As filed with the Securities and Exchange Commission on January 11, 2000
Registration No. 333-_________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
THE SECURITIES ACT OF 1933
(Exact name of Registrant as specified in its charter)
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
1350 Charleston Road
Mountain View, California 94043-1331
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
Dana L. Evan
Chief Financial Officer
1350 Charleston Road
Mountain View, California 94043-1331
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Jeffrey R. Vetter, 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 the 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
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [_]_____________
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [_]_____________
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. [_]
CALCULATION OF REGISTRATION FEE
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
<S> <C> <C> <C> <C>
Common Stock, par value $0.001 per share 4,391,409 shares $169.19 $742,982,488.71 $196,147.38
(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 January 5, 2000.
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),
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and we are not soliciting offers to buy these
securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION
January 11, 2000
All of the 4,391,409 shares of common stock of VeriSign, Inc. are being
sold by a stockholder of VeriSign. VeriSign will not receive any proceeds from
the sale of shares offered by the selling stockholder. See "Selling
Stockholder" 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 January 5, 2000, the closing price per share of the common stock on the
Nasdaq National Market was $169 13/16.
The common stock offered involves a high degree of risk. See "RISK FACTORS" on
The date of this prospectus is , 2000.
TABLE OF CONTENTS
VeriSign, Inc........................................................ 3
Risk Factors......................................................... 4
Use of Proceeds...................................................... 14
Selling Stockholder.................................................. 15
Plan of Distribution................................................. 16
Legal Matters........................................................ 18
Documents Incorporated By Reference In This Prospectus............... 19
Where You Can Find More Information.................................. 19
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
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
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
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
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
. 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
. the continued evolution of electronic commerce as a viable means of
. the demand for our Internet trust services;
. competition levels;
. the perceived security of electronic commerce and communications over IP
. the perceived security of our services, technology, infrastructure and
. our continued ability to maintain our current, and enter into additional,
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;
. 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;
. 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;
. 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
. the amount and timing of expenditures related to expansion of our
. 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
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, with respect to our operations in
Japan, 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
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
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 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
We may experience future losses.
We have experienced substantial net losses in the past. As of September
30, 1999, we had an accumulated deficit of approximately $52.0 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 371 employees at September 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 and, in January 2000
we acquired Signio and Thawte. 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.
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
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
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
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,
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 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 26% of our revenues in the nine months
ended September 30, 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,
. 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.
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.
Since January 1998 we have acquired three businesses. 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
. 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
If we are unable to successfully address any of these risks, our business
could be 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 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 September 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
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.
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
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 103,440,285 shares of common
stock (assuming no exercise of outstanding options after December 31, 1999),
substantially all of which are currently eligible for sale in the public market.
These share numbers exclude 17,742,218 shares subject to outstanding
stock options and 5,046,293 shares reserved for future issuance under our
stock plans as of December 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 stockholder.
The following table sets forth certain information known to VeriSign with
respect to the beneficial ownership of the Company's common stock as of January
5, 2000 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
103,440,285 shares of common stock outstanding as of December 31, 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 stockholder has advised VeriSign that it is the beneficial
owner of the shares being offered.
Shares Beneficially Shares Beneficially
Owned Before Offering Shares Being Owned After Offering
Name Number Percent Offered Number Percent
- ---- ------------- ----------- -------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Mark Shuttleworth.................... 4,391,409 4.2% 4,391,409 0 0
Mr. Shuttleworth received the shares he proposes to sell under this
prospectus under the terms of an Exchange Agreement dated as of December 19,
1999 by and between VeriSign and Mr. Shuttleworth. Under this Agreement,
VeriSign issued to Mr. Shuttleworth 4,391,409 shares of common stock in exchange
for all of the outstanding stock of Thawte Holdings (Pty) Ltd., a South Africa
corporation, and Thawte USA, Inc., a North Carolina corporation which we
collectively refer to as THAWTE. Of these shares, 439,141 will be held in
escrow until January 2001, in order to secure the indemnification obligations of
Mr. Shuttleworth under the exchange agreement.
PLAN OF DISTRIBUTION
The selling stockholder received its shares under an Exchange Agreement in
connection with the acquisition by VeriSign of THAWTE. To VeriSign's knowledge,
the selling stockholder has not 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 stockholder or by its pledgees, donees, transferees and other successors
in interest only during "Permitted Windows." A permitted window is a period of
30 (thirty) consecutive calendar days. In order to open a permitted window
other than the first permitted window, which was opened as of the date of this
prospectus, the selling stockholder must notify VeriSign that the holder desires
to sell shares. As provided in the Registration Rights Agreement, VeriSign may
notify the holder that (1) this prospectus is current, (2) the prospectus must
be amended or (3) if it intends to defer the opening of a permitted window as
provided in the Registration Rights Agreement, which provisions are summarized
below. There will be no more than three permitted windows in either the first
or second 12 months subsequent to the date of this prospectus. In addition,
there must be a 60-day interval between any two permitted windows. In addition,
the selling stockholder agreed not to sell an amount of shares in excess of
three percent (3%) of VeriSign's outstanding common stock in any quarterly
The selling stockholder 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
. 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
VeriSign has been advised by the selling stockholder that it has not, 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 stockholder 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, the selling
stockholder may also enter into hedging transactions. For example, the selling
. 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 the selling stockholder 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.
VeriSign has advised the selling stockholder 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 his affiliates. The selling
stockholder has advised VeriSign that during the time that they may be engaged
in the attempt to sell shares registered, he will:
. not engage in any stabilization activity in connection with any of
. 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 defer the opening
of a permitted window if, in the good faith judgment of the board of directors
of VeriSign, it would be seriously detrimental to VeriSign and its stockholders
for a permitted window to be in effect 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.
This offering will terminate on the earlier to occur of
. two years from the date of this prospectus;
. the date on which all shares offered have been sold by the selling
. the shares may be sold by the selling stockholder in a three month
period under Rule 144 or 145 under the Securities Act.
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
stockholder 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 the 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
. 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
. 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.
The validity of the shares of common stock offered hereby will be passed
upon for VeriSign by Fenwick & West LLP, Palo Alto, California.
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.
DOCUMENTS INCORPORATED BY REFERENCE IN THIS
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, June 30, 1999 September 30, 1999, as amended;
. VeriSign's Annual Report on Form 10-K for the year ended December 31,
. VeriSign's Current Report on Form 8-K filed with the SEC on January 6,
. VeriSign's Definitive Proxy Statement for its 1999 Annual Meeting of
Stockholders filed with the SEC on April 22, 1999; and
. VeriSign's Registration Statement on Form 8-A (SEC file number 000-23593
and filing date January 5, 1998, which describes VeriSign's common
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
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 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
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.
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:
Securities and Exchange Commission registration fee............. $196,147.37
Nasdaq listing fee.............................................. 17,500
Accounting fees and expenses.................................... 10,000
Legal fees and expenses......................................... 10,000
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 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 Indemnification Agreements with each of its other executive officers to
give 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
The Registrant has obtained directors' and officers' liability insurance
with a per claim and annual aggregate coverage limit of $5 million.
ITEM 16. Exhibits.
(a) The following exhibits are filed herewith:
Number Exhibit Title
3.01 Third Amended and Restated Certificate of Incorporation of the
3.02 Amended and Restated Bylaws of Registrant.(1)
4.01 Form of Specimen Common Stock Certificate.(1)
5.01 Opinion of Fenwick & West LLP regarding legality of the securities
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-5).
(1) Previously filed with the Commission as an exhibit to the Registrant's
Registration Statement on Form S-1 filed on January 2, 1998 (File Number
333-40789) and incorporated herein by reference.
* To be filed by amendment.
(b) Financial statement schedules are omitted because the information
called for is not required or is shown either in the financial statements or the
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:
(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
(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.
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 11th
day of January, 2000.
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
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
Signature Title Date
- --------- ----- ----
<S> <C> <C>
Principal Executive Officer:
/s/ Stratton D. Sclavos President, Chief Executive Officer January 11, 2000
Stratton D. Sclavos and Director
Principal Financial and
Principal Accounting Officer:
/s/ Dana L. Evan Executive Vice President of Finance January 11, 2000
Dana L. Evan and Administration and Chief
/s/ D. James Bidzos Chairman of the Board January 11, 2000
D. James Bidzos
/s/ William Chenevich Director January 11, 2000
/s/ Kevin R. Compton Director January 11, 2000
Kevin R. Compton
/s/ David J. Cowan Director January 11, 2000
David J. Cowan
/s/ Timothy Tomlinson Director January 11, 2000
Number Exhibit Title
3.01 Third Amended and Restated Certificate of Incorporation of the Registrant.(1)
3.02 Amended and Restated Bylaws of Registrant.(1)
4.01 Form of Specimen Common Stock Certificate.(1)
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-5).
(1) Previously filed with the Commission as an exhibit to the Registrant's
Registration Statement on Form S-1 filed on January 2, 1998 (File Number
333-40789) and incorporated herein by reference.
* To be filed by amendment.
January 11, 2000
1350 Charleston Road
Mountain View, CA 94043-1331
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 January 11, 2000 in
connection with the registration under the Securities Act of 1933, as amended,
of an aggregate of 4,391,409 shares of your common stock (the "Stock"), all of
which are currently issued and outstanding and will be sold by a selling
stockholder (the "Selling Stockholder").
In rendering this opinion, we have examined the following:
(1) 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;
(2) your registration statement on Form 8-A (File Number 000-23593) filed
with the Commission on January 5, 1998;
(3) the Registration Statement, together with the Exhibits filed as a part
(4) the Prospectus prepared in connection with the Registration Statement;
(5) the minutes of meetings and actions by written consent of the
stockholders and Board of Directors;
(6) 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 December 31,
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 December 31, 1999, verifying the number of the issued and
(7) a Management Certificate addressed to us and dated of even date
herewith executed by the Company containing certain factual and other
(8) the various stock purchase and other agreements under which the
Selling Stockholder acquired the Stock to be sold by them as described
in the Registration Statement; and
(9) a Selling Stockholder Questionnaire executed by the Selling
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 "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 this 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 will have been declared effective under the Securities Act of 1933, as
amended, that the registration will apply to these 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 these shares of Stock.
Based upon the foregoing, it is our opinion that the 4,391,409 shares of
Stock to be sold by the Selling Stockholder 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
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