<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 10, 1998
REGISTRATION NO. 333-63991
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
to
Form S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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ORYX TECHNOLOGY CORP.
(Exact name of registrant as specified in its charter)
DELAWARE 3600 22-2115841
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction Classification Code Number) Identification No.)
of incorporation
or organization)
1100 Auburn Street
Fremont, California 94538
(510) 492-2080
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
MR. PHILIP MICCICHE
Chief Executive Officer
Oryx Technology Corp.
1100 Auburn Street
Fremont, California 94538
(510) 492-2080
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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COPIES TO:
JERROLD F. PETRUZZELLI
DAVID M. PIKE
Wise & Shepard LLP
3030 Hansen Way
Palo Alto, California 94304-1006
(650) 856-1200
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From Time To Time After The Effective Date Of This Registration Statement.
<PAGE>
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If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. /_/
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /x/
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. /_/
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. /_/
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. /_/
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of each class of Proposed Proposed maximum Amount of
securities to be Amount to be maximum offering aggregate offering registration
registered registered price per share (1) price(1) fee (1)
<S> <C> <C> <C> <C>
Common Stock,
par value $0.001 202,500 $0.59375 $120,234 $ 35
Common Stock,
par value $0.001 (2) 234,546 $0.59375 $139,262 $ 41
TOTAL: 437,046 $259,496 $ 76
</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 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") of $0.59375 on September
16, 1998.
(2) Represents shares issuable upon the exercise of Common Stock purchase
warrants.
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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>
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SUBJECT TO COMPLETION, DATED NOVEMBER __, 1998
PROSPECTUS
ORYX TECHNOLOGY CORP.
437,046 SHARES OF COMMON STOCK
This Prospectus (the "Prospectus") relates to an aggregate of 437,046
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 entities listed as Selling Security Holders herein
(the "Selling Security Holders"). See "Selling Security Holders." The Company
will not receive any proceeds from the offering.
The Shares may be offered for sale by the Selling Security Holders from
time to time in the over-the-counter market, in the Nasdaq Small Cap Market, in
privately negotiated transactions or otherwise at market prices prevailing at
the time of sale, at prices related to such prevailing market prices or at
negotiated prices. The Shares may be sold by the Selling Security Holders
directly to purchasers or through agents, underwriters or dealers. See "Selling
Security Holders" and "Plan of Distribution." If required, the names of any such
agents or underwriters involved in the sale of the Shares in respect of which
this Prospectus is being delivered and the applicable agent's commission,
dealer's purchase prices or underwriter's discount, if any, will be set forth in
an accompanying supplement to this prospectus (a "Prospectus Supplement").
The Selling Security Holders will receive all of the net proceeds from the
sale of the Shares and will pay all underwriting discounts and selling
commissions, if any, applicable to the sale of the Shares. The Company is
responsible for payment of all other expenses incident to the offer and sale of
the Shares.
The Selling Security Holders and any broker/dealers, agents, or
underwriters which participate in the distribution of the Shares may be deemed
to be "underwriters" within the meaning of the Securities Act of 1933, as
amended (the "Securities Act"), and any commissions, discounts or concessions
received by them and any profit on the resale of the Shares purchased by them
may be deemed to be underwriting commissions or discounts under the Securities
Act.
On September 16, 1998, the closing bid price of the Common Stock, which is
quoted on the Nasdaq Small Cap Market under the symbol "ORYX," was $0.59375 per
share.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
THE SECURITIES OFFERED HEREBY INVOLVE A SIGNIFICANT DEGREE OF RISK. SEE "RISK
FACTORS" AT PAGES 5 TO 10.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
---------------
SOME OF THE INFORMATION IN THIS PROSPECTUS, INCLUDING THE DISCUSSION OF THE
COMPANY'S STRATEGY, PRODUCTION PLANS, DISTRIBUTION STRATEGIES AND VARIOUS
STATEMENTS CONCERNING THE COMPANY'S PLANS FOR EXPANSION AND EXPECTATIONS FOR
GROWTH FOR BOTH THE COMPANY AND THE MARKETS IN WHICH THE COMPANY COMPETES
CONSTITUTE FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE
SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED. ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE
PROJECTED IN THE FORWARD-LOOKING STATEMENTS AS A RESULT OF THE RISKS AND
UNCERTAINTIES DESCRIBED UNDER THE CAPTION "RISK FACTORS" SET FORTH IN PART I OF
THIS PROSPECTUS AND THOSE IDENTIFIED BY THE COMPANY FROM TIME TO TIME IN OTHER
FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION"), PRESS
RELEASES AND OTHER COMMUNICATIONS.
THE DATE OF THIS PROSPECTUS IS NOVEMBER __, 1998.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information . . . . . . . . . . . . . . . . . . . . . . . . 3
Incorporation of Certain Information by Reference . . . . . . . . . . 4
Risk Factors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Selling Security Holders. . . . . . . . . . . . . . . . . . . . . . . 18
Plan of Distribution. . . . . . . . . . . . . . . . . . . . . . . . . 19
Description of Securities . . . . . . . . . . . . . . . . . . . . . . 19
Stock Transfer Agent. . . . . . . . . . . . . . . . . . . . . . . . . 22
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
</TABLE>
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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 furnished 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.
2
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements, and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed with the Commission can be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's
Regional Offices at Seven World Trade Center, 13th Floor, New York, New York
10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such materials also can be obtained from the Public
Reference Section of the Commission, Washington, D.C. 20549 at prescribed rates.
Such reports, proxy statements and other information can also be inspected at
the offices of the National Association of Securities Dealers, Inc. at 1735 K
Street, N.W., Washington, D.C. 20006. The Commission maintains a World Wide Web
site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the Commission.
The address of the site is http://www.sec.gov. In addition, such reports, proxy
statements and other information concerning the Company can be inspected and
copied at the offices of the Nasdaq Small Cap Market, Nasdaq Operations, 1735 K
Street, N.W., Washington, D.C. 20006, on which the Common Stock of the Company
is quoted.
The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Shelf Registration Statement") under the Securities Act with respect to the
offering of the Common Stock made hereby. This Prospectus does not contain all
of the information set forth in the Shelf Registration Statement, certain parts
of which are omitted in accordance with the rules and regulations of the
Commission. For further information with respect to the Company and the Common
Stock, reference is hereby made to the Shelf Registration Statement. Statements
contained in this Prospectus as to the contents of any contract or other
document referred to are not necessarily complete, and in each instance
reference is made to the copy of such contract or other document filed as an
exhibit to the Shelf Registration Statement, each such statement being qualified
in all respects by such reference. A copy of the Shelf Registration Statement
may be inspected without charge at the offices of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 and copies of all or any part thereof may
be obtained from the Public Reference Section of the Commission upon the payment
of the fees prescribed by the Commission. In addition, copies of the Shelf
Registration Statement may be obtained from the Commission's World Wide Web site
at http://www.sec.gov.
3
<PAGE>
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 Forms
10-KSB/A1 and 10-KSB/A2 for the fiscal year ended February 28, 1998;
2. The Company's Quarterly Report on Form 10-QSB for the quarter ended
May 31, 1998 and the Company's Quarterly Report on 10-QSB, for the quarter
ended August 31, 1998;
3. The Company's Current Reports on Forms 8-K filed with the Commission on
March 16, 1998 and March 23, 1998; and
4. The description of the Company's Common Stock contained in the Company's
Registration Statement on Form 8-A filed with the Commission on December 13,
1993, as amended, including any amendment or report filed for the purpose of
updating such description.
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,
1100 Auburn Street, Fremont, California 94538, (510) 492-2080. 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.
4
<PAGE>
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; 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 the quarters ended
May 31, 1996, August 31, 1996 and November 30, 1996. At August 31, 1998, the
Company had an accumulated deficit of $17,676,000. The Company anticipates
modest operating losses to continue for the remainder of the fiscal year
ending February 28, 1999 and continuing for the first half of the fiscal year
ending February 28, 2000. However, the Company anticipates that it will
become profitable during late fiscal year 2000, provided trial demonstrations
of a lowered manufacturing cost for its SurgX technology is successfully
implemented and SurgX's licensees are successful in marketing SurgX's products.
RESTRUCTURING OF COMPANY OPERATIONS
In fiscal 1998, the Company undertook substantial restructuring of its
operations, such that the majority of the Company's activities may properly be
deemed "developmental." In the course of selling various business units, Oryx
Power Products Corporation and the test equipment portion of the Instruments and
Material business, the Company disposed of these operations which had accounted
for a substantial majority of its revenues. While the Company believes that this
downsizing will substantially reduce its losses and enable it to focus on key
strategic businesses, the actual impact cannot be certain. In the absence of
increased sales from its remaining businesses, and key technology developments,
such restructuring may have sharply reduced the Company's revenues while not yet
creating opportunities to offset the lost revenues.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital decreased from $7,406,000 at February 28,
1997 to $1,501,000 at February 28, 1998 primarily due to operating losses.
The Company's ratio of current assets to current liabilities was 3.7:1 at
February 28, 1997 and 1.6:1 at February 28, 1998. At February 28, 1998 the
Company had $129,000 outstanding under its Inventory credit line related to
continuing operations. As of August 31, 1998, the Company had no outstanding
borrowings under its Inventory credit line or any other credit lines. In
February 1998 and March 1998 the Company sold its majority interest in its
Instruments and Materials subsidiary and the business of its Power Products
subsidiary. These two actions substantially reduced the Company's on-going
operating losses and provided sufficient capital to meet its current fiscal
1999 operating plan. However, in the event the Company does not meet its
current operating plan and it requires additional equity or attempts to raise
capital through an asset sale or development contract, there can be no
assurance that such transactions can be effected in a timely manner to meet
all of the Company's needs, or at all, that any such transaction will be on
terms acceptable to the Company or in the interest of its stockholders or
that these events will not have a material impact on the financial results of
the Company.
5
<PAGE>
RISKS OF NEW PHASE OF DEVELOPMENT
During fiscal 1998, the Company amended its licensing agreement with
Bussmann, a division of Cooper Industries ("Bussmann") in addition to other
considerations, to receive funding of $1,700,000 for continued development
activities for SurgX's board level ESD protection technology. These funds
were primarily exhausted in February 1998 and the Company revamped its
development efforts to bring its operating costs in line with projected
available funds. As a result of these steps, substantially all development
activities related to on-chip ESD protection was halted. The Company believes
it is employing adequate resources to support product enhancements for
on-board ESD protection and will increase development efforts if development
funds become available. In September 1998, joint development efforts with
Bussman resulted in demonstration trials of two low-cost manufacturing
processes. If these processes can be successfully implemented in a
manufacturing environment, one process has the potential of reducing product
costs by as much as 60% and the other process may ultimately result in a
five-to-ten fold decrease in product costs. However, there can be no
assurances that these demonstrated processes can be transferred to the
manufacturing process or that such processes will prove reliable once
incorporated into manufacturing. Further, to the extent additional
development is required, there can be no assurance that the Company will be
able successfully to raise the necessary development funds or that these
enhancements can be commercialized or developed into financially viable
businesses. Development results in the future will be influenced by numerous
factors, including the availability of funding, technological developments by
the Company, its customers and competitors, increases in expenses associated
with product development, market acceptance of the Company's products, the
ability of the Company successfully to control its costs of development,
overhead and other costs, the capacity of the Company to develop and manage
the introduction of new products, and competition.
SIGNIFICANT CUSTOMER DEPENDENCE
The Company entered into two exclusive license agreements for use of its
SurgX technology for ESD protection on discrete components and connector
arrays. The Company receives a royalty equal to a percentage of each
licensee's gross profit on sales of products utilizing the SurgX technology.
While the Company has assisted and will assist the licensees in their efforts
to exploit this technology, the Company's future royalties are currently
based solely upon the successful sales, marketing and manufacturing efforts
of its licensees. While the license agreements contains minimum annual
royalty payment requirements for the licensees to maintain their exclusive
rights, there can be no assurances that the licensees will pay the minimum
royalty or that these minimum payments will provide enough liquidity to
continue to support the Company's operations. In the case of Bussmann,
minimum royalty payments through 2001 have been prepaid to maintain
exclusivity pursuant to an amended license agreement. There can be no
assurances that the Company will receive any additional royalty payments from
Bussmann through 2001 since Bussmann would have to be successful in selling
SurgX products exceeding the minimum royalty payments, and at present, such
sales have not yet been material. To date, Bussmann has shipped limited
quantities of product incorporating SurgX technology. However, no product
utilizing the new reduced-cost trial processes has been shipped. The Company
expects, if these reduced cost processes are successfully commercialized, to
deliver its first commercially available product utilizing either one these
processes by March 1999. However, there can be no assurances that these
processes can be successfully implemented in the manufacturing process.
RELIANCE ON THIRD PARTY MANUFACTURERS
The Company relies on third-party manufacturers for the supply of
substantially all key components for its products. In the case of the
materials division, it relies on Toyo Tansco USA for its raw materials for
sputtering target assemblies and Heraeus Precision Engineering PTE, LTD for
paste for metallizing the raw material. While reliance on a single supplier
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, the Company
believes its sole source arrangement has provided a lower cost, higher
quality product than sourcing material from multiple sources. However, any
inability to obtain adequate deliveries
6
<PAGE>
or any other circumstances that would require the Company to seek alternative
sources of supply could lead to disruption of the operations of the Company,
product deficiencies, unanticipated and fluctuating expenses, unpredictable
revenues, and may have a material adverse effect on the Company's business and
operations.
NEW PRODUCTS AND TECHNOLOGICAL CHANGES
The developments design and manufacture of technology constantly undergoes
rapid and significant 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 upon the enhancement of SurgX's current technology. Critical to the
Company's success and future profitability will be its capacity to improve these
technologies. 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, or that there will be sufficient
funds to support development efforts. There can be no assurance that future
technological developments will not render existing or proposed products of the
Company uneconomical, obsolete or that the Company will not be adversely
affected by competition or by the future development of commercially viable
products by others.
To date, the Company's research and development program has been
supported by government contracts and, to a lesser extent, development
funding contracts with customers and other third parties. As of October 31,
1998, substantially all funds for government and other third party contracts
have been received and used by the Company. The Company is completing the
final phases of two government contracts with the Department of Defense
("DOD") and the Office of Naval Research and is continuing to work on two
small development contracts with third parties. The Company is actively
seeking additional contracts with strategic partners, however, the Company is
not currently investigating or petitioning any government agencies for
development contracts. While the Company has, in the past, been successful in
securing such contracts, there can be no assurances that the Company will be
successful in entering into such contracts in the future.
FLUCTUATIONS OF QUARTERLY OPERATING RESULTS
The Company's quarterly operating results have in the past been, and will
in the future be, subject to significant fluctuation. The Company's operating
results are impacted by numerous factors, such as, market acceptance of the
Company's SurgX' products, its licensees' continued marketing, sales and
financial support of SurgX technology, containment of development costs, the
level of activity of the disk drive industry, purchasing patterns of OEMs and
other customers, delays in, or failures to receive, orders due to customer
financial difficulties, and overall economic trends. In addition, customer
orders may involve design in requirements, 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, the successful launch of SurgX products by its licensees and the
recovery of the disk drive industry. The Company may be unable to adjust
spending in a timely manner to compensate for any delay in product development,
or revenue shortfall, or the recovery of the disk drive industry. 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, and any weakening in demand for the Company's
products or delays in acceptance of the SurgX's technology could have a material
adverse effect on the Company's operating results.
7
<PAGE>
INVENTORY BACKLOG
Backlog at the beginning of a quarter typically does not include all sales
required to achieve the Company's sales and operating targets for a quarter,
which targets depend on the Company's shipping orders scheduled to be sold
during that quarter. The terms of customer purchase orders generally provide
that the customer may delay a substantial portion of the order with limited
notice and with little or no penalty. The Company has experienced rescheduling
in the past and expects that it will experience such changes in the future.
Moreover, as the Company transitions to a licensing operation for the majority
of its revenues, it will have far less direct control over shipments of products
resulting in revenues to it, and hence, less visibility as to financial
performance and projected earnings, if any. In such case, the Company will have
to rely on the success of its licensees, Bussmann and Iriso, a Japanese
connector manufacturer ("Irisio"), in selling products incorporating the
Company's technology.
COMPETITION
The Company is engaged in certain highly competitive and rapidly changing
segments of the electronic components 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.
DEPENDENCE ON PROPRIETARY TECHNOLOGY
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. SurgX has patented
its two primary patents in the U.S., the European Patent Office (Australia,
Belgium, Switzerland, Liechtenstein, Germany, Denmark, France, United
Kingdom, Spain, Ireland, Italy, Luxembourg, the Netherlands, Portugal and
Sweden), Canada, Japan, Australia, Vietnam, Singapore, Korea and Mexico. The
Company's patents will not be protected in countries in which it has not
filed for patent protection. 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 that
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
8
<PAGE>
technology. The protection of proprietary technology through claims of trade
secrets 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. 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 lenders, underwriters or others. 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
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.
On February 27, 1998 the Company entered into a financing arrangement
with KBK Financial, Inc. ("KBK") which provided the Company with a six-month
bridge loan for an amount up to $1,000,000. In consideration for this loan,
the Company issued warrants to KBK to purchase 174,546 shares of Common Stock
at a per share price of $1.15. The Warrants are exercisable for a period of
three years from the inception date of the bridge loan agreement.
Effective August 7, 1998, the Company entered into a Market Access Program
Marketing Agreement with Continental Capital & Equity Corporation pursuant to
which the Company is obligated to issue 202,500 shares of its Common Stock,
subject to an escrow provision expiring on August 1, 1999, and a warrant to
purchase 60,000 shares of the Company's Common Stock at an exercise price of
$1.09 per share with a term of twenty-four months from the date of issuance.
As a result of these and various other transactions previously entered by
the Company, as of August 31, 1998, there were convertible securities and
warrants and options of the Company currently outstanding for the conversion and
purchase of up to approximately 7,724,986 shares of Common Stock. These
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.
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VOLATILITY OF STOCK PRICE
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
continue to fluctuate substantially, including, for example, 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 industries served by the Company, 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 securities and ability to
obtain additional financing.
POTENTIAL NASDAQ DELISTING
The Company has received a notice from Nasdaq that the Company's Common
Stock will be subject to delisting from the Nasdaq Small Cap Market,
effective with the close of business on November 26, 1998 unless the
Company's Common Stock has a closing bid price of $1.00 per share for ten
consecutive trading days prior to November 26, 1998 or Nasdaq grants the
Company a stay of delisting pursuant to the Nasdaq rules. As of October 31,
1998, the closing bid price of the Company's Common Stock has not been above
$1.00 per share for ten consecutive trading days. If the Company's Common
Stock is delisted on such date, the Common Stock will be traded on the "pink
sheets" and the Company may be subject to the "penny stock" rules promulgated
by the SEC, which require, among other things that, prior to any transaction
in the Company's Common Stock by a broker or dealer, that such broker or
dealer provide its customer with a disclosure document summarizing certain
risks of investing in penny stocks and obtains from the customer a signed
written acknowledgement of receipt of the document. Further, any broker or
dealer effecting a transaction in the Company's Common Stock must disclose
the bid and offer quote for the stock as well as the broker or dealer
compensation in connection with such transaction. Delisting of the Company's
Common Stock from the Nasdaq Small Cap Market may make it more difficult to
trade the Company's shares and for the Company to raise funds through the
issuance of stock.
AUTHORIZATION OF NEW SERIES OF PREFERRED STOCK AND POTENTIAL ADVERSE EFFECT
ON COMMON STOCK; ANTI-TAKEOVER EFFECT OF ISSUANCE 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 limitation 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 holder 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. As of August 31, 1998 the Company had
4,500 shares of Preferred Stock outstanding with an obligation to pay
dividends thereon at the rate of $0.50 per share per annum. Each share of
Preferred Stock may be converted, at the option of the holder, into
approximately 11.67 shares of Common Stock. 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.
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THE COMPANY
INTRODUCTION
Oryx Technology Corp. ("Oryx" or the "Company") restructured its operations
during fiscal 1998. Through fiscal 1998, the Company designed, manufactured and
marketed 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. During fiscal 1998, the Company
operated three majority owned subsidiaries, focusing in three distinct market
segments: (i) power conversion products (Oryx Power Products Corporation), (ii)
electrical surge protection products (SurgX), and (iii) materials analysis and
test equipment and specialized materials products (Oryx Instruments and
Materials Corporation). During fiscal 1998 the Company embarked upon a major
restructuring program which resulted in the sale on February 27, 1998 of the
test equipment portion of the business of Oryx Instruments and Materials
Corporation ("Instruments and Materials" or "Instruments") and the sale on March
2, 1998 of substantially all of the assets of Oryx Power Products Corporation.
Effective with the 1999 fiscal year (ending February 28, 1999), the Company
has restructured itself as a materials based business. Today, Oryx designs,
licenses and sells its proprietary technologies to provide electrostatic
discharge (ESD) protection and to coat materials used in the disk drive industry
(with Intragene-TM-, a patented process, and other ceramic metallization and
joining systems products).
Oryx' customer base for its current product lines includes the following
OEMs: MMC Technology Inc., Read Rite Corp., Seagate Technology, Inc.,
Western Digital Media Corporation, Matsubo Company LTD, Heraeus Precision
Engineering PTE, LTD and Western Digital Corp. Bussman is a licensee of the
SurgX technology and the following customers individually represented more
than 10% of the Company's total revenue and, as a group, represented 81% of
the Company's revenue of the Materials business unit for the six months ended
August 31, 1998: Heraeus Precision Engineering PTE, LTD, Matsubo Company LTD,
MMC Technology, Inc. and Western Digital Corporation. The Company currently
plans to market its existing product lines to these and other OEMs during
fiscal 1999.
The Company is finishing two programs, "Joining of Composites" with the
Department of Defense ("DOD") and "Novel Surge Suppression Devices" with the
Office of Naval Research, and plans to pursue further development programs
with major companies in or supporting the information technology industry.
Research and development net expenses were $2,669,000 and $2,157,000 for the
years ended February 28, 1998 and 1997, respectively. In fiscal year 1998,
the Company recognized development funding of $1,307,000 received from
non-government third parties to assist in the development of certain
products, as an offset to its research and development expenses. This
compares to $1,107,000 of development funding in fiscal year 1997. The
Company has research government contracts in which $716,000 and $627,000 of
revenue and $734,000 and $422,000 of cost of sales were recognized under these
contracts for the years ending February 28, 1998 and February 28, 1997,
respectively.
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.
SURGX CORPORATION
SurgX Corporation ("SurgX") is currently the principal subsidiary through
which the Company designs, manufactures and sells its surge protection
technology. The underlying technologies developed by SurgX are licensed
exclusively to two licensees, Bussmann, a division of Cooper Industries and
Iriso, a Japanese connector manufacturer. Products manufactured by these
licensees utilizing SurgX's proprietary technology are sold to OEMs in the
computer and electronics industries to provide protection against ESD events
through connectors and discretes at the printed circuit board level.
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BACKGROUND
As the information technology industry increases capacity, speed and
performance, it is simultaneously moving toward faster circuit performance,
smaller chip geometries and using lower operating voltages. These developments
have been accompanied by increases in both product susceptibility to failure
from over-voltage threats as well as more widespread incidences of such threats.
Failure to address these problems can result in the destruction of chips and
circuitry. These threats can originate from inside or outside the products and
can arise from such factors as human body electrostatic discharge, induced
lightning effects, spurious line transients and other complex over-voltage
sources. During the last decade, new products emerged to address this need to
protect integrated circuits from ESD. Related specialized products range from
wrist straps worn by electronics assembly workers, to special anti-static
packaging of both components and sub-assemblies and on board level protection
devices such as diodes, varistors and other surge protection devices.
The global market for all surge protection devices is predicted to reach
$1.9 billion in calendar 1998, and is comprised of some mature devices such as
gas discharge tubes, varistors, "TVS" (transient voltage suppression), diodes
and thyristors. The key markets using surge protection devices and technologies
are telecommunication, automotive and computers. Sales of surge protection
devices are split between 40% for varistors, 40% for diodes, and 20% for gas
discharge tubes and surge resistor networks.
Gas Discharge Tubes (GDT's), Varistors, TVS Diodes and Thyristors are
all used as protection from overvoltage transients. SurgX is also used as
protection from overvoltage transients. SurgX is an emerging transient
protection device based on polymer technology.
GDT's are traditionally used for protection of signal lines such as
phone lines, computer data line communications and antennae because their low
capacitance does not interfere with the band width of high frequency
communication circuits. GDTs are also used for the protection of AC
powerlines since they can handle high currents. GDT's are inherently bipolar,
have low capacitance, in the .5 to 2pF range, and handle the high currents in
the 5 to 20,000 amps range. Negatives of the GDT are their slow turn on,
which allows some of the over voltage pulse to get through and damage
sensitive electronics and the difficulty in turning them off after the
transient has ended.
Varistors are typically used for protection of electronic components
from transients generated on the power lines supplying electronic systems. The
varistor is bipolar in nature but has the largest capacitance of the common
overvoltage protection devices, commonly ranging between 200 to 10,000pF. As
long as the varistor is large enough, it can handle high currents. Varistors
typical response time is cited are slow due to the parasitic inductance of
the package and leads required to handle large currents.
Diodes offer the tightest clamping voltage of the overvoltage protection
devices and fastest response times of the standard circuit protection
devices. For this reason diodes have been the preferred device for the final
stage of protection for fragile devices such as integrated circuits. Diodes
are used extensively in printed circuit board application in communications,
computer, industrial and automotive electronics. Diodes have very fast
response times, nanosecond or less, depending on the package, but they are
not bipolar, and those diodes designed to protect against large overvoltages
are large and have high capacitance. Capacitance's are commonly greater than
50 to 100's of pF.
A thyristor is typically used for over current surge protection. Within
the thyristor line are Sidac's which are used for overvoltage protection.
SIDACs stem from the thyristor line of components. Basically, a Sidac
operates as fast as a Zener (diode), but also has the surge handling
capability similar to or exceeding that of a zinc oxide varistor.
SurgX is an overvoltage protection component which is designed for
extensive use on printed circuit boards for many of the same applications as
the diode addresses. Like the Varistor and the GDT, SurgX is bipolar in
nature, allowing a single SurgX component to replace 2 diode devices. The
capacitance of SurgX devices is typically less that 1 pF, lower than that of
any of the standard overvoltage protection components. SurgX devices can
therefor be used at high frequencies without interfering with signals. The
low capacitance is particularly important as the frequencies of today's
electronics go beyond 100 mega hertz, since most diodes will interfere with
the electronic signals above 100 megahertz, and varistors are not used on
high frequency signal lines because they interfere at even lower
frequencies. The slow response time of the GDT prohibits their use even
though they have the low capacitance required.
SurgX is used as a diode replacement in ESD overvoltage transient
applications since it has nanoseconds response, with a fold back trigger
response similar to a Sidac, low capacitance, a very small footprint, lower
leakage current than either a diode or a varistor, and high current shunting
capability. In larger packages with larger electrodes, the energy handling
capability of SurgX is enhanced allowing its use in applications such as
modems where GDT's and Varistors would typically be used.
Though proven for performance and reliability, each of these
technologies has only a narrow range of application. In addition, none
achieves the desired combination of high speed, elevated power handling
capability, low clamping voltage and low capacitance. Furthermore, present
conventional devices and methodologies are expensive for use on all signal
lines on a given circuit board. The major suppliers for surge protection
products include General Instrument Corp., Harris Semiconductor, Inc.,
Motorola Corp., Panasonic, Shinko and Siemens Components, Inc.
BUSINESS
In 1993, the Company assembled a product design team for the development
and manufacture of a family of specialized components designed to protect
integrated circuits, integrated circuit modules, and assembled printed circuit
boards. The Company completed preliminary prototypes of its SurgX-TM- products
in fiscal 1995 and first production releases were shipped in the beginning of
calendar year 1998.
The proprietary SurgX technology for over-voltage protection is comprised
of a specialized polymer formulation containing inorganic solids, metal
particles and adhesion-promoting agents which can be tailored for use against
surge threats with different voltage and power levels. The Company continues to
optimize the electrical performance of the technology to stay abreast of the
fast changing requirements of the industry. In 1996, the formulations designed
in 1994 were modified to fit unique requirements of the Bussmann manufacturing
process, and to improve response voltage performance.
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As part of its efforts to establish brand name recognition for its SurgX
product line, the Company intends to register unique names for its products with
different applications. For instance, the trademark SurgX-TM- was registered
with the US Patent and Trademark Office on March 17, 1998. The Company is in the
process of filing statements registering SurgTape-TM-. SurgTape-TM- should be
registered shortly after such filing. The Company has also initiated the
trademark application process for SurgFlex-TM-.
The original two patents filed by the Company in 1995 on manufacturing
processes, methods of making the SurgX compositions, materials and on devices
have been divided up by the patent office into eleven different inventions
for filings as individual patents. To date, three of these patents have been
filed and a fourth is drafted for filing. In May 1998, the Company received
notice from the Patent Office that the patent on the method of manufacturing
has been approved and will be issued on or around September, 1998. In 1997,
foreign filings were initiated in 10 countries plus Europe on the two
original patents. Except for the grant of both applications by Singapore, all
of the foreign patents are in process. A third patent on surface mount
devices and connector component designs was filed in the US in 1996, and in
Europe in 1997. In 1998, two additional patents on overvoltage protection
inside the IC package were prepared for filing. As SurgX products are
commercialized, the Company plans to review for filing the relevant invention
disclosures from 1996 and 1997. These disclosures cover significantly
proprietary art in devices, processes and materials.
SurgX's approach to the market had consisted of two parallel paths. The
first product group was based on board-level ESD protection, incorporating
SurgX's liquid polymer-based material into discrete ESD protection devices.
These products are now being produced and sold in limited quantities by Bussmann
and IRISO. The second product group, SurgTape-TM-, was intended to provide
on-chip protection by placing SurgX-based tape inside the IC package on the
leadframe. This product has not been commercially developed successfully to date
and development efforts have been shifted to develop SurgTape-TM- for use in
board level protection by applying it on discrete ESD protection devices.
However, due to limited development resources of the Company, development
efforts on SurgTape-TM- have been curtailed.
SurgX is a polymer technology for over-voltage protection. Other
companies having similar technologies and competitive with Surgx and its
licenses, Bussman and Irisio include G & H Technology, Inc., Bourns, Inc. and
Littlefuse, Inc. In addition, SurgX also competes directly with
conventional over-voltage transient protection manufacturers such as General
Instrument Corp., Harris Semiconductor, Inc., Motorola Corp., Panasonic,
Shinko and Siemens Components, Inc. The Company believes that SurgX
technology has competitive advantages over traditional over-voltage
protection devices including lower capacitance, smaller footprint on the
board and potential lower cost. However, there can be no assurances that
customers will value the advantages of SurgX technology such that they will
change from the current over-voltage protection devices in use currently.
The Company is directing substantially all of its development efforts to
achieve lower response voltage performance and cost reductions in manufacturing
and packaging processes for the board level protection product. It is the
Company's belief that if these improvements can be realized, it will expand the
number of markets which SurgX's technology can address. Efforts to develop
SurgTape-TM- for on-board level protection, laser machining techniques and
alternate substrate manufacturing methods have been/and are methods the Company
is pursuing to achieve these objectives. However, there can no assurances these
technologies can be commercially developed or that customers will accept these
products as solutions for ESD protection.
The discrete diode is the primary market addressed by SurgX. This market is
forecast to be approximately $700 million in 1998 with a growth rate predicted
between 9% to 10% annually. To a lesser extent, SurgX will seek to participate
in the varistor market, approximately the same size as the diode segment. The
low capacitance requirement of ESD protection devices in many circuit designs
will provide the initial entry into this market segment. With further product
development, SurgX intends to address the larger, overall ESD protection market.
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SurgTape-TM- was conceived as an inexpensive, on-board surge protection
device for direct installation into the IC package. Due to inconclusive initial
development trials, insufficient funding and the need to develop a more easily
manufacturable version of SurgTape-TM- as an improved alternative to current
board-level protection techniques, efforts to develop SurgTape-TM- for on-chip
protection have been suspended. Management believes that the development of low
cost, small size, and easy to use SurgTape-TM- or variation of SurgTape-TM- for
application inside the integrated circuit package remains a viable alternative
to existing ESD protection devices; however, given the Company's resource
constraints, the Company will continue this development effort only if
technology improvements are realized and development funds are available. There
can be no assurance that SurgX-TM- will be able to raise development funding,
that SurgTape can be commercially developed, or that IC manufacturers will
embrace this technology and replace or supplement existing on-chip ESD
protection devices with SurgTape-TM-.
PRODUCTS AND DISTRIBUTION
In fiscal year 1996, a strategic review of the SurgX business was
undertaken as part of the Company's overall business review. The Company
determined that it would be more efficient to establish a relationship with an
experienced corporate partner who could provide the necessary high volume
manufacturing and distribution channels.
In fiscal year 1997, an exclusive, world wide (except for Japan) license
was granted to Bussmann for the manufacture and marketing of SurgX surface mount
and connector array components. In consideration for this license, Bussmann paid
$750,000 in development funding, and, subject to terms of the license agreement,
will pay royalties for approximately 11 years to SurgX based upon Bussmann's
sales of surface mount components and connectors. In September of 1997, this
license agreement was amended, extending the term of the agreement to 20 years,
granting the rights to Bussmann for SurgTape for board-level ESD protection and
providing SurgX with $1,700,000 (in the form of non-refundable minimum
royalties) of funding for the development and commercialization of SurgTape-TM-.
If SurgTape-TM- is successfully commercialized, this product will be marketed by
Bussmann under the SurgX trademark.
Bussmann is a leading manufacturer of fuses, and, prior to entering the
license agreement with SurgX, was seeking new circuit protection technology.
Bussmann's target market for SurgX is the rapidly growing electronics market.
Since the signing of the initial license agreement in July 1996, Bussmann has
taken on the manufacturing of SurgX components using liquid SurgX manufactured
by SurgX and the product launch with the Bussmann sales and marketing
organization was initiated in early calendar year 1998 with limited quantities
currently being shipped.
In November 1997, Iriso made an equity investment of $500,000 in SurgX in
exchange for an ownership interest of approximately 3%. In conjunction with this
equity investment, Iriso received a 15 year co-license to manufacture and sell
the Company's SurgX technology for board level ESD protection exclusively in
Japan. These products are marketed under the SurgX trademarks. Iriso is
currently providing samples to prospective customers and plans the market launch
of Surgx surface mount and connector components in late calendar year 1998.
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In fiscal 1997, SurgX entered into two SurgTape milestone-based product
development agreements with two manufacturers of integrated circuits. While
SurgX completed the electrical proof of concept milestone with one such
manufacturer, the Company was unable to repeat this success with the second
manufacturer. Subsequently, these manufacturers did not commit additional
funding for any further development and substantially all development efforts
for SurgTape for on-chip protection have been abandoned. The two manufacturers
who funded the initial development expressed interest in testing and evaluating
SurgTape when the performance and design parameters are improved to the levels
required by their proprietary integrated circuits and their package
requirements.
After development efforts for the board level protection products are
successfully completed, management will renew efforts to investigate new
development contracts for on-chip protection with integrated circuit
manufacturers. However, there can be no assurance that SurgX will be able to
consummate any of these relationships, that any such relationship will be on
commercially advantageous terms to SurgX, or that any of the products will be
ultimately developed.
ORYX INSTRUMENTS AND MATERIALS CORPORATION
Prior to February 27, 1998 Oryx Instruments and Materials Corporation
designed, manufactured and marketed test equipment, specialized materials and
electromagnet systems for the hard disk drive and semiconductor industries. On
February 27, 1998, a third party acquired 8,000,000 shares of Class A Common
Stock of Oryx Instruments and Materials Corporation for a purchase price of
$500,000. As part of the sale transaction, Oryx Instruments and Materials then
redeemed 8,000,000 shares of the Company's 10,000,000 share holdings of Class A
Common Stock for an aggregate price of $1,500,000. Terms of the 8,000,000 share
stock redemption include $500,000 paid on the closing, $333,000 payable on
February 27, 1999 and $667,000 payable on February 27, 2000 pursuant to a
promissory note and stock pledge agreement. As part of the sale, Oryx
Instruments and Materials distributed all the assets and liabilities of the
Materials business segment and certain other assets of the Instruments business
segment to the Company. The Company retains an ownership interest of 19.9% in
Oryx Instruments and Materials.
MATERIALS BUSINESS UNIT BACKGROUND
The Company currently owns and operates the former materials division of
Oryx Instruments and Materials Corporation. This division offers specialized
materials assemblies based upon the patented Intragene -TM- ceramic
metallization and joining system.
The materials division product line consists of Intragene-TM- based
sputtering target assemblies and electromagnent systems. The sputtering target
assemblies have been sold into the rigid disk market since 1986 and are
considered one of the most reliable such assemblies in the market today.
Sputtering target assemblies are manufactured by materials companies and
sold to end-users as source materials for coating other materials via a vacuum
based process called sputtering. Sputtering is employed as the primary method
for depositing thin film functional and protective
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layers on rigid magnetic media (hard disks), as well as in many semiconductor
manufacturing operations. Once a target is made, it must usually be incorporated
into the sputtering apparatus by joining it to a backing plate to make sound
electrical, thermal and mechanical contact. The bonding of a target to the
backing plate, which is usually made of copper, forms what is known as the
"bonded target assembly."
The materials division manufactures these high quality sputtering target
assemblies based primarily on its patented Intragene-TM- metal to non-metal and
metal to metal joining process. The Intragene-TM- process is a proprietary
methodology developed by metallurgists and materials scientists at the Company
and has been granted six U.S. patents as well as national phase patents based on
two European patent applications and three Japanese patents. The
Intragene-TM-process facilitates the ability to metallize, solder or braze a
wide range of engineering ceramics, graphite and refractory metals. The
materials division also manufactures electromagnet systems which produce very
accurate and high level electromagnet fields. These products are sold to
magnetic recording head manufacturers who often utilize these systems for wafer
plating.
The materials division employs personnel with extensive backgrounds in
engineering materials and joining. This has allowed it to develop several
approaches to bonding brittle solids of low to intermediate thermal expansion to
typical high-expansion backing plate materials such as copper and aluminum. The
Company's experience in assembly, design and stress reduction, combined with the
ability to produce bonded target assemblies, has enabled it to become a supplier
of such products selling directly to the thin-film magnetic media manufacturers.
The materials division's primary customers of the bonded targets are
Fuji Electric, MMC Technology, Inc., Seagate Recording Media, Inc. (formerly,
Conner Peripherals and Seagate Magnetics), Trace Technology, and Western
Digital Media Corporation. Primary customers for the materials division's
electromagnet system are DAS Devices, Inc. and Read Rite Corp. The following
customers, individually represented more than 10% of the Company's total
revenue and, as a group, represented 81% of the Company's revenue of the
Materials business for the six months ended August 31, 1998: Heraeus
Precision Engineering PTE, LTD, Matsubo Company LTD, MMC Technology, Inc. and
Western Digital Corporation.
The materials division derives substantially all of its revenue from rigid
magnetic media manufacturers. During the fourth quarter of fiscal 1998 the disk
drive industry experienced a significant slow down which has had and continues
to have a direct impact on the Company's sales. Demand for bonded sputtering
target assemblies continues to be suppressed as world-wide demand for rigid
magnetic media are at low levels. Management currently believes that demand for
product will increase toward the end of fiscal 1999, as the disk drive industry
itself recovers.
Magnetic media manufacturers are presently working on new technologies
which could significantly reduce the demand for the Company's sputtering target
assemblies. Currently, magnetic media manufacturers are exploring Chemical Vapor
Deposition ("CVD") techniques as alternatives to the sputtering target assembly
due to expected superior product performance and reduced cost. The Company is
exploring the feasibility of being a supplier of this new technology as well as
offering new synergistic products to its current customer base. There can be no
assurances that the Company will be able to develop and supply new products or
that its current products will not be rendered obsolete by new technologies.
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The Company's operations in the ESD and materials businesses have been
partially funded through government contracts.
The Company has also undertaken research programs with the DoD, and has
been the recipient of four Phase I and two Phase II SBIR (Small Business
Innovative Research) contracts from NASA, two Phase I contracts from the DoD,
and one Phase I contract from the National Science Foundation during its
1992-1997 fiscal years, most of which involve applications of its Intragene-TM-
and related core technology. The contracts represent grants totaling over $2
million.
The Company was awarded two Phase II SBIR research and development
contracts. One such contract with the US Army Tank Automotive Command in
Warren, Michigan, is valued at $600,000 and is for development of impact
absorbing Materials. This contract started in March 1996, has a 33-month term
and will be concluded by December 1998. The other contract from BMDO,
monitored through the Office of Naval Research, relates to the development of
a fabrication protocol for the high volume manufacturing of the Company's
SurgX devices for ESD surge suppression. This contract started in July 1997,
has a 24-month term and is valued at approximately $1.5 million with one-half
being provided as matching funds from Oryx or partner companies. The expected
completion of this contract is March 1999. Under all government research
contracts, the Company recognized $716,000, $627,000 and $339,000 of revenue
and $734,000, $422,000 and $445,000 of cost of sales for the years ending
February 28, 1998 and 1997 and for the six months ending August 31, 1998,
respectively.
ORYX POWER PRODUCTS CORPORATION (DISCONTINUED OPERATION)
Oryx Power Products Corporation ("Power Products" or "Oryx Components")
designed, manufactured and marketed custom and standard AC/DC switching power
supplies and high density DC/DC power conversion products for various
electronics products, and provided contract manufacturing services to OEMs. On
March 2, 1998, Oryx's Power Products business was sold in its entirety through a
disposition of substantially all of its assets and liabilities to Todd Power
Products, and the name Oryx Power Products was changed as part of such sale
to Oryx Components Corporation.
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 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 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, if any, were to be exercised, the Company would
receive net proceeds of approximately $247,249, after payment of offering
expenses estimated to be approximately $18,076. No proceeds will be obtained by
the Company from the sale to the Warrant holders of the shares issued upon
exercise of the Warrants. It is anticipated that the net proceeds upon exercise
of the Warrants, 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
17
<PAGE>
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 Warrants proceeds is consistent with the
Company's current business plan objectives, the Company reserves the right to
change the use of such proceeds depending on working capital requirements and
opportunities afforded to the Company. Pending utilization of the Warrant
proceeds as described above, if any, the net proceeds of the Warrant 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 August 31, 1998, there were issued
and outstanding 13,124,821 shares of Common Stock of the Company as to which the
percentages referred to below are based.
<TABLE>
<CAPTION>
Name of Selling Number of Shares to Percentage Owned Shares Owned
Security Holder Shares Owned be Offered Before Offering After Offering
--------------- ------------ ---------- --------------- --------------
<S> <C> <C> <C> <C>
KBK Financial Inc. (1) 174,546 174,546 1.3% -0-
Continental Capital & Equity 262,500 262,500 1.5% -0-
Corporation (2)
</TABLE>
- ----------------
* Represents less than 1%.
(1) Represents shares issueable upon exercise of a warrant issued to a
financial institution in connection with a six month bridge loan to the
Company.
(2) Represents 202,500 shares of Common Stock and a warrant to purchase 60,000
shares of Common Stock issuable upon exercise of a warrant issued
pursuant to the terms of a market access program marketing agreement
between the Company and the Selling Security Holder.
18
<PAGE>
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 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 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 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 13,124,821 shares were
outstanding as of August 31, 1998. 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 August 31, 1998.
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
19
<PAGE>
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"), the
Underwriters' warrants issued in the Company's previous public offering 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
Warrants registered on Form SB-2 (Registration Number 33-72104, effective
April 6, 1994) ("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 2.1 shares of Common Stock. The Public Warrants are exercisable at
$3.50 per Warrant which is the equivalent of $1.69 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.
20
<PAGE>
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 2% Convertible Cumulative Preferred Stock (the "Series A Preferred Stock"),
and 4,500 shares were outstanding as of August 31, 1998.
21
<PAGE>
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 11.67 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 52,515 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.
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 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/A2 of Oryx Technology Corp. for the year ended
February 28, 1998, have been so incorporated in reliance on the report of
PricewaterhouseCoopers 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
22
<PAGE>
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.
23
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
--------------------------------------------
The following table sets forth the estimated expenses of the Registrant in
connection with the offering described in this Registration Statement.
<TABLE>
<S> <C>
Securities & Exchange Commission
Registration fee . . . . . . . . . . . . . $ 76
Legal fees and expenses. . . . . . . . . . . $10,000*
Accounting fees and expenses . . . . . . . . $ 6,000*
Printing & Engraving Expenses. . . . . . . . $ 1,000*
Miscellaneous. . . . . . . . . . . . . . . . $ 1,000*
Total . . . . . . . . . . . . . . . . . $18,076
</TABLE>
*Estimated
Item 15. Indemnification of Directors and Officers.
- -------------------------------------------------------------
Section 145 of the Delaware General Corporation Law permits a corporation
to indemnify any director or officer of the corporation against expenses
(including attorney's fees), judgments, fines and amounts paid in settlements
actually and reasonably incurred in connection with any action, suit or
proceeding brought by reason of the fact that such person is or was a director
or officer of the corporation, if such person acted in good faith and in a
manner that 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, if he or she had no reason to believe his conduct was unlawful. In a
derivative action, i.e., one by or in the right of the corporation,
indemnification may be made only for expenses actually incurred by any director
or officer in connection with the defense or settlement of an action, if such
person has acted in good faith and in a manner that he or she reasonably
believed to be in or not opposed to the best interests of the corporation,
except that no indemnification shall be made if such person shall have been
adjudged to be liable to the corporation, unless and only to the extent that the
court in which the action or suit was brought shall determine upon application
that the defendant is reasonably entitled to indemnity for such expenses despite
such adjudication of liability.
The Company's Certificate of Incorporation provides that, to the fullest
extent permitted by Delaware law, the Company's directors will not be liable for
monetary damages, for breach of the directors' fiduciary duty of care to the
Company and its stockholders. This provision and the Certificate of
Incorporation does not eliminate the duty of care and in appropriate
circumstances,
II-1
<PAGE>
equitable remedies such as an injunction or other forms of non-monetary relief
would remain available under Delaware law. Each director will continue to be
subject to liability for breach of the directors' duty of loyalty to the Company
for acts or omissions not in good faith or involving intentional misconduct or
knowing violations of law, for acts or omissions that the director believes to
be contrary to the best interests of the Company or its stockholders for any
transaction from which the director derived an improper personal benefit for
acts or omissions involving a reckless disregard of the director's duty to the
Company or its stockholders where the director was aware or should have been
aware of the risk of serious injury to the Company or its stockholders for acts
or omissions that constitute an unexcused pattern of inattention that amounts to
an abdication of the director's duty to the Company or its stockholders for
improper transactions between the director and the Company and for improper
distributions to stockholders and loans to directors and officers. This
provision also does not affect the director's responsibilities under any other
laws such as the federal securities laws or state or federal environmental laws.
The Company's Bylaws provide that the Company has the power to indemnify
its directors and officers to the fullest extent permitted by the Delaware
General Corporation Law.
Pursuant to the authority provided for in the Company's Certificate of
Incorporation, the Company has entered into indemnification agreements with each
of its officers and directors, indemnifying them against certain potential
liabilities that may arise as a result of their service to the Company.
The Company also maintains insurance policy covering the liability and
expenses which might be incurred in connection with lawful indemnification of
directors and officers of the Company and its majority owned subsidiaries for
certain liabilities and expenses of such directors and officers for acts in
those capacities. Such directors and officers are also insured against certain
liabilities and expense incurred for acts in such capacities and for which they
are not entitled to indemnification by the Company.
Item 16. Exhibits.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBITS
- ----------- -----------------------
<S> <C>
4. 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)
4 Incentive and Nonqualified Stock Option Plan, as Amended(5)
4.4A 1996 Directors Stock Option Plan(5)
4.4B 1995 Directors Stock Option Plan(6)
4.5 Form of Promissory Note issued to Series A Preferred Stock
investors(1)
4.6 Unit Purchase Warrant(1)
</TABLE>
II-2
<PAGE>
<TABLE>
<S> <C>
4.7 Form of Warrants issued to Yorkton Securities, Inc. in December 1996
and February 1997(8)
4.8 Nonstatutory Stock Option Agreement, dated as of March 1, 1998,
between the Registrant and Bharat Shah.(5)
4.9 Nonstatutory Stock Option Agreement, dated as of March 1, 1998,
between the Registrant and Bharat Shah.(5)
4.10 Nonstatutory Stock Option Agreement, dated as of March 1, 1998,
between the Registrant and Paul Dickerson.(5)
4.11 Nonstatutory Stock Option Agreement, dated as of March 1, 1998,
between the Registrant and Thomas Landgraf.(5)
4.12 Nonstatutory Stock Option Agreement, dated as of March 1, 1998,
between the Registrant and Charles Ray.(5)
4.13 Nonstatutory Stock Option Agreement, dated as of March 1, 1998,
between the Registrant and Gary Sollner.(5)
4.14 Warrant dated as of August 10, 1998, between the Registrant and
Continental Capital & Equity Corporation.
4.15 Stock Warrant dated as of February 27, 1998, between the Registrant
and KBK Financial, Inc.*
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)
10.7 Lease Agreement with E.B.J. Partners LP re: Fremont, California office
and manufacturing facility(12)
10.8 Letter of Separation Agreement with Andrew Wilson(12)
10.9 Letter of Employment Agreement with Mitchel Underseth(12)
10.10 Letter of Employment Agreement with Philip Micciche(12)
10.11 Letter of Employment and Non-Competition Agreement with Andrew
Intrater(1)
10.12 Agreement for the Purchase and Sale of Stock with Intek Diversified
Corporation(1)
10.13 Asset Purchase Agreement with Zenith Electronics Corporation(1)
10.14 Promissory Notes issued in interim debt financing(1)
10.15 Common Stock Purchase Warrants issued in interim debt financing(3)
10.16 Placement Agency Agreement between the Company and Yorkton Securities,
Inc. dated February 8, 1996, as amended April 22, 1996(4)
10.17 Form of Subscription Agreement between the Company and various
investors in Yorkton Private Placement dated February 29, 1996 and
May 13, 1996(4)
10.18 Offering Memorandum dated February 8, 1996 and Supplement thereto
dated April 22, 1996, relating to Yorkton private placement(4)
10.19 Settlement Agreement between the Company and Zenith Electronics
Corporation dated February 29, 1996, as amended April 16, 1996(4)
</TABLE>
II-3
<PAGE>
<TABLE>
<S> <C>
10.20 Agreement between the Company and Bussmann dated July, 1996(12)
10.21 Agreement between the Company and National Semiconductor dated June 7,
1996(12)
10.22 Agreement between the Company and LSI Logic dated September 30,
1996(12)
10.23 Agency Agreement between the Company and Yorkton Securities, Inc.
dated December 4, 1996, as amended January 23, 1997(8)
10.24 Form of Subscription Agreement between the Company and various
investors in Yorkton Private Placement dated December 4, 1996(9)
10.25 Asset Purchase Agreement relating to the acquisition of Power Sensors
Corporation by Oryx Power Products Corporation dated December 19,
1996(6)
10.26 Stock Purchase and Reorganization Agreement by and among the
Registrant, Corus Investment, Ltd. and Oryx Instruments and Materials
Corporation Dated February 27, 1998(10)
10.27 Stockholders' Agreement Dated February 27, 1998(10)
10.28 Pledge Agreement Dated February 27, 1998(10)
10.29 Promissory Note Dated February 27, 1998(10)
10.30 Asset Purchase Agreement by and among the Registrant, Todd Power
Corporation and Oryx Power Products Corporation Dated March 2,
1998(11)
10.31 License Agreement with Iriso Electronics Limited(13)
10.32 Stock Purchase Agreement with Iriso Electronics Limited(13)
10.33 Agreement with Office of Naval Research(13)
10.34 Das Devices Inc. Preferred Stock Purchase Agreement(13)
10.35 Arvind Patel Separation Agreement(13)
10.36 Amended Bussmann License Agreement(13)
10.37 Revolving Account Transfer and Purchase Agreement(13)
10.38 First Amendment to Loan Agreement(13)
10.39 Revolving Credit Promissory Note(13)
10.40 Second Amendment to Loan Agreement(13)
10.41 Market Access Program Marketing Agreement dated as of August 7, 1998,
by and between the Registrant and Continental Capital & Equity
Corporation.
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.
II-4
<PAGE>
(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. 333-62767) filed with the Commission on
September 1, 1998 and is incorporated herein by reference.
(6) Previously filed as an exhibit to the Company's Registration Statement
on Form S-8 (Registration No. 333-07409) filed with the Commission on
July 2, 1996 and incorporated herein by reference.
(7) Previously filed as an exhibit to the Company's Current Report on Form
8-K filed with the Commission on January 3, 1997.
(8) Previously filed as an exhibit to the Company's Current Report on Form
8-K filed with the Commission on February 21, 1997.
(9) Previously filed as an exhibit to the Company's Registration Statement
on Form S-3 (Registration No. 333-23317) which became effective on
March 31, 1997 and is incorporated herein by reference.
(10) Previously filed as an exhibit to the Company's Current Report on Form
8-K filed with the Commission on March 16, 1998.
(11) Previously filed as an exhibit to the Company's Current Report on Form
8-K filed with the Commission on March 23, 1998.
(12) Previously filed as an exhibit to the Company's Annual Report on Form
10-KSB for the fiscal year ended February 28, 1997.
(13) Previously filed as an exhibit to the Company's Annual Report on Form
10-KSB for the fiscal year ended February 28, 1998.
Item 17. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which it offers or sells
securities being made, a post-effective amendment to this Registration
Statement.
II-5
<PAGE>
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(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 together, represent a
fundamental change in the information set forth in the
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 the
registration statement or any material change to such
information in the registration statement;
PROVIDED, HOWEVER, that paragraphs (1)(a)(i) and (1)(a)(ii) do not apply if the
registration statement is on Form S-3, Form S-8, or Form F-3 and 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 Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement;
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof; 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 the purpose
of determining any liability under the Securities Act of 1933, each filing of
the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-6
<PAGE>
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 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 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
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 Act and will
be governed by the final adjudication of such issue.
II-7
<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 November 10, 1998.
ORYX TECHNOLOGY CORP.
By: /S/ PHILIP J. MICCICHE
----------------------------------
Philip J. Micciche
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each officer or director of Oryx
Technology Corp. whose signature appears below constitutes and appoints Philip
J. Micciche and Mitchel Underseth, and each of them severally her/his true and
lawful attorney-in-fact and agent, with full and several power of substitution,
for her/him and in her/his name, place and stead, in any and all capacities, to
sign any or all amendments, including post-effective amendments and supplements
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 attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as
they or she/he might or could do in person, hereby ratifying and confirming all
that said attorney-in-fact and agent or her/his or their substitute or
substitutes may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
II-8
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/S/ PHILLIP J. MICCICHE President & Chief Executive November 10, 1998
- --------------------------- Officer & Director (Principal
Philip J. Micciche Executive Officer)
/S/ MITCHEL UNDERSETH Chief Financial Officer November 10, 1998
- --------------------------- & Director (Principal
Mitchel Underseth Financial and Accounting
Officer)
/S/ ANDREW INTRATER Secretary, Treasurer & Director November 10, 1998
- ---------------------------
Andrew Intrater
/S/ DR. JOHN ABELES Director November 10, 1998
- ---------------------------
Dr. John Abeles
/S/ JAY M. HAFT Director November 10, 1998
- ---------------------------
Jay M. Haft
/S/ RICHARD HUBBARD Director November 10, 1998
- ---------------------------
Richard Hubbard
/S/ DOUG MCBURNIE Director November 10, 1998
- ---------------------------
Doug McBurnie
/S/ TED MORGAN Director November 10, 1998
- ---------------------------
Ted D. Morgan
</TABLE>
II-9
<PAGE>
ORYX TECHNOLOGY CORP.
AMENDMENT NO. 1 TO REGISTRATION STATEMENT ON FORM S-3
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
4.15 Stock Warrant dated as of February 27, 1998, between the Registrant
and KBK Financial, Inc.
5.1 Opinion of Wise & Shepard LLP.
23.1 Consent of Independent Accountants.
23.2 Consent of Wise & Shepard LLP (incorporated into opinion included in
Exhibit 5.1).
</TABLE>
<PAGE>
EXHIBIT 4.15
STOCK WARRANT
This Stock Warrant ("Warrant") is issued this 27th day of February, 1998, by
ORYX TECHNOLOGY CORP., a Delaware corporation (the "Company"), to KBK
Financial, Inc., a Delaware corporation (KBK Financial, Inc. and any
subsequent assignee or transferree hereof are hereinafter referred to
collectively as "Holder").
AGREEMENT
1. ISSUANCE OF WARRANT. For and in consideration of $500.00 and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company hereby grants to Holder the right to purchase 174,546
shares of the Company's $.001 par value common stock (the "Common Stock"). The
shares of Common Stock issuable on exercise of this Warrant are hereafter
referred to as the "Shares." This Warrant shall be exercisable at any time and
from time to time from the date hereof until February 27, 2001.
2. EXERCISE PRICE. The per share exercise price (the "Exercise Price") for which
all or any of the Shares may be purchased pursuant to the terms of this Warrant
shall be $1.145583.
3. EXERCISE.
(a) This Warrant may be exercised by the Holder hereof (but only on the
conditions hereinafter set forth) as to all or a portion of such Shares, upon
delivery of written notice of intent to exercise to the Company at the
following address: 47321 Bayside Parkway, Fremont, California 94538 Attn:
Philip Micciche, or such other address as the Company shall designate by
written notice to the Holder hereof, together with this Warrant and payment
to the Company of the aggregate Exercise Price of the Shares so purchased.
The Exercise Price shall be payable, at the option of the Holder, (i) by
certified or cashier's check, (ii) by the surrender of that certain Term
Promissory Note of even date herewith payable by the Company to the order of
KBK Financial, Inc. in the stated principal amount of $1,000,000.00 (the
"Note") or portion thereof having an outstanding principal balance equal to
the aggregate Exercise Price or (iii) by the surrender of a portion of this
Warrant having a fair market value equal to the aggregate Exercise Price.
Upon exercise of this Warrant as aforesaid, the Company shall as promptly as
practicable, and in any event within fifteen (15) days thereafter, execute
and deliver to the Holder of this Warrant a certificate or certificates for
the total number of whole Shares for which this Warrant is being exercised in
such names and denominations as are requested by such Holder. If this Warrant
shall be exercised with respect to less than all of the Shares, the Holder
shall be entitled to receive a new Warrant covering the number of Shares in
respect of which new Warrant shall not have been exercised, which new Warrant
shall in all other respects be identical to this Warrant. The Company
covenants and agrees that it will pay when due
1
<PAGE>
any and all state and federal issue taxes which may be payable in respect of the
issuance of this Warrant or the issuance of any Shares upon exercise of this
Warrant.
(b) In lieu of exercising this Warrant as specified in Subsection 4(a)
hereof, Holder may from time to time convert this Warrant, in whole or in part,
into a number of Shares determined by dividing (i) the aggregate fair market
value of the Shares or other securities otherwise issuable upon exercise of this
Warrant minus the aggregate Exercise Price of such Shares by (ii) the fair
market value of one Share. The fair market value of the Shares shall be equal to
the average of the closing price for the Company's Common Stock for three (3)
trading days immediately prior to the date of determination.
4. REPRESENTATIONS, COVENANTS AND CONDITIONS. The above provisions are subject
to the following:
(a) Neither this Warrant nor the Shares have been registered under the
Securities Act of 1933, as amended ("Securities Act") or any state securities
laws ("Blue Sky Laws"). This Warrant has been acquired for investment purposes
and not with a view to distribution or resale and may not be pledged,
hypothecated, sold, made subject to a security interest, or otherwise
transferred without (i) an effective registration statement for such Warrant
under the Securities Act and such applicable Blue Sky Laws, or (ii) an opinion
of counsel which opinion and counsel shall be reasonably satisfactory to the
Company and its counsel that registration is not required under the Securities
Act or under any applicable Blue Sky Laws. Transfer of the Shares issued upon
the exercise of this Warrant shall be restricted in the same manner and to the
same extent as this Warrant and the certificates representing such Shares shall
bear substantially the following legend:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("ACT"), OR ANY
APPLICABLE STATE SECURITIES LAW AND MAY NOT BE TRANSFERRED UNTIL (i) A
REGISTRATION STATEMENT UNDER THE ACT OR SUCH APPLICABLE STATE SECURITIES LAWS
SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) IN THE OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY, REGISTRATION UNDER SUCH SECURITIES ACTS OR
SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH
PROPOSED TRANSFER.
The Holder hereof and the Company agree to execute such other documents and
instruments as counsel for the Company reasonably deems necessary to effect the
compliance of the issuance of this Warrant and any shares of Common Stock issued
upon exercise hereof with applicable federal and state securities laws.
(b) The Company covenants and agrees that all Shares which may be issued
upon exercise of this Warrant will, upon issuance and payment therefor, be
legally and validly issued and outstanding, full paid and nonassessable, free
from all taxes, liens, charges and preemptive rights, if any, with respect
thereto or to the issuance thereof. The Company shall at all times reserve and
keep available for issuance upon the exercise of this Warrant such number of
authorized but unissued shares of Common Stock as will be sufficient to permit
the exercise in full of this Warrant.
2
<PAGE>
(c) The Company represents and warrants to Holder the following:
(i) As of the date hereof, 13,124,000 shares of Common Stock are
issued and outstanding and 41,000 shares of preferred stock of the Company are
issued and outstanding;
(ii) As of the date hereof, the Company shall not have outstanding any
stock or securities convertible or exchangeable for any shares of its Common
Stock or containing any profit participation features, nor shall it have
outstanding any rights or options to subscribe for or to purchase its Common
Stock or any stock or securities convertible into or exchangeable for its Common
Stock or any stock appreciation rights or phantom stock plans;
(iii) The total number of shares issuable upon exercise of all
outstanding options and warrants for the Company's capital stock, does not
exceed 6,700,000;
(iv) As of the date hereof, the Company shall not be subject to any
obligation (contingent or otherwise) to repurchase, redeem, retire or otherwise
acquire any shares of its capital stock or any warrants, options or other rights
to acquire its capital stock;
(v) As of the date hereof, all of the outstanding shares or the
Company's capital stock shall be validly issued, fully paid and nonassessable.
There are not statutory or contractual preemptive rights, rights of first
refusal, anti-dilution rights or any similar rights, held by stockholders or
option holders of the Company, with respect to the issuance of this Warrant or
the issuance of the Common Stock upon exercise of this Warrant other than the
anti-dilution rights (1) with respect to the public warrants (the current total
number of shares issuable upon exercise of the public warrants not exceeding
2,300,000 shares of Common Stock) and (2) with respect to the warrants issued to
DAS Devices and J.W. Charles (the current total number of shares issuable upon
exercise of such warrants not exceeding 635,000 shares of Common Stock).
5. TRANSFER OF WARRANT. Subject to the provisions of Section 4 hereof, this
Warrant may be transferred, in whole or in part, to any person or entity, by
presentation of this Warrant to the Company with written instructions for such
transfer. Upon such presentation for transfer, the Company shall promptly
execute and deliver a new Warrant or Warrants in the form hereof in the name of
the assignee or assignees and in the denominations specified in such
instructions. The Company shall pay all expenses incurred by it in connection
with the preparation, issuance and delivery of Warrants under this Section.
6. ADJUSTMENT UPON CHANGES IN STOCK.
(a) If all or any portion of this Warrant shall be exercised subsequent to
any stock split, stock dividend, recapitalization, combination of shares of the
Company, or other similar event, occurring after the date hereof, then the
Holder exercising this Warrant shall receive, for the aggregate price paid upon
such exercise, the aggregate number and class of shares which such Holder would
have received if this Warrant had been exercised immediately prior to such stock
split, stock dividend, recapitalization, combination of shares, or other similar
event. If any adjustment under this Subsection would create a fractional share
of Common Stock or a right to acquire a fractional share of Common Stock, such
fractional share shall be disregarded and the
3
<PAGE>
number of shares subject to this Warrant shall be the next higher number of
shares, rounding all fractions upward. Whenever there shall be an adjustment
pursuant to this Subsection, the Company shall forthwith notify the Holder or
Holders of this Warrant of such adjustment, setting forth in reasonable detail
the event requiring the adjustment and the method by which such adjustment was
calculated.
(b) If upon the closing of any Acquisition (as defined below) the successor
entity assumes the obligations of this Warrant, then this Warrant shall be
exercisable for the same securities, cash, and property as would be payable for
the Shares issuable upon exercise of the unexercised portion of this Warrant as
if such Shares were outstanding on the record date for the Acquisition and
subsequent closing. The Exercise Price shall be adjusted according. If upon the
closing of any Acquisition the successor entity does not assume the obligations
of this Warrant and Holder has not otherwise exercised this Warrant in full,
then the unexercised portion of this Warrant shall be deemed to have been
automatically converted pursuant to Section 3(b) and thereafter Holder shall
participate in the Acquisition on the same terms as other holders of the same
class of securities of the Company. For the purpose of this Warrant,
"Acquisition" means any sale, license, or other disposition of all or
substantially all of the assets of the Company, or any reorganization,
consolidation or merger of the Company where the holders of the Company's
securities before the transaction beneficially own less than 50% of the
outstanding voting of the surviving entity after the transaction.
7. REGISTRATION. The Company and the holders of the Shares agree that if at any
time the Company shall propose to file a registration statement with respect to
any of its Common Stock on a form suitable for a secondary offering, it will
give notice in writing to such effect to the registered holder(s) of the Shares
at least thirty (30) days prior to such filing, and, at the written request of
any such registered holder, made within ten (10) days after the receipt for such
notice, will include therein at the Company's cost and expense (including the
fees and expenses of counsel to such holder(s), but excluding underwriting,
discounts, and commissions and filing fees attributable to the Shares included
therein) such of the Shares as such holder(s) shall request; provided, however,
that if the offering being registered by the Company is underwritten and if the
representative of the underwriters certifies in writing that the inclusion
therein of the Shares would materially and adversely affect the sale of the
securities to be sold by the Company thereunder, then the Company shall be
required to include in the offering only that number of securities, including
the Shares, which the underwriters determine in their sole discretion will not
jeopardize the success of the offering (the securities so included to be
apportioned pro rata among all selling shareholders according to the total
amount of securities entitled to be included therein owned by such selling
shareholder).
8. PROHIBITED SALES. Until (a) the Note is fully paid and satisfied, and (b) [*]
has no further commitment to make advances under the Note, neither Philip
Micciche nor Mitchell Underseth (collectively, the "Shareholders") shall entered
into any transaction which would result in the sale or pledge of any Common
Stock owned by the Shareholders.
9. LIMITATION ON INTEREST. The Company and Holder intend to conform strictly to
the usury laws in force that apply to this transaction. Accordingly, all
agreements between the Company and Holder, whether now existing or hereafter
arising and whether written or oral, are hereby limited so
4
<PAGE>
that in no contingency, whether by reason of acceleration of the indebtedness
evidenced by the Note or otherwise, shall the interest (and all other sums that
are deemed to be interest) contracted for, charged or received by Holder with
respect to such indebtedness exceed the maximum rate of interest permitted to be
charged under applicable law (the "Maximum Rate"). The Company and the Holder
stipulate and represent that, as of the date hereof (the same being the date of
the granting of this Warrant to the Holder), the value of this Warrant, as
compensation for the use of money, is both contingent (in the sense that the
future realization of any value from the exercise of this Warrant is dependent
upon the occurrence of events beyond the control of the parties) and speculative
(in the sense that the amount, if any, which will be realized upon the exercise
of this Warrant is uncertain). The Company and the Holder stipulate and agree
that the terms and provisions contained in this Warrant are not intended to and
shall never be construed to create a contract to pay for the use, forbearance or
detention of money or, if so construed, to pay for the use, forbearance or
detention of money in an amount in excess of the Maximum Rate permitted to be
charged. Neither the Company nor any other party now or hereafter becoming
liable for payment of the Note shall ever be required to pay interest on or with
respect to the Note in an amount in excess of the Maximum Rate that lawfully may
be charged, and the provisions of this Section shall control over all other
provisions of this Agreement and the Note. If the difference between (i) the
Fair Market Value (determined as of the date hereof or such other date as
required by applicable law) of the Shares, and (ii) the Exercise Price with
respect to such Shares, could ever be or is deemed to constitute interest in an
amount that, when taken together with the interest otherwise contracted for,
charged or received with respect to the Note, would exceed the Maximum Rate, the
Exercise Price with respect to the Shares shall automatically be increased by an
amount equal to such excess, or if this Warrant has been exercised, the Holder
shall, at the option of Holder, either refund to the Company the amount of such
excess or credit the amount of such excess against the principal balance of the
Notes. All amounts not payable to Holder under this Warrant on account of the
foregoing limitations shall be retained by the Company, provided that, if at a
later date prior to the termination of this Warrant, Holder determines that a
greater amount could lawfully be paid to it, then the Company shall immediately
upon request of Holder, pay to Holder such greater amount up to an amount equal
to the aggregate of all amounts that were retained by the Company on account of
such limitation on the amount of interest that the Holder could receive on or
with respect to any notes under applicable law. All interest paid or agreed to
be paid to Holder shall, to the extent permitted by applicable law, be
amortized, prorated, allocated and spread throughout the full period until
payment in full of the principal of such indebtedness (including the period of
any renewal or extension thereof) so that the interest for such full period
shall not exceed the maximum Rate. The term "applicable law" as used in this
Agreement shall mean the laws of the State of Texas or laws of the United States
applicable to transactions in Texas, whichever laws allow the greater rate of
interest, as such laws now exist may be changed or amended or come into effect
in the future.
10. GOVERNING LAW: VENUE: SUBMISSION TO JURISDICTION. THIS WARRANT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
THIS WARRANT IS PERFORMABLE BY THE PARTIES IN TARRANT COUNTY, TEXAS. THE COMPANY
AND HOLDER EACH AGREE THAT TARRANT COUNTY, TEXAS SHALL BE THE EXCLUSIVE VENUE
FOR LITIGATION OF ANY DISPUTE OR CLAIM ARISING UNDER OR RELATING TO THIS
WARRANT, AND THAT SUCH COUNTY IS A CONVENIENT FORUM IN WHICH TO DECIDE ANY SUCH
DISPUTE OR CLAIM. THE COMPANY AND HOLDER EACH CONSENT TO THE
5
<PAGE>
PERSONAL JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN TARRANT COUNTY,
TEXAS FOR THE LITIGATION OF ANY SUCH DISPUTE OR CLAIM. THE COMPANY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN
SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM.
11. SEVERABILITY. If any provision(s) of this Warrant or the application thereof
to any person or circumstances shall be invalid or unenforceable to any extent,
the remainder of this Warrant and the application of such provisions to other
persons or circumstances shall not be affected thereby and shall be enforced to
the greatest extent permitted by law.
12. COUNTERPARTS. This Warrant may be executed in any number of counterparts and
by different parties to this Warrant in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same Warrant.
13. WAIVER OF JURY TRIAL. THE COMPANY AND HOLDER EACH HEREBY IRREVOCABLY WAIVES,
TO THE MAXIMUM EXTENT PERMITTED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY AT ANY TIME ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS WARRANT OR ANY TRANSACTION CONTEMPLATED HEREBY
OR ASSOCIATED HEREWITH.
IN WITNESS WHEREOF, the parties hereto have set their hands as of the date
first above written.
ORYX TECHNOLOGY CORP., a Delaware corporation
By: /S/ PHILIP MICCICHI
---------------------------------
Name: Philip Micciche
Title: Chief Executive Officer
KBK Financial, Inc., a Delaware corporation
By:
---------------------------------
Name: Jeff Kessing
Title: Vice President and General Counsel
6
<PAGE>
The undersigned Shareholders join in the execution of this Warrant for the
purposes of acknowledging and agreeing to be bound by Section 8 hereof.
/S/ PHILLIP MICCICHE
---------------------------------
Phillip Micciche
/S/ MITCHELL UNDERSETH
---------------------------------
Mitchell Underseth
7
<PAGE>
EXHIBIT 5.1
WISE & SHEPARD LLP
November 9, 1998
Oryx Technology Corp.
1100 Auburn Street
Fremont, California 94538
Re: Registration Statement on Form S-3; Oryx Technology Corp. (the
"Company"), 437,046 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 437,046 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
202,500 shares of Common Stock currently outstanding and 234,546 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. We express no opinion with respect
to any matters which may be, or purport to be, governed by the laws of any state
or other jurisdiction or country other than the State of California, the
corporate law of the State of Delaware, and any federal law of the United States
of America.
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
duly authorized and validly issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name under the heading "Legal
Matters" in the prospectus forming a part of the Registration Statement.
Very truly yours,
---------------------------
Wise & Shepard LLP
1
<PAGE>
EXHIBIT 23.1
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 22, 1998, appearing on page F-2 of Oryx Technology Corp.'s Annual Report on
Form 10-KSB/A2 for the year ended February 28, 1998.
/s/ PRICEWATERHOUSECOOPERS LLP
- ------------------------------
PRICEWATERHOUSECOOPERS LLP
San Jose, California
November 5, 1998.
