As filed with the Securities and Exchange Commission on March 9, 1998
REGISTRATION NO. 33-
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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RAMTRON INTERNATIONAL CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 84-0962308
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
1850 Ramtron Drive, Colorado Springs, Colorado 80921 (719) 481-7000
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(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
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L. DAVID SIKES
Chief Executive Officer
Ramtron International Corporation
1850 Ramtron Drive
Colorado Springs, Colorado 80921
(719) 481-7000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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Copies to:
JOHN A. ST. CLAIR, ESQ.
ROBERT R. JESUELE, ESQ.
Coudert Brothers
1055 West Seventh Street, 20th Floor
Los Angeles, California 90017
(213) 688-9088
Approximate date of commencement of proposed sale to the public:
From time to time after this Registration Statement becomes effective.
<PAGE>
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. / /
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / X /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration number of the earlier effective
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Title of Proposed Proposed
Each Class of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Per Offering Registration
Registered Registered Security Price Fee
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<S> <C> <C> <C> <C>
Common Stock,
$0.01 par value 880,000(1) $5.13(2) $ 4,514,400 $ 1,332
Common Stock,
$0.01 par value 7,478,346(3)(4) $5.13(2) $38,363,915 $11,317
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TOTAL $12,649
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<FN>
(1) Includes the registration for resale of: (i) 800,000 shares of Common
Stock (subject to adjustment) of Registrant issued to certain investors in
connection with a Common Stock private placement by the Registrant in
December 1997 (the "Common Stock Private Placement"); and (ii) 80,000
shares of Common Stock (subject to adjustment) of Registrant issuable upon
exercise of the five-year Common Stock Purchase Warrants issued to affiliates
of the placement agents in connection with the Common Stock Private Placement
(the "Common Stock Purchase Warrants").
(2) Estimated in accordance with Rule 457(c) of the Securities Act of 1933,
as amended, solely for the purpose of determining the amount of the
registration fee and based on the average of the high and low reported sale
prices of a share of the Registrant's Common Stock as reported by The Nasdaq
Stock Market on March 5, 1998.
<PAGE>
(3) Includes the registration for resale of: Registrant's good-faith estimate
of the number of shares of Common Stock of the Registrant issuable (i) upon
conversion of 17,425 shares of Series A Convertible Preferred Stock (the
"Series A Preferred") of the Registrant issued to certain investors in
connection with a private placement by the Registrant of the Series A
Preferred in February 1998 (the "Preferred Stock Private Placement"); and
(ii) upon exercise of the 1,742 five-year Preferred Stock Purchase Warrants
(the "Series A Preferred Warrants") and conversion of the Series A Preferred
issuable upon such exercise which were issued to affiliates of the placement
agents in connection with the Preferred Stock Private Placement. The number of
shares of Common Stock indicated is an estimate that assumes a Series A
Preferred conversion price of $2.563 per share (which is equal to one-half of
the reported closing sale price per share of Registrant's Common Stock as
reported by the Nasdaq National Stock market on March 2, 1998) and is subject
to adjustment in accordance with the terms of the Certificate of Designation
of Registrant governing the Series A Preferred. The actual number of shares
of Common Stock to be issuable upon conversion of the Series A Preferred could
be materially less or more than such estimated amount depending upon factors,
which cannot be predicted at this time, including, among others, the actual
conversion price of the Series A Preferred and the decisions by holders of the
Series A Preferred as to when to convert such securities.
(4) Pursuant to Rule 416, there are also registered for resale hereby a
presently indeterminate number of additional shares of Common Stock of the
Registrant issuable upon conversion of or otherwise in respect of the Series A
Preferred as such number may be adjusted as a result of stock splits, stock
dividends and other antidilution provisions (including the fluctuating
conversion rate) with respect to the Series A Preferred.
</TABLE>
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
<PAGE>
Information contained herein is subject to completion or amendment. A
Registration Statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the Registration Statement becomes
effective. This Prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these
securities in any state in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such state.
Subject to Completion
March 9, 1998
Prospectus
RAMTRON INTERNATIONAL CORPORATION
8,358,346 Shares of Common Stock
This Prospectus relates to an aggregate of 8,358,346 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"). See
"Selling Security Holders."
Included in the 8,358,346 Shares offered hereby by the Selling Security
Holders are: (i) 800,000 Shares (subject to adjustment) which were issued by
the Company in a private offering in reliance on available exemptions under
the Securities Act of 1933, as amended (the "Securities Act"), to certain
accredited investors in connection with a Common Stock private placement in
December 1997 (the "Common Stock Private Placement"), and 80,000 Shares
(subject to adjustment) which are issuable upon exercise of the Common Stock
Purchase Warrants issued by the Company to six principals, each an accredited
investor, of the placement agents in connection with the Common Stock Private
Placement; and (ii) 6,798,673 Shares (subject to adjustment) which may be
issued to certain Selling Security Holders upon conversion of the 17,425
shares of Series A Convertible Preferred Stock, $0.01 par value per share (the
"Series A Preferred"), issued by the Company in a private offering in reliance
on available exemptions under the Securities Act to certain accredited
investors in connection with a private placement of the Series A Preferred in
February 1998 (the "Preferred Stock Private Placement"), and 679,672 Shares
(subject to adjustment) issuable upon exercise of the 1,742 five-year
Preferred Stock Purchase Warrants (the "Series A Preferred Warrants") and
conversion of the Series A Preferred issuable upon such exercise issued by the
Company in a private offering in reliance on available exemptions under the
Securities Act to six principals, each an accredited investor, of the
placement agent in connection with the Preferred Stock Private Placement.
In the Common Stock and in the Preferred Stock Private Placements, the Company
granted certain registration rights for the benefit of the Selling Security
Holders. The filing of the Registration Statement of which this Prospectus is
a part, registering the resale of the Shares issued in the Common Stock
Private Placement and the Shares issuable upon conversion of the Series A
Preferred, upon exercise of the Common Stock Purchase Warrants and upon
exercise of the Series A Preferred Warrants and conversion of the Series A
Preferred issuable upon such exercise, is intended to satisfy the Company's
obligations with respect to such registration rights.
<PAGE>
The number of Shares offered hereby includes the resale of such presently
indeterminable number of Shares as may be received by the Selling Security
Holders upon conversion of the Series A Preferred, upon exercise of the Common
Stock Purchase Warrants, and upon exercise of the Series A Preferred Warrants
and conversion of the Series A Preferred issuable upon such exercise. The
number of shares of Common Stock indicated is an estimate that assumes a
Series A Preferred conversion price of $2.563 per share (which is equal to
one-half of the reported closing sale price per share of Registrant's Common
Stock as reported by the Nasdaq National Stock market on March 2, 1998) and is
subject to adjustment in accordance with the terms of the Certificate of
Designation of Registrant governing the Series A Preferred.
The actual number of Shares to be received by the Selling Security Holders
upon conversion of the Series A Preferred could be materially less or more
than such estimated amounts depending upon factors which cannot be predicted
at this time, including, among others, the actual conversion prices of the
Series A Preferred, and the decisions by the Selling Security Holders as to
when to convert such securities, which will affect the number of shares of
Series A Preferred issuable as dividends on the Series A Preferred. Moreover,
depending upon the conversion price per share of Series A Preferred, the
Company may be required to issue additional Shares to the investors in the
Common Stock Private Placement, the resale of which additional Shares the
Company has agreed to register. The presentation herein of the number of
Shares offered pursuant to this Prospectus is not intended to constitute a
prediction as to the future market price of the Common Stock, as to when
Selling Security Holders will elect to convert their shares of Series A
Preferred into Common Stock or as to whether the Company will be required to
issue additional Shares to the investors in the Common Stock Private
Placement. See "Selling Security Holders"; "Plan of Distribution";
"Description of Capital Stock -- Preferred Stock."
The Selling Security Holders may from time to time sell all or a portion of
the Shares 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-dealer may be
in excess of customary commissions). To the knowledge of the Company, no
arrangements relating to the distribution of the Shares covered by this
Prospectus have been entered into as of the date hereof by the Selling
Security Holders. 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) of the
Securities Act, and the commissions paid or discounts allowed to any such
brokers, dealers or agents, in addition to any profits received on resale of
the Shares, if any such broker, dealer or agent should purchase any Shares as
a principal, may be deemed to be underwriting discounts or commissions under
the Securities Act.
<PAGE>
The Company will receive no proceeds from the sale of the Shares by the
Selling Security Holders. See "Use of Proceeds." The Company has agreed
with the Selling Security Holders 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 the Securities Act. The Common Stock of the Company trades
on the Nasdaq National Market tier of The Nasdaq Stock Market under the symbol
"RMTR." On March 2, 1998, the last reported sale price for the Common Stock
as reported on The Nasdaq Stock Market was $5.125 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.
Selling Security Holders, brokers or dealers effecting transactions in the
Shares should confirm the registration or qualification thereof under the
securities laws of the states in which such transactions occur or the
existence of any exemption from registration.
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK
AND MAY RESULT IN SUBSTANTIAL DILUTION. 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 March 9, 1998
<PAGE>
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,
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 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, 1996; (2) the Company's quarterly reports on
Form 10-Q for the quarters ended March 31, 1997, June 30, 1997 and
September 30, 1997; (3) the Company's Current Report on Form 8-K dated
December 24, 1997; (4) the Company's Current Report on Form 8-K dated
February 4, 1998; (5) the Company's Current Report on Form 8-K dated March 4,
1998; and (6) 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
Series A Preferred.
<PAGE>
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 Shares 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.
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).
SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
Except for the historical information contained herein, the discussion in this
Prospectus contains forward-looking statements within the meaning of Section
27A of the Securities Act, concerning, but not limited to, future operating
results and business plans of the Company, that involve risks, uncertainties
and other factors (including, without limitation, those factors discussed
under "Risk Factors") which may cause the Company's actual results,
performance or financial condition to differ materially from those discussed
in this Prospectus and the documents incorporated by reference herein. Any
such forward-looking statements are expressly qualified in their entirety by
this cautionary notice. From time to time the Company details other risks
with respect to its business and financial results and condition in its
filings with the Commission.
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 specialty 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(registered trademark)) products. The Company's
executive offices are located at 1850 Ramtron Drive, Colorado Springs,
Colorado 80921, and its telephone number is (719) 481-7000. The Company has
two wholly owned subsidiaries, Enhanced Memory Systems, Inc. ("EMS"), which
was established in May 1995, and Ramtron Kabushki Kaisha ("Ramtron K.K."),
which was established in July 1996. The Company formed EMS to operate its
EDRAM business. The Company formed Ramtron K.K. to perform sales and
marketing functions within Japan for the Company's products and to act as a
liaison between the Company and its Japan alliance partners. To date, Ramtron
K.K. has had limited operations.
<PAGE>
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.
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 Mr. Benton's bankruptcy in
1995, the Company ceased to rely on Mr. 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 Mr. Benton, the Fund and
BEA Associates, Inc. ("BEA") (as the holder by assignment of a note issued
by the Company to Mr. 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 Mr. 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
sold approximately $17.4 million of Series A Preferred, to certain
institutional investors in separate private placements 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
<PAGE>
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.
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.
<PAGE>
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.
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.
<PAGE>
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.
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
<PAGE>
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
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.
<PAGE>
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 entered into
manufacturing agreements with IBM and Siemens Semiconductors ("Siemens")
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.
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.
<PAGE>
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.
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.).
<PAGE>
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
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.
<PAGE>
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.
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
<PAGE>
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.
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.
<PAGE>
CONTROL BY EXISTING STOCKHOLDERS; CHANGE IN CONTROL. The Fund, the NTC
Liquidating Trust and the Benton Liquidating Trust (successors to Mr. 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 December 31, 1997, the Fund, the NTC and Benton Liquidating
Trusts and the BEA Holders beneficially owned or controlled approximately
21.6%, 17.7% and 11.2%, respectively, of the Company's issued and outstanding
shares of Common Stock. Mr. Benton, the Fund, BEA and the Company have also
agreed that, for as long as any of Mr. 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 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
Mr. Benton's bankruptcy case resulted in the trustee of the NTC and Benton
Liquidating Trusts holding shares of the Company formerly owned by Mr. 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 December 31, 1997, the Company
had 37,922,630 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. Upon the
effectiveness of the Registration Statement of which this Prospectus is a
part, and as long as such Registration Statement remains effective, (i) an
additional 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;
(iii) an indeterminate number of shares of Common Stock issuable upon
conversion of 17,425 of the Company's Series A Preferred 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
<PAGE>
future date thereof may be sold by the holders thereof. As of December 31,
1997, approximately 1,403,030 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 restrictions), will be
eligible for immediate resale in the public market upon exercise of such
options. As of December 31, 1997, in addition to the Common Stock Purchase
Warrants and the 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 December 31, 1997, 614,266 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 December 31, 1997, 37,922,630 shares were outstanding and 12,178,550 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 March 2, 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 the Preferred Stock
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 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
<PAGE>
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 the Common
Stock Private Placement (such lower price being the "Reset Price"), then the
$4.93 per share purchase price of the Shares issued in the Common Stock
Private Placement 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
resales 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
14 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 ($1,045,500 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 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 March 2, 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. The
information set forth below is based on information provided by the Selling
Security Holders. None of the Selling Security Holders has had a material
relationship with the Company within the past three years, other than as a
result of the ownership of the Shares or other securities of the Company.
<PAGE>
<TABLE>
<CAPTION>
No. of Shares
Beneficially Owned Shares Beneficially
Prior to Offering(1) No. of Owned After Offering(2)
Name of Selling ------------------- Shares -----------------------
Security Holder Number % Offered(1) Number %
- --------------- ------ --- --------- ------ ---
<S> <C> <C> <C> <C> <C>
DFA Group Trust- 419,000 1.1 419,900 0 0
Small Company
Subtrust
US 9-10 Small 219,200 * 219,200 0 0
Company
Portfolio
DFA Group Trust- 160,900 * 160,900 0 0
6-10 Subtrust
Linda S. Cappello 18,000 * 18,000 0 0
Gerard K. Cappello 12,000 * 12,000 0 0
Lawrence K. 10,000 * 10,000 0 0
Fleischman
Jonathan 10,000 * 10,000 0 0
Davidson
James W. 15,000 * 15,000 0 0
Montgomery
Living Trust
Kim 15,000 * 15,000 0 0
Enterprises, LP
ProFuture Fund 114,784 * 114,784 0 0
Management, Inc(3)
ELARA Ltd.(3) 573,921 1.5 573,921 0 0
Deere Park 746,097 1.9 746,097 0 0
Capital
Management, LLC(3)
Crisostomo B. 45,914 * 45,914 0 0
Garcia Trust(3)
Laredo Capital 22,957 * 22,957 0 0
Partners(3)
LICAP 34,435 * 34,435 0 0
Partners(3)
SIL Nominees 229,568 * 229,568 0 0
Ltd.(3)
Alfred Romano(3) 11,478 * 11,478 0 0
<PAGE>
Earl E. 22,957 * 22,957 0 0
Gales, Jr.(3)
Triton Capital 114,784 * 114,784 0 0
Holdings, Ltd.(3)
JMG Capital 114,784 * 114,784 0 0
Partners, LP(3)
Lisa G. Shine(3) 5,739 * 5,739 0 0
Loretta Hirsh 5,739 * 5,739 0 0
Shine(3)
Paul 22,957 * 22,957 0 0
Rajewski(3)
Fayerweather 45,914 * 45,914 0 0
Associates(3)
Anvil 57,392 * 57,392 0 0
Investment
Partners, LP(3)
Lawrence Kaplan 22,957 * 22,957 0 0
& Helaine Kaplan
J/T(3)
Jerry 11,478 * 11,478 0 0
Kaplan(3)
Stanley A. 22,957 * 22,957 0 0
Kaplan(3)
Robert & Ellen 11,478 * 11,478 0 0
Deutschman
Family Trust(3)
Peter J. 57,392 * 57,392 0 0
Cocoziello(3)
Ronald H. 11,478 * 11,478 0 0
Means(3)
Jonathan 5,739 * 5,739 0 0
Thomas(3)
Schotz/Wheeler 5,739 * 5,739 0 0
Family Trust(3)
KEYWAY 459,137 1.2 459,137 0 0
Investments,
Ltd.(3)
Kris Melling(3) 18,478 * 11,478 7,000 *
Real A 13,774 * 13,774 0 0
Rouillard(3)
<PAGE>
Joseph M. 20,478 * 11,478 9,000 *
Fitzgerald(3)
George R. 16,478 * 11,478 5,000 *
Wong(3)
CC Investments, 688,705 1.8 688,705 0 0
LDC(3)
Nancy A. 3,444 * 3,444 0 0
Aossey(3)
PRIF, LP(3) 229,568 * 229,568 0 0
Offense Group 114,784 * 114,784 0 0
Associates, LP(3)
Kayne Anderson 114,784 * 114,784 0 0
Non-Traditional
Investments,
LP(3)
Gerard K. 11,478 * 11,478 0 0
Cappello(3)
Alexander L. 11,478 * 11,478 0 0
Cappello(3)
- ------------
<FN>
* Less than one percent.
(1) The actual number of shares of Common Stock shown as beneficially owned
and offered hereby, and included in the Registration Statement of which this
Prospectus is a part, includes such additional number of shares of Common
Stock as may be issued or issuable upon conversion of the Series A Preferred
Stock by reason of the floating conversion price mechanisms thereof, or by
reason of any stock split, stock dividend or similar transaction involving the
Common Stock in order to prevent dilution, all in accordance with Rule 416
under the Securities Act.
(2) For each Selling Security Holder, assumes 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.
(3) The number of shares of Common Stock shown above as beneficially owned by
such Selling Security Holder represents an estimate of the number of shares of
Common Stock issuable to such Selling Security Holder upon (i) conversion of
the shares of Series A Preferred or (ii) conversion of the up to 1,742 shares
of Series A Preferred issuable upon exercise of the Series A Preferred
Warrants, as the case may be. The actual number of shares of Common Stock to
be issued upon conversion of the Series A Preferred, as well as the
corresponding percentages of beneficial ownership, could be materially less or
more than the amounts and percentages estimated in this table, depending upon
factors which cannot be predicted at this time, including, among others, the
actual conversion price of the Series A Preferred and the decisions by holders
of the Series A Preferred as to when to convert such securities. For purposes
of this table, the number of shares of Common Stock shown as beneficially
owned prior to the offering by each holder of the Series A Preferred Stock and
Series A Preferred Warrants is an estimate that assumes a Series A Preferred
conversion price of $4.356 per share (which is equal to 85% of the reported
closing price per share of Registrant's Common Stock as reported by the Nasdaq
National Stock Market on March 2, 1998).
</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 December 31, 1997, there were 37,922,630 shares of Common
Stock issued and outstanding which were held of record by approximately 2,408
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 1,403,030 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
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.
<PAGE>
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.
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.
<PAGE>
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.
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.
<PAGE>
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 resales 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
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 to satisfy the stockholder approval
requirements undertaken for the benefit of the holders Series A Preferred in
connection with the Preferred Stock Private Placement. The Company presently
expects that this approval will be sought at its 1998 annual meeting of
stockholders. 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 Company has agreed to register the shares of Common Stock issuable upon
conversion of the Series A Preferred, including upon conversion of shares
payable as dividends thereon and shares issuable upon exercise of the Series A
Preferred Warrants, for resale under the Securities Act no later than 120 days
after original issuance. 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 Series A Preferred 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.
<PAGE>
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 agreed to issue
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. The
Company is obligated to register the shares of Common Stock issuable upon
conversion of the Series A Preferred received upon exercise of the Series A
Preferred Warrants for resale under the Securities Act and is doing so by the
registration statement of which this Prospectus is a part.
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.
PLAN OF DISTRIBUTION
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.
The Selling Security Holders have advised the Company that the sale or
distribution of the Shares may be effected directly to purchasers by the
Selling Security Holders or by pledgees, donees, transferees or other
successors in interest, as principals or through one or more underwriters,
brokers, dealers or agents from time to time in one or more transactions
(which may involve crosses or block transactions) (i) on any stock exchange,
in the Nasdaq National Market, or in the over-the-counter market, (ii) in
transactions otherwise than on any stock exchange or in the over-the counter
market, or (iii) through the writing of options (whether such options are
listed on an options exchange or otherwise) on, or settlement of short sales
of, the Shares. Any of such transactions may be effected at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices, at varying prices determined at the time of sale or at negotiated or
fixed prices, in each case as determined by the Selling Security Holder or by
agreement between the Selling Security Holder and underwriters, brokers,
dealers or agents, or purchasers. If the Selling Security Holders effect such
transactions by selling Shares to or through underwriters, brokers, dealers or
agents, such underwriters, brokers, dealers or agents may receive compensation
in the form of discounts, concessions or commissions from the Selling Security
Holders or from purchasers of Shares for whom they may act as agent (which
discounts, concessions or commissions as to particular underwriters, brokers,
dealers or agents may be in excess of those customary in the types of
transactions involved).
<PAGE>
The Selling Security Holders and any brokers, dealers, agents or other persons
who participate in the sale or distribution 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.
Under the securities laws of certain states, the Shares may be sold in such
states only through registered or licensed brokers or dealers. In addition,
in certain states the Shares may not be sold unless the Shares have been
registered or qualified for sale in such state or an exemption from
registration or qualification is available and is complied with.
The Company has informed the Selling Security Holders that the anti-
manipulation provisions of Regulation M under the Exchange Act may apply to
purchases and sales of the Shares by the Selling Security Holders, and that
there are restrictions on market-making activities by person engaged in the
distribution of the Shares. The Company has also advised the Selling Security
Holders that if a particular offer of Shares is to be made on terms
constituting a material change from the information set forth above with
respect to the Plan of Distribution, then to the extent required, a Prospectus
Supplement must be distributed setting forth such terms and related
information as required.
The Company has agreed to pay all expenses (other than commissions and
discounts of underwriters, brokers, dealers or agents 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.
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, 1996 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>
===========================================================================
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 hereof 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
Special Cautionary
Notice Regarding Forward-Looking Statements . . . . . . . . 4
The Company . . . . . . . . . . . . . . . . . . . . . . . . 4
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . 4
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . 15
Selling Security Holders . . . . . . . . . . . . . . . . . 16
Description of Capital Stock . . . . . . . . . . . . . . . 18
Plan of Distribution . . . . . . . . . . . . . . . . . . . 21
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . 22
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . 22
</TABLE>
--------------------
8,358,346 Shares
RAMTRON INTERNATIONAL CORPORATION
COMMON STOCK
PROSPECTUS
March 9, 1998
==============================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth the expenses (other than underwriting discounts
and commissions) in connection with the sale and distribution of the
securities being registered. All the amounts shown are estimates except for
the SEC registration fee.
SEC registration fee $12,649
Accounting fees and expenses $2,000
Legal fees and expenses $40,000
Miscellaneous expenses $10,000
-------
Total $64,649
=======
The Company has agreed to pay all expenses (other than commissions discounts
of underwriters, brokers, dealers or agents 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.
Item 15. Indemnification of Directors and Officers
The Company has adopted provisions in its Certificate of Incorporation that
limit the liability of its directors to the fullest extent permitted by the
Delaware General Corporation Law for monetary damages arising from a breach of
their fiduciary duty as directors. Such limitation does not affect such
liability: (i) for any breach of a director's duty of loyalty to the Company
or its stockholders; (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law; (iii) under
Section 174 of the Delaware General Corporation Law; or (iv) for any
transaction from which a director derived an improper personal benefit.
The Company's Bylaws provide that the Company shall indemnify its directors
and officers to the fullest extent permitted by Delaware law, including
circumstances in which indemnification is otherwise discretionary under
Delaware law. The Company also maintains on behalf of its directors and
officers insurance protection against certain liabilities arising out of the
discharge of their duties.
In an Indemnification Agreement entered into between Oren L. Benton, a
principal stockholder and former director of the Company, and George J.
Stathakis, a director of the Company, in March 1990, Mr. Benton agreed to
indemnify Mr. Stathakis against all expenses, liabilities and other items
referred to in Section 145 of the Delaware General Corporation Law and against
certain other expenses incurred in connection with derivative actions if
Mr. Stathakis is a party to such actions or is threatened to be made a party
to such actions by reason of his being a director, officer, employee or agent
of the Company. The Company has not determined what effect, if any,
Mr. Benton's bankruptcy had on such agreement.
<PAGE>
In a Consulting Agreement entered into in January 1990 among the Fund,
William G. Tull, a director of the Company, and WGT Associates, Inc., the Fund
agreed to indemnify Mr. Tull with respect to claims made by third parties
against Mr. Tull as the Fund's designated nominee on the Company's Board of
Directors, provided that such claims may not involve either a breach of
fiduciary responsibility under the Employee Retirement and Income Security Act
of 1974 or liability for willful misconduct, bad faith or negligence.
Pursuant to a Stock and Warrant Purchase Agreement entered into between the
Company and the Fund in March 1989 (the "1989 Fund Purchase Agreement"), the
Company also agreed to indemnify the Fund and its affiliates, including
consultants to the Fund such as Mr. Tull, with respect to claims made by third
parties arising out of the 1989 Fund Purchase Agreement, provided that the
Company is not required to indemnify Mr. Tull for claims relating to:
(i) Mr. Tull's violation of securities laws or a knowing violation of other
laws, (ii) an agreement to which Mr. Tull and the third-party claimant are
parties or (iii) the fiduciary duties of Mr. Tull to the third-party claimant.
The Company has also obtained directors and officers liability insurance.
Item 16. Exhibits and Financial Statement Schedules
Exhibit Number
4.1 Certificate of Designation, Preferences, Rights and Limitations of
Series A Convertible Preferred Stock(1)
4.2 Form of Common Stock Purchase Agreement
4.3 Form of Common Stock Purchase Warrant
4.4 Form of Preferred Stock Investment Agreement(1)
4.5 Form of Preferred Stock Purchase Warrant(1)
5.1 Opinion of Coudert Brothers
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Coudert Brothers (included in Exhibit 5.1)
- ------------
(1) Incorporated by reference to the Registrant's Current Report on
Form 8-K filed with the Commission on March 4, 1998.
Item 17. Undertakings
The Company hereby undertakes:
to file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
<PAGE>
(ii) To reflect in the prospectus any facts or events arising after the
effective date of this Registration Statement (or the most recent post-
effective amendment hereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in this Registration
Statement. Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities offered would
not exceed that which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20% change
in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement:
Provided, however, That paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Company pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
The Company hereby undertakes that, for the purpose of determining any
liability under the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
The Company hereby undertakes to remove from registration by means of a post-
effective amendment any of the securities being registered which remain unsold
at the termination of the offering.
The Company hereby undertakes that, for the purpose of determining any
liability under the Act, each filing of the Company's annual report pursuant
to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report pursuant
to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated
by reference in this Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company
in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, the Company will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
<PAGE>
The Company hereby undertakes that, for purposes of determining any liability
under the Act, the information omitted from the form of prospectus filed as
part of this Registration Statement in reliance upon Rule 430A and contained
in a form of prospectus filed by the Company pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
The Company hereby undertakes that, for the purpose of determining any
liability under the Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Colorado Springs, State of Colorado, on
March 9, 1998.
RAMTRON INTERNATIONAL CORPORATION
By: /S/ L. David Sikes
-------------------------------
L. David Sikes
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
hereby constitutes and appoints L. David Sikes and Richard L. Mohr, or either
of them, his attorneys-in-fact and agents, each with full power of
substitution for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments to this Registration Statement, and
to file the same with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto each of
said attorneys-in-fact and agents full power and authority to do so and
perform each and every act and thing requisite and necessary to be done in
connection with this Registration Statement, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming
all that either of said attorneys-in-fact and agents, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities
indicated.
Signature Title Date
- -------------------------- ---------------------------- --------------
/S/ L. David Sikes
- -------------------------- Chairman and Chief Executive 3-09-98
L. David Sikes Officer
/S/ George J. Stathakis
- -------------------------- Director 3-09-98
George J. Stathakis
/S/ William G. Howard
- ------------------------- Director 3-09-98
William G. Howard
/S/ William G. Tull
- ------------------------- Director 3-09-98
William G. Tull
/S/ L. T. Womack
- ------------------------- Director 3-09-98
L. T. Womack
/S/ Michael L. Rothschild
- ------------------------- Director 3-09-98
Michael L. Rothschild
/S/ Greg B. Jones
- ------------------------- Director, President and 3-09-98
Greg B. Jones Chief Operating Officer
/S/ Richard L. Mohr
- ------------------------- Executive Vice President and 3-09-98
Richard L. Mohr Chief Financial Officer
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is made as of December 23,
1997, between Ramtron International Corporation, a Delaware corporation (the
"Corporation"), and (name) whose name is set forth at the foot of this
Agreement (the "Purchaser").
The Corporation and the Purchaser hereby agree as follows:
SECTION 1
Authorization, Purchase and Sale of the Stock
1.1 Authorization of the Stock. The Corporation has authorized issuance and
sale of (number of) shares of its common stock (the "Stock") to Purchaser as
herein provided.
1.2 Sale and Purchase of the Stock. At the Closing, subject to the terms and
conditions hereof and in reliance upon the representations, warranties and
agreements contained herein, the Purchaser will purchase the Stock from the
Corporation at a purchase price of $4.93 per share, ($ amount) in total.
SECTION 2
Closing, Payment and Delivery
2.1 Closing Date and Place of Closing. The closing shall be held as soon as
practicable, and in no event more than 10 business days after execution of
this Agreement, on such date as the Corporation and the Purchaser may agree to
(the "Closing Date") and shall be held at the offices of (NAME AND ADDRESS).
2.2 Payment and Delivery. At the Closing, the Purchaser will pay or cause to
be paid to the Corporation by wire funds transfer the entire purchase price.
The Corporation will deliver in advance of the Closing to an institutional
custodian designated by the Purchaser a certificate or certificates,
registered in such name or names as Purchaser may designate, representing all
of the Stock, with instructions that such certificates are to be held for the
account of Purchaser upon payment of the purchase price.
2.3 Covenant of Best Efforts and Good Faith. The Corporation and the
Purchaser agree to use their respective best efforts and to act in good faith
to cause to occur all conditions to Closing which are in their respective
control.
SECTION 3
Purchase Price Adjustment
<PAGE>
3.1 Subsequent Sale at Lower Price. If during the twelve month period
following the Closing Date, the Corporation sells any shares of its common
stock for a selling price lower than the purchase price per share set forth in
Section 1.2 hereof, to anyone other than Purchaser or an entity advised by
Dimensional Fund Advisors Inc., the purchase price per share of the Stock sold
to Purchaser hereunder shall be adjusted downward to equal such lower selling
price. The Corporation shall give to the Purchaser prompt written notice of
any such sale.
3.2 Adjustment Mechanism. If an adjustment of the purchase price is required
pursuant to this Section the Corporation shall immediately deliver to
Purchaser such number of additional shares of common stock as will cause
(i) the total number of shares of common stock delivered to Purchaser
hereunder, multiplied by (ii) the adjusted purchase price per share, to equal
(iii) the total purchase price set forth in Section 1.2 hereof; provided
however, that the Corporation shall effect such adjustment in cash, in whole
or in part, to the extent required by the following subsection.
3.3 Limitation on Number of Shares. Purchaser and other entities advised by
Dimensional Fund Advisors Inc. shall not be required to accept, by way of any
such adjustment, a number of shares of the Corporation such that the total
number of such shares held by Purchaser and such other entities, which were
held by them on the date of this Agreement or acquired by them pursuant to
this Agreement or agreements of like tenor with such other entities, would
exceed 4.99% of the total outstanding stock of the Corporation. The
Corporation shall effect the adjustment required by this Section by cash
refund to the extent necessary to avoid causing the aforesaid limitation to be
exceeded.
3.4 Capital Adjustments. In case of any stock split or reverse stock split,
stock dividend, reclassification of the common stock, recapitalization, merger
or consolidation, or like capital adjustment affecting the common stock of the
Corporation, the provisions of this Section shall be applied as if such
capital adjustment event had occurred immediately prior to the Closing Date
and the original purchase price had been fairly allocated to the stock
resulting from such capital adjustment; and in other respects the provisions
of this Section shall be applied in a fair, equitable and reasonable manner so
as to give effect, as nearly as may be, to the purposes hereof.
3.5 Exclusions. Section 3.1 shall not apply to sales of shares by the
Corporation (i) upon conversion or exercise of any convertible securities,
options or warrants outstanding on the date hereof, if the conversion or
exercise price thereof is fixed at the date of this Agreement, or
(ii) pursuant to the provisions of any shareholder-approved employee benefit
or incentive plan heretofore or hereafter adopted by the Corporation.
3.6 Definitions. For purposes of Section 3.1 hereof, a sale of shares shall
mean and include the sale or issuance of rights, options, warrants or
convertible securities under which the Corporation is or may become obligated
to issue shares of common stock, and the "selling price" of the common stock
covered thereby shall be the exercise or conversion price thereof plus the
consideration (if any) received by the Corporation upon such sale or issuance.
In case of any such security presently outstanding or issued within twelve
months after the Closing Date, if the conversion or exercise price is
variable, the "selling price" shall be deemed to be the lowest conversion or
exercise price of such security during its life after the Closing. If shares
are issued for a consideration other than cash, the "selling price" shall be
the fair value of the such consideration as determined in good faith by the
Board of Directors of the Corporation. The term "Stock" as used in this
Agreement shall include shares issued pursuant to this Section.
<PAGE>
SECTION 4
Representations and Warranties of the Corporation
The Corporation hereby represents and warrants to the Purchaser that:
4.1 Corporate Power, Qualification and Standing. The Corporation and its
subsidiaries are validly existing and in good standing under the laws of their
respective jurisdictions of incorporation and each of them is qualified to
transact business in each jurisdiction in which its ownership of property or
conduct of activities requires such qualification. The Corporation has all
requisite corporate power and authority to enter into this Agreement, to sell
the Stock and to carry out and perform its other obligations under this
Agreement.
4.2 S.E.C. Reports; Financial Statements. The common stock of the
Corporation is registered under Section 12(b) or (g) of the Securities
Exchange Act of 1934 and the Corporation is in full compliance with its
reporting and filing obligations under said Act. The Corporation has
delivered to Purchaser its Annual Reports to shareholders and its reports on
Form 10K for its last three fiscal years, and all its quarterly reports to
shareholders, quarterly reports on Form 10Q, and each other report,
registration statement, definitive proxy statement or other document filed
with the S.E.C. since the beginning of said three fiscal years (collectively,
the "SEC Reports"). The SEC Reports do not (as of their respective dates)
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The audited and unaudited financial statements of the Corporation
included in the SEC Reports (the "Financial Statements") have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis (except as stated in such Financial Statements or the notes
thereto) and fairly present the financial position of the Corporation and its
consolidated subsidiaries as of the dates thereof and the results of their
operations and changes in financial position for the periods then ended.
Except as publicly disclosed by the Corporation in the SEC Reports or
otherwise, since the end of the most recent of said fiscal years there has
been no material adverse change in the business, financial condition, or
results of operations of the Corporation and its subsidiaries taken together,
and there is no existing condition, event or series of events which can
reasonably be expected to have a material adverse effect on the business,
financial condition or results of operations of the Corporation and its
subsidiaries taken together, or its ability to perform its obligations under
this Agreement.
4.3 Authorization; No Conflict. Execution and delivery of this Agreement and
issuance and sale of the Stock have been duly authorized by all necessary
corporate action of the Corporation, and the Stock when issued will be validly
issued, fully paid and non-assessable. Performance by the Corporation of its
obligations under this Agreement will not conflict with or violate (i) the
charter documents or bylaws of the Corporation, (ii) any indenture, loan
agreement, lease, mortgage or other material agreement binding on the
Corporation, (iii) any order of a court or administrative agency binding on
the Corporation, or (iv) any applicable law or governmental regulation; and
such performance does not and will not require the permission or approval of
any governmental agency other than the Securities and Exchange Commission in
<PAGE>
connection with registration, and will not result in the imposition or
creation of any lien or charge against any assets of the Corporation. Except
as disclosed in the Financial Statements and SEC Reports (i) the Corporation
has no obligation to redeem or repurchase any of its equity securities,
(ii) no shareholder or other person has pre-emptive or other rights to acquire
equity securities of the Corporation, and (iii) the Corporation has no
obligation to register any of its securities otherwise than pursuant to
Section 8 of this Agreement or as disclosed on Exhibit A hereto.
4.4 Material Agreements; No Defaults. All material indentures, loan
agreements, leases, mortgages and other agreements binding on the Corporation
or its subsidiaries are identified in the list of exhibits contained in the
Corporation's most recent 10K report ("Other Agreements"), except agreements
entered into in the ordinary course which are not required to be so
identified. No material default on the part of the Corporation or any of its
subsidiaries (including any event which, with notice or the passage of time,
would constitute a default) exists under any of the Other Agreements.
4.5 Material Liabilities. Except for liabilities disclosed in the Financial
Statements or the SEC Reports, and obligations under the Other Agreements, the
Corporation and its subsidiaries have no material liabilities or obligations,
absolute or contingent, other than liabilities arising in the ordinary course
of business subsequent to the date of the most recent of the Financial
Statements.
4.6 Properties. The Corporation and its subsidiaries (i) have good title to
the properties and assets reflected in the Financial Statements as owned by
them, (ii) have valid leasehold interests in the properties leased by them,
and (iii) own or have the right to use under valid license agreements all
trademarks, trade names, copyrights, patents and other intellectual property
rights regularly utilized by them; subject in each case to no material liens,
security interests or adverse claims except as disclosed in the Financial
Statements or SEC Reports.
4.7 Litigation. There are no material legal actions, arbitrations, or
administrative proceedings pending against the Corporation or its
subsidiaries, except for the matters disclosed in the SEC Reports or in
Exhibit A hereto.
4.8 Tax Matters. The Corporation and its subsidiaries have filed on a timely
basis all tax returns required to be filed by them and have paid their taxes
prior to delinquency, and have made adequate accruals for tax liabilities on
the Financial Statements in accordance with generally accepted accounting
principles.
4.9 ERISA Compliance. Neither the Corporation nor any of its subsidiaries
has incurred any material funding deficiency within the meaning of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") or any
material liability to the Pension Benefit Guarantee Corporation in connection
with any employee benefit plan. The Corporation and its subsidiaries are in
compliance in all material respects with all applicable provisions of ERISA,
and have no obligations with respect to any multi-employer plan. No
"reportable event" as such term is defined in ERISA, which may result in any
material liability, has occurred with respect to any employee benefit or other
plan maintained for employees of the Corporation or any subsidiary.
<PAGE>
4.10 Environmental Matters. Except as disclosed in the SEC Reports, neither
the Corporation nor any of its subsidiaries (i) has been notified by any
governmental authority that it is, or may be, a Responsible Party with respect
to cleanup or remediation of any environmental condition or hazardous waste
site, (ii) has violated any law, regulation, order or requirement of
governmental authority with respect to Hazardous Substances, or (iii) has
incurred any material liability for violation or noncompliance with applicable
Environmental Regulations. The term "Environmental Regulations" means any
law, regulation, order or requirement relating to protection of the
environment, including without limitation, the Clean Air Act, the Clean Water
Act, the Comprehensive Environmental Response, Compensation and Liability Act,
the Resource Conservation and Recovery Act, the Hazardous Materials
Transportation Act and the Toxic Substances Control Act. The term "Hazardous
Substance" means any substance defined or listed as such in any Environmental
Regulation.
4.11 Other Matters. The Corporation is not now and will not be after giving
effect to the receipt of the proceeds from the sale of the Stock an
"Investment Company" within the meaning of the Investment Company Act of 1940,
nor will it be controlled by or acting on behalf of any person which is such
an investment company. The Corporation is not selling the Stock "for the
purpose of purchasing or carrying any margin stock" within the meaning of
Regulation G of the Board of Governors of the Federal Reserve System. The
Corporation has not offered this Stock to any person other than the Purchaser.
SECTION 5
Representations and Warranties of the Purchaser
The Purchaser represents and warrants to the Corporation that:
5.1 Corporate Power and Authority. It is validly existing and in good
standing with all requisite power and authority to enter into this Agreement
and carry out its obligations hereunder and has taken all actions necessary to
authorize it to enter into this Agreement and carry out such obligations and
such performance will not violate any law, regulation or agreement binding on
Purchaser.
5.2 Investment. It is acquiring the Stock for investment and not with the
view to, or for resale in connection with, any distribution thereof. It is an
"accredited investor" within the meaning of the Securities Act of 1933 and the
rules thereunder. It understands that the Stock has not been registered under
the Securities Act of 1933 nor qualified under any State blue sky law by
reason of specified exemptions therefrom which depend upon, among other
things, the bona fide nature of its investment intent as expressed herein.
5.3 Rule 144. It acknowledges that the Stock must be held indefinitely
unless it is subsequently registered under the Securities Act of 1933 or an
exemption from such registration is available. It has been advised or is
aware of the provisions of Rule 144 promulgated under the Securities Act.
SECTION 6
Conditions to Obligations of the Purchaser
The obligation of the Purchaser to purchase the Stock is subject to the
fulfillment on or prior to the Closing Date of each of the following
conditions:
<PAGE>
(a) Representations and Warranties. The representations and warranties of
the Corporation shall be true and correct in all material respects on the
Closing Date.
(b) Performance. All covenants, agreements and conditions contained in
this Agreement to be performed or complied with by the Corporation on or prior
to the Closing Date shall have been performed or complied with in all material
respects.
(c) Opinion of Corporation's Counsel. The Purchaser shall have received
from counsel to the Corporation an opinion confirming the representations set
forth in the first sentence of Section 4.3 hereof, and on the basis of such
counsel's review of the Other Agreements and certificates of officers of the
Corporation as to factual matters, confirming the representations set forth in
the second and third sentences of Section 4.3 hereof.
(d) Legal Issuance. At the time of the Closing, the issuance and purchase
of the Stock shall be legally permitted by all laws and regulations to which
the Purchaser and the Corporation are subject.
(e) Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated hereby and all documents and
instruments incident to such transactions shall be satisfactory in form and
substance to the Purchaser and its counsel.
(f) Satisfaction of Obligations to Broker. The Corporation shall have
furnished the Purchaser with assurances satisfactory to the Purchaser that the
Corporation has satisfied its obligations to any broker entitled to
compensation in connection with the sale of the Stock.
SECTION 7
Conditions to Obligations of the Corporation
The Corporation's obligation to sell the Stock is subject to the fulfillment
on or prior to the Closing Date of each of the following conditions:
(a) Representations and Warranties. The representations and warranties
made by the Purchaser shall be true and correct in all material respects on
the Closing Date.
(b) Legal Issuance. At the time of the Closing, the issuance and purchase
of the Stock shall be legally permitted by all laws and regulations to which
the Purchaser and the Corporation are subject.
(c) Payment. The Corporation shall concurrently receive payment for the
Stock as provided in Section 2.
SECTION 8
Covenant to Register
(a) For purposes of this Section 8, the following definitions shall apply:
(i) The terms "register", "registered", and "registration" refer to a
registration under the Securities Act of 1933, as amended (the "Act") effected
by preparing and filing a registration statement or similar document in
compliance with the Act or an amendment thereto, and the declaration or
ordering of effectiveness of such registration statement, document or
amendment thereto.
<PAGE>
(ii) The term "Registrable Securities" means the Stock and any
securities of the Corporation or securities of any successor corporation
issued as, or issuable upon the conversion or exercise of any warrant, right
or other security that is issued as, a dividend or other distribution with
respect to, or in exchange for or in replacement of, the Stock.
(b) (i) At any time after one hundred and twenty (120) days after the
date of this Purchase Agreement and from time to time thereafter, Purchaser
shall have the right to require by notice in writing that the Corporation
register all or any part of the Registrable Securities held by Purchaser (a
"Demand Registration") and the Corporation shall thereupon effect such
registration in accordance herewith. As a separate covenant, the Corporation
agrees to file a registration statement on Form S-3 in order to register the
resale of the Stock and to cause such registration statement to be declared
effective within one hundred twenty (120) days of Closing. A 3% cash penalty
will accrue for every thirty (30) days after such date that the securities
remain unregistered. The penalty shall be pro-rated for periods of less than
thirty (30) days.
(ii) The Corporation shall not be obligated to effect Demand
Registration (i) if all of the Registrable Securities held by Purchaser which
are intended to be covered by the Demand Registration are, at the time of the
request of a Demand Registration, included in an effective registration
statement and the Corporation is in compliance with its obligations under
Subsection (d)(ii) through (v) hereof with respect to such registration
statement, or (ii) within 120 days after the effective date of any other
registration as to which Purchaser was given piggy-back rights pursuant to
subsection (c) hereof and in which Purchaser was able to register and sell at
least eighty percent (80%) of the Registrable Securities requested by
Purchaser to be included in such registration.
(c) If the Corporation proposes to register (including for this purpose a
registration effected by the Corporation for shareholders other than the
Purchaser) any of its stock or other securities under the Act in connection
with a public offering of such securities (other than a registration on Form
S-4, Form S-8 or other limited purpose form) and the Registrable Securities
have not heretofore been included in a registration statement under
Subsection (b), which remains effective, the Corporation shall, at such time,
promptly give the Purchaser written notice of such registration. Upon the
written request of the Purchaser given within twenty (20) days after receipt
of such notice by the Purchaser, the Corporation shall cause to be registered
under the Act all of the Registrable Securities that the Purchaser has
requested to be registered. However, the Corporation shall have no obligation
under this Subsection (c) to the extent that, with respect to a public
offering registration, any underwriter of such public offering reasonably
requests that the Registrable Securities or a portion thereof be excluded
therefrom.
(d) Whenever required under this Section 8 to effect the registration of
any Registrable Securities, the Corporation shall, as expeditiously as
reasonably possible:
(i) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause such
registration to become effective and, upon the request of the Purchaser, keep
such registration statement effective for so long as Purchaser desires to
dispose of the securities covered by such registration statement (but not
after Purchaser in the reasonable opinion of its counsel is free to sell such
securities under the provisions of Rule 144(k) under the Act).
<PAGE>
(ii) Prepare and file with the SEC such amendments and supplements to
such registration statements and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of
the Act with respect to the disposition of all securities covered by such
registration statement.
(iii) Furnish to the Purchaser such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the 1933 Act, and such other documents as the Purchaser may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by Purchaser.
(iv) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by Purchaser,
provided that the Corporation shall not be required in connection therewith or
as a condition thereto to qualify to do business or to file a general consent
to service and process in any such states or jurisdictions.
(v) Notify Purchaser of the happening of any event as a result of
which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of material fact or omits to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing.
(vi) Furnish, at the request of Purchaser, an opinion of counsel of
the Corporation, dated the effective date of the registration statement, as to
the due authorization and issuance of the securities being registered and
compliance with securities laws by the Corporation in connection with the
authorization and issuance thereof.
(e) The Purchaser will furnish to the Corporation in connection with any
registration under this Section 8 such information regarding itself, the
Registrable Securities and other securities of the Corporation held by it, and
the intended method of disposition of such securities as shall be required to
effect the registration of the Registrable Securities held by Purchaser.
(f) (i) The Corporation shall indemnify, defend and hold harmless each
holder of Registrable Securities which are included in a registration
statement pursuant to the provisions of Subsections (b) or (c), any
underwriter (as defined in the Act) for such holder, and the directors,
officers and controlling persons of such holder or underwriter from and
against, and shall reimburse all of them with respect to, any and all claims,
suits, demands, causes of action, losses, damages, liabilities, costs or
expenses ("Liabilities") to which any of them may become subject under the Act
or otherwise, arising from or relating to (A) any untrue statement or alleged
untrue statement of any material fact contained in such registration
statement, any prospectus contained therein or any amendment or supplement
thereto, or (B) the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not
misleading; provided, however, that the Corporation shall not be liable in any
such case to the extent that any such Liability arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged
omission so made in conformity with information furnished by such person in
writing specifically for use in the preparation thereof.
<PAGE>
(ii) Each holder of Registrable Securities included in a registration
pursuant to the provisions of Subsection (b) or (c) shall indemnify, defend,
and hold harmless the Corporation, its directors, officers and controlling
persons, and shall reimburse the Corporation, its directors, officers and
controlling persons with respect to, any and all Liabilities to which any of
them may become subject under the Act or otherwise, arising from or relating
to (A) any untrue statement or alleged untrue statement of any material fact
contained in such registration statement, any prospectus contained therein or
any amendment or supplement thereto, or (B) the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances in which they were
made, not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was so made in reliance upon and in strict conformity with written
information furnished by or on behalf of such holder specifically for use in
the preparation thereof.
(iii) Promptly after receipt by an indemnified party pursuant to the
provisions of Subsection (f) (i) or (f) (ii) of notice of the commencement of
any action involving the subject matter of the foregoing indemnity provisions,
such indemnified party shall, if a claim thereof is to be made against the
indemnifying party pursuant to the provisions of Subsection (f)(i) or (f)(ii),
promptly notify the indemnifying party of the commencement thereof; provided,
however, that the failure to so notify the indemnifying party shall not
relieve it from its indemnification obligations hereunder except to the extent
that the indemnifying party is materially prejudiced by such failure. If such
action is brought against any indemnified party and it notifies the
indemnifying party of the commencement thereof, the indemnifying party shall
have the right to participate in, and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party; provided,
however, if the defendants in any action include both the indemnified party
and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses different from or in addition to
those available to the indemnifying party, or if there is conflict of interest
which would prevent counsel for the indemnifying party from also representing
the indemnified party, the indemnified party shall have the right to select
separate counsel to participate in the defense of such action on behalf of
such indemnified party. After notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party pursuant to
Subsection (f)(i) or (f)(ii) for any expense of counsel subsequently incurred
by such indemnified party in connection with the defense thereof other than
reasonable costs of investigation, unless (A) the indemnified party shall have
employed counsel in accordance with the provisions of the preceding sentence,
or (B) the indemnifying party shall not have employed counsel satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after the notice of the commencement of the action. An indemnifying party
shall not be responsible for amounts paid in settlement without its consent,
provided that its consent may not be unreasonably withheld.
(g) (i) With respect to the inclusion of Registrable Securities in a
registration statement pursuant to subsections (b) or (c), all fees, costs and
expenses of and incidental to such registration, inclusion and public offering
shall be borne by the Corporation; provided, however, that any securityholders
participating in such registration shall bear their pro rata share of the
underwriting discounts and commissions, if any.
<PAGE>
(ii) The fees, costs and expenses of registration to be borne by the
Corporation as provided in this Subsection (g) shall include, without
limitation, all registration, filing and NASD fees, printing expenses, fees
and disbursements of counsel and accountants for the Corporation, and all
legal fees and disbursements and other expenses of complying with state
securities or Blue Sky laws of any jurisdiction or jurisdictions in which
securities to be offered are to be registered and qualified. Fees and
disbursements of counsel and accountants for the selling securityholders
shall, however, be borne by the respective selling securityholder.
(e) The rights to cause the Corporation to register all or any portion of
Registrable Securities pursuant to this Section 8 may be assigned by Purchaser
to a transferee or assignee of 20% or more of the Stock. Within a reasonable
time after such transfer the Purchaser shall notify the Corporation of the
name and address of such transferee or assignee and the securities with
respect to which such registration rights are being assigned. Such assignment
shall be effective only if immediately following such transfer the further
disposition of such securities by the transferee or assignee is restricted
under the Act. Any transferee asserting registration rights hereunder shall
be bound by the provisions of this Section 8.
(f) From and after the date of this Agreement, the Corporation shall not
agree to allow the holders of any securities of the Corporation to include any
of their securities in any registration statement filed by the Corporation
pursuant to Subsection (b) unless the inclusion of such securities will not
reduce the amount of the Registrable Securities included therein.
SECTION 9
Affirmative Covenants of the Corporation
The Corporation hereby covenants that, during such time as the Purchaser (or
one of its affiliates) owns any Stock, or for four years, whichever period is
shorter:
9.1 Reports and Financial Statements.
(a) The Corporation will cause its common stock to continue to be
registered under Sections 12(b) or 12(g) of the Securities Exchange Act of
1934, will comply in all respects with its reporting and filing obligations
under said Act, and will not take any action or file any document (whether or
not permitted by said Act or the rules thereunder) to terminate or suspend
such registration or to terminate or suspend its reporting and filing
obligations under said Act. The Corporation will take all action necessary to
continue the listing or trading of its common stock on any national securities
exchange or the Automated Quotation System of the National Association of
Securities Dealers on which such common stock is listed or traded, and will
comply in all respects with its reporting, filing and other obligations under
the bylaws or rules of said exchange or Association.
(b) The Corporation will furnish to the Purchaser, concurrently with the
distribution or filing thereof, each annual and quarterly report to its
shareholders, its reports on Form 10K and 10Q, and each other report,
registration statement, definitive proxy statement or other document filed
with the S.E.C., and each press release or other public announcement issued by
the Corporation.
<PAGE>
9.2 Maintenance of Office. The Corporation will maintain an office or agency
in the United States at such address as may be designated in writing from time
to time to the registered holders of the Stock, where notices, presentations
and demands to or upon the Corporation in respect of the Stock may be given or
made. Unless or until another office or agency is designated by the
Corporation, such office shall be at the address set forth adjacent to the
name of the Corporation at the foot of this Agreement.
9.3 Maintenance and Compliance. The Corporation will (i) maintain its
corporate existence, rights, powers and privileges in good standing,
(ii) comply in all material respects with all laws and governmental
regulations and restrictions applicable to its business or properties,
(iii) keep records and books of account and maintain a system of internal
accounting controls in accordance with generally accepted accounting
principles and in compliance with Section 13(b)(2) of the Securities Exchange
Act of 1934, and (iv) retain independent public accountants of recognized
national standing as auditors of the Corporation's annual financial
statements.
9.4 Assignment of Rights. The rights of the Purchaser hereunder may be
assigned by the Purchaser in connection with the transfer or assignment to a
single transferee of not less than 20% of the Stock originally purchased by
the Purchaser hereunder, and such rights may be further reassigned by such
transferee to another such single transferee. Any transferee asserting rights
under this Agreement shall be bound by its provisions.
9.5 Effect of Covenants. The covenants in Sections 9.1 and 9.3 shall not be
deemed to prohibit a merger, sale of all assets or other corporate
reorganization if (i) the entity surviving or succeeding to the Corporation is
bound by this Agreement with respect to its securities issued in exchange for
or replacement of the Stock, or (ii) the consideration received in exchange
for or replacement of the Stock is cash.
SECTION 10
Legend on Stock
Each certificate representing the Stock shall be stamped or otherwise
imprinted with a legend substantially in the following form (in addition to
any legend required under any applicable state securities laws):
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR OFFERED FOR SALE IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID
ACT AND ANY APPLICABLE STATE SECURITIES LAW OR AN OPINION OF COUNSEL
SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.
Upon request of a holder of Stock the Corporation shall remove the foregoing
legend or issue to such holder a new certificate therefor free of any such
legend, if the Corporation shall have received either an opinion of counsel or
a "no-action" letter of the S.E.C., in either case reasonably satisfactory in
substance to the Corporation and its counsel, to the effect that such legend
is no longer required.
<PAGE
SECTION 11
Miscellaneous
11.1 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California. Any action or proceeding
relating to this Agreement may be brought in the courts of California sitting
in Los Angeles County, or in the United States courts located in Los Angeles
County, California, and each of the parties irrevocably consents to the
jurisdiction of such courts in any such action or proceeding.
11.2 Successors and Assigns. Except as otherwise expressly provided herein,
the provisions hereof shall inure to the benefit of and be binding upon the
successors and assigns of the parties.
11.3 Entire Agreement; Amendment. This Agreement (including any Exhibits
hereto) and the other documents delivered pursuant hereto constitute the full
and entire understanding and agreement between the parties with regard to the
subjects hereof and thereof. Neither this Agreement nor any term hereof may
be amended, waived, discharged or terminated except by a written instrument
signed by the Corporation and the Purchaser.
11.4 Notices, etc. All notices and other communications required or
permitted hereunder shall be mailed by first-class mail, postage prepaid, or
delivered either by hand or by messenger, addressed (a) if to the Purchaser,
as indicated below the Purchaser's signature, or at such other address as the
Purchaser shall have furnished to the Corporation in writing, or (b) if to any
other holder of any Stock, at the address of such holder as shown on the
records of the Corporation, or (c) if to the Corporation, at its address set
forth below or at such other address as the Corporation shall have furnished
to the Purchaser and each such other holder in writing. All such notices or
communications shall be deemed given when actually delivered by hand,
messenger, facsimile or mailgram or, if mailed, three days after deposit in
the U.S. mail.
11.5 Delays or Omissions. No delay or omission to exercise any right, power
or remedy accruing to any party to this Agreement (including any holder of
Stock), upon any breach or default of another party under this Agreement,
shall impair any such right, power or remedy of such party nor shall it be
construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any
other breach or default theretofore or thereafter occurring. All remedies,
either under this Agreement or by law or otherwise afforded to any party,
shall be cumulative and not alternative.
11.6 Publicity. The Company shall not disclose nor include in any public
announcement the name or names of Dimensional Fund Advisors Inc. or its
related entities, except as required by law or applicable regulation and then
only to the extent of such requirement.
11.7 Severability. In case any provision of the Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
<PAGE>
11.8 Titles and Subtitles. The titles of the Sections and subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
11.9 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and
delivered by their duly authorized officers as of the day and year first
written above.
RAMTRON INTERNATIONAL CORPORATION
By: /S/ Richard L. Mohr
----------------------------
Richard L. Mohr, Executive Vice
President and Chief Financial
Officer
Address: 1850 Ramtron Drive
Colorado Springs, CO 80921
Purchaser
(NAME)
By: (SIGNATURE)
---------------------------
Address: -----------------------------
-----------------------------
<PAGE>
EXHIBIT A
1. Conversion option held by the National Electrical Benefit Fund ("NEBF")
to convert all or any portion of Ramtron International Corporation's
outstanding obligations under a Loan Agreement dated August 31, 1995 between
Ramtron International Corporation ("Ramtron") and NEBF (the "Loan
Agreement") into Common Stock of Ramtron pursuant to Section 2.14 of the Loan
Agreement.
2. Registration rights held by NEBF in connection with NEBF's conversion
option described above.
3. The complaint was filed by David J. Beckman, as trustee for the NTC
Liquidating Trust. The liquidating trust was created under Colorado law, in
connection with implementation of Chapter 11 plans of liquidation for Oren
Benton. The named defendants pursuant to the case are Ramtron International
Corporation, Citibank, N.A. a national banking association and Brown Brothers
Harriman & Co. a New York State chartered private bank.
Beckman asserts two claims against Ramtron. The First Claim for Relief
alleges that Ramtron, as stock issuer, is liable to four adult daughters of
Oren Benton for a wrongful transfer of certain Ramtron common stock owned by
the daughters, which transfer occurred while Benton, and related entities (but
not his daughters), were in bankruptcy proceedings. The claim alleges
liability under U.C.C. section 8-311, as embodied in 6 Del.C. section 8-311
(b). The second claim against Ramtron, styled as the Fifth Claim for Relief,
alleges that Ramtron and the other defendants violated the automatic stay by
transferring the daughters' shares while Benton and his affiliates (but,
again, not the daughters) were in Chapter 11 proceedings.
Beckman claims a right to pursue the daughters' claims on behalf of the
liquidating trust, based on an assignment of such claims to the trust, from
the daughters and their alleged nominee with respect to the Ramtron shares,
David Becker. The assignment of the claims was made to the trust after the
Chapter 11 plans were confirmed and consummated.
The Complaint's Second, Third and Fourth Claims are state law claims against
Ramtron's transfer agent, Citibank, N.A. and an apparent custodial holder of
the shares, Brown Brothers Harriman & Co., based on the same transfer that is
the subject of the claim against Ramtron in the First Claim for Relief.
Pursuant to Ramtron's stock transfer agent agreement with Citibank, N.A.,
Ramtron has agreed to indemnify Citibank, N.A. from all actions or suits
arising out of the agency relationship created under the stock transfer agent
agreement, whereby Citibank N.A. has acted in good faith and without
negligence.
<PAGE>
The Claim for Relief under the First claim requests an award of money damages
in an amount not less than the proceeds that were generated by the improper
transfer and unauthorized sales of the Ramtron stock, which amount is not less
than $5,903,646.16. In the alternative, the trust requests to obtain
possession of new certified securities representing ownership of the 523,137
shares of Ramtron stock. The Claim for Relief under the Fifth claim requests
(i) actual and consequential damages (ii) pre-judgement interest at the legal
rate (iii) punitive damages, and (iv) costs and expenses, including attorneys'
fees. In the alternative, the plaintiff requests issuance of new certified
securities, in favor of Plaintiff, representing ownership of 523,137 shares of
Ramtron common stock.
STOCK PURCHASE WARRANT
WARRANT TO PURCHASE [NUMBER OF] SHARES
OF
COMMON STOCK
No. PW- EXPIRES AT 5:00 P.M. PACIFIC TIME, ON DECEMBER 23, 2002
RAMTRON INTERNATIONAL CORPORATION
This certifies that (name), the registered holder hereof or assigns (the
"Warrantholder") is entitled to purchase from Ramtron International
Corporation, a Delaware corporation (the "Company"), at any time before the
expiration time and date shown above (the "Expiration Time") at the purchase
price per share of $4.93 (the "Warrant Price"), the number of shares shown
above of the Common Stock of the Company. The number and class of shares
purchasable upon exercise of this Warrant and the Warrant Price per share
shall be subject to adjustment from time to time as set forth below.
Section 1. Transferability and Form of Warrant.
1.1 Registration. This Warrant shall be numbered and shall be registered on
the books of the Company.
1.2 Transfer. This Warrant shall be transferable on the books of the
Company only upon delivery thereof duly endorsed by the Warrantholder or duly
authorized attorney or representative, accompanied by proper evidence of
succession, assignment or authority to transfer. Upon any registration of
transfer, the Company shall execute and deliver a new Warrant to the person
entitled thereto. This Warrant may be divided or combined, upon request to
the Company by the Warrantholder, into a certificate or certificates
representing the right to purchase the same aggregate number of shares.
Unless the context indicates otherwise, the term "Warrantholder" shall
include any transferee or transferees of a Warrant and the term "Warrant"
shall include any and all warrants issued upon division, exchange,
substitution or transfer of this Warrant.
1.3 Form of Warrant. The Warrant shall be executed on behalf of the Company
by its President, Vice President or other authorized officer, and shall be
dated as of the date of signature thereof by the Company either upon initial
issuance or upon division, exchange, substitution or transfer. A Warrant
bearing the signature of an individual who was at any time the proper officer
of the Company shall bind the Company, notwithstanding that such individual
shall have ceased to hold such office prior to the delivery of such Warrant.
The form of election to exercise this Warrant and the form of assignment of
this Warrant shall be substantially as attached hereto.
Section 2. Payment of Taxes.
The Company will pay all documentary stamp taxes, if any, attributable to the
initial issuance of shares to the Warrantholder; provided, however, that the
Company shall not be required to pay any tax or taxes which may be payable in
respect to any secondary transfer of the Warrant or the shares.
<PAGE>
Section 3. Mutilated or Missing Warrants.
In case this Warrant shall be mutilated, lost, stolen or destroyed, the
Company shall, at the request of the Warrantholder, issue and deliver in
exchange and substitution for and upon cancellation of the mutilated Warrant,
or in lieu of and in substitution for the lost, stolen or destroyed Warrant,
a new Warrant of like tenor, but only upon receipt of evidence satisfactory to
the Company of such loss, theft or destruction of such Warrant. The applicant
shall also comply with such other reasonable regulations and pay such other
reasonable administrative charges as the Company may prescribe.
Section 4. Reservation of Shares.
There has been reserved, and the Company shall at all times keep reserved so
long as this Warrant remains outstanding, out of its authorized shares of
capital stock, such number and class of shares as shall be subject to purchase
under this Warrant. Such reserved shares shall be used solely for issuances
upon exercise of this Warrant. Shares of any class issued upon exercise of
this Warrant shall have all the rights and privileges of other shares of the
same class, whenever issued, subject to the adjustment provisions set forth
below.
Section 5. Exercise of Warrant.
5.1 Exercise by Cash Payment. The Holder of this Warrant shall have the
right at any time and from time to time to exercise this Warrant in full or in
part by surrender of this Warrant to the Company accompanied by payment to the
Company in cash or by certified or cashier's check or by wire transfer of
funds of the aggregate Warrant Price for the number of shares in respect of
which this Warrant is then exercised.
5.2 Cashless Exercise. This Warrant may be exercised in full or in part by
surrender of this Warrant to the Company accompanied by written notice
substantially in the form attached hereto of the holder's election to effect
cashless exercise ("Cashless Exercise"). Upon Cashless Exercise, the holder
shall be entitled to receive, in respect of each share for which this Warrant
is then exercised, that number of shares of Common Stock (or such other class
of shares as may then be issuable upon exercise hereof) which, valued at
Current Market Value, have a value equal to the Current Market Value of each
shares as to which this Warrant is then being exercised less the Warrant Price
payable for such share. Current Market Value of the Common Stock shall be as
defined in Section 7.
5.3 Delivery of Certificates. Upon exercise of this Warrant the Company
shall issue and cause to be delivered with all reasonable dispatch to or upon
the written order of the Warrantholder and in such name or names as the
Warrantholder may designate, a certificate or certificates for the number of
full shares issuable upon such exercise together with cash, as provided in
Section 7 hereof, in respect of any fractional shares. The Company shall
effect such issuance immediately and shall transmit the certificates by
messenger or overnight delivery service to reach the address designated by the
Warrantholder within two business days after receipt of the Warrant Price or,
in the case of a cashless exercise, after receipt of the Warrant. Such
certificate or certificates shall be deemed to have been issued and any person
so designated to be named therein shall be deemed to have become a holder of
record of such shares as of the date of surrender of the Warrant and payment
of the Warrant Price, as aforesaid, notwithstanding that the certificates
representing such shares shall not actually have been delivered or that the
stock transfer books of the Company shall then be closed. In the event of
partial exercise a new Warrant evidencing the remaining portion of this
Warrant will be issued by the Company.
<PAGE>
Section 6. Adjustment of Warrant Price and Number of Shares.
6.1 Adjustments. The number and kind of securities purchasable upon the
exercise of the Warrants and the Warrant Price shall be subject to adjustment
from time to time upon the happening of certain events, as follows:
(a) If the shares purchasable upon exercise of the Warrants are
subdivided, combined or reclassified, or if other shares of the kind so
purchasable are issued in respect thereof as a dividend thereon (excluding
dividends required by the charter provisions governing such shares), the
number and class of shares purchasable upon exercise of the Warrants
immediately prior thereto shall be adjusted so that the Warrantholder shall be
entitled to receive the kind and number of shares or other securities of the
Company which it would have owned or would have been entitled to receive after
the happening of any of the events described above, had the Warrants been
exercised immediately prior to the happening of such event or any record date
with respect thereto. Any adjustment made pursuant to this paragraph (a)
shall become effective immediately after the effective date of such event
retroactive to the record date, if any, for such event.
(b) If the shares purchasable upon exercise of the Warrants become
entitled to receive a distribution of evidences of indebtedness or assets
(excluding dividends required by the charter provisions governing such shares)
or rights, options, warrants or convertible securities containing the right to
subscribe for or purchase securities or assets of the Company, then, in each
case, the number of shares thereafter purchasable upon the exercise of the
Warrants shall be determined by multiplying the number of shares theretofore
purchasable upon exercise of the Warrants by a fraction, of which the
numerator shall be the then Current Market Value on the date of such
distribution, and of which the denominator shall be such Current Market Value
on such date minus the then fair value of the portion of the assets or
evidence of indebtedness so distributed or of such subscription rights,
options or warrants applicable to one share. Such adjustment shall be made
whenever any such distribution is made and shall become effective on the date
of distribution retroactive to the record date for the determination of
shareholders entitled to receive such distribution. Current Market Value
shall have the meaning set forth in Section 7.
(c) No adjustment in the number of shares purchasable hereunder shall
be required unless such adjustment would require an increase or decrease of at
least one percent (1%) in the number of shares then purchasable upon the
exercise of a Warrant; provided, however, that any adjustments which by reason
of this paragraph (c) are not required to be made immediately shall be carried
forward and taken into account in any subsequent adjustment.
(d) Whenever the purchase price per share is adjusted pursuant to the
provisions of Section 3 of the Stock Purchase Agreement entered into on or
about the date hereof between the Company and certain entities advised by
Dimensional Fund Advisors, Inc., an equal adjustment shall be made in the
Warrant Price.
(e) Whenever the Warrant Price or the number or class of shares
purchasable upon the exercise of a Warrant is adjusted as herein provided, a
corresponding adjustment in the number of shares so purchasable or the Warrant
Price, as the case may be, shall be made so that the aggregate Warrant Price
payable upon full exercise of this Warrant shall remain the same. If such
adjustment results in more than one class of security being purchasable upon
exercise of this Warrant, the adjusted Warrant Price shall be allocated to
such securities on the basis of their respective fair market values.
<PAGE>
(f) Whenever the number or class of shares purchasable upon the
exercise of a Warrant or the Warrant Price is adjusted as herein provided, the
Company shall cause to be promptly mailed to the Warrantholder by first class
mail, postage prepaid, notice of such adjustment or adjustments setting forth
the number and class of shares purchasable upon the exercise of a Warrant and
the Warrant Price after such adjustment, together with a brief statement of
the facts requiring such adjustment and the computation by which such
adjustment was made. If any holder disputes the computation of such
adjustment, the Company shall cause independent public accountants selected by
the Company to verify and, if necessary, correct such computation.
(g) The term "Common Stock" shall mean (i) the class of stock
designated as the Common Stock of the Company at the issue date of this
Warrant or (ii) any other class of stock resulting from successive changes or
reclassifications of such Common Stock. In the event that at any time, as a
result of an adjustment made pursuant to this Section, the Warrantholder shall
become entitled to purchase any securities of the Company other than shares of
Common Stock, thereafter the number of such other securities so purchasable
upon exercise of the Warrant and the Warrant Price of such securities shall be
subject to adjustment from time to time in a manner and on terms nearly
equivalent as practicable to the provisions contained in this Section.
6.2 No Adjustment for Dividends. Except as provided in Subsection 6.1, no
adjustment in respect of any dividends shall be made during the term of the
Warrant or upon the exercise of the Warrant.
6.3 Preservation of Purchase Rights upon Reclassification, Consolidation,
etc. In case of any reclassification of the securities of the Company or any
consolidation of the Company with or merger of the Company into another
corporation or in case of any sale or conveyance to another corporation of the
property, assets or business of the Company as an entirety or substantially as
an entirety, the Company or such successor or purchasing corporation, as the
case may be, shall provide by agreement that the Warrantholder shall have the
right thereafter upon payment of the Warrant Price in effect immediately prior
to such action to purchase upon exercise of the Warrant the kind and amount of
shares and other securities and property which he/she would have owned or have
been entitled to receive after the happening of such reclassification,
consolidation, merger, sale or conveyance had the Warrant been exercised
immediately prior to such action. Such agreement shall provide for
adjustments, which shall be as nearly equivalent as may be practicable to the
adjustment provided for in this Section. The provisions of this subsection
shall similarly apply to successive reclassifications, consolidations,
mergers, sales or conveyances.
6.4 Statement on Warrant Certificates. Irrespective of any adjustments in
the Warrant Price or the number of securities purchasable upon the exercise of
the Warrant, the Warrant certificate or certificates theretofore or thereafter
issued may continue to express the same price and number of securities as are
stated in the similar Warrant certificates initially issued.
<PAGE>
Section 7. Fractional Interests; Current Market Value; Closing Bid Price.
The Company shall not be required to issue fractional shares on the exercise
of the Warrant. If any fraction of a share would, except for the provisions
of this Section, be issuable on the exercise of the Warrant (or specified
portion thereof), the Company shall pay an amount in cash equal to the then
Current Market Value multiplied by such fraction. The term "Current Market
Value" of the Common Stock shall mean (i) if the Common Stock is traded in
the over-the-counter market or on the National Association of Securities
Dealers, Inc. Automated Quotation System ("NASDAQ"), the average per share
closing sale prices of the Common Stock on the 20 consecutive trading days
immediately preceding the date in question, as reported by NASDAQ or an
equivalent generally accepted reporting service, or (ii) if the Common Stock
is traded on a national securities exchange, the average for the 20
consecutive trading days immediately preceding the date in question of the
daily per share closing prices of the Common Stock on the principal stock
exchange on which it is listed, or (iii) if the Common Stock is not so listed
or traded, the fair market value of the Common Stock as determined in good
faith by the board of directors of the Company. The term "closing sale
price" shall mean the last sale price on the day in question as reported by
NASDAQ or an equivalent generally accepted reporting service or (as the case
may be) as reported by the principal stock exchange on which the Common Stock
is listed, or if not so reported, as reasonably determined in good faith by
the board of directors of the Company.
Section 8. No Rights as Shareholder; Notices to Warrantholder.
Nothing contained herein shall be construed as conferring upon the
Warrantholder any rights whatsoever as a shareholder of the Company, including
the right to vote, to receive dividends, to consent or to receive notices as a
shareholder in respect to any meeting of shareholders for the election of
directors of the Company or any other matter. If, however, at any time prior
to the expiration of the Warrant and prior to its exercise, any of the
following events shall occur:
(a) any action which would require an adjustment pursuant to Sections
6.1 or 6.3; or
(b) a dissolution, liquidation or winding up of the Company (other than
in connection with a consolidation, merger or sale of its property, assets and
business, as an entirety) shall be proposed; then in any one or more of said
events, the Company shall give notice in writing of such event to the
Warrantholder at least 20 days prior to the date fixed as a record date or the
date of closing the transfer books or other applicable date with respect
thereto. Such notice shall specify such record date or the date of closing
the transfer books, as the case may be.
Any notice to the Warrantholder shall be given at the address of the
Warrantholder appearing on the books of the Company, and if the Warrantholder
has specified a telecopier address, by facsimile transmission to such address.
<PAGE>
Section 9. Registration and Indemnification.
The holder of this Warrant and the holder of shares of Common Stock issued
upon exercise of this Warrant shall have the same rights and obligations with
respect to registration under the Securities Act of 1933, and with respect to
indemnification in connection with any such registration, as if such holder
were one of the Purchasers under the Stock Purchase Agreement entered into on
or about the date hereof between the Company and the certain entities advised
by Dimensional Fund Advisors, Inc., excluding, however, the provisions of the
last two sentences of Section (8)(b)(i) of said Agreements. Such rights and
obligations shall continue until not more than one year after the expiration
or earlier exercise of this Warrant.
Section 10. Expiration of Warrant.
If not theretofore exercised, this Warrant shall terminate at 5:00 p.m.
Pacific time on the date shown in the caption hereof.
Section 11. Successors.
All the covenants and provisions of this Agreement by or for the benefit of
the Company or the Warrantholder shall bind and inure to the benefit of their
respective successors and assigns hereunder.
Section 12. Merger or Consolidation of the Company.
The Company will not merge or consolidate with or into any other corporation
or sell all or substantially all of its property to another corporation,
unless the provisions of Section 6.3 are complied with.
Section 13. Applicable Law.
This Agreement shall be deemed to be a contract made under the laws of the
State of New York and for all purposes shall be construed in accordance with
the laws of said State.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by a
duly authorized officer of the Company.
RAMTRON INTERNATIONAL CORPORATION
By: /S/ Richard L. Mohr
-----------------------------
Name: Richard L. Mohr
Title: Executive Vice President and CFO
<PAGE>
PURCHASE FORM
The undersigned hereby irrevocably elects to exercise the right of purchase
represented by the within Warrant in respect of ---------------- of the shares
provided for therein, and requests that certificates be issued in the name of:
- ------------------------------------------------------------------------
(Please Print Name, Address and Taxpayer Identification Number)
- ------------------------------------------------------------------------
and, if said number of shares shall not be all the shares purchasable
hereunder, that a new Warrant certificate for the balance of the shares
purchasable under the within Warrant be registered in the name of the
undersigned Warrantholder or his/her Assignee as below indicated and delivered
to the address stated below.
The undersigned:
[ ] elects to pay the full Warrant Price in cash or by certified or
cashier's check or wire funds transfer
[ ] elects "cashless exercise" pursuant to Section 5.2 of the Warrant
"Current Market Value" for purposes of Cashless
Exercise is: $-------------
Number of shares issuable on Cashless Exercise is: -------------
Dated: ----------------
------------------------------------
Signature of Warrantholder
The above signature must correspond with the name appearing upon the face of
this Warrant in every particular, without alteration or enlargement or any
change whatever.
Name of Assignee, if any: ---------------------------------------------
(Please Print)
- ----------------------------------------------------------------------------
(Please Print Name, Address and Taxpayer Identification Number
- ----------------------------------------------------------------------------
Signature Guaranteed: Signature guarantee is required if certificates are to
be registered in the name of any person other than the name written upon the
face of the Warrant. Signature must be guaranteed by a commercial bank or
trust company or a member firm of the New York Stock Exchange.
<PAGE>
ASSIGNMENT
(To be signed only upon assignment of Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
- ----------------------------------------------------------------------------
(Name and Address of Assignee Must be Printed or Typewritten)
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
(Taxpayer Identification Number of Assignee)
the within Warrant, hereby irrevocably constituting and appointing
- ----------------------- Attorney to transfer said Warrant on the books of
the Company, with full power of substitution in the premises.
Date: ---------------------- --------------------------------------
Signature of Registered Holder
Signature Guaranteed: The above signature must correspond with the name
appearing upon the face of this Warrant in every particular, without
alteration or enlargement or any change whatever, and must be guaranteed by a
commercial bank or trust company or a member firm of the New York Stock
Exchange.
March 9, 1998
Ramtron International Corporation
1850 Ramtron Drive
Colorado Springs, Colorado 80921
Re: Ramtron International Corporation - Registration
Statement on Form S-3
Ladies and Gentlemen:
We have acted as securities counsel for Ramtron International Corporation (the
"Company"), in connection with the preparation of a registration statement on
Form S-3 (the "Registration Statement"), under the Securities Act of 1933, as
amended (the "Securities Act"), that was filed with the Securities and
Exchange Commission (the "Commission") on March 9, 1998, in connection with
the registration of 8,358,346 shares (the "Shares") of the Company's common
stock, par value $0.01 per share (the "Common Stock"), which Shares are to be
offered and sold from time to time by certain stockholders of the Company (the
"Selling Security Holders"). Included in the 8,358,346 Shares being
registered pursuant to the Registration Statement are: (i) 800,000 Shares
(subject to adjustment), which were issued by the Company to certain
accredited investors in connection with a Common Stock private placement in
December 1997 (the "Common Stock Private Placement"), and 80,000 Shares
(subject to adjustment) which are issuable upon exercise of Common Stock
purchase warrants issued by the Company to six principals of the placement
agents in connection with the Common Stock Private Placement; and
(ii) 6,798,673 Shares (subject to adjustment) which may be issued by the
Company to certain Selling Security Holders upon conversion of the 17,425
shares of Series A Convertible Preferred Stock, $0.01 par value per share (the
"Series A Preferred"), issued by the Company to certain accredited investors
in connection with a private placement of the Series A Preferred in February
1998 (the "Preferred Stock Private Placement"), and 679,672 Shares (subject
to adjustment) issuable upon exercise of the 1,742 five-year Series A
Preferred purchase warrants and conversion into Common Stock of the Series A
Preferred issuable upon such exercise, which warrants were issued by the
Company to six principals of the placement agents in connection with the
Preferred Stock Private Placement.
In connection with the preparation of the Registration Statement and the sale
of the Shares in accordance with the prospectus forming a part of the
Registration Statement, we have made certain legal and factual examinations
and inquiries and examined, among other things, such documents, instruments,
records, agreements, certificates and matters as we have considered
appropriate and necessary to render this opinion. We have assumed for the
purpose of this opinion the authenticity of all documents submitted to us as
originals and the conformity with the originals of all documents submitted to
us as copies, and the genuineness of all signatures thereon. As to various
questions of fact material to this opinion, we have, when relevant facts were
not independently established, relied, to the extent deemed proper by us, upon
certificates and statements of officers and representatives of the Company.
<PAGE>
Based on the foregoing and in reliance thereon, it is our opinion that the
Shares have been duly authorized and, after the Registration Statement becomes
effective and after any post-effective amendment required by law is duly
completed, filed and becomes effective (such Registration Statement as it
finally becomes effective or, if required to be post-effectively amended, then
as it is so amended, is referred to hereinafter as the "Final Registration
Statement"), and when the applicable provisions of "Blue Sky" and other state
securities laws shall have been complied with, and when the Shares are issued
and/or sold in accordance with the prospectus forming a part of the Final
Registration Statement, the Shares will be validly issued, fully paid and
nonassessable.
We hereby consent to the inclusion of our opinion as Exhibit 5.1 to the
Registration Statement and further consent to the references to this firm in
the Registration Statement. In giving this consent, we do not hereby admit
that we are in the category of persons whose consent is required under
Section 7 of the Securities Act, or the rules and regulations of the
Commission thereunder.
We are opining herein as to the effect on the subject transaction only of
United States federal law and the internal (and not the conflict of law) laws
of the State of Delaware, and we assume no responsibility as to the
applicability thereto, or the effect thereon, of the laws of any other
jurisdiction.
Very truly yours,
/S/ COUDERT BROTHERS
-----------------
COUDERT BROTHERS
Exhibit 23.1
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement on Form S-3 of our report dated
February 7, 1997, included in Ramtron International Corporation's Form 10-K
for the year ended December 31, 1996 and to all references to our Firm
included in this Registration Statement.
/S/ Arthur Andersen LLP
Denver, Colorado
March 9, 1998
