 4,615,569 11.3%
Trust
Benton Liquidating 2,069,130(4) 5.5 2,069,130 0 0
Trust
National Electrical 12,866,903(5) 30.2 9,046,044(6) 3,820,859 9.0
Benefit Fund
C.I. Global 673,000(7) 1.8 673,000 0 0
Equity RSP Fund
Empire Partners, LP 25,010(7) * 25,010 0 0
C.I. Global Fund 1,320,000(7) 3.8 1,320,000 0 0
C.I. American Fund 680,000(7) 1.7 680,000 0 0
C.I. International 200,000(7) * 200,000 0 0
Balanced RSP Fund
C.I. International 200,000(7) * 200,000 0 0
Balanced Fund
Essex Associates 29,912(7) * 29,912 0 0
- ------------
<FN>
* Less than 1 percent.
<PAGE>
(1) For each Selling Security Holder, assumes that all of the Warrants and
Options held by that Selling Security Holder are exercised and that all of the
Shares covered by the Prospectus are sold or otherwise disposed of and that no
other shares are acquired or sold by the Selling Security Holders.
(2) In an amended Schedule 13D dated December 2, 1997, the NTC Liquidating
Trust reported sole dispositive power as to 7,589,390 shares consisting of:
(i) 4,628,174 shares of Common Stock owned directly and (ii) 2,961,216 shares
of Common Stock issuable upon exercise of the warrants held by the NTC
Liquidating Trust.
(3) Includes 2,961,216 shares of Common Stock, subject to adjustment in
certain circumstances, issuable upon exercise of the Warrants held by the
NTC Liquidating Trust.
(4) In a Schedule 13D dated October 8, 1997, the Benton Liquidating Trust
reported sole voting and sole dispositive power as to 2,069,130 shares of
Common Stock owned directly.
(5) Includes: (i) 8,193,399 shares of Common Stock owned by the Fund;
(ii) 4,028,485 shares of Common Stock issuable upon exercise of the warrants
held by the Fund; (iii) approximately 635,019 shares issuable as of April 29,
1998 upon conversion of a convertible promissory note dated August 31, 1995
made by the Company in favor of the Fund; and (iv) 10,000 shares issuable to
the Fund pursuant to Options which are exercisable or become exercisable
within 60 days after April 29, 1998. The trustees of the Fund share voting
and dispositive powers as to such shares. The Fund beneficially owns more
than 5% of the outstanding shares of the Company's Common Stock and has
certain rights with respect to the election of one director on the Company's
Board of Directors. Mr. Tull is the Fund's designee on the Company's Board of
Directors.
(6) Includes 4,028,485 shares of Common Stock, subject to adjustment in
certain circumstances, issuable upon exercise of the warrants held by the
Fund.
(7) These seven Selling Security Holders constitute the BEA Holders, and each
of their securities are deemed to be owned beneficially by BEA. BEA
beneficially owns more than 5% of the outstanding shares of the Company's
Common Stock and has certain rights to the election of one director on the
Company's Board of Directors. Mr. Rothschild is BEA's designee on the
Company's Board of Directors.
</TABLE>
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company is comprised of 85,000,000 shares,
of which 75,000,000 shares have been designated Common Stock, $0.01 par value,
and 10,000,000 shares have been designated Preferred Stock, $0.01 par value.
COMMON STOCK. As of April 29, 1998, there were 37,953,772 shares of Common
Stock issued and outstanding which were held of record by approximately
2,390 stockholders. The holders of the Company's Common Stock are entitled
to one vote per share on all matters to be voted upon by the stockholders.
Subject to the rights and preferences of the Series A Preferred and any other
Preferred Stock which may be outstanding in the future, the holders of Common
Stock are entitled to receive ratably such dividends as may be declared from
time to time by the Board of Directors. In the event of the liquidation,
dissolution or winding up of the Company, the holders of Common Stock are
entitled to share ratably in all assets remaining after payment of
liabilities, subject to the liquidation preferences of the Series A Preferred
and any other Preferred Stock then outstanding. There are no cumulative
voting rights and no redemption or sinking fund provisions applicable to the
Common Stock. All outstanding shares of Common Stock are fully paid and
nonassessable.
The Company has outstanding Common Stock Purchase Warrants entitling the
holders to purchase 80,000 shares of Common Stock at $4.93 per share expiring
December 23, 2002 pursuant to the Common Stock Private Placement. The Common
Stock Purchase Warrants are subject to customary antidilution adjustments. In
addition, approximately 1,701,038 shares of Common Stock are subject to
issuance upon exercise of outstanding and exercisable options granted under
the Company's stock option plans, and approximately 6,989,701 shares of Common
Stock are subject to issuance upon exercise of outstanding and exercisable
warrants at an exercise price $4.15 per share expiring August 31, 2000.
The Company has agreed with the purchasers of the Shares issued in the Common
Stock Private Placement, among other matters, that if, during the twelve-month
period following December 23, 1997, the Company shall sell any shares of
Common Stock, or issue any shares of Common Stock upon conversion of the
Series A Preferred at any time, in each case for a selling or conversion price
per share which shall be lower than the $4.93 per share purchase price of the
Shares sold in the Common Stock Private Placement (such lower price being the
"Reset Price"), then such $4.93 per share purchase price will be adjusted
downward by issuance of such additional number of shares of Common Stock, or
in certain instances by such cash refund to the investors, as is necessary to
reduce the effective purchase price to the Reset Price. Issuance of Shares
upon conversion or exercise of convertible securities, options or warrants
outstanding on December 23, 1997, of which the conversion or exercise price
was fixed at that date, and of options or warrants issued pursuant to
stockholder approved employee benefit or incentive plans are excluded from the
Reset Price obligation. The Company also agreed with the purchasers of the
Shares issued in the Common Stock Private Placement to register such Shares
<PAGE>
and the Shares issuable upon exercise of the Common Stock Purchase Warrants,
for resale under the Securities Act, no later than 120 days after the Closing
of the Common Stock Private Placement. Any delay in having the related
registration statement declared effective by the Commission beyond the
applicable period will result in the payment by the Company to each holder, in
cash, of 3% of the total purchase price of the Common Stock issued in the
Common Stock Private Placement for each 30-day period of the delay (pro rated
for any shorter period). Upon the effectiveness of the Registration Statement
of which this Prospectus is a part within such 120-day period, no such
penalties are payable by the Company.
PREFERRED STOCK. The Company's Board of Directors has the authority to issue
shares of Preferred Stock in one or more series and to fix the designations,
powers, preferences and rights thereof, including dividend rights, conversion
rights, voting rights, terms of redemption, liquidation preferences and the
number of shares constituting any series or the designation of such series,
without further vote or action by the stockholders. The issuance of shares of
Preferred Stock, including the Series A Preferred, may have the effect of
delaying, deferring or preventing a change in control of the Company and may
adversely affect the voting power and other rights of Common Stock. As of the
date of this Prospectus, 29,000 shares of the authorized Preferred Stock have
been designated as the Series A Preferred, of which 17,425 shares are issued
and outstanding and 1,742 shares are subject to Series A Preferred Warrants,
none of which have been exercised. The outstanding Series A Preferred
Warrants are exercisable to purchase a total of 1,742 shares of Series A
Preferred at a price of $1,000 per share and expire on February 25, 2003. The
Series A Preferred Warrants are subject to customary antidilution adjustments.
SERIES A PREFERRED. The Series A Preferred has a liquidation preference (the
"Liquidation Preference") of $1,000 per share, plus accumulated and unpaid
dividends and any amounts due but unpaid pursuant to the Company's agreement
to pay certain penalties to the holders of the Series A Preferred if the
Company shall fail to cause to become effective within a specified period
under the Securities Act a registration statement covering all shares of
Common Stock issuable upon conversion of the Series A Preferred. The Series A
Preferred ranks prior to all other classes of equity securities of the
Company, including the Common Stock, as to distributions of assets upon
liquidation, dissolution or winding up of the Company, whether voluntary or
involuntary. Each share of Series A Preferred is entitled to receive
cumulative dividends at the rate of $60.00 per share per annum, payable in
additional shares of Series A Preferred valued at $1,000 per share, when and
as declared by the Company's Board of Directors. Such dividends shall accrue
from day to day whether or not declared. Upon any conversion of the Series A
Preferred, dividends not previously paid shall be paid in respect of the
shares of Series A Preferred being converted and the shares of the Series A
Preferred issued in payment of such dividends shall also be simultaneously
converted into Common Stock.
<PAGE>
A consolidation or merger of the Company with or into any other corporation,
or sale of all or substantially all of the assets of the Company (a "Change
in Control Transaction"), will, at the option of the holders of the Series A
Preferred, be deemed a liquidation if the shares of stock of the Company
(along with all derivative securities) outstanding immediately prior to such
transaction represent immediately after such transaction less than a majority
of the voting power of the surviving corporation (or the acquiror of the
Company's assets in the case of a sale of assets). In such event, the holders
of the Series A Preferred will be entitled to receive, in cash, upon the
occurrence of such transaction an amount per share equal to the Liquidation
Preference. Such option shall not apply to a business combination in which
substantially all the Common Stock of the Company is converted into or
exchanged for voting common stock of the corporation surviving such business
combination, if (i) such common stock of the surviving corporation is listed
and traded on the NASDAQ National Market or the New York Stock Exchange and
(ii) the Board of Directors of the Company determines in good faith that the
conversion rights and other rights and preferences of the Series A Preferred
are preserved and not rendered of less value by the terms of such business
combination.
All outstanding shares of the Series A Preferred, including any accrued
dividends thereon, shall be automatically converted into Common Stock on the
fifth anniversary of the date of issuance of the Series A Preferred at the
Conversion Price (as hereinafter defined) in effect on such anniversary date.
Commencing the earlier of (i) three calendar months after the date of issuance
and (ii) the date that a registration statement registering the shares of
Common Stock issuable upon conversion of the Series A Preferred (including
such shares issuable upon exercise of the Series A Preferred Warrants) is
declared effective by the Securities and Exchange Commission, each holder of
Series A Preferred shall be entitled to convert, in any calendar month on a
cumulative basis following such commencement date, at least 20% and up to 50%
(depending upon the price at which the Common Stock is trading) of the number
of shares of Series A Preferred held of record by such holder on such day.
Notwithstanding the foregoing, all the Series A Preferred will be fully
convertible upon the happening of certain events, including a Change in
Control Transaction (whether or not the holders of Series A Preferred deem
such event to be a liquidation); the filing under any bankruptcy or similar
law for the relief of debtors by or against the Company; the failure or
unwillingness of the Company's independent auditors to issue a customary
opinion on the Company's financial statements within 90 days after the end of
the Company's fiscal year or the issuance of such opinion subject to a "going
concern" qualification; the failure of the Common Stock to be listed on either
the NASDAQ National Market or the New York Stock Exchange; or the occurrence
of a material breach by the Company of any of its obligations under the
Preferred Stock Investment Agreements pursuant to which the Series A Preferred
was originally issued, which breach has a material adverse effect on the
holders of the Series A Preferred.
<PAGE>
The number of shares of Common Stock issuable upon conversion of shares of
Series A Preferred will equal the Liquidation Preference of the shares being
converted divided by the then-effective conversion price applicable to the
Common Stock (the "Conversion Price"). The Conversion Price as of any date
during the six full calendar month period following the date of issuance shall
be $10.00. The Conversion Price as of any date after the six full calendar
month period following the date of issuance shall be the lowest trading price
of the Common Stock during the twenty-two (22) consecutive trading days
immediately preceding the date of conversion, reduced by the "Applicable
Percentage." The "Applicable Percentage" is dependent upon the time which has
passed from original issuance to the date of measurement, being 7.0% starting
on the first day of the seventh month and increasing by one percent in each
subsequent month to 15% starting on the first day of the fifteenth month after
the date of issuance, provided that the maximum Conversion Price shall be the
lesser of: (i) 85% of the average of the daily low trade prices of the Common
Stock for the fifteenth calendar month after the date of issuance, (ii) 85% of
the average of the daily low trade prices of the Common Stock for the twenty-
first calendar month after the date of issuance, and (iii) 85% of the average
of the daily low trade prices of the Common Stock for the twenty-seventh
calendar month after the date of issuance, with the provisions of clauses
(i), (ii) and (iii) becoming effective at the end of the fifteenth, twenty-
first and twenty-seventh calendar months, respectively, following said date of
issuance. The Conversion Price is at all times also subject to adjustment for
customary anti-dilution events such as stock splits, stock dividends,
reorganizations and certain mergers affecting the Common Stock. No holder of
Series A Preferred will be entitled to convert any share of Series A Preferred
into shares of Common Stock if, following such conversion, the holder and its
affiliates (within the meaning of the Exchange Act) will be the beneficial
owners (as defined in Rule 13d-3 thereunder) of 10% or more of the outstanding
shares of Common Stock.
Following conversion of the Series A Preferred into shares of Common Stock,
the holders of such shares of Common Stock have agreed to limits on re-sales
of such shares on any trading day to the greatest of: (i) 10% of the average
daily trading volume of the Common Stock for the five trading days preceding
any such sale; (ii) 20,000 shares; or (iii) 10% of the trading volume for the
Common Stock on the date of any such sale. Each of such holders has also
agreed that it and its affiliates will not (subject to certain exceptions)
engage in any short sales, swaps, purchasing of puts or other hedging
activities that involve the direct or indirect use of Common Stock to hedge
its investment in the Series A Preferred. Furthermore, the Company has the
right, subject to certain conditions, if the Conversion Price falls below a
price designated by the Company upon proper notice (the "Green Floor
Price"), to honor any conversion request, if at a Conversion Price lower than
the Green Floor Price then in effect by a cash payment in lieu of the issuance
of Common Stock in an amount equal to the proceeds which would otherwise have
been received by the holder if conversion were in fact made into shares of
Common Stock and such shares were sold at the high trade price on the date
that the conversion notice is given (the "Green Floor Conversion"). The
<PAGE>
Company is not obligated to issue, in the aggregate, more than 7,420,000
shares of Common Stock if issuance of a larger number of shares would
constitute a breach of the Rules of the Nasdaq Stock Market, Inc. (the "Nasdaq
Rules"). If, however, stockholder approval of the Preferred Stock Private
Placement is not received by June 30,1998, the Company will be obligated to
redeem, at a price of 110% of the Liquidation Preference, a sufficient number
of shares of Series A Preferred which, in its reasonable judgment, will permit
conversion of the remaining shares of Series A Preferred without breaching the
Nasdaq Rules. Any default in payment of such redemption price will cause such
redemption amount to accrue interest at the rate of 0.0005% per day until
paid. In addition, if the issuance of Common Stock upon conversion of any
shares of Series A Preferred submitted for conversion would otherwise
constitute a breach of the Nasdaq Rules, then the Company has agreed to honor
such conversion request by exercise of the Green Floor Conversion with respect
to such shares of Series A Preferred in lieu of issuing Common Stock.
The Company intends to seek the approval of its stockholders of the Preferred
Stock Private Placement issuance at its 1998 Annual Meeting of Stockholders to
satisfy the stockholder approval requirements undertaken for the benefit of
the holders of Series A Preferred in connection with the Preferred Stock
Private Placement. The Company's executive officers, directors and
stockholders holding 21% of the Company's outstanding Common Stock have agreed
to vote their respective shares in favor of the Preferred Stock Private
Placement and have given the Company's Chief Executive Officer their proxies
to vote their respective shares in favor of approving the Preferred Stock
Private Placement.
The placement agents for the Preferred Stock Private Placement were Cappello
Capital Corp. and CEA Montgomery Media, L.L.C. (the "Placement Agents"). In
partial consideration for placing such securities, the Company issued to the
Placement Agents or their affiliates 1,742 Series A Preferred Warrants
(subject to the same anti-dilution protections as are applicable to the Series
A Preferred). Such warrants are exercisable for a period of five years to
purchase shares of Series A Preferred at an exercise price of $1,000.
Except for the right to consent or not to actions by the Company to (i) modify
its Certificate of Incorporation or Bylaws so as to amend or change any of the
rights, preferences or privileges of the Series A Preferred, (ii) authorize or
issue any other equity security senior to or ranking on parity with the Series
A Preferred, or (iii) pay any dividends in cash or property on, or purchase or
otherwise acquire for value, any Common Stock or other equity security of the
Corporation either junior to or on a parity with the Series A Preferred
(except from current or retained earnings or from the net proceeds of sales of
equity securities and except for purchases of Common Stock from terminating or
retiring employees pursuant to the terms of employee benefit plans in an
aggregate amount not greater than $1 million), and except as otherwise
provided by applicable law, holders of shares of Series A Preferred have no
voting rights.
<PAGE>
PLAN OF DISTRIBUTION
The Company will sell the Warrant Shares only to the registered holders of the
Warrants, in accordance with the terms thereof, if and when such holders
exercise the Warrants.
The Shares offered hereby are being offered directly by the Selling Security
Holders. The Company will receive no proceeds from the sale of the Shares.
Sales may be effected by the Selling Security Holders from time to time in
transactions on the Nasdaq Stock Market at prevailing market prices, in
negotiated transactions at negotiated prices or in a combination of such
methods of sale. The Selling Security Holders may effect such transactions by
selling the shares to or through broker-dealers, and such broker-dealers may
receive compensation in the form of discounts or commissions from the Selling
Security Holders and/or the purchasers of the Shares for whom such broker-
dealers may act as agents or to whom they sell as principal, or both (which
compensation as to a particular broker-dealer may be in excess of customary
commissions). There can be no assurance that the Selling Security Holders
will sell all or any of the shares offered hereby.
The Selling Security Holders and any persons who participate in the sale of
the shares offered hereby from time to time may be deemed to be "underwriters"
within the meaning of Section 2(11) of the Securities Act. Any commissions
paid or discounts or concessions allowed to any such persons and any profits
received on resale of the shares offered hereby, may be deemed to be
underwriting compensation under the Securities Act.
The Company has agreed to pay all expenses (other than selling commissions and
fees and expenses of counsel and other advisors to the Selling Security
Holders) in connection with the registration and sale of the shares being
offered hereby, other than commissions and discounts of underwriters, brokers,
dealers or agents.
LEGAL MATTERS
The validity of the shares of the Company's Common Stock offered hereby will
be passed upon for the Company by Coudert Brothers, Los Angeles, California.
EXPERTS
The financial statements of the Company included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1995 and incorporated by
reference in this Prospectus, have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with respect
thereto, and are incorporated herein in reliance upon the authority of said
firm as experts in accounting and auditing in giving said report.
<PAGE>
GLOSSARY
CMOS - Complimentary Metal Oxide Semiconductor process technology. A
semiconductor technology that uses two types of basic transistors (p-channel
and n-channel) to build a circuit with low power and high performance.
DRAM - Dynamic Random Access Memory. A semiconductor memory device whose
stored information must be refreshed every few milliseconds.
EDRAM - Enhanced Dynamic Random Access Memory. A specialty memory
semiconductor device which incorporates a fast DRAM array and an SRAM cache to
achieve very high speeds in comparison to conventional DRAM devices.
Ferroelectric Technology - A technology that integrates ferroelectric material
into a microelectronic semiconductor structure.
FRAM - The Company's Ferroelectric Random Access Memory. A random access
memory that employs a ferroelectric digital memory capacitor to make it
nonvolatile.
Kilobit - 1,000 bits. In reference to a memory, usually 1,024 bits since
memories are partitioned into sizes that are an exponential of two.
Megabit - 1,000,000 bits. In reference to a memory, usually 1,048,576 bits
since memories are partitioned into sizes that are an exponential of two.
Nonvolatile Memory - An integrated circuit that retains information without
electrical power.
Silicon Wafer Underlayer - A silicon wafer manufactured through all processes
prior to application of the Company's ferroelectric processes.
<PAGE>
==============================================================================
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus, and, if given
or made, such information or representations must not be relied upon as having
been authorized. This prospectus does not constitute an offer to sell or the
solicitation of an offer to buy any securities other than the securities to
which it relates or any offer to sell or the solicitation of an offer to buy
such securities in any circumstances in which such offer or solicitation is
unlawful. Neither the delivery of this prospectus nor any sale made hereunder
shall, under any circumstances, create any implication that there has been no
change in the affairs of the company since the date thereof or that the
information contained herein is correct as of any time subsequent to its date.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
Available Information . . . . . . . . . . . . . . . 3
Additional Information . . . . . . . . . . . . . . 3
Incorporation of Certain Documents by Reference . . 3
The Company . . . . . . . . . . . . . . . . . . . . 4
Risk Factors . . . . . . . . . . . . . . . . .. . . 4
Use of Proceeds . . . . . . . . . . . . . . . . . . 14
Selling Security Holders. . . . . . . . . . . . . . 15
Description of Capital Stock . . . . . . . . . . . 16
Plan of Distribution . . . . . . . . . . . . . . . 19
Legal Matters . . . . . . . . . . . . . . . . . . . 19
Experts . . . . . . . . . . . . . . . . . . . . . . 19
Glossary . . . . . . . . . . . . . . . . . . . . . 19
</TABLE>
-------------------------
19,591,852 SHARES
RAMTRON INTERNATIONAL CORPORATION
COMMON STOCK
PROSPECTUS
May 6, 1998
==============================================================================
<PAGE>
