As filed with the Securities and Exchange Commission on March 14, 1997
Registration No. 333-_____
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
Form S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
---------------
ORYX TECHNOLOGY CORP.
(Exact name of registrant as specified in its charter)
Delaware 3600
(State or other jurisdiction of (Primary Standard Industrial
incorporation or organization) Classification Code Number)
22-2115841
(I.R.S. Employer
Identification No.)
47341 Bayside Parkway
Fremont, California 94538
(510) 249-1144
(Name, address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
Arvind Patel
Chief Executive Officer
47341 Bayside Parkway
Fremont, California 94538
(510) 249-1144
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
--- -----------
Copies to:
Jerrold F. Petruzzelli
Wise & Shepard LLP
3030 Hansen Way
Palo Alto, California 94304-1006
(415) 856-1200
---------------
Approximate date of commencement of proposed sale to
the public: From time to time after the effective date of
this Registration Statement.
---------------
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 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>
Proposed Proposed
maximum maximum Amount of
Title of each class of securities Amount to be price per aggregate registration
to be registered registered share (1) offering price fee
---------------- ---------- --------- -------------- ---
<S> <C> <C> <C> <C>
Common Stock, par value
$.001 per share....................... 2,044,130 $2.27 $4,640,175 $1,406
- ----------------------------------------------------------------------------------------------------------------------
Common Stock, par value
$.001 per share (2)................... 239,530 $2.27 $543,733 $165
- ----------------------------------------------------------------------------------------------------------------------
Total................................. 2,283,660 $5,183,908 $1,571
</TABLE>
(1) Estimated solely for the purpose of computing the amount of the
registration fee in accordance with Rule 457(c) under the Securities Act
of 1933, as amended (the "Securities Act"), based on the average of the
high and low sale price for the Common Stock, $.001 par value per share
(the "Common Stock") as reported by the National Association of Securities
Dealers Automated Quotation System (SmallCap) ("NASDAQ") on March 10,
1997.
(2) Represents shares issuable upon the exercise of Common Stock Purchase
Warrants together with such additional indeterminate number of shares as
may be issued upon exercise of such warrants by reason of the
anti-dilution provisions contained therein.
---------------
The registrant hereby undertakes to amend this Registration Statement
on such date or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
<PAGE>
===============================================================================
Subject to Completion, dated March 14, 1997
PROSPECTUS
ORYX TECHNOLOGY CORP.
2,283,660 SHARES OF COMMON STOCK
This Prospectus (the "Prospectus") relates to 2,283,660 shares of
Common Stock, par value $.001 per share (the "Shares"), of Oryx Technology
Corp., a Delaware corporation ("Oryx" or the "Company"), which may be sold from
time to time by the individuals and entities listed as Selling Security Holders
herein (the "Selling Security Holders"). The Company will not receive any
proceeds from the offering.
The Company will pay all the expenses, estimated to be approximately
$18,071, in connection with this offering, other than underwriting commissions
and discounts and counsel fees and expenses of the Selling Security Holders.
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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.
THE SECURITIES OFFERED HEREBY INVOLVE A SIGNIFICANT DEGREE OF RISK. SEE "RISK
FACTORS" AT PAGES 7 TO 14.
--------------------------------
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 ___, 1997.
The Selling Security Holders have advised the Company that they propose to sell
the Shares, from time to time, publicly through broker-dealers acting as agents
for others, or in private sales. See "Selling Security Holders" and "Plan of
Distribution." The Company will not receive any of the proceeds from the sale of
the Shares offered hereby by the Selling Security Holders.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended, and in accordance therewith files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and other
information filed by the Company may be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's Regional Offices
at Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511 and 7 World Trade Center, New York, New York 10048. Copies
of such material may be obtained from the Public Reference Section of the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
at prescribed rates. The Commission also maintains an internet site that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission at
http://www.sec.gov.
This Prospectus, which constitutes part of a Registration Statement
filed by the Company with the Commission under the Securities Act of 1933, as
amended (the "Act"), omits certain information contained in the Registration
Statement in accordance with the rules and regulations of the Commission.
Reference is hereby made to the Registration Statement and to the exhibits
relating thereto for further information with respect to the Company and the
securities offered hereby.
<PAGE>
TABLE OF CONTENTS
Page
Available Information...................................................... 4
Incorporation of Certain Information by Reference.......................... 6
Risk Factors............................................................... 7
The Company................................................................ 14
Use of Proceeds............................................................ 15
Selling Security Holders................................................... 15
Plan of Distribution....................................................... 17
Description of Securities.................................................. 18
Stock Transfer Agent....................................................... 21
Legal Matters.............................................................. 21
Experts.................................................................... 21
Indemnification............................................................ 22
The Company's Common Stock is quoted on the National Association of
Securities Dealers Automated Quotation System (Small Cap) ("NASDAQ") under the
symbol "ORYX", and on the Pacific Stock Exchange ("PSE") under the symbol "OXT".
On March 7, 1997, the closing price on NASDAQ for the Common Stock was $2.09 per
share. There have been no recent reported trades on the PSE.
The Company will not receive any proceeds from the sale of Common Stock
for the account of the Selling Security Holders. The Company has informed the
Selling Security Holders that the anti-manipulative rules under the Exchange Act
of 1934, Rules 10b-6 and 10b-7, may apply to their sales in the market and has
furnished the Selling Security Holders with a copy of these rules. The Company
has also informed the Selling Security Holders of the need for delivery of
copies of this Prospectus in connection with any sale of securities registered
hereunder.
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH
THE OFFERING DESCRIBED HEREIN AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION TO
ANY PERSON TO WHOM SUCH OFFER WOULD BE UNLAWFUL OR AN OFFERING OF ANY SECURITIES
OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES. NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR ANY OFFER OR SALE MADE HEREUNDER AT ANY TIME SHALL IMPLY
THAT THE INFORMATION PROVIDED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS
DATE.
--------------------------
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 and, in accordance therewith, files reports and
other information with the Securities and Exchange Commission.
The Company has previously and intends to furnish its stockholders with
annual reports containing audited financial statements and may distribute
quarterly reports containing unaudited summary financial information for each of
the first three quarters of each fiscal year.
INCORPORATION OF CERTAIN INFORMATION 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-KSB as amended by Form
10-KSB/A1 for the fiscal year ended February 29, 1996;
2. The Company's Quarterly Report on Form 10-QSB for the quarter ended
November 30, 1996;
3. The Company's Current Reports on Forms 8-K filed with the
Commission on January 3, 1997 and February 21, 1997; and
4. The description of the Common Stock contained in the Company's
Registration Statement on Form 8-A filed with the Commission under Section 12 of
the Exchange Act.
All reports and other documents filed pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus
and prior to the termination of the offering of the Shares shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such reports or other documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein 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 such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
Copies of any and all documents that have been incorporated by
reference herein, other than exhibits to such documents, may be obtained upon
request without charge from the Company's Chief Financial Officer, Mitchel
Underseth, 47341 Bayside Parkway, Fremont, California 94538, (510) 249-1144.
Please specify the information desired when making such request. The information
relating to the Company contained in this Prospectus does not purport to be
comprehensive and should be read together with the information contained in the
documents or portions of documents incorporated by referenced into this
Prospectus.
RISK FACTORS
The securities offered hereby involve a high degree of risk. It is
impossible to foresee and describe all the risks and business, economic and
financial factors which may affect the Company. Prospective investors should
carefully consider the risk and speculative factors, as well as other matters
set forth elsewhere in this Prospectus, before making an investment in the
Company.
HISTORY OF UNPROFITABILITY; SUBSTANTIAL RECENT OPERATING LOSSES AND ACCUMULATED
DEFICIT
Since its initial public offering in April 1994, the Company has not
been profitable on a quarterly or annual basis except for its most recent three
quarters ended May 31, 1996, August 31, 1996 and November 30, 1996. At November
30, 1996, the Company had an accumulated deficit of $7,534,000. During the
fiscal year ended February 29, 1996, the Company experienced significant delays
and additional costs in the development of its material analysis, electrostatic
discharge testing and surge protection product lines and experienced
deterioration of gross margins in the power products subsidiary, all of which
have added to the Company's continuing losses. Due to the significant reduction
in sales to Pitney Bowes, discussed below, the Company expects that it will not
be profitable during the fourth quarter of the fiscal year ended February 28,
1997 as well as during the first two quarters of the fiscal year ending February
28, 1998. Therefore, there can be no assurance that the Company will be
profitable for the fiscal year ended February 28, 1997 or thereafter.
SIGNIFICANT CUSTOMER DEPENDENCE
For the nine months ended November 30, 1996 and the fiscal years ended
February 29, 1996 and February 28, 1995, sales to Pitney Bowes accounted for
approximately 50%, 41% and 27% of consolidated revenues, respectively. The
Company will experience a significant reduction in sales to Pitney Bowes during
the fourth quarter of 1997 and the 1998 fiscal year. Accordingly, the Company's
operating results will be materially and adversely affected by the loss of
business from Pitney Bowes. There can be no assurance that such customer or any
other customers will in the future continue to purchase products from the
Company at levels that equal or exceed those of prior periods, if at all. While
the Company actively pursues new customers, there can be no assurances that the
Company will be successful in its efforts, and any significant weakening in
customer demand would have a material adverse effect on the Company.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital was approximately $5,856,000 at November
30, 1996. On February 28, 1996, the Company's line of credit terminated and the
outstanding balance was repaid. The Company's operating losses, increasing
accounts payable, loss of its line of credit and inventory build-up continued or
occurred in the fiscal year ended February 29, 1996, and together with payments
made to Zenith Electronics Corporation ("Zenith") and required payments on
certain short term financings, further exacerbated the Company's cash flow
needs. During the fourth quarter of the fiscal year ended February 28, 1997, the
Company raised additional capital of $3,510,462 pursuant to a private placement
in which it issued and sold an aggregate of 2,044,130 shares of its common stock
to certain qualified institutional investors under Regulation S of the
Securities Act of 1933, as amended. The Company is currently pursuing other
credit arrangements and hopes to establish a line of credit facility by May 31,
1997. Failure to obtain such a credit facility or other financing, however,
could have a material adverse impact on the Company's growth and liquidity.
NEED FOR ADDITIONAL FINANCING
The Company's current financial resources may not be sufficient to
enable it to satisfy all of its anticipated financing needs for the fiscal year
ending February 28, 1998. In the event the Company requires additional equity or
debt financing, or attempts to raise capital through an asset sale, there can be
no assurance that such transactions can be effected in a timely manner to meet
all the Company's needs, or at all, or that any such transaction will be on
terms acceptable to the Company or in the interest of its stockholders.
RISKS OF NEW PHASE OF DEVELOPMENT AND ACQUISITION
The Company has invested substantially in the development of
proprietary technologies in surface analysis, electrostatic surge testing of
integrated circuits and surge protection, and has shipped four units of its new
secondary ion mass spectrometer as well as completed a licensing agreement for
part of its SurgX technology with an electronic component manufacturer. There
can be no assurance that the Company will be successful in further
commercializing these technologies or any other products, or developing
financially viable businesses based on these technologies or products. Results
of operations in the future will be influenced by numerous factors, including
technological developments by the Company, its customers and competitors,
increases in expenses associated with product development and sales growth,
market acceptance of the Company's products, the ability of the Company to
successfully control its costs of development, overhead and other costs and
manage its operations, the capacity of the Company to develop and manage the
introduction of new products, and by competition. There can be no assurance that
revenue growth will be sustained or profitability on a quarterly or annual basis
will be achieved. Accordingly, there can be no assurance that the Company will
be able to implement its business plan, expand its operations and develop and
sustain profitable operations.
On December 19, 1996, Oryx Power Products Corporation ("Power
Products"), the Company's power products subsidiary, acquired all of the assets,
assumed a portion of the liabilities, and hired key personnel of Power Sensors
Corporation, an Illinois corporation ("Power Sensors") for 6 percent of the
outstanding Series A Common Stock of Power Products and cash payment of
$120,000. The Asset Purchase Agreement for this acquisition provides that if,
within 3 years of December 19, 1996, Power Products is not itself sold in its
entirety to, or purchased by, a third party for cash or public securities of
such third party or publicly traded as a company whose securities are registered
under the Securities Act of 1933 or is a reporting company under the Securities
Exchange Act of 1934, then each of the holders of the Power Products Series A
Common Stock issued in the acquisition, shall have the option on that date to
exchange such Common Stock into a non-interest bearing promissory note of Power
Products in an amount equal to $2.50 per share of Common Stock for a total
indebtedness of $1,500,000. Power Sensors is a developer and manufacturer of
DC-to-DC power conversion products. While this acquisition is intended to
provide the Company with entry into the DC to DC power supply market and to
generate sales sufficient to help offset the reduction in sales to Pitney Bowes
as discussed above, there can be no assurance that the Company will be able to
successfully market such products or that any sales of such products will offset
any reductions in the Company's sales to Pitney Bowes or any other customer.
RISKS ASSOCIATED WITH MANAGEMENT OF GROWTH; INTERNAL CONTROL DEFICIENCIES
The Company has recently experienced and may continue to experience
substantial growth in the number of employees and the scope of its operations,
resulting in increased responsibilities for management. To manage growth
effectively, the Company will need to continue to improve its operational,
financial and management information systems and to develop and maintain sound
internal controls. In connection with the Company's audit for the fiscal year
ended February 28, 1995, the Company's independent accountants identified a
reportable condition in the Company's internal controls with respect to its
inventory management systems as it relates to tracking the movement of costed
inventory which resulted in an adjustment to the fiscal 1995 financial
statements. Another reportable condition was identified with respect to the
Company's record keeping for equity financing and share issuance transactions.
In connection with the Company's audit for the fiscal year ended February 29,
1996, the Company's independent accountants identified a further reportable
condition relating to physical inventory procedures specifically with regard to
substantial adjustments that resulted from physical inventories taken during the
fiscal year ended February 29, 1996. The resulting adjustments were reflected in
the fiscal 1996 financial statements. A reportable condition indicates that a
material error or irregularity may occur in the Company's quarterly and year-end
financial statements and may not be detected on a timely basis by the Company's
employees, thereby possibly resulting in a misstatement of the Company's
financial statements. While the Board of Directors has instituted action to
correct the preceding conditions, there can be no assurance that the Company
will be able to effectively achieve or manage any future growth, or develop and
maintain strong internal controls. Such failure could result in a material
adverse effect on the Company's financial condition and results of operations
and could result in a misstatement of operating results.
COST OF POWER CONVERSION PRODUCTS
In July 1995, the Company's contract with Zenith, pursuant to which
Zenith manufactured certain power conversion products for the Company at a fixed
price per unit, expired in accordance with its terms. Since such time, the
Company has manufactured power conversion products at its facility in Reynosa,
Mexico, while purchasing components for such products from various third party
manufacturers and distributors. The Company has purchased many components for
power conversion products from distributors at prices which are higher than
those offered directly from manufacturers, and the current market prices of such
components are substantially higher than the prices of such components
anticipated by the Company at the time it entered into the Zenith contract.
Accordingly, the Company has incurred higher costs in producing its power
conversion products and the Company's per unit profit margin on such products
has decreased. There can be no assurance that the Company will be able to
produce such products at a lower cost or negotiate more favorable, or even as
favorable, terms for the components thereof, in the future and, therefore, the
Company's profit margin on power products may be subject to further erosion,
which would have a material adverse affect on the Company.
RELIANCE ON THIRD PARTY MANUFACTURERS MAY DISRUPT OPERATIONS
The Company relies on third-party manufacturers for the supply of
substantially all key components for all of its products. The Company's reliance
on outside manufacturers generally, and a sole manufacturer or a limited group
of manufacturers in particular, involves several risks, including without
limitation, a potential inability to obtain an adequate supply of required
components and reduced control over pricing, quality, cost, and timely delivery
of components. Any inability to obtain adequate deliveries or any other
circumstances that would require the Company to seek alternative sources of
supply or to manufacture such components internally could lead to disruption of
the operations of the Company, product deficiencies, unanticipated and
fluctuating expenses, unpredictable revenues, and sales and marketing
dislocations that are beyond the Company's control, and may have a material
adverse effect on the Company's business and operations.
TECHNOLOGICAL CHANGES AFFECTING PRODUCTS AND PRODUCT DEVELOPMENT RISKS
The design and manufacture of technologically advanced components and
equipment continually undergo rapid and significant technological change. The
Company's success will depend upon its ability to maintain a competitive
position with respect to its proprietary and other enhanced technology and to
continue to attract and retain qualified personnel in all phases of its
operations. The Company's business is, to a large degree, dependent on the
enhancement of its current products and the development of new products.
Critical to the Company's success and future profitability will be its capacity
to develop new technologies for new product lines and product upgrades. Product
development and enhancement involve substantial research and development
expenditures and a high degree of risk, and there is no assurance that the
Company's product development efforts will be successful, will be accepted by
the market, or that such development efforts can be completed on a
cost-effective or timely basis. There can be no assurance that future
technological developments will not render existing or proposed products of the
Company uneconomical or obsolete or that the Company will not be adversely
affected by competition or by the future development of commercially viable
products by others.
QUARTERLY FLUCTUATIONS OF OPERATING RESULTS
The Company's quarterly operating results have in the past been, and
will in the future be, subject to fluctuation. The Company's operating results
are impacted by numerous factors, such as product introductions or modifications
by competitors, market acceptance of the Company's products and its customers'
products, product price changes, product mix, purchasing patterns of original
equipment manufacturers ("OEMs") and other customers, delays in, or failure to
receive, orders due to customer financial difficulties, and overall economic
trends. The Company plans to introduce product upgrades or new product lines
from time-to-time, which could generate short-term order fluctuations and have
an adverse impact on sales of certain existing products. In addition, customer
orders may involve competing capital budget considerations for the customer,
thus making the timing of customer orders difficult to predict and uneven. Any
delay or failure to receive anticipated orders, or any deferrals or cancellation
of existing orders, would adversely affect the Company's financial performance.
The Company's expense levels are based in part on its expectations as to future
revenues and, in particular, revenue growth, and the Company may be unable to
adjust spending in a timely manner to compensate for any revenue shortfall.
Accordingly, operating results in any one quarter could be materially adversely
affected by, among other factors, a failure to receive, ship or obtain customer
acceptance of sufficient orders in that quarter. Any weakening in demand for the
Company's products could have a material adverse effect on the Company's
operating results and the Company's ability to achieve profitability.
BACKLOG AND INVENTORY
Power Products, the Company's power products subsidiary, generally
operates with a substantial backlog due primarily to orders from OEMs for custom
power supplies, which generally comprise between 30% to 40% of the Company's
total revenues. However, Power Products' backlog at the beginning of a quarter
typically does not include all sales required to achieve the Company's sales
objectives for Power Products for that quarter. Therefore, Power Products' net
sales and operating results for a quarter depend on the Company shipping orders
scheduled to be sold during that quarter and obtaining additional orders for
products to be sold during that same quarter. Moreover, the terms of customer
purchase orders generally provide that the customer may cancel or reschedule all
or a substantial portion of the order with limited notice and with little or no
penalty. The Company has experienced rescheduling in the past and, to a lesser
extent, cancellations, and expects that it will experience such changes in the
future. If the Company is unable to timely adjust its parts orders to meet its
actual product demand, the result may be that the Company has a parts or product
inventory which is substantially different from the number and mix of products
actually sold. Any such inventory imbalance could result in inventory write
downs or other unexpected charges, contributing to significant fluctuations in
operating results from quarter to quarter.
The Company's other subsidiaries currently operate with virtually no
backlog. Therefore, because the Company ships most of its current products
within a short period after receipt of an order, the Company's net sales and
operating results for a quarter depend on the Company's ability to obtain orders
for and ship products within the same quarter. There can be no assurance,
however, that the Company will be able to obtain a sufficient level of orders to
obtain annual profitability.
COMPETITION
The Company is engaged in certain highly competitive and rapidly
changing segments of the electronic components and systems manufacturing
industry in which technological advances, costs, consistency and reliability of
supply are critical to competitive position. In addition, the competition for
recruitment of personnel in the technologically-advanced manufacturing industry
is continuous and highly intense. The Company competes or may subsequently
compete, directly or indirectly, with a large number of companies which may
provide products or components comparable to those provided by the Company. In
addition, many present or prospective competitors are larger, better
capitalized, more established and have greater access to resources necessary to
produce a competitive advantage. In particular, there are a large number of
competitors producing power conversion products, many of which are larger and
more established technology oriented companies in the United States as well as
low cost manufacturers in the Far East who may be expected to introduce more
technologically advanced power conversion products in the future. There can be
no assurance that the Company will be able to compete effectively in some or all
of its markets.
NO ASSURANCES OF PROTECTION FOR PATENTS AND PROPRIETARY RIGHTS; RELIANCE ON
TRADE SECRETS
The Company relies on a combination of patent, copyright, trademark and
trade secret laws, non-disclosure agreements and other intellectual property
protection methods to protect its proprietary technology. There can be no
assurance that any existing or subsequently obtained patents will provide the
Company with substantial competitive advantages, or that challenges will not be
instituted against the validity or enforceability of any patents owned by the
Company, or if initiated, that such challenges will not be successful. To the
extent the Company wishes to assert its patent rights, there can be no assurance
that any claims of the Company's patents will be sufficient to protect the
Company's technology, and the cost of any litigation to uphold the validity of a
patent and prevent infringement can be substantial even if the Company prevails.
In addition, there can be no assurance that others will not independently
develop similar technologies, duplicate the Company's technology, or
legitimately design around the patented aspects of the Company's technology.
Competitors or potential competitors may have filed applications for or received
patents, and may obtain additional patents and proprietary rights relating to
technology competitive with that of the Company. Furthermore, if additional
patents do not issue from present or future patent applications, the Company may
be subject to greater competition.
In certain cases, the Company also relies on trade secrets to protect
proprietary technology and processes which it has developed or may develop in
the future. There can be no assurance that secrecy obligations will be honored
or that others will not independently develop similar or superior technology.
The protection of proprietary technology through claims of trade secret status
has been the subject of increasing claims and litigation by various companies,
both in order to protect proprietary rights, and for competitive purposes, even
where proprietary claims are unsubstantiated. The prosecution of proprietary
claims or the defense of such claims is costly and uncertain given the rapid
development of the principles of law pertaining to this area.
NO DIVIDENDS ON COMMON STOCK
The Company has not paid any cash dividends on its Common Stock since
its inception and does not anticipate paying cash dividends on its Common Stock
in the foreseeable future. Payment of dividends is likely to be restricted under
the terms of any new credit facility. The future payment of dividends is
directly dependent upon future earnings of the Company, its financial
requirements and other factors to be determined by the Company's Board of
Directors, as well as the possible consent of any of its prospective lenders.
For the foreseeable future, it is anticipated that any earnings which may be
generated from the Company's operations will be used to finance the growth of
the Company and will not be paid to holders of Common Stock.
RISK OF SIGNIFICANT DILUTION
On December 23, 1996, the Company issued and sold 1,134,130 shares of
Common Stock to various investors in a private placement exempt from the
registration requirements of the Securities Act under Regulation S thereunder.
On February 7, 1997, the Company issued and sold an additional 910,000 shares of
Common Stock in a second closing of the same offering described above (the
transactions described in the previous two sentences shall be referred to herein
collectively as the "Regulation S Offering.")
In connection with the Regulation S Offering, the Company retained
Yorkton Securities, Inc. ("Yorkton") to act as placement agent pursuant to that
certain Agency Agreement dated as of December 4, 1996 and amended as of January
23, 1997 (the "Agency Agreement"). Under the terms of the Agency Agreement, the
Company issued Yorkton warrants to purchase 90,730 and 72,800 shares of Common
Stock for a per share exercise price of $1.90 (the "Yorkton Warrants"). The
Yorkton Warrants are exercisable for a period of five years from the date of
each closing of the Regulation S Offering.
As a result of these and various other transactions previously
undertaken by the Company as of February 7, 1997, there were convertible
securities and warrants and options of the Company currently outstanding for the
conversion and purchase of up to approximately 5,482,000 shares of Common Stock,
which represent significant additional potential dilution for existing
stockholders of the Company. These underlying shares of Common Stock are not
included in currently outstanding shares. In addition, as a result of the
anti-dilution provisions included in certain of these derivative securities,
there may be further dilution based on the price that the Company issues other
securities in the future.
VOLATILITY OF STOCK PRICE
There can be no assurance that the market price of the Common Stock
will not decline below the price at which such shares are being offered pursuant
to this Prospectus, particularly since the market price of the Company's Common
Stock has fluctuated substantially since the Company's initial public offering
in April 1994. The Company believes that a variety of factors could cause the
price of the Company's Common Stock to fluctuate substantially, including, for
example, the Company's ability to establish a credit facility to replace its
former facility with its bank, announcements of developments related to the
Company's business, liquidity and financial viability, fluctuations in the
Company's operating results and order levels, general conditions in the
Company's industries, the technology industry in general or the United States or
worldwide economy, announcements of technological innovations, new products or
product enhancements by the Company or its competitors, developments in patents
or other intellectual property rights, and developments in the Company's
relationships with its customers, distributors and suppliers. In addition, in
recent years, the stock market in general and the market for shares of small
capitalization stocks in particular has experienced extreme price fluctuations
which have often been unrelated to the operating performance of affected
companies. Such fluctuations could adversely affect the market price of the
Company's Common Stock and the Warrants and ability to obtain additional
financing.
AUTHORIZATION OF PREFERRED STOCK
The Board of Directors is authorized to issue shares of preferred stock
and to fix the dividend, liquidation, conversion, redemption and the rights,
preferences and limitations of such shares without any further vote or action of
the stockholders. Accordingly, the Board of Directors is empowered, without
stockholder approval, to issue preferred stock with dividend, liquidation,
conversion, voting or other rights which could adversely affect the voting power
of other rights of the holders of the Company's Common Stock. In the event of
issuance, the preferred stock could be utilized, under certain circumstances, as
a method of discouraging and delaying or preventing a change of control of the
Company. Although the Company has no present intention to issue any additional
shares of its preferred stock, there can be no assurance that the Company will
not do so in the future.
THE COMPANY
Oryx Technology Corp. designs, manufactures and markets specialized
components, analytical equipment and instrumentation products for original
equipment manufacturers ("OEMs") in the information technology industry. This
industry includes office equipment, computers, telecommunications and consumer
electronics. The Company markets or has in product development, technologically-
advanced products which perform diagnostic and analytical functions and address
industry requirements for efficient power conversion, surge protection and
specialized materials technology. The Company has concentrated its product
development programs in critical areas where the larger manufacturers of office
equipment, computers, computer peripherals and other electronic and
telecommunications products depend upon complementary technology and product
support. The Company operates in three distinct market segments: (i) power
conversion products, (ii) electrical surge protection products, and (iii)
materials analysis and test equipment and specialized materials products.
In November 1995, the Company made a strategic decision to improve
business focus and execution by separating its core businesses and placing
assets for each core business into wholly-owned subsidiaries. Three new
subsidiaries were formed: Oryx Power Products Corporation ("Power Products"),
SurgX Corporation ("SurgX") and Oryx Instruments and Materials Corporation
("Instrument and Materials"). The subsidiaries are intended to provide
additional management and employee motivation to increase the value of each
business through potential equity ownership tied more closely to each business
unit, and to position the Company to be better able to seek financing or equity
investment at the subsidiary level in order to develop the Company's businesses.
On December 19, 1996, Power Products acquired all of the assets,
assumed a portion of the liabilities, and hired key personnel of Power Sensors
Corporation, an Illinois corporation ("Power Sensors") for 6 percent amounting
to 600,000 shares of the outstanding Series A Common Stock of Power Products and
cash payment of $120,000. Power Sensors is a developer and manufacturer of DC to
DC power conversion products.
Oryx' and its subsidiaries' customer base for their current product
lines includes the following OEMs: Akashic Memories Corporation, Cooper
Industries, IBM Corporation, Pitney Bowes, Seagate Technology, Inc., Western
Digital Media Corporation, and Xerox Corporation. The Company plans to market
its existing lines, and, possibly additional product lines to these and other
OEMs during fiscal 1998.
Oryx also derives revenues from sales of products based on its patented
IntrageneTM ceramic metallization and joining system and from the design and
fabrication of electromagnet systems. IntrageneTM is a proprietary metallurgical
technology developed by Oryx which affords the Company the capacity to
metallize, solder or braze a comprehensive range of difficult-to-join
engineering ceramics, graphite and refractory metals used in electronic and
structural applications.
The Company's predecessor, Advanced Technology, Inc. ("ATI"), was
incorporated on April 21, 1976 in New Jersey. On July 25, 1993, ATI formed the
Company as a wholly-owned Delaware subsidiary, and on September 29, 1993, ATI
merged into the Company. The Company's principal executive offices are located
at 47341 Bayside Parkway, Fremont, California 94538, and its telephone number is
(510) 249-1144.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of Common Stock
for the account of the Selling Security Holders. However, with respect to the
Warrants, the Company will receive proceeds only from the exercise of the
Warrants, the timing of which is at the discretion of the holders of the
Warrants. In the event all of the Warrants were to be exercised, the Company
would receive net proceeds of approximately $432,476, after payment of offering
expenses estimated to be approximately $18,071. It is anticipated that the net
proceeds, if any, will be used by the Company for expansion of operations and
product lines and for working capital. The actual allocation of proceeds
realized from the exercise of the Warrants will depend upon the amount and
timing of such exercises, the Company's operating revenues and cash position at
such time and its working capital requirements during the course of such
exercise period. There can be no assurances that any of the Warrants will be
exercised.
While the intended use of proceeds is consistent with the Company's
current business plan objectives, the Company reserves the right to change the
use of proceeds depending on working capital requirements and opportunities
afforded to the Company. Pending utilization of the proceeds as described above,
the net proceeds of the offering will be deposited in interest bearing accounts
or invested in money market instruments, government obligations, certificates of
deposits or similar short-term investment grade interest bearing investments.
SELLING SECURITY HOLDERS
The following table sets forth the name of the Selling Security
Holders, the amount of shares of Common Stock held directly or indirectly or
underlying the Warrants and other derivative securities of the Company owned by
the Selling Security Holders on the date hereof, the amount of shares of Common
Stock to be offered by the Selling Security Holders, the amount to be owned by
the Selling Security Holders following sale of such shares of Common Stock and
the percentage of shares of Common Stock to be owned by the Selling Security
Holders following completion of such offering. As of November 30, 1996, there
were issued and outstanding 10,918,725 shares of Common Stock of the Company as
to which the percentages referred to below are based.
<PAGE>
<TABLE>
Percentage Owned
Name of Selling Number of Shares Shares to Before Shares Owned After
Security Holder Owned be Offered Offering Offering
<S> <C> <C> <C> <C>
Saraville Limited (1) 210,525 210,525 1.9% -0-
Value Management & Research (1)
50,000 50,000 * -0-
VMR High Octane Fund Ltd. (1)
842,105 842,105 7.7% -0-
Caisse Centrale des Banques
Populaires (1) 31,500 31,500 * -0-
Govett American Smaller Companies
Trust PLC (1) 465,000 465,000 4.3% -0-
Govett Global Smaller Companies
Investment Trust PLC (1) 60,000 60,000 * -0-
Chase Manhattan Trustees Ltd. (1)
125,000 125,000 1.1% -0-
Royal Bank of Scotland Trust
Company Ltd. (1) 90,000 90,000 * -0-
VPB Finanz AG (1) 70,000 70,000 * -0-
Dreadnought Limited (1) 100,000 100,000 * -0-
Yorkton Securities, Inc. (2) 163,530 163,530 1.5% -0-
JW Charles Financial Services,
Inc. (3) 76,000 76,000 * -0-
TOTAL 2,283,660
- - ----------------
* Represents less than 1%.
</TABLE>
(1) Represents shares issued in the Company's Regulation S offering undertaken
between December 1996 and February 7, 1997.
(2) Represents shares issuable upon exercise of two warrants issued in
consideration for serving as placement agent for the Company's Regulation S
offering to institutional non-U.S. investment firms completed on February
7, 1997. The warrants are exercisable at $1.90 per share for 90,730 shares
on or prior to December 24, 2001, and for 72,800 shares on or prior to
February 7, 2002
(3) Represents shares issuable upon exercise of 40,000 callable Common Stock
Purchase Warrants issued in connection with repurchase by the Company of
the Underwriters' Warrant described below. Each Common Stock Purchase
Warrant entitles the holder to purchase 1.9 shares of Common Stock at a
price of $3.50 per warrant.
Between December 1996 and February 1997, the Company issued and sold
2,044,130 shares of the Company's Common Stock to a limited group of qualified
institutional investors which are not "U.S. Persons" (as that term is defined in
Rule 902(o) under the Securities Act of 1933, as amended (the "Act")). The
transaction was intended to be exempt from the registration requirements of the
Act pursuant to Regulation S thereunder. The Company retained Yorkton Securities
Inc. ("Yorkton") to act on a best efforts basis as its exclusive agent in
connection with this offering. The Company paid Yorkton commissions and expenses
totaling $388,000 and further issued to Yorkton two warrants to purchase a total
of 163,530 shares of the Company's common stock at a price of $1.90 per share.
On December 27, 1996, the Company repurchased from JW Charles
Financial Services, Inc. ("JW Charles"), the Underwriters' Unit Purchase Warrant
(the "Underwriters' Warrant") issued by the Company to JW Charles in connection
with the Company's initial public offering of its securities in April 1994. The
Underwriters' Warrant originally entitled JW Charles to purchase 110,000 Units,
which was subsequently increased to 318,421 Units due to the anti-dilution
provisions contained therein. In September 1996, however, JW Charles paid to the
Company $371,000 to exercise a portion of the Underwriters' Warrant and thereby
acquired 100,000 Units. Therefore, on the date of repurchase, the Underwriters'
Warrant entitled JW Charles to purchase 218,421 Units, with each Unit consisting
of two shares of Common Stock and one warrant to purchase 1.9 shares of Common
Stock. As consideration for the repurchase of the Underwriters' Warrant, the
Company paid to JW Charles $475,000 and issued to it 40,000 callable Common
Stock Purchase Warrants (the "Warrants"), with each Warrant entitling the holder
thereof to purchase 1.9 shares of the Company's Common Stock at an exercise
price of $3.50 until April 6, 1999. This Prospectus also relates to the Warrants
and to the shares of Common Stock underlying the Warrants as hereinafter
described.
The Company has agreed to pay for all costs and expenses incident to
the issuance, offer, sale and delivery of the Shares and the Warrants,
including, but not limited to, all expenses and fees of preparing, filing and
printing the Registration Statement and Prospectus and related exhibits,
amendments and supplements thereto and mailing of such items. The Company will
not pay selling commissions and expenses associated with any such sales by the
Selling Security Holders. The Company has agreed to indemnify the Selling
Security Holders against civil liabilities including liabilities under the
Securities Act of 1933. The Selling Security Holders have advised the Company
that sales of the Shares may be made from time to time by or for the account of
the Selling Security Holders in one or more transactions in the over-the-counter
market, in negotiated transactions or otherwise, at prices related to the
prevailing market prices or at negotiated prices.
PLAN OF DISTRIBUTION
The Shares and the Warrants may be sold from time to time by the
Selling Security Holders. Such sales may be made in the over-the-counter market
or otherwise at prices and at terms then prevailing or at prices related to the
then current market price, or in negotiated transactions. The Shares and the
Warrants may be sold by one or more of the following methods: (i) a block trade
in which the broker or dealer so engaged will attempt to sell the Shares as
agent for the Selling Security Holder; (ii) ordinary brokerage transactions;
(iii) transactions in which the broker solicits purchasers and (iv) privately
negotiated transactions. In effecting sales, brokers or dealers engaged by the
Selling Security Holders may arrange for other brokers or dealers to
participate. Brokers or dealers may receive commissions from the Selling
Security Holders in amounts to be negotiated immediately prior to the sale. Such
brokers or dealers and any other participating brokers or dealers may be deemed
to be "underwriters" within the meaning of the Securities Act in connection with
such sales.
DESCRIPTION OF SECURITIES
The Company is currently authorized to issue up to 25,000,000 shares of
Common Stock par value $.001 per share, of which 10,918,725 shares were
outstanding as of November 30, 1996. The Company is also authorized to issue up
to 3,000,000 shares of Preferred Stock, par value $.001 per share, of which
4,500 shares of Series A Preferred Stock were outstanding as of November 30,
1996.
COMMON STOCK
Each share of Common Stock entitles the holders thereof to one vote.
Holders of Common Stock do not have cumulative voting rights which means that
the holders of more than 50% of the shares voting for the election of directors
can elect all of the directors if they choose to do so, and in such event, the
holders of the remaining shares will not be able to elect any directors. The
Bylaws of the Company require that only a majority of the issued and outstanding
shares of Common Stock of the Company need be represented to constitute a quorum
and to transact business at a stockholders' meeting.
Subject to the dividend rights of the holders of any outstanding shares
of Preferred Stock, holders of shares of Common Stock are entitled to share, on
a ratable basis, such dividends as may be declared by the Board of Directors out
of funds legally available therefor. Upon liquidation, dissolution or winding up
of the Company, after payment to creditors and holders of any outstanding shares
of preferred stock, the assets of the Company will be divided pro rata on a per
share basis among the holders of the Common Stock. The Common Stock has no
preemptive, subscription or conversion rights and is not redeemable by the
Company. The Shares of the Company's Common Stock which may be issued upon
exercise of the Company's publicly traded warrants (the "Public Warrants"), and
other warrants and options issued by the Company when issued in accordance with
the terms thereof, will be duly authorized, validly issued, fully paid and
non-assessable.
COMMON STOCK PURCHASE WARRANTS
The Public Warrants were issued in registered form pursuant to an
Agreement, dated April 6, 1994 (the "Warrant Agreement"), between the Company
and North American Transfer Co., as Warrant Agent (the "Warrant Agent"). The
following discussion of certain terms and provisions of the Public Warrants is
qualified in its entirety by reference to the detailed provisions of the
Statement of Rights, Terms and Conditions for the Public Warrants which forms a
part of the Warrant Agreement.
Each of the Public Warrants currently entitles the registered holder to
purchase 1.9 shares of Common Stock. The Public Warrants are exercisable at
$3.50 per Warrant which is the equivalent of $1.84 per share of Common Stock,
subject to certain further adjustments. The Public Warrants are entitled to the
benefit of adjustments in their exercise prices and in the number of shares of
Common Stock or other securities deliverable upon the exercise thereof in the
event of a stock dividend, stock split, reclassification, reorganization,
consolidation or merger.
The Public Warrants may be exercised at any time commencing October 6,
1994 and continuing thereafter until April 6, 1999, unless such period is
extended by the Company. After the expiration date, Public Warrant holders shall
have no further rights. Public Warrants may be exercised by surrendering the
certificate evidencing such Public Warrant, with the form of election to
purchase on the reverse side of such certificate properly completed and
executed, together with payment of the exercise price and any transfer tax, to
the Warrant Agent. If less than all of the Public Warrants evidenced by a
warrant certificate are exercised, a new certificate will be issued for the
remaining number of Public Warrants. Payment of the exercise price may be made
by cash, bank draft or official bank or certified check equal to the exercise
price.
Public Warrant holders do not have any voting or any other rights as
stockholders of the Company. The Company has the right at any time beginning
October 6, 1994 to repurchase the Public Warrants, at a price of $.05 per Public
Warrant, by written notice to the registered holders thereof, mailed 30 days
prior to the repurchase date. The Company may exercise this right only if the
closing bid price for the Common Stock for 20 trading days during a 30
consecutive trading day period ending no more than 10 days prior to the date
that the notice of repurchase is given, equals or exceeds $5.10 per share [145%
of the offering price per share, attributing no value to the Public Warrants]
subject to adjustment for stock dividends and stock splits. Any such repurchase
shall be for all outstanding Public Warrants. If the Company exercises its right
to call Public Warrants for repurchase, such Public Warrants may still be
exercised until the close of business on the day immediately preceding the date
fixed for repurchase. If any Public Warrant called for repurchase is not
exercised by such time, it will cease to be exercisable, and the holder thereof
will be entitled only to the repurchase price. Notice of repurchase will be
mailed to all holders of Public Warrants of record at least thirty (30) days,
but not more than sixty (60) days, before the repurchase date. The foregoing
notwithstanding, the Company may not call the Public Warrants at any time that a
current registration statement under the Act is not then in effect.
The Warrant Agreement permits the Company and the Warrant Agent,
without the consent of Public Warrant holders, to supplement or amend the
Warrant Agreement in order to cure any ambiguity, manifest error or other
mistake, or to address other matters or questions arising thereunder that the
Company and the Warrant Agent deem necessary or desirable and that do not
adversely affect the interest of any Public Warrant holder. The Company and the
Warrant Agent may also supplement or amend the Warrant Agreement in any other
respect with the written consent of holders of not less than a majority in the
number of the Public Warrants then outstanding; however, no such supplement or
amendment may (i) make any modification of the terms upon which the Public
Warrants are exercisable or may be redeemed; or (ii) reduce the percentage
interest of the holders of the Public Warrants without the consent of each
Public Warrant holder affected thereby.
In order for the holder to exercise a Public Warrant, there must be an
effective registration statement, with a current prospectus, on file with the
Securities and Exchange Commission covering the shares of Common Stock
underlying the Public Warrant, and the issuance of such shares to the holder
must be registered, qualified or exempt under the laws of the state in which the
holder resides. If required, the Company will file a new registration statement
with the Commission with respect to the securities underlying the Public
Warrants prior to the exercise of such Public Warrants and will deliver a
prospectus with respect to such securities to all holders thereof as required by
Section 10(a)(3) of the Securities Act of 1933.
PREFERRED STOCK
The Company is authorized to issue 3,000,000 shares of Preferred Stock,
par value $.001 per share, issuable in such series and bearing such voting,
dividend, conversion, liquidation and other rights and preferences as the Board
of Directors may determine. Of such shares, 45,000 shares were designated Series
A $25 2% Convertible Cumulative Preferred Stock (the "Series A Preferred
Stock"), and 4,500 shares were outstanding as of November 30, 1996.
Shares of Series A Preferred Stock accrue cumulative preferred cash
dividends at the annual rate of 2% or $0.50 per share, payable semi-annually
commencing November 1, 1993. The holders of the Series A Preferred Stock have no
right to have the Company redeem such shares, and the Company is not obligated
to redeem such shares under any circumstances. The holders of Series A Preferred
Stock are entitled to receive, upon a voluntary or involuntary dissolution,
liquidation or winding up of the Company, $25.00 per share plus an amount equal
to all accrued and unpaid dividends, if any.
At the election of the holder thereof, each share of Series A Preferred
Stock is convertible into 11.6666 shares of Common Stock, subject to certain
adjustments. If all 4,500 shares of outstanding Series A Preferred Stock were
converted, there would be issued approximately 52,650 shares of Common Stock of
the Company. Holders of Series A Preferred Stock have one vote per share on all
matters submitted to the stockholders of the Company. In addition, the
affirmative vote of at least a majority of the outstanding Series A Preferred
Stock is required to approve any adverse change in the preferences, rights or
limitations with respect to the Series A Preferred Stock.
INTERIM FINANCING SECURITIES
In March 1994, the Company issued $150,000 principal amount of 9%
Promissory Notes (the "Interim Notes") and bridge warrants to purchase 37,500
shares of Common Stock. The Interim Notes were retired from the proceeds of the
Company's public offering in April 1994.
Each bridge warrant entitles the holder to purchase one share of Common
Stock at an exercise price of $2.28 per share on or prior to March 31, 1999. The
resale of the shares of Common Stock issuable upon exercise of the bridge
warrants has been registered in a separate public offering, and the Company has
agreed to maintain an effective registration statement and current prospectus
concerning the issuance of the shares upon exercise of the bridge warrants
during their term.
The Company has also issued warrants in the private offerings and
commercial transactions described under "Selling Security Holders."
CAPITALIZATION OF SUBSIDIARIES
In November 1995, the Company restructured its operations and organized
three initially wholly-owned subsidiaries into which the Company placed its core
businesses and related assets. The three subsidiaries formed were Oryx Power
Products Corporation, SurgX Corporation and Oryx Instruments and Materials
Corporation (collectively the "Subsidiaries"). Each of the Subsidiaries was
organized under the laws of Delaware with authorized capitalization of
20,000,000 shares of Class A Common Stock, 5,000,000 shares of Class B Common
Stock and 5,000,000 shares of Preferred Stock for all subsidiaries except SurgX
Corporation. The Class B Common Stock will be used to fulfill options granted to
members of management and other key employees of the Subsidiaries. The Class A
Common Stock was issued to the Company in exchange for all assets and
liabilities including intellectual property associated with the respective
businesses. The Class A Common Stock and Class B Common Stock are identical
except that the Class A Common Stock possesses a liquidation preference. As of
the date hereof, SurgX and Instruments and Materials each has 10,000,000 shares
of Class A Common Stock issued and outstanding and held by the Company. Power
Products has 10,600,000 shares of Class A Common Stock issued and outstanding,
with 10,000,000 of such shares held by the Company and 600,000 of such shares
held by Power Sensors Corporation. No shares of Class B Common Stock or
Preferred Stock have been issued by any of the Subsidiaries. Power Products has
granted options to purchase 1,177,000 shares of its Class B Common Stock,
Instruments and Materials has granted options to purchase 1,119,000 shares of
its Class B Common Stock and SurgX has granted options to purchase 280,000
shares of its Class B Common Stock to management and key employees which will
vest ratably over a period of five years.
STOCK TRANSFER AGENT
The transfer agent for the shares of Common Stock is North American
Transfer Co., 147 West Merrick Road, Freeport, New York 11520.
LEGAL MATTERS
Certain legal matters in connection with the Shares and the Warrants
being offered hereby will be passed upon for the Company by Wise & Shepard LLP,
3030 Hansen Way, Suite 100, Palo Alto, California 94304.
EXPERTS
The financial statements incorporated in this Prospectus by reference
to the Annual Report on Form 10-KSB/A1 for the year ended February 29, 1996,
have been so incorporated in reliance on the report (which contains an
explanatory paragraph relating to the Company's ability to continue as a going
concern as described in Note 1 to the financial statements) of Price Waterhouse
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.
INDEMNIFICATION
Section 145 of the General Corporation Law of Delaware, under which
jurisdiction the Company is incorporated, empowers a corporation to indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative by reason of the fact that he or she
is or was a director, officer, employee or agent of the corporation or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation or enterprise. A corporation may indemnify against
expenses (including attorneys' fees) and, other than in respect of an action by
or in the right of the corporation, against judgments, fines and amounts paid in
settlement actually and reasonably incurred in connection with such action, suit
or proceeding if the person indemnified acted in good faith and in a manner he
or she reasonably believed to be in or not opposed to the best interests of the
corporation, and with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful. In the case of an
action by or in the right of the corporation, no indemnification of expenses may
be made in respect to any claim, issue or matter as to which such person shall
have been adjudged to be liable to the corporation unless and only to the extent
that the Court of Chancery or the court in which such action was brought shall
determine that, despite the adjudication of liability, such person is fairly and
reasonably entitled to indemnity for such expenses which the court shall deem
proper. Section 145 of the General Corporation Law of Delaware further provides
that to the extent a director, officer, employee or agent of the corporation has
been successful in the defense of any action, suit or proceeding referred to
above or in the defense of any claim, issue or matter therein, he or she shall
be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him or her in connection therewith.
The By-laws of the Company require the Company to indemnify its
directors and officers to the fullest extent permitted by the General
Corporation Law of the State of Delaware.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended, 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>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
--------------------------------------------
The following table sets forth the estimated expenses, all of which are
being paid by the Company, in connection with this offering.
Registration fee................................. $1,571.00
Legal fees and expenses.......................... $7,500.00*
Blue sky qualification fees
and expenses................................. $ 500.00*
Accounting fees and expenses..................... $7,500.00*
Printing expenses................................ $ 500.00*
Miscellaneous.................................... $ 500.00*
--------
Total .................................... $18,071.00
*Estimated
Item 15. Indemnification of Directors and Officers.
-----------------------------------------
Section 145 of the General Corporation Law of Delaware, under which
jurisdiction the Company is incorporated, empowers a corporation to indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative by reason of the fact that he or she
is or was a director, officer, employee or agent of the corporation or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation or enterprise. A corporation may indemnify against
expenses (including attorneys' fees) and, other than in respect of an action by
or in the right of the corporation, against judgments, fines and amounts paid in
settlement actually and reasonably incurred in connection with such action, suit
or proceeding if the person indemnified acted in good faith and in a manner he
or she reasonably believed to be in or not opposed to the best interests of the
corporation, and with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful. In the case of an
action by or in the right of the corporation, no indemnification of expenses may
be made in respect to any claim, issue or matter as to which such person shall
have been adjudged to be liable to the corporation unless and only to the extent
that the Court of Chancery or the court in which such action was brought shall
determine that, despite the adjudication of liability, such person is fairly and
reasonably entitled to indemnity for such expenses which the court shall deem
proper. Section 145 of the General Corporation Law of Delaware further provides
that to the extent a director, officer, employee or agent of the corporation has
been successful in the defense of any action, suit or proceeding referred to
above or in the defense of any claim, issue or matter therein, he or she shall
be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him or her in connection therewith.
The Company's Bylaws provide that the Company has the power to
indemnify its directors and executive officers and may indemnify its other
officers, employees and other agents to the fullest extent permitted by Delaware
law.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended, 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.
Item 16. Exhibits.
Exhibits
Exhibit No. Description of Exhibits
3.1 Certificate of Incorporation of the Registrant dated July 26, 1993(1) 3.2
Bylaws of the Registrant dated July 26, 1993(1) 3.3 Certificate of Amendment
to Certificate of Incorporation dated July 23, 1993(1) 3.3A Certificate of
Amendment of Certificate of Incorporation dated February 7, 1996(4) 4.1
Specimen Common Stock Certificate(1) 4.2 Specimen Common Stock Purchase
Warrant(1) 4.3 Warrant Agency Agreement including Statement of Rights, Terms
and Conditions for Callable Stock
Purchase Warrants(2)
<TABLE>
<S> <C>
4.4 Incentive and Nonqualified Stock Option Plan, as Amended(5)
4.4A 1996 Directors Stock Option Plan(5)
4.5 Form of Promissory Note issued to Series A Preferred Stock investors(1)
4.6 Unit Purchase Warrant(1)
4.7 Form of Warrants issued to Yorkton Securities, Inc. in December 1996 and February 1997(7)
5.1 Opinion of Wise & Shepard LLP as to the validity of the securities being registered.*
10.1 Lease Agreement with Renco Investment Company re: Fremont, California office, a laboratory and
manufacturing facility(1)
10.2 Lease Agreement with FINSA re: Reynosa, Mexico, manufacturing facility(3)
10.3 Lease Agreement with Greer Enterprises re: Fremont, California manufacturing facility(3)
10.4 Lease Agreement with Hospitak/Meditron re: McAllen, Texas, warehouse facility(3)
10.5 Lease Agreement with Security Capital Industrial Trust re: Fremont, California manufacturing
facility(4)
10.6 Lease Agreement with OTR, State Teachers Retirement System of Ohio re: Mt. Prospect, Illinois
office(4)
</TABLE>
10.7 Letter of Employment and Non-Competition Agreement with Arvind Patel(1)
10.8 Letter of Employment and Non-Competition Agreement with Andrew
Intrater(1) 10.9 Agreement for the Purchase and Sale of Stock with Intek
Diversified Corporation(1) 10.10 Asset Purchase Agreement with Zenith
Electronics Corporation(1) 10.11 Promissory Notes issued in interim debt
financing(1) 10.12 Common Stock Purchase Warrants issued in interim debt
financing(3)
<TABLE>
<S> <C>
10.13 Agency Agreement between the Company and Yorkton Securities, Inc. dated December 4, 1996, as amended
January 23, 1997(7)
10.14 Form of Subscription Agreement between the Company and various
investors in Yorkton Private Placement dated December 24, 1996
and February 7, 1997*
10.15 Asset Purchase Agreement relating to the acquisition of Power Sensors Corporation by Oryx Power
Products Corporation dated December 19, 1996(6)
21 Subsidiaries of the Registrant(4)
23.1 Consent of Independent Accountants*
23.2 Consent of Wise & Shepard LLP (incorporated in opinion included in Exhibit 5.1).
</TABLE>
* Filed herewith.
(1) Previously filed as an exhibit to the Company's Registration Statement on
Form SB-2 (Registration No. 33-72104) which became effective on April 6,
1994 and is incorporated herein by reference.
(2) Previously filed as an exhibit to the Company's Current Report on Form 8-K
filed with the Commission on March 27, 1995.
(3) Previously filed as an exhibit to the Company's Annual Report on Form
10-KSB for the fiscal year ended February 28, 1995.
(4) Previously filed as an exhibit to the Company's Annual Report on Form
10-KSB (as Amended) for the fiscal year ended February 29, 1996.
(5) Previously filed as an exhibit to the Company's Registration Statement on
Form S-8 (Registration No. 333-13887) filed with the Commission on October
10, 1996 and is incorporated herein by reference.
(6) Previously filed as an exhibit to the Company's Current Report on Form 8-K
filed with the Commission on January 3, 1997.
(7) Previously filed as an exhibit to the Company's Current Report on Form
8-K filed with the Commission on February 21, 1997.
Item 17. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement;
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of this Registration Statement (or the
most recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in 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 and 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 20 percent 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 this
Registration Statement or any material change to such information in
this Registration Statement;
provided, however, that the undertakings set forth in paragraphs
(a)(1)(i) and (a)(1)(ii) above do not apply if the information required
to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated
by reference in this Registration Statement;
(2) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof; and
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d)
of the Exchange Act (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the Exchange
Act) that is incorporated by reference in this Registration Statement
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such
issue.
(d) The undersigned Registrant hereby undertakes that:
(1) For determining any liability under the Securities Act of
1933, as amended, treat 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
Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act of 1933, as amended, as part of this Registration
Statement as of the time the Commission declared it effective.
(2) For determining any liability under the Securities Act of
1933, as amended, treat each post-effective amendment that contains a
form of prospectus as a new registration statement for the securities
offered in the Registration Statement, and that offering of the
securities at that time as the initial bona fide offering of these
securities.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Fremont, State of California on March 12, 1997.
ORYX TECHNOLOGY CORP.
By: /s/ Arvind Patel
--------------------
Arvind Patel
Chief Executive Officer
KNOWN ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Arvind Patel and Mitchel Underseth and
each of them, his true and lawful attorneys-in-fact and agents with full power
of substitution and re-substitution for him and in his name, place and stead, in
any and all capacities, to sign any or all amendments (including post-effective
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 said attorneys-in-fact and
agents and each of them full power and authority, to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
to all intents and purposes and as full as they might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents or
their substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated.
Signature and Title Date
- ------------------- ----
/s/ Arvind Patel March 12, 1997
- ----------------
Arvind Patel
Chief Executive Officer
and Director
/s/ Mitchel Underseth March 12, 1997
- ---------------------
Mitchel Underseth
Chief Financial Officer
<PAGE>
Signature and Title........ Date
/s/ Andrew Intrater March 12, 1997
- -------------------
Andrew Intrater
Secretary, Treasurer and Director
/s/ John Abeles March 12, 1997
- ----------------
John Abeles
Chairman of the Board and Director
/s/ Jay M. Haft March 12, 1997
- ---------------
Jay M. Haft
Director
/s/ Ted D. Morgan March 12, 1997
- -----------------
Ted D. Morgan
Director
<PAGE>
EXHIBIT 5.1 LEGAL OPINION
WISE & SHEPARD LLP
March 12, 1997
Oryx Technology Corp.
47341 Bayside Parkway
Fremont, California 94538
Re: Registration Statement on Form S-3; Oryx Technology, Corp. (the "Company"),
2,283,660 Shares of Common Stock
Gentlemen:
This opinion is submitted pursuant to the applicable rules of the
Securities and Exchange Commission with respect to the registration by the
Company of the resale of 2,283,660 shares of Common Stock, par value $.001 per
share (the "Common Stock") to be sold by the Selling Security Holders designated
in the Registration Statement. The shares of Common Stock to be sold consist of
2,044,130 shares of Common Stock currently outstanding and 239,530 shares of
Common Stock underlying various warrants described in the Registration Statement
(the "Warrants").
In our capacity as counsel to the Company, we have examined the
original, certified, conformed, photostat or other copies of the Company's
Certificate of Incorporation (as amended), By-Laws, instruments pertaining to
the related exhibits and corporate minutes provided to us by the Company. In all
such examinations, we have assumed the genuineness of all signatures on original
documents, and the conformity to originals or certified documents of all copies
submitted to us as conformed, photostat or other copies. In passing upon certain
corporate records and documents of the Company, we have necessarily assumed the
correctness and completeness of the statements made or included therein by the
Company, and we express no opinion thereon.
Based upon and in reliance of the foregoing, we are of the opinion that
the Common Stock to be resold by the Selling Security Holders presently
outstanding, and the Common Stock to be issued upon exercise of the Warrants
(when issued in accordance with the terms of the Warrants), are or will be
validly issued, fully paid and non-assessable.
We hereby consent to the use of this opinion in the Registration
Statement on Form S-3 to be filed with the Commission.
Very truly yours,
/s/ Wise & Shepard LLP
----------------------
Wise & Shepard LLP
<PAGE>
EXHIBIT 10.14 FORM OF SUBSCRIPTION AGREEMENT
THE SHARES TO WHICH THIS AGREEMENT RELATES (THE "SHARES") HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR UNDER ANY STATE SECURITIES LAWS ("STATE LAWS") OR ANY SECURITIES LAWS OF
JURISDICTIONS OUTSIDE OF THE UNITED STATES, AND MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED IN THE UNITED STATES OR TO A "U.S. PERSON" (AS
DEFINED HEREIN) EXCEPT (1) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FILED
UNDER THE SECURITIES ACT COVERING THE SHARES, (2) UPON DELIVERY TO THE COMPANY
OF AN OPINION OF U.S. COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT THE
SHARES MAY BE TRANSFERRED WITHOUT REGISTRATION PURSUANT TO (A) RULE 144, RULE
144A, OR RULE 904 OF REGULATION S PROMULGATED UNDER THE SECURITIES ACT OR (B)
ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF THE SECURITIES ACT, OR (3) AS OTHERWISE PERMITTED UNDER THE
TERMS OF SUBSECTION 10.2 OF THIS AGREEMENT.
SUBSCRIPTION AGREEMENT
Dated for reference purposes December 4, 1996
TO: ORYX TECHNOLOGY CORP. ......... Personal & Confidential
47341 Bayside Parkway
Fremont, California 94538
1. Subscription for Shares. The undersigned (the "Subscriber") hereby
irrevocably subscribes for and agrees to purchase from Oryx Technology Corp.
(the "Company"), subject to the terms and conditions set forth in this
Subscription Agreement, shares (the "Shares") of the $.001 par value common
stock of the Company (the "Common Stock") for the total purchase price set forth
next to the Subscriber's name on page 14 hereof (the "Total Purchase Price").
All dollar amounts set forth herein refer to U.S. dollars, unless otherwise
indicated. The Shares form part of a larger private placement (the "Private
Placement") of Shares for an aggregate minimum offering price of $2,000,000 and
an aggregate maximum offering price of $4,000,000. The Shares are being sold by
the Company pursuant to an agency agreement dated as of December 4, 1996 (the
"Agency Agreement") between Yorkton Securities Inc. (the "Agent") and the
Company pursuant to which the Agent has agreed to act as the sole and exclusive
agent of the Company to solicit offers to purchase the Shares on a best efforts
basis. Subject to the terms hereof, this subscription will be effective upon its
acceptance by the Company.
2. Number of Shares. The number of Shares subscribed for herein shall
be determined by dividing the Total Purchase Price by the Price Per Share as
defined in Section 3 hereof.
3. Price Per Share. The price per Share ("Price Per Share") shall be
calculated as 90% of the average closing bid price of the Company's Common Stock
as it trades on the Nasdaq SmallCap Market for the 10 trading days immediately
preceding the date of contracting under this subscription agreement, provided,
however, that in no event will the Price Per Share based on this calculation be
less than $1.80.
4. Subscription. The Subscriber must deliver to the Agent a fully
completed and executed copy of this Subscription Agreement, including completed
registration and delivery instructions appearing after the Subscriber's
signature hereto.
5. Payment. Together with this Subscription Agreement, the Subscriber
must deliver to the Agent the Total Purchase Price of the Shares subscribed for
hereunder, paid by certified check or bank draft payable to the Agent or payable
in such other manner as may be specified by the Agent.
6. Terms of Closing.
6.1......Closing. Provided that the Agent has received Private
Placement subscriptions equaling or exceeding the aggregate minimum offering
price of $2,000,000 and all other terms and conditions of this Subscription
Agreement have been satisfied, the closing of the Private Placement (the
"Closing") shall take place on December 16, 1996 at 10:00 a.m. (Pacific Time)
and/or on such other date or at such other time as the Company and the Agent
shall mutually agree (the "Closing Date"). The Closing shall be held at the
place or places provided for in the Agency Agreement. At the Closing, the
proceeds of the Private Placement will be delivered to the Company (net of
amounts due to the Agent under the terms of the Agency Agreement) and a
certificate (the "Certificate") representing the Shares (which shall contain all
legends required under the terms of this Subscription Agreement) will be
delivered to the Agent for the benefit of the Subscriber.
6.2......Failure to Close. In the event that the Agent does
not receive the aggregate minimum offering price required to close the Private
Placement, or any other condition to the Closing is not satisfied or waived in
accordance with the terms of this Subscription Agreement, the Total Purchase
Price of the Shares, exclusive of any interest thereon, shall promptly be
returned by the Agent to the Subscriber.
7. Subscriber's Representations, Warranties and Covenants. The
Subscriber hereby represents, warrants and covenants to the Company and the
Agent as of the date of this Subscription Agreement and at the Closing that:
7.1......Investment Intent. The Subscriber's acquisition of
the Shares is solely for the Subscriber's own account, for investment, and not
with a view to, or to offer or sell for an issuer in connection with, any
distribution thereof, and the Subscriber has no present intention of selling or
distributing any of the Shares. The Subscriber has no contract, arrangement or
understanding with the Company, the Agent, or any other person to participate in
a distribution of the Shares, is not an affiliate of a person which has such a
contract, arrangement or understanding, and will not act on behalf of any of the
foregoing persons in any offer or sale of the Shares. The Subscriber is
acquiring the Shares in the ordinary course of its business.
7.2......Access to Information. The Subscriber has received a
copy of each of the Exhibits to this Subscription Agreement, including (i) the
Company's Annual Report on Form 10-KSB for the fiscal year ended February 29,
1996 (Exhibit A), (ii) the Proxy Statement for the Company's Annual Meeting of
Stockholders held on September 20, 1996 (Exhibit B), (iii) the Company's
Quarterly Report on Form 10-QSB for the quarterly period ended August 31, 1996
(Exhibit C), and (iv) the Company's Post-Effective Amendment No. 3 to Form SB-2
Registration Statement filed with the Securities and Exchange Commission on
November 14, 1996 with respect to an unrelated offering of securities (Exhibit
D) (collectively referred to in this Subscription Agreement as the "Offering
Documents"), and, if desired, has sought and obtained from management of the
Company such additional information concerning the business, management and
financial affairs of the Company as the Subscriber has deemed necessary or
appropriate in determining whether or not to purchase the Shares. The Subscriber
understands and acknowledges that the Agent has been engaged solely to act as
placement agent for the offering of the Shares and has not independently
verified any of the information contained in the Offering Documents and assumes
no responsibility for the accuracy or completeness thereof. The Subscriber
acknowledges that it has not relied on the Agent or any person affiliated or
associated with the Agent in connection with its investigation of the
information in the Offering Documents or in connection with its investment
decision.
7.3......Accredited Investor; Knowledge and Experience. The
Subscriber is an "accredited investor," as that term is defined in Rule 501(a)
under the Securities Act, a copy of which the undersigned has read and
understands. The Subscriber has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of an
investment in the Shares, and it is able to bear the economic risk of losing up
to the entire amount of its investment therein. Further, the individual
executing this Subscription Agreement has such knowledge and experience in
financial and business matters that he is capable of utilizing the information
made available to him in connection with the offering of the Shares, of
evaluating the merits and risks of an investment in the Shares, and of making an
informed investment decision with respect to the Shares, including assessment of
the risk factors set forth in the Offering Documents.
7.4......Suitability. The Subscriber has carefully considered,
and has, to the extent the Subscriber deems it necessary, discussed with the
Subscriber's own professional legal, tax and financial advisers the suitability
of an investment in the Shares for the Subscriber's particular tax and financial
situation, and the Subscriber has determined that the Shares are a suitable
investment.
7.5......Private Offering. The offer to sell the Shares was
directly communicated to the Subscriber by the Agent. At no time was the
Subscriber presented with or solicited by any leaflet, newspaper or magazine
article, radio or television advertisement, or any other form of general
advertising or solicited or invited to attend a promotional meeting otherwise
than in connection and concurrently with such communicated offer.
7.6......Compliance with Regulation S. The Subscriber
acknowledges that a condition to the sale of the Shares to the Subscriber is
that the Company and the Agent must be satisfied that registration under the
Securities Act is not required by virtue of compliance with Regulation S
thereunder.
7.7......No Directed Selling Efforts. The Subscriber is not
aware of any Directed Selling Efforts (as hereinafter defined) having been made
in the United States with respect to the Shares by the Company, the Agent, their
respective affiliates, or any person acting on behalf of any of the foregoing.
In addition, the Subscriber, its affiliates, and persons acting on behalf of the
foregoing have not made and will not make, any Directed Selling Efforts in the
United States with respect to the Shares. For purposes of this Subscription
Agreement, "Directed Selling Efforts" include any activity undertaken for the
purpose of, or that could reasonably be expected to have the effect of,
conditioning the market in the United States for the Shares, including, but not
limited to, the placement of an advertisement in a publication with a general
circulation in the United States that refers to the offering of the Shares, the
mailing of promotional materials to persons located in the United States or the
holding of promotional meetings or seminars in the United States.
7.8......Offshore Transaction. The offer and sale of the
Shares to the Subscriber qualifies as an Offshore Transaction. For purposes of
this Subscription Agreement, the term "Offshore Transaction" means that:
(1) The Subscriber was outside the United States at
the time the Shares were offered for sale to the Subscriber; and
(2) The Subscriber was outside the United States at
the time the Subscriber originated the buy order for the Shares,
including, but not limited to, the time when the Subscriber signed
and delivered this Subscription Agreement and otherwise subscribed
for or agreed to purchase the Shares.
In this Subscription Agreement, the term "United States" means the United States
of America, its territories and possessions, any State of the United States, and
the District of Columbia. Notwithstanding the foregoing definition of "Offshore
Transaction," the offer and sale of the Shares to the Subscriber shall not
constitute an "Offshore Transaction" if the Subscriber is acquiring the Shares
for the account or benefit of any specifically targeted, identifiable group of
U.S. citizens abroad, such as members of the U.S. armed forces serving overseas,
but shall constitute an "Offshore Transaction" if the Subscriber is a person
excluded from the definition of "U.S. Person" pursuant to Section 7.9(2)(f) of
this Subscription Agreement or is a person holding an account excluded from the
definition of "U.S. Person" pursuant to Section 7.9(2)(a) of this Subscription
Agreement, solely in its capacity as a holder of such an account.
7.9......Non-U.S. Person. The Subscriber is not a U.S.
Person, as such term is defined below, and
----------------
is not acquiring the Shares for the account or benefit of any U.S. Person.
(1) Definition of U.S. Person. For purposes of this
Subscription Agreement, the term "U.S. Person" means:
(a) Any natural person resident in the
United States;
(b) Any partnership or corporation
organized or incorporated under the laws of the United
States;
(c) Any estate of which any executor or
administrator is a U.S. Person;
(d) Any trust of which any trustee is a
U.S. Person;
(e) Any agency or branch of a foreign
entity located in the United States;
(f) Any non-discretionary account or
similar account (other than an estate or trust) held by a
dealer or other fiduciary for the benefit or account of a
U.S. Person;
(g) Any discretionary account or similar
account (other than an estate or trust) held by a dealer or
other fiduciary organized, incorporated, or (if an individual)
resident in the United States; and
(h) Any partnership or corporation if
organized or incorporated under the laws of any foreign
jurisdiction, and formed by a U.S. Person principally for the
purpose of investing in securities not registered under the
Securities Act, unless it is organized or incorporated, and
owned, by accredited investors (as defined in Rule 501(a)
under the Securities Act), who are not natural persons,
estates or trusts.
(2) Exclusions from Definition. Notwithstanding the
foregoing definition of "U.S. Person":
(a) Any discretionary account or similar
account (other than an estate or trust) held for the benefit
or account of a non-U.S. Person by a dealer or other
professional fiduciary organized, incorporated, or (if an
individual) resident in the United States shall not be deemed
a U.S. Person.
(b) Any estate of which any professional
fiduciary acting as executor or administrator is a U.S. Person
shall not be deemed a U.S. person if an executor or
administrator of the estate who is not a U.S. Person has sole
or shared investment discretion with respect to the assets of
the estate, and the estate is governed by foreign law.
(c) Any trust of which any professional
fiduciary acting as trustee is a U.S. Person shall not be
deemed a U.S. Person if a trustee who is not a U.S. Person
has sole or shared investment discretion with respect to the
trust assets, and no beneficiary of the trust (and no settlor
if the trust is revocable) is a U.S. Person.
(d) An employee benefit plan established
and administered in accordance with the law of a country
other than the United States and customary practices and
documentation of such country shall not be deemed a U.S.
Person.
(e) Any agency or branch of a U.S. Person
located outside the United States shall not be deemed a U.S.
Person if the agency or branch operates for valid business
reasons, and the agency or branch is engaged in the business
of insurance or banking and is subject to substantive
insurance or banking regulation, respectively, in the
jurisdiction where located.
(f) The International Monetary Fund, the
International Bank for Reconstruction and Development, the
Inter-American Development Bank, the Asian Development Bank,
the African Development Bank, the United Nations, and their
agencies, affiliates and pension plans, and any other similar
international organizations, their agencies, affiliates and
pension plans shall not be deemed U.S. Persons.
7.10.....No Fairness Determination. The Subscriber understands
that no governmental or other agency has reviewed or approved the terms of the
Subscriber's investment in the Shares or the accuracy or adequacy of the
Offering Documents, nor has any such agency made any finding or determination as
to the fairness of an investment in the Shares or made any recommendation or
endorsement of the Shares.
7.11.....Truth and Accuracy. All representations and
warranties made by the Subscriber in this Subscription Agreement are true and
accurate as of the effective date of this Subscription Agreement and shall be
true and accurate as of the Closing Date. If such representations and warranties
shall not be true and accurate in any respect, the Subscriber will, prior to the
Closing, give written notice of such fact to the Company specifying which
representations and warranties are not true and accurate and the reasons
therefor.
7.12.....Authority. The individual executing and delivering
this Subscription Agreement on behalf of the Subscriber has been duly authorized
and is duly qualified to execute and deliver this Subscription Agreement on
behalf of the Subscriber in connection with the purchase of the Shares; the
signature of such individual is binding upon the Subscriber; the Subscriber is
duly organized and subsisting under the laws of the jurisdiction in which is was
organized; and the Subscriber was not formed for the specific purpose of
acquiring the Shares.
7.13.....No Violation. The execution and delivery of this
Subscription Agreement and the consummation of the transactions or performance
of the obligations contemplated by this Subscription Agreement do not and will
not result in a breach of any term of, or constitute a default under, the
Subscriber's charter or bylaws or any statute, indenture, mortgage, other
agreement or instrument to which the Subscriber is a party or by which it is
bound, or any order, writ, judgment or decree.
7.14.....Enforceability. The Subscriber has duly executed and
delivered this Subscription Agreement and (subject to acceptance by the Company)
it constitutes a valid and binding agreement of the Subscriber enforceable in
accordance with its terms against the Subscriber, except as such enforceability
may be limited by principles of public policy, and subject to laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
rules of law governing specific performance, injunctive relief or other
equitable remedies.
7.15.....Acceptance by Company Required. The Subscriber
acknowledges that this Subscription Agreement is not enforceable by the
Subscriber unless it has been accepted by the Company.
7.16.....Notice of Company's Acceptance Waived. The Subscriber
waives any requirement for the Company to communicate its acceptance of this
Subscription Agreement to the Subscriber.
7.17.....Reliance on Own Advisers. In connection with the
Subscriber's investment in the Shares, the Subscriber has not relied upon the
Company or the Agent or their respective legal and tax advisers for legal or tax
advice, and has, if desired, in all cases sought the advice of the Subscriber's
own personal legal counsel and tax advisers.
7.18.....Confidentiality of Information. The Subscriber
acknowledges and understands that the information given in Schedule A to this
Subscription Agreement has not yet been disclosed to the public, and the
Subscriber agrees not to disclose such information or to trade in the securities
of the Company until such information has been publicly disclosed by the
Company.
8. Company's Representations, Warranties and Covenants. The Company hereby
represents, warrants and covenants as of the date of this Subscription Agreement
and at the Closing that, except as otherwise disclosed in the Offering
Documents:
8.1 Organization. The Company has been duly incorporated
and organized and is validly existing in good standing under the
laws of the State of Delaware.
8.2......Good Standing. The Company and its subsidiaries are
duly qualified to do business as foreign corporations in good standing in those
jurisdictions which require such qualification except to the extent that failure
to so qualify would not have a material adverse effect on the Company.
8.3......Authority. The Company has corporate power and
authority to enter into and perform this Subscription Agreement, to own its own
properties and assets, and to carry on its business as it is currently being
conducted. All corporate action on the part of the Company, its directors and
stockholders necessary for the authorization, execution, delivery and
performance of this Subscription Agreement by the Company and the performance of
all of the Company's obligations hereunder has been duly taken.
8.4......Enforceability. This Subscription Agreement, when
executed and delivered by the Company and duly authorized, executed and
delivered by the Subscriber, will be a binding obligation on the Company,
enforceable in accordance with its terms, except as may be limited by principles
of public policy, and subject to laws of general application relating to
bankruptcy, insolvency and the relief of debtors and rules of law governing
specific performance, injunctive relief or other equitable remedies.
8.5......No Violation. The execution and delivery of this
Subscription Agreement and the consummation of the transactions or performance
of the obligations contemplated by this Subscription Agreement do not and will
not result in a breach of any term of, or constitute a default under, the
Company's charter or bylaws, any statute, any indenture, mortgage, or other
agreement or instrument to which the Company or any of its subsidiaries is or
are a party or by which any of them is or are bound, or any order, writ,
judgment or decree.
8.6......Actions and Claims. To the best of the Company's
knowledge, there are no actions or proceedings of any kind whatsoever
outstanding, pending, contemplated or threatened relating to the bankruptcy or
insolvency of the Company or any of its subsidiaries. To the best of its
knowledge, there are no other claims, actions, suits, judgments, investigations
or proceedings of any kind whatsoever outstanding, pending or threatened against
or affecting the Company, its subsidiaries, or the Company's directors, officers
or promoters, at law or in equity or before or by any federal, state, municipal
or other governmental department, commission, board, bureau or agency of any
kind whatsoever which could materially affect its business or financial
condition and, to the best of its knowledge, there is no basis therefor.
8.7......Disclosure. The Company's Offering Documents do not,
as of the respective dates thereof, contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
made therein, in light of the circumstances under which they have been made, not
misleading.
8.8......Authorized and Validly Issued Shares. The authorized
and issued capital stock of the Company as of the dates set forth in the
Offering Documents is as disclosed in the Offering Documents, and the issued and
outstanding shares of Common Stock of the Company are fully paid and
non-assessable. The Company has sufficient authorized and unissued shares of
Common Stock to provide for the issuance and delivery of the Shares. The Shares,
when issued in the manner contemplated by the provisions of this Subscription
Agreement, will be duly authorized and validly issued and will be fully paid and
non-assessable.
8.9......Convertible Securities. No securities convertible or
exchangeable into Common Stock of the Company or agreements, warrants, options,
rights or privileges for the purchase or other acquisition of any unissued
securities of the Company are outstanding.
8.10.....Intellectual Property Rights. The Company or its
subsidiaries own, possess or have access to adequate rights to use all material
patents, patent rights, inventions, trademarks, service marks, trade names,
copyrights and proprietary rights necessary for the conduct of its business as
described in the Offering Documents; and the Company has no knowledge of any
infringement of or conflict with rights of others, or any claims thereof, with
respect to any patents, patent rights, inventions, trademarks, service marks,
trade names, copyrights or other proprietary rights, the effect of which
infringement, conflict or claims would be materially adverse to the Company.
8.11.....Financial Statements. The financial statements
included in the Offering Documents (the "Financial Statements") are true and
correct in all material respects and present fairly and accurately the financial
position and results of the operations of the Company and its subsidiaries for
the periods shown therein, and the Financial Statements have been prepared in
accordance with accounting principles generally accepted in the United States
applied on a consistent basis except for normal year-end adjustments.
8.12.....Change in Circumstances. Except as disclosed on
Schedule A to this Subscription Agreement, since August 31, 1996 there has not
been any adverse material change of any kind whatsoever in the financial
position or condition of the Company or of any of its subsidiaries, or any
damage, loss or other change of circumstances of any kind whatsoever materially
affecting the business or assets of the Company or of any subsidiaries or the
right or capacity of the Company or of any subsidiaries to carry on their
business.
8.13.....Defaults. Since April 30, 1996, neither the Company
nor any of its subsidiaries has defaulted, or is currently in default (i) with
respect to the payment of interest or principal on any material indebtedness of
the Company or its subsidiaries, or (ii) under any material contract to which
the Company or any of its subsidiaries is a party.
8.14.....Stop Orders. No order prohibiting the sale of the
Company's securities has been issued against the Company or, to Company's
knowledge, its directors, officers or promoters, and no proceedings for this
purpose have been instituted, are pending, or, to its knowledge, contemplated or
threatened.
8.15.....Transfer Agent. North American Transfer Co., having
its principal office in Freeport, New York, has been duly appointed as the
transfer agent for the Company's Common Stock.
8.16.....Domestic Reporting Company. The Company is a
"domestic issuer," as such term is defined in Rule 902 of Regulation S, and has
a class of securities registered pursuant to Section 12(b) or 12(g) of the
United States Securities Exchange Act of 1934, as amended (the "Exchange Act")
or is required to file reports pursuant to Section 15(d) of the Exchange Act.
8.17.....Exchange Act Reports. At the time of commencement of
the Offering, the Company had filed all the material required to be filed
pursuant to Section 13(a) or 15(d) of the Exchange Act for a period of at least
the twelve months immediately prior thereto, and the Company has since remained,
and continues to remain, current in satisfying such filing obligations.
8.18.....No Directed Selling Efforts. The Company, its
affiliates, and persons acting on behalf of the foregoing have not made and will
not make any Directed Selling Efforts in the United States with respect to the
Shares.
8.19.....Use of Proceeds. The Company intends to use
approximately $500,000 of the net proceeds of the Private Placement to
repurchase outstanding Underwriter's Units (which, if fully exercised, would
have constituted ownership of a total of 900,000 shares of Common Stock), and to
use the remaining net proceeds for working capital purposes, primarily to assist
the Company in the marketing and distribution of its surge protection and
materials analysis products.
8.20.....No Stockholder Approval. The Company is not required
under the National Association of Securities Dealers Bylaws to obtain
stockholder approval prior to offering or selling the Shares in the Private
Placement.
9. Registration Rights. The Company agrees, on the following terms and
subject to the following conditions, to register under the Securities Act the
resale of all of the Shares purchased by the Subscriber in the Private
Placement, and, additionally, any securities issued or issuable by way of stock
dividend or any other distribution with respect to or in exchange for, or in
replacement of, such Shares, by stock split, or in connection with a combination
of shares, recapitalization, merger, consolidation, amalgamation or other
reorganization (collectively, the "Registrable Securities"), at the Company's
own expense, with the exception of any legal and advisory fees or expenses
incurred by the Subscriber in connection with the registration.
9.1......Filing of Registration Statement. The Company shall
prepare and file with the United States Securities and Exchange Commission
("SEC") not later than 90 days after the Closing Date a registration statement
on an appropriate form (the "Registration Statement") for registration under the
Securities Act of the resale of the Registrable Securities. In the event that
(i) the Company does not file the Registration Statement within 90 days after
the Closing Date, or (ii) the Registration Statement is not declared effective
under the Securities Act within 180 days after the Closing Date, as herein
provided, then the restrictive legend required to be placed on the Share
Certificate pursuant to Subsection 10.2 shall thereafter be of no further force
or effect and shall promptly be removed by the Company's transfer agent upon
request of the Subscriber without further authorization from the Company. Prior
to the Closing, the Company shall irrevocably instruct its transfer agent to
remove such legend from the Share Certificate in accordance with the terms
stated in the previous sentence without any further authorization from the
Company.
9.2......Information. In connection with the preparation of
the Registration Statement:
(1) The Subscriber shall furnish to the Company all
information reasonably requested by the Company (including, for
example, information regarding the Subscriber's intended method of
disposition of the Registrable Securities) for inclusion in the
Registration Statement and response to SEC comments and questions.
(2) As the Subscriber may be deemed a statutory
underwriter of any Shares sold by the Subscriber under the Registration
Statement, the Company shall give the Subscriber and its legal counsel
and accountants such access to copies of the Company's records and
documents and such opportunities to discuss the business of the Company
with its officers and the independent public accountants who have
certified its financial statements as shall be reasonably necessary, in
the opinion of the Subscriber or its legal counsel, to conduct a
reasonable investigation within the meaning of the Securities Act.
9.3......Effectiveness of Registration Statement. The Company
shall use its best efforts to cause the Registration Statement to become
effective within 180 days after the Closing Date (but if not effective within
such period, the Company shall continue to use its best efforts to cause the
Registration Statement to become effective as soon as possible thereafter) and
to keep the Registration Statement effective thereafter until the earlier of (i)
the date on which all Registrable Securities sold in the Private Placement have
been resold pursuant to the Registration Statement or otherwise resold without
restriction under the Securities Act, or (ii) the date on which is ended the
three-year period referenced in Rule 144(k) (or such shorter period set forth in
any amendment to Rule 144(k)) under the Securities Act or any successor rule or
subsection relating to the resale of "restricted securities" by "non-affiliates"
of an issuer, as such terms are defined in the Securities Act and the rules and
regulations promulgated thereunder.
9.4......Amendments and Supplements. The Company shall prepare
and file with the SEC such amendments and supplements to the Registration
Statement and the prospectus used in connection with the Registration Statement
as may be necessary to comply with the provisions of the Securities Act with
respect to the disposition of the Registrable Securities.
9.5......Copies of Prospectuses. The Company shall furnish to
the Subscriber such numbers of copies of prospectuses or prospectus documents
conforming with the requirements of the Securities Act as the Subscriber may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by the Subscriber.
9.6......Blue Sky Registrations. The Company shall use its
best efforts to register and qualify the Registrable Securities under the state
securities or Blue Sky laws ("State Laws") of such jurisdictions as the
Subscriber reasonably requests; provided, however, that the Company shall not be
required to take any action to register or qualify the Registrable Securities in
any jurisdiction in which the Company would be required to execute a general
consent to service of process in effecting such registration or qualification
unless the Company has previously executed such a general consent in such
jurisdiction.
9.7......Quiet Periods. The Subscriber agrees that, upon its
receipt of any notice from the Company of the happening of any event which makes
any statement made in the Registration Statement, the prospectus or any document
incorporated therein by reference, untrue in any material respect or which
requires the making of any changes in the Registration Statement, the prospectus
or any document incorporated therein by reference, in order to make the
statements therein not misleading in any material respect, the Subscriber will
forthwith discontinue disposition of Registrable Securities under the prospectus
related to the Registration Statement until the Company provides the Subscriber
with copies of the supplemented or amended prospectus or prospectus documents,
or until the Subscriber is advised in writing by the Company that the use of the
prospectus may be resumed. The Company agrees to provide the Subscriber with
such copies of the supplemented or amended prospectus or prospectus documents,
or notice that use of the prospectus may be resumed, as soon as reasonably
practicable.
9.8......Trading Market. The Company covenants to use its best
efforts to maintain a continuous trading market for its Common Stock on the
Nasdaq SmallCap Market or National Market System or a United States national
securities exchange throughout the period that the registration rights afforded
by this Section 9 remain in effect.
9.9......Compliance with Anti-Manipulation Rules. The
Subscriber agrees that, with respect to the offering for resale of the
Registrable Securities, the Subscriber will comply with Rules 10b-6 and 10b-7
promulgated under the Exchange Act and such other or additional
anti-manipulation rules then in effect (the "Anti-Manipulation Rules") until
such offering has been completed. The Company also agrees to comply with the
Anti-Manipulation Rules with respect to the offering for resale of the
Registrable Securities until such offering has been completed.
9.10.....Indemnification. To the extent permitted by law, the
Company agrees to indemnify and hold harmless the Subscriber and its affiliates
and agents, and the Subscriber agrees to indemnify and hold harmless the Company
and its affiliates and agents:
(1) against any losses, claims, damages and
liabilities and any legal or other costs and expenses reasonably
incurred by such indemnified parties in connection with investigating
or defending any such loss, claim, damage liability, or action to which
such parties may become subject under the Securities Act or other
federal or state law, insofar as such losses, claims, damages,
liabilities, costs or expenses (or actions in respect thereof) did not
arise out of and were not based upon written information furnished by
such parties expressly for use in the Registration Statement; and
(2) for amounts paid in settlement of any such loss,
claim, damage, liability, or action if such settlement is effected by
the indemnifying party without the prior written consent of the other
party to this Subscription Agreement, which consent shall not be
unreasonably withheld.
9.11.....Enforcement. In the event of a material breach of the
terms of this Section 9 by the Company, the Subscriber will be entitled to
enforce its rights under this Section 9 specifically (without posting a bond or
other security), to recover damages by reason of any breach of any provision
hereof, and to exercise all other rights existing in its favor. The parties
hereto agree and acknowledge that money damages may not be an adequate remedy
for any breach by the Company of the provisions hereof, and that the Subscriber
may in its sole discretion apply to a court of competent jurisdiction for
specific performance and/or injunctive relief in order to enforce or prevent any
violation of the provisions hereof. In addition, upon the occurrence of a
material breach by the Company or by the Subscriber of this Section 9, the
breaching party shall pay all costs and expenses (including the prevailing
party's attorney's fees and expenses) reasonably incurred in connection with the
preservation and enforcement of such party's rights hereunder.
9.12.....Subsequent Holders. Any person who acquires
Registrable Securities from the Subscriber in a transaction that is permitted
under Section 10 of this Subscription Agreement and that does not result in such
person receiving securities which are free of restrictions on transfer in the
United States and to U.S. Persons, such person shall be entitled to the benefit
of all of the rights and privileges set forth in this Section 9, provided that
such person agrees in a writing to the Company to undertake all of the
obligations of the Subscriber under this Section 9.
10. Restrictions on Transfer.
10.1.....Securities Act Restrictions and Legend. The
Subscriber acknowledges and agrees that:
(1) The offer and sale of the Shares to the
Subscriber have not been registered under the Securities Act or under
any State Laws, and therefore may not be transferred without
registration under the Securities Act unless an exemption from such
registration requirements is available or registration is not required
pursuant to Regulation S under the Securities Act.
(2) Subject to the provisions of Subsection 10.2
which govern the imposition of a restrictive legend on the Certificate
representing the Shares, removal of such legend under certain
circumstances, and resales made by the Subscriber after the removal of
such legend, the Subscriber will not offer, sell or otherwise transfer
any of the Shares directly or indirectly except:
(a) pursuant to an effective registration
statement filed under the Securities Act, as contemplated by
Section 9 of this Subscription Agreement; or
(b) upon delivery to the Company of an
opinion of U.S. counsel reasonably satisfactory to the Company
that the Shares may be transferred without registration
pursuant to (i) Rule 144, Rule 144A, or Rule 904 of Regulation
S promulgated under the Securities Act or (ii) any other
available exemption from the registration and prospectus
delivery requirements of the Securities Act.
10.2.....Restrictive Legends.
(1) The Subscriber understands and agrees that,
although Regulation S does not expressly require the placement of a
restrictive legend on the certificate representing the Shares, a legend
will be placed on the Certificate noting the restrictions on transfer
set forth in Subsection 10.1 of this Subscription Agreement in order to
help ensure compliance with certain requirements of Regulation S that
continue to apply during the applicable restricted period following the
Closing. Such legend shall read substantially as follows:
"THE SHARES REPRESENTED BY THIS CERTIFICATE (THE "SHARES") HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR UNDER ANY STATE SECURITIES LAWS ("STATE LAWS") OR
ANY SECURITIES LAWS OF JURISDICTIONS OUTSIDE OF THE UNITED STATES, AND
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE
UNITED STATES OR TO A "U.S. PERSON," AS THAT TERM IS DEFINED IN
REGULATION S UNDER THE SECURITIES ACT, EXCEPT (1) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT FILED UNDER THE SECURITIES ACT
COVERING THE SHARES, OR (2) UPON DELIVERY TO THE COMPANY OF AN OPINION
OF U.S. COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT THE SHARES
MAY BE TRANSFERRED WITHOUT REGISTRATION PURSUANT TO (A) RULE 144, RULE
144A, OR RULE 904 OF REGULATION S PROMULGATED UNDER THE SECURITIES ACT
OR (B) ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF THE SECURITIES ACT. NOTWITHSTANDING
THE FOREGOING, IF (i) THE COMPANY HAS NOT FILED A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT ON OR BEFORE ___________, 1997
[insert the date which is 90 days after the Closing Date] WHICH COVERS
THE SHARES, OR (ii) SUCH A REGISTRATION STATEMENT IS NOT DECLARED
EFFECTIVE UNDER THE SECURITIES ACT ON OR BEFORE __________, 1997
[insert the date which is 180 days after the Closing Date], THIS LEGEND
SHALL THEREAFTER BE OF NO FURTHER FORCE OR EFFECT AND SHALL PROMPTLY BE
REMOVED BY THE COMPANY'S TRANSFER AGENT UPON REQUEST OF THE HOLDER
WITHOUT FURTHER AUTHORIZATION FROM THE COMPANY."
(2) In the event that such legend has not previously
been removed from the Certificate representing the Shares pursuant to
the provisions of paragraph (1) of this Subsection 10.2, the Company
covenants that it will use its best efforts to have such legend removed
promptly upon the Subscriber's request (if necessary, by obtaining an
opinion of counsel acceptable to the Company's transfer agent to the
effect that the legend is not required and may be removed in that the
offer and sale of the Shares to the Subscriber were made in compliance
with provisions of Regulation S, including Rule 903(c)(2) thereof) in
the event that, after the Registration Statement has become effective,
there is any period of 15 or more consecutive calendar days, or 30
total nonconsecutive calendar days, during which the Subscriber,
through no fault of its own, would not be permitted by Section 9 to
resell its Registrable Securities under the Registration Statement.
(3) The Subscriber represents and warrants that it
has no present intention or view toward disposing of or distributing
the Shares upon any such removal of the legend. The Subscriber
acknowledges and agrees that, even after removal of the legend, if such
removal occurs, it may not transfer the Shares without registration
under the Securities Act and applicable State Laws unless an exemption
from such registration is available or registration is not required
pursuant to Regulation S under the Securities Act. After removal of the
legend, if at any time the Subscriber becomes entitled to sell the
Shares into the United States or to a U.S. Person pursuant to an
available exemption from registration (as determined in the sole
discretion of the Subscriber and its own legal counsel), the Subscriber
will not, individually or as part of a group, directly or indirectly
sell any of the Shares into the United States or to a U.S. Person in a
manner which would disrupt the market for the Shares in the United
States. The Subscriber acknowledges that no representation, warranty or
guaranty, express or implied, has been given to the Subscriber by any
officer, director, agent, or employee of, legal counsel to, or any
other person connected with, the Company, the Agent, or any other party
regarding the availability at any time of an exemption from
registration under the Securities Act or State Laws for any offer, sale
or other transfer or disposition of the Shares by the Subscriber; and
the Subscriber further understands and agrees that the availability of
any such exemption from registration must be determined solely by the
Subscriber and the Subscriber's own legal counsel based on the
particular facts and circumstances existing at the time of the proposed
transaction.
11. Reliance. The Subscriber understands and agrees that the Company
and the Agent and their respective officers, directors, employees and
professional advisers may, and will, rely on the accuracy of the Subscriber's
representations and warranties in this Subscription Agreement to establish
compliance with applicable securities laws. The Subscriber agrees to indemnify
and hold harmless all such parties against all losses, claims, costs, expenses
and damages or liabilities which they may suffer or incur caused or arising from
their reliance on such representations and warranties.
12. Appointment of the Agent.
12.1.....Related Agreements. The Subscriber hereby irrevocably
authorizes the Agent to negotiate and settle the form of any other document or
agreement to be entered into in connection with this transaction.
12.2.....Agency Agreement. The Subscriber hereby acknowledges
and agrees that the Agent and the Company may vary, amend, alter or waive, in
whole or in part, one or more of the conditions set forth in the Agency
Agreement in such manner and on such terms and conditions as they may determine,
acting reasonably, without affecting in any way the Subscriber's obligations
hereunder; provided, however, that the Agent shall not vary, amend, alter or
waive any such condition where to do so would result in a material change to any
of the material terms of the Private Placement.
12.3..... Closing; Termination. The Subscriber hereby
acknowledges and agrees that the Agent may waive, in whole or in part, or extend
the time for compliance with, any of the conditions for Closing in such manner
and on such terms and conditions as the Agent may determine, acting reasonably,
without in any way affecting the Subscriber's obligations, and may terminate
this Subscription Agreement on behalf of the Subscriber in the event that any
condition for Closing has not been satisfied.
13. Miscellaneous.
13.1.....Survival. The representations, warranties, covenants
and agreements made in this Subscription Agreement shall survive the Closing and
shall continue in full force and effect notwithstanding the completion of the
issuance of the Shares to the Subscriber and notwithstanding any subsequent
disposition by the Subscriber of any of the Shares.
13.2.....Assignment. This Subscription Agreement is not
transferable or assignable.
13.3.....Execution and Delivery of Subscription Agreement. The
Company and the Agent shall be entitled to rely on delivery by facsimile machine
of an executed copy of this Subscription Agreement, and acceptance by the
Company of such facsimile copy shall be equally effective to create a valid and
binding agreement between the Subscriber and the Company in accordance with the
terms hereof.
13.4.....Execution and Delivery of Other Documents. The
Subscriber agrees that it will execute and deliver such other documents as may
be necessary or desirable to complete the transactions contemplated hereby.
13.5.....Titles and Subtitles. The titles and subtitles of the
sections and subsections of this Subscription Agreement are for the convenience
of reference only and are not to be considered in construing this Subscription
Agreement.
13.6.....Severability. The invalidity or unenforceability of
any particular provision of this Subscription Agreement shall not affect or
limit the validity or enforceability of the remaining provisions of this
Subscription Agreement.
13.7.....Termination. If, prior to Closing, the Agent
exercises its right of termination as contained in the Agency Agreement, this
Subscription Agreement and the obligations of the parties hereto (other than the
terms of Subsection 6.2 governing the return to the Subscriber of subscription
funds, exclusive of interest) are deemed to have terminated as at the effective
date of such termination.
13.8.....Entire Agreement. This Subscription Agreement
constitutes the entire agreement and understanding between the parties with
respect to the subject matters herein, and supersedes and replaces any prior
agreements and understandings, whether oral or written, between them with
respect to such matters. Except as otherwise provided herein, the provisions of
this Subscription Agreement may be waived, altered, amended or repealed, in
whole or in part, only upon the mutual written agreement of the Company and the
Subscriber.
13.9.....Counterparts. This Subscription Agreement may be
executed in any number of counterparts, each of which shall be an original, but
all of which together shall constitute one and the same instrument.
13.10....Governing Law. This Subscription Agreement is
governed by and shall be construed in accordance with the laws of the State of
California, except that the authority to award damages (including punitive
damages) shall be interpreted under New York law. The Subscriber agrees that it
shall not be entitled to claim punitive damages as a result of any dispute
arising under or in connection with this Subscription Agreement, and the
Subscriber has been advised to seek counsel concerning the possible waiver by
the Subscriber of certain rights otherwise available to the Subscriber as a
consequence of such agreement.
13.11....Revised Minimum Offering Amount. The parties
acknowledge that the original $3,000,000 aggregate minimum offering price needed
to close the Placement has been reduced to $2,000,000.
IN WITNESS WHEREOF, the Subscriber has duly executed this Subscription
Agreement as of the date first above mentioned.
Total Purchase Price:
$
.........
Name of Subscriber (please type or print)
.........
Signature and, if applicable, office
.........
Street address of Subscriber
.........
City, state/province, country and postal code of Subscriber
REGISTRATION AND DELIVERY INSTRUCTIONS
(TO BE COMPLETED BY SUBSCRIBER)
1. Registration. Please register the Subscriber's Share Certificate as
follows:
Name:
Address:
2. Delivery. Please deliver the Subscriber's Share Certificate to the
following address:
ACCEPTANCE
The above subscription is hereby accepted by ORYX TECHNOLOGY CORP. at
Fremont, California on the day of , 1996.
......... .........ORYX TECHNOLOGY CORP.
......... .........By:
......... .........Authorized signing officer
SCHEDULE A
In November 1996, Pitney-Bowes Corp., the Company's largest customer,
informed the Company that it does not intend to renew one of the three contracts
it has with the Company when that contract expires on December 31, 1996. The
Company expects that sales to Pitney-Bowes under that contract will represent
approximately 25% of the consolidated revenues of the Company for the 1996
calendar year.
Oryx Power Products Corporation ("Power Products"), a wholly-owned
subsidiary of the Company, is currently negotiating to acquire the assets of a
DC to DC power supply company in exchange for approximately 600,000 shares of
common stock of Power Products and the assumption by Power Products of certain
associated liabilities. If this acquisition is completed, as to which no
assurances can be given, the Company expects that the increase in revenues
attributable to such acquisition will approximately offset the loss of revenues
due to the expiration of the Pitney-Bowes contract.
<PAGE>
EXHIBIT INDEX
Exhibit A Annual Report on Form 10-KSB for the fiscal year ended February 29,
1996
Exhibit B Proxy Statement for the Annual Meeting of Stockholders held on
September 20, 1996
Exhibit C Quarterly Report on Form 10-QSB for the period
ended August 31, 1996
Exhibit D Post-Effective Amendment No. 3 to Form SB-2
Registration Statement filed with the Securities and Exchange Commission on
November 14, 1996 with respect to an unrelated offering of securities
<PAGE>
EXHIBIT 23.1 CONSENT OF PRICE WATERHOUSE LLP
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report dated
May 13, 1996 appearing on page F-2 of Oryx Technology Corp.'s Annual Report on
Form 10-KSB/A1 for the year ended February 29, 1996. We also consent to the
reference to us under the heading "Experts" in such Prospectus.
/s/ PRICE WATERHOUSE LLP
- ------------------------
PRICE WATERHOUSE LLP
San Jose, California
March 10, 1997
