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As filed with the Securities and Exchange Commission on April 30, 1999
REGISTRATION NO.333-_________
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
____________________
VERISIGN, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 94-3221585
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
____________________
1350 Charleston Road
MOUNTAIN VIEW, CALIFORNIA 94043-1331
(650) 961-7500
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
____________________
Dana L. Evan
CHIEF FINANCIAL OFFICER
VERISIGN, INC.
1350 CHARLESTON ROAD
MOUNTAIN VIEW, CALIFORNIA 94043-1331
(650) 961-7500
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
____________________
Copies to:
JEFFREY R. VETTER, ESQ.
TYLER R. COZZENS, ESQ.
FENWICK & WEST LLP
TWO PALO ALTO SQUARE
PALO ALTO, CALIFORNIA 94306
____________________
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: FROM TIME TO
TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT UNTIL APRIL 30,
2000 OR UNTIL THE EARLIER SALE OF ALL SHARES REGISTERED HEREUNDER.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_] _____________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_] _____________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
_____________________
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED SHARE(1) PRICE(1) REGISTRATION FEE
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<S> <C> <C> <C> <C>
Common Stock, par value $0.001 per share 407,622 shares $111.44 $45,425,395.68 $12,628.26
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(1) Estimated solely for the purpose of calculating the amount of the
registration fee, pursuant to Rule 457(c) under the Securities Act, based on
the average of the high and low prices of the common stock on the Nasdaq
National Market on April 28, 1999.
____________________
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION
April 30, 1999
407,622 SHARES
VERISIGN, INC.
COMMON STOCK
___________________
All of the 407,622 shares of common stock of VeriSign, Inc. are being sold
by stockholders of VeriSign. VeriSign will not receive any proceeds from the
sale of shares offered by the selling stockholders. See "Selling Stockholders"
and "Plan of Distribution."
The common stock is listed on the Nasdaq National Market under the symbol
"VRSN." The shares of common stock offered will be sold as described under
"Plan of Distribution."
On April 29, 1999, the closing price per share of the common stock on the
Nasdaq National Market was $110.00.
___________________
The common stock offered involves a high degree of risk. See "RISK FACTORS" on
page 3.
___________________
THE DATE OF THIS PROSPECTUS IS ___________, 1999.
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THE COMPANY
VeriSign is the leading provider of Internet trust services needed by
websites, enterprises and individuals to conduct trusted and secure electronic
commerce and communications over the Internet, intranets and extranets, or IP
networks. We have established strategic relationships with industry leaders,
including AT&T, British Telecommunications, or BT, Cisco, Microsoft, Netscape,
Network Associates, RSA, Security Dynamics and VISA, to enable widespread
utilization of our digital certificate services and to assure their
interoperability with a wide variety of applications and network equipment. We
have used our secure online infrastructure to issue over 125,000 of our website
digital certificates and over 3.5 million of our digital certificates for
individuals. Our Website Digital Certificate services are used by over 400 of
the Fortune 500 companies. We also offer the VeriSign OnSite service, which
allows an organization to leverage our trusted service infrastructure to develop
and deploy customized digital certificate services for use by its employees,
customers and business partners. Over 300 enterprises have subscribed to the
OnSite service since its introduction in November 1997, including Bank of
America, Hewlett-Packard, the Internal Revenue Service, Kodak, Sumitomo Bank,
Texas Instruments and USWest. We market our Internet trust services worldwide
through multiple distribution channels, including the Internet, direct sales,
telesales, value-added resellers, or VARs, systems integrators and our
affiliates, and intend to expand these distribution channels.
VeriSign was incorporated in Delaware in April 1995. Our executive offices
are located at 1350 Charleston Road, Mountain View, California 94043-1331. Our
telephone number at this location is (650) 961-7500. Our website is located at
http://www.verisign.com. Information contained in our website is not part of
this prospectus.
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RISK FACTORS
You should carefully consider the risks and uncertainties described below
before making an investment decision. These risks and uncertainties are not the
only ones facing VeriSign. Additional risks and uncertainties not presently
known to us or that we currently deem immaterial may also impair our business
operations.
If any of the following risks actually occur, our business, financial
condition or operating results could be materially harmed. In such case, the
trading price of our common stock could decline and you may lose all or part of
your investment.
This prospectus also contains forward-looking statements that involve
risks and uncertainties. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors
including the risks faced by us described below and elsewhere in this
prospectus.
WE HAVE A LIMITED OPERATING HISTORY
VeriSign was incorporated in April 1995, and we began introducing our
Internet trust services in June 1995. Accordingly, we have only a limited
operating history on which to base an evaluation of our business and prospects.
Our prospects must be considered in light of the risks and uncertainties
encountered by companies in the early stages of development. These risks and
uncertainties are often worse for companies in new and rapidly evolving markets.
Our success will depend on many factors, including, but not limited to, the
following:
. the rate and timing of the growth and use of IP networks for electronic
commerce and communications;
. the extent to which digital certificates are used for such communications
and commerce;
. the continued evolution of electronic commerce as a viable means of
conducting business;
. the demand for our Internet trust services;
. competition levels;
. the perceived security of electronic commerce and communications over IP
networks;
. the perceived security of our services, technology, infrastructure and
practices; and
. our continued ability to maintain our current, and enter into additional,
strategic relationships.
To address these risks we must, among other things:
. successfully market our Internet trust services and our digital
certificates to our new and existing customers;
. attract, integrate, train, retain and motivate qualified personnel;
. respond to competitive developments;
. successfully introduce new Internet trust services; and
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. successfully introduce enhancements to our existing Internet trust services
to address new technologies and standards.
We cannot be certain that we will successfully address any of these risks.
WE HAVE A HISTORY OF LOSSES AND ANTICIPATE FUTURE LOSSES
We have experienced substantial net losses in each fiscal period since we
were formed. As of March 31, 1999, we had an accumulated deficit of $53.4
million. VeriSign's limited operating history, the emerging nature of its
market and the factors described under "--Our Business Depends on-the Adoption
of IP Networks" and "--Our Quarterly Operating Results May Fluctuate; Our Future
Revenues and Profitability Are Uncertain," among other factors, make prediction
of our future operating results difficult. In addition, we intend to increase
our expenditures in all areas in order to execute our business plan. As a
result, we expect to incur substantial additional losses. Although our revenues
have grown in recent periods, we may be unable to sustain such growth.
Therefore, you should not consider our historical growth indicative of future
revenue levels or operating results. We may never achieve profitability. Even
if we do, we may not be able to sustain it.
OUR BUSINESS DEPENDS ON THE ADOPTION OF IP NETWORKS
In order for VeriSign to be successful, IP networks must be widely adopted,
in a timely manner, as a means of trusted and secure electronic commerce and
communications. Because electronic commerce and communications over IP networks
are new and evolving, it is difficult to predict the size of this market and its
sustainable growth rate. To date, many businesses and consumers have been
deterred from utilizing IP networks for a number of reasons, including, but not
limited to:
. potentially inadequate development of network infrastructure;
. security concerns including the potential for merchant or user
impersonation and fraud or theft of stored data and information
communicated over IP networks;
. inconsistent quality of service;
. lack of availability of cost-effective, high-speed service;
. limited numbers of local access points for corporate users;
. inability to integrate business applications on IP networks;
. the need to operate with multiple and frequently incompatible products; and
. a lack of tools to simplify access to and use of IP networks.
The adoption of IP networks will require a broad acceptance of new methods
of conducting business and exchanging information. Companies and government
agencies that already have invested substantial resources in other methods of
conducting business may be reluctant to adopt new methods. Also, individuals
with established patterns of purchasing goods and services and effecting
payments may be reluctant to change.
The use of IP networks may not increase or may increase more slowly than we
expect because the infrastructure required to support widespread use may not
develop. The Internet may continue to
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experience significant growth both in the number of users and the level of use.
However, the Internet infrastructure may not be able to continue to support the
demands placed on it by continued growth. Continued growth may also affect the
Internet's performance and reliability. In addition, the growth and reliability
of IP networks could be harmed by delays in development or adoption of new
standards and protocols to handle increased levels of activity or by increased
governmental regulation. Changes in, or insufficient availability of,
communications services to support IP networks could result in poor performance
and also adversely affect their usage. Any of these factors could materially
harm our business.
OUR MARKET IS NEW AND EVOLVING
We target our Internet trust services at the market for trusted and secure
electronic commerce and communications over IP networks. This is a new and
rapidly evolving market that may not continue to grow. Accordingly, the demand
for our Internet trust services is very uncertain. Even if the market for
electronic commerce and communications over IP networks grows, our Internet
trust services may not be widely accepted. The factors that may affect the
level of market acceptance of digital certificates and, consequently, our
Internet trust services, include the following:
. market acceptance of products and services based upon authentication
technologies other than those we use;
. public perception of the security of digital certificates and IP networks;
. the ability of the Internet infrastructure to accommodate increased levels
of usage; and
. government regulations affecting electronic commerce and communications
over IP networks.
Even if digital certificates achieve market acceptance, our Internet trust
services may fail to address the market's requirements adequately. If digital
certificates do not achieve market acceptance in a timely manner and sustain
such acceptance, or if our Internet trust services in particular do not achieve
or sustain market acceptance, our business would be materially harmed.
OUR QUARTERLY OPERATING RESULTS MAY FLUCTUATE; OUR FUTURE REVENUES AND
PROFITABILITY ARE UNCERTAIN
Our quarterly operating results have varied and may fluctuate significantly
in the future as a result of a variety of factors, many of which are outside our
control. These factors include the following:
. continued market acceptance of our Internet trust services;
. the long sales and implementation cycles for, and potentially large order
sizes of, certain of our Internet trust services;
. the timing and execution of individual contracts;
. customer renewal rates for our Internet trust services;
. the timing of releases of new versions of Internet browsers or other third-
party software products and networking equipment which include our digital
certificate service interface technology;
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. the mix of our services sold during a quarter;
. our success in marketing other Internet trust services to our existing
customers and to new customers;
. continued development of our direct and indirect distribution channels,
both in the U.S. and abroad;
. market acceptance of our Internet trust services or our competitors'
products and services;
. our ability to attract, integrate, train, retain and motivate a substantial
number of sales and marketing, research and development and technical
support personnel;
. our ability to expand our operations;
. our success in assimilating the operations and personnel of SecureIT and
any other acquired businesses;
. the amount and timing of expenditures related to expansion of our
operations;
. the impact of price changes in our Internet trust services or our
competitors' products and services; and
. general economic conditions and economic conditions specific to IP network
industries.
Our limited operating history and the emerging nature of our market make it
difficult to predict future revenues. Our expenses are based, in part, on our
expectations regarding future revenues, and are largely fixed in nature,
particularly in the short term. We may be unable to predict our future revenues
accurately or to adjust spending in a timely manner to compensate for any
unexpected revenue shortfall. Accordingly, any significant shortfall of
revenues in relation to our expectations could cause significant declines in our
quarterly operating results.
Due to all of the foregoing factors, our quarterly revenues and operating
results are difficult to forecast. Therefore, we believe that period-to-period
comparisons of our operating results will not necessarily be meaningful, and you
should not rely upon them as an indication of our future performance. Also, it
is likely that our operating results will fall below our expectations and the
expectations of securities analysts or investors in some future quarter. In
such event, the market price of our common stock could be materially adversely
affected.
SYSTEM INTERRUPTIONS AND SECURITY BREACHES COULD HARM OUR BUSINESS
We depend on the uninterrupted operation of our secure data centers and our
other computer and communications systems. We must protect these systems from
loss, damage or interruption caused by fire, earthquake, power loss,
telecommunications failure or other events beyond our control. Most of our
systems are located at, and most of our customer information is stored in, our
facilities in Mountain View, California and Kawasaki, Japan, areas susceptible
to earthquakes. Any damage or failure that causes interruptions in our secure
data centers and our other computer and communications systems could materially
harm our business. In addition, our ability to issue digital certificates
depends on the efficient operation of the Internet connections from customers to
our secure data centers. Such connections depend upon efficient operation of
web browsers, Internet service providers and Internet
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backbone service providers, all of which have had periodic operational problems
or experienced outages in the past. Any of these problems or outages could
adversely affect customer satisfaction.
Our success also depends upon the scalability of our systems. Our systems
have not been tested at the volumes that may be required in the future. Thus,
it is possible that a substantial increase in demand for our Internet trust
services could cause interruptions in our systems. Any such interruptions could
adversely affect our ability to deliver our Internet trust services and
therefore could materially harm our business.
Although we periodically perform, and retain accredited third parties to
perform, audits of our operational practices and procedures, we may not be able
to remain in compliance with our internal standards or those set by third-party
auditors. If we fail to maintain these standards, we may have to expend
significant time and money to return to compliance and our business could be
materially harmed.
We retain certain confidential customer information in our secure data
centers. It is critical to our business strategy that our facilities and
infrastructure remain secure and are perceived by the marketplace to be secure.
Despite our security measures, our infrastructure may be vulnerable to physical
break-ins, computer viruses, attacks by hackers or similar disruptive problems.
It is possible that we may have to expend additional financial and other
resources to address such problems. Any physical or electronic break-ins or
other security breaches or compromises of the information stored at our secure
data centers may jeopardize the security of information stored on our premises
or in the computer systems and networks of our customers. In such an event, we
could face significant liability and customers could be reluctant to use our
Internet trust services. Such an occurrence could also result in adverse
publicity and therefore adversely affect the market's perception of the security
of electronic commerce and communications over IP networks as well as of the
security or reliability of our services.
WE FACE SIGNIFICANT COMPETITION
We anticipate that the market for services that enable trusted and secure
electronic commerce and communications over IP networks will remain intensely
competitive. We compete with larger and smaller companies that provide products
and services that are similar to certain aspects of our Internet trust services.
We expect that competition will increase in the near term, and that our primary
long-term competitors may not yet have entered the market. Increased
competition could result in pricing pressures, reduced margins or the failure of
our Internet trust services to achieve or maintain market acceptance, any of
which could materially harm our business. Several of our current and potential
competitors have longer operating histories and significantly greater financial,
technical, marketing and other resources. As a result, we may not be able to
compete effectively. For a more detailed description of the competitive threats
facing us.
TECHNOLOGICAL CHANGES WILL AFFECT OUR BUSINESS
The emerging nature of the Internet and digital certificate markets and
their rapid evolution requires us to continually improve the performance,
features and reliability of our Internet trust services, particularly in
response to competitive offerings. We must also introduce any new Internet
trust services as quickly as possible. The success of new Internet trust
services depends on several factors, including proper new service definition and
timely completion, introduction and market acceptance of our new Internet trust
services. We may not succeed in developing and marketing new Internet trust
services that respond to competitive and technological developments and changing
customer needs. This could materially harm our business.
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If new Internet, networking or telecommunication technologies or standards
are widely adopted or if other technological changes occur, we may need to
expend significant resources to adapt our Internet trust services.
WE MUST MANAGE OUR GROWTH AND EXPANSION
Our historical growth has placed, and any further growth is likely to
continue to place, a significant strain on our resources. VeriSign has grown
from 26 employees at December 31, 1995 to 336 employees at March 31, 1999. We
have also opened additional sales offices and have significantly expanded our
operations, both in the U.S. and abroad, during this time period. We expanded
our operations by acquiring SecureIT during 1998. To be successful, we will
need to implement additional management information systems, develop further our
operating, administrative, financial and accounting systems and controls and
maintain close coordination among our executive, engineering, accounting,
finance, marketing, sales and operations organizations. Any failure to manage
growth effectively could materially harm our business.
WE DEPEND ON KEY PERSONNEL
We depend on the performance of our senior management team and other key
employees. Our success will depend on our ability to retain and motivate these
individuals. Our success will also depend on our ability to attract, integrate,
train, retain and motivate additional highly skilled technical and sales and
marketing personnel, both in the U.S. and abroad. There is intense competition
for these personnel. In addition, our stringent hiring practices for some of
our key personnel, which consist of background checks into prospective
employees' criminal and financial histories, further limit the number of
qualified persons for such positions. See "Business--Security and Trust
Practices." VeriSign has no employment agreements with any of its key
executives that prevent them from leaving VeriSign at any time. In addition, we
do not maintain key person life insurance for any of our officers or key
employees other than our President and Chief Executive Officer. The loss of the
services of any of our senior management team or other key employees or our
failure to attract, integrate, train, retain and motivate additional key
employees could materially harm our business.
WE MUST ESTABLISH AND MAINTAIN STRATEGIC RELATIONSHIPS
One of our significant business strategies has been to enter into strategic
or other similar collaborative relationships in order to reach a larger customer
base than we could reach through our direct sales and marketing efforts. We may
need to enter into additional relationships to execute our business plan. We
may not be able to enter into additional, or maintain our existing, strategic
relationships on commercially reasonable terms. If we failed, we would have to
devote substantially more resources to the distribution, sale and marketing of
our Internet trust services than we would otherwise. Furthermore, as a result
of our emphasis on these relationships, our success in such relationships will
depend both on the ultimate success of the other parties to such relationships,
particularly in the use and promotion of IP networks for trusted and secure
electronic commerce and communications, and on the ability of certain of these
parties to market our Internet trust services successfully. Failure of one or
more of our strategic relationships to result in the development and maintenance
of a market for our Internet trust services could materially harm our business.
Our existing strategic relationships do not, and any future strategic
relationships may not, afford VeriSign any exclusive marketing or distribution
rights. In addition, the other parties may not view their relationships with us
as significant for their own businesses. Therefore, they could reduce their
commitment to VeriSign at any time in the future. These parties could also
pursue alternative technologies or develop alternative products and services
either on their own or in collaboration with
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others, including our competitors. If we are unable to maintain our strategic
relationships or to enter into additional strategic relationships, our business
could be materially harmed.
CERTAIN OF OUR INTERNET TRUST SERVICES HAVE LENGTHY SALES AND IMPLEMENTATION
CYCLES
We market many of our Internet trust services directly to large companies
and government agencies. The sale and implementation of our services to these
entities typically involves a lengthy education process and a significant
technical evaluation and commitment of capital and other resources. This
process is also subject to the risk of delays associated with customers'
internal budgeting and other procedures for approving large capital
expenditures, deploying new technologies within their networks and testing and
accepting new technologies that affect key operations. As a result, the sales
and implementation cycles associated with certain of our Internet trust services
can be lengthy, potentially lasting from three to six months. Our quarterly and
annual operating results could be materially harmed if orders forecasted for a
specific customer for a particular quarter are not realized.
OUR INTERNET TRUST SERVICES COULD HAVE UNKNOWN DEFECTS
Services as complex as those we offer or develop frequently contain
undetected defects or errors. Despite testing, defects or errors may occur in
existing or new Internet trust services, which could result in loss of or delay
in revenues, loss of market share, failure to achieve market acceptance,
diversion of development resources, injury to our reputation, increased
insurance costs or increased service and warranty costs, any of which could
materially harm our business. Furthermore, we often provide implementation,
customization, consulting and other technical services in connection with the
implementation and ongoing maintenance of our Internet trust services and our
digital certificate service agreements. The performance of these Internet trust
services typically involves working with sophisticated software, computing and
communications systems. Our failure or inability to meet customer expectations
or project milestones in a timely manner could also result in loss of or delay
in revenues, loss of market share, failure to achieve market acceptance, injury
to our reputation and increased costs.
Because customers rely on our Internet trust services for critical security
applications, any significant defects or errors in our Internet trust services
might discourage customers from subscribing to our services. Such defects or
errors could also result in tort or warranty claims. Although we attempt to
reduce the risk of losses resulting from such claims through warranty
disclaimers and liability limitation clauses in our sales agreements, these
contractual provisions may not be enforceable in every instance. Furthermore,
although we maintain errors and omissions insurance, such insurance coverage may
not adequately cover us for claims. If a court refused to enforce the
liability-limiting provisions of our contracts for any reason, or if liabilities
arose that were not contractually limited or adequately covered by insurance,
our business could be materially harmed.
PUBLIC KEY CRYPTOGRAPHY TECHNOLOGY IS SUBJECT TO CERTAIN RISKS
Our Internet trust services depend on public key cryptography technology.
With public key cryptography technology, a user is given a public key and a
private key, both of which are required to encrypt and decode messages. The
security afforded by this technology depends on the integrity of a user's
private key and that it is not stolen or otherwise compromised. The integrity
of private keys also depends in part on the application of certain mathematical
principles known as "factoring." This integrity is predicated on the assumption
that the factoring of large numbers into their prime number components is
difficult. Should an easy factoring method be developed, then the security of
encryption products utilizing public key cryptography technology would be
reduced or eliminated. Furthermore, any significant advance in techniques for
attacking cryptographic systems could also render some or all
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of our existing Internet trust services obsolete or unmarketable. Even if no
breakthroughs in factoring or other methods of attacking cryptographic systems
are made, factoring problems can theoretically be solved by computer systems
significantly faster and more powerful than those presently available. Current
or future governmental regulation regarding the use, scope and strength of
public key cryptography could also limit our ability to develop and distribute
digital certificates with encryption strong enough to maintain the integrity of
a user's private key against factoring by more powerful computer systems. If
such improved techniques for attacking cryptographic systems are ever developed,
we would likely have to reissue digital certificates to some or all of our
customers, which could damage our reputation and brand or otherwise harm our
business. In the past there have been public announcements of the successful
decoding of certain cryptographic messages and of the potential misappropriation
of private keys. Such publicity could also adversely affect the public
perception as to the safety of the public key cryptography technology included
in our digital certificates. Such adverse public perception could harm our
business.
OUR INTERNATIONAL OPERATIONS ARE SUBJECT TO CERTAIN RISKS
Revenues of VeriSign Japan K.K., or VeriSign Japan, and revenues from other
international affiliates and customers accounted for approximately 9% of our
revenues in 1997 and approximately 14% of our revenues in 1998. We intend to
expand our international operations and international sales and marketing
activities. Expansion into these markets has required and will continue to
require significant management attention and resources. We may also need to
tailor our Internet trust services for a particular market and to enter into
international distribution and operating relationships. We have limited
experience in localizing our Internet trust services and in developing
international distribution or operating relationships. We may not succeed in
expanding our Internet trust service offerings into international markets. Any
such failure could harm our business.
In addition, there are certain risks inherent in doing business on an
international basis, including, among others:
. regulatory requirements;
. legal uncertainty regarding liability;
. export and import restrictions on cryptographic technology and products
incorporating that technology;
. tariffs and other trade barriers;
. difficulties in staffing and managing foreign operations;
. longer sales and payment cycles;
. problems in collecting accounts receivable;
. difficulty of authenticating customer information;
. political instability;
. seasonal reductions in business activity; and
. potentially adverse tax consequences.
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We have licensed to certain international affiliates the VeriSign
Processing Center platform, which is designed to replicate our own secure data
centers and allows the affiliate to offer back-end processing of Internet trust
services. The VeriSign Processing Center platform provides an affiliate with
the knowledge and technology to offer Internet trust services similar to those
offered by VeriSign. It is critical to our business strategy that the
facilities and infrastructure used in issuing and marketing digital certificates
remain secure and be perceived by the marketplace to be secure. Although we
provide the affiliate with training in security and trust practices, network
management and customer service and support, these practices are performed by
the affiliate and are outside of our control. Any failure of an affiliate to
maintain the privacy of confidential customer information could result in
negative publicity and therefore adversely affect the market's perception of the
security of our services as well as the security of electronic commerce and
communication over IP networks generally.
All of our international revenues from sources other than VeriSign Japan
are denominated in U.S. dollars. If additional portions of our international
revenues were to be denominated in foreign currencies, we could become subject
to increased risks relating to foreign currency exchange rate fluctuations.
WE DEPEND ON AUTHENTICATION INFORMATION
We rely upon information provided by third-party sources to authenticate
the identity of customers requesting certain of our digital certificates. This
information is presently only available from a limited number of sources and we
currently procure such information from single sources. Reliance on single
sources involves certain risks and uncertainties, including the possibility of
delayed or discontinued availability. Any such delay or unavailability, coupled
with any inability to develop alternative sources quickly and cost-effectively,
could impair our ability to deliver certain digital certificates on a timely
basis and result in the cancellation of orders, increased costs and injury to
our reputation. This could harm our business. Reliance on third-party
information sources for authentication has also limited the distribution of
certain of our digital certificates outside of the U.S., where access to such
sources has been unavailable or limited.
Additionally, accurate authentication of the identity of the individuals
and entities to which we issue digital certificates is necessary for such
digital certificates to provide security and trust. Therefore, if any
authentication information that we rely upon is inaccurate, it could adversely
affect our reputation and result in tort or warranty claims from customers
relying upon our digital certificates for trusted and secure electronic commerce
and communications. This could materially harm our business.
WE COULD BE AFFECTED BY GOVERNMENT REGULATION
Exports of software products utilizing encryption technology are generally
restricted by the U.S. and various non-U.S. governments. Although we have
obtained approval to export our Global Server digital certificate service and
none of our other Internet trust services are currently subject to export
controls under U.S. law, the list of products and countries for which export
approval is required could be revised in the future to include more digital
certificate products and related services. If we do not obtain required
approvals we may not be able to sell certain Internet trust services in
international markets. There are currently no federal laws or regulations that
specifically control certificate authorities, but a limited number of states
have enacted legislation or regulations with respect to certificate authorities.
If the market for digital certificates grows, the U.S. federal or state or non-
U.S. governments may choose to enact further regulations governing certificate
authorities or other providers of digital certificate products and related
services. Such regulations or the costs of complying with such regulations
could harm our business.
11
<PAGE>
Many companies conducting electronic commerce over IP networks do not
collect sales or other similar taxes with respect to shipments of goods into
other states or foreign countries or with respect to other transactions
conducted between parties in different states or countries. It is possible that
the U.S. federal or state or non-U.S. governments may seek to impose sales taxes
on companies that engage in electronic commerce over IP networks. In the event
that government bodies succeed in imposing sales or other taxes on electronic
commerce, the growth of the use of IP networks for electronic commerce could
slow substantially, which could materially harm our business.
Due to the increasing popularity of IP networks, it is possible that laws
and regulations may be enacted covering issues such as user privacy, pricing,
content and quality of products and services. The increased attention focused
upon these issues as a result of the adoption of other laws or regulations may
reduce the rate of growth of IP networks, which in turn could result in
decreased demand for our Internet trust services or could otherwise materially
harm our business.
ACQUISITIONS COULD HARM OUR BUSINESS
During 1998, we acquired SecureIT. If we are unable to successfully
complete the integration of SecureIT, our business could be materially harmed.
We may acquire additional businesses, technologies, product lines or service
offerings in the future. Acquisitions involve a number of risks including,
among others:
. the difficulty of assimilating the operations and personnel of the
acquired businesses;
. the potential disruption of our business;
. our inability to integrate, train, retain and motivate key personnel of
the acquired business;
. the diversion of our management from our day-to-day operations;
. our inability to incorporate acquired technologies successfully into our
Internet trust services;
. the additional expense associated with completing an acquisition and
amortizing any acquired intangible assets;
. the potential impairment of relationships with our employees, customers
and strategic partners; and
. the inability to maintain uniform standards, controls, procedures and
policies.
If we are unable to successfully address any of these risks, our business
could be materially harmed.
WE FACE RISKS RELATED TO INTELLECTUAL PROPERTY RIGHTS
Our success depends on our internally developed technologies and other
intellectual property. Despite our precautions, it may be possible for a third
party to copy or otherwise obtain and use our intellectual property or trade
secrets without authorization. In addition, it is possible that others may
independently develop substantially equivalent intellectual property. If we do
not effectively protect our intellectual property, our business could be
materially harmed.
In the future we may have to resort to litigation to enforce our
intellectual property rights, to protect our trade secrets or to determine the
validity and scope of the proprietary rights of others. Such
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<PAGE>
litigation, regardless of its outcome, could result in substantial costs and
diversion of management and technical resources.
We also license third-party technology, such as public key cryptography
technology licensed from RSA and other technology that is used in our products,
to perform key functions. These third-party technology licenses may not
continue to be available to us on commercially reasonable terms or at all. Our
business could be materially harmed if we lost the rights to use these
technologies. A third party could claim that the licensed software infringes
any patent or other proprietary right. Litigation between the licensor and a
third party or between us and a third party could lead to royalty obligations
for which we are not indemnified or for which such indemnification is
insufficient, or we may not be able to obtain any additional license on
commercially reasonable terms or at all.
The loss of, or our inability to obtain or maintain, any of these
technology licenses could delay the introduction of our Internet trust services
until equivalent technology, if available, is identified, licensed and
integrated. This could harm our business.
From time to time, we have received, and may receive in the future, notice
of claims of infringement of other parties' proprietary rights. Infringement or
other claims could be made against us in the future. Any such claims, with or
without merit, could be time-consuming, result in costly litigation and
diversion of technical and management personnel, cause product shipment delays
or require us to develop non-infringing technology or enter into royalty or
licensing agreements. Such royalty or licensing agreements, if required, may
not be available on acceptable terms or at all. If a successful claim of
product infringement were made against us and we could not develop non-
infringing technology or license the infringed or similar technology on a timely
and cost effective basis, our business could be harmed.
YEAR 2000 ISSUES COULD AFFECT OUR BUSINESS
We are in the process of assessing and remediating any Year 2000 issues
with the computer communications, software and security systems that we use to
deliver and manage our Internet trust services and to manage our internal
operations. Despite our testing and remediating, our systems may contain errors
or faults with respect to the Year 2000. For a more detailed discussion of Year
2000 issues, please see "Item 7: Management's Discussion and Analysis of
Financial Condition and Results of Operations - Year 2000 Issues" in our Annual
Report on Form 10-K, filed with the Securities and Exchange Commission on
February 22, 1999. If our systems do not operate properly with regard to the
Year 2000 and thereafter we could incur unanticipated expenses to remedy any
problems, which could adversely affect our business.
Customer's purchasing plans could be affected by Year 2000 issues as they
may need to expend significant resources to correct their existing systems.
This situation may result in reduced funds available to implement the
infrastructure needed to conduct trusted and secure electronic commerce and
communications over IP networks or to purchase our Internet trust services.
These factors could materially harm our business.
WE HAVE IMPLEMENTED CERTAIN ANTI-TAKEOVER PROVISIONS
Certain provisions of our Amended and Restated Certificate of Incorporation
and Bylaws, as well as provisions of Delaware law could make it more difficult
for a third party to acquire us, even if doing so would be beneficial to our
stockholders.
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<PAGE>
FUTURE SALES OF SHARES COULD AFFECT OUR STOCK PRICE
If our stockholders sell substantial amounts of our common stock in the
public market following this offering, the market price of our common stock
could fall. We have outstanding approximately 24,999,328 shares of common stock
(assuming no exercise of outstanding options after March 31, 1999). Of these
shares 24,110,754 are currently eligible for sale in the public market. The
remaining 888,574 shares will be eligible for public sale after July 6, 1999,
subject to the volume limitations and other conditions of Rule 144.
These share numbers exclude 4,367,864 shares subject to outstanding stock
options and 133,138 shares reserved for future issuance under our stock plans as
of March 31, 1999.
OUR STOCK PRICE MAY BE VOLATILE
The market price of our common stock has fluctuated in the past and is
likely to fluctuate in the future. In addition, the market prices of securities
of other technology companies, particularly Internet-related companies, have
been highly volatile. Factors that may have a significant effect on the market
price of our common stock include:
. fluctuations in our operating results;
. announcements of technological innovations or new Internet trust services
by us or new products or services by our competitors;
. analysts' reports and projections;
. regulatory actions; and
. general market, economic or political conditions in the U.S. or abroad.
Investors may not be able to resell their shares of our common stock at or
above the offering price.
USE OF PROCEEDS
VeriSign will not receive any of the proceeds from the sale of shares by
the selling stockholders.
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<PAGE>
SELLING STOCKHOLDERS
The following table sets forth certain information known to VeriSign with
respect to the beneficial ownership of the Company's common stock as of March
31, 1999 by the selling stockholders. Except as set forth below, none of the
selling stockholders has had any position, office or other material relationship
with VeriSign within the past three years. The table assumes that the selling
stockholders sell all of the shares offered by them in this offering. However,
VeriSign is unable to determine the exact number of shares that will actually be
sold or when or if such sales will occur. VeriSign will not receive the
proceeds of any shares sold under this prospectus.
The selling stockholders have advised VeriSign that they are the beneficial
owner of the shares being offered.
<TABLE>
<CAPTION>
Shares Beneficially Shares Beneficially
Owned Before Offering Owned After Offering
--------------------- Shares Being ---------------------
Name Number Percent Offered Number Percent
- ---- ------ ------- ------- ------ -------
<S> <C> <C> <C> <C> <C>
Jagtar and P. Jyoti Chaudhry (1)........... 1,023,816 4.1% 361,813 662,003 2.6%
Jay W. Johnson (2)......................... 75,501 * 25,132 50,369 *
George and Lena Valente Foundation......... 61,879 * 20,677 41,202 *
</TABLE>
____________________________
* Less than 1%.
(1) Represents 22,361 shares held by Jagtar Chaudhry, 441,527 shares held by P.
Jyoti Chaudhry, the wife of Jagtar Chaudhry, 328,302 shares held by
NetConsult Inc., of which Mrs. Chaudhry is President, 33,511 shares held by
Chaudhry Enterprises LLLP and 65,922, 65,922, 65,922 and 349 shares held by
four Chaudhry family trusts for the benefit of Simran D. Chaudhry, Yash P.
Chaudhry, Samir R. Chaudhry and Manpreet Bains, respectively. The number of
shares being offered represents 328,302 shares offered for the account of
NetConsult Inc. and 33,511 shares offered for the account of Chaudhry
Enterprises LLLP. Mr. Chaudhry is the Vice President and General Manger of
Security Services of VeriSign.
(2) Mr. Johnson is Vice President, Field Operations, of SecureIT, Inc., a
wholly-owned subsidiary of VeriSign.
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<PAGE>
PLAN OF DISTRIBUTION
The selling stockholders are former stockholders of SecureIT, Inc., a
company which VeriSign acquired in July 1998. The selling stockholders are
bound by a registration rights agreement with VeriSign. To VeriSign's
knowledge, no selling stockholder has entered into any agreement, arrangement or
understanding with any particular broker or market maker with respect to the
shares offered hereby, nor does VeriSign know the identity of the brokers or
market makers that will participate in the offering.
The shares of common stock may be offered and sold from time to time by the
selling stockholders or by their pledgees, donees, transferees and other
successors in interest. Each of the selling stockholders will act independently
of VeriSign in making decisions with respect to the timing, manner and size of
each sale. Such sales may be made over the Nasdaq National Market or otherwise,
at then prevailing market prices, at prices related to prevailing market prices
or at negotiated prices. The shares may be sold by one or more of the
following:
. a block trade in which the broker-dealer engaged by a selling
stockholder will attempt to sell the shares as agent but may position
and resell a portion of the block as principal to facilitate the
transaction;
. purchases by the broker-dealer as principal and resale by such broker
or dealer for its account pursuant to this Prospectus; and
. ordinary brokerage transactions and transactions in which the broker
solicits purchasers.
VeriSign has been advised by each of the selling stockholders that none of
them has, as of the date hereof, entered into any arrangement with a broker-
dealer for the sale of shares through a block trade, special offering, or
secondary distribution of a purchase by a broker-dealer. In effecting sales,
broker-dealers engaged by the selling stockholders may arrange for other broker-
dealers to participate. Broker-dealers will receive commissions or discounts
from the selling stockholders in amounts to be negotiated immediately prior to
the sale.
In connection with distributions of the shares or otherwise, selling
stockholders may also enter into hedging transactions. For example, the selling
stockholders may:
. enter into transactions involving short sales of the shares of common
stock by broker-dealers;
. sell shares of common stock short and redeliver these shares to close
out the short position;
. enter into option or other types of transactions that require the
selling stockholders to deliver shares of common stock to a broker-
dealer, who will then resell or transfer the shares of common stock
under this prospectus; or
. loan or pledge shares of common stock to a broker dealer, who may sell
the loaned shares or, in the event of default, sell the pledged
shares.
Broker-dealers or agents may receive compensation in the form of
commissions, discounts or concessions from selling stockholders in amounts to be
negotiated in connection with the sale. Broker-dealers and any other
participating broker-dealers may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with the sales, and any commission,
discount or concession may be deemed to be underwriting discounts or commissions
under the Securities Act. The selling
16
<PAGE>
stockholders have agreed with VeriSign in the registration rights agreement not
to sell any of the shares under this Prospectus in an underwritten offering
without VeriSign's prior written consent. In addition, any securities covered by
this Prospectus which qualify for sale under Rule 144 of the Securities Act may
be sold under Rule 144 rather than under this Prospectus.
VeriSign has advised the selling stockholders that the anti-manipulation
rules under the Exchange Act may apply to sales of shares in the market and to
the activities of the selling stockholder and its affiliates. The selling
stockholders have advised VeriSign that during such time as they may be engaged
in the attempt to sell shares registered, they will:
. not engage in any stabilization activity in connection with any of
VeriSign's securities;
. not bid for or purchase any of VeriSign's securities or any rights to
acquire VeriSign's securities, or attempt to induce any person to
purchase any of VeriSign's securities or rights to acquire VeriSign's
securities other than as permitted under the Exchange Act;
. not effect any sale or distribution of the shares until after the
prospectus shall have been appropriately amended or supplemented, if
required, to set forth the terms thereof; and
. effect all sales of shares in broker's transactions through broker-
dealers acting as agents, in transactions directly with market makers or
in privately negotiated transactions where no broker or other third
party (other than the purchaser) is involved.
Under certain circumstances, VeriSign has the ability to suspend the use of
this prospectus if, in the good faith judgment of the Board of Directors of
VeriSign, it would be seriously detrimental to VeriSign and its stockholders for
resales of shares to be made due to:
. the existence of a material development or potential material
development with respect to or involving VeriSign which VeriSign would
be obligated to disclose in the prospectus, which disclosure would in
the good faith judgment of the Board of Directors of VeriSign be
premature or otherwise inadvisable at such time and would have a
material adverse affect upon VeriSign and its stockholders, or
. the occurrence of any event that makes any statement made in the
prospectus or any document incorporated or deemed to be incorporated
therein by reference untrue in any material respect or which requires
the making of any changes in the prospectus so that it will not contain
any untrue statement of a material fact required to be stated therein or
necessary to make the statements therein not misleading or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading.
This offering will terminate on the earlier of:
. the termination of the period during which the Company is required to
maintain the effectiveness of the Registration Statement of which this
Prospectus forms a part, or
. the date on which all shares offered have been sold by the selling
stockholders.
VeriSign has agreed to pay the expenses of registering the shares under the
Securities Act, including registration and filing fees, printing expenses,
administrative expenses and certain legal and accounting fees. The selling
stockholders will bear all discounts, commissions or other amounts payable
17
<PAGE>
to underwriters, dealers or agents as well as fees and disbursements for legal
counsel retained by any selling stockholder.
VeriSign and the selling stockholders have agreed to indemnify each other
and certain other related parties for certain liabilities in connection with the
registration of the Shares offered hereby.
Upon the occurrence of any of the following events, this prospectus will be
amended to include additional disclosure before offers and sales of the
securities in question are made:
. to the extent the securities are sold at a fixed price or at a price
other than the prevailing market price, such price would be set forth in
the prospectus,
. if the securities are sold in block transactions and the purchaser
acting in the capacity of an underwriter wishes to resell, such
arrangements would be described in the prospectus,
. if the selling stockholder sells to a broker-dealer acting in the
capacity as an underwriter, such broker-dealer will be identified in the
prospectus and
. if the compensation paid to broker-dealers is other than usual and
customary discounts, concessions or commissions, disclosure of the terms
of the transaction would be included in the prospectus.
LEGAL MATTERS
The validity of the shares of common stock offered hereby will be passed
upon for VeriSign by Fenwick & West LLP, Palo Alto, California.
EXPERTS
The consolidated balance sheets of VeriSign, Inc., and subsidiaries as of
December 31, 1998 and 1997 and the consolidated statements of operations,
stockholders' equity, and cash flows for each of the years in the three-year
period ended December 31, 1998, have been incorporated by reference herein and
in the registration statement in reliance upon the report of KPMG LLP,
independent auditors, incorporated by reference herein, and upon the authority
of said firm as experts in accounting and auditing.
18
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE IN THIS
PROSPECTUS
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH.
All documents filed by us pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act, after the date of this prospectus are incorporated
by reference into and to be a part of this prospectus from the date of filing of
those documents.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR THAT
WE HAVE REFERRED YOU TO. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT.
The following documents which were filed by VeriSign with the Securities
and Exchange Commission, are incorporated by reference into this prospectus.
. VeriSign's Annual Report on Form 10-K for the year ended December 31,
1998 (SEC file number 000-28064 and filing date February 22, 1999)
. VeriSign's Registration Statement on Form 8-A (SEC file number 000-
23593 and filing date January 5, 1998, which describes VeriSign's
common stock)
Any statement contained in a document incorporated or deemed to be
incorporated herein by reference will be deemed to be modified or superseded for
purposes of this prospectus to the extent that a statement contained in this
prospectus or any other subsequently filed document that is deemed to be
incorporated in this prospectus by reference modifies or supersedes the
statement. Any statement so modified or superseded will not be deemed, except
as so modified or superseded, to constitute a part of this prospectus.
WHERE YOU CAN FIND MORE INFORMATION
The documents incorporated by reference into this prospectus are available
from us upon request. We will provide a copy of any and all of the information
that is incorporated by reference in this prospectus, not including exhibits to
the information unless those exhibits are specifically incorporated by reference
into this prospectus, to any person, without charge, upon written or oral
request.
Requests for documents should be directed to VeriSign, Inc., Attention:
Investor Relations, 1350 Charleston Road, Mountain View, California, 94043-1331,
telephone number (650) 429-3550.
We file reports, proxy statements and other information with the Securities
and Exchange Commission. Copies of our reports, proxy statements and other
information may be inspected and copied at the public reference facilities
maintained by the SEC:
Judiciary Plaza Citicorp Center Seven World Trade Center
Room 1024 5000 West Madison Street 13th Floor
450 Fifth Street, N.W. Suite 1400 New York, New York 10048
Washington, D.C. 20549 Chicago, Illinois 60661
Copies of these materials can also be obtained by mail at prescribed rates
from the Public Reference Section of the SEC, 450 Fifth Street, N.W.,
Washington, D.C. 20549 or by calling the SEC at
19
<PAGE>
1-800-SEC-0330. The SEC maintains a Website that contains reports, proxy
statements and other information regarding each of us. The address of the SEC
Website is http://www.sec.gov.
VeriSign has filed a registration statement under the Securities Act with
the Securities and Exchange Commission with respect to the shares to be sold by
the selling stockholder. This prospectus has been filed as part of the
registration statement. This prospectus does not contain all of the information
set forth in the registration statement because certain parts of the
registration statement are omitted in accordance with the rules and regulations
of the SEC. The registration statement is available for inspection and copying
as set forth above.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF
AN OFFER TO PURCHASE, THE SECURITIES OFFERED BY THIS PROSPECTUS OR THE
SOLICITATION OF A PROXY, IN ANY JURISDICTION TO OR FROM ANY PERSON TO WHOM OR
FROM WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER, SOLICITATION OF AN OFFER OR PROXY
SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY DISTRIBUTION OF SECURITIES PURSUANT TO THIS PROSPECTUS SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
INFORMATION SET FORTH OR INCORPORATED HEREIN BY REFERENCE OR IN OUR AFFAIRS
SINCE THE DATE OF THIS PROSPECTUS.
20
<PAGE>
================================================================================
VERISIGN, INC.
407,622 Shares of
Common Stock
____________________
PROSPECTUS
____________________
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. Other Expenses of Issuance and Distribution.
The aggregate estimated expenses to be paid by the Registrant in connection
with this offering are as follows:
<TABLE>
<CAPTION>
<S> <C>
Securities and Exchange Commission registration fee $12,628
Accounting fees and expenses.......................... 6,000
Legal fees and expenses............................... 8,000
Miscellaneous......................................... 1,372
Total............................................... $28,000
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law authorizes a court to
award, or a corporation's Board of Directors to grant, indemnity to directors
and officers in terms sufficiently broad to permit such indemnification under
certain circumstances for liabilities (including reimbursement for expenses
incurred) arising under the Securities Act of 1933, as amended (the "Securities
Act").
As permitted by the Delaware General Corporation Law, the Registrant's
Third Amended and Restated Certificate of Incorporation includes a provision
that eliminates the personal liability of its directors for monetary damages for
breach of fiduciary duty as a director, except for liability (i) for any breach
of the director's duty of loyalty to the Registrant or its stockholders, (ii)
for acts or omissions not in good faith or that involve intentional misconduct
or a knowing violation of law, (iii) under section 174 of the Delaware General
Corporation Law (regarding unlawful dividends and stock purchases) or (iv) for
any transaction from which the director derived an improper personal benefit.
As permitted by the Delaware General Corporation Law, the Registrant's
Amended and Restated Bylaws, which will become effective upon the completion of
this offering, provide that (i) the Registrant is required to indemnify its
directors and officers to the fullest extent permitted by the Delaware General
Corporation Law, subject to certain very limited exceptions, (ii) the Registrant
may indemnify its other employees and agents to the extent that it indemnifies
its officers and directors, unless otherwise required by law, its Certificate of
Incorporation, its Amended and Restated Bylaws, or agreement, (iii) the
Registrant is required to advance expenses, as incurred, to its directors and
executive officers in connection with a legal proceeding to the fullest extent
permitted by the Delaware General Corporation Law, subject to certain very
limited exceptions and (iv) the rights conferred in the Amended and Restated
Bylaws are not exclusive.
The Registrant has entered into Indemnification Agreements with each of its
current directors and certain of its executive officers and intends to enter
into such Indemnification Agreements with each of its other executive officers
to give such directors and executive officers additional contractual assurances
regarding the scope of the indemnification set forth in the Registrant's
Certificate of Incorporation and to provide additional procedural protections.
At present, there is no pending litigation or proceeding involving a director,
officer or employee of the Registrant regarding which indemnification is sought,
nor is the Registrant aware of any threatened litigation that may result in
claims for indemnification.
The indemnification provisions in the Registrant's Certificate of
Incorporation, Amended and Restated Bylaws and the Indemnification Agreements
entered into between the Registrant and each of its directors and executive
officers may be sufficiently broad to permit indemnification of the Registrant's
directors and executive officers for liabilities arising under the Securities
Act.
The Registrant has obtained directors' and officers' liability insurance
with a per claim and annual aggregate coverage limit of $5 million.
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<PAGE>
ITEM 16. EXHIBITS.
(a) The following exhibits are filed herewith:
EXHIBIT
NUMBER EXHIBIT TITLE
------ -------------
2.01 Agreement and Plan of Reorganization dated as of July 6, 1998 by
and between Registrant, VeriSign Merger Corp., SecureIT and the
shareholders of SecureIT.(1)
3.01 Third Amended and Restated Certificate of Incorporation of the
Registrant.(2)
3.02 Amended and Restated Bylaws of Registrant.(2)
4.01 Registration Rights Agreement dated as of July 6, 1998 by and
between Registrant and the former shareholders of SecureIT.(3)
4.02 Form of Specimen Common Stock Certificate.(2)
5.01 Opinion of Fenwick & West LLP regarding legality of the securities
being registered.
23.01 Consent of Fenwick & West LLP (included in Exhibit 5.01).
23.02 Consent of KPMG LLP, Independent Auditors.
24.01 Power of Attorney (see Page II-4).
_________________
(1) Previously filed as an exhibit to the Registrant's Current Report on Form 8-
K filed on July 21, 1998 and incorporated herein by reference.
(2) Previously filed with the Commission as an exhibit to the Registrant's
Registration Statement on Form S-1 (File Number 333-49789) and incorporated
herein by reference.
(3) Previously filed with the Commission as an exhibit to the Registrant's
Registration Statement on Form S-8 (File No. 333-58583) and incorporated
herein by reference.
(b) Financial statement schedules are omitted because the information
called for is not required or is shown either in the financial statements or the
notes thereto.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made
pursuant to this Registration Statement, a post-effective amendment to this
Registration Statement:
2
<PAGE>
(i) to include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933 (the "Securities Act");
(ii) to reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement (notwithstanding the foregoing, any
increase or decrease in volume or securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement); and
(iii) to include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement; provided, however, that paragraphs (1)(i) and
-------- -------
(1)(ii) do not apply if the information required to be included in a
post-effective amendment by paragraphs (1)(i) or (1)(ii) is contained
in any periodic report filed with or furnished to the Securities and
Exchange Commission by the Registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 (the "Exchange
Act") that are incorporated by reference in the Registration
Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each post-effective amendment shall be deemed 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.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the
Securities Act, each filing of the Registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to Section 15(d) of
the Exchange Act) that is incorporated by reference in this Registration
Statement shall be deemed to be a new registration statement relating to the
securities offered herein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(5) For purposes of determining any liability under the Securities
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 Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 15 above, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all for the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Mountain View, State of California, on the 30th day
of April, 1999.
VERISIGN, INC.
By: /s/ Stratton D. Sclavos
-----------------------
Stratton D. Sclavos
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS that each individual whose signature appears
below constitutes and appoints Stratton D. Sclavos and Dana L. Evan, and each of
them, his attorneys-in-fact and agents, each with the power of substitution, 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 this Registration Statement that is to be effective upon filing pursuant to
Rule 462(b) promulgated under the Securities Act of 1933, and all post-effective
amendments thereto, and to file the same, with all exhibits thereto and all
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 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 his or their
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, 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>
PRINCIPAL EXECUTIVE OFFICER:
/s/ Stratton D. Sclavos President, Chief Executive Officer April 30, 1999
- ------------------------------- and Director
Stratton D. Sclavos
PRINCIPAL FINANCIAL AND
PRINCIPAL ACCOUNTING OFFICER:
/s/ Dana L. Evan Vice President of Finance and April 30, 1999
- ------------------------------- Administration and Chief
Dana L. Evan Financial Officer
DIRECTORS:
Chairman of the Board
- -------------------------------
D. James Bidzos
Director
- -------------------------------
William Chenevich
/s/ Kevin R. Compton Director April 30, 1999
- -------------------------------
Kevin R. Compton
/s/ David J. Cowan Director April 28, 1999
- -------------------------------
David J. Cowan
/s/ Timothy Tomlinson Director April 28, 1999
- -------------------------------
Timothy Tomlinson
</TABLE>
4
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER EXHIBIT TITLE
- ------ -------------
2.01 Agreement and Plan of Reorganization dated as of July 6, 1998 by
and between Registrant, VeriSign Merger Corp., SecureIT and the
shareholders of SecureIT.(1)
3.01 Third Amended and Restated Certificate of Incorporation of the
Registration .(2)
3.02 Amended and Restated Bylaws of Registrant.(2)
4.01 Registration Rights Agreement dated as of July 6, 1998 by and
between Registrant and the former shareholders of SecureIT.(3)
4.02 Form of Specimen Common Stock Certificate.(2)
5.01 Opinion of Fenwick & West LLP regarding legality of the securities
being registered.
23.01 Consent of Fenwick & West LLP (included in Exhibit 5.01).
23.02 Consent of KPMG LLP, Independent Auditors.
24.01 Power of Attorney (see Page II-4).
______________
(1) Previously filed as an exhibit to the Registrant's Current Report on Form 8-
K filed on July 21, 1998 and incorporated herein by reference.
(2) Previously filed with the Commission as an exhibit to the Registrant's
Registration Statement on Form S-1 (File Number 333-49789) and incorporated
herein by reference.
(3) Previously filed with the Commission as an exhibit to the Registrant's
Registration Statement on Form S-8 (File No. 333-58583) and incorporated
herein by reference.
<PAGE>
EXHIBIT 5.01
------------
April 29, 1999
VeriSign, Inc.
1350 Charleston Road
Mountain View, CA 94043-1331
Gentlemen/Ladies:
At your request, we have examined the Registration Statement on Form S-3
(the "Registration Statement") to be filed by you with the Securities and
Exchange Commission (the "Commission") on or about April 30, 1999 in connection
with the registration under the Securities Act of 1933, as amended, of an
aggregate of 407,622 shares of your common stock (the "Stock"), all of which are
presently issued and outstanding and will be sold by certain selling
stockholders (the "Selling Stockholders").
In rendering this opinion, we have examined the following:
(1) your registration statement on Form S-1 (File Number 333-70121)
declared effective by the Commission on January 26, 1999, together
with the Exhibits filed as a part thereof;
(2) your registration statement on Form S-1 (File Number 333-40789)
declared effective by the Commission on January 29, 1998, together
with the Exhibits filed as a part thereof;
(3) your registration statement on Form 8-A (File Number 000-23593) filed
with the Commission on January 5, 1998;
(4) the Registration Statement, together with the Exhibits filed as a part
thereof;
(5) the Prospectuses prepared in connection with the Registration
Statement;
(6) the minutes of meetings and actions by written consent of the
stockholders and Board of Directors that are contained in your minute
books that are in our possession;
(7) your stock records that you have provided to us (consisting of a
certificate from your transfer agent verifying the number of your
issued and outstanding shares of capital stock as of April 28, 1999,
and a list of option and warrant holders respecting your capital and
of any rights to purchase capital stock that was prepared by you and
dated April 28, 1999, verifying the number of such issued and
outstanding securities);
(8) a Management Certificate addressed to us and dated of even date
herewith executed by the Company containing certain factual and other
representations;
(9) the various stock purchase and other agreements under which the
Selling Stockholders acquired the Stock to be sold by them as
described in the Registration Statement; and
(10) a Selling Stockholder Questionnaire executed by each of the Selling
Stockholders.
By telephone call to the offices of the Commission, we have also confirmed
the continued effectiveness of the Company's registration under the Securities
Exchange Act of 1934, as amended (the
<PAGE>
"Exchange Act"), and the timely filing by you of all reports required to be
filed by you pursuant to Rules 13, 14 and 15 promulgated under the Exchange Act.
In our examination of documents for purposes of this opinion, we have
assumed, and express no opinion as to, the genuineness of all signatures on
original documents, the authenticity and completeness of all documents submitted
to us as originals, the conformity to originals and completeness of all
documents submitted to us as copies, the legal capacity of all natural persons
executing the same, the lack of any undisclosed terminations, modifications,
waivers or amendments to any documents reviewed by us and the due authorization,
execution and delivery of all documents where due authorization, execution and
delivery are prerequisites to the effectiveness thereof.
As to matters of fact relevant to this opinion, we have relied solely upon
our examination of the documents referred to above and have assumed the current
accuracy and completeness of the information obtained from public officials and
records referred to above. We have made no independent investigation or other
attempt to verify the accuracy of any of such information or to determine the
existence or non-existence of any other factual matters; however, we are not
-------
aware of any facts that would cause us to believe that the opinion expressed
herein is not accurate.
We are admitted to practice law in the State of California, and we express
no opinion herein with respect to the application or effect of the laws of any
jurisdiction other than the existing laws of the United States of America and
the State of California and (without reference to case law or secondary sources)
the existing Delaware General Corporation Law.
In connection with our opinion expressed below, we have assumed that, at or
prior to the time of the delivery of any shares of Stock, the Registration
Statement willl have been declared effective under the Securities Act of 1933,
as amended, that the registration will apply to such shares of Stock and will
not have been modified or rescinded and that there will not have occurred any
change in law affecting the validity or enforceability of such shares of Stock.
Based upon the foregoing, it is our opinion that the 407,622 shares of
Stock to be sold by the Selling Stockholders pursuant to the Registration
Statement are legally issued, fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to all references to us, if any, in the
Registration Statement, the Prospectus constituting a part thereof and any
amendments thereto.
This opinion speaks only as of its date and we assume no obligation to
update this opinion should circumstances change after the date hereof. This
opinion is intended solely for the your use as an exhibit to the Registration
Statement for the purpose of the above sale of the Stock and is not to be relied
upon for any other purpose.
Very truly yours,
FENWICK & WEST LLP
By: /s/ Jeffrey Vetter
-------------------------
Jeffrey Vetter, a Partner
<PAGE>
EXHIBIT 23.02
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
VeriSign, Inc.:
We consent to incorporation by reference in the registration statement dated on
or about April 29, 1999, on Form S-3 of VeriSign, Inc. of our report dated
January 15, 1999, with respect to the consolidated balance sheets of VeriSign,
Inc. and subsidiaries as of December 31, 1998 and 1997, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the years in the three-year period ended December 31, 1998, which report
appears in the December 31, 1998, annual report on Form 10-K of VeriSign, Inc.,
and to the reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG LLP
Mountain View, California
April 29, 1999
