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Filed pursuant to Rule 424(b)(3)
Registration No. 333-89991
167,750 SHARES
VERISIGN, INC.
COMMON STOCK
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All of the 167,750 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 November 18, 1999, the closing price per share of the common stock on the
Nasdaq National Market was $173.00
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The common stock offered involves a high degree of risk.
See "RISK FACTORS" on page 4.
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The date of this Prospectus is November 19, 1999.
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TABLE OF CONTENTS
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Page
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VeriSign, Inc. ............................................................ 3
Risk Factors............................................................... 4
Use of Proceeds............................................................ 12
Selling Stockholders....................................................... 13
Plan of Distribution....................................................... 15
Legal Matters.............................................................. 17
Experts.................................................................... 17
Documents Incorporated By Reference In This Prospectus..................... 18
Where You Can Find More Information........................................ 19
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VERISIGN, INC.
VeriSign is the leading provider of Internet trust services and digital
certificate solutions needed by websites, enterprises and individuals to
conduct trusted and secure electronic commerce and communications over 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 180,000 of our website
digital certificates and over 3.9 million of our digital certificates for
individuals. Our Website Digital Certificate services are used by all of the
Fortune 500 companies with a Web presence. 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 600 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 currently
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 harmed. In that 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 electronic commerce
and communications;
. 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 new and existing customers;
. attract, integrate, train, retain and motivate qualified personnel;
. respond to competitive developments;
. successfully introduce new Internet trust services; and
. 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.
Our business depends on the adoption of IP networks.
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;
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. 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.
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
acceptance, or if our Internet trust services in particular do not achieve or
sustain market acceptance, our business would be harmed.
Our quarterly operating results may fluctuate and 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;
. 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;
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. 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 any 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. If
this happens, the market price of our common stock could decline.
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 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. These connections depend upon efficient operation of web
browsers, Internet service providers and Internet backbone service providers,
all of which have had periodic operational problems or experienced outages in
the past. Any of these problems or outages could decrease 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 interruptions could harm
our ability to deliver our Internet trust services and therefore could 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
suffer.
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.
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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 these 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 this event, we
could face significant liability and customers could be reluctant to use our
Internet trust services. This type of occurrence could also result in adverse
publicity and therefore harm 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 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.
We may experience future losses.
We have experienced substantial net losses in the past. As of June 30, 1999,
we had an accumulated deficit of $53.5 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 and our future revenues and profitability are
uncertain," among other factors, make prediction of our future operating
results difficult. As a result, we may incur additional losses in the future.
Although our revenues have grown in recent periods, we may be unable to sustain
this growth. Therefore, you should not consider our historical growth
indicative of future revenue levels or operating results.
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 harm our business.
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 364 employees at June 30, 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 also
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 harm our business.
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We depend on key personnel.
We depend on the performance of our senior management team and other key
employees. Our success will also depend on our ability to attract, integrate,
train, retain and motivate these individuals and 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 these positions. 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 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 to do so, we would have to devote substantially more resources to the
distribution, sale and marketing of our Internet trust services than we would
otherwise need to do. Furthermore, as a result of our emphasis on these
relationships, our success in them will depend both on the ultimate success of
the other parties to these 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 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 others, including our competitors.
If we are unable to maintain our strategic relationships or to enter into
additional strategic relationships, our business could suffer.
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. Our quarterly and annual operating results could be
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, tort or warranty
claims, increased insurance costs or increased service and warranty costs, any
of which could harm our business. Furthermore, we often provide implementation,
customization, consulting and other technical services in connection with the
implementation and ongoing
8
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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.
Public key cryptography technology is subject to 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 of our existing
Internet trust services obsolete or unmarketable. If 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.
This type of publicity could also hurt the public perception as to the safety
of the public key cryptography technology included in our digital certificates.
This negative public perception could harm our business.
Our international operations are subject to risks.
Revenues of VeriSign Japan and revenues from other international affiliates
and customers accounted for approximately 24% of our revenues in the first half
of 1999 and 14% of our revenues for the full year of 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 of these factors 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;
. difficulties 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 these affiliates 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 our affiliates with training in security and trust
practices, network management and customer service and support, these practices
are performed by our affiliates 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 damage the market's perception of
the security of our services as well as the security of electronic commerce and
communication over IP networks generally. For further information, please see
"--System interruptions and security breaches could harm our business."
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 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. These regulations or the costs of complying with these
regulations could harm our business.
Acquisitions could harm our business.
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 businesses;
. 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 expenses associated with completing acquisitions 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 harmed.
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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 suffer.
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. This type of
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 suffer 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 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 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. 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 2: Management's Discussion and Analysis of
Financial Condition and Results of Operations--Year 2000 Compliance" in our
Quarterly Report on Form 10-Q for the quarter ended June 30, 1999, filed with
the Securities and Exchange Commission on August 10, 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 harm 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 harm our business.
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We have implemented anti-takeover provisions.
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.
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 51,210,758 shares of common stock
(assuming no exercise of outstanding options after September 30, 1999),
substantially all of which are currently eligible for sale in the public
market.
These share numbers exclude 9,304,225 shares subject to outstanding stock
options and 2,620,693 shares reserved for future issuance under our stock plans
as of September 30, 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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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
September 30, 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 percentage
ownership is based on 51,210,758 shares of common stock outstanding as of
September 30, 1999. Shares of common stock subject to options are counted as
outstanding for the purpose of computing the percentage ownership of the person
holding the options but not for computing the percentage ownership of any other
person. 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 these 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.
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Shares Beneficially Shares Beneficially
Owned Before Offering Owned After Offering
------------------------Shares Being ----------------------
Name Number Percent Offered Number Percent
---- ------------ ----------------------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Deer III & Co. LLC(1)... 77,580 * 27,000 50,580 *
VISA International
Service
Association(2)......... 42,000 * 19,750 22,250 *
TZM Investment Fund(3).. 28,876 * 27,000 1,876 *
KPC&B VII
Associates(4).......... 106,513 * 37,000 69,513 *
Kairdos L.L.C.
Tolmi L.L.C.(5)......... 113,500 * 57,000 56,500 *
</TABLE>
- --------
* Less than 1%.
(1) Represents 44,954 shares held by David J. Cowan, 27,000 shares subject to
options held by Deer III & Co. LLC, of which 20,158 shares are exercisable
within 60 days of September 30, 1999 and 5,626 shares subject to options
held by David J. Cowan that are exercisable within 60 days of September 30,
1999. Mr. Cowan, a director of VeriSign, is a manager of Deer III & Co.
LLC. Mr. Cowan disclaims beneficial ownership of shares held by Deer III &
Co. LLC, except for his proportional interest therein. The 27,000 shares
being offered are shares issued or issuable upon exercise of stock options
that have been assigned to Deer III & Co. LLC by Mr. Cowan. The address for
Deer III & Co. LLC is 535 Middlefield Road, Suite 245, Menlo Park,
California 94025-3468.
(2) Represents 22,250 shares held by VISA International Service Association and
19,750 shares subject to options held by VISA International Service
Association, of which 2,626 shares are exercisable within 60 days of
September 30, 1999. The 19,750 shares being offered are shares issued or
issuable upon exercise of stock options that have been assigned to VISA
International Service Association by William Chenevich, a director of
VeriSign. The address of VISA International Service Association is 900
Metro Center Boulevard, Foster City, CA 94404-2775.
(3) Represents 27,000 shares subject to options held by TZM Investment Fund, of
which 3,376 are exercisable within 60 days of September 30, 1999, and 1,876
shares subject to options held by Timothy Tomlinson that are exercisable
within 60 days of September 30, 1999. Mr. Tomlinson, the Secretary and a
director of VeriSign, is a general partner of TZM Investment Fund and a
trustee of each trust. The 27,000 shares being offered are shares issued or
issuable upon exercise of stock options that have been assigned to
TZM Investment Fund by Mr. Tomlinson. The address of TZM Investment Fund is
200 Page Mill Road, Second Floor, Palo Alto, CA 94306-2022.
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(4) Represents 53,263 shares held by Kevin R. Compton, 16,250 shares subject to
options held by Kevin R. Compton that are exercisable within 60 days of
September 30, 1999, and 37,000 shares subject to options held by Kleiner
Perkins Caufield & Byers VII L.P., or KPC&B VII, of which 9,564 shares are
exercisable within 60 days of September 30, 1999. The 37,000 shares being
offered are shares issued or issuable upon exercise of stock options that
have been assigned to KPC&B VII by Mr. Compton. Mr. Compton, a director of
VeriSign, is a general partner of the general partner of KPC&B VII. Mr.
Compton disclaims beneficial ownership of shares held by KPC&B VII, except
for his proportional interest therein. The address for KPC&B VII is Kleiner
Perkins Caufield & Byers, 2750 Sand Hill Road, Menlo Park, CA 94025.
(5) Represents 30,000 shares held by D. James Bidzos, 6,500 shares held by
Kairdos L.L.C., 20,000 shares subject to options held by D. James Bidzos
that are exercisable within 60 days of September 30, 1999, 20,000 shares
subject to options held by Kairdos L.L.C., of which 8,750 shares are
exercisable within 60 days of September 30, 1999 and 37,000 shares subject
to options held by Tolmi L.L.C., of which 9,564 shares are exercisable
within 60 days of September 30, 1999. This number does not include
4,193,052 shares held by Security Dynamics Technologies, Inc. or by its
wholly- owned subsidiaries. Mr. Bidzos is an Executive Vice President and a
director of Security Dynamics Technologies, Inc., and disclaims beneficial
ownership of these shares. The 20,000 shares being offered by Kairdos
L.L.C. and the 37,000 shares offered by Tolmi L.L.C. are shares issued or
issuable upon exercise of stock options that have been assigned to these
entities by Mr. Bidzos. Mr. Bidzos, the Chairman of the Board of VeriSign,
is the General manager and a member of Kairdos L.L.C and Tolmi L.L.C. Mr.
Bidzos disclaims beneficial ownership of the shares held by Kairdos L.L.C.
and Tolmi L.L.C., except for his proportional interest therein. The address
for Mr. Bidzos is 20 Crosby Drive, Bedford, Massachusetts 01730. The
address for Kairdos L.L.C is 202 S. Minnesota Street, Carson City, NV
89703. The address for Tolmi L.L.C is 361 Ridgewood Avenue, Mill Valley, CA
94941.
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PLAN OF DISTRIBUTION
The selling stockholders have been assigned options to purchase shares of
our common stock by members of our board of directors. 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. 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 the 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. 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.
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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 the time that 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 that 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 date on which all shares offered have
been sold by the selling stockholders.
VeriSign will 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 to
underwriters, dealers or agents as well as fees and disbursements for legal
counsel retained by any selling stockholder.
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, the 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, the arrangements
would be described in the prospectus,
. if the selling stockholder sells to a broker-dealer acting in the
capacity as an underwriter, the 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.
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<PAGE>
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.
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DOCUMENTS INCORPORATED BY REFERENCE IN THIS PROSPECTUS
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
IN THIS PROSPECTUS OR DELIVERED WITH THIS PROSPECTUS.
All documents filed by VeriSign 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 Quarterly Reports on Form 10-Q for the quarters ended March
31, 1999 and June 30, 1999 (SEC file number 000-23593) and filing dates
May 13, 1999 and August 10, 1999
. VeriSign's Annual Report on Form 10-K for the year ended December 31,
1998 (SEC file number 000-23593 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.
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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:
<TABLE>
<S> <C> <C>
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
</TABLE>
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 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 AN OFFER, SOLICITATION OF AN OFFER OR PROXY
SOLICITATION IN THAT 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.
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