<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 10, 1997
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------
PERICOM SEMICONDUCTOR CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
--------------
CALIFORNIA 3674 77-0254621
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION CLASSIFICATION CODE NO.) IDENTIFICATION NO.)
OR ORGANIZATION)
2380 BERING DRIVE
SAN JOSE, CALIFORNIA 95131
(408) 435-0800
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES AND PRINCIPAL
PLACE OF BUSINESS)
--------------
PATRICK B. BRENNAN
VICE PRESIDENT, FINANCE AND ADMINISTRATION
PERICOM SEMICONDUCTOR CORPORATION
2380 BERING DRIVE
SAN JOSE, CALIFORNIA 95131
(408) 435-0800
(NAME, ADDRESS, AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
COPIES TO:
MICHAEL C. PHILLIPS, ESQ. GREGORY M. GALLO, ESQ.
KEVIN A. FAULKNER, ESQ. JAMES M. KOSHLAND, ESQ.
HEIKE E. FISCHER, ESQ. PAUL A. BLUMENSTEIN, ESQ.
MORRISON & FOERSTER LLP GRAY CARY WARE & FREIDENRICH
755 PAGE MILL ROAD A PROFESSIONAL CORPORATION
PALO ALTO, CA 94304-1018 400 HAMILTON AVENUE
PALO ALTO, CA 94301-1825
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box. [_]
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. [_]
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===============================================================================================
TITLE OF EACH CLASS PROPOSED MAXIMUM AMOUNT OF
OF SECURITIES TO BE REGISTERED AGGREGATE OFFERING PRICE(1) REGISTRATION FEE
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stock, no par value....... $35,937,500 $10,891
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</TABLE>
(1) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(o) under the Securities Act of 1933.
--------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED SEPTEMBER 10, 1997
PROSPECTUS
Shares
[PERICOM LOGO APPEARS HERE]
Common Stock
Of the shares of Common Stock offered hereby, shares
are being offered by Pericom Semiconductor Corporation (the "Company") and
shares are being offered by certain shareholders of the Company (the
"Selling Shareholders"). See "Principal and Selling Shareholders." The Company
will not receive any of the proceeds from the sale of shares by the Selling
Shareholders.
Prior to this offering, there has been no public market for the Common Stock
of the Company. It is currently estimated that the initial public offering
price will be between $ and $ per share. See "Underwriting" for a
discussion of the factors to be considered in determining the initial public
offering price.
The Company has applied to have the Common Stock approved for quotation on
the Nasdaq National Market under the symbol "PSEM."
SEE "RISK FACTORS," BEGINNING ON PAGE 5, FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK.
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.
<TABLE>
<CAPTION>
UNDERWRITING PROCEEDS TO
PRICE TO DISCOUNTS AND PROCEEDS TO SELLING
PUBLIC COMMISSIONS(1) COMPANY(2) SHAREHOLDERS
-------- -------------- ----------- ------------
<S> <C> <C> <C> <C>
Per Share........................ $ $ $ $
Total(3)......................... $ $ $ $
</TABLE>
- ----
(1) The Company and the Selling Shareholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."
(2) Before deducting expenses payable by the Company, estimated at $ .
(3) The Company and the Selling Shareholders have granted the Underwriters an
option, on the same terms and conditions as set forth above exercisable
within 30 days of the date hereof, to purchase up to additional
shares of Common Stock solely to cover over-allotments, if any. If such
option is exercised in full, the total Price to Public, Underwriting
Discounts and Commissions, Proceeds to Company and Proceeds to Selling
Shareholders will be $ , $ , $ and $ , respectively. See
"Underwriting."
The shares are being offered by the several Underwriters when, as and if
delivered to and accepted by the Underwriters, subject to various prior
conditions, including their right to reject orders in whole or in part. It is
expected that delivery of share certificates will be made in New York, New
York, on or about , 1997.
SoundView Financial Group, Inc. Unterberg Harris
, 1997
<PAGE>
Set forth on the left hand side of the inside front cover page there are two
photos under the heading "Pericom High-Performance ICs," the one on the left
showing a gymnast performing a manouver on the still rings, the one to the
right showing a Pericom IC device on a circuit board. Below such photos, there
are three columns. The column on the left sets forth the following text:
"Pericom designs, develops and markets high-performance integrated circuits
(ICs) for the transfer, routing and timing of digital and analog signals in
personal computers, networking equipment and multimedia hardware. COMPUTERS--
Solutions for signal transfer, signal switching, clock distribution, hot-plug
interfaces, and mixed-voltage interface." The column in the center shows
graphics of seven Pericom IC devices of various types with the following
captions underneath: "Interface Logic," "Networking Transceivers," "Clock
Generators," "Digital Switches" and "Analog Switches." Below such graphics,
the center column includes the following text: "NETWORKING--Solutions used in
FastEthernet protocol switching, hub-to-hub connections, back plane drives,
clock distribution, physical layer transceivers, and hot-plug interfaces." The
column on the right sets forth the following text: "MULTIMEDIA--Solutions used
in TV/PC monitors, video switching, picture-in-picture video overlay, audio
switching, and video multiplexing." Set forth below such text is a stylized
letter "P" in a circle and the name "PERICOM."
Set forth on the left hand side of the inside cover gatefold under the
caption "High-Performance Notebook Computer and Multimedia Applications" and
the sentence "Pericom supplies interface logic, digital and analog switches
and clock management products to notebook PC manufacturers such as Acer,
Compaq, Dell, Hitachi, IBM, and multimedia companies such as Avid, Diamond
Multimedia, STB Systems and Trident Microsystems." Set forth below are
graphics consisting of one circle, four rectangular boxes with smaller boxes
inside, and one square box, labeled as a file server, a docking station, a
notebook computer, a sound card, a video card, and a laser printer,
respectively. The circle representing a file server is connected to the box
representing a docking station which in turn is connected to the boxes
representing a notebook computer and a sound card. The circle is also
connected to the square labeled laser printer. Within the boxes, certain
elements of the applicable item are depicted, with the interconnection of such
elements shown by lines. The elements offered by Pericom are highlighted:
"Switch" in the box depicting a docking station; "Logic," "Clock", and two
"Switches" in the box depicting a notebook computer; "Switch," "Clock," and
two "Analog Switch[es]" in the box depicting a sound card; "Switch," "Clock"
and "Video Switch" in the box depicting a video card, and "Clock" in the box
depicting a laser printer. Set forth under such graphics is the following
sentence: "APPLICATIONS: High-performance notebook computer with Pentium-class
microprocessor with docking station connection."
Set forth on the right side of the inside cover gatefold under the caption
"Networking Application" and the sentence "Pericom supplies interface logic,
LAN switches, clock management products, and transceivers to networking
companies such as 3COM, Ascend communications, Cabletron Systems, Cisco
Systems, Hewlett-Packard and Samsung." Set forth below are graphics consisting
of rectangular boxes labeled "Switching Hub" and thereunder graphics and title
"LAN Adapter." Within the boxes, certain elements of the applicable items are
depicted, with the interconnection of such elements shown by lines. The
elements offered by Pericom are highlighted: "Switch," "Logic," "Clock,"
"PHY," and "LAN Switch" in the box representing a switching hub; and "Logic,"
"Clock," and "LAN Switch" in the box representing a LAN adapter. Elements that
Pericom is currently shipping engineering samples are footnoted as such with
an asterisk. The boxes depicting the two systems are connected by a line. Set
forth to the left of the box representing a switching hub is a three-
dimensional graphic labeled "Switching Hub," and to the left of the box
depicting a LAN adapter is a graphic labeled "Notebook Computer with Docking
Station." Set forth at the bottom of the page is the following sentence:
"APPLICATION: Networking systems with multiprotocol 100-megabit transceivers
for switching hub and LAN adapter.
[INSIDE FRONT COVER PHOTOGRAPHS]
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING OVER-ALLOTMENT, STABILIZING TRANSACTIONS, SYNDICATE SHORT-COVERING
TRANSACTIONS AND PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING."
The Company intends to furnish its shareholders with annual reports
containing financial statements audited by independent accountants and to make
available quarterly reports containing unaudited summary financial information
for each of the first three quarters of each fiscal year.
Pericom is a registered trademark of the Company and SiliconConnect,
SiliconSwitch, SiliconClock, SiliconInterface, LanSwitch, DigitalSwitch,
AnalogSwitch, FlexClock and VideoSwitch are trademarks and trade names of the
Company. This Prospectus also contains other product names and trade names and
trademarks of the Company and of other organizations.
2
<PAGE>
Set forth on the left side of the inside cover gatefold under the caption
"High Performance Notebook Computer and Multimedia Applications" and the
sentence "Pericom supplies interface logic, digital and analog switches, and
clock management products to notebook companies such as Acer, Compaq, Dell,
Hitachi, IBM, and multimedia companies such as Avid, Diamond Multimedia, STB
Systems, and Trident Microsystems" are one circle, four rectangular boxes with
smaller boxes inside, and one square box, labeled as a file server, a docking
station, a notebook computer, a sound card, and a laser printer. The circle
representing a file server is connected to the box representing a docking
station which in turn is connected to the boxes representing a notebook computer
and a laser printer. Within the boxes, certain elements of the applicable item
are depicted, with the interconnection of such elements shown by lines. The
elements offered by Pericom are highlighted: "Switch" in the box depicting a
docking station; "Logic," "Clock", and two "Switches" in the box depicting a
notebook computer; "Switch," "Clock," and two "Analog Switch[es]" in the box
depicting a sound card; "Switch", "Clock" and "Video Switch" in the box
depicting a video card, and "Clock" in the box depicting a laser printer. Set
forth under such graphics is the following sentence: "APPLICATION: High-
performance notebook computers with Pentium-Class microprocessors communicating
with docking station connections".
Set forth on the right side of the inside cover gatefold under the caption
"Networking Application" and the sentence "Pericom supplies interface logic, LAN
switches, clock management products, and transceivers to networking companies
such as 3COM, Ascend Communications, Cabletron Systems, Cisco Systems, Hewlett-
Packard and Samsung" are rectangular boxes labeled "Switching Hub System" and
thereunder graphics entitled "Adapter System." Within the boxes, certain
elements of the applicable item are depicted, with the interconnection of such
elements shown by lines. The elements offered by Pericom are highlighted:
"Switch,", "Logic," "Clock," "PHY," and "LAN Switch" in the box representing a
switching hub system; and "Logic," "Clock," and "LAN Switch" in the box
representing an adapter system. Elements of which Pericom is currently shipping
engineering samples are marked as such. The boxes depicting the systems are
connected by a line. Set forth to the left of the box representing a switching
hub system is a three-dimensional box labeled "Switching Hub," and to the left
of the box depicting an adapter system is a graphic labeled "Mobile Computer
with Docking Station." Set forth at the bottom of the page is the following
sentence: "APPLICATION: Networking systems with multiprotocol 100-megabit
transceivers for switching hub and adapter system."
<PAGE>
PROSPECTUS SUMMARY
The following summary should be read in conjunction with, and is qualified in
its entirety by, the detailed information and the Financial Statements,
including the Notes thereto, appearing elsewhere in this Prospectus. Unless
otherwise indicated, the information in this Prospectus (i) assumes no exercise
of the Underwriters' over-allotment option, (ii) has been adjusted to reflect a
1-for-2 reverse stock split to be effected in October 1997, and (iii) has been
adjusted to reflect the conversion of all outstanding shares of Preferred Stock
into Common Stock upon the closing of the offering.
THE COMPANY
Pericom Semiconductor Corporation (the "Company" or "Pericom") designs,
develops and markets high-performance interface integrated circuits ("ICs")
used in many of today's advanced electronic systems. Interface ICs, such as
interface logic, switches and clock management products, transfer, route and
time electrical signals among a system's microprocessor, memory and various
peripherals and between interconnected systems. High-performance interface ICs,
which enable excellent signal quality, are essential for the full utilization
of the available speed and bandwidth of advanced microprocessors, memory ICs,
LANs and WANs. Pericom focuses on high-growth and-performance segments of the
notebook computing, networking and multimedia markets, in which advanced system
designs require interface ICs with high-speed performance, reduced power
consumption, low voltage operation, small size and higher levels of
integration.
Pericom has combined its extensive design technology and applications
knowledge with its responsiveness to the specific needs of electronic systems
developers to become a leading supplier of interface ICs. The Company has
evolved from one product line in fiscal 1992 to four currently --
SiliconInterface, SiliconSwitch, SiliconClock and SiliconConnect -- with a
goal of providing an increasing breadth of interface IC solutions to its
customers. Pericom currently offers approximately 300 standard products, of
which 80 were introduced during the past twelve months, and is planning to
introduce more than 40 new products during the remainder of calendar 1997.
Pericom has developed and is continuously refining a modular design
methodology which enables it to rapidly introduce proprietary and leading-
performance products. Central to this methodology is Pericom's library of
advanced digital and analog macrocells and core functions, many of which are
not available in commercial ASIC libraries. A number of these macrocells and
core functions, including mixed-voltage input/output cells, a digital and
analog PLL and a charge pump, are designed with patented technology. This
advanced library allows Pericom to effectively address the market requirements
for interface ICs with short propagation delay, low noise and jitter, minimal
skew and reduced EMI emissions. The modular methodology also allows the Company
to utilize a combination of digital macrocells, analog macrocells and sea-of-
gates arrays to quickly design interface ICs optimized for power, density,
performance and manufacturing. Another key attribute of the methodology is the
utilization of common mask sets from which multiple designs can be developed,
resulting in rapid product introductions, lower development costs and fast
response to volume requirements at competitive pricing.
The Company has adopted a fabless manufacturing strategy to gain access to a
broad range of advanced process technologies without having to incur
substantial capital investments. The Company has a long-standing relationship
with Chartered, recently began using TSMC as an important supplier and is
currently qualifying LG Semicon. The Company also utilizes AMS and NJRC for
BiCMOS and high-voltage CMOS processes.
Pericom pursues a three-tier customer strategy, consisting of (i) penetrating
target accounts by working with customer system design engineers to have
Pericom ICs included in their product designs, (ii) solidifying customer
relationships through on-time delivery of high-quality, state-of-the-art,
competitively-priced ICs and
3
<PAGE>
(iii) expanding sales to existing customers by providing increasingly extensive
solutions to customer needs. The Company markets and distributes its products
through a worldwide network of independent sales representatives and
distributors. The Company's customers and end users include 3Com, Apple
Computer, Inc., Ascend Communications, Avid Technology, Inc., Cabletron
Systems, Inc., Canon Inc., Cisco Systems, Inc., Compaq, Digital Equipment
Corporation, Hewlett-Packard Company, Hitachi Ltd., International Business
Machines Corporation, Intel Corporation, Inventec Inc., Smart Modular
Technologies Inc., Solectron Technology Corporation and Toshiba Corporation.
THE OFFERING
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<S> <C>
Common Stock Offered:
By the Company.................................. shares
By the Selling Shareholders..................... shares
----------
Total..................................... shares
Common Stock to be outstanding after the
offering(1)...................................... shares
Use of proceeds................................... General corporate purposes,
including working capital, purchase
of capital equipment and potential
acquisitions.
Proposed Nasdaq National Market symbol............ PSEM
</TABLE>
SUMMARY FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30,
--------------------------------------
1993 1994 1995 1996 1997
------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net revenues...................................... $6,284 $18,886 $22,732 $41,174 $33,166
Gross profit...................................... 2,983 7,878 9,859 18,377 12,180
Income from operations............................ 367 2,432 2,879 7,492 2,004
Net income........................................ 333 2,544 2,041 4,710 1,578
Net income per common and equivalent share........ $ 0.05 $ 0.33 $ 0.26 $ 0.57 $ 0.20
Shares used in computing per share data(2) ....... 6,599 7,657 7,936 8,230 8,053
</TABLE>
<TABLE>
<CAPTION>
AS OF JUNE 30, 1997
-----------------------
ACTUAL AS ADJUSTED (3)
------- ---------------
<S> <C> <C>
BALANCE SHEET DATA:
Cash and equivalents.................................... $ 9,566 $
Working capital......................................... 12,984
Total assets............................................ 23,581
Shareholders' equity.................................... 16,795
</TABLE>
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(1) Excludes 1,196,615 shares reserved for issuance pursuant to the exercise of
stock options outstanding as of June 30, 1997 having a weighted average
exercise price of $1.70 per share. See "Management -- Stock Plans" and Note
6 of Notes to Financial Statements.
(2) See Note 1 of Notes to Financial Statements for an explanation of the
method used to determine the number of shares used in computing net income
per common and equivalent share.
(3) Adjusted to reflect the receipt of the estimated net proceeds from the sale
of shares offered by the Company hereby at an assumed initial
public offering price of $ per share.
4
<PAGE>
RISK FACTORS
In addition to the other information contained in this Prospectus, investors
should carefully consider the following risk factors in evaluating an
investment in the Common Stock offered hereby. This Prospectus contains
certain forward-looking statements. These statements are subject to risks and
uncertainties, including those set forth below, and actual results could
differ materially from those expressed or implied in these statements. All
forward-looking statements included in this Prospectus are made as of the date
hereof, and the Company assumes no obligation to update any such forward-
looking statements or reason why actual results might differ.
LIMITED OPERATING HISTORY; POTENTIAL FLUCTUATIONS IN OPERATING RESULTS
The Company was founded in 1990 and has a limited history of operations,
having shipped its first products in volume in fiscal 1993. There can be no
assurance that any past levels of revenue growth or profitability can be
sustained on a quarterly or annual basis. The Company's expense levels are
based in part on anticipated future revenue levels, which can be difficult to
predict. The Company's business is characterized by short-term orders and
shipment schedules. The Company does not have long-term purchase agreements
with any of its customers, and customers can typically cancel or reschedule
their orders without significant penalty. The Company typically plans its
production and inventory levels based on forecasts, generated with input from
customers and sales representatives, of customer demand which is highly
unpredictable and can fluctuate substantially. If net revenues fall
significantly below anticipated levels, the Company's business, financial
condition and results of operations would be materially and adversely
affected. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
The Company has experienced significant fluctuations in its quarterly
operating results in the past three fiscal years and could continue to
experience such fluctuations in the future. For instance, in the quarter ended
June 30, 1997, sales to Harris Corporation ("Harris") under a private label
resale program were $3.1 million, compared to an average of $0.8 million in
each of the three previous quarters. Sales to Harris are not expected to
continue at the level achieved in the quarter ended June 30, 1997 and may
fluctuate significantly from quarter to quarter. The Company's operating
results are affected by a wide variety of factors that could materially and
adversely affect net revenues and results of operations, including a decline
in the gross margins of its products, the growth or reduction in the size of
the market for interface circuits, delay or decline in orders received from
distributors, the availability of manufacturing capacity with the Company's
wafer suppliers, changes in product mix, customer acceptance of the Company's
new products, the ability of customers to make payments to the Company, the
timing of new product introductions and announcements by the Company and its
competitors, increased research and development expenses associated with new
product introductions or process changes, expenses incurred in obtaining and
enforcing, and in defending claims with respect to, intellectual property
rights, changes in manufacturing costs and fluctuations in manufacturing
yields, and other factors such as general conditions in the semiconductor
industry. All of the above factors are difficult for the Company to forecast,
and these or other factors can materially and adversely affect the Company's
business, financial condition and results of operations for one quarter or a
series of quarters. The Company's expense levels are based in part on its
expectations regarding future sales and are fixed in the short term to a large
extent. Therefore, the Company
may be unable to adjust spending in a timely manner to compensate for any
unexpected shortfall in sales. Any significant decline in demand relative to
the Company's expectations or any material delay of customer orders could have
a material adverse effect on the Company's business, financial condition and
results of operations. There can be no assurance that the Company will be able
to sustain profitability on a quarterly or annual basis. In addition, it is
possible that the Company's operating results in future quarters may fall
below the expectations of public market analysts and investors, which would
likely result in a material drop in the market price of the Company's Common
Stock. See "-- No Prior Market, Stock Price Volatility; Dilution" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
5
<PAGE>
Historically, selling prices in the semiconductor industry generally, as
well as for the Company's products, have decreased significantly over the life
of each product. Beginning late in calendar 1995 and continuing into calendar
1997, the Company experienced a significant decrease in the selling prices of
many of its products, which had a material adverse effect on the Company's net
revenues and overall gross margins. The Company expects that selling prices
for its existing products will continue to decline over time and that average
selling prices for new products will decline significantly over the lives of
these products. Declines in selling prices for the Company's products, if not
offset by reductions in the costs of producing these products or by sales of
new products with higher gross margins, would decrease the Company's overall
gross margins and could materially and adversely affect the Company's
business, financial condition and results of operations. There can be no
assurance that the Company will be able to reduce production costs or to
develop and market new products with higher gross margins. See "--
Technological Change; Dependence on New Products," "-- Competition," "--
Semiconductor Industry Risks" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
DEPENDENCE ON INDEPENDENT WAFER FOUNDRIES
In fiscal 1996 and 1997, approximately 90% of the wafers for the Company's
semiconductor products were manufactured by Chartered Semiconductor
Manufacturing Pte, Ltd. ("Chartered"), and the remainder of the Company's
wafers were manufactured by Austria Mikro Systeme GmbH ("AMS"), New Japan
Radio Corporation ("NJRC") and Taiwan Semiconductor Manufacturing Corporation
("TSMC"). The Company is currently qualifying LG Semicon ("LG") as a foundry
supplier. The Company believes that it will receive an increasing portion of
its wafer requirements from TSMC and LG in the future. The Company's reliance
on independent wafer suppliers to fabricate its wafers at their production
facilities subjects the Company to such possible risks as potential lack of
adequate capacity and available manufactured products, lack of control over
delivery schedules and the risk of events limiting production and reducing
yields, such as fires or other damage to production facilities or technical
difficulties. Although, to date, the Company has not experienced any material
delays in obtaining an adequate supply of wafers, there can be no assurance
that the Company will not experience delays in the future. Any inability or
unwillingness of the Company's wafer suppliers generally, and Chartered in
particular, to provide adequate quantities of finished wafers to meet the
Company's needs in a timely manner or in needed quantities would delay
production and product shipments and have a material adverse effect on the
Company's business, financial condition and results of operations.
At present, the Company purchases wafers from its wafer suppliers through
the issuance of purchase orders based on rolling six-month forecasts provided
by the Company, and such purchase orders are subject to acceptance by each
wafer foundry. The Company does not have long-term purchase agreements with
any of its wafer suppliers, each of which has the right to reduce or terminate
allocations of wafers to the Company. In the event that these suppliers were
unable or unwilling to continue to manufacture the Company's key products in
required volumes, the Company would have to identify and qualify additional
foundries. In any event, the Company's future growth will also be dependent
upon its ability to identify and qualify new wafer foundries. The
qualification process can take up to six months or longer, and there can be no
assurance that any additional wafer foundries will become available to the
Company or will be in a position to satisfy any of the Company's requirements
on a timely basis. The Company also depends upon its wafer suppliers to
participate in process improvement efforts, such as the transition to finer
geometries, and any inability or unwillingness of such suppliers to do so
could delay or otherwise materially adversely affect the Company's development
and introduction of new products. Furthermore, sudden shortages of raw
materials or production capacity constraints can lead wafer suppliers to
allocate available capacity to customers other than the Company or for
internal uses, which could interrupt the Company's ability to meet its product
delivery obligations. Any significant interruption in the supply of wafers to
the Company would adversely affect the Company's operating results and
relations with affected customers. The Company's reliance on independent wafer
suppliers may also impact the length of the development cycle for the
Company's products, which may provide time-to-market advantages to competitors
that have in-house fabrication capacity.
6
<PAGE>
In the recent past, some wafer foundries, including some of those utilized
by the Company, required certain customers to make substantial financial
commitments to them as a condition to future allocations of finished wafer
output. These financial commitments have taken the form of equity investments
in the foundry, full or partial pre-payments on orders, or the furnishing of
capital equipment to the foundry. The Company has not been required to make
such financial commitments to date. Although wafer foundries, in general, are
no longer requiring such financial commitments, there can be no assurance that
wafer foundries will not, at some time in the future, renew such requirements.
The Company has limited financial resources and would be substantially less
able than many of its competitors and other semiconductor companies to provide
equity investments or other financial accommodations to its foundries to
obtain capacity allocation guarantees. To the extent that such financial
commitments are required to maintain existing wafer output or to obtain new
capacity, the Company's ability to obtain wafers will be adversely affected if
the Company is unable to meet such requirements.
Each of Chartered, AMS, NJRC, TSMC and LG is located outside the United
States, which exposes the Company to risks associated with international
business operations, including foreign governmental regulations, currency
fluctuations, reduced protection for intellectual property, changes in
political conditions, disruptions or delays in shipments and changes in
economic conditions in the countries where these foundries are located, each
of which could have a material adverse effect on the Company's business,
financial condition and results of operations. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and
"Business -- Manufacturing."
TECHNOLOGICAL CHANGE; DEPENDENCE ON NEW PRODUCTS
The markets for the Company's products are characterized by rapidly changing
technology, frequent new product introductions and declining selling prices
over product life cycles. The Company's future success is highly dependent
upon the timely completion and introduction of new products at competitive
price/performance levels. The success of new products depends on a variety of
factors, including product selection, product performance and functionality,
customer acceptance, competitive pricing, successful and timely completion of
product development, sufficient wafer fabrication capacity and achievement of
acceptable manufacturing yields by the Company's wafer suppliers. There can be
no assurance that the Company will be able to successfully identify new
product opportunities and develop and bring to market such new products or
that the Company will be able to respond effectively to new technological
changes or new product announcements by others. In addition, the Company may
experience delays, difficulty in procuring adequate fabrication capacity for
the development and manufacture of such products or other difficulties in
achieving volume production of these products. The failure of the Company to
complete and introduce new products in a timely manner at competitive
price/performance levels would materially and adversely affect the Company's
business, financial condition and results of operations.
The Company has relied in the past and continues to rely upon its
relationships with manufacturers of high-performance systems for insights into
product development strategies for emerging system requirements. The Company
believes it will rely on these relationships more in the future as the Company
focuses on the development and production of application specific standard
products ("ASSPs"). The Company generally incorporates its new products into a
customer's product or system at the design stage. However, these design
efforts, which can often require significant expenditures by the Company, may
precede the generation of volume sales, if any, by a year or more. Moreover,
the value of any design win will depend in large part on the ultimate success
of the customer's product and on the extent to which the system's design
accommodates components manufactured by the Company's competitors. No
assurance can be given that the Company will achieve design wins or that any
design win will result in significant future revenues. To the extent the
Company cannot develop or maintain such relationships, its ability to develop
well-accepted new products may be impaired, which could have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations," "Business -- Products" and "Business -- Research
and Development."
7
<PAGE>
CUSTOMER CONCENTRATION
A relatively small number of customers has accounted for a significant
portion of the Company's net revenues in each of the past several fiscal years
and the Company expects this trend to continue for the foreseeable future. In
fiscal 1997, sales to Harris and International Business Machines Corporation
("IBM") accounted for approximately 17% and 14%, respectively, of the
Company's net revenues, and sales to the Company's top five customers
accounted for approximately 47% of net revenues. In the quarter ended June 30,
1997, sales to Harris under a private label resale program were $3.1 million
and accounted for 27.3% of the Company's net revenues during that quarter. The
Company does not have long-term purchase agreements with any of its customers.
There can be no assurance that the Company's current customers will continue
to place orders with the Company, that orders by existing customers will
continue at the levels of previous periods or that the Company will be able to
obtain orders from new customers. In particular, sales to Harris are not
expected to continue at the level achieved in the quarter ended June 30, 1997.
Loss of one or more of the Company's large customers, or a reduction in the
volume of orders placed by any of such customers, could materially and
adversely affect the Company's business, financial condition and results of
operations. See "-- Limited Operating History; Potential Fluctuations in
Operating Results," "Management's Discussion and Analysis of Financial
Condition and Results of Operations," "Business -- Customers" and "Business --
Sales and Marketing."
COMPETITION
The semiconductor industry is intensely competitive. Significant competitive
factors in the market for high performance interface integrated circuits
("ICs") include product features and performance, product quality, price,
success in developing new products, adequate wafer fabrication capacity and
sources of raw materials, efficiency of production, timing of new product
introductions, ability to protect intellectual property rights and proprietary
information, and general market and economic conditions. The Company's
competitors include Cypress Semiconductor Corporation, Integrated Device
Technology, Inc., Maxim Integrated Products, Inc., Quality Semiconductor, Inc.
and Texas Instruments, Inc., most of which have substantially greater
financial, technical, marketing, distribution and other resources, broader
product lines and longer-standing customer relationships than the Company. The
Company also competes with other major or emerging companies that sell
products to certain segments of the markets addressed by the Company.
Competitors with greater financial resources or broader product lines may also
have greater ability than the Company to engage in sustained price reductions
in the Company's primary markets in order to gain or maintain market share.
The Company believes that its future success will depend on its ability to
continue to improve and develop its products and processes. Unlike the
Company, many of the Company's competitors maintain internal manufacturing
capacity for the fabrication and assembly of semiconductor products, which may
provide such companies with more reliable manufacturing capability, shorter
development and manufacturing cycles and time-to-market advantages. In
addition, competitors with their own wafer fabrication facilities that are
capable of producing products with the same design geometries as those of the
Company may be able to manufacture and sell competitive products at lower
prices. Introduction of products by competitors that are manufactured with
improved process technology could materially and adversely affect the
Company's business and results of operations. As is typical in the
semiconductor industry, competitors of the Company have developed and marketed
products having functionality similar or identical to the Company's products,
and the Company expects that this trend will continue in the future. To the
extent the Company's products do not achieve performance, price, size or other
advantages over products offered by competitors, the Company is likely to
experience greater price competition with respect to such products. The
Company also faces competition from the makers of microprocessors and other
system devices, including application specific integrated circuits ("ASICs"),
that have been and may be developed for particular systems. These devices may
include interface logic functions, which may eliminate the need or sharply
reduce the demand for the Company's products in particular applications. There
can be no assurance that the Company will be able to compete successfully in
the future or that competitive pressures will not materially and adversely
affect the Company's financial condition and results of operations.
Competitive pressures could also reduce market acceptance of the Company's
products and result in price reductions and increases in expenses that could
materially and adversely affect the Company's
8
<PAGE>
business, financial condition and results of operations. See "-- Dependence on
Independent Wafer Foundries," "-- Dependence on Single or Limited Source
Assembly Subcontractors," "Business -- Manufacturing" and "Business --
Competition."
VARIATION IN PRODUCTION YIELDS
The manufacture and assembly of semiconductor products is highly complex and
sensitive to a wide variety of factors, including the level of contaminants in
the manufacturing environment, impurities in the materials used and the
performance of manufacturing personnel and production equipment. In a typical
semiconductor manufacturing process, silicon wafers produced by the foundry
are sorted and cut into individual die that are then assembled into individual
packages and tested for performance. The Company's wafer fabrication suppliers
have from time to time experienced lower-than-anticipated yields of good die,
as is typical in the semiconductor industry. In the event of such decreased
yields, the Company would incur additional costs to sort wafers, an increase
in average cost per usable die and an increase in the time to market for its
products. These conditions could reduce the Company's net revenues and gross
margin, and have an adverse effect on the Company's business and results of
operations, and relations with affected customers. No assurance can be given
that the Company or its suppliers will not experience yield problems in the
future which could result in a material adverse effect on the Company's
business and results of operations. See "Business -- Manufacturing."
SEMICONDUCTOR INDUSTRY RISKS
The semiconductor industry has historically been cyclical and periodically
subject to significant economic downturns, characterized by diminished product
demand, accelerated erosion of selling prices, overcapacity and rapidly
changing technology and evolving industry standards. Beginning late in
calendar 1995 and continuing into calendar 1997, the Company experienced a
significant decrease in the selling prices of many of its products,
attributable primarily to a significant downward trend in pricing experienced
in the semiconductor industry. Although the semiconductor industry is
currently experiencing increased demand, it is uncertain how long these
conditions will continue. The Company does not expect that this high level of
demand will continue indefinitely. Accordingly, the Company may in the future
experience substantial period-to-period fluctuations in business and results
of operations due to general semiconductor industry conditions, overall
economic conditions or other factors. The Company's business is also subject
to the risks associated with the effects of legislation and regulations
relating to the import or export of semiconductor products. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
"Business -- Manufacturing," "Business -- Sales and Marketing" and
"Business -- Competition."
RELIANCE ON DISTRIBUTORS; PRODUCT RETURNS
Sales through domestic and international distributors represented 40% and
36% of the Company's net revenues in fiscal 1996 and 1997, respectively. The
Company's distributors are not subject to minimum purchase requirements, may
reduce or delay orders periodically due to excess inventory and can
discontinue selling the Company's products at any time. The Company recognizes
revenue and related gross profit from sales of products through distributors
when shipped. Domestic distributors are permitted a return allowance of 10% of
their net purchases every six months. Although the Company believes that, to
date, it has provided adequate allowances for exchanges, returns, price
protection and other concessions, there can be no assurance that actual
amounts incurred will not exceed the Company's allowances, particularly in
connection with the introduction of new products, enhancements to existing
products or price reductions. The Company's distributors typically offer
competing products. The loss of one or more distributors, or the decision by
one of the distributors to reduce the number of the Company's products offered
by such distributor or to carry the product lines of the Company's
competitors, could have a material adverse effect on the Company's business,
financial condition and results of operations. See "Business -- Sales and
Marketing."
9
<PAGE>
MANAGEMENT OF GROWTH
The Company has recently experienced and may continue to experience growth
in the number of its employees and the scope of its operations, resulting in
increased responsibilities for management personnel. To manage recent and
potential future growth effectively, the Company will need to continue to
implement and improve its operational, financial and management information
systems and to hire, train, motivate and manage a growing number of employees.
The future success of the Company also will depend on its ability to attract
and retain qualified technical, marketing and management personnel,
particularly highly-skilled design, process and test engineers, for whom
competition is intense. In particular, the current availability of qualified
engineers is limited, and competition among companies for skilled and
experienced engineering personnel is very strong. The Company is currently
attempting to hire a number of engineering personnel and has experienced
delays in filling such positions. During strong business cycles, the Company
expects to experience continued difficulty in filling its needs for qualified
engineers and other personnel. The Company intends to implement a new
management information system over the next six months. There can be no
assurance that the Company will not encounter difficulties as it seeks to
integrate this new system into its operations. There can be no assurance that
the Company will be able to achieve or manage effectively any such growth, and
failure to do so could delay product development cycles or otherwise have a
material adverse effect on the Company's business, financial condition and
results of operations.
DEPENDENCE ON KEY PERSONNEL
The Company's future success will depend to a large extent on the continued
contributions of its executive officers and other key management and technical
personnel, none of whom has an employment agreement with the Company and each
of whom would be difficult to replace. The Company does not maintain any key
person life insurance policy on any such persons. The loss of the services of
one or more of the Company's executive officers or key personnel or the
inability to continue to attract qualified personnel could delay product
development cycles or otherwise have a material adverse effect on the
Company's business, financial condition and results of operations. See
"Business -- Employees" and "Management."
PATENTS AND PROPRIETARY RIGHTS
The Company's success depends in part on its ability to obtain patents and
licenses and preserve other intellectual property rights covering its products
and development and testing tools. In the United States, the Company holds
five patents covering certain aspects of its product designs, has been granted
allowance on three other patents and has three additional patent applications
pending. Copyrights, mask work protection, trade secrets and confidential
technological know-how are also key elements of the Company's business. There
can be no assurance that any additional patents will be issued to the Company
or that the Company's patents or other intellectual property will provide
meaningful protection from competition. The Company may be subject to or may
initiate interference proceedings in the U.S. Patent and Trademark Office,
which can consume significant financial and management resources. In addition
to the foregoing, the laws of certain territories in which the Company's
products are or may be developed, manufactured or sold may not protect the
Company's products and intellectual property rights to the same extent as the
laws of the United States. The inability of the Company to protect its
intellectual property adequately could have a material adverse effect on its
business, financial condition and results of operations.
The semiconductor industry is characterized by frequent litigation regarding
patent and other intellectual property rights, and there can be no assurance
that the Company will not be subject to infringement claims by other parties.
In May 1995, Quality Semiconductor, Inc. ("QSI"), a competitor of the Company,
brought a lawsuit against the Company in the United States District Court for
the Northern District of California, San Francisco Division, claiming
infringement of one of its patents by certain features in certain of the
Company's bus switch products and seeking injunctive relief and monetary
damages. Discovery has commenced, but is stayed pending a claim construction
hearing. The Company believes that it has meritorious defenses and that the
resolution of this matter will not have a material adverse effect on the
Company's business, financial position or results of operations. However, any
litigation, whether or not determined in favor of the Company, can result in
10
<PAGE>
significant expense to the Company and can divert the efforts of the Company's
technical and management personnel from productive tasks. In the event of an
adverse ruling in any litigation involving intellectual property, the Company
might be required to discontinue the use of certain processes, cease the
manufacture, use and sale of infringing products, expend significant resources
to develop non-infringing technology or obtain licenses to the infringed
technology, and may suffer significant monetary damages, which could include
treble damages. In the event the Company attempts to license any allegedly
infringed technology, there can be no assurance that such a license would be
available on reasonable terms or at all. In the event of a successful claim
against the Company and the Company's failure to develop or license a
substitute technology on commercially reasonable terms, the Company's business
and results of operations would be materially and adversely affected. There
can be no assurance that the claims brought by QSI or any potential
infringement claims by other parties (or claims for indemnity from customers
resulting from any infringement claims) will not materially and adversely
affect the Company's business, financial condition and results of operations.
The process technology used by the Company's independent foundries,
including process technology that the Company has developed with its
foundries, can generally be used by such foundries to produce their own
products or to manufacture products for other companies, including the
Company's competitors. In addition, the Company does not generally have the
right to implement the process technology used to manufacture its products
with foundries other than the foundry with which it has developed such process
technology. See "Business --Intellectual Property."
RISKS OF INTERNATIONAL SALES
Sales outside of the United States accounted for approximately 35%, 30% and
37% of the Company's net revenues in fiscal 1995, 1996 and 1997, respectively.
The Company expects that export sales will continue to represent a significant
portion of net revenues. The Company intends to expand its operations outside
of the United States, which will require significant management attention and
financial resources and further subject the Company to international operating
risks. These risks include unexpected changes in regulatory requirements,
delays resulting from difficulty in obtaining export licenses for certain
technology, tariffs and other barriers and restrictions, and the burdens of
complying with a variety of foreign laws. The Company is also subject to
general geopolitical risks in connection with its international operations,
such as political and economic instability and changes in diplomatic and trade
relationships. In addition, because the Company's international sales are
denominated in U.S. dollars, increases in the value of the U.S. dollar could
increase the price in local currencies of the Company's products in foreign
markets and make the Company's products relatively more expensive than
competitors' products that are denominated in local currencies, and there can
be no assurance that the Company will not be materially and adversely affected
by fluctuating exchange rates. There can be no assurance that regulatory,
geopolitical and other factors will not materially and adversely affect the
Company's business, financial condition and results of operations in the
future or require the Company to modify its current business practices. See
"Business -- Customers" and "Business -- Sales and Marketing."
DEPENDENCE ON SINGLE OR LIMITED SOURCE ASSEMBLY SUBCONTRACTORS
The Company relies on foreign subcontractors primarily for the assembly and
packaging of its products and, to a lesser extent, for the testing of its
finished products. Some of these subcontractors are the Company's single
source supplier for certain new packages. Although the Company believes that
it is not materially dependent upon any such subcontractor, changes in the
Company's or a subcontractor's business could cause the Company to become
materially dependent on a subcontractor. The Company has from time to time
experienced difficulties in the timeliness and quality of product deliveries
from the Company's subcontractors. Although delays experienced to date have
not been material, there can be no assurance that the Company will not
experience similar or more severe difficulties in the future. The Company
generally purchases these single or limited source components or services
pursuant to purchase orders and has no guaranteed arrangements with such
subcontractors. There can be no assurance that these subcontractors will
continue to be able and willing to meet the Company's requirements for any
such components or services. Any significant disruption in supplies from, or
degradation in the quality of components or services supplied by, these
subcontractors, or any other
11
<PAGE>
circumstance that would require the Company to qualify alternative sources of
supply could delay shipments and result in the loss of customers, limitations
or reductions in the Company's revenues, or otherwise materially and adversely
affect the Company's business, financial condition and results of operations.
Each of the Company's assembly subcontractors is located outside the United
States, which exposes the Company to risks associated with international
business operations, including foreign governmental regulations, currency
fluctuations, reduced protection for intellectual property, changes in
political conditions, disruptions or delays in shipments and changes in
economic conditions in the countries where these subcontractors are located,
any of which could have a material adverse effect on the Company's business,
financial condition and results of operations. See "Business --
Manufacturing."
CONTROL BY PRINCIPAL SHAREHOLDERS
Upon the consummation of this offering, the current officers, directors and
current holders of five percent or more of the Company's Common Stock will own
approximately % of the outstanding Common Stock. Accordingly, these
shareholders acting as a group will have control with respect to matters
requiring approval by the shareholders of the Company, including the ability
to elect a majority of the board of directors. In addition, effective upon the
closing of this offering, the Company's Restated Articles of Incorporation
will be amended to allow the Company to issue Preferred Stock with rights
senior to those of the Common Stock without any further vote or action by the
shareholders, which could make it more difficult for shareholders to effect
certain corporate actions. These provisions could also have the effect of
delaying or preventing a change in control of the Company. See "Management,"
"Principal and Selling Shareholders" and "Description of Capital Stock."
BROAD MANAGEMENT DISCRETION IN USE OF PROCEEDS.
The net proceeds to the Company from the sale of the Common Stock offered by
the Company hereby at the estimated initial public offering price of $ per
share are estimated to be $ million ($ million if the Underwriters'
over-allotment option is exercised in full) after deducting the underwriting
discounts and commissions and estimated offering expenses payable by the
Company. While the Company currently anticipates that it will use a portion of
such proceeds for acquisition of capital equipment, a substantial portion of
such proceeds are currently allocated only for general corporate purposes.
Consequently, management will have broad discretion over the use of a majority
of the proceeds of the offering. See "Use of Proceeds."
NO PRIOR MARKET; STOCK PRICE VOLATILITY; DILUTION
Prior to this offering, there has been no public market for the Company's
Common Stock. Consequently, the initial public offering price will be
determined by negotiations among the Company, the Selling Shareholders and the
representatives of the Underwriters. There can be no assurance that an active
public market for the Common Stock will develop or be sustained after the
offering or that the market price of the Common Stock will not decline below
the initial public offering price. The trading price of the Company's Common
Stock could be subject to wide fluctuations in response to quarter-to-quarter
variations in operating results, announcements of technological innovations or
new products by the Company or its competitors, general conditions in the
semiconductor and electronic systems industries, changes in earnings estimates
by analysts, or other events or factors. In addition, the stock market has
experienced extreme price and volume fluctuations, which have particularly
affected the market prices of many high technology companies and which have
often been unrelated to the operating performance of such companies. Any of
the foregoing factors may materially and adversely affect the market price of
the Company's Common Stock. In addition, purchasers of the Common Stock will
experience immediate and substantial dilution in net tangible book value per
share of the Common Stock from the initial public offering price per share.
See "Dilution" and "Underwriting."
12
<PAGE>
POTENTIAL EFFECT OF SHARES ELIGIBLE FOR FUTURE SALE ON MARKET PRICE OF THE
COMMON STOCK
Sales of a substantial number of shares of Common Stock after this offering
could adversely affect the market price of the Common Stock and could impair
the Company's ability to raise capital through the sale of equity securities.
Upon completion of this offering, the Company will have approximately
shares of Common Stock outstanding, based on the number of shares
of Common Stock outstanding as of August 31, 1997. Of these shares, the
shares offered hereby will be freely tradeable without restriction
under the Securities Act of 1933, as amended (the "Securities Act"), unless
they are held by "affiliates" of the Company as that term is used in Rule 144
under the Securities Act.
The remaining 7,012,040 outstanding shares are "restricted securities"
within the meaning of Rule 144. 155,000 of these shares will be eligible for
sale in the public market at the effective date of the Registration Statement
of which this Prospectus is a part (the "Effective Date") under Rule 144,
subject in some cases to certain volume restrictions and other conditions
imposed thereby. 90 days after the date of this Prospectus, approximately
146 outstanding shares and 131,732 additional shares subject to vested options
will become eligible for sale subject to compliance with Rule 144 and Rule
701. Upon the expiration of agreements not to sell shares entered into with
SoundView Financial Group, Inc. and/or the Company, 180 days after the
Effective Date, approximately 6,856,894 additional shares will become eligible
for sale subject to the provisions of Rule 144 or Rule 701 and 826,891
additional shares subject to vested options will be eligible for sale subject
to compliance with Rule 144 and Rule 701. The remainder of the shares will be
eligible for sale from time to time thereafter upon expiration of their
respective one-year holding periods, subject in each case to the restrictions
on such sales by affiliates of the Company. Any shares subject to lock-up
agreements may be released by SoundView Financial Group, Inc. prior to the
expiration of the lock-up period at any time without notice. See
"Underwriting."
As soon as practicable after the Effective Date, the Company intends to file
one or more registration statements on Form S-8 under the Securities Act up to
register approximately 3,787,364 shares of Common Stock reserved for issuance
under the Company's 1990 Stock Option Plan, 1995 Stock Option Plan and 1997
Employee Stock Purchase Plan, thus permitting the resale of such shares by
non-affiliates in the public market without restriction under the Securities
Act unless subject to lock-up agreements. Such registration statement(s) will
become effective immediately upon filing. See "Management -- Stock Plans."
Prior to this offering, there has been no public market for the Common Stock
of the Company, and any sale of substantial amounts in the open market may
adversely affect the market price of the Common Stock offered hereby. See
"Shares Eligible for Future Sale."
13
<PAGE>
THE COMPANY
Pericom Semiconductor Corporation was incorporated in California on June 25,
1990. The principal executive offices of the Company are located at 2380
Bering Drive, San Jose, California 95131, and its telephone number at this
address is (408) 435-0800.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the shares of
Common Stock being offered by the Company hereby at an assumed initial public
offering price of $ per share are estimated to be $
($ if the Underwriters' over-allotment option is exercised in full),
after deducting the estimated underwriting discounts and commissions and
offering expenses. The principal purposes of this offering are to create a
public market for the Company's Common Stock, obtain additional capital and
facilitate future access by the Company to public equity markets. The net
proceeds to the Company are expected to be used for general corporate
purposes, including working capital. The Company expects to use approximately
$2.0 million of the net proceeds of the offering in fiscal 1998 to acquire
capital equipment for research and development and testing. The Company will
not receive any proceeds from the sale of shares of Common Stock by the
Selling Shareholders. See "Risk Factors -- Broad Management Discretion in Use
of Proceeds" and "Principal and Selling Shareholders."
The Company may also use a portion of the net proceeds to fund acquisitions
of complementary businesses, products or technologies. Although the Company
has in the past reviewed potential acquisition opportunities, there are no
current agreements or negotiations with respect to any such transactions.
Pending the foregoing uses, the net proceeds of this offering will be
invested in short-term, investment-grade or U.S. government securities.
DIVIDEND POLICY
The Company has never declared or paid dividends on its capital stock. The
Company currently does not intend to pay dividends in the foreseeable future
so that it may reinvest its earnings in the development of its business.
14
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company (i) as of
June 30, 1997, (ii) on a pro forma basis to give effect to the conversion into
Common Stock of all outstanding shares of Preferred Stock upon the closing of
the offering, and (iii) as further adjusted to give effect to the sale by the
Company of the shares of Common Stock being offered by the Company
hereby at an assumed initial public offering price of $ per share and the
receipt of the estimated net proceeds therefrom. This table should be read in
conjunction with the Financial Statements, including the Notes thereto, and
"Selected Financial Data" included elsewhere herein.
<TABLE>
<CAPTION>
AS OF JUNE 30, 1997
------------------------
PRO AS
ACTUAL FORMA ADJUSTED
------- ------- --------
(IN THOUSANDS, EXCEPT
SHARE DATA)
<S> <C> <C> <C>
Shareholders' equity:
Preferred Stock, no par value; 14,225,000 shares au-
thorized, actual; 5,000,000 shares authorized, pro
forma and as adjusted:
Series A Preferred Stock, 5,200,000 shares
designated, issued and outstanding, actual; none
designated, issued and outstanding, pro forma and as
adjusted............................................ $ 2,588 $ -- $ --
Series B Preferred Stock, 2,150,000 shares
designated, issued and outstanding, actual; none
designated, issued and outstanding, pro forma and as
adjusted............................................ 2,137 -- --
Series C Preferred Stock, 1,875,000 shares
designated, issued and outstanding, actual; none
designated, issued and outstanding, pro forma and as
adjusted............................................ 2,992 -- --
Common Stock, no par value; 30,000,000 shares
authorized; 2,345,951 shares outstanding, actual;
6,958,451 shares outstanding, pro forma;
shares outstanding , as adjusted(1)............. 201 7,918
Retained earnings.................................... 8,877 8,877 8,877
------- ------- ------
Total shareholders' equity........................ 16,795 16,795
------- ------- ------
Total capitalization............................ $16,795 $16,795 $
======= ======= ======
</TABLE>
- --------
(1) Excludes 1,196,615 shares subject to outstanding options and 1,607,275
shares available for future issuance under the Company's 1990 Stock Option
Plan and 1995 Stock Option Plan and 300,000 shares available for future
issuance under the Company's 1997 Employee Stock Purchase Plan. See
"Management -- Stock Plans" and Note 6 of Notes to Financial Statements.
15
<PAGE>
DILUTION
The pro forma net tangible book value of the Company as of June 30, 1997 was
approximately $16,795,000, or $2.41 per share. Pro forma net tangible book
value per share represents the amount of the Company's shareholders' equity
divided by 6,958,451 shares of Common Stock outstanding at June 30, 1997,
assuming the conversion of all outstanding shares of Preferred Stock into
Common Stock. Pro forma net tangible book value dilution per share represents
the difference between the amount per share paid by purchasers of shares of
Common Stock in this offering and the pro forma net tangible book value per
share of Common Stock immediately after completion of the offering. After
giving effect to the sale by the Company of shares of Common Stock
offered by the Company hereby at an assumed initial public offering price of
$ per share, and the receipt of the estimated net proceeds therefrom, the
pro forma net tangible book value of the Company as of June 30, 1997 would
have been approximately $ , or $ per share. This represents an
immediate increase in pro forma net tangible book value of $ per share to
existing shareholders and an immediate dilution in pro forma net tangible book
value of $ per share to the purchasers of Common Stock in the offering, as
illustrated in the following table:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share................... $
Pro forma net tangible book value per share as of June 30, 1997. $2.41
Increase in pro forma net tangible book value attributable to
new investors ................................................. --
Pro forma net tangible book value per share after offering........
------
Dilution per share to new investors............................... $
======
</TABLE>
The following table sets forth, on a pro forma basis as of June 30, 1997,
the difference between the existing shareholders and the purchasers of shares
in the offering (at an assumed initial public offering price of $ per
share) with respect to the number of shares purchased from the Company, the
total consideration paid and the average price per share paid:
<TABLE>
<CAPTION>
TOTAL
SHARES PURCHASED CONSIDERATION
----------------- ------------------ AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ---------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing shareholders(1)..... 6,958,451 % $7,918,000 % $1.14
New investors................ % %
--------- ----- ---------- -----
Total...................... 100.0% $ 100.0%
========= ===== ========== =====
</TABLE>
- --------
(1) Sales by the Selling Shareholders in this offering will reduce the number
of shares held by existing shareholders as of June 30, 1997 to ,
or % ( % if the over-allotment option is exercised in full), and
will increase the number of shares held by new investors to , or
% ( , or % if the over-allotment option is exercised in
full), of the total number of shares of Common Stock outstanding after
this offering. See "Principal and Selling Shareholders."
At June 30, 1997, there were outstanding stock options to purchase an
aggregate of 1,196,615 shares of Common Stock at a weighted average exercise
price of $1.70 per share. To the extent that these options are exercised,
there will be further dilution to new investors.
16
<PAGE>
SELECTED FINANCIAL DATA
The following selected financial data of the Company is qualified by
reference to and should be read in conjunction with the Financial Statements,
including the Notes thereto, and Management's Discussion and Analysis of
Financial Condition and Results of Operations included elsewhere herein. The
Statement of Income Data for each of the years in the three-year period ended
June 30, 1997 and the Balance Sheet Data as of June 30, 1996 and 1997 are
derived from, and are qualified by reference to, the Financial Statements
included elsewhere in this Prospectus, which have been audited by Deloitte &
Touche LLP, independent accountants, whose report with respect thereto appears
elsewhere in this Prospectus. The Statement of Income Data for the years ended
June 30, 1993 and 1994 and the Balance Sheet Data as of June 30, 1993, 1994
and 1995 are derived from audited financial statements not included herein.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30,
-----------------------------------------
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net revenues......................... $6,284 $18,886 $22,732 $41,174 $33,166
Cost of revenues..................... 3,301 11,008 12,873 22,797 20,986
------ ------- ------- ------- -------
Gross profit....................... 2,983 7,878 9,859 18,377 12,180
Operating expenses:
Research and development........... 1,167 2,303 2,942 4,414 4,187
Selling, general and
administrative.................... 1,449 3,143 4,038 6,471 5,989
------ ------- ------- ------- -------
Total operating expenses......... 2,616 5,446 6,980 10,885 10,176
------ ------- ------- ------- -------
Income from operations............... 367 2,432 2,879 7,492 2,004
Other income (expense), net.......... (33) 106 144 (50) 351
------ ------- ------- ------- -------
Income before income taxes........... 334 2,538 3,023 7,442 2,355
Provision (credit) for income taxes.. 1 (6) 982 2,732 777
------ ------- ------- ------- -------
Net income........................... $ 333 $ 2,544 $ 2,041 $ 4,710 $ 1,578
====== ======= ======= ======= =======
Net income per common and equivalent
share............................... $ 0.05 $ 0.33 $ 0.26 $ 0.57 $ 0.20
====== ======= ======= ======= =======
Shares used in computing per share
data (1)............................ 6,599 7,657 7,936 8,230 8,053
====== ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
AS OF JUNE 30,
--------------------------------------
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
BALANCE SHEET DATA:
<S> <C> <C> <C> <C> <C>
Working capital.......................... $2,115 $ 6,625 $ 7,999 $12,145 $12,984
Total assets............................. 4,458 10,054 14,483 19,820 23,581
Long-term obligations.................... 123 -- -- -- --
Shareholders' equity..................... 2,742 8,294 10,352 15,095 16,795
</TABLE>
- --------
(1) See Note 1 of Notes to Financial Statements for an explanation of the
method used to determine the number of shares used in computing net income
per common and equivalent share.
17
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
The Company, founded in June 1990, designs, develops and markets high-
performance interface ICs for the transfer, routing and timing of signals
within electronic systems. The Company's first volume sales occurred in fiscal
1993 and consisted exclusively of 5-volt 8-bit interface logic circuits. The
Company expanded its product offering by introducing 3.3-volt 16-bit logic
circuits, 8-bit digital switches in fiscal 1994; clock generators, 3.3-volt
clock synthesizers and buffers, and high-speed interface products for the
networking industry in fiscal 1995; 32-bit logic, 16-bit digital switches and
Pentium, 56K modem and laser printer clocks in fiscal 1996; and an analog
switch family, mixed-voltage logic, a family of clock generators and a
FastEthernet transceiver in fiscal 1997.
The Company completed its first profitable fiscal year on June 30, 1993 and
has been profitable in each of its last eighteen quarters. Beginning late in
calendar 1995 and continuing into calendar 1997, the Company experienced a
significant decrease in the selling prices of many of its products, which had
a material adverse effect on the Company's net revenues and overall gross
margins. This decrease in selling prices was attributable primarily to a
significant downward trend in pricing experienced in the semiconductor
industry and by the Company and was not fully offset by cost reductions. The
decrease in net revenues and gross margins was also attributable to reduced
sales to two customers, Apple Computer, Inc. ("Apple") and American Computer &
Digital Components, Inc. ("ACDC"), which had previously accounted for
substantial sales of certain of the Company's higher margin products. In
addition, in the fourth quarter of fiscal 1997, the Company made significant
shipments to Harris under a private label resale program, which had lower
gross margins. Sales to Harris are not expected to continue at the level
achieved in that quarter. The Company's operating results are influenced by a
wide variety of factors that could materially and adversely affect net
revenues and results of operations. See "Risk Factors --Limited Operating
History; Potential Fluctuations in Operating Results."
As is typical in the semiconductor industry, the Company expects selling
prices for its products to decline over the life of each product. The
Company's ability to increase net revenues is highly dependent upon its
ability to increase unit sales volumes of existing products and to introduce
and sell new products in quantities sufficient to compensate for the
anticipated declines in selling prices of existing products. The Company seeks
to increase unit sales volume through increased wafer fabrication capacity
allocations from its existing foundries, qualification of new foundries,
increase the number of die per wafer through die size reductions and improve
yields of good die through the implementation of advanced process
technologies, but there can be no assurance that the Company will be
successful in these efforts. In fiscal 1996 and 1997, approximately 90% of the
wafers for the Company's semiconductor products were manufactured by
Chartered. The Company qualified AMS as a wafer supplier in fiscal 1991, NJRC
in fiscal 1995 and TSMC in fiscal 1997, and the Company is currently
qualifying LG as an additional foundry supplier. The Company believes that it
will receive an increasing portion of its wafer requirements from TSMC and LG
in the future. See "Risk Factors -- Dependence on Independent Wafer
Foundries."
Declining selling prices will adversely affect gross margins unless the
Company is able to offset such declines with the sale of new higher margin
products or achieve commensurate reductions in unit costs. The Company seeks
to improve its overall gross margin through the development and introduction
of selected new products that the Company believes will ultimately achieve
higher gross margins. A higher gross margin for a new product is typically not
achieved until some period after the initial introduction of the product --
\after start-up expenses for that product have been incurred and once volume
production of the product begins. In general, costs are higher at the
introduction of a new product due to the use of a more generalized design
schematic, lower economies of scale in the assembly phase and lower die yield.
The Company's ability to decrease unit cost depends on its ability to shrink
the die sizes of its products, improve yields, obtain favorable subcontractor
pricing, and make in-house test and assembly operations more productive and
efficient. There can be no assurance that these efforts, even if successful,
will be sufficient to offset declining selling prices.
18
<PAGE>
Revenue from product sales is recognized upon shipment. Estimated costs for
exchanges, returns, price protection and other concessions are accrued in the
period that sales are recognized. Although the Company believes that, to date,
it has provided adequate allowances for exchanges, returns, price protection
and other concessions, there can be no assurance that actual amounts incurred
will not exceed the Company's allowances, particularly in connection with the
introduction of new products, enhancements to existing products or price
reductions. See "Risk Factors -- Reliance on Distributors; Product Returns."
RESULTS OF OPERATIONS
The following table sets forth certain statement of income data as a
percentage of net revenues for the periods indicated.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
JUNE 30,
-------------------
1995 1996 1997
----- ----- -----
<S> <C> <C> <C>
Net revenues............................................... 100.0% 100.0% 100.0%
Cost of revenues........................................... 56.6 55.4 63.3
----- ----- -----
Gross margin.............................................. 43.4 44.6 36.7
Operating expenses:
Research and development................................. 12.9 10.7 12.6
Selling, general and administrative...................... 17.8 15.7 18.1
----- ----- -----
Total operating expenses............................... 30.7 26.4 30.7
----- ----- -----
Income from operations..................................... 12.7 18.2 6.0
Other income (expense), net................................ 0.6 (0.1) 1.1
----- ----- -----
Income before income taxes................................. 13.3 18.1 7.1
Provision for income taxes................................. 4.3 6.6 2.3
----- ----- -----
Net income................................................. 9.0% 11.5% 4.8%
===== ===== =====
</TABLE>
COMPARISON OF FISCAL 1995, 1996 AND 1997
NET REVENUES. Net revenues consist primarily of product sales, which are
recognized at time of shipment, less an estimate for returns and other
allowances as discussed above. Net revenues increased 81% from $22.7 million
in fiscal 1995 to $41.2 million in fiscal 1996. The increase in net revenues
in fiscal 1996 was primarily attributable to the Company's 16-bit logic family
introduced in fiscal 1995, which accounted for 42% of net revenues in fiscal
1996 up from 19% of net revenues in fiscal 1995. Net revenues decreased 19%
from $41.2 million in fiscal 1996 to $33.2 million in fiscal 1997. This
decrease was primarily attributable to the significant downward trend in
pricing experienced by the semiconductor industry and the Company in late
fiscal 1996 through fiscal 1997. A 30% increase in the number of units shipped
in 1997 compared to 1996 was not sufficient to offset a 36% decline in selling
prices experienced by the Company in 1997. In addition, sales to two of the
Company's principal customers decreased significantly in fiscal 1997. Apple,
which accounted for 20% of the Company's net revenues in fiscal 1996,
curtailed a number of programs and, as a result, significantly reduced its
purchases of the Company's products. ACDC, a chip module supplier which
accounted for 8% of the Company's net revenues in fiscal 1996, experienced a
downturn in its business and reduced its purchases of integrated circuits from
a number of suppliers, including the Company. ACDC has not purchased any
products from the Company since the fourth quarter of 1996. In the fourth
quarter of fiscal 1997, sales to Harris totaled $3.1 million, compared to an
average of $0.8 million in each of the three previous fiscal quarters. Sales
to Harris in future periods are not expected to continue at the level achieved
in the fourth quarter of fiscal 1997.
19
<PAGE>
GROSS PROFIT. Gross profit increased 86% from $9.9 million in fiscal 1995 to
$18.4 million in fiscal 1996. Gross profit as a percentage of net revenues, or
gross margin, increased from 43.4% in fiscal 1995 to 44.6% in fiscal 1996.
These increases were primarily due to changes in product mix, as well as cost
reductions, which were achieved primarily through lower per unit assembly and
test costs attributable to volume production economies and increased die per
wafer resulting from reduced design geometries. Gross profit decreased 34%
from $18.4 million in fiscal 1996 to $12.2 million in fiscal 1997. Gross
margin decreased from 44.6% in fiscal 1996 to 36.7% in fiscal 1997. These
decreases were primarily the result of the significant downward trend in
pricing experienced by the semiconductor industry and the Company in late
fiscal 1996 through fiscal 1997 that was not fully offset by cost reductions,
as well as the significant decrease in high-margin sales to Apple and ACDC and
significant shipments in fiscal 1997 of the Company's products to Harris under
a private label resale program which had lower margins.
RESEARCH AND DEVELOPMENT. Research and development expenses increased 52%
from $2.9 million in fiscal 1995 to $4.4 million in fiscal 1996, but decreased
as a percentage of net revenues from 12.9% in fiscal 1995 to 10.7% in fiscal
1996. The increase in expense was primarily due to an expansion of the
Company's engineering staff, additional depreciation expense for new design
hardware and software, increased mask expenses and additional legal expenses
associated with patent and other intellectual property rights. Research and
development expenses decreased 5% from $4.4 million in fiscal 1996 to $4.2
million in fiscal 1997 but increased as a percentage of net revenues from
10.7% in fiscal 1996 to 12.6% in fiscal 1997. The decrease in research and
development expense was due primarily to reduced legal expenses associated
with patent and other intellectual property rights and reduced mask expenses.
Research and development expenses increased as a percentage of net revenues
from fiscal 1996 to fiscal 1997 due to the decrease in net revenues in that
period, as well as the Company's commitment to continued product development
efforts.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
expenses increased 63% from $4.0 million in fiscal 1995 to $6.5 million in
fiscal 1996, but decreased as a percentage of net revenues from 17.8% in
fiscal 1995 to 15.7% in fiscal 1996. The increase in expenses was primarily
due to increased staffing levels, particularly in sales and marketing, as well
as increased commission expense due to higher sales levels. Selling, general
and administrative expenses decreased 8% from $6.5 million in fiscal 1996 to
$6.0 million in fiscal 1997, but increased as a percentage of net revenues
from 15.7% in fiscal 1996 to 18.1% in fiscal 1997 due to the lower net
revenues recorded in fiscal 1997. The decrease in expenses was primarily due
to reduced expenses resulting from lower net revenues in fiscal 1997 compared
to fiscal 1996.
OTHER INCOME (EXPENSE), NET. Other income (expense), net includes interest
income and expense and the Company's allocated portion of net losses of
Pericom Technology, Inc., a British Virgin Islands corporation based in
Shanghai, People's Republic of China ("PTI"). PTI was formed by Pericom and
certain Pericom shareholders in 1994 to develop and market semiconductors in
China and certain other Asian countries. See Note 4 of Notes to Financial
Statements. Other income (expense), net decreased from income of $144,000 in
fiscal 1995 to an expense of $50,000 in fiscal 1996 due to the one-time write-
off in fiscal 1996 of $382,000 in costs associated with the Company's proposed
initial public offering, which was not consummated, partially offset by a
$199,000 increase in interest income from the investment of the Company's
cash. Other income (expense), net increased from an expense of $50,000 in
fiscal 1996 to income of $351,000 in fiscal 1997 interest earned on cash
balances in fiscal 1997 and the fact that fiscal 1996 included costs
associated with the initial public offering that was not consummated.
PROVISION FOR INCOME TAXES. The provision for income taxes was $982,000,
$2,732,000 and $777,000 in fiscal 1995, 1996 and 1997, respectively. In each
of these fiscal years, the provision for income taxes differed from the
federal statutory rate primarily due to state income taxes and the utilization
of research and experimentation tax credits.
20
<PAGE>
QUARTERLY RESULTS OF OPERATIONS
The following tables present certain unaudited quarterly results in dollars
and as a percentage of net revenues for fiscal 1996 and 1997. The Company
believes that all necessary adjustments, consisting only of normal recurring
accruals, have been included in the amounts stated below to present fairly the
selected quarterly information when read in conjunction with the Financial
Statements, including the Notes thereto, included elsewhere herein. The
results of operations for any quarter are not necessarily indicative of
results that may be expected for any subsequent periods.
<TABLE>
<CAPTION>
FISCAL 1996 QUARTER ENDED FISCAL 1997 QUARTER ENDED
-------------------------------------- ------------------------------------
SEPT. 30, DEC. 31, MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31, JUNE 30,
1995 1995 1996 1996 1996 1996 1997 1997
STATEMENT OF INCOME DATA: --------- -------- -------- -------- --------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenues.............. $9,776 $11,553 $11,359 $8,486 $6,601 $7,300 $8,008 $11,257
Cost of revenues.......... 5,377 6,147 6,197 5,076 3,996 4,676 5,017 7,297
------ ------- ------- ------ ------ ------ ------ -------
Gross profit.............. 4,399 5,406 5,162 3,410 2,605 2,624 2,991 3,960
Operating expenses:
Research and development. 974 1,175 1,159 1,106 986 989 1,078 1,134
Selling, general and
administrative.......... 1,563 1,684 1,737 1,487 1,448 1,407 1,497 1,637
------ ------- ------- ------ ------ ------ ------ -------
Total operating
expenses............... 2,537 2,859 2,896 2,593 2,434 2,396 2,575 2,771
------ ------- ------- ------ ------ ------ ------ -------
Income from operations.... 1,862 2,547 2,266 817 171 228 416 1,189
Other income (expense),
net...................... 58 110 (296) 78 105 75 90 81
------ ------- ------- ------ ------ ------ ------ -------
Income before income
taxes.................... 1,920 2,657 1,970 895 276 303 506 1,270
Provision for income
taxes.................... 720 996 739 277 91 100 167 419
------ ------- ------- ------ ------ ------ ------ -------
Net income................ $1,200 $ 1,661 $ 1,231 $ 618 $ 185 $ 203 $ 339 $ 851
====== ======= ======= ====== ====== ====== ====== =======
Net income per common and
equivalent share......... $ 0.15 $ 0.20 $ 0.15 $ 0.07 $ 0.02 $ 0.03 $ 0.04 $ 0.11
====== ======= ======= ====== ====== ====== ====== =======
Shares used in computing
per share data........... 8,057 8,325 8,289 8,248 8,185 8,073 8,005 7,948
====== ======= ======= ====== ====== ====== ====== =======
<CAPTION>
FISCAL 1996 QUARTER ENDED FISCAL 1997 QUARTER ENDED
-------------------------------------- ------------------------------------
SEPT. 30, DEC. 31, MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31, JUNE 30,
1995 1995 1996 1996 1996 1996 1997 1997
AS A PERCENTAGE OF NET REVENUES: --------- -------- -------- -------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenues.............. 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of revenues.......... 55.0 53.2 54.6 59.8 60.5 64.1 62.6 64.8
------ ------- ------- ------ ------ ------ ------ -------
Gross margin............. 45.0 46.8 45.4 40.2 39.5 35.9 37.4 35.2
Operating expenses:
Research and development. 10.0 10.2 10.2 13.0 15.0 13.5 13.5 10.1
Selling, general and
administrative.......... 16.0 14.6 15.3 17.5 21.9 19.3 18.7 14.5
------ ------- ------- ------ ------ ------ ------ -------
Total operating
expenses............... 26.0 24.8 25.5 30.5 36.9 32.8 32.2 24.6
------ ------- ------- ------ ------ ------ ------ -------
Income from operations.... 19.0 22.0 19.9 9.7 2.6 3.1 5.2 10.6
Other income (expense),
net...................... 0.6 1.0 (2.6) 0.9 1.6 1.0 1.1 0.7
------ ------- ------- ------ ------ ------ ------ -------
Income before income
taxes.................... 19.6 23.0 17.3 10.6 4.2 4.1 6.3 11.3
Provision for income
taxes.................... 7.4 8.6 6.5 3.3 1.4 1.3 2.1 3.7
------ ------- ------- ------ ------ ------ ------ -------
Net income................ 12.2% 14.4% 10.8% 7.3% 2.8% 2.8% 4.2% 7.6%
====== ======= ======= ====== ====== ====== ====== =======
</TABLE>
The Company has a limited history of operations, having shipped its first
products in volume in fiscal 1993. There can be no assurance that any past
levels of revenue growth or profitability can be sustained on a quarterly or
annual basis. The Company's expense levels are based in part on anticipated
future revenue levels, which can
21
<PAGE>
be difficult to predict. The Company's business is characterized by short-term
orders and shipment schedules. The Company does not have long-term purchase
agreements with any of its customers, and customers can typically cancel or
reschedule their orders without significant penalty. The Company typically
plans its production and inventory levels based on a combination of external
and internal forecasts of customer demand. If net revenues fall significantly
below anticipated levels, the Company's business and results of operations
would be materially and adversely affected.
The Company's future operating results may fluctuate as a result of a number
of additional factors, including a decline in the gross margins of its
products, the growth or reduction in the size of the market for interface
circuits, delay or decline in orders received from distributors, the
availability of manufacturing capacity with the Company's wafer suppliers,
changes in product mix, customer acceptance of the Company's new products, the
ability of customers to make payments to the Company, the timing of new
product introductions and announcements by the Company and its competitors,
increased research and development expenses associated with new product
introductions or process changes, expenses incurred in obtaining and
enforcing, and in defending claims with respect to, intellectual property
rights, changes in manufacturing costs and fluctuations in manufacturing
yields, and other factors such as general conditions in the semiconductor
industry. See "Risk Factors -- Limited Operating History; Potential
Fluctuations in Operating Results and "Risk Factors -- Semiconductor Industry
Risks."
NET REVENUES. The Company's net revenues have fluctuated over the last eight
quarters from a low of $6.6 million in the first quarter of fiscal 1997 to a
high of $11.6 million in the second quarter of fiscal 1996. Beginning with the
third quarter of fiscal 1996, the Company's net revenues declined for three
consecutive quarters. This decrease was primarily attributable to the
significant downward trend in pricing experienced by the semiconductor
industry and the Company in late fiscal 1996 through fiscal 1997. Reduced
sales to Apple and ACDC beginning in the last quarter of fiscal 1996, combined
with this general downturn in the semiconductor industry, caused the Company's
net revenues to decrease significantly beginning in the fourth quarter of
fiscal 1996. Unit shipments declined 7% from the second quarter of fiscal 1996
to the first quarter of fiscal 1997 but increased on a quarterly basis through
the remainder of fiscal 1997. Unit shipments increased 106% from the first
quarter of fiscal 1997 to the fourth quarter of fiscal 1997, and net revenues
grew on a quarterly basis in that period as well. Increased net revenues have
resulted from continued market acceptance of the Company's existing products,
and additions to the Company's SiliconInterface and SiliconSwitch product
lines. In the fourth quarter of fiscal 1997, sales to Harris totaled $3.1
million. Sales to Harris are not expected to continue at this level in future
periods.
GROSS PROFIT. Gross profit and gross margin fluctuated significantly from
quarter to quarter over the last eight quarters. Gross margin ranged from a
low of 35.2% in the fourth quarter of fiscal 1997 to a high of 46.8% in the
second quarter of fiscal 1996. Gross margin was adversely affected by the
significant downward trend in pricing experienced by the semiconductor
industry and the Company in late fiscal 1996 and through fiscal 1997, as well
as the significant decrease in high-margin sales to Apple and ACDC. Cost
reductions achieved by lower per unit assembly and test costs attributable to
volume production economies and increased die per wafer resulting from reduced
design geometries were not sufficient to offset the decline in selling prices
experienced by the Company during most of this time period. After rising in
the third quarter of fiscal 1997 due primarily to cost reductions, gross
margin declined in the fourth quarter of fiscal 1997 as the Company made
significant shipments of its products to Harris under a private label resale
program which has lower gross margins.
OPERATING EXPENSES. Research and development expenses have consistently
ranged from approximately $1.0 million to $1.2 million on a quarterly basis
over the last eight quarters. Research and development expenses are expected
to grow in the future in absolute amounts as the Company intends to increase
resources to develop new products. Selling, general and administrative
expenses fluctuated on a quarterly basis over the last eight quarters,
primarily due to varying levels of sales commissions based on net revenues
during these periods.
22
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Since inception, the Company has used proceeds from the private sale of
equity securities, bank borrowings and internal cash flow to support its
operations, acquire capital equipment and finance inventory and accounts
receivable growth. The Company has raised a total of $7.9 million from the
private sale of equity securities. Operating activities provided approximately
$1.6 million in cash in fiscal 1995, $4.9 million in fiscal 1996 and $2.9
million in fiscal 1997.
The Company made capital expenditures of approximately $1.3 million, $1.4
million and $2.0 million in fiscal 1995, 1996 and 1997, respectively,
primarily for the purchase of test equipment and design and engineering
systems. The Company expects to spend approximately $2.0 million of the net
proceeds of the offering to acquire capital equipment for research and
development and testing in fiscal 1998. See "Use of Proceeds."
As of June 30, 1997, the Company's principal source of liquidity included
cash and cash equivalents of approximately $9.6 million. The Company believes
that cash generated from operations and the net proceeds of the offering will
be sufficient to fund necessary purchases of capital equipment and to provide
working capital at least through the next 12 months. However, there can be no
assurance that future events will not require the Company to seek additional
capital sooner or, if so required, that adequate capital will be available at
all or on terms acceptable to the Company.
23
<PAGE>
BUSINESS
Pericom Semiconductor Corporation (the "Company" or "Pericom") designs,
develops and markets high-performance interface integrated circuits ("ICs")
used in many of today's advanced electronic systems. Interface ICs, such as
interface logic, switches and clock management products, transfer, route and
time electrical signals among a system's microprocessor, memory and various
peripherals and between interconnected systems. High-performance interface
ICs, which enable excellent signal quality, are essential for the full
utilization of the available speed and bandwidth of advanced microprocessors,
memory ICs, LANs and WANs. Pericom focuses on high-growth and-performance
segments of the notebook computing, networking and multimedia markets, in
which advanced system designs require interface ICs with high-speed
performance, reduced power consumption, low voltage operation, small size and
higher levels of integration.
Pericom has combined its extensive design technology and applications
knowledge with its responsiveness to the specific needs of electronic systems
developers to become a leading supplier of interface ICs. The Company has
evolved from one product line in fiscal 1992 to four currently --
SiliconInterface, SiliconSwitch, SiliconClock and SiliconConnect -- with a
goal of providing an increasing breadth of interface IC solutions to its
customers. Pericom currently offers approximately 300 standard products, of
which 80 were introduced during the past twelve months, and is planning to
introduce more than 40 new products during the remainder of calendar 1997. The
Company's customers and end users include 3Com Corporation, Apple Computer,
Inc., Ascend Communications, Inc., Avid Technology, Inc., Cabletron Systems,
Inc., Canon, Inc., Cisco Systems, Inc., Compaq, Digital Equipment Corporation,
Hewlett-Packard Company, Hitachi Ltd., International Business Machines
Corporation, Intel Corporation, Inventec Inc., Smart Modular Technologies
Inc., Soletron Technology Corporation and Toshiba Corporation.
INDUSTRY BACKGROUND
OVERVIEW
The presence of electronic systems and subsystems permeates our everyday
life, as evidenced by the growth of the personal computer, mobile
communications, networking and consumer electronics markets. The growth of
these markets has been driven by systems characterized by ever-improving
performance, flexibility, reliability and multifunctionality, as well as
decreasing size, weight and power consumption. Advances in ICs through
improvements in semiconductor technology have contributed significantly to the
increased performance of, and demand for, electronic systems and to the
increasing presence of ICs as a proportion of overall system cost. This
technological progress has occurred at an accelerating pace, while the cost of
electronic systems has remained steady or declined.
ROLE OF THE INTEGRATED CIRCUIT IN ELECTRONIC SYSTEMS
Performance of electronic systems has benefited significantly from advances
in IC technology, which has fostered innovations in applications such as
notebook computers, networking and multimedia and associated software.
Innovations in these applications have in turn created new opportunities and
challenges that foster further innovations by IC designers. In this way, IC
and application developers have participated in a cyclical process that has
led to shorter product lives, increasing the pressure on system manufacturers
to introduce products with enhanced capabilities and performance while keeping
prices within reach of their target markets. This process in turn is driving
the demand for timely, cost-effective IC solutions.
An electronic system generates and manipulates electrical signals using
three types of ICs: (1) system logic ICs, such as microprocessors and
controllers, which perform arithmetic and logic functions and control specific
system operations; (2) memory ICs, such as DRAMs and EPROMs, which store data
and instructions for future retrieval; and (3) "interface" ICs, such as
interface logic, switches and clock management products, which control the
transfer, routing and timing of data. Data is retrieved from the memory and is
received from various system peripherals, such as a keyboard, mouse, modem,
scanner, microphone or camera, and from network interface cards. Data is
manipulated by the microprocessor in accordance with its arithmetic and logic
functions to produce the desired output, which the microprocessor communicates
to the memory and various output devices, such as printers, video display
terminals, modems, speakers and network interface cards. In this environment,
data travels in the form of electrical signals, which convey information in
the form of rising and falling voltage levels.
24
<PAGE>
In order to efficiently move data from the input devices and memory to the
microprocessor and from the microprocessor to memory and output devices, the
electrical signals must be precisely timed, synchronized, transmitted and
routed by a variety of interface ICs. For example, interface logic and bus
switches are used to transfer and route data between system logic ICs and
memory within the system and between systems. Analog switches are used to
transfer and route signals such as video and audio signals. Clock management
ICs are used to generate, buffer and distribute precise timing signals that
are required to synchronize the operation of different system logic and memory
ICs. Network transceivers are used to transmit and receive data packets
between different network nodes. Without a very high degree of precision in
the transfer, routing and timing of electrical signals, the system will either
operate at a degraded performance level or crash.
Whereas system logic and memory ICs consist entirely of digital circuits,
interface ICs can consist of digital circuits, analog circuits, or mixed
digital and analog ("mixed-signal") circuits. Digital circuits process
discrete electrical signals in a binary format, i.e., as either a "1" or a
"0," typically represented by different voltage levels. Analog circuits
process continuous electrical signals that vary over a specified operating
range, performing such functions as amplification and transmission. Mixed-
signal circuits process both digital and analog signals on a single IC to
achieve higher levels of integration and enhanced performance. Increasingly,
interface circuits are combining both analog and digital circuitry to achieve
better IC performance. The development of these mixed-signal ICs incorporates
a level of circuit design complexity which presents significant development
challenges, requiring a high level of design expertise.
PERFORMANCE CHALLENGES
The development of high-performance personal computers, the requirement for
higher network performance and the increased level of connectivity among
different types of electronic devices have driven the demand for high-speed,
high-performance interface circuits to handle the transfer, routing and timing
of digital and analog signals at high speeds with minimal loss of signal
quality. High-speed signal transfer is essential to fully utilize the speed
and bandwidth of the microprocessor, the memory and the LAN or WAN. High
signal quality is equally essential to achieve optimal balance between high
data transmission rates and reliable system operation. Market requirements for
interface circuits are driven by the same market pressures as those imposed on
microprocessors, including higher speed, reduced power consumption, lower
voltage operation, smaller size and higher levels of integration.
The problems associated with signal quality that must be addressed by the
interface ICs are magnified by increases in the speeds at which interface ICs
must transfer, route and time electrical signals, the number of interconnected
devices that send or receive signals and the variety of types of signals
processed by the interface ICs. The most significant performance challenges
faced by designers of interface ICs are the requirements to transfer signals
at high speed with low propagation delay, minimize signal degradation caused
by "noise," "jitter," and "skew" and reduce electromagnetic interference
("EMI"). Minimizing propagation delay sources of signal degradation and
interference is needed to enable today's state-of-the-art electronic systems
to function.
Propagation Delay. Propagation delay refers to the time it takes to
transfer an electrical signal from a source to a destination (e.g., from
the microprocessor to the memory). Such transmission time depends on the
strength of the transmitted signal, length of the signal path and the
electrical load. Long propagation delays create signal transfer bottlenecks
and cause a system to run slower.
Noise. Noise refers to electrical interference among a system's
components, which can distort, mask or weaken the intended signal.
Excessive noise causes poor signal quality and loss of signal fidelity,
misinterpretation of transmitted data (such as mistaking a "1" for a "0" as
a result of a distorted voltage level) and potential system malfunctions.
The tendency of a system to produce this kind of interference has grown as
circuit operating frequencies have increased and additional functions are
integrated into the system.
Jitter. Jitter refers to the inevitable random fluctuations in the
frequency and phase of signals. Excess jitter in a signal can cause a loss
of data or a system crash. As advanced microprocessors, memories and
certain interface ICs are designed to tighter tolerances, they require
clock sources with an increasingly
25
<PAGE>
precise frequency range to achieve reliable operation. For example, a
microprocessor designed to operate at 200 MHz needs a very precise clock
timing source within a range of plus or minus one ten-billionth of a second
between adjacent clock cycles.
Skew. Skew refers to a failure of two or more given signals to properly
synchronize their arrival at a designated place in the IC or system for
reasons such as varying lengths and electrical loads of signal paths on the
system board or within the interconnects inside the ICs. The need to wait
for all signals to arrive before a function can be performed results in
added delay and lower system performance. As advanced systems operate at
higher frequencies and shorter cycle times, the acceptable amount of skew
has been decreasing.
Electromagnetic Interference. EMI refers to emissions from electronic
systems that generate noise and cause interference with other systems. As
these systems operate at increasingly higher frequencies, EMI emissions are
increasing and the systems are becoming more sensitive to such emissions.
This increasing sensitivity to EMI has prompted government agencies in
various countries, such as the FCC in the United States, to force the
continued reduction in EMI emissions coming from home and office
electronics systems. Compliance with ever more stringent governmental
standards worldwide for EMI has made the reduction in EMI essential in
order for systems to be certified by appropriate government agencies.
Pericom believes that several major market trends will make reliable
operations of systems at high frequency and high data transfer rates even more
challenging in the future. Multimedia and high-performance network applications
will continue to push for more data bandwidth on system bus and across system
boundaries. Computer and networking system clock frequencies will continue to
increase at a very rapid rate, shortening the time available to perform data
transfers. While the data transfer rate is expected to increase several fold
within the next few years, the continuing desire for higher system reliability
with minimal system downtime will create increasing pressure to achieve lower
data error rates. Governmental agencies are imposing increasingly stringent
restrictions on EMI emissions, compelling system designers to develop and
implement new ways to further reduce these emissions. These factors all
increase the need for very high-speed interface circuits with outstanding
performance specifications.
Pericom also believes that electronic systems designers and OEMs are
increasingly requiring solutions to the technical challenges described above in
order to take advantage of continuing speed and performance enhancements in
microprocessor and memory ICs. These customers are also continuing to migrate
from single-part vendors to suppliers who can provide multiple parts for their
systems, both to reduce the number of vendors they must deal with and to
address interoperability requirements among the interface ICs within the
system. Due to the short design times and product life cycles these customers
face for their own products, they are requiring rapid response time and part
availability from interface IC vendors. Interface IC vendors are further
required to accomplish these tasks in a cost-effective manner that flexibly
responds to specific customer needs.
THE PERICOM SOLUTION
Pericom has combined its extensive signal transfer, routing and timing
technology with its responsiveness to the specific needs of electronic systems
developers to become a leading supplier of interface ICs. While Pericom's
products address a wide spectrum of applications, Pericom primarily devotes its
resources to responding to the requirements of the OEM customer base in its
target markets. Pericom currently offers approximately 300 standard products,
of which 80 were introduced during the past twelve months, and is planning to
introduce more than 40 new products during the remainder of calendar 1997.
EXTENSIVE TECHNOLOGY UTILIZATION. Since its founding in 1990, Pericom has
developed and continuously refined a modular design methodology that enables it
to rapidly introduce proprietary and leading-performance products. Central to
this methodology is Pericom's library of digital and analog functions composed
of many high performance macrocells, several of which are patented, such as
mixed-voltage input/output cells, a digital and analog PLL and a charge pump,
as well as numerous core functions, many of which are not available in
26
<PAGE>
commercial ASIC libraries. The Company utilizes various digital cells, analog
cells and sea-of-gates arrays to rapidly design interface ICs optimized for
power, density, performance and manufacturability, while addressing the market
requirements for short propagation delay, low noise and jitter, minimal skew
and reduced EMI emissions. The Company's design methodology utilizes common
mask sets from which multiple designs can be developed, resulting in rapid
product introductions, lower development costs and fast response to volume
requirements at competitive pricing.
CUSTOMER RESPONSIVENESS. With a primary focus on three rapidly-growing
markets, Pericom has been able to work with leading designers of notebook
computing, networking and multimedia systems to develop products integral to
their designs. Pericom's approach is to provide its customers with extensive
solutions to their signal transfer, routing and timing needs, which has
allowed Pericom to become an important supplier to them, rather than only a
specific part provider. The Company endeavors to work with its customers at
the product specification stage, keeping abreast of system logic and memory
performance enhancements in order to anticipate the engineering challenges
interface ICs will face and thereby shorten customers' system development
cycle times. While Pericom can typically satisfy a customer need with one of
its standard designs, Pericom's design methodology can enable the design and
delivery of a derivative product solution in as little as four to six weeks to
meet that need.
THE PERICOM STRATEGY
Pericom is a market-driven supplier of high-performance digital, analog and
mixed-signal ICs, focusing on providing superior solutions for the transfer,
routing and timing of high speed electrical signals. Utilizing the Company's
design expertise, advanced CMOS and other process technologies and
collaborative relationships with leading wafer foundries, the Company aims to
expeditiously deliver superior solutions to its customers, with the objective
of becoming the acknowledged leader in providing interface ICs that are both
state-of-the-art and cost-effective. Key elements of the Company's strategy
for achieving this objective are:
MARKET FOCUS. Pericom's market strategy is to focus on the high-growth,
high-performance segments of the computing and networking markets and emerging
opportunities in multimedia. Currently, the Company designs and sells products
for specific high-volume applications within these target markets, including
notebook computers, LAN and WAN switches, routers and hubs, and multimedia
switches. The Company's customers include a number of leading OEMs in each
market: Acer, Compaq, Dell, Hitachi and IBM in the notebook market; 3COM,
Ascend Communications, Cabletron Systems, Cisco Systems, Hewlett-Packard and
Samsung in the network equipment market; and Acer, Avid, Diamond Multimedias
STB Systems and Trident Microsystems in the multimedia applications market.
Pericom intends to pursue new opportunities in these markets where its rapid-
cycle IC design and development expertise and understanding of the product
evolution of its customers enable Pericom to become the leading solution
supplier.
CUSTOMER FOCUS. Pericom's customer strategy is to use a superior level of
responsiveness to customer needs to continually expand its customer base and
further penetrate its existing customers. Key elements of the Company's
customer strategy are:
. Penetrate target accounts with appropriate business solutions. The
Company approaches prospective customers primarily by working with their
system design engineers at the product specification stage with the goal
that one or more Pericom ICs will be incorporated into a new system
design. Pericom's understanding of its customers' requirements combined
with its ability to develop and deliver reliable, high performance
products within its customers' product introduction schedules has enabled
Pericom to establish strong relationships with several leading OEMs.
. Solidify customer relationships through superior responsiveness. Pericom
believes that its customer service orientation is a significant
competitive advantage. Pericom seeks to maintain short product lead times
and provide its customers with excellent delivery-to-schedule
performance, in part by having available adequate finished goods
inventory for anticipated customer demands. Pericom puts heavy emphasis
on product quality and maintaining very competitive defect levels for its
products. Pericom has been ISO-9001 certified since April 1995. The
Company is flexible in responding to its customers'
27
<PAGE>
changing requirements, rescheduling deliveries if necessary or developing a
new derivative product, typically in four to six weeks, should a customer's
revised system design require modified performance features. The Company
regularly enhances the performance of its product lines through innovation
and seeks to offer products and implementation solutions at the lowest
achievable costs.
. Expand customer relationships through broad-based solutions. Pericom aims
to grow its business with existing customers by offering a product line
that provides an increasingly extensive solution for their signal
transfer, routing and timing needs. Pericom believes that suppliers with
the broadest offerings of high performance, reliable, cost-effective and
dependably delivered products are enjoying increasing competitive
advantages as customers continue to seek reductions in their vendor
counts. By providing its customers with superior vendor support in
existing programs and anticipating its customers' needs in next-
generation products, Pericom has often been able to substantially
increase its overall volume of business with those customers. With its
larger customers Pericom has also initiated EDI and remote warehousing
programs, annual purchase and supply programs, joint development projects
and other services intended to enhance the Company's position as a key
vendor.
TECHNOLOGY FOCUS. Pericom's technology strategy is to maintain its leading
position in the development of new, higher performance interface ICs by
continuing to design additional core cells that address the more challenging
problems of signal interface as electronic systems become faster and require
lower power and voltages. Pericom's primary efforts are in the creation of
additional proprietary digital, analog and mixed-signal functionalities.
Pericom is working closely with its wafer foundry partners to incorporate
their advanced CMOS process technologies to improve its ability to introduce
next generation products expeditiously. Pericom intends to expand its patent
portfolio with the goal of providing increasingly proprietary product lines.
MANUFACTURING FOCUS. The Company's manufacturing strategy is closely
integrated with its focus on customer needs. Central to this strategy is the
Company's intent to support high volume shipment requirements on short notice
from customers. Pericom designs its products for manufacturability, to enable
it to manufacture any one of many different ICs from a single partially-
processed wafer. Accordingly, the Company keeps inventory in the form of wafer
banks, from which wafers can be completed to produce a variety of specific ICs
in two to four weeks. This approach has enabled the Company to reduce its
overall work-in-process inventory while providing increased availability for a
single product. In addition, the Company keeps some inventory in the form of
die banks, which can become finished product in two weeks or less. To ensure
adequate, timely supply, the Company has established relationships with two
leading foundries, Chartered and TSMC, is qualifying LG as a third, and is
maintaining its relationships with AMS and NJRC for certain products which are
manufactured in BiCMOS or high voltage CMOS processes.
STRATEGIC AND COLLABORATIVE RELATIONSHIPS FOCUS. Pericom pursues a strategy
of entering into new relationships and expanding existing relationships with
companies in the product design, manufacturing and marketing of integrated
circuits. The Company believes that these relationships have enabled it to
access additional design and application expertise, accelerate product
introductions, reduce costs and obtain additional needed capacity. In product
design, the Company has engaged PTI, an affiliated company, and certain design
houses to develop interface ICs as a means of rapidly expanding the Company's
product portfolio. Pericom has established collaborative relationships with
leading foundries capable not only of providing adequate capacity and advanced
process migration paths, but which also have digital core libraries of
sufficiently high performance to be utilized in the Company's future products.
In February 1996, the Company entered into a private label resale program with
Harris, under which Harris buys certain Pericom products and resells them
under its own name. Pericom intends to seek additional such relationships in
the future.
28
<PAGE>
PRODUCTS
The Company has used its expertise in high-performance digital, analog and
mixed-signal IC design, its re-usable core cell library and its modular design
methodology to achieve a rapid rate of new product introductions. As
demonstrated by the chart below, the Company has evolved from one product line
in fiscal 1992 to four product lines currently, with a goal of providing an
increasing breadth of product solutions to its customers. Within each product
line, the Company has continued to introduce products with higher performance,
higher levels of integration, and new features and options.
[GRAPHIC APPEARS HERE]
SILICONINTERFACE
Through its SiliconInterface product line, Pericom offers a broad range of
high-performance 5-volt and 3.3-volt CMOS logic interface circuits. These
products provide logic functions to handle data transfer between
microprocessors and memory, bus exchange, backplane interface, and other logic
interface functions where high-speed, low-power, low-noise and high-output
drive characteristics are essential. The Company's thin and tight-lead-pitch
packages allow significant reduction in board space and provide enhanced
switching characteristics. The Company has two patents that relate to certain
SiliconInterface products: one that relates to mixed-voltage operations that
are scaleable for future generations of low-voltage logic families, and one
that relates to a high-speed, low-noise input/output buffer design. The
SiliconInterface product line is used in a wide array of systems applications,
including notebook computers, high-speed network hubs, routers and switches
and multimedia systems.
5-VOLT INTERFACE LOGIC. The Company's high-speed 5-volt interface logic
products in 8-, 16- and 32-bit configurations address specific system
applications, including a "Quiet Series" family for high-speed, low-noise,
point-to-point data transfer in computing and networking systems and a
"Balanced Drive" family with series resistors at output drivers to reduce
switching noise in high-capacitive load switching in the main and cache
memories of high-performance computers.
3.3-VOLT INTERFACE LOGIC. Pericom's 3.3-volt interface logic products in 8-
and 16-bit configurations address a range of cost and performance
requirements. The Company's 3.3-volt ALVCH, LPT, LCX and FCT3 interface logic
families offer a comprehensive range of performance at very low power. The
ALVCH, LPT and
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<PAGE>
LCX families allow customers the flexibility to use certain Pericom 3.3-volt
products in pure 3.3-volt or mixed 3.3/5-volt designs. Because a full range of
3.3-volt components is not always available, this flexibility is important as
computer and networking designs transition from 5 volts to 3.3 volts. ALVCH, a
leading-edge performance family that targets high-speed computer and
networking designs, offers bus hold and 5-volt I/O tolerance options. LPT is a
mid-range performance family and the industry's first 3.3-volt CMOS logic
family with 5-volt I/O tolerance. LCX is a relatively slow-speed family that
is targeted for low-cost applications. FCT3 is a mid-range performance family
that can interface only with 3.3-volt components.
The table below lists Pericom's 212 SiliconInterface products, indicating
the number of 8-, 16- and 32-bit products in each product family.
SILICONINTERFACE PRODUCT LINE
<TABLE>
<CAPTION>
NUMBER OF
PRODUCTS OFFERED
-------------------
PRODUCT FAMILIES 8-BIT 16-BIT 32-BIT
<S> <C> <C> <C>
5-Volt Interface Logic
FCT Interface Logic Family 83 56 2
------------------------------------------------------------
3.3 Volt Interface Logic
ALVCH Interface Logic Family -- 20 --
LPT Interface Logic Family 11 12 --
LCX Interface Logic Family 10 11 --
FCT3 Interface Logic Family 2 5 --
</TABLE>
SILICONSWITCH
Through its SiliconSwitch product line, Pericom offers a broad range of
high-performance switches for switching digital and analog signals. The
ability to switch or route high-speed digital or analog signals with minimal
delay and signal distortion is a critical requirement in many high-speed
computers, networking and multimedia applications. Historically, systems
designers have used mechanical relays, solid-state relays and analog switches,
which have significant disadvantages compared to IC switches: mechanical
relays are bulky, dissipate significant power and have very low response
times; solid-state relays are expensive and dissipate significant power; and
traditional analog switches have relatively high resistance that can cause
significant signal distortion.
DIGITALSWITCH. The Company offers a family of digital switches in 8-, 16-
and 32-bit densities that address the switching needs of high-performance
systems. These digital switches offer performance and cost advantages over
traditional switch functions, offering low on-resistance (less than 5 ohms),
low propagation delay (less than 250 picoseconds), low standby power (less
than 1 microamp) and series resistor options that support low EMI emission
requirements. Applications for the Company's digital switches include 5-volt-
to-3.3-volt signal translation, high-speed data transfer and switching between
microprocessors and multiple memories, and hot plug interfaces in notebook and
desktop computers, workstations and switching hubs and routers.
ANALOGSWITCH. The Company offers a family of analog switches for low-voltage
(2- to 5-volt) applications such as multimedia audio and video signal
switching with enhanced characteristics such as low power, high bandwidth, low
crosstalk and low distortion to maintain analog signal integrity. Traditional
analog switches cause unacceptable levels of distortion due to high on-
resistance. The Company's analog switches have significantly lower on-
resistance, resulting in significant improvement in bandwidth and distortion.
This allows the Company's analog switches to be used for state-of-the-art
video and audio switching applications where traditional analog switches
cannot be used. Applications for Pericom's analog switches include personal
computer multimedia sound and video, as well as telecommunications systems,
cellular phones and instrumentation.
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<PAGE>
LANSWITCH AND VIDEOSWITCH. The Company offers a line of application-specific
standard product ("ASSP") switches for specific applications. These products
include LANSwitch, which is used to switch among multiple LAN protocols (e.g.,
Ethernet, FastEthernet and Token Ring) on networking systems, and VideoSwitch,
which is used in graphic and multimedia systems to switch among different
video and audio sources at very high frequencies with minimal distortion,
hence preserving high video and audio fidelity.
The table below lists Pericom's 52 SiliconSwitch products.
SILICONSWITCH PRODUCT LINE
<TABLE>
<CAPTION>
NO. OF
PRODUCTS
PRODUCT FAMILIES OFFERED
<S> <C>
Digital Switch Family 38
--------------------------------------
Analog Switch Family 11
--------------------------------------
LANSwitch/VideoSwitch Family 3
</TABLE>
SILICONCLOCK
Through its SiliconClock product line, Pericom offers a broad range of
general-purpose solutions including clock buffers, PLL-based zero-delay clock
generators and ASSP PLL-based frequency synthesizer products for Pentium,
Pentium Pro, Pentium II and PowerPC-based systems, as well as a number of ASSP
clock products for laser printers and modem applications. As system designers
use microprocessors and memories that run at increasingly high frequencies,
there is a demand for correspondingly reliable clock management circuits to
generate and distribute high-precision, high-frequency timing control signals
for advanced computer, networking, multimedia and embedded applications. To
enable the reliable operations of these ICs with precise timing, the clock
circuits need to have short propagation delay, low jitter and low pin-to-pin
signal skew.
CLOCK BUFFERS AND ZERO-DELAY CLOCK GENERATOR. Clock buffers receive a
digital signal from a frequency source and create multiple copies of the
signal for distribution across system boards. Pericom offers 3.3-volt and 5-
volt clock buffers for high-speed, low-skew applications in computer and
networking. PLL-based clock generators, also known as zero-delay clock
generators, virtually eliminate propagation delays by synchronizing the clock
outputs with the incoming frequency source. Pericom's zero-delay clock
generator offers frequencies of up to 100MHz for applications in computer
servers, PCI bridges and SDRAM modules.
CLOCK FREQUENCY SYNTHESIZERS. Clock frequency synthesizers use single or
multiple PLLs to generate various output frequencies using a crystal
oscillator as an input frequency source. Clock frequency synthesizers are used
to provide critical timing signals to microprocessors, PCI buses, SDRAM and
peripheral functions. Pericom's PLL-based clock synthesizers support Pentium,
Pentium Pro, Pentium II and PowerPC microprocessors and are designed with an
emphasis on minimizing jitter and power consumption. In addition, some of the
products come with integrated serial I/2/C serial link communications and
options for spread-spectrum selection that meets low EMI requirements for
mobile and desktop PC motherboards. The Company's PLL-based laser printer
clock provides a cost effective solution for high-speed, high-resolution video
clock generation at 40MHz for low-cost color laser printer controllers and at
80 MHz for high-speed color laser printer controllers. The Company offers
modem clocks to support 28.8K and 56K rack-mount modem designs.
FLEXCLOCK. To support embedded processor and data transmission operations,
telecom and datacom applications often require unique combinations of
frequencies on the system board. Traditionally, such requirements have been
handled by the simultaneous use of several crystal oscillators. This approach
is costly, however, and requires significant board space. Also, certain
uncommon frequencies require very long purchase order lead times. Supporting
quick-turn customer prototyping as well as volume production requirements,
Pericom's FlexClock product offers customers programmable PLL-based clock
synthesizers that provide multiple customer-specified frequencies in a single
IC with short lead time and with fast factory programming of custom requested
frequencies.
31
<PAGE>
The table below lists Pericom's 26 SiliconClock products.
SILICONCLOCK PRODUCT LINE
<TABLE>
<CAPTION>
NO. OF
PRODUCTS
PRODUCT FAMILIES OFFERED
<S> <C>
5-Volt Clock Buffers 7
--------------------------------------
3-Volt Clock Buffers 5
--------------------------------------
Zero-Delay Clock Generator 1
--------------------------------------
Clock Frequency Synthesizers 12
--------------------------------------
FlexClock Synthesizer 1
</TABLE>
SILICONCONNECT
Through its SiliconConnect product line, Pericom offers a range of highly-
integrated physical layer ("PHY") interface ICs for various high-speed LAN
standards such as Token Ring and FastEthernet. Pericom's earlier development
effort in Token Ring and other networking protocols helped the Company develop
expertise in the design and testing of high-speed network transceivers, much
of which expertise is applicable to the current FastEtherent development
efforts.
100TX FASTETHERNET TRANSCEIVERS. The Company is currently shipping
engineering samples of two recently-developed 4-port FastEthernet PHY
transceiver products for 100TX FastEthernet hub and switch markets. Pericom's
PI2C6040 is designed to integrate 4-port 100TX PHY channels into a single-chip
PHY for networking switch designs. For the repeater hub market, Pericom's
PI2C6050 is designed to integrate 4-port 100TX PHY channels with multiplexing
circuits in a space-saving, 100-pin QFP package. By using higher levels of
integration, the Company is developing multiport PHY solutions designed to
connect seamlessly to popular physical medium dependent (PMD) ICs at reduced
system cost and board space.
PBX TELECOM SWITCHES. The Company offers two telecom products for digital
switch matrix PBX applications: the PT9085, which provides serial-to-parallel
or parallel-to-serial conversion, and the PT9085, which provides address and
switching functions for PBX switching stations.
TOKEN RING AND OTHER LAN PROTOCOL TRANSCEIVERS. For Token Ring switch hub
applications, the Company offers two Token Ring PHY transceivers that use a
patented attenuator retiming circuit that can significantly reduce signal
jitter as data is transmitted between network nodes. The Company also offers a
100Mpbs transceiver that implements the physical layer interface for the
100VG-AnyLAN hub and network interface card applications.
The table below lists Pericom's seven SiliconConnect products.
SILICONCONNECT PRODUCT LINE
<TABLE>
<CAPTION>
NO. OF
PRODUCTS
PRODUCT FAMILIES OFFERED
<S> <C>
100TX FastEthernet* 2
---------------------------------
PBX Switch 2
---------------------------------
Token Ring Transceivers 3
</TABLE>
* The Company is currently providing engineering samples of these products.
32
<PAGE>
The Company is continuing to enhance and refine the offerings in its
existing product lines, while working to add next-generation products which
address new market opportunities on a timely basis. In particular, the Company
is developing PCI bridge products targeted for the networking, workstation and
PC markets, additional 3.3-volt and high-voltage digital and analog switches
complementing its current product families, additional ALVCH 3.3-volt products
to expand the current ALVCH product family, additional high-performance
frequency synthesizers and clock buffers intended for new markets or
applications. The failure of the Company to complete and introduce new
products in a timely manner at competitive price/performance levels would
materially and adversely affect the Company's business and results of
operations. See "Risk Factors -- Technological Changes; Dependence on New
Products."
TARGETED MARKETS AND APPLICATIONS
Pericom's products and technology are applicable to the transfer, routing
and timing of signals in many different system designs. Pericom currently
focuses on three high-volume, high-growth market segments: notebook computers,
networking and multimedia.
Pericom's SiliconInterface, SiliconSwitch and SiliconClock products are
currently used by notebook OEMs for a broad range of applications, including
docking station interface, high-speed transfer and timing of signals for
memories and microprocessors, mixed-voltage translations and audio and video
switching. Set forth below is a simplified block diagram of a typical high-
performance multimedia notebook computer connected to a docking station.
HIGH PERFORMANCE NOTEBOOK COMPUTER DOCKING STATION
[Inserted in the text are graphics consisting of two rectangular boxes with
smaller boxes inside, labeled as a high performance notebook computer and a
docking station, which are connected by a double-sided arrow. Within the
boxes, certain elements of the applicable items are depicted, with the
interconnection of such elements shown by lines. The elements offered by Pericom
are highlighted: "Switch" in the box depicting a docking station, and "Logic,"
"Clock", and two "Switch[es]" in the box depicting a notebook.
Products offered by Pericom.
* These functions may also incorporate Pericom products, as depicted on pages
34 and 35.]
High-performance notebook computers pose unique engineering challenges due
to their small size, the need for long battery life and the desire to achieve
performance levels comparable to desktop computers. To enable higher overall
system speed, Pericom provides fast interface logic and switches for data
buffering and memory
33
<PAGE>
bank switching between high-precision microprocessors and memory. To reduce
power consumption and extend battery life, Pericom provides a variety of 3.3-
volt interface logic, clock management and switching ICs. To accommodate the
smaller size of a notebook motherboard, many of the Company's products feature
high levels of integration with advanced packaging in 1 mm thickness and 0.4
mm lead pitch. To comply with various governmental standards regarding EMI
emissions, the Company offers ICs with special circuits to reduce EMI and
specialized ICs to reduce overall system EMI. To provide multimedia options in
this demanding environment, Pericom offers low-distortion, high-bandwidth
video switches for high-resolution video and low-distortion analog switches
for high-fidelity audio signal switching. To permit connection to office
networks without turning the power off, Pericom provides digital switches for
implementing hot-plug docking station interface and PCMCIA cards. Pericom's
representative customers in the notebook computer segment include Acer,
Compaq, Dell, Hitachi and IBM.
NETWORKING HUBS, SWITCHES AND ROUTERS.
Pericom currently supplies a broad range of products for high-performance
hubs, switches and routers, servicing applications such as Ethernet and
FastEtherent protocol switching, hub-to-hub connections, clock distribution,
backplane drive and hot plug interface. The Company has also started sampling
an integrated four-port FastEthernet PHY transceiver product targeting
FastEthernet repeater and switch designs. Set forth below is a simplified
block diagram of a typical network switching hub and adapter system connected
to a network interface card.
[Inserted in the text are graphics consisting of rectangular boxes labeled
"Switching Hub System" and "Adapter System." Within the boxes, certain elements
of the applicable item are depicted, with the interconnection of such elements
shown by lines. The elements offered by Pericom are highlighted: "Switch",
"Logic," "Clock," "PHY," and "LAN Switch" in the box representing a switching
hub and "Logic," "Clock," and "LAN Switch" in the box representing an adapter
system. Elements of which Pericom is currently shipping engineering samples
are marked as such. The boxes depicting the systems are connected by a line.
Set forth to the left of the box representing a switching hub system is an
additional box labeled "Backplane Bus."
Products offered by Pericom.
* The Company is currently shipping engineering samples of these products.]
Advanced networking systems require high-bandwidth, multi-protocol
processing, hot-plug insertion, ability to mix 5- and 3.3-volt ICs, low cost
and high levels of system integration. Pericom offers the following products
to address some of these requirements: 100Mbps Quad FastEthernet PHY
transceivers with low latency for higher data rate throughput and four-channel
integration; high speed interface logic for microprocessor and memory
interface; high-speed drivers for the network backplane bus; low-distortion
LAN switches for selecting
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<PAGE>
multiple protocols; digital switches for hot-plug interface; 5-volt tolerant
I/Os with 3.3-volt supply interface logic for mixed-voltage systems; and a
FlexClock IC that replaces multiple crystal oscillators with a single
programmable IC for microprocessor, memory, and network protocol timing
signals.
Pericom's Representative customers in this segment include 3COM, Ascend
Communications, Cabletron Systems, Cisco Systems, Hewlett-Packard and Samsung.
MULTIMEDIA
The Company currently supplies its high-bandwidth, low-noise VideoSwitch,
AnalogSwitch and SiliconSwitch products to a variety of multimedia system
suppliers. These products support applications such as TV/PC monitor video
switching, picture-in-picture video overlay, audio switching and video
multiplexing. Set forth below are simplified block diagrams of typical sound
card and video card applications.
SOUND CARD
[GRAPHIC APPEARS HERE]
VIDEO CARD
[GRAPHIC APPEARS HERE]
Inserted in the text are graphics consisting of two rectangular boxes labeled
"Sound Card" and "Video Card." Within the boxes, certain elements
of the applicable card are depicted, with the interconnection of such elements
shown by lines. The elements offered by Pericom are highlighted: "Switch,"
"Clock," and two "Analog Switch[es]" in the box depicting a sound card, and
"Switch," "Clock," and "Video Switch" in the box depicting a video card.
Products offered by Pericom.
Desktop and mobile computers integrate audio and other multimedia functions
either on the motherboard or as add-on cards. These functions are often
required to support both 3-volt and 5-volt signal levels, high-speed data
transfer between MPEG or other DSP processors and memory, hot-plug insertions
for card options and small packaging. Pericom supplies IC solutions to meet
the following requirements: low-distortion analog switches for high fidelity
audio switching; high-bandwidth and low cross talk video switches for high
fidelity video switching; high-speed interface logic and switches for
interface between MPEG and DSP processor functions and memory; 3.3-volt
interface logic with 5-volt tolerant I/Os for mixed 3.3/5-volt system
requirements; for processor and memory requirements, a low-cost FlexClock that
replaces multiple crystal oscillators with a single programmable IC for all
the multimedia clock signals; [bus switches for hot-plug insertion; small,
thin packages and a high level of circuit integration for small form factor
packaging requirements.] Representative customers in this segment include
Acer, Avid, Diamond Multimedia, STB Systems and Trident Microsystems.
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<PAGE>
OTHER MARKETS
In addition to Pericom's three target markets, its products are also used in
other market segments by customers such as Apple, Canon, Dell, Digital
Equipment Corporation, Hitachi, Samsung and Smart Modular. Some of the more
significant segments include desktop PCs and workstations, laser printers,
memory modules, instrumentation, and set-top boxes. In particular, Pericom
offers high-frequency, programmable video clock generators for high-speed,
high-resolution laser printer engine designs; zero-delay PLL generators for
high-performance PCs, workstations and memory modules; and multiple-frequency
output clock generators for rack-mounted modem applications. Further, the
Company offers telecom PBX switches and clock generators for cellular base
stations and clock generators for high-performance embedded systems ranging
from arcade games to medical instruments. For all of these applications,
Pericom also provides interface logic and switches.
CUSTOMERS
The following is a list of selected customers of the Company, including end
users and OEMs:
COMPUTER NETWORKING
Acer Incorporated 3Com
Apple Computer, Inc. Ascend Communications
Compaq Cabletron Systems, Inc.
Dell Cisco Systems, Inc.
Digital Equipment Corporation Hewlett-Packard Company
Hitachi Ltd. Samsung Corporations
International Business
Machines Corporation
Intel MULTIMEDIA, PERIPHERALS AND OTHERS
Inventec, Inc.
NEC Corporation Adaptec, Inc.
Toshiba Corporation Avid Technology, Inc.
Canon
CONTRACT MANUFACTURING Diamond Multimedia Systems, Inc.
Mylex Corporation
AVEX Electronics PictureTel Corporation
Celestica, Inc. STB Systems
Jabil Circuit, Inc. Trident Microsystems, Inc.
SCI Standard Products Xerox Corporation
Smart Modular Technologies Inc.
Solectron Technology Corporation
The Company's customers include a broad range of end users and OEMs in the
computer, peripherals, networking and contract manufacturing markets. In
fiscal 1996, sales to Apple and Pioneer Standard Electronics, Inc., a
distributor, accounted for approximately 20% and 16%, respectively, of net
revenues and sales to the Company's top five customers accounted for
approximately 52% of net revenues. In fiscal 1997, sales to Harris and IBM
accounted for approximately 17% and 14%, respectively, of the Company's net
revenues, and sales to the Company's top five customers accounted for
approximately 47% of net revenues. See "Risk Factors -- Customer
Concentration."
Contract manufacturers have become important customers for the Company as
systems designers in the Company's target markets are increasingly outsourcing
portions of their manufacturing. In addition, these contract manufacturers are
playing an increasingly vital role in determining which vendors' ICs are
incorporated into new designs.
DESIGN AND PROCESS TECHNOLOGY
The Company's design efforts focus on the development of high-performance
digital, analog and mixed-signal ICs. To minimize design cycle times of high-
performance products, the Company utilizes a modular design methodology that
has enabled it to produce many new products each year and to meet its
customers' need
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<PAGE>
for fast time-to-market response. This methodology uses state-of-the-art
computer-aided design software tools such as HDL description, logic synthesis,
full-chip mixed-signal simulation, and automated design layout and
verification using Pericom's library of high-performance digital and analog
core cells. This family of core cells has been developed over several years
and contains high-performance, specialized digital and analog functions not
available in commercial ASIC libraries. Among these cells are the Company's
proprietary mixed-voltage I/O cells, high-speed, low-noise I/O cells, analog
and digital PLLs, charge pumps and datacom transceiver circuits. Pericom has
been granted four U.S. patents relating to its circuit designs and has several
U.S. and foreign patent applications pending. Another advantage of this
modular design methodology is that it allows the application of final design
options late in the wafer manufacturing process to determine a product's
specific function. This option gives the Company the ability to use pre-staged
wafers, which significantly reduces the design and manufacturing cycle time
and enables the Company to respond rapidly to a customer's prototype needs and
volume requirements.
The Company utilizes advanced CMOS processes to achieve optimal performance
and die cost. The Company's process and device engineers work closely with its
independent wafer foundry partners to develop and evaluate new process
technologies. The Company's process engineers also work closely with circuit
design engineers to optimize the performance and reliability of its cell
library. The Company currently manufactures a majority of its products using
0.5 micron and 0.6 micron advanced CMOS process technologies and is using a
0.35 micron CMOS process in the design of a number of its new products. The
Company is also using a high-voltage CMOS process developed by one of its
foundry partners in the design of new switch products.
SALES AND MARKETING
The Company markets and distributes its products through a worldwide network
of independent sales representatives and distributors. In fiscal years 1995,
1996 and 1997, international sales comprised 35%, 30% and 37%, respectively,
of the Company's net revenues. The Company has five regional sales offices in
the United States, a sales office in Taiwan and a sales office in Europe. The
Company also supports field sales design-in and training activities with
application engineers. All marketing and product management personnel are
located at the Company's corporate headquarters in San Jose, California. See
"Risk Factors -- Risks of International Sales."
The Company focuses its marketing efforts on product definition, new product
introduction, product marketing, advertising and public relations. The Company
actively seeks cooperative relationships in product development and product
marketing. For example, the Company is working with NJRC on the development
and marketing of clock synthesis products for the Japanese market. In February
1996, the Company and Harris entered into a private label program pursuant to
which Harris sells the Company's SiliconInterface products under its own
label. The Company uses advertising both domestically and internationally to
market its products. Pericom product information is available on its web site,
which contains technical information on all of its products and allows the
user both fax-back and sample-request capabilities on line. The Company also
publishes and circulates technical briefs relating to its products and their
applications.
Pericom believes that contract manufacturing customers are growing in
importance and employs sales and marketing personnel who focus on servicing
these customers and on expanding Pericom's product sales via these customers
to OEMs. In addition, Pericom uses programs such as EDI, bonded inventories
and remote warehousing to enhance its service and attractiveness to contract
manufacturers.
Sales through domestic and international distributors were approximately 40%
of the Company's net revenues in fiscal 1996 compared to approximately 36% in
fiscal 1997. Major distributors in the United States include All American
Semiconductor, Bell Microproducts, Interface Electronics, Pioneer Standard,
and Reptron Electronics. Major international distributors include Ambar
(U.K.), Desner Electronics (Singapore), Internix (Japan), Macro Vision
(Taiwan), MCM (Japan) and Techmosa (Taiwan). See "Risk Factors -- Reliance on
Distributors."
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<PAGE>
The Company does not have long-term purchase agreements with any of its
customers, and customers can typically cancel or reschedule their orders
without significant penalty. As a result, customers frequently revise product
quantities and delivery schedules to reflect their changing needs. Since most
of the Company's backlog can be canceled or rescheduled, the Company does not
believe its backlog is a meaningful indicator of future revenue. See "Risk
Factors -- Limited Operating History; Potential Fluctuations in Operating
Results."
MANUFACTURING
The Company has adopted a fabless manufacturing strategy by subcontracting
its wafer production to independent wafer foundries. The Company has
established collaborative relationships with selected independent foundries
and targets additional foundry partners with which it can develop a strategic
relationship to the benefit of both parties. The Company believes that its
fabless strategy enables it to introduce high performance products quickly at
competitive cost. To date, the Company's principal manufacturing relationship
has been with Chartered. The Company provides Chartered with new product
designs to be used by Chartered for testing and qualifying advanced
manufacturing processes from development to production. In exchange, Chartered
provides the Company with wafer allocation and early access to process
technology. The Company has also used AMS as a foundry since 1992. The Company
qualified a 0.8 micron high-voltage CMOS process at NJRC plans to use this
process for some of its future products. Recently the Company qualified a 0.5
micron CMOS process at TSMC.
In fiscal 1996 and 1997, approximately 90% of the wafers for the Company's
semiconductor products were manufactured by Chartered, and the remainder of
the Company's wafers were manufactured by AMS, NJRC and TSMC. The Company is
currently qualifying LG as a foundry supplier. The Company believes that it
will receive an increasing portion of its wafer requirements from TSMC and LG
in the future. The Company's reliance on independent wafer suppliers to
fabricate its wafers at their production facilities subjects the Company to
such possible risks as potential lack of adequate capacity and available
manufactured products, lack of control over delivery schedules and the risk of
events limiting production and reducing yields, such as fires or other damage
to production facilities or technical difficulties. Although, to date, the
Company has not experienced any material delays in obtaining an adequate
supply of wafers, there can be no assurance that the Company will not
experience delays in the future. Any inability or unwillingness of the
Company's wafer suppliers generally, and Chartered in particular, to provide
adequate quantities of finished wafers to meet the Company's needs in a timely
manner or in needed quantities would delay production and product shipments
and have a material adverse effect on the Company's business, financial
condition and results of operations.
At present, the Company purchases wafers from its wafer suppliers through
the issuance of purchase orders based on rolling six-month forecasts provided
by the Company, and such purchase orders are subject to acceptance by each
wafer foundry. The Company does not have long-term purchase agreements with
any of its wafer suppliers, each of which has the right to reduce or terminate
allocations of wafers to the Company. In the event that these suppliers were
unable or unwilling to continue to manufacture the Company's key products in
required volumes, the Company would have to identify and qualify additional
foundries. In any event, the Company's future growth will also be dependent
upon its ability to identify and qualify new wafer foundries. The
qualification process can take up to six months or longer, and there can be no
assurance that any additional wafer foundries will become available to the
Company or will be in a position to satisfy any of the Company's requirements
on a timely basis. The Company also depends upon its wafer suppliers to
participate in process improvement efforts, such as the transition to finer
geometries, and any inability or unwillingness of such suppliers to do so
could delay or otherwise materially adversely affect the Company's development
and introduction of new products. Furthermore, sudden shortages of raw
materials or production capacity constraints can lead wafer suppliers to
allocate available capacity to customers other than the Company or for
internal uses, which could interrupt the Company's ability to meet its product
delivery obligations. Any significant interruption in the supply of wafers to
the Company would adversely affect the Company's operating results and
relations with affected customers. The Company's reliance on independent wafer
suppliers may also impact the length of
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<PAGE>
the development cycle for the Company's products, which may provide time-to-
market advantages to competitors that have in-house fabrication capacity. See
"Risk Factors -- Dependence on Independent Wafer Foundries" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
The Company relies on foreign subcontractors primarily for the assembly and
packaging of its products and, to a lesser extent, for the testing of its
finished products. Some of these subcontractors are the Company's single
source supplier for certain new packages. Although the Company believes that
it is not materially dependent upon any such subcontractor, changes in the
Company's or a subcontractor's business could cause the Company to become
materially dependent on a subcontractor. The Company has from time to time
experienced difficulties in the timeliness and quality of product deliveries
from the Company's subcontractors. Although delays experienced to date have
not been material, there can be no assurance that the Company will not
experience similar or more severe difficulties in the future. The Company
generally purchases these single or limited source components or services
pursuant to purchase orders and has no guaranteed arrangements with such
subcontractors. There can be no assurance that these subcontractors will
continue to be able and willing to meet the Company's requirements for any
such components or services. Any significant disruption in supplies from, or
degradation in the quality of components or services supplied by, these
subcontractors, or any other circumstance that would require the Company to
qualify alternative sources of supply could delay shipments and result in the
loss of customers, limitations or reductions in the Company's revenues, or
otherwise materially and adversely affect the Company's business and results
of operations. See "Risk Factors -- Dependence on Single or Limited Source
Assembly Subcontractors."
The manufacture and assembly of semiconductor products is highly complex and
sensitive to a wide variety of factors, including the level of contaminants in
the manufacturing environment, impurities in the materials used, and the
performance of manufacturing personnel and production equipment. In a typical
semiconductor manufacturing process, silicon wafers produced by the foundry
are sorted and cut into individual die that are then assembled into individual
packages and tested for performance. The Company's wafer fabrication suppliers
have from time to time experienced lower-than-anticipated yields of good die,
as is typical in the semiconductor industry. In the event of such decreased
yields, the Company would incur additional costs to sort wafers, an increase
in average cost per usable die and an increase in the time to market for its
products. See "Risk Factors -- Variation in Production Yields."
COMPETITION
The semiconductor industry is intensely competitive. Significant competitive
factors in the market for high- performance ICs include product features and
performance, product quality, price, success in developing new products,
adequate wafer fabrication capacity and sources of raw materials, efficiency
of production, timing of new product introductions, ability to protect
intellectual property rights and proprietary information, and general market
and economic conditions. The Company's competitors include Cypress
Semiconductor Corporation, Integrated Device Technology, Inc., Maxim
Integrated Products, Inc., Quality Semiconductor, Inc. and Texas Instruments,
Inc., most of which have substantially greater financial, technical,
marketing, distribution and other resources, broader product lines and longer-
standing customer relationships than the Company. The Company also competes
with other major or emerging companies that sell products to certain segments
of the markets addressed by the Company. Competitors with greater financial
resources or broader product lines may also have greater ability than the
Company to engage in sustained price reductions in the Company's primary
markets in order to gain or maintain market share.
The Company believes that its future success will depend on its ability to
continue to improve and develop its products and processes. Unlike the
Company, many of the Company's competitors maintain internal manufacturing
capacity for the fabrication and assembly of semiconductor products, which may
provide such
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<PAGE>
companies with more reliable manufacturing capability, shorter development and
manufacturing cycles and time-to-market advantages. In addition, competitors
with their own wafer fabrication facilities that are capable of producing
products with the same design geometries as those of the Company may be able
to manufacture and sell competitive products at lower prices. Introduction of
products by competitors that are manufactured with improved process technology
could materially and adversely affect the Company's business and results of
operations. As is typical in the semiconductor industry, competitors of the
Company have developed and marketed products having functionality similar or
identical to the Company's products, and the Company expects that this trend
will continue in the future. To the extent the Company's products do not
achieve performance, price, size or other advantages over products offered by
competitors, the Company is likely to experience greater price competition
with respect to such products. The Company also faces competition from the
makers of microprocessors and other system devices, including application
specific integrated circuits ("ASICs"), that have been and may be developed
for particular systems. These devices may include interface logic functions,
which may eliminate the need or sharply reduce the demand for the Company's
products in particular applications. There can be no assurance that the
Company will be able to compete successfully in the future or that competitive
pressures will not materially and adversely affect the Company's financial
condition and results of operations. Competitive pressures could also reduce
market acceptance of the Company's products and result in price reductions and
increases in expenses that could materially and adversely affect the Company's
business and results of operations. See "Risk Factors -- Dependence Upon
Independent Wafer Foundries," "Risk Factors -- Competition," "Risk Factors --
Dependence on Single or Limited Source Assembly Subcontractors" and " "--
Manufacturing."
RESEARCH AND DEVELOPMENT
The Company believes that the continued timely development of new interface
ICs is essential to maintaining its competitive position. Accordingly, the
Company has assembled a team of highly-skilled engineers whose activities are
focused on the development of signal transfer, routing and timing technologies
and products. As of August 31, 1997, Pericom had 30 employees engaged in
research and development activities, a majority of whom have advanced
technical degrees. Research and development expenses in fiscal 1995, 1996, and
1997 were $2.9 million, $4.4 million and $4.2 million, respectively.
By leveraging its proprietary high-performance, cell library, the Company
plans to expand product offerings in each of its key product lines. The
Company intends to design high-speed, low-noise 2.5-volt and 3.3-volt
interface logic products using its proprietary low-noise I/O technology. Some
of these logic products will also incorporate the Company's patented mixed-
voltage I/O technology. The Company intends to use the combination of low-
noise, mixed-voltage technology with advanced 0.35 micron and 0.25 micron
process technology to develop a broad portfolio of versatile, high-performance
interface logic circuits essential for high-speed, low-power computer and
networking systems. In the digital and analog switch areas, the Company
intends to apply its low-resistance, low-noise techniques to a family of
switches with new functions operating under different power supply voltages.
Based on the Company's core analog and digital PLL technologies, the Company
intends to develop new families of clock generators and frequency synthesizers
for applications in Pentium II class computers, laser printers and modems. The
Company is developing a new family of 100Base-X FastEthernet network
transceivers and PMD ICs based on the Company's mixed-signal design
technologies. In an effort to expand its product offerings in the mobile
computing and data communication markets, the Company is exploring
opportunities to develop new products for wireless applications.
To address increasing price/performance requirements, the Company intends to
continue to redesign its high-volume products by using more advanced
fabrication processes and refined design techniques, with the goal of
enhancing product performance and reducing die size and product costs. The
Company also intends to further refine noise performance by using newly
developed low-noise I/O technology.
Most of the Company's new products are manufactured using advanced 0.5
micron and 0.6 micron process technologies. The Company plans to manufacture
some of its products using advanced 0.35 micron and
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0.25 micron CMOS process technologies beginning in fiscal 1998 and will
continue new process technology work with its foundry partners. In an effort
to further reduce costs and enhance reliability, the Company is developing new
high-speed test hardware and software to support testing and characterization
of its products.
The success of new products depends on many factors, including product
selection, timely completion of product development, ability to gain access to
advanced fabrication processes, achievement of acceptable wafer fabrication
yield, and the ability to secure sufficient wafer fabrication capacity. There
can be no assurance that the Company will be able to successfully identify new
product opportunities and timely develop and bring to market such new
products. Failure of the Company to complete, introduce and bring to volume
production new products in a timely manner and at competitive
price/performance levels could adversely affect the Company's results of
operations. See "Risk Factors -- Technological Change; Dependence on New
Products."
INTELLECTUAL PROPERTY
In the United States, the Company holds five patents covering certain
aspects of its product designs, has been granted allowances on three other
patents and has three additional patent applications pending. The Company
expects to continue to file patent applications where appropriate to protect
its proprietary technologies; however, the Company believes that its continued
success depends primarily on factors such as the technological skills and
innovation of its personnel, rather than on its patents.
The Company's success depends in part on its ability to obtain patents and
licenses and preserve other intellectual property rights covering its products
and development and testing tools. Copyrights, mask work protection, trade
secrets and confidential technological know-how are also key elements of the
Company's business. There can be no assurance that any additional patents will
be issued to the Company or that the Company's patents or other intellectual
property will provide meaningful protection from competition. The Company may
be subject to or may initiate interference proceedings in the U.S. Patent and
Trademark Office, which can consume significant financial and management
resources. In addition to the foregoing, the laws of certain territories in
which the Company's products are or may be developed, manufactured or sold may
not protect the Company's products and intellectual property rights to the
same extent as the laws of the United States. The inability of the Company to
protect its intellectual property adequately could have a material adverse
effect on its business and results of operations.
The semiconductor industry is characterized by frequent litigation regarding
patent and other intellectual property rights, and there can be no assurance
that the Company will not be subject to infringement claims by other parties.
In May 1995, Quality Semiconductor, Inc. ("QSI"), a competitor of the Company,
brought a lawsuit against the Company in the United States District Court for
the Northern District of California, San Francisco Division, claiming
infringement of one of its patents by certain features in certain of the
Company's bus switch products and seeking injunctive relief and monetary
damages. Discovery has commenced, but is stayed pending a claim construction
hearing. The Company believes that it has meritorious defenses and that the
resolution of this matter will not have a material adverse effect on the
Company's business, financial position or results of operations. However, any
litigation, whether or not determined in favor of the Company, can result in
significant expense to the Company and can divert the efforts of the Company's
technical and management personnel from productive tasks. In the event of an
adverse ruling in any litigation involving intellectual property, the Company
might be required to discontinue the use of certain processes, cease the
manufacture, use and sale of infringing products, expend significant resources
to develop non-infringing technology or obtain licenses to the infringed
technology, and may suffer significant monetary damages, which could include
treble damages. In the event the Company attempts to license any allegedly
infringed technology, there can be no assurance that such a license would be
available on reasonable terms or at all. In the event of a successful claim
against the Company and the Company's failure to develop or license a
substitute technology on commercially reasonable terms, the Company's business
and results of operations would be materially and adversely affected. There
can be no assurance that the claims brought by QSI or any potential
infringement claims by other parties (or claims for indemnity from customers
resulting from any infringement claims) will not materially and adversely
affect the Company's business, financial condition and results of operations.
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The process technology used by the Company's independent foundries,
including process technology that the Company has developed with its
foundries, can generally be used by such foundries to produce their own
products or to manufacture products for other companies, including the
Company's competitors. In addition, the Company does not generally have the
right to implement the process technology used to manufacture its products
with foundries other than the foundry with which it has developed such process
technology. See "Risk Factors -- Patents and Proprietary Rights."
EMPLOYEES
As of June 30, 1997, the Company had 135 full-time employees, including 27
in sales, marketing and customer support, 61 in manufacturing, assembly and
testing, 34 in engineering and quality assurance and 13 in finance and
administration, including information systems. The Company has never had a
work stoppage and no employee is represented by a labor organization. The
Company considers its employee relations to be good.
The Company's future success will depend to a large extent on the continued
contributions of its executive officers and other key management and technical
personnel, none of whom has an employment agreement with the Company and each
of whom would be difficult to replace. The Company does not maintain any key
person life insurance policy on any of such persons. The loss of the services
of one or more of the Company's executive officers or key personnel or the
inability to continue to attract qualified personnel could delay product
development cycles or otherwise have a material adverse effect on the
Company's business, financial condition and results of operations. See "Risk
Factors -- Dependence on Key Personnel."
FACILITIES
The Company leases approximately 34,000 square feet of space in San Jose,
California in which its headquarters, technology and product development and
testing facilities are located. The facility is leased through 2001 with
certain renewal options. The Company also has sales offices located in San
Jose, California, Laguna Niguel, California, Marlborough, Massachusetts, Cary,
North Carolina and Austin, Texas, as well as in Taiwan and the United Kingdom.
The Company believes its current facilities are adequate to support its needs
through the end of fiscal 1998.
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MANAGEMENT
EXECUTIVE OFFICERS, DIRECTORS AND KEY EMPLOYEES
The executive officers, directors and key employees of the Company and their
respective ages as of August 31, 1997 are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION(S)
---- --- -----------
<S> <C> <C>
Executive Officers and
Directors
Alex Chi-Ming Hui......... 40 Chief Executive Officer, President and Director
Chi-Hung (John) Hui,
Ph.D.(1).................. 42 Vice President, Technology and Director
Patrick B. Brennan........ 59 Vice President, Finance and Administration
Daniel W. Wark............ 41 Vice President, Operations
Glen R. Wiley............. 47 Vice President, Sales
Yao T. (Michael) Yen,
Ph.D...................... 61 Vice President, Applications
Tay Thiam Song(1)(2)...... 42 Director
Jeffrey Young(1)(2)....... 48 Director
Key Employee
Van Lewing................ 58 Director of Marketing
</TABLE>
- --------
(1) Member of Audit Committee.
(2) Member of Compensation Committee.
Alex Chi-Ming Hui has been President, Chief Executive Officer and a member
of the Board of Directors of the Company since its inception in June 1990.
From August 1982 to May 1990, Mr. Hui was employed by LSI Logic Inc., most
recently as its Director of Advanced Development. From August 1980 to July
1982, Mr. Hui was a member of the technical staff of Hewlett-Packard Company.
Mr. Hui holds a B.S.E.E. from the Massachusetts Institute of Technology and an
M.S.E.E. from the University of California at Los Angeles.
Chi-Hung (John) Hui, Ph.D., has been Vice President, Technology and a member
of the Board of Directors of the Company since its inception in June 1990.
From August 1987 to June 1990, Dr. Hui was employed by Integrated Device
Technology, most recently as Manager of its Research and Development
Department. From August 1984 to August 1987, Dr. Hui was a member of the
technical staff of Hewlett-Packard Company. Dr. Hui holds a B.S.E.E. from
Cornell University and an M.S.E.E. and a Ph.D. in Electrical Engineering from
the University of California at Berkeley.
Patrick B. Brennan has been Vice President, Finance and Administration of
the Company since March 1993. From February 1991 to March 1993, Mr. Brennan
was employed by Datacord, Inc., a subsidiary of Newell Research, Inc., as its
Vice President, Finance, and from July 1985 to February 1991, he was employed
as the Vice President, Finance of SEEQ Technology, Inc. From January 1980 to
June 1985, he was employed by National Semiconductor Corporation, most
recently as Vice President and Treasurer. Mr. Brennan holds a B.S. in Business
Administration from Arizona State University.
Daniel W. Wark joined the Company in April 1996 as its Director of
Operations and became its Vice President, Operations in July 1997. From May
1983 to December 1995, Mr. Wark was employed by Linear Technology Corporation,
most recently as Director of Corporate Services. Other positions that Mr. Wark
held at Linear Technology Corporation included Managing Director of its
Singapore Operations and Production Control Manager. Prior to his employment
with Linear Technology Corporation, Mr. Wark was employed by National
Semiconductor and Avantek, Inc. Mr. Wark holds a B.S. in Business
Administration from San Jose State University and an APICS certification.
Glen R. Wiley has been Vice President, Sales of the Company since April
1997. From April 1992 to November 1996, Mr. Wiley was the Vice President of
Sales at Orbit Semiconductor, and from January 1990 to March 1992, he served
as Vice President of Pro Associates, a manufacturers' representative firm.
From January 1989 to December 1989, Mr. Wiley was employed by Gazelle
Microcircuits as its Western Area Sales Manager, and from February 1980 to
December 1988, he served as a Senior Account Salesman with Pro Associates.
Mr. Wiley holds a B.A. in English from Humboldt State University.
43
<PAGE>
Yao T. (Michael) Yen, Ph.D., has been Vice President, Applications of the
Company since September 1992. From January 1990 to August 1992, Dr. Yen was
employed by Transcomputer Inc. as Vice President, Engineering, and from
January 1983 to December 1989, he was employed by Answer Software Corporation
as Vice President, Engineering. Dr. Yen was also employed as Engineering
Manager Microcomputer Systems at Intel Corporation. Dr. Yen holds a B.S.E.E.
from National Taiwan University and an M.S.E.E. and a Ph.D. in Electrical
Engineering from the University of Illinois at Urbana-Champaign.
Tay Thiam Song, has been a member of the Board of Directors since June 1992.
Mr. Tay resides in Singapore, and, since 1985, has been serving as the
Executive Director of various companies in Singapore and Malaysia, including
Daiman Group (a Malaysian public company) and Chye Seng Tannery (Pte) Ltd. Mr.
Tay holds a B.A. from the North East London Polytechnic University.
Jeffrey Young, has been a member of the Board of Directors since August
1995. Since 1988, Mr. Young has been a resident of Singapore and has served as
the Executive Director of Daiman Roof Tiles Sdn. Bhd., a subsidiary of the
Daiman Group, and Great Wall Brick Work Sdn. Bhd., and as a Director of Daiman
Singapore (Pte) Ltd., Teletel System (Pte) Ltd. and Daiman Investments
(Australia) Pty. Ltd. Mr. Young holds a B.S. from the Electronic College of
Canton, People's Republic of China.
Van Lewing, joined the Company in March 1995 as its Director of Marketing.
Prior to joining the Company, Mr. Lewing was employed as Marketing Manager,
Mixed-Signal Products at National Semiconductor Corporation from November 1993
to March 1995. He also served as Marketing Manager, RISC Microprocessors at
Performance Semiconductor from April 1990 to November 1993 and as Director of
Marketing, ASIC Products at LSI Logic from January 1987 to April 1990. Mr.
Lewing holds a B.S.E.E. from the University of New Mexico and an M.B.A. from
National University.
All directors of the Company serve until the next annual meeting of the
shareholders of the Company and until their successors have been duly elected
and qualified. Mr. Tay was elected director as the representative of the
holders of the Company's Series A Preferred Stock, and Mr. Young was elected
director as the representative of the holders of the Company's Series B and C
Preferred Stock. The Company's Articles of Incorporation provide for the
elimination of cumulative voting in the election of directors upon qualifying
as a "listed corporation" under the California Corporations Code, which will
occur when the Company has at least 800 shareholders of record as of its most
recent annual shareholders meeting. Each officer serves at the discretion of
the Board of Directors. Mr. Hui and Dr. Hui are brothers, and Mr. Young and
Mr. Tay are brothers-in-law. There are no other family relationships among any
of the directors, officers or key employees of the Company.
DIRECTOR COMPENSATION
The Company's directors receive no fees for their services as members of the
Board of Directors or committee members and are not reimbursed for expenses
incurred in connection with attending meetings of the Board of Directors or
any committee thereof. Pursuant to the 1995 Stock Option Plan, all non-
employee directors of the Company receive automatic stock option grants upon
joining the Board of Directors and annually thereafter. The exercise price of
such stock options is equivalent to the fair market value of the underlying
Common Stock on the date of grant. See "-- Stock Plans -- 1995 Stock Option
Plan."
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Although the Company has established a compensation committee, this
committee has not held any meetings to date, and all decisions regarding
executive compensation to date have been made by the full Board of Directors.
None of the executive officers who serves on the Board of Directors has
participated in deliberations regarding his own compensation.
44
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning compensation
of the Company's Chief Executive Officer and each of the other most highly
compensated executive officers of the Company whose aggregate salary, bonus
and other compensation exceeded $100,000 during fiscal 1997 (collectively, the
"Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL
COMPENSATION SHARES
---------------- UNDERLYING
NAME AND PRINCIPAL POSITION SALARY BONUS OPTIONS
- ------------------------------------------------- -------- ------- ------------
<S> <C> <C> <C>
Alex Chi-Ming Hui................................ $152,849 $23,000 --
Chief Executive Officer, President and Director
Chi-Hung (John) Hui.............................. 137,039 18,000 --
Vice President, Technology and Director
Patrick B. Brennan............................... 118,908 9,000 20,000
Vice President, Finance and Administration
Daniel W. Wark................................... 106,693 9,000 25,000
Vice President, Operations
Yao T. (Michael) Yen............................. 104,962 -- 5,000
Vice President, Applications
Henry O'Hara (1)................................. 120,030 -- --
Vice President, Sales
</TABLE>
- --------
(1) Mr. O'Hara resigned as Vice President, Sales in March 1997.
OPTION GRANTS. The following table sets forth certain information concerning
stock option grants to each of the Named Executive Officers during fiscal
1997.
<TABLE>
<CAPTION>
OPTION GRANTS IN FISCAL 1997
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
----------------------------------------------- AT ASSUMED ANNUAL RATES
NUMBER OF OF STOCK PRICE
SHARES PERCENT OF TOTAL EXERCISE APPRECIATION FOR OPTION
UNDERLYING OPTIONS GRANTED PRICE TERM(4)
OPTIONS TO EMPLOYEES IN PER EXPIRATION ---------------------------
NAME GRANTED FISCAL 1997(1) SHARE(2) DATE(3) 5% 10%
- ------------------------ ---------- ---------------- -------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Alex Chi-Ming Hui....... -- -- -- -- -- --
Chi-Hung (John) Hui..... -- -- -- -- -- --
Patrick B. Brennan...... 5,000 1.0% $3.80 09/26/06 $ 11,949 $ 30,281
15,000 3.1 2.40 04/24/07 22,640 57,375
Daniel W. Wark.......... 25,000 5.1 2.40 05/19/06 34,269 85,030
Yao T. (Michael) Yen.... 5,000 1.0 3.80 09/26/06 11,949 30,281
Henry O'Hara............ -- -- -- -- -- --
</TABLE>
- --------
(1) In fiscal 1997, the Company granted options to employees to purchase an
aggregate of 488,825 shares.
(2) Each of these options was granted pursuant to the Company's 1995 Stock
Option Plan and is subject to the terms of such plan as described below.
These options were granted at an exercise price equal to the fair market
value of the Company's Common Stock as determined by the Board of
Directors of the Company on the date of the grant. All such options vest
over a four-year period, subject to continued employment with the Company.
45
<PAGE>
(3) Options may terminate before their expiration dates if the optionee's
status as an employee or consultant is terminated or upon the optionee's
death or disability.
(4) The 5% and 10% assumed annual rates of compounded stock price appreciation
are mandated by rules of the Securities and Exchange Commission and do not
represent the Company's estimate or projection of the Company's future
Common Stock prices.
OPTION EXERCISES AND YEAR-END HOLDINGS. The following table sets forth
certain information as of June 30, 1997 concerning exercisable and
unexercisable stock options held by each of the Named Executive Officers.
AGGREGATE OPTION EXERCISES IN FISCAL 1997 AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
NUMBER OF OPTIONS AT JUNE 30, 1997 JUNE 30, 1997 (2)
SHARES ACQUIRED VALUE ------------------------- -------------------------
NAME ON EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------ --------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Alex Chi-Ming Hui....... -- -- 150,000 -- $210,000 --
Chi-Hung (John) Hui..... -- -- 100,000 -- 140,000 --
Patrick B. Brennan...... -- -- 54,376 21,624 113,000 $2,760
Daniel W. Wark.......... -- -- 6,771 18,229 -- --
Yao T. (Michael) Yen.... 50,000 $110,000 4,376 5,624 5,156 2,344
Henry O'Hara............ 45,104 67,966 -- -- -- --
</TABLE>
- --------
(1) No public market existed for the Company's Common Stock during fiscal
1997. The value realized represents the estimated value of shares of
Common Stock determined by the Board of Directors of the Company, less the
option exercise price.
(2) The value of "in-the-money" stock options represents the difference
between the exercise price of such stock options and the fair market value
of $2.40 per share of Common Stock as of June 30, 1997, as determined by
the Company's Board of Directors, multiplied by the total number of shares
subject to such options on June 30, 1997.
STOCK PLANS
1990 STOCK OPTION PLAN. The Company's 1990 Stock Option Plan (the "1990
Plan") was approved by the Board of Directors in February 1991 and by the
Company's shareholders in May 1991. The 1990 Plan provides for the grant of
options intended to qualify as "incentive stock options" under Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code"), and nonqualified
stock options. The 1990 Plan also provides for the issuance or sale of Common
Stock in connection with the performance of services to the Company or its
affiliates. As of June 30, 1997, 489,346 shares of Common Stock had been
issued upon exercise of options granted under the 1990 Plan and 787,510 shares
remained reserved for future issuance upon the exercise of outstanding
options. Effective June 30, 1997, the Board of Directors terminated the 1990
Plan, and no further options will be granted under the 1990 Plan.
The Board of Directors or a committee designated by the Board is authorized
to administer the 1990 Plan, including the selection of individuals eligible
for grants of options, issuances of Common Stock, the terms of such grants or
issuances and the interpretation of the terms of, and adoption of rules for,
the 1990 Plan. The maximum term of any stock option granted under the 1990
Plan is ten years, except that with respect to incentive stock options granted
to a person possessing more than 10% of the combined voting power of the
Company (a "10% Shareholder"), the term of such stock options shall be no more
than five years. The exercise price of nonqualified stock options and
incentive stock options granted under the 1990 Plan must be at least 85% and
100%, respectively, of the fair market value of the Company's Common Stock on
the grant date, except that the exercise price of incentive stock options
granted to a 10% Shareholder must be at least 110% of such fair market
46
<PAGE>
value on the grant date. Options granted to employees under the 1990 Plan
generally vest over a four-year period. The aggregate fair market value on the
date of grant of the Common Stock for which incentive stock options are
exercisable for the first time by an employee during any calendar year may not
exceed $100,000. The 1990 Plan may be amended at any time by the Board, except
that certain amendments require shareholder approval.
1995 STOCK OPTION PLAN. The Company's 1995 Stock Option Plan (the "1995
Plan") was approved by the Board of Directors in September 1995 and by the
Company's shareholders in October 1995. The 1995 Plan permits the grant of
incentive stock options to employees of the Company (including officers and
directors who are also employees of the Company) and the grant of nonqualified
stock options to employees, officers, directors, independent contractors and
consultants of the Company. Initially, 1,800,000 shares of Common Stock were
reserved for issuance in connection with the grant of options under the 1995
Plan. The 1995 Plan provides that the share reserve will be increased on July
1 of each year by an amount equal to 10% of the total number of shares of
Common Stock outstanding as of the immediately preceding June 30; provided,
however, that the maximum number of shares of Common Stock reserved for
issuance under the 1995 Plan shall not exceed 2,700,000 shares. The aggregate
number of shares of Common Stock available for grant of incentive stock
options, however, is 1,800,000 shares and is not subject to annual adjustment.
As of July 1, 1997, an aggregate of 2,251,120 shares of Common Stock was
reserved for issuance under the 1995 Plan, 146 shares had been issued upon
exercise of outstanding options under the 1995 Plan. 420,855 shares remained
reserved for issuance upon the exercise of outstanding options and 1,830,119
shares remained available for future grant. In addition, the maximum number of
shares of Common Stock with respect to which options may be granted to any
individual in any calendar year under the 1995 Plan is 150,000. Options
granted to employees under the 1995 Plan generally vest over a four-year
period.
The 1995 Plan provides for automatic options to purchase nonqualified option
grants to directors who are not employees of the Company (the "Non-Employee
Directors") of 7,500 shares of Common Stock at the time first elected to the
Board ("Initial Grants") and 3,750 shares annually thereafter ("Subsequent
Grants") to continuing Non-Employee Directors immediately following the annual
meeting of shareholders of the Company. The exercise price of options granted
to Non-Employee Directors will be at the fair market value on the date of
grant. Initial Grants will be fully vested and exercisable as of the date of
grant and Subsequent Grants will vest at the rate of 25% each quarter
following the date of grant, so that the option will be fully vested and
exercisable twelve months following the date of grant. Non-Employee Directors
are not eligible to receive any other option grants under the 1995 Plan or any
other stock plans of the Company.
The Board of Directors or a committee designated by the Board (the
"Committee") is authorized to administer the 1995 Plan, including the
selection of persons (other than Non-Employee Directors) to whom options may
be granted and the interpretation and implementation of the 1995 Plan. Options
granted under the 1995 Plan will vest and become exercisable as determined by
the Committee at the time of the option grant. The maximum term of an option
granted under the 1995 Plan is ten years (five years in the case of an
incentive stock option granted to a 10% Shareholder). The aggregate fair
market value, on the date of grant, of the Common Stock for which incentive
stock options are exercisable for the first time by an employee during any
calendar year may not exceed $100,000. The exercise price of each option
granted under the 1995 Plan shall not be less than the fair market value of
the Common Stock on the date of grant (or not less than 110% of fair market
value in the case of an incentive stock option granted to a 10% Shareholder).
Except for the provisions relating to the grant of stock options to Non-
Employee Directors, the 1995 Plan may be amended at any time by the Board of
Directors, although certain amendments require shareholder approval. The 1995
Plan will terminate in September 2005, unless earlier terminated by the Board.
1997 EMPLOYEE STOCK PURCHASE PLAN. The Company's 1997 Employee Stock
Purchase Plan (the "Stock Purchase Plan"), which was approved by the Board of
Directors in September 1997 and will be submitted for approval by the
Company's shareholders in October 1997, is intended to qualify as an "employee
stock purchase plan" under Section 423 of the Code and to provide employees of
the Company with an opportunity to purchase shares of Common Stock through
payroll deductions. A total of 300,000 shares of the Company's Common
47
<PAGE>
Stock has been reserved for issuance under the Stock Purchase Plan, none of
which have been issued. The Stock Purchase Plan permits eligible employees to
purchase Common Stock at a discount through payroll deductions, during
concurrent 24-month purchase periods. Each purchase period will be divided into
four consecutive six-month accrual periods. The price at which stock is
purchased under the Stock Purchase Plan is equal to 85% of the fair market
value of the Common Stock on the first day of the purchase period or the last
day of the accrual period, whichever is lower. The initial purchase period will
commence on the Effective Date.
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS
The Company's Bylaws provide that the Company will indemnify its directors,
executive officers, employees and other agents to the fullest extent permitted
by California law. Prior to the consummation of this offering, the Company
intends to enter into indemnification agreements with each of its directors and
executive officers and to obtain a directors' and officers' liability insurance
policy that insures such persons against the cost of defense, settlement or
payment of judgments under certain circumstances.
In addition, the Company's Amended and Restated Articles of Incorporation
(the "Articles") eliminate the liability of the Company's directors to the
fullest extent permitted by California law. This provision in the Articles does
not eliminate a director's duty of care and, in appropriate circumstances,
equitable remedies such as an injunction or other forms of non-monetary relief
would remain available under California law. Each director will continue to be
subject to liability for breach of the director's duty of loyalty to the
Company, acts or omissions not in good faith or involving intentional
misconduct or knowing violations of law, acts or omissions that the director
believes to be contrary to the best interests of the Company or its
shareholders, any transaction from which the director derived an improper
personal benefit, improper transactions between the director and the Company
and improper distributions to shareholders and loans to directors and officers.
This provision also does not affect a director's responsibilities under any
other laws, such as the federal securities laws, or federal or state
environmental laws. The Articles also authorize the Company's indemnification
of its agents for breach of their duty through Bylaw provisions or agreements
to the fullest extent permitted under California law.
There is no pending litigation or proceeding involving a director or officer
of the Company as to which indemnification is being sought, nor is the Company
aware of any pending or threatened litigation that may result in claims for
indemnification by any director or officer.
48
<PAGE>
CERTAIN TRANSACTIONS
The Company, Alex Chi-Ming Hui, President, Chief Executive Officer and a
director of the Company, and Chi-Hung (John) Hui, Vice President, Technology
and a director of the Company, and Dato' Sri Tay Kia Hong and members of his
immediate family, who are principal shareholders of the Company, formed
Pericom Technology, Inc., a British Virgin Islands corporation ("PTI") with
principal offices in Shanghai, People's Republic of China. 18.4% of the
outstanding voting stock of PTI is held by the Company whereas the remaining
81.6% of the outstanding PTI voting stock is held by directors, officers and
principal shareholders of the Company. Each of the directors of the Company is
a director of PTI. Pericom and PTI are parties to an agreement, dated as of
March 17, 1995, which provides for cost reimbursement between the Company and
PTI for any facility sharing or personnel time and certain procedures for
funding research and development and joint development projects. During the
years ended June 30, 1996 and 1997, the Company sold $24,000 and $39,000
respectively, in services to PTI. As of June 30, 1997, $99,000 was owed to the
Company by PTI for certain administrative expenses incurred by the Company on
behalf of PTI. See Note 4 of Notes to Financial Statements and "Principal and
Selling Shareholders."
Further, the Company and PTI have entered into an international distributor
agreement, dated as of September 14, 1995, pursuant to which PTI has been
appointed a non-exclusive distributor for certain Pericom products in People's
Republic of China.
The Company believes that all of the transactions set forth above were made
on terms no less favorable to the Company than could have been obtained from
unaffiliated third parties. All future transactions between the Company and
its officers, directors, principal shareholders and their affiliates,
including transactions with PTI, will continue to be on terms no less
favorable to the Company than could be obtained from unaffiliated third
parties.
The Company intends to enter into indemnification agreements with each of
its executive officers and directors. See "Management -- Limitation of
Liability and Indemnification Matters."
49
<PAGE>
PRINCIPAL AND SELLING SHAREHOLDERS
The following table sets forth certain information known to the Company with
respect to beneficial ownership of the Company's Common Stock as of August 31,
1997 and as adjusted to reflect the sale of the shares offered hereby, by (i)
each person known by the Company to own beneficially more than 5% of the
outstanding shares of Common Stock, (ii) each of the Company's directors,
(iii) each of the Named Executive Officers, (iv) each of the Selling
Shareholders, and (v) all executive officers and directors of the Company as a
group.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO NUMBER OWNED AFTER
OFFERING(1) OF SHARES OFFERING(1)
----------------- BEING ---------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT OFFERED NUMBER PERCENT
- ------------------------------ --------- ------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
Dato' Sri Tay Kia Hong(2)..... 1,312,500 18.6%
No. 2, Chuan Walk
Singapore 1955
Tay Thiam Song(3)............. 1,088,126 15.5
No. 5, Chuan Walk
Singapore 1955
Alex Chi-Ming Hui(4)(5)....... 917,195 12.8
Chi-Hung (John) Hui(5)(6)..... 715,618 10.1
Chye Seng Tannery (Pte)
Ltd.(7)....................... 625,000 8.9
741/743 Geylang Road
Singapore 1438
Tay Tian Liang(8)............. 450,000 6.4
48 Andrew Road
Singapore 1129
Tay Thiang Phong(9)........... 450,000 6.4
No. 1, Chuan Walk
Singapore 1955
Tay Thiam Yew(10)............. 450,000 6.4
No. 3, Chuan Walk
Singapore 1955
Jeffrey Young(11)............. 238,126 3.4
Patrick B. Brennan(12)........ 59,542 *
Yao T. (Michael) Yen(13)...... 55,208 *
Henry O'Hara.................. 45,104 *
Daniel W. Wark(14)............ 10,313 *
All executive officers and
directors as a group
(8 persons)(15).............. 3,084,128 42.0
</TABLE>
- --------
* Less than 1% of the outstanding Common Stock.
50
<PAGE>
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage ownership of that
person, shares of Common Stock subject to options held by that person that
are currently exercisable or exercisable within 60 days of August 31, 1997
are deemed outstanding. Percentage of beneficial ownership is based upon
7,012,040 shares of Common Stock outstanding before this offering and
shares of Common Stock outstanding after this offering, as of August 31,
1997 and assuming no exercise of the Underwriters' over-allotment option.
To the Company's knowledge, except as set forth in the footnotes to this
table and subject to applicable community property laws, each person named
in the table has sole voting and investment power with respect to the
shares set forth opposite such person's name.
(2) Dato' Sri Tay Kia Hong is the father of Mr. Tay Thiam Song, a director of
the Company, Mr. Tay Tian Liang, Mr. Tay Thiang Phong and Mr. Tay Thiem
Yew, and the father-in-law of Mr. Jeffrey Young, a director of the
Company. Includes 50,000 shares issuable upon exercise of stock options
exercisable within 60 days of August 31, 1997. Also includes 625,000
shares owned by Chye Seng Tannery (Pte) Ltd., which company is controlled
by Dato' Sri Tay Kia Hong, who may therefore be deemed to beneficially own
such shares, but Dato' Sri Tay Kia Hong disclaims beneficial ownership of
such shares except to the extent of his pecuniary interest therein. See
footnote 7.
(3) Mr. Tay Thiam Song is a brother-in-law of Mr. Young. Includes 13,126
shares issuable upon exercise of stock options exercisable within 60 days
of August 31, 1997. Also includes 625,000 shares owned by Chye Seng
Tannery (Pte) Ltd. Mr. Tay, as Executive Director of Chye Seng Tannery
(Pte) Ltd., may be deemed to beneficially own such shares, but Mr. Tay
disclaims beneficial ownership of all such shares. See footnote 7.
(4) Includes 156,250 shares issuable upon exercise of stock options
exercisable within 60 days of August 31, 1997.
(5) The address of such person is 2380 Bering Drive, San Jose, California
95131.
(6) Includes 104,688 shares issuable upon exercise of stock options
exercisable within 60 days of August 31, 1997.
(7) Chye Seng Tannery (Pte) Ltd. is controlled by Dato' Sri Tay Kia Hong, the
former Chairman of the Board of Directors of the Company and a principal
shareholder of the Company, and certain members of his immediate family,
each of whom is also a principal shareholder of the Company. See footnotes
2 and 3.
(8) Mr. Tay Tian Liang is a brother of Mr. Tay Tiam Song and a brother-in-law
of Mr. Young.
(9) Mr. Tay Thiang Phong is a brother of Mr. Tay Tiam Song and a brother-in-
law of Mr. Young.
(10) Mr. Tay Thiam Yew is a brother of Mr. Tay Tiam Song and a brother-in-law
of Mr. Young.
(11) Includes 13,126 shares issuable upon exercise of stock options exercisable
within 60 days of August 31, 1997.
(12) Includes 31,542 shares issuable upon exercise of stock options exercisable
within 60 days of August 31, 1997.
(13) Includes 50,000 shares held as community property with Mei Y. Yen and
5,208 shares issuable upon exercise of stock options exercisable within 60
days of August 31, 1997.
(14) Consists of 10,313 shares issuable upon exercise of stock options
exercisable within 60 days of August 31, 1997.
(15) Includes 334,253 shares issuable upon exercise of stock options
exercisable within 60 days of August 31, 1997.
51
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The Company is authorized to issue up to 30,000,000 shares of Common Stock,
no par value per share, and 5,000,000 shares of Preferred Stock, no par value
per share.
The following summary of certain provisions of the Common Stock and
Preferred Stock does not purport to be complete and is subject to, and
qualified in its entirety by, the provisions of the Company's Articles, which
are included as an exhibit to the Registration Statement of which this
Prospectus is a part, and by the provisions of applicable law.
COMMON STOCK
As of August 31, 1997, there were 7,012,040 shares of Common Stock
outstanding that were held of record by approximately 131 shareholders. Upon
completion of the offering, there will be shares of Common Stock
outstanding. The holders of Common Stock are entitled to one vote for each
share held of record on all matters submitted to a vote of the shareholders of
the Company. Subject to preferences that may be granted to any then
outstanding Preferred Stock, holders of Common Stock are entitled to receive
ratably such dividends as may be declared by the Board of Directors out of
funds legally available therefor as well as any distributions to the
shareholders. See "Dividend Policy." In the event of a liquidation,
dissolution or winding up of the Company, holders of Common Stock are entitled
to share ratably in all assets of the Company remaining after payment of
liabilities and the liquidation preference of any then outstanding Preferred
Stock. Holders of Common Stock have no preemptive or other subscription or
conversion rights. There are no redemption or sinking fund provisions
applicable to the Common Stock. All outstanding shares of Common Stock are,
and all shares of Common Stock to be outstanding upon completion of the
offering will be, validly issued, fully paid and nonassessable.
PREFERRED STOCK
As of the closing of this offering, no shares of Preferred Stock will be
outstanding. Effective at such time and pursuant to the Company's Articles,
the Board of Directors will have the authority, without further action by the
Company's shareholders, to issue up to 5,000,000 shares of Preferred Stock in
one or more series and to fix the rights, preferences, privileges and
restrictions thereof, including dividend rights, conversion rights, voting
rights, terms of redemption, liquidation preferences, sinking fund terms and
the number of shares constituting any series or the designation of such
series, any or all of which may be greater than the rights of the Common
Stock. The issuance of Preferred Stock could adversely affect the voting power
of holders of Common Stock and the likelihood that such holders will receive
dividend payments and payments upon liquidation and could have the effect of
delaying, deferring or preventing a change in control of the Company. The
Company has no present plan to issue any additional shares of Preferred Stock.
REGISTRATION RIGHTS
Pursuant to an agreement between the Company and the holders (the "Holders")
of approximately 4,415,000 shares of Common Stock after the completion of this
offering (the "Registrable Securities"), the Holders or their transferees are
entitled to certain rights with respect to the registration of such shares
under the Securities Act. If the Company proposes to register any of its
securities under the Securities Act, either for its own account or the account
of other security holders, the Company is required to use its best efforts to
effect such registration, and the Holders are entitled to notice of such
registration and, subject to certain conditions and limitations, are entitled
to include, at the Company's expense, such shares therein. In addition, at any
time, the Holders of at least 50% of the Registrable Securities may require
the Company, on not more than two occasions, to file a registration statement
under the Securities Act at the Company's expense, and the Company is required
to use its best efforts to effect such registration, subject to certain
conditions and limitations. Further, the Holders of such Registrable
Securities may require the Company to file additional registration statements
on Form S-3 when such form becomes available to the Company, subject to
certain conditions and limitations. The expenses incurred in connection with
such Form S-3 registrations will be borne pro rata by the Holders
participating in such registrations.
52
<PAGE>
LISTING
Application has been made for quotation of the Company's Common Stock on The
Nasdaq National Market under the symbol "PSEM."
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Company's Common Stock is The First
National Bank of Boston. Its address is 150 Royall Street, Canton,
Massachusetts 02021, and its telephone number is (617) 774-5573.
SHARES ELIGIBLE FOR FUTURE SALE
Sales of a substantial number of shares of Common Stock after this offering
could adversely affect the market price of the Common Stock and could impair
the Company's ability to raise capital through the sale of equity securities.
Upon completion of this offering, the Company will have approximately
shares of Common Stock outstanding, based on the number of shares of
Common Stock outstanding as of August 31, 1997. Of these shares, the
shares offered hereby will be freely tradable without restriction under the
Securities Act, unless they are held by "affiliates" of the Company as that
term is used in Rule 144 under the Securities Act.
The remaining 7,012,040 outstanding shares are "restricted securities"
within the meaning of Rule 144. 155,000 of these shares will be eligible for
sale in the public market as of the Effective Date under Rule 144, subject in
some cases to certain volume restrictions and other conditions imposed
thereby. 90 days after the date of this Prospectus, 146 outstanding shares and
approximately 131,732 additional shares subject to vested options will become
eligible for sale subject to compliance with Rule 144 and Rule 701. Upon the
expiration of agreements not to sell shares entered into with SoundView
Financial Group, Inc. and/or the Company, 180 days after the Effective Date,
approximately 6,856,894 additional shares will become eligible for sale
subject to the provisions of Rule 144 or Rule 701 and approximately 826,891
additional shares subject to vested options will be eligible for sale subject
to compliance with Rule 144 and Rule 701. The remainder of the shares will be
eligible for sale from time to time thereafter upon expiration of their
respective one-year holding periods, subject in each case to the restrictions
on such sales by affiliates of the Company. Any shares subject to lock-up
agreements may be released by SoundView Financial Group, Inc. prior to the
expiration of the lock-up period at any time without notice. See
"Underwriting."
As soon as practicable after the Effective Date, the Company intends to file
one or more registration statements on Form S-8 under the Securities Act to
register up to approximately 3,787,364 shares of Common Stock reserved for
issuance under the Company's 1990 Plan, 1995 Plan and Stock Purchase Plan,
thus permitting the resale of such shares by non-affiliates in the public
market without restriction under the Securities Act unless subject to lock-up
agreements. Such registration statement(s) will become effective immediately
upon filing. See "Management -- Stock Plans."
Prior to this offering, there has been no public market for the Common Stock
of the Company, and any sale of substantial amounts in the open market may
adversely affect the market price of the Common Stock offered hereby. See
"Risk Factors -- Potential Effect of Shares Eligible for Future Sale on Market
Price of the Common Stock."
53
<PAGE>
UNDERWRITING
Upon the terms and subject to the conditions set forth in an underwriting
agreement (the "Underwriting Agreement"), the Underwriters named below, for
whom SoundView Financial Group, Inc. and Unterberg Harris are acting as
representatives (the "Representatives"), have severally agreed to purchase
from the Company and the Selling Shareholders an aggregate of shares
of Common Stock. The number of shares of Common Stock that each underwriter
has agreed to purchase is set forth opposite its name below:
<TABLE>
<CAPTION>
NUMBER
OF
UNDERWRITER SHARES
----------- -------
<S> <C>
SoundView Financial Group, Inc.......................................
Unterberg Harris.....................................................
-------
Total..............................................................
=======
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters to purchase shares of Common Stock are subject to the approval of
certain legal matters by counsel and to certain other conditions. If any of
the shares of Common Stock are purchased by the Underwriters pursuant to the
Underwriting Agreement, all such shares of Common Stock (other than the shares
of Common Stock covered by the over-allotment option described below) must be
so purchased.
The Company and the Selling Shareholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act, and to contribute to payments that the Underwriters may be
required to make in respect thereof.
The Underwriters propose to offer the shares of Common Stock directly to the
public at the initial public offering price set forth on the cover page of
this Prospectus and to certain dealers (who may include the Underwriters) at
such price less a concession not to exceed $ per share. The Underwriters
may allow, and such dealers may reallow, a concession not to exceed $ per
share to any other Underwriter and certain other dealers. After the initial
public offering of the shares offered hereby, the offering price and other
selling terms may be changed by the Representatives. The Representatives have
advised the Company that the Underwriters do not intend to confirm any shares
to any accounts over which they exercise discretionary control.
The Company and the Selling Shareholders have granted to the Underwriters an
option, exercisable for 30 days from the date of this Prospectus, to purchase
up to an aggregate of additional shares of Common Stock at the
initial public offering price less underwriting discounts and commissions.
Such option may be exercised solely for the purpose of converting
overallotments, if any, in connection with the offering of the shares offered
hereby. To the extent that the Underwriters exercise such option, each of the
Underwriters will be committed, subject to certain conditions, to purchase a
number of additional shares proportionate to such Underwriter's initial
commitment as indicated in the preceding table.
The offering of the shares offered hereby is made for delivery when, as and
if accepted by the Underwriters and subject to prior sale and to withdrawal,
cancellation or modification of the offering without notice. The Underwriters
reserve the right to reject an order for the purchase of shares in whole or in
part.
The Company, all directors and executive officers of the Company, and
certain shareholders and optionholders of the Company, who will beneficially
own an aggregate of shares of Common Stock after this offering, have
agreed that, without the prior written consent of SoundView Financial Group,
Inc., they will
54
<PAGE>
not, with certain limited exceptions, directly or indirectly, offer, sell,
contract to sell, grant any option to purchase or otherwise dispose of any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or, in any manner, transfer all or a portion of
the economic consequences associated with the ownership of the Common Stock,
for a period of 180 days after the Effective Date, other than the shares of
Common Stock offered hereby.
In connection with this offering, certain Underwriters and selling group
members and their respective affiliates may engage in transactions that
stabilize, maintain or otherwise affect the market price of the Common Stock.
Such transactions may include stabilization transactions effected in
accordance with Rule 104 of Regulation M under the Securities Exchange Act of
1934, as amended, pursuant to which such persons may bid for or purchase
shares of Common Stock for the purpose of stabilizing the market price for
shares of Common Stock. The Underwriters also may create a short position for
the account of the Underwriters by selling more shares of Common Stock in
connection with this offering than they are committed to purchase from the
Company and the Selling Shareholders, and in such case may purchase shares of
Common Stock in the open market following the completion of this offering to
cover all or a portion of the shares of Common Stock or by exercising the
Underwriters' over-allotment option referred to above. In addition, SoundView
Financial Group, Inc., on behalf of the Underwriters, may impose "penalty
bids" under contractual arrangements with the other Underwriters whereby it
may reclaim for an Underwriter (or a dealer participating in this offering)
for the account of the other Underwriters, the selling concession with respect
to shares of Common Stock that are distributed in this offering but
subsequently purchased for the account of the Underwriters in the open market.
Any of the transactions described in this paragraph may result in the
maintenance of the price of the Common Stock at a level above that which might
otherwise prevail in the open market. None of the transactions described in
this paragraph are required, and, if they are undertaken, may be discontinued
at any time.
Prior to this offering, there has been no public market for the Common
Stock. The initial public offering price for the Common Stock offered hereby
will be determined by negotiation among the Company, the Selling Shareholders
and the Representatives. Among the factors to be considered in determining the
initial public offering price are prevailing market conditions, revenues and
earnings of the Company, market valuations of other companies engaged in
activities similar to the Company, estimates of the business potential and
prospects of the Company, the present state of the Company's business
operations, the history of and prospects for the Company's business and the
industry in which it competes, the Company's management and other factors
deemed relevant. The estimated initial public offering price range set forth
on the cover of this preliminary prospectus is subject to change as a result
of market conditions and other factors.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for the
Company and the Selling Shareholders by Morrison & Foerster LLP, Palo Alto,
California. Certain legal matters in connection with this offering will be
passed upon for the Underwriters by Gray Cary Ware & Freidenrich, A
Professional Corporation, Palo Alto, California.
EXPERTS
The financial statements as of June 30, 1996 and 1997 and for each of the
three years in the period ended June 30, 1997 included in this Prospectus and
the related financial statement schedule included elsewhere in the
registration statement have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their reports appearing herein and elsewhere in the
registration statement, and have been so included in reliance upon the reports
of such firm given upon their authority as experts in accounting and auditing.
55
<PAGE>
ADDITIONAL INFORMATION
The Company has filed with Securities and Exchange Commission (the
"Commission") in Washington, D.C. a registration statement (together with all
amendments, the "Registration Statement") on Form S-1 under the Securities Act
with respect to the Common Stock offered hereby. This Prospectus, filed as
part of the Registration Statement, does not contain all of the information
set forth in the Registration Statement and the exhibits and schedules
thereto, certain portions of which have been omitted as permitted by the rules
and regulations of the Commission. For further information with respect to the
Company and the Common Stock, reference is made to the Registration Statement
and to such exhibits and schedules thereto. Statements contained in this
Prospectus as to the contents of any contract, agreement or other document are
not necessarily complete and, in each instance, reference is made to the copy
of such contract, agreement or document filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference. The Registration Statement and the exhibits and schedules
thereto may be inspected by anyone without charge at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549 and at the regional offices of the Commission located at 7 World
Trade Center, Suite 1300, New York, New York 10048 and 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of all or any part of such
materials may be obtained from the Commission upon the payment of certain fees
prescribed by the Commission. Such reports and other information may also be
inspected without charge at the Commission's web site. The address of such
site is http://www.sec.gov.
56
<PAGE>
PERICOM SEMICONDUCTOR CORPORATION
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Financial Statements:
Independent Auditors' Report............................................. F-2
Balance Sheets as of June 30, 1996 and 1997.............................. F-3
Statements of Income for the Fiscal Years Ended June 30, 1995, 1996 and
1997.................................................................... F-4
Statements of Shareholders' Equity for the Fiscal Years Ended June 30,
1995, 1996 and 1997..................................................... F-5
Statements of Cash Flows for the Fiscal Years Ended June 30, 1995, 1996
and 1997................................................................ F-6
Notes to Financial Statements............................................ F-7
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of
Pericom Semiconductor Corporation:
We have audited the accompanying balance sheets of Pericom Semiconductor
Corporation as of June 30, 1996 and 1997, and the related statements of
income, shareholders' equity, and cash flows for each of the three years in
the period ended June 30, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Pericom Semiconductor Corporation at June
30, 1996 and 1997, and the results of its operations and its cash flows for
each of the three years in the period ended June 30, 1997, in conformity with
generally accepted accounting principles.
San Jose, California
July 31, 1997
( , 1997 as to the third and fourth sentences of Note 1)
----------------
To the Board of Directors and Shareholders of Pericom Semiconductor
Corporation:
The financial statements included herein have been adjusted to give effect
to the one-for-two reverse stock split as described in the third and fourth
sentences of Note 1 to the financial statements. The above report is in the
form that will be signed by Deloitte & Touche LLP upon the effectiveness of
such reverse stock split assuming that from July 31, 1997 to the effective
date of such events, no other events shall have occurred that would affect the
accompanying financial statements or notes thereto.
Deloitte & Touche LLP
San Jose, California
September 10, 1997
F-2
<PAGE>
PERICOM SEMICONDUCTOR CORPORATION
BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
AS OF JUNE 30,
---------------
1996 1997
------- -------
<S> <C> <C>
ASSETS
Current assets:
Cash and equivalents.......................................... $ 8,556 $ 9,566
Accounts receivable:
Trade (net of allowances of $1,605 and $1,198)............... 1,849 3,247
Related party................................................ 74 99
Inventories................................................... 5,469 6,182
Prepaid expenses and other current assets..................... 82 149
Income taxes refundable....................................... 295 --
Deferred income taxes......................................... 413 339
------- -------
Total current assets....................................... 16,738 19,582
Property and equipment -- net.................................. 2,394 3,422
Investments.................................................... 625 545
Other assets................................................... 63 32
------- -------
Total...................................................... $19,820 $23,581
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable.............................................. $ 3,283 $ 4,984
Accrued liabilities........................................... 1,310 1,203
Income taxes payable.......................................... -- 411
------- -------
Total current liabilities.................................. 4,593 6,598
Commitments and contingencies (Notes 8 and 9)
Deferred income taxes.......................................... 132 188
Shareholders' equity:
Preferred stock, no par value; 14,225,000 shares authorized
(agreggate liquidation preference of outstanding series A, B
and C of $7,750,000):
Series A, 5,200,000 shares designated and outstanding........ 2,588 2,588
Series B, 2,150,000 shares designated and outstanding........ 2,137 2,137
Series C, 1,875,000 shares designated and outstanding........ 2,992 2,992
Common stock, no par value, 30,000,000 shares authorized;
shares issued and outstanding: 1996, 2,165,251; 1997,
2,345,951................................................... 79 201
Retained earnings............................................. 7,299 8,877
------- -------
Total shareholders' equity................................. 15,095 16,795
------- -------
Total...................................................... $19,820 $23,581
======= =======
</TABLE>
See notes to financial statements.
F-3
<PAGE>
PERICOM SEMICONDUCTOR CORPORATION
STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE
30,
-------------------------
1995 1996 1997
------- ------- -------
<S> <C> <C> <C>
Net revenues......................................... $22,732 $41,174 $33,166
Cost of revenues..................................... 12,873 22,797 20,986
------- ------- -------
Gross profit....................................... 9,859 18,377 12,180
------- ------- -------
Operating expenses:
Research and development............................ 2,942 4,414 4,187
Selling, general and administrative................. 4,038 6,471 5,989
------- ------- -------
Total.............................................. 6,980 10,885 10,176
------- ------- -------
Income from operations............................... 2,879 7,492 2,004
Equity in net loss of joint venture.................. (55) (70) (80)
Interest income...................................... 203 402 431
Interest expense..................................... (4) -- --
Other expense........................................ -- (382) --
------- ------- -------
Income before income taxes........................... 3,023 7,442 2,355
Provision for income taxes........................... 982 2,732 777
------- ------- -------
Net income........................................... $ 2,041 $ 4,710 $ 1,578
======= ======= =======
Net income per common and equivalent share........... $ 0.26 $ 0.57 $ 0.20
======= ======= =======
Shares used in computing per share data.............. 7,936 8,230 8,053
======= ======= =======
</TABLE>
See notes to financial statements.
F-4
<PAGE>
PERICOM SEMICONDUCTOR CORPORATION
STATEMENTS OF SHAREHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
PREFERRED
STOCK COMMON STOCK TOTAL
------------- ------------- RETAINED SHAREHOLDERS'
SHARES AMOUNT SHARES AMOUNT EARNINGS EQUITY
------ ------ ------ ------ -------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balances, July 1, 1994...... 9,225 $7,717 2,061 $ 29 $ 548 $ 8,294
Exercise of employee stock
options..................... -- -- 58 17 -- 17
Net income.................. -- -- -- -- 2,041 2,041
----- ------ ----- ---- ------ -------
Balances, June 30, 1995..... 9,225 7,717 2,119 46 2,589 10,352
Exercise of employee stock
options..................... -- -- 46 33 -- 33
Net income.................. -- -- -- -- 4,710 4,710
----- ------ ----- ---- ------ -------
Balances, June 30, 1996..... 9,225 7,717 2,165 79 7,299 15,095
Exercise of employee stock
options..................... -- -- 181 122 -- 122
Net income.................. -- -- -- -- 1,578 1,578
----- ------ ----- ---- ------ -------
Balances, June 30, 1997..... 9,225 $7,717 2,346 $201 $8,877 $16,795
===== ====== ===== ==== ====== =======
</TABLE>
See notes to financial statements.
F-5
<PAGE>
PERICOM SEMICONDUCTOR CORPORATION
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE
30,
-------------------------
1995 1996 1997
------- ------- -------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income......................................... $ 2,041 $ 4,710 $ 1,578
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization..................... 448 698 966
Equity in net loss of joint venture............... 55 70 80
Deferred income taxes............................. 30 (97) 130
Changes in assets and liabilities:
Accounts receivable.............................. (2,541) 1,287 (1,423)
Inventories...................................... (815) (2,050) (713)
Prepaid expenses and other current assets........ (30) 18 (67)
Accounts payable................................. 1,862 533 1,701
Accrued liabilities.............................. 418 306 (107)
Income taxes payable (refundable)................ 143 (600) 706
------- ------- -------
Net cash provided by operating activities...... 1,611 4,875 2,851
------- ------- -------
Cash flows from investing activities:
Additions to property and equipment............... (1,260) (1,384) (2,001)
(Increase) decrease in other assets............... (7) (43) 31
Proceeds from sale of property and equipment...... -- -- 7
------- ------- -------
Net cash used for investing activities......... (1,267) (1,427) (1,963)
------- ------- -------
Cash flows from financing activities:
Sale of common stock.............................. 17 33 122
Note payable repayments........................... (123) -- --
------- ------- -------
Net cash provided by (used for) financing
activities.................................... (106) 33 122
------- ------- -------
Net increase in cash and equivalents 238 3,481 1,010
Cash and equivalents:
Beginning of period............................... 4,837 5,075 8,556
------- ------- -------
End of period..................................... $ 5,075 $ 8,556 $ 9,566
======= ======= =======
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest......................................... $ 4 $ -- $ --
======= ======= =======
Income taxes..................................... $ 809 $ 3,429 $ 50
======= ======= =======
</TABLE>
See notes to financial statements.
F-6
<PAGE>
PERICOM SEMICONDUCTOR CORPORATION
NOTES TO FINANCIAL STATEMENTS
FISCAL YEARS ENDED JUNE 30, 1995, 1996 AND 1997
1. BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Pericom Semiconductor Corporation (the "Company") was incorporated in June
1990. The Company designs, manufactures and markets high performance digital,
analog and mixed-signal integrated circuits for the personal computer,
workstation, peripherals and networking markets. In September 1997 and October
1997, the Company's Board of Directors and shareholders, respectively,
approved a one-for-two reverse stock split of the common stock to be effected
in October 1997. All common stock data in the accompanying financial
statements have been retroactively adjusted to reflect the reverse split.
FINANCIAL STATEMENT ESTIMATES -- The preparation of financial statements in
conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets,
liabilities, revenues and expenses during the reporting period. Such estimates
include the level of the allowance for potentially uncollectible receivables,
estimated costs for sales returns, price protection, stock rotation and other
allowances, inventory reserves for obsolete, slow moving or nonsalable
inventory and accrued liabilities. Actual results could differ from those
estimates.
CASH EQUIVALENTS -- The Company considers all highly liquid debt instruments
purchased with a remaining maturity of three months or less to be cash
equivalents. The recorded carrying amounts of the Company's cash and cash
equivalents approximate their fair market value.
INVENTORIES are stated at the lower of cost (first-in, first-out) or market.
PROPERTY AND EQUIPMENT are stated at cost. Depreciation and amortization are
computed using the straight-line method over estimated useful lives of three
to five years.
INVESTMENT IN JOINT VENTURE is accounted for using the equity method (see
Note 4).
LONG-LIVED ASSETS -- On July 1, 1996, the Company adopted Statement of
Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed Of." SFAS 121
requires long-lived assets to be evaluated for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. The Company's policy is to review the recoverability of all
intangible assets based upon undiscounted cash flows on an annual basis at a
minimum, and in addition, whenever events or changes indicate that the
carrying amount of an asset may not be recoverable. Adoption of SFAS No. 121
did not have a material effect on the Company's financial statements.
INCOME TAXES -- The Company accounts for income taxes under SFAS No. 109,
"Accounting for Income Taxes," which requires an asset and liability approach
to recording deferred taxes.
STOCK-BASED COMPENSATION -- The Company accounts for stock-based awards to
employees using the intrinsic method in accordance with Accounting Principles
Board Opinion No. 25, "Accounting for Stock-Based Compensation."
REVENUE RECOGNITION -- Revenue from product sales is recognized upon
shipment. Estimated costs for sales returns, price protection, stock rotation
and other allowances are accrued in the period that sales are recognized.
Domestic distributors are permitted a return allowance of 10% of their net
purchases every six months. Revenue from design services, included in net
revenues, is recognized on the completion of project milestones set forth in
the related agreements.
FISCAL PERIOD -- The Company's fiscal years in the accompanying financial
statements have been shown as ending on June 30. Fiscal years 1995, 1996 and
1997 ended on July 1, 1995, June 29, 1996 and June 28, 1997, respectively, and
each includes 52 weeks.
F-7
<PAGE>
PERICOM SEMICONDUCTOR CORPORATION
NOTES TO FINANCIAL STATEMENTS
FISCAL YEARS ENDED JUNE 30, 1995, 1996 AND 1997
CONCENTRATION OF CREDIT RISK AND CERTAIN SIGNIFICANT RISKS AND
UNCERTAINTIES -- The Company sells its products primarily to large
organizations and generally does not require its customers to provide
collateral or other security to support accounts receivable. The Company
maintains allowances for estimated bad debt losses.
The Company participates in a dynamic high technology industry and believes
that changes in any of the following areas could have a material adverse
effect on the Company's future financial position or results of operations:
advances and trends in new technologies; competitive pressures in the form of
new products or price reductions on current products; changes in product mix;
changes in the overall demand for products and services offered by the
Company; changes in certain strategic partnerships or customer relationships;
litigation or claims against the Company based on intellectual property,
patent, product, regulatory or other factors; risks associated with changes in
domestic and international economic and/or political conditions or
regulations; availability of necessary components, and the Company's ability
to attract and retain employees necessary to support its growth.
RECENTLY ISSUED ACCOUNTING STANDARDS -- In June 1997, the Financial
Accounting Standards Board (FASB) issued SFAS No. 130, "Reporting
Comprehensive Income," which requires an enterprise to report, by major
components and as a single total, the change in net assets during the period
from nonowner sources; and No. 131, "Disclosures about Segments of an
Enterprise and Related Information," which establishes annual and interim
reporting standards for an enterprise's business segments and related
disclosures about its products, services, geographic areas and major
customers. Adoption of these statements will not impact the Company's
financial position, results of operations or cash flows. Both statements are
effective for fiscal years beginning after December 15, 1997, with earlier
application permitted.
NET INCOME PER SHARE -- Net income per common and equivalent share is based
upon the weighted average number of common and dilutive common equivalent
shares (preferred stock, common stock options and warrants) outstanding.
Pursuant to rules of the Securities and Exchange Commission, all common shares
issued and options, warrants and other rights to acquire shares of Common
Stock at a price less than the initial public offering price granted by the
Company during the period subsequent to November 6, 1996 (using the treasury
stock method until shares are issued and an estimated initial public offering
price) have been included in the computation of common and common equivalent
shares outstanding for all periods presented.
In February 1997, the FASB issued SFAS No. 128, "Earnings per Share." The
Company is required to adopt SFAS 128 in the second quarter of fiscal 1998 and
will restate at that time earnings per share (EPS) data for prior periods to
conform with SFAS 128. Earlier application is not permitted.
SFAS 128 replaces current EPS reporting requirements and requires a dual
presentation of basic and diluted EPS. Basic EPS excludes dilution and is
computed by dividing net income attributable to common stockholders by the
weighted average of common shares outstanding for the period. Diluted EPS
reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into common stock.
However, the SEC rules regarding share issuances and option and other rights
granted to acquire shares prior to an initial public offering, as stated
above, are still applicable and such amounts are included in both basic and
diluted EPS.
Pro forma amounts for basic and diluted EPS assuming SFAS 128 had been in
effect for the periods presented are as follows:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
JUNE 30,
-----------------
1995 1996 1997
----- ----- -----
<S> <C> <C> <C>
Basic EPS............................................... $0.72 $1.63 $0.54
Diluted EPS............................................. $0.26 $0.57 $0.20
</TABLE>
F-8
<PAGE>
PERICOM SEMICONDUCTOR CORPORATION
NOTES TO FINANCIAL STATEMENTS
FISCAL YEARS ENDED JUNE 30, 1995, 1996 AND 1997
2. INVENTORIES
Inventories consist of (in thousands):
<TABLE>
<CAPTION>
AS OF JUNE
30,
-------------
1996 1997
------ ------
<S> <C> <C>
Finished goods................................................. $1,151 $1,327
Work-in-process................................................ 2,455 3,659
Raw materials.................................................. 1,863 1,196
------ ------
$5,469 $6,182
====== ======
</TABLE>
3. PROPERTY AND EQUIPMENT
Property and equipment consist of (in thousands):
<TABLE>
<CAPTION>
AS OF JUNE 30,
----------------
1996 1997
------- -------
<S> <C> <C>
Machinery and equipment.................................... $ 1,809 $ 3,195
Computer equipment and software............................ 1,545 1,844
Furniture and fixtures..................................... 312 322
Leasehold improvements..................................... 71 80
Construction-in-progress................................... 260 544
------- -------
Total...................................................... 3,997 5,985
Accumulated depreciation and amortization.................. (1,603) (2,563)
------- -------
Property and equipment -- net.............................. $ 2,394 $ 3,422
======= =======
</TABLE>
4. INVESTMENT IN JOINT VENTURE
In fiscal 1994, the Company purchased 1,500,000 shares of Series A
Convertible Preferred Stock issued by Pericom Technology, Inc. ("PTI") for
$750,000 (an 18.4% equity investment). Such preferred stock is convertible at
the option of the Company into 1,500,000 shares of PTI common stock, does not
bear dividends, has a liquidation preference up to the purchase price and
votes based on the number of common shares into which it is convertible. PTI
was incorporated in 1994 and in 1995 established a design center and sales
office to pursue opportunities and participate in joint ventures in China. The
investment in PTI is accounted for using the equity method due to the
Company's significant influence over its operations. In addition, several of
the directors of the Company are also directors of PTI, and certain
shareholders of the Company are also shareholders of PTI. During the years
ended June 30, 1996 and 1997, the Company sold $24,000 and $39,000,
respectively, in services to PTI. At June 30, 1996 and 1997, $74,000 and
$99,000, respectively, was owed to the Company by PTI for reimbursement of
certain administrative expenses incurred by the Company on behalf of PTI.
Condensed financial information of the joint venture at June 30, 1997 is as
follows (in thousands):
<TABLE>
<S> <C>
Total assets...................................................... $2,096
Total liabilities................................................. 99
Total equity...................................................... 1,997
Expenses.......................................................... 502
------
Operating loss.................................................... (490)
Interest income................................................... 65
------
Net loss.......................................................... $ (425)
======
</TABLE>
F-9
<PAGE>
PERICOM SEMICONDUCTOR CORPORATION
NOTES TO FINANCIAL STATEMENTS
FISCAL YEARS ENDED JUNE 30, 1995, 1996 AND 1997
The Company's investment in preferred stock of PTI has a liquidation
preference of $545,000 at June 30, 1997. This carrying value of the PTI
investment at June 30, 1997, is greater that the 18.4% equity interest
consistent with the Company's liquidation preference.
5. ACCRUED LIABILITIES
Accrued liabilities consist of (in thousands):
<TABLE>
<CAPTION>
AS OF JUNE
30,
-------------
1996 1997
------ ------
<S> <C> <C>
Accrued compensation.......................................... $ 716 $ 591
External sales representative commissions..................... 296 310
Other accrued expenses........................................ 298 302
------ ------
$1,310 $1,203
====== ======
</TABLE>
6. SHAREHOLDERS' EQUITY
CONVERTIBLE PREFERRED STOCK
Significant terms of the Series A, Series B and Series C Convertible
Preferred Stock are as follows:
. Two shares of preferred stock are convertible at the option of the holder
into one share of common stock (subject to adjustments for events of
dilution). Shares will be converted automatically upon the earlier of an
underwritten public offering of the Company's common stock meeting
certain criteria, such as that contemplated by this offering, or the
voluntary conversion of 70% or more of the preferred stock.
. Each share of preferred stock has voting rights equivalent to the number
of shares of common stock into which it is convertible.
. Dividends may be declared at the discretion of the Board of Directors and
are noncumulative. Dividends of $0.04, $0.08 and $0.13 per share for
Series A, Series B and Series C preferred stock, respectively, must be
declared and paid before payment of any common stock dividends.
. In the event of liquidation, dissolution, merger or winding up of the
Company, Series A, Series B and Series C preferred shareholders are
entitled to receive $0.50 per share, $1.00 per share and $1.60 per share,
respectively, (subject to adjustments for events of dilution) plus all
accrued and unpaid dividends prior to any distribution to the common
shareholders. Any remaining assets will be shared by common shareholders
on a pro rata basis.
STOCK OPTION PLANS
Under the Company's 1990 Stock Option Plan and 1995 Stock Option Plans,
incentive and nonqualified stock options to purchase up to 3,293,382 shares of
common stock have been reserved for issuance to employees, officers,
directors, independent contractors and consultants of the Company.
The options may be granted at not less than the fair value, as determined by
the Board of Directors, and not less than 85% of the fair value on grant date
for incentive stock options and nonqualified stock options, respectively.
Options vest over periods of up to 48 months as determined by the Board.
Options granted under the Plans expire 10 years from grant date.
F-10
<PAGE>
PERICOM SEMICONDUCTOR CORPORATION
NOTES TO FINANCIAL STATEMENTS
FISCAL YEARS ENDED JUNE 30, 1995, 1996 AND 1997
Activity in the Company's option plans is summarized below:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
SHARES EXERCISE PRICE
--------- --------------
<S> <C> <C>
Balance July 1, 1994.............................. 600,344 $0.36
Granted.......................................... 567,251 1.12
Exercised........................................ (57,851) 0.28
Canceled......................................... (105,702) 0.46
---------
Balance June 30, 1995............................. 1,004,042 0.78
Granted (weighted average fair value: $1.04 per
share).......................................... 639,881 4.42
Exercised........................................ (45,917) 0.82
Canceled......................................... (393,037) 3.98
---------
Balance June 30, 1996............................. 1,204,969 1.56
Granted (weighted average fair value: $0.94 per
share).......................................... 488,825 2.48
Exercised........................................ (180,700) 0.64
Canceled......................................... (316,479) 3.08
---------
Balance June 30, 1997............................. 1,196,615 $1.70
=========
</TABLE>
At June 30, 1997, 1,607,275 shares were available for future issuance under
the option plans.
In fiscal 1996, the Company canceled options to purchase 277,700 shares of
common stock with exercise prices ranging from $5.00 to $6.00 per share and
issued replacement options with an exercise price of $3.80 per share.
In fiscal 1997, the Company canceled options to purchase 160,700 shares of
common stock with an exercise price of $3.80 per share and issued replacement
options with an exercise price of $2.40 per share.
Additional information regarding options outstanding as of June 30, 1997 is
as follows:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
---------------------
OPTIONS EXERCISABLE
WEIGHTED --------------------
AVERAGE WEIGHTED WEIGHTED
REMAINING AVERAGE AVERAGE
RANGE OF NUMBER CONTRACTUAL EXERCISE NUMBER EXERCISE
EXERCISE PRICES OUTSTANDING LIFE (YEARS) PRICE EXERCISABLE PRICE
--------------- ----------- ------------ -------- ----------- --------
<S> <C> <C> <C> <C> <C>
$0.10-0.90 273,802 5.87 $0.30 265,522 $0.30
$1.00 250,000 7.22 1.00 250,000 1.00
$1.20-1.44 89,073 7.75 1.34 56,986 1.32
$2.40 453,636 9.37 2.40 58,930 2.40
$3.80 130,104 8.48 3.80 66,870 3.80
--------- -------
1,196,615 $1.70 698,308 $1.14
========= =======
</TABLE>
ADDITIONAL STOCK PLAN INFORMATION -- As discussed in Note 1, the Company
continues to account for its stock-based awards using the intrinsic value
method in accordance with Accounting Principles Board No. 25, "Accounting for
Stock Issued to Employees," and its related interpretations. Accordingly, no
compensation expense has been recognized in the financial statements for
employee stock arrangements.
F-11
<PAGE>
PERICOM SEMICONDUCTOR CORPORATION
NOTES TO FINANCIAL STATEMENTS
FISCAL YEARS ENDED JUNE 30, 1995, 1996 AND 1997
SFAS No. 123, "Accounting for Stock-Based Compensation," (SFAS 123),
requires the disclosure of pro forma net income as if the Company had adopted
the fair value method as of the beginning of fiscal 1996. Under SFAS 123, the
fair value of stock-based awards to employees is calculated through the use of
option pricing models, even though such models were developed to estimate the
fair value of freely tradable, fully transferable options without vesting
restrictions, which significantly differ from the terms of the Company's stock
option awards. These models also require subjective assumptions, including
expected time to exercise, which greatly affect the calculated values. The
Company's calculations were made using the Black-Scholes option pricing model
with the following weighted average assumptions: expected life, five years;
risk-free interest rates, 5.9% in 1996 and 6.3% in 1997; and no dividends
during the expected term. The Company's calculations are based on a single
option valuation approach, and forfeitures are recognized as they occur. If
the computed fair values of the 1996 and 1997 awards had been amortized to
expense over the vesting period of the awards, pro forma net income would have
been $4,637,000 ($0.56 per share) in 1996 and $1,398,000 ($0.17 per share) in
1997. However, the impact of outstanding nonvested stock options granted prior
to fiscal 1996 has been excluded from the pro forma calculation; accordingly,
the 1996 and 1997 pro forma adjustments are not indicative of future period
pro forma adjustments, when the calculation will apply to all applicable stock
options.
7. INCOME TAXES
The provision for income taxes consists of (in thousands):
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
JUNE 30,
-------------------
1995 1996 1997
----- ------ ----
<S> <C> <C> <C>
Federal:
Current................................................ $ 784 $2,552 $652
Deferred............................................... 180 (121) 104
----- ------ ----
964 2,431 756
State:
Current................................................ 168 277 (5)
Deferred............................................... (150) 24 26
----- ------ ----
18 301 21
----- ------ ----
Provision for income taxes.............................. $ 982 $2,732 $777
===== ====== ====
</TABLE>
A reconciliation between the Company's effective tax rate and the U.S
statutory rate is as follows:
<TABLE>
<CAPTION>
FISCAL YEAR
ENDED JUNE 30,
----------------
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Tax at federal statutory rate.............................. 35.0% 35.0% 35.0%
State income taxes, net of federal benefit................. 5.7 6.4 5.3
Research and development tax credits....................... (6.9) (3.6) (8.7)
Other...................................................... (1.3) (1.1) 1.4
---- ---- ----
Provision for income taxes................................. 32.5% 36.7% 33.0%
==== ==== ====
</TABLE>
F-12
<PAGE>
PERICOM SEMICONDUCTOR CORPORATION
NOTES TO FINANCIAL STATEMENTS
FISCAL YEARS ENDED JUNE 30, 1995, 1996 AND 1997
The components of the net deferred tax assets were as follows (in thousands):
<TABLE>
<CAPTION>
AS OF
JUNE 30,
------------
1996 1997
----- -----
<S> <C> <C>
Deferred tax assets:
Accruals and reserves recognized in different periods......... $ 274 $ 398
Capitalized research and development costs.................... 17 4
Other......................................................... 122 11
----- -----
413 413
----- -----
Deferred tax liabilities:
Tax basis depreciation........................................ (132) (188)
Other......................................................... -- (74)
----- -----
(132) (262)
----- -----
Net deferred tax assets....................................... $ 281 $ 151
===== =====
</TABLE>
8. LEASES
The Company leases certain facilities under operating leases through 2001,
with an option to extend the facilities lease for an additional three years
upon termination of the original lease term. The future minimum operating lease
commitments at June 30, 1997 are as follows (in thousands):
<TABLE>
<S> <C>
Fiscal Year:
1998.............................................................. $ 266
1999.............................................................. 275
2000.............................................................. 281
2001.............................................................. 235
------
$1,057
======
</TABLE>
Rent expense for operating leases for the years ended June 30, 1995, 1996 and
1997 was $211,000, $281,000 and $366,000, respectively.
9. CONTINGENCIES
The semiconductor industry is characterized by frequent claims and related
litigation regarding patent and other intellectual property rights. The Company
is party to one claim of this nature. Although the ultimate outcome of this
matter is not presently determinable, management believes that the resolution
of this matter will not have a material adverse effect on the Company's
financial position or results of operations.
10. MAJOR CUSTOMERS AND FOREIGN SALES
In fiscal 1995, two customers accounted for 12% and 11% of net product sales,
respectively, and one customer represented 21% of trade accounts receivable at
June 30, 1995. In fiscal 1996, two customers accounted for 20% and 16% of net
revenues, respectively, and three customers represented 14%, 11%, and 10% of
trade accounts receivable at June 30, 1996. In fiscal 1997, two customers
accounted for 17% and 14% of net revenues, respectively, and two customers
represented 12% and 11% of trade accounts receivable, respectively, at June 30,
1997.
F-13
<PAGE>
PERICOM SEMICONDUCTOR CORPORATION
NOTES TO FINANCIAL STATEMENTS
FISCAL YEARS ENDED JUNE 30, 1995, 1996 AND 1997
Total export sales represented approximately 35%, 30% and 37% of net
revenues in fiscal years 1995, 1996 and 1997, respectively. Export sales to
Asia were approximately 27%, 22% and 26% of net revenues in fiscal years 1995,
1996 and 1997, respectively. Export sales to Europe were approximately 11% in
fiscal 1997 and were less than 10% in fiscal years 1995 and 1996.
11. EMPLOYEE BENEFIT PLAN
The Company has a 401(k) tax-deferred savings plan under which eligible
employees may elect to have a portion of their salary deferred and contributed
to the plan. Employer matching contributions are determined by the Board of
Directors and are discretionary. There were no employer matching contributions
in 1995, 1996 or 1997.
F-14
<PAGE>
[Photo of an IC die]
Set forth on the left hand side of the inside back cover page is a
photo of an IC die, three areas of which are labeled as "ANALOG CELLS,"
"STANDARD CELLS," and "GATE ARRAYS." The text under such photo reads: "Pericom
products are designed with a modular methodology using a combination of sea-of-
gates arrays, standard and proprietary digital and analog cells. This
methodology provides for the rapid design of interface integrated circuits
optimized for performance, density, low power and manufacturability. The
Company's four-port FastEthernet PHY transceiver product is designed with
this innovative technology".
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AU-
THORIZED BY THE COMPANY OR ANY OF THE UNDERWRITERS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF ANY OFFER TO BUY, COMMON
STOCK IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN
OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PRO-
SPECTUS 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 OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS
OF THE COMPANY SINCE THE DATE HEREOF.
------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................................................ 3
Risk Factors.............................................................. 5
The Company............................................................... 14
Use of Proceeds........................................................... 14
Dividend Policy........................................................... 14
Capitalization............................................................ 15
Dilution.................................................................. 16
Selected Financial Data................................................... 17
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 18
Business.................................................................. 24
Management................................................................ 43
Certain Transactions...................................................... 49
Principal and Selling Shareholders........................................ 50
Description of Capital Stock.............................................. 52
Shares Eligible for Future Sale........................................... 53
Underwriting.............................................................. 54
Legal Matters............................................................. 55
Experts................................................................... 55
Additional Information.................................................... 56
Index to Financial Statements............................................. F-1
</TABLE>
------------
UNTIL , 1997 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEAL-
ERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING
IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS DELIVERY
REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPEC-
TUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Shares
[PERICOM LOGO APPEARS HERE]
Common Stock
----------------
PROSPECTUS
----------------
SoundView Financial Group, Inc.
Unterberg Harris
, 1997
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses to be paid by the Registrant in connection with the
distribution of the securities being registered, other than underwriting
discounts and commissions, are as follows:
<TABLE>
<CAPTION>
AMOUNT*
--------
<S> <C>
Securities and Exchange Commission Filing Fee................... $ 10,891
NASD Filing Fee................................................. 4,094
Nasdaq National Market Listing Fee..............................
Accounting Fees and Expenses.................................... 105,000
Blue Sky Fees and Expenses...................................... 7,500
Legal Fees and Expenses......................................... 150,000
Transfer Agent and Registrar Fees and Expenses.................. 7,000
Directors' and Officers' Liability Insurance Premium............ 70,000
Printing Expenses............................................... 115,000
Miscellaneous Expenses..........................................
--------
Total......................................................... $600,000
========
</TABLE>
- --------
* All amounts are estimates except the SEC filing fee and the NASD filing
fee.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Section 317 of the California Corporations Code, the Registrant has
broad powers to indemnify its directors and officers against liabilities they
may incur in such capacities, including liabilities under the Securities Act.
The Registrant's Bylaws also provide for mandatory indemnification of its
directors and executive officers and permissive indemnification of its
employees and agents, to the fullest extent permissible under California law.
The Registrant's Articles of Incorporation provide that the liability of its
directors for monetary damages shall be eliminated to the fullest extent
permissible under California law. Pursuant to California law, this includes
elimination of liability for monetary damages for breach of the directors'
fiduciary duty of care to the Registrant and its shareholders. These
provisions do not eliminate the directors' duty of care and, in appropriate
circumstances, equitable remedies such as injunctive or other forms of non-
monetary relief will remain available under California law. In addition, each
director will continue to be subject to liability for breach of the director's
duty of loyalty to the Registrant, for acts or omissions not in good faith or
involving intentional misconduct, for knowing violations of law, for any
transaction from which the director derived an improper personal benefit, and
for payment of dividends or approval of stock repurchases or redemptions that
are unlawful under California law. The provision also does not affect a
director's responsibilities under any other laws, such as the federal
securities laws or state or federal environmental laws.
Prior to the effective date of this Registration Statement, the Registrant
intends to enter into agreements with its directors and certain of its
executive officers that require the Registrant to indemnify such persons
against expenses, judgments, fines, settlements and other amounts actually and
reasonably incurred (including expenses of a derivative action) in connection
with any proceeding, whether actual or threatened, to which any such person
may be made a party by reason of the fact that such person is or was a
director or officer of the Registrant or any of its affiliated entities,
provided such person acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best interests of the
Registrant and, with respect to any criminal proceeding, had no reasonable
cause to believe his or her conduct was unlawful. The indemnification
agreements also set forth certain procedures that will apply in the event of a
claim for indemnification thereunder.
II-1
<PAGE>
The Registrant intends to obtain prior to the effective date of the
Registration Statement a policy of directors' and officers' liability
insurance that insures the Company's directors and officers against the cost
of defense, settlement or payment of a judgment under certain circumstances.
The Underwriting Agreement filed as Exhibit 1.1 to this Registration
Statement provides for indemnification by the Underwriters of the Registrant
and its officers and directors for certain liabilities arising under the
Securities Act or otherwise.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Since September 10, 1994, the Registrant has issued and sold the following
unregistered securities:
1. During the period, the Registrant granted stock options to employees,
directors and consultants under its 1990 Stock Option Plan and 1995 Stock
Option Plan covering an aggregate of 1,988,813 shares of the Registrant's
Common Stock, at exercise prices ranging from $0.90 to $6.00 per share.
2. During the period, the Registrant issued and sold an aggregate of
329,155 shares of its Common Stock to 45 employees for cash in the
aggregate amount of $184,052 upon exercise of stock options granted
pursuant to the Registrant's 1990 Stock Option Plan and 1995 Stock Option
Plan.
The sales and issuance of securities in the transactions described in
paragraphs 1 and 2 above were deemed to be exempt from registration under the
Securities Act by virtue of Rule 701 promulgated thereunder in that they were
offered and sold either pursuant to written compensatory benefit plans or
pursuant to a written contract relating to compensation, as provided by Rule
701.
Appropriate legends were affixed to the stock certificates issued in the
above transactions. Similar legends were imposed in connection with any
subsequent sales of any such securities. No Underwriters were employed in any
of the above transactions.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) EXHIBITS
The exhibits are as set forth in the Exhibit Index.
(b) FINANCIAL STATEMENT SCHEDULES
Schedule II -- Valuation and Qualifying Accounts. See page II-6.
Schedules other than those listed above have been omitted since they are not
required or are not applicable or the required information is shown in the
financial statements or related notes. Columns omitted from schedules filed
have been omitted since the information is not applicable.
ITEM 17. UNDERTAKINGS
The Registrant hereby undertakes to provide to the Underwriters at the
closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Act"), may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
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-2
<PAGE>
The Registrant hereby undertakes that:
(1) For purposes of any liability under the Act, the information omitted
from the form of prospectus filed as part of this Registration Statement in
reliance upon Rule 430A and contained in a form of prospectus filed by the
Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Act shall
be deemed to be part of this Registration Statement as of the time it was
declared effective.
(2) For the purpose of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of San Jose, State of
California on the 10th day of September, 1997.
PERICOM SEMICONDUCTOR CORPORATION
By /s/ Alex C. Hui
_________________________________
Alex C. Hui
Chief Executive Officer and
President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Alex Hui, John Chi-Hung Hui and Patrick B.
Brennan, and each of them, as his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration
Statement, and to sign any registration statement for the same offering
covered by the Registration Statement that is to be effective upon filing
pursuant to Rule 462(b) promulgated 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, 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 and necessary to be done in
connection therewith and about the premises, as fully 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
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------ ---------------------------- ------------------
<S> <C> <C>
/s/ Alex C. Hui Chief Executive Officer, September 10, 1997
____________________________________ President and Director
Alex C. Hui (Principal Executive
Officer)
/s/ Patrick B. Brennan Vice President, Finance & September 10, 1997
____________________________________ Administration
Patrick B. Brennan (Principal Financial and
Accounting Officer)
/s/ John Chi-Hung Hui Vice President, Technology September 10, 1997
____________________________________ and Director
John Chi-Hung Hui
/s/ Jeffrey Young Director September 10, 1997
____________________________________
Jeffrey Young
/s/ Tay Thiam Song Director September 10, 1997
____________________________________
Tay Thiam Song
</TABLE>
II-4
<PAGE>
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT AND REPORT ON SCHEDULE
To the Board of Directors and Stockholders of
Pericom Semiconductor Corporation:
We consent to the use in this Registration Statement No. 333- of
Pericom Semiconductor Corporation (the "Company") on Form S-1 of our report
dated July 31, 1997 ( , 1997 as to the third and fourth sentences of Note
1), appearing in the Prospectus, which is a part of this Registration
Statement, and to the references to us under the headings "Selected Financial
Data" and "Experts" in such Prospectus.
Our audits of the financial statements referred to in our aforementioned
report also included the financial statement schedule of the Company, listed
in Item 16b. The financial statement schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits. In our opinion, such financial statement schedule, when considered in
relation to the basic financial statements taken as a whole, presents fairly
in all material respects the information set forth therein.
San Jose, California
September 10, 1997
----------------
The financial statements included in the Prospectus have been adjusted to
give effect to the one-for-two reverse stock split as described in the third
and fourth sentences of Note 1 to the financial statements. The above consent
and report is in the form which will be signed by Deloitte & Touche LLP upon
the effectiveness of such reverse stock split, assuming that from July 31,
1997 to the effective date of such reverse stock split, no other events shall
have occurred that would affect the accompanying financial statements or notes
thereto.
Deloitte & Touche LLP
San Jose, California
September 10, 1997
II-5
<PAGE>
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONS
---------------------
BALANCE AT CHARGED TO CHARGED TO
BEGINNING OF COSTS AND OTHER BALANCE AT
DESCRIPTION PERIOD EXPENSES ACCOUNTS DEDUCTIONS END OF PERIOD
- ------------------------ ------------ ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Accounts receivable
allowances
June 30,
1995.................. $ 606 $129 $-- $-- $ 735
1996.................. 735 870 -- -- 1,605
1997.................. 1,605 19 -- 426 1,198
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DOCUMENT
------- --------
<C> <S>
1.1* Form of Underwriting Agreement.
3.1 Restated Articles of Incorporation of the Registrant, as currently in
effect.
3.2* Form of Restated Articles of Incorporation of the Registrant, to be
filed prior to the closing of the offering made under this
Registration Statement.
3.3 Registrant's Bylaws.
3.4 Form of Registrant's Certificate of Amendment of Bylaws.
4.1 Specimen certificate for Common Stock (in standard printer form, not
provided).
5.1* Opinion of Morrison & Foerster LLP.
10.1 Registrant's 1990 Stock Option Plan, including forms of Agreements
thereunder.
10.2 Registrant's 1995 Stock Option Plan, including forms of Agreements
thereunder.
10.3 Registrant's 1997 Employee Stock Purchase Plan, including forms of
Agreements thereunder.
10.4 Lease, dated November 29, 1993, by and between Orchard Investment
Company Number 510 as Landlord and Registrant as Tenant, as amended.
10.5* Common Stock Purchase Agreement, dated June 25, 1990, by and between
Alex C. Hui and the Registrant.
10.6* Common Stock Purchase Agreement, dated June 25, 1990, by and between
Chi-Hung Hui and the Registrant.
10.7* Series A Stock Purchase Agreement, dated July 10, 1990, by and among
the Registrant and the Investors listed on the signature pages
thereto.
10.8* Series B Stock Purchase Agreement, dated December 30, 1991, by and
among the Registrant and the Investors listed on the signature pages
thereto.
10.9* Series C Stock Purchase Agreement, dated July 21, 1993 by and among
the Registrant and the Investors listed on the signature pages
thereto.
10.10 Second Amended Investors Rights Agreement, dated July 21, 1993, by and
among the Registrant and the holders of Series A, Series B and Series
C Preferred Stock.
10.11 Form of Indemnification Agreement.
10.12 Pericom Technology Agreement, dated March 17, 1995, by and between the
Registrant and Pericom Technology, Inc.
10.13+ Harris Agreement, dated February 28, 1996, by and between the
Registrant and Harris Corporation.
11.1 Statement regarding calculation of net income per share.
23.1* Consent of Morrison & Foerster LLP. Reference is made to Exhibit 5.1.
23.2 Independent Auditors' Consent and Report on Schedule. Reference is
made to Page II-5.
24.1 Powers of Attorney. Reference is made to Page II-4.
27.1 Financial Data Schedule.
</TABLE>
- --------
* To be filed by amendment.
+ Confidential treatment has been requested as to a portion of this Exhibit.
<PAGE>
EXHIBIT 3.1
RESTATED ARTICLES OF INCORPORATION
OF
PIONEER SEMICONDUCTOR CORPORATION,
A CALIFORNIA CORPORATION
The undersigned, Alex C. Hui and Chi-Hung Hui, do hereby certify that:
ONE: They are the duly elected and acting President and Secretary,
respectively, of Pioneer Semiconductor Corporation, a California corporation.
TWO: The Articles of Incorporation of said corporation are amended and
restated in full to read as follows:
ARTICLE I
The name of this Corporation is Pioneer Semiconductor Corporation.
ARTICLE II
The purpose of this Corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
California other than the banking business, the trust company business, or the
practice of a profession permitted to be incorporated by the California
Corporation Code.
ARTICLE III
A. Classes of Stock. This Corporation is authorized to issue two classes
----------------
of shares, designated "Preferred Stock" and "Common Stock." The total number of
shares which the Corporation is authorized to issue is fifty million
(50,000,000) shares. Thirty million (30,000,000) shares shall be Common Stock,
without par value (the "Common Stock"), and twenty million (20,000,000) shares
shall be Preferred Stock, without par value (the "Preferred Stock").
1
<PAGE>
B. Rights, Preferences and Privileges of Preferred Stock. The Preferred
-----------------------------------------------------
Stock may be issued from time to time in one or more series. The Board of
Directors is hereby authorized, within the limitations and restrictions stated
in these Articles of Incorporation, to fix or alter the individual rights,
dividend rate, conversion rights, voting rights, rights and terms of redemption
(including sinking fund provisions), the redemption price or prices, the
liquidation preference of any wholly unissued series of Preferred Stock, and the
number of shares constituting any such series and the designation thereof, or
any of them, and to increase or decrease the number of shares of any series
subsequent to the issue of shares of that series, but not below the number of
shares of such series then outstanding. In case the number of shares of any
series shall be so decreased, the shares constituting such decrease shall resume
the status which they had prior to the adoption of the resolution originally
fixing the number of shares of such series.
ARTICLE IV
The rights, preferences, privileges, restrictions and other matters
relating to the shares of Series A Preferred Stock and Series B Preferred Stock
are as follows:
A. Designation. Five million two hundred thousand (5,200,00) shares of
-----------
Preferred Stock are hereby designated "Series A Preferred Stock" (hereinafter
referred to as the "Series A Stock") with the rights, preferences and privileges
specified herein. Four million (4,000,000) shares are hereby designated and
known as "Series B Preferred Stock" (hereinafter referred to as the "Series B
Stock") with the rights, preferences and privileges specified herein. One
million eight hundred seventy-five thousand (1,875,000) shares of Preferred
Stock are hereby designated "Series C Preferred Stock" (hereinafter referred to
as the "Series C Stock"). As described further herein, all of the rights,
privileges, preferences and restrictions of the Series C Stock shall be and
hereby are deemed pari passu (on an equal basis) with (including, without
---- -----
limitation, inclusion in provisions with respect to liquidation and acquisition
preferences, redemption and/or approval of matters by vote or written consent)
any of those of the Series A Stock and Series B Stock.
B. Dividends. The holders of outstanding Series A Stock, Series B Stock
---------
and Series C Stock shall be entitled, to receive in any fiscal year, when and as
declared by the Board of Directors of the corporation, out of any assets at the
time legally available therefor, dividends at the rate of $.04 per share of
Series A Stock per annum, $.08 per share of Series B Stock per annum and $.13
per share of Series C Stock per annum, before any dividend is paid on Common
Stock. The Series A Stock, Series B Stock and Series C Stock shall rank on a
parity basis as to the declaration and payment of dividends thereon, and no
dividend shall be paid on or declared and set apart for the shares of a series
of the Preferred Stock unless at the same time a like proportion to the relative
annual dividend, ratably in proportion to the respective annual dividend rate
fixed therefor, shall be paid on or declared and set apart for the other series
of the Preferred Stock. Such dividends may be payable quarterly or otherwise as
the Board of Directors may from time to time determine.
2
<PAGE>
Dividends may be declared and paid upon Common Stock in any fiscal year of the
corporation only if dividends shall have been paid to or declared and set apart
upon all shares of Series A Stock, Series B Stock and Series C Stock at such
annual rate for each quarter of such fiscal year of the corporation including
the quarter in which such dividends upon Common Stock are declared. To the
extent dividends are paid on the Common Stock, the holders of Series A Stock,
Series B Stock and Series C Stock shall be entitled to dividends at least as
large per share (as determined on an as-converted basis) as those declared or
paid with respect to the Common Stock. The right to such dividends on Series A
Stock, Series B Stock and Series C Stock shall not be cumulative and no right
shall accrue to holders of Series A Stock, Series B Stock and Series C Stock by
reason of the fact that dividends on said shares are not declared in any prior
year, nor shall any undeclared or unpaid dividend bear or accrue interest.
C. Liquidation Preference.
----------------------
(1) In the event of any liquidation, dissolution, or winding up of the
corporation, either voluntary or involuntary, the holders of the Series A Stock,
Series B Stock and Series C Stock shall be entitled to receive, prior and in
preference to any distribution of any of the assets or surplus funds of the
corporation to the holders of the Common Stock by reason of their ownership of
such stock, an amount per share of Series A Stock equal to the sum of $.50 plus
all declared but unpaid dividends (the "Series A Liquidation Preference"), an
amount per share of Series B Stock equal to the sum of $1.00 plus all declared
but unpaid dividends (the "Series B Liquidation Preference") and an amount per
share of Series C Stock equal to the sum of $1.60 plus all declared but unpaid
dividends (the "Series C Liquidation Preference"), for each share of Series A
Stock, Series B Stock and Series C Stock, respectively, then held by them. If
upon the occurrence of such event, the assets and funds thus distributed among
the holders of the Series A Stock, Series B Stock and Series C Stock shall be
insufficient to permit the payment to such holders of the full aforesaid
preferential amounts, then the entire assets and funds of the corporation
legally available for distribution shall be distributed pari passu among the
---- -----
holders of the Series A Stock, Series B Stock and Series C Stock in proportion
to the full preferential amount each such holder is otherwise entitled to
receive. After the payment or setting apart of payment to the holders of Series
A Stock, Series B Stock and Series C Stock of the full amounts to which they
shall be entitled as aforesaid, the holders of Common Stock shall be entitled to
receive ratably on a per share basis all the remaining assets of the
corporation.
(2) A consolidation or merger of the corporation with or into any
other corporation or corporations, or a sale of all or substantially all of the
assets of the corporation, shall be deemed to be a liquidation, dissolution, or
winding up within the meaning of this Section C.
3
<PAGE>
D. Voting Rights.
-------------
(1) The holder of each share of the Series A Stock, Series B Stock and
Series C Stock shall be entitled to the number of votes equal to the number of
shares of Common Stock into which such shares of Series A Stock, Series B Stock
and Series C Stock could be converted on the record date for the vote or consent
of shareholders and, subject to the provisions of subsections (2) and (3) below,
shall have voting rights and powers equal to the voting rights and powers of the
Common Stock and shall be entitled to notice of any shareholders' meeting in
accordance with the Bylaws of the corporation. Fractional votes shall not,
however, be permitted and any fractional voting rights resulting from the above
formula (after aggregating all shares into which shares of Series A Stock,
Series B Stock and Series C Stock held by each holder could be converted) shall
be rounded to the nearest whole number (with one-half being rounded upward).
(2) At each annual election of directors of the corporation, the
holders of Series A Stock shall be entitled, voting as a single class, to elect
one (1) director of the corporation. In the case of any vacancy in the office
of a director elected by the holders of Series A Stock, a successor shall be
elected to hold office for the unexpired term of such director by the
affirmative vote of the holders of the Series A Stock, voting as a single class,
given at a special meeting of such shareholders duly called for that purpose or
by the unanimous written consent of such shareholders. Except for a vacancy
created by the removal of a director as provided below and prior to an annual or
special meeting of the holders of the Series A Stock convened for the purpose of
electing a director to fill a vacancy on the Board of Directors as provided
above, the acting and incumbent director previously elected pursuant to this
subparagraph (2) may appoint a director to serve until the holders of the Series
A Stock duly elect a successor director. Any director who shall have been
elected by the holders of Series A Stock may appoint a director to serve as such
until the holders of the Series A Stock duly elect a successor director. Any
director who shall have been elected by the holders of the Series A Stock may be
removed during the aforesaid term of office, either for or without cause, by,
and only by, the affirmative vote of the holders of that percentage of the
Series A Stock required by Section 303(a) of the California General Corporations
Law, given at a special meeting of such shareholders duly called for that
purpose or by the unanimous written consent of such shareholders, and any such
vacancy thereby created may be filled by the holders of the Series A Stock
represented at such meeting or by such unanimous written consent.
(3) At each annual election of directors of the corporation, the
holders of Series B Stock and Series C Stock, voting together as a single class,
shall be entitled, voting separately as a single class, to elect one (1)
director of the corporation. In the case of any vacancy in the office of a
director elected by the holders of Series B Stock and Series C Stock, a
successor shall be elected to hold office for the unexpired term of such
director by the affirmative vote of the holders of the Series B Stock and Series
C Stock, voting together as a single class, given at a special meeting of such
shareholders duly called for that purpose or by the unanimous written consent of
such shareholders. Except for a vacancy created by
4
<PAGE>
the removal of a director as provided below and prior to an annual or special
meeting of the holders of the Series B Stock and Series C Stock convened for the
purpose of electing a director to fill a vacancy on the Board of Directors as
provided above, the acting and incumbent director previously elected by the
holders of Series B Stock and Series C Stock may appoint a director to serve as
such until the holders of the Series B Stock and Series C Stock duly elect a
successor director. Any director who shall have been elected by the holders of
the Series B Stock and Series C Stock may be removed during the aforesaid term
of office, either for or without cause, by, and only by, the affirmative vote of
the holders of that percentage of the Series B Stock and Series C Stock required
by Section 303(a) of the California General Corporations Law, given at a special
meeting of such shareholders duly called for that purpose or by the unanimous
written consent of such shareholders, and any such vacancy thereby created may
be filled by the holders of the Series B Stock and Series C Stock represented at
such meeting or by such unanimous written consent.
(4) At each annual election of directors of the corporation, the
holders of Common Stock shall be entitled, voting as a separate class, to elect
all remaining directors not elected pursuant to subparagraphs (2) and (3) above.
In the case of any vacancy in the office of a director elected by the holders of
Common Stock, a successor shall be elected to hold office for the unexpired term
of such director by the affirmative vote of the holders of a majority of the
Common Stock given at a special meeting of such shareholders duly called for
that purpose or by the unanimous written consent of such shareholders. Except
for a vacancy created by the removal of a director as provided below and prior
to an annual or special meeting of the holders of the Common Stock convened for
the purpose of electing a director to fill a vacancy on the Board of Directors
as provided above, the acting and incumbent director previously elected pursuant
to this subparagraph (4) may appoint a director to serve as such until the
holders of the Common Stock duly elect a successor director. Any director who
shall have been elected by the holders of the Common Stock may be removed during
the aforesaid term of office, either for or without cause, by, and only by, the
affirmative vote of the holders of that percentage of the Common Stock required
by Section 303(a) of the California General Corporations Law, given at a special
meeting of such shareholders duly called for that purpose or by the unanimous
written consent of such shareholders, and any such vacancy thereby created may
be filled by the holders of the Common Stock represented at such meeting or by
such unanimous written consent.
E. Conversion. The holders of the Series A Stock, Series B Stock and
----------
Series C Stock shall have conversion rights as follows (the "Conversion
Rights"):
(1) Right to Convert. Each share of Series A Stock shall be
----------------
convertible, at the option of the holder thereof, at any time after the date of
issuance of such share, at the office of the corporation or any transfer agent
for the Preferred Stock, into such number of fully paid and nonassessable shares
of Common Stock as is determined by dividing fifty cents ($.50) by the Series A
Conversion Price (as hereinafter defined). Each share of Series B Stock shall be
convertible, at the option of the holder thereof, at any time after the date of
issuance of such share, at the office of the corporation or any transfer agent
for the Preferred
5
<PAGE>
Stock, into such number of fully paid and nonassessable shares of Common Stock
as is determined by dividing one dollar ($1.00) by the Series B Conversion Price
(as hereinafter defined) in effect at the time of conversion. Each share of
Series C Stock shall be convertible, at the option of the holder thereof, at any
time after the date of issuance of such share, at the office of the corporation
or any transfer agent for the Preferred Stock, into such number of fully paid
and nonassessable shares of Common Stock as is determined by dividing one dollar
and sixty cents ($1.60) by the Series C Conversion Price (as hereinafter
defined) in effect at the time of conversion. The initial conversion price per
share of Series A Stock (the "Series A Conversion Price"), Series B Stock (the
"Series B Conversion Price") and Series C Stock (the "Series C Conversion
Price") shall be fifty cents ($0.50), one dollar ($1.00) and one dollar and
sixty cents ($1.60), respectively. The Series A Conversion Price, Series B
Conversion Price and Series C Conversion Price are sometimes collectively
referred to herein as the "Conversion Prices"). The initial Conversion Prices
shall be subject to adjustment as hereinafter provided.
(2) Automatic Conversion. Each share of Series A Stock, Series B
--------------------
Stock and Series C Stock shall automatically be converted into shares of Common
Stock at the then effective Conversion Price upon the earlier of (i) the closing
of a firm commitment underwritten public offering pursuant to an effective
registration statement under the Securities Act of 1933, as amended, covering
the offer and sale of Common Stock for the account of the corporation to the
public at a price per share of Common Stock of not less than $3.00 (as adjusted
for stock splits, stock dividends and the like) from which the aggregate gross
proceeds to the corporation (prior to underwriting commissions and expenses) is
not less than $10,000,000 or (ii) the voluntary conversion into Common Stock of
seventy percent (70%) or more of the originally issued shares of Series A Stock,
Series B Stock and Series C Stock treated for such purpose as one class.
(3) Mechanics of Conversion. No fractional shares of Common Stock
-----------------------
shall be issued upon conversion of the Series A Stock, Series B Stock and Series
C Stock. In lieu of any fractional shares to which the holder would otherwise
be entitled, the corporation shall pay cash equal to such fraction multiplied by
the effective Series A Conversion Price, Series B Conversion Price and Series C
Conversion Price. Before any holder of Series A Stock, Series B Stock or Series
C Stock shall be entitled to convert the same into full shares of Common Stock,
such holder shall surrender the certificate or certificates therefor, duly
endorsed, at the office of the corporation or of any transfer agent for the
Series A Stock, Series B Stock or Series C Stock, and shall give written notice
to the corporation at such office that such holder elects to convert the same.
The corporation shall, as soon as practicable thereafter, issue and deliver at
such office to such holder of Series A Stock, Series B Stock or Series C Stock,
a certificate or certificates for the number of shares of Common Stock to which
such holder shall be entitled as aforesaid and a check payable to such holder in
the amount of any cash amounts payable as the result of a conversion into
fractional shares of Common Stock. Such conversion shall be deemed to have been
made immediately prior to the close of business on the date of such surrender of
the shares of Series A Stock, Series B Stock or Series C Stock to be converted,
and the person or persons
6
<PAGE>
entitled to receive the shares of Common Stock issuable upon such conversion
shall be treated for all purposes as the record holder or holders of such shares
of Common Stock on such date. If the conversion is in connection with an
underwritten offer of securities registered pursuant to the Securities Act of
1933, the conversion may, at the option of any holder tendering Series A Stock,
Series B Stock or Series C Stock for conversion, be conditioned upon the closing
with the underwriter of the sale of securities pursuant to such offering, in
which event the person(s) entitled to receive the Common Stock issuable upon
such conversion of the Series A Stock, Series B Stock or Series C Stock shall
not be deemed to have converted such Series A Stock, Series B Stock or Series C
Stock until immediately prior to the closing of such sale of securities.
(4) Adjustments to Conversion Price for Diluting Issues.
---------------------------------------------------
(a) Special Definitions. For purposes of this paragraph (4), the
-------------------
following definitions shall apply:
(i) 'Options' shall mean rights, options or warrants to
subscribe for, purchase or otherwise acquire either Common Stock or Convertible
Securities.
(ii) 'Original Issue Date' shall mean the date on which a
share of Series C Stock was first issued.
(iii) 'Convertible Securities' shall mean any evidence of
indebtedness, shares (other than Common Stock, Series A Stock, Series B Stock
and Series C Stock) or other securities convertible into or exchangeable for
Common Stock.
(iv) 'Additional Shares of Common Stock, shall mean all shares
of Common Stock issued (or, pursuant to subparagraph (4)(c), deemed to be
issued) by the corporation after the original issue date, other than Common
Stock issued or issuable:
(w) upon conversion of shares of Series A Stock, Series B
Stock and Series C Stock;
(x) to officers, directors or employees of, or
consultants to, the corporation pursuant to a stock grant, option plan or
purchase plan or other employee stock incentive program (collectively, the
"Plans") approved by the Board of Directors;
(y) as a dividend or distribution on Series A Stock,
Series B Stock and Series C Stock; and
(z) by way of dividend or other distribution on Common
Stock excluded from the definition of Additional Shares of Common Stock by the
foregoing clauses (w), (y) or this clause (z) or Common Stock so excluded.
7
<PAGE>
(b) No Adjustment of Conversion Price. No adjustment in the
---------------------------------
Conversion Price of a particular share of Series A Stock, Series B Stock or
Series C Stock shall be made in respect of the issuance of Additional Shares of
Common Stock unless the consideration per share for an Additional Share of
Common Stock issued or deemed to be issued by the corporation is less than the
Series A Conversion Price, Series B Conversion Price or Series C Conversion
Price in effect on the date of, and immediately prior to such issue, for such
share of Series A Stock, Series B Stock or Series C Stock, respectively.
(c) Deemed Issuance of Additional Shares of Common Stock.
----------------------------------------------------
(i) Options and Convertible Securities. In the event the
----------------------------------
corporation at any time or from time to time after the Original Issue Date shall
issue any Options or Convertible Securities or shall fix a record date for the
determination of holders of any class of securities entitled to receive any such
Options or Convertible Securities, then the maximum number of shares (as set
forth in the instrument relating thereto without regard to any provisions
contained therein for a subsequent adjustment of such number) of Common Stock
issuable upon the exercise of such Options or, in the case of Convertible
Securities and Options therefor, the conversion or exchange of such convertible
securities, shall be deemed to be Additional Shares of Common Stock issued as of
the time of such issue or, in case such a record date shall have been fixed, as
of the close of business on such record date, provided that Additional Shares of
Common Stock shall not be deemed to have been issued unless the consideration
per share (determined pursuant to subparagraph E(4)(e) hereof) of such
Additional Shares of Common Stock would be less than the Series A Conversion
Price, Series B Conversion Price and Series C Conversion Price in effect on the
date of and immediately prior to such issue, or such record date, as the case
may be, and provided further that in any such case in which Additional Shares of
Common Stock are deemed to be issued:
(x) no further adjustment in the Series A Conversion
Price, Series B Conversion Price and Series C Conversion Price shall be made
upon the subsequent issue of Convertible Securities or shares of Common Stock
upon the exercise of such Options or conversion or exchange of such Convertible
Securities;
(y) if such Options or Convertible Securities by their
terms provide, with the passage of time or otherwise, for any increase in the
consideration payable to the corporation, or decrease in the number of shares of
Common Stock issuable, upon the exercise, conversion or exchange thereof, the
Series A Conversion Price, Series B Conversion Price or Series C Conversion
Price computed upon the original issue thereof (or upon the occurrence of a
record date with respect thereto), and any subsequent adjustments based thereon,
shall, upon any such increase or decrease becoming effective, be recomputed to
reflect such increase or decrease insofar as it affects such Options or the
rights of conversion or exchange under such Convertible Securities; and
8
<PAGE>
(z) no readjustment pursuant to clause (y) above shall have
the effect of increasing the Series A Conversion Price, Series B Conversion
Price or Series C Conversion Price to an amount which exceeds the lower of (i)
the Series A Conversion Price, Series B Conversion Price or Series C Conversion
Price on the original adjustment date, or (ii) the Series A Conversion Price,
Series B Conversion Price or Series C Conversion Price that would have resulted
from any issuance of Additional Shares of Common Stock between the original
adjustment date and such readjustment date.
(ii) Stock Dividends and Subdivisions. In the event the
--------------------------------
corporation at any time or from time to time after the Original Issue Date shall
declare or pay any dividend on the Common Stock payable in Common Stock, or
effect a split or subdivision of the outstanding shares of Common Stock into a
greater number of shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in Common), then and in any such event, Additional
Shares of Common Stock shall be deemed to have been issued:
(x) in the case of any such dividend, immediately after the
close of business on the record date for the determination of holders of any
class of securities entitled to receive such dividend, or
(y) in the case of any such subdivision, at the close of
business on the date immediately prior to the date upon which such corporate
action becomes effective.
(d) Adjustment of Conversion Price Upon Issuance of Additional Shares
-----------------------------------------------------------------
of Common Stock. In the event this corporation shall issue Additional Shares of
- ---------------
Common Stock (including Additional Shares of Common Stock deemed to be issued
pursuant to subparagraph (4)(c) of this Section E) without consideration or for
a consideration per share less than the applicable Series A Conversion Price,
Series B Conversion Price and/or Series C Conversion Price in effect immediately
prior to such event, such Series A Conversion Price, Series B Conversion Price
and/or Series C Conversion Price, as applicable, shall be reduced, concurrently
with such issue, to a price (calculated to the nearest tenth of a cent)
determined by multiplying such Conversion Price by a fraction, the numerator of
which shall be the number of shares of Common Stock outstanding immediately
prior to such issue plus the number of shares of Common Stock which the
aggregate consideration received by the corporation for the total number of
Additional Shares of Common Stock so issued would purchase at such Conversion
Price; and the denominator of which shall be the number of shares of Common
Stock outstanding immediately prior to such issue plus the number of such
Additional Shares of Common Stock so issued; provided that, for the purposes of
this paragraph (d), all shares of Common Stock issuable upon exercise of
outstanding Options and conversion of outstanding Convertible Securities shall
be deemed to be outstanding, and immediately after any Additional Shares of
Common Stock are deemed issued pursuant to paragraph (iii), such Additional
Shares of Common Stock shall be deemed to be outstanding.
9
<PAGE>
(e) Determination of Consideration. For purposes of this paragraph
------------------------------
E(4), the consideration received by the corporation for the issue of any
Additional Shares of Common Stock shall be computed as follows:
(i) Cash and property: Such consideration shall:
(x) insofar as it consists of cash, be computed at the
aggregate amount of cash received by the corporation excluding amounts paid or
payable for accrued interest or accrued dividends;
(y) insofar as it consists of property other than cash, be
computed at the fair value thereof at the time of such issue, as determined in
good faith by the Board of Directors ; and
(z) in the event Additional Shares of Common Stock are issued
together with other shares or securities or other assets of the corporation for
consideration which covers both, be the proportion of such consideration so
received, computed as provided in clauses (x) and (y) above, as determined in
good faith by the Board of Directors.
(ii) Options and Convertible Securities. The consideration per
----------------------------------
share received by the corporation for Additional Shares of Common Stock deemed
to have been issued pursuant to subparagraph E(4)(C)(i), relating to Options and
Convertible Securities, shall be determined by dividing
(x) the total amount, if any, received or receivable by the
corporation as consideration for the issue of such Options or Convertible
Securities, plus the minimum aggregate amount of additional consideration (as
set forth in the instruments relating thereto without regard to any provision
contained therein for a subsequent adjustment of such consideration) payable to
the corporation upon the exercise of such Options or the conversion or exchange
of such Convertible Securities, or in the case of options for Convertible
Securities, the exercise of such Options for Convertible Securities and the
conversion or exchange of such Convertible Securities by
(y) the maximum number of shares of Common Stock (as set
forth in the instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such number) issuable upon the
exercise of such Options or the conversion or exchange of such Convertible
Securities.
(iii) Stock Dividends and Stock Subdivisions. Any Additional
--------------------------------------
Shares of Common Stock deemed to have been issued, relating to stock dividends
and stock splits or subdivisions, shall be deemed to have been issued for no
consideration.
10
<PAGE>
(f) Adjustment for Combinations or Consolidation of Common Stock.
------------------------------------------------------------
In the event the outstanding shares of Common Stock shall be
combined or consolidated, by reclassification or otherwise, into a lesser number
of shares of Common Stock, the Series A Conversion Price, Series B Conversion
Price and Series C Conversion Price in effect immediately prior to such
combination or consolidation shall, concurrently with the effectiveness of such
combination or consolidation, be proportionately increased.
(5) Adjustments for Recapitalizations. If at any time or from time to
---------------------------------
time there shall be a recapitalization of the Common Stock (other than a
subdivision or combination provided for elsewhere in paragraph (4) above,
provision shall be made so that the holders of the Series A Stock, Series B
Stock and Series C Stock shall thereafter be entitled to receive upon conversion
of the Series A Stock, Series B Stock and Series C Stock the number of shares of
stock or other securities or property of the Company or otherwise, to which a
holder of Common Stock deliverable upon conversion would have been entitled on
such recapitalization. In any such case, appropriate adjustment shall be made
in the application of the provisions of this paragraph (5) with respect to the
rights of the holders of the Series A Stock, Series B Stock and Series C Stock
after the recapitalization to the end that the provisions of this paragraph E
(including adjustment of the Series A Conversion Price, Series B Conversion
Price and Series C Conversion Price then in effect and the number of shares
issuable upon conversion of the Series A Stock, Series B Stock and Series C
Stock) shall be applicable after that event as nearly equivalent as may be
practicable.
(6) No Impairment. The corporation will not, by amendment of its
-------------
Articles of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the corporation but will at
all times in good faith assist in the carrying out of all the provisions of this
paragraph E and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of the
Series A Stock, Series B Stock and Series C Stock against impairment.
(7) Certificate as to Adjustments. Upon the occurrence of each
-----------------------------
adjustment or readjustment of the Series A Conversion Price, Series B Conversion
Price and Series C Conversion Price pursuant to this paragraph E, the
corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of
Series A Stock, Series B Stock and Series C Stock a certificate setting forth
such adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The corporation shall, upon the written
request at any time of any holder of Series A Stock, Series B Stock and Series C
Stock, furnish or cause to be furnished to such holder a like certificate
setting forth (i) such adjustments and readjustments, (ii) the Series A
Conversion Price, Series B Conversion Price and Series C Conversion Price at the
11
<PAGE>
time in effect, and (iii) the number of shares of Common Stock and the amount,
if any, of other property which at the time would be received upon the
conversion of Series A Stock, Series B Stock and Series C Stock.
(8) Notices of Record Date. In the event that this corporation shall
----------------------
propose at any time:
(a) to declare any dividend or distribution upon its Common Stock,
whether in cash, property, stock or other securities, whether or not a regular
cash dividend and whether or not out of earnings or earned surplus;
(b) to offer for subscription pro rata to the holders of any class
or series of its stock any additional shares of stock of any class or series or
other rights;
(c) to effect any reclassification or recapitalization of the
shares of its Common Stock outstanding involving a change in the Common Stock;
or
(d) to merge or consolidate with or into any other corporation, or
sell, lease or convey all or substantially all its property or business or to
liquidate, dissolve or wind up;
then, in connection with each such event, this corporation shall send to the
holders of the Series A Stock and Series B Stock:
(i) at least 20 days' prior written notice of the date on
which a record shall be taken for such dividend, distribution or subscription
rights (and specifying the date on which the holders of Common Stock shall be
entitled thereto) or for determining rights to vote in respect of the matters
referred to in (c) and (d) above; and
(ii) in the case of the matters referred to in (c) and (d)
above, at least 20 days' prior written notice of the date when the same shall
take place (and specifying the date on which the holders of the Common Stock
shall be entitled to exchange their shares of Common Stock for securities or
other property deliverable upon the occurrence of such events).
(9) Issue Taxes. The corporation shall pay any and all issue and
-----------
other taxes that may be payable in respect of any issue or delivery of shares of
Common Stock on conversion of shares of Series A Stock, Series B Stock and
Series C Stock.
(10) Reservation of Common Stock Issuable Upon Conversion. The
----------------------------------------------------
corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock solely for the purpose of effecting the
conversion of the shares of the Series A Stock, Series B Stock and Series C
Stock such number of its shares of Common Stock as shall from time to time be
sufficient to effect the conversion of all outstanding
12
<PAGE>
shares of the Series A Stock, Series B Stock and Series C Stock. If at any time
the number of authorized but unissued shares of Common Stock shall not be
sufficient to effect the conversion of all then outstanding shares of the Series
A Stock, Series B Stock and Series C Stock, the corporation will take such
corporate action as may, in the opinion of its counsel, be necessary to increase
its authorized but unissued shares of Common Stock to such number of shares as
shall be sufficient for such purpose.
(11) Notices. Any notice required by the provisions of paragraph (8)
-------
to be given to the holders of shares of Series A Stock, Series B Stock and
Series C Stock shall be deemed given if deposited in the United States mail,
postage prepaid, and addressed to each holder of record at his address appearing
on the books of the corporation.
F. Rights and Preferences of Other Series of Preferred Stock. The Board
---------------------------------------------------------
of Directors of the corporation shall be authorized, in designating additional
series of Preferred Stock of the corporation and fixing the rights, privileges
and preferences relating thereto, to fix such rights, privileges and preferences
of such additional series of Preferred Stock as to be of equal seniority and
grade as the Series A Stock, Series B Stock and Series C Stock herein
designated. Without limitation of the foregoing, the board may fix the dividend
and liquidation preferences of any such additional series of preferred stock so
that such additional series of preferred stock are entitled to participate pari
----
passu with the Series A Stock, Series B Stock and Series C Stock as to dividends
- -----
and liquidating distributions in such amounts as the board shall designate as
the dividend and liquidation preferences for any such additional series of
Preferred Stock.
G. Repurchase of Common Stock. Each holder of an outstanding share of
--------------------------
Series A Stock, Series B Stock and Series C Stock shall be deemed to have
consented, for purposes of Sections 502, 503, and 506 of the California General
Corporation Law to distributions made by the corporation in connection with the
repurchase, at cost, of shares of Common Stock issued to or held by employees
upon termination of their employment pursuant to agreements providing for the
right of such repurchase between the corporation and such employees.
H. Protective Provisions.
---------------------
(1) So long as any shares of Series A Stock are outstanding, the
Corporation shall not, without first obtaining the approval by vote or written
consent, in the manner provided by law, of the holders of a majority of the then
outstanding shares of Series A Stock, voting separately as a class;
(a) materially and adversely alter or change any of the powers,
preferences, privileges or rights of the Series A Stock; or
(b) increase the authorized number of shares of Series A Stock; or
13
<PAGE>
(c) amend the provisions of this paragraph (H)(1); or
(d) designate or issue any new class or series of shares having
preferences superior to the Series A Stock as to dividends, conversion rights or
liquidation.
(2) So long as any shares of Series B Stock are outstanding, the
Corporation shall not, without first obtaining the approval by vote or written
consent, in the manner provided by law, of the holders of a majority of the then
outstanding shares of Series B Stock, voting separately as a class;
(a) materially and adversely alter or change any of the powers,
preferences, privileges or rights of the Series B Stock; or
(b) increase the authorized number of shares of Series B Stock; or
(c) amend the provisions of this paragraph (H)(2); or
(d) designate or issue any new class or series of shares having
preferences superior to the Series B Stock as to dividends, conversion rights or
liquidation.
(3) So long as any shares of Series C Stock are outstanding, the
Corporation shall not, without first obtaining the approval by vote or written
consent, in the manner provided by law, of the holders of a majority of the then
outstanding shares of Series C Stock, voting separately as a class;
(a) materially and adversely alter or change any of the powers,
preferences, privileges or rights of the Series C Stock; or
(b) increase the authorized number of shares of Series C Stock; or
(c) amend the provisions of this paragraph (H)(3); or
(d) designate or issue any new class or series of shares having
preferences superior to the Series C Stock as to dividends, conversion rights or
liquidation.
(4) So long as any shares of Series A Stock, Series B Stock and Series
C Stock are outstanding, the corporation shall not, without first obtaining the
approval by vote or written consent, in the manner provided by law, of the
holders of a majority of the then outstanding shares of Series A Stock, Series B
Stock and Series C Stock, voting together as a single class, sell, convey or
otherwise dispose of all or substantially all of its property or business, or
merge into or consolidate with any other corporation (other than a wholly-owned
subsidiary corporation), or effect any transaction or series of related
transactions pursuant to
14
<PAGE>
which shares of the corporation representing more than fifty percent (50%) of
the voting power of the corporation are disposed of.
ARTICLE V
A. Limitation of Directors' Liability. The liability of the directors of
----------------------------------
this corporation for monetary damages shall be eliminated to the fullest extent
permissible under California law.
B. Indemnification of Corporate Agents. This corporation is authorized
-----------------------------------
to provide indemnification of its agents (as defined in Section 317 of the
California Corporations Code) for breach of their duty to this corporation and
its shareholders through bylaw provisions or through agreements with the agents,
or both, in excess of the indemnification otherwise permitted by such Section
317, subject to the limits on such excess indemnification set forth in Section
204 of the California Corporations Code.
C. Repeal or Modification. Any repeal or modification of the foregoing
----------------------
provisions of this Article V shall be prospective only and shall not adversely
affect any right of indemnification or limitation of liability of an agent of
this Corporation relating to acts or omissions occurring prior to such repeal or
modification.
THREE: The foregoing amendment and restatement of the Articles of
Incorporation has been duly approved by the Board of Directors of said
corporation.
FOUR: The foregoing amendment and restatement of the Articles of
Incorporation was duly approved by the holder of the requisite number of shares
of said corporation in accordance with Sections 902 and 903 of the California
Corporations Code. The total number of outstanding shares of each class
entitled to vote with respect to the foregoing amendment and restatement is
3,885,513 shares of Common Stock, 5,200,000 Series A Preferred Stock and
2,150,000 shares of Series B Preferred Stock. The number of shares voting in
favor of the foregoing amendment and restatement equaled or exceeded the vote
required. The percentage vote required was more than 50% of the outstanding
shares of Common Stock, voting separately as a class, more than 50% of the
outstanding shares of Series A
15
<PAGE>
Preferred Stock, voting separately as a class, more than 50% of the outstanding
shares of Series B Preferred Stock, voting separately as a class, and more than
50% of the outstanding shares of Common Stock, Series A Preferred Stock and
Series B Preferred Stock, voting together as a class.
We further declare under penalty of perjury under the laws of the State of
California that the matters set forth in this certificate are true and correct
of our own knowledge.
Date: July 8, 1993.
/s/ Alex C. Hui
_______________________________
Alex C. Hui
President
/s/ Chi-Hung Hui
________________________________
Chi-Hung Hui
Secretary
16
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE RESTATED
ARTICLES OF INCORPORATION
OF
PIONEER SEMICONDUCTOR CORPORATION
Alex C. Hui and Chi-Hung Hui hereby certify that:
1. They are the President and the Secretary, respectively, of Pioneer
Semiconductor Corporation, a California corporation (the "Corporation").
2. Article I of the Restated Articles of Incorporation of said
Corporation shall be amended to read in full as follows:
"ARTICLE I
The name of this corporation is Pericom Semiconductor Corporation."
3. The foregoing Amendment has been approved by the Board of
Directors of said Corporation.
4. The foregoing Amendment has been approved by the required vote of
the shareholders of said Corporation in accordance with Section 902 of the
California Corporations Code. The total number of outstanding shares entitled to
vote with respect to the foregoing Amendment was 3,885,513 shares of Common
Stock, 5,200,000 shares of Series A Preferred Stock, 2,150,000 shares of Series
B Preferred Stock, and 1,875,000 shares of Series C Preferred Stock; and the
number of shares voting in favor of the foregoing
<PAGE>
Amendment equaled or exceeded the vote required, such required vote being more
than 50% of the outstanding shares.
We further declare under penalty of perjury under the laws of the
State of California that the matters set forth in the foregoing Certificate are
true and correct of our own knowledge.
Executed at San Jose, California, on October 31, 1993.
/s/ Alex C. Hui
_______________________________
Alex C. Hui
/s/ Chi-Hung Hui
_______________________________
Chi-Hung Hui
<PAGE>
EXHIBIT 3.3
BYLAWS
OF
PIONEER SEMICONDUCTOR CORPORATION
a California corporation
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I Offices.................................................. 1
Section 1.1 Principal Executive Office............................... 1
Section 1.2 Other Offices............................................ 1
ARTICLE II Meetings of Shareholders................................. 1
Section 2.1 Place of Meetings........................................ 1
Section 2.2 Annual Meeting........................................... 1
Section 2.3 Notice of Annual Meeting................................. 2
Section 2.4 Special Meetings......................................... 3
Section 2.5 Notice of Special Meetings............................... 3
Section 2.6 Quorum................................................... 4
Section 2.7 Adjourned Meeting and Notice............................. 4
Section 2.8 Record Date.............................................. 4
Section 2.9 Voting................................................... 5
Section 2.10 Proxies.................................................. 6
Section 2.11 Validation of Defectively Called or
Noticed Meetings....................................... 7
Section 2.12 Action Without Meeting................................... 8
Section 2.13 Inspectors of Election................................... 9
ARTICLE III Board of Directors....................................... 10
Section 3.1 Powers; Approval of Loans to
Officers............................................... 10
Section 3.2 Number and Qualification of
Directors.............................................. 11
Section 3.3 Election and Term of Office.............................. 11
Section 3.4 Vacancies................................................ 11
Section 3.5 Time and Place of Meetings............................... 12
Section 3.6 Notice of Special Meetings............................... 13
Section 3.7 Action at a Meeting: Quorum and
Required Vote.......................................... 14
Section 3.8 Action Without a Meeting................................. 14
Section 3.9 Adjourned Meeting and Notice............................. 14
Section 3.10 Fees and Compensation.................................... 14
Section 3.11 Appointment of Executive and Other
Committees............................................. 15
</TABLE>
<PAGE>
<TABLE>
<S> <C>
ARTICLE IV Officers................................................. 16
Section 4.1 Officers................................................. 16
Section 4.2 The Chairman of the Board................................ 17
Section 4.3 The President............................................ 17
Section 4.4 Vice-Presidents.......................................... 17
Section 4.5 The Secretary............................................ 18
Section 4.6 The Treasurer............................................ 18
Section 4.7 The Controller........................................... 19
ARTICLE V Execution of Corporate Instruments,
Ratification, and Voting of Stocks
Owned by the Corporation............................... 19
Section 5.1 Execution of Corporate Instruments....................... 19
Section 5.2 Ratification by Shareholders............................. 20
Section 5.3 Voting of stocks Owned by the
Corporation............................................ 20
ARTICLE VI Annual and Other Reports................................. 20
Section 6.1 Reports to Shareholders.................................. 20
Section 6.2 Report of Shareholder Vote............................... 22
Section 6.3 Reports to the Secretary of State........................ 22
ARTICLE VII Shares of Stock.......................................... 23
ARTICLE VIII Inspection of Corporate Records.......................... 24
Section 8.1 General Records.......................................... 24
Section 8.2 Inspection of Bylaws..................................... 25
ARTICLE IX Indemnification of Officers, Directors,
Employees, and Agents.................................. 25
Section 9.1 Right to Indemnification................................. 25
Section 9.2 Authority to Advance Expenses............................ 26
Section 9.3 Right of Claimant to Bring suit.......................... 26
Section 9.4 Provisions Nonexclusive.................................. 27
Section 9.5 Authority to Insure...................................... 27
Section 9.6 Survival of Rights....................................... 27
Section 9.7 Settlement of Claims..................................... 28
Section 9.8 Effect of Amendment...................................... 28
Section 9.9 Subrogation.............................................. 28
Section 9.10 No Duplication of Payments............................... 28
ARTICLE X Amendments............................................... 28
Section 10.1 Power of Shareholders.................................... 28
Section 10.2 Power of Directors....................................... 29
</TABLE>
<PAGE>
<TABLE>
<S> <C>
ARTICLE XI Definitions.............................................. 29
ARTICLE XII Corporate Seal........................................... 29
ARTICLE XIII Right of First Refusal................................... 29
</TABLE>
<PAGE>
BYLAWS
OF
PIONEER SEMICONDUCTOR CORPORATION
a California corporation
ARTICLE I
Offices
Section 1.1 Principal Executive Office.
- ----------- --------------------------
The principal executive office of the corporation is hereby fixed and
located at: 3380 Kipling Street, Palo Alto, California, 94306. The Board of
Directors is hereby granted full power and authority to change said principal
executive office from one location to another. Any such change shall be noted on
these Bylaws by the Secretary, opposite this Section, or this Section may be
amended to state the new location.
Section 1.2 Other Offices.
- ----------- -------------
Other business offices may at any time be established at any place or
places specified by the Board of Directors.
ARTICLE II
Meetings of Shareholders
Section 2.1 Place of Meetings.
- ----------- -----------------
All meetings of shareholders shall be held at the principal executive
office of the corporation, or at any other place, within or without the State of
California, specified by the Board of Directors.
Section 2.2 Annual Meeting.
- ----------- --------------
The annual meeting of the shareholders, after the year 1990, shall be
held at the time and date in each year fixed by the Board of Directors. At the
annual meeting directors shall be elected, reports of the affairs of the
corporation shall be considered, and any other business may be transacted that
is within the power of the shareholders.
1
<PAGE>
Section 2.3 Notice of Annual Meeting.
- ----------- ------------------------
Written notice of each annual meeting shall be given to each
shareholder entitled to vote, either personally or by first-class mail, or, if
the corporation has outstanding shares held of record by 500 or more persons
(determined in accordance with Section 605 of the General Corporation Law) on
the record date for the meeting, by third-class mail, or by other means of
written communication, charges prepaid, addressed to such shareholder at the
shareholder's address appearing on the books of the corporation or given by such
shareholder to the corporation for the purpose of notice. If any notice or
report addressed to the shareholder at the address of such shareholder appearing
on the books of the corporation is returned to the corporation by the United
States Postal Service marked to indicate that the United States Postal Service
is unable to deliver the notice or report to the shareholder at such address,
all future notices or reports shall be deemed to have been duly given without
further mailing if the same shall be available for the shareholder upon written
demand of the shareholder at the principal executive office of the corporation
for a period of one year from the date of the giving of the notice or report to
all other shareholders. If a shareholder gives no address, notice shall be
deemed to have been given to such shareholder if addressed to the shareholder at
the place where the principal executive office of the corporation is situated,
or if published at least once in some newspaper of general circulation in the
county in which said principal executive office is located.
All such notices shall be given to each shareholder entitled thereto
not less than ten (10) days (or, if sent by third-class mail, thirty (30) days)
nor more than sixty (60) days before each annual meeting. Any such notice shall
be deemed to have been given at the time when delivered personally or deposited
in the mail or sent by other means of written communication. An affidavit of
mailing of any such notice in accordance with the foregoing provisions, executed
by the Secretary, Assistant Secretary or any transfer agent of the corporation
shall be prima facie evidence of the giving of the notice.
----- -----
Such notice shall specify:
(a) the place, the date, and the hour of such meeting;
(b) those matters that the Board of Directors, at the time of the
mailing of the notice, intends
2
<PAGE>
to present for action by the shareholders (but, subject to the provisions of
subsection (d) below, any proper matter may be presented at the meeting for such
action);
(c) if directors are to be elected, the names of nominees
intended at the time of the notice to be presented by the Board of Directors for
election;
(d) the general nature of a proposal, if any, to take action with
respect to approval of (i) a contract or other transaction with an interested
director, (ii) amendment of the Articles of Incorporation, (iii) a
reorganization of the corporation as defined in section 181 of the General
Corporation Law, (iv) voluntary dissolution of the corporation, or (v) a
distribution in dissolution other than in accordance with the rights of
outstanding preferred shares, if any; and
(e) such other matters, if any, as may be expressly required by
statute.
Section 2.4 Special Meetings.
- ----------- ----------------
Special meetings of the shareholders for any purpose or purposes
whatsoever may be called at any time by the Chairman of the Board (if there be
such an officer appointed), by the President, by the Board of Directors, or by
one or more shareholders entitled to cast not less than ten percent (10%) of the
votes at the meeting.
Section 2.5 Notice of Special Meetings.
- ----------- --------------------------
Upon request in writing that a special meeting of shareholders be
called for any proper purpose, directed to the Chairman of the Board (if there
be such an officer appointed), President, Vice President or secretary by any
person (other than the Board of Directors) entitled to call a special meeting of
shareholders, the officer forthwith shall cause notice to be given to the
shareholders entitled to vote that a meeting will be held at a time requested by
the person or persons calling the meeting, not less than thirty-five (35) nor
more than sixty (60) days after the receipt of the request. Except in special
cases where other express provision is made by statute, notice of any special
meeting of shareholders shall be given in the same manner as for annual meetings
of shareholders. In addition to the matters required by Section 2.3(a) and, if
applicable, Section 2.3(c) of these Bylaws, notice of any special meeting shall
specify the general nature of the business to be transacted, and no other
business may be transacted at such meeting.
3
<PAGE>
Section 2.6 Quorum.
- ----------- ------
The presence in person or by proxy of persons entitled to vote a
majority of the voting shares at any meeting shall constitute a quorum for the
transaction of business. If a quorum is present, the affirmative vote of a
majority of the shares represented and voting at the meeting (which shares
voting affirmatively also constitute at least a majority of the required quorum)
shall be the act of the shareholders, unless the vote of a greater number or
voting by classes is required by the General Corporation Law or the Articles of
Incorporation. Any meeting of shareholders, whether or not a quorum is present,
may be adjourned from time to time by the vote of the holders of a majority of
the shares present in person or represented by proxy thereat and entitled to
vote, but in the absence of a quorum no other business may be transacted at such
meeting, except that the shareholders present or represented by proxy at a duly
called or held meeting, at which a quorum is present, may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum, if any action taken (other than
adjournment) is approved by at least a majority of the shares required to
constitute a quorum.
Section 2.7 Adjourned Meeting and Notice.
- ----------- ----------------------------
When any shareholders' meeting, either annual or special, is adjourned
for more than forty-five (45) days, or if after adjournment a new record date is
fixed for the adjourned meeting, notice of the adjourned meeting shall be given
as in the case of an original meeting. Except as provided above, it shall not be
necessary to give any notice of the time and place of the adjourned meeting or
of the business to be transacted thereat, other than by announcement of the time
and place thereof at the meeting at which such adjournment is taken.
Section 2.8 Record Date.
- ----------- -----------
(a) The Board of Directors may fix a time in the future as a record
date for the determination of the shareholders entitled to notice of and to vote
at any meeting of shareholders or entitled to give consent to corporate action
in writing without a meeting, to receive any report, to receive any dividend or
other distribution, or allotment of any rights, or to exercise rights in respect
of any other lawful action. The record date so fixed shall be not more than
sixty (60) days nor less than ten (10) days prior to the date of such meeting,
nor more than sixty (60) days prior to any other action. A determination of
4
<PAGE>
shareholders of record entitled to notice of or to vote at a meeting of
shareholders shall apply to any adjournment of the meeting unless the Board of
Directors fixes a new record date for the adjourned meeting, but the Board of
Directors shall fix a new record date if the meeting is adjourned for more than
forty-five (45) days from the date set for the original meeting. When a record
date is so fixed, only shareholders of record at the close of business on that
date are entitled to notice of and to vote at any such meeting, to give consent
without a meeting, to receive any report, to receive the dividend, distribution,
or allotment of rights, or to exercise the rights, as the case may be,
notwithstanding any transfer of any shares on the books of the corporation after
the record date, except as otherwise provided in the Articles of Incorporation
or these Bylaws.
(b) If no record date is fixed:
(1) The record date for determining shareholders entitled to
notice of or to vote at a meeting of shareholders shall be at the close of
business on the business day next preceding the day on which notice is given or,
if notice is waived, at the close of business on the business day preceding the
day on which the meeting is held.
(2) The record date for determining shareholders entitled to give
consent to corporate action in writing without a meeting, when no prior action
by the Board of Directors has been taken, shall be the day on which the first
written consent is given.
(3) The record date for determining shareholders for any other
purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto, or the sixtieth (60th) day
prior to the date of such other action, whichever is later.
Section 2.9 Voting.
- ----------- ------
(a) Except as provided below with respect to cumulative voting and
except as may be otherwise provided in the Articles of Incorporation, each
outstanding share, regardless of class, shall be entitled to one vote on each
matter submitted to a vote of shareholders. Any holders of shares entitled to
vote on any matter may vote part of the shares in favor of the proposal and
refrain from voting the remaining shares or vote them against the proposal,
other than elections to office, but, if the shareholder fails to specify the
number of shares such shareholder is voting affirmatively, it will be
conclusively presumed that the shareholder's approving vote is with respect to
all shares such shareholder is entitled to vote.
5
<PAGE>
(b) Subject to the provisions of Sections 702 through 704 of the
General Corporation Law (relating to voting of shares held by a fiduciary,
receiver, pledgee, or minor, in the name of a corporation, or in joint
ownership), persons in whose names shares entitled to vote stand on the stock
records of the corporation at the close of business on the record date shall be
entitled to vote at the meeting of shareholders. Such vote may be viva voce or
---- ----
by ballot; provided, however, that all elections for directors must be by ballot
upon demand made by a shareholder at any election and before the voting begins.
Shares of this corporation owned by a corporation more than twenty-five percent
(25%) of the voting power of which is owned directly by this corporation, or
indirectly through one or more majority-owned subsidiaries of this corporation,
shall not be entitled to vote on any matter.
(c) Subject to the requirements of the next sentence, every
shareholder entitled to vote at any election for directors shall have the right
to cumulate such shareholder's votes and give one candidate a number of votes
equal to the number of directors to be elected multiplied by the number of votes
to which such shareholder's shares are normally entitled, or to distribute votes
on the same principle among as many candidates as such shareholder thinks fit.
No shareholder shall be entitled to cumulate votes unless such candidate's name
or candidates' names have been placed in nomination prior to the voting and the
shareholder has given notice at the meeting, prior to the voting, of the
shareholder's intention to cumulate such shareholder's votes. If any one
shareholder has given such notice, all shareholders may cumulate their votes for
candidates in nomination. The candidates receiving the highest number of
affirmative votes of shares entitled to be voted for them, up to the number of
directors to be elected by such shares, shall be elected. Votes against a
director and votes withheld shall have no legal effect.
Section 2.10 Proxies.
- ------------ -------
(a) Every person entitled to vote shares (including voting by written
consent) may authorize another person or other persons to act by proxy with
respect to such shares. "Proxy" means a written authorization signed by a
shareholder or the shareholder's attorney-in-fact giving another person or
persons power to vote with respect to the shares of such shareholder. "Signed"
for the purpose of this Section means the placing of the shareholder's name on
the proxy (whether by manual signature, typewriting, telegraphic transmission or
otherwise) by the shareholder or the shareholder's attorney-in-fact. Any proxy
duly executed
6
<PAGE>
is not revoked and continues in full force and effect until (i) a written
instrument revoking it is filed with the Secretary of the corporation prior to
the vote pursuant thereto, (ii) a subsequent proxy executed by the person
executing the prior proxy is presented to the meeting, (iii) the person
executing the proxy attends the meeting and votes in person, or (iv) written
notice of the death or incapacity of the maker of such proxy is received by the
corporation before the vote pursuant thereto is counted; provided that no such
proxy shall be valid after the expiration of eleven (11) months from the date of
its execution, unless otherwise provided in the proxy. Notwithstanding the
foregoing sentence, a proxy that states that it is irrevocable, is irrevocable
for the period specified therein to the extent permitted by Section 705(e) and
(f) of the General Corporation Law. The dates contained on the forms of proxy
presumptively determine the order of execution, regardless of the postmark dates
on the envelopes in which they are mailed.
(b) As long as no outstanding class of securities of the corporation
is registered under Section 12 of the Securities Exchange Act of 1934, or is not
exempted from such registration by Section 12(g)(2) of such Act, any form of
proxy or written consent distributed to ten (10) or more shareholders of the
corporation when outstanding shares of the corporation are held of record by 100
or more persons shall afford an opportunity on the proxy or form of written
consent to specify a choice between approval and disapproval of each matter or
group of related matters intended to be acted upon at the meeting for which the
proxy is solicited or by such written consent, other than elections to office,
and shall provide, subject to reasonable specified conditions, that where the
person solicited specifies a choice with respect to any such matter the shares
will be voted in accordance therewith. In any election of directors, any form
of proxy in which the directors to be voted upon are named therein as candidates
and which is marked by a shareholder "withhold" or otherwise marked in a manner
indicating that the authority to vote for the election of directors is withheld
shall not be voted for the election of a director.
Section 2.11 Validation of Defectively Called or Noticed Meetings.
- ------------ ----------------------------------------------------
The transactions of any meeting of shareholders, however called and
noticed, and wherever held, are as valid as though had at a meeting duly held
after regular call and notice, if a quorum is present either in person or by
proxy, and if, either before or after the meeting, each of the
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persons entitled to vote, not present in person or by proxy, signs a written
waiver of notice or a consent to the holding of the meeting or an approval of
the minutes thereof. All such waivers, consents and approvals shall be filed
with the corporate records or made a part of the minutes of the meeting.
Attendance of a person at a meeting shall constitute a waiver of notice of and
presence at such meeting, except when the person objects, at the beginning of
the meeting, to the transaction of any business because the meeting is not
lawfully called or convened and except that attendance at a meeting is not a
waiver of any right to object to the consideration of matters required by these
Bylaws or by the General Corporation Law to be included in the notice if such
objection is expressly made at the meeting. Neither the business to be
transacted at nor the purpose of any regular or special meeting of shareholders
need be specified in any written waiver of notice, consent to the holding of the
meeting or approval of the minutes thereof, unless otherwise provided in the
Articles of Incorporation or these Bylaws, or unless the meeting involves one or
more matters specified in Section 2.3(d) of these Bylaws.
Section 2.12 Action Without Meeting.
- ------------ ----------------------
(a) Directors may be elected without a meeting by a consent in
writing, setting forth the action so taken, signed by all of the persons who
would be entitled to vote for the election of directors, provided that, without
notice except as hereinafter set forth, a director may be elected at any time to
fill a vacancy not filled by the directors (other than a vacancy created by
removal of a director) by the written consent of persons holding a majority of
the outstanding shares entitled to vote for the election of directors.
Any other action that may be taken at a meeting of the shareholders,
may be taken without a meeting, and without prior notice except as hereinafter
set forth, if a consent in writing, setting forth the action so taken, is signed
by the holders of outstanding shares having not less than the minimum number of
votes that would be necessary to authorize or take such action at a meeting at
which all shares entitled to vote thereon were present and voted.
(b) Unless the consents of all shareholders entitled to vote have been
solicited in writing:
(1) notice of any proposed shareholder approval of (i) a contract
or other transaction with an interested director, (ii) indemnification of an
agent of the
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corporation, (iii) a reorganization of the corporation as defined in Section 181
of the General Corporation Law, or (iv) a distribution in dissolution other than
in accordance with the rights of outstanding preferred shares, if any, without a
meeting by less than unanimous written consent, shall be given at least ten (10)
days before the consummation of the action authorized by such approval; and
(2) prompt notice shall be given of the taking of any other
corporate action approved by shareholders without a meeting by less than
unanimous written consent to those shareholders entitled to vote who have not
consented in writing. Such notices shall be given in the manner provided in
Section 2.3 of these Bylaws.
(c) Any shareholder giving a written consent, or the shareholder's
proxyholders, or a transferee of the shares or a personal representative of the
shareholder or their respective proxyholders, may revoke the consent by a
writing received by the corporation prior to the time that written consents of
the number of shares required to authorize the proposed action have been filed
with the Secretary of the corporation, but may not do so thereafter. Such
revocation is effective upon its receipt by the Secretary of the corporation.
Section 2.13 Inspectors of Election
- ------------ ----------------------
(a) In advance of any meeting of shareholders, the Board of Directors
may appoint inspectors of election to act at the meeting and any adjournment
thereof. If inspectors of election are not so appointed, or if any persons so
appointed fail to appear or refuse to act, the chairman of any such meeting may,
and on the request of any shareholder or the holder of such shareholder's proxy
shall, appoint inspectors of election (or persons to replace those who so fail
or refuse) at the meeting. The number of inspectors shall be either one or
three. If inspectors are appointed at a meeting on the request of one or more
shareholders or holders of proxies, the majority of shares represented in person
or by proxy shall determine whether one inspector or three inspectors are to be
appointed.
(b) The inspectors of election shall determine the number of shares
outstanding and the voting power of each, the shares represented at the meeting,
the existence of a quorum and the authenticity, validity and effect of proxies;
receive votes, ballots or consents; hear and determine all challenges and
questions in any way arising in connection with the right to vote; count and
tabulate all votes or consents; determine when the polls shall close; determine
9
<PAGE>
the result; and do such acts as may be proper to conduct the election or vote
with fairness to all shareholders.
(c) The inspectors of election shall perform their duties
impartially, in good faith, to the best of their ability and as expeditiously as
is practical. If there are three inspectors of election, the decision, act or
certificate of a majority is effective in all respects as the decision, act or
certificate of all. Any report or certificate made by the inspectors of election
is prima facie evidence of the facts stated therein.
----- -----
ARTICLE III
Board of Directors
Section 3.1 Powers; Approval of Loans to Officers.
- ----------- -------------------------------------
(a) Subject to the provisions of the General Corporation Law and any
limitations in the Articles of Incorporation relating to action required to be
approved by the shareholders or by the outstanding shares, the business and
affairs of the corporation shall be managed and all corporate powers shall be
exercised by or under the direction of the Board of Directors. The Board of
Directors may delegate the management of the day-to-day operation of the
business of the corporation to a management company or other person provided
that the business and affairs of the corporation shall be managed and all
corporate powers shall be exercised under the ultimate direction of the Board of
Directors.
(b) The corporation may, upon approval of the Board of Directors
alone, make loans of money or property to, or guarantee the obligations of, any
officer (whether or not a director) of the corporation or of its parent, or
adopt an employee benefit plan authorizing such loans or guaranties provided
that:
(1) the Board of Directors determines that such a loan, guaranty,
or plan may reasonably be expected to benefit the corporation;
(2) the corporation has outstanding shares held of record by 100
or more persons (determined as provided in section 605 of the General
Corporation Law) on the date of approval by the Board of Directors;
(3) the approval by the Board of Directors is by a vote
sufficient without counting the vote of any interested director(s); and
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(4) the loan is otherwise made in compliance with Section 315 of
the General Corporation Law.
Section 3.2 Number and Qualification of Directors.
- ----------- -------------------------------------
The number of directors of the corporation shall not be less than four
(4) nor more than seven (7) until changed by amendment of the Articles of
Incorporation or by a Bylaw amending this Section 3.2 duly adopted by the vote
or written consent of holders of a majority of the outstanding shares, provided
that if the minimum number of directors is five or more, any proposal to reduce
the minimum number of directors to a number less than five cannot be adopted if
the votes cast against its adoption at a meeting, or the shares not consenting
in the case of action by written consent, are equal to more than sixteen and
two-thirds percent (16-2/3%) of the outstanding shares entitled to vote. The
exact number of directors shall be fixed from time to time, within the limits
specified in the Articles of Incorporation or in this Section 3.2, by a bylaw or
amendment thereof duly adopted by the vote of a majority of the shares entitled
to vote represented at a duly held meeting at which a quorum is present, or by
the written consent of the holders of a majority of the outstanding shares
entitled to vote, or by the Board of Directors.
Subject to the foregoing provisions for changing the number of
directors, the number of directors of the corporation has been fixed at four
(4).
Section 3.3 Election and Term of Office.
- ----------- ---------------------------
The directors shall be elected at each annual meeting of shareholders,
but, if any such annual meeting is not held or the directors are not elected
thereat, the directors may be elected at any special meeting of shareholders
held for that purpose. Each director, including a director elected to fill a
vacancy, shall hold office until the expiration of the term for which elected
and until a successor has been elected and qualified.
Section 3.4 Vacancies.
- ----------- ---------
A vacancy in the Board of Directors shall be deemed to exist in case of
the death, resignation or removal of any director, if a director has been
declared of unsound mind by order of court or convicted of a felony, if the
authorized number of directors is increased, if the incorporator or
incorporators have failed to appoint the authorized number of directors in any
resolution for appointment of directors upon the initial organization of the
corporation, or if the
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shareholders fail, at any annual or special meeting of shareholders at which any
director or directors are elected, to elect the full authorized number of
directors to be voted for at that meeting.
Vacancies in the Board of Directors, except for a vacancy created by
the removal of a director, may be filled by a majority of the directors present
at a meeting at which a quorum is present, or if the number of directors then in
office is less than a quorum, (a) by the unanimous written consent of the
directors then in office, (b) by the vote of a majority of the directors then in
office at a meeting held pursuant to notice or waivers of notice in compliance
with these Bylaws, or (c) by a sole remaining director. Each director so elected
shall hold office until his or her successor is elected at an annual or a
special meeting of the shareholders. A vacancy in the Board of Directors created
by the removal of a director may be filled only by the vote of a majority of the
shares entitled to vote represented at a duly held meeting at which a quorum is
present, or by the written consent of all of the holders of the outstanding
shares.
The shareholders may elect a director or directors at any time to fill
any vacancy or vacancies not filled by the directors. Any such election by
written consent other than to fill a vacancy created by removal shall require
the consent of holders of a majority of the outstanding shares entitled to vote.
Any such election by written consent to fill a vacancy created by removal shall
require the unanimous written consent of all shares entitled to vote for the
election of directors.
Any director may resign effective upon giving written notice to the
Chairman of the Board (if there be such an officer appointed), the President,
the Secretary or the Board of Directors of the corporation, unless the notice
specifies a later time for the effectiveness of such resignation. If the
resignation is effective at a future time, a successor may be elected to take
office when the resignation becomes effective.
No reduction of the authorized number of directors shall have the
effect of removing any director prior to the expiration of the director's term
of office.
Section 3.5 Time and Place of Meetings.
- ----------- --------------------------
The Board of Directors shall hold a regular meeting immediately after
the meeting of shareholders at which it is elected and at the place where such
meeting is held, or at
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such other place as shall be fixed by the Board of Directors, for the purpose of
organization, election of officers of the corporation and the transaction of
other business. Notice of such meeting is hereby dispensed with. Other regular
meetings of the Board of Directors shall be held without notice at such times
and places as are fixed by the Board of Directors. Special meetings of the Board
of Directors may be held at any time whenever called by the Chairman of the
Board (if there be such an officer appointed), the President, any Vice-
President, the Secretary or any two directors.
Except as hereinabove provided in this Section 3.5, all meetings of the
Board of Directors may be held at any place within or without the State of
California that has been designated by resolution of the Board of Directors as
the place for the holding of regular meetings, or by written consent of all
directors. In the absence of such designation, meetings of the Board of
Directors shall be held at the principal executive office of the corporation.
Special meetings of the Board of Directors may be held either at a place so
designated or at the principal executive office of the corporation.
Section 3.6 Notice of Special Meetings.
- ----------- --------------------------
Notice of the time and place of special meetings shall be delivered
personally to each director or communicated to each director by telephone,
telegraph or mail, charges prepaid, addressed to the director at the director's
address as it is shown upon the records of the corporation or, if it is not so
shown on such records or is not readily ascertainable, at the place at which the
meetings of the directors are regularly held. In case such notice is mailed, it
shall be deposited in the United States mail at least four (4) days prior to the
time of the holding of the meeting. In case such notice is delivered personally
or by telephone or telegraph, as above provided, it shall be so delivered at
least forty-eight (48) hours prior to the time of the holding of the meeting.
Such mailing, telegraphing or delivery, personally or by telephone, as above
provided, shall be due, legal and personal notice to such director.
Notice of a meeting need not be given to any director who signs a
waiver of notice or a consent to holding the meeting or an approval of the
minutes thereof, whether before or after the meeting, or who attends the meeting
without protesting, prior thereto or at its commencement, the lack of notice to
such director. All such
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<PAGE>
waivers, consents and approvals shall be filed with the corporate records or
made a part of the minutes of the meetings.
Section 3.7 Action at a Meeting: Quorum and Required Vote.
- ----------- ---------------------------------------------
Presence of a majority of the authorized number of directors at a
meeting of the Board of Directors constitutes a quorum for the transaction of
business, except as hereinafter provided. Members of the Board of Directors may
participate in a meeting through use of conference telephone or similar
communications equipment, so long as all members participating in such meeting
can hear one another. Participation in a meeting as permitted in the preceding
sentence constitutes presence in person at such meeting. Every act or decision
done or made by a majority of the directors present at a meeting duly held at
which a quorum is present is the act of the Board of Directors, unless a greater
number, or the same number after disqualifying one or more directors from
voting, is required by law, by the Articles of Incorporation, or by these
Bylaws. A meeting at which a quorum is initially present may continue to
transact business notwithstanding the withdrawal of directors, if any action
taken is approved by at least a majority of the required quorum for such
meeting.
Section 3.8 Action Without a Meeting.
- ----------- ------------------------
Any action required or permitted to be taken by the Board of Directors
may be taken without a meeting, if all members of the Board of Directors shall
individually or collectively consent in writing to such action. Such written
consent or consents shall be filed with the minutes of the proceedings of the
Board of Directors. Such action by written consent shall have the same force
and effect as a unanimous vote of such directors.
Section 3.9 Adjourned Meeting and Notice.
- ----------- ----------------------------
A majority of the directors present, whether or not a quorum is
present, may adjourn any meeting to another time and place. If the meeting is
adjourned for more than twenty-four (24) hours, notice of any adjournment to
another time or place shall be given prior to the time of the adjourned meeting
to the directors who were not present at the time of the adjournment.
Section 3.10 Fees and Compensation.
- ------------ ---------------------
Directors and members of committees may receive such compensation, if
any, for their services, and such
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<PAGE>
reimbursement for expenses, as may be fixed or determined by resolution of the
Board of Directors.
Section 3.11 Appointment of Executive and Other Committees.
- ------------ ---------------------------------------------
The Board of Directors may, by resolution adopted by a majority of the
authorized number of directors, designate one or more committees, each
consisting of two or more directors, to serve at the pleasure of the Board of
Directors. The Board of Directors may designate one or more directors as
alternate members of any committee, who may replace any absent member at any
meeting of the committee. The appointment of members or alternate members of a
committee requires the vote of a majority of the authorized number of directors.
Any such committee, to the extent provided in the resolution of the Board of
Directors or in these Bylaws, shall have all the authority of the Board of
Directors, except with respect to:
(a) The approval of any action for which the General Corporation Law
also requires shareholders' approval or approval of the outstanding shares.
(b) The filling of vacancies on the Board of Directors or in any
committee.
(c) The fixing of compensation of the directors for serving on the
Board of Directors or on any committee.
(d) The amendment or repeal of these Bylaws or the adoption of new
Bylaws.
(e) The amendment or repeal of any resolution of the Board of Directors
that by its express terms is not so amendable or repealable.
(f) A distribution to the shareholders of the corporation, except at a
rate, in a periodic amount or within a price range determined by the Board of
Directors.
(g) The appointment of other committees of the Board of Directors or
the members thereof.
The provisions of Sections 3.5 through 3.9 of these Bylaws apply also to
committees of the Board of Directors and action by such committees, mutatis
-------
mutandis (with the necessary changes having been made in the language thereof).
- --------
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ARTICLE IV
Officers
Section 4.1 Officers.
- ----------- --------
The officers of the corporation shall consist of the President, the
Secretary and the Treasurer, and each of them shall be appointed by the Board of
Directors. The corporation may also have a Chairman of the Board, one or more
Vice-Presidents, a Controller, one or more Assistant Secretaries and Assistant
Treasurers, and such other officers as may be appointed by the Board of
Directors, or with authorization from the Board of Directors by the President.
The order of the seniority of the Vice-Presidents shall be in the order of their
nomination, unless otherwise determined by the Board of Directors. Any two or
more of such offices may be held by the same person. The Board of Directors
shall designate one officer as the chief financial officer of the corporation.
In the absence of such designation, the Treasurer shall be the chief financial
officer. The Board of Directors may appoint, and may empower the President to
appoint, such other officers as the business of the corporation may require,
each of whom shall have such authority and perform such duties as are provided
in these Bylaws or as the Board of Directors may from time to time determine.
All officers of the corporation shall hold office from the date
appointed to the date of the next succeeding regular meeting of the Board of
Directors following the meeting of shareholders at which the Board of Directors
is elected, and until their successors are elected; provided that all officers,
as well as any other employee or agent of the corporation, may be removed at any
time at the pleasure of the Board of Directors, or, except in the case of an
officer chosen by the Board of Directors, by any officer upon whom such power of
removal may be conferred by the Board of Directors, and upon the removal,
resignation, death or incapacity of any officer, the Board of Directors or the
President, in cases where he or she has been vested by the Board of Directors
with power to appoint, may declare such office vacant and fill such vacancy.
Nothing in these Bylaws shall be construed as creating any kind of contractual
right to employment with the corporation.
Any officer may resign at any time by giving written notice to the
Board of Directors, the President, or the Secretary of the corporation, without
prejudice, however, to the rights, if any, of the corporation under any contract
to which such officer is a party. Any such
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<PAGE>
resignation shall take effect at the date of the receipt of such notice or at
any later time specified therein; and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
The salary and other compensation of the officers shall be fixed from
time to time by resolution of or in the manner determined by the Board of
Directors.
Section 4.2 The Chairman of the Board.
- ----------- -------------------------
The Chairman of the Board (if there be such an officer appointed)
shall, when present, preside at all meetings of the Board of Directors and shall
perform all the duties commonly incident to that office. The Chairman of the
Board shall have authority to execute in the name of the corporation bonds,
contracts, deeds, leases and other written instruments to be executed by the
corporation (except where by law the signature of the President is required),
and shall perform such other duties as the Board of Directors may from time to
time determine.
Section 4.3 The President.
- ----------- -------------
Subject to such supervisory powers, if any, as may be given by the
Board of Directors to the Chairman of the Board, the President shall be the
chief executive officer of the corporation and shall perform all the duties
commonly incident to that office. The president shall have authority to execute
in the name of the corporation bonds, contracts, deeds, leases and other written
instruments to be executed by the corporation. The President shall preside at
all meetings of the shareholders and, in the absence of the Chairman of the
Board or if there is none, at all meetings of the Board of Directors, and shall
perform such other duties as the Board of Directors may from time to time
determine.
Section 4.4 Vice-Presidents.
- ----------- ---------------
The Vice-Presidents (if there be such officers appointed), in the order
of their seniority (unless otherwise established by the Board of Directors), may
assume and perform the duties of the President in the absence or disability of
the President or whenever the offices of the Chairman of the Board and President
are vacant. The Vice-Presidents shall have such titles, perform such other
duties, and have such other powers as the Board of Directors, the President or
these Bylaws may designate from time to time.
17
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Section 4.5 The Secretary.
- ----------- -------------
The Secretary shall record or cause to be recorded, and shall keep or
cause to be kept, at the principal executive office and such other place as the
Board of Directors may order, a book of minutes of actions taken at all meetings
of directors and committees thereof and of shareholders, with the time and place
of holding, whether regular or special, and, if special, how authorized, the
notice thereof given, the names of those present at directors' meetings, the
number of shares present or represented at shareholders' meetings, and the
proceedings thereof.
The Secretary shall keep, or cause to be kept, at the principal
executive office or at the office of the corporation's transfer agent, a share
register or a duplicate share register in a form capable of being converted into
written form, showing the names of the shareholders and their addresses, the
numbers and classes of shares held by each, the number and date of certificates
issued for the same, and the number and date of cancellation of every
certificate surrendered for cancellation.
The Secretary shall give, or cause to be given, notice of all the
meetings of the shareholders and of the Board of Directors and committees
thereof required by these Bylaws or by law to be given, and shall have such
other powers and perform such other duties as may be prescribed by the Board of
Directors or by these Bylaws.
The President may direct any Assistant Secretary to assume and perform
the duties of the Secretary in the absence or disability of the Secretary, and
each Assistant Secretary shall perform such other duties and have such other
powers as the Board of Directors or the President may designate from time to
time.
Section 4.6 The Treasurer.
- ----------- -------------
The Treasurer shall keep and maintain, or cause to be kept and
maintained, adequate and correct accounts of the properties and business
transactions of the corporation. The books of account shall at all reasonable
times be open to inspection by any director.
The Treasurer shall deposit all moneys and other valuables in the name
and to the credit of the corporation with such depositaries as may be designated
by the Board of Directors. The Treasurer shall disburse the funds of the
corporation as may be ordered by the Board of Directors,
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<PAGE>
shall render to the President and directors, whenever they request it, an
account of all of the Treasurer's transactions as Treasurer and of the
financial condition of the corporation, and shall have such other powers and
perform such other duties as may be prescribed by the Board of Directors or
these Bylaws.
The President may direct any Assistant Treasurer to assume and perform
the duties of the Treasurer in the absence or disability of the Treasurer, and
each Assistant Treasurer shall perform such other duties and have such other
powers as the Board of Directors or the president may designate from time to
time.
Section 4.7 The Controller.
- ----------- --------------
The Controller (if there be such an officer appointed) shall be
responsible for the establishment and maintenance of accounting and other
systems required to control and account for the assets of the corporation and
provide safeguards therefor, and to collect information required for management
purposes, and shall perform such other duties and have such other powers as the
Board of Directors or the President may designate from time to time. The
President may direct any Assistant Controller to assume and perform the duties
of the Controller, in the absence or disability of the Controller, and each
Assistant Controller shall perform such other duties and have such other powers
as the Board of Directors, the Chairman of the Board (if there be such an
officer appointed) or the President may designate from time to time.
ARTICLE V
Execution of Corporate Instruments,
Ratification, and Voting of Stocks
Owned by the Corporation
Section 5.1 Execution of Corporate Instruments.
- ----------- ----------------------------------
In its discretion, the Board of Directors may determine the method and
designate the signatory officer or officers or other person or persons, to
execute any corporate instrument or document, or to sign the corporate name
without limitation, except where otherwise provided by law, and such execution
or signature shall be binding upon the corporation.
19
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All checks and drafts drawn on banks or other depositaries on funds to
the credit of the corporation, or in special accounts of the corporation, shall
be signed by such person or persons as the Board of Directors shall authorize to
do so.
The Board of Directors shall designate an officer who personally, or
through his representative, shall vote shares of other corporations standing in
the name of this corporation. The authority to vote shares shall include the
authority to execute a proxy in the name of the corporation for purposes of
voting the shares.
Section 5.2 Ratification by Shareholders.
- ----------- ----------------------------
In its discretion, the Board of Directors may submit any contract or
act for approval or ratification of the shareholders at any annual meeting of
shareholders, or at any special meeting of shareholders called for that purpose;
and any contract or act that shall be approved or ratified by the holders of a
majority of the voting power of the corporation shall be as valid and binding
upon the corporation and upon the shareholders thereof as though approved or
ratified by each and every shareholder of the corporation, unless a greater vote
is required by law for such purpose.
Section 5.3 Voting of Stocks Owned by the Corporation.
- ----------- -----------------------------------------
All stock of other corporations owned or held by the corporation for
itself, or for other parties in any capacity, shall be voted, and all proxies
with respect thereto shall be executed, by the person authorized to do so by
resolution of the Board of Directors, or in the absence of such authorization,
by the Chairman of the Board (if there be such an officer appointed), the
President or any Vice-President, or by any other person authorized to do so by
the Chairman of the Board, the President or any Vice President.
ARTICLE VI
Annual and Other Reports
Section 6.1 Reports to Shareholders.
- ----------- -----------------------
The Board of Directors of the corporation shall cause an annual report
to be sent to the shareholders not later than 120 days after the close of the
fiscal year, and at least fifteen (15) days (or, if sent by third-class mail,
20
<PAGE>
thirty-five (35) days) prior to the annual meeting of shareholders to be held
during the next fiscal year. This report shall contain a balance sheet as of
the end of that fiscal year and an income statement and statement of changes in
financial position for that fiscal year, accompanied by any report thereon of
independent accountants or, if there is no such report, the certificate of an
authorized officer of the corporation that the statements were prepared without
audit from the books and records of the corporation. This report shall also
contain such other matters as required by Section 1501(b) of the General
Corporation Law, unless the corporation is subject to the reporting requirements
of Section 13 of the Securities Exchange Act of 1934, and is not exempted
therefrom under Section 12(g)(2) thereof. As long as the corporation has less
than 100 holders of record of its shares (determined as provided in Section 605
of the General Corporation Law), the foregoing requirement of an annual report
is hereby waived.
If no annual report for the last fiscal year has been sent to
shareholders, the corporation shall, upon the written request of any shareholder
made more than 120 days after the close of such fiscal year, deliver or mail to
the person making the request within thirty (30) days thereafter the financial
statements for such year as required by Section 1501(a) of the General
corporation Law. A shareholder or shareholders holding at least five percent
(5%) of the outstanding shares of any class of the corporation may make a
written request to the corporation for an income statement of the corporation
for the three-month, six-month or nine-month period of the current fiscal year
ended more than thirty (30) days prior to the date of the request and a balance
sheet of the corporation as of the end of such period and, in addition, if no
annual report for the last fiscal year has been sent to shareholders, the annual
report for the last fiscal year, unless such report has been waived under these
Bylaws, The statements shall be delivered or mailed to the person making the
request within thirty (30) days thereafter. A copy of any such statements shall
be kept on file in the principal executive office of the corporation for twelve
(12) months, and they shall be exhibited at all reasonable times to any
shareholder demanding an examination of the statements, or a copy shall be
mailed to the shareholder.
The quarterly income statements and balance sheets referred to in this
Section shall be accompanied by the report thereon, if any, of any independent
accountants engaged by the corporation or the certificate of an authorized
officer of the corporation that the financial statements were prepared without
audit from the books and records of the corporation.
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Section 6.2 Report of Shareholder Vote.
- ----------- ---------------------------
For a period of sixty (60) days following the conclusion of an annual,
regular, or special meeting of shareholders, the corporation shall, upon written
request from a shareholder, forthwith inform the shareholder of the result of
any particular vote of shareholders taken at the meeting, including the number
of shares voting for, the number of shares voting against, and the number of
shares abstaining or withheld from voting. If the matter voted on was the
election of directors, the corporation shall report the number of shares (or
votes if voted cumulatively) cast for each nominee for director. If more than
one class or series of shares voted, the report shall state the appropriate
numbers by class and series of shares.
Section 6.3 Reports to the Secretary of State.
- ----------- ----------------------------------
(a) Every year, during the calendar month in which the original
articles of incorporation were filed with the California Secretary of State, or
during the preceding five calendar months, the corporation shall file a
statement with the Secretary of State on the prescribed form, setting forth the
authorized number of directors; the names and complete business and residence
addresses of all incumbent directors; the names and complete business or
resident addresses of the chief executive officer, the secretary, and the chief
financial officer; the street address of the corporation's principal executive
office or principal business office in this state; a statement of the general
type of business constituting the principal business activity of the
corporation; and a designation of the agent of the corporation for the purpose
of service of process, all in compliance with Section 1502 of the Corporations
Code of California.
(b) Notwithstanding the provisions of paragraph (a) of this Section,
if there has been no change in the information contained in the corporation's
last annual statement on file in the Secretary of State's office, the
corporation may, in lieu of filing the annual statement described in paragraph
(a) of this Section, advise the Secretary of State, on the appropriate form,
that no changes in the required information have occurred during the applicable
period.
22
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ARTICLE VII
Shares of Stock
Every holder of shares in the corporation shall be entitled to have a
certificate signed in the name of the corporation by the Chairman or Vice
Chairman of the Board (if there be such officers appointed) or the president or
a Vice-President and by the chief financial officer or any Assistant Treasurer
or the Secretary or any Assistant Secretary, certifying the number of shares and
the class or series of shares owned by the shareholder. Any of the signatures on
the certificate may be a facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate has ceased to be such officer, transfer agent or registrar before
such certificate is issued, it may be issued by the corporation with the same
effect as if such person were an officer, transfer agent or registrar at the
date of issue.
Any such certificate shall also contain such legends or other
statements as may be required by Sections 417 and 418 of the General Corporation
Law, the Corporate Securities Law of 1968, federal or other state securities
laws, and any agreement between the corporation and the issuee of the
certificate.
Certificates for shares may be issued prior to full payment, under such
restrictions and for such purposes as the Board of Directors or these Bylaws may
provide; provided, however, that the certificate issued to represent any such
partly paid shares shall state on the face thereof the total amount of the
consideration to be paid therefor, the amount remaining unpaid and the terms of
payment.
No new certificate for shares shall be issued in lieu of an old
certificate unless the latter is surrendered and cancelled at the same time;
provided, however, that a new certificate will be issued without the surrender
and cancellation of the old certificate if (1) the old certificate is lost,
apparently destroyed or wrongfully taken; (2) the request for the issuance of
the new certificate is made within a reasonable time after the owner of the old
certificate has notice of its loss, destruction, or theft; (3) the request for
the issuance of a new certificate is made prior to the receipt of notice by the
corporation that the old certificate has been acquired by a bona fide purchaser;
(4) the owner of the old certificate files a sufficient indemnity bond with or
provides other adequate security to the corporation; and (5) the owner satisfies
any other reasonable requirement imposed by the
23
<PAGE>
corporation. In the event of the issuance of a new certificate, the rights and
liabilities of the corporation, and of the holders of the old and new
certificates, shall be governed by the provisions of Sections 8104 and 8405 of
the California Commercial Code.
ARTICLE VIII
Inspection of Corporate Records
Section 8.1 General Records.
- ----------- ---------------
The accounting books and records and the minutes of proceedings of the
shareholders, the Board of Directors and committees thereof of the corporation
and any subsidiary of the corporation shall be open to inspection upon the
written demand on the corporation of any shareholder or holder of a voting trust
certificate at any reasonable time during usual business hours, for a purpose
reasonably related to such holder's interests as a shareholder or as the holder
of such voting trust certificate. Such inspection by a shareholder or holder of
a voting trust certificate may be made in person or by agent or attorney, and
the right of inspection includes the right to copy and make extracts. Minutes
of proceedings of the shareholders, Board, and committees thereof shall be kept
in written form. Other books and records shall be kept either in written form
or in any other form capable of being converted into written form
A shareholder or shareholders holding at least five percent (5%) in the
aggregate of the outstanding voting shares of the corporation or who hold at
least one percent (1%) of such voting shares and have filed a Schedule 14B with
the United States Securities and Exchange commission relating to the election of
directors of the corporation shall have (in person, or by agent or attorney) the
right to inspect and copy the record of shareholders' names and addresses and
shareholdings during usual business hours upon five (5) business days' prior
written demand upon the corporation or to obtain from the transfer agent for the
corporation, upon written demand and upon the tender of its usual charges for
such list, a list of the shareholders' names and addresses, who are entitled to
vote for the election of directors, and their shareholdings, as of the most
recent record date for which it has been compiled or as of a date specified by
the shareholder subsequent to the date of demand. The list shall be made
available on or before the later of five (5) business days after the demand is
received or the date specified therein as the date as of which the list is to be
compiled.
24
<PAGE>
Every director shall have the absolute right at any reasonable time to
inspect and copy all books, records and documents of every kind and to inspect
the physical properties of the corporation and its subsidiaries. Such
inspection by a director may be made in person or by agent or attorney, and the
right of inspection includes the right to copy and make extracts.
Section 8.2 Inspection of Bylaws.
- ----------- ---------------------
The corporation shall keep at its principal executive office in
California, or if its principal executive office is not in California, then at
its principal business office in California (or shall otherwise provide upon
written request of any shareholder if it has no such office in California) the
original or a copy of these Bylaws as amended to date, which shall be open to
inspection by the shareholders at all reasonable times during office hours.
ARTICLE IX
Indemnification of
Officers, Directors, Employees and Agents
-----------------------------------------
Section 9.1 Right to Indemnification.
- ----------- -------------------------
Each person who was or is a party or is threatened to be made a party
to or is involved (as a party, witness, or otherwise), in any threatened,
pending, or completed action, suit, or proceeding, whether civil, criminal,
administrative, or investigative (hereafter a "Proceeding"), by reason of the
fact that he, or a person of whom he is the legal representative, 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 foreign or domestic corporation, partnership, joint venture, trust, or
other enterprise, or was a director, officer, employee, or agent of a foreign or
domestic corporation that was a predecessor corporation of the corporation or of
another enterprise at the request of such predecessor corporation, including
service with respect to employee benefit plans, whether the basis of the
proceeding is alleged action in an official capacity as a director, officer,
employee, or agent or in any other capacity while serving as a director,
officer, employee, or agent (hereafter an "Agent"), shall be indemnified and
held harmless by the corporation to the fullest extent authorized by statutory
and decisional law, as the same exists or may hereafter be interpreted or
amended (but, in the case of any such amendment or
25
<PAGE>
interpretation, only to the extent that such amendment or interpretation permits
the corporation to provide broader indemnification rights than were permitted
prior thereto) against all expenses, liability, and loss (including attorneys'
fees, judgments, fines, ERISA excise taxes and penalties. amounts paid or to be
paid in settlement, any interest, assessments, or other charges imposed thereon,
and any federal, state, local, or foreign taxes imposed on any Agent as a result
of the actual or deemed receipt of any payments under this Article) incurred or
suffered by such person in connection with investigating, defending, being a
witness in, or participating in (including on appeal), or preparing for any of
the foregoing in, any Proceeding (hereafter "Expenses"). The right to
indemnification conferred in this Article shall be a contract right. It is the
corporation's intention that these bylaws provide indemnification in excess of
that expressly permitted by Section 317 of the California General corporation
Law, as authorized by the corporation's Articles of Incorporation.
Section 9.2. Authority to Advance Expenses.
- ----------- -----------------------------
The right to indemnification provided in Section 9.1 of these Bylaws
shall include the right to be paid, in advance of a Proceeding's final
disposition, Expenses incurred in defending that Proceeding; provided, however,
-------- -------
that if required by the California General Corporation Law, as amended, the
payment of Expenses in advance of the final disposition of the Proceeding shall
be made only upon delivery to the corporation of an undertaking by or on behalf
of the Agent to repay such amount if it shall ultimately be determined that he
is not entitled to be indemnified by the corporation as authorized under this
Article or otherwise. The Agent's obligation to reimburse the corporation for
Expense advances shall be unsecured and no interest shall be charged thereon.
Section 9.3 Right of Claimant to Bring Suit.
- ----------- -------------------------------
If a claim under Section 9.1 or 9.2 of these Bylaws is not paid in full
by the corporation within thirty (30) days after a written claim has been
received by the corporation, the claimant may at any time thereafter bring suit
against the corporation to recover the unpaid amount of the claim and, if
successful in whole or in part, the claimant shall be entitled to be paid also
the expense (including attorneys' fees) of prosecuting such claim. It shall be a
defense to any such action (other than an action brought to enforce a claim for
expenses incurred in defending a Proceeding in advance of its final disposition
where the required undertaking has been tendered to the
26
<PAGE>
corporation) that the claimant has not met the standards of conduct that make it
permissible under the California General Corporation Law for the corporation to
indemnify the claimant for the amount claimed. The burden of proving such a
defense shall be on the corporation. Neither the failure of the corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper under the circumstances
because he has met the applicable standard of conduct set forth in the
California General Corporation Law nor an actual determination by the
corporation (including its Board of Directors, independent legal counsel, or its
stockholders) that the claimant had not met such applicable standard of conduct,
shall be a defense to the action or create a presumption that claimant has not
met the applicable standard of conduct.
Section 9.4 Provisions Nonexclusive.
- ----------- -----------------------
The rights conferred on any person by this Article shall not be
exclusive of any other rights that such person may have or hereafter acquire
under any statute, provision of the Articles of Incorporation, agreement, vote
of stockholders or disinterested directors, or otherwise, both as to action in
an official capacity and as to action in another capacity while holding such
office. To the extent that any provision of the Articles, agreement, or vote of
the stockholders or disinterested directors is inconsistent with these bylaws,
the provision, agreement, or vote shall take precedence.
Section 9.5 Authority to Insure.
- ----------- -------------------
The corporation may purchase and maintain insurance to protect itself
and any Agent against any Expense asserted against or incurred by such person,
whether or not the corporation would have the power to indemnify the Agent
against such Expense under applicable law or the provisions of this Article,
provided that, in cases where the corporation owns all or a portion of the
shares of the company issuing the insurance policy, the company and/or the
policy must meet one of the two sets of conditions set forth in Section 317 of
the California General Corporation Law, as amended.
Section 9.6 Survival of Rights.
- ----------- ------------------
The rights provided by this Article shall continue as to a person who
has ceased to be an Agent and shall inure to the benefit of the heirs,
executors, and administrators of such person.
27
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Section 9.7 Settlement of Claims.
- ----------- --------------------
The corporation shall not be liable to indemnify any Agent under this
Article (a) for any amounts paid in settlement of any action or claim effected
without the corporation's written consent, which consent shall not be
unreasonably withheld; or (b) for any judicial award, if the corporation was not
given a reasonable and timely opportunity, at its expense, to participate in the
defense of such action.
Section 9.8 Effect of Amendment.
- ----------- --------------------
Any amendment, repeal, or modification of this Article shall not
adversely affect any right or protection of any Agent existing at the time of
such amendment, repeal, or modification.
Section 9.9 Subrogation.
- ----------- ------------
In the event of payment under this Article, the corporation shall be
subrogated to the extent of such payment to all of the rights of recovery of the
Agent, who shall execute all papers required and shall do everything that may be
necessary to secure such rights, including the execution of such documents
necessary to enable the corporation effectively to bring suit to enforce such
rights.
Section 9.10 No Duplication of Payments.
- ------------ ---------------------------
The corporation shall not be liable under this Article to make any
payment in connection with any claim made against the Agent to the extent the
Agent has otherwise actually received payment (under any insurance policy,
agreement, vote, or otherwise) of the amounts otherwise indemnifiable hereunder.
ARTICLE X
Amendments
Section 10.1 Power of Shareholders.
- ------------ ---------------------
New bylaws may be adopted or these Bylaws may be amended or repealed by
the affirmative vote of a majority of the outstanding shares entitled to vote,
or by the written assent of shareholders entitled to vote such shares, except as
otherwise provided by law or by the Articles of Incorporation.
28
<PAGE>
Section 10.2 Power of Directors.
- ------------ -------------------
Subject to the right of shareholders as provided in Section 10.1 of
this Article X to adopt, amend or repeal these Bylaws, these Bylaws (other than
a bylaw or amendment thereof providing for the approval by the Board, acting
alone, of a loan or guarantee to any officer or an employee benefit plan
providing for the same) may be adopted, amended or repealed by the Board of
Directors; provided, however, that the Board of Directors may adopt a bylaw or
amendment thereof changing the authorized number of directors only for the
purpose of fixing the exact number of directors within the limits specified in
the Articles of Incorporation or in Section 3.2 of these Bylaws.
ARTICLE XI
Definitions
Unless the context otherwise requires, the general provisions, rules of
construction and definitions contained in the General Corporation Law as amended
from time to time shall govern the construction of these Bylaws. Without
limiting the generality of the foregoing, the masculine gender includes the
feminine and neuter, the singular number includes the plural and the plural
number includes the singular, and the term "person" includes a corporation as
well as a natural person.
ARTICLE XII
Corporate Seal
The corporate seal shall consist of a circular die bearing the name of
the corporation, the state in which it was incorporated and the date of its
incorporation. If and when authorized by the Board of Directors, a duplicate of
the corporate seal may be kept and used by such officer or person as the Board
of Directors may designate.
ARTICLE XIII
Right of First Refusal
----------------------
Section 1. Right of First Refusal. No shareholder shall sell, assign,
----------------------
pledge, or in any manner transfer any securities of the corporation or any right
or interest therein, whether voluntarily or by operation of law, or by
29
<PAGE>
gift or otherwise, except by a transfer which meets the requirements hereinafter
set forth in this bylaw:
(a) If the shareholder receives from anyone a bona fide offer
acceptable to the shareholder to purchase any of his securities of the
corporation, then the shareholder shall first give written notice thereof to the
corporation. The notice shall name the proposed transferee and state the type
and number of securities to be transferred, the price per share and all other
terms and conditions of the offer.
(b) For fifteen (15) days following receipt of such notice, the
corporation shall have the option to purchase all or any lesser part of the
securities specified in the notice at the price and upon the terms set forth in
such bona fide offer. In the event the corporation elects to purchase all the
securities, it shall give written notice to the selling shareholder of its
election and settlement for said securities shall be made as provided below in
paragraph (d).
(c) The corporation may, from time to time, assign its right of first
refusal, as set forth in paragraph (b) of this bylaw, on a pro rata basis, to
shareholders holding more than one percent (1%) of the then outstanding
securities of the Company. For purposes of this bylaw, each shareholder's pro
rata share shall be equal to the quotient obtained by dividing (i) the number of
shares of Common Stock of the corporation held by such shareholder (assuming
conversion of all securities convertible into Common Stock) by (ii) the
outstanding shares of Common Stock of the corporation (assuming conversion of
all securities convertible into Common Stock) held by all such shareholders
holding in excess of one percent (1%). The right of first refusal that the
corporation may assign to shareholders pursuant to paragraph (c) of this bylaw
shall include the right of overallotment, so that the shareholders who exercise
such right in full may purchase on a pro rata basis any securities not purchased
by shareholders who fail to exercise in full their right of first refusal.
(d) In the event the corporation and/or Shareholders, other than the
selling shareholder, elect to acquire any of the securities of the selling
shareholder as specified in said selling shareholder's notice, the Secretary of
the corporation shall so notify the selling shareholder and settlement thereof
shall be made in cash within thirty (30) days after the Secretary of the
corporation receives said selling shareholder's notice; provided that if the
terms of payment set forth in said
30
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selling shareholder's notice were other than cash against delivery, the
corporation and/or its other Shareholders shall pay for said securities on the
same terms and conditions set forth in said selling shareholder's notice.
(e) In the event the corporation and/or its other Shareholders do not
elect to acquire all of the securities specified in the selling shareholder's
notice, said selling shareholder may, within the sixty (60) day period following
the expiration of the option rights granted to the corporation and Shareholders
therein, sell elsewhere the securities specified in said selling shareholder's
notice which were not acquired by the corporation and/or its other Shareholders,
in accordance with the provisions of paragraph (d) of this bylaw, provided that
said sale shall not be on terms and conditions more favorable to the purchase
than those contained in the bona fide offer set forth in said selling
shareholder's notice. All securities so sold by said selling shareholder shall
continue to be subject to the provisions of this bylaw in the same manner as
before said transfer.
(f) Anything to the contrary contained herein notwithstanding, the
following transactions shall be exempt from the provisions of this bylaw:
(1) A shareholder's transfer of any or all securities held
either during such shareholder's lifetime or on death by will or intestacy to
such shareholder's immediate family. "Immediate family" as used herein shall
mean spouse, lineal descendant, father, mother, brother, or sister of the
shareholder making such transfer;
(2) A shareholder's bona fide pledge or mortgage of any
securities with a commercial lending institution, provided that any subsequent
transfer of said securities by said institution shall be conducted in the manner
set forth in this bylaw;
(3) A shareholder's transfer of any or all of such shareholder's
securities to any other shareholder of the corporation;
(4) A shareholder's transfer of any or all of such shareholders
securities to a person who, at the time of such transfer, is an officer or
director of the corporation;
(5) A corporate shareholder's transfer of any or all of its
securities pursuant to and in accordance with the terms of any merger,
consolidation, reclassification of securities or capital reorganization of the
corporate
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shareholder, or pursuant to a sale of all or substantially all of the stock or
assets of a corporate shareholder;
(6) A corporate shareholder's transfer of any or all of its
securities to any or all of its shareholders; or
(7) A transfer by a shareholder which is a limited or general
partnership to any or all of its partners.
In any such case, the transferee, assignee, or any other recipient
shall receive and hold such securities subject to the provisions of this bylaw,
and there shall be no further transfer of such securities except in accord with
this bylaw.
(g) The provisions of this bylaw may be waived with respect to any
transfer either by the corporation, upon duly authorized action of its Board of
Directors, or by the shareholders, upon the express written consent of the
owners of a majority of the voting power of the corporation (excluding the votes
represented by those securities to be sold by the selling shareholder). This
bylaw may be amended or repealed either by a duly authorized action of the Board
of Directors or by the shareholders, upon the express written consent of the
owners of a majority of the voting power of the corporation.
(h) Any sale or transfer, or purported sale or transfer, of
securities of the corporation shall be null and void unless the terms,
conditions, and provisions of this bylaw are strictly observed and followed.
(i) The foregoing right of first refusal shall terminate on either of
the following dates, whichever shall first occur:
(1) On June 30, 2000; or
(2) Upon the date securities of the corporation are first
offered to the public pursuant to a registration statement filed with, and
declared effective by, the United States Securities and Exchange Commission
under the Securities Act of 1933, as amended.
(j) The certificates representing securities of the corporation shall
bear on their face the following
32
<PAGE>
legend so long as the foregoing right of first refusal remains in effect:
THE SHARES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO A RIGHT OF
FIRST REFUSAL OPTION IN FAVOR OF THE
CORPORATION AND ITS OTHER SHAREHOLDERS,
AS PROVIDED IN THE BYLAWS OF THE
CORPORATION.
33
<PAGE>
CERTIFICATE OF SECRETARY
------------------------
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned does hereby certify that the undersigned is the
Secretary of Pioneer Semiconductor Corporation, a corporation duly organized and
existing under and by virtue of the laws of the State of California; that the
above and foregoing Bylaws of said corporation were duly and regularly adopted
as such by the Board of Directors of said corporation; and that the above and
foregoing Bylaws are now in full force and effect.
Dated: June 25, 1990.
/s/ Chun Chiu Daniel Wong
--------------------------
Chun Chiu Daniel Wong
34
<PAGE>
CERTIFICATE OF SECRETARY
------------------------
The undersigned, Secretary of Pioneer Semiconductor Corporation, a
California corporation, hereby certifies that the foregoing is a full, true and
correct copy of the Bylaws of the corporation with all amendments to date of
this Certificate.
WITNESS the signature of the undersigned this 25th day of June 1990.
/s/ Chun Chiu Daniel Wong
--------------------------
Chun Chiu Daniel Wong
Secretary
<PAGE>
EXHIBIT 3.4
CERTIFICATE OF AMENDMENT
OF
THE BYLAWS
OF
PERICOM SEMICONDUCTOR CORPORATION
a California corporation
The undersigned, John Chi-Hung Hui hereby certifies that:
1. He is the duly elected and acting Secretary of Pericom Semiconductor
Corporation, a California corporation (the "Corporation").
2. Effective September 10, 1997, Section 1.1 of the Bylaws of the
Corporation was amended to read in its entirety as follows:
"Section 1.1 Principal Office.
------------------------------
The principal executive office of the corporation shall be
located at such place as the Board of Directors may from time to
time authorize. If the principal executive office is located
outside this state, and the corporation has one or more business
offices in this state, the Board of Directors shall fix and
designate a principal executive office in the State of
California."
3. Effective September 10, 1997, the first paragraph of Section 4.1 of
the Bylaws of the Corporation was amended to read in its entirety as follows:
"The officers of the corporation shall consist of the President,
the Secretary and the Chief Financial Officer, and each of them
shall be appointed by the Board of Directors. The corporation may
also have a Chairman of the Board, one or more Vice-Presidents, a
Controller, one or more Assistant Secretaries and Assistant
Treasurers, and such other officers as may be appointed by the
Board of Directors, or with authorization from the Board of
Directors by the President. The order of the seniority of the
Vice Presidents shall be in the order of their nomination, unless
otherwise determined by the Board of Directors. Any two or more
of such offices may be held by the same person. The Board of
Directors may appoint, and may empower the President to appoint,
such other officers as the business of the corporation may
require, each of whom shall have such authority and perform such
duties as are provided in these Bylaws or as the Board of
Directors may from time to time determine."
IN WITNESS WHEREOF, the undersigned has set his hand hereto this 1997. 10th
day of September, 1997
_________________________
John Chi-Rung Rui
Secretary
<PAGE>
EXHIBIT 10.1
PERICOM SEMICONDUCTOR CORPORATION
1990 STOCK PLAN
1. Establishment, Purpose, and Definitions.
---------------------------------------
(a) There is hereby adopted the 1990 Stock Plan (the "Plan") of
PERICOM SEMICONDUCTOR CORPORATION (the "Company").
(b) The purpose of the Plan is to provide a means whereby eligible
individuals (as defined in paragraph 4 below) can acquire Common Stock of the
Company (the "Stock"). The Plan provides employees (including officers and
directors who are employees) of the Company and of its Affiliates an opportunity
to purchase shares of Stock pursuant to options which may qualify as incentive
stock options (referred to as "incentive stock options") under Section 422 of
the Internal Revenue Code, as amended (the "Code"), and employees, officers,
directors, independent contractors, and consultants of the Company and of its
Affiliates an opportunity to purchase shares of Stock pursuant to options which
are not described in Section 422 or 423 of the Code (referred to as
"nonqualified stock options"). The Plan also provides for the transfer or sale
of Stock to eligible individuals in connection with the performance of services
for the Company or its Affiliates.
(c) The term "Affiliates" as used in the Plan means parent or
subsidiary corporations, as defined in Sections 425(e) and (f) of the Code (but
substituting "the Company" for "employer corporation"), including parents or
subsidiaries which become such after adoption of the Plan.
2. Administration of the Plan.
--------------------------
(a) The Plan shall be administered by the Board of Directors of the
Company (the "Board"). The Board may delegate the responsibility for
administering the Plan to a committee, under such terms and conditions as the
Board shall determine (the "Committee"). The Committee shall consist of not
less than three members to be appointed by the Board. The Board may remove
members from or add members to the Committee. Vacancies on the Committee shall
be filled by the Board. The Committee shall select one of its members as
chairman, and shall hold meetings at such times and places as it may determine.
A majority of the Committee shall constitute a quorum and acts of the Committee
at which a quorum is present, or acts reduced to or approved in writing by all
the members of the Committee, shall be the valid acts of the Committee. If the
Board does not delegate administration of the Plan to the Committee, then each
reference in this Plan to "the Committee" shall be construed to refer to
1
<PAGE>
the Board.
(b) The Committee shall determine which eligible individuals (as
defined in paragraph 4 below) shall be granted options under the Plan, the
timing of such grants, the terms thereof (including any restrictions on the
Stock), and the number of shares for which an option or options shall be granted
to an optionee.
(c) The Committee may amend the terms of any outstanding option
granted under this Plan, but any amendment which would adversely affect the
optionee's rights under an outstanding option shall not be made without the
optionee's written consent. The Committee may, with the optionee's written
consent, cancel any outstanding stock option or accept any outstanding stock
option in exchange for a new option.
(d) The Committee shall also determine which eligible individuals (as
defined in paragraph 4 below) shall be issued Stock under the Plan, the timing
of such grants, the terms thereof (including any restrictions), and the number
of shares to be granted. The Stock shall be issued for such consideration (if
any) as the Committee deems appropriate. Stock issued subject to restrictions
shall be evidenced by a written agreement (the "Restricted Stock Purchase
Agreement"). The Committee may amend any Restricted Stock Purchase Agreement,
but any amendment which would adversely affect the individual's rights to the
Stock shall not be made without his or her written consent.
(e) The Committee shall have the sole authority, in its absolute
discretion to adopt, amend, and rescind such rules and regulations as, in its
opinion, may be advisable in the administration of the Plan, to construe and
interpret the Plan, the rules and the regulations, and the instruments
evidencing options or Stock granted under the Plan and to make all other
determinations deemed necessary or advisable for the administration of the Plan.
All decisions, determinations, and interpretations of the Committee shall be
binding on all optionees.
3. Stock Subject to the Plan.
-------------------------
(a) An aggregate of not more than two million nine hundred ten
thousand (2,910,000) shares of Stock shall be available for the grant of options
or the issuance of Stock under the Plan. If an option is surrendered (except
surrender for shares of Stock) or for any other reason ceases to be exercisable
in whole or in part, the shares which were subject to such option but as to
which the option had not been exercised shall continue to be available under the
Plan.
(b) If there is any change in the Stock subject
2
<PAGE>
to the Plan, the Stock subject to a Restricted Stock Purchase Agreement or the
Stock subject to any option granted under the Plan, through merger,
consolidation, reorganization, recapitalization, reincorporation, stock split,
stock dividend (in excess of two percent of the outstanding capital Stock of the
Company), or other change in the corporate structure of the Company, appropriate
adjustments may be made by the Committee in order to preserve but not to
increase the benefits to the individual, including adjustments to the aggregate
number and kind of shares subject to the Plan or to a Restricted Stock Purchase
Agreement and the number and kind of shares and the price per share subject to
outstanding options on a basis consistent with adjustments made to the shares
issued and outstanding outside of the Plan.
4. Eligible Individuals. Individuals who shall be eligible to have
--------------------
granted to them the options or Stock provided for by the Plan shall be such
employees, officers, directors, independent contractors, and consultants of the
Company or an Affiliate as the Committee, in its discretion, shall designate
from time to time. Notwithstanding the foregoing, only employees of the Company
or an Affiliate (including officers and directors who are bona fide employees)
shall be eligible to receive incentive stock options.
5. The Option Price. The exercise price of the Stock covered by each
----------------
incentive stock option shall be not less than the per share fair market value of
such Stock as determined in good faith by the Committee as of the date the
option is granted. The exercise price of the Stock covered by each nonqualified
stock option shall be not less than 85% of the per share fair market value of
such stock as determined in good faith by the Committee as of the date the
option is granted. Notwithstanding the foregoing, in the case of an option
granted to a person possessing more than ten percent of the combined voting
power of the Company or an Affiliate, the exercise price shall be not less than
110 percent of the fair market value of the Stock on the date the option is
granted. The exercise price of an option shall be subject to adjustment to the
extent provided in paragraph 3(b), above.
6. Terms and Conditions of Options.
-------------------------------
(a) Each option granted pursuant to the Plan will be evidenced by a
written Stock Option Agreement executed by the Company and the person to whom
such option is granted.
(b) The Committee shall determine the term of each option granted
under the Plan; provided, however, that the term of any stock option shall not
-------- -------
be for more than 10 years and that, in the case of an option granted to a person
possessing more than ten percent of the combined voting power of the Company
3
<PAGE>
or an Affiliate, the term of each option shall be for no more than five years.
(c) In the case of incentive stock options, the aggregate fair market
value (determined as of the time such option is granted) of the Stock with
respect to which incentive stock options are exercisable for the first time by
an eligible employee in any calendar year (under this Plan and any other plans
of the Company or its Affiliates) shall not exceed $100,000.
(d) The Stock Option Agreement may contain such other terms,
provisions, and conditions as may be determined by the Committee (not
inconsistent with this Plan). If an option, or any part thereof is intended to
qualify as an incentive stock option, the Stock Option Agreement shall contain
those terms and conditions which are necessary to so qualify it.
7. Terms and Conditions of Stock Purchase and Bonus
------------------------------------------------
(a) Each sale or grant of stock pursuant to the Plan will be evidenced
by either a written Restricted Stock Purchase Agreement executed by the Company
and the person to whom such stock is sold or granted or a written Restricted
Stock Bonus Agreement executed by the Company and the person to whom such stock
is granted.
(b) The Restricted Stock Purchase Agreement or Restricted Stock Bonus
Agreement may contain such other terms, provisions, and conditions as may be
determined by the Committee (not inconsistent with this Plan), including not by
way of limitation, restrictions on transfer, forfeiture provisions, repurchase
provisions, and vesting provisions.
(c) At the time of each sale or grant of stock or options pursuant to
the Plan, a copy of the Plan shall be delivered by the Company to the person to
whom such stock is sold or option granted.
8. Amendment, Suspension, or Termination of the Plan.
-------------------------------------------------
(a) The Board may at any time amend, suspend or terminate the Plan as
it deems advisable; provided, however, except as provided in paragraph 3(b),
above, the Board shall not amend the Plan with respect to incentive stock
options in the following respects without the consent of stockholders then
sufficient to approve the Plan with respect to incentive stock options in the
first instance:
(i) To increase the maximum number of shares subject to incentive
stock options issued under the Plan; or
4
<PAGE>
(ii) To change the designation or class of persons eligible to
receive incentive stock options under the Plan.
(b) No option may be granted nor any Stock issued under the Plan
during any suspension or after the termination of the Plan, and no amendment,
suspension, or termination of the Plan shall, without the affected individual's
consent, alter or impair any rights or obligations under any option previously
granted under the Plan. The Plan shall terminate on December 20, 2000, unless
previously terminated by the Board pursuant to this paragraph 9.
9. Assignability. Each option granted pursuant to this Plan shall,
-------------
during the optionee's lifetime, be exercisable only by him, or by his guardian
or legal representative and neither the option nor any right hereunder shall be
transferable by optionee by operation of law or otherwise other than by will or
the laws of descent and distribution. Stock subject to a Restricted Stock
Purchase Agreement shall be transferable only as provided in such Agreement.
This Plan and all options to purchase Stock and all shares of Stock issued
hereunder shall be binding upon, and shall inure to the benefit of any successor
corporation to the Company.
10. Payment Upon Exercise. Payment of the purchase price upon exercise
---------------------
of any option granted under this Plan shall be made in cash; provided, however,
that the Committee, in its sole discretion, may permit an optionee to pay the
option price in whole or in part (i) with shares of Stock owned by the Optionee;
(ii) by delivery on a form prescribed by the Committee of an irrevocable
direction to a securities broker approved by the Committee to sell shares and
deliver all or a portion of the proceeds to the Company in payment for the
Stock; (iii) by delivery of the optionee's promissory note with such recourse,
interest, security, and redemption provisions as the Committee in its discretion
determines appropriate; or (iv) in any combination of the foregoing. Any Stock
used to exercise options shall be valued at its fair market value on the date of
the exercise of the option.
11. Withholding. No Stock shall be granted or sold under the Plan to any
-----------
participant until the participant has made arrangements acceptable to the
Committee for the satisfaction of federal, state, and local income and social
security tax withholding obligations incident to either the receipt of Stock
under the Plan, the lapsing of restrictions applicable to such Stock, or the
failure to satisfy the conditions for treatment as incentive stock options under
applicable tax law. With the consent of the Committee and in accordance with
procedures established by the Committee, optionees may utilize the Company's
common stock (whether acquired through exercise of a stock option
5
<PAGE>
or otherwise) to satisfy federal, state, and local income and social security
tax withholding obligations.
12. Restrictions on Transfer of Shares. The Stock acquired pursuant
----------------------------------
to the Plan shall be subject to such restrictions and agreements regarding sale,
assignment, encumbrances, or other transfer as are in effect among the
stockholders of the Company at the time such Stock is acquired, as well as to
such other restrictions as the Committee shall deem advisable.
13. Stockholder Approval. This Plan shall only become effective with
--------------------
regard to incentive stock options upon its approval by a majority of the
stockholders voting (in person or by proxy) at a stockholders' meeting held
within 12 months of the Board's adoption of the Plan. The Committee may grant
incentive stock options under the Plan prior to stockholder approval, but until
stockholder approval of the Plan is obtained, no incentive stock option shall be
exercisable.
14. Merger or Sale of Assets. In the event of a merger or
------------------------
consolidation in which the Company is not the surviving corporation, options
granted pursuant to the Plan shall terminate to the extent the option is
unexercised; provided, however, that, notwithstanding the terms of the option,
the option shall become fully exercisable prior to consummation of such merger
or consolidation at such time(s) as the Board shall determine and the surviving
or acquiring corporation, as a condition precedent to consummation of said
transaction, shall assume the outstanding options or issue a substitute stock
option in place thereof.
15. Effect of Change in Stock Subject to Plan. Appropriate
-----------------------------------------
adjustments shall be made in the number, exercise price, and class of shares of
stock subject to an option in the event of a stock dividend, stock split,
reverse stock split, or like change in the capital structure of the Company.
Any such adjustment shall be determined in good faith by the Board and shall be
binding on the Company and the optionee.
16. Information. During the period that any option is outstanding,
-----------
the Company shall provide optionees, access, on an annual or other periodic
basis, to such financial information regarding the Company as the Company
prepares for distribution to its shareholders.
6
<PAGE>
PERICOM SEMICONDUCTOR CORPORATION
INCENTIVE STOCK OPTION AGREEMENT
This Agreement is made as of _____________, 19__ (the "Grant Date"),
between PERICOM SEMICONDUCTOR CORPORATION (the "Company") and
__________________________ ("Optionee").
WITNESSETH:
WHEREAS, the Company has adopted the Pericom Semiconductor Corporation
1990 Stock Plan (the "Plan"), which Plan is incorporated in this Agreement by
reference and made a part of it; and
WHEREAS, the Company regards Optionee as a valuable employee of the
Company, and has determined that it would be to the advantage and interest of
the Company and its shareholders to grant the options provided for in this
Agreement to Optionee as an inducement to remain in the service of the Company
and its Affiliates (as defined in the Plan) and as an incentive for increased
efforts during such service;
1. (a) Option Grant. The Company hereby grants to Optionee the right
------------
and option to purchase from the Company on the terms and conditions
hereinafter set forth, all or any part of an aggregate of ____________
shares of the Common Stock of the Company (the "Stock"). This option is
intended to satisfy the requirements of Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code").
(b) Option Price. The purchase price of the stock subject to
------------
this option shall be $__________ per share. The term "Option Price" as
used in this agreement refers to the purchase price of the Stock subject to
this option.
2. Option Period. This option shall be exercisable only during the
-------------
Option Period, and during such Option Period, the exercisability of the option
shall be subject to the limitations of paragraph 3 and the vesting provisions of
paragraph 4. The Option Period shall commence on the Grant Date and except as
provided in paragraph 3, shall terminate five years from the Grant Date (the
"Expiration Date").
3. Limits on Option Period. The Option Period may end before the
-----------------------
Expiration Date, as follows:
(a) If Optionee ceases to be a bona fide employee of the Company
or an Affiliate for any reason other than termination for cause, disability
(within the meaning of
7
<PAGE>
subparagraph (c)) or death during the Option Period, the Option Period
shall terminate ninety (90) days after the date of such cessation of
employment or on the Expiration Date, whichever shall first occur, and the
option shall be exercisable only to the extent exercisable under paragraph
4 on the date of Optionee's cessation of employment.
(b) If Optionee dies while in the employ of the Company or any of
its Affiliates, the Option Period shall end one year after the date of
death or on the Expiration Date, whichever shall first occur, and
Optionee's executor or administrator or the person or persons to whom
Optionee's rights under this option shall pass by will or by the applicable
laws of descent and distribution may exercise this option only to the
extent exercisable under paragraph 4 on the date of Optionee's death.
(c) If Optionee's employment is terminated by reason of
disability (within the meaning of Section 105(d)(4) of the Code), the
Option Period shall end one year after the date of Optionee's cessation of
employment or on the Expiration Date, whichever shall first occur, and the
option shall be exercisable only to the extent exercisable under paragraph
4 on the date of Optionee's cessation of employment.
(d) If Optionee is on a leave of absence from the Company or an
Affiliate because of his disability, or for the purpose of serving the
government of the country in which the principal place of employment of
Optionee is located, either in a military or civilian capacity, or for such
other purpose or reason as the Board may approve, Optionee shall not be
deemed during the period of such absence, by virtue of such absence alone,
to have terminated employment with the Company or an Affiliate except as
the Board may otherwise expressly provide.
(e) If Optionee's employment with the Company or any of its
Affiliates terminates for cause during the Option Period, the Option Period
shall terminate on the date of such Optionee's termination of employment
and the number of vested and unexercised shares as of the date of
termination shall be exercisable for a period of thirty (30) days from the
date of termination.
4. Vesting of Right to Exercise Options. Subject to other
------------------------------------
limitations contained in this Agreement, the Optionee shall have the right to
exercise the option in accordance with the following schedule:
(a) As to 50% of the number of shares covered by the option, at
any time after the Date of Grant;
8
<PAGE>
(b) As to the remaining 50% of the number of shares covered by the
Option, an additional 2.083% of the total shares each month commencing after the
Date of Grant so that the option is fully exercisable as to all shares subject
hereto two (2) years from the Date of Grant.
Any portion of the option that is not exercised shall accumulate and
may be exercised at any time during the Option Period prior to the Expiration
Date. No partial exercise of this option may be for less than 5 percent of the
total number of shares then available under this option. In no event shall the
Company be required to issue fractional shares. Notwithstanding the foregoing,
the aggregate fair market value (determined as of the time such option is
granted) of the Stock with respect to which incentive stock options are
exercisable for the first time in any calendar year (under the Plan and any
other incentive stock option plans of the Company or its Affiliates) shall not
exceed $100,000.
5. Method of Exercise. Optionee may exercise the option with
------------------
respect to all or any part of the shares of Stock then subject to such exercise
as follows:
(a) By giving the Company written notice of such exercise,
specifying the number of such shares as to which this option is exercised.
Such notice shall be accompanied by an amount equal to the Option Price of
such shares, in the form of any one or combination of the following: (i)
cash, a certified check, bank draft, postal or express money order payable
to the order of the Company in lawful money of the United States; or (ii)
such other consideration as the Committee may consider acceptable in its
sole discretion, or (iii) in any combination of the foregoing. If shares
of Stock are permitted to be delivered as consideration, the shares of
Stock shall be valued in accordance with procedures established by the
Board or a committee appointed by the Board to administer the Plan (the
"Committee"). (If the Board does not delegate administration of the Plan
to the Committee, then each reference in this Agreement to "the Committee"
shall be construed to refer to the Board.) Any note used to exercise this
option shall be a full recourse, interest-bearing obligation containing
such terms as the Committee shall determine. If a note is used, the
Optionee agrees to execute such further documents as the Company may deem
necessary or appropriate in connection with issuing the note, perfecting a
security interest in the Stock purchased with the note, and any related
terms or conditions that the Company may propose. Such further documents
may include, not by way of limitation, a security agreement, an escrow
agreement, a voting trust agreement and an assignment separate from
certificate.
(b) Optionee (and Optionee's spouse, if any) shall be required,
as a condition precedent to acquiring Stock
9
<PAGE>
through exercise of the option, to execute one or more agreements relating
to obligations in connection with ownership of the Stock or restrictions on
transfer of the Stock no less restrictive than the obligations and
restrictions to which the other stockholders of the Company are subject at
the time of such exercise.
(c) If required by the Company, Optionee shall give the Company
satisfactory assurance in writing, signed by Optionee or his legal
representative, as the case may be, that such shares are being purchased
for investment and not with a view to the distribution thereof, provided
that such assurance shall be deemed inapplicable to (1) any sale of such
shares by such Optionee made in accordance with the terms of a regis-
tration statement covering such sale, which may hereafter be filed and
become effective under the Securities Act of 1933, as amended, and with
respect to which no stop order suspending the effectiveness thereof has
been issued, and (2) any other sale of such shares with respect to which in
the opinion of counsel for the Company, such assurance is not required to
be given in order to comply with the provisions of the Securities Act of
1933, as amended.
As soon as practicable after receipt of the notice required in
paragraph 5(a) and satisfaction of the conditions set forth in paragraphs 5(b)
and 5(c), the Company shall, without transfer or issue tax and without other
incidental expense to Optionee, deliver to Optionee at the principal office of
the Company, attention of the Secretary, or such other place as may be mutually
acceptable to the Company and Optionee, a certificate or certificates of such
shares of Stock; provided, however, that the time of such delivery may be
postponed by the Company for such period as may be required for it with
reasonable diligence to comply with applicable registration requirements under
the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, any applicable listing requirements of any national securities
exchange, and requirements under any other law or regulation applicable to the
issuance or transfer of such shares.
6. Corporate Transactions. If there should be any change in a class
----------------------
of Stock subject to this option, through merger, consolidation, reorganization,
recapitalization, reincorporation, stock split, stock dividend (in excess of 2
percent of the Company's outstanding capital stock) or other change in the
corporate structure of the Company, the Company shall make appropriate
adjustments in order to preserve, but not to increase, the benefits to Optionee,
including adjustments in the number of shares of such Stock subject to this
option and in the price per share. Any adjustment made pursuant to this
paragraph 6 as a consequence of a change in the corporate structure of the
Company shall not entitle Optionee to acquire a number of shares of such
10
<PAGE>
Stock of the Company or shares of stock of any successor company greater than
the number of shares Optionee would receive if, prior to such change, Optionee
had actually held a number of shares of such Stock equal to the number of shares
subject to this option. If the Company is not the surviving corporation in any
merger or consolidation, every option outstanding hereunder shall be assumed by
the surviving entity and the Board shall give the Optionee the right to exercise
this option for a reasonable period of time prior to such event without regard
to the vesting provisions of paragraph 4.
7. Limitations on Transfer. This option shall, during Optionee's
-----------------------
lifetime, be exercisable only by him or by his representative or legal guardian,
and neither this option nor any right hereunder shall be transferable by
Optionee by operation of law or otherwise other than by will or the laws of
descent and distribution. In the event of any attempt by Optionee to alienate,
assign, pledge, hypothecate, or otherwise dispose of this option or of any right
hereunder, except as provided for in this Agreement, or in the event of the levy
of any attachment, execution, or similar process upon the rights or interest
hereby conferred, the Company at its election may terminate this option by
notice to Optionee and this option shall thereupon become null and void.
8. No Shareholder Rights. Neither Optionee nor any person entitled
---------------------
to exercise Optionee's rights in the event of his death shall have any of the
rights of a shareholder with respect to the shares of Stock subject to this
option except to the extent the certificates for such shares shall have been
issued upon the exercise of this option.
9. Lock-Up Agreement. Optionee, if requested by an underwriter of
-----------------
Common Stock or other securities of the Company, shall agree not to sell or
otherwise transfer or dispose of any Common Stock of the Company held by
Optionee (except Common Stock included in such registration) during the 180 day
period following the effective date of a registration statement of the Company
filed under the Securities Act of 1933, as amended, or such shorter period of
time as the underwriter shall require. Such agreement shall be in writing in
the form satisfactory to such underwriter. The Company may impose stop-transfer
instructions with respect to such Common Stock subject to the foregoing
restriction until the end of said period.
10. No Effect on Terms of Employment. Subject to the terms of any
--------------------------------
written employment contract to the contrary, the Company (or its Affiliate which
employs Optionee) shall have the right to terminate or change the terms of
employment of Optionee at any time and for any reason whatsoever, with or
without cause.
11. Notice. Any notice required to be given under the terms of this
------
Agreement shall be addressed to the Company in care
11
<PAGE>
of its Secretary at the Office of the Company in Palo Alto, California, and any
notice to be given to Optionee shall be addressed to him at the address given by
him beneath his signature to this Agreement, or such other address as either
party to this Agreement may hereafter designate in writing to the other. Any
such notice shall be deemed to have been duly given when enclosed in a properly
sealed envelope or wrapper addressed as aforesaid, registered or certified and
deposited (postage or registration or certification fee prepaid) in a post
office or branch post office regularly maintained by the United States.
12. Committee Decisions Conclusive. All decisions of the Committee
------------------------------
upon any question arising under the Plan or under this Agreement shall be
conclusive.
13. Successors. This Agreement shall be binding upon and inure to
----------
the benefit of any successor or successors of the Company. Where the context
permits, "Optionee" as used in this Agreement shall include Optionee's executor,
administrator or other legal representative or the person or persons to whom
Optionee's rights pass by will or the applicable laws of descent and
distribution.
14. Early Dispositions. Optionee agrees, as partial consideration
------------------
for the designation of this option as an incentive stock option under Section
422A of the Code, to notify the Company in writing within thirty (30) days of
any disposition of any shares acquired by exercise of this option if such
disposition occurs within two (2) years from the Grant Date or within one (1)
year from the date Optionee purchased such shares by exercise of this option.
15. California Law. The interpretation, performance, and enforcement
--------------
of this Agreement shall be governed by the laws of the State of California.
IN WITNESS WHEREOF, the Company has caused these presents to be
executed on its behalf, and Optionee has hereunto set his hand as of the day and
year first above written.
PERICOM SEMICONDUCTOR CORPORATION
By:______________________________
Its:_____________________________
_________________________________
Optionee
Address:
_________________________________
12
<PAGE>
ATTACHMENT A
------------
CONSENT OF SPOUSE
I, _____________________, spouse of __________________, have read and
approved the foregoing Agreement. In consideration of granting of the right of
my spouse to purchase shares of Pericom Semiconductor Corporation, as set forth
in the Agreement, I hereby appoint my spouse as my attorney-in-fact in respect
to the exercise of any rights of the Agreement insofar as I may have any rights
under such community property laws of the State of California or similar laws
relating to marital property in effect in the state of our residence as of the
date of the signing of the foregoing Agreement.
Dated: _______________
By: ______________________
13
<PAGE>
PERICOM SEMICONDUCTOR CORPORATION
NONQUALIFIED STOCK OPTION AGREEMENT
This Agreement is made as of March __, 1994 (the "Grant Date"),
between PERICOM SEMICONDUCTOR CORPORATION (the "Company") and ______________
("Optionee").
WITNESSETH:
WHEREAS, the Company has adopted the Pericom Semiconductor Corporation
1990 Stock Plan (the "Plan"), which Plan is incorporated in this Agreement by
reference and made a part of it; and
WHEREAS, the Company granted Optionee certain option rights to
purchase up to _______________ shares of Common Stock on _________________ for
certain consulting services previously rendered by Consultant to the Company and
wishes to enter into this Nonqualified Stock Option Agreement for the purpose of
evidencing such prior option grant;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth, the parties to this Agreement hereby agree as follows:
1. (a) Option Grant. The Company hereby grants to Optionee the right
------------
and option to purchase from the Company on the terms and conditions
hereinafter set forth, all or any part of an aggregate of ___________
shares of the Common Stock of the Company (the "Stock"). This option is not
intended to satisfy the requirements of Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code").
(b) Option Price. The purchase price of the Stock subject to this
------------
option shall be $__________per share. The term "Option Price" as used in
this agreement refers to the purchase price of the Stock subject to this
option.
2. Option Period. This option shall be exercisable only during the
-------------
Option Period. The Option Period shall commence on the Grant Date and shall
terminate five years from the Grant Date (the "Expiration Date").
3. Method of Exercise. Optionee may exercise the option with
------------------
respect to all or any part of the shares of Stock then subject to such exercise
as follows:
(a) By giving the Company written notice of such exercise,
specifying the number of such shares as to which this option is exercised.
Such notice shall be accompanied by an amount equal to the Option Price of
such shares, in cash,
14
<PAGE>
a certified check, bank draft, postal or express money order payable to the
order of the Company in lawful money of the United States.
(If the Board does not delegate administration of the Plan to a
committee appointed by the Board to administer the Plan (the "Committee"), then
each reference in this Agreement to "the Committee" shall be construed to refer
to the Board.)
(b) Optionee (and Optionee's spouse, if any) shall be required,
as a condition precedent to acquiring Stock through exercise of the option, to
execute one or more agreements relating to obligations in connection with
ownership of the Stock or restrictions on transfer of the Stock no less
restrictive than the obligations and restrictions to which the other
stockholders of the Company are subject at the time of such exercise.
(c) If required by the Company, Optionee shall give the Company
satisfactory assurance in writing, signed by Optionee or his legal
representative, as the case may be, that such shares are being purchased for
investment and not with a view to the distribution thereof, provided that such
assurance shall be deemed inapplicable to (1) any sale of such shares by such
Optionee made in accordance with the terms of a registration statement covering
such sale, which may hereafter be filed and become effective under the
Securities Act of 1933, as amended, and with respect to which no stop order
suspending the effectiveness thereof has been issued, and (2) any other sale of
such shares with respect to which in the opinion of counsel for the Company,
such assurance is not required to be given in order to comply with the
provisions of the Securities Act of 1933, as amended. As soon as practicable
after receipt of the notice required in paragraph 3(a) and satisfaction of the
conditions set forth in paragraphs 3(b) and 3(c), the Company shall, without
transfer or issue tax and without other incidental expense to Optionee, deliver
to Optionee at the principal office of the Company, attention of the Secretary,
or such other place as may be mutually acceptable to the Company and Optionee, a
certificate or certificates of such shares of Stock; provided, however, that the
time of such delivery may be postponed by the Company for such period as may be
required for it with reasonable diligence to comply with applicable registration
requirements under the Securities Act of 1933, as amended, the Securities
Exchange Act of 1934, as amended, any applicable listing requirements of any
national securities exchange, and requirements under any other law or regulation
applicable to the issuance or transfer of such shares.
4. Corporate Transactions. If there should be any change in a class of
----------------------
Stock subject to this option, through merger,
<PAGE>
consolidation, reorganization, recapitalization, reincorporation, stock split,
stock dividend (in excess of 2 percent) or other change in the corporate
structure of the Company, the Company shall make appropriate adjustments in
order to preserve, but not to increase, the benefits to Optionee, including
adjustments in the number of shares of such Stock subject to this option and in
the price per share. Any adjustment made pursuant to this paragraph 4 as a
consequence of a change in the corporate structure of the Company shall not
entitle Optionee to acquire a number of shares of such Stock of the Company or
shares of stock of any successor company greater than the number of shares
Optionee would receive if, prior to such change, Optionee had actually held a
number of shares of such Stock equal to the number of shares subject to this
option. If the Company is not the surviving corporation in any merger or
consolidation, every option outstanding hereunder shall be assumed by the
surviving entity and the Board shall give the Optionee the right to exercise
this option for a reasonable period of time prior to such event.
5. Limitations on Transfer. This option shall, during Optionee's
-----------------------
lifetime, be exercisable only by him or by his representative or legal guardian,
and neither this option nor any right hereunder shall be transferable by
Optionee by operation of law or otherwise other than by will or the laws of
descent and distribution. In the event of any attempt by Optionee to alienate,
assign, pledge, hypothecate, or otherwise dispose of this option or of any right
hereunder, except as provided for in this Agreement, or in the event of the levy
of any attachment, execution, or similar process upon the rights or interest
hereby conferred, the Company at its election may terminate this option by
notice to Optionee and this option shall thereupon become null and void.
6. No Shareholder Rights; No Further Option Rights. Neither Optionee nor
-----------------------------------------------
any person entitled to exercise Optionee's rights in the event of his death
shall have any of the rights of a shareholder with respect to the shares of
Stock subject to this option except to the extent the certificates for such
shares shall have been issued upon the exercise of this option. The options
granted herein are received by Optionee in full satisfaction of Optionee's
rights to receive any further option rights, equity securities or other
consideration from the Company for the consulting services previously rendered
by Optionee to the Company.
7. Lock-Up Agreement. Optionee, if requested by an underwriter of Common
-----------------
Stock or other securities of the Company, shall agree not to sell or otherwise
transfer or dispose of any Common Stock of the Company held by Optionee (except
Common Stock included in such registration) during the 180 day period following
the effective date of a registration statement of the Company filed under the
Securities Act of 1933, as amended, or such shorter period of time as the
underwriter shall require. Such agreement shall be in writing in the form
satisfactory to such underwriter.
<PAGE>
The Company may impose stop-transfer instructions with respect to such Common
Stock subject to the foregoing restriction until the end of said period.
8. Notice. Any notice required to be given under the terms of this
------
Agreement shall be addressed to the Company in care of its Secretary at the
Office of the Company in Palo Alto, California, and any notice to be given to
Optionee shall be addressed to him at the address given by him beneath his
signature to this Agreement, or such other address as either party to this
Agreement may hereafter designate in writing to the other. Any such notice
shall be deemed to have been duly given when enclosed in a properly sealed
envelope or wrapper addressed as aforesaid, registered or certified and
deposited (postage or registration or certification fee prepaid) in a post
office or branch post office regularly maintained by the United States.
9. Committee Decisions Conclusive. All decisions of the Committee upon
------------------------------
any question arising under the Plan or under this Agreement shall be conclusive.
10. Successors. This Agreement shall be binding upon and inure to the
----------
benefit of any successor or successors of the Company. Where the context
permits, "Optionee" as used in this Agreement shall include Optionee's executor,
administrator or other legal representative or the person or persons to whom
Optionee's rights pass by will or the applicable laws of descent and
distribution.
11. Withholding. Optionee agrees to make appropriate arrangements
-----------
(including the withholding of shares from exercise or the transfer of shares to
the Company) with the Company and his employer for satisfaction of any
applicable federal, state or local income tax or employment tax withholding
requirements.
12. California Law. The interpretation, performance, and enforcement of
--------------
this Agreement shall be governed by the laws of the State of California.
<PAGE>
IN WITNESS WHEREOF, the Company has caused these presents to be
executed on its behalf, and Optionee has hereunto set his hand as of the day and
year first above written.
PERICOM SEMICONDUCTOR CORPORATION
By:______________________________
Its:_____________________________
---------------------------------
Optionee
Address:
---------------------------------
---------------------------------
<PAGE>
ATTACHMENT A
------------
CONSENT OF SPOUSE
I, ___________________, spouse of ___________________, have read and
approved the foregoing Agreement. In consideration of granting of the right of
my spouse to purchase shares of Pericom Semiconductor Corporation, as set forth
in the Agreement, I hereby appoint my spouse as my attorney-in-fact in respect
to the exercise of any rights of the Agreement insofar as I may have any rights
under such community property laws of the State of California or similar laws
relating to marital property in effect in the state of our residence as of the
date of the signing of the foregoing Agreement.
Dated: __________________
By: _______________________
<PAGE>
PERICOM SEMICONDUCTOR CORPORATION
RESTRICTED STOCK PURCHASE AGREEMENT
THIS AGREEMENT is entered into as of the ____ day of ______, 19__,
between Pericom Semiconductor Corporation (the "Company") and
____________________________ (the "Recipient").
W I T N E S S E T H:
WHEREAS, the Company has adopted the Pericom Semiconductor Corporation 1990
Stock Plan (the "Plan"), which Plan is hereby incorporated in this Agreement by
reference and made a part of it; and
WHEREAS, the Company regards Recipient as a valuable contributor to the
Company, and has determined that it would be in the interest of the Company and
its shareholders to sell or grant the Stock provided for in this Agreement to
the Recipient as a reward for past efforts and an incentive for continued
service with the Company or its Affiliates (as defined in the Plan) and
increased achievements in the future by Recipient;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth, the parties to this Agreement hereby agree as follows:
1. Restricted Stock Purchase. Contemporaneously with the execution of
-------------------------
this Agreement, the Company will issue to Recipient ____________ shares of
Common Stock of the Company (the "Stock") for a consideration of $____ per share
("Purchase Price"). Payment for the Stock in the amount of the Purchase Price
multiplied by the number of shares issued hereunder shall be made to the Company
upon execution of this Agreement in cash, certified check or wire transfer
acceptable to a committee appointed by the Board of Directors of the Company
(the "Board") to administer the Plan (the "Committee"). (If the Board has not
appointed a Committee, then each reference to the "Committee" shall be construed
to refer to the Board.) Payment may also be made by a full recourse promissory
note, in the form attached hereto as Exhibit A, that bears interest at a rate
equal to at least that of the applicable federal rate on a compounded basis.
Recipient shall pledge the Stock as security for the promissory note.
All shares of Stock issued hereunder shall be deemed issued to Recipient as
fully paid and nonassessable shares, and Recipient shall have all rights of a
shareholder with respect thereto, including the right to vote, receive dividends
(including stock dividends), participate in stock splits or other
recapitalizations, and exchange such shares in a merger,
<PAGE>
consolidation or other reorganization. The Company shall pay any applicable
stock transfer taxes. The term "Stock" also refers to the purchased Stock and
all securities received in replacement of the Stock, as a stock dividend or as a
result of any stock split, recapitalization, merger, reorganization, exchange or
the like, and all new, substituted or additional securities or other properties
to which Recipient is entitled by reason of Recipient's ownership of the Stock.
2. Restrictions. No Stock issued to the Recipient hereunder shall be
------------
sold, transferred by gift, pledged, hypothecated, or otherwise transferred or
disposed of by the Recipient prior to the date when the Recipient shall become
vested in such Stock pursuant to Section 3 hereof, and such Stock shall
constitute "Non-Vested Stock" until such date. Any attempt to transfer Stock in
violation of this Section 2 shall be null and void and shall be disregarded by
the Company. In addition, Non-Vested Stock shall be subject to a repurchase
option in favor of the Company (the "Repurchase Option").
The Repurchase Option shall be subject to the following terms and
conditions. In the event of the voluntary or involuntary termination of
employment of Recipient with the Company for any reason, with or without cause
(including death or disability), the Company shall, upon the date of such
termination, have an irrevocable, exclusive option for a period of ninety (90)
days from such date to repurchase from Recipient or any person receiving the
Non-Vested Stock by operation of law of other involuntary transfer, at the
original Purchase Price for the Non-Vested Stock.
The Repurchase Option shall be exercised by written notice by the Company
to Recipient or his executor and, at the Company's option, (i) by delivery to
the Recipient or his executor, with such notice, of a check in the amount of the
Purchase Price for the Non-Vested Stock being repurchased, or (ii) in the event
the Recipient is indebted to the Company, by cancellation by the Company of an
amount of such indebtedness equal to the Purchase Price for the Non-Vested Stock
being repurchased, or (iii) by a combination of (i) and (ii) so that the
combined payment and cancellation of indebtedness equals such Purchase Price.
Upon delivery by the Company of such notice and payment of the Purchase Price in
any of the ways described above, the Company shall become the legal and
beneficial owner of the Non-Vested Stock being repurchased and all rights and
interest therein or related thereto, and the Company shall have the right to
transfer to its own name the number of shares of Non-Vested Stock being
repurchased by the Company, without further action by Recipient.
<PAGE>
For purposes of facilitating the enforcement of the provisions of this
paragraph 2, Recipient agrees, immediately upon receipt of the certificate(s)
for his Shares, to deliver such certificate(s), together with a stock power
executed in blank by Recipient and Recipient's spouse (if required for transfer)
with respect to each such stock certificate, to the Secretary or Assistant
Secretary of the Company, or their designee, to hold in escrow for so long as
such stock remains as Non-Vested Stock, with the authority to take all such
actions and to effectuate all such transfers and/or releases as may be necessary
or appropriate to accomplish the objectives of this Agreement in accordance with
the terms hereof. Recipient hereby acknowledges that the appointment of the
Secretary or Assistant Secretary of the Company (or their designee) as the
escrow holder hereunder with the stated authorities is a material inducement to
the Company to make this Agreement and that such appointment is coupled with an
interest and is accordingly irrevocable. Recipient agrees that such escrow
holder shall not be liable to any party hereto (or to any other party) for any
actions or omissions unless such escrow holder is grossly negligent relative
thereto. The escrow holder may rely upon any letter, notice or other document
executed by any signature purported to be genuine and may resign at any time.
3. Vesting. For purposes of this Agreement, the term "vest" shall mean
-------
with respect to any share of the Stock that such share is no longer subject to
the restrictions on transfer set forth in paragraph 2 and that such share is
released from the Repurchase Option. If Recipient would become vested in any
fraction of a share of Stock on any date, such fractional share shall not vest
and shall remain Non-Vested Stock until the Recipient becomes vested in the
entire share. The Stock subject to this Agreement shall vest:
(a) As to 25% of the number of shares covered by this Agreement,
one year from date of this Agreement;
(b) As to the remaining 75% of the number of shares covered by
this Agreement, at the rate of 2.083% per month commencing one year and one
month from the date of this Agreement so that all of the Stock is vested four
years from date of this Agreement.
4. Withholding of Taxes. Recipient shall provide the Company with a copy
--------------------
of any timely election made pursuant to Section 83(b) of the Internal Revenue
Code or similar provision of state law (collectively, an "83(b) Election"). If
Recipient makes a timely 83(b) Election, Recipient shall immediately pay Company
(or the Affiliate that employs Recipient) the amount necessary to satisfy any
applicable federal, state, and local income tax withholding requirements and
social security tax withholding requirements. If Recipient does not make a
timely
<PAGE>
83(b) Election, Recipient shall, either at the time that the restrictions lapse
under this Agreement and the Plan or at the time withholding is otherwise
required by any applicable law, pay Company (or the Affiliate that employs
Recipient) the amount necessary to satisfy any applicable federal, state, and
local income tax withholding requirements and social security tax withholding
requirements.
5. Acceleration of Time for Vesting. The Committee may, in its sole
--------------------------------
discretion and in accordance with Section 14 of the Plan, accelerate, in whole
or in part, the time for vesting of Stock as set forth in section 3 above.
6. Additional Securities. Any securities received as the result of
---------------------
ownership of Non-Vested Stock (hereinafter called "Additional Securities"),
including, but not by way of limitation, warrants, options and securities
received as a stock dividend or stock split, or as a result of a
recapitalization or reorganization, shall be retained by the Company in the same
manner and subject to the same conditions as the Non-Vested Stock with respect
to which they were issued. Recipient shall be entitled to direct the Company to
exercise any warrant or option received as Additional Securities upon supplying
the funds necessary to do so, in which event the securities so purchased shall
constitute Additional Securities, but the Recipient may not direct Company to
sell any such warrant or option. If Additional Securities consist of a
convertible security, Recipient may exercise any conversion right, and any
securities so acquired shall be deemed Additional Securities. Additional
Securities shall be subject to the provisions of paragraphs 2, 3 and 5 above in
the same manner as the Non-Vested Stock.
7. Investment Representations.
--------------------------
(a) This Agreement is made in reliance upon the Recipient's representation
to the Company, which by its acceptance hereof the Recipient hereby confirms,
that the shares of Stock to be received by him will be acquired for investment
for his own account and not with a view to the sale or distribution of any part
thereof within the meaning of the Securities Act of 1933, as amended (the "1933
Act").
(b) The Recipient understands that the Stock is not registered under the
1933 Act, on the basis that the sale provided for in this Agreement and the
issuance of securities hereunder is exempt from registration under the 1933 Act
pursuant to section 4(2) and/or Section 3(b) thereof, and that the Company's
reliance on such exemption is predicated on the Recipient's representations set
forth herein.
(c) The Recipient understands that the Stock may not be sold, transferred,
or otherwise disposed of without
<PAGE>
registration under the 1933 Act or an exemption therefrom, and that in the
absence of an effective registration statement covering the Stock or an
available exemption from registration under the 1933 Act, the Stock must be held
indefinitely. In particular, the Recipient is aware that the Stock (and any
Common Stock issued on conversion thereof) may not be sold pursuant to Rule 144
or Rule 701 promulgated under the 1933 Act unless all of the conditions of the
applicable Rules are met. Among the conditions for use of Rule 144 is the
availability of current information to the public about the Company. Such
information is not now available, and the Company has no present plans to make
such information available. The Recipient represents that, in the absence of an
effective registration statement covering the Stock, it will sell, transfer, or
otherwise dispose of the Stock only in a manner consistent with its
representations set forth herein and then only in accordance with the provisions
of paragraph 7(d) hereof.
(d) The Recipient agrees that in no event will it make a transfer or
disposition of any of the Stock (other than pursuant to an effective
registration statement under the 1933 Act), unless and until (i) the Recipient
shall have notified the Company of the proposed disposition and shall have
furnished the Company with a statement of the circumstances surrounding the
disposition, and (ii) if requested by the Company, at the expense of the
Recipient or transferee, the Recipient shall have furnished to the Company
either (A) an opinion of counsel, reasonably satisfactory to the Company, to the
effect that such transfer may be made without registration under the 1933 Act or
(B) a "no action" letter from the Securities and Exchange Commission to the
effect that the transfer of such securities without registration will not result
in a recommendation by the staff of the Securities and Exchange Commission that
action be taken with respect thereto. The Company will not require such a legal
opinion or "no action" letter (a) in any transaction in compliance with Rule
144, (b) in any transaction in which the Recipient which is a partnership
distributes Stock after six months after the purchase of such securities
hereunder solely to partners or retired partners (including spouses and
ancestors, descendants and siblings of such partners or spouses who acquire
Stock by gift, will or intestate succession) thereof for no consideration,
provided that each transferee agrees in writing to be subject to the terms of
this paragraph 7(d), (c) in any transaction in which the Recipient transfers any
or all shares held by such Recipient's by gift to such Investor's immediate
family ("immediate family" used herein shall mean spouse, father, mother,
brother, sister, or lineal descendant), (d) in any transaction in compliance
with Rule 701(c), or (e) in any transfer of unlegended securities.
8. Legends; Stop Transfer California Securities Law.
------------------------------------------------
<PAGE>
(a) All certificates for shares of the Stock shall bear the following
legends:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND
NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF.
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED BY THE TERMS OF THAT
CERTAIN RESTRICTED STOCK PURCHASE AGREEMENT BETWEEN THE COMPANY AND
________________, dated _____________. THE SHARES REPRESENTED BY THIS
CERTIFICATE MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH SUCH AGREEMENT, A COPY OF
WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.
(b) The certificates for shares of the Stock shall also bear any legend
required by any applicable state securities law.
(c) THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS
NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF
CALIFORNIA, AND THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY
PART OF THE CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL,
UNLESS THE SALE OF SECURITIES IS EXEMPT FROM THE QUALIFICATION BY SECTION 25100,
25102 OR 25105 OF THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES
TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING
OBTAINED, UNLESS THE SALE IS SO EXEMPT.
9. Lock-Up Agreement. Recipient, if requested by an underwriter of Common
-----------------
Stock or other securities of the Company, shall agree not to sell or otherwise
transfer or dispose of any Common Stock of the Company held by the Recipient
(except Common Stock included in such registration) during the 180 day period
following the effective date of a registration statement of the Company filed
under the 1933 Act, or such shorter period of time as the underwriter shall
require. Such agreement shall be in writing in the form satisfactory to such
underwriter. The Company may impose stop-transfer instructions with respect to
such Common Stock subject to the foregoing restriction until the end of said
period.
10. NO EMPLOYMENT RIGHTS.
--------------------
THIS AGREEMENT SHALL NOT CONFER UPON RECIPIENT ANY RIGHT WITH RESPECT TO
CONTINUATION OF HIS EMPLOYMENT WITH THE COMPANY OR ITS SUBSIDIARIES, NOR SHALL
IT INTERFERE IN ANY WAY WITH THE RIGHT OF RECIPIENT OR THE COMPANY, OR ANY OF
ITS SUBSIDIARIES, TO TERMINATE RECIPIENT'S EMPLOYMENT WITH THE
<PAGE>
COMPANY AT ANY TIME OR CHANGE THE TERMS OF EMPLOYMENT OF RECIPIENT.
11. Rule 701 Filing. The Company and Recipient agree that the Shares are
---------------
being sold to Recipient pursuant to Rule 701 promulgated under the 1933
Securities Act. The Company covenants and agrees to file Form 701 with the
Securities and Exchange Commission as required by Rule 701.
12. Distributions. Company shall disburse to Recipient all dividends,
-------------
interest and other distributions paid or made in cash or property (other than
Additional Securities) with respect to Non-Vested Stock and Additional
Securities, less any applicable federal or state withholding taxes.
13. Successors. This Agreement shall be binding upon and shall inure to
----------
the benefit of the parties hereto and their respective heirs, executors,
administrators, successors and assigns.
14. Notice. Any notice or other paper required to be given or sent
------
pursuant to the terms of this Agreement shall be sufficiently given or served
hereunder to any party when transmitted by registered or certified mail, postage
prepaid, addressed to the party to be served as follows:
Company: Pericom Semiconductor Corporation
2380 Bering Drive
San Jose, CA 95131
Recipient: At Recipient's address as it appears under
Recipient's signature to this Agreement, or to
such other address as Recipient may specify in
writing to the Company.
Any party may designate another address for receipt of notices so long as notice
is given in accordance with this paragraph.
15. Committee Decisions Conclusive. All decisions of the Committee
------------------------------
arising under the Plan or under this Agreement shall be conclusive.
16. California Law. The interpretation, performance and enforcement
--------------
of this Agreement shall be governed by the laws of the State of California.
17. Section 83(b) Election.
----------------------
Recipient hereby represents that he understands (a) the contents and
requirements of the 83(b) Election, (b) the application of Section 83(b) to the
purchase of Shares by
<PAGE>
Recipient pursuant to this Agreement, (c) the nature of the election to be made
by Recipient under Section 83(b), and (d) the effect and requirements of the
83(b) Election under relevant state and local tax laws. Recipient further
represents that he [intends/does not intend] to file an election pursuant to
Section 83(b) with the Internal Revenue Service within thirty (30) days
following purchase of the Shares hereunder, and a copy of such election with his
federal tax return for the calendar year in which the date of this Agreement
falls. Recipient covenants to inform the Company of any change in Recipient's
state of residency.
IN WITNESS WHEREOF, the parties hereto have duly executed this Non-
Vested Stock Purchase Agreement as of the date first above written.
PERICOM SEMICONDUCTOR CORPORATION
By:______________________________
Its:_____________________________
_________________________________
Recipient
Address:
_________________________________
_________________________________
<PAGE>
ATTACHMENT A
------------
CONSENT OF SPOUSE
I, _____________________, spouse of __________________, have read and
approved the foregoing Agreement. In consideration of the right of my spouse to
purchase shares of Pericom Semiconductor Corporation, as set forth in the
Agreement, I hereby appoint my spouse as my attorney-in-fact in respect to the
exercise of any rights of the Agreement insofar as I may have any rights under
such community property laws of the State of California or similar laws relating
to marital property in effect in the state of our residence as of the date of
the signing of the foregoing Agreement.
Dated: _______________, 19__
By: ________________________
<PAGE>
EXHIBIT 10.2
PERICOM SEMICONDUCTOR CORPORATION
---------------------------------
1995 STOCK OPTION PLAN
----------------------
1. Establishment, Purpose, and Definitions.
---------------------------------------
(a) There is hereby adopted the 1995 Stock Option Plan (the "Plan") of
Pericom Semiconductor Corporation (the "Company").
(b) The purpose of the Plan is to provide a means whereby eligible
individuals (as defined in Section 4, below) can acquire Common Stock of the
Company (the "Stock"). The Plan provides employees (including officers and
directors who are employees) of the Company and of its Affiliates an opportunity
to purchase shares of Stock pursuant to options which may qualify as incentive
stock options (referred to as "incentive stock options") under Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code"), and employees,
officers, directors, independent contractors, and consultants of the Company and
of its Affiliates an opportunity to purchase shares of Stock pursuant to options
which are not described in Sections 422 or 423 of the Code (referred to as
"nonqualified stock options").
(c) The term "Affiliates" as used in the Plan means parent or
subsidiary corporations, as defined in Sections 424(e) and (f) of the Code (but
substituting "the Company" for "employer corporation"), including parents or
subsidiaries which become such after adoption of the Plan.
2. Administration of the Plan.
--------------------------
(a) The Plan shall be administered by the Board of Directors of the
Company (the "Board"). Subject to Section 2(e) below, the Board may delegate
the responsibility for administering the Plan to a committee, under such terms
and conditions as the Board shall determine (the "Committee"). The Committee
shall consist of two or more members of the Board or such lesser number of
members of the Board as permitted by Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended ("Rule 16b-3"). Except as permitted by Rule
16b-3, none of the members of the Committee shall receive, while serving on the
Committee, or during the one-year period preceding appointment to the Committee,
a grant or award of equity securities under (i) the Plan or (ii) any other plan
of the Company or its affiliates under which the participants are entitled to
acquire Stock (including restricted Stock), stock options, stock bonuses,
related rights or stock appreciation rights of the Company or any of its
affiliates, other than pursuant to the grant of automatic options provided in
Section 7 below and pursuant to transactions in any such other plan which do not
disqualify a director from being a disinterested person under Rule 16b-3. The
limitations set forth in this Section 2(a) shall automatically incorporate any
additional requirements that may in the future be necessary for the Plan to
comply with Rule 16b-3. Members of the Committee shall serve at the pleasure of
the Board. The Committee shall select one of its members as chairman, and shall
hold meetings at such times and places as it may determine. A majority of the
Committee shall constitute a
1
<PAGE>
quorum and acts of the Committee at which a quorum is present, or acts reduced
to or approved in writing by all the members of the Committee, shall be the
valid acts of the Committee. If the Board does not delegate administration of
the Plan to the Committee, then each reference in this Plan to "the Committee"
shall be construed to refer to the Board.
(b) Except for options granted to Non-Employee Directors pursuant to
Section 7, the Committee shall determine which eligible individuals (as defined
in Section 4, below) shall be granted options under the Plan, the timing of such
grants, the terms thereof (including any restrictions on the Stock), and the
number of shares subject to such options.
(c) Except for options granted to Non-Employee Directors pursuant to
Section 7, the Committee may amend the terms of any outstanding option granted
under this Plan, but any amendment which would adversely affect the optionee's
rights under an outstanding option shall not be made without the optionee's
written consent. The Committee may, with the optionee's written consent, cancel
any outstanding stock option or accept any outstanding stock option in exchange
for a new option.
(d) The Committee shall have the sole authority, in its absolute
discretion to adopt, amend, and rescind such rules and regulations as, in its
opinion, may be advisable in the administration of the Plan, to construe and
interpret the Plan, the rules and the regulations, and the instruments
evidencing options or Stock granted under the Plan and to make all other
determinations deemed necessary or advisable for the administration of the Plan.
All decisions, determinations, and interpretations of the Committee shall be
binding on all participants. Notwithstanding the foregoing, the Committee shall
not exercise any discretionary functions with respect to options granted to Non-
Employee Directors pursuant to Section 7.
(e) Notwithstanding the foregoing provisions of this Section 2, grants
of options to any "Covered Employee," as such term is defined by Section 162(m)
of the Code shall be made only by a subcommittee of the Committee which, in
addition to meeting other applicable requirements of this Section 2, is composed
solely of two or more "outside directors," within the meaning of Section 162(m)
of the Code and the regulations thereunder (the "Subcommittee") to the extent
necessary to qualify such grants as "performance-based compensation" under
Section 162(m). In the case of such grants to Covered Employees, references to
the "Committee" shall be deemed to be references to the Subcommittee as
specified above.
3. Stock Subject to the Plan.
-------------------------
(a) The aggregate number of shares of Common Stock of the Company
available for grant of options under the Plan initially shall be 1,200,000
shares, and commencing with the first business day of each fiscal year of the
Company thereafter beginning with July 1, 1996, such maximum number of shares
reserved for issuance hereunder shall be increased by a number equal to ten
percent (10%) of the number of shares of Common Stock outstanding as of June 30
of the immediately preceding year; provided, however, that such maximum number
of shares shall not exceed 1,800,000 shares. Notwithstanding the foregoing, the
aggregate number
2
<PAGE>
of shares of Common Stock available for grant of incentive stock options shall
be 1,200,000 shares, and such number shall not be subject to annual adjustment.
If an option is surrendered (except surrender for shares of Stock) or for any
other reason ceases to be exercisable in whole or in part, the shares which were
subject to such option but as to which the option had not been exercised shall
continue to be available under the Plan.
(b) If there is any change in the Stock subject to any option granted
under the Plan, through merger, consolidation, reorganization, recapitalization,
reincorporation, stock split, stock dividend (in excess of two percent), or
other change in the capital structure of the Company, appropriate adjustments
shall be made by the Committee in order to preserve but not to increase the
benefits to the individual, including adjustments to the number and kind of
shares and the price per share subject to outstanding options.
4. Eligible Individuals. The persons eligible to participate in the Plan
--------------------
(other than pursuant to Section 7) are such employees, officers, independent
contractors, and consultants of the Company or an Affiliate as the Committee, in
its discretion, shall designate from time to time. Notwithstanding the
foregoing, only employees of the Company or an Affiliate (including officers and
directors who are bona fide employees) shall be eligible to receive incentive
stock options. Except for grants pursuant to Section 7, Eligible Individuals
shall not include Non-Employee Directors.
5. The Option Price. Except as provided in Section 7, the exercise price
----------------
of the each option shall be not less than the per share fair market value of the
Stock subject to such option on the date the option is granted. Notwithstanding
the foregoing, in the case of an incentive stock option granted to a person
possessing more than ten percent of the combined voting power of the Company or
an Affiliate, the exercise price shall be not less than 110 percent of the fair
market value of the Stock on the date the option is granted. The exercise price
of an option shall be subject to adjustment to the extent provided in Section
3(b), above.
6. Terms and Conditions of Options.
-------------------------------
(a) Each option granted pursuant to the Plan will be evidenced by a
written Stock Option Agreement executed by the Company and the person to whom
such option is granted.
(b) The Committee shall determine the term of each option granted
under the Plan; provided, however, that (i) the term of each option shall not be
-------- -------
more than 10 years, (ii) in the case of an incentive stock option granted to a
person possessing more than ten percent of the combined voting power of the
Company or an Affiliate, the term of each incentive stock option shall be no
more than five years, and (iii) the term of an option granted pursuant to
Section 7 shall be as provided in Section 7.
(c) In the case of incentive stock options, the aggregate fair market
value (determined as of the time such option is granted) of the Stock with
respect to which incentive stock options are exercisable for the first time by
an eligible employee in any calendar year
3
<PAGE>
(under this Plan and any other plans of the Company or its Affiliates) shall not
exceed $100,000. If the aggregate fair market value of stock with respect to
which incentive stock options are exercisable by an optionee for the first time
during any calendar year exceeds $100,000 such options shall be treated as
nonqualified options to the extent required by Section 422 of the Code. The rule
set forth in the preceding sentence shall be applied by taking options into
account in the order in which they were granted.
(d) Except for grants to Non-Employee Directors pursuant to Section 7,
which shall be granted on the form of Stock Option Agreement attached hereto as
Exhibit A, the Stock Option Agreement may contain such other terms, provisions,
and conditions as may be determined by the Committee not inconsistent with this
Plan. If an option, or any part thereof is intended to qualify as an incentive
stock option, the Stock Option Agreement shall contain those terms and
conditions which are necessary to so qualify it.
(e) The maximum number of Shares with respect to which options may be
granted to any individual per calendar year under the Plan shall be 100,000
shares, subject to adjustment pursuant to Section 3(b). To the extent required
by Section 162(m) of the Code or the regulations thereunder, in applying the
foregoing limitation with respect to an employee, if any option is cancelled,
the cancelled option shall continue to count against the maximum number of
shares for which options may be granted to the employee under this Section 6(e).
For this purpose, the repricing of an option shall be treated as a cancellation
of the existing option and the grant of a new option.
7. Stock Options for Non-Employee Directors.
----------------------------------------
(a) All grants of options pursuant to this Section 7 shall be
automatic and nondiscretionary and shall be made strictly in accordance with the
provisions of this Section 7. No person shall have any discretion to select
which Non-Employee Directors shall be granted options or to determine the number
of shares of Stock to be covered by options granted to Non-Employee Directors,
the timing of such option grants or the exercise price thereof.
(b) An option to purchase 5,000 shares of Stock shall be granted
("Initial Grant") to each director who is not an officer of the Company ("Non-
Employee Director"), such Initial Grant to be made (i) to the then-existing Non-
Employee Directors upon approval of the Plan by the stockholders of the Company
("Approval Date") and (ii) to other Non-Employee Directors elected or appointed
to the Board after the Approval Date upon the date each such Non-Employee
Director first becomes a Non-Employee Director following the Approval Date. In
addition, immediately following each annual meeting of the Company's
stockholders, each Non-Employee Director who continues as a Non-Employee
Director following such annual meeting shall be granted an option to purchase
2,500 shares of Stock ("Subsequent Grant"); provided that no Subsequent Grant
shall be made to any Non-Employee Director who has not served as a director of
the Company, as of the time of such annual meeting, for at least one (1) year.
Each such Subsequent Grant shall be made on the date of the annual stockholders'
meeting in question. If any option ceases to be exercisable in whole or in
part, the shares which were subject to such option but as to which the option
had not been exercised shall continue to be
4
<PAGE>
available under the Plan. All options granted to Non-Employee Directors shall be
nonqualified stock options.
(c) The exercise price per share of Stock covered by each option shall
be the per-share fair market value of the Stock on the date the option is
granted. The exercise price of an option granted under the Plan shall be
subject to adjustment to the extent provided in Section 3(b) hereof. The term
of each option shall be for ten years.
(d) Each Initial Grant shall be fully vested and exercisable as to all
of the shares covered thereby at the time of grant. Each Subsequent Grant shall
vest and become exercisable as to 625 of the shares covered thereby on the
expiration of each three (3) month period following the date of grant such that
the option will be fully exercisable one (1) year after its date of grant.
8. Use of Proceeds. Cash proceeds realized from the sale of Stock under
---------------
the Plan or pursuant to options granted under the Plan shall constitute general
funds of the Company.
9. Amendment, Suspension, or Termination of the Plan.
-------------------------------------------------
(a) The Board may at any time amend, suspend or terminate the Plan as
it deems advisable; provided that such amendment, suspension or termination
complies with all applicable requirements of state and federal law, including
any applicable requirement that the Plan or an amendment to the Plan be approved
by the shareholders, and provided further that, except as provided in Section
3(b), above, the Board shall in no event amend the Plan in the following
respects without the consent of stockholders then sufficient to approve the Plan
in the first instance:
(i) To increase the maximum number of shares subject to stock
options issued under the Plan; or
(ii) To change the designation or class of persons eligible to
receive incentive stock options under the Plan.
(b) No option may be granted nor any Stock issued under the Plan
during any suspension or after the termination of the Plan, and no amendment,
suspension, or termination of the Plan shall, without the affected individual's
consent, alter or impair any rights or obligations under any option previously
granted under the Plan. The Plan shall terminate on the tenth anniversary of
the date of adoption of the Plan, unless previously terminated by the Board
pursuant to this Section 9.
(c) Notwithstanding the provisions of Sections 9(a) and 9(b), above,
the provisions set forth in Section 7 of the Plan (and any other sections of the
Plan that affect the formula award terms of option grants to Non-Employee
Directors required to be specified in the Plan by Rule 16b-3) shall not be
amended periodically and in no event more than once every six months, other than
to comport with changes to the Code, the Employee Retirement Income Security Act
of 1974, as amended, or any applicable rules and regulations thereunder.
5
<PAGE>
10. Assignability. To the extent required by Rule 16b-3, no option
-------------
granted pursuant to this Plan shall be transferable by the holder except by
operation of law or by will or the laws of descent and distribution; provided,
that, if Rule 16b-3 is amended after the date of the Board's adoption of the
Plan to permit broader transferability of options under that Rule, (i) options
granted under Section 7 to Non-Employee Directors shall be transferable to the
fullest extent permitted by Rule 16b-3 as so amended, (ii) any other option
shall be transferable to the extent provided in the option agreement covering
the option, and the Committee shall have discretion to amend any such
outstanding option to provide for broader transferability of the option as the
Committee may authorize within the limitations of Rule 16b-3. Notwithstanding
the foregoing, if required by the Code, each incentive stock option under the
Plan shall be transferable by the optionee only by will or the laws of descent
and distribution, and, during the optionee's lifetime, shall be exercisable only
by the optionee. In the event of any Rule 16b-3 permitted transfer of an option
hereunder, the transferee shall be entitled to exercise the option in the same
manner and only to the same extent as the optionee (or his personal
representative or the person who would have acquired the right to exercise the
option by bequest or intestate succession) would have been entitled to exercise
the option under Sections 6, 7 and 11 had the option not been transferred.
11. Payment Upon Exercise of Options.
--------------------------------
(a) Payment of the purchase price upon exercise of any option granted
under this Plan shall be made in cash, by optionee's personal check, a certified
check, bank draft, or postal or express money order payable to the order of the
Company in lawful money of the United States (collectively, "Cash
Consideration"); provided, however, that, except for options granted under
Section 7, the Committee, in its sole discretion, may permit an optionee to pay
the option price in whole or in part (i) with shares of Stock owned by the
optionee or with shares of Stock withheld from the shares otherwise deliverable
to the optionee upon exercise of the option; (ii) by delivery on a form
prescribed by the Committee of an irrevocable direction to a securities broker
approved by the Committee to sell shares of Stock and deliver all or a portion
of the proceeds to the Company in payment for the Stock; (iii) by delivery of
the optionee's promissory note with such recourse, interest, security, and
redemption provisions as the Committee in its discretion determines appropriate;
or (iv) in any combination of the foregoing. The exercise price of any options
granted under Section 7 shall be paid in Cash Consideration, the consideration
specified in clauses (i) or (ii) of the preceding sentence, or in any
combination thereof. Any Stock used to exercise options shall be valued at its
fair market value on the date of the exercise of the option. In addition, the
Committee, in its sole discretion, may authorize the surrender by an optionee of
all or part of an unexercised option (excluding options granted under Section 7,
above) and authorize a payment in consideration thereof of an amount equal to
the difference between the aggregate fair market value of the Stock subject to
such option and the aggregate option price of such Stock. In the Committee's
discretion, such payment may be made in cash, shares of Stock with a fair market
value on the date of surrender equal to the payment amount, or some combination
thereof.
(b) In the event that the exercise price is satisfied by shares
withheld from the shares of Stock otherwise deliverable to the optionee, the
Committee may issue the optionee an
6
<PAGE>
additional option, with terms identical to the option agreement under which the
option was exercised, entitling the optionee to purchase additional shares of
Stock equal to the number of shares so withheld but at an exercise price equal
to the fair market value of the Stock on the grant date of the new option;
provided, however, that no such additional options may be granted with respect
to options granted pursuant to Section 7, above. Any additional option shall be
subject to the provisions of Section 6(e), above.
12. Withholding Taxes.
-----------------
(a) No Stock shall be delivered under the Plan to any participant
until the participant has made arrangements acceptable to the Committee (or in
the case of exercise of options granted to Named Executives, the Subcommittee)
for the satisfaction of federal, state, and local income and social security tax
withholding obligations, including, without limitation, obligations incident to
the receipt of Stock under the Plan or to the failure to satisfy the conditions
for treatment as incentive stock options under applicable tax law. Upon
exercise of a stock option the Company shall withhold from the optionee an
amount sufficient to satisfy federal, state and local income and social security
tax withholding obligations.
(b) In the event that such tax withholding is satisfied by the Company
or the optionee's employer withholding shares of Stock otherwise deliverable to
the optionee, the Committee may issue the optionee an additional option, with
terms identical to the option agreement under which the option was exercised,
entitling the optionee to purchase additional shares of Stock equal to the
number of shares so withheld but at an exercise price equal to the fair market
value of the Stock on the grant date of the new option; provided, however, that
no such additional options may be granted with respect to options granted
pursuant to Section 7, above. Any additional option shall be subject to the
provisions of Section 6(e), above.
13. Change in Control.
-----------------
(a) For purposes of this Section 13, a "Change in Control" shall be
deemed to occur upon:
(i) The direct or indirect acquisition by any person or related
group of persons (other than an acquisition from or by the Company or by a
Company-sponsored employee benefit plan or by a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Company) of beneficial ownership (within the meaning of Rule 13d-3 of the
Securities Exchange Act of 1934, as amended) of securities possessing more than
fifty percent (50%) of the total combined voting power of the Company's
outstanding Stock;
(ii) A change in the composition of the Board over a period of
thirty-six (36) months or less such that a majority of the Board members cease,
by reason of one or more contested elections for Board membership or by one or
more actions by written consent of stockholders, to be comprised of individuals
who either (A) have been Board members continuously since the beginning of such
period or (B) have been elected or nominated for
7
<PAGE>
election as Board members during such period by at least a majority of the Board
members described in clause (A) who were still in office at the time such
election or nomination was approved by the Board;
(iii) Approval by the Company's stockholders of a merger or
consolidation in which the Company is not the surviving entity, except for a
transaction the principal purpose of which is to change the state in which the
Company is incorporated;
(iv) Approval by the Company's stockholders of (A) the sale,
transfer or other disposition of all or substantially all of the assets of the
Company (including the capital stock of the Company's subsidiary corporations)
or (B) the complete liquidation or dissolution of the Company; or
(v) Approval by the Company's stockholders of any reverse merger
in which the Company survives as an entity but in which securities possessing
more than fifty percent (50%) of the total combined voting power of the
Company's outstanding securities are transferred to a person or persons
different from those who held such securities immediately prior to such merger.
(vi) For the purpose of this Section 13, "Approval by the
Company's Stockholders" shall mean approval by a majority of those shares of
Stock voting at a stockholder's meeting at which a quorum is present, excluding
shares beneficially owned (within the meaning of Rule 13d-3 under the Exchange
Act) by the Non-Employee Directors.
(b) Except for options granted to Non-Employee Directors under Section
7, the Committee may provide in any stock option agreement (or in an amendment
thereto) that, in the event of any Change in Control, any outstanding options
covered by such an agreement shall be fully vested, nonforfeitable and become
exercisable, as of the date of the Change in Control.
(c) If the Committee determines to incorporate a Change in Control
provision in any option agreement hereunder, the agreement shall provide that,
(i) in the event of a Change in Control described in clauses (i), (ii) and (v)
of paragraph (a) above, the option shall remain exercisable for the remaining
term of the option and (ii) in the event of a Change in Control described in
clauses (iii) or (iv) of paragraph (a) above, the option shall terminate as of
the effective date of the merger, disposition of assets, liquidation or
dissolution described therein.
(d) As to any options granted under Section 7 to Non-Employee
Directors, (i) in the event of a Change in Control described in clauses (i),
(ii) or (v) of paragraph (a) above, any such outstanding options under the Plan
shall become fully vested and remain exercisable for the remaining term of such
options and (ii) in the event of a Change in Control described in clauses (iii)
or (iv) of paragraph (a) above, outstanding options under the Plan shall
terminate as of the effective date of the merger, disposition of assets,
liquidation or dissolution described therein.
(e) Notwithstanding the foregoing provisions of this Section 13, an
outstanding option may not be accelerated under this Section 13 if and to the
extent (i) such
8
<PAGE>
option is, in connection with the transaction giving rise to a Change of
Control, either to be assumed by the successor or parent thereof or to be
replaced with a comparable option to purchase shares of the capital stock of the
successor corporation or parent thereof, or (ii) such option is to be replaced
with a cash incentive program of the successor corporation that preserves the
option spread existing at the time of the corporate transaction giving rise to
the Change of Control and provides for subsequent payment in accordance with the
same vesting schedule applicable to such option.
14. Stockholder Approval. The Plan and any options granted pursuant to
--------------------
Section 7 and options granted to Covered Employees hereunder shall become
effective only upon approval by the holders of a majority of the Company's
shares voting (in person or by proxy) at a stockholders' meeting held within 12
months of the Board's adoption of the Plan. The Committee may grant stock
options under the Plan prior to the stockholders' meeting, but until stockholder
approval of the Plan is obtained, no such option shall be exercisable. In the
event that stockholder approval is not obtained within the period provided
above, all options described in this Section 14 previously granted above, shall
terminate.
15. Rule 16b-3 Compliance. Transactions under the Plan are intended to
---------------------
comply with all applicable conditions of Rule 16b-3 or its successors under the
Exchange Act. To the extent any provision of the Plan or action by the Board or
the Committee fails to so comply, it shall be deemed null and void, to the
extent permitted by law and deemed advisable by the Board or the Committee.
Moreover, in the event the Plan does not include a provision required by Rule
16b-3 to be stated therein in order to qualify the grants under Section 7 hereof
as grants under a non-discretionary formula under Rule 16b-3 such provision
(other than one relating to eligibility requirements, or the price and amount of
awards) shall be deemed automatically to be incorporated by reference into the
Plan with respect to grants of options to Non-Employee Directors.
16. Applicable Law. The law of the State of California will govern all
--------------
matters relating to this Plan except to the extent it is superseded by the laws
of the United States.
9
<PAGE>
EXHIBIT 10.3
PERICOM SEMICONDUCTOR CORPORATION
1997 EMPLOYEE STOCK PURCHASE PLAN
---------------------------------
The following constitute the provisions of the 1997 Employee Stock
Purchase Plan of Pericom Semiconductor Corporation.
1. Purpose. The purpose of the Plan is to provide employees of the
-------
Company and its Designated Parents or Subsidiaries with an opportunity to
purchase Common Stock of the Company through accumulated payroll deductions. It
is the intention of the Company to have the Plan qualify as an "Employee Stock
Purchase Plan" under Section 423 of the Code. The provisions of the Plan,
accordingly, shall be construed so as to extend and limit participation in a
manner consistent with the requirements of that section of the Code.
2. Definitions. As used herein, the following definitions shall
-----------
apply:
(a) "Accrual Period" means a period of approximately six months,
--------------
commencing on [MAY 1] and [NOVEMBER 1] of each year and terminating on the next
following [OCTOBER 31] or [APRIL 30], respectively; provided, however, that the
first Accrual Period shall commence on the Effective Date and shall end on
[APRIL 30, 1998].
(b) "Board" means the Board of Directors of the Company.
-----
(c) "Change in Control" means a change in ownership or control of the
-----------------
Company effected through the direct or indirect acquisition by any person or
related group of persons (other than an acquisition from or by the Company or by
a Company-sponsored employee benefit plan or by a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Company) of beneficial ownership (within the meaning of Rule 13d-3 of the
Securities Exchange Act of 1934, as amended) of securities possessing more than
fifty percent (50%) of the total combined voting power of the Company's
outstanding securities.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
----
(e) "Common Stock" means the common stock of the Company.
------------
(f) "Company" means Pericom Semiconductor Corporation, a California
-------
corporation.
(g) "Compensation" means an Employee's base salary from the Company or
------------
one or more Designated Parents or Subsidiaries, including such amounts of base
salary as are deferred by the Employee (i) under a qualified cash or deferred
arrangement described in Section 401(k) of the Code, or (ii) to a plan qualified
under Section 125 of the Code. Compensation does not include overtime, bonuses,
annual awards, other incentive payments, reimbursements or other expense
allowances, fringe benefits (cash or noncash), moving expenses, deferred
1
<PAGE>
compensation, contributions (other than contributions described in the first
sentence) made on the Employee's behalf by the Company or one or more Designated
Parents or Subsidiaries under any employee benefit or welfare plan now or
hereafter established, and any other payments not specifically referenced in the
first sentence.
(h) "Corporate Transaction" means any of the following stockholder-
---------------------
approved transactions to which the Company is a party:
(1) a merger or consolidation in which the Company is not the
surviving entity, except for a transaction the principal purpose of
which is to change the state in which the Company is incorporated;
(2) the sale, transfer or other disposition of all or
substantially all of the assets of the Company (including the capital
stock of the Company's subsidiary corporations) in connection with
complete liquidation or dissolution of the Company; or
(3) any reverse merger in which the Company is the surviving
entity but in which securities possessing more than fifty percent
(50%) of the total combined voting power of the Company's outstanding
securities are transferred to a person or persons different from those
who held such securities immediately prior to such merger; provided
that if such merger is preceded by a Change in Control within six (6)
months of the merger, then a Corporate Transaction will be deemed to
have occurred if securities possessing more than fifty percent (50%)
of the total combined voting power of the Company's outstanding
securities are transferred pursuant to the merger to a person or
persons different from those who held such securities immediately
prior to such Change in Control.
(i) "Designated Parents or Subsidiaries" means the Parents or
----------------------------------
Subsidiaries which have been designated by the Plan Administrator from time to
time as eligible to participate in the Plan.
(j) "Effective Date" means the effective date of the Registration
--------------
Statement relating to the Company's initial public offering of its Common Stock.
However, should any Designated Parent or Subsidiary become a participating
company in the Plan after such date, then such entity shall designate a separate
Effective Date with respect to its employee-participants.
(k) "Employee" means any individual, including an officer or director,
--------
who is an employee of the Company or a Designated Parent or Subsidiary for
purposes of Section 423 of the Code. For purposes of the Plan, the employment
relationship shall be treated as continuing intact while the individual is on
sick leave or other leave of absence approved by the individual's employer.
Where the period of leave exceeds ninety (90) days and the individual's right to
reemployment is not guaranteed either by statute or by contract, the employment
relationship will be deemed to have terminated on the ninety-first (91st) day of
such leave, for purposes of determining eligibility to participate in the Plan.
2
<PAGE>
(l) "Enrollment Date" means the first day of each Purchase Period.
---------------
(m) "Exchange Act" means the Securities Exchange Act of 1934, as
------------
amended.
(n) "Exercise Date" means the last day of each Accrual Period.
-------------
(o) "Fair Market Value" means, as of any date, the value of Common
-----------------
Stock determined as follows:
(1) Where there exists a public market for the Common Stock, the
Fair Market Value shall be (A) the closing price for a share of Common
Stock for the last market trading day prior to the time of the
determination (or, if no closing price was reported on that date, on
the last trading date on which a closing price was reported) on the
stock exchange determined by the Plan Administrator to be the primary
market for the Common Stock or the Nasdaq National Market, whichever
is applicable or (B) if the Common Stock is not traded on any such
exchange or national market system, the average of the closing bid and
asked prices of a share of Common Stock on the Nasdaq Small Cap Market
for the day prior to the time of the determination (or, if no such
prices were reported on that date, on the last date on which such
prices were reported), in each case, as reported in The Wall Street
Journal or such other source as the Plan Administrator deems reliable;
or
(2) In the absence of an established market of the type described
in (1), above, for the Common Stock, and subject to (3), below, the
Fair Market Value thereof shall be determined by the Plan
Administrator in good faith; or
(3) On the Effective Date, the Fair Market Value shall be the
price at which the Board, or if applicable, the Pricing Committee of
the Board, and the underwriters agree to offer the Common Stock to the
public in the initial public offering of the Common Stock, net of
discounts and underwriting commissions.
(p) "Parent" means a "parent corporation," whether now or hereafter
------
existing, as defined in Section 424(e) of the Code.
(q) "Participant" means an Employee of the Company or Designated
-----------
Parent or Subsidiary who is actively participating in the Plan.
(r) "Plan" means this Employee Stock Purchase Plan.
----
(s) "Plan Administrator" means either the Board or a committee of the
------------------
Board that is responsible for the administration of the Plan.
(t) "Purchase Period" means a purchase period established pursuant to
---------------
Section 4 hereof.
3
<PAGE>
(u) "Purchase Price" shall mean an amount equal to 85% of the Fair
--------------
Market Value of a share of Common Stock on the Enrollment Date or on the
Exercise Date, whichever is lower.
(v) "Reserves" means the number of shares of Common Stock covered by
--------
each option under the Plan which have not yet been exercised and the number of
shares of Common Stock which have been authorized for issuance under the Plan
but not yet placed under option.
(w) "Subsidiary" means a "subsidiary corporation," whether now or
----------
hereafter existing, as defined in Section 424(f) of the Code.
3. Eligibility.
-----------
(a) General. Any individual who is an Employee on a given Enrollment
-------
Date shall be eligible to participate in the Plan for the Purchase Period
commencing with such Enrollment Date.
(b) Limitations on Grant and Accrual. Any provisions of the Plan to
--------------------------------
the contrary notwithstanding, no Employee shall be granted an option under the
Plan (i) if, immediately after the grant, such Employee (taking into account
stock owned by any other person whose stock would be attributed to such Employee
pursuant to Section 424(d) of the Code) would own stock and/or hold outstanding
options to purchase stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of stock of the Company or of any
Parent or Subsidiary, or (ii) which permits his/her rights to purchase stock
under all employee stock purchase plans of the Company and its Parents or
Subsidiaries to accrue at a rate which exceeds Twenty-Five Thousand Dollars
($25,000) worth of stock (determined at the Fair Market Value of the shares at
the time such option is granted) for each calendar year in which such option is
outstanding at any time. The determination of the accrual of the right to
purchase stock shall be made in accordance with Section 423(b)(8) of the Code
and the regulations thereunder.
(c) Other Limits on Eligibility. Notwithstanding Subsection (a),
---------------------------
above, the following Employees shall not be eligible to participate in the Plan
for any relevant Purchase Period: (i) Employees whose customary employment is 20
hours or less per week; (ii) Employees whose customary employment is for not
more than 5 months in any calendar year; and (iii) Employees who are subject to
rules or laws of a foreign jurisdiction that prohibit or make impractical the
participation of such Employees in the Plan.
4. Purchase Periods.
----------------
(a) The Plan shall be implemented through overlapping or consecutive
Purchase Periods until such time as (i) the maximum number of shares of Common
Stock available for issuance under the Plan shall have been purchased or (ii)
the Plan shall have been sooner terminated in accordance with Section 19 hereof.
The maximum duration of a Purchase Period shall be twenty-seven (27) months.
Initially, the Plan shall be implemented through
4
<PAGE>
overlapping Purchase Periods of twenty-four (24) months' duration commencing
each [MAY 1] and [NOVEMBER 1] following the Effective Date (except that the
initial Purchase Period shall commence on the Effective Date and shall end on
[OCTOBER 31, 1999]). The Plan Administrator shall have the authority to change
the length of any Purchase Period and the length of Accrual Periods within any
such Purchase Period subsequent to the initial Purchase Period by announcement
at least thirty (30) days prior to the commencement of the Purchase Period and
to determine whether subsequent Purchase Periods shall be consecutive or
overlapping.
(b) A Participant shall be granted a separate option for each Purchase
Period in which he/she participates. The option shall be granted on the
Enrollment Date and shall be automatically exercised in successive installments
on the Exercise Dates ending within the Purchase Period.
(c) An Employee may participate in only one Purchase Period at a time.
Accordingly, except as provided in Section 4(d), an Employee who wishes to join
a new Purchase Period must withdraw from the current Purchase Period in which
he/she is participating and must also enroll in the new Purchase Period prior to
the Enrollment Date for that Purchase Period.
(d) If on the first day of any Accrual Period in a Purchase Period in
which a Participant is participating, the Fair Market Value of the Common Stock
is less than the Fair Market Value of the Common Stock on the Enrollment Date of
the Purchase Period (after taking into account any adjustment during the
Purchase Period pursuant to Section 18(a)), the Purchase Period shall be
terminated automatically and the Participant shall be enrolled automatically in
the new Purchase Period which has its first Accrual Period commencing on that
date, provided the Participant is eligible to participate in the Plan on that
date and has not elected to terminate participation in the Plan.
(e) Except as specifically provided herein, the acquisition of Common
Stock through participation in the Plan for any Purchase Period shall neither
limit nor require the acquisition of Common Stock by a Participant in any
subsequent Purchase Period.
5. Participation.
-------------
(a) An eligible Employee may become a Participant in the Plan by
completing a subscription agreement authorizing payroll deductions in the form
of Exhibit A to this Plan and filing it with the designated payroll office of
the Company at least ten (10) business days prior to the Enrollment Date for the
Purchase Period in which such participation will commence, unless a later time
for filing the subscription agreement is set by the Plan Administrator for all
eligible Employees with respect to a given Purchase Period.
(b) Payroll deductions for a Participant shall commence with the first
payroll period following the Enrollment Date and shall end on the last complete
payroll period during the Purchase Period, unless sooner terminated by the
Participant as provided in Section 10.
5
<PAGE>
6. Payroll Deductions.
------------------
(a) At the time a Participant files his/her subscription agreement,
he/she shall elect to have payroll deductions made during the Purchase Period in
an amount not exceeding ten percent (10%) of the Compensation which he/she
receives during the Purchase Period.
(b) All payroll deductions made for a Participant shall be credited to
his/her account under the Plan and will be withheld in whole percentages only.
A Participant may not make any additional payments into such account.
(c) A Participant may discontinue his/her participation in the Plan as
provided in Section 10, or may decrease the rate of his/her payroll deductions
during the Purchase Period by completing and filing with the Company a new
subscription agreement authorizing a decrease in the payroll deduction rate.
The decrease in rate shall be effective with the first full payroll period
commencing ten (10) business days after the Company's receipt of the new
subscription agreement unless the Company elects to process a given change in
participation more quickly. A Participant may increase the rate of his/her
payroll deductions for a future Purchase Period by filing with the Company a new
subscription agreement authorizing an increase in the payroll deduction rate
within ten (10) business days (unless the Company elects to process a given
change in participation more quickly) before the commencement of the upcoming
Purchase Period. A Participant's subscription agreement shall remain in effect
for successive Purchase Periods unless terminated as provided in Section 10.
The Plan Administrator shall be authorized to limit the number of payroll
deduction rate changes during any Purchase Period.
(d) Notwithstanding the foregoing, to the extent necessary to comply
with Section 423(b)(8) of the Code and Section 3(b) herein, a Participant's
payroll deductions may be decreased to 0% at such time during any Accrual Period
which is scheduled to end during the current calendar year (the "Current Accrual
Period") that the aggregate of all payroll deductions which were previously used
to purchase stock under the Plan in a prior Accrual Period which ended during
that calendar year plus all payroll deductions accumulated with respect to the
Current Accrual Period equal $21,250. Payroll deductions shall recommence at
the rate provided in such Participant's subscription agreement at the beginning
of the first Accrual Period which is scheduled to end in the following calendar
year, unless terminated by the Participant as provided in Section 10.
7. Grant of Option. On the Enrollment Date, each Participant in
---------------
such Purchase Period shall be granted an option to purchase on each Exercise
Date of such Purchase Period (at the applicable Purchase Price) up to a number
of shares of the Common Stock determined by dividing such Participant's payroll
deductions accumulated prior to such Exercise Date and retained in the
Participant's account as of the Exercise Date by the applicable Purchase Price;
provided (i) that such purchase shall be subject to the limitations set forth in
Sections 3(b) and 12 hereof, and (ii) the maximum number of shares of Common
Stock a Participant shall be permitted to purchase in any Accrual Period shall
be 5,000 shares, subject to adjustment as provided in Section 18 hereof.
Exercise of the option shall occur as provided in Section 8, unless
6
<PAGE>
the Participant has withdrawn pursuant to Section 10, and the option, to the
extent not exercised, shall expire on the last day of the Purchase Period.
8. Exercise of Option. Unless a Participant withdraws from the Plan
------------------
as provided in Section 10, below, his/her option for the purchase of shares will
be exercised automatically on each Exercise Date, and the maximum number of full
shares subject to the option shall be purchased for such Participant at the
applicable Purchase Price with the accumulated payroll deductions in his/her
account. No fractional shares will be purchased; any payroll deductions
accumulated in a Participant's account which are not sufficient to purchase a
full share shall be carried over to the next Accrual Period or Purchase Period,
whichever applies, or returned to the Participant, if the Participant withdraws
from the Plan. Any amount remaining in a Participant's account following the
purchase of shares on the Exercise Date which exceeds the cost of one full share
of Common Stock on the Exercise Date shall be returned to the Participant and
shall not be carried over to the next Purchase Period. During a Participant's
lifetime, a Participant's option to purchase shares hereunder is exercisable
only by him/her.
9. Delivery. Upon receipt of a request from a Participant after
--------
each Exercise Date on which a purchase of shares occurs, the Company shall
arrange the delivery to such Participant, as promptly as practicable, of a
certificate representing the shares purchased upon exercise of his/her option.
10. Withdrawal; Termination of Employment.
-------------------------------------
(a) A Participant may withdraw all but not less than all the payroll
deductions credited to his/her account and not yet used to exercise his/her
option under the Plan at any time by giving written notice to the Company in the
form of Exhibit B to this Plan. All of the Participant's payroll deductions
credited to his/her account will be paid to such Participant as promptly as
practicable after receipt of notice of withdrawal, such Participant's option for
the Purchase Period will be automatically terminated, and no further payroll
deductions for the purchase of shares will be made during the Purchase Period.
If a Participant withdraws from a Purchase Period, payroll deductions will not
resume at the beginning of the succeeding Purchase Period unless the Participant
delivers to the Company a new subscription agreement.
(b) Upon a Participant's ceasing to be an Employee for any reason or
upon termination of a Participant's employment relationship (as described in
Section 2(j)), the payroll deductions credited to such Participant's account
during the Purchase Period but not yet used to exercise the option will be
returned to such Participant or, in the case of his/her death, to the person or
persons entitled thereto under Section 14, and such Participant's option will be
automatically terminated.
11. Interest. No interest shall accrue on the payroll deductions
--------
credited to a Participant's account under the Plan.
7
<PAGE>
12. Stock.
-----
(a) The maximum number of shares of Common Stock which shall be made
available for sale under the Plan shall be 300,000 shares, subject to adjustment
upon changes in capitalization of the Company as provided in Section 18. If on
a given Exercise Date the number of shares with respect to which options are to
be exercised exceeds the number of shares then available under the Plan, the
Plan Administrator shall make a pro rata allocation of the shares remaining
available for purchase in as uniform a manner as shall be practicable and as it
shall determine to be equitable.
(b) A Participant will have no interest or voting right in shares
covered by his/her option until such shares are actually purchased on the
Participant's behalf in accordance with the applicable provisions of the Plan.
No adjustment shall be made for dividends, distributions or other rights for
which the record date is prior to the date of such purchase.
(c) Shares to be delivered to a Participant under the Plan will be
registered in the name of the Participant or in the name of the Participant and
his/her spouse.
13. Administration. The Plan shall be administered by the Board or a
--------------
committee of members of the Board appointed by the Board. The Board or its
committee shall have full and exclusive discretionary authority to construe,
interpret and apply the terms of the Plan, to determine eligibility and to
adjudicate all disputed claims filed under the Plan. Every finding, decision
and determination made by the Board or its committee shall, to the full extent
permitted by law, be final and binding upon all persons.
14. Designation of Beneficiary.
--------------------------
(a) Each Participant will file a written designation of a beneficiary
who is to receive any shares and cash, if any, from the Participant's account
under the Plan in the event of such Participant's death. If a Participant is
married and the designated beneficiary is not the spouse, spousal consent shall
be required for such designation to be effective.
(b) Such designation of beneficiary may be changed by the Participant
(and his/her spouse, if any) at any time by written notice. In the event of the
death of a Participant and in the absence of a beneficiary validly designated
under the Plan who is living at the time of such Participant's death, the
Company shall deliver such shares and/or cash to the executor or administrator
of the estate of the Participant, or if no such executor or administrator has
been appointed (to the knowledge of the Plan Administrator), the Plan
Administrator, in its discretion, may deliver such shares and/or cash to the
spouse or to any one or more dependents or relatives of the Participant, or if
no spouse, dependent or relative is known to the Plan Administrator, then to
such other person as the Plan Administrator may designate.
15. Transferability. Neither payroll deductions credited to a
---------------
Participant's account nor any rights with regard to the exercise of an option or
to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 14 hereof) by the Participant. Any
8
<PAGE>
such attempt at assignment, transfer, pledge or other disposition shall be
without effect, except that the Plan Administrator may treat such act as an
election to withdraw funds from a Purchase Period in accordance with Section 10.
16. Use of Funds. All payroll deductions received or held by the
------------
Company under the Plan may be used by the Company for any corporate purpose, and
the Company shall not be obligated to segregate such payroll deductions.
17. Reports. Individual accounts will be maintained for each
-------
Participant in the Plan. Statements of account will be given to Participants at
least annually, which statements will set forth the amounts of payroll
deductions, the Purchase Price, the number of shares purchased and the remaining
cash balance, if any.
18. Adjustments Upon Changes in Capitalization; Corporate
-----------------------------------------------------
Transactions.
- ------------
(a) Adjustments Upon Changes in Capitalization. Subject to any
------------------------------------------
required action by the stockholders of the Company, the Reserves, as well as the
Purchase Price, shall be proportionately adjusted for any increase or decrease
in the number of issued shares of Common Stock resulting from a stock split,
reverse stock split, stock dividend, combination or reclassification of the
Common Stock, or any other similar event resulting in an increase or decrease in
the number of issued shares of Common Stock. Such adjustment shall be made by
the Plan Administrator, whose determination in that respect shall be final,
binding and conclusive. Except as expressly provided herein, no issue by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of Common Stock subject
to an option. The Plan Administrator may, if it so determines in the exercise
of its sole discretion, make provision for adjusting the Reserves, as well as
the price per share of Common Stock covered by each outstanding option, in the
event the Company effects one or more reorganizations, recapitalizations, rights
offerings or other increases or reductions of shares of its outstanding Common
Stock.
(b) Corporate Transactions. In the event of a proposed Corporate
----------------------
Transaction, each option under the Plan shall be assumed or an equivalent option
shall be substituted by such successor corporation or a parent or subsidiary of
such successor corporation, unless the Plan Administrator determines, in the
exercise of its sole discretion and in lieu of such assumption or substitution,
to shorten the Purchase Period then in progress by setting a new Exercise Date
(the "New Exercise Date"). If the Plan Administrator shortens the Purchase
Period then in progress in lieu of assumption or substitution in the event of a
Corporate Transaction, the Plan Administrator shall notify each Participant in
writing, at least ten (10) days prior to the New Exercise Date, that the
Exercise Date for his/her option has been changed to the New Exercise Date and
that his/her option will be exercised automatically on the New Exercise Date,
unless prior to such date he/she has withdrawn from the Purchase Period as
provided in Section 10. For purposes of this Subsection, an option granted
under the Plan shall be deemed to be assumed if, following the Corporate
Transaction, the option confers the right to purchase, for each share of Common
Stock subject to the option immediately prior to the Corporate Transaction, the
9
<PAGE>
consideration (whether stock, cash or other securities or property) received in
the Corporate Transaction by holders of Common Stock for each share of Common
Stock held on the effective date of the Corporate Transaction (and if such
holders were offered a choice of consideration, the type of consideration chosen
by the holders of a majority of the outstanding shares of Common Stock);
provided, however, that if such consideration received in the Corporate
Transaction was not solely common stock of the successor corporation or its
Parent, the Plan Administrator may, with the consent of the successor
corporation and the Participant, provide for the consideration to be received
upon exercise of the option to be solely common stock of the successor
corporation or its Parent equal in fair market value to the per share
consideration received by holders of Common Stock in the Corporate Transaction.
19. Amendment or Termination.
------------------------
(a) The Plan Administrator may at any time and for any reason
terminate or amend the Plan. Except as provided in Section 18, no such
termination can affect options previously granted, provided that a Purchase
Period may be terminated by the Plan Administrator on any Exercise Date if the
Plan Administrator determines that the termination of the Plan is in the best
interests of the Company and its stockholders. Except as provided in Section
18, no amendment may make any change in any option theretofore granted which
adversely affects the rights of any Participant. To the extent necessary to
comply with Section 423 of the Code (or any successor rule or provision or any
other applicable law or regulation), the Company shall obtain stockholder
approval in such a manner and to such a degree as required.
(b) Without stockholder consent and without regard to whether any
Participant rights may be considered to have been "adversely affected," the Plan
Administrator shall be entitled to change the Purchase Periods, limit the
frequency and/or number of changes in the amount withheld during Purchase
Periods, establish the exchange ratio applicable to amounts withheld in a
currency other than U.S. dollars, establish additional terms, conditions, rules
or procedures to accommodate the rules or laws of applicable foreign
jurisdictions, permit payroll withholding in excess of the amount designated by
a Participant in order to adjust for delays or mistakes in the Company's
processing of properly completed withholding elections, establish reasonable
waiting and adjustment periods and/or accounting and crediting procedures to
ensure that amounts applied toward the purchase of Common Stock for each
Participant properly correspond with amounts withheld from the Participant's
Compensation, and establish such other limitations or procedures as the Plan
Administrator determines in its sole discretion advisable and which are
consistent with the Plan.
20. Notices. All notices or other communications by a Participant to
-------
the Company under or in connection with the Plan shall be deemed to have been
duly given when received in the form specified by the Plan Administrator at the
location, or by the person, designated by the Plan Administrator for the receipt
thereof.
21. Conditions Upon Issuance of Shares. Shares shall not be issued
----------------------------------
with respect to an option unless the exercise of such option and the issuance
and delivery of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign,
10
<PAGE>
including, without limitation, the Securities Act of 1933, as amended, the
Exchange Act, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the shares may then be listed, and
shall be further subject to the approval of counsel for the Company with respect
to such compliance. As a condition to the exercise of an option, the Company may
require the Participant to represent and warrant at the time of any such
exercise that the shares are being purchased only for investment and without any
present intention to sell or distribute such shares if, in the opinion of
counsel for the Company, such a representation is required by any of the
aforementioned applicable provisions of law. In addition, no options shall be
exercised or shares issued hereunder before the Plan shall have been approved by
stockholders of the Company as provided in Section 23.
22. Term of Plan. The Plan shall become effective upon the earlier
------------
to occur of its adoption by the Board or its approval by the stockholders of the
Company. It shall continue in effect for a term of ten (10) years unless sooner
terminated under Section 19.
23. Stockholder Approval. Continuance of the Plan shall be subject
--------------------
to approval by the stockholders of the Company within twelve (12) months before
or after the date the Plan is adopted. If such stockholder approval is obtained
at a duly held stockholders' meeting, the Plan must be approved by a majority of
the votes cast at such stockholders' meeting at which a quorum representing a
majority of all outstanding voting stock of the Company is, either in person or
by proxy, present and voting on the Plan. If such stockholder approval is
obtained by written consent, it must be obtained by the written consent of the
holders of a majority of all outstanding voting stock of the Company. However,
approval at a meeting or by written consent may be obtained by a lesser degree
of stockholder approval if the Plan Administrator determines, in its discretion
after consultation with the Company's legal counsel, that such a lesser degree
of stockholder approval will comply with all applicable laws and will not
adversely affect the qualification of the Plan under Section 423 of the Code.
24. No Employment Rights. The Plan does not, directly or indirectly,
--------------------
create any right for the benefit of any employee or class of employees to
purchase any shares under the Plan, or create in any employee or class of
employees any right with respect to continuation of employment by the Company or
a Designated Parent or Subsidiary, and it shall not be deemed to interfere in
any way with such employer's right to terminate, or otherwise modify, an
employee's employment at any time.
25. Effect of Plan. The provisions of the Plan shall, in accordance
--------------
with its terms, be binding upon, and inure to the benefit of, all successors of
each Participant, including, without limitation, such Participant's estate and
the executors, administrators or trustees thereof, heirs and legatees, and any
receiver, trustee in bankruptcy or representative of creditors of such
Participant.
26. Applicable Law. The laws of the State of California (excluding
--------------
that body of law pertaining to its conflicts of law) will govern all matters
relating to this Plan except to the extent it is superseded by the laws of the
United States.
11
<PAGE>
EXHIBIT A
---------
PERICOM SEMICONDUCTOR CORPORATION
1997 EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
___ Original Application Enrollment Date:_____________
___ Change in Payroll Deduction Rate
___ Change of Beneficiary(ies)
1. I,________________________, hereby elect to participate in the
Pericom Semiconductor Corporation 1997 Employee Stock Purchase Plan (the
"Employee Stock Purchase Plan") and subscribe to purchase shares of the
Company's Common Stock in accordance with this Subscription Agreement and the
Employee Stock Purchase Plan.
2. I hereby authorize payroll deductions from each paycheck in the
amount of ______% of my Compensation on each payday (not to exceed 10%) during
the Purchase Period in accordance with the Employee Stock Purchase Plan.
(Please note that no fractional percentages are permitted.)
3. I understand that the payroll deductions shall be accumulated for
the purchase of shares of Common Stock at the applicable Purchase Price
determined in accordance with the Employee Stock Purchase Plan. I understand
that if I do not withdraw from a Purchase Period, any accumulated payroll
deductions will be used to automatically exercise my option.
4. I have received a copy of the complete "Pericom Semiconductor
Corporation 1997 Employee Stock Purchase Plan." I understand that my
participation in the Employee Stock Purchase Plan is in all respects subject to
the terms of the Plan. I understand that the grant of the option by the Company
under this Subscription Agreement is subject to obtaining stockholder approval
of the Employee Stock Purchase Plan.
5. Shares purchased for me under the Employee Stock Purchase Plan
should be issued in the name(s) of:
_________________________________
_________________________________
6. I understand that if I dispose of any shares received by me
pursuant to the Employee Stock Purchase Plan within two (2) years after the
Enrollment Date (the first day of the Purchase Period during which I purchased
such shares) or within one (1) year after the Exercise Date (the date I
purchased such shares), I will be treated for federal income tax purposes as
having received ordinary income at the time of such disposition in an amount
equal to the excess of the fair market value of the shares on the date such
shares were purchased for me over
12
<PAGE>
the price which I paid for the shares. I hereby agree to notify the Company in
---------------------------------------
writing within 30 days after the date of any such disposition and I will make
- -----------------------------------------------------------------------------
adequate provision for foreign, federal, state or other tax withholding
- -----------------------------------------------------------------------
obligations, if any which arise upon the disposition of the Common Stock. The
- ------------------------------------------------------------------------
Company may, but will not be obligated to, withhold from my compensation the
amount necessary to meet any applicable withholding obligation including any
withholding necessary to make available to the Company any tax deductions or
benefits attributable to sale or early disposition of Common Stock by me. If I
dispose of such shares at any time after the expiration of the 2-year and 1-year
holding periods described above, I understand that I will be treated for federal
income tax purposes as having received income only at the time of such
disposition, and that such income will be taxed as ordinary income only to the
extent of an amount equal to the lesser of (1) the excess of the fair market
value of the shares at the time of such disposition over the purchase price
which I paid for the shares, or (2) 15% of the fair market value of the shares
on the first day of the Purchase Period. The remainder of the gain, if any,
recognized on such disposition will be taxed as long-term capital gain. I also
understand that the foregoing income tax consequences are based on current
federal income tax law and that the Company is not responsible for advising me
of any changes in the applicable tax rules.
7. I hereby agree to be bound by the terms of the Employee Stock
Purchase Plan. The effectiveness of this Subscription Agreement is dependent
upon my eligibility to participate in the Employee Stock Purchase Plan.
8. In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due me under the Employee
Stock Purchase Plan.
NAME: (Please print) _________________________________________________
(First) (Middle) (Last)
Relationship: _________________________________________________
Address: _________________________________________________
_________________________________________________
_________________________________________________
Employee's Social
Security Number: _________________________________________________
Employee's Home Address: _________________________________________________
_________________________________________________
_________________________________________________
13
<PAGE>
I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT THROUGHOUT
SUCCESSIVE PURCHASE PERIODS UNLESS TERMINATED BY ME
Employee's Signature: ____________________________________________________
Dated: ____________________________________________________
Signature of spouse
if beneficiary is other
than spouse: ____________________________________________________
Dated: ____________________________________________________
14
<PAGE>
EXHIBIT B
PERICOM SEMICONDUCTOR CORPORATION
1997 EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
NOTICE OF WITHDRAWAL
The undersigned Participant in the Purchase Period of the Pericom
Semiconductor Corporation 1997 Employee Stock Purchase Plan which began on
_________________, 19___, hereby notifies the Company that he or she hereby
withdraws from the Purchase Period. He or she hereby directs the Company to pay
to the undersigned as promptly as practicable all the payroll deductions
credited to his/her account with respect to such Purchase Period. The
undersigned understands and agrees that his/her option for such Purchase Period
will be automatically terminated. The undersigned understands further that no
further payroll deductions will be made for the purchase of shares in the
current Purchase Period and the undersigned shall be eligible to participate in
succeeding Purchase Periods only by delivering to the Company a new Subscription
Agreement.
Name and Address
of Participant: ________________________________________________
________________________________________________
________________________________________________
Signature: ________________________________________________
Date: ________________________________________________
15
<PAGE>
EXHIBIT 10.4
LEASE
DATED November 29, 1993
-----------------
BY AND BETWEEN
ORCHARD INVESTMENT COMPANY NUMBER 510
-------------------------------------
as Landlord
and
PERICOM SEMICONDUCTOR CORPORATION
---------------------------------
as Tenant
AFFECTING PREMISES COMMONLY KNOWN AS
2380 Bering Drive
------------------------------------
San Jose, California 95131
------------------------------------
[10/05/92 MULTI TENANT NET INDUSTRIAL LEASE]
<PAGE>
SUMMARY OF BASIC LEASE TERMS
----------------------------
<TABLE>
<CAPTION>
SECTION TERMS
(LEASE REFERENCE)
<S> <C>
A. Lease Reference Date: November 29, 1993
-------------------- ------------------------------------------------
(Introduction)
B. Landlord: ORCHARD INVESTMENT COMPANY NUMBER 510
-------- ------------------------------------------------
(Introduction) a California general partnership
------------------------------------------------
C. Tenant: PERICOM SEMICONDUCTOR CORPORATION
------ ------------------------------------------------
(Introduction) a California corporation
------------------------------------------------
D. Premises: That area consisting of 19,786 square feet
-------- ------
((S)1.21) of gross leasable area the address of which is
2380 Bering Drive
------------------------------------------------
San Jose, California , within the
---------------------------------
Building as Shown on Exhibit A.
---------
E. Project: The land and improvements shown on Exhibit A
------- ---------
((S)1.22) consisting of six (6) buildings the aggregate
-------
gross leasable area of which is 166, 928 square
--------
feet.
F. Building: The building in which the Premises are located
--------
((S)1.7) known as 2380-2390 Bering Drive
---------------------------------------
San Jose, California
------------------------------------------------
containing 27,488 square feet of gross
------
leasable area.
G. Tenant's Share: 71.98 %
-------------- -----
((S)1.29)
H. Tenant's Allocated Parking Stalls: 76 stalls.
---------------------------------- ---
((S)4.5)
I. Scheduled Commencement Date: Approximately seven (7)
---------------------------- -----------------------------------
((S)1.26) weeks after the Effective Date of this Lease
---------------------------------------------------------------------------
J. Lease Term: 60 calendar months (plus the partial month
------------------ ---
((S)1.18) following the Commencement Date if such date is
not the first day of a month).
K. Base Monthly Rent: Months 1 - 12: $10,090.86
------------------ --------------------------------------------------
((S)3.1) Months 13 - 36: $14,839.50
--------------------------------------------------
Months 37 - 60: $16,224.52
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
--------------------------------------------------
L. Prepaid Rent: $ 10,090.86
------------------ -------------------------------------------------
((S)3.3)
M. Security Deposit: $ 16,224.52
------------------ --------------------------------------------------
((S)3.5)
N. Permitted Use: Office, marketing, design, test,
------------------ --------------------------------------------------------
((S)4.1) assembly, storage and distribution of integrated
---------------------------------------------------------------------------
circuits.
---------------------------------------------------------------------------
---------------------------------------------------------------------------
O. Permitted Tenant's Alterations Limit: $5,000,00
------------------------------------- ------------------------------------
((S)5.2)
P. Tenant's Liability Insurance Minimum: $2,000,000.00
------------------------------------- ------------------------------------
((S)9.1)
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Q. Landlord's Address: 2290 North First Street
------------------- --------------------------------------------------
((S)1.3) Suite 300
---------------------------------------------------------------------------
San Jose, California 95111
---------------------------------------------------------------------------
R. Tenant's Address: 2343 Bering Drive
---------------- --------------------------------------------------
((S)1.3): San Jose, California 95111
--------------------------------------------------
S. Retained Real Estate Brokers: None
----------------------------- --------------------------------------------
((S)15.13) ___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
T. Lease: This Lease includes the summary of the Basic Lease Terms,
-----
((S)1.17) the Lease, and the following exhibits and addenda: First
Addendum to Lease, Exhibit A (site plan of the Project
---------
containing description of the Premises), Exhibit B
---------
(Improvement Agreement), Exhibit C (Approves Specifications),
---------
Exhibit D (acceptance agreement), Exhibit E (description
---------
of Private Restrictions), Exhibit F (sign criteria),
---------
Exhibit G (form of subordination agreement), Exhibit H
--------- ---------
(Hazardous Materials Questionnaire), and: ____________
</TABLE>
The foregoing Summary is hereby incorporated into and made a part of this
Lease. Each reference in this Lease to any term of the Summary shall mean the
respective information set forth above and shall be construed to incorporate
all of the terms provided under the particular paragraph pertaining to such
information. In the event of any conflict between the Summary and the Lease, the
Summary shall control.
LANDLORD: TENANT:
ORCHARD INVESTMENT COMPANY
NUMBER 510 PERICOM SEMICONDUCTOR CORPORATION
--- ---------------------------------
a California general partnership
a California corporation
---------------------------------
By: NELO, a California general partnership
By: /s/ David J. Brown By: /s/ Alex Hui
----------------------------------- ----------------------------
David J. Brown, a General Partner
ALEX HUI
---------------------------------
By:______________________________ (typed or printed name)
Mark T. Ziemendorf
His Attorney in Fact Title: President
---------------------------
By: _____________________________
_________________________________
(typed or printed name)
Title: __________________________
Dated: 12-16-93 Dated: 12/1/93
--------------------------------- ---------------------------
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE 1 - DEFINITIONS Page
- ------------------------- ----
<S> <C>
1.1 General 1
1.2 Additional Rent 1
1.3 Address for Notices 1
1.4 Agents 1
1.5 Agreed Interest Rate 1
1.6 Base Monthly Rate 1
1.7 Building 1
1.8 Commencement Date 1
1.9 Common Area 1
1.10 Common Operating Expense 1
1.11 Consumer Price Index 1
1.12 Effective Date 1
1.13 Event of Tenant's Default 1
1.14 Hazardous Materials 1
1.15 Insured and Uninsured Peril 1
1.16 Law 1
1.17 Lease 1
1.18 Lease Term 1
1.19 Lender 1
1.20 Permitted Use 2
1.21 Premises 2
1.22 Project 2
1.23 Private Restrictions 2
1.24 Real Property Taxes 2
1.25 Scheduled Commencement Date 2
1.26 Security Instrument 2
1.27 Summary 2
1.28 Tenant's Alterations 2
1.29 Tenant's Share 2
1.30 Trade Fixtures 2
ARTICLE 2 - DEMISE, CONSTRUCTION, AND ACCEPTANCE 2
- ---------------------------------------------------
2.1 Demise of Premises 2
2.2 Commencement Date 2
2.3 Construction of Improvements 2
2.4 Delivery and Acceptance of Possession 2
2.5 Early Occupancy 3
ARTICLE 3 - RENT 3
- ------------------------
3.1 Base Monthly Rent 3
3.2 Additional Rent 3
3.3 Payment of Rent 3
3.4 Late Charge and Interest on Rent in Default 3
3.5 Security Deposit 3
ARTICLE 4 - USE OF PREMISES 3
- -----------------------------
4.1 Limitation on Use 3
4.2 Compliance with Regulations 4
4.3 Outside Areas 4
4.4 Signs 4
4.5 Parking 4
4.6 Rules and Regulations 4
</TABLE>
i
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
PAGE:
----
<S> <C>
ARTICLE 5 - TRADE FIXTURES AND ALTERATIONS 4
- --------------------------------------------
5.1 Trade Fixtures 4
5.2 Tenant's Alterations 4
5.3 Alterations Required by Law 5
5.4 Amortization of Certain Capital Improvements 5
5.5 Mechanic's Liens 5
5.6 Taxes on Tenant's Property 6
ARTICLE 6 - REPAIR AND MAINTENANCE 6
- ----------------------------------
6.1 Tenant's Obligation to Maintain 6
6.2 Landlord's Obligation to Maintain 6
6.3 Control of Common Area 6
ARTICLE 7 - WASTE DISPOSAL AND UTILITIES 7
- ----------------------------------------
7.1 Waste Disposal 7
7.2 Hazardous Materials 7
7.3 Utilities 8
7.4 Compliance with Governmental Regulations 8
ARTICLE 8 - COMMON OPERATING EXPENSES 8
- -------------------------------------
8.1 Tenant's Obligation to Reimburse 8
8.2 Common Operating Expenses Defined 8
8.3 Real Property Taxes Defined 9
ARTICLE 9 - INSURANCE 9
- ---------------------
9.1 Tenant's Insurance 9
9.2 Landlord's Insurance 10
9.3 Tenant's Obligation to Reimburse 10
9.4 Release and Waiver of Subrogation 10
ARTICLE 10 - LIMITATION ON LANDLORD'S LIABILITY AND INDEMNITY 10
- -------------------------------------------------------------
10.1 Limitation on Landlord's Liability 10
10.2 Limitation on Tenant's Recourse 11
10.3 Indemnification of Landlord 11
ARTICLE 11 - DAMAGE TO PREMISES 11
- -------------------------------
11.1 Landlord's Duty to Restore 11
11.2 Landlord's Right to Terminate 11
11.3 Tenant's Right to Terminate 12
11.4 Abatement of Rent 12
ARTICLE 12 - CONDEMNATION 12
- -------------------------
12.1 Landlord's Termination Right 12
12.2 Tenant's Termination Right 12
12.3 Restoration and Abatement of Rent 12
12.4 Temporary Taking 12
12.5 Division of Condemnation Award 12
</TABLE>
ii
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
PAGE:
-----
<S> <C>
ARTICLE 13 - DEFAULT AND REMEDIES 13
- ---------------------------------
13.1 Events of Tenant's Default 13
13.2 Landlord's Remedies 13
13.3 Waiver 14
13.4 Limitation on Exercise of Rights 14
13.5 Waiver by Tenant of Certain Remedies 14
ARTICLE 14 - ASSIGNMENT AND SUBLETTING 14
- --------------------------------------
14.1 Transfer by Tenant 14
14.2 Transfer by Landlord 16
ARTICLE 15 - GENERAL PROVISIONS 16
- -------------------------------
15.1 Landlord's Right to Enter 16
15.2 Surrender of the Premises 17
15.3 Holding Over 17
15.4 Subordination 17
15.5 Mortgagee Protection and Attornment 17
15.6 Estoppel Certificates and Financial Statements 17
15.7 Reasonable Consent 18
15.8 Notices 18
15.9 Attorney's Fees 18
15.10 Corporate Authority 18
15.11 Miscellaneous 18
15.12 Termination by Exercise of Right 18
15.13 Brokerage Commissions 19
15.14 Force Majeure 19
15.15 Entire Agreement 19
</TABLE>
EXHIBITS
- --------
Exhibit A - Site plan of the Project containing a
description of the Premises
Exhibit B - Improvement Agreement
Exhibit C - Approved Specifications
Exhibit D - Acceptance Agreement
Exhibit E - Description of Private Restrictions
Exhibit F - Sign Criteria
Exhibit G - Form of Subordination Agreement
Exhibit H - Hazardous Materials Questionnaire
iii
<PAGE>
LEASE
- --------------------------------------------------------------------------------
This Lease is dated as of the lease reference date specified in Section A of
---------
the Summary and is made by and between the party identified as Landlord in
Section B of the Summary and the party identified as Tenant in Section C of the
- --------- ---------
Summary.
ARTICLE 1
---------
DEFINITIONS
-----------
1.1 General: Any initially capitalized term that is given a special meaning
-------
by this Article 1, the Summary, or by any other provision of this Lease
(including the exhibits attached hereto) shall have such meaning when used in
this Lease or any addendum or amendment hereto unless otherwise clearly
indicated by the context.
1.2 Additional Rent: The term "Additional Rent" is defined in (P)3.2.
---------------
1.3 Address for Notices: The term "Address for Notices" shall mean the
-------------------
addresses set forth in Sections O and R of the Summary; provided, however, that
----------------
after the Commencement Date, Tenant's Address for Notices shall be the address
of the Premises.
1.4 Agents: The term "Agents" shall mean the following: (i) with respect to
------
Landlord or Tenant, the agents, employees, contractors, and invitees of such
party; and (ii) in addition with respect to Tenant, Tenant's subtenants and
their respective agents, employees, contractors, and invitees.
1.5 Agreed Interest Rate: The term "Agreed Interest Rate" shall mean that
--------------------
interest rate determined as of the time it is to he applied that is equal to the
lesser of (i) 5% in excess of the discount rate established by the Federal
Reserve Bank of San Francisco as it may be adjusted from time to time, or (ii)
the maximum interest rate permitted by Law.
1.6 Base Monthly Rent: The term "Base Monthly Rent" shall mean the fixed
-----------------
monthly rent payable by Tenant pursuant to (P)3.1 which is specified in Section
-------
K of the Summary.
- -
1.7 Building: The term "Building" shall mean the building in which the
--------
Premises are located which Building is identified in Section F of the Summary,
---------
the gross leasable area of which is referred to herein as the "Building Gross
Leasable Area."
1.8 Commencement Date: The term "Commencement Date" is the date the Lease
-----------------
Term commences, which term is defined in (P)2.2.
1.9 Common Area: The term "Common Area" shall mean all areas and facilities
-----------
within the Project that are not designated by Landlord for the exclusive use of
Tenant or any other lessee or other occupant of the Project, including the
parking areas, access and perimeter roads, pedestrian sidewalks, landscaped
areas, trash enclosures, recreation areas and the like.
1.10 Common Operating Expenses: The term "Common Operating Expenses" is
-------------------------
defined in (P)8.2.
1.11 Consumer Price Index: The term "Consumer Price Index" shall refer to
--------------------
the Consumer Price Index. All Urban Consumers, subgroup "All Items", for the San
Francisco-Oakland-San Jose metropolitan area (base year 1982-84 equals 100),
which is presently being published monthly by the United States Department of
Labor, Bureau of Labor Statistics. However, if this Consumer Price Index is
changed so that the base year is altered from that used as of the commencement
of the initial term of this Lease, the Consumer Price Index shall be converted
in accordance with the conversion factor published by the United States
Department of Labor, Bureau of Labor Statistics to obtain the same results that
would have been obtained had the base year not been changed. If no conversion
factor is available, or if the Consumer Price Index is otherwise changed,
revised or discontinued for any reason, there shall be substituted in lieu
thereof and the term "Consumer Price Index" shall thereafter refer to the most
nearly comparable official price index of the United States government in order
to obtain substantially the same result as would have been obtained had the
original Consumer Price Index not been discontinued, revised or changed, which
alternative index shall be selected by Landlord and shall be subject to Tenant's
written approval.
1.12 Effective Date: The term "Effective Date" shall mean the date the last
--------------
signatory to this Lease whose execution is required to make it binding on the
parties hereto shall have executed this Lease.
1.13 Event of Tenant's Default: The term "Event of Tenant's Default" is
-------------------------
defined in (P)13.1.
1.14 Hazardous Materials: The terms "Hazardous Materials" and "Hazardous
-------------------
Materials Laws" are defined in (P)7.2E.
1.15 Insured and Uninsured Peril: The terms "Insured Peril" and "Uninsured
---------------------------
Peril" are defined in (P)11.2E.
1.16 Law: The term "Law" shall mean any judicial decision, statute,
---
constitution, ordinance, resolution, regulation, rule, administrative order, or
other requirement of any municipal, county, state, federal or other government
agency or authority having jurisdiction over the parties to this Lease or the
Premises, or both, in effect either at the Effective Date or any time during the
Lease Term.
1.17 Lease: The term "Lease" shall mean the Summary and all elements of this
-----
Lease identified in Section T of the Summary, all of which are attached hereto
---------
and incorporated herein by this reference.
1.18 Lease Term: The term "Lease Term" shall mean the term of this Lease
----------
which shall commence on the Commencement Date and continue for the period
specified in Section J of the Summary.
---------
1.19 Lender: The term "Lender" shall mean any beneficiary, mortgagee, secured
------
party, lessor, or other holder of any Security Instrument.
1.20 Permitted Use: The term "Permitted Use" shall mean the use specified in
-------------
Section N of the Summary.
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1.21 Premises: The term "Premises" shall mean that building area described in
--------
Section D of the Summary that is within the Building.
- ---------
1.22 Project: The term "Project" shall mean that real property and the
-------
improvements thereon which are specified in Section E of the Summary, the
---------
aggregate gross leasable area of which is referred to herein as the "Project
Gross Leasable Area."
1.23 Private Restrictions: The term "Private Restrictions" shall mean all
--------------------
recorded covenants, conditions and restrictions, private agreements, reciprocal
easement agreements, and any other recorded instruments affecting the use of the
Premises which (i) exist as of the Effective Date, or (ii) are recorded after
the Effective Date and are approved by Tenant.
1.24 Real Property Taxes: The term "Real Property Taxes" is defined in
-------------------
(P)8.3.
1.25 Scheduled Commencement Date: The term "Scheduled Commencement Date"
---------------------------
shall mean the date specified in Section I of the Summary.
---------
1.26 Security Instrument: The term "Security Instrument" shall mean any
-------------------
underlying lease, mortgage or deed of trust which now or hereafter affects the
Project, and any renewal, modification, consolidation, replacement or extension
thereof.
1.27 Summary: The term "Summary" shall mean the Summary of Basic Lease Terms
-------
executed by Landlord and Tenant that is part of this Lease.
1.28 Tenant's Alterations: The term "Tenant's Alterations" shall mean all
--------------------
improvements, additions, alterations, and fixtures installed in the Premises by
tenant at its expense which are not Trade Fixtures.
1.29 Tenant's Share: The term "Tenant's Share" shall mean the percentage
---------------
obtained by dividing Tenant's Gross Leasable Area by the Building Gross Leasable
Area, which as of the Effective Date is the percentage identified in Section G
---------
of the Summary.
1.30 Trade Fixtures: The term "Trade Futures" shall mean (i) Tenant's
--------------
inventory, furniture, signs, and business equipment, and (ii) anything affixed
to the Premises by Tenant at its expense for purposes of trade, manufacture,
ornament or domestic use (except replacement of similar work or material
originally installed by Landlord) which can be removed without material injury
to the Premises unless such thing has, by the manner in which it is affixed,
become an integral part of the Premises.
ARTICLE 2
---------
DEMISE, CONSTRUCTION, AND ACCEPTANCE.
------------------------------------
2.1 Demise of Premises: Landlord hereby leases to Tenant, and Tenant leases
------------------
from Landlord, for the Lease Term upon the terms and conditions of this Lease,
the Premises for Tenant's own use in the conduct of Tenant's business together
with (i) the non-exclusive right to use the number of Tenant's Allocated Parking
Stalls within the Common Area (subject to the limitations set forth in (P)4.5),
and (ii) the non-exclusive right to use the Common Area for ingress to and
egress from the Premises. Landlord reserves the use of the exterior walls, the
roof and the area beneath and above the Premises, together with the right to
install, maintain, use, and replace ducts, wires, conduits and pipes leading
through the Premises in locations which shall not materially interfere with
Tenant's use of the Premises.
2.2 Commencement Date: If Landlord is not obligated to construct improvements
-----------------
prior to the Commencement Date pursuant to (P)2.3, then on the Scheduled
Commencement Date Landlord shall deliver possession of the Premises to Tenant
and the Lease Term shall commence, and such date shall be referred to herein as
the "Commencement Date". If Landlord is required to construct improvements to
the Premises prior to the Commencement Date, then the Scheduled Commencement
Date shall be only an estimate of the actual Commencement Date, and the term of
this Lease shall begin on the first to occur of the following, which shall be
the "Commencement Date": (i) the date Landlord offers to deliver possession of
the Premises to Tenant following substantial completion of all improvements to
be constructed by Landlord pursuant to (P)2.3 except for punch list items which
do not prevent Tenant from using the Premises for the Permitted Use and such
work as Landlord is required to perform but cannot complete until Tenant
performs necessary portions of construction work it has elected or is required
to do; or (ii) the date Tenant enters into occupancy of the Premises.
2.3 Construction of Improvements: Prior to the Commencement Date, Landlord
----------------------------
shall construct certain improvements that shall constitute or become part of the
Premises if required by, and then in accordance with, the terms of Exhibit B and
---------
Exhibit C.
- ---------
2.4 Delivery and Acceptance of Possession: If this Lease provides that
-------------------------------------
Landlord must deliver possession of the Premises to Tenant on a certain date,
then if Landlord is unable to deliver possession of the Premises to Tenant on or
before such date for any reason whatsoever, this Lease shall not be void or
voidable for a period of 60 days thereafter, delays by Tenant excepted, and
Landlord shall not be liable to Tenant for any loss or damage resulting
therefrom except to the extent covered by Landlord's gross negligence or willful
misconduct. Tenant shall accept possession and enter into good faith occupancy
of the entire Premises and commence the operation of its business therein within
30 days after the Commencement Date. Tenant acknowledges that it has had an
opportunity to conduct, and has conducted, such inspections of the Premises as
it deems necessary to evaluate its condition. Except as otherwise specifically
provided herein, Tenant agrees to accept possession of the Premises after
completion of the construction of Interior Improvements and resultant "punch
list" inspections, in its then existing condition, "as-is", including all patent
and latent defects. Tenant's taking possession of any part of the Premises shall
be deemed to be an acceptance by Tenant of any work of improvement done by
Landlord in such part as complete and in accordance with the terms of this Lease
except for defects of which Tenant has given Landlord written notice prior to
the time Tenant takes possession. At the time Landlord delivers possession of
the Premises to Tenant, Landlord and Tenant shall together execute an acceptance
agreement in the form attached as
2
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Exhibit D, appropriately completed. Landlord shall have no obligation to deliver
- ---------
possession, nor shall Tenant be entitled to take occupancy, of the Premises
until such acceptance agreement has been executed, and Tenant's obligation to
pay Base Monthly Rent and Additional Rent shall not be excused or delayed
because of Tenant's failure to execute such acceptance agreement.
2.5 Early Occupancy: If Tenant enters or permits its contractors to enter
---------------
the Premises prior to the Commencement Date with the written permission of
Landlord, it shall do so upon all of the terms of this Lease (including its
obligations regarding indemnity and insurance) except those regarding the
obligation to pay rent, which shall commence on the Commencement Date.
SEE FIRST ADDENDUM TO LEASE PARAGRAPH 2
ARTICLE 3
---------
RENT
----
3.1 Base Monthly Rent: Commencing on the Commencement Date and continuing
-----------------
throughout the Lease Term, Tenant shall pay to Landlord the Base Monthly Rent
set forth in Section K of the Summary.
---------
3.2 Additional Rent: Commencing on the Commencement Date and continuing
---------------
throughout the Lease Term, Tenant shall pay the following as additional rent
(the "Additional Rent"): (i) any late charges or interest due Landlord pursuant
to (P)3.4; (ii) Tenant's Share of Common Operating Expenses as provided in
(P)8.1; (iii) Landlord's share of any Subrent received by Tenant upon certain
assignments and sublettings as required by (P)14.1; (iv) any legal fees and
costs due Landlord pursuant to (P)15.9; and (v) any other charges due Landlord
from Tenant pursuant to this Lease.
3.3 Payment of Rent: Concurrently with the execution of this Lease by both
---------------
parties, Tenant shall pay to Landlord the amount set forth in Section L of the
---------
Summary as prepayment of rent for credit against the first installment(s) of
Base Monthly Rent. All rent required to be paid in monthly installments shall
be paid in advance on the first day of each calendar month during the Lease
Term. If Section K of the Summary provides that the Base Monthly Rent is to be
---------
increased during the Lease Term and if the date of such increase does not fall
on the first day of a calendar month, such increase shall become effective on
the first day of the next calendar month. All rent shall be paid in lawful money
of the United States, without any abatement, deduction or offset whatsoever
(except as specifically provided in (P)11.4 and (P)12.3 or any other provision
of this lease) and without any prior demand therefor. Rent shall be paid to
Landlord at its address set forth in Section P of the Summary, or at such other
---------
place as Landlord may designate from time to time. Tenant's obligation to pay
Base Monthly Rent and Tenant's Share of Common Operating Expenses shall be
prorated at the commencement and expiration of the Lease Term.
3.4 Late Charge and Interest on Rent in Default: If any Base Monthly Rent
-------------------------------------------
or Additional Rent is not received by Landlord from Tenant within five (5)
business days after Landlord has notified Tenant in writing that payment of such
rent has not been received by Landlord, then Tenant shall immediately pay to
Landlord a late charge equal to 5% of such delinquent rent as liquidated damages
for Tenant's failure to make timely payment. In no event shall this provision
for a late charge be deemed to grant to Tenant a grace period or extension of
time within which to pay any rent or prevent Landlord from exercising any right
or remedy available to Landlord upon Tenant's failure to pay any rent due under
this Lease in a timely fashion, including any right to terminate this Lease
pursuant to (P)13.2B. If any rent remains delinquent for a period in excess of
30 days then, in addition to such late charge, Tenant shall pay to Landlord
interest on any rent that is not paid when due at the Agreed Interest Rate
following the date such amount became due until paid.
3.5 Security Deposit: On the Effective Date, Tenant shall deposit with
----------------
Landlord the amount set forth in Section M of the Summary as security for the
---------
performance by Tenant of its obligations under this Lease, and not as prepayment
of rent (the "Security Deposit"). Landlord may from time to time apply such
portion of the Security Deposit as is reasonably necessary for the following
purposes: (i) to remedy any default by Tenant in the payment of rent; (ii) to
repair damage to the Premises caused by Tenant; (iii) to clean the Premises upon
termination of the Lease if the Premises are not surrendered in the condition
required by this Lease, and (iv) to remedy any other default of Tenant to the
extent permitted by Law and, in this regard, Tenant hereby waives any
restriction on the uses to which the Security Deposit may be put contained in
California Civil Code Section 1950.7. In the event the Security Deposit or any
portion thereof is so used, Tenant agrees to pay to Landlord promptly upon
demand an amount in cash sufficient to restore the Security Deposit to the full
original amount. Landlord shall not be deemed a trustee of the Security Deposit,
may use the Security Deposit in business, and shall not be required to segregate
it from its general accounts. Tenant shall not be entitled to any interest on
the Security Deposit. If Landlord transfers the Premises during the Lease Term,
Landlord may pay the Security Deposit to any transferee of Landlord's interest
in conformity with the provisions of California Civil Code Section 1950.7 and/or
any successor statute, in which event the transferring Landlord will be released
from all liability for the return of the Security Deposit.
ARTICLE 4
---------
USE OF PREMISES
---------------
4.1 Limitation on Use: Tenant shall use the Premises solely for the Permitted
-----------------
Use specified in Section N of the Summary. Tenant shall not do anything in or
---------
about the Premises which will (i) cause structural injury to the Building, or
(ii) cause damage to any part of the Building except to the extent reasonably
necessary for the installation of Tenant's Trade Fixtures and Tenant's
Alterations, and then only in a manner which has been first approved by Landlord
in writing which approval shall not be unreasonably withheld. Tenant shall not
operate any equipment within the Premises which will (i) materially damage the
Building or the Common Area, (ii) overload existing electrical systems or other
mechanical equipment servicing the Building, (iii) impair the efficient
operation of the sprinkler system or the heating, ventilating or air
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conditioning ("HVAC") equipment within or servicing the Building, or (iv)
damage, overload or corrode the sanitary sewer system. Tenant shall not attach,
hang or suspend anything of any significant weight from the ceiling, roof, walls
or columns of the Building or set any load on the floor in excess of the load
limits for which such items are designed nor operate hard wheel forklifts within
the Premises. Any dust, fumes, or waste products generated by Tenant's use of
the Premises shall be contained and disposed so that they do not (i) create an
unreasonable fire or health hazard, (ii) damage the Premises, or (iii) result in
the violation of any Law. Except as approved by Landlord, Tenant shall not
change the exterior of the Building or install any equipment or antennas on or
make any penetrations of the exterior or roof of the Building. Tenant shall not
commit any waste in or about the Premises, and Tenant shall keep the Premises in
an neat, clean, attractive and orderly condition, free of any nuisances. If
Landlord designates a standard window covering for use throughout the Building,
Tenant shall use this standard window covering to cover all windows in the
Premises. Tenant shall not conduct on any portion of the Premises or the Project
any sale of any kind, including any public or private auction, fire sale, going-
out-of-business sale, distress sale or other liquidation sale.
4.2 Compliance with Regulations: Tenant shall not use the Premises in any
---------------------------
manner which violates any Laws or Private Restrictions which affect the
Premises. Tenant shall abide by and promptly observe and comply with all Laws
and Private Restrictions. Tenant shall not use the Premises in any manner which
will cause a cancellation of any insurance policy covering Tenant's Alternations
or any improvements installed by Landlord at its expense or which poses an
unreasonable risk of damage or injury to the Premises. Tenant shall not sell, or
permit to be kept, used, or sold in or about the Premises any article which may
be prohibited by the standard form of fire insurance policy. Tenant shall comply
with all reasonable requirements of any insurance company, insurance
underwriter, or Board of Fire Underwriters which are necessary to maintain the
insurance coverage carried by either Landlord or Tenant pursuant to this Lease.
4.3 Outside Areas: No materials, supplies, tanks or containers, equipment,
-------------
finished products or semi-finished products, raw materials, inoperable vehicles
or articles of any nature shall be stored upon or permitted to remain outside of
the Premises except in fully fenced and screened areas outside the Building
which have been designed for such purpose and have been approved in writing by
Landlord for such use by Tenant.
4.4 Signs: Tenant shall not place on any portion of the Premises any sign,
-----
placard, lettering in or on windows, banner, displays or other advertising or
communicative material which is visible from the exterior of the Building
without the prior written approval of Landlord. All such approved signs shall
strictly conform to all Laws, Private Restrictions, and Landlord's sign criteria
attached as Exhibit F, and shall be installed at the expense of Tenant. Tenant
---------
shall maintain such signs in good condition and repair. Tenant shall have the
exclusive use of the existing monument sign in front of the Premises.
4.5 Parking: Tenant is allocated and shall have the non-exclusive right to
-------
use not more than the number of Tenant's Allocated Parking Stalls contained
within the Project described in Section H of the Summary for its use and the use
---------
of Tenant's Agents, the location of which may be designated from time to time by
Landlord. Tenant shall not at any time use more parking spaces than the number
so allocated to Tenant or park its vehicles or the vehicles of others in any
portion of the Project not designated by Landlord as a non-exclusive parking
area. Tenant shall not have the exclusive right to use any specific parking
space. If Landlord grants to any other tenant the exclusive right to use any
particular parking space(s), Tenant shall not use such spaces. Landlord reserves
the right, after having given Tenant reasonable notice, to have any vehicles
owned by Tenant or Tenant's Agents utilizing parking spaces in excess of the
parking spaces allowed for Tenant's use to be towed away at Tenant's cost. All
trucks and delivery vehicles shall be (i) parked at the rear of the Building,
(ii) loaded and unloaded in a manner which does not interfere with the
businesses of other occupants of the Project, and (iii) permitted to remain on
the Project only so long as is reasonably necessary to complete loading and
unloading. In the event Landlord elects or is required by any Law to limit or
control parking in the Project, whether by validation of parking tickets or any
other method of assessment, Tenant agrees to participate in such validation or
assessment program under such reasonable rules and regulations as are from time
to time established by Landlord.
SEE FIRST ADDENDUM TO LEASE PARAGRAPH 3
4.6 Rules and Regulations: Landlord may from time to time promulgate
---------------------
reasonable and nondiscriminatory rules and regulations applicable to all
occupants of the Project for the care and orderly management of the Project and
the safety of its tenants and invitees. Such rules and regulations shall be
binding upon Tenant upon delivery of a copy thereof to Tenant, and Tenant agrees
to abide by such reasonable rules and regulations. If there is a conflict
between the rules and regulations and any of the provisions of this Lease, the
provisions of this Lease shall prevail. Landlord shall not be responsible for
the violation by any other tenant of the Project of any such rules and
regulations.
ARTICLE 5
--------
TRADE FIXTURES AND ALTERATIONS
------------------------------
5.1 Trade Fixtures: Throughout the Lease Term, Tenant may provide and
--------------
install, and shall maintain in good condition, any Trade Fixtures required in
the conduct of its business in the Premises. All Trade Fixtures shall remain
Tenant's property.
5.2 Tenant's Alterations: Construction by Tenant of Tenant's Alterations
--------------------
shall be governed by the following:
A. Tenant shall not construct any Tenant's Alterations or otherwise
alter the Premises without Landlord's prior written approval which approval
shall not be unreasonably withheld. Tenant shall be entitled, without Landlord's
prior approval, to make Tenant's Alterations (i) which do not affect the
structural or exterior parts or water tight character of the Building, and (ii)
the reasonably estimated cost of which, plus the original cost of any part of
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the Premises removed or materially altered in connection with such Tenant's
Alterations, together do not exceed the Permitted Tenant Alterations Limit
specified in Section O of the Summary per work of improvement. In the event
---------
Landlord's approval for any Tenant's Alterations is required, Tenant shall not
construct the Leasehold Improvement until Landlord has approved in writing the
plans and specifications therefor, and such Tenant's Alterations shall be
constructed substantially in compliance with such approved plans and
specifications by a licensed contractor first approved by Landlord. All Tenant's
Alterations constructed by Tenant shall be constructed by a licensed contractor
in accordance with all Laws using new materials of good quality.
B. Tenant shall not commence construction of any Tenant's Alterations
until (i) all required governmental approvals and permits have been obtained,
(ii) all requirements regarding insurance imposed by this Lease have been
satisfied, (iii) Tenant has given Landlord at least five days' prior written
notice of its intention to commence such construction, and (iv) if reasonably
requested by Landlord, Tenant has obtained contingent liability and broad form
builders' risk insurance in an amount reasonably satisfactory to Landlord if
there are any perils relating to the proposed construction not covered by
insurance carried pursuant to Article 9.
C. All Tenant's Alterations shall remain the property of Tenant during
the Lease Term but shall not be altered or removed from the Premises. At the
expiration or sooner termination of the Lease Term, all Tenant's Alterations
shall be surrendered to Landlord as part of the realty and shall then become
Landlord's property, and Landlord shall have no obligation to reimburse Tenant
for all or any portion of the value or cost thereof; provided, however, that if
Landlord requires Tenant to remove any Tenant's Alterations, Tenant shall so
remove such Tenant's Alterations prior to the expiration or sooner termination
of the Lease Term. Notwithstanding the foregoing, Tenant shall not be obligated
to remove any Tenant's Alterations with respect to which the following is true:
(i) Tenant was required, or elected, to obtain the approval of Landlord to the
installation of the Leasehold Improvement in question; (ii) at the time Tenant
requested Landlord's approval, Tenant requested of Landlord in writing that
Landlord inform Tenant of whether or not Landlord would require Tenant to remove
such Leasehold Improvement at the expiration of the Lease Term; and (iii) at the
time Landlord granted its approval, it did not inform Tenant that it would
require Tenant to remove such Leasehold Improvement at the expiration of the
Lease Term.
5.3 Alterations Required by Law: Tenant shall make any alteration, addition
---------------------------
or change of any sort to the Premises that is required by any Law because of (i)
Tenant's particular use or change of use of the Premises: (ii) Tenant's
application for any permit or governmental approval: or (iii) Tenant's
construction or installation of any Tenant's Alterations or Trade Fixtures. Any
other alteration, addition, or change required by Law which is not the
responsibility of Tenant pursuant to the foregoing shall be made by Landlord
(subject to Landlord's right to reimbursement from Tenant specified in (P)5.4.
SEE FIRST ADDENDUM TO LEASE PARAGRAPH 7
5.4 Amortization of Certain Capital Improvements : Tenant shall pay
--------------------------------------------
Additional Rent in the event Landlord reasonably elects or is required to make
any of the following kinds of capital improvements to the Project and the cost
thereof is nonreimbursible as a Common Operating Expense: (i) capital
improvements required to be constructed in order to comply with any Law
(excluding any Hazardous Materials Law) not in effect or applicable to the
Project as of the Effective Date; (ii) modification of existing or construction
of additional capital improvements or building service equipment for the purpose
of reducing the consumption of utility services or Common Operating Expenses of
the Project; (iii) replacement of capital improvements or building service
equipment existing as of the Effective Date when required because of normal
wear and tear; and (iv) restoration of any part of the Project that has been
damaged by any peril to the extent the cost thereof is not covered by insurance
proceeds actually recovered by Landlord up to a maximum amount per occurrence of
10% of the then replacement cost of the Project. The amount of Additional Rent
Tenant is to pay with respect to each such capital improvement shall be
determined as follows:
A. All costs paid by Landlord to construct such improvements (including
financing costs) shall be amortized over the useful life of such improvement (as
reasonably determined by Landlord in accordance with generally accepted
accounting principles) with interest on the unamortized balance at the then
prevailing market rate Landlord would pay if it borrowed funds to construct such
improvements from an institutional lender, and Landlord shall inform Tenant of
the monthly amortization payment required to so amortize such costs, and shall
also provide Tenant with the information upon which such determination is made.
B. As Additional Rent, Tenant shall pay at the same time the Base
Monthly Rent is due an amount equal to Tenant's Share of that portion of such
monthly amortization payment fairly allocable to the Building (as reasonably
determined by Landlord) for each month after such improvements are completed
until the first to occur of (i) the expiration of the Lease Term (as it may be
extended), or (ii) the end of the term over which such costs were amortized.
SEE FIRST ADDENDUM TO LEASE PARAGRAPH 4
5.5 Mechanic's Liens: Tenant shall keep the Project free from any liens and
----------------
shall pay when due all bills arising out of any work performed, materials
furnished, or obligations incurred by Tenant or Tenant's Agents relating to the
Project. If any claim of lien is recorded (except those caused by Landlord or
Landlord's Agents), Tenant shall bond against or discharge the same within 10
days after the same has been recorded against the Project. Should any lien be
filed against the Project or any action be commenced affecting title to the
Project, the party receiving notice of such lien or action shall immediately
give the other party written notice thereto.
5.6 Taxes on Tenant's Property: Tenant shall
--------------------------
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pay before delinquency any and all taxes, assessments, license fees and public
charges levied, assessed or imposed against Tenant or Tenant's estate in this
Lease or the property of Tenant situated within the Premises which become due
during the Lease Term. If any tax or other charge is assessed by any
governmental agency because of the execution of this Lease, such tax shall be
paid by Tenant. On demand by Landlord, Tenant shall furnish Landlord with
satisfactory evidence of these payments.
ARTICLE 6
---------
REPAIR AND MAINTENANCE
----------------------
6.1 Tenant's Obligation to Maintain: Except as otherwise provided in (P)6.2,
-------------------------------
(P)11.1, and (P)12.3, Tenant shall be responsible for the following during the
Lease Term:
A. Tenant shall clean and maintain in good order, condition, and repair
and replace when necessary the Premises and every part thereof, through regular
inspections and servicing, including, but not limited to: (i) all plumbing and
sewage facilities (including all sinks, toilets, faucets and drains), and all
duets, pipes, vents or other parts of the HVAC or plumbing system provided for
the exclusive use of the Tenant; (ii) all fixtures, interior walls, floors,
carpets and ceilings; (iii) all windows, doors, entrances, plate glass,
showcases and skylights (including cleaning both interior and exterior
surfaces); (iv) all electrical facilities and all equipment (including all
lighting fixtures, lamps, bulbs, tubes, fans, vents, exhaust equipment and
systems); and (v) any automatic fire extinguisher equipment in the Premises.
B. With respect to utility facilities serving the Premises (including
electrical wiring and conduits, gas lines, water pipes, and plumbing and sewage
fixtures and pipes), Tenant shall be responsible for the maintenance and
repair of any such facilities which serve only the Premises, including all such
facilities that are within the walls or floor, or on the roof of the Premises,
and any part of such facility that is not within the Premises, but only up to
the point where such facilities join a main or other junction (e.g., sewer main
or electrical transformer) from which such utility services are distributed to
other parts of the Project as well as to the Premises. Tenant shall replace any
damaged or broken glass in the Premises (including all interior and exterior
doors and windows) with glass of the same kind, size and quality. Tenant shall
repair any damage to the Premises (including exterior doors and windows) caused
by vandalism or any unauthorized entry.
C. Tenant shall (i) maintain, repair and replace when necessary all
HVAC equipment which services only the Premises, and shall keep the same in good
condition through regular inspection and servicing, and (ii) maintain
continuously throughout the Lease Term a service contract for the maintenance of
all such HVAC equipment with a licensed HVAC repair and maintenance contractor
approved by Landlord, which contract provides for the periodic inspection and
servicing of the HVAC equipment at least once every 60 days during the Lease
Term. Notwithstanding the foregoing, Landlord may elect at any time to assume
responsibility for the maintenance, repair and replacement of such HVAC
equipment which serves only the Premises. Tenant shall maintain continuously
throughout the Lease Term a service contract for the washing of all windows
(both interior and exterior surfaces) in the Premises with a contractor approved
by Landlord or by Tenant which contract provides for the periodic washing of all
such windows at least once every 60 days during the Lease Term. Tenant shall
furnish Landlord with copies of all such service contracts, which shall provide
that they may not be cancelled or changed without at least 30 days' prior
written notice to Landlord.
D. All repairs and replacements required of Tenant shall be promptly
made with new materials of like kind and quality. If the work affects the
structural parts of the Building or if the estimated cost of any item of repair
or replacement is in excess of the Permitted Tenant's Alterations Limit, then
Tenant shall first obtain Landlord's written approval of the scope of the work,
plans therefor, materials to be used, and the contractor which approval shall
not be unreasonably withheld.
SEE FIRST ADDENDUM TO LEASE PARAGRAPHS
6.2 Landlord's Obligation to Maintain: Landlord shall repair, maintain and
---------------------------------
operate the Common Area and repair and maintain the roof, exterior and
structural parts of the building(s) located on the Project so that the same are
kept in good order and repair. If there is central HVAC or other building
service equipment and/or utility facilities serving portions of the Common Area
and/or both the Premises and other parts of the Building, Landlord shall
maintain and operate (and replace when necessary) such equipment. Landlord shall
not be responsible for repairs required by an accident, fire or other peril or
for damage caused to any part of the Project by any act or omission of Tenant
or Tenant's Agents except as otherwise required by Article 11. Landlord may
engage contractors of its choice to perform the obligations required of it by
this Article, and the necessity of any expenditure to perform such obligations
shall be at the sole discretion of Landlord.
6.3 Control of Common Area: Landlord shall at all times have exclusive
----------------------
control of the Common Area. Landlord shall have the right, without the same
constituting an actual or constructive eviction and without entitling Tenant
to any abatement of rent, to: (i) close any part of the Common Area to
whatever extent required in the opinion of Landlord's counsel to prevent a
dedication thereof or the accrual of any prescriptive rights therein; (ii)
temporarily close the Common Area to perform maintenance or for any other reason
deemed sufficient by Landlord; (iii) change the shape, size, location and extent
of the Common Area; (iv) eliminate from or add to the Project any land or
improvement, including multi-deck parking structures; (v) make changes to the
Common Area including, without limitation, changes in the location of driveways
entrances, passageways, doors and doorways, elevators, stairs, restrooms, exits,
parking spaces, parking areas, sidewalks or the direction of the flow of traffic
and the site of the Common Area; (vi) remove unauthorized persons from the
Project; and/or (vii) change the name or address of the Building or Project.
Tenant shall keep the Common Area clear of all obstructions created or permitted
by Tenant. If in the opinion of Landlord unauthorized persons are using any of
the Common
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Area by reason of the presence of Tenant in the Building, Tenant, upon demand of
Landlord, shall restrain such unauthorized use by appropriate proceedings. In
exercising any such rights regarding the Common Area, (i) Landlord shall make a
reasonable effort to minimize any disruption to Tenant's business, and (ii)
Landlord shall not exercise its rights to control the Common Area in a manner
that would materially interfere with Tenant's use or access of the Premises
without first obtaining Tenant's consent. Landlord shall have no obligation to
provide guard services or other security measures for the benefit of the
Project. Tenant assumes all responsibility for the protection of Tenant and
Tenant's Agents from acts of third parties; provided, however, that nothing
contained herein shall prevent Landlord, at its sole option, from providing
security measures for the Project.
ARTICLE 7
---------
WASTE DISPOSAL AND UTILITIES
----------------------------
7.1 Waste Disposal: Tenant shall store its waste either inside the Premises
--------------
or within outside trash enclosures provided by Landlord at Landlord's sole cost,
that are fully fenced and screened in compliance with all Private Restrictions,
and designed for such purpose. All entrances to such outside trash enclosures
shall be kept closed, and waste shall be stored in such manner as not to be
visible from the exterior of such outside enclosures. Tenant shall cause all of
its waste to be regularly removed from the Premises at Tenant's sole cost.
Tenant shall keep all fire corridors and mechanical equipment rooms in the
Premises free and clear of all obstructions at all times.
7.2 Hazardous Materials: Landlord and Tenant agree as follows with respect
-------------------
to the existence or use of Hazardous Material on the Project:
A. Any handling, transportation, storage, treatment, disposal or use of
Hazardous Materials by Tenant and Tenant's Agents after the Effective Date in or
about the Project shall strictly comply with all applicable Hazardous Materials
Laws. Tenant shall indemnify, defend upon demand with counsel reasonably
acceptable to Landlord, and hold harmless Landlord from and against any
liabilities, losses, claims, damages, lost profits, consequential damages,
interest, penalties, fines, monetary sanctions, attorneys' fees, experts' fees,
court costs, remediation costs, investigation costs, and other expenses which
result from or arise in any manner whatsoever out of the use, storage,
treatment, transportation, release, or disposal of Hazardous Materials on or
about the Project by Tenant or Tenant's Agents after the Effective Date, except
to the extent caused by the negligence or willful misconduct of Landlord or
Landlord's agents.
B. If the presence of Hazardous Materials on the Project caused or
permitted by Tenant or Tenant's Agents after the Effective Date results in
contamination or deterioration of water or soil resulting in a level of
contamination greater than the levels established as acceptable by any
governmental agency having jurisdiction over such contamination, then Tenant
shall promptly take any and all action necessary to investigate and remediate
such contamination if required by Law or as a condition to the issuance or
continuing effectiveness of any governmental approval which relates to the use
of the Project or any part thereof. Tenant shall further be solely responsible
for, and shall defend, indemnify and hold Landlord and its agents harmless from
and against all claims, costs and liabilities, including attorneys' fees and
costs, arising out of or in connection with any investigation and remediation
required hereunder to return the Project to its condition existing prior to the
appearance of such Hazardous Materials.
C. Landlord and Tenant shall each give written notice to the other as
soon as reasonably practicable of (i) any communication received from any
governmental authority concerning Hazardous Materials which relates to the
Project, and (ii) any contamination of the Project by Hazardous Materials which
constitutes a violation of any Hazardous Materials Law. Tenant may use small
quantities of household chemicals such as adhesives, lubricants, and cleaning
fluids in order to conduct its business at the Premises and such other Hazardous
Materials as are necessary for the operation of Tenant's business of which
Landlord receives notice prior to such Hazardous Materials being brought onto
the Premises and which Landlord consents in writing may be brought onto the
Premises. At any time during the Lease Term, Tenant shall, within fifteen (15)
(unless it constitutes a health or safety risk) days after written reasonable
request therefor received from Landlord, disclose in writing all Hazardous
Materials that are being used by Tenant on the Project, the nature of such use,
and the manner of storage and disposal.
D. Landlord may cause testing wells to be installed on the Project, and
may cause the ground water to be tested to detect the presence of Hazardous
Material by the use of such tests as are then customarily used for such
purposes. If Tenant so requests, Landlord shall supply Tenant with copies of
such test results. The cost of such tests and of the installation, maintenance,
repair and replacement of such wells shall be paid by Tenant if such tests
disclose the existence of facts which give rise to liability of Tenant pursuant
to its indemnity given in (P)7.2A and/or (P)7.2B.
E. As used herein, the term "Hazardous Material," means any hazardous
or toxic substance, material or waste which is or becomes regulated by any local
governmental authority, the State of California or the United States Government.
The term "Hazardous Material" includes, without limitation, petroleum products,
asbestos, PCB's, and any material or substance which is (i) listed under Article
9 or defined as hazardous or extremely hazardous pursuant to Article 11 of Title
22 of the California Administrative Code, Division 4, Chapter 20, (ii) defined
as a "hazardous waste" pursuant to Section 1004 of the Federal Resource
Conservation and Recovery Act, 42 U.S.C. 6901 et seq. (42 U.S.C. 6903), or
(iii) defined as a "hazardous substance" pursuant to Section 101 of the
Comprehensive Environmental Response: Compensation and Liability Act, 42 U.S.C.
9601 et seq. (42 U.S.C. 9601). As used herein, the term "Hazardous Material Law"
shall mean any statute, law, ordinance, or regulation of any governmental body
or agency (including the U.S. Environmental Protection Agency, the California
Regional Water Quality Control Board, and the California Department of Health
Services) which regulates the use, storage, release or disposal of any
Hazardous Material.
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F. The obligations of Landlord and Tenant under this (P)7.2 shall
survive the expiration or earlier termination of the Lease Term. The rights and
obligations of Landlord and Tenant with respect to issues relating to Hazardous
Materials are exclusively established by this (P)7.2. In the event of any
inconsistency between any other part of this Lease and this (P)7.2, the terms of
this (P)7.2 shall control.
7.3 Utilities: Tenant shall promptly pay, as the same become due, all
---------
charges for water, gas, electricity, telephone, sewer service, waste pick-up and
any other utilities, materials or services furnished directly to or used by
Tenant on or about the Premises during the Lease Term, including, without
limitation, (i) meter, use and/or connection fees, hook-up fees, or standby fee
(excluding any connection fees or hook-up fees which relate to making the
existing electrical, gas, and water service available to the Premises as of the
Commencement Date), and (ii) penalties for discontinued or interrupted service.
If any utility service is not separately metered to the Premises, then Tenant
shall pay its pro rata share of the cost of such utility service with all others
served by the service not separately metered. However, if Landlord determines
that Tenant is using a disproportionate amount of any utility service not
separately metered, then Landlord at its election may (i) periodically charge
Tenant, as Additional Rent, a sum equal to Landlord's reasonable estimate of the
cost of Tenant's excess use of such utility service, or (ii) install a separate
meter (at Tenant's expense) to measure the utility service supplied to the
Premises.
7.4 Compliance with Governmental Regulations: Landlord and Tenant shall
----------------------------------------
comply with all rules, regulations and requirements promulgated by national,
state or local governmental agencies or utility suppliers concerning the use of
utility services, including any rationing, limitation or other control. Tenant
shall not be entitled to terminate this Lease nor to any abatement in rent by
reason of such compliance.
ARTICLE 8
---------
COMMON OPERATING EXPENSES
-------------------------
8.1 Tenant's Obligation to Reimburse: As Additional Rent, Tenant shall pay
--------------------------------
Tenant's Share (specified in Section G of the Summary) of all Common Operating
---------
Expenses; provided, however, if the Project contains more than one building,
then Tenant shall pay Tenant's Share of all Common Operating Expenses fairly
allocable to the Building, including (i) all Common Operating Expenses paid with
respect to the maintenance, repair, replacement and use of the Building, and
(ii) a proportionate share (based on the Building Gross Leasable Area as a
percentage of the Project Gross Leasable Area) of all Common Operating Expenses
which relate to the Project in general are not fairly allocable to any one
building that is part of the Project. Tenant shall pay such share of the actual
Common Operating Expenses incurred or paid by Landlord but not theretofore
billed to Tenant within 15 days after receipt of a written bill therefor from
Landlord, on such periodic basis as Landlord shall designate, but in no event
more frequently than once a month. Alternatively, Landlord may from time to time
require that Tenant pay Tenant's Share of Common Operating Expenses in advance
in estimated monthly installments, in accordance with the following: (i)
Landlord shall deliver to Tenant Landlord's reasonable estimate of the Common
Operating expenses it anticipates will be paid or incurred for the Landlord's
fiscal year in question; (ii) during such Landlord's fiscal year Tenant shall
pay such share of the estimated Common Operating Expenses in advance in monthly
installments as required by Landlord due with the installments of Base Monthly
Rent; and (iii) within 90 days after the end of each Landlord's fiscal year,
Landlord shall furnish to Tenant a statement in reasonable detail of the actual
Common Operating Expenses paid or incurred by Landlord during the just ended
Landlord's fiscal year and thereupon there shall be an adjustment between
Landlord and Tenant, with payment to Landlord or credit by Landlord against the
next installment of Base Monthly Rent, as the case may require, within 15 days
after delivery by Landlord to Tenant of said statement, so that Landlord shall
receive the entire amount of Tenant's Share of all Common Operating Expenses for
such Landlord's fiscal year and no more. Tenant shall have the right at its
expense, exercisable upon reasonable prior written notice to Landlord, to
inspect at Landlord's office during normal business hours Landlord's books and
records as they relate to Common Operating Expenses. Such inspection must be
within 90 days of Tenant's receipt of Landlord's annual statement for the same,
and shall be limited to verification of the charges contained in such statement.
Tenant may not withhold payment of such bill pending completion of such
inspection.
8.2 Common Operating Expenses Defined: The term "Common Operating Expenses"
---------------------------------
shall mean the following:
A. All costs and expenses paid or incurred by Landlord in doing the
following (including payments to independent contractors providing services
related to the performance of the following): (i) maintaining, cleaning,
repairing and resurfacing the roof (including repair of leaks) and the exterior
surfaces (including painting) of all buildings located on the Project; (ii)
maintenance of the liability, fire and property damage insurance covering the
Project carried by Landlord pursuant to (P)9.2 (including the prepayment of
premiums for coverage of up to one year); (iii) maintaining, repairing,
operating and replacing when necessary HVAC equipment, utility facilities and
other building service equipment; (iv) providing utilities to the Common Area
(including lighting, trash removal and water for landscaping irrigation); (v)
complying with all applicable Laws and Private Restrictions; (vi) operating,
maintaining, repairing, cleaning, painting, restriping and resurfacing the
Common Area; (vii) replacement or installation of lighting fixtures, directional
or other signs and signals, irrigation systems, trees, shrubs, ground cover and
other plant materials, and all landscaping in the Common Area: and (viii)
providing security;
B. The following costs: (i) Real Property Taxes as defined in (P)8.3;
(ii) the amount of any "deductible" paid by Landlord with respect to damage
caused by any Insured Peril; (iii) the cost to repair damage caused by an
Uninsured Peril up to
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a maximum amount in any 12 month period equal to 2% of the replacement cost of
the buildings or other improvements damaged; and (iv) that portion of all
compensation (including benefits and premiums for workers' compensation and
other insurance) paid to or on behalf of employees of Landlord but only to the
extent they are involved in the performance of the work described by (P)8.2A
that is fairly allocable to the Project;
C. Fees for management services rendered by either Landlord or a third
party manager engaged by Landlord (which may be a party affiliated with
Landlord), except that the total amount charged for management services and
included in Tenant's Share of Common Operating Expenses shall not exceed the
monthly rate of 5% of the Base Monthly Rent.
D. All additional costs and expenses incurred by Landlord with respect
to the operation, protection, maintenance, repair and replacement of the Project
which would be considered a current expense (and not a capital expenditure)
pursuant to generally accepted accounting principles; provided, however, that
Common Operating Expenses shall not include any of the following: (i) payments
on any loans or ground leases affecting the Project; (ii) depreciation of any
buildings or any major systems of building service equipment within the Project;
(iii) leasing commissions; (iv) the cost of tenant improvements installed for
the exclusive use of other tenants of the Project; and (v) any cost incurred in
complying with Hazardous Materials Laws, which subject is governed exclusively
by (P)7.2.
8.3 Real Property Taxes Defined: The term "Real Property Taxes" shall mean
---------------------------
all taxes, assessments, levies and other charges of any kind or nature
whatsoever, general and special, foreseen and unforeseen (including all
installments of principal and interest required to pay any existing or future
general or special assessments for public improvements, services or benefits,
and any increases resulting from reassessments resulting from a change in
ownership, new construction, or any other cause), now or hereafter imposed by
any governmental or quasi-governmental authority or special district having the
direct or indirect power to tax or levy assessments, which are levied or
assessed against, or with respect to the value, occupancy or use of all or any
portion of the Project (as now constructed or as may at any time hereafter be
constructed, altered, or otherwise changed) or Landlord's interest therein, the
fixtures, equipment and other property of Landlord, real or personal, that are
an integral part of and located on the Project, the gross receipts, income, or
rentals from the Project, or the use of parking areas, public utilities, or
energy within the Project, or Landlord's business of leasing the Project. If at
any time during the Lease Term the method of taxation or assessment of the
Project prevailing as of the Effective Date shall be altered so that in lieu of
or in addition to any Real Property Tax described above there shall be levied,
assessed or imposed (whether by reason of a change in the method of taxation or
assessment, creation of a new tax or charge, or any other cause) an alternate or
additional tax or charge (i) on the value, use or occupancy of the Project or
Landlord's interest therein, or (ii) on or measured by the gross receipts,
income or rentals from the Project, on Landlord's business of leasing the
Project, or computed in any manner with respect to the operation of the Project,
then any such tax or charge, however designated, shall be included within the
meaning of the term "Real Property Taxes" for purposes of this Lease. If any
Real Property Tax is based upon property or rents unrelated to the Project, then
only that part of such Real Property Tax that is fairly allocable to the Project
shall be included within the meaning of the term "Real Property Taxes".
Notwithstanding the foregoing, the term "Real Property Taxes" shall not include
estate, inheritance, transfer, gift or franchise taxes of Landlord or the
federal or state net income tax imposed on Landlord's income from all sources.
ARTICLE 9
---------
INSURANCE
---------
9.1 Tenant's Insurance: Tenant shall maintain insurance complying with all
------------------
of the following:
A. Tenant shall procure, pay for and keep in full force and effect the
following:
(1) Commercial general liability insurance, including property
damage, against liability for personal injury, bodily injury, death and damage
to property occurring in or about, or resulting from an occurrence in or about,
the Premises with combined single limit coverage of not less than the amount of
Tenant's Liability Insurance Minimum specified in Section P of the Summary,
---------
which insurance shall contain a "contractual liability" endorsement insuring
Tenant's performance of Tenant's obligation to indemnify Landlord contained in
(p)10.3;
(2) Fire and property damage insurance in so-called "all risk"
form insuring Tenant's Trade Fixtures and Tenant's Alterations for the full
actual replacement cost thereof;
(3) Such other insurance that is either (i) required by any
Lender, or (ii) reasonably required by Landlord and customarily carried by
tenants of similar property in similar businesses.
B. Where applicable and required by Landlord, each policy of insurance
required to be carried by Tenant pursuant to this (P)9.1: (i) shall name
Landlord and such other parties in interest as Landlord reasonably designates as
additional insured; (ii) shall be primary insurance which provides that the
insurer shall be liable for the full amount of the loss up to and including the
total amount of liability set forth in the declarations without the right of
contribution from any other insurance coverage of Landlord; (iii) shall be in a
form satisfactory to Landlord; (iv) shall be carried with companies reasonably
acceptable to Landlord; (v) shall provide that such policy shall not be subject
to cancellation, lapse or change except after at least 30 days prior written
notice to Landlord so long as such provision of 30 days notice is reasonably
obtainable, but in any event not less than 10 days prior written notice; (vi)
shall not have a "deductible" in excess of such amount as is approved by
Landlord; (vii) shall contain a cross liability endorsement; and (viii) shall
contain a "severability" clause. If Tenant has in full force and effect a
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blanket policy of liability insurance with the same coverage for the Premises
as described above, as well as other coverage of other premises and properties
of Tenant, or in which Tenant has some interest, such blanket insurance shall
satisfy the requirements of this (P)9.1.
C. A copy of each certificate of insurance evidencing the insurance
required to be carried by Tenant pursuant to this (P)9.1 (appropriately
authenticated by the insurer) or a certificate of the insurer, certifying that
such policy has been issued, providing the coverage required by this (P)9.1, and
containing the provisions specified herein, shall be delivered to Landlord prior
to the time Tenant or any of its Agents enters the Premises and upon renewal of
such policies, but not less than 5 days prior to the expiration of the term of
such coverage, Landlord may, at any time, and from time to time, inspect and/or
copy any and all insurance policies required to be procured by Tenant pursuant
to this (P)9.1. If any Lender or insurance advisor reasonably determines at any
time that the amount of coverage required for any policy of insurance Tenant is
to obtain pursuant to this (P)9.1 is not adequate, then Tenant shall increase
such coverage for such insurance to such amount as such Lender or insurance
advisor reasonably deems adequate, not to exceed the level of coverage for such
insurance commonly carried by comparable businesses similarly situated.
9.2 Landlord's Insurance: Landlord shall have the following obligations and
--------------------
options regarding insurance:
A. Landlord shall maintain a policy or policies of fire and property
damage insurance in so-called "all risk" form insuring Landlord (and such others
as Landlord may designate) against loss of rents for a period of not less than
12 months and from physical damage to the Project with coverage of not less than
the full replacement cost thereof. Landlord may so insure the Project
separately, or may insure the Project with other property owned by Landlord
which Landlord elects to insure together under the same policy or policies. Such
fire and property damage insurance (i) may be endorsed to cover loss caused by
such additional perils against which Landlord may elect to insure, including
earthquake and/or flood, and to provide such additional coverage as Landlord
reasonably requires, and (ii) shall contain reasonable "deductibles" which, in
the case of earthquake and flood insurance, may be up to 10% of the replacement
value of the property insured or such higher amount as is then commercially
reasonable. Landlord shall not be required to cause such insurance to cover any
Trade Fixtures or Tenant's Alterations of Tenant.
B. Landlord may maintain a policy or policies of commercial general
liability insurance insuring Landlord (and such others as are designated by
Landlord) against liability for personal injury, bodily injury, death and damage
to property occurring or resulting from an occurrence in, on or about the
Project, with combined single limit coverage in such amount as Landlord from
time to time determines is reasonably necessary for its protection.
9.3 Tenant's Obligation to Reimburse: If Landlord's insurance rates for the
--------------------------------
Building are increased at any time during the Lease Term as a result of the
nature of Tenant's use of the Premises, Tenant shall reimburse Landlord for the
full amount of such increase immediately upon receipt of a bill from Landlord
therefor.
9.4 Release and Waiver of Subrogation: The parties hereto release each
---------------------------------
other, and their respective agents and employees, from any liability for injury
to any person or damage to property that is caused by or results from any risk
insured against under any valid and collectible insurance policy carried by
either of the parties which contains a waiver of subrogation by the insurer and
is in force at the time of such injury or damage; subject to the following
limitations: (i) the foregoing provision shall not apply to the commercial
general liability insurance described by subparagraphs (P)9.1A and (P)9.2B; (ii)
such release shall apply to liability resulting from any risk insured against or
covered by self-insurance maintained or provided by Tenant to satisfy the
requirements of (P)9.1 to the extent permitted by this Lease; and (iii) Tenant
shall not be released from any such liability to the extent any damages
resulting from such injury or damage are not covered by the recovery obtained by
Landlord from such insurance, but only if the insurance in question permits such
partial release in connection with obtaining a waiver of subrogation from the
insurer. This release shall be in effect only so long as the applicable
insurance policy contains a clause to the effect that this release shall not
affect the right of the insured to recover under such policy. Each party shall
use reasonable efforts to cause each insurance policy obtained by it to provide
that the insurer waives all right of recovery by way of subrogation against the
other party and its agents and employees in connection with any injury or damage
covered by such policy. However, if any insurance policy cannot be obtained with
such a waiver of subrogation, or if such waiver of subrogation is only available
at additional cost and the party for whose benefit the waiver is to be obtained
does not pay such additional cost, then the party obtaining such insurance shall
notify the other party of that fact and thereupon shall be relieved of the
obligation to obtain such waiver of subrogation rights from the insurer with
respect to the particular insurance involved.
ARTICLE 10
----------
LIMITATION ON LANDLORD'S
------------------------
LIABILITY AND INDEMNITY
-----------------------
10.1 Limitation on Landlord's Liability: Landlord shall not be liable to
----------------------------------
Tenant, nor shall Tenant be entitled to terminate this Lease or to any abatement
of rent (except as expressly provided otherwise herein), for any injury to
Tenant or Tenant's Agents, damage to the property of Tenant or Tenant's Agents,
or loss to Tenant's business resulting from any cause, including without
limitation any: (i) failure, interruption or installation of any HVAC or other
utility system or service; (ii) failure to furnish or delay in furnishing any
utilities or services when such failure or delay is caused by fire or other
peril, the elements, labor disturbances of any character, or any other accidents
or other conditions beyond the reasonable control of
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Landlord: (iii) limitation, curtailment, rationing or restriction on the use of
water or electricity, gas or any other form of energy or any services or utility
serving the Project: (iv) vandalism or forcible entry by unauthorized persons or
the criminal act of any person: or (v) penetration of water into or onto any
portion of the Premises or the Building through roof leaks or otherwise.
Notwithstanding the foregoing but subject to (P)9.4, Landlord shall be liable
for any such injury, damage or loss which is proximately caused by Landlord's
willful misconduct or gross negligence of which Landlord has actual notice and a
reasonable opportunity to cure but which it fails to so cure.
10.2 Limitation on Tenant's Recourse: If Landlord is a corporation, trust,
-------------------------------
partnership, joint venture, unincorporated association or other form of business
entity: (i) the obligations of Landlord shall not constitute personal
obligations of the officers, directors, trustees, partners, joint venturers,
members, owners, stockholders, or other principals or representatives of such
business entity; and (ii) Tenant shall not have recourse to the assets of such
officers, directors, trustees, partners, joint venturers, members, owners,
stockholders, principals or representatives except to the extent of their
interest in the Project. Tenant shall have recourse only to the interest of
Landlord in the Project for the satisfaction of the obligations of Landlord and
shall not have recourse to any other assets of Landlord for the satisfaction of
such obligations.
10.3 Indemnification of Landlord: Tenant shall hold harmless, indemnify and
---------------------------
defend Landlord, and its employees, agents and contractors, with competent
counsel reasonably satisfactory to Landlord (and Landlord agrees to accept
counsel that any insurer requires be used), from all liability, penalties,
losses, damages, costs, expenses, causes of action, claims and/or judgments
arising by reason of any death, bodily injury, personal injury or property
damage resulting from (i) any cause or causes whatsoever (other than the willful
misconduct or gross negligence of Landlord of which Landlord has had notice and
a reasonable time to cure, but which Landlord has failed to cure) occurring in
or about or resulting from an occurrence in or about the Premises during the
Lease Term, (ii) the negligence or willful misconduct of Tenant or its agents,
employees and contractors, wherever the same may occur, or (iii) an Event of
Tenant's Default. The provisions of this (P)10.3 shall survive the expiration or
sooner termination of this Lease.
ARTICLE 11
----------
DAMAGE TO PREMISES
------------------
11.1 Landlord's Duty to Restore: If the Premises are damaged by any peril
--------------------------
after the Effective Date, Landlord shall restore the Premises unless the Lease
is terminated by Landlord pursuant to (P)11.2 or by Tenant pursuant to (P)11.3.
All insurance proceeds available from the fire and property damage insurance
carried by Landlord pursuant to (P)9.2 shall be paid to and become the property
of Landlord. If this Lease is terminated pursuant to either (P)11.2 or (P)11.3,
then all insurance proceeds available from insurance carried by Tenant which
covers loss to property that is Landlord's property or would become Landlord's
property on termination of this Lease shall be paid to and become the property
of Landlord. If this Lease is not so terminated, then upon receipt of the
insurance proceeds if the loss is covered by insurance, and the issuance of all
necessary governmental permits. Landlord shall commence and diligently prosecute
to completion the restoration of the Premises, to the extent then allowed by
Law, to substantially the same condition in which the Premises were immediately
prior to such damage. Landlord's obligation to restore shall be limited to the
Premises and interior improvements constructed by Landlord as they existed as of
the Commencement Date, excluding any Trade Fixtures and/or personal property
constructed or installed by Tenant in the Premises. Tenant shall forthwith
replace or fully repair all Tenant's Alterations and Trade Fixtures installed by
Tenant and existing at the time of such damage or destruction, and all insurance
proceeds received by Tenant from the insurance carried by it pursuant to
(P)9.A(2) shall be used for such purpose.
11.2 Landlord's Right to Terminate: Landlord shall have the right to
-----------------------------
terminate this Lease in the event any of the following occurs, which right may
be exercised only by delivery to Tenant of a written notice of election to
terminate within 30 days after the date of such damage:
A. Either the Project or the Building is damaged by an Insured Peril to
such an extent that the estimated cost to restore exceeds 33% of the then actual
replacement cost thereof;
B. Either the Project or the Building is damaged by an Uninsured Peril
to such an extent that the estimated cost to restore exceeds 2% of the then
actual replacement cost thereof; provided, however, that Landlord may not
terminate this Lease pursuant to this (P)11.2B if one or more tenants of the
Project agree in writing to pay the amount by which the cost to restore the
damage exceeds such amount and subsequently deposit such amount with Landlord
within 30 days after Landlord has notified Tenant of its election to terminate
this Lease;
C. The Premises are damaged by any peril within 12 months of the last
day of the Lease Term to such an extent that the estimated cost to restore
equals or exceeds an amount equal to six times the Base Monthly Rent then due;
provided, however, that Landlord may not terminate this Lease pursuant to this
(P)11.2C if Tenant, at the time of such damage, has a then valid express written
option to extend the Lease Term and Tenant exercises such option to extend the
Lease Term within 15 days following the date of such damage; or
D. Either the Project or the Building is damaged by any peril and,
because of the Laws then in force, (i) cannot be restored at reasonable cost to
substantially the same condition in which it was prior to such damage, or (ii)
cannot be used for the same use being made thereof before such damage if
restored as required by this Article.
E. As used herein, the following terms shall have the following
meanings: (i) the term "Insured Peril" shall mean a peril actually insured
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against for which the insurance proceeds actually received by Landlord are
sufficient (except for any "deductible" amount specified by such insurance)
to restore the Project under then existing building codes to the condition
existing immediately prior to the damage; and (ii) the term "Uninsured Peril"
shall mean any peril which is not an Insured Peril. Notwithstanding the
foregoing, if the "deductible" for earthquake or flood insurance exceeds 2% of
the replacement cost of the improvements insured, such peril shall be deemed an
"Uninsured Peril."
11.3 Tenant's Right to Terminate: If the Premises are damaged by any
---------------------------
peril and Landlord does not elect to terminate this Lease or is not entitled to
terminate this Lease pursuant to (P)11.2 then as soon as reasonably
practicable, Landlord shall furnish Tenant with the written opinion of
Landlord's architect or construction consultant as to when the restoration work
required of Landlord may be completed. Tenant shall have the right to terminate
this Lease in the event any of the following occurs, which right may be
exercised only by delivery to Landlord of a written notice of election to
terminate within 21 days after Tenant receives from Landlord the estimate of the
time needed to complete such restoration.
A. The Premises are damaged by any peril and, in the reasonable
opinion of Landlord's architect or construction consultant, the restoration of
the Premises cannot be substantially completed within 180 days after the date of
such damage; or
B. The Premises are damaged by any peril within 12 months of the
last day of the Lease Term and, in the reasonable opinion of Landlord's
architect or construction consultant, the restoration of the Premises cannot be
substantially completed within 90 days after the date of such damage and such
damage renders unusable more than 30% of the Premises.
11.4 Abatement of Rent: In the event of damage to the Premises which does
-----------------
not result in the termination of this Lease, the Base Monthly Rent and the
Additional Rent shall be temporarily abated during the period of restoration in
proportion to the degree to which Tenant's use of the Premises is impaired by
such damage. Tenant shall not be entitled to any compensation or damages from
Landlord for loss of Tenant's business or property or for any inconvenience or
annoyance caused by such damage or restoration. Tenant hereby waives the
provisions of California Civil Code Sections 1932(2) and 1933(4) and the
provisions of any similar law hereinafter enacted.
ARTICLE 12
----------
CONDEMNATION
------------
12.1 Landlord's Termination Right: Landlord shall have the right to
----------------------------
terminate this Lease if, as a result of a taking by means of the exercise of the
power of eminent domain; (including a voluntary sale or transfer by Landlord to
a condemnor under threat of condemnation), (i) all or any part of the Premises
is so taken, (ii) more than 10% of the Building Leasable Area is so taken, or
(iii) more than 50% of the Common Area is so taken. Any such right to terminate
by Landlord must he exercised within a reasonable period of time, to be
effective as of the date possession is taken by the condemnor.
12.2 Tenant's Termination Right: Tenant shall have the right to terminate
--------------------------
this Lease if, as a result of any taking by means of the exercise of the power
of eminent domain (including any voluntary sale or transfer by Landlord to any
condemnor under threat of condemnation), (i) 10% or more of the Premises is so
taken and that part of the Premises that remains cannot be restored within a
reasonable period of time and thereby made reasonably suitable for the continued
operation of the Tenant's business, or (ii) there is a taking affecting the
Common Area and, as a result of such taking Landlord cannot provide parking
spaces within reasonable walking distance of the Premises equal in number to at
least 80% of the number of spaces allocated to Tenant by (P)2.1, whether by
rearrangement of the remaining parking areas in the Common Area (including
construction of multi-deck parking structures or restriping for compact cars
where permitted by Law) or by alternative parking facilities on other land.
Tenant must exercise such right within a reasonable period of time, to be
effective on the date that possession of that portion of the Premises or Common
Area that is condemned is taken by the condemnor.
12.3 Restoration and Abatement of Rent: If any part of the Premises or
---------------------------------
the Common Area is taken by condemnation and this Lease is not terminated, then
Landlord shall restore the remaining portion of the Premises and Common Area and
interior improvements constructed by Landlord as they existed as of the
Commencement Date, excluding any, Trade Fixtures and/or personal property
constructed or installed by Tenant. Thereafter, except in the case of a
temporary taking, as of the date possession is taken the Base Monthly Rent shall
be reduced in the same proportion that the floor area of that part of the
Premises so taken (less any addition thereto by reason of any reconstruction)
bears to the original floor area of the Premises.
12.4 Temporary Taking: If any portion of the Premises is temporarily
----------------
taken for one year or less, this Lease shall remain in effect. If any portion of
the Premises is temporarily taken by condemnation for a period which exceeds one
year or which extends beyond the natural expiration of the Lease Term, and such
taking materially and adversely affects Tenant's ability to use the Premises for
the Permitted Use, then Tenant shall have the right to terminate this Lease,
effective on the date possession is taken by the condemnor.
12.5 Division of Condemnation Award: Any award made as a result of any
------------------------------
condemnation of the Premises or the Common Area shall belong to and be paid to
Landlord, and Tenant hereby assigns to Landlord all of its right, title and
interest in any such award; provided, however, that Tenant shall be entitled to
receive any condemnation award that is made directly to Tenant for the following
so long as the award made to Landlord is not thereby reduced: (i) for the taking
of personal property or Trade Fixtures belonging to Tenant, (ii) for the
interruption of Tenant's business or its moving costs, (iii) for loss of
Tenant's goodwill; or (iv) for
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any temporary taking where this Lease is not terminated as a result of such
taking. The rights of Landlord and Tenant regarding any condemnation shall be
determined as provided in this Article. and each party hereby waives the
provisions of California Code of Civil Procedure Section 1265.130 and the
provisions of any similar law hereinafter enacted allowing either party to
petition the Superior Court to terminate this Lease in the event of a partial
taking of the Premises.
ARTICLE 13
----------
DEFAULT AND REMEDIES
--------------------
13.1 Events of Tenant's Default: Tenant shall be in default of its
--------------------------
obligations under this Lease if any of the following events occurs (an Event of
Tenant's Default"):
A. Tenant shall have failed to pay Base Monthly Rent or Additional
Rent when due, and such failure is not cured within 5 days after delivery of
written notice from Landlord specifying such failure to pay; or
B. Tenant shall have failed to perform any term, covenant, or
condition of this Lease except those requiring the payment of Base Monthly Rent
or Additional Rent, and Tenant shall have failed to cure such breach within 30
days after written notice from Landlord specifying the nature of such breach
where such breach could reasonably be cured within said 30 day period, or if
such breach could not be reasonably cured within said 30 day period, Tenant
shall have failed to commence such cure within said 30 day period and thereafter
continue with due diligence to prosecute such cure to completion within such
time period as is reasonably needed but not to exceed 90 days from the date of
Landlord's notice; or
C. Tenant shall have sublet the Premises or assigned its interest in
the Lease in violation of the provisions contained in Article 14; or
D. Tenant shall have abandoned the Premises or left the Premises
substantially vacant; or
E. The occurrence of the following: (i) the making by Tenant of any
general arrangements or assignments for the benefit of creditors; (ii) Tenant
becomes a "debtor" as defined in 11 USC (S)101 or any successor statute thereto
(unless, in the ease of a petition filed against Tenant, the same is dismissed
within 60 days); (iii) the appointment of a trustee or receiver to take
possession of substantially all of Tenant's assets located at the Premises or of
Tenant's interest in this Lease, where possession is not restored to Tenant
within 30 days; or (iv) the attachment, execution or other judicial seizure of
substantially all of Tenant's assets located at the Premises or of Tenant's
interest in this Lease, where such seizure is not discharged within 30 days;
provided, however, in the event that any provision of this Section 13.1E is
contrary to any applicable Law, such provision shall be of no force or effect;
or
F. Tenant shall have failed to deliver documents required of it
pursuant to (P)154 or (P)915.6 within the time periods specified therein.
13.2 Landlord's Remedies: If an Event of Tenant's Default occurs,
-------------------
Landlord shall have the following remedies, in addition to all other rights and
remedies provided by any Law or otherwise provided in this Lease, to which
Landlord may resort cumulatively or in the alternative:
A. Landlord may keep this Lease in effect and enforce an action at
law or in equity all of its rights and remedies under this Lease including (i)
the right to recover the rent and other sums as they become due by appropriate
legal action, (ii) the right to make payments required of Tenant or perform
Tenant's obligations and be reimbursed by Tenant for the cost thereof with
interest at the Agreed Interest Rate from the date the sum is paid by Landlord
until Landlord is reimbursed by Tenant, and (iii) the remedies of injunctive
relief and specific performance to compel Tenant to perform its obligations
under this Lease. Notwithstanding anything contained in this Lease, in the event
of a breach of an obligation by Tenant which results in a condition which poses
an imminent danger to safety of persons or damage to property, an unsightly
condition visible from the exterior of the Building, or a threat to insurance
coverage, then if Tenant does not cure such breach within 3 days after delivery
to it of written notice from Landlord identifying the breach, Landlord may cure
the breach of Tenant and be reimbursed by Tenant for the cost thereof with
interest at the Agreed Interest Rate from the date the sum is paid by Landlord
until Landlord is reimbursed by Tenant.
B. Landlord may enter the Premises and release them to third parties
for Tenant's account for any period, whether shorter or longer than the
remaining Lease Term. Tenant shall be liable immediately to Landlord for all
costs Landlord incurs in releasing the Premises, including brokers' commissions
expenses of altering and preparing the Premises required by the releasing.
Tenant shall pay to Landlord the rent and other sums due under this Lease on the
date the rent is due, less the rent and other sums Landlord received from any
releasing. No act by Landlord allowed by this subparagraph shall terminate this
Lease unless Landlord notifies Tenant in writing that Landlord elects to
terminate this Lease. Notwithstanding any releasing without termination,
Landlord may later elect to terminate this Lease because of the default by
Tenant.
C. Landlord may terminate this Lease by giving Tenant written notice
of termination, in which event this Lease shall terminate on the date set forth
for termination in such notice. Any termination under this (P)13.2C shall not
relieve Tenant from its obligation to pay sums then due Landlord or from any
claim against Tenant for damages or rent previously accrued or then accruing. In
no event shall any one or more of the following actions by Landlord, in the
absence of a written election by Landlord to terminate this Lease, constitute
a termination of this Lease: (i) appointment of a receiver or keeper in order to
protect Landlord's interest hereunder; (ii) consent to any subletting of the
Premises or assignment of this Lease by Tenant, whether pursuant to the
provisions hereof or otherwise; or (iii) any other action by Landlord or
Landlord's Agents intended
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to mitigate the adverse effects of any breach of this Lease by Tenant, including
without limitation any action taken to maintain and preserve the Premises, or
any action taken to relet the Premises or any portions thereof to the extent
such actions do not affect a termination of Tenant's right to possession of the
Premises.
D. In the event Tenant breaches this Lease and abandons the
Premises, this Lease shall not terminate unless Landlord gives Tenant written
notice of its election to so terminate this Lease. No act by or on behalf of
Landlord intended to mitigate the adverse effect of such breach, including those
described by (P)13.C, shall constitute a termination of Tenant's right to
possession unless Landlord gives Tenant written notice of termination. Should
Landlord not terminate this Lease by giving Tenant written notice, Landlord may
enforce all its rights and remedies under this Lease, including the right to
recover the rent as it becomes due under the Lease as provided in California
Civil Code Section 1951.4.
E. In the event Landlord terminates this Lease, Landlord shall be
entitled, at Landlord's election, to damages in an amount as set forth in
California Civil Code Section 19512 as in effect on the Effective Date. For
purposes of computing damages pursuant to California Civil Code Section 1951.2,
(i) an interest rate equal to the Agreed Interest Rate shall be used where
permitted, and (ii) the term "rent" includes Base Monthly Rent and Additional
Rent. Such damages shall include:
(1) The worth at the time of award of the amount by which
the unpaid rent for the balance of the term after the time of award exceeds the
amount of such rental loss that Tenant proves could be reasonably avoided,
computed by discounting such amount at the discount rate of the Federal Reserve
Bank of San Francisco at the time of award plus one percent (1%); and
(2) Any other amount necessary to compensate Landlord for
all detriment proximately caused by Tenant's failure to perform Tenant's
obligations under this Lease, or which in the ordinary course of things would be
likely to result therefrom, including to the extent reasonable the following:
(i) expenses for cleaning, repairing or restoring the Premises; (ii) expenses
for altering, remodeling or otherwise improving the Premises for the purpose of
reletting, including installation of leasehold improvements (whether such
installation be funded by a reduction of rent, direct payment or allowance to a
new tenant, or otherwise); (iii) broker's fees, advertising costs and other
expenses of reletting the Premises; (iv) costs of carrying the Premises, such as
taxes, insurance premiums, utilities and security precautions; (v) expenses in
retaking possession of the Premises; and (vi) attorneys' fees and court costs
incurred by Landlord in retaking possession of the Premises and in releasing the
Premises or otherwise incurred as a result of Tenant's default.
F. Nothing in this (P)13.2 shall limit Landlord's right to
indemnification from Tenant as provided in (P)7.2 and (P)10.3. Any notice given
by Landlord in order to satisfy the requirements of (P)13.1A or (P)l3.1B above
shall also satisfy the notice requirements of California Code of Civil Procedure
Section 116l regarding unlawful detainer proceedings.
13.3 Waiver: One party's consent to or approval of any act by the other
------
party requiring the first party's consent or approval shall not be deemed to
waive or render unnecessary the first party's consent to or approval of any
subsequent similar act by the other party. The receipt by Landlord of any
rent or payment with or without knowledge of the breach of any other provision
hereof shall not be deemed a waiver of any such breach unless such waiver is in
writing and signed by Landlord. No delay or omission in the exercise of any
right or remedy accruing to either party upon any breach by the other party
under this Lease shall impair such right or remedy or be construed as a waiver
of any such breach theretofore or thereafter occurring. The waiver by either
party of any breach of any provision of this Lease shall not be deemed to be a
waiver of any subsequent breach of the same or of any other provisions herein
contained.
13.4 Limitation On Exercise of Rights: At any time that an Event of
--------------------------------
Tenant's Default has occurred and remains uncured, (i) it shall not be
unreasonable for Landlord to deny or withhold any consent or approval requested
of it by Tenant which Landlord would otherwise be obligated to give, and (ii)
Tenant may not exercise any option to extend, right to terminate this Lease, or
other right granted to it by this Lease which would otherwise be available to
it.
l3.5 Waiver by Tenant of Certain Remedies: Tenant waives the provisions
------------------------------------
of Sections 1932(1), 1941 and 1942 of the California Civil Code and any similar
or successor law regarding Tenant's right to terminate this Lease or to make
repairs and deduct the expenses of such repairs from the rent due under this
Lease. Tenant hereby waives any right of redemption or relief from forfeiture
under the laws of the State of California, or under any other present or future
law, including the provisions of Sections 1174 and L179 of the Califorina. Code
of Civil Procedure.
ARTICLE 14
----------
ASSIGNMENT AND SUBLETTING
-------------------------
14.1 Transfer By Tenant: The following provisions shall apply to any
------------------
assignment subletting or other transfer by Tenant or any subtenant or assignee
or other successor in interest of the original Tenant (collectively referred to
this (P)14.1 as "Tenant"):
A. Subject to subparagraph F below,Tenant shall not do any of the
following (collectively referred to herein as a Transfer), whether voluntarily,
involuntarily or by operation of law, without the prior written consent of
Landlord, which consent shall not be unreasonably withheld or delayed: (i)
sublet all or any part of the Premises or allow it to be sublet, occupied or
used by any person or entity other than Tenant; (ii) assign its interest in this
Lease; (iii) mortgage or encumber the Lease (or otherwise use the Lease as a
security device) in any manner; or (iv) material amend or modify an assignment,
sublease or other transfer that has been previously approved by Landlord. Tenant
shall reimburse Landlord for all reasonable
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costs and attorneys' fees not to exceed $500,000 per indifference unless Tenant
challenges Landlords review decision incurred by Landlord in connection with the
evaluation, processing, and/or documentation of any requested Transfer, whether
or not Landlord's consent is granted. Landlord's reasonable costs shall include
the cost of any review or investigation performed by Landlord or consultant
acting on Landlord's behalf of (i) Hazardous Materials (as defined in Section
7.2E of this Lease) used, stored, released, or disposed of by the potential
Subtenant or Assignee, and/or (ii) violations of Hazardous Materials Law (as
defined in Section 7.2E of this lease) by the Tenant or the proposed Subtenant
or Assignee. Any Transfer so approved by Landlord shall not be effective until
Tenant has delivered to Landlord an executed counterpart of the document
evidencing the Transfer which (i) is in a form reasonably approved by Landlord,
(ii) contains substantially the same terms and conditions as stated in Tenant's
notice given to Landlord pursuant to (P)14.1B, and (iii) in the case of an
assignment of the Lease, contains the agreement of the proposed transferee to
assume all obligations of Tenant under this Lease arising after the effective
date of such Transfer and to remain jointly and severally liable therefor with
Tenant. Any attempted Transfer without Landlord's consent shall constitute an
Event of Tenant's Default and shall be voidable at Landlord's option. Landlord's
consent to any one Transfer shall not constitute a waiver of the provisions of
this (P)14.1 as to any subsequent Transfer or a consent to any subsequent
Transfer. No Transfer, even with the consent of Landlord, shall relieve Tenant
of its personal and primary obligation to pay the rent and to perform all of the
other obligations to be performed by Tenant hereunder. The acceptance of rent by
Landlord from any person shall not be deemed to be a waiver by Landlord of any
provision of this Lease nor to be a consent to any Transfer.
B. At least 15 days before a proposed Transfer is to become
effective, Tenant shall give Landlord written notice of the proposed terms of
such Transfer and request Landlord's approval, which notice shall include the
following: (i) the name and legal composition of the proposed transferee; (ii) a
current financial statement of the transferee, financial statements of the
transferee covering the preceding three years if the same exist, and (if
available) an audited financial statement of the transferee for a period ending
not more than one year prior to the proposed effective date of the Transfer, all
of which statements are prepared, to the extent reasonable in accordance with
generally accepted accounting principles; (iii) the nature of the proposed
transferee's business to be carried on in the Premises; (iv) all consideration
to be given on account of the Transfer; (v) a current financial statement of
Tenant; and (vi) an accurately filled out response to Landlord's standard
Hazardous Materials Questionnaire. Tenant shall provide to Landlord such other
information as may be reasonably requested by Landlord within seven days after
Landlord's receipt of such notice from Tenant. Landlord shall respond in writing
to Tenant's request for Landlord's consent to a Transfer within the later of (i)
10 days of receipt of such request together with the required accompanying
documentation, or (ii) seven days after Landlord's receipt of all information
which Landlord reasonably requests within seven days after it receives Tenants
first notice regarding the Transfer in question. If Landlord fails to respond in
writing within said period, Landlord will be deemed to have withheld consent to
such Transfer. Tenant shall immediately notify Landlord if any material
modification to the proposed terms of such Transfer.
C. In the event that Tenant seeks to make any Transfer for the
balance of the Lease Term, Landlord shall have the right to terminate this Lease
or, in the case of a sublease of less than all of the Premises, terminate this
Lease as to that part of the Premises proposed to be so sublet, either (i) on
the condition that the proposed transferee immediately enter into a direct lease
of the Premises with Landlord (or, in the case of a partial sublease, a lease
for the portion proposed to be so sublet) on the same terms and conditions
contained in Tenant's notice, or (ii) so that Landlord is thereafter free to
lease the Premises (or, in the case of a partial sublease, the portion proposed
to be so sublet) to whomever it pleases on whatever terms are acceptable to
Landlord. In the event Landlord elects to so terminate this Lease, then (i) if
such termination is conditioned upon the execution of a lease between Landlord
and the proposed transferee, Tenant's obligations under this Lease shall not be
terminated until such transferee executes a new lease with Landlord, enters into
possession and commences the payment of rent, and (ii) if Landlord elects simply
to terminate this Lease (or, in the case of a partial sublease, terminate this
Lease as to the portion to be so sublet), the Lease shall so terminate in its
entirety (or as to the space to be so sublet) fifteen (15) days after Landlord
has notified Tenant in writing of such election. Upon such termination, Tenant
shall be released from any further obligation under this Lease if it is
terminated in its entirety, or shall be released from any further obligation
under the Lease with respect to the space proposed to be sublet in the case of a
proposed partial sublease. In the case of a partial termination of the Lease,
the Base Monthly Rent and Tenant's share shall be reduced to an amount which
bears the same relationship to the original amount thereof as the area of that
part of the Premises which remains subject to the Lease bears to the original
area of the Premises. Landlord and Tenant shall execute a cancellation and
release with respect to the Lease to effect such termination.
D. If Landlord consents to a Transfer proposed by Tenant, Tenant may
enter into such Transfer, and if Tenant does so, the following shall apply:
(1) Unless Otherwise mutually agreed upon in writing by
Landlord and Tenant, Tenant shall not be released of its liability for the
performance of all of its obligations under the Lease.
(2) If Tenant assigns its interest in this Lease, then
Tenant shall pay to Landlord 50% of all Subrent (as defined in (P)14.1D(5))
received by Tenant over and above (i) the assignee's agreement to assume the
obligations of Tenant under this Lease, and (ii) all Permitted Transfer Costs
related to such assignment. In the case of assignment, the amount of Subrent
owed to Landlord shall be paid to Landlord on the same basis, whether periodic
or in lump sum, that such Subrent is paid to Tenant by the assignee.
(3) If Tenant sublets any part of the Premises, then with
respect to the space so
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subleased, Tenant shall pay to Landlord 5O% of the positive difference, if any,
between (i) all Subrent paid by the subtenant to Tenant, less (ii) the sum of
all Base Monthly Rent and Additional Rent allocable to the space sublet and all
Permitted Transfer Costs related to such sublease. Such amount shall be paid to
Landlord on the same basis, whether periodic or in lump sum, that such Subrent
is paid to Tenant by its subtenant. In calculating Landlord's share of any
periodic payments, all Permitted Transfer Costs shall be first recovered by
Tenant.
(4) Tenant's obligations under this (P)14.1D shall survive
any Transfer, and Tenant's failure to perform its obligations hereunder shall be
an Event of Tenant's Default. At the time Tenant makes any payment to Landlord
required by this (P)14.1D, Tenant shall deliver an itemized statement of the
method by which the amount to which Landlord is entitled was calculated,
certified by Tenant as true and correct. Landlord shall have the right at
reasonable intervals to inspect Tenant's books and records relating to the
payments due hereunder. Upon request therefor, Tenant shall deliver to Landlord
copies of all bills, invoices or other documents upon which its calculations are
based. Landlord may condition its approval of any Transfer upon obtaining a
certification from both Tenant and the proposed transferee of all Subrent and
other amounts that are to be paid to Tenant in connection with such Transfer.
(5) As used in this (P)14.1D, the term "Subrent" shall
mean any consideration of any kind received, or to be received, by Tenant as a
result of the Transfer, if such sums are related to Tenant's interest in this
Lease or in the Premises, including payments from or on behalf of the transferee
(in excess of the book value thereof) for Tenant's assets, fixtures, leasehold
improvements, inventory, accounts, goodwill, equipment, furniture, and general
intangibles. As used in this (P)14.1D, the term "Permitted Transfer Costs" shall
mean (i) all reasonable leasing commissions paid to third parties not affiliated
with Tenant in order to obtain the Transfer in question, and (ii) all reasonable
attorneys' fees incurred by Tenant with respect to the Transfer in question.
E. If Tenant is a corporation, the following shall be deemed a
voluntary assignment of Tenant's interest in this Lease: (i) any dissolution,
merger, consolidation, or other reorganization of or affecting Tenant, whether
or not Tenant is the surviving corporation; and (ii) if the capital stock of
Tenant is not publicly traded, the sale or transfer to one person or entity (or
to any group of related persons or entities) stock possessing more than 50% of
the total combined voting power of all classes of Tenant's capital stock issued,
outstanding and entitled to vote for the election of directors. If Tenant is a
partnership, any withdrawal or substitution (whether voluntary, involuntary or
by operation of law, and whether occurring at one time or over a period of
time) of any partner owning 25% or more (cumulatively) of any interest in the
capital or profits of the partnership, or the dissolution of the partnership,
shall be deemed a voluntary assignment of Tenant's interest in this Lease.
F. Notwithstanding anything contained in (P)14.1, so long as Tenant
otherwise complies with the provisions of (P)14.1 Tenant may enter into any of
the following transfers (a "Permitted Transfer") without Landlord's prior
written consent, and Landlord shall not be entitled to terminate the Lease
pursuant to (P)14.1C or to receive any part of any Subrent resulting therefrom
that would otherwise be due it pursuant to (P)14.1D:
(1) Tenant may sublease all or part of the Premises or
assign its interest in this Lease to any corporation which controls, is
controlled by, or is under common control with the original Tenant to this Lease
by means of an ownership interest of more than 50%;
(2) Tenant may assign its interest in the Lease to a
corporation which results from a merger, consolidation or other reorganization
in which Tenant is not the surviving corporation, so long as the surviving
corporation has a net worth at the time of such assignment that is equal to or
greater than the net worth of Tenant immediately prior to such transaction; and
(3) Tenant may assign this Lease to a corporation which
purchases or otherwise acquires all or substantially all of the assets of
Tenant, so long as such acquiring corporation has a net worth at the time of
such assignment that is equal to or greater than the net worth of Tenant
immediately prior to such transaction.
14.2 Transfer By Landlord: Landlord and its successors in interest shall
--------------------
have the right to transfer their interest in this Lease and the Project at any
time and to any person or entity. In the event of any such transfer, the
Landlord originally named herein (and, in the case of any subsequent transfer,
the transferror) from the date of such transfer, shall be automatically
relieved, without any further act by any person or entity, of all liability for
the performance of the obligations of the Landlord hereunder which may accrue
after the date of such transfer. After the date of any such transfer, the term
"Landlord" as used herein shall mean the transferee of such interest in the
Premises.
ARTICLE 15
----------
GENERAL PROVISIONS
------------------
15.1 Landlord's Right to Enter: Landlord and its agents may enter the
-------------------------
Premises at any reasonable time after giving at least 24 hours' prior notice to
Tenant (and immediately in the case of emergency) for the purpose of: (i)
inspecting the same; (ii) posting notices of non-responsibility; (iii) supplying
any service to be provided by Landlord to Tenant; (iv) showing the Premises to
prospective purchasers, mortgagees or during the last sixty (60) days of the
Lease Term, tenants; (v) making necessary alterations, additions or repairs;
(vi) performing Tenant's obligations when Tenant has failed to do so after
written notice from Landlord; (vii) placing upon the Premises ordinary "for
lease" signs or "for sale" signs; and (viii) responding to an emergency.
Landlord shall have the right to use any and all means Landlord may reasonably
deem necessary and proper to enter the Premises in an emergency. Any entry into
the Premises obtained by Landlord in accordance with this (P)15.1 shall not be a
forcible or unlawful
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entry into, or a detainer of, the Premises, or an eviction, actual or
constructive, of Tenant from the Premises.
15.2 Surrender of the Premises: Upon the expiration or sooner termination
-------------------------
to this Lease, Tenant shall vacate and surrender the Premises to Landlord in the
same condition as existed at the Commencement Date, except for (i) reasonable
wear and tear, (ii) damage caused by any peril or condemnation, and (iii)
contamination by Hazardous Materials for which Tenant is not responsible
pursuant to (P)7.2A or (P)7.2B. In this regard, normal wear and tear shall be
construed to mean wear and tear caused to the Premises by the natural aging
process which occurs in spite of prudent application of commercially reasonable
standards for maintenance, repair and janitorial practices, and does not include
items of neglected or deferred maintenance, that Tenant was required to maintain
during the Lease Term In any event, Tenant shall cause the following to be done
prior to the expiration or the sooner termination of this Lease: (i) all
interior walls shall be cleaned; (ii) all tiled floors shall be cleaned and
waxed; (iii) all carpets shall be cleaned and shampooed; (iv) all broken,
marred, stained or nonconforming acoustical ceiling tiles shall be replaced; (v)
all windows shall be washed; (vi) the HVAC system shall be serviced by a
reputable and licensed service firm or trained in-house employee and left in
good operating condition and repair as so certified by such firm; and (vii) the
plumbing and electrical systems and lighting shall be placed in good order and
repair (including replacement of any burned out, discolored or broken light
bulbs, ballast's, or lenses). If Landlord so requests, Tenant shall, prior to
the expiration or sooner termination of this Lease, (i) remove any Tenant's
Alterations which Tenant is required to remove pursuant to (P)5.2 and repair
all damage caused by such removal, and (ii) return the Premises or any part
thereof to its original configuration existing as of the time the Premises were
delivered to Tenant. If the Premises are not so surrendered at the termination
of this Lease, Tenant shall be liable to Landlord for all costs incurred by
Landlord in returning the Premises to the required condition, plus interest on
all costs incurred at the Agreed Interest Rate. Tenant shall indemnify Landlord
against loss or liability resulting from delay by Tenant in so surrendering the
Premises, including, without limitation, any claims made by any succeeding
tenant or losses to Landlord due to lost opportunities to lease to succeeding
tenants.
15.3 Holding Over: This Lease shall terminate without further notice at the
------------
expiration of the Lease Term. Any holding over by Tenant after expiration of the
Lease Term shall not constitute a renewal or extension of the Lease or give
Tenant any rights in or to the Premises except as expressly provided in this
Lease. Any holding over after such expiration with the written consent of
Landlord shall be construed to be a tenancy from month to month on the same
terms and conditions herein specified insofar as applicable except that Base
Monthly Rent shall be increased to an amount equal 125% of the Base Monthly
Rent payable during the last full calendar month of the Lease Term.
15.4 Subordination: The following provisions shall govern the relationship
-------------
of this Lease to any Security Instrument:
A. The Lease is subject and subordinate to all Security instruments
existing as of the Effective Date. However, if any Lender so requires, this
Lease shall become prior and superior to any such Security Instrument.
B. At Landlord's election, this Lease shall become subject and
subordinate to any Security Instrument created after the Effective Date.
Notwithstanding such subordination, Tenant's right to quiet possession of the
Premises shall not be disturbed so long as Tenant is not in default and performs
all of its obligations under this Lease, unless this Lease is otherwise
terminated pursuant to its terms.
C. Tenant shall upon request execute any document or instrument
reasonably required by any Lender to make this Lease either prior or subordinate
to a Security Instrument, which may include such other matters as the Lender
customarily and reasonably requires in connection with such agreements,
including provisions that the Lender not be liable for (i) the return of any
security deposit unless the Lender receives it from Landlord, and (ii) any
defaults on the part of Landlord occurring prior to the time the Lender takes
possession of the Project in connection with the enforcement of its Security
Instrument. Tenant's failure to execute any such document or instrument within
10 days after written demand therefor shall constitute an Event of Tenant's
Default. Tenant approves as reasonable the form of subordination agreement
attached to this Lease as Exhibit G.
---------
15.5 Mortgagee Protection and Attornment: In the event of any default on the
------------------------------------
part of the Landlord, Tenant will use reasonable efforts to give notice by
registered mail to any Lender whose name has been provided to Tenant and shall
offer such Lender a reasonable opportunity to cure the default, including time
to obtain possession of the Premises by power of sale or judicial foreclosure or
other appropriate legal proceedings, if such should prove necessary to effect a
cure. Tenant shall attorn to any purchaser of the Premises at any foreclosure
sale or private sale conducted pursuant to any Security Instrument encumbering
the Premises, or to any grantee or transferee designated in any deed given in
lieu of foreclosure.
15.6 Estoppel Certificates and Financial Statements: At all times during the
----------------------------------------------
Lease Term, each party agrees, following any request by the other party,
promptly to execute and deliver to the requesting party within 15 days following
delivery of such request an estoppel certificate: (i) certifying that this Lease
is unmodified and in full force and effect or, if modified, stating the nature
of such modification and certifying that this Lease, as so modified, is in full
force and effect, (ii) stating the date to which the rent and other charges are
paid in advance, if any, (iii) acknowledging that there are not, to the
certifying party's knowledge, any uncured defaults on the part of any party
hereunder or, if there are uncured defaults, specifying the nature of such
defaults, and (iv) certifying such other information about the Lease as may be
reasonably required by the requesting party. A failure to
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deliver an estoppel certificate within 15 days after delivery of a request
therefor shall be a conclusive admission that, as of the date of the request for
such statement: (i) this Lease is unmodified except as may be represented by the
requesting party in said request and is in full force and effect; (ii) there are
no uncured defaults in the requesting party's performance, and (iii) no rent has
been paid more than 30 days in advance. At any time during the Lease Term Tenant
shall, upon 15 days' prior written notice from Landlord, provide Tenant's most
recent financial statement and financial statements covering the 24 month period
prior to the date of such most recent financial statement to any existing Lender
or to any potential Lender or buyer of the Premises to the extent available, and
Landlord signs a confidentiality statement. Such statements shall be prepared in
accordance with generally accepted accounting principles and, if such is the
normal practice of Tenant, shall be audited by an independent certified public
accountant.
15.7 Reasonable Consent: Whenever any party's approval or consent is required
------------------
by this Lease before an action may be taken by the other party, such approval or
consent shall not be unreasonably withheld or delayed.
15.8 Notices: Any notice required or desired to be given regarding this Lease
-------
shall be in writing and may be given by personal delivery, by facsimile
telecopy, by courier service, or by mail. A notice shall be deemed to have
been given (i) on the third business day after mailing if such notice was
deposited in the United States mail, certified or registered, postage prepaid,
addressed to the party to be served at its Address for Notices specified in
Section Q and Section R of the Summary (as applicable), (ii) when delivered if
- --------- ---------
given by personal delivery, and (iii) in all other cases when actually received
at the party's Address for Notices. Either party may change its address by
giving notice of the same in accordance with this (p)15.8
15.9 Attorneys' Fees: In the event either Landlord or Tenant shall bring any
---------------
action or legal proceeding for an alleged breach of any provision of this Lease,
to recover rent to terminate this Lease or otherwise to enforce, protect or
establish any term or covenant of this Lease, the prevailing party shall be
entitled to recover as a part of such action or proceeding, or in a separate
action brought for that purpose, reasonable attorneys' fees, court costs, and
experts' fees as may be fixed by the court.
15.10 Corporate Authority If Tenant is a corporation (or partnership), each
-------------------
individual executing this Lease on behalf of Tenant represents and warrants that
he is duly authorized to execute and deliver this Lease on behalf of such
corporation in accordance with the by-laws of such corporation (or partnership
in accordance with the partnership agreement of such partnership) and that this
Lease is binding upon such corporation (or partnership) in accordance with its
terms. Each of the persons executing this Lease on behalf of a corporation does
hereby covenant and warrant that the party for whom it is executing this Lease
is a duly authorized and existing corporation, that it is qualified to do
business in California and that the corporation his full right and authority to
enter into this Lease.
15.11 Miscellaneous: Should any provision of this Lease prove to be invalid
-------------
or illegal, such invalidity or illegality shall in no way affect, impair or
invalidate any other provision hereof, any such remaining provisions shall
remain in full force and effect. Time is of the essence with respect to the
performance of every provision of this Lease in which time of performance is a
factor. The captions used in this Lease are for convenience only and shall not
be considered in the construction or interpretation of any provision hereof. Any
executed copy of this Lease shall be deemed an original for all purposes. This
Lease shall, subject to the provisions regarding assignment, apply to and bind
the respective heirs, successors, executors, administrators and assigns of
Landlord and Tenant. "Party" shall mean Landlord or Tenant, as the context
implies. If Tenant consists of more than one person or entity, then all members
of Tenant shall be jointly and severally liable hereunder. This Lease shall be
construed and enforced in accordance with the laws of the State of California.
The language in all parts of this Lease shall in all cases be construed as a
whole according to its fair meaning, and not strictly for or against either
Landlord or Tenant. When the context of this Lease requires, the neuter gender
includes the masculine, the feminine, a partnership or corporation or joint
venture, and the singular includes the plural. The terms "shall", "will" and
"agree" are mandatory. The term "may" is permissive. When a party is required to
do something by this Lease, it shall do so at its sole cost and expense without
right of reimbursement from the other party unless a provision of this Lease
expressly requires reimbursement. Landlord and Tenant agree that (i) the gross
leasable area of the Premises includes any atriums, depressed loading docks,
covered entrances or egresses, and covered loading areas, (ii) each has had an
opportunity to determine to its satisfaction the actual area of the project and
the Premises, (iii) all measurements of area contained in this Lease are
conclusively agreed to be correct and binding upon the parties, even if a
subsequent measurement of any one of these areas determines that it is more or
less than the amount of area reflected in this Lease, and (iv) any such
subsequent determination that the area is more or less than shown in this Lease
shall not result in a change in any of the computations of rent, improvement
allowances, or other matters described in this Lease where area is a factor.
Where a party hereto is obligated not to perform any act, such party is also
obligated to restrain any others within its control from performing said act,
including the Agents of such party. Landlord shall not become or be deemed a
partner or a joint venturer with Tenant by reason of the provisions of this
Lease.
15.12 Termination by Exercise of Right: If this Lease is terminated pursuant
--------------------------------
to its terms by the proper exercise of a right to terminate specifically granted
to Landlord or Tenant by this Lease, then this Lease shall terminate 30 days
after the date the right to terminate is properly exercised (unless another date
is specified in that part of the Lease creating the right, in which event the
date so specified for termination shall prevail), the rent and all other charges
due hereunder shall be prorated as of the date of termination, and neither
Landlord nor Tenant shall have any further rights or obligations under this
Lease except for those that have accrued
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prior to the date of termination or those obligations which this Lease
specifically provides are to survive termination. This (P)15.12 does not apply
to a termination to this Lease by Landlord as a result of an Event of Tenants
Default.
15.13 Brokerage Commissions: Each party hereto (i) represents and warrants to
---------------------
the other that it has not had any dealings with any real estate brokers, leasing
agents or salesmen, or incurred any obligations for the payment of real estate
brokerage commissions or finder's fees which would be earned or due and payable
by reason of the execution of this Lease, other than to the Retained Real Estate
Brokers described in Section S of the Summary, and (ii) agrees to indemnify,
---------
defend, and hold harmless the other party from any claim for any such commission
or fees which result from the actions of the indemnifying party. Landlord shall
be responsible for the payment of any commission owed to the Retained Real
Estate Brokers for the payment of a commission as a result of the execution of
this Lease.
15.14 Force Majeure: Any prevention, delay or stoppage due to strikes,
-------------
lock-outs, inclement weather, labor disputes, inability to obtain labor,
materials, fuels or reasonable substitutes therefor, governmental restrictions,
regulations, controls, action or inaction, civil commotion, fire or other acts
of God, and other causes beyond the reasonable control of the party obligated to
perform (except financial inability) shall excuse the performance, for a period
equal to the period of any said prevention, delay or stoppage, of any obligation
hereunder except the obligation of Tenant to pay rent or any other sums due
hereunder.
15.15 Entire Agreement: This Lease constitutes the entire agreement between
----------------
the parties, and there are no binding agreements or representations between the
parties except as expressed herein. Tenant acknowledges that neither Landlord
nor Landlord's Agents has made any legally binding representation or warranty as
to any matter except those expressly set forth herein, including any warranty as
to (i) whether the Premises may be used for Tenant's intended use under existing
Law, (ii) the suitability of the Premises or the Project for the conduct of
Tenant's business, or (iii) the condition of any improvements. There are no oral
agreements between Landlord and Tenant affecting this Lease, and this Lease
supersedes and cancels any and all previous negotiations, arrangements,
brochures, agreements and understandings, if any, between Landlord and Tenant or
displayed by Landlord to Tenant with respect to the subject matter of this
Lease. This instrument shall not be legally binding until it is executed by both
Landlord and Tenant. No subsequent change or addition to this Lease shall be
binding unless in writing and signed by Landlord and Tenant.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease with the
intent to be legally bound thereby, to be effective as to the Effective Date.
LANDLORD:
ORCHARD INVESTMENT COMPANY NO. 510,
a California general partnership
By: NELO, a California general partnership
By: /s/ David J. Brown
-----------------------------------
David J. Brown, a General Partner
By:________________________________
Mark T. Ziemendorf
His Attorney in Fact
Dated: 12-16-93
---------------------------------
TENANT:
PERICOM SEMICONDUCTOR CORPORATION
- ---------------------------------------
a California corporation
- ---------------------------------------
By: /s/ Alex Hui
-----------------------------------
Alex Hui
- ---------------------------------------
typed or printed name
Title: President
---------------------------------
By: ___________________________________
_______________________________________
typed or printed name
Title: ________________________________
Dated: 12/1/93
---------------------------------
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FIRST ADDENDUM TO LEASE
THIS FIRST ADDENDUM is dated for reference purposes as November 29, 1993,
and is made a part of that Lease Agreement (the "Lease") dated November 29,
1993, by and between ORCHARD INVESTMENT COMPANY NUMBER 510, a California general
partnership ("Landlord") and PERICOM SEMICONDUCTOR CORPORATION, a California
corporation ("Tenant") affecting certain real property commonly known as 2380
Bering Drive, San Jose, California 95131, with reference to the following facts:
1. Option to Extend Lease Term: Landlord hereby grants to Tenant one
---------------------------
option to extend the Lease Term for a three (3) year term on the following terms
and conditions:
A. Tenant must give Landlord notice in writing of its exercise of
the option in question no earlier than one hundred eighty (180) days and no
later than one hundred twenty (120) days before the date the Lease Term would
end but for said exercise.
B. Tenant may not extend the Lease Term pursuant to any option
granted by this paragraph if Tenant is materially in default beyond any
applicable cure period as of the date of exercise of the option in question or
as of the date this Lease would have been terminated but for said exercise.
C. All terms and conditions of this Lease shall apply during the
Option Period, except that the Base Monthly Rent for the Option Period shall be
determined as provided in Paragraph D.
D. The Base Monthly Rent for the Option Period shall be the greater
of (i) one hundred percent (100%) of the Base Monthly Rent due the last month of
the previous Lease Term, or (ii) one hundred percent (100%) of the then fair
market monthly rent determined as of the commencement of the Option Period in
question based upon like buildings with like Improvements in the San Jose area
within the boundaries of Highways 237, 101 and 880. If the parties are unable to
agree upon the fair market monthly rent for the Premises for the Option Period
in question at least seventy-five (75) days prior to the commencement of the
Option Period in question, then the fair market monthly rent shall be determined
by appraisal conducted pursuant to subparagraph E.
E. In the event it becomes necessary to determine by appraisal the
fair market rent of the Premises for the purpose of establishing the Base
Monthly Rent during the Option Period, then such fair market monthly rent shall
be determined by three (3) real estate appraisers, all of whom shall be members
of the American Institute of Real Estate Appraisers with not less than five (5)
years experience appraising real property (other than residential or
agricultural property) located in Santa Clara County, California, in accordance
with the following procedures:
(1) The party demanding an appraisal (the "'Notifying Party")
shall notify the other party (the "Non-Notifying Party") thereof by delivering a
written demand for appraisal, which demand, to be effective, must give the name,
address, and qualifications of an appraiser selected by the Notifying Party.
Within ten (10) days of receipt of said demand, the Non-Notifying Party shall
select its appraiser and notify the Notifying Party, in writing, of the name,
address, and qualifications of an appraiser selected by it. Failure by the Non-
Notifying Party to select a qualified appraiser within said ten (10) day period
shall be deemed a waiver of its right to select a second appraiser on its own
behalf and the Notifying Party shall select a second appraiser on behalf of the
Non-Notifying Party within five (5) days after the expiration of said ten (10)
day period. Within ten (10) days from the date the second appraiser shall have
been appointed, the two (2) appraisers so selected shall appoint a third
appraiser. If the two appraisers fail to select a third qualified appraiser, the
third appraiser shall be selected by the American Arbitrations Association or
if it shall refuse to perform this function, then at the request of either
Landlord or Tenant, such third appraiser shall be promptly appointed by the then
Presiding Judge of the Superior Court of the State of California for the County
of Santa Clara.
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(2) The three (3) appraisers so selected shall meet in San Jose,
California, not later than twenty (20) days following the selection of the third
appraiser. At said meeting the appraisers so selected shall attempt to
determine the fair market monthly rent of the Premises for the Option Period in
question (including the timing and amount of periodic increases).
(3) If the appraisers so selected are unable to complete their
determination in one meeting, they may continue to consult at such times as
they deem necessary for a fifteen (15) day period from the date of the first
meeting, in an attempt to have at least two (2) of them agree. If, at the
initial meeting or at any time during said fifteen (15) day period, two (2) or
more of the appraisers so selected agree on the fair market rent of the Leased
Premises, such agreement shall be determinative and binding on the parties
hereto, and the agreeing appraisers shall, in simple letter form executed by the
agreeing appraisers, forthwith notify both Landlord and Tenant of the amount set
by such agreement.
(4) If two (2) or more appraisers do not so agree within said
fifteen (15) day period, then each appraiser shall, within five (5) days after
the expiration of said fifteen (15) day period, submit his independent appraisal
in simple letter form to Landlord and Tenant stating his determination of the
fair market rent of the Premises for the Option Period in question. The parties
shall then determine the fair market rent for the Premises by determining the
average of the fair market rent set by each of the appraisers. However, if the
lowest appraisal is less than eighty-five percent (85%) of the middle appraisal
then such lowest appraisal shall be disregarded and/or if the highest appraisal
is greater than one hundred fifteen percent (115%) of the middle appraisal then
such highest appraisal shall be disregarded. If the fair market rent set by any
appraisal is so disregarded, then the average shall be determined by computing
the average set by the other appraisals that have not been disregarded.
(5) Nothing contained herein shall prevent Landlord and Tenant
from jointly selecting a single appraiser to determine the fair market rent of
the Premises, in which event the determination of such appraisal shall be
conclusively deemed the fair market rent of the Premises.
(6) Each party shall bear the fees and expenses of the appraiser
selected by or for it, and the fees and expenses of the third appraiser (or the
joint appraiser if one joint appraiser is used) shall be borne fifty percent
(50%) by Landlord and fifty percent (50%) by Tenant.
2. Early Occupancy:
---------------
A. As consideration for Tenant's performance of all obligations to
be performed by Tenant under the Lease, and upon receipt of the first month's
Base Monthly Rent, and Security Deposit totaling $26,315.38, Landlord shall
permit Tenant to use the Premises commencing with the Effective Date of This
Lease until the Interior Improvements have been completed (the "Early Occupancy
Period"). Such occupancy during the Early Occupancy Period shall be subject to
all of the terms, covenants and conditions of the Lease provided, however, that
the rent payable during the Early Occupancy Period shall be waived.
B. In the event either party shall bring any action or legal
proceeding for damages for alleged breach of any provision of this agreement, to
recover rent, to terminate tenancy of the Premises, or to enforce, protect or
establish any term or covenant of this agreement or the Lease or right of remedy
of either party, the prevailing party shall be entitled to recover as a part of
such action or proceeding, reasonable attorney's fees and court costs as may be
fixed by the court or jury.
C. In consideration of executing this Early Occupancy Agreement.
Tenant agrees to indemnify and save Landlord harmless of and from any and all
liability, damage, expense, cause of action, suits or claims or judgments
resulting from injury to person or property arising from the use of the Premises
by Tenant during the Early Occupancy Period, including loss or damage to Tenant,
its equipment, materials or supplies.
<PAGE>
Page Three
D. Tenant agrees to cooperate with construction personnel completing
the Interior Improvements in the Premises and not cause any delay in the
completion of these improvements. It is the intent of Landlord and Tenant that
Tenant's obligation to pay the Base Monthly Rent and all Additional Rent not be
delayed by any cause or other act of Tenant and, if it is so delayed, and
provided that Landlord promptly notifies Tenant in writing of each separate
delay and the estimated period of delay, then Tenant's obligation to pay the
Base Monthly Rent and all Additional Rent shall commence as of the date it would
have commenced absent said delay caused by Tenant.
E. If Tenant conducts any of its business within the Leased Premises
during the Early Occupancy Period, Tenant shall arrange to have all utility
services, including but not limited to gas, electric, water and trash, billed
directly to Tenant for payment commencing the date upon which Tenant starts
conducting business.
3. Parking: Notwithstanding the provisions of Article 4.5 of the Lease,
-------
Tenant may markup to five (5) of its Allocated Parking Spaces for its exclusive
use at the immediate entrance to the Premises.
4. Amortization of Certain Capital Improvements: Landlord warrants that
--------------------------------------------
the interior improvements to the Premises have been constructed to code and that
the roof is in good working condition as of the Commencement Date.
5. Repair and Maintenance: Landlord, at Landlord's cost, shall repair or
----------------------
replace any failure to the electrical plumbing or HVAC systems during the first
sixty (60) days of the Lease Term. Landlord's obligation shall be limited to
those repairs or replacements in excess of $250.00 for the HVAC system.
6. Tenant's Right of First Negotiation for Additional Space:
--------------------------------------------------------
A. Landlord hereby grants to Tenant a right of first negotiation
regarding the leasing of the contiguous space to the Premises commonly known as
2390 Bering Drive, San Jose, consisting of 7,702 square feet as shown on Exhibit
"A (the Expansion Space"), on the terms contained in this Paragraph.
B. If Landlord proposes to lease the Expansion Space; (i) Landlord
shall notify Tenant in writing of the following basic business terms upon which
Landlord would be willing to lease the Expansion Space: (a) the description of
the Expansion Space; (b) the term of the lease; (c) the tenant improvements
Landlord is willing to construct or that it will require be constructed and the
contribution Landlord is willing to make to pay for such tenant improvements;
(d) the rent for the term of the lease or the formula to be used to determine
such rent; and, (e) any other material business terms Landlord elects to
specify; (ii) Tenant shall have ten (10) days (the "Negotiation Notice Period")
from receipt of Landlord's notice within which to agree to enter into good faith
negotiations with Landlord regarding Tenant's leasing of the Expansion Space,
whether on the terms set forth in Landlord's notice or otherwise. Promptly upon
Landlord's receipt of Tenant's notice, the parties shall enter into good faith
negotiations regarding Tenant leasing the Expansion Space, which negotiations
shall be completed with ten (10) days after the commencement of such
negotiations.
C. If Tenant does not indicate in writing its agreement to lease the
Expansion Space as provided for in Paragraph B above within ten (10) business
days of the commencement of such negotiations, landlord thereafter shall have
the right to offer such space to any third party, on such terms and conditions
as Landlord may elect.
D. The right granted to Tenant in this paragraph is personal to
Tenant, and may not be exercised by any assignee or sublessee of Tenant, other
than an affiliate of Tenant (i.e., subsidiaries of Tenant) and shall terminate
upon; (i) the expiration or earlier termination of the Lease; or, (ii) any
assignment y Tenant of its interest in this Lease or subletting by Tenant of
substantially all of the Premises for substantially all of the remainder of the
Lease Term other than to any affiliate of Tenant (as defined above).
<PAGE>
Page Four
E The right granted to Tenant by this paragraph shall not be deemed
to arise on account of or in connections with the renewal or extension of the
term of any then existing lease affecting all or any portion of the Expansion
Space.
7. Alterations Required by Law: Landlord warrants the Interior
---------------------------
Improvements to the Premises comply with all applicable building codes as of the
Commencement Date of this Lease
LANDLORD: TENANT:
ORCHARD INVESTMENT COMPANY PERICOM SEMICONDUCTOR
NUMBER 510, CORPORATION
a California general partnership a California corporation
By: NELO, a California general partnership
By: /s/ David J. Brown By:/s/ Alex Hui
--------------------------------- --------------------------------
David J. Brown, General Partner Alex Hui, President
By: _________________________________
Mark T. Ziemendorf,
His Attorney in Fact
Date: 12-16-93 Date: 12/1/93
------------------------------------ -------------------------------
<PAGE>
[LEASE FOR BUILDING C APPEARS HERE]
EXHIBIT A
<PAGE>
EXHIBIT B
INTERIOR IMPROVEMENT AGREEMENT
------------------------------
THIS IMPROVEMENT AGREEMENT is made part of that Lease dated November 12,
1993, (the "Lease") by and between ORCHARD INVESTMENT COMPANY NUMBER 510,
("Landlord"), and PERICOM SEMICONDUCTOR CORPORATION ("Tenant") Landlord and
Tenant agree that the following terms are part of the Lease:
1. Purpose of Improvement Agreement: The purpose of this Improvement
--------------------------------
Agreement is to set forth the rights and obligations of Landlord and Tenant with
respect to the construction of Interior Improvements within the Premises prior
to the Commencement Date.
2. Definitions: As used in this Interior Improvement Agreement, the
-----------
following terms shall have the following meanings, and terms which are not
defined below, but which are defined in the Lease and which are used in this
Interior Improvement Agreement, shall have the meanings ascribed to them by the
Lease:
A. Approved Specifications: The term "Approved Specifications" shall
-----------------------
mean those specifications for the Interior Improvements to be constructed by
Landlord which are described by Exhibit "C" to the Lease.
-----------
B. Interior Improvements: The term "Interior Improvements" shall
---------------------
mean all interior improvements to be constructed by Landlord in accordance with
the Approved Specifications (e.g., HVAC equipment and distribution, transformer
and power distribution, partitions, floor, wall, and window covering, lighting
fixtures).
C. Interior Improvement Costs: The term "Interior Improvement Costs"
--------------------------
shall mean the following: (i) the total amount due pursuant to the general
construction contract entered into by Landlord to construct the Interior
Improvements; (ii) the cost of all governmental approvals required as a
condition to the construction of the Interior Improvements (including all
construction taxes imposed by the City of San Jose) in connection with the
issuance of a building permit for the Interior Improvements; (iii) all utility
connection or use fees; (iv) fees of architects or engineers for services
rendered in connection with the design and construction of the Interior
Improvements; and (v) the cost of payment and performance bonds obtained by
Landlord or Prime Contractor to assure completion of the Interior Improvement.
The parties acknowledge that the City of San Jose imposes certain taxes as a
condition to the issuance of building permits in certain circumstances,
including the "Building and Structure Construction Tax" imposed by Chapter 4.46
of the City of San Jose Municipal Code (the "BSC Tax") and the "Commercial-
Residential-Mobile Home Park Building Tax" imposed by Chapter 4.47 of the City
of San Jose Municipal Code (the "CRM Tax"). The parties further acknowledge that
the rate for these two taxes is higher for a structure designed or intended to
be used for "industrial purposes". However, the parties acknowledge and agree
that (i) an additional BSC Tax will be due upon the issuance of a building
permit for all Interior Improvements if the City of San Jose determines that the
Interior Improvements are intended for "industrial purposes" or (ii) a BSC Tax
and a CRM Tax based on the value of the Interior Improvements, plus an
additional BSC Tax and a CRM Tax based on the value of the shell, will be due if
the City of San Jose determines that the Building is intended for "commercial
purposes", and (iii) any of such taxes that must be paid in order to obtain
building permits for the Interior Improvements shall be "Interior Improvement
Costs".
D. Substantial Completion and Substantially Complete: The terms
-------------------------------------------------
"Substantial Completion" and "Substantially Complete" shall each mean the date
when all of the following have occurred with respect to the Interior
Improvements in question: (i) the construction of the Interior Improvements in
question has been substantially completed in accordance with the requirements of
this Lease; (ii) the architect responsible for preparing the plans shall have
executed a certificate or statement representing that the Interior Improvements
in question have been substantially completed in accordance with the plans and
specifications therefor; and (iii) the Building Department of the City of San
Jose has completed its final inspection of such improvements and has "signed
off" the building inspection card approving such work as complete.
<PAGE>
Page Two
3. Construction of Interior Improvements: Tenant desires to cause certain
-------------------------------------
Interior Improvements to be constructed in the Premises and Landlord agrees to
construct such Interior Improvements in the Premises in conformance with the
Approved Specifications attached to the Lease as Exhibit C, provided, however,
---------
that Landlord shall not be required to approve or construct any Interior
Improvements that: (i) do not conform to applicable government regulations
or are disapproved by any governmental agency having jurisdiction; (ii) overload
the floors of the Premises or the Building; or (iii) are, in Landlord's
reasonable judgment, of a nature or quality inconsistent with the nature and
quality of the remainder of the Premises or the Building. Such Interior
Improvements will be constructed by Landlord in accordance with the following:
A. Improvements and Plans: On or before the Effective Date, Tenant
----------------------
shall deliver to Landlord all preliminary plans, specifications, and other
information needed by Landlord to prepare final plans, specifications, and
working drawings for the Interior Improvements Tenant desires to be constructed
in the Premises. As soon as Landlord receives such information from Tenant for
the Interior Improvements, Landlord shall cause to be prepared, as quickly as
possible, final plans, specifications and working drawings which are acceptable
to Landlord and conform to the information provided by Tenant. As soon as such
final plans, specifications and working drawings are completed, Landlord shall
deliver a copy of them to Tenant. Tenant shall not disapprove any change made by
Landlord in such final plans to the information initially submitted by Tenant
unless Tenant's use of the Leased Premises would be significantly impaired
thereby. Landlord shall not unreasonably withhold its approval of any specific
written changes submitted by Tenant to the final plans. As soon as approved by
Landlord and Tenant, which approval shall not be unreasonably withheld or
delayed, Landlord shall submit such final plans, specifications and working
drawings to all appropriate governmental agencies for approval. Immediately
after all such governmental approvals have been obtained, four (4) copies of
such plans, specifications and working drawings shall be initialed and dated by
Landlord and Tenant. The final plans, specifications and working drawings so
approved, and all change orders specifically permitted by the Lease, shall be
referred to herein as the "Approved Specifications". Tenant acknowledges that
the commencement of the Lease Term depends upon when the Interior Improvements
are Substantially Completed and that such completion depends upon Tenant's
initial submission of its requirements for such improvements and its response to
approving plans prepared by Landlord. Tenant agrees to use its best efforts to
process the preparation approval of plans for the Interior Improvements within
the schedule set forth herein.
B. Construction Contract: Landlord and Tenant agree that the
---------------------
Interior Improvements per Exhibit C shall be constructed by a general contractor
---------
selected by Landlord (hereinafter the "Prime Contractor").
C. Commencement and Completion for the Interior Improvements: As
---------------------------------------------------------
soon as the Approved Specifications have been developed as provided above, all
necessary governmental approvals have been obtained and Landlord has entered
into a general construction contract with Prime Contractor, then Landlord shall
thereafter commence construction of the Interior Improvements and shall
diligently prosecute such construction to completion, using its best efforts so
that the Interior Improvements may be Substantially Completed within seven (7)
weeks after the Effective Date (the "Scheduled Commencement Date"), but without
any representation or warranty by Landlord as to when such improvements will be
completed.
<PAGE>
Page Three
4. Changes to Approved Specifications: Once the Approved Specifications
----------------------------------
have been approved by Landlord and Tenant, neither shall have the right to order
extra work or change orders with respect to the construction of the Interior
Improvements without the prior written consent of the other. All extra work or
change orders requested by either Landlord or Tenant shall be made in writing,
shall specify any added or reduced cost and/or construction time resulting
therefrom, and shall become effective and a part of the Approved Specifications
once approved in writing by both parties. If a change order requested by Tenant
results in an increase in the Interior Improvements Costs, Tenant shall pay the
amount of such increase caused by the change order requested by Tenant at the
time the change order is approved by both Landlord and Tenant. If a change order
results in an increase in the amount of construction time needed by Landlord to
complete the Interior Improvements, paragraph 5 hereof may apply.
5. Delay in Completion Caused by Tenant: The parties hereto acknowledge
------------------------------------
that the date on which Tenant's obligation to pay the Base Monthly Rent and the
Additional Rent would otherwise commence may be delayed because of (i) Tenant's
failure to submit necessary information to Landlord when required, (ii) Tenant's
failure to promptly review and approve the plans for the Interior Improvements,
(iii) any act by Tenant which interferes with or delays the completion of the
plans for the Interior Improvements or Landlord's construction work, (iv) change
orders requested by Tenant and approved by Landlord, or (v) special materials or
equipment ordered or specified by Tenant that cannot be obtained by Landlord at
normal cost within a reasonable period of time because of limited availability.
It is the intent of the parties hereto that the commencement of Tenant's
obligation to pay the Base Monthly Rent and all Additional Rent not be delayed
by any of such causes or by any other act of Tenant, and in the event it is so
delayed, Tenant's obligation to pay the base Monthly Rent and all Additional
Rent shall commence as of the date it would otherwise have commenced absent
delay caused by Tenant, provided that within a reasonable period of time after
learning of the occurrence of the cause of any such delay, Landlord notifies
Tenant in writing of the fact that such delay has occurred and the known or
anticipated extent of any such delay.
6. Delivery of Possession, Punch List and Acceptance Agreement: As soon
-----------------------------------------------------------
as the Interior Improvements are Substantially Completed, Landlord and Tenant
shall together walk through the Premises and inspect all Interior Improvements
so completed, using reasonable efforts to discover all uncompleted or defective
construction in the Interior Improvements. After such inspection has been
completed, each party shall sign an acceptance agreement in the form attached to
the Lease as Exhibit "D", which shall (i) include a list of all "punch list"
-----------
items which the parties agree are to be corrected by Landlord and (ii) shall
state the Commencement Date and the Base Monthly Rent. As soon as such
inspection has been completed and such acceptance agreement executed, Landlord
shall deliver possession of the Premises to Tenant. Landlord shall use
reasonable efforts to complete and/or repair such "punch list" items within
thirty (30) days after executing the acceptance agreement. Landlord shall have
no obligation to deliver possession of the Premises to Tenant until such
procedures regarding the preparation of a punch list and the execution of the
acceptance agreement have been completed. Tenant's taking possession of any part
of the Premises shall be deemed to be an acceptance by Tenant of Landlord's work
of improvement in such part as complete and in accordance with the terms of the
Lease except for the punch list items noted and latent defects that could not
reasonable have been discovered by Tenant during its inspection of the Interior
Improvements prior to completion of the acceptance agreement. Notwithstanding
anything contained herein, Tenant's obligation to pay the Base Monthly Rent and
Additional Rent shall commence as provided in the Lease, regardless of whether
Tenant completes such inspection or executes such acceptance agreement.
7. Standard of Construction and Warranty: Landlord hereby warrants that
-------------------------------------
the Interior Improvements shall be constructed substantially in accordance with
the Approved Specifications (as modified by change orders approved by Landlord
and Tenant), all Private Restrictions and all Laws, in a good and workmanlike
manner, and all materials and equipment furnished shall conform to such final
plans and shall be new and otherwise of good quality. The foregoing warranty
shall be subject to, and limited by, the following:
<PAGE>
Page Four
A. Once Landlord is notified in writing of any breach of the above-
described warranty, Landlord shall promptly commence the cure of such breach and
complete such cure with diligence at Landlord's sole cost and expense.
B. Landlord's liability pursuant to such warranty shall be limited
to the cost of correcting the defect or other matter in question. In no event
shall Landlord be liable to Tenant for any damages or liability incurred by
Tenant as a result of such defect or other matter, including without limitation
damages resulting from any loss of business by Tenant or other consequential
damages.
C. Notwithstanding anything contained herein, Landlord shall not be
liable for any defect in design, construction, or equipment furnished which is
discovered and of which Landlord receives written notice from Tenant after the
first (1st) anniversary of the recordation of a notice of completion for the
work of improvement affected by the defect.
D. With respect to defects for which Landlord is not responsible
pursuant to subparagraph 7C, Tenant shall have the benefit of any construction
or equipment warranties existing in favor of Landlord that would assist Tenant
in correcting such defect and in discharging its obligations regarding the
repair and maintenance of the Premises. Upon request by Tenant, Landlord shall
inform Tenant of all written construction and equipment warranties existing in
favor of Landlord which affect the Interior Improvements. Landlord shall
cooperate with Tenant in enforcing such warranties and in bringing any suit that
may be necessary to enforce liability with regard to any defect for which
Landlord is not responsible pursuant to this paragraph so long as Tenant pays
all costs reasonably incurred by Landlord in so acting.
E. Landlord makes no other express or implied warranty with respect
to the design, construction or operation of the Interior Improvements except as
set forth in this paragraph.
8. Condition to Landlord's Performance: Landlord's obligations under the
-----------------------------------
Lease are subject to the satisfaction or waiver of the condition that Landlord
obtain all building permits and other governmental approvals required in order
to commence construction of the Interior Improvements by the due dates specified
in the Schedule of Performance. If such condition is not satisfied or waived
within the applicable time period, Landlord shall have the option of terminating
the Lease; provided, however, that Landlord shall have the option to extend the
time period for the satisfaction of such condition for a period of up to sixty
(60) days to enable Landlord to continue its efforts to cause such condition to
be satisfied. If any such option to extend the time for satisfaction of this
condition is exercised, (i) Landlord shall continue to use reasonable efforts to
cause the condition to be satisfied; (ii) all other time periods contained in
the Schedule of Performance which are impacted by such extension shall be
appropriately adjusted; and (iii) such extension shall not constitute a delay
caused by Tenant pursuant to paragraph 5 hereof, nor shall Landlord in any way
be penalized for exercising such option to obtain additional time to cause the
condition to be satisfied. If Landlord becomes entitled to and elects to so
terminate the Lease, the Lease shall terminate on the dated notice is so given
to Tenant. Landlord shall be under an obligation of good faith to use all
reasonable efforts to cause the condition to be satisfied.
<PAGE>
Page Five
9. Effect of Agreement: In the event of any inconsistency between this
-------------------
Improvement Agreement and the Lease, the terms of this Improvement Agreement
shall prevail
LANDLORD: TENANT:
ORCHARD INVESTMENT COMPANY PERICOM SEMICONDUCTOR
NUMBER 510, CORPORATION
a California general partnership a California corporation
By: NELO, a California general
partnership
By: /s/ David J. Brown By: /s/ Alex Hui
--------------------------------- --------------------------------
David J. Brown, General Partner Alex Hui, President
By: _________________________________
Mark T. Ziemendorf,
His Attorney in Fact
Date: 12-16-93 Date: 12/1/93
---------------------------------- --------------------------------
<PAGE>
SECOND AMENDMENT TO LEASE
-------------------------
THIS SECOND AMENDMENT TO LEASE (this "Amendment") is dated for reference
purposes only as July 31, 1997, by and between CARRAMERICA REALTY CORPORATION, a
Maryland corporation ("Landlord"), and PERICOM SEMICONDUCTOR CORPORATION, a
California corporation ("Tenant").
RECITALS
--------
A. Orchard Investment Company Number 510, a California general
partnership ("Orchard"), Landlord's predecessor in interest, as landlord, and
Tenant, as tenant, entered into that certain Lease (and First Addendum thereto)
dated November 29, 1993 (collectively, the "Original Lease"), in which Orchard
leased to Tenant and Tenant leased from Orchard, approximately 19,786 square
feet within that certain building which contains approximately 27,488 square
feet commonly known as 2380-2390 Bering Drive, San Jose, California ("Building
C"), as more particularly described on Exhibit A, attached to the Original Lease
---------
(the "Original Premises"). Orchard and Tenant also entered into that certain
Acceptance Agreement dated as of January 28, 1994 regarding the Original
Premises.
B. Orchard and Tenant entered into that certain First Amendment to
Lease ("First Amendment") dated February 5, 1996 pursuant to which the size of
the Original Premises was increased by 7,000 rentable square feet (the "First
Expansion Space") and the Lease Term was extended. The First Expansion Space is
located in the building containing approximately 25,888 square feet commonly
known as 2340-2350 Bering Drive, San Jose, California ("Building E"). Orchard
and Tenant also entered into that certain Interior Improvement Agreement and
Acceptance Agreement regarding the First Expansion Space, each dated February 5,
1996.
C. All of Orchard's right, title and interest in the Original Lease has
been assigned to Landlord in connection with Landlord's acquisition of the
Project.
D. Landlord intends to execute simultaneously with this amendment, a
lease termination agreement with Praegitzer Industries, Inc., an Oregon
corporation ("Praegitzer"), regarding approximately 7,702 square feet of space
(the "Second Expansion Space") in Building C (the "Praegitzer Lease Termination
Agreement"). The Second Expansion Space is described in Exhibit A attached
---------
hereto.
E. Subject to the terms and conditions set forth herein, Landlord and
Tenant now desire to amend to further amend the Original Lease to, among other
things, further increase the size of the Original Premises. The Original Lease
and the two Acceptance Agreements described above, as amended by the First
Amendment and this Amendment, are collectively hereinafter referred to as the
"Lease". Capitalized terms used in this Amendment not otherwise defined herein
shall have the meaning given such terms in the Lease.
NOW, THEREFORE, for good and valuable consideration, the adequacy of
which is hereby acknowledged, the parties hereby mutually promise, covenant and
agree as follows:
1. Effectiveness of Amendment. Notwithstanding any provision herein to the
--------------------------
contrary, the effectiveness of this Amendment shall be subject to and
conditioned upon (a) the execution of Praegitzer Lease Termination
Agreement by Praegitzer, (b) the delivery of possession of the
1
<PAGE>
Second Expansion Space by Praegitzer to Landlord prior to the
Effective Date hereunder (as defined in Section 2 below), and (c)
Landlord's receipt and approval of Tenant's most recent audited
financial statements.
2. Premises. As of December 1, 1997 (the "Effective Date"), Section D of
--------
the Summary of Basic Lease Terms to the Lease is amended to revise the
definition of "Premises" to include the (i) Original Premises
(approximately 19,786 square feet in Building C), (ii) the First
Expansion Space (approximately 7,000 square feet in Building E), and
(iii) the Second Expansion Space (approximately 7,702 square feet in
Building C), for a total of 34,488 square feet.
3. Building. As of the Effective Date, Section F of the Summary of Basic
--------
Lease Terms to the Lease is amended to include both Building C
(approximately 27,488 square feet), and Building E (approximately
25,888 square feet).
4. Tenant's Share. As of he Effective Date, Section G of the Summary of
--------------
Basic Lease Terms to the Lease is hereby amended in its entirety to
read: 100% of Building C and 27.04% of Building E.
5. Tenant's Allocated Parking Stalls. As of the Effective Date, Section H
---------------------------------
of the Summary of Basic Lease Terms to the Lease is amended in its
entirety to read as follows: 120 parking stalls (of which Tenant may
use two (2) stalls for the installation of its generator and one (1)
stall for the new door access at the 2350 Bering portion of the
Premises.
6. Term. Section J of the Summary of basic Lease Terms to the Lease is
----
amended to provide that the of this Lease for the Second Expansion
Space shall commence on the Effective Date, and shall expire on April
30, 2001 (i.e., he same expiration date as the Original Premises and
First Expansion Space), unless sooner terminated according to the
terms of the Lease or by mutual written agreement of the parties.
7. Rent. Section K of the Summary of Basic Lease Terms to the Lease is
----
amended to add the following at the end thereof:
Commencing on the Effective Date and continuing throughout the
Lease Term, the Base Monthly Rent payable by Tenant under
Section 3 of the Lease shall be increased by the amounts set
forth below (the "Second Expansion Base Monthly Rent"):
Second Expansion Space
Period Monthly Base Rent:
------ -----------------
December 1, 1997 through November 30, 1998 $11,321.94 per month
December 1, 1997 through November 30, 1999 $11,707.04 per month
December 1, 1997 through November 30, 2000 $12,092.14 per month
December 1, 1997 through April 30, 2001 $12,477.24 per month
In addition, as of the Effective Date and throughout the remainder of
the Term, Tenant shall pay Additional Rent for the Second Expansion
Space. The Second Expansion Space Base Monthly Rent and Additional
Rent on the Second Expansion Space shall be paid at the same time
and in the same manner as the Base Monthly Rent and Additional Rent
payable in connection with the Original Premises and the First
Expansion Space.
2
<PAGE>
8. Security Deposit. As of the Effective Date, Section M of the Lease is
----------------
amended to provide for an increase in the amount of the Security Deposit
by Tenant by $12,477 which will make the total amount of Security Deposit
held by Landlord hereunder equal to $35,945.52. Tenant shall deliver the
check for the additional $12,477 in Security Deposit along with Tenant's
delivery to Landlord of this Amendment executed by Tenant.
9. Amendment of Section 2 of First Addendum. Section 2 of the First Addendum
----------------------------------------
regarding Tenant's Early Occupancy rights is hereby amended in its
entirety to read as follows:
Commencing on October 1, 1997 and ending on the Effective Date
(the "Early Occupancy Period"), Tenant may enter the Second
Expansion Space for the express purpose of constructing the
"Interior Improvements" described in Section 12 below).
Tenant's use of the Second Expansion Space during the Early
Occupancy Period shall be subject to all of the terms and
conditions set forth in this Lease (including its obligations
regarding indemnity and insurance), except that Tenant shall
not be obligated to pay the Second Expansion Space Base
Monthly Rent or the Additional Rent payable in connection with
Second Expansion Space until the Effective Date.
10. Deletion of Section 6 of First Addendum. Section 6 of the First Addendum
---------------------------------------
regarding Tenant's Right of First Negotiation for the Second Expansion
Space is hereby deleted in its entirety.
11. Tenant Improvements. Tenant agrees and acknowledges that Landlord shall
-------------------
provide the Second Expansion Space in its "as-is" condition with existing
paint and carpet and that Tenant shall be obligated to construct all
interior improvements within the Second Expansion Space in accordance
with the terms of Exhibit B attached hereto. Landlord's only obligations
in connection with the Second Expansion Space shall be to (i) provide the
"Expansion Space Tenant Improvement Allowance" in the manner described
below, and (ii) provide the electrical, plumbing, HVAC and roof systems
for the Second Expansion Space in good working condition as of the
Effective Date. During the period commencing on October 1, 1997, and
ending on February 28, 1998, Landlord agrees to make available to Tenant
the Expansion Space Tenant Improvement Allowance in the amount of $38,510
for the construction of additional interiors (including compliance with
the Americans With Disabilities Act ("ADA"), cabling, electrical, and
security system) within the Second Expansion Space and any exterior costs
(including ADA compliance) in accordance with the provisions of Exhibit
B to this Amendment. No portion of any unused Tenant Improvement
Allowance shall not be credited against Rent payable by Tenant hereunder.
12. Repairs and Maintenance. Landlord, at Landlord's sole cost and expense,
-----------------------
shall repair or replace any damage or failure to the electrical,
plumbing, HVAC and roof systems of the Second Expansion Space for the
first three (3) months following the Effective Date; provided that such
damage was not caused by Tenant, its agents, employees or contractors or
by Tenant's failure to properly and timely perform its maintenance
obligations under this Lease.
13. Brokers. Landlord and Tenant each represents and warrants to the other
-------
that it has not dealt with any broker respecting the amendment of the
Lease. Landlord and Tenant each agrees to indemnify and hold the other
harmless from any and all claims by any broker, agent or person
<PAGE>
claiming a commission or other form of compensation by virtue of this
Amendment as a result of such party's dealings with the party from
whom indemnification is sought.
14. Notice. Landord's new address for receipt of notices under the Lease
------
is as follows:
CarrAmerica Realty Corporation
4410 Rosewood Drive, Suite 1100
Pleasanton, California 94588
Attention: Vice President - Market Officer
with a copy to: CarrAmerica Realty Corporation
1700 Pennsylvania Ave., N.W.
Washington, D.C. 20006
Attention: Lease Adminstrator
15. Time. Time is of the essence for each and every provision of this
----
Amendment.
16. Confirmation of Lease. Except as amended by this Amendment, the
---------------------
parties hereby agree and confirm that the Lease is in full force and
effect.
IN WITNESS HEREOF, th parties hereto have executed this Amendment as
of the date first written above.
"Tenant"
PERICOM SEMICONDUCTOR CORPORATION,
a California corporation
By: /s/ Patrick B. Brennan
------------------------------------------------
Its: Vice President, Finance & Administration
--------------------------------------------
Name: Patrick B. Brennan
-------------------------------------------
"Landlord"
CARRAMERICA REALTY CORPORATION,
a Maryland corporation
By: /s/ Brian K. Fields
------------------------------------------------
Its: CFO
Name: Brian K. Fields
4
<PAGE>
EXHIBIT A
For Lease
Building C
[MAP OF BUILDING C]
[FLOOR PLAN OF BUILDING C]
<PAGE>
EXHIBIT A
---------
TENANT IMPROVEMENTS CONSTRUCTION AGREEMENT
------------------------------------------
This Tenant Improvements Construction Agreement ("Agreement") is part of the
Second Amendment to Lease ("Amendment") relating to certain premises
("Premises") which are more particularly described in Exhibit A of the
---------
Amendment. Capitalized terms used in this Agreement not otherwise defined
herein shall have the meaning given such terms in the Amendment. Landlord and
Tenant agree as follows with respect to the Tenant Improvements, if any, to be
installed in the Premises:
1. PLANS AND SPECIFICATIONS
------------------------
A. Preliminary Plans. Preliminary plans and specifications for
-----------------
construction of the Tenant Improvements o be installed in the
Premises shall be approved in written by Landlord prior to
commencement of construction of the Tenant Improvements. Tenant
shall deliver to Landlord plans and specifications prepared by
Tenant's architect, which architect shall be reasonably accepted
to Landlord ("Architect"). Within ten (10) business days after the
plans and specifications are received by Landlord, Landlord shall
approve or disapprove the plans and specifications. The plans and
specifications which have been approved by Landlord and Tenant are
hereinafter referred to as the "Approved Plans." Landlord's
approval of the Approved Plans shall be solely for the purposes of
authorizing construction of the Tenant Improvements, and shall not
be deemed to be an approval of the technical merits of the Approved
Plans nor a verification that such Approved Plans comply with
applicable laws, codes or regulations.
B. Termination. If this Agreement and the Lease are terminated by
-----------
Landlord pursuant to any of the provisions of this Agreement, the
parties' rights and obligations hereunder shall be discharged.
2. CONSTRUCTION OF TENANT IMPROVEMENTS.
-----------------------------------
A. Construction by Tenant. Tenant shall be responsible for the
----------------------
construction of any Tenant Improvements within the Building.
Tenant shall construct the Tenant Improvements in accordance
with the Approved Plans and in accordance with all rules,
regulation, codes, statutes, ordinances and laws of all of the
government and quasi-governmental authorities and in a good and
workmanlike manner. Landlord's sole obligation with respect to the
Tenant Improvements shall be to provide the Expansion Space Tenant
Improvements Allowance as described herein, and landlord shall
have no responsibility for the construction of the Tenant
Improvements. The Tenant Improvements also shall be constructed
with new materials of good quality and with adequately trained and
supervised labor using currently approved methods of their
particular trade.
B. Contractor. Prior to commencement of construction, Tenant shall
----------
select a general contractor which his reasonably acceptable to
Landlord ("Contractor") to construct the Tenant Improvements. The
Contractor shall be licensed by the State of California and
1
<PAGE>
bondable. The construction contract ("Construction Contract")
for the Tenant Improvements shall be between Tenant (not
Landlord) and Contractor.
C. Construction Process. Tenant shall not commence the
--------------------
construction of any Tenant Improvements until after Landlord
and Tenant have agreed on the Approved Plans and Contractor.
Thereafter, Tenant shall be responsible for completing the
construction of the Tenant Improvements in accordance with the
Approved Plans.
D. Insurance. Prior to Contractor's entry onto the Premises to
---------
commence construction of the Tenant Improvements, Tenant shall
furnish Landlord with sufficient evidence that Tenant and
Contractor are carrying worker's compensation insurance in
statutory required amounts and general liability insurance in
an amount reasonably acceptable to Landlord naming Landlord
and Landlord's Contract Manager as additional insureds.
E. Compliance. The Tenant Improvements and all materials
----------
incorporated therein shall comply with the Approved Plans, as
may be revised from time to time pursuant to the terms of this
Agreement, and shall be free from all design, material and
workmanship defects. Tenant and Contractor shall comply with
all applicable laws, regulations, permits and other approvals
applicable to construction of the Tenant Improvements.
F. Liens. Tenant shall defend and indemnify Landlord and hold it
-----
harmless from any and all cliams, losses, demands, judgments,
settlements, costs and expenses, including reasonable
attorneys' fees, resulting from any act or omission of Tenant
or anyone claiming by, through, or under Tenant, in connection
with construction of the Tenant Improvements, for any
mechanics' lien or other lien filed against the Premises or
the Building or against other property of Landlord (whether or
not the lien is valid or enforceable). Tenant shall, at its
own expense, (i) cause any such liens to be discharged of
record, or (ii) cause to be recorded a bond in compliance with
CC section 3143, within a reasonable time, not to exceed
thirty (30) days, after the later of (a) Tenant's actual
notice of the lien or (b) the date of filing.
G. Indemnity. Tenant shall indemnify, defend (with counsel
---------
reasonably satisfactory to Landlord) and hold Landlord
harmless from and against any and all suits, claims, actions,
loss, cost or expense (including claims for workers'
compensation, attorneys' fees and costs) based on personal
injury or property damage caused in, or contract claims
(including, but not limited to claims for breach of warranty)
arising from, construction of the Tenant's Improvements,
except to the extent caused by Landlord's acts or omissions.
Tenant shall repair or replace (or, at Landlord's election,
reimburse Landlord for the cost of repairing or replacing) any
portion of the Building or item of Landlord's equipment or any
of Landlord's real or personal property damaged, lost or
destroyed in construction of the Tenant Improvements, except
to the extent the damage, loss or destruction is the result of
Landlord's acts or omissions.
3. TENANT IMPROVEMENT ALLOWANCE AND COSTS
--------------------------------------
Landlord agrees to make a available to Tenant the Expansion
Space Tenant Improvement Allowance described in the Amendment
in accordance with and subject to the following
<PAGE>
provisions. Tenant shall submit invoices to Landlord for payment together
with evidence satisfactory to Landlord in its reasonable discretion that
the portion of the Tenant Improvements for which the invoice has been
submitted have been completed in the manner required under this
Agreement. Following Landlord's reasonable review and approval thereof,
Landlord shall reimburse Tenant for the amount of such invoice; provided
in no event shall Landlord be obligation to pay Tenant more than the
Expansion Space Tenant Improvement Allowance. Any expenses incurred by
Tenant in excess of the Expansion Space Tenant Improvement Allowance
shall be at Tenant's sole cost and expense. The Expansion Space Tenant
Improvement Allowance shall be utilized for improvements constructed
solely within the Second Expansion Space. Landlord shall not disburse to
Tenant and Tenant shall not be entitled to any remaining portion of the
Expansion Space Tenant Improvement Allowance for invoices which are
received by Landlord after February 28, 1998.
Landlord and Tenant acknowledge that the City of San Jose imposes certain
taxes as a condition to issuing building permits in certain
circumstances, including the "Building and Structure Construction Tax"
imposed by Chapter 4.46 if the City of San Jose Municipal Code (the "BSC
Tax") and the "Commercial-Residential-Mobile Home Park Building Tax"
imposed by Chapter 4.47 of the City of San Jose Municipal Code (the "CRM
Tax"). Landlord and Tenant further agree and acknowledge that the rate
for these two taxes is higher for a structure designed or intended to be
used for "industrial purposes". However, the parties acknowledge and
agree that (i) an additional BSC Tax will be due upon the issuance of a
building permit for all Tenant Improvements if the City of San Jose
determines that the Tenant Improvements are intended for "industrial
purposes", or (ii) a BSC Tax and a CRM Tax based on the value of the
Tenant Improvements, plus an additional BSC Tax and a CRM Tax based on
the value of the shell, will be due if the City of San Jose determines
that the Building is intended for "commercial purposes", and (iii) any of
such taxes that must be paid in order to obtain building permits for the
Tenant Improvements shall be paid by Tenant.
4. CHANGE REQUESTS. No material changes to the Approved Plans requested by
---------------
Tenant shall be made without Landlord's prior approval, which approval
shall not be unreasonably withheld; provided, however, that no change
request shall affect the structure of the Building. Landlord shall
approve or disapprove any change requests within five (5) business days
of receipt of a signed request from Tenant. Any material changes to the
Approved Plans shall be in writing and shall be signed by both Landlord
and Tenant prior to the change being made. Notwithstanding Landlord's
approval of any changes to the Approved Plans, The Expansion Space Tenant
Improvement Allowance shall not be increased.
5. NOTICE. Tenant shall notify Landlord at least five (5) business days
------
prior to the commencement of construction of any Tenant Improvements and
permit Landlord to post on the Premises such notices of nonresponsibility
as may be required or otherwise available to Landlord.
6. AMENDMENT COMMENCEMENT DATE. Tenant shall be responsible (and Landlord
---------------------------
shall have no responsibility) for construction of the Tenant
Improvements. The Effective Date (and Tenant's obligation to commence
paying Base Monthly Rent and Additional Rent for the Second Expansion
Space) shall not be affected or delayed by any delays in constructing the
Tenant Improvements.
<PAGE>
7. AS-BUILTS. Upon completion of the Tenant Improvements, Tenant shall
---------
deliver to Landlord "as-built" drawings for the completed Tenant
Improvements.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
PERICOM SEMICONDUCTOR CORPORATION,
a California corporation
By: /s/ Patrick Brennan
------------------------------------------------
Its: Vice President Finance & Administration
--------------------------------------------
Name: Patrick B. Brennan
-------------------------------------------
CARRAMERICA REALTY CORPORATION,
a Maryland corporation
By: /s/ Brian K. Fields
------------------------------------------------
Its: CFO
Name: Brian K. Fields
4
<PAGE>
EXHIBIT 10.10
EXHIBIT C
SECOND AMENDED INVESTORS RIGHTS AGREEMENT
THIS SECOND AMENDED INVESTORS RIGHTS AGREEMENT is entered into as of
the 21st day of July, 1993 by and among Pioneer Semiconductor Corporation, a
California corporation (the "Company"), those existing holders of Series A
Preferred Stock of the Company (the "Series A Investors"), those existing
holders of Series B Preferred Stock of the Company (the "Series B Investors"),
and those holders of Series C Preferred Stock of the Company set forth in
Exhibit A hereto (the "Series C Investors," and collectively with the Series A
Investors and the Series B Investors, the "Investors").
R E C I T A L S
1. The Company and the Series C Investors are parties to that
certain Series C Preferred Stock Purchase Agreement of even date herewith (the
"Series C Agreement"), pursuant to which the Series C Investors purchased from
the Company shares of its Series C Preferred Stock.
2. As consideration for the obligations of the Series C Investors
under the Series C Agreement, the Company wishes to enter into this Agreement to
provide the Series C Investors certain registration, first refusal and
information rights.
3. The Company, the Series A Investors and the Series B Investors
are parties to that certain First Amended Investors Rights Agreement, dated as
of December 30, 1991 (the "Amended Agreement"), pursuant to which the Company
granted the Series A Investors and the Series B Investors similar registration,
first refusal and information rights. The Series A Investors and the Series B
Investors wish to become party to this Agreement and to replace the Amended
Agreement with this Agreement so as to have consistency between the Investors as
to such registration, first refusal and information rights.
NOW THEREFORE, in consideration of the foregoing and the mutual
promises herein contained, the parties agree as follows:
A G R E E M E N T
1. DEFINITIONS. As used in this Agreement, the following terms shall
have the following respective meanings:
(a) The terms "register," "registered" and "registration" refer to
a registration effected by preparing and filing a registration statement in
compliance with the Securities Act and the declaration or ordering of the
effectiveness of such registration statement;
1
<PAGE>
(b) The term "Registrable Securities" means: (i) any Common Stock
issued or to be issued pursuant to conversion of the Series A Preferred Stock
(the "Series A Stock"), Series B Preferred Stock (the "Series B Stock") and
Series C Preferred Stock ("Series C Stock") issued by the Company to Investors;
and (ii) any other Common Stock issued as a dividend or other distribution with
respect to, or in exchange for or in replacement of such Series A Stock, Series
B Stock and Series C Stock or the shares of Common Stock issued pursuant to
conversion of said Series A Stock, Series B Stock and Series C Stock; provided,
however, that shares of Common Stock or other securities shall only be treated
as Registrable Securities (A) if and so long as they have not been sold to or
through a broker or dealer or underwriter in a public distribution or a public
securities transaction pursuant to an effective registration statement or
pursuant to SEC Rule 144, or (B) if in the opinion of counsel to the Company
they may be sold in a transaction exempt from the prospectus delivery
requirements of the Securities Act so that all transfer restrictions and legends
with respect thereto are removed from the consummation of such sale;
(c) The term "Holder" means any holder of outstanding Registrable
Securities who is (i) an Investor; or (ii) any person to which the registration
rights provided for in this Agreement shall have been properly assigned in
accordance with Section 12 hereof;
(d) The term "Initiating Holders" means any Holder or Holders making a
request for registration pursuant to the provisions of Section 2 hereof; and
(e) The term "Substantial Amount of Registrable Securities" means at
least fifty percent (50%) of the Registrable Securities.
(f) The term "Securities Act" shall mean the Securities Act of 1933,
as amended, or any similar federal statute, and the rules and regulations of the
commission thereunder, all as the same shall be in effect at the time.
(g) The term "Commission" shall mean the Securities and Exchange
Commission or any other federal agency at the time administering the Securities
Act.
2. REQUESTED REGISTRATION.
(a) REQUESTED REGISTRATION. In the event that the Company, prior to
such time as the Company has effected two (2) registrations pursuant to this
Section 2 and such registrations have been declared or ordered effective, the
Company shall receive from the Holders of a Substantial Amount of Registrable
Securities a written request that the Company effect any registration,
qualification or compliance with respect to all or a part of the Registrable
Securities with an expected aggregate offering price, net of underwriter's
discounts and commissions, to the public of at least $5,000,000, the Company
will:
(i) promptly give written notice of the proposed registration,
qualification or compliance to all other Holders; and
2
<PAGE>
(ii) as soon as practicable, use its diligent best efforts to
effect all such registrations, qualifications and compliances (including,
without limitation, the execution of an undertaking to file post-effective
amendments, appropriate qualification under the applicable blue sky or other
state securities laws and appropriate compliance with exemptive regulations
issued under the Securities Act and any other governmental requirements or
regulations) as may be so requested and as would permit or facilitate the sale
and distribution of all or such portion of such Holder's or Holders' Registrable
Securities as are specified in such request, together with all or such portion
of the Registrable Securities of any other Holder or Holders joining in such
request as are specified in a written notice given within fifteen (15) days
after receipt of such written notice from the Company; provided that the Company
shall not be obligated to take any action to effect any such registration,
qualification or compliance pursuant to this Section 2:
(A) In any particular jurisdiction in which the Company
would be required to execute a general consent to service of process in
effecting such registration, qualification or compliance unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Securities Act;
(B) Prior to the earlier of June 30, 1995 or six (6) months
following the effective date of the registration statement pertaining to the
first underwritten public offering of securities of the Company for its own
account; or
(C) If at the time of the request to register Registrable
Securities the Company gives notice within thirty (30) days of such request that
it is engaged or has fixed plans to engage within sixty (60) days of the time of
the request in an initial firmly underwritten registered public offering as to
which the Holders may include Registrable Securities pursuant to Sections 2 or
3.
Subject to the foregoing provisions, the Company shall file a
registration statement covering the Registrable Securities so requested to be
registered as soon as practicable after receipt of the request or requests of
the Initiating Holders.
(a) UNDERWRITING. If the Initiating Holders intend to distribute the
Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Company and shall designate the underwriter or
underwriters to be employed in connection therewith (who shall be selected by
the majority in interest of the Initiating Holders with the approval of the
Company, which approval shall not be unreasonably withheld) as a part of their
request made pursuant to Section 2(a) and the Company shall include such
information in the written notice referred to in Section 2(a)(i). In such
event, the right of any Holder to registration pursuant to this Section 2 shall
be conditioned upon such Holder's participation in such underwriting and the
inclusion of such Holder's Registrable Securities in the underwriting (unless
otherwise mutually agreed by a majority in interest of the Initiating Holders
and such Holder) to the extent provided herein. The Company shall (together
with all Holders proposing to distribute their securities through such
underwriting) enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting by a majority in
interest of the Initiating Holders. Notwithstanding any other provision of this
Section 2, if the underwriter advises the Initiating Holders in writing that
marketing factors require a limitation of the number of shares to be
underwritten, then the Initiating Holders shall so advise all Holders of
3
<PAGE>
Registrable Securities that would otherwise be registered and underwritten
pursuant hereto, and the number of shares included in the registration and
underwriting shall be allocated among the Holders of Registrable Securities
requesting registration in proportion, as nearly as practicable, to the total
number of Registrable Securities held by such Holders at the time of filing of
the registration statement. No registrable Securities excluded from the
underwriting by reason of the underwriter's marketing limitation shall be
included in such registration.
If any Holder disapproves of the terms of the underwriting, such
person may elect to withdraw therefrom by written notice to the Company, the
underwriter and the Initiating Holders. The Registrable Securities and/or other
securities so withdrawn from such underwriting shall also be withdrawn from such
registration; provided that in the event that the withdrawal of a Holder results
in an anticipated aggregate offering price to the public of less than five
million dollars ($5,000,000), the Company shall no longer be required to effect
such registration pursuant to this Section 2.
If the underwriter has not limited the number of Registrable
Securities to be underwritten, the Company may include securities for its own
account or the account of others in such registration if the underwriter so
agrees and if the number of Registrable Securities which would otherwise have
been included in such registration and underwriting will not thereby be limited.
(c) DELAY OF REGISTRATION. If the Company shall furnish to the
Initiating Holders a certificate signed by the President of the Company stating
that, in the good faith judgment of the Board of Directors of the Company, it
would be seriously detrimental to the Company and its shareholders for such
registration statement to be filed on or before the date filing would be
required and it is therefore essential to defer the filing of such registration
statement, then the Company may direct that such request for registration be
delayed for a period not in excess of one hundred twenty (120) days such right
to delay a request to be exercised by the Company not more than twice in any
one-year period.
3. COMPANY REGISTRATION.
(a) NOTICE OF REGISTRATION. If at any time or from time to time, the
Company shall determine to register any of its Common Stock, either for its own
account or the account of a security holder or holders (other than the Holders),
other than a registration relating solely to employee stock option or purchase
plans, relating solely to Rule 145 transaction or a registration form which does
not include substantially the same information as would be required to be
included in a registration statement covering the sale of Registrable
Securities, the Company will:
(i) promptly give to each Holder written notice thereof which
shall include a list of the jurisdictions in which the Company intends to
attempt to qualify such securities under the applicable blue sky or other state
securities laws); and
(ii) include in such registration (and any related qualification
under blue sky laws or other compliance), and in any underwriting involved
therein, all the Registrable Securities specified in a written request or
requests, made within twenty (20)
4
<PAGE>
days after receipt of such written notice from the Company, by any Holder or
Holders, except as set forth in Section 3(b) below.
(b) UNDERWRITING. If the registration of which the Company gives
notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 3(a)(i). In such event the right of any Holder to
registration pursuant to this Section 3 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their securities through such underwriting shall
(together with the Company and other holders distributing their securities
through such underwriting) enter into an underwriting agreement in customary
form with the underwriter or underwriters selected for such underwriting by the
Company. Notwithstanding any other provision of this Section 3, if the
underwriter determines that marketing factors require a limitation of the number
of shares to be underwritten, the underwriter may limit the number of
Registrable Securities to be included in the registration and underwriting on a
pro rata basis based on the total number of the Registrable Securities held by
the Holders and based on the total number of securities (other than Registrable
Securities) entitled to registration held by the Holders and by other persons to
organizations selling securities pursuant to registration rights granted them by
the Company, provided that in connection with any registered public offering
other than the initial such offering, no such reduction may reduce the
securities being offered by the Holders to less than 30% of the total number of
securities included in such registration and underwriting. The Company shall
advise all Holders of Registrable Securities which would otherwise be registered
and underwritten pursuant hereto of any such limitations, and the number of
shares of Registrable Securities that may be included in the registration. If
any Holder disapproves of the terms of any such underwriting, he may elect to
withdraw therefrom by written notice to the Company and the underwriter. The
Registrable Securities so withdrawn shall also be withdrawn from registration.
4. EXPENSES OF REGISTRATION. All expenses incurred in connection with the
registration, qualification or compliance pursuant to Section 2 and any
registration, qualification or compliance pursuant to Section 3, including
without limitation, all registration, filing and qualification fees, printing
expenses, fees and disbursements of counsel for the Company, expenses of any
special audits incidental to or required by such registration and the fees and
disbursements of one counsel retained by the Holders of Registrable Securities
covered by such registration, qualification or compliance shall be borne by the
Company, except that:
(a) The Company shall not be required to pay for expenses of any
registration proceeding begun pursuant to Section 2, the request of which has
been subsequently withdrawn by the Initiating Holders, in which case, such
expenses shall be borne by the Holders of securities (including Registrable
Securities) requesting or causing such withdrawal; and
(b) The Company shall not be required to pay underwriters' discounts,
commissions, or stock transfer taxes relating to Registrable Securities.
5
<PAGE>
5. REGISTRATION PROCEDURES. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Agreement,
the Company will keep each Holder participating therein advised in writing as to
the initiation of each registration, qualification and compliance and as to the
completion thereof. At its expense (except as otherwise provided in Section 4
above) the Company will:
(a) keep such registration, qualification or compliance pursuant to
Sections 2 or 3 effective for a period of one hundred twenty (120) days or until
the Holder or Holders have completed the distribution described in the
registration statement relating thereto, whichever first occurs;
(b) furnish such number of prospectuses and other documents incident
thereto as a Holder from time to time may reasonably request;
(c) prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statements as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement;
(d) notify each Holder of Registrable Securities covered by such
registration statement, at any time when a prospectus relating thereto covered
by such registration statement is required to be delivered under the Securities
Act, of the happening of any event as a result of which the prospectus included
in such registration statement, as then in effect, includes an untrue statement
of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the light
of the circumstances then existing; and
(e) furnish, at the request of any Holder requesting registration of
Registrable Securities pursuant to this Agreement, on the date that such
Registrable Securities are delivered to the underwriters for sale in connection
with a registration pursuant to this Agreement, if such securities are being
sold through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statements with respect to such
securities becomes effective, (i) an opinion, dated such date, of the counsel
representing the Company for the purposes of such registration, in form and
substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities and (ii) a letter dated such date, from
the independent certified public accountants of the Company, in form and
substance as is customarily given by independent certified public accounts to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Securities.
6. INDEMNIFICATION.
(a) The Company will indemnify each Holder of Registrable Securities,
each of its officers and directors, and each person controlling such Holder,
with respect to which registration, qualification or compliance has been
effected pursuant to this Agreement, against all claims, losses, damages, costs,
expenses and liabilities whatsoever (or actions in respect thereof) arising out
of or based on (i) any untrue statement (or alleged untrue statement) of a
material fact contained in any registration statement, prospectus,
6
<PAGE>
offering circular or other similar document (including any related registration,
statement, notification or the like) incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the circumstances under
which they were made, or (ii) any violation by the Company of the Securities Act
or any state securities law or of any rule or regulation promulgated under the
Securities Act or any state securities law applicable to the Company and
relating to action or inaction required of the Company in connection with any
such registration, qualification or compliance, and will reimburse each such
Holder, each of its officers and directors, and each person controlling such
Holder, for any legal and any other expenses reasonably incurred in connection
with investigating or defending any such claim, loss, damage, liability or
action, except that the Company will not be liable in any such case to the
extent that any such claim, loss, damage, liability, or action arises out of or
is based on any untrue statement or omission based upon written information
furnished to the Company by an instrument duly executed by any Holder and stated
to be specifically for use therein or furnished by any Holder to the Company in
response to a request by the Company stating specifically that such information,
and except that the foregoing indemnity agreement is subject to the condition
that, insofar as it relates to any such untrue statement (or alleged untrue
statement) or omission (or alleged omission) made in the preliminary prospectus
but eliminated or remedied in the amended prospectus on file with the Commission
at the time the registration statement becomes effective or in the amended
prospectus filed with the Commission pursuant to Rule 424(b) (the "Final
Prospectus"), such indemnity agreement shall not inure to the benefit of any
Holder if a copy of the Final Prospectus was not furnished to the person or
entity asserting the loss, liability, claim or damage at or prior to the time
such action is required by the Securities Act.
(b) Each Holder will, if Registrable Securities held by or issuable to
such Holder are included in the securities to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors and officers, each legal counsel and independent accountant of the
Company, each underwriter, if any, of the Company's securities covered by such
registration statement, each person who controls the Company within the meaning
of the Securities Act, and each other Holder, each of such other Holder's
officers and directors and each person controlling such other Holder, against
all claims, losses, damages, costs, expenses and liabilities whatsoever (or
actions in respect thereof) arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other similar document (including
any related registration statement, notification or the like) incident to any
such registration, qualification or compliance, or based on any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances under which they were made, and will reimburse the Company, such
other Holders, such directors, officers, persons or underwriters for any legal
or any other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, cost, expense, liability or action, in
each case to the extent, but only to the extent, that such untrue statement (or
alleged untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information furnished to the
Company by an instrument duly executed by such Holder and stated to be
specifically for use therein or furnished by the Holder to the Company in
response to a request by the Company stating specifically that
7
<PAGE>
such information will be used by the Company therein, except that the foregoing
indemnity agreement is subject to the condition that, insofar as it relates to
any such untrue statements (or alleged untrue statement) or omission (or alleged
omission) made in the preliminary prospectus but eliminated or remedied in the
Final Prospectus, such indemnity agreement shall not inure to the benefit of (i)
the Company and (ii) any underwriter or any Holder, if there is no underwriter,
if a copy of the Final Prospectus was not furnished to the person or entity
asserting the loss, liability, claim or damage at or prior to the time such
action is required by the Securities Act.
(c) Each party entitled to indemnification under this Section 6 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld). The failure of any Indemnified Party to give notice as provided
herein shall relieve the Indemnifying Party of its obligations under this
Agreement only to the extent that such failure to give notice shall materially
adversely prejudice the Indemnifying Party in the defense of any such claim or
any such litigation. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation. If any such Indemnified Party shall have been advised by counsel
chosen by it that there may be one or more legal defenses available to such
Indemnified Party that are different from or additional to those available to
the Indemnifying Party, the Indemnifying Party shall not have the right to
assume the defense of such action on behalf of such Indemnified Party and will
reimburse such Indemnified Party and any person controlling such Indemnified
Party for the reasonable fees and expenses of any counsel retained by the
Indemnified Party, it being understood that the Indemnifying Party shall not, in
connection with any one action or separate but similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances,
be liable for the reasonable fees and expenses of more than one separate firm of
attorneys for such Indemnified Party or controlling person, which firm shall be
designated in writing by the Indemnified Party to the Indemnifying Party.
7. INFORMATION BY HOLDER. The Holder or Holders or Registrable Securities
included in any registration shall furnish to the Company such information
regarding such Holder or Holders and the distribution proposed by such Holder or
Holders as the Company may request in writing and as shall be required in
connection with any registration, qualification or compliance referred to in
this Agreement.
8. SALE WITHOUT REGISTRATION. If at the time of any transfer of any
Registrable Securities, such Registrable Securities shall not be registered
under the Securities Act, the Company may require, as a condition of allowing
such transfer, that the Holder or transferee furnish to the Company (a) such
information as is necessary in order to establish that such transfer may be made
without registration under the Securities Act; and (b) at the expense of the
Holder or transferee, an opinion by legal counsel designated by such Holder or
transferee and reasonably satisfactory in form and substance to the Company, to
the effect
8
<PAGE>
that such transfer may be made without registration under the Securities Act,
except that nothing contained in this Section 8 shall relieve the Company from
complying with any request for registration, qualification or compliance made
pursuant to the other provisions of this Agreement. For the purpose of this
Section 8, Registrable Securities shall also be deemed to include any Series A
Stock, Series B Stock or Series C Stock held by a Holder.
9. TERMINATION OF COMPANY'S OBLIGATIONS. The Company shall have no
obligations pursuant to Section 2, 3, or 13 hereof with respect to any request
or request made by any Holder after September 30, 2001.
10. RULE 144 REPORTING. With a view to making available to the Holders
the benefits of certain rules and regulations of the Commission which may permit
the sale of Registrable Securities to the public without registration, the
Company agrees to:
(a) use its best efforts to make and keep public information
available, as those terms are understood and defined in SEC Rule 144 under the
Securities Act, at all times after ninety (90) days after the effective date of
the first registration under the Securities Act filed by the Company that
involves a sale of securities of the Company to the general public;
(b) use its best efforts to then file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Securities Exchange Act of 1934, as amended (the
"Securities Exchange Act"); and
(c) take such action, including the voluntary registration of its
Common Stock under Section 3 of the Securities Exchange Act, as is necessary to
enable the Holders to utilize From S-3 for the sale of their Registrable
Securities, such action to be taken as soon as practicable after the end of the
fiscal year in which the first registration statement filed by the Company for
the offering of its securities to the general public is declared effective;
(d) furnish to any Holder, so long as such Holder owns any Registrable
Securities, forthwith upon written request a written statement by the Company
that it has complied with the reporting requirements of said Rule 144 (at any
time after ninety (90) days after the effective date of the first registration
statement filed by the Company for an offering of its securities to the general
public), and of the Securities Act and the Securities Exchange Act (at any time
after it has become subject to such reporting requirements), a copy of the most
recent annual or quarterly report of the Company, and such other reports and
documents so filed by the Company as such Holder may reasonably request in
availing itself of any rule or regulation of the Commission permitting the
Holder to sell any such securities without registration.
11. STANDOFF AGREEMENT. Each Holder agrees, so long as such Holder holds
at least one percent (1%) of the Company's outstanding voting equity securities,
in connection with the Company's initial public offering of the Company's
securities, upon request of the Company or the underwriters managing any
underwritten offering of the Company's securities, not to sell, make any short
sale of, loan, grant any option for the purchase of, or otherwise dispose of any
Registrable Securities (other than those included in the registration) without
the prior written consent of the Company or such underwriters, as
9
<PAGE>
the case may be, for such period of time (not to exceed one hundred eighty (180)
days) from the effective date of such registration as may be requested by the
underwriter.
12. TRANSFER OF REGISTRATION RIGHTS.
(a) Except as otherwise provided herein, the rights to cause the
Company to register securities granted by the Company under Sections 2, 3 and 13
may be assigned or otherwise conveyed to a transferee or assignee of Registrable
Securities, who shall be considered a "Holder" for purposes of this Agreement;
provided that (i) such transfer is effected in accordance with applicable
federal and state securities laws, (ii) such transferee or assignee becomes a
party to this Agreement or agrees in writing to be subject to the terms hereof
to the same extent as if he were an original purchaser hereunder and (iii) such
transferee or assignee (A) is a wholly owned subsidiary or constituent partner
(including limited partners) or affiliate of the transferring Holder, or (B)
acquires at least one hundred thousand (100,000) shares of Series A Stock,
Series B Stock or Series C Stock or an equivalent amount of Registrable
Securities issued upon conversion thereof and, provided further, that the
Company is given written notice by such Holder at the time of or within a
reasonable time after said transfer, stating the name and address of said
transferee or assignee and identifying the securities with respect to which such
registration rights are being assigned.
13. FORM S-3 REGISTRATION. In case the Company shall receive from any
Holder or Holders a written request or requests that the Company effect a
registration on Form S-3 (or any substantially equivalent registration form
under the Securities Act subsequently adopted by the Commission that permits
inclusion or incorporation by reference to other documents filed by the Company
with the Commission) and any related qualification or compliance with respect to
all or a part of the Registrable Securities owned by such Holder or Holders, the
Company will:
(a) promptly give written notice of the proposed registration, and any
related qualification or compliance, to all other Holders; and
(b) as soon as practicable, effect such registration and all such
qualifications and compliances as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Holder's or
Holders' Registrable Securities as are specified in such request, together with
all or such portion of the Registrable Securities of any other Holder or Holders
joining in such request as are specified in a written request given within
fifteen (15) days after receipt of such written notice from the Company, except
that the Company shall not be obligated to effect any such registration,
qualification or compliance, pursuant to this Section 13: (1) if Form S-3 is not
available for such offering by the Holders; (2) if the Holders, together with
the holders of any other securities of the Company entitled to inclusion in such
registration, propose to sell Registrable Securities and such other securities
(if any) at an aggregate price to the public (net of any underwriters' discounts
and commissions) of less than $500,000; (3) if the Company shall furnish to the
Holders a certificate signed by the President of the Company stating that, in
the good faith judgment of the Board of Directors of the Company, it would be
seriously detrimental to the Company and its shareholders for such Form S-3
registration to be effected at such time, in which event the Company shall have
the right to defer the filing of the Form S-3 registration statement for a
period of not more than 60 days after receipt of the request of the Holder or
10
<PAGE>
Holders under this Section 13, except that the Company shall not utilize this
right more than once in any twelve (12) month period; (4) if the Company has
already effected one registration on Form S-3 for the Holders during the
immediately preceding six (6) month period; or (5) in any particular
jurisdiction in which the Company would be required to qualify to do business or
to execute a general consent to service of process in effecting such
registration, qualification or compliance.
Subject to the foregoing, the Company shall file a registration
statement covering the Registrable Securities and other securities so requested
to be registered as soon as practicable after receipt of the request or requests
of the Holders. All expenses incurred in connection with a registration
requested pursuant to this Section 13, including (without limitation) all
registration, filing, qualification, printer's and accounting fees and the
reasonable fees and disbursements of counsel for the selling Holder or Holders
shall be borne pro rata by the Holder or Holders participating in the Form S-3
registration. Registrations effected pursuant to this Section 13 shall not be
counted as demands for registration or registrations effected pursuant to
Section 2 or 3, respectively.
14. LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. From and after the
date hereof, the Company, except as provided in Section 15 below, shall not,
without the prior written consent of Holders owning more than 50% of the
outstanding Series A Stock, 50% of the outstanding Series B Stock, 50% of the
outstanding shares of Series C Stock, an equivalent amount of Registrable
Securities issued upon conversion thereof, or any combination with respect
thereto, enter into any agreement with any holder or prospective holder of any
securities of the Company which would allow such holder or prospective holder of
any securities of the Company to include such securities in any registration
filed under Section 2 hereof, unless (anything in subsection 2(b) to the
contrary notwithstanding) under the terms of such agreement, such holder or
prospective holder may include such securities in any such registration only to
the extent that the inclusion of his securities will not diminish the amount of
Registrable Securities which are included.
15. ADDITIONAL PURCHASERS. Notwithstanding Section 14 above, the Company
shall have the right to cause those persons acquiring shares of Series C Stock
from the Company after the date hereof ("Additional Purchasers") to become
parties hereto upon the purchase of such Series C Stock and to be entitled to
exercise all rights and privileges granted to the Purchasers hereunder.
16. RIGHT OF FIRST REFUSAL ON COMPANY ISSUANCES.
(a) RIGHT OF FIRST REFUSAL. The Company hereby grants to each Holder
the right of first refusal to purchase, pro rata, all (or any part) of New
Securities (as defined in this Section 16) that the Company may, from time to
time propose to sell and issue. Such Holder's pro rata share, for purposes of
this right of first refusal, is the ratio, the numerator of which is the number
of shares of Common Stock then owned or issuable upon conversion of the Series A
Stock, Series B Stock or Series C Stock of the Company then owned by such
Holder, and the denominator of which is the total number of shares of Common
Stock outstanding immediately prior to the issuance of the New Securities,
assuming full conversion of all outstanding shares of Series A Stock, Series B
Stock and Series C Stock of the Company. This right of first refusal shall be
subject to the following provisions listed below.
11
<PAGE>
(b) "New Securities" shall mean any capital stock of the Company,
whether now authorized or not, and rights, options, or warrants to purchase said
capital stock, and securities of any type whatsoever that are, or may become,
convertible into said capital stock; provided, however, that "New Securities"
does not include (i) securities issuable upon conversion of or with respect to
Series A Stock, Series B Stock and Series C Stock; (ii) securities issued
pursuant to the acquisition of another corporation by the Company by merger,
purchase or substantially all of the assets, or other reorganization whereby the
Company owns more than fifty percent (50%) of the voting power of such
corporation; (iii) shares of the Company's Common Stock (or related options)
issued to employees, officers or consultants of the Company pursuant to any
employee stock offering, plan, or arrangement approved by the Board of
Directors; (iv) shares of the Company's Common Stock, Series A Stock, Series B
Stock or Series C Stock issued in connection with any stock split, stock
dividend, or similar recapitalization by the Company; (v) those shares of Series
C Stock to be issued to the Additional Purchasers; or (vi) securities issued
pursuant to equipment or debt financing or leases which are approved by the
Company's Board of Directors.
(c) In the event that the Company proposes to undertake an issuance of
New Securities, it shall give each Holder written notice of its intention,
describing the type of New Securities, the price, and the general terms upon
which the Company proposes to issue the same. Each Holder shall have twenty
(20) days from the date of mailing of any such notice to agree to purchase up to
its full pro rata share of such New Securities for the price and upon the
general terms specified in the notice by giving written notice to the Company
and stating therein the quantity of New Securities to be purchased.
(d) In the event that Holders fail to exercise in full the right of
first refusal within said twenty (20) day period the Company shall have ninety
(90) days thereafter to sell or enter into an agreement providing for the
closing of the sale of the New Securities respecting which the Holders' rights
were not exercised within thirty (30) days of such agreement at a price and upon
general terms no more favorable to the purchasers thereof than specified in the
Company's notice. In the event the Company has not sold, or entered into an
agreement for the sale of the New Securities within such ninety (90) day period,
the Company shall not thereafter issue or sell any New Securities, without first
offering such securities to the Holders in the manner provided above.
(e) The right of first refusal granted under this Agreement shall not
apply to and shall expire upon the first closing of the first firmly
underwritten public offering of Common Stock of the Company that is pursuant to
a registration statement filed with, and declared effective by, the Commission
under the Securities Act, covering the offer and sale of Common Stock to the
public at a per share price (prior to underwriter commissions and expenses) of
at least three dollars ($3.00) and at an aggregate offering price (before
deduction for underwriter commissions and expenses) of not less than ten million
dollars ($10,000,000) (the "Initial Public Offering").
(f) This right of first refusal is assignable only to an affiliate of
a Holder or in connection with a sale or transfer of Registrable Securities.
12
<PAGE>
17. FINANCIAL STATEMENTS.
(A) ANNUAL REPORT. For fiscal years ending after the Closing Date, the
Company agrees to deliver to each Holder:
(i) as soon as practicable after the end of each fiscal year, and
in any event within ninety (90) days thereafter, a balance sheet of the Company
as at the end of such fiscal year and a statement of operations and a statement
of sources and application of funds of the Company for such year, prepared in
accordance with generally accepted accounting principles consistently applied
and setting forth in each case in comparative form the figures for the two (2)
previous fiscal years, all in reasonable detail and audited by independent
public accountants selected by the Company; and
(ii) within forty-five (45) days after the end of each of the
first three quarters of each fiscal year, an unaudited consolidated profit or
loss statement for such fiscal quarter and an unaudited balance sheet as of the
end of such fiscal quarter.
(B) ANNUAL PLAN. Within ten (10) days of adoption by the Board of
Directors but not later than the beginning of each fiscal year of the Company,
the Company shall submit to each Holder an annual plan for such year which shall
include quarterly capital and operating expense budgets, cash flow statements,
manpower projections, projected balance sheets, profit and loss projections and
sales projections for each month and for the end of such year itemized in such
detail as the Board of Directors may reasonably determine. Approval of such
budgets, statements and projections shall be required by a majority of the Board
of Directors. If the annual plan is modified by the Board of Directors to
reflect changes as a result of operating results and other events that occur
during the year covered by the annual plan, copies of such modification shall be
promptly submitted to each Holder.
(C) TERMINATION OF REPORTS AND RIGHTS. The Company shall deliver the
reports and give the rights specified in this Section 17 to each Holder until
the earlier of (i) the closing of the Initial Public Offering, or (ii) the date
on which the total number of shares of Series A Stock, Series B Stock or Series
C Stock then held by such Holder (including shares of Common Stock obtained upon
conversion thereof) represents less than 500,000 shares of Series A Stock,
Series B Stock or Series C Stock, at which time the Company's obligation to
deliver such reports or give such rights to such Holder shall terminate.
(D) ASSIGNMENT OF RIGHTS TO INFORMATION. The rights granted pursuant
to this Section 17 may not be assigned or otherwise conveyed by any Holder or by
any subsequent transferee of any such rights without the written consent of the
Company, which consent shall not be unreasonably withheld; provided that the
Company may refuse such written consent if the proposed transferee is a
competitor of the Company as determined by the Company's Board of Directors; and
provided further, that no such written consent shall be required if the transfer
is made to a party who is not a competitor of the Company and who is a parent,
subsidiary, affiliate, partner or group member of any Investor.
13
<PAGE>
(E) CONFIDENTIALITY. Each Holder agrees that it will keep
confidential and will not disclose or divulge any confidential, proprietary or
secret information which such Holder may obtain from the Company, and which the
Company has prominently marked "Confidential", "Proprietary" or "Secret" or has
otherwise identified as being such, pursuant to financial statements, reports
and other materials submitted by the Company as required hereunder unless such
information is or become known to the Holder from a source other than the
Company or is or becomes publicly known, or unless the Company gives its written
consent to the Holder's release of such information, except that no such written
consent shall be required (and Holder shall be free to release such information)
if such information is to be provided to a Holder's counsel or accountant, or to
an officer, director or partner of a Holder, provided that the Holder shall
inform the recipient of the confidential nature of such information, and shall
instruct the recipient to treat the information as confidential.
18. MISCELLANEOUS.
(A) GOVERNING LAW. This Agreement shall be governed in all respects
by the laws of the State of California as such laws are applied to agreements
between California residents entered into and to be performed entirely within
California.
(B) SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto whose rights or obligations hereunder are affected by such
amendments.
(C) NOTICES. Except as otherwise provided, all notices and other
communications required or permitted hereunder shall be in writing and shall be
mailed by first class mail, postage prepaid, addressed (a) if to the Holder, at
each Holder's address set forth below its signature, or at such other address as
such Holder shall have furnished to the Company in writing, or (b) if to any
other holder of any of the Series A Stock, Series B Stock and Series C Stock or
other securities issued with respect thereto, at such address such holder shall
have furnished the Company in writing, or until any such holder furnishes an
address to the Company, then to and at the address of the last holder of such
securities who has so furnished an address to the Company, or (c) if to the
Company, at its address set forth below, or at such other address as the Company
shall have furnished to the Holders in writing.
(D) AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended
and the observance of any term of the Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), with the
written consent of the Company, the holders of more than fifty percent (50%) of
the outstanding shares of Series A Stock, Series B Stock and Series C Stock
(including, for such purposes, on a proportional basis, any shares of Common
Stock into which any of the Series A Stock, Series B Stock and Series C Stock
have been converted that have not been sold to the public). Any amendment or
waiver effected in accordance with this Section shall be binding upon each
Holder, each future holder of all such securities, and the Company.
14
<PAGE>
(E) TITLES AND SUBTITLES. The titles of the Sections and Subsections
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
(F) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
(G) AMENDED AGREEMENT. This Agreement shall become effective and
supersede the Amended Agreement in its entirety upon the last to occur of the
following: (a) the execution and delivery of this Agreement by (i) the Company,
(ii) Series A Investors holding more than fifty percent (50%) of the Series A
Stock, (iii) Series B Investors holding more than fifty percent (50%) of the
Series B Stock, (iv) Series C Investors purchasing Series C Stock at the first
closing pursuant to the Series C Agreement; and (v) the initial issuance of
Series C Stock by the Company. At such time as the Amended Agreement is so
superseded, any rights and obligations of the Company and the Series A Investors
and Series B Investors thereunder shall be terminated and of no further force
and effect.
(H) SEVERABILITY. Should any provision of this Agreement be
determined to be illegal or unenforceable, such determination shall not affect
the remaining provisions of this Agreement.
15
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year hereinabove first written.
PIONEER SEMICONDUCTOR INVESTORS:
CORPORATION
By: /s/ Alex C. Hui
---------------------------- ---------------------------------
Alex C. Hui, President Name
Address: Address:
2343 Bering Drive _________________________________
San Jose, CA 95131 _________________________________
_________________________________
16
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year hereinabove first written.
PIONEER SEMICONDUCTOR INVESTORS:
CORPORATION
By: /s/ Alex C. Hui /s/ ^^
---------------------------- ---------------------------------
Alex C. Hui, President Name
Address: Address:
2343 Bering Drive ^^
San Jose, CA 95131 ---------------------------------
---------------------------------
---------------------------------
17
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year hereinabove first written.
PIONEER SEMICONDUCTOR INVESTORS:
CORPORATION
By: /s/ Alex C. Hui /s/ ^^
---------------------------- ---------------------------------
Alex C. Hui, President Name
Address: Address:
2343 Bering Drive 12-IF.261.SEC 1
San Jose, CA 95131 ---------------------------------
Tunhwa S. Road
---------------------------------
Taipei, Taiwan
---------------------------------
18
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year hereinabove first written.
PIONEER SEMICONDUCTOR INVESTORS:
CORPORATION
By: /s/ Alex C. Hui /s/ ^^
---------------------------- ---------------------------------
Alex C. Hui, President Name
Address: Address:
2343 Bering Drive 12-IF.261.SEC 1
San Jose, CA 95131 ---------------------------------
Tunhwa S. Road
---------------------------------
Taipei, Taiwan
---------------------------------
19
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year hereinabove first written.
PIONEER SEMICONDUCTOR CORPORATION
By: /s/ Alex C. Hui
----------------------
Alex C. Hui, President
INVESTORS:
HOLDERS OF SERIES A PREFERRED STOCK:
/s/ Chen-Yueh Chin
__________________________
Chen-Yueh Chin
/s/ Sze-Wu Hsu
__________________________
Sze-Wu Hsu
/s/ Chih-Ray Hsu
__________________________
Chih-Ray Hsu
/s/ Yu-Pu Hsu
__________________________
Yu-Pu Hsu
/s/ Koh Tong Poat
__________________________
Koh Tong Poat
/s/ Tay Kia Hong
__________________________
Tay Kia Hong
/s/ Tay Thiam Yew
__________________________
Tay Thiam Yew
20
<PAGE>
/s/ Tay Thiang Phong
__________________________
Tay Thiang Phong
/s/ Tay Thiam Song
__________________________
Tay Thiam Song
/s/ Tay Tian Liang
__________________________
Tay Tian Liang
/s/ Jeffrey Young
__________________________
Jeffrey Young
HOLDERS OF SERIES B PREFERRED STOCK:
/s/ Yu-Pu Hsu
__________________________
Yu-Pu Hsu
/s/ Koh Tong Poat
__________________________
Koh Tong Poat
/s/ Tay Kia Hong
__________________________
Tay Kia Hong
/s/ Tay Thiam Yew
__________________________
Tay Thiam Yew
/s/ Tay Thiang Phong
__________________________
Tay Thiang Phong
/s/ Tay Thiam Song
__________________________
Tay Thiam Song
21
<PAGE>
/s/ Tay Tian Liang
__________________________
Tay Tian Liang
/s/ Jeffrey Young
__________________________
Jeffrey Young
/s/ Chih-Fang Hsu
__________________________
Chih-Fang Hsu
22
<PAGE>
EXHIBIT 10.11
INDEMNIFICATION AGREEMENT
-------------------------
THIS AGREEMENT is entered into, effective as of ____________, 1995 by
and between PERICOM SEMICONDUCTOR CORPORATION, a California corporation (the
"Company"), and ______________ ("Indemnitee").
WHEREAS, it is essential to the Company to retain and attract as
directors and officers the most capable persons available;
WHEREAS, Indemnitee is a director and/or officer of the Company;
WHEREAS, both the Company and Indemnitee recognize the increased risk
of litigation and other claims currently being asserted against directors and
officers of corporations; and
WHEREAS, in recognition of Indemnitee's need for substantial
protection against personal liability in order to enhance Indemnitee's continued
and effective service to the Company, and in order to induce Indemnitee to
provide services to the Company as a director and/or officer, the Company wishes
to provide in this Agreement for the indemnification of and the advancing of
expenses to Indemnitee to the fullest extent (whether partial or complete)
permitted by California law and as set forth in this Agreement, and, to the
extent insurance is maintained, for the coverage of Indemnitee under the
Company's directors' and officers' liability insurance policies.
NOW, THEREFORE, in consideration of the above premises and of
Indemnitee's continuing to serve the Company directly or, at its request, with
another enterprise, and intending to be legally bound hereby, the parties agree
as follows:
1. Certain Definitions:
-------------------
(a) Board: the Board of Directors of the Company.
-----
(b) Change in Control: shall be deemed to have occurred if (i)
-----------------
any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the "Act")), other than a trustee or other
fiduciary holding securities under an employee benefit plan of the Company or a
corporation owned directly or indirectly by the shareholders of the Company in
substantially the same proportions as their ownership of stock of the Company,
is or becomes the "Beneficial Owner" (as defined in Rule 13d-3 under the Act),
directly or indirectly, of securities of the Company representing 30% or more of
the total voting power represented by the Company's then outstanding Voting
Securities, or (ii) during any period of two consecutive years, individuals who
at the beginning of such period constitute the Board and any new director whose
election by the
1
<PAGE>
Board or nomination for election by the Company's shareholders was approved by a
vote of at least two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute a majority of the Board, or, or (iii) the shareholders of the Company
approve a merger or consolidation of the Company with any other corporation,
other than a merger or consolidation that would result in the Voting Securities
of the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into Voting Securities of
the surviving entity) at least 80% of the total voting power represented by the
Voting Securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or (iv) the shareholders of the
Company approve a plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company (in one transaction or a series of
transactions) of all or substantially all of the Company's assets.
(c) Expenses: any expense, liability, or loss, including attorneys'
--------
fees, judgments, fines, ERISA excise taxes and penalties, amounts paid or to be
paid in settlement, any interest, assessments, or other charges imposed thereon,
and any federal, state, local, or foreign taxes imposed as a result of the
actual or deemed receipt of any payments under this Agreement, paid or incurred
in connection with investigating, defending, being a witness in, or
participating in (including on appeal), or preparing for any of the foregoing
in, any Proceeding relating to any Indemnifiable Event.
(d) Indemnifiable Event: any event or occurrence that takes place
-------------------
either prior to or after the execution of this Agreement, related to the fact
that Indemnitee is or was a director or an officer of the Company, or while a
director or officer is or was serving at the request of the Company as a
director, officer, employee, trustee, agent, or fiduciary of another foreign or
domestic corporation, partnership, joint venture, employee benefit plan, trust,
or other enterprise, or was a director, officer, employee, or agent of a foreign
or domestic corporation that was a predecessor corporation of the Company or of
another enterprise at the request of such predecessor corporation, or related to
anything done or not done by Indemnitee in any such capacity, whether or not the
basis of the Proceeding is alleged action in an official capacity as a director,
officer, employee, or agent or in any other capacity while serving as a
director, officer, employee, or agent of the Company, as described above.
(e) Independent Counsel: the person or body appointed in connection
-------------------
with Section 3.
(f) Potential Change in Control: shall be deemed to have occurred if
---------------------------
(i) the Company enters into an agreement or arrangement, the consummation of
which would result in the occurrence of a Change in Control; (ii) any person
(including the Company) publicly announces an intention to take or to consider
taking actions that, if consummated, would constitute a Change in Control; (iii)
any person (other than a trustee or
2
<PAGE>
other fiduciary holding securities under an employee benefit plan of the Company
acting in such capacity or a corporation owned, directly or indirectly, by the
shareholders of the Company in substantially the same proportions as their
ownership of stock of the Company), who is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company representing 10% or more of
the combined voting power of the Company's then outstanding Voting Securities,
increases his beneficial ownership of such securities by 5% or more over the
percentage so owned by such person on the date hereof, or (iv) the Board adopts
a resolution to the effect that, for purposes of this Agreement, a Potential
Change in Control has occurred.
(g) Proceeding: (i) any threatened, pending, or completed action,
----------
suit, or proceeding, or whether civil, criminal, administrative, investigative,
or other; (ii) any inquiry, hearing, or investigation, whether conducted by the
Company or any other party, that Indemnitee in good faith believes might lead to
the institution of any such action, suit, or proceeding.
(h) Reviewing Party: the person or body appointed in accordance with
---------------
Section 3.
(i) Voting Securities: any securities of the Company that vote
-----------------
generally in the election of directors.
2. Agreement to Indemnify.
----------------------
(a) General Agreement. In the event Indemnitee was, is, or becomes a
-----------------
party to or witness or other participant in, or is threatened to be made a party
to or witness or other participant in, a Proceeding by reason of (or arising in
part out of) an Indemnifiable Event, the Company shall indemnify Indemnitee from
and against any and all Expenses to the fullest extent permitted by law, as the
same exists or may hereafter be amended or interpreted (but in the case of any
such amendment or interpretation, only to the extent that such amendment or
interpretation permits the Company to provide broader indemnification rights
than were permitted prior thereto). The parties hereto intend that this
Agreement shall provide for indemnification in excess of that expressly
permitted by statute, including, without limitation, any indemnification
provided by the Company's Articles of Incorporation, its bylaws, vote of its
shareholders or disinterested directors, or applicable law.
(b) Initiation of Proceeding. Notwithstanding anything in this
------------------------
Agreement to the contrary, Indemnitee shall not be entitled to indemnification
pursuant to this Agreement in connection with any Proceeding initiated by
Indemnitee against the Company or any director or officer of the Company unless
(i) the Company has joined in or the Board has consented to the initiation of
such Proceeding; (ii) the Proceeding is one to enforce indemnification rights
under Section 5; or (iii) the Proceeding is instituted after a Change in Control
and Independent Counsel has approved its initiation.
3
<PAGE>
(c) Expense Advances. If so requested by Indemnitee, the Company
----------------
shall advance (within ten business days of such request) any and all Expenses to
Indemnitee (an "Expense Advance"); provided that, if and to the extent that the
Reviewing Party determines that Indemnitee would not be permitted to be so
indemnified under applicable law, the Company shall be entitled to be reimbursed
by Indemnitee (who hereby agrees to reimburse the Company) for all such amounts
theretofore paid. If Indemnitee has commenced legal proceedings in a court of
competent jurisdiction to secure a determination that Indemnitee should be
indemnified under applicable law, as provided in Section 4, any determination
made by the Reviewing Party that Indemnitee would not be permitted to be
indemnified under applicable law shall not be binding and Indemnitee shall not
be required to reimburse the Company for any Expense Advance until a final
judicial determination is made with respect thereto (as to which all rights of
appeal therefrom have been exhausted or have lapsed). Indemnitee's obligation
to reimburse the Company for Expense Advances shall be unsecured and no interest
shall be charged thereon.
(d) Mandatory Indemnification. Notwithstanding any other provision of
-------------------------
this Agreement (other than Section 2(f) below), to the extent that Indemnitee
has been successful on the merits in defense of any Proceeding relating in whole
or in part to an Indemnifiable Event or in defense of any issue or matter
therein, Indemnitee shall be indemnified against all Expenses incurred in
connection therewith.
(e) Partial Indemnification. If Indemnitee is entitled under any
-----------------------
provision of this Agreement to indemnification by the Company for some or a
portion of Expenses, but not, however, for the total amount thereof, the Company
shall nevertheless indemnify Indemnitee for the portion thereof to which
Indemnitee is entitled.
(f) Prohibited Indemnification. No indemnification pursuant to this
--------------------------
Agreement shall be paid by the Company on account of any Proceeding in which
judgment is rendered against Indemnitee for an accounting of profits made from
the purchase or sale by Indemnitee of securities of the Company pursuant to the
provisions of Section 16(b) of the Act or similar provisions of any federal,
state, or local laws.
3. Reviewing Party. Prior to any Change in Control, the Reviewing Party
---------------
shall be any appropriate person or body consisting of a member or members of the
Board or any other person or body appointed by the Board who is not a party to
the particular Proceeding with respect to which Indemnitee is seeking
indemnification; after a Change in Control, the Reviewing Party shall be the
Independent Counsel referred to below. With respect to all matters arising after
a Change in Control (other than a Change in Control approved by a majority of
the directors on the Board who were directors immediately prior to such Change
in Control) concerning the rights of Indemnitee to indemnity payments and
Expense Advances under this Agreement or any other agreement or under applicable
law or the Company's Articles of Incorporation or Bylaws now or hereafter in
effect relating to indemnification for Indemnifiable Events, the Company shall
seek legal advice only from Independent Counsel selected by Indemnitee and
approved by the Company (which approval
4
<PAGE>
shall not be unreasonably withheld), and who has not otherwise performed
services for the Company or the Indemnitee (other than in connection with
indemnification matters) within the last five years. The Independent Counsel
shall not include any person who, under the applicable standards of professional
conduct then prevailing, would have a conflict of interest in representing
either the Company or Indemnitee in an action to determine Indemnitee's rights
under this Agreement. Such counsel, among other things, shall render its
written opinion to the Company and Indemnitee as to whether and to what extent
the Indemnitee should be permitted to be indemnified under applicable law. The
Company agrees to pay the reasonable fees of the Independent Counsel and to
indemnify fully such counsel against any and all expenses (including attorneys'
fees), claims, liabilities, loss, and damages arising out of or relating to this
Agreement or the engagement of Independent Counsel pursuant hereto.
4. Indemnification Process and Appeal.
----------------------------------
(a) Indemnification Payment. Indemnitee shall be entitled to
-----------------------
indemnification of Expenses, and shall receive payment thereof, from the Company
in accordance with this Agreement as soon as practicable after Indemnitee has
made written demand on the Company for indemnification, unless the Reviewing
Party has given a written opinion to the Company that Indemnitee is not entitled
to indemnification under applicable law.
(b) Suit to Enforce Rights. Regardless of any action by the Reviewing
----------------------
Party, if Indemnitee has not received full indemnification within thirty days
after making a demand in accordance with Section 4(a), Indemnitee shall have the
right to enforce its indemnification rights under this Agreement by commencing
litigation in any court in the State of California having subject matter
jurisdiction thereof and in which venue is proper seeking an initial
determination by the court or challenging any determination by the Reviewing
Party or any aspect thereof. The Company hereby consents to service of process
and to appear in any such proceeding. Any determination by the Reviewing Party
not challenged by the Indemnitee shall be binding on the Company and Indemnitee.
The remedy provided for in this Section 4 shall be in addition to any other
remedies available to Indemnitee in law or equity.
(c) Defense to Indemnification, Burden of Proof, and Presumptions. It
-------------------------------------------------------------
shall be a defense to any action brought by Indemnitee against the Company to
enforce this Agreement (other than an action brought to enforce a claim for
Expenses incurred in defending a Proceeding in advance of its final disposition
where the required undertaking has been tendered to the Company) that it is not
permissible under applicable law for the Company to indemnify Indemnitee for the
amount claimed. In connection with any such action or any determination by the
Reviewing Party or otherwise as to whether Indemnitee is entitled to be
indemnified hereunder, the burden of proving such a defense or determination
shall be on the Company. Neither the failure of the Reviewing Party or the
Company (including its Board, independent legal counsel, or its shareholders) to
have made a determination prior to the commencement of such action by Indemnitee
that indemnification
5
<PAGE>
of the claimant is proper under the circumstances because Indemnitee has met the
standard of conduct set forth in applicable law, nor an actual determination by
the Reviewing Party or Company (including its Board, independent legal counsel,
or its shareholders) that the Indemnitee had not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
Indemnitee has not met the applicable standard of conduct. For purposes of this
Agreement, the termination of any claim, action, suit, or proceeding, by
judgment, order, settlement (whether with or without court approval),
conviction, or upon a plea of nolo contendere, or its equivalent, shall not
create a presumption that Indemnitee did not meet any particular standard of
conduct or have any particular belief or that a court has determined that
indemnification is not permitted by applicable law.
5. Indemnification for Expenses Incurred in Enforcing Rights. The Company
---------------------------------------------------------
shall indemnify Indemnitee against any and all Expenses and, if requested by
Indemnitee, shall (within ten business days of such request), advance such
Expenses to Indemnitee, that are incurred by Indemnitee in connection with any
claim asserted against or action brought by Indemnitee for
(i) indemnification of Expenses or Expense Advances by the Company
under this Agreement or any other agreement or under applicable law or the
Company's Articles of Incorporation or Bylaws now or hereafter in effect
relating to indemnification for Indemnifiable Events, and/or
(ii) recovery under directors' and officers' liability insurance
policies maintained by the Company,
regardless of whether Indemnitee ultimately is determined to be entitled to such
indemnification, Expense Advances, or insurance recovery, as the case may be.
6. Notification and Defense of Proceeding.
--------------------------------------
(a) Notice. Promptly after receipt by Indemnitee of notice of the
------
commencement of any Proceeding, Indemnitee shall, if a claim in respect thereof
is to be made against the Company under this Agreement, notify the Company of
the commencement thereof; but the omission so to notify the Company will not
relieve the Company from any liability that it may have to Indemnitee, except as
provided in Section 6(c).
(b) Defense. With respect to any Proceeding as to which Indemnitee
-------
notifies the Company of the commencement thereof, the Company shall be entitled
to participate in the Proceeding at its own expense and except as otherwise
provided below, to the extent the Company so wishes, it may assume the defense
thereof with counsel reasonably satisfactory to Indemnitee. After notice from
the Company to Indemnitee of its election to assume the defense of any
Proceeding, the Company shall not be liable to Indemnitee under this Agreement
or otherwise for any Expenses subsequently incurred by Indemnitee in connection
with the defense of such Proceeding other than reasonable costs of
6
<PAGE>
investigation or as otherwise provided below. Indemnitee shall have the right
to employ his or her own legal counsel in such Proceeding, but all Expenses
related thereto incurred after notice from the Company of its assumption of the
defense shall be at Indemnitee's expense unless: (i) the employment of legal
counsel by Indemnitee has been authorized by the Company, (ii) Indemnitee has
reasonably determined that there may be a conflict of interest between
Indemnitee and the Company in the defense of the Proceeding, (iii) after a
Change in Control, the employment of counsel by Indemnitee has been approved by
the Independent Counsel, or (iv) the Company shall not in fact have employed
counsel to assume the defense of such Proceeding, in each of which case all
Expenses of the Proceeding shall be borne by the Company. The Company shall not
be entitled to assume the defense of any Proceeding brought by or on behalf of
the Company or as to which Indemnitee shall have made the determination provided
for in (ii) above.
(c) Settlement of Claims. The Company shall not be liable to
--------------------
indemnify Indemnitee under this Agreement or otherwise for any amounts paid in
settlement of any Proceeding effected without the Company's written consent,
provided, however, that if a Change in Control has occurred, the Company shall
be liable for indemnification of Indemnitee for amounts paid in settlement if
the Independent Counsel has approved the settlement. The Company shall not
settle any Proceeding in any manner that would impose any penalty or limitation
on Indemnitee without Indemnitee's written consent. Neither the Company nor the
Indemnitee will unreasonably withhold their consent to any proposed settlement.
The Company shall not be liable to indemnify the Indemnitee under this Agreement
with regard to any judicial award if the Company was not given a reasonable and
timely opportunity, at its expense, to participate in the defense of such
action; the Company's liability hereunder shall not be excused if participation
in the Proceeding by the Company was barred by this Agreement.
7. Establishment of Trust. In the event of a Change in Control or a
----------------------
Potential Change in Control, the Company shall, upon written request by
Indemnitee, create a Trust for the benefit of the Indemnitee and from time to
time upon written request of Indemnitee shall fund the Trust in an amount
sufficient to satisfy any and all Expenses reasonably anticipated at the time of
each such request to be incurred in connection with investigating, preparing
for, participating in, and/or defending any Proceeding relating to an
Indemnifiable Event. The amount or amounts to be deposited in the Trust pursuant
to the foregoing funding obligation shall be determined by the Reviewing Party.
The terms of the Trust shall provide that upon a Change in Control, (i) the
Trust shall not be revoked or the principal thereof invaded, without the written
consent of the Indemnitee, (ii) the Trustee shall advance, within ten business
days of a request by the Indemnitee, any and all Expenses to the Indemnitee (and
the Indemnitee hereby agrees to reimburse the Trust under the same circumstances
for which the Indemnitee would be required to reimburse the Company under
Section 2(c) of this Agreement), (iii) the Trust shall continue to be funded by
the Company in accordance with the funding obligation set forth above, (iv) the
Trustee shall promptly pay to the Indemnitee all amounts for which the
Indemnitee shall be entitled to indemnification pursuant to this Agreement or
otherwise, and (v) all unexpended funds in the Trust shall
7
<PAGE>
revert to the Company upon a final determination by the Reviewing Party or a
court of competent jurisdiction, as the case may be, that the Indemnitee has
been fully indemnified under the terms of this Agreement. The Trustee shall be
chosen by the Indemnitee. Nothing in this Section 7 shall relieve the Company
of any of its obligations under this Agreement. All income earned on the assets
held in the Trust shall be reported as income by the Company for federal, state,
local, and foreign tax purposes. The Company shall pay all costs of
establishing and maintaining the Trust and shall indemnify the Trustee against
any and all expenses (including attorneys' fees), claims, liabilities, loss, and
damages arising out of or relating to this Agreement or the establishment and
maintenance of the Trust.
8. Non-Exclusivity. The rights of Indemnitee hereunder shall be in
---------------
addition to any other rights Indemnitee may have under the Company's Articles of
Incorporation, Bylaws, applicable law, or otherwise. To the extent that a change
in applicable law (whether by statute or judicial decision) permits greater
indemnification by agreement than would be afforded currently under the
Company's Articles of Incorporation, Bylaws, applicable law, or this Agreement,
it is the intent of the parties that Indemnitee enjoy by this Agreement the
greater benefits so afforded by such change.
9. Liability Insurance. To the extent the Company maintains an insurance
-------------------
policy or policies providing directors' and officers' liability insurance,
Indemnitee shall be covered by such policy or policies, in accordance with its
or their terms, to the maximum extent of the coverage available for any Company
director or officer.
10. Period of Limitations. No legal action shall be brought and no cause
---------------------
of action shall be asserted by or on behalf of the Company or any affiliate of
the Company against Indemnitee, Indemnitee's spouse, heirs, executors, or
personal or legal representatives after the expiration of two years from the
date of accrual of such cause of action, or such longer period as may be
required by state law under the circumstances. Any claim or cause of action of
the Company or its affiliate shall be extinguished and deemed released unless
asserted by the timely filing of a legal action within such period; provided,
however, that if any shorter period of limitations is otherwise applicable to
any such cause of action the shorter period shall govern.
11. Amendment of this Agreement. No supplement, modification, or
---------------------------
amendment of this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of this Agreement
shall operate as a waiver of any other provisions hereof (whether or not
similar), nor shall such waiver constitute a continuing waiver. Except as
specifically provided herein, no failure to exercise or any delay in exercising
any right or remedy hereunder shall constitute a waiver thereof.
12. Subrogation. In the event of payment under this Agreement, the
-----------
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all papers required and shall do
everything that may be
8
<PAGE>
necessary to secure such rights, including the execution of such documents
necessary to enable the Company effectively to bring suit to enforce such
rights.
13. No Duplication of Payments. The Company shall not be liable under this
--------------------------
Agreement to make any payment in connection with any claim made against
Indemnitee to the extent Indemnitee has otherwise received payment (under any
insurance policy, Bylaw, or otherwise) of the amounts otherwise indemnifiable
hereunder.
14. Binding Effect. This Agreement shall be binding upon and inure to the
--------------
benefit of and be enforceable by the parties hereto and their respective
successors (including any direct or indirect successor by purchase, merger,
consolidation, or otherwise to all or substantially all of the business and/or
assets of the Company), assigns, spouses, heirs, and personal and legal
representatives. The Company shall require and cause any successor (whether
direct or indirect by purchase, merger, consolidation, or otherwise) to all,
substantially all, or a substantial part, of the business and/or assets of the
Company, by written agreement in form and substance satisfactory to Indemnitee,
expressly to assume and agree to perform this Agreement in the same manner and
to the same extent that the Company would be required to perform if no such
succession had taken place. The indemnification provided under this Agreement
shall continue as to Indemnitee for any action taken or not taken while serving
in an indemnified capacity pertaining to an Indemnifiable Event even though he
or she may have ceased to serve in such capacity at the time of any Proceeding.
15. Severability. If any provision (or portion thereof) of this Agreement
------------
shall be held by a court of competent jurisdiction to be invalid, void, or
otherwise unenforceable, the remaining provisions shall remain enforceable to
the fullest extent permitted by law. Furthermore, to the fullest extent
possible, the provisions of this Agreement (including, without limitation, each
portion of this Agreement containing any provision held to be invalid, void, or
otherwise unenforceable, that is not itself invalid, void, or unenforceable)
shall be construed so as to give effect to the intent manifested by the
provision held invalid, void, or unenforceable.
16. Governing Law. This Agreement shall be governed by and construed and
-------------
enforced in accordance with the laws of the State of California applicable to
contracts made and to be performed in such State without giving effect to the
principles of conflicts of laws.
9
<PAGE>
17. Notices. All notices, demands, and other communications required or
-------
permitted hereunder shall be made in writing and shall be deemed to have been
duly given if delivered by hand, against receipt, or mailed, postage prepaid,
certified or registered mail, return receipt requested, and addressed to the
Company at:
Pericom Semiconductor Corporation
2380 Bering Drive
San Jose, CA 95131
Attn: President
and to Indemnitee at:
_________________________
_________________________
_________________________
Attn: __________________
Notice of change of address shall be effective only when given in
accordance with this Section. All notices complying with this Section shall be
deemed to have been received on the date of delivery or on the third business
day after mailing.
18. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the day specified above.
PERICOM SEMICONDUCTOR INDEMNITEE:
CORPORATION
By:_______________________________ ___________________________________
[Signature]
Title:____________________________ ___________________________________
[Print Name]
10
<PAGE>
Exhibit 10.12
AGREEMENT
This Agreement is entered into as of this 17th day of March, 1995 between
Pericom Semiconductor Corporation, a California corporation ("Pericom")
and Pericom Technology, Inc., a British Virgin Islands corporation ("PTI").
RECITALS
--------
1. PTI is in the business of designing and developing semiconductor and
other electronic products targeted for the People's Republic of China ("PRC"),
to market and sell such products and third party semiconductor and other
electronic products in the PRC and to provide Design Services (as defined below)
to third parties, which may include Pericom.
2. Pericom has not previously conducted business operations in the PRC
and desires to appoint PTI as its non-exclusive distributor in the PRC upon
terms herein provided as a means to enter the PRC market. PTI wishes to grant
Pericom the right to sell its products in the United States and Japan as its
non-exclusive distributor in such countries upon the terms herein provided.
3. Pericom and PTI may provide Design Services to each other and wish to
set forth herein the terms and conditions upon which such Design Services shall
be provided between the parties, including, without limitation, the charges
therefore and the ownership of Proprietary Rights (as defined below) as to any
inventions, new developments or technology developed or created thereby. Such
Design Services may be provided on a contract basis by the party to the other or
as part of a Joint Development Project (as defined below) between the parties.
4. The parties may further provide General Services (as defined below) to
each other and wish to establish the charges payable between them for such
General Services as herein provided.
NOW THEREFORE, in consideration of the foregoing and the mutual promises
herein contained, the parties agree as follows:
1
<PAGE>
AGREEMENT
---------
ARTICLE 1 - Definitions
- -----------------------
When used in this Agreement, the following terms shall have the meaning set
forth below (terms defined in the singular shall have the same meaning when used
in the plural and vice versa):
"Confidential Information" shall mean any information, including, but not
limited to, technical information, specifications, patents, copyrights,
trademarks, trade secrets, confidential information and supporting
documentation, owned by or licensed to a party hereto that (a) is identified as
proprietary or confidential or provided under circumstances that reasonably
indicate that the information is proprietary or confidential and (b) is
disclosed by a party to one or both of the other parties for the purpose of
exercising rights or fulfilling obligations under this Agreement. Confidential
Information includes oral, visual, or machine readable disclosures that are
identified at the time of disclosure as proprietary.
"Design Services" shall mean and any design or technical development
services provided by one party to another or in connection with a Joint
Development Project.
"Development Plan" shall mean a written plan agreed between the parties
with respect to any development project to be performed by one or both of the
parties pursuant to Section 5.1 or 5.2 below.
"General Services" shall mean any and all services other than Design
Services provided by one party to the other party pursuant to this Agreement.
General Services shall include, without limitation, assistance from the
employees and other personnel of a party in administrative, financial or
marketing and sales functions, use of facilities space and use of equipment or
other physical assets of a party.
"Joint Development Project(s)" shall mean any research and development work
that the parties agree to perform pursuant to Section 5.2 below in which both
parties shall participate through either the performance of Design Services or
the funding of Design Services to be performed by the other party.
"Proprietary Rights" shall mean any U.S. and foreign patents, copyrights,
trade secrets, mask work rights or other intellectual property rights that would
otherwise restrict the unauthorized use of any technical or other proprietary
information, data, invention, or process of a party hereto.
"Services" shall mean General Services or Design Services.
2
<PAGE>
"Time and Material Rates" of a party shall mean that party's then effective
charges for the Services, materials or other items provided by such party as
disclosed by that party to the other party not later than thirty (30) days prior
to the performance of the Services for which such charges are made. The parties
agree that the Time and Material Rates for Design Services shall generally be
cost, plus an agreed percentage thereof attributable to profit, and for General
Services shall be cost.
"Subsidiary" shall mean any corporation or other business entity controlled
by a party hereto by the direct or indirect ownership by that party of more than
50% of the outstanding voting stock of the controlled corporation or other
business entity.
ARTICLE 2 - Organization and Start Up of PTI
--------------------------------------------
Subject to the reasonable availability of Pericom's personnel, facilities
and other resources, Pericom agrees to provide General Services to PTI in
connection with the initial organization and start-up of PTI's business
operations, as PTI may reasonably request. PTI agrees to pay Pericom for such
General Services at Pericom's their effective Time and Material rates in
accordance with Article 6 below.
ARTICLE 3 - Confidentiality Restrictions
- ----------------------------------------
In the event one party shall be provided facilities space by the other
party, the parties agree to: (i) mutually cooperate in establishing protective
procedures and other restrictions to prevent access by one party to the
Confidential Information of the other party; and (ii) fully comply with any such
protective procedures with restrictions. To the extent that a party shall be
exposed to the Confidential Information of the other party through such sharing
of facilities, that party agrees not to use such Confidential Information except
as expressly authorized in writing by the other party and to comply with Article
7 hereof with respect to any such Confidential Information.
ARTICLE 4 - Reciprocal Distribution Appointments
- ------------------------------------------------
4.1 Distribution of Pericom Products in the PRC. Effective as of the date
-------------------------------------------
hereof, Pericom appoints PTI as Pericom's non-exclusive distributor in the PRC
for the period and upon the terms set forth in that certain Non-Exclusive
Distribution Agreement attached hereto as Exhibit A, which Pericom and PTI shall
execute and deliver between them upon execution of this Agreement.
4.2 Distribution of PTI Products in the United States and Japan.
-----------------------------------------------------------
Effective as of the date hereof, PTI appoints Pericom as PTI's non-exclusive
distributor in the United States and Japan for the period and upon the terms set
forth in that certain Non-Exclusive Distribution
3
<PAGE>
Agreement attached hereto as Exhibit B, which PTI and Pericom shall execute and
deliver between them upon execution of this Agreement.
ARTICLE 5 - Design Services, Joint Development Projects
- -------------------------------------------------------
5.1 Contract Design Services. Each of PTI and Pericom shall perform
------------------------
Design Services for the other party on such terms and conditions as the parties
shall mutually agree. The parties agree that this Section 5.1 shall apply with
respect to any Design Services provided by one party ("Performing Party") for
the other party ("Funding Party") for development payments. To the extent both
parties shall jointly provide Design Services in connection with research and
development or design project, such project shall be deemed a Joint Development
Project and be governed by Section 5.2 below. Except as the parties may
otherwise agree in writing, the charges payable to the Performing Party for
Design Services shall be the Performing Party's then effective Time and
Materials Rates. Any Design Services to be provided pursuant to this Section
5.1 shall be set forth in a Development Plan agreed upon by the parties, which
Development Plan shall set forth the scope of the research and development work,
the specifications and deliverables therefor, the proposed delivery dates, the
compensation payable between the parties and such other material terms as the
parties shall mutually agree upon. Unless the parties shall otherwise agree,
the Funding Party shall own the results of any research and development work
performed pursuant to this Section 5.1 and any Proprietary Rights related
thereto.
5.2 Joint Development Projects. In the event that Pericom and PTI shall
-------------------------------
determine to pursue Joint Development Projects, Pericom and PTI shall enter into
a written Development Plan, to be signed by Pericom and PTI, which shall set
forth the scope of the research and development work, the specifications and
deliverables therefor, the proposed delivery dates, the compensation payable
between the parties, and such other material terms as the parties shall mutually
agree. The rights and obligations of the parties as to the results of any such
joint research and development work and any Proprietary Rights related thereto
shall, unless they otherwise agree in any Joint Development Plan, be jointly
owned between the parties.
ARTICLE 6 - Payment
- -------------------
Payment for any charges pursuant to this Agreement shall be due and payable
thirty (30) days from invoice date.
ARTICLE 7 - Confidentiality
- ---------------------------
7.1 Confidentiality. Except as expressly authorized by the other parties,
---------------
each party agrees to use diligent efforts, and at least the same degree of care
that it uses to protect its own confidential information of like importance, to
prevent unauthorized use, dissemination and disclosure of the other parties'
Confidential Information. In furtherance, and not in limitation
4
<PAGE>
of the foregoing, each party agrees that it shall (i) leave in place any
proprietary or confidential legends or markings placed upon any Confidential
Information by the disclosing party, (ii) restrict disclosure of Confidential
Information to those of its employees and agents who have a "need to know" such
Confidential Information, and (iii) instruct and require such employees and
agents to maintain the confidentiality of such information and not to use such
Confidential Information except as expressly permitted herein. Such obligations
shall apply with respect to Confidential Information for the term of this
Agreement and for a period of ten (10) years after any termination hereof.
7.2 Rights to Confidential Information. All Confidential Information
----------------------------------
shall remain the sole property of the disclosing party. The receiving party or
parties, as the case may be, shall have no rights to the Confidential
Information of the disclosing party.
7.3 Return of Information. After any termination of this Agreement, upon
---------------------
written request, each party shall promptly discontinue the use of, and return
within thirty (30) days all originals and copies of, any requested Confidential
Information that has been fixed in any tangible means of expression.
7.4 Exceptions. Notwithstanding the other provisions of this Agreement,
----------
nothing received by any party will be considered to be Confidential Information
of another party if it: (i) is not marked or otherwise designated in writing as
confidential and is provided for a purpose that reasonably contemplates
disclosure to or use by others, (ii) becomes a matter of public knowledge
through no action or inaction of the party receiving the Confidential
Information, (iii) is disclosed by the party providing the Confidential
Information to a third party without a duty of confidentiality, (iv) is
rightfully received by the receiving party from a third party without a duty of
confidentiality, or (v) was known to the receiving party before its first
receipt from the disclosing party, as shown by files existing at the time of
initial disclosure.
7.5 Equitable Relief. Each party acknowledges that any breach of any of
----------------
its obligations under this Article 7 is likely to cause or threaten irreparable
harm to the other parties, and, accordingly, each party agrees that in such
event the disclosing party or parties, as the case may be, shall be entitled to
equitable relief to protect its interests, including but not limited to
preliminary and permanent injunctive relief, as well as money damages.
ARTICLE 8 - Subsidiaries
- ------------------------
Each party shall have the right to assign or exercise its rights hereunder
and to assign and delegate its duties hereunder to one or more of its
Subsidiaries provided that any such assignment, exercise or delegation shall not
relieve the assigning party of its primary obligations hereunder and provided
further that any such Subsidiary shall be required, as a
5
<PAGE>
condition precedent to such assignment, to agree in writing to be bound by all
of the terms and conditions hereof.
ARTICLE 9 - Term and Termination
- --------------------------------
9.1 Term. This Agreement shall commence on the date hereof and shall
----
continue for a period of sixty (60) months from such date, unless sooner
terminated in accordance with this Article 9.
9.2 Termination with Cause. This Agreement may be terminated immediately
----------------------
by any party in the event another party (a) breaches any material provision of
this Agreement and does not remedy such breach within thirty (30) days following
notice of such breach from the non-breaching party, or (b) enters bankruptcy
proceedings, becomes insolvent, or otherwise becomes generally unable to meet
its obligations under this Agreement. A termination of this Agreement by a party
as a result of a material breach by another party shall not serve to limit the
terminating party's rights and remedies under applicable law arising from such
breach.
9.3 Return of Confidential Information. Upon termination of this
----------------------------------
Agreement, the parties shall each (a) return to the other parties the original
and all copies of any Confidential Information provided by such party and any
summaries or analyses thereof or studies or notes thereon, and (b) at the
request of the party which provided such Confidential Information, have one of
its officers certify in writing that a. it shall not make any further use of
such Confidential Information and b. shall comply with the terms of Section 7.1
regarding prohibited use of Confidential Information.
9.4 Survival. The provisions of Sections 3, 5.1, 5.2, and 9.3, and
--------
Articles 1, 7, and 10 of this Agreement shall survive any termination of this
Agreement.
ARTICLE 10 - Miscellaneous
- --------------------------
10.1 Force Majeure. No party shall be responsible for any defaults,
-------------
failures to assist, or delays in delivery which are due to causes beyond its
control, including, but without limitation, acts of God or of a public enemy,
acts of or any order of a government, or any preference, priority, or any order
of such government, currency restrictions, strikes, embargoes, unduly severe
weather, or incidents of war.
10.2 Entire Agreement. This Agreement constitutes the entire agreement
----------------
between the parties hereto regarding the matters described herein and supersedes
all previous and contemporaneous oral and written discussions, agreements or
understandings among the parties regarding such matters.
6
<PAGE>
10.3 Modification. Any modification of this Agreement will be effective
------------
only if it is in writing and signed by the party or parties to be charged.
10.4 Governing Law. This Agreement shall be governed by, and construed in
-------------
accordance with, the laws of the state of California, U.S.A. applicable to
contracts made and to be performed entirely within such state.
10.5 Arbitration.
-----------
(a) Any and all disputes arising out of or relating to the validity,
interpretation, enforceability, or performance of this Agreement, including,
without limitation, this arbitration clause, shall be solely and finally settled
by binding arbitration in San Francisco, California, in accordance with the then
prevailing rules of the American Arbitration Association.
(b) By written notice to the other party or parties, a party may
demand that a disputed matter be submitted to arbitration. In the demand
notice, the party shall specify the nature of the dispute. Within twenty (20)
days of the notice, each party involved in such dispute shall nominate an
arbitrator. The arbitrators chosen must be knowledgeable in the technical field
which is the subject of this Agreement. The arbitrators shall permit only
limited discovery and may prohibit discovery in their sole discretion and may
admit or exclude evidence in their sole discretion.
(c) The arbitrators shall decide the dispute or claim in accordance
with the then prevailing rules of arbitration of the American Arbitration
Association applying the substantive law set forth in Section 11.4 above.
Judgment upon the arbitral award may be entered in any court having jurisdiction
over the parties or their assets. No party shall take any dispute or claim
subject to arbitration hereunder to any court until an arbitration decision has
been made, except that any party shall have the right to institute any legal
action for provisional relief pending final settlement by arbitration.
(d) The parties agree that service of process and any notices required
in connection with any arbitration hereunder or any related court proceedings
may be given in the manner provided for the giving of notices under this
Agreement as set forth in Section 11.6.
(e) The arbitrators shall apportion to each party involved in the
dispute all costs (other than attorneys' fees) incurred in conducting the
arbitration in accordance with what they deem just and equitable under the
circumstances.
10.6 Notices. All notices and other communications hereunder shall be
-------------
in writing and shall be delivered personally, by facsimile or mailed by
certified or registered airmail, postage
7
<PAGE>
prepaid, return receipt requested, to the parties at the following addresses, or
at such other addresses as the parties may designate by written notice in the
manner aforesaid:
If to Pericom: Pericom Semiconductor Corp.
2380 Bering Drive
San Jose, CA 95131
If to PTI:
A notice shall be deemed given when delivered, in the case of personal delivery
or delivery by facsimile, or five (5) days after mailing in the manner
prescribed herein.
10.7 Independent Contractors. Performance by the parties under this
-----------------------
Agreement shall be as independent contractors. Nothing contained herein or done
in pursuance of this Agreement shall constitute the parties entering upon a
joint venture or partnership, or shall constitute any party the agent for
another party for any purpose or in any sense whatsoever.
10.8 Assignment. No party may transfer or assign this Agreement or any of
----------
its rights or obligations hereunder without the prior written consent of the
other parties.
10.9 Waiver. The failure of any party to enforce at any time or for any
------
period of time the provisions hereof shall not be construed to be a waiver of
such provisions or of the right of such party to enforce each and every such
provision.
10.10 Severability. If any term, provision, covenant, or condition of this
------------
Agreement is held by a court of competent jurisdiction to be invalid, void, or
unenforceable, the remainder of the provisions shall remain in full force and
effect and shall in no way be affected, impaired, or invalidated.
8
<PAGE>
10.11 Counterparts. This Agreement may be executed in any number of
------------
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute one agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by an authorized officer or representative as of the date first above
written.
PERICOM SEMICONDUCTOR CORPORATION
By: ^^
-----------------------------------
Title: V P Sales/Marketing
--------------------------------
PERICOM TECHNOLOGY, INC.
By: ^^
----------------------------------
Title: V P Sales/Marketing
-------------------------------
9
<PAGE>
EXHIBIT A
Non-Exclusive Distribution Agreements (appointing PTI to distribute Pericom
products in PRC).
10
<PAGE>
[LOGO] PERICOM
INTERNATIONAL DISTRIBUTOR AGREEMENT
This International Distributor Agreement ("Agreement"), is entered into in
Santa Clara, California, as of September 14, 1995, between PERICOM SEMICONDUCTOR
CORPORATION, a California corporation with principal offices at 2380 Bering
Drive, San Jose, CA 95131 and Pericom Technology Inc, (Shanghi) with offices in
the People's Republic of China--various locations ("Distributor").
In consideration of the mutual promises contained herein, the parties agree
as follows:
1. DEFINITIONS
-----------
(a) "Products" shall mean those products listed in Exhibit A attached
hereto. Products may be changed, abandoned or added by Manufacturer, at its sole
discretion, provided that Manufacturer gives thirty (30) days' prior written
notice to Distributor. Manufacturer shall be under no obligation to continue the
production of any Product, except as provided herein.
(b) "Territory" shall mean that geographic area identified in Exhibit
B attached hereto.
(c) "Software" shall mean all software, computer programs, source
codes, object codes, listings, and related materials in machine-readable or
printed form (including firmware and all types of media), and all updates and
modifications thereto, that are included in the Products.
2. APPOINTMENT AND AUTHORITY OF DISTRIBUTOR
----------------------------------------
(a) Appointment. Subject to the terms and conditions set forth
-----------
herein, Manufacturer hereby appoints Distributor as Manufacturer's non-exclusive
distributor for the Products in the Territory, and Distributor hereby accepts
such appointment.
(b) Direct Sales by Manufacturer. Manufacturer reserves the right to
----------------------------
market its products directly
(c) Territorial Responsibility. Distributor shall pursue aggressive
--------------------------
sales policies and procedures to realize the maximum sales potential for the
Products in the Territory. Distributor shall not advertise, sell, lease or ship
the Products outside the Territory without the prior written consent of
Manufacturer.
<PAGE>
(d) Independent Contractors. The relationship of Manufacturer and
-----------------------
Distributor established by this Agreement is that of independent contractors,
and nothing contained in this Agreement shall be construed to (i) give either
party the power to direct and control the day-to-day activities of the other,
(ii) constitute the parties as partners, joint venturers, co-owners or otherwise
as participants in a joint or common undertaking, or (iii) allow Distributor to
create or assume any obligation on behalf of Manufacturer for any purpose
whatsoever. All financial obligations associated with Distributor's business are
the sole responsibility of Distributor. All sales and other agreements between
Distributor and its customers are Distributor's exclusive responsibility and
shall have no effect on Distributor's obligations under this Agreement.
Distributor shall be solely responsible for, and shall indemnify and hold
Manufacturer free and harmless from, any and all claims, damages or lawsuits
(including Manufacturer's attorneys' fees) arising out of the acts of
Distributor, its employees or its agents.
3. TERMS OF PURCHASE OF PRODUCTS BY DISTRIBUTOR
--------------------------------------------
(a) Terms and Conditions. All purchases of Products by Distributor
--------------------
from Manufacturer during the term of this Agreement shall be subject to the
terms and conditions of this Agreement.
(b) Purchase of Products Subject to Software License and Other
----------------------------------------------------------
Restrictions. The sale of each Product to Distributor and the transfer of title
- ------------
for each purchased Product to Distributor shall not include a sale of the
Software or transfer of its title but shall instead include a fully paid license
for Distributor to transfer the Software to its customers upon execution of a
Software license by Distributor's customers in accordance with the terms of
Subsection 5(a) below. Manufacturer shall retain full title to the Software and
all copies thereof, and Distributor and its customers may use the Software only
in accordance with the provisions of their executed Software licenses. Neither
Distributor nor its customers shall have any access to or rights in the Software
source codes. Neither Distributor nor its customers shall have the right to
copy, modify, or remanufacture any Product or part thereof.
(c) Prices. All prices are F.O.B. Manufacturer's plant currently
------
located at the address listed for Manufacturer at the beginning of this
Agreement. The purchase price to Distributor for each of the Products ("Purchase
Price") shall be as set forth in Exhibit A attached hereto. The difference
between Distributor's Purchase Price and Distributor's selling price to its
customers shall be Distributor's sole remuneration for sale of the Products.
Manufacturer has the right at any time to revise the prices in Exhibit A with
thirty (30) days' advance written notice to Distributor. Such revisions shall
apply to all orders received after the effective date of revision. Price
increases shall not affect unfulfilled purchase orders accepted by Manufacturer
prior to the effective date of the price increase. Price decreases shall apply
to pending purchase orders accepted by Manufacturer prior to the effective date
of the decrease but not yet shipped.
2
<PAGE>
(d) Taxes. Distributor's Purchase Price does not include any federal,
-----
state or local taxes that may be applicable to the Products. When Manufacturer
has the legal obligation to collect such taxes, the appropriate amount shall be
added to Distributor's invoice and paid by Distributor unless Distributor
provides Manufacturer with a valid tax exemption certificate authorized by the
appropriate taxing authority.
(e) Order and Acceptance. All orders for Products submitted by
--------------------
Distributor shall be initiated by written purchase orders sent to Manufacturer
and requesting a delivery date during the term of this Agreement; provided,
however, that an order may initially be placed orally or by telex if a
confirmational written purchase order is received by Manufacturer within five
(5) days after said oral or telex order. No order shall be binding upon
Manufacturer until accepted by Manufacturer in writing, and Manufacturer shall
have no liability to Distributor with respect to purchase orders that are not
accepted. Manufacturer shall use its reasonable best efforts to notify
Distributor of the acceptance or rejection of an order and of the assigned
delivery date for accepted orders within thirty (30) days after receipt of the
purchase order. No partial shipment of an order shall constitute the acceptance
of the entire order, absent the written acceptance of such entire order.
Manufacturer shall use its reasonable best efforts to deliver Products at the
times specified either in its quotation or in its written acceptance of
Distributor's purchase orders.
(f) Terms of Purchase Orders. Distributor's purchase orders submitted
------------------------
to Manufacturer from time to time with respect to Products to be purchased
hereunder shall be governed by the terms of this Agreement, and nothing
contained in any such purchase order shall in any way modify such terms of
purchase or add any additional terms or conditions.
(g) Initial Order. Upon execution of this Agreement, Distributor
-------------
shall deliver to Manufacturer a written purchase order for the quantities of
Products shown in Exhibit C attached hereto. The order shall be non-cancellable
and shall be shipped to Distributor as soon as Manufacturer's production
schedule will permit.
(h) Change Orders. Distributor may utilize written change orders
-------------
without penalty for orders that have not yet been accepted by Manufacturer. For
orders that have been accepted by Manufacturer but have not yet been shipped
(excluding the initial order under Subsection 3(g) above), Distributor may
utilize written change orders subject to the following conditions:
(i) Distributor may delay delivery of any accepted order,
provided that the rescheduled delivery date occurs during
the term of this Agreement and provided further that
Distributor's change order is received by Manufacturer more
than thirty (30) days before the assigned delivery date, or
more than sixty (60) days for factory programmed devices.
(ii) Distributor may cancel any order that has been accepted by
Manufacturer, provided the written change order is received
by Manufacturer more than
3
<PAGE>
thirty (30) days before the assigned delivery date, or more
than sixty (60) days for factory programmed devices.
(i) Payment. Manufacturer shall submit an invoice to Distributor upon
-------
shipment of each Product and spare part ordered by Distributor. The invoice
shall cover Distributor's Purchase Price for the Products in a given shipment
plus any freight, taxes or other applicable costs initially paid by Manufacturer
but to be borne by Distributor. Payment terms shall be net thirty days of the
invoiced amount due for full payment or 100% irrevocable L/C at sight to be
decided by Manufacturer. Any invoiced amount not received within thirty days of
the date of invoice shall be subject to a service charge of one and one-half
percent (1.5%) per month. Distributor shall pay all of Manufacturer's costs and
expenses (including reasonable attorneys' fees) to enforce and preserve
Manufacturer's rights under this Subsection 3(i).
(j) Shipping. All Products delivered pursuant to the terms of this
--------
Agreement shall be suitably packed for air freight shipment in Manufacturer's
standard shipping cartons, marked for shipment at Distributor's address set
forth above, and delivered to Distributor or its carrier agent F.O.B.
Manufacturer's manufacturing plant, at which time title to such Products and
risk of loss shall pass to Distributor. Unless otherwise instructed in writing
by Distributor, Manufacturer shall select the carrier. All freight, insurance,
and other shipping expenses, as well as any special packing expense, shall be
paid by Distributor. Distributor shall also bear all applicable taxes, duties,
and similar charges that may be assessed against the Products after delivery to
the carrier at Manufacturer's plant.
(k) Rejection of Products. Distributor's customer shall inspect all
---------------------
Products promptly upon receipt thereof and may reject any Product that fails in
any material way to meet the specifications set forth in Manufacturer's current
brochure for that Product. Any Product not properly rejected within thirty (30)
days after receipt of that Product by Distributor's customer ("Rejection
Period") shall be deemed accepted. To reject a Product, Distributor shall,
within the Rejection Period, notify Manufacturer in writing of its rejection and
request a Return Material Authorization ("RMA") number. Manufacturer shall use
its best efforts to provide the RMA number in writing to Distributor within
fifteen (15) days after receipt of the request. Within ten (10) days after
receipt of the written RMA number, Distributor shall return to Manufacturer the
rejected Product, freight prepaid, in its original shipping carton with the RMA
number displayed on the outside of the carton. Provided that Manufacturer has
complied with its obligations in this Subsection 3(k), Manufacturer reserves the
right to refuse to accept any rejected Products that do not bear an RMA number
on the outside of the carton. Manufacturer shall, at its option and expense,
either repair or replace the Products. Manufacturer shall pay the shipping
charges back to Distributor for properly rejected Products; otherwise,
Distributor shall be responsible for the shipping charges.
(l) Return of Products after Rejection Period. After the Rejection
-----------------------------------------
Period, Distributor may not return a Product to Manufacturer for any reason
without Manufacturer's prior written consent.
4
<PAGE>
(m) Security Interest. Manufacturer hereby reserves, and Distributor
-----------------
hereby grants to Manufacturer, a purchase money security interest in each
Product sold under this Agreement. If Distributor sells or leases such Product
to another party prior to Distributor's paying the full amount of Distributor's
Purchase Price for such Product, then the security interest shall cover the
proceeds from such sale or lease. These interests will be satisfied by payment
in full of Distributor's Purchase Price. Distributor hereby appoints
Manufacturer as its attorney-in-fact to execute, on Distributor's behalf and in
Distributor's name, financing statements and other instruments to perfect
Manufacturer's security interest in each Product for the amount of Distributor's
Purchase Price. A copy of this Agreement may be filed with the appropriate
authorities at any time after its execution as a financing statement or chattel
mortgage to perfect Manufacturer's security interest.
(n) Inventory Price Reduction. In the event Manufacturer decreases
-------------------------
the published Distributor cost on any Product shown in Exhibit A, Manufacturer
will furnish Distributor with a listing of items affected, showing the old price
and the new price. Distributor may apply for a credit equal to the difference
between the Published Distributor Price paid by the Distributor and the new
decreased Distributor Price for the product, multiplied by the quantity of such
Product in Distributor's inventory on the effective date of the price reduction.
This credit must be requested in writing within thirty (30) days of the mailing
of the above listing. Issuance of such credit by Manufacturer will be contingent
upon Manufacturer's verification of Distributor's inventory report. All such
credits will be applied to Distributor's account, for subsequent purchases of
Product. All Products shipped after the effective date of a price decrease will
be invoiced at the new/lower prices.
Inventory that the distributor purchase at a discounted price from the then
Published Distributor Price (Broken Cost) will not be eligible for any
protection.
Pericom reserves the right to audit the Distributor on all orders that were
shipped at a broken cost.
5
<PAGE>
(o) Stock Rotation
--------------
After the initial twelve (12) month period of this Agreement, and within the
thirty (30) days after each six (6) month period of this Agreement, Distributor
may return for credit to be applied against future purchases, a quantity of slow
or non-moving unprogrammed Product, the value of which shall not exceed ten
percent (10%) of the net sales dollars invoiced by Manufacturer to the
Distributor for Product received during the six month period immediately
preceding. This Product return privilege shall apply only if, at the time of
such return, the Distributor orders from Manufacturer a quantity of Product, the
value of which at least equals the value of the returned Product. "Net sales
dollars invoiced" is defined as the net invoice unit price paid by the
Distributor, less any prior credits granted by Manufacturer. Stock rotation
product must meet the following conditions:
. Parts returned must be originally brought at Published Distributor Price at
the time of ordering (i.e. parts brought at Broken Cost will not be eligible
for stock rotation privilege)
. Parts must be returned in full tubes
. Minimum return per line item is $100.00 in multiple of tube quantities
. Product must be returned in original condition, any product with bent leads,
visual damage will be rejected for return.
(p) Discontinuance of Product. Manufacturer shall notify Distributor
-------------------------
in writing of the discontinuance of sale and manufacture of any Product shown in
Exhibit A hereto. The Distributor, within thirty (30) days of date of such
notice, shall contact Manufacturer and advise of its intention to return any or
all Product so discontinued which remains in its inventory. Distributor shall
receive credit to be applied against future purchases, at the net price paid
less any prior credits granted by Manufacturer to the Distributor for any such
Product returned, in a new and unused condition. Freight charges shall be paid
by Manufacturer on such Products returned.
(q) RMA for Product Return. Prior to returning any Product under the
----------------------
return privileges of this paragraph 3, Distributor must obtain a Return Material
Authorization number from Manufacturer. All Products returned shall be shipped
F.O.B. Distributor's designated facility, freight prepaid.
4. WARRANTY TO DISTRIBUTOR'S CUSTOMERS
-----------------------------------
(a) Standard Limited Warranty. Distributor shall pass on to its
-------------------------
customers Manufacturer's standard limited warranty for the Products, including
the limitations set forth in Subsections 4(b) and 4(c) below. This warranty is
contingent upon proper use of a Product in the application for which it was
intended and does not cover Products that were modified without Manufacturer's
approval or that were subjected by the customer to unusual physical or
electrical stress.
6
<PAGE>
(b) No Other Warranty. EXCEPT FOR THE EXPRESS WARRANTY SET FORTH
-----------------
ABOVE, MANUFACTURER GRANTS NO OTHER WARRANTIES, EXPRESS OR IMPLIED, BY STATUTE
OR OTHERWISE, REGARDING THE PRODUCTS, THEIR FITNESS FOR ANY PURPOSE, THEIR
QUALITY, THEIR MERCHANTABILITY, OR OTHERWISE.
(c) Limitation of Liability. MANUFACTURER'S LIABILITY UNDER THE
-----------------------
WARRANTY SHALL BE LIMITED TO A REFUND OF THE CUSTOMER'S PURCHASE PRICE. IN NO
EVENT SHALL MANUFACTURER BE LIABLE FOR THE COST OF PROCUREMENT OF SUBSTITUTE
GOODS BY THE CUSTOMER OR FOR ANY SPECIAL, CONSEQUENTIAL OR INCIDENTAL DAMAGES
FOR BREACH OF WARRANTY.
5. ADDITIONAL OBLIGATIONS OF DISTRIBUTOR
-------------------------------------
(a) Promotion of the Products. Distributor shall, at its own expense,
-------------------------
vigorously promote the sale of the Products within the Territory. Such promotion
shall include but not be limited to various advertising, promotion programs and
directly soliciting orders from customers for the Products. Special advertising
or promotion programs may be agreed upon from time to time in which the parties
will agree to some sharing of the costs.
(b) Representations. Distributor shall not make any false or
---------------
misleading representations to customers or others regarding Manufacturer or the
Products. Distributor shall not make any representations, warranties or
guarantees with respect to the specifications, features or capabilities of the
Products that are not consistent with Manufacturer's documentation accompanying
the Products or Manufacturer's literature describing the Products, including the
limited warranty and disclaimers.
(c) Inventory. Distributor shall, at its own expense, maintain an
---------
inventory of the Products equal to ninety (90) days of sales to fulfill its
commitments under this agreement.
(d) Reports. Distributor shall send to Manufacturer, within fifteen
-------
(15) working days after the end of each month, a written report containing the
following information by location:
(1) A detailed inventory of all Products, at the end of said
month, with quantities and value.
(2) A detailed sales activity report including the names of
purchasers with products and quantities purchased, and the dollar amounts billed
to said purchasers.
6. ADDITIONAL OBLIGATIONS OF MANUFACTURER
--------------------------------------
(a) Materials. Manufacturer shall promptly provide Distributor with
---------
marketing and technical information concerning the Products as well as
reasonable quantities of brochures, instructional material, advertising
literature, and other Product data.
7
<PAGE>
(b) Response to Inquiries. Manufacturer shall promptly respond to all
---------------------
inquiries from Distributor concerning matters pertaining to this Agreement.
(c) Testing. Manufacturer shall test all Products before shipment to
-------
Distributor.
(d) Delivery Time. Manufacturer shall minimize delivery time as much
-------------
as possible and use its reasonable best efforts to fulfill delivery obligations
as committed in acceptances.
7. TERM AND TERMINATION
--------------------
(a) Term. This Agreement shall continue in force for a fixed term of
----
one (1) year from the date hereof unless terminated earlier under the provisions
of this Section 7. At the end of the fixed term, this Agreement shall
automatically be renewed thereafter for additional one (1) year periods at all
anniversary dates hereof unless this Agreement is otherwise terminated as
provided herein.
(b) Termination for Convenience. This agreement may be canceled by
---------------------------
either party for any reason or no reason. If the Distributor cancels for
convenience, then they will provide the Manufacturer written notice six (6)
months in advance. The Manufacturer will repurchase the Distributor's inventory
at the end of the six (6) months notice at Distributor's Net Invoice Price less
any prior credits, less a 15% restocking charge. If the Manufacturer cancels the
agreement for convenience then he will provide the Distributor with a written
notice ninety (90) days in advance. If Manufacturer terminates this Agreement
under the provisions of this Subsection 7(b), then Manufacturer shall, at
Distributor's option, repurchase Distributor's then-current inventory at
Distributor's net invoice price less any prior credits, and shall bear all
shipping costs for the return to Manufacturer of that inventory.
(c) Termination for Cause. If either party defaults in the
---------------------
performance of any provision of this Agreement, then the non-defaulting party
may give written notice to the defaulting party that if the default is not cured
within thirty (30) days the Agreement will be terminated. If the non-defaulting
party gives such notice and the default is not cured during the thirty-day
period, then the Agreement shall automatically terminate at the end of that
period. If the Distributor is the defaulting party, then a 15% restocking charge
shall apply to all inventory the Manufacturer agrees to allow returned.
(d) Termination for Insolvency. This Agreement shall terminate,
--------------------------
without notice, (i) upon the institution by or against Distributor of
insolvency, receivership or bankruptcy proceedings or any other proceedings for
the settlement of Distributor's debts, (ii) upon Distributor's making an
assignment for the benefit of creditors, or (iii) upon Distributor's dissolution
or ceasing to do business.
(e) Fulfillment of Orders upon Termination. Upon termination of this
--------------------------------------
Agreement for other than Distributor's breach, Manufacturer shall continue to
fulfill, subject to the terms of Section 3 above, all orders accepted by
Manufacturer prior to the date of termination.
8
<PAGE>
(f) Return of Materials. All trademarks, trade names, patents,
-------------------
copyrights, designs, drawings, formulas or other data, photographs, samples,
literature, and sales aids of every kind shall remain the property of
Manufacturer. Within thirty (30) days after the termination of this Agreement,
Distributor shall prepare all such items in its possession for shipment, as
Manufacturer may direct, at Manufacturer's expense. Distributor shall not make,
use, dispose of or retain any copies of any confidential items or information
which may have been entrusted to it. Effective upon the termination of this
Agreement, Distributor shall cease to use all trademarks, marks, and trade names
of Manufacturer.
(g) Limitation on Liability. In the event of termination by either
-----------------------
party in accordance with any of the provisions of this Agreement, neither party
shall be liable to the other, because of such termination, for compensation,
reimbursement or damages on account of the loss of prospective profits or
anticipated sales or on account of expenditures, inventory, investments, leases
or commitments in connection with the business or goodwill of Manufacturer or
Distributor. Termination shall not, however, relieve either party of obligations
incurred prior to the termination.
(h) Survival of Certain Terms. The provisions of Sections 3(b), 3(i),
-------------------------
3(m), 4, 7, 8, 9, 10, 11, and 12 shall survive the termination of this Agreement
for any reason. All other rights and obligations of the parties shall cease
upon termination of this Agreement.
8. LIMITATION ON LIABILITY
-----------------------
MANUFACTURER'S LIABILITY ARISING OUT OF THIS AGREEMENT AND/OR SALE OF
THE PRODUCTS SHALL BE LIMITED TO THE AMOUNT PAID BY THE CUSTOMER FOR THE
PRODUCTS. IN NO EVENT SHALL MANUFACTURER BE LIABLE FOR COSTS OF PROCUREMENT OF
SUBSTITUTE GOODS. IN NO EVENT SHALL MANUFACTURER BE LIABLE TO DISTRIBUTOR OR ANY
OTHER ENTITY FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL, OR INDIRECT DAMAGES,
HOWEVER CAUSED, ON ANY THEORY OF LIABILITY.
9
<PAGE>
9. PROPERTY RIGHTS & CONFIDENTIALITY
---------------------------------
(a) Property Rights. Distributor agrees that Manufacturer owns all
---------------
right, title, and interest in the product lines that include the Products and in
all of Manufacturer's patents, trademarks, trade names, inventions, copyrights,
know-how, and trade secrets relating to the design, manufacture, operation or
service of the Products. The use by Distributor of any of these property rights
is authorized only for the purposes herein set forth, and upon termination of
this Agreement for any reason such authorization shall cease.
(b) Sale Conveys no Right to Manufacture or Copy. The Products are
--------------------------------------------
offered for sale and are sold by Manufacturer subject in every case to the
condition that such sale does not convey any license, expressly or by
implication, to manufacture, duplicate or otherwise copy or reproduce any of the
Products. Distributor shall take appropriate steps with its customers, as
Manufacturer may request, to inform them of and assure compliance with the
restrictions contained in this Subsection 12(b).
(c) Confidentiality. Distributor acknowledges that by reason of its
---------------
relationship to Manufacturer hereunder it will have access to certain
information and materials concerning Manufacturer's business, plans, customers,
technology, and products that are confidential and of substantial value to
Manufacturer, which value would be impaired if such information were disclosed
to third parties. Distributor agrees that it will not use in any way for its own
account or the account of any third party, nor disclose to any third party, any
such confidential information revealed to it by Manufacturer. Distributor shall
take every reasonable precaution to protect the confidentiality of such
information. Upon request by Distributor, Manufacturer shall advise whether or
not it considers any particular information or materials to be confidential.
Distributor shall not publish any technical description of the Products beyond
the description published by Manufacturer. In the event of termination of this
Agreement, there shall be no use or disclosure by Distributor of any
confidential information of Manufacturer, and Distributor shall not manufacture
or have manufactured any devices, components or assemblies utilizing any of
Manufacturer's confidential information.
10. TRADEMARKS AND TRADE NAMES
--------------------------
(a) Use. During the term of this Agreement, Distributor shall have
---
the right to indicate to the public that it is an authorized distributor of
Manufacturer's Products and to advertise (within the Territory) such Products
under the trademarks, marks, and trade names that Manufacturer may adopt from
time to time ("Manufacturer's Trademarks"). Distributor shall not alter or
remove any Manufacturer's Trademark applied to the Products at the factory.
Except as set forth in this Section 13, nothing contained in this Agreement
shall grant to Distributor any right, title or interest in Manufacturer's
Trademarks. At no time during or after the term of this Agreement shall
Distributor challenge or assist others to challenge Manufacturer's Trademarks or
the registration thereof or attempt to register any trademarks, marks or trade
names confusingly similar to those of Manufacturer.
10
<PAGE>
(b) Approval of Representations. All representations of
---------------------------
Manufacturer's Trademarks that Distributor intends to use shall first be
submitted to Manufacturer for approval (which shall not be unreasonably
withheld) of design, color, and other details or shall be exact copies of those
used by Manufacturer. If any of Manufacturer's Trademarks are to be used in
conjunction with another trademark on or in relation to the Products, then
Manufacturer's mark shall be presented equally legibly and equally prominently
but nevertheless separated from the other so that each appears to be a mark in
its own right, distinct from the other mark.
11. PATENT, COPYRIGHT, AND TRADEMARK INDEMNITY
------------------------------------------
(a) Indemnification. Distributor agrees that Manufacturer has the
---------------
right to defend, or at its option to settle, and Manufacturer agrees, at its own
expense, to defend or at its option to settle, any claim, suit or proceeding
brought against Distributor or its customer on the issue of infringement of any
United States patent, copyright or trademark by the Products sold hereunder or
the use thereof, subject to the limitations hereinafter set forth. Manufacturer
shall have sole control of any such action or settlement negotiations, and
Manufacturer agrees to pay, subject to the limitations hereinafter set forth,
any final judgement entered against Distributor or its customer on such issue in
any such suit or proceeding defended by Manufacturer. Distributor agrees that
Manufacturer at its sole option shall be relieved of the foregoing obligations
unless Distributor or its customer notifies Manufacturer promptly in writing of
such claim, suit or proceeding and gives Manufacturer authority to proceed as
contemplated herein, and, at Manufacturer's expense, gives Manufacturer proper
and full information and assistance to settle and/or defend any such claim, suit
or proceeding. If the Products, or any part thereof, are, or in the opinion of
Manufacturer may become, the subject of any claim, suit or proceeding for
infringement of any United States patent, copyright or trademark, or if it is
adjudicatively determined that the Products, or any part thereof, infringe any
United States patent, copyright or trademark, or if the sale or use of the
Products, or any part thereof, is, as a result, enjoined, then Manufacturer may,
at its option and expense either: (i) procure for Distributor and its customers
the right under such patent, copyright or trademark to sell or use, as
appropriate, the Products or such part thereof; or (ii) replace the Products, or
part thereof, with other suitable Products or parts; or (iii) suitably modify
the Products, or part thereof; or (iv) if the use of the Products, or part
thereof, is prevented by injunction, remove the Products, or part thereof, and
refund the aggregate payments paid therefor by Distributor, less a reasonable
sum for use and damage. Manufacturer shall not be liable for any costs or
expenses incurred without its prior written authorization.
(b) Limitation. Notwithstanding the provisions of Subsection 11(a)
----------
above, Manufacturer assumes no liability for (i) infringements covering
completed equipment or any assembly, circuit, combination, method or process in
which any of the Products may be used but not covering the Products when used
alone; (ii) trademark infringements involving any marking or branding not
applied by Manufacturer or involving any marking or branding applied at the
request of Distributor; or (iii) infringements involving the modification or
servicing of the Products, or any part thereof, unless such modification or
servicing was done by Manufacturer.
11
<PAGE>
(c) Entire Liability. The foregoing provisions of this Section 11
----------------
state the entire liability and obligations of Manufacturer and the exclusive
remedy of Distributor and its customers, with respect to any alleged
infringement of patents, copyrights, trademarks or other intellectual property
rights by the Products or any part thereof.
12. GENERAL PROVISIONS
------------------
(a) Governing Law and Jurisdiction. This Agreement shall be governed
------------------------------
by and construed under the laws of the State of California. The federal and
state courts within the State of California shall have exclusive jurisdiction to
adjudicate any dispute arising out of this Agreement. Distributor hereby
expressly consents to (i) the personal jurisdiction of the federal and state
courts within California and (ii) service of process being effected upon it by
registered mail sent to the address set forth at the beginning of this
Agreement.
(b) Entire Agreement. This Agreement sets forth the entire agreement
----------------
and understanding of the parties relating to the subject matter herein and
merges all prior discussions between them. No modification of or amendment to
this Agreement, nor any waiver of any rights under this Agreement, shall be
effective unless in writing signed by the party to be charged.
(c) Notices. Any notice required or permitted by this Agreement shall
-------
be in writing and shall be sent by prepaid registered or certified mail, return
receipt requested, addressed to the other party at the address shown at the
beginning of this Agreement or at such other address for which such party gives
notice hereunder. Such notice shall be deemed to have been given three (3) days
after deposit in the mail.
(d) Force Majeure. Nonperformance of either party shall be excused to
-------------
the extent that performance is rendered impossible by strike, fire, flood,
governmental acts or orders or restrictions, failure of suppliers, or any other
reason where failure to perform is beyond the reasonable control of and is not
caused by the negligence of the nonperforming party.
(e) Nonassignability and Binding Effect. A mutually agreed
-----------------------------------
consideration for Manufacturer's entering into this Agreement is the reputation,
business standing, and goodwill already honored and enjoyed by Distributor under
its present ownership, and, accordingly, Distributor agrees that its rights and
obligations under this Agreement may not be transferred or assigned directly or
indirectly without the prior written consent of Manufacturer. Subject to the
foregoing sentence, this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their successors and assigns.
12
<PAGE>
(f) Legal Expenses. The prevailing party in any legal action brought
--------------
by one party against the other and arising out of this Agreement shall be
entitled, in addition to any other rights and remedies it may have, to
reimbursement for its expenses, including court costs and reasonable attorneys'
fees.
(g) Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
Pericom Semiconductor PERICOM TECHNOLOGY, INC.
Corporation ---------------------------------
(Distributor)
By ____________________________ By /s/
------------------------------
Title ___________________________ Title V. P. Sales & Marketing
---------------------------
August 24, 1995
13
<PAGE>
(f) Legal Expenses. The prevailing party in any legal action brought
--------------
by one party against the other and arising out of this Agreement shall be
entitled, in addition to any other rights and remedies it may have, to
reimbursement for its expenses, including court costs and reasonable attorneys'
fees.
(g) Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
Pericom Semiconductor
Corporation _______________________________
(Distributor)
By ?????????? By _____________________________
------------------------------
Title V. P. Sales/Marketing Title ___________________________
---------------------------
13
<PAGE>
EXHIBIT A
PRODUCT DESCRIPTION AND PURCHASE PRICE
Distributor's
Purchase Price
Product (Dollars)
-------
All Products included in the
Manufacturer's current price list.
A-1
14
<PAGE>
EXHlBIT B
TERRITORY
Distributor's Territory shall be all portions of the following:
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
People Republic of China
B-1
15
<PAGE>
EXHIBIT C
INITIAL ORDER
Upon execution of this Agreement, Distributor shall deliver to Manufacturer
a written, non-cancellable purchase order for the following quantities of
Products:
Products Quantity
-------- --------
To be Agreed Upon
C-1
16
<PAGE>
EXHIBIT D
17
<PAGE>
EXHIBIT 10.13
Confidential treatment has been requested for portions of this Exhibit. An
unredacted copy of this Exhibit is on file with the Securities and Exchange
Commission.
THIS Agreement is made as of the 28th day of February, 1996, by and between
Harris Corporation, Semiconductor Sector, P.O. Box 883, Melbourne, Florida
32902-0883 ("Harris") and Pericom Semiconductor Corporation, 2380 Bering Drive,
San Jose, California 95131, ("Pericom").
Whereas Harris designs, manufactures, assembles, tests and sells digital
integrated circuits; and
Whereas Pericom has a product line family of FCT and LPT devices which Pericom
desires to sell worldwide; and
Whereas Harris has a worldwide sales and marketing distribution system including
direct salesman, sales representatives, field application support and authorized
distributors; and
Whereas Pericom is desirous of selling product through Harris worldwide
distribution system;
Now therefore for and in consideration of the mutual promises set forth below
the parties agree as follows:
1. SCOPE OF AGREEMENT
------------------
Harris shall purchase from Pericom FCT and LPT products both reference as
("Products") set forth in Exhibit A hereto for resale by Harris through Harris
worldwide distribution system.
Harris shall have the right, to sell LPT Products directly to original equipment
manufactures ("OEM") through its direct salesman or sales representatives and to
authorized distributors of Harris products.
Harris shall have the right, to sell FCT Products directly to original equipment
manufactures ("OEM") through its direct salesman or sales representatives and to
authorized distributors of Harris products.
The single exclusion/restriction to Harris' right to sell Product is the
restriction of Harris' and Pericom's mutual sales representative, Nova
Marketing, from making direct sales of the Exhibit A Products, on the behalf of
Harris, in the State of Texas.
Harris and Pericom shall discuss and upon mutual agreement, Harris have the
right to market and sell new Products. It is anticipated that Exhibit A will be
modified from time to time to include existing and new Products.
1.1. MUTUAL EXTENSIONS
Harris and Pericom shall discuss and upon mutual agreement, Pericom
Technology, a Pericom affiliate, have the right to represent and distribute
selected Harris Semiconductor products in Peoples Republic of China (PRC)
under a separate distributor agreement to be defined.
1
[*] IDENTIFIES REDACTED MATERIAL DELETED PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
<PAGE>
Harris and Pericom shall discuss and upon mutual agreement, Pericom shall
have the right, without exclusions or restrictions, to sell selected Harris
Semiconductor products directly to original equipment manufactures ("OEM")
through Pericom direct salesman or sales representatives and to authorized
distributors.
2. PRICE AND PRICE ADJUSTMENT
--------------------------
Pericom and Harris will mutually agree upon a price to Harris for each
Product purchased by Harris on a case by case basis prior to the issuance
of a purchase order. As each price is agreed, it will be added to Exhibit
A. The price list (Exhibit A) will be reviewed and amended on a quarterly
basis. In the event Pericom lowers its price to distributors, Pericom
shall adjust Harris' price on all outstanding backlog beyond thirty (30)
days. In no event will the price of a Product be increased to Harris within
1 year of its price agreement.
2.1 BACKLOG PRICE ADJUSTMENT
Price reductions resulting from the quarterly reviews - All Harris orders
to Pericom with a Harris delivery request date greater than 30 days will be
written down to the price negotiated.
Price increases resulting from the quarterly reviews - All uncommitted
Harris orders with a Harris delivery request date greater than 30 days will
be written up to the price negotiated.
2.2 QUARTERLY REVIEWS
Quarterly reviews shall be held around the twelfth week of the quarter.
3. PURCHASE ORDER
--------------
Harris shall place all orders for Pericom Products directly with Pericom on
Harris purchase orders. Such purchase orders will identify a Harris product
distribution center ("PDC") for delivery of the Products. Provided each
purchase order correctly identifies the quantity, price and delivery date,
Pericom shall accept the purchase order. Lead times shall be [*]. The
minimum order size for each product shall be [*] units. Harris shall
place a minimum [*] in orders for Product, [*] after Agreement
signing, for Product to be delivered within [*] of issuance of
purchase order to Pericom. The guaranteed order quantity thereafter shall
be a minimum order quantity of [*] units per quarter for the next
[*]. Total minimum order quantity, including the initial [*] units,
is [*] units.
3.1 GUARANTEE OF SUPPLY
During the first [*] of the Agreement, Pericom guarantees to deliver, at
Harris' sole option, up to [*] times the quantity ordered in the
previous quarter. Thereafter, Pericom guarantees to deliver, at Harris'
sole option, up to [*] times the quantity ordered in the previous
quarter.
3.2 In recognition of Pericom's Guarantee of Supply (3.1), Harris shall provide
to Pericom, on a monthly basis, an annual rolling forecast, the first three
months of which are to be considered [*] firm.
2
[*] IDENTIFIES REDACTED MATERIAL DELETED PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
<PAGE>
4. PAYMENT
-------
Harris shall pay for all purchases within thirty (30) days after the date
of invoice. Harris payment shall be made without regard to prior inspection
of the Products, but Harris right of inspection pursuant to the agreement
shall not be impaired thereby.
5. BRANDING
--------
Pericom shall brand all the Products sold to Harris for resale with
Harris's logo and other service markings all in accordance with Harris
branding specifications. Pericom shall not deliver any Products marked
Harris with Harris logo, service mark or trademark to any third party
without Harris' prior written consent.
6. CANCELLATION OF ORDER
---------------------
Harris may cancel the unshipped portion of any order without liability to
Pericom in accordance with the following schedule:
a. [*] of the unshipped balance upon written notice received by Pericom
up to [*] before scheduled shipping date.
b. [*] of the unshipped balance upon written notice received by Pericom
[*] before scheduled shipping date.
7. DELIVERY, TITLE, AND RISK
-------------------------
All purchases shall be F.O.B. Origin, freight collect pre-paid on a Harris
designated freight carrier. At the end of each three month period, Harris
may, at Harris' sole option, purchase up to 3% of Pericom's overbuild
quantity, or pay Pericom a reasonable re-stocking charge for up to 3% of
the overbuild quantity. Harris may provide shipment releases identify
interim delivery dates for partial shipments for orders in excess of [*]
units. Partial shipments shall be individually invoiced. Shipments shall be
in full tubes full tape and reels.
Pericom shall deliver Product to Harris in Harris designated shipping
material.
8. INSPECTION
----------
Harris shall have the right but not the obligation to inspect or test all
Products purchased hereunder. Harris failure to inspect or test shall not
affect Pericom warranty of the Product or Harris' right to replacement of
the parts or credit in the event of a Pericom's failure to conform to the
warranty.
9. WARRANTY
--------
a. Pericom warrants that its Products at the time of shipment by Pericom
are free from defects in material and workmanship and possess the
electrical characteristics as set forth herein, and will perform in
accordance with the applicable data sheet when operated within the
temperature and all other operating condition limitations set forth
therein.
3
[*] IDENTIFIES REDACTED MATERIAL DELETED PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
<PAGE>
b. The foregoing shall apply only to failures to meet said warranties
which appear and are reported to Pericom within eighteen (18) months from
the date of shipment.
c. The liability of Pericom hereunder is solely and exclusively limited to
replacement, repair or credit at the purchase price at Pericom's option for
any Product which is returned by Harris during the applicable warranty
period.
d. The foregoing warranties extend to Harris only, and not to customers or
to users of Harris products. Harris will warrant the sale of products to
Harris' customers. Nothing herein shall be interpreted to exclude Harris
from returning to Pericom any Products returned to Harris from Harris'
customers during the warranty period.
e. EXCEPT FOR THE WARRANTY OF TITLE, PERICOM MAKES NO OTHER WARRANTIES
EXPRESS, IMPLIED, OR STATUTORY, INCLUDING BUT NOT LIMITED TO ANY IMPLIED
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
10. FAILURE ANALYSIS
----------------
Harris may return, to Pericom, at Pericom's expense, any Product which
fails on use by Harris' customers. Pericom shall perform analysis of the
reason for failure, and provide corrective action taken by Pericom to
prevent future failures. Pericom agrees to complete its analysis within 15
working days. Pericom agrees that Harris may share the written failure
analysis report with Harris' customer after consultation with Pericom.
11. TRAINING
--------
Pericom shall provide Harris up to [*] hours of free application
training. If training is scheduled at a site other than Pericom's
facilities, Pericom shall be reimbursed for travel expenses. All additional
training by Pericom will be billed to Harris at [*] /Pericom person
plus travel expenses if applicable. Harris is not limited in the number of
engineers who can attend the training sessions.
12 TECHNICAL DATA FOR CUSTOMER SUPPORT
-----------------------------------
Pericom shall provide Harris with characterization data and theory of
operation data to permit Harris to support its customer's use of Products.
Pericom shall provide Harris an individual support person, who shall be
Harris' contact person during normal business hours pacific time to provide
assistance to Harris in support of Harris customers. This material will be
deemed confidential information and held under the provisions of Paragraph
14. Schematic drawings, mask layout, and bonding layout of Product shall be
provided by mutual agreement on an as needed basis.
13. ESTABLISHMENT OF FOUNDRY PLAN
-----------------------------
In the event Pericom, for whatever reason, decides to discontinue the
general offering of a Product, Pericom will provide Harris with Pericom's
reasonable order rate to continue supply of Product to Harris. In the
further event that Pericom and Harris cannot reach agreement on a
reasonable order rate, Pericom shall give Harris [*] notice with a
last time buy option in accordance with clause 18e. Term and Termination.
--------------------
4
[*] IDENTIFIES REDACTED MATERIAL DELETED PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
<PAGE>
14. CONFIDENTIAL INFORMATION
------------------------
Confidential information shall be exchanged in accordance with the
Pericom/Harris Confidential Disclosure Agreement (CDA) dated 11 October,
1995. The term of the CDA, however, is by this Agreement, extended to the
life of this Agreement.
15. LICENSE AGREEMENT
-----------------
Pericom hereby grants Harris a nonexclusive, nontransferable, worldwide
license, without right to sublicense, to sell Products to any third party
through Harris' worldwide sales and distribution organization.
16. PATENT INDEMNITY
----------------
Subject to the following provisions Pericom shall defend any suit or
proceeding brought against Harris, or Harris' customer insofar as such
suit or proceeding is based on a claim that Products manufactured and
supplied by Pericom to Harris or Harris customer constitutes direct
infringement of any duly issued United States patent and Pericom shall pay
all damages and costs finally awarded therein against Harris or Harris'
customer, provided that Pericom (1) is promptly informed and furnished a
copy of each communication or notice with such suit or proceeding and the
alleged infringement, and (2) is given authority, information and
assistance (at Pericom' expense) necessary to defend or settle such suit or
proceeding. Pericom shall not be obligated to defend or be liable for cost
or damages for any infringement arising out of (i) compliance with Harris
specifications (ii) any additions or modifications or the Product by
Harris; (iii) use of the Products in combinations with other goods or with
each other after delivery by Pericom; or (iv) use of Products in a patented
process. Pericom shall not be obligated to defend or be liable for cost or
damages for any suit claiming that the Products infringe a patent in which
Harris, or any subsidiary of affiliate thereof, has a direct or indirect
ownership interest in such patent.
b. If any Products manufactured and supplied by Pericom to Harris are held
to infringe a United States patent and Harris is enjoined from using or
selling such Products, Pericom at its option and expense will either (i)
procure for Harris the right to continue using or selling such Products
free of any liability for patent infringement, or (ii) replace such
Products with non-infringing but otherwise conforming products, or (iii)
refund the purchase price for any such Products returned by Harris to
Pericom.
c. If a claim of alleged infringement is made prior to completion of
delivery by Pericom under this contract, Pericom may decline to make
further shipment without being in breach of this contract, and provided
Pericom has not been enjoined from selling such Products to Harris, Pericom
agrees to supply same to Harris at Harris option whereupon Harris shall
defend and indemnify Pericom (on the same basis as would otherwise have
been required of Pericom to Harris hereunder) for any continuing
infringement arising therefrom subsequent to Harris' exercise of such
option.
d. If any suit or proceeding is brought against Pericom based on a claim
that Products manufactured and/or supplied hereunder by Pericom constitute
direct
5
<PAGE>
infringement of any duly issued United States patent, and such claim arises
from any of the reasons in Paragraph a.(i) through a.(iv) above then
Harris shall defend and indemnify Pericom on the same basis as would
otherwise have been required of Pericom to Harris hereunder.
e. THE FOREGOING INDEMNITY EXTENDS TO HARRIS AND ITS CUSTOMERS AND STATES
THE SOLE AND EXCLUSIVE LIABILITY AND REMEDY OF THE PARTIES HERETO FOR
PATENT INFRINGEMENT, AND IS IN LIEU OF ALL WARRANTIES, EXPRESS, IMPLIED, OR
STATUTORY, IN REGARD THERETO.
17. LIMITATION OF HARRIS' REMEDIES AND DAMAGES
------------------------------------------
a. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER, OR TO ANY PARTY,
WHETHER AS A RESULT OF BREACH OF CONTRACT, WARRANTY, TORT (INCLUDING
NEGLIGENCE OR OTHERWISE), FAILURE OF A REMEDY TO ACCOMPLISH ITS PURPOSE OR
OTHERWISE, FOR SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES INCLUDING BUT
NOT LIMITED TO, LOSS OF PROFITS, DAMAGE TO ASSOCIATED EQUIPMENT, DOWNTIME
OF PLANT OR EQUIPMENT, COST OF SUBSTITUTE EQUIPMENT OR PRODUCTS OR CLAIMS
OF HARRIS' CUSTOMERS FOR SUCH DAMAGES.
b. The liability of either party on any claim of any kind, whether based
upon breach of contract, warranty, tort (including negligence or
otherwise), for any loss or damage arising out of, or resulting from this
agreement, or from its performance or breach, or from any product furnished
hereunder, shall in no event exceed ten times the price of the Product
which gives rise to the claim. Except as to title, all such liability shall
terminate upon the expiration of the applicable warranty periods set forth
in Paragraph 9 above.
18. TERM AND TERMINATION
--------------------
a. TERM
This agreement shall continue in effect for [*] from the effective date
hereof.
b. TERMINATION ON DEFAULT
If either party shall at any time default in the payment of moneys due in
accordance with this Agreement or in fulfilling any of the other
obligations or conditions hereof, prior to terminating this Agreement, the
other party may give notice of such default specifying the reasons thereof.
If such default is not cured by the noticed party within sixty (60) days
after service of such notice, the other party shall then have the right in
its own discretion to terminate this Agreement by giving notice of
termination. This Agreement shall terminate on the thirtieth (30th) day
after such notice of termination is given. The noticed party shall have the
right to cure any such default up to but not after giving such notice of
termination.
6
[*] IDENTIFIES REDACTED MATERIAL DELETED PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
<PAGE>
c. TERMINATION ON INSOLVENCY
This agreement shall terminate forthwith in the event of:
(i) The adjudication of either party to be bankrupt or insolvent;
(ii) the filing by either party of a petition in bankruptcy or insolvency
(iii) The filing by either party of a petition or answer seeking
reorganization or readjustment under any law relating to insolvency or
bankruptcy;
(iv) The appointment of a receiver with respect to all or substantially
all of the property of either party;
(v) Any assignment by either party of its assets for the benefit of
creditors;
(vi) The institution by either party of any proceedings for liquidation or
the winding up of its business other than for purposes or reorganization,
consolidation or merger.
d. TERMINATION WITHOUT CAUSE
Either party may terminate this Agreement without cause and without
liability to the other party by giving the other party not less than
[*] written notice.
e. EFFECTS OF TERMINATION WITHOUT CAUSE
Upon completion of the [*] termination notice period, Pericom's
obligation to accept new orders and Harris right to place new orders on
Pericom shall cease. Notwithstanding the written notice of termination,
Pericom shall provide Harris the irrevocable right to place life-of-type
orders during the [*] termination notice period and shall deliver, in
accordance with the terms of the purchase order, any Product ordered by
Harris prior to termination. Each party shall return, upon request, the
other party's confidential information.
19. MISCELLANEOUS
-------------
a. USE OF DATA SHEETS
Pericom hereby grants Harris the right to copy Pericom's Product data
sheets; and further grants Harris the right for Harris to mark the data
sheets with Harris logo.
b. GOVERNING LAW
This agreement shall be governed by and construed, and any claim or
controversy arising with respect thereto shall be determined in accordance
with the laws of New York.
c. INVALID
Should any part or provision of this agreement be held unenforceable or
prohibited in any jurisdiction, the validity of the remaining parts or
provisions shall not be affected by such holding.
7
[*] IDENTIFIES REDACTED MATERIAL DELETED PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
<PAGE>
d. EXPORT LICENSES
The parties agree, with respect to any disclosure or other disposition of
Confidential Information, and with respect to the Licensed Product, to
comply with all the export rules, and regulations of the United States of
America as amended from time to time. This provision shall survive the
expiration or termination of this Agreement.
f. NO PARTNERSHIP
Nothing herein shall be construed as forming a partnership or joint venture
between the parties. Neither party shall so represent or commit the other
in any way, neither party's employees shall be considered employees of the
other.
g. NOTICES
All notices required or permitted to be given by ether party shall be in
writing and shall be deemed as given when received and shall be addressed
as follows, and dispatched by airmail letter, telex or facsimile:
To Pericom Pericom Semiconductor Corporation
----------
2380 Bering Drive
San Jose, California 95131, USA
Attention: Van Lewing
Facsimile: (408) 321-0933
To Harris Harris Semiconductor Sector, Inc.
---------
P.O. Box 883
Melbourne, Florida 32901, USA
Attention: Jim Poe
Facsimile: (407) 729-4563
Either party may give written notice of a change of address to the other
party.
h. FORCE MAJEURE
Neither party shall be liable in damages for any delay or default in the
performance of all or ANY of this Agreement, if such delay or default is
caused by conditions beyond its control, including but not limited to: acts
of the elements, fires, explosion, floods, or other casualties, government
orders or restrictions, and inability to obtain government import or export
licenses, or any other necessary governmental approvals.
i. PUBLIC ANNOUNCEMENTS
Neither party shall use the other party's name in any public announcement,
or press release, without the other party's express written approval. In
addition, unless mutually agreed in writing, neither party shall use the
term "Buy/Resale" or any term, or writing, relating to a buy/resale
agreement in any public announcement concerning the Agreement.
8
<PAGE>
j. SURVIVABILITY
Unless otherwise provided elsewhere in this Agreement Paragraphs 4, 9, 14,
16, 17, 18, and 19(d) shall survive expiration or termination of this
Agreement and remain in full force.
20. RIGHT OF FIRST REFUSAL
----------------------
In the event Pericom reaches a decision to sell or otherwise dispose of, or
discontinue, all or part of the company's technology incorporated in one or
more Products, Pericom shall first offer Harris the opportunity to purchase
or license such technology on mutually agreeable terms. Harris shall
respond to Pericom's offer within 30 days.
21. PRIOR AGREEMENTS
----------------
The terms and conditions herein contained constitute the entire Agreement
between the parties and shall supersede all previous communications, either
oral or written, between the parties with respect to the subject matter
hereof, and no agreement or understanding, varying, modifying or extending
the same, nor any subsequent course of dealing or conduct of the parties,
shall be binding upon either party unless in writing and signed by a duly
authorized officer or representative of each party.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
by the authorized representatives.
Harris Semiconductor Sector, Inc. Pericom Semiconductor Corporation
By: /s/ Jim Poe By:/s/ Van Lewing
---------------------------------------- -------------------------------
Title: Sr. Manager, Contracts Administration Title: Dir Marketing
------------------------------------- ----------------------------
Date: 2/27/96 Date: 2/28/96
--------------------------------------- ------------------------------
9
<PAGE>
HARRIS APPENDIX A11-1
<TABLE>
<CAPTION>
FAMILY HARRIS DEVICE DEVICE PKG SPEED New Price TAPE & REEL MIN
------ ------------- ------ --- ------ --- ----- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
5V/ FCT/16 PIN CD74FCTl38TM/TQM PI74FCT138TS/Q S/Q - [*] S0IC=lK, QSOP=3K
CD74FCT138ATM/ATQM PI74FCT138ATS/Q A [*] S0IC=lK, QSOP=3K
CD74FCT138CTM/CTQM PI74FCTl38CTS/Q C [*] S0IC=lK, QSOP=3K
CD74FCT138TNM PI74FCT138TW W - [*] W=3K
CD74FCT138ATNM PI74FCT138ATW A [*] W=3K
CD74FCT138CTNM PI74FCT138CTW C [*] W=3K
CD74FCT139TM/TQM PI74FCT139TS/Q S/Q - [*] S0IC=lK, QSOP=3K
CD74FCT139ATM/ATQM PI74FCT139ATS/Q A [*] S0IC=lK, QSOP=3K
CD74FCT139CTM/CTQM PI74FCT139CTS/Q C [*] S0IC=lK, QSOP=3K
CD74FCT139TNM PI74FCT139TW W - [*] W=3K
CD74FCT139ATNM PI74FCT139ATW A [*] W=3K
CD74FCTl39CTNM PI74FCT139CTW C [*] W=3K
CD74FCTl5lTM/TQM PI74FCT151TS/Q S/Q - [*] S0IC=lK, QSOP=3K
CD74FCT151ATM/ATQM PI74FCT151ATS/Q A [*] FCT151ATS only S0IC=lK, QSOP=3K
CD74FCT15lCTM/CTQM PI74FCTl5lCTS/Q C [*] S0IC=lK, QSOP=3K
CD74FCT151TNM PI74FCT151TW W - [*] W=3K
CD74FCT151ATNM PI74FCT151ATW A [*] W=3K
CD74FCT151CTNM PI74FCT151CTW C [*] W=3K
CD74FCT153TM/TQM PI74FCT153TS/Q S/Q - [*] S0IC=lK, QSOP=3K
CD74FCT153ATM/ATQM PI74FCT153ATS/Q A [*] S0IC=lK, QSOP=3K
CD74FCT153CTM/CTQM PI74FCT153CTS/Q C [*] S0IC=lK, QSOP=3K
CD74FCT153TNM PI74FCT153TW W - [*] W=3K
CD74FCTl53ATNM PI74FCT153ATW A [*] W=3K
CD74FCT153CTNM PI74FCT153CTW C [*] W=3K
CD74FCT157TM/TQM PI74FCT157TS/Q S/Q - [*] S0IC=lK, QSOP=3K
CD74FCT157ATM/ATQM PI74FCT157ATS/Q A [*] S0IC=lK, QSOP=3K
CD74FCT157CTM/CTQM PI74FCT157CTS/Q C [*] S0IC=lK, QSOP=3K
CD74FCT157DTM/DTQM PI74FCTl57DTS/Q D [*] S0IC=lK, QSOP=3K
CD74FCT157TNM PI74FCT157TW W - [*] W=3K
CD74FCT157ATNM PI74FCT157ATW* A [*] FCT157ATW only W=3K
CD74FCT157CTNM PI74FCT157CTW C [*] W=3K
CD74FCT157DTNM PI74FCT157DTW D [*]
CD74FCT238TM/TQM PI74FCT238TS/Q S/Q - [*] S0IC=1K, QSOP=3K
CD74FCT238ATM/ATQM PI74FCT238ATS/Q A [*] S0IC=1K, QSOP=3K
CD74FCT238CTM/CTQM PI74FCT238CTS/Q C [*] S0IC=1K, QSOP=3K
CD74FCT238TNM PI74FCT238TW W - [*] W=3K
CD74FCT238ATNM PI74FCT238ATW A [*] W=3K
CD74FCT238CTNM PI74FCT238CTW C [*] W=3K
CD74FCT239TM/TQM PI74FCT239TS/Q S/Q - [*] S0IC=1K, QSOP=3K
CD74FCT239ATM/ATQM PI74FCT239ATS/Q A [*] S0IC=1K, QSOP=3K
CD74FCT239CTM/CTQM PI74FCT239CTS/Q C [*] S0IC=1K, QSOP=3K
CD74FCT239TNM PI74FCT239TW W - [*] W=3K
CD74FCT239ATNM PI74FCT239ATW A [*] W=3K
CD74FCT239CTNM PI74FCT239CTW C [*] W=3K
CD74FCT251TM/TQNI PI74FCT251TS/Q S/Q - [*] S0IC=lK, QSOP=3K
CD74FCT251ATM/ATQM PI74FCT251ATS/Q A [*] S0IC=lK, QSOP=3K
CD74FCT251CTM/CTQM PI74FCT251CTS/Q C [*] S0IC=lK, QSOP=3K
CD74FCT251TNM PI74FCT251TW W - [*] W=3K
CD74FCT251ATNM PI74FCT251ATW A [*] W=3K
CD74FCT251CTNM PI74FCT251CTW C [*] W=3K
5V/ FCT/16 PIN CD74FCT253TM/TQM PI74FCT253TS/Q S/Q - [*] S0IC=lK, QSOP=3K
CD74FCT253ATM/ATQM PI74FCT253ATS/Q A [*] S0IC=lK, QSOP=3K
CD74FCT253CTM/CTQM PI74FCT253CTS/Q C [*] S0IC=lK, QSOP=3K
CD74FCT253TNM PI74FCT253TW W - [*] W=3K
CD74FCT253ATNM PI74FCT253ATW A [*] W=3K
CD74FCT253CTNM PI74FCT253CTW C [*] W=3K
CD74FCT257TM/TQM PI74FCT257TS/Q S/Q - [*] S0IC=lK, QSOP=3K
CD74FCT257ATM/ATQM PI74FCT257ATS/Q A [*] S0IC=lK, QSOP=3K
CD74FCT257CTM/CTQM PI74FCT257CTS/Q C [*] S0IC=lK, QSOP=3K
</TABLE>
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[*] IDENTIFIES REDACTED MATERIAL DELETED PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
<PAGE>
HARRIS APPENDIX A11-1
<TABLE>
<CAPTION>
FAMILY HARRIS DEVICE DEVICE PKG SPEED NEW Price TAPE & REEL MIN
- ------ ------------- ------ --- ----- --------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
CD74FCT257TNM PI74FCT257TW W - [*] W=3K
CD74FCT257ATNM PI74FCT257ATW A [*] W=3K
CD74FCT257CTNM PI74FCT257CTW C [*] W=3K
CD74FCT399TM/TQM PI74FCT399TS/Q S/Q - [*] INCREASE S0IC=1K, QSOP=3K
CD74FCT399ATM/ATQM PI74FCT399ATS/Q A [*] INCREASE S0IC=1K, QSOP=3K
CD74FCT399CTM/CTQM PI74FCT399TCS/Q C [*] INCREASE S0IC=1K, QSOP=3K
CD74FCT399TNM PI74FCT399TW W - [*] INCREASE W=3K
CD74FCT399ATNM PI74FCT399ATW A [*] INCREASE W=8K
CD74FCT399CTNM PI74FCT399CTW C [*] INCREASE W=3K
SV/ FCT/20PIN CD74FCT240TM/TQM PI74FCT240TS/Q S/Q - [*] S0IC=1K, QSOP=3K
CD74FCT240ATM/ATQM PI74FCT240ATS/Q A [*] S0IC=1K, QSOP=3K
CD74FCT240CTM/CTQM PI74FCT240CTS/Q C [*] S0IC=1K, QSOP=3K
CD74FCT240DTM/DTQM PI74FCT240DTS/Q D [*] S0IC=1K, QSOP=3K
CD74FCT241TM/TQM PI74FCT241TS/Q S/Q - [*] S0IC=1K, QSOP=3K
CD74FCT241ATM/ATQM PI74FCT241ATS/Q A [*] S0IC=1K, QSOP=3K
CD74FCT241CTM/CTQM PI74FCT241CTS/Q C [*] S0IC=1K, QSOP=3K
CD74FCT241DTM/DTQM PI74FCT241DTS/Q D [*] S0IC=1K, QSOP=3K
CD74FCT244TM/TQM PI74FCT244TS/Q S/Q - [*] S0IC=1K, QSOP=3K
CD74FCT244ATM/ATQM PI74FCT244ATS/Q* A [*] FCT244ATQ only S0IC=1K, QSOP=3K
CD74FCT244CTM/CTQM PI74FCT244CTS/Q C [*] S0IC=1K, QSOP=3K
CD74FCT244DTNM/DTQM PI74FCT244DTS/Q D [*] S0IC=1K, QSOP=3K
CD74FCT245TM/TQM PI74FCT245TS/Q* S/Q - [*] FCT245TS only S0IC=1K, QSOP=3K
CD74FCT245ATM/ATQM PI74FCT245ATS/Q* A [*] FCT245ATQ only S0IC=1K, QSOP=3K
CD74FCT245CTM/CTQM PI74FCT245CTS/Q C [*] S0IC=1K, QSOP=3K
CD74FCT245DTM/DTQM PI74FCT245DTS/Q D [*] S0IC=1K, QSOP=3K
CD74FCT273TM/TQM PI74FCT273TS/Q S/Q - [*] S0IC=1K, QSOP=3K
CD74FCT273ATM/ATQM PI74FCT273ATS/Q* A [*] FCT273ATQ only S0IC=1K, QSOP=3K
CD74FCT273CTM/CTQM PI74FCT273CTS/Q C [*] S0IC=1K, QSOP=3K
CD74FCT273DTM/DTQM PI74FCT273DTS/Q D [*] S0IC=1K, QSOP=3K
CD74FCT373TM/TQM PI74FCT373TS/Q S/Q - [*] S0IC=1K, QSOP=3K
CD74FCT373ATM/ATQM PI74FCT373ATS/Q A [*] S0IC=1K, QSOP=3K
CD74FCT373CTM/CTQM PI74FCT373CTS/Q C [*] S0IC=1K, QSOP=3K
CD74FCT373DTM/DTQM PI74FCT373DTS/Q D [*] S0IC=1K, QSOP=3K
CD74FCT374TM/TQM PI74FCT374TS/Q* S/Q - [*] FCT374TS only S0IC=1K, QSOP=3K
CD74FCT374ATM/ATQM PI74FCT374ATS/Q A [*] S0IC=1K, QSOP=3K
CD74FCT374CTM/CTQM PI74FCT374CTS/Q C [*] S0IC=1K, QSOP=3K
CD74FCT374DTM/DTQM PI74FCT374DTS/Q D [*] S0IC=1K, QSOP=8K
CD74FCT377TM/TQM PI74FCT377TS/Q S/Q - [*] S0IC=1K, QSOP=3K
CD74FCT377ATM/ATQM PI74FCT377ATS/Q A [*] S0IC=1K, QSOP=3K
CD74FCT377CTM/CTQM PI74FCT377CTS/Q C [*] INCREASE S0IC=1K, QSOP=3K
CD74FCT377DTM/DTQM PI74FCT377DTS/Q D [*] INCREASE S0IC=1K, QSOP=3K
CD74FCT521TM/TQM PI74FCT521TS/Q S/Q - [*] S0IC=1K, QSOP=3K
CD74FCT521ATM/ATQM PI74FCT521ATS/Q A [*] S0IC=1K, QSOP=3K
CD74FCT521BTM/BTQM PI74FCT521BTS/Q B [*] S0IC=1K, QSOP=3K
CD74FCT521CTM/CTQM PI74FCT521CTS/Q C [*] S0IC=1K, QSOP=3K
CD74FCT521DTM/DTQM PI74FCT521DTS/Q D [*]
CD74FCT533TM/TQM PI74FCT533TS/Q S/Q - [*] S0IC=1K, QSOP=3K
CD74FCT533ATM/ATQM PI74FCT533ATS/Q A [*] S0IC=1K, QSOP=3K
CD74FCT533CTM/CTQM PI74FCT533CTS/Q C [*] INCREASE S0IC=1K, QSOP=3K
CD74FCT534TM/TQM PI74FCT534TS/Q S/Q - [*] S0IC=1K, QSOP=3K
CD74FCT534ATM/ATQM PI74FCT534ATS/Q A [*] S0IC=1K, QSOP=3K
CD74FCT534CTM/CTQM PI74FCT534CTS/Q C [*] INCREASE S0IC=1K, QSOP=3K
CD74FCT534DTM/DTQM PI74FCT534DTS/Q D [*] NEW S0IC=1K, QSOP=3K
SV/ FCT/20 PIN CD74FCT540TM/TQM PI74FCT540TS/Q S/Q - [*] S0IC=1K, QSOP=3K
CD74FCT540ATM/ATQM PI74FCT540ATS/Q A [*] S0IC=1K, QSOP=3K
CD74FCT540CTM/CTQM PI74FCT540CTS/Q C [*] S0IC=1K, QSOP=3K
CD74FCT540DTM/DTQM PI74FCT540DTS/Q D [*] S0IC=1K, QSOP=3K
CD74FCT541TM/TQM PI74FCT541TS/Q S/Q - [*] S0IC=1K, QSOP=3K
CD74FCT541ATM/ATQM PI74FCT541ATS/Q A [*] S0IC=1K, QSOP=3K
CD74FCT541CTM/CTQM PI74FCT541CTS/Q C [*] S0IC=1K, QSOP=3K
</TABLE>
Page 2
[*] IDENTIFIES REDACTED MATERIAL DELETED PURSUANT TO A REQUEST FOR CONFIDENTIAL
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<PAGE>
HARRIS APPENDIX A11-1
<TABLE>
<CAPTION>
FAMILY HARRIS DEVICE DEVICE PKG SPEED New Price TAPE & REEL MIN
- ------ ------------- ------ --- ----- --------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
CD74FCTS4IDTM/DTQM PI74FCTM/DTS/Q D [*] S0IC=1K, QSOP=3K
CD74FCT573TM/TQM PI74FCT573TS/Q S/Q - [*] S0IC=1K, QSOP=3K
CD74FCT573ATM/ATQM PI74FCT573ATS/Q* A [*] FCT573ATQ only S0IC=1K, QSOP=3K
CD74FCT573CTM/CTQM PI74FCT573CTS/Q C [*] S0IC=1K, QSOP=3K
CD74FCT573DTM/DTQM PI74FCT573DTS/Q D [*] S0IC=1K, QSOP=3K
CD74FCT574TM/TQM PI74FCT574T5/Q S/Q - [*] S0IC=1K, QSOP=3K
CD74FCT574ATM/ATQM PI74FCT574ATS/Q A [*] S0IC=1K, QSOP=3K
CD74FCT574CTM/CTQM PI74FCT574CTS/Q C [*] S0IC=1K, QSOP=3K
CD74FCT574DTM/DTQM PI74FCT574DTS/Q D [*] S0IC=1K, QSOP=3K
CD74FCT623TM/TQM PI74FCT623TS/Q S/Q - [*] S0IC=1K, QSOP=3K
CD74FCT623ATM/ATQM PI74FCT623ATS/Q A [*] S0IC=1K, QSOP=3K
CD74FCT623CTM/CTQM PI74FCT623CTS/Q C [*] S0IC=1K, QSOP=3K
CD74FCT623DTM/DTQM PI74FCT623DTS/Q D [*] S0IC=1K QSOP=3K
CD74FCT640TM/TQM PI74FCT640TS/Q S/Q - [*] S0IC=1K, QSOP=3K
CD74FCT640ATM/ATQM PI74FCT640ATS/Q A [*] S0IC=1K, QSOP=3K
CD74FCT640CTM/CTQM PI74FCT640CTS/Q C [*] S0IC=1K, QSOP=3K
CD74FCT640DTM/DTQM PI74FCT640DTS/Q D [*] S0IC=1K, QSOP=3K
5V/ FCT/24 PIN CD74FCT543TM/TQM PI74FCT543TS/Q S/Q - [*] S0IC=1K, QSOP=3K
CD74FCT543ATM/ATQM PI74FCT543ATS/Q A [*] S0IC=1K, QSOP=3K
CD74FCT543CTM/CTQM PI74FCT543CTS/Q C [*] S0IC=1K, QSOP=3K
CD74FCT543DTM/DTQM PI74FCT543DTS/Q D [*] S0IC=1K, QSOP=3K
CD74FCT544TM/TQ PI74FCT544TS/Q S/Q - [*] S0IC=1K, QSOP=3K
CD74FCT544ATM/ATQM PI74FCTS44ATS/Q A [*] S0IC=1K, QSOP=3K
CD74FCT544CTM/CTQM PI74FCT544CTS/Q C [*] S0IC=1K, QSOP=3K
CD74FCT646TM/TQM PI74FCT646TS/Q S/Q - [*] S0IC=1K, QSOP=3K
CD74FCT646ATM/ATQM PI74FCT646ATS/Q A [*] S0IC=1K, QSOP=3K
CD74FCT646CTM/CTQM PI74FCT646CTS/Q C [*] S0IC=1K, QSOP=3K
CD74FCT646DTM/DTQM PI74FCT646DTS/Q D [*] S0IC=1K, QSOP=3K
CD74FCT648TM/TQM PI74FCT648TS/Q S/Q - [*] S0IC=1K, QSOP=3K
CD74FCT648ATM/ATQM PI74FCT648ATS/Q A [*] S0IC=1K, QSOP=3K
CD74FCT648CTM/CTQM PI74FCT648CTS/Q C [*] S0IC=1K, QSOP=3K
CD74FCT651TM/TQM PI74FCT651TS/Q S/Q - [*] S0IC=1K, QSOP=3K
CD74FCT651ATM/ATQM PI74FCT651ATS/Q A [*] S0IC=1K, QSOP=3K
CD74FCT651CTM/CTQM PI74FCT651CTS/Q C [*] S0IC=1K, QSOP=3K
CD74FCT652TM/TQM PI74FCT652TS/Q S/Q - [*] S0IC=1K, QSOP=3K
CD74FCT652ATM/ATQM PI74FCT652ATS/Q A [*] S0IC=1K, QSOP=3K
CD74FCT652CTM/CTQM PI74FCT652CTS/Q C [*] S0IC=1K, QS0P=3K
CD74FCT652DTM/DTQM PI74FCT652DTS/Q D [*] S0IC=1K, QSOP=3K
5V/ FCT/24 PIN CD74FCT821ATM/ATQM PI74FCT821ATS/Q S/Q A [*] S0IC=lK, QSOP=3K
CD74FCT821BTM/BTQM PI74FCT821BTS/Q B [*] S0IC=1K, QSOP=3K
CD74FCT821CTM/CTQM PI74FCT821CTS/Q C [*] S0IC=lK, QSOP=3K
CD74FCT823ATM/ATQM PI74FCT823ATS/Q S/Q A [*] S0IC=1K, QSOP=3K
CD74FCT823BTM/BTQM PI74FCT823BTS/Q B [*] S0IC=1K, QSOP=3K
CD74FCT823CTM/CTQM PI74FCT823CTS/Q C [*] S0IC=1K, QSOP=3K
CD74FCT825ATM/ATQM PI74FCT825ATS/Q S/Q A [*] S0IC=1K, QSOP=3K
CD74FCT825BTM/BTQM PI74FCT825BTS/Q B [*] S0IC=1K, QSOP=3K
CD74FCT825CTM/CTQM PI74FCT825CTS/Q C [*] S0IC=1K, QSOP=3K
CD74FCT827ATM/ATQM PI74FCT827ATS/Q S/Q A [*] S0IC=1K, QSOP=3K
CD74FCT827BTM/BTQM PI74FCT827BTS/Q B [*] S0IC=1K, QSOP=3K
CD74FCT827CTM/CTQM PI74FCT827CTS/Q C [*] S0IC=1K, QSOP=3K
CD74FCT828ATM/ATQM PI74FCT828ATS/Q S/Q A [*] S0IC=1K, QSOP=3K
CD74FCT828BTM/BTQM PI74FCT828BTS/Q B [*] S0IC=1K, QSOP=3K
CD74FCT828CTM/CTQM PI74FCT82SCTS/Q C [*] S0IC=lK, QSOP=3K
CD74FCT841ATM/ATQM PI74FCT841ATS/Q S/Q A [*] S0IC=1K, QSOP=3K
CD74FCT841BTM/BTQM PI74FCT841BTS/Q B [*] S0IC=1K, QSOP=3K
CD74FCT841CTM/CTQM PI74FCT841CTS/Q C [*] SOIC=1K, QSOP=3K
CD74FCT843ATM/ATQM PI74FCT843ATS/Q S/Q A [*] S0IC=1K, QSOP=3K
CD74FCT843BTM/BTQM PI74FCT843BTS/Q B [*] S0IC=1K, QSOP=3K
CD74FCT843CTM/CTQM PI74FCT843CTS/Q C [*] S0IC=1K, QSOP=3K
</TABLE>
Page 3
[*] IDENTIFIES REDACTED MATERIAL DELETED PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
<PAGE>
HARRIS APPENDIX A11-1
<TABLE>
<CAPTION>
FAMILY HARRIS DEVICE DEVICE PKG SPEED New Price TAPE & REEL MIN
- ------ ------------- ------ --- ---- --------- ---------------
<S> <C> <C> <C> <C> <C> <C>
CD74FCT845ATM/ATQM PI74FCT845ATS/Q S/Q A [*] S0IC=1K, QSOP=3K
CD74FCT845BTM/BTQM PI74FCT845BTS/Q B [*] S0IC=1K, QSOP=3K
CD74FCT845CTM/CTQM PI74FCT845CTS/Q C [*] S0IC=1K, QSOP=3K
CD74FCT861ATM/ATQM PI74FCT861ATS/Q S/Q A [*] S0IC=1K, QSOP=8K
CD74FCT861BTM/BTQM PI74FCT861BTS/Q B [*] S0IC=1K, QSOP=3K
CD74FCT861CTM/CTQM P174FCT861CTS/Q C [*] S0IC=1K, QSOP=3K
CD74FCT863ATM/ATQM PI74FCT863ATS/Q S/Q A [*] S0IC 1K, QSOP=3K
CD74FCT863BTM/BTQM PI74FCT863BTS/Q B [*] S0IC 1K, QSOP=3K
CD74FCT863CTM/CTQM PI74FCT863CTS/Q C [*] S0IC 1K, QSOP=3K
CD74FCT864ATM/ATQM PI74FCT864ATS/Q S/Q A [*] S0IC 1K, QSOP=3K
CD74FCT864BTM/BTQM PI74FCT864BTS/Q B [*] S0IC 1K, QSOP=3K
CD74FCT864CTM/CTQM PI74FCT864CTS/Q C [*] S0IC SK, QSOP=3K
CD29FCT52ATM/ATQM PI29FCT52ATS/Q S/Q A [*] S0IC 1K, QSOP=3K
CD29FCT52BTM/BTQM PI29FCT52BTS/Q B [*] S0IC 1K, QSOP=3K
CD29FCT520ATM/ATQM PI29FCT520ATS/Q S/Q A [*] S0IC 1K, QSOP=3K
CD29FCT520BTM/BTQM PI29FCT520BTS/Q B [*] S0IC 1K, QSOP=3K
CD29FCT2520TM/TQM PI29FCT2520TS/Q S/Q - [*] S0IC 1K, QSOP=3K
CD29FCT2520ATM/ATQM PI29FCT2520ATS/Q A [*] S0IC 1K, QSOP=3K
5V 25 OHM 8-BIT CD74FCT2151TM/TQM PI74FCT2151TS/Q S/Q - [*] S0IC=1K, QSOP=3K
16-PIN CD74FCT2151ATM/ATQM PI74FCT2151ATS/Q A [*] S0IC=1K, QSOP=3K
CD74FCT2151CTM/CTQM PI74FCT2151CTS/Q C [*] S0IC=1K, QSOP=3K
CD74FCT2151TNM PI74FCT2151TW W [*] W=3K
CD74FCT2151ATNM PI74FCT2151ATW A [*] W=3K
CD74FCT2151CTNM PI74FCT2151CTW C [*] W=3K
CD74FCT2153TM/TQM PI74FCT2153TS/Q S/Q - [*] S0IC=1K, QSOP=3K
CD74FCT2I53ATM/ATQM PI74FCT2153ATS/Q A [*] S0IC=1K, QSOP=3K
CD74FCT2153CTM/CTQM PI74FCT2153CTS/Q C [*] S0IC=1K, QSOP=3K
CD74FCT2153TNM PI74FCT2153TW W - [*] W=3K
CD74FCT2153ATNM PI74FCT2153ATW A [*] W=3K
CD74FCT2153CTNM PI74FCT2153CTW C [*] W=3K
CD74FCT2l57TM/TQM PI74FCT2157TS/Q S/Q - [*] S0IC=1K, QSOP=3K
CD74FCT2157ATM/ATQM PI74FCT2157ATS/Q A [*] S0IC=lK, QSOP=3K
CD74FCT2157CTM/CTQM PI74FCT2157CTS/Q C [*] S0IC=1K, QSOP=3K
CD74FCT2157TNM PI74FCT2157TW W - [*] W=3K
CD74FCT2157ATNM PI74FCT2I57ATW A [*] W=3K
CD74FCT2157CTNM PI74FCT2I57CTW C [*] W=3K
CD74FCT2253TM/TQM PI74FCT2253TS/Q S/Q - [*] S0IC=1K, QSOP=3K
CD74FCT2253ATM/ATQM PI74FCT2253ATS/Q A [*] S0IC=1K, QSOP=3K
CD74FCT2253CTM/CTQM PI74FCT2253CTS/Q C [*] S0IC=1K, QSOP=3K
CD74FCT2253TNM PI74FCT2253TW W - [*] W=3K
CD74FCT2253ATNM PI74FCT2253ATW A [*] W=3K
CD74FCT2253CTNM PI74FCT2253CTW C [*] W=3K
CD74FCT2257TM/TQM PI74FCT2257TS/Q S/Q - [*] S0IC=1K, QSOP=3K
CD74FCT2257ATM/ATQM PI74FCT2257TS/Q A [*] S0IC=1K, QSOP=3K
CD74FCT2257CTM/CTQM PI74FCT2257CTS/Q C [*] S0IC=1K, QSOP=3K
CD74FCT2257TNM PI74FCT2257TW W - [*] W=3K
CD74FCT2257ATNM PI74FCT2257ATW A [*] W=3K
CD74FCT2257CTNM PI74FCT2257CTW C [*] W=3K
20 pin 5v 8-bit CD74FCT2240TM/TQM PI74FCT2240TS/Q S/Q - [*] S0IC=1K, QSOP=3K
25 OHm CD74FCT22400ATM/TQM PI74FCT2240ATS/Q A [*] S0IC=1K, QSOP=3K
CD74FCT2240CTM/CTQM PI74FCT2240CTS/Q C [*] S0IC=1K, QSOP=3K
CD74FCT2241TM/TQM PI74FCT2241TS/Q S/Q - [*] S0IC=1K, QSOP=3K
CD74FCT2241ATM/ATQM PI74FCT2241ATS/Q A [*] S0IC=1K, QSOP=3K
CD74FCT2241CTM/CTQM PI74FCT2241CTS/Q C [*] S0IC=1K, QSOP=3K
CD74FCT2244TM/TQM PI74FCT2244TS/Q S/Q - [*] S0IC=1K, QSOP=3K
CD74FCT2244ATM/ATQM PI74FCT2244ATS/Q A [*] S0IC=lK, QSOP=3K
</TABLE>
PAGE 4
[*] IDENTIFIES REDACTED MATERIAL DELETED PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
<PAGE>
HARRIS APPENDIX A11-1
<TABLE>
<CAPTION>
FAMILY HARRIS DEVICE DEVICE PKG SPEED New Price TAPE & REEL MIN
- ------ ------------- ------ --- ----- --------- ---------------
<S> <C> <C> <C> <C> <C> <C>
CD74FCT2244CTM/CTQM PI74FCT2244CTS/Q C [*] S0IC=1K, QSOP=3K
CD74FCT2245TM/TQM PI74FCT2245TS/Q S/Q - [*] S0IC=1K, QSOP=3K
CD74FCT2245ATM/ATQM PI74FCT2245ATS/Q A [*] S0IC=1K, QSOP=3K
CD74FCT2245CTM/CTQM PI74FCT2245CTS/Q C [*] S0IC=1K, QSOP=3K
CD74FCT2273TM/TQM PI74FCT2273TS/Q S/Q - [*] S0IC=lK, QSOP=3K
CD74FCT2273ATM/ATQM PI74FCT2273ATS/Q A [*] S0IC=1K, QSOP=3K
CD74FCT2273CTM/CTQM PI74FCT2273CTS/Q C [*] S0IC=1K, QSOP=3K
CD74FCT2373TM/TQM PI74FCT2373TS/Q S/Q - [*] S0IC=1K, QSOP=3K
CD74FCT2373ATM/ATQM PI74FCT2373ATS/Q A [*] S0IC=1K, QSOP=3K
CD74FCT2373CTM/CTQM PI74FCT2373CTS/Q C [*] S0IC=1K, QSOP=3K
CD74FCT2374TM/TQM PI74FCT2374TS/Q S/Q - [*] S0IC=1K, QSOP=3K
CD74FCT2374ATM/ATQM PI74FCT2374AS/Q A [*] S0IC=1K, QSOP=3K
CD74FCT2374CTM/CTQM PI74FCT2374CTS/Q C [*] S0IC=1K, QSOP=3K
CD74FCT2541TM/TQM PI74FCT2541TS/Q S/Q - [*] S0IC=1K, QSOP=3K
CD74FCT254lATM/ATQM PI74FCT2541ATS/Q A [*] S0IC=1K, QSOP=3K
CD74FCT2541CTM/CTQM PI74FCT2541CTS/Q C [*] S0IC=1K, QSOP=3K
CD74FCT2573TM/TQM PI74FCT2573TS/Q S/Q - [*] S0IC=1K, QSOP=3K
CD74FCT2573ATM/ATQM PI74FCT2573ATS/Q A [*] S0IC=1K, QSOP=3K
CD74FCT2573CTM/CTQM PI74FCT2573CTS/Q C [*] S0IC=lK, QSOP=3K
CD74FCT2574TM/TQM PI74FCT2574TS/Q S/Q - [*] S0IC=1K, QSOP=3K
CD74FCT2574ATM/ATQM PI74FCT2574ATS/Q A [*] S0IC=1K, QSOP=3K
CD74FCT2574CTM/CTQM PI74FCT2574CTS/Q C [*] S0IC=1K, QSOP=3K
24-pin 5V 8-bit CD74FCT2543TM/TQM PI74FCT2543TS/Q S/Q - [*] S0IC=1K, QSOP=3K
251 OHM CD74FCT2543ATM/ATQM PI74FCT2543ATS/Q A [*] S0IC=1K, QSOP=3K
CD74FCT2543CTM/CTQM PI74FCT2543CTS/Q C [*] S0IC=1K, QSOP=3K
CD74FCT2646TM/TQM PI74FCT2646TS/Q S/Q - [*] S0IC=1K, QSOP=3K
CT74FCT2646ATM/ATQM PI74FCT2646ATS/Q A [*] S0IC=lK, QSOP=3K
CD74FCT2652TM/TQM PI74FCT2652TS/Q S/Q - [*] S0IC=1K, QSOP=3K
CD74FCT2652ATM/ATQM PI74FCT2652ATS/Q A [*] S0IC=1K, QSOP=3K
CD74FCT2652CTM/CTQM PI74FCT2652CTS/Q C [*] S0IC=1K, QSOP=3K
CD74FCT2821ATM/ATQM PI74FCT2821ATS/Q S/Q A [*] S0IC=1K, QSOP=3K
CD74FCT2821BTM/BTQM PI74FCT2821BTS/Q B [*] S0IC=lK, QSOP=3K
CD74FCT2823ATM/ATQM PI74FCT2823ATS/Q S/Q A [*] S0IC=lK, QSOP=3K
CD74FCT2823BTM/BTQM PI74FCT2823BTS/Q B [*]
CD74FCT2823CTM/CTQM PI74FCT2823CTS/Q C [*]
CD74FCT2827ATM/ATQM PI74FCT2827ATS/Q S/Q A [*] S0IC=1K, QSOP=3K
CD74FCT2827BTM/BTQM PI74FCT2827BTS/Q B [*] S0IC=1K, QSOP=3K
CD74FCT2827CTM/CTQM PI74FCT2827CTS/Q C [*]
CD74FCT2828ATM/ATQM PI74FCT2828ATS/Q S/Q A [*] S0IC=1K, QSOP=3K
CD74FCT2828BTM/BTQM PI74FCT2828BTS/Q B [*] S0IC=1K, QSOP=3K
CD74FCT2828CTM/CTQM PI74FCT2828CTS/Q C [*] S0IC=lK, QSOP=3K
CD74FCT2841ATM/ATQM PI74FCT2841ATS/Q S/Q A [*] S0IC=lK, QSOP=3K
CD74FCT2841BTM/BTQM PI74FCT2841BTS/Q B [*] S0IC=1K, QSOP=3K
CD74FCT2841CTM/CTQM PI74FCT2841CTS/Q C [*] S0IC=1K, QSOP=3K
5V 16-BIT LOGIC
48-PIN CD74FCT16240/2240TMT PI74FCT16240/2Z40TA A - [*] TSSOP = 1500
CD74FCT16240/2240ATMT PI74FCT1624012240ATA A [*] TSSOP = 1500
CD74FCT16240/2240CTMT PI74FCT16240/2240CTA C [*] TSSOP = 1500
CD74FCT16240/2240DTMT PI74FCT16240/2240DTA D [*] TSSOP = 1500
CD74FCT16240/2240ETMT PI74FCT1624012240ETA E [*] TSSOP = 1500
CD74FCT16240/2240TSM PI74FCT16240/2240TV V - [*] SSOP = 1000
CD74FCT16240/2240ATSM PI74FCT16240/2240ATV A [*] SSOP = 1000
CD74FCT16240/2240CTSM PI74FCT16240/2240CTV C [*] SSOP = 1000
CD74FCT16240/2240DTSM PI74FCT16240/2240DTV D [*] SSOP = 1000
CD74FCT16240/2240ETSM PI74FCT16240/2240ETV E [*] SSOP = 1000
CD74FCT16244/2244TMT PI74FCT16244/2244TA A - [*] TSSOP = 1500
CD74FCT16244/2244ATMT PI74FCT16244/2244ATA A [*] TSSOP = 1500
CD74FCT16244/2244CTMT PI74FCT16244/2244CTA C [*] TSSOP = 1500
CD74FCT16244/2244DTMT PI74FCT16244/2244DTA D D [*] TSSOP = 1500
</TABLE>
Page 5
[*] IDENTIFIES REDACTED MATERIAL DELETED PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
<PAGE>
HARRIS APPENDIX A11-1
<TABLE>
<CAPTION>
FAMILY HARRIS DEVICE DEVICE PKG SPEED New Price TAPE & REEL MIN
- ------ ------------- ------ --- ----- --------- ---------------
<S> <C> <C> <C> <C> <C> <C>
CD74FCT16244/2244ETMT PI74FCT16244/2244ETA E [*] TSSOP= 1500
CD74FCT16244/2244TSM PI74FCT16244/2244TV V - [*] SSOP = 1000
CD74FCT16244/2244ATSM PI74FCT16244*/2244ATV A [*]FCT16244ATV only SSOP = 1000
CD74FCT16244/2244CTSM PI74FCT16244/2244CTV C [*] SSOP = 1000
CD74FCT16244/2244DTSM PI74FCT16244/2244DTV D [*] SSOP = 1000
CD74FCT16244/2244ETSM PI74FCT16244/2244ETY E [*] SSOP = 1000
CD74FCT16245/2245TMT PI74FCT16245/2245TA A - [*] TSSOP = 1500
CD74FCT16245/2245ATMT PI74FCT16245/2245ATA* A [*]FCT162245ATA only TSSOP = 1500
CD74FCT16245/2245CTMT PI74FCT16245/2245CTA C [*] TSSOP = 1500
CD74FCT16245/2245DTMT PI74FCT16245/Z245DTA D [*] TSSOP = 1500
CD74FCT16245/2245ETMT PI74FCT16245/2245ETA E [*] TSSOP = 1500
CD74FCT16245/2245TSM PI74FCT16245/2245TV V - [*] SSOP = 1000
CD74FCT16245/2245ATSM PI74FCT16245/2245ATV A [*] SSOP = 1000
CD74FCT16245/2245CTSM PI74FCT16245/2245CTV* C [*]FCT162245CTV only SSOP = 1000
CD74FCT16245/2245DTSM PI74FCT16245/2245DTV D [*] SSOP = 1000
CD74FCT16245/2245ETSM PI74FCT16245/2245ETV E [*] SSOP = 1000
CD74FCT16373/2373TMT PI74FCT16373/2373TA A - [*] TSSOP = 1500
CD74FCT16373/2373ATMT PI74FCT16373/2373ATA A [*] TSSOP = 1500
CD74FCT16373/2373CTMT PI74FCT16373/2373CTA C [*] TSSOP = 1500
CD74FCT16373/2373DTMT PI74FCT16373/2373DTA D [*] TSSOP = 1500
CD74FCT16373/2373ETMT PI74FCT16373/2373ETA E [*] TSSOP = 1500
CD74FCT16373/2373TSM PI74FCT16373/2373TV V - [*] SSOP = 1000
CD74FCT16373/2373ATSM PI74FCT16373/2373ATV* A [*]FCT162373ATV only SSOP = 1000
CD74FCT16373/2373CTSM PI74FCT16373/2373CTV C [*] SSOP = 1000
CD74FCT16373/2373DTSM PI74FCT16373/2373DTV D [*] SSOP = 1000
CD74FCT16373/2373ETSM PI74FCT16373/2373ETV E [*] SSOP = 1000
CD74FCT16374/2374TMT PI74FCT16374/2874TA A - [*] TSSOP = 1500
CD74FCT16374/2374ATMT PI74FCT16374*/2374ATA A [*]FCT16374ATA only TSSOP = 1500
CD74FCT16374/2374CTMT PI74FCT16374/2374CTA C [*] TSSOP = 1500
CD74FCT16374/2374DTMT PI74FCT16374/2374DTA D [*] TSSOP = 1500
CD74FCT16374/2374ETMT PI74FCT16374/2374ETA E [*] TSSOP = 1500
CD74FCT16374/2374TSM PI74FCT16374/2374TV V - [*] SSOP = 1000
CD74FCT16374/2374ATSM PI74FCT16374/2374ATV* A [*]FCT162374AVT only SSOP = 1000
CD74FCT16374/2374CTSM PI74FCT16374/2374CTV C [*] SSOP = 1000
CD74FCT16374/2374DTSM PI74FCT16374/2374DTV D [*] SSOP = 1000
CD74FCT16374/2374ETSM PI74FCT16374/2374FTV E [*] SSOP = 1000
CD74FCT16540/2540TMT PI74FCT16540/2540TA A - [*] TSSOP = 1500
CD74FCT16540/2540ATMT PI74FCT16540/2540ATA A [*] TSSOP = 1500
CD74FCT16540/2540CTMT PI74FCT16540/2540CTA C [*] TSSOP = 1500
D & E Speed not CD74FCT162540DTMT PI74FCT262540DTA D [*] TSSOP = 1500
available in high CD74FCT162540ETMT PI74FCT262540ETA E [*] TSSOP = 1500
drive
CD74FCT16540/2540TSM PI74FCT16540/2540TV V - [*] SSOP = 1000
CD74FCT16540/2540ATSM PI74FCT16540/2540ATV A [*] SSOP = 1000
CD74FCT16540/2540CTSM PI74FCT16540/2540CTV C [*] SSOP = 1000
D & E Speed not CD74FCT162540DTSM PI74FCT16254ODTV D [*] SSOP = 1000
Available in high CD74FCT162540ETSM PI74FCT16254OETV E [*] SSOP = 1000
drive
5V 16-BIT LOGIC CD74FCT16541/2541TMT PI74FCT16541/2541TA A - [*] TSSOP = 1500
48-PIN CD74FCT16541/2541ATMT PI74FCTI6541/2541ATA A [*] TSSOP = 1500
CD74FCT16541/2541CTMT PI74FCT16541/2541CTA C [*] TSSOP = 1500
CD74FCT16541/2541DTMT PI74FCTO6541/2541DTA D [*] TSSOP = 1500
CD74FCT16541/2541ETMT PI74FCTO6541/2541ETA E [*] TSSOP = 1500
CD74FCT16541/2541TSM PI74FCT16541/2541TV V - [*] SSOP = 1000
CD74FCT16541/2541ATSM PI74FCT16541/2541ATV A [*] SSOP = 1000
CD74FCT16541/2541CTSM PI74FCT16541/2541CTV C [*] SSOP = 1000
CD74FCT16541/2541DTSM PI74FCT16541/2541DTV D [*] SSOP = 1000
CD74FCT16541/2541ETSM PI74FCT16541/2541ETV E [*] SSOP = 1000
5V 16-BIT LOGIC CD74FCT16500/2500ATMT PI74FCTI6500/2500ATA A A [*] TSSOP = 1500
56-PIN CD74FCT16500/2500CTMT PI74FCT16500/2500CTA C [*] TSSOP = 1500
CD74FCT16500DTMT PI74FCT16500DTA D [*]
CD74FCT16500/2500ATSM PI74FCT16500/2500ATV V A [*] SSOP = 1000
CD74FCT16500/2500CTSM PI74FCT16500/2500CTV C [*] SSOP = 1000
CD74FCT16500DTSM PI74FCT16500DTV [*]
CD74FCT16501/2501ATMT PI74FCT16501/2501ATA A A [*] TSSOP = 1500
</TABLE>
Page 6
[*] IDENTIFIES REDACTED MATERIAL DELETED PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
<PAGE>
HARRIS APPENDIX A11-1
<TABLE>
<CAPTION>
FAMILY HARRIS DEVICE DEVICE PKG SPEED New Price TAPE & REEL MIN
- ------ ------------- ------- ---- ----- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
CD74FCT16501/2501CTMT PI74FCT16501/2501CTA C [*] TSSOP = 1500
CD74FCT16501/2501DTMT PI74FCT16501/2501DTA D [*] TSSOP = 1500
CD74FCT16501/2501ETMT PI74FCT16501/2501ETA E [*] TSSOP = 1500
CD74FCT16501/2501ATSM PI74FCT16501/2501ATV V A [*] SSOP = 1000
CD74FCT16501/2501CTSM PI74FCT16501/2501CTV C [*] SSOP = 1000
CD74FCT16501/2501DTSM PI74FCT16501/2501DTV D [*] SSOP = 1000
CD74FCT16501/2501ETSM PI74FCT16501/2501ETV E [*] SSOP = 1000
CD74FCT16511/2511TMT PI74FCT16511/2511TA A - [*] TSSOP = 1500
CD74FCT16511ATMT PI74FCT162511ATA A [*] TSSOP = 1500
CD74FCT16511/2511TSM PI74FCT16511/2511TV V - [*] SSOP = 1000
CD74FCT162511ATSM PI74FCT162511ATV A [*] SSOP = 1000
CD74FCT16543/2543TMT PI74FCT16543/2543TA A - [*] TSSOP = 1500
CD74FCT16543/2543ATMT PI74FCT16543/2543ATA A [*] TSSOP = 1500
CD74FCT16543/2543CTMT PI74FCT16543/2543CTA C [*] TSSOP = 1500
CD74FCT16543/2543DTMT PI74FCT16543/2543DTA D [*] TSSOP = 1500
CD74FCT16543/2543ETMT PI74FCT16543/2543ETA E [*] TSSOP = 1500
CD74FCT16543/2543TSM PI74FCT16543/2543TV V - [*] SSOP = 1000
CD74FCT16543/2543ATSM PI74FCT16543/2543ATV A [*] SSOP = 1000
CD74FCT16543/2543CTSM PI74FCT16543/2543CTV C [*] SSOP = 1000
CD74FCT16543/2543DTSM PI74FCT16543/2543DTV D [*] SSOP = 1000
CD74FCT16543/2543ETSM PI74FCT16543/2543ETV E [*] SSOP = 1000
CD74FCT16646/2646TMT PI74FCT16646/2646TA A - [*] TSSOP = 1500
CD74FCT16646/2646ATMT PI74FCT16646/2646ATA A [*] TSSOP = 1500
CD74FCT16646/2646CTMT PI74FCT16646/2646CTA C [*] TSSOP = 1500
CD74FCT16646/2646DTMT PI74FCT16646/2646DTA D [*] TSSOP = 1500
CD74FCT16646/2646ETMT PI74FCT16646/2646ETA E [*] TSSOP = 1500
CD74FCT16646/2646TSM PI74FCT16646/2646TV V - [*] SSOP = 1000
CD74FCT16646/2646ATSM PI74FCT16646/2646ATV A [*] SSOP = 1000
CD74FCT16646/2646CTSM PI74FCT16646/2646CTV C [*] SSOP = 1000
CD74FCT16646/2646DTSM PI74FCT16646/2646DTV D [*] SSOP = 1000
CD74FCT16646/2646ETSM PI74FCT16646/2646ETV E [*] SSOP = 1000
CD74FCT16652/2652TMT PI74FCT16652/2652TA A - [*] TSSOP = 1500
CD74FCT16652/2652ATMT PI74FCT16652/2652ATA A [*] TSSOP = 1500
CD74FCT16652/2652CTMT PI74FCT16652/2652CTA A [*]
CD74FCT16652DTMT PI74FCT16652DTA C [*] TSSOP = 1500
5V 16-BIT LOGIC CD74FCT16652/2652TSM PI74FCT16652/2652TV V - [*] SSOP = 1000
56-PIN CD74FCT16652/2652ATSM PI74FCT16652/2652ATV A [*] SSOP = 1000
CD74FCT16652/2652CTSM PI74FCT16652/2652CTV C [*] SSOP = 1000
CD74FCTI6652DTSM PI74FCT16652DTV D [*] SSOP = 1000
SSOP = 1000
CD74FCT16823/2823ATMT PI74FCT16823/2823ATA A A [*] TSSOP = 1500
CD74FCT16823/2823BTMT PI74FCT16823/2823BTA B [*] TSSOP = 1500
CD74FCT16823/2823CTMT PI74FCT16823/2823CTA C [*] TSSOP = 1500
CD74FCT16828/2823DTMT PI74FCT16823/2823DTA D [*] TSSOP = 1500
CD74FCT16823/2823ETMT PI74FCT16823/2823ETA E [*]
CD74FCT16823/2823ATSM PI74FCT16823/2823ATV V A [*] SSOP = 1000
CD74FCT16823/2823BTSM PI74FCT16823/2823BTV B [*] SSOP = 1000
CD74FCT16823/2823CTSM PI74FCT16823/2823CTV C [*] SSOP = 1000
CD74FCT16823/2823DTSM PI74FCT16823/2823DTV D [*] SSOP = 1000
CD74FCT16523/2823ETSM PI74FCT16823/2823ETV E [*] SSOP = 1000
CD74FCT16827/2827ATMT PI74FCT16827/2827ATA A A [*] TSSOP = 1500
CD74FCT16827/2827BTMT PI74FCT16827/2827BTA B [*] TSSOP = 1500
CD74FCT16827/2827CTMT PI74FCT16827/2827CTA C [*] TSSOP = 1500
CD74FCT16827/2827DTMT PI74FCT16827/2827DTA D [*] TSSOP = 1500
CD74FCT16827/2827ETMT PI74FCT16827/2827ETA E [*] TSSOP = 1500
CD74FCT16827/2827ATSM PI74FCT16827/2827ATV V A [*] SSOP = 1000
CD74FCT16827/2827BTSM PI74FCT16827/2827BTV B [*] SSOP = 1000
CD74FCT16827/2827CT5M PI74FCT16827/2827CTV C [*] SSOP = 1000
CD74FCT16827/2827DTSM PI74FCT16827/2827DTV D [*] SSOP = 1000
CD74FCT16827/2827ETSM PI74FCT16827/2827ETV E [*] SSOP = 1000
CD74FCT16841/2841ATMT PI74FCT16841/2541ATA A A [*] TSSOP = 1500
CD74FCT16841/2841BTMT PI74FCT16841/2841BTA B [*] TSSOP = 1500
CD74FCT16841/2841CTMT PI74FCT16841/2541CTA C [*] TSSOP = 1500
</TABLE>
Page 7
[*] IDENTIFIES REDACTED MATERIAL DELETED PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
<PAGE>
HARRIS APPENDIX All-1
<TABLE>
<CAPTION>
FAMILY HARRIS DEVICE DEVICE PKG SPEED New Price TAPE & REEL MIN
- ------ ------------- ------ --- ----- --------- ---------------
<S> <C> <C> <C> <C> <C> <C>
CD74FCT16841/2841DTMT PI74FCT16841/2841DTA D [*] TSSOP = 1500
CD74FCT16841/2841ETMT PI74FCT16841/2841ETA E [*] TSSOP = 1500
CD74FCT16841/2841ATSM PI74FCT16841/2841ATV V A [*] SSOP = 1000
CD74FCT16841/2841BTSM PI74FCT16841/2841BTV B [*] SSOP = 1000
CD74FCT16841/2841CTSM PI74FCT16841/2841CTV C [*] SSOP = 1000
CD74FCT16841/2841DTSM PI74FCT16841/2841DTV D [*] SSOP = 1000
CD74FCT16841/2841ETSM PI74FCT16841/2841ETV E [*] SSOP = 1000
CD74FCT16952/2952TMT PI74FCT16952/2952TA A A [*] TSSOP = 1500
CD74FCT16952/2952ATMT PI74FCT16952/2952ATA B [*] TSSOP = 1500
CD74FCT16952/29512CTMT PI74FCT16952/2952CTA C [*] TSSOP = 1500
CD74FCT16952/2952DTMT PI74FCT16952/2952DTA D [*] TSSOP = 1500
CD74FCT16952/2952ETMT PI74FCT16952/2952ETA E [*] TSSOP = 1500
5V 16-BIT LOGIC CD74FCT16952/2952TSM PI74FCT16952/2952TV V A [*] SSOP = 1000
56-PIN CD74FCT16952/2952ATSM PI74FCT16952/2952ATV B [*] SSOP = 1000
CD74FCT16952/2952CTSM PI74FCT16952/2952CTV C [*] SSOP = 1000
CD74FCT16952/2952DTSM PI74FCT16952/2952DTV D [*] SSOP = 1000
CD74FCT16952/29522ETSM PI74FCT16952/2952ETV E [*] SSOP = 1000
5V 16-BIT W/BUS HOLD CD74FCT162H240TMT PI74FCT162H240TA A - [*]
CD74FCT162H240ATMT PI74FCT162H240ATA A [*]
CD74FCT162H240CTMT PI74FCT162H240CTA C [*]
CD74FCT162H240DTMT PI74FCT162H240DTA D [*]
CD74FCT162H240ETMT PI74FCT162H240ETA E [*]
48-PIN
CD74FCT162H240TSM PI74FCT162H240TV V - [*]
CD74FCT162H240ATSM PI74FCT162H240ATV A [*]
CD74FCT162H240CTSM PI74FCT162H240CTV C [*]
CD74FCT162H240DTSM PI74FCT162H240DTV D [*]
CD74FCT162H240ETSM PI74FCT162H240ETV E [*]
CD74FCT162H244TMT PI74FCT162H244TA A - [*]
CD74FCT162H244ATMT PI74FCT162H244ATA A [*]
CD74FCT162H244CTMT PI74FCT162H244CTA C [*]
CD74FCT162H244DTMT PI74FCT162H244DTA D [*]
CD74FCT162H244ETMT PI74FCT162H244ETA E [*]
CD74FCT162H244TSM PI74FCT162H244TV V - [*]
CD74FCT162H244ATSM PI74FCT162H244ATV A [*]
CD74FCT162H244CTSM PI74FCT162H244CTV C [*]
CD74FCT162H244DTSM PI74FCT162H244DTV D [*]
CD74FCT162H244ETSM PI74FCT162H244ETV E [*]
CD74FCT162H245TMT P74FCT162H245TA A - [*]
CD74FCT162H245ATMT PI74FCT162H245ATA A [*]
CD74FCT162H245CTMT PI74FCT162H245CTA C [*]
CD74FCT162H245DTMT PI74FCT162H245DTA D [*]
CD74FCT162H245ETMT PI74FCT162H245ETA E [*]
CD74FCT162H245TSM PI74FCT162H245TV V - [*]
CD74FCT162H245ATSM PI74FCT162H245ATV A [*]
CD74FCT162H245CTSM PI74FCT162H245CTV C [*]
CD74FCT162H245DTSM PI74FCT162H245DTV D [*]
CD74FCT162H245ETSM PI74FCT162H245ETV E [*]
CD74FCT162H373TMT PI74FCT162H373TA A - [*]
CD74FCT162H373ATMT PI74FCT162H373ATA A [*]
CD74FCT162H373CTMT PI74FCT162H373CTA C [*]
CD74FCT162H373DTMT PI74FCT162H373DTA D [*]
CD74FCT162H373ETMT PI74FCT162H373ETA E [*]
CD74FCT162H373TSM PI74FCT162H373TV V - [*]
CD74FCT162H373ATSM PI74FCT162H373ATV A [*]
CD74FCT162H373CTSM PI74FCT162H373CTV C [*]
CD74FCT162H373DTSM PI74FCT162H373DTV D [*]
CD74FCT162H373ETSM PI74FCT162H373ETV E [*]
CD74FCT162H374TMT PI74FCT162H374TA A - [*]
CD74FCT162H374ATMT PI74FCT162H374ATA A [*]
CD74FCT162H374CTMT PI74FCT162H374CTA C [*]
CD74FCT162H374DTMT PI74FCT162H374DTA D [*]
CD74FCT162H374ETMT PI74FCT162H374ETA E [*]
CD74FCT162H374TSM PI74FCT162H374TV V - [*]
CD74FCT162H374TSM PI74FCT162H374ATV A [*]
</TABLE>
Page 8
[*] IDENTIFIES REDACTED MATERIAL DELETED PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
<PAGE>
HARRIS APPENDIX All-1
<TABLE>
<CAPTION>
FAMILY HARRIS DEVICE DEVICE PKG SPFFD New Price TAPE & REEL MIN
- ------ ------------- ------ --- ----- --------- ---------------
<S> <C> <C> <C> <C> <C> <C>
CD74FCT162H374CTSM PI74FCT162H374CTV C [*]
CD74FCT162H374DTSM PI74FCT162H374DTV D [*]
CD74FCT162H374ETSM PI74FCT162H374ETV E [*]
CD74FCT162H501TMT PI74FCT162H501TA A - [*]
CD74FCT162H501ATMT PI74FCT162H501ATA A [*]
CD74FCT162H501CTMT PI74FCT162H501CTA C [*]
CD74FCT162H501DTMT PI74FCT162H501DTA D [*]
CD74FCT162H501ETMT PI74FCT162H501ETA E [*]
CD74FCT162H501TSM PI74FCT162H501TV V - [*]
CD74FCT162H501ATSM PI74FCT162H501ATV A [*]
CD74FCT162H501CTSM PI74FCT162H501CTV C [*]
CD74FCT162H501DTSM PI74FCT162H501DTV D [*]
CD74FCT162H501ETSM PI74FCT162H501ETV E [*]
CD74FCT162H540TMT PI74FCT162H540TA A - [*]
CD74FCT162H540ATMT PI74FCT162H540ATA A [*]
CD74FCT162H540CTMT PI74FCT162H540CTA C [*]
CD74FCT162H540DTMT PI74FCT162H540DTA D [*]
CD74FCT162H540ETMT PI74FCT162H540ETA E [*]
CD74FCT162H540TSM PI74FCT162H540TV V - [*]
CD74FCT162H540ATSM PI74FCT162H540ATV A [*]
CD74FCT162H540CTSM PI74FCT162H540CTV C [*]
CD74FCT162H540DTSM PI74FCT162H540DTV D [*]
CD74FCT162H540ETSM PI74FCT162H540ETV E [*]
CD74FCT162H541TMT PI74FCT162H541TA A - [*]
CD74FCT162H541ATMT PI74FCT162H541ATA A [*]
CD74FCT162H541CTMT PI74FCT162H541CTA C [*]
CD74FCT162H541DTMT PI74FCT162H541DTA D [*]
CD74FCT162H541ETMT PI74FCT162H541ETA E [*]
CD74FCT162H541TSM PI74FCT162H541TV V - [*]
CD74FCT162H541ATSM PI74FCT162H541ATV A [*]
CD74FCT162H541CTSM PI74FCT162H541CTV C [*]
CDT4FCT162H541DTSM PI74FCT162H541DTV D [*]
CD74FCT162H541ETSM PI74FCT162H541ETV E [*]
CD74FCT162H543TMT PI74FCT162H543TA A - [*]
CD74FCT162H543ATMT PI74FCT162H543ATA A [*]
CD74FCT162H543CTMT PI74FCT162H543CTA C [*]
CD74FCT162H543DTMT PI74FCT162H543DTA D [*]
CD74FCT162H543ETMT PI74FCT162H543ETA E [*]
CD74FCT162H543TSM PI74FCT162H543TV V - [*]
CD74FCT162H543ATSM PI74FCT162HS43ATV A [*]
CD74FCT162H543CTSM PI74FCT162H543CTV C [*]
CD74FCT162H543DTSM PI74FCT162H543DTV D [*]
CD74FCT162H543ETSM PI74FCT162HS43ETV E [*]
CD74FCT162H646TMT PI74FCT162H646TA A - [*]
CD74FCT162H646ATMT PI74FCT162H646ATA A [*]
CD74FCT162H646CTMT PI74FCT162H646CTA C [*]
CD74FCT162H646DTMT PI74FCT162H646DTA D [*]
CD74FCT162H646ETMT PI74FCT162H646ETA E [*]
CD74FCT162H646TSM PI74FCT162H646TV V - [*]
CD74FCT162H646ATSM PI74FCT162H646ATV A [*]
CD74FCT162H646CTSM PI74FCT162H646CTV C [*]
CD74FCT162H646DTSM PI74FCT162H646DTV D [*]
CD74FCT162H245ETSM PI74FCT162H646ETV E [*]
CD74FCT162H823ATMT PI74FCT162H823ATA A A [*]
CD74FCT162H823BTMT PI74FCT162H823BTA B [*]
CD74FCT162H823CTMT PI74FCT162H823CTA C [*]
CD74FCT162H823DTMT PI74FCT162H823DTA D [*]
CD74FCT162H823ETMT PI74FCT162H823ETA E [*]
CD74FGT162H823ATSM PI74FCT162H823ATV V A [*]
CD74FCT162H823BTSM PI74FCT162H823BTV B [*]
CD74FCT162H823CTSM PI74FCT162H823CTV C [*]
CD74FCT162H823DTSM PI74FCT162H823DTV D [*]
CD74FCT162H823ETSM PI74FCT162H823ETV E [*]
CD74FCT162HB27ATMT PI74FCT162H827ATA A A [*]
</TABLE>
Page 9
[*] IDENTIFIES REDACTED MATERIAL DELETED PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
<PAGE>
HARRIS APPENDIX All-1
<TABLE>
<CAPTION>
FAMILY HARRIS DEVICE DEVICE PKG SPEED New Price TAPE & REEL MIN
- ------ ------------- ------ --- ----- --------- ---------------
<S> <C> <C> <C> <C> <C> <C>
CD74FCT162H827BTMT PI74FCT162H827BTA B [*]
CD74FCT162H827CTMT PI74FCT162H827CTA C [*]
CD74FCT162H827DTMT PI74FCT162H827DTA D [*]
CD74FCT162H827ETMT PI74FCT162H827ETA E [*]
CD74FCT162H827ATSM PI74FCT162H827ATV V A [*]
CD74FCT162H827BTSM PI74FCT162H827BTV B [*]
CD74FCT162H827CTSM PI74FCT162H827CTV C [*]
CD74FCT162H827DTSM PI74FCT162H827DTV D [*]
CD74FCT162H827ETSM PI74FCT162H827ETV E [*]
CD74FCT162H952ATMT PI74FCT162H952ATA A A [*]
CD74FCT162H952BTMT PI74FCT162H952BTA B [*]
CD74FCT162H952CTMT PI74FCT162H952CTA C [*]
CD74FCT162H952DTMT PI74FCT162H952DTA D [*]
CD74FCT162H952ETMT PI74FCT162H952ETA E [*]
CD74FCT162H952ATSM PI74FCT162H952ATV V A [*]
CD74FCT162H952BTSM PI74FCT162H952BTV B [*]
CD74FCT162H952CTSM PI74FCT162H952CTV C [*]
CD74FCT162H952DTSM PI74FCT162H952DTV D [*]
CD74FCT162H952ETSM PI74FCT162H952ETV E [*]
5V 16-BIT QUIET CD74FCT162Q244TMT PI74FCT162Q244TA A - [*] TSSOP =1500
48-PIN CD74FCT162Q244ATMT PI74FCT162Q244ATA A [*] TSSOP =1500
CD74FCT162Q244CTMT PI74FCT162Q244CTA C [*] TSSOP =1500
CD74FCT162Q244DTMT PI74FCT162Q244DTA D [*] TSSOP =1500
CD74FCT162Q244TSM PI74FCT162Q244TV V - [*] SSOP =1000
CD74FCT162Q244ATSM PI74FCT162Q244ATV A [*] SSOP =1000
CD74FCT162Q244CTSM PI74FCT162Q244CTV C [*] SSOP =1000
CD74FCT162Q244DTSM PI74FCT162Q244DTV D [*] SSOP =1000
CD74FCT162Q245TMT PI74FCT162Q245TA A - [*] TSSOP =1500
CD74FCT162Q245ATMT PI74FCT162Q245ATA A [*] TSSOP =1500
CD74FCT162Q245CTMT PI74FCT162Q245CTA C [*] TSSOP =1500
CD74FCT162Q245DTMT PI74FCT162Q245DTA D [*] TSSOP =1500
CD74FCT162Q245ETMT PI74FCT162Q245ETA E [*] TSSOP =1500
CD74FCT162Q245TSM PI74FCT162Q245TV V - [*] SSOP =1000
CD74FCT162Q245ATSM PI74FCT162Q245ATV A [*] SSOP =1000
CD74FCT162Q245CTSM PI74FCT162Q245CTV C [*] SSOP =1000
CD74FCT162Q245DTSM PI74FCT162Q245DTV D [*] SSOP =1000
CD74FCT162Q245ETSM PI74FCT162Q245ETV E [*] SSOP =1000
CD74FCT162Q373TMT PI74FCT162Q373TA A - [*] TSSOP =1500
CD74FCT162Q373ATMT PI74FCT162Q373ATA A [*] TSSOP =1500
CD74FCT162Q373CTMT PI74FCT162Q373CTA C [*] TSSOP =1500
CD74FCT162Q373DTMT PI74FCT162Q373DTA D [*] TSSOP =1500
CD74FCT162Q373ETMT PI74FCT162Q873ETA E [*] TSSOP =1500
CD74FCT162Q373TSM PI74FCT162Q373TV V - [*] SSOP =1000
CD74FCT162Q373ATSM PI74FCT162Q373ATV A [*] SSOP =1000
CD74FCT162Q373CTSM PI74FCT162Q373CTV C [*] SSOP =1000
CD74FCT162Q373DTSM PI74FCT162Q373DTV D [*] SSOP =1000
CD74FCT162Q373ETSM PI74FCT162Q373ETV E [*] SSOP =1000
CD74FCT162Q374TMT PI74FCT162Q374TA A - [*] TSSOP =1500
CD74FCT162Q374ATMT PI74FCT162Q374ATA A [*] TSSOP =1500
CD74FCT162Q374CTMT PI74FCT162Q374CTA C [*] TSSOP =1500
CD74FCT162Q374DTMT PI74FCT162Q374DTA D [*] TSSOP =1500
CD74FCT162Q374ETMT PI74FCT162Q374ETA E [*] TSSOP =1500
CD74FCT162Q374TSM PI74FCT162Q374TV V - [*] SSOP =1000
CD74FCT162Q374ATSM PI74FCT162Q374ATV A [*] SSOP =1000
CD74FCT162Q374CTSM PI74FCT162Q374CTV C [*] SSOP =1000
CD74FCT162Q374DTSM PI74FCT162Q374DTV D [*] SSOP =1000
CD74FCT162Q374ETSM PI74FCT162Q374ETV E [*] SSOP =1000
16-BIT CD74FCT163240MT PI74FCT163240A A - [*] TSSOP =1500
3.3V FCT CD74FCT163240AMT PI74FCT163240AA A [*] TSSOP =1500
CD74FCT163240SM PI74FCT163240V V - [*] SSOP =1000
CD74FCT163240ASM PI74FCT163240AV A [*] SSOP =1000
CD74FCT163244MT PI74FCT163244A A - [*] TSSOP =1500
CD74FCT163244AMT PI74FCT163244AA A [*] TSSOP =1500
</TABLE>
Page 10
[*] IDENTIFIES REDACTED MATERIAL DELETED PURSUANT TO A REQUEST FOR CONFIDENTIAL
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<PAGE>
HARRIS APPENDIX All-1
<TABLE>
<CAPTION>
FAMILY HARRIS DEVICE DEVICE PKG SPEED New Price TAPE & REEL MIN
- ------ ------------- ------ --- ----- --------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
CD74FCT163244CMT PI74FCT163244CA C [*] TSSOP =1500
CD74FCT163244SM PI74FCT163244V V - [*] SSOP =1000
CD74FCT163244ASM PI74FCT163244AV A [*] SSOP =1000
CD74FCT163244CSM PI74FCT163244CV C [*] SSOP =1000
CD74FCT163245MT PI74FCT163245A A - [*] TSSOP =1500
CD74FCT163245AMT PI74FCT163245AA A [*] TSSOP =1500
CD74FCT163245CMT PI74FCT163245CA C [*] TSSOP =1500
CD74FCT163245SM PI74FCT163245V V - [*] SSOP =1000
CD74FCT163245ASM PI74FCT163245AV A [*] SSOP =1000
CD74FCT163245CSM PI74FCT163245CV C [*] SSOP =1000
CD74FCT163373MT PI74FCT163373A A - [*] TSSOP =1500
CD74FCT163373AMT PI74FCT163373AA A [*] TSSOP =1500
CD74FCT163373CMT PI74FCT163373CA C [*] TSSOP =1500
CD74FCT163373SM PI74FCT163373V V - [*] TSSOP =1000
CD74FCT163373ASM PI74FCT163373AV A [*] TSSOP =1000
CD74FCT163873CSM PI74FCT163373CV C [*] TSSOP =1000
CD74FCT163374MT PI74FCT163374A A - [*] TSSOP =1500
CD74FCT163374AMT PI74FCT163374AA A [*] TSSOP =1500
CD74FCT163374CMT PI74FCT163374CA C [*] TSSOP =1500
CD74FCT163374SM PI74FCT163374V V - [*] SSOP =1000
CD74FCT163374ASM PI74FCT163374AV A [*] SSOP =1000
CD74FCT163374CSM PI74FCT163374CV C [*] SSOP =1000
3.3V 16-BIT LPT CD74LPT16240MT PI74LPT16240A A - [*] TSSOP =1500
48 PIN CD74LPT16240AMT PI74LPT16240AA A [*] TSSOP =1500
CD74LPT16240SM PI74LPT16240V V - [*] SSOP =1000
CD74LPT16240ASM PI74LPT16240AV A [*] SSOP =1000
CD74LPT16244MT PI74LPT16244A A - [*] TSSOP =1500
CD74LPT16244AMT PI74LPT16244AA A [*] TSSOP =1500
CD74LPT16244CMT PI74LPT16244CA [*] NEW
CD74LPT16244SM PI74LPT16244V V - [*] SSOP =1000
CD74LPT16244ASM PI74LPT16244AV A [*] SSOP =1000
CD74LPT16244CSM PI74LPT16244CV [*] NEW
CD74LPT16245MT PI74LPT16245A A - [*] TSSOP =1500
CD74LPT16245AMT PI74LPT16245AA A [*] TSSOP =1500
3.3V 16-BIT LPT CD74LPT16245SM PI74LPT16245V V - [*] SSOP =1000
48 PIN CD74LPT16245ASM PI74LPT16245AV A [*] SSOP =1000
CD74LPT16373MT PI74LPT16373A A - [*] TSSOP =1500
CD74LPT16373AMT PI74LPT16373AA A [*] TSSOP =1500
CD74LPT16373SM PI74LPT16373V V - [*] SSOP =1000
CD74LPT16373ASM PI74LPT16373AV A [*] SSOP =1000
CD74LPT16374MT PI74LPT16374A A - [*] TSSOP =1500
CD74LPT16374AMT PI74LPT16374AA A [*] TSSOP =1500
CD74LPT16374SM PI74LPT16374V V - [*] SSOP =1000
CD74LPT16374ASM PI74LPT16374AV A [*] SSOP =1000
3.3V 16-BIT LPT CD74LPT16501MT PI74LPT16501A A - [*] TSSOP =1500
56 PIN CD74LPT16501AMT PI74LPT16501AA A [*] TSSOP =1500
CD74LPT16501CMT PI74LPT16501CA [*] NEW
CD74LPT16501SM PI74LPT16501V V - [*] SSOP =l000
CD74LPT16501ASM PI74LPT16501AV A [*] SSOP =1000
CD74LPT16501CSM PI74LPT16501CV [*] NEW
CD74LPT16543MT PI74LPT16543A A - [*] TSSOP =1500
CD74LPT16543AMT PI74LPT16543AA A [*] TSSOP =1500
CD74LPT16543CMT PI74LPT16543CA C [*] TSSOP =1500
CD74LPT16543SM PI74LPT16543V V - [*] SSOP =1000
CD74LPT16543ASM PI74LPTI6543AV A [*] SSOP =1000
CD74LPT16543CSM PI74LPTI6543CV C [*] SSOP =1000
</TABLE>
Page 11
[*] IDENTIFIES REDACTED MATERIAL DELETED PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
<PAGE>
HARRIS APPENDIX All-1
<TABLE>
<CAPTION>
FAMILY HARRIS DEVICE DEVICE PKG SPEED New Price TAPE & REEL MIN
- ------ ------------- ------ --- ----- --------- ---------------
<S> <C> <C> <C> <C> <C> <C>
CD74LPT16646MT PI74LPT16646A A - [*] TSSOP =1500
CD74LPT16646AMT PI74LPT16646AA A [*] TSSOP =1500
CD74LPT16646CMT PI74LPT16646CA C [*]
CD74LPT16646SM PI74LPT16646V V - [*] SSOP =1000
CD74LPT16646ASM PI74LPT16646AV A [*] SSOP =1000
CD74LPT16646CSM PI74LPT16646CV C [*]
CD74LPT16652MT PI74LPT16652A A - [*] TSSOP =1500
CD74LPT16652AMT PI74LPT16652AA A [*] TSSOP =1500
CD74LPT16652CMT PI74LPT16652CA C [*]
CD74LPT16652SM PI74LPT16652V V - [*] SSOP =1000
CD74LPT16652ASM PI74LPT16652AV A [*] SSOP =1000
CD74LPT16652CSM PI74LPT16652CV C [*]
CD74LPT16827AMT PI74LPT16827AA A A [*] TSSOP =1500
CD74LPT16827BMT PI74LPTI6827BA B [*] TSSOP =1500
CD74LPT16827CMT PI74LPT16827CA C [*]
CD74LPT16827ASM PI74LPT16827AV V A [*] SSOP =1000
CD74LPT16827BSM PI74LPT16827BV B [*] SSOP =1000
CD74LPT16827CSM PI74LPT16827CV C [*]
CD74LPT16952AMT PI74LPT16952AA A A [*] TSSOP =1500
CD74LPT16952BMT PI74LPT16952BA B [*] TSSOP =1500
CD74LPT16952CMT PI74LPTI6952CA C [*]
CD74LPT16952ASM PI74LPT16952AV V A [*] SSOP =1000
CD74LPT16952BSM PI74LPT16952BV B [*] SSOP =1000
CD74LPT16952CSM PI74LPT16952CV C [*]
3.3V 8-BIT LPT CD74LPT241M/QM PI74LPT241S/Q S/Q - [*] S0IC=1K, QSOP=3K
20 PIN CD74LPT241AM/AQM PI74LPT241AS/Q A [*] S0IC=1K, QSOP=3K
CD74LPT24ICM/CQM PI74LPT241CS/Q C [*] S0IC=1K, QSOP=3K
CD74LPT244M/QM PI74LPT244S/Q S/Q - [*] S0IC=1K, QSOP=3K
CD74LPT244AM/AQM PI74LPT244AS/Q A [*] S0IC=1K, QSOP=3K
CD74LPT244CM/CQM PI74LPT244CS/Q C [*] S0IC=1K, QSOP=3K
CD74LPT245M/QM PI74LPT245S/Q S/Q - [*] S0IC=1K, QSOP=3K
CD74LPT245AM/AQM PI74LPT245AS/Q A [*] S0IC=1K, QSOP=3K
CD74LPT245CM/CQM PI74LPT245CS/Q C [*] S0IC=1K, QSOP=3K
CD74LPT373M/QM PI74LPT373S/Q S/Q - [*] S0IC=1K, QSOP=3K
CD74LPT373AM/AQM PI74LPT373AS/Q A [*] S0IC=1K, QSOP=3K
CD74LPT373CM/CQM PI74LPT373CS/Q C [*] S0IC=1K, QSOP=3K
CD74LPT541M/QM PI74LPT541S/Q S/Q - [*] S0IC=1K, QSOP=3K
CD74LPT541AM/AQM PI74LPT541AS/Q A [*] S0IC=1K, QSOP=3K
CD74LPT541CM/CQM PI74LPT541CS/Q C [*] S0IC=1K, QSOP=3K
CD74LPT573M/QM PI74LPT573S/Q S/Q - [*] S0IC=1K, QSOP=3K
CD74LPT573AM/AQM PI74LPT573AS/Q A [*] S0IC=1K, QSOP=3K
CD74LPT573CM/CQM PI74LPT573CS/Q C [*] S0IC=1K, QSOP=3K
3.3V 8-BIT LPT CD74LPT543M/QM PI74LPT543S/Q S/Q - [*] S0IC=1K, QSOP=3K
24 PIN CD74LPT543AM/AQM PI74LPT543AS/Q A [*] S0IC=1K, QSOP=3K
CD74LPT543CM/CQM PI74LPT543CS/Q C [*] S0IC=1K, QSOP=3K
CD74LPT646M/QM PI74LPT646S/Q S/Q - [*] S0IC=1K, QSOP=3K
CD74LPT646AM/AQM PI74LPT646AS/Q A [*] S0IC=1K, QSOP=3K
CD74LPT646CM/CQM PI74LPT646CS/Q C [*] S0IC=1K, QSOP=3K
CD74LPT652M/QM PI74LPT652S/Q S/Q - [*] S0IC=1K, QSOP=3K
CD74LPT652AM/AQM PI74LPT652AS/Q A [*] S0IC=1K, QSOP=3K
CD74LPT652CM/CQM PI74LPT652CS/Q C [*] S0IC=1K, QSOP=3K
CD74LPT827AM/AQM PI74LPT827AS/Q S/Q A [*] S0IC=1K, QSOP=3K
CD74LPT827BM/BQM PI74LPT827BS/Q B [*] S0IC=1K, QSOP=3K
</TABLE>
Page 12
[*] IDENTIFIES REDACTED MATERIAL DELETED PURSUANT TO A REQUEST FOR CONFIDENTIAL
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<PAGE>
Exhibit 11.1
Statement Regarding Computation of Net Income Per Share
<TABLE>
<CAPTION>
Fiscal Year Ended June 30,
-----------------------------------------
1995 1996 1997
---- ---- ----
(in thousands, except per share data)
<S> <C> <C> <C>
Weighted average common shares 2,097 2,150 2,165
Common stock equivalents:
Preferred shares 4,613 4,613 4,613
Dilutive options using treasury stock method 488 722 538
Warrants 1 8 -
Cheap stock pursuant to SEC rules: (1)
Options granted 529 529 529
Common shares issued 208 208 208
------ ------ ------
Shares used in computing per share data 7,936 8,230 8,053
====== ====== ======
Net Income $2,041 $4,710 $1,578
====== ====== ======
Net income per common and equivalent share $ 0.26 $ 0.57 $ 0.20
====== ====== ======
</TABLE>
(1) Includes all common shares issued and options, warrants and other rights
to acquire shares of common stock at a price less than the initial public
offering price granted by the Company during the period subsequent to
November 6, 1996 (using the treasury stock method until shares are issued
and an estimated initial public offering price), pursuant to the rules of
the Securities and Exchange Commission.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM JUNE 30, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> JUN-30-1997
<CASH> 9,566
<SECURITIES> 0
<RECEIVABLES> 4,544
<ALLOWANCES> 1,198
<INVENTORY> 6,182
<CURRENT-ASSETS> 19,582
<PP&E> 5,985
<DEPRECIATION> 2,563
<TOTAL-ASSETS> 23,581
<CURRENT-LIABILITIES> 6,598
<BONDS> 0
0
7,717
<COMMON> 201
<OTHER-SE> 8,877
<TOTAL-LIABILITY-AND-EQUITY> 23,581
<SALES> 33,166
<TOTAL-REVENUES> 33,166
<CGS> 20,986
<TOTAL-COSTS> 31,162
<OTHER-EXPENSES> 80
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,355
<INCOME-TAX> 777
<INCOME-CONTINUING> 1,578
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,578
<EPS-PRIMARY> 0.20
<EPS-DILUTED> 0.20
</TABLE>
