AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 13, 2000
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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ZITEL CORPORATION
(Exact name of Registrant as specified in its charter)
CALIFORNIA 7372 94-2566313
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification
Number)
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47211 BAYSIDE PARKWAY, FREMONT, CALIFORNIA 94538-6517
(510) 440-9600
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
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ANNA M. MCCANN, CHIEF FINANCIAL OFFICER
47211 BAYSIDE PARKWAY, FREMONT, CALIFORNIA 94538-6517
(510) 440-9600
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
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COPIES TO:
JOHN L. CARDOZA, ESQ., COOLEY GODWARD LLP
ONE MARITIME PLAZA #2000, SAN FRANCISCO, CALIFORNIA 94111
(415) 693-2000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
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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 filed in 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 of the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
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CALCULATION OF REGISTRATION FEE
================================================================================
TITLE OF EACH PROPOSED PROPOSED
CLASS OF AMOUNT MAXIMUM MAXIMUM AMOUNT OF
SECURITIES TO BE TO BE OFFERING PRICE AGGREGATE REGISTRATION
REGISTERED REGISTERED PER SHARE (1) OFFERING PRICE (1) FEE
- --------------------------------------------------------------------------------
Common Stock (2) 4,659,897 $2 15/32 $11,504,121 $3,037.09
TOTAL
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(1) Estimated in accordance with Rule 457(c) solely for the purpose of
computing the amount of the registration fee based on the average of the
high and low prices of the Company's Common Stock as reported on the Nasdaq
National Market System on January 12, 2000.
(2) Issuable upon conversion of the Series B Convertible Preferred Stock of the
Company (the "Series B Preferred"). For purposes of estimating the number
of shares of Common Stock to be included in the Registration Statement, the
Company used the maximum number of shares which may be issued upon
conversion of the Series B Preferred. In addition to the shares set forth
in the table, the amount to be registered includes an indeterminate number
of shares issuable upon conversion of or in respect of the Series B
Preferred, as such number may be adjusted as a result of stock splits,
stock dividends and antidilution provisions in accordance with Rule 416.
- ---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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PROSPECTUS
4,659,897 SHARES
ZITEL CORPORATION
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COMMON STOCK
-------------------
The Selling Securityholders identified in this Prospectus are selling up to
4,659,897 shares of our common stock that may be acquired by them upon
conversion of 200,000 shares of our Series B Convertible Preferred Stock. These
shares may be offered from time to time by the Selling Securityholders through
public or private transactions, on or off The Nasdaq SmallCap Market, at
prevailing market prices or at privately negotiated prices. The Selling
Securityholders will receive all of the 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. We will pay the expenses of registration of the sale
of the shares.
Our common stock is currently traded on The Nasdaq SmallCap Market under
the symbol "ZITL." On __________, 2000, the last reported sales price of a share
of Zitel common stock on The Nasdaq SmallCap Market was $_______ per share.
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INVESTMENT IN THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH
DEGREE OF RISK.
SEE "RISK FACTORS" ON PAGE 2 OF THIS PROSPECTUS.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is ___________, 2000.
THIS PROSPECTUS IS A PART OF A REGISTRATION STATEMENT WE FILED WITH THE
SEC. YOU SHOULD RELY ONLY ON THE INFORMATION INCORPORATED BY REFERENCE OR
PROVIDED IN THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE ELSE TO PROVIDE YOU
WITH DIFFERENT INFORMATION. WE ARE NOT MAKING AN OFFER OF THESE SECURITIES IN
ANY STATE WHERE THE OFFER IS NOT PERMITTED. YOU SHOULD NOT ASSUME THAT THE
INFORMATION IN THIS PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON
THE FRONT OF THE DOCUMENT.
WHERE CAN YOU FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy the documents we file at the
SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. You can request copies of these documents by writing to the
SEC and paying a fee for the copying cost. Please call the SEC at 1-800-
SEC-0330 for further information on the public reference rooms. Our SEC filings
are also available to the public at no cost from the SEC's Website at
http://www.sec.gov.
The SEC allows us to "incorporate by reference" information that we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this Prospectus, and information that we file later
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings we
will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities and Exchange Act of 1934:
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by Zitel Corporation with the SEC pursuant to
the Securities Exchange Act of 1934 are by this reference incorporated in and
made a part of this Prospectus:
(1) The Proxy Statement filed on January 27, 1999, including all matters
incorporated by reference therein;
(2) The Annual Report on Form 10-K for the fiscal year ended September 30,
1999, including all matters incorporated therein by reference;
(3) The Amendment to the Annual Report on Form 10-K for the fiscal year ended
September 30, 1999, filed December 30, 1999 on Form 10-K/A.
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1.
THE COMPANY
Zitel Corporation was incorporated in California in 1979. Our executive
offices are located at 47211 Bayside Parkway, Fremont, California 94538-6517,
and our telephone number is (510) 440-9600.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of shares by the
Selling Securityholders.
DIVIDEND POLICY
Zitel has never paid cash dividends. The Company's Board of Directors
currently intends to retain any earnings for use in Zitel's business and does
not anticipate paying any cash dividends in the foreseeable future.
AN INVESTMENT IN ZITEL INVOLVES A HIGH DEGREE OF RISK. THE RISK FACTORS SET
FORTH BELOW SHOULD BE CONSIDERED CAREFULLY BEFORE PURCHASING THE COMMON STOCK
OFFERED HEREBY.
RISK FACTORS
RECENT LEVELS OF NET SALES HAVE BEEN INSUFFICIENT TO PRODUCE OPERATING PROFITS
In recent years, we have not generated net sales sufficient to produce an
operating profit and have relied on a stream of royalty payments under an
agreement with IBM and significant financings to support our activities. In
April 1998, Zitel and IBM entered into an agreement whereby IBM stopped paying
royalties to Zitel in exchange for a lump sum payment amounting to $740,000. We
sustained substantial operating losses and net losses in fiscal 1997, fiscal
1998 and fiscal 1999. We must generate substantial additional net sales and
gross margins on our products and services and must continue to successfully
implement programs to manage cost and expense levels in order to remain a viable
operating entity. There can be no assurance that we can achieve these
objectives.
WE HAVE REPORTED SIGNIFICANT LOSSES
During our 1999 fiscal year, we reported a net loss of $13,103,000. We
reported a net loss of $43,205,000 in fiscal 1998. We reported a net loss of
$17,501,000 in fiscal 1997.
While we have taken a number of steps to attempt to return to
profitability, there is no assurance that we will be successful. A significant
portion of the recent losses were caused by the operations of our former storage
systems business unit and the writeoff of our investment in and advances to
MatriDigm Corporation. In July 1998, we sold the storage systems business unit.
At September 30, 1999, we had written off all of our investments in and advances
to MatriDigm Corporation. We are in the process of attempting to sublease our
Fremont, California headquarters and move to substantially smaller and less
costly premises. We are also taking other actions to reduce our costs in an
effort to bring costs into line with anticipated revenues. There can be no
assurance that we will be successful in this effort and remain a viable
operating entity.
WE HAVE EXPERIENCED FLUCTUATIONS IN QUARTERLY RESULTS
Our quarterly operating results have in the past varied and may in the
future vary significantly depending on a number of factors, including:
- The level of competition, size, timing, cancellation or rescheduling
of significant orders;
- Market acceptance of new products and product enhancements;
- New product announcements or introductions by our competitors;
- Deferrals of customer orders in anticipation of new products or
product enhancements;
2.
- Changes in pricing by us or our competitors;
- Our ability to develop, introduce and market new products and product
enhancements on a timely basis;
- Our success in expanding our sales and marketing programs;
- Technological changes in the market for our products;
- Product mix and the mix of sales among our sales channels;
- Levels of expenditures on research and development;
- Changes in our strategy and personnel changes;
- General economic trends and other factors.
Due to all of the foregoing factors, we believe that period-to-period
comparisons of our results of operations are not necessarily meaningful and
should not be relied upon as an indicator of future performance. It is possible
that in some future quarter our operating results may be below the expectations
of public market analysts and investors.
OUR STOCK PRICE HAS BEEN VOLATILE
The price of our common stock was subject to extreme volatility during
fiscal 1998, as the closing bid price ranged between a low of 2-7/32 and a high
of 23-5/8. We feels that one of the reasons for this volatility was rumored
progress of and rumored problems in the product development program and
marketing efforts of MatriDigm. The price of our common stock during fiscal year
1999 demonstrated significantly less volatility, ranging from the low closing
bid price of 1-7/32 to the high closing bid price of 6-15/32.
THE MARKET FOR SYSTEMS MANAGEMENT TOOLS IS INTENSELY COMPETITIVE
The market for system management tools in which our software products
business unit competes is intensely competitive. Many of the companies with
which we compete, such as TeamQuest Corporation, Computer Associates
International, Inc., Hewlett-Packard Company and BMC Software, Inc., have sold
systems to many more customers and have greater financial resources than Zitel.
There can be no assurance that our competitors will not develop products
comparable or superior to those developed by us or adapt more quickly than we do
to new technologies, evolving industry standards, new product introductions, or
changing customer requirements.
RAPID TECHNOLOGICAL CHANGE COULD RENDER OUR EXISTING PRODUCTS AND SERVICES
OBSOLETE
The markets in which we operate are characterized by rapid technological
change, changing customer needs, frequent new product introductions and evolving
industry standards. The introduction of products embodying new technologies
and/or the emergence of new industry standards could render our existing
products and services obsolete and unmarketable. Our future success will depend
upon our ability to develop and introduce new products and services on a timely
basis that keep pace with technological developments and emerging industry
standards and address the increasingly sophisticated needs of our customers.
There can be no assurance that we will be successful in developing and marketing
products or services that respond to technological changes or evolving industry
standards, that we will not experience difficulties that could delay or prevent
the successful development, introduction and marketing of new products or
services, or that our new products or services will adequately meet the
requirements of the marketplace and achieve market acceptance. If we are unable,
for technological or other reasons, to develop and introduce new products or
services in a timely manner in response to changing market conditions or
customer requirements, our business, operating results and financial condition
will be harmed.
PRODUCT LIABILITY COULD HURT US IF LIABILITY LIMITATIONS ARE NOT EFFECTIVE
Our agreements with our customers typically contain provisions intended to
limit our exposure to potential product liability claims. It is possible that
the limitation of liability provisions contained in our agreements may not be
effective. Although we have not
3.
received any product liability claims to date, the sale and support of
products and the incorporation of products from other companies may entail
the risk of such claims. A successful product liability claim against us
could harm our business.
OUR SUCCESS DEPENDS ON PROPRIETARY TECHNOLOGY
Our success depends significantly upon our proprietary technology. We
currently rely on a combination of patent, copyright and trademark laws, trade
secrets, confidentiality agreements and contractual provisions to protect our
proprietary rights. We seek to protect our software, documentation and other
written materials under trade secret and copyright laws, which afford only
limited protection. We have registered our Zitel and Datametrics trademarks and
will continue to evaluate the registration of additional trademarks as
appropriate. We generally enter into confidentiality agreements with our
employees and with key vendors and suppliers. We currently hold a United States
patent on one of our software technologies. There can be no assurance that this
patent will provide us with any competitive advantages or will not be challenged
by third parties, or that the patents of others will not impair our ability to
do business. We believe that the rapidly changing technology in the computer
industry makes our success depend more on the technical competence and creative
skills of our personnel than on patents.
There has also been substantial litigation in the computer industry
regarding intellectual property rights, and litigation may be necessary to
protect our proprietary technology. We have not received significant claims that
we are infringing third parties' intellectual property rights, but there can be
no assurance that third parties will not in the future claim infringement by us
with respect to current or future products, trademarks or other proprietary
rights.
We expect that companies in our markets will increasingly be subject to
infringement claims as the number of products and competitors in our target
markets grows. Any such claims or litigation may be time-consuming and costly,
cause product shipment delays, require us to redesign our products or require us
to enter into royalty or licensing agreements, any of which could have a harm on
our business. Despite our efforts to protect its proprietary rights,
unauthorized parties may attempt to copy aspects of our products or to obtain
and use information that we regard as proprietary. There can be no assurance
that our means of protecting our proprietary rights will be adequate or that our
competitors will not independently develop similar technology, duplicate our
products or design around patents issued to us or our other intellectual
property rights.
INTERNATIONAL SALES AND OPERATIONS INVOLVE RISKS NOT EXPERIENCED
IN DOMESTIC OPERATIONS
Sales to customers outside the United States have accounted for significant
portions of our net sales, and we expect that the acquisition of companies
headquartered and operating in the United Kingdom and The Netherlands,
respectively, will result in international sales representing an increasingly
significant portion of our net sales. International sales pose certain risks not
faced by companies that limit themselves to domestic sales. Fluctuations in the
value of foreign currencies relative to the U.S. dollar, for example, could make
our products less price competitive. If in the future we denominate any of our
sales in foreign currencies, this could result in losses from foreign currency
transactions. International sales also could be harmed by factors beyond our
control, including the imposition of government controls, export license
requirements, restrictions on technology exports, changes in tariffs and taxes
and general economic and political conditions. The laws of some countries do not
protect our intellectual property rights to the same extent as the laws of the
United States. We do not believe these additional risks are significant in the
United Kingdom or in The Netherlands.
LOSS OF KEY PERSONNEL COULD HARM OUR BUSINESS
Our future performance depends in significant part upon the continued
service of our key technical and senior management personnel. We provide
incentives such as salary, benefits and option grants (which are typically
subject to vesting over four years) to attract and retain qualified employees.
The loss of the services of one or more of our officers or other key employees
could harm our business. Our future success also depends on our continuing
ability to attract and retain highly qualified technical and management
personnel. Competition for such personnel is intense, and there can be no
assurance that we can retain our key technical and management employees or that
we can attract, assimilate and retain other highly qualified technical and
management personnel in the future.
We believe there is significant competition for the few software
development professionals with the advanced technological skills necessary to
perform the services offered by our business. Our ability to maintain or renew
existing relationships and obtain new business depends, in large part, on our
ability to hire and retain technical personnel. An inability to hire such
additional qualified personnel could impair our ability to manage and complete
our existing projects and to bid for and obtain new projects.
4.
ANTI-TAKEOVER PROVISIONS COULD DISCOURAGE TENDER OFFER OR TAKEOVER ATTEMPTS,
INCLUDING THOSE THAT MIGHT RESULT IN A PREMIUM OVER MARKET PRICE
Certain provisions of our Articles of Incorporation, as amended and
restated, and Bylaws, as amended, California law and our indemnification
agreements with our officers and directors may be deemed to have an
anti-takeover effect. Such provisions may delay, defer or prevent a tender offer
or takeover attempt that a stockholder might consider to be in that
stockholder's best interests, including attempts that might result in a premium
over the market price for the shares held by stockholders.
Our Board of Directors may issue additional shares of common stock or
establish one or more classes or series of Preferred Stock, having the number of
shares, designations, relative voting rights, dividend rates, liquidation and
other rights, preferences and limitations as determined by the Board of
Directors without stockholder approval.
Our Board of Directors has approved the adoption of a Preferred Share
Purchase Rights Plan (the "Rights Plan"). Terms of the Rights Plan provide for a
dividend distribution of one preferred share purchase right for each outstanding
share of our common stock. Each purchase right entitles the registered holder to
purchase one one-hundredth of a share of Series A Junior Participating Preferred
Stock at an exercise price of $69.50 per one one-hundredth of a preferred share,
subject to adjustment, and a redemption price of $.01 per purchase right. Each
one one-hundredth of a share of preferred stock has designations and the powers,
preferences and rights, and the qualifications, limitations and restrictions
which make its value approximately equal to the value of a common share.
The purchase rights are not exercisable until the earlier to occur of (i)
10 days following a public announcement that a person, entity or group of
affiliated or associated persons have acquired beneficial ownership of 15% or
more of the outstanding common stock or (ii) 10 business days (or such later
date as may be determined by action of the Board of Directors prior to such time
as any person or entity acquires 15% or more of our outstanding common stock)
following the commencement of, or announcement of an intention to make, a tender
offer or exchange offer the consummation of which would result in the beneficial
ownership by a person or group of 15% or more of such outstanding common stock.
The purchase rights have certain anti-takeover effects, as they would cause
substantial dilution to a person or group that attempted to acquire Zitel on
terms not approved by our Board of Directors. The purchase rights should not
interfere with any merger or other business combination approved by the Board of
Directors, since the purchase rights may be redeemed at $.01 per purchase right
prior to the earliest of (i) the twentieth day following the time that a person
or group has acquired beneficial ownership of 15% or more of our outstanding
common stock (unless extended for one or more 10 day periods by the Board of
Directors), (ii) a change of control, or (iii) the final expiration date of the
purchase rights.
5.
THE SERIES B CONVERTIBLE PREFERRED STOCK
On August 27, 1999, we sold 200,000 shares of our Series B Convertible
Preferred Stock to the selling securityholders named in this prospectus. These
shares of preferred stock:
- have liquidation preferences of $10.00 per share plus any declared and
unpaid dividends over all other current classes of stock;
- provide for non-cumulative dividends of $.30 per share, if, as and
when declared;
- have no voting rights except to the extent required by California law;
- are subject to redemption of all, but not less than all, of the
outstanding shares of preferred stock at our option at any time at a
liquidation price of $10.00 per share plus declared and unpaid
dividends;
- are convertible at the option of the holder into the number of shares
of Common Stock of the Company equal to the quotient obtained by
dividing the liquidation preference by a conversion price based on the
conversion formula described below.
The conversion formula is based on the closing price of our common stock on
the effective date of the registration statement of which this prospectus is a
part and the closing price on the day prior to date of conversion. Under the
formula, the baseline price is $__________. On the effective date and for the
first 180 days thereafter, the conversion price is equal to the closing price on
the trading day prior to the date of conversion. However, during that 180-day
period, the conversion price shall not be less than 70% of the baseline price
and shall not be more than the closing price on the trading day prior to the
date of conversion plus one half of the amount by which the closing price
exceeds 130% of the baseline price. After that 180-day period, the conversion
price is equal to the closing price on the trading day prior to the day of
conversion, provided it shall not be less than the baseline price. The
conversion price is subject to antidilution and similar adjustments.
BUSINESS
We are an information technology company specializing in performance
management of enterprise information systems. We employ our core competencies
through Datametrics software products and services business, marketing
multi-platform performance analysis and correlation software used to optimize
performance in mission critical systems, databases and applications.
Zitel was organized in 1979 to develop, market and sell semiconductor
memory systems. It subsequently developed memory algorithms, which we
incorporated in high performance data storage systems developed, marketed and
sold by our data storage business. With the acquisition, in June 1997, of the
business of Datametrics Systems Corporation, we commenced the transition to an
information technology company. This transition was completed in July 1998, when
we sold our data storage business.
GENERAL
We develop, market and support a wide range of data management solutions in
the form of multi-platform performance analysis and correlation software used to
optimize performance in mission critical systems, databases and applications. We
do so through our Datametrics software products business, which is the
combination of Datametrics Systems Corporation and Palmer & Webb Systems
companies, which were acquired in 1997 and combined with our Performance and
Modeling, Inc. subsidiary. The business operates under the Datametrics Systems
Corporation name. This business markets a suite of ViewPoint software utilized
for data management that automatically alerts, analyzes, correlates,
investigates and reports on data center performance for mainframe computers,
open systems and distributed network systems. In addition, this business
includes a professional services business to solve customers' IT professional
needs and a training business to assist customers with their software training
needs. Products are sold through a direct sales force in the United States and
Europe, and through value added resellers, distributors and original equipment
manufacturers worldwide. This business provides both direct and indirect
customer maintenance and support for its software products.
6.
PRODUCTS AND SERVICES
SOFTWARE PRODUCTS
The flagship product of our Datametrics business is ViewPoint. ViewPoint is
a multi-platform performance management and analysis product for the entire
enterprise that automatically monitors, analyzes and correlates thousands of
performance metrics simultaneously and at a very high speed. ViewPoint also
provides trend analysis, simulation modeling and "What If" analysis for capacity
planning. ViewPoint operates in systems running Compaq, OpenVMS, Unisys 2200,
Unisys A Series, Windows NT and many UNIX platforms including Sun, HP, IBM,
Siemans, and Sequent.
Datametrics also markets VisualRoute and VisualRoute Server which are Java
based tools providing the functionality of the common Internet tools, "ping",
"whois" and "traceroute" in an integrated fashion. VisualRoute provides a
simple, graphical tool to determine precisely where and how the traffic is
flowing between a server and the client trying to access it, providing a
geographical map of the route and the performance of each portion of the route.
VisualRoute can be installed on a client PC to determine connectivity and
connection performance between that PC and any server on the Internet.
VisualRoute Server, the enterprise version of VisualRoute, enables Web Master
and ISP's to provide this capability to any client that has a Java-enabled Web
browser.
Datametrics Professional Services (DPS) group provides professionals to its
customers to assist in installation, confirmation, outsourcing, training and
consultation. DPS will work with clients to provide the skills and knowledge for
deployment and maintenance of performance enhancing products throughout their
enterprise. DPS will provide services at the clients facility, at DPS's
facilities or provide distance learning through Web-driven computer-based
training. The latter is done via a Process-based Structured Intranet Training
Environment which is a browser-based knowledge environment delivering process
specific training or support knowledge for custom situations. DPS is also a
performance service provider, providing outsourcing services to clients whereby
DPS will provide performance management for its clients enterprise on an
outsource basis.
MARKETING
We sell our software products through a direct sales force in the United
States, the United Kingdom and The Netherlands, and through value added
resellers, distributors and original equipment manufacturers worldwide. We
provide direct customer maintenance and support for our software products.
EMPLOYEES
At September 30, 1999, we employed 117 persons on a full-time basis: 22 in
research and development, 13 in professional services, 7 in operations, 50 in
sales and marketing, and 25 in general management and administration.
We believe that our further success will depend, in part, on our ability to
attract and retain qualified employees, who are in great demand. None of our
employees are represented by a labor union and we believe that our employee
relations are good.
7.
SELLING SECURITYHOLDERS
The following table sets forth the names of the selling securityholders,
the number of shares of common stock owned by each selling securityholder prior
to this offering, the number of shares of common stock being offered for the
account of each selling securityholder and the number of shares of common stock
to be owned by each selling securityholder after completion of this offering.
This information is based upon information provided by the selling
securityholders if all of the shares are sold and no other shares are acquired.
Because the selling securityholders may offer all, some or none of their common
stock, no definitive estimate as to the number of Shares thereof that will be
held by the selling securityholders after such offering can be provided.
SHARES SHARES
BENEFICIALLY SHARES BENEFICIALLY
SELLING OWNED PRIOR TO BEING OWNED AFTER
SECURITYHOLDER(1) OFFERING OFFERED OFFERING(3)
---------------- -------------- -------------- -------------
ECC Chief, Inc. 2,329,948.5(2) 2,329,948.5(2) 0
ACS BRC Holding, Inc. 2,329,948.5(2) 2,329,948.5(2) 0
(1) Neither of the Selling Securityholders has, or within the past three years
has had, any position, office, or other material relationship with the
Company or any of its predecessors and affiliates.
(2) Assumes that all of the shares registered are allocated pro rata between
the Selling Securityholders.
(3) Assumes the sale of all shares offered hereby. We have agreed to pay all
reasonable fees and expenses incident to the filing of this offering.
8.
PLAN OF DISTRIBUTION
The common stock issuable upon conversion of the Series B preferred stock
may be sold from time to time by the selling securityholders in one or more
transactions at fixed prices, at market prices at the time of sale, at varying
prices determined at the time of sale or at negotiated prices. The selling
securityholders may offer their common stock in one or more of the following
transactions directly or through underwriters, broker dealers or agents:
- On any national securities exchange or quotation service on which our
common stock may be listed or quoted at the time of sale, including
the Nasdaq SmallCap Market;
- In the over-the-counter market;
- In private transactions;
- Through options;
- By pledge to secure debts or other obligations; or
- A combination of any of the above transactions.
The selling securityholders may effect these transactions by selling to or
through one or more underwriters, broker-dealers or agents, and such
underwriters, broker-dealers or agents may receive compensation in the form of
underwriting discounts, concessions or commissions from the selling
securityholders. The selling securityholders and any other persons that
participate in the distribution may at times, be deemed to be "underwriters"
within the meaning of the Securities Act of 1933, and any commissions received
by such broker-dealers and any profits realized on any resale of the common
stock by them might be deemed to be underwriting discounts and commissions under
the Securities Act.
Under applicable rules and regulations under the Securities Exchange Act,
any person engaged in the distribution of the common stock may not
simultaneously engage in market making activities with respect to our common
stock for a period of two business days prior to the commencement of such
distribution. In addition and without limiting the foregoing, the selling
securityholders and any other person participating in a distribution will be
subject to application provisions of the Securities Exchange Act and the rules
and regulations thereunder, including without limitation, Regulation M under the
Securities Exchange Act, which may limit the timing of purchases and sales of
shares of our common stock by the selling securityholders or any such other
person.
We will make copies of this prospectus available to the selling
securityholders and have informed the selling securityholders of the need for
delivery of a copy of this prospectus to each purchaser prior to or at the time
of any sale of the common stock.
The selling securityholders will pay all underwriting discounts,
commissions, transfer taxes and other expenses associated with the sale of the
common stock by them. We will pay all costs and expenses associated with the
registration of the common stock. We estimate that our expenses in connection
with this offering will be approximately $30,000.00.
9.
LEGAL MATTERS
The validity of the common stock offered hereby will be passed upon for
Zitel by Cooley Godward LLP, San Francisco, California.
EXPERTS
The financial statements incorporated in this Prospectus by reference to
the Annual Report on Form 10-K/A for the year ended September 30, 1999 have been
so incorporated herein in reliance on the report by PricewaterhouseCoopers LLP,
independent accountants, given on the authority of that firm as experts in
auditing and accounting.
10.
==============================================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY ZITEL. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER OF ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES OR AN OFFER
TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY
JURISDICTION WHERE SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN
IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
TABLE OF CONTENTS
PAGE
----
Where You Can Find More Information ................................. 1
Incorporation of Certain Documents by Reference ..................... 1
The Company ......................................................... 2
Use of Proceeds ..................................................... 2
Dividend Policy ..................................................... 2
Risk Factors ........................................................ 2
The Series B Convertible Preferred Stock ............................ 3
Business ............................................................ 4
Selling Securityholders ............................................. 8
Plan of Distribution ................................................ 9
Legal Matters ....................................................... 10
Experts ............................................................. 11
=============================================================================
4,659,897 SHARES
ZITEL CORPORATION
COMMON STOCK
------------
PROSPECTUS
------------
JANUARY __, 2000
=============================================================================
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses payable by the Company in
connection with the sale, issuance and distribution of the securities being
registered, other than underwriting discounts and commissions. All amounts are
estimates except the SEC registration fee. None of these expenses will be paid
by the Selling Securityholders.
SEC Registration Fee $ 3,037.39
Printing and Engraving Expenses 5,000.00
Legal Fees and Expenses $15,500.00
Accounting Fees and Expenses 5,000.00
Blue Sky Fees and Expenses 1,462.61
----------
Total $30,000.00
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant's Amended and Restated Articles of Incorporation and
Bylaws include provisions to (i) eliminate the personal liability of its
directors for monetary damages resulting from breaches of their fiduciary
duty to the extent permitted by California law and (ii) require the
Registrant to indemnify its directors and officers to the fullest extent
permitted by California law, including circumstances in which indemnification
is otherwise discretionary. Pursuant to California law, a corporation
generally has the power to indemnify its present and former directors,
officers, employees and agents against expenses incurred by them in
connection with any suit to which they are, or are threatened to be made, a
party by reason of their serving in such positions so long as they acted in
good faith and in a manner they reasonably believed to be in, or not opposed
to, the best interests of a corporation, and, with respect to any criminal
action, they had no reasonable cause to believe their conduct was unlawful.
The Registrant believes that these provisions are necessary to attract and
retain qualified persons as directors and officers. These provisions do not
eliminate liability for breach of the director's duty of loyalty to the
Registrant or its stockholders, for acts or omissions not in good faith or
involving intentional misconduct or knowing violations of law, for any
transaction from which the director derived an improper personal benefit or
for any willful or negligent payment of any unlawful dividend or any unlawful
stock purchase agreement or redemption.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
EXHIBIT
NUMBER DESCRIPTION
4.1 Certificate of Determination of Preferences of Series B Convertible
Preferred Stock of Zitel Corporation*
5.1 Opinion of Cooley Godward LLP.
23.1 Consent of PricewaterhouseCoopers LLP, Independent Accountants.
23.2 Consent of Cooley Godward LLP. Reference is made to 5.1.
24.1 Power of Attorney (included on signature page II-3).
99.1 Series B Convertible Preferred Stock Purchase Agreement dated as of
September 3, 1999
99.2 Registration Rights Agreement dated as of September 3, 1999
* Incorporated by reference to the indicated exhibit to the Company's
report on 10-K for the fiscal year ended September 30, 1999.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement: (i) To include
any prospectus required by section 10(a)(3) of the Securities Act of
1933; (ii) To reflect in the prospectus any
II-1.
facts or events arising after the effective date of the registration
statement (or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a fundamental
change in the information set forth in the 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, the foregoing undertaking
shall not apply if the information required to be included in a
post-effective amendment by the foregoing paragraphs is contained in
periodic reports filed with or furnished to the Commission by the
registrant pursuant to section 13 or section 15(d) of the 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, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof; 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. The undersigned registrant hereby
undertakes that, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual report
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of
1934 (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Securities Exchange Act
of 1934) that is incorporated by reference in 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. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the registrant pursuant to provisions described in Item 15,
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 Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
II-2.
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 January 13, 2000.
ZITEL CORPORATION
By /s/ Asa W. Lanum
--------------------------
Asa W. Lanum
President and Chief
Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Asa W. Lanum and Anna M. McCann, or either of
them, his attorneys-in-fact, and agents each with the power of substitution,
for him in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this registration statement (or any other
registration statement for the same offering that is to be effective upon
filing pursuant to Rule 462(b) under the Securities Act of 1933), and to file
the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, hereby granting unto
said attorneys-in-fact and agents, and each of them, full power and authority
to do and perform each and every act and thing requisite or necessary to be
done in and about the premises, as full to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them or their or his substitutes may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Asa W. Lanum President, Chief Executive January 13, 2000
- ----------------------- Officer and Director
Asa W. Lanum (PRINCIPAL EXECUTIVE OFFICER)
/s/ Anna M. McCann Vice President, Finance and January 13, 2000
- ----------------------- Administration, Secretary and
Anna M. McCann Chief Financial Officer
(PRINCIPAL ACCOUNTING OFFICER)
/s/ William R. Longergan Chairman of the Board of January 13, 2000
- ------------------------ Directors
William R. Lonergan
Director January , 2000
- ------------------------
Tsvi Gal
/s/ Jack H. King Director January 13, 2000
- ------------------------
Jack H. King
/s/ Philip J. Koen Director January 13, 2000
- ------------------------
Philip J. Koen
/s/ Catherine P. Lego Director January 13, 2000
- ------------------------
Catherine P. Lego
/s/ William M. Regitz Director January 13, 2000
- ------------------------
William M. Regitz
II-3.