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As filed with the Securities and Exchange Commission on December 17, 1998
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8/S-3
REGISTRATION STATEMENT
(Including registration of shares for resale by means of a Form S-3 Prospectus)
Under
THE SECURITIES ACT OF 1933
HI/FN, INC.
(Exact name of issuer as specified in its charter)
DELAWARE 33-0732700
(State of Incorporation) (IRS Employer Identification No.)
750 University Avenue
Los Gatos, California 95032
(Address of principal executive offices)
1996 EQUITY INCENTIVE PLAN
(Full title of the plan)
Raymond J. Farnham
Chief Executive Officer
hi/fn, inc.
750 University Avenue
Los Gatos, California 95032
(Name and address of agent for service)
(408) 399-3500
(Telephone number, including area code, of agent for service)
Copy to:
Steven E. Bochner, Esq.
WILSON SONSINI GOODRICH & ROSATI
650 Page Mill Road
Palo Alto, California 94304-1050
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CALCULATION OF REGISTRATION FEE
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AMOUNT TO PROPOSED MAXIMUM AMOUNT OF
TITLE OF SECURITIES BE OFFERING PRICE REGISTRATION
TO BE REGISTERED REGISTERED PER SHARE (1) FEE
- ------------------------------------------------------------------------------------------
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Common Stock, par value $0.001 per share
Issued under 1996 Equity Incentive Plan 465,898 $18.94 $2,453.10
==========================================================================================
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(1) The price of $18.94 per share, which was the average of the high and low
prices of the Registrant's Common Stock on the Nasdaq National Market on
December 17, 1998, is set forth solely for the purpose of calculating the
registration fee in accordance with Rule 457(c) of the Securities Act of
1933, as amended.
<PAGE> 2
EXPLANATORY NOTE
This Registration Statement on Form S-8/S-3 ("Registration Statement")
is being filed pursuant to General Instruction E to Form S-8 for the purpose of
registering these additional Common Stock shares, which have been issued under
hi/fn, inc.'s 1996 Equity Incentive Plan and are of the same class of Common
Stock for which a registration statement on Form S-8 (Registration No.
333-68917) relating to such 1996 Equity Incentive Plan is effective. The
contents of hi/fn, inc.'s Registration Statement on Form S-8 (Registration No.
333-68917) are hereby incorporated by reference.
<PAGE> 3
RESALE PROSPECTUS
HI/FN, INC.
UP TO 465,898 SHARES OF COMMON STOCK
WHICH THE SELLING STOCKHOLDERS MAY RESELL UNDER THIS PROSPECTUS
--------------------------------------
The stockholders of hi/fn, inc. ("hi/fn" or the "Company") listed below
may offer and resell up to 465,898 shares of hi/fn common stock under this
prospectus, for their own accounts. The Company will not receive any proceeds
from the sale of the shares.
The Company issued these shares to the selling stockholders under the
Company's 1996 Equity Incentive Plan.
The selling stockholders may offer their hi/fn common stock through
public or private transactions, at prevailing market prices or at privately
negotiated prices. Such future prices are not currently known.
The Company's common stock is quoted on the Nasdaq National Market under
the symbol "HIFN." As of the date of this prospectus, there has not been a
reported sale price on the Nasdaq National Market for one share hi/fn common
stock because a trading market has not yet developed for hi/fn common stock. The
Company expects a trading market for its common stock to develop upon
consummation of the dividend distribution of hi/fn common stock held by Stac,
Inc., hi/fn's parent company ("Stac"), to Stac stockholders. This dividend
distribution of hi/fn common stock held by Stac to Stac stockholders commenced
on December 16, 1998.
-------------------
CONSIDER CAREFULLY THE RISK FACTORS
BEGINNING ON PAGE 3 IN THIS PROSPECTUS.
-------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
--------------------
The date of this prospectus is December 17, 1998
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TABLE OF CONTENTS
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Page
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hi/fn 2
Foward-Looking Statements 2
Risk Factors 3
Selling Stockholders 8
Plan of Distribution 10
Information Incorporated by Reference 11
Where to Find More Information About hi/fn 12
Indemnification and the SEC's Position on Enforceability 12
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HI/FN
The Company's principal executive offices are located at 750 University
Avenue, Los Gatos, California 95302. The telephone number at that location is
(408) 399-3500.
The Company designs, develops and markets high-performance
multi-protocol packet processors -- semiconductor devices that enable secure,
high-bandwidth network connectivity and efficient storage of business
information. The Company's packet processor products perform the
computation-intensive tasks of compression and encryption/compression, providing
its customers with high-performance, interoperable implementations of a wide
variety of industry-standard networking and storage protocols. The Company's
products are used in a wide variety of networking and storage equipment such as
routers, remote access concentrators, firewalls and back-up devices.
In this prospectus, unless indicated otherwise, "hi/fn," the "Company,"
"we," "us" and "our" refer to hi/fn, inc.
FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated herein by reference
contain forward-looking statements. The Company bases these statements on its
current expectations, estimates and projections about its industry. Either the
beliefs of management, or assumptions made by management, form the basis for
those expectations, estimates and projections. The safe harbor created by
Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and
Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") generally protects the Company and the selling stockholders from liability
for these statements. You can often recognize such forward-looking statements by
words such as "anticipates," "expects," "intends," "plans," "believes," "seeks,"
"estimates," variations of such words, and similar expressions.
These forward-looking statements do not guarantee future performance and
are subject to risks, uncertainties and assumptions that are difficult to
predict. The Risk Factors section following this paragraph sets forth some of
such risks and uncertainties. The documents incorporated by reference may also
set forth risks and uncertainties. These risks and uncertainties could cause
actual results to differ materially and adversely from those discussed in the
forward-looking statements. The Company undertakes no obligation to publicly
update any of these forward-looking statements to reflect new information or
future events.
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RISK FACTORS
You should carefully consider the risks described below before making an
investment decision. If any of the following risks actually occur, our business,
financial condition or results of operations could be materially adversely
affected. In such case, the trading price of our common stock could decline and
you may lose all or part of your investment.
WE HAVE A LIMITED OPERATING HISTORY.
On August 14, 1996, we were incorporated by Stac, Inc., which transferred its
semiconductor business to us in exchange for shares of our preferred and common
stock. Because we are a relatively new company with a limited operating history,
we may experience financial and other difficulties as we attempt to grow our
business. For example, to expand our business we are increasing our operating
and research and development expenses. This increase in expenses will negatively
affect our financial performance unless we are able to sustain and grow
revenues. In making an investment decision, you should evaluate this risk, as
well as the other difficulties and uncertainties frequently encountered by early
stage companies that operate in competitive markets. If we are not able to
develop our business, we will not be profitable and will not be able to sustain
a viable business.
OUR OPERATING RESULTS MAY FLUCTUATE SIGNIFICANTLY.
Our operating results have fluctuated significantly in the past and we expect
that they will continue to fluctuate in the future. This fluctuation is a result
of a variety of factors including the following:
o general business conditions in our markets as well as global economic
uncertainty;
o a reduction in demand for our customer's products;
o the timing and amount of orders we receive from our customers;
o cancellations or delays of customer product orders;
o any new product introductions by us or our competitors;
o our suppliers increasing costs or changing the delivery of products to
us;
o increased competition or a reduction in the prices that we are able to
charge;
o the variety of the products that we sell as well as seasonal demand for
our products; and
o the availability of manufacturing capacity necessary to make our
products.
Our revenues and operating results depend upon the amount and timing of customer
orders that we receive in a given quarter. In the past we have recognized a
substantial portion of our revenues in the last month of a quarter. If this
trend continues, any failure or delay to fulfill orders by the end of
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a particular quarter will have a material adverse effect on our business, result
of operations and financial condition. As a result of these and other factors,
we believe that period-to-period comparisons of our historical results or
operations are not a good predictor of our future performance. If our future
operating results are below the expectations of stock market analysts, our stock
price may decline.
THE TERMINATION OF OUR RELIANCE ON STAC MAY CAUSE UNFORESEEN PROBLEMS.
When we were a subsidiary of Stac, we benefited from Stac's financial strength
and extensive network of business relationships. Only recently have we become a
stand-alone company and we are now unable to benefit to the same extent from
Stac's relationships. Although we still have certain inter-company agreements
with Stac, generally these agreements will only last for a year or less and
require us to replace services currently being provided by Stac. If we are
unable to timely and effectively replace these services, our business, results
or operations and financial condition will suffer.
IF WE FAIL TO ADD NEW CUSTOMERS OR TO CONVINCE LARGE COMPANIES NOT TO ADOPT
COMPETING STANDARDS, OUR BUSINESS WILL SUFFER.
A significant portion of our revenues has come from only a few customers. In
particular, we are substantially dependent upon sales to Quantum Corporation.
For example, in 1998, 1997, and 1996 sales to Quantum accounted for 70%, 61%,
and 43% of our revenues. Quantum is not under any binding obligation to order
products from us and if we experience a decline in sales from them, we would
experience a material adverse effect on our business, results of operations and
financial condition. We believe that our most significant future customers could
be different from our current customers because of customers' deployment
schedules and budget considerations. As a result, we expect to experience
significant fluctuations in our results of operations on a quarterly and annual
basis. We believe that our future success will depend upon our ability to
establish and maintain relationships with the major companies in our markets.
Many of our current and potential customers currently internally develop
components that are an alternative to our packet processor technology. Customers
may decide not to purchase products from us and instead may rely on their own
internally-developed solutions. Our future success will depend in large part
upon the decision of our current and prospective customers to purchase products
from us. If orders from current customers are cancelled, decreased or delayed,
or we fail to obtain significant orders from new customers, or any significant
customer delays payment or fails to pay, we will experience a material adverse
effect on our business, results of operations and financial condition.
The market for network equipment that would include our packet processor
technology is currently dominated by a few large corporations, including Cisco
Systems, Inc., Ascend Communications, Inc., 3Com Corporation and Bay Networks,
Inc. If these large corporations choose not to incorporate our technology into
their products, we could experience a material adverse effect on our business,
results of operations and financial condition.
THE COMPANY IS DEPENDENT UPON THE DEVELOPMENT OF THE MARKET FOR PACKET
PROCESSORS.
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Our prospects are dependent upon the acceptance of packet processors as an
alternative to other technology traditionally utilized by network and storage
equipment vendors. Many of our current and potential customers have substantial
technological capabilities and financial resources and currently develop their
own solutions. These customers may in the future continue to utilize these
solutions or may determine to develop or acquire components, technologies or
packet processors that are similar to, or that may be substituted for, our
products. In order to be successful we must anticipate market trends and the
price, performance and functionality requirements of such network and storage
equipment vendors and must successfully develop and manufacture products that
meet their requirements. In addition, we must make products available to these
large customers on a timely basis and at competitive prices. Our results of
operations, business and financial condition would be materially and adversely
affected if we are unable to meet these market requirements and customers do not
purchase our products.
FAILURE TO PENETRATE THE EMERGING VIRTUAL PRIVATE MARKET WOULD HAVE AN ADVERSE
EFFECT ON THE COMPANY.
We want to be a leading supplier of packet processors that implement the network
security protocols necessary to support the deployment of the virtual private
network market. In making an investment decision, you should consider the
possibility that this market may not grow or that our products may not
successfully serve this market. Our ability to generate significant revenue in
the virtual private network will depend upon, among other things, the following:
o our ability to demonstrate the benefits of our technology to
distributors, original equipment manufacturers and end users; and
o the increased use of the Internet by businesses as replacements for, or
enhancements to, their private networks.
If we are unable to penetrate the virtual private network, or if that market
fails to develop, we could experience a material adverse effect on our business,
results of operations and financial condition.
RISKS ASSOCIATED WITH EVOLVING INDUSTRY STANDARDS AND RAPID TECHNOLOGICAL
CHANGE.
The markets that we compete in are characterized by rapidly changing technology,
frequent product introductions and evolving industry standards. Our performance
depends on a number of factors, including our ability to do the following:
o properly identify emerging target markets and related technological
trends;
o develop and maintain competitive products;
o enhance our products by adding innovative features that differentiate
our products from those of competitors;
o bring products to market on a timely basis at competitive prices; and
o respond effectively to new technological changes or new product
announcements by others.
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Our past success has been dependent in part upon our ability to develop products
that have been selected for design into new products of leading equipment
manufacturers. However, the development of our packet processors is complex and
from time to time, we have experienced delays in completing the development and
introduction of new products. We may not be able to adhere to our new product
design and introduction schedules and our products may not be accepted in the
market at favorable prices, if at all.
In evaluating new product decisions, we must anticipate future demand for
product features and performance characteristics, as well as available
supporting technologies, manufacturing capacity, competitive product offerings
and industry standards. We must also continue to make significant investments in
research and development in order to continue to enhance the performance and
functionality of our products to keep pace with competitive products and
customer demands for improved performance, features and functionality. The
technical innovations required for the Company to remain competitive are
complicated and require a significant amount of time and money. We may
experience substantial difficulty in introducing new products and we may be
unable to offer enhancements to existing products on a timely, cost-effective
basis, if at all. Our inability to develop and introduce new products or
enhancements directed at new industry standards could have a material adverse
effect on our business, financial condition and results of operations.
OUR MARKETS ARE HIGHLY COMPETITIVE.
We compete in markets that are intensely competitive and are expected to become
more competitive as current competitors expand their product offerings and new
competitors enter the market. The markets that we compete in are subject to
frequent product introductions with improved price-performance characteristics,
rapid technological change, and the continued emergence of new industry
standards. Our products compete with offerings from companies such as
International Business Machines Corporation, VLSI Technology, Inc., Rainbow
Technologies, Inc., Information Resource Engineering Inc. and Analog Devices,
Inc. In 1994, Stac entered into two license agreements with IBM where Stac
granted IBM the right to use, but not sublicense, our patented compression
technology in IBM hardware and software products. Stac also entered into a
license agreement with Microsoft Corporation in 1994 where Stac granted
Microsoft the right to use our compression technology in their software
products. We expect significant future competition from major domestic and
international semiconductor suppliers. Several established electronics and
semiconductor suppliers have recently entered, or expressed an interest to
enter, the network equipment market. We also may face competition from suppliers
of products based on new or emerging technologies. Furthermore, many of our
existing and potential customers internally develop solutions which attempt to
perform all or a portion of the functions performed by our products.
A key element of our packet processor architecture is our encryption technology.
In order to export encryption-related products, the U.S. Department of Commerce
requires us to obtain a license. Foreign competitors that are not subject to
similar requirements have an advantage over us in their ability to rapidly
respond to the requests of customers in the global market.
Many of our current and prospective competitors offer broader product lines and
have significantly greater financial, technical, manufacturing and marketing
resources than us. As a result, they may be
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able to adapt more quickly to new or emerging technologies and changes in
customer requirements or to devote greater resources to promote the sale of
their products. In particular, companies such as Texas Instruments Incorporated,
National Semiconductor Corporation, Lucent Technologies Inc., Intel Corporation
and Motorola, Inc. have a significant advantage over us given their
relationships with many of our customers, their extensive marketing power and
name recognition and their substantial financial resources. In addition, current
and potential competitors may decide to consolidate, lower the prices of their
products or to bundle their products with other products. Any of the above would
significantly and negatively impact our ability to compete and obtain or
maintain market share. If we are unable to successfully compete against our
competitors our business, results of operations and financial condition will be
materially and adversely effected.
We believe that the important competitive factors in our markets are the
following:
o performance and price;
o the time that is required to develop a new product or enhancements to
existing products;
o the ability to achieve product acceptance with major network and storage
equipment vendors;
o the support that exists for new network and storage standards;
o features and functionality;
o adaptability of products to specific applications;
o reliability; and
o technical service and support as well as effective intellectual property
protection.
If we are unable to successfully develop and market products that compete with
those of other suppliers, we would experience a material adverse effect on our
business, financial condition and results of operations. In addition, we must
compete for the services of qualified distributors and sales representatives. To
the extent that our competitors offer distributors or sales representatives more
favorable terms, these distributors and sales representatives may decline to
carry, or discontinue carrying, our products. Our business, financial condition
and results of operations could be adversely affected by any failure to maintain
and expand our distribution network.
WE ARE DEPENDENT UPON THE GROWTH IN DEMAND FOR NETWORK AND STORAGE EQUIPMENT.
Our success is largely dependent upon continued growth in the market for network
security equipment. In addition, our success depends upon storage equipment
vendors incorporating our packet processors into their systems. The network
security equipment market has in the past and may in the future fluctuate
significantly based upon numerous factors, including the lack of industry
standards, adoption of alternative technologies, capital spending levels and
general economic conditions. We are unable to determine the rate or extent to
which this market will grow, if at all. Any decrease in the growth of the
network or storage equipment market or a decline in demand for
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our products could have a material adverse effect on our business, financial
condition and results of operations.
WE WILL NEED SUBSTANTIAL CAPITAL IN THE FUTURE, BUT WE DO NOT HAVE ANY
COMMITMENTS TO PROVIDE THAT CAPITAL.
Our success is dependent upon being able to obtain money from debt or equity
financings. Currently, we have no external source of financing and we do not
have any commitments to provide financing. We may not be able to secure this
capital on favorable terms, if at all. Our failure to obtain needed capital
would have a material adverse effect on our business, results of operations and
financial condition.
OUR OPERATING RESULTS ARE SUBSTANTIALLY DEPENDENT ON ONE PRODUCT FAMILY.
We derive substantially all of our revenue from sales of our compression
processor products which accounted for 84%, 88% and 89% of revenue in the years
ended September 30, 1998, 1997 and 1996. We expect that this trend will continue
for the foreseeable future. A significant decline in revenue from such products
would have a material adverse effect on our business, financial condition and
results of operation.
IT TAKES A LONG TIME TO MAKE A SALE TO OUR CUSTOMERS AND THIS MAY IMPAIR OUR
OPERATING RESULTS.
Our customers typically take a long time to evaluate our products. In fact, it
usually takes our customers 3 to 6 months or more to test our products with an
additional 9 to 18 months or more before they commence significant production of
equipment incorporating our products. As a result this lengthy sales cycle, we
may experience a delay between increasing expenses for research and development
and sales and marketing efforts and the generation of higher revenues, if any.
In addition, the delays inherent in such a lengthy sales cycle raise additional
risks of customer decisions to cancel or change product plans, which could
result in the loss of anticipated sales. Our business, financial condition and
results of operations could be materially adversely affected if customers
curtail, reduce or delay orders or choose not to release products using our
technology.
SELLING STOCKHOLDERS
The selling stockholders acquired beneficial ownership of all the shares
listed below through stock options granted under the Company's 1996 Equity
Incentive Plan. The following table shows, in each case as of December 16, 1998:
o the name of each selling stockholder;
o how many shares the selling stockholder beneficially owns;
o how many shares the selling stockholder can resell under this
prospectus; and
o assuming a selling stockholder sells all shares listed next to his or
her name, how many shares the selling stockholder will beneficially own
after completion of the offering.
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The Company may amend or supplement this prospectus from time to time in
the future to update or change this list of selling stockholders and shares
which may be resold.
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SHARES WHICH MAY
SHARES BE SOLD UNDER
BENEFICIALLY THIS SHARES BENEFICIALLY OWNED
SELLING STOCKHOLDER OWNED (1) PROSPECTUS AFTER OFFERING
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Darren Bell (2) 6,666 3,125 3,541
Mark Birman (2) 26,250 23,333 2,917
John Brown (2) 6,197 5,104 1,093
Chih-Ming Chen (2) 5,333 4,666 667
Jeffrey Chrzanowski (3) 2,108 2,108 0
Timothy Clark (2) 2,656 2,656 0
Arthur J. Collmeyer (4) 225,000 225,000 0
Stephen A. Farnow (5) 42,403 39,238 3,115
Sandra Ferguson (2) 1,458 100 1,358
Robert Friend (2) 5,208 4,375 833
Stephen High (2) 5,625 1,000 4,625
Jonathan Levitt (3) 2,500 2,500 0
Robert Lenz (2) 19,600 5,000 14,600
Davis Ly (3) 1,875 1,875 0
Robert A. Monsour (6) 44,062 40,000 4,062
Karla Moore (3) 312 312 0
Mark Muegge (2) 4,427 3,906 521
Barbara S. Newlon (2) 1,979 500 1,479
Cheryl Poland (3) 16,862 16,862 0
Michael Scruggs (2) 10,625 4,687 5,938
William Tanksley (2) 1,633 758 875
Paul Walker (2) 18,616 9,800 816
William R. Walker (7) 31,250 27,083 4,167
Dale Waltz (2) 25,000 12,500 12,500
Dominique Waluk (2) 2,291 2,083 208
Ann Wehling (3) 750 750 0
Walt Wolman (2) 10,744 9,863 881
Dickson Wong (2) 26,041 16,664 9,377
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(1) The Company has calculated the number and percentage of shares each
selling stockholder "beneficially owns" in accordance with Rule 13d-3
under the Exchange Act. Beneficial ownership as defined in Rule 13d-3
does not necessarily indicate beneficial ownership for any other
purpose. Under Rule 13d-3, a person beneficially owns all shares as to
which they have either sole or shared voting power or sole or shared
investment power, as well as all shares which they have the right to
acquire within 60 days of the calculation date by exercising any stock
option or other right. Since the list above speaks as of December 16,
1998, beneficial ownership therefore includes all shares which the
selling stockholder has the right to acquire within 60 days of December
16, 1998 (i.e. on or before February 16, 1999).
(2) As of the date of this prospectus, the selling stockholder is employed
by the Company.
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(3) The selling stockholder was previously employed by the Company.
(4) Mr. Collmeyer served as President and Chief Executive Officer of the
Company until July 2, 1998.
(5) As of the date of this prospectus, Mr. Farnow serves as the Company's Vice
President of Operations.
(6) As of the date of this prospectus, Mr. Monsour serves as the Company's Vice
President of Marketing.
(7) As of the date of this prospectus, Mr. Walker serves as the Company's Vice
President of Finance, Chief Financial Officer and Secretary.
PLAN OF DISTRIBUTION
The Company has been advised by the selling stockholders that they
intend to sell all or a portion of the shares offered hereby from time to time
in the Nasdaq National Market and that sales will be made at prices prevailing
in the Nasdaq National Market at the times of such sales. The selling
stockholders may also make private sales directly or through a broker or
brokers, who may act as agent or as principal. Further, the selling stockholders
may choose to dispose of the shares offered hereby by gift to a third party or
as a donation to a charitable or other non-profit entity. In connection with any
sales, the selling stockholders and any brokers participating in such sales may
be deemed to be underwriters within the meaning of the Securities Act.
Any broker-dealer participating in such transactions as agent may
receive commissions from the selling stockholders (and, if such broker acts as
agent for the purchaser of such shares, from such purchaser). Broker-dealers may
agree with the selling stockholders to sell a specified number of shares at a
stipulated price per share, and, to the extent such a broker-dealer is unable to
do so acting as agent for the selling stockholders, to purchase as principal any
unsold shares at the price required to fulfill the broker-dealer commitment to
the selling stockholders. Broker-dealers who acquire shares as principal may
thereafter resell such shares from time to time in transactions (which may
involve crosses and block transactions and which may involve sales to and
through other broker-dealers, including transactions of the nature described
above) in the over-the-counter market, in negotiated transactions or otherwise
at market prices prevailing at the time of sale or at negotiated prices, and in
connection with such resales may pay to or receive from the purchasers of such
shares commissions computed as described above.
The Company has advised the selling stockholders that Regulation M
promulgated under the Exchange Act may apply to sales in the market and has
informed them of the possible need for delivery of copies of this prospectus.
The selling stockholders may indemnify any broker-dealer that participates in
transactions involving the sale of the shares against certain liabilities,
including liabilities arising under the Securities Act. Any commissions paid or
any discounts or concessions allowed to any such broker-dealers, and, if any
such broker-dealers purchase shares as principal, any profits received on the
resale of such shares, may be deemed to be underwriting discounts and
commissions under the Securities Act.
Upon the Company's being notified by the selling stockholders that any
material arrangement has been entered into with a broker-dealer for the sale of
shares through a cross or block trade, a supplemental prospectus will be filed
under Rule 424(c) under the Securities Act, setting forth the name of the
participating broker-dealer(s), the number of shares involved, the price at
which such
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shares were sold by the selling stockholders, the commissions paid or discounts
or concessions allowed by the selling stockholders to such broker-dealer(s), and
where applicable, that such broker-dealer(s) did not conduct any investigation
to verify the information set out in this prospectus.
Any securities covered by this prospectus which qualify for sale
pursuant to Rules 144 and 701 under the Securities Act may be sold under Rule
144 rather than pursuant to this prospectus. In general, under Rule 144 as
currently in effect, a person (or persons whose shares are aggregated),
including any person who may be deemed to be an "affiliate" of the Company, is
entitled to sell within any three month period "restricted shares" beneficially
owned by him or her in an amount that does not exceed the greater of (i) 1% of
the then outstanding shares of Common Stock or (ii) the average weekly trading
volume in shares of Common Stock during the four calendar weeks preceding such
sale, provided that at least one year has elapsed since such shares were
acquired from the Company or an affiliate of the Company. Sales are also subject
to certain requirements as to the manner of sale, notice and availability of
current public information regarding the Company. However, a person who has not
been an "affiliate" of the Company at any time within three months prior to the
sale is entitled to sell his or her shares without regard to the volume
limitations or other requirements of Rule 144, provided that at least one year
has elapsed since such shares were acquired from the Company or an affiliate of
the Company. In general, under Rule 701 as currently in effect, any employee,
consultant or advisor of the Company who purchases shares from the Company in
connection with a compensatory stock or option plan or other written agreement
related to compensation is eligible to resell such shares in reliance on Rule
144, but without compliance with certain restrictions contained in Rule 144.
There can be no assurance that the selling stockholders will sell any or
all of the shares of Common Stock offered hereunder.
INFORMATION INCORPORATED BY REFERENCE
This prospectus incorporates by reference the following documents and
information, all of which the Company has filed in the past with the Securities
and Exchange Commission ("SEC"):
o hi/fn's Registration Statement on Form 10 (File No. 0-24765) filed
December 8, 1998.
o hi/fn's Registration Statement on Form S-8 (Registration No. 333-68917)
filed December 15, 1998.
Unless the Company has filed a post-effective amendment to the
registration statement under the Securities Act which contains this prospectus
indicating that all of the shares have been sold or which deregisters all shares
then remaining unsold, all documents which the Company subsequently files under
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act shall be deemed to be
incorporated by reference in this prospectus and to be part of this prospectus
from the date of filing of such documents.
The Company will provide without charge to each person to whom a copy of
this prospectus is delivered, upon written or oral request, a copy of the
information that has been or may be incorporated by reference in this
prospectus. Direct any request for such copies by writing or
11
<PAGE> 14
telephoning us at the following address: hi/fn, inc., 750 University Avenue, Los
Gatos, California 95032; the telephone number is (408) 399-3500.
WHERE TO FIND MORE INFORMATION ABOUT HI/FN
The Company is required to file special reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's public reference room at 450 Fifth Street, N.W., Washington, D.C.
20549. Please call the SEC at 1-800-SEC-0330 for further information on the
operation of the public reference room. Our SEC filings are also available to
the public from the SEC's Web site at http://www.sec.gov.
This prospectus contains information concerning the Company and the sale
of its Common Stock by the Selling Stockholders, but does not contain all the
information set forth in the Registration Statement on Form S-8/S-3 which the
Company has filed with the SEC under the Securities Act. Statements made in this
Prospectus as to the contents of any referenced contract, agreement or other
document are not necessarily complete, and such statement shall be deemed
qualified in its entirety by reference thereto. The Registration Statement,
including various exhibits, may be obtained upon payment of the fee prescribed
by the SEC, or may be examined without charge at the SEC's office in Washington,
D.C.
INDEMNIFICATION AND THE SEC'S POSITION ON ENFORCEABILITY
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. This may under certain circumstances include indemnification for
liabilities arising under the Securities Act as well as for expenses incurred in
that regard. The Company's Certificate of Incorporation and Bylaws provide for
the indemnification of present and former directors, officers, employees and
agents of the Company to the maximum extent permitted by the Delaware General
Corporation Law. The Company has also entered into, or will enter into,
Indemnification Agreements with its officers and directors.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, the Company has been informed that in the
opinion of the SEC such indemnification is against public policy as expressed in
the Securities Act and is therefore unenforceable.
12
<PAGE> 15
HI/FN, INC.
REGISTRATION STATEMENT ON FORM S-8
PART II
INFORMATION REQUIRED IN REGISTRATION STATEMENT
ITEM 1. INCORPORATION OF DOCUMENTS BY REFERENCE.
The contents of the Company's Registration Statement on Form S-8
(Registration No. 333-68917) are hereby incorporated by reference.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
The issuance of the shares being offered by the Form S-3 resale
prospectus were deemed to be exempt from registration under the Securities Act
in reliance on Section 4(2) of the Securities Act or Regulation D promulgated
thereunder, or Rule 701 promulgated under Section 3(b) of the Securities Act, as
transactions by an issuer not involving a public offering or transactions
pursuant to compensatory benefit plans and contracts relating to compensation as
provided under such Rule 701. The recipients of securities in each such
transaction represented their intention to acquire the securities for investment
only and not with a view to or for sale in connection with any distribution
thereof and appropriate legends were affixed to the share certificates and
instruments issued in such transactions. All recipients had adequate access,
through their relationship with the Company, to information about the Company.
II-1
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Company, hi/fn, inc., a corporation organized and existing under the laws of
the State of Delaware, certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-8/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 Los Gatos, State of California, on
this 16th day of December, 1998.
hi/fn, inc.
By: /s/ RAYMOND J. FARNHAM
------------------------------------
Raymond J. Farnham
President, Chief Executive Officer
and Director
II-2
<PAGE> 17
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Raymond J. Farnham and William R. Walker,
and each of them, as his or her attorney-in-fact, with full power of
substitution in each, for him or her in any and all capacities to sign any
amendments to this Registration Statement on Form S-8/S-3, and to file the same,
with exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
said attorney-in-fact, or his substitutes, may do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ RAYMOND J. FARNHAM President, Chief Executive Officer and December 16, 1998
- ---------------------- Director
Raymond J. Farnham
/s/ WILLIAM R. WALKER Vice President, Finance, Chief Financial December 16, 1998
- --------------------- Officer and Secretary
William R. Walker
/s/ DOUGLAS L. WHITING Director December 16, 1998
- ----------------------
Douglas L. Whiting
/s/ ROBERT W. JOHNSON Director December 16, 1998
- ---------------------
Robert W. Johnson
</TABLE>
II-3
<PAGE> 18
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION NUMBERED PAGE
------ ----------- -------------
<S> <C>
5.1 Opinion of Counsel as to legality of securities being registered
23.1 Consent of Independent Accountants
23.2 Consent of Counsel (contained in Exhibit 5.1)
24.1 Power of Attorney (see Page II-3)
</TABLE>
<PAGE> 1
EXHIBIT 5.1
December 17, 1998
hi/fn, inc.
750 University Avenue
Los Gatos, California 95302
Re: Registration Statement on Form S-8/S-3
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-8/S-3 (the
"Registration Statement") to be filed by hi/fn, inc., a Delaware corporation
(the "Registrant" or "you"), with the Securities and Exchange Commission on or
about December 17, 1998, in connection with the registration under the
Securities Act of 1933, as amended, of 465,898 shares of your Common Stock,
$.001 par value (the "Shares"), which have been issued pursuant to the
Registrant's 1996 Equity Incentive Plan (the "Plan"). As your legal counsel, we
have reviewed the actions proposed to be taken by you in connection with the
proposed sale and issuance of the Shares.
It is our opinion that, upon completion of the proceedings being taken,
or contemplated by us, as your counsel, to be taken prior to the issuance of the
Shares pursuant to the Registration Statement and the Plans, including the
proceedings being taken in order to permit such transaction to be carried out in
accordance with applicable state securities laws, the Shares, when issued and
sold in the manner described in the Registration Statement, will be legally and
validly issued, fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement, and further consent to the use of our name wherever appearing in the
Registration Statement, including the Prospectus constituting a part thereof,
and any amendments thereto.
Very truly yours,
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8/S-3 of our report dated October 23, 1998, appearing on
page F-1 of hi/fn, inc.'s Registration Statement on Form 10 (File No. 0-24765).
PRICEWATERHOUSECOOPERS LLP
San Diego, California
December 17, 1998
