<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 8, 1995
REGISTRATION STATEMENT NO. 33-64043
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-3
------------------------
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------
ANALOG DEVICES, INC.
(Exact name of registrant as specified in its charter)
------------------------
MASSACHUSETTS 04-2348234
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
ONE TECHNOLOGY WAY, NORWOOD, MASSACHUSETTS 02062-9106 (617) 329-4700
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------------------
PAUL P. BROUNTAS, ESQ.
HALE AND DORR
60 STATE STREET
BOSTON, MASSACHUSETTS 02109
(617) 526-6000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
PAUL P. BROUNTAS, ESQ.
MARK G. BORDEN, ESQ. KEITH F. HIGGINS, ESQ.
HALE AND DORR ROPES & GRAY
60 State Street One International Place
Boston, Massachusetts 02109 Boston, Massachusetts 02110
(617) 526-6000 (617) 951-7000
------------------------
Approximate date of commencement of proposed sale to public: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. / /
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, please 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. / /
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
SHALL DETERMINE.
================================================================================
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED DECEMBER 8, 1995
$200,000,000
ANALOG LOGO
% CONVERTIBLE SUBORDINATED NOTES DUE 2000
------------------------
The Notes offered hereby will be convertible into Common Stock of Analog
Devices, Inc. ("Analog" or the "Company") at any time after 60 days following
the latest date of original issuance thereof and prior to maturity, unless
previously redeemed, at a conversion price of $ per share, subject to
adjustment in certain events. See "Description of Notes -- Conversion Rights"
for a description of events that may cause an adjustment to the conversion
price. The Common Stock of the Company is traded on the New York Stock Exchange
under the symbol "ADI." On December 7, 1995, the last reported sale price of the
Common Stock on the New York Stock Exchange was $35 5/8 per share. See "Price
Range of Common Stock."
Interest on the Notes is payable on June 1 and December 1 of each year,
commencing on June 1, 1996. The Notes are redeemable, in whole or in part, at
the option of the Company at any time on or after December 1, 1998 at the
redemption prices set forth herein, plus accrued interest, if any, to the
redemption date. If a Change in Control (as defined herein) occurs, each holder
of Notes will have the right, subject to certain conditions and restrictions, to
require the Company to offer to repurchase all outstanding Notes, in whole or in
part, owned by such holder at 100% of their principal amount, plus accrued
interest, if any, to the date of repurchase. See "Description of Notes" for a
more complete description of the Indenture's provisions. The Notes are
subordinated to all existing and future Senior Indebtedness (as defined herein)
of the Company and will be effectively subordinated to all indebtedness and
other obligations of the Company's subsidiaries. At July 29, 1995, the Company
had approximately $80.1 million of outstanding Senior Indebtedness, and the
subsidiaries of the Company had approximately $75.1 million of indebtedness and
other liabilities (other than indebtedness to the Company). The Indenture
governing the Notes does not restrict the ability of the Company or its
subsidiaries to incur additional indebtedness, including Senior Indebtedness.
The Notes have been approved for listing on the New York Stock Exchange
subject to notice of issuance.
SEE "RISK FACTORS" BEGINNING ON PAGE 6 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE NOTES OFFERED HEREBY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
==================================================================================================
<CAPTION>
Price to Underwriting Proceeds to
Public(1) Discount(2) Company(1)(3)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note.............................. % % %
Total(4).............................. $ $ $
==================================================================================================
<FN>
(1) Plus accrued interest, if any, from the date of initial issuance.
(2) See "Underwriting" for information concerning indemnification of the
Underwriters and other matters.
(3) Before deducting expenses payable by the Company, estimated at $525,000.
(4) The Company has granted the Underwriters a 30-day option to purchase up to
an additional $30,000,000 aggregate principal amount of Notes at the Price
to Public, less the Underwriting Discount, solely to cover over-allotments,
if any. If the Underwriters exercise this option in full, the Price to
Public will total $ the Underwriting Discount will total
$ , and the Proceeds to Company will total $ . See
"Underwriting."
</TABLE>
The Notes are offered by the Underwriters when, as and if delivered to and
accepted by the Underwriters and subject to the right to reject any order in
whole or in part. It is expected that delivery of the certificates representing
the Notes will be made against payment therefor at the office of Montgomery
Securities on or about , 1995.
------------------------
MONTGOMERY SECURITIES GOLDMAN, SACHS & CO.
, 1995
<PAGE> 3
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). The reports and other information filed by the
Company with the Commission can be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the Regional Offices of the Commission at Seven World Trade
Center, New York, New York 10048 and Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material
also can be obtained from the Public Reference Section of the Commission,
Washington, D.C. 20549 at prescribed rates. The Company's Common Stock is listed
on the New York Stock Exchange. Reports, proxy materials and other information
concerning the Company may also be inspected at the offices of the New York
Stock Exchange, 20 Broad Street, New York, New York 10005.
The Company has filed with the Commission a Registration Statement on Form
S-3 under the Securities Act with respect to the Notes offered hereby. This
Prospectus does not contain all of the information set forth in the Registration
Statement and the exhibits and schedules thereto, certain portions of which are
omitted as permitted by the rules and regulations of the Commission. For further
information with respect to the Company and the Notes, reference is made to the
Registration Statement, including the exhibits and schedules. The Registration
Statement, together with its exhibits and schedules thereto, may be inspected,
without charge, at the Commission's principal office at 450 Fifth Street, N.W.,
Washington, D.C. 20459, and also at the regional offices of the Commission
listed above. Copies of such material may also be obtained from the Commission
upon the payment of prescribed fees.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
In accordance with the requirements of the Exchange Act, certain reports
and other information are filed by the Company periodically with the Commission.
The following documents filed by the Company with the Commission are
incorporated herein by reference: (1) the Company's Annual Report on Form 10-K
for the fiscal year ended October 29, 1994, (2) the Company's Quarterly Report
on Form 10-Q for the quarter ended January 28, 1995, (3) the Company's Quarterly
Report on Form 10-Q for the quarter ended April 29, 1995, (4) the Company's
Quarterly Report on Form 10-Q for the quarter ended July 29, 1995 and (5) all
documents filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Exchange Act after November 7, 1995 and prior to the date of this
Prospectus.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and before the
termination of the offering shall be deemed incorporated herein by reference,
and such documents shall be deemed to be a part hereof from the date of filing
such documents. Any statement contained herein or in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement as so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, on the request of any such person, a copy of any or all
of the above documents incorporated herein by reference (other than exhibits to
such documents, unless such exhibits are specifically incorporated by reference
into the documents that this Prospectus incorporates). Requests should be
directed to Joseph E. McDonough, Vice President, Finance of Analog Devices,
Inc., One Technology Way, Norwood, MA 02062-9106, telephone number (617)
329-4700.
------------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN MARKET PRICES OF THE NOTES OFFERED
HEREBY OR SHARES OF THE COMPANY'S COMMON STOCK AT LEVELS ABOVE THOSE WHICH MIGHT
OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE
NEW YORK STOCK EXCHANGE OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
2
<PAGE> 4
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to the more
detailed information and Consolidated Financial Statements, including the notes
thereto, appearing elsewhere in or incorporated by reference in this Prospectus.
Unless the context indicates or requires otherwise, references in this
Prospectus to the "Company" or "Analog" are to Analog Devices, Inc. and its
subsidiaries. Unless otherwise indicated, all information in this Prospectus
assumes that the Underwriters' over-allotment option is not exercised. See
"Underwriting." All share and per share information in this Prospectus does not
reflect the three-for-two split of the Company's Common Stock effected in the
form of a 50% stock dividend to be distributed on January 3, 1996 to
stockholders of record on December 12, 1995.
THE COMPANY
Analog Devices, Inc. ("Analog" or the "Company") designs, manufactures and
markets a broad line of high-performance linear, mixed-signal and digital
integrated circuits ("ICs") that address a wide range of real-world signal
processing applications. The Company's principal products include
general-purpose, standard-function linear and mixed-signal ICs ("SLICs"),
special-purpose linear and mixed-signal ICs ("SPLICs") and digital signal
processing ICs ("DSP ICs"). The Company also manufactures and markets devices
using assembled product technology.
Analog believes it is one of the world's largest suppliers of SLIC
products. The Company's SLIC products are primarily high-performance,
single-function devices. The majority of the Company's SLIC revenue is
attributable to data converters (analog-to-digital and digital-to-analog) and
amplifiers. Other SLIC products offered by the Company include analog
signal-processing devices (such as analog multipliers), voltage references and
comparators. SLICs are sold to a very large customer base for a wide variety of
applications, including applications in the medical, engineering and scientific
instruments market, factory automation market and military/aerospace market.
Over the past five years, Analog has sought to balance its traditionally
stable SLIC business with the growth opportunities available for SPLICs and DSP
ICs, particularly in the communications and computer markets. Analog's SPLIC and
DSP IC products feature high levels of functional integration on a single chip
and are designed to address customers' needs to incorporate increasingly greater
levels of real-world signal processing capability in their products. The
Company's SPLIC and DSP ICs include products used in wireless communication
applications, such as digital mobile phones and base stations, and computer
applications, such as audio enhancement in multimedia PCs.
To build upon its position as a leader in real-world signal processing, the
Company is pursuing strategies that include: (i) expanding its traditional SLIC
business, (ii) becoming a major supplier of general-purpose DSP ICs, (iii)
pursuing growth opportunities for system-level signal-processing ICs, and (iv)
leveraging its core technologies to develop innovative products.
RECENT OPERATING RESULTS
On November 29, 1995, the Company reported its results for the fourth
quarter of fiscal 1995. The Company reported that for the fourth quarter its
sales were $257.2 million and its earnings per share were $0.44. The Company
also reported bookings of approximately $301 million in the fourth quarter. The
Company reported that for fiscal 1995 its sales were $941.5 million and that its
earnings per share were $1.50.
3
<PAGE> 5
<TABLE>
THE OFFERING
<S> <C>
Securities Offered................... $200,000,000 aggregate principal amount of %
Convertible Subordinated Notes due 2000 (the
"Notes").
Interest Payment Dates............... June 1 and December 1, commencing June 1, 1996.
Maturity............................. December 1, 2000.
Conversion........................... The Notes are convertible into the Company's Common
Stock at any time after 60 days following the latest
date of original issuance thereof and prior to
maturity, unless previously redeemed, at a conversion
price of $ per share, subject to adjustment in
certain events.
Redemption at Option of Company...... The Notes are redeemable at the prices set forth
herein, in whole or in part, at the option of the
Company, at any time on or after December 1, 1998.
See "Description of Notes -- Optional Redemption."
Company Repurchase at Option of
Holders............................ The Notes are repurchaseable at the option of the
holder
upon a Change in Control (as defined under
"Description of Notes -- Repurchase at Option of
Holders Upon a Change in Control") at 100% of the
principal amount thereof, plus accrued interest to
the repurchase date.
Subordination........................ The Notes are subordinated to all existing and future
Senior Indebtedness (as defined herein) of the
Company, and will be effectively subordinated to all
indebtedness and other liabilities of the Company's
subsidiaries. At July 29, 1995, the Company had
approximately $80.1 million of outstanding Senior
Indebtedness (excluding Senior Indebtedness
constituting liabilities of a type not required to be
reflected as a liability on the balance sheet of the
Company in accordance with generally accepted
accounting principles, such as contingent
obligations, forward foreign exchange contracts and
interest rate swap agreements). As of July 29, 1995,
the subsidiaries of the Company had approximately
$75.1 million of outstanding indebtedness and other
liabilities (other than indebtedness to the Company).
The Indenture governing the Notes does not restrict
the ability of the Company or its subsidiaries to
incur additional indebtedness, including Senior
Indebtedness.
Use of Proceeds...................... The Company intends to use the net proceeds from the
sale of the Notes for expansion of manufacturing
capacity and other general corporate purposes,
including working capital. See "Use of Proceeds."
Listing.............................. The Notes have been approved for listing on the New
York Stock Exchange, subject to notice of issuance.
The Common Stock is listed on the New York Stock
Exchange under the symbol "ADI."
</TABLE>
4
<PAGE> 6
<TABLE>
SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA AND RATIOS)
<CAPTION>
FISCAL YEAR ENDED(1) NINE MONTHS ENDED
---------------------------------------------------------- --------------------
NOV. 3, NOV. 2, OCT. 31, OCT. 30, OCT. 29, JULY 30, JULY 29,
1990(2)(3) 1991(2) 1992 1993 1994 1994 1995
---------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS
DATA:
Net sales............................... $485,214 $537,738 $567,315 $666,319 $773,474 $570,173 $684,352
Gross margin............................ 240,960 265,314 265,637 315,467 379,026 277,182 346,372
Operating income........................ 6,218 17,377 26,172 62,685 101,816 72,827 111,184
Income (loss) before income taxes....... (13,563) 9,382 18,965 55,525 96,911 68,394 111,819
Net income (loss)....................... $(12,913) $ 8,203 $ 14,935 $ 44,457 $ 74,496 $ 52,823 $ 84,136
Net income (loss) per share(4).......... $ (0.18) $ 0.12 $ 0.21 $ 0.59 $ 0.96 $ 0.68 $ 1.06
Shares used in computing net income
(loss) per share(4)................... 70,415 70,329 71,624 75,695 77,271 77,004 79,064
OTHER DATA:
EBITDA(5)............................... $ 52,994 $ 70,082 $ 81,122 $122,498 $163,100 $118,895 $158,231
Cash flows from operating activities.... 82,237 51,014 33,462 89,495 183,342 114,954 120,258
Cash flows from investing activities.... (99,068) (52,270) (65,654) (67,155) (163,508) (82,127) (153,727)
Cash flows from financing activities.... (4,894) 10,001 33,653 39,593 9,971 8,671 (12,076)
Capital expenditures, net............... 39,029 52,270 65,654 67,155 90,856 42,783 145,838
Ratio of earnings to fixed charges(6)... --(7) 2.4x 3.6x 7.1x 10.0x 9.5x 18.0x
Ratio of EBITDA to gross interest
expense............................... 16.6x 14.7x 13.6x 17.1x 22.8x 21.8x 48.8x
</TABLE>
<TABLE>
<CAPTION>
JULY 29, 1995
---------------------------
ACTUAL AS ADJUSTED(8)
---------- --------------
<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Working capital......................................................................... $284,570 $ 479,545
Total assets............................................................................ 911,536 1,111,536
Long-term obligations................................................................... 80,000 280,000
Stockholders' equity.................................................................... 619,647 619,647
<FN>
- ---------------
(1) The Company's fiscal year ends on the Saturday closest to the last day in
October. Fiscal years 1991, 1992, 1993 and 1994 were each 52-week years.
Fiscal year 1990 was a 53-week year.
(2) In fiscal years 1990 and 1991, the Company recorded restructuring charges of
$18.5 million and $7.0
million, respectively, related to the consolidation of certain
manufacturing, sales and administrative operations worldwide. These charges
provided for the cost of employee separations, facility consolidations,
equipment write-downs and disposals and other restructuring costs.
(3) Other expense in fiscal year 1990 includes investment valuation expense
totaling $18.3 million related to reserves recorded against investments in
the Company's previously operated venture capital division.
(4) Adjusted to reflect the three-for-two stock split effected in the form of a
50% stock dividend distributed on January 4, 1995.
(5) EBITDA is defined as earnings before interest expense, interest income,
other expenses, taxes on income, depreciation and amortization. EBITDA is
presented here to provide additional information about the Company's
ability to meet its future debt service, capital expenditure, and working
capital requirements and should not be construed as a substitute for or a
better indicator of results of operations or liquidity than net income or
cash flow from operating activities computed in accordance with generally
accepted accounting principles.
(6) The ratio of earnings to fixed charges is computed by dividing income before
income taxes and fixed charges by fixed charges. Fixed charges consist of
interest on all indebtedness, amortization of debt offering costs, and the
estimated interest component of rental expense.
(7) As a result of the loss incurred in fiscal year 1990, the Company was unable
to cover fixed charges. The amount of such coverage deficiency was $14.1
million.
(8) Adjusted to reflect the sale of the Notes offered hereby and the receipt of
the estimated net proceeds.
</TABLE>
5
<PAGE> 7
RISK FACTORS
Prospective purchasers of the Notes offered hereby should carefully
consider the following risk factors in addition to the other information
contained in, or incorporated by reference in, this Prospectus before purchasing
the Notes offered hereby.
POTENTIAL FLUCTUATIONS IN OPERATING RESULTS. The Company's operating
results are affected by a wide variety of factors, including the timing of new
product announcements or introductions by the Company and its competitors,
competitive pricing pressures, fluctuations in manufacturing yields,
availability of manufacturing capacity, changes in product mix and economic
conditions in the United States and international markets. In addition, the
semiconductor market has historically been cyclical and subject to significant
economic downturns at various times. While the semiconductor industry in recent
periods has experienced increased demand and production capacity constraints, it
is uncertain how long these conditions will continue. As a result of these and
other factors, there can be no assurance that the Company will not experience
material fluctuations in future operating results on a quarterly or annual
basis.
DEPENDENCE ON NEW PRODUCTS AND NEW MARKETS. The Company's success depends
in part on its continued ability to develop and market new products. There can
be no assurance that the Company will be able to develop and introduce new
products in a timely manner or that such products, if developed, will achieve
market acceptance. In addition, the Company's growth is dependent on its
continued ability to penetrate new markets such as the computer, communications
and automotive segments of the electronics market, where the Company has limited
experience and competition is intense. The electronics market is characterized
by rapidly changing technology and evolving industry standards. There can be no
assurance that the markets being served by the Company will continue to grow,
that the Company's existing and new products will meet the requirements of such
markets or that the Company's products will achieve customer acceptance in such
markets.
MANUFACTURING CAPACITY LIMITATIONS. The Company's manufacturing facilities
are operating at full capacity, and therefore Analog's business is currently
constrained. While the Company is planning in fiscal 1996 to increase
substantially its manufacturing capacity through both expansion of its
production facilities and increased access to third-party wafer foundries, there
can be no assurance that the Company will complete the expansion of its
production facilities or secure increased access to third party foundries in a
timely manner, that the Company will not encounter unanticipated production
problems at either its own facilities or at third-party foundries or that the
increased capacity will be sufficient to satisfy demand for its products. The
Company relies, and plans to continue to rely, on third-party wafer fabricators
to supply most of its wafers that can be manufactured using industry-standard
digital processes, and such reliance involves several risks, including the
absence of adequate guaranteed capacity and reduced control over delivery
schedules, manufacturing yields and costs. Continued manufacturing capacity
constraints could adversely affect the business of the Company's customers and
cause them to seek alternative sources for the products currently obtained from
the Company. In addition, the Company's capacity additions will result in a
significant increase in operating expenses, and if revenue levels do not
increase to offset these additional expense levels, the Company's future
operating results could be adversely affected. See "Business -- Manufacturing
Capacity."
The Company believes that other semiconductor manufacturers are also
expanding or planning to expand their production capacity over the next several
years, and there can be no assurance that the expansion by the Company and its
competitors will not lead to overcapacity in the Company's target markets, which
could lead to price erosion that would adversely affect the Company's operating
results.
COMPETITION. The semiconductor industry is intensely competitive. Certain
of the Company's competitors have greater technical, marketing, manufacturing
and financial resources than the Company. The Company's competitors also include
emerging companies attempting to sell products to specialized markets such as
those served by the Company. Competitors of the Company have, in some cases,
developed and marketed products having similar design and functionality as the
Company's products. There can be no assurance that the Company will be able to
compete successfully in the future against existing or new competitors or that
the Company's operating results will not be adversely affected by increased
price competition.
6
<PAGE> 8
MANUFACTURING RISKS. The fabrication of integrated circuits involves
highly complex and precise processes that are continuously being modified in an
effort to improve yields and product performance. Minute impurities or other
difficulties in the manufacturing process can lower yields. As the Company
continues to increase its manufacturing output and its use of third-party
foundries, there can be no assurance that the Company will not experience a
decrease in manufacturing yields or other manufacturing problems. Decreased
yields could adversely affect gross margin and operating results. If the Company
were unable to use any manufacturing facility, as a result of a natural disaster
or otherwise, the Company's operations would be materially adversely affected.
PATENTS AND INTELLECTUAL PROPERTY. The semiconductor industry is
characterized by frequent claims and litigation involving patent and other
intellectual property rights. The Company has from time to time received, and
may in the future receive, claims from third parties asserting that the
Company's products or processes infringe their patents or other intellectual
property rights. In the event a third party makes a valid intellectual property
claim and a license is not available on commercially reasonable terms, the
Company's operating results could be materially and adversely affected.
Litigation may be necessary to enforce patents or other intellectual property
rights of the Company or to defend the Company against claims of infringement,
and such litigation can be costly and divert the attention of key personnel. See
"Business -- Legal Proceedings" for information concerning pending litigation
involving the Company. An adverse resolution of such litigation may, in certain
cases, have a material adverse effect on the Company's consolidated financial
position or on its consolidated results of operations or cash flows in the
period in which the litigation is resolved.
INTERNATIONAL OPERATIONS. For the nine months ended July 29, 1995, 57% of
Analog's revenues were derived from customers in international markets. The
Company has manufacturing facilities in Ireland, the Philippines and Taiwan. The
Company is therefore subject to the economic and political risks inherent in
international operations, including air transportation disruptions, currency
controls and changes in currency exchange rates, tax and tariff rates and
freight rates. Although the Company engages in hedging transactions to reduce
its exposure to currency exchange rate fluctuations, there can be no assurance
that such hedging efforts will be successful or that the Company's competitive
position will not be adversely affected by changes in the exchange rate of the
U.S. dollar against other currencies.
STOCK PRICE VOLATILITY. The trading price of the Company's Common Stock
may be subject to wide fluctuations in response to quarter-to-quarter variations
in operating results, announcements of new products by the Company or its
competitors, general conditions in the semiconductor industry, changes in
earnings estimates and recommendations by analysts or other events. In future
quarters, if the Company's financial performance were to fall below the
performance predicted by securities analysts, the Company's stock price could
decline. In addition, the public stock markets have experienced extreme price
and trading volume volatility that has significantly affected the market prices
of securities of many high technology companies and that has often been
unrelated or disproportionate to the operating performance of these companies.
These factors may adversely affect the market price of the Common Stock. See
"Price Range of Common Stock and Dividend Policy."
SUBORDINATION OF NOTES. The Notes will be unsecured subordinated
obligations of the Company and will be subordinated to the prior payment in full
of all Senior Indebtedness (as defined in the Indenture) of the Company. The
Notes will also be effectively subordinated to all indebtedness and other
liabilities of the Company's subsidiaries. As of July 29, 1995, the Company had
approximately $80.1 million of outstanding indebtedness which constituted Senior
Indebtedness (excluding Senior Indebtedness constituting liabilities of a type
not required to be reflected as a liability on the balance sheet of the Company
in accordance with generally accepted accounting principles, such as contingent
obligations, forward foreign exchange contracts and interest rate swap
agreements). In addition, as of July 29, 1995, subsidiaries of the Company had
outstanding an aggregate of approximately $75.1 million of indebtedness and
other liabilities to which the Notes are effectively subordinated. The Indenture
will not limit the amount of additional indebtedness, including Senior
Indebtedness, which the Company or any of its subsidiaries can create, incur,
assume or guaranty. No payment on account or principal, premium, if any, or
interest on, or redemption or repurchase of, the Notes may be made by the
Company if there is a default in the payment of principal, premium, if any, or
interest (including a default under any repurchase or redemption obligation)
with respect to any Senior
7
<PAGE> 9
Indebtedness or if any other event of default with respect to any Senior
Indebtedness permitting the holders thereof to accelerate the maturity thereof
shall have occurred and shall not have been cured or waived. Upon any
acceleration of the principal due on the Notes or payment or distribution of
assets of the Company to creditors upon any dissolution, winding-up, liquidation
or reorganization, all principal, premium, if any, and interest due on all
Senior Indebtedness must be paid in full before the holders of the Notes are
entitled to receive any payment. See "Description of Notes -- Subordination."
LIMITATION ON REPURCHASE OF NOTES. Upon a Change in Control (as defined),
each holder of Notes will have certain rights, at the holder's option, to
require the Company to repurchase all or a portion of such holder's Notes. If a
Change in Control were to occur, there can be no assurance that the Company
would have sufficient funds to pay the repurchase price for all Notes tendered
by the holders thereof. In addition, the Company's repurchase of Notes as a
result of the occurrence of a Change in Control would create an event of default
under the Company's revolving credit agreement and could create an event of
default under other future Senior Indebtedness. Also, upon certain changes in
control, holders of the Company's 6 5/8% Notes Due 2000 (the "Senior Notes")
have the right to require the Company to repurchase the Senior Notes. In such
event, indebtedness of the Company under its revolving credit agreement and the
Senior Notes would be required to be repaid before holders of the Notes could be
repaid. The Indenture excludes from the definition of Change in Control
transactions that would otherwise constitute a Change in Control if (i) the
trading price of the Common Stock during specified periods equals or exceeds
105% of the conversion price of the Notes or (ii) the consideration in the
transaction consists of shares of common stock traded on a national securities
exchange or quoted on the Nasdaq National Market and the Notes maintain a
certain credit rating following the transaction. See "Description of Notes --
Repurchase at Option of Holders Upon a Change in Control."
ABSENCE OF PUBLIC MARKET FOR NOTES. The Notes will be a new issue of
securities with no established trading market. While the Notes have been
approved for listing on the New York Stock Exchange, subject to notice of
issuance, there can be no assurance that an active trading market will develop
or be maintained.
8
<PAGE> 10
USE OF PROCEEDS
The net proceeds from the sale of the Notes offered hereby are estimated to
be approximately $195 million (approximately $224 million if the Underwriters'
over-allotment option is exercised in full), after deducting the estimated
underwriting discount and offering expenses. The Company intends to use the net
proceeds for expansion of its manufacturing capacity and other general corporate
purposes, including working capital. The Company plans to make capital
expenditures of approximately $275 million in fiscal 1996, primarily in
connection with the expansion of its manufacturing capacity, and the Company
plans to use the net proceeds, together with available cash and cash expected to
be generated from future operations, for such purposes. In addition, the Company
is continuing to explore various options for increasing its manufacturing
capacity, including joint ventures, acquisitions, equity investments in or loans
to wafer suppliers and construction of additional facilities, and the Company
may use a portion of the net proceeds of this offering for such purposes.
Pending such uses, the Company intends to invest the net proceeds in investment
grade securities and interest-bearing obligations.
<TABLE>
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
The Company's Common Stock is traded on the New York Stock Exchange under
the symbol "ADI." The following table sets forth, for the periods indicated, the
high and low sale prices per share of Common Stock as reported on the NYSE
Composite Transactions Tape.
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
FISCAL YEAR ENDED OCTOBER 29, 1994
First Quarter............................................ $17.50 $12.88
Second Quarter........................................... 20.75 16.38
Third Quarter............................................ 20.88 16.38
Fourth Quarter........................................... 24.50 17.63
FISCAL YEAR ENDED OCTOBER 28, 1995
First Quarter............................................ $24.38 $20.38
Second Quarter........................................... 28.13 20.00
Third Quarter............................................ 37.88 25.63
Fourth Quarter........................................... 39.38 29.75
FISCAL YEAR ENDING NOVEMBER 2, 1996
First Quarter (through December 7, 1995)................. $38.88 $31.50
</TABLE>
The last reported sale price of the Common Stock as reported on the NYSE
Composite Transactions Tape was $35 5/8 on December 7, 1995. As of October 28,
1995, there were approximately 4,474 holders of record of the Common Stock.
The Company's bank credit agreement restricts the aggregate of all cash
dividend payments declared or made subsequent to January 30, 1993 to an amount
not exceeding $29,734,000 plus 50% of the consolidated net income of the Company
for the period from January 31, 1993 through the end of the Company's then most
recent fiscal quarter. At July 29, 1995, this amount was equal to $127,215,000.
Although prior credit agreements may not have restricted the payment of
dividends, the Company has never paid any cash dividends on its Common Stock.
9
<PAGE> 11
<TABLE>
CAPITALIZATION
The following table sets forth the short-term obligations and the
capitalization of the Company as of July 29, 1995, and as adjusted to give
effect to the sale of the Notes and the receipt of the estimated net proceeds
therefrom.
<CAPTION>
JULY 29, 1995
----------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS)
<S> <C> <C>
Short-term obligations:
Short-term borrowings........................................... $ 2,155 $ 2,155
Current portion of capital lease obligations.................... 96 96
-------- --------
Total short-term obligations............................... $ 2,251 $ 2,251
======== ========
Long-term obligations:
6 5/8% Notes due 2000........................................... $ 80,000 $ 80,000
% Convertible Subordinated Notes due 2000.................... -- 200,000
-------- --------
Total long-term obligations................................ 80,000 280,000
-------- --------
Stockholders' equity:
Preferred stock, $1.00 par value, 500,000 shares authorized;
none outstanding............................................... -- --
Common stock, $.16 2/3 par value, 300,000,000 shares authorized;
76,214,980 shares issued(1).................................... 12,703 12,703
Capital in excess of par value, net of deferred compensation.... 154,700 154,700
Retained earnings............................................... 446,330 446,330
Cumulative translation adjustment............................... 5,999 5,999
Common shares in treasury, at cost, 2,777 shares................ (85) (85)
-------- --------
Total stockholders' equity...................................... 619,647 619,647
-------- --------
Total capitalization.................................. $699,647 $899,647
======== ========
<FN>
- ---------------
(1) Excludes a total of 12,547,830 shares reserved for issuance as of July 29,
1995 under the Company's employee and director stock option plans (the
"Plans") and a warrant agreement. At July 29, 1995, 8,366,468 shares were
issuable upon exercise of options granted under the Plans and 1,500,000
shares were issuable upon exercise of outstanding warrants. As of October
28, 1995, there were 76,354,704 shares of Common Stock issued and
outstanding.
</TABLE>
10
<PAGE> 12
<TABLE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth selected financial data and other operating
information of the Company. The consolidated statement of operations data set
forth below for the fiscal years ended October 31, 1992, October 30, 1993 and
October 29, 1994, and the consolidated balance sheet data as of October 31,
1992, October 30, 1993 and October 29, 1994 are derived from the consolidated
financial statements of the Company which have been audited by Ernst & Young
LLP, independent auditors. Ernst & Young LLP's report on the consolidated
financial statements for the year ended October 29, 1994, which is incorporated
by reference elsewhere herein, includes an explanatory paragraph that describes
claims and actions brought against the Company discussed in Note 6 to the
consolidated financial statements. The consolidated statement of operations data
for the fiscal years ended November 3, 1990 and November 2, 1991, and the
consolidated balance sheet data as of November 3, 1990 and November 2, 1991 are
derived from the consolidated financial statements of the Company that have also
been audited by Ernst & Young LLP but are not incorporated herein by reference.
The financial data as of July 29, 1995 and for the nine-month periods ended July
30, 1994 and July 29, 1995 are derived from unaudited consolidated financial
statements of the Company and reflect all adjustments, consisting only of normal
recurring accruals, which the Company considers necessary for a fair
presentation of the consolidated financial position and the consolidated results
of operations for these periods. Operating results for the nine months ended
July 29, 1995 are not necessarily indicative of the results that may be expected
for future periods or for the year ended October 28, 1995. The following
selected consolidated financial data should be read in conjunction with the
consolidated financial statements and related notes and other financial
information included or incorporated by reference herein.
<CAPTION>
FISCAL YEAR ENDED(1) NINE MONTHS ENDED
-------------------------------------------------------- --------------------
NOV. 3, NOV. 2, OCT. 31, OCT. 30, OCT. 29, JULY 30, JULY 29,
1990 1991 1992 1993 1994 1994 1995
-------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA AND RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Net sales................................ $485,214 $537,738 $567,315 $666,319 $773,474 $570,173 $684,352
Cost of sales............................ 244,254 272,424 301,678 350,852 394,448 292,991 337,980
-------- -------- -------- -------- -------- -------- --------
Gross margin............................. 240,960 265,314 265,637 315,467 379,026 277,182 346,372
Operating expenses:
Research and development............... 80,306 89,001 88,172 94,107 106,869 77,821 98,551
Selling, marketing, general and
administrative....................... 135,926 151,936 151,293 158,675 170,341 126,534 136,637
Restructuring of operations............ 18,510(2) 7,000(2) -- -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Total operating expenses............. 234,742 247,937 239,465 252,782 277,210 204,355 235,188
-------- -------- -------- -------- -------- -------- --------
Operating income......................... 6,218 17,377 26,172 62,685 101,816 72,827 111,184
Nonoperating expenses (income):
Interest expense....................... 3,190 4,778 5,976 7,184 7,149 5,455 3,242
Interest income........................ (2,830) (771) (867) (1,417) (5,165) (3,059) (5,903)
Other.................................. 19,421(3) 3,988 2,098 1,393 2,921 2,037 2,026
-------- -------- -------- -------- -------- -------- --------
Total nonoperating expenses
(income)........................... 19,781 7,995 7,207 7,160 4,905 4,433 (635)
-------- -------- -------- -------- -------- -------- --------
Income (loss) before income taxes........ (13,563) 9,382 18,965 55,525 96,911 68,394 111,819
Provision for (benefit from) income
taxes.................................. (650) 1,179 4,030 11,068 22,415 15,571 27,683
-------- -------- -------- -------- -------- -------- --------
Net income (loss)........................ $(12,913) $ 8,203 $ 14,935 $ 44,457 $ 74,496 $ 52,823 $ 84,136
======== ======== ======== ======== ======== ======== ========
Net income (loss) per share(4)........... $ (0.18) $ 0.12 $ 0.21 $ 0.59 $ 0.96 $ 0.68 $ 1.06
======== ======== ======== ======== ======== ======== ========
Shares used in computing net income
(loss) per share(4).................... 70,415 70,329 71,624 75,695 77,271 77,004 79,064
======== ======== ======== ======== ======== ======== ========
OTHER DATA:
EBITDA(5)................................ $ 52,994 $ 70,082 $ 81,122 $122,498 $163,100 $118,895 $158,231
Cash flows from operating activities..... 82,237 51,014 33,462 89,495 183,342 114,954 120,258
Cash flows from investing activities..... (99,068) (52,270) (65,654) (67,155) (163,508) (82,127) (153,727)
Cash flows from financing activities..... (4,894) 10,001 33,653 39,593 9,971 8,671 (12,076)
Capital expenditures, net................ 39,029 52,270 65,654 67,155 90,856 42,783 145,838
Ratio of earnings to fixed charges(6):... --(7) 2.4x 3.6x 7.1x 10.0x 9.5x 18.0x
Ratio of EBITDA to gross interest
expense:............................... 16.6x 14.7x 13.6x 17.1x 22.8x 21.8x 48.8x
</TABLE>
11
<PAGE> 13
<TABLE>
<CAPTION>
FISCAL YEAR ENDED(1) NINE MONTHS ENDED
------------------------------------------------------ ----------------------
NOV. 3, NOV. 2, OCT. 31, OCT. 30, OCT. 29, JULY 30, JULY 29,
1990 1991 1992 1993 1994 1994 1995
------- ------- -------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA AS A
PERCENTAGE OF NET SALES:
Net sales................................... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales............................... 50.3 50.7 53.2 52.7 51.0 51.4 49.4
----- ----- ----- ----- ----- ----- -----
Gross margin................................ 49.7 49.3 46.8 47.3 49.0 48.6 50.6
Operating expenses:
Research and development.................. 16.6 16.5 15.5 14.1 13.8 13.6 14.4
Selling, marketing, general and
administrative.......................... 28.0 28.3 26.7 23.8 22.0 22.2 20.0
Restructuring of operations............... 3.8 1.3 -- -- -- -- --
----- ----- ----- ----- ----- ----- -----
Total operating expenses................ 48.4 46.1 42.2 37.9 35.8 35.8 34.4
----- ----- ----- ----- ----- ----- -----
Operating income............................ 1.3 3.2 4.6 9.4 13.2 12.8 16.2
Interest expense, interest income and other,
net....................................... 4.1 1.5 1.3 1.1 0.7 0.8 (0.1)
----- ----- ----- ----- ----- ----- -----
Income (loss) before income taxes........... (2.8) 1.7 3.3 8.3 12.5 12.0 16.3
Provision for (benefit from) income taxes... (0.1) 0.2 0.7 1.6 2.9 2.7 4.0
----- ----- ----- ----- ----- ----- -----
Net income (loss)........................... (2.7)% 1.5% 2.6% 6.7% 9.6% 9.3% 12.3%
===== ===== ===== ===== ===== ===== =====
</TABLE>
<TABLE>
<CAPTION>
NOV. 3, NOV. 2, OCT. 31, OCT. 30, OCT. 29, JULY 29,
1990 1991 1992 1993 1994 1995
-------- -------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Working capital.............................. $126,054 $151,886 $197,404 $270,365 $299,271 $284,570
Property, plant and equipment, net........... 223,862 223,962 237,423 248,430 281,815 383,581
Total assets................................. 487,188 503,317 561,867 678,492 815,871 911,536
Long-term obligations........................ 24,129 36,819 70,632 100,297 80,061 80,000
Stockholders' equity......................... 342,724 354,445 375,017 432,018 521,915 619,647
<FN>
- ---------------
(1) The Company's fiscal year ends on the Saturday closest to the last day in
October. Fiscal years 1991, 1992, 1993 and 1994 were each 52-week years.
Fiscal year 1990 was a 53-week year.
(2) In fiscal years 1990 and 1991, the Company recorded restructuring charges of
$18.5 million and $7.0 million, respectively, related to the consolidation
of certain manufacturing, sales and administrative operations worldwide.
These charges provided for the cost of employee separations, facility
consolidations, equipment write-downs and disposals and other restructuring
costs.
(3) Other expense in fiscal year 1990 includes investment valuation expense
totaling $18.3 million related to reserves recorded against investments in
the Company's previously operated venture capital division.
(4) Adjusted to reflect the three-for-two stock split effected in the form of a
50% stock dividend distributed on January 4, 1995.
(5) EBITDA is defined as earnings before interest expense, interest income,
other expenses, taxes on income, depreciation and amortization. EBITDA is
presented here to provide additional information about the Company's
ability to meet its future debt service, capital expenditure, and working
capital requirements and should not be construed as a substitute for or a
better indicator of results of operations or liquidity than net income or
cash flow from operating activities computed in accordance with generally
accepted accounting principles.
(6) The ratio of earnings to fixed charges is computed by dividing income before
income taxes and fixed charges by fixed charges. Fixed charges consist of
interest on all indebtedness, amortization of debt offering costs, and the
estimated interest component of rental expense.
(7) As a result of the loss incurred in fiscal year 1990, the Company was unable
to cover fixed charges. The amount of such coverage deficiency was $14.1
million.
</TABLE>
12
<PAGE> 14
BUSINESS
Analog Devices, Inc. ("Analog" or the "Company") designs, manufactures and
markets a broad line of high performance linear, mixed-signal and digital
integrated circuits ("ICs") that address a wide range of real-world signal
processing applications. The Company's principal products include
general-purpose, standard-function linear and mixed-signal ICs ("SLICs"),
special-purpose linear and mixed-signal ICs ("SPLICs") and digital signal
processing ICs ("DSP ICs"). The Company also manufactures and markets devices
using assembled product technology.
INDUSTRY BACKGROUND
Real-world phenomena, such as temperature, pressure, sound, images, speed,
acceleration, position and rotation angle, are inherently analog in nature,
consisting of continuously varying information. This information can be detected
and measured using analog sensors, which represent real-world phenomena by
generating continuously varying voltages and currents. The signals from these
sensors are initially processed using analog methods, such as amplification,
filtering and shaping. They are then usually converted to digital form for input
to a microprocessor, which is used to manipulate, store or display the
information. In many cases the signals are further processed after conversion to
digital form using a technology called "digital signal processing." In addition,
digital signals are frequently converted to analog form to provide signals for
analog display, sound, or control functions. These manipulations and
transformations are collectively known as "real-world signal processing."
Significant advances in semiconductor technology over the past 10 to 15
years have led to substantial increases in the performance and functionality of
ICs used for signal processing applications. These advances include the ability
to create VLSI (Very Large Scale Integration) mixed-signal ICs that contain both
high-performance analog circuitry and large amounts of high-density digital
circuitry. The analog circuitry portion of the IC is used for manipulating
real-world signals while still in analog form and for converting analog signals
into digital form (or vice versa), and the digital portion is used for further
processing analog signals subsequent to their conversion to digital form. The
ICs resulting from these advances are used as components in equipment and
systems to achieve higher performance and more efficient signal processing.
COMPANY OVERVIEW AND STRATEGY
Analog believes it is one of the world's largest suppliers of SLIC
products. The Company's SLIC products are primarily high-performance,
single-function devices. The majority of the Company's SLIC revenue is
attributable to data converters (analog-to-digital and digital-to-analog) and
amplifiers. SLICs are sold to a very large customer base for a wide variety of
applications, including applications in the medical, engineering and scientific
instruments market, factory automation market and military/aerospace market.
Over the past five years, Analog has sought to balance its traditionally
stable SLIC business with the growth opportunities available for SPLICs and DSP
ICs. Building upon its expertise in linear IC technology, the Company has
developed special-purpose linear and mixed-signal ICs tailored to specific
high-volume applications in target markets. The Company also has extended its
expertise in analog signal processing and data conversion to develop DSP ICs.
The Company's SPLICs and DSP ICs address the emerging demand for high levels of
performance in many computer, communications and other high volume applications.
These products have a high level of functionality (i.e., many functions on one
chip) to satisfy OEMs' requirements for an integrated solution with low cost per
function.
To build upon its position as a leader in real-world signal processing,
Analog is pursuing strategies that include the following:
- Expand Traditional SLIC Business. The Company has taken a three-pronged
approach to grow its SLIC business. First, it is seeking to solidify its
leading position in the market for general purpose operational amplifiers
and data converters, particularly in instrumentation and factory
automation applications. Second, it is expanding its SLIC product
portfolio to address other market segments, such as power management ICs
for laptop computers and mobile phones and interface ICs for modems and
printers. Third, the Company is developing SLICs for new high volume
applications in the computer,
13
<PAGE> 15
communications and consumer markets, including radio frequency ("RF") products
for both wireless and broadband wired communication applications.
- Become a Major Supplier of General-Purpose DSP ICs. The Company's
general-purpose DSP ICs consist of a family of programmable 16-bit fixed
point and 32-bit floating point DSPs. These products offer processing
speed, ease of programming and on-chip memory that allow system designers
to cost effectively implement complex algorithms for signal processing
applications. Analog believes that this product line will enable it to
build a leading position in the general-purpose DSP market, principally
for computer and communications applications.
- Pursue Growth Opportunities for System-Level Signal-Processing ICs. The
Company is leveraging its expertise in both analog signal processing and
data conversion to develop SPLICs and DSP ICs that provide system-level
solutions for various growth applications, particularly in the
communications and computer markets. The Company's system-level ICs often
replace a combination of SLICs and general-purpose DSPs that are used by
customers in their initial product designs. The Company offers
system-level ICs for wireless communications applications such as digital
mobile phones and base stations, and for computer applications such as
audio enhancement in multimedia PCs.
- Leverage Core Technologies to Develop Innovative Products. The Company
plans to continue applying its core technologies to develop a continuous
flow of new products. In addition, the Company plans to continue to extend
its core technologies to include new technologies, such as RF signal
processing, which Analog has used primarily for wireless communications
applications, and surface micromachining, which Analog has used to develop
its accelerometer for automobile airbag systems. The Company intends to
use its micromachining technology to address other applications outside
the automotive industry.
PRINCIPAL PRODUCTS
<TABLE>
Analog's products can be divided into four classifications: SLICs; SPLICs
and DSP ICs; hard disk drive ICs; and assembled products. The following table
sets forth the approximate percentage of revenue attributable to each of the
Company's four product groups for the periods indicated:
<CAPTION>
NINE MONTHS
FISCAL YEAR ENDED JULY
--------------- 29,
PRODUCTS 1993 1994 1995
-------- ---- ---- -----------
<S> <C> <C> <C>
SLICs..................................... 60% 59% 64%
SPLICs and DSP ICs........................ 20 21 23
Hard Disk Drive ICs....................... 6 9 4
Assembled Products........................ 14 11 9
</TABLE>
SLICs
Analog believes that it is one of the world's largest suppliers of SLIC
products. SLICs have been the foundation of the Company's business for more than
20 years. The Company's SLIC products are primarily high-performance,
single-function devices. The majority of the Company's SLIC revenue is
attributable to data converters (analog-to-digital and digital-to-analog) and
amplifiers. Other SLIC products offered by the Company include analog
signal-processing devices (such as analog multipliers), voltage references and
comparators. The Company is currently expanding its SLIC product offerings in
areas where it traditionally has had limited focus, principally interface
circuits and power management ICs. It is also expanding its SLIC product line to
include a much larger number of products designed to operate from single-supply
3- or 5-volt power sources to better meet the needs of customers designing
portable, battery-operated equipment.
Analog's SLIC products tend to be general purpose in nature, which allows
customers to incorporate them in a wide variety of equipment and systems.
Analog's product portfolio includes several hundred SLICs, any one of which can
have as many as several hundred customers. SLICs typically have long product
life cycles. The Company's SLIC customers include both OEMs and customers who
build equipment for their own use. Historically, most SLICs have been purchased
by OEMs which serve the industrial and mili-
14
<PAGE> 16
tary/aerospace markets, but they are now also being used for applications in
personal computers ("PCs"), peripheral equipment used with PCs and computers,
and commercial and consumer communications equipment.
By using standard, high performance, readily available, off-the-shelf
components in their designs, Analog's customers can reduce the time required to
develop and bring new products to market. Given the high cost of developing
customized ICs, SLICs usually provide the most cost-effective solutions for low-
to medium-volume applications. In addition, combinations of SLICs connected
together on a printed circuit board can provide functionality that cannot
currently be implemented with a single-chip device.
SPLICs and DSP ICs
SPLICs and DSP ICs, which are collectively referred to as system-level ICs,
are multi-function devices that feature high levels of functional integration on
a single chip. Most SPLICs are mixed-signal devices (some of which include DSP
capability) and the balance are linear-only devices. SPLICs are almost always
designed to the requirements of a specific application, and the design process
often includes significant input from one or more potential key customers.
Market demand for SPLICs is driven by the benefits that result from combining a
number of functions on a single circuit as opposed to a combination of SLICs and
other ICs. These benefits include higher performance, lower cost per function,
smaller size, lower weight, fewer parts and decreased power consumption. These
products enable customers to achieve easier design-ins and faster time to
market. The Company believes that these benefits are becoming more important to
the Company's OEM customers as they increase their focus on high-performance,
small, lightweight products, many of which are battery powered.
The Company's general-purpose DSP ICs are designed to efficiently execute
specialized programs (algorithms) associated with processing real-time,
real-world data. The Company's fixed-point and floating-point DSP ICs share a
common architecture and code compatibility, which allows system designers to
address cost, performance and time-to-market constraints. Analog's DSP ICs are
supported with specialized applications and easy-to-use, low-cost design tools,
which reduce product development cost and time to market.
The Company's DSP ICs include general purpose DSPs and mixed-signal ICs
that include a DSP core along with data conversion and analog signal processing
circuitry. Demand for system level ICs that incorporate both DSP functionality
and sophisticated mixed-signal capability tailored to specific applications is
increasing as customers continue to demand as much functionality as possible
from a single chip.
Hard Disk Drive ICs
ICs in this product category are used in hard disk drives that serve as
rotating mass storage devices in end products such as PCs, workstations and
network servers. These ICs process analog signals from a hard disk drive's
read/write head during read operations and position the read/write head over the
desired track on a hard disk drive platter during read and write operations.
Assembled Products
The Company's assembled products consist of hybrids, printed-board modules
and multi-chip modules ("MCMs"). A hybrid consists of several chips and discrete
components mounted and wired together on a substrate. A printed-board module
consists of surface-mount components assembled on a small printed board that is
then encapsulated in a small plastic case. An MCM consists of several chips
assembled in an automated fashion in a multilayer package that provides high
interconnect density at low cost.
Revenues from this product group have been declining since 1989, as hybrids
have been replaced in many new designs with smaller, lower-cost monolithic ICs
that offer higher levels of performance and integration. The Company plans to
continue to market printed-board modules (primarily input/output modules used
for industrial control and factory automation) as it pursues selected
opportunities for new MCMs with growth potential.
15
<PAGE> 17
MARKET AND APPLICATIONS
The Company's products are sold primarily to original equipment
manufacturers ("OEMs") that incorporate the Company's products in equipment,
instruments and systems sold to end users for a wide variety of applications,
including computers and computer peripherals; communications equipment;
engineering, medical and scientific instruments; factory automation equipment;
military/aerospace equipment; and high-end consumer electronics products. The
Company's growth has been aided both by the expansion of these markets and the
increasing use of computer technology in the equipment and systems sold in these
markets.
For the first nine months of fiscal 1995, Analog's 20 largest customers
accounted for approximately 26% of the Company's net sales. The largest single
customer represented less than 5% of net sales.
Listed below are some of the characteristics of each of the Company's major
served markets:
INSTRUMENTATION -- includes manufacturers of engineering, medical and
scientific instruments. These products are usually designed using the highest
performance SLICs available, where production volumes generally do not warrant
custom or application-specific ICs.
FACTORY AUTOMATION -- includes data acquisition systems, automatic process
control systems, robotics, environmental control systems and automatic test
equipment ("ATE"). These products generally require ICs that offer performance
greater than that available from commodity-level ICs, but generally do not have
production volumes that warrant custom or application-specific ICs. Combinations
of SLICs are therefore usually employed to achieve the necessary functionality,
except in ATE applications where the high level of electronic circuitry required
per tester has created opportunities for SPLICs.
MILITARY/AEROSPACE -- includes the military, commercial avionics and space
markets, all of which require high-performance ICs that meet rigorous
environmental and reliability specifications. Nearly all of the Company's SLICs
can be supplied in versions that meet the appropriate military standards. In
addition, many products can be supplied to meet the standards required for
broadcast satellites and other commercial space applications. Most of the
Company's products sold into this market are derived from standard commercial
grade ICs, although the Company sometimes develops products expressly for
military/aerospace applications.
COMPUTERS AND COMPUTER PERIPHERALS -- includes high-performance personal
computers, workstations and peripheral devices such as hard disk drives. The
Company currently supplies a variety of ICs used in this market for functions
such as graphic displays; interfaces between PCs and peripherals such as modems
and printers; power and battery management; and enhanced sound input and output
capability for business and entertainment applications.
COMMUNICATIONS -- includes data and fax modems, digital cellular telephones
and portable, wireless communications equipment and broadband wired
applications. The need for ever higher speed, coupled with more reliable, more
bandwidth-efficient communications is creating increasing demand for systems
that include both digital and analog signal processing capability. Demand for
signal processing ICs for this market is also being driven by the equipment
manufacturers' need for components that enable them to develop cost-effective
products that feature high performance, small size, low weight and minimal power
consumption.
CONSUMER ELECTRONICS -- The emergence of high-performance consumer
products, such as compact disc players, digital VCRs, digital audio tape
equipment and digital camcorders, has led to the need for high performance
SPLICs with a high level of functionality. Although the Company's revenue from
this market is not currently significant, the Company expects to supply ICs for
sophisticated products used by consumers for computing, communications and
entertainment applications, and believes that many of these applications will
involve digital signal processing.
AUTOMOTIVE -- Although the automotive market has historically been served
with low-cost, low-performance ICs, demand has emerged for higher performance
devices for a wide range of applications. In response, Analog is developing
products specifically for the automotive market. The Company began shipments of
its first automotive product, a micromachined IC employed as a crash sensor in
airbag systems, in 1993. This product serves as an alternative to an
electromechanical sensor. The Company began shipments
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<PAGE> 18
of this device to Delco in 1994 for use in several 1995 model-year General
Motors "W body" cars. It is also being used in, or has been selected for,
several other manufacturers' airbag systems.
MANUFACTURING CAPACITY
Analog's IC products are fabricated both at the Company's production
facilities and by third-party wafer fabricators. Assuming that the Company can
continue to maintain favorable relationships with its third-party wafer
fabricators, it intends to rely primarily on such suppliers to supply wafers
that can be fabricated using industry-standard digital processes. The Company
intends to rely primarily on its own facilities for production of wafers
fabricated with linear and mixed-signal processes.
The Company operates wafer fabrication facilities in Wilmington,
Massachusetts; Santa Clara, California; and Limerick, Ireland for production of
linear and mixed-signal devices. The Company also operates assembly and test
facilities located in the United States, Ireland, the Philippines and Taiwan.
The Company uses two principal foundries, Taiwan Semiconductor Manufacturing
Company ("TSMC") and Chartered Semiconductor Corporation, for the production of
digital and VLSI mixed-signal devices.
As a result of strong demand for its products, the Company was
manufacturing capacity constrained throughout the second half of fiscal 1995.
The Company is pursuing a multi-faceted manufacturing capacity expansion program
to substantially increase the number of fabricated wafers available to it in
fiscal 1996 and beyond.
The construction of Analog's first six-inch wafer fabrication module was
completed in fiscal 1995 at the Company's Limerick, Ireland manufacturing site.
This module is now undergoing test and qualification, and is expected to begin
supplying production wafers before the end of the first half of fiscal 1996. It
will be used initially to fabricate mixed-signal VLSI products on a 0.6 micron
digital CMOS process.
In 1995 the Company purchased an existing six-inch wafer fabrication module
located close to its Santa Clara, California site. This facility is being
upgraded and modernized to produce advanced linear technology ICs, and is
expected to go into production in the latter half of fiscal 1996.
The Company has also begun upgrading its existing Wilmington, Massachusetts
wafer fabrication facility from four-inch to six-inch wafer production. This
additional capacity, which will also become available in the latter half of
fiscal 1996, will be used primarily for high-speed linear products.
In addition, Analog has taken steps to secure additional foundry capacity
for the fabrication of sub-micron digital CMOS wafers, which are used in large
part for products that go into the communications and computer markets. The
Company has expanded its relationship with its primary foundry, TSMC, so that
TSMC will make available significantly higher capacity to Analog over the period
from 1996 to 1999. Under the agreement with TSMC, the Company will pay option
fees aggregating $22.4 million through 1999 to secure rights to use additional
capacity at TSMC's facilities. The Company has also made an equity investment of
$14 million in Chartered Semiconductor Corporation in Singapore and expects to
invest an additional $6 million in 1996, in exchange for a less than 5%
ownership interest. This investment is structured to provide access to that
company's new eight-inch, 0.5 micron wafer fabrication facility beginning in
1996. The Company is also actively pursuing various types of relationships with
both its existing foundries and others to provide additional capacity for 1996
and future years.
LEGAL PROCEEDINGS
The Company was a defendant in two lawsuits brought in Texas by Texas
Instruments, Inc. ("TI"), alleging patent infringement, including patent
infringement arising from certain plastic encapsulation processes, and seeking
an injunction and unspecified damages against the Company. The alleged
infringement of one of these patents is also the subject matter of a proceeding
brought by TI against the Company before the International Trade Commission
("ITC"). On January 10, 1994, the ITC brought an enforcement proceeding against
the Company alleging that the Company had violated the ITC's cease and desist
order of February 1992 (as modified in July 1993), which prohibited the
Company's importation of certain plastic encapsulated circuits, and seeking
substantial penalties against the Company for these alleged violations. If it
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<PAGE> 19
is determined that the Company has violated the cease and desist order, the ITC
could seek to impose penalties of up to $100,000 per day of violation from the
date of the cease and desist order (February 1992) or a sum equal to twice the
value of the goods determined to be sold in violation of the order. In addition,
in June 1992, the Company commenced a lawsuit against TI in Massachusetts
alleging certain TI digital signal processors infringed one of the Company's
patents.
Effective April 1, 1995, the Company and TI settled both Texas lawsuits and
the Massachusetts lawsuit principally by means of a royalty-free cross license
of certain of the Company's and TI's patents. On April 25, 1995, the Company
filed with the ITC a motion to terminate the ITC enforcement proceeding on the
grounds that further action by the ITC is unnecessary in light of the Company's
settlement with TI. On May 8, 1995, an Administrative Law Judge issued a
recommended determination to the ITC to grant the Company's motion to terminate
the ITC proceeding. The investigative office of the ITC has opposed the motion,
claiming that, notwithstanding the Company's settlement with TI, the Company's
alleged violation of the ITC's cease and desist order warrants the imposition of
substantial penalties. The Company's motion is pending before the ITC.
The Company is a defendant in a lawsuit brought by Maxim Integrated
Products, Inc. ("Maxim") in the United States District Court for the Northern
District of California seeking an injunction against, and claiming damages for,
alleged antitrust violations and unfair competition in connection with
distribution arrangements between the Company and certain distributors. Maxim
alleged that certain distributors ceased doing business with Maxim as a result
of the distribution arrangements between the distributors and the Company,
resulting in improper restrictions to Maxim's access to channels by which it
distributes its products. Maxim asserted actual and consequential damages in the
amount of $14.1 million and claimed restitution and punitive damages in an
unspecified amount. Under applicable law, Maxim would receive three times the
amount of any actual damages suffered as a result of any antitrust violation. On
September 7, 1994, Maxim's claim was dismissed for lack of evidence. Maxim has
appealed this ruling and briefing of the appeal was concluded in March 1995. No
hearing on this appeal has yet been scheduled.
Although the Company believes it should prevail in these matters, the
Company is unable to determine their ultimate outcome or estimate the ultimate
amount of liability, if any, at this time. An adverse resolution of these
matters could have a material adverse effect on the Company's consolidated
financial position or on its consolidated results of operations or cash flows in
the period in which the matters are resolved.
In addition, from time to time as a normal incidence of the nature of the
Company's business, various claims, charges and litigation are asserted or
commenced against the Company arising from or related to contractual matters,
patents, personal injury, environmental matters and product liability. Such
litigation includes patent infringement actions brought against the Company by
Sextant Avionique, S.A. ("Sextant") in Paris, France, which claims that the
Company's accelerometer infringes certain Sextant patents and seeks to enjoin
such infringement. While the Company is vigorously defending such claims by
Sextant, there can be no assurance that the Company will prevail.
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<PAGE> 20
DESCRIPTION OF NOTES
The Notes are to be issued under an Indenture, to be dated as of December
, 1995 (the "Indenture"), between the Company and State Street Bank and Trust
Company, as Trustee (the "Trustee"), a copy of which is filed as an exhibit to
the Registration Statement. The following is a summary of certain provisions of
the Indenture. As used in this "Description of Notes," the "Company" refers to
Analog Devices, Inc. and does not include its subsidiaries.
GENERAL
The Notes will be unsecured convertible subordinated obligations of the
Company, will be limited to $200,000,000 aggregate principal amount, plus such
additional principal amount of Notes, not to exceed $30,000,000, to cover
over-allotments in the public offering to which this Prospectus relates, and
will mature on December 1, 2000. The Notes will bear interest at the rate per
annum shown on the front cover of this Prospectus from December , 1995 or from
the most recent Interest Payment Date to which interest has been paid or duly
provided for, payable semiannually on June 1 and December 1 of each year,
commencing on June 1, 1996, to the Person in whose name the Note (or any
predecessor Note) is registered at the close of business on the preceding May 15
or November 15, as the case may be. (sec. 3.1 and 3.7) Principal of, and
premium, if any, and interest on the Notes will be payable at the offices or
agencies of the Company in New York, New York or Boston, Massachusetts, and the
transfer of Notes will be registrable at the office of the Trustee in Boston,
Massachusetts. In addition, payment of interest may, at the option of the
Company, be made by check mailed to the address of the person entitled thereto
as it appears in the Security Register. (sec.sec. 3.1, 3.5 and 10.2)
The Notes will be issued only in fully registered form, without coupons, in
denominations of $1,000 and any integral multiple thereof. (sec. 3.2) No service
charge will be made for any registration of transfer or exchange of Notes, but
the Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. (sec. 3.5)
CONVERSION RIGHTS
The Holder of any Note will have the right, at the Holder's option, to
convert any portion of the principal amount thereof that is an integral multiple
of $1,000 into shares of Common Stock at any time after 60 days following the
latest date of original issuance thereof and prior to maturity (unless earlier
redeemed or repurchased) at the conversion price set forth on the cover page
hereof (subject to adjustment as described below). The right to convert a Note
called for redemption or delivered for repurchase will terminate at the close of
business on the fifth Business Day prior to the Redemption Date for such Note or
the second trading day preceding the Repurchase Date, as the case may be. (sec.
12.1)
Any Note (except Notes called for redemption) surrendered for conversion
during the period from the close of business on any Regular Record Date to the
opening of business of the next succeeding Interest Payment Date must be
accompanied by payment of an amount equal to the interest payable on such
Interest Payment Date on the principal amount of Notes being surrendered for
conversion. In the case of any Note which has been converted after any Regular
Record Date but before the next Interest Payment Date, interest, the Stated
Maturity of which is due on such Interest Payment Date, shall be payable on such
Interest Payment Date notwithstanding such conversion, and such interest shall
be paid to the Holder of such Note on such Regular Record Date. As a result,
Holders that surrender Notes for conversion on a date that is not an Interest
Payment Date will not receive any interest for the period from the Interest
Payment Date next preceding the date of conversion to the date of conversion or
for any later period, even if the Notes are surrendered after a notice of
redemption (except for the payment of interest on Notes called for redemption on
a Redemption Date between a Regular Record Date and the Interest Payment Date to
which it relates). No fractional shares will be issued upon conversion but, in
lieu thereof, an appropriate amount will be paid in cash by the Company based on
the market price of Common Stock at the close of business on the day of
conversion. (sec.sec. 3.7, 12.2 and 12.3)
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<PAGE> 21
The conversion price is subject to adjustment in certain events, including:
(a) dividends (and other distributions) payable in Common Stock on shares of
capital stock of the Company, (b) the issuance to all holders of Common Stock of
rights, options or warrants entitling them to subscribe for or purchase Common
Stock at less than the then current market price (determined as provided in the
Indenture) of Common Stock, (c) subdivisions, combinations and reclassifications
of Common Stock, (d) distributions to all holders of Common Stock of evidences
of indebtedness of the Company, shares of capital stock, cash or assets
(including securities, but excluding those dividends, rights, options, warrants
and distributions referred to above, dividends and distributions paid
exclusively in cash and mergers and consolidations to which the second
succeeding paragraph applies), (e) distributions consisting exclusively of cash
(excluding any cash portion of distributions referred to in (d) above, or cash
distributed upon a merger or consolidation to which the second succeeding
paragraph applies) to all holders of Common Stock in an aggregate amount that,
combined together with (i) other such all-cash distributions made within the
preceding 12 months in respect of which no adjustment has been made and (ii) any
cash and the fair market value of other consideration payable in respect of any
tender offer by the Company or any of its subsidiaries for Common Stock
concluded within the preceding 12 months in respect of which no adjustment has
been made, exceeds 12.5% of the Company's market capitalization (being the
product of the then current market price of the Common Stock and the number of
shares of Common Stock then outstanding) on the record date for such
distribution, and (f) the successful completion of a tender offer made by the
Company or any of its subsidiaries for Common Stock which involves an aggregate
consideration that, together with (i) any cash and other consideration payable
in a tender offer by the Company or any of its subsidiaries for Common Stock
expiring within the 12 months preceding the expiration of such tender offer in
respect of which no adjustment has been made and (ii) the aggregate amount of
any such all-cash distributions referred to in (e) above to all holders of
Common Stock within the 12 months preceding the expiration of such tender offer
in respect of which no adjustments have been made, exceeds 12.5% of the
Company's market capitalization on the expiration of such tender offer. The
Company reserves the right to make such reductions in the conversion price in
addition to those required in the foregoing provisions as it considers to be
advisable in order that any event treated for federal income tax purposes as a
dividend of stock or stock rights will not be taxable to the recipients. No
adjustment of the conversion price will be required to be made until the
cumulative adjustments amount to 1.0% or more of the conversion price. (sec.
12.4)
Generally, Holders converting Notes into Common Stock will be entitled to
receive upon such conversion, in addition to the Common Stock into which the
Notes are converted, the associated rights (the "Rights") to purchase shares of
Common Stock of the Company, pursuant to the Rights Agreement dated as of
January 28, 1988, as amended, between the Company and The First National Bank of
Boston, as Rights Agent, as presently constituted or under any similar plan (see
"Description of Capital Stock -- Stockholder Rights Plan"). If for any reason
converting holders of the Notes are not entitled to receive the Rights that
would otherwise be attributable to the shares of Common Stock received upon such
conversion or such Rights are not issued to them upon conversion for any reason,
then adjustment of the conversion price shall be made under paragraph (b) of the
preceding paragraph as if the Rights were then being distributed to the
stockholders. If such an adjustment is made and the Rights are later redeemed,
invalidated, or terminated, then a corresponding reversing adjustment shall be
made to the conversion price, on an equitable basis, to take account of such
event. (sec. 12.4)
In case of any consolidation or merger of the Company with or into another
Person or any merger of another Person into the Company (other than a merger
which does not result in any reclassification, conversion, exchange or
cancellation of the Common Stock), or in case of any sale or transfer of all or
substantially all of the assets of the Company, each Note then outstanding will,
without the consent of any Holder of any Note, become convertible only into the
kind and amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer by a holder of the number of shares of
Common Stock into which such Note was convertible immediately prior thereto
(assuming such holder of Common Stock failed to exercise any rights of election
and that such Note was then convertible). (sec. 12.11)
If at any time the Company makes a distribution of property to its
stockholders which would be taxable to such stockholders as a dividend for
federal income tax purposes (e.g., distributions of evidences of
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<PAGE> 22
indebtedness or assets of the Company, but generally not stock dividends on
Common Stock or rights to subscribe for Common Stock) and, pursuant to the
anti-dilution provisions of the Indenture, the number of shares into which Notes
are convertible is increased, such increase may be deemed for federal income tax
purposes to be the payment of a taxable dividend to Holders of Notes. Holders of
Notes could, therefore, have taxable income as a result of an event pursuant to
which they receive no cash or property that could be used to pay the related
income tax.
SUBORDINATION
The payment of the principal of, premium, if any, and interest on, and the
repurchase of the Notes will be subordinated in right of payment to the extent
set forth in the Indenture to the prior payment in full of the principal of (and
premium, if any), and interest on all Senior Indebtedness of the Company. Senior
Indebtedness includes (a) all indebtedness of the Company, including the
principal of and premium, if any, and interest on such indebtedness, whether
outstanding currently or hereafter created, (i) for borrowed money, (ii) for
money borrowed by others and guaranteed, directly or indirectly, by the Company,
(iii) constituting purchase money indebtedness for the payment of which the
Company is directly or contingently liable, (iv) constituting reimbursement
obligations under bank letters of credit, (v) under interest rate and currency
swaps, caps, floors, collars or similar agreements or arrangements intended to
protect the Company against fluctuations in interest or currency rates, (vi)
under any lease of any real or personal property, which obligations are
capitalized on the Company's books, unless by the terms of the instrument
creating or evidencing such indebtedness it is provided that such indebtedness
is not superior in right of payment to the Notes or to other indebtedness which
is pari passu with, or subordinated to, the Notes, or (vii) all obligations of
others of the kind described in the preceding clauses (i), (ii), (iii), (iv),
(v) and (vi) assumed by or guaranteed by the Company, and (b) any modifications,
refundings, deferrals, renewals or extensions of any such Senior Indebtedness,
or debentures, notes or other evidences of indebtedness issued in exchange for
such Senior Indebtedness. (sec.sec. 13.1 and 13.2)
No payment on account of principal, premium, if any, or interest on, or
redemption or repurchase of, the Notes may be made by the Company if there is a
default in the payment of principal, premium, if any, sinking funds or interest
(including a default under any repurchase or redemption obligation) with respect
to any Senior Indebtedness or if any other event of default with respect to any
Senior Indebtedness, permitting the holders thereof to accelerate the maturity
thereof, shall have occurred and shall not have been cured or waived or shall
not have ceased to exist after written notice to the Company and the Trustee by
any holder of Senior Indebtedness. Upon any acceleration of the principal due on
the Notes or payment or distribution of assets of the Company to creditors upon
any dissolution, winding up, liquidation or reorganization, whether voluntary or
involuntary, or in bankruptcy, insolvency, receivership or other proceedings,
all principal, premium, if any, and interest due on all Senior Indebtedness must
be paid in full before the Holders of the Notes are entitled to receive any
payment. By reason of such subordination, in the event of insolvency, creditors
of the Company who are holders of Senior Indebtedness may recover more, ratably,
than the Holders of the Notes, and such subordination may result in a reduction
or elimination of payments to the Holders of the Notes. (sec. 13.2)
The Notes will be effectively subordinated to all indebtedness and other
liabilities (including trade payables and lease obligations) of the Company's
subsidiaries. Any right of the Company to receive any assets of its subsidiaries
upon their liquidation or reorganization (and the consequent right of the
Holders of the Notes to participate in those assets) will be effectively
subordinated to the claims of that subsidiary's creditors (including trade
creditors), except to the extent that the Company is itself recognized as a
creditor of such subsidiary, in which case the claims of the Company would still
be subordinate to any security interest in the assets of such subsidiary and any
indebtedness of such subsidiary senior to that held by the Company.
As of July 29, 1995, the principal amount of outstanding Senior
Indebtedness was approximately $80.1 million (excluding Senior Indebtedness
constituting liabilities of a type not required to be reflected as a liability
on the balance sheet of the Company in accordance with generally accepted
accounting principles, such as contingent obligations, forward foreign exchange
contracts and interest rate swap agreements). As of July 29, 1995, there was
outstanding approximately $75.1 million of indebtedness and other liabilities of
subsidiaries of the Company (excluding (i) intercompany liabilities, (ii)
indebtedness included in Senior
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Indebtedness because it is guaranteed directly or indirectly by the Company and
(iii) liabilities of a type not required to be reflected as a liability on the
balance sheet of such subsidiaries in accordance with generally accepted
accounting principles), as to which the Notes would have been structurally
subordinated.
The Indenture does not limit the Company's ability to incur Senior
Indebtedness or any other indebtedness.
OPTIONAL REDEMPTION
The Notes may not be redeemed at the option of the Company prior to
December 1, 1998. Thereafter, the Notes may be redeemed, in whole or in part, at
the option of the Company, upon not less than 30 nor more than 60 days' notice
by mail.
The Redemption Prices (expressed as a percentage of principal amount) are
as follows for the 12-month period beginning on December 1 of the following
years (sec.sec. 2.3, 11.1, 11.5, 11.7):
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
----------------------------------------------- ----------
<S> <C>
1998........................................... %
1999...........................................
</TABLE>
in each case together with accrued interest to the Redemption Date.
REPURCHASE AT OPTION OF HOLDERS UPON A CHANGE IN CONTROL
If a Change in Control (as defined) occurs, each Holder of Notes shall have
the right, at the Holder's option, to require the Company to repurchase all of
such Holder's Notes, or any portion thereof that is an integral multiple of
$1,000, on the date (the "Repurchase Date") that is 45 days after the date of
the Company Notice (as defined), at a price equal to 100% of the principal
amount of the Notes to be repurchased (the "Repurchase Price"), together with
accrued interest to the Repurchase Date. (sec. 14.1)
Within 30 days after the occurrence of a Change in Control, the Company is
obligated to mail to all Holders of record of the Notes a notice (the "Company
Notice") of the occurrence of such Change in Control and of the repurchase right
arising as a result thereof. The Company must deliver a copy of the Company
Notice to the Trustee and cause a copy or a summary of such notice to be
published in a newspaper of general circulation in the Borough of Manhattan, The
City of New York, and the County of Suffolk, The City of Boston. To exercise the
repurchase right, a Holder of Notes must deliver on or before the 30th day after
the date of the Company Notice irrevocable written notice to the Trustee of the
Holder's exercise of such right, together with the Notes with respect to which
the right is being exercised, duly endorsed for transfer to the Company. (sec.
14.2)
A Change in Control shall be deemed to have occurred at such time after the
original issuance of the Notes as there shall occur:
(i) the acquisition by any Person (including any syndicate or group
deemed to be a "person" under Section 13(d)(3) of the Exchange Act) of
beneficial ownership, directly or indirectly, through a purchase, merger or
other acquisition transaction or series of transactions, of shares of
capital stock of the Company entitling such Person to exercise 50% or more
of the total voting power of all shares of capital stock of the Company
entitled to vote generally in elections of directors; or
(ii) any consolidation of the Company with, or merger of the Company
into, any other Person, any merger of another Person into the Company, or
any sale or transfer of all or substantially all of the assets of the
Company to another Person (other than a merger (x) which does not result in
any reclassification, conversion, exchange or cancellation of outstanding
shares of capital stock or (y) which is effected solely to change the
jurisdiction of incorporation of the Company and results in a
reclassification, conversion or exchange of outstanding shares of Common
Stock into solely shares of common stock); or
(iii) a change in the Board of Directors of the Company in which the
individuals who constituted the Board of Directors of the Company at the
beginning of the 24-month period immediately preceding
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<PAGE> 24
such change (together with any other director whose election by the Board
of Directors of the Company or whose nomination for election by the
stockholders of the Company was approved by a vote of at least a majority
of the directors then in office either who were directors at the beginning
of such period or whose election or nomination for election was previously
so approved) cease for any reason to constitute a majority of the directors
then in office;
provided, however, that a Change in Control shall not be deemed to have occurred
if either (i) the closing price per share of the Common Stock for any five
trading days within the period of ten consecutive trading days ending
immediately after the later of the Change in Control or the public announcement
of the Change in Control (in the case of a Change in Control under clause (i)
above) or ending immediately before the Change in Control (in the case of a
Change in Control under clause (ii) above) shall equal or exceed 105% of the
conversion price of the Notes in effect on each such trading day, or (ii)(a) all
of the consideration (excluding cash payments for fractional shares) in the
transaction or transactions constituting the Change in Control consists of
shares of common stock traded on a national securities exchange or quoted on the
Nasdaq National Market and as a result of such transaction or transactions the
Notes become convertible solely into such common stock and (b) after giving
effect to such transaction or transactions and for a period of 12 months
thereafter, the Notes have a rating equivalent or better than the ratings given
to the Notes by Moody's Investors Service, Inc. and Standard & Poor's
Corporation (or their successors) in connection with this offering. "Beneficial
owner" shall be determined in accordance with Rule 13d-3 promulgated by the
Commission under the Exchange Act, as in effect on the date of execution of the
Indenture. (sec. 14.3)
The right to require the Company to repurchase Notes as a result of the
occurrence of a Change in Control would create an event of default under the
Company's revolving credit agreement and could create an event of default under
future Senior Indebtedness of the Company. As a result, any repurchase would,
absent a waiver, be blocked by the subordination provisions of the Notes. See
"Subordination." Failure by the Company to repurchase the Notes when required
would result in an Event of Default with respect to the Notes whether or not
such repurchase is permitted by the subordination provisions. See "Events of
Default."
Rule 13e-4 under the Exchange Act requires the dissemination of certain
information to security holders in the event of an issuer tender offer and may
apply in the event that the repurchase option becomes available to Holders of
the Notes. The Company will comply with this rule to the extent applicable at
that time.
The foregoing provisions would not necessarily afford Holders of the Notes
protection in the event of highly leveraged or other transactions involving the
Company that may adversely affect Holders.
MERGERS AND SALES OF ASSETS BY THE COMPANY
The Company may not consolidate with or merge into any other Person or
transfer or lease its properties and assets substantially as an entirety to any
Person unless (a) the Person formed by such consolidation or into which the
Company is merged or the Person to which the properties and assets of the
Company are so transferred or leased shall be a corporation, partnership or
trust organized and existing under the laws of the United States, any State
thereof or the District of Columbia and shall expressly assume the payment of
the principal of (and premium, if any) and interest on the Notes and the
performance of the other covenants of the Company under the Indenture, and (b)
immediately after giving effect to such transaction, no Event of Default, and no
event which, after notice or lapse of time or both, would become an Event of
Default, shall have occurred and be continuing. (sec. 8.1)
EVENTS OF DEFAULT
The following will be Events of Default under the Indenture: (a) failure to
pay principal of or premium, if any, on any Note when due, whether or not such
payment is prohibited by the subordination provisions of the Indenture; (b)
failure to pay any interest on any Note when due, continuing for 30 days,
whether or not such payment is prohibited by the subordination provisions of the
Indenture; (c) failure to perform any other covenant of the Company in the
Indenture, continuing for 60 days after written notice as provided in the
Indenture; (d) failure of the Company or any subsidiary to make any payment at
maturity in respect of indebtedness, which term as used in the Indenture means
obligations (other than non-recourse obligations) of,
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or guaranteed or assumed by, the Company or any subsidiary for borrowed money
("Indebtedness"), in an amount in excess of $25,000,000 and continuance of such
failure for 180 days; (e) default by the Company or any subsidiary with respect
to any Indebtedness, which default results in the acceleration of Indebtedness
in an amount in excess of $25,000,000 without such Indebtedness having been
discharged or such acceleration having been cured, waived, rescinded or annulled
within 30 days after notice as provided in the Indenture; and, (f) certain
events in bankruptcy, insolvency or reorganization. (sec. 5.1) Subject to the
provisions of the Indenture relating to the duties of the Trustee in case an
Event of Default shall occur and be continuing, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request or direction of any of the Holders, unless such Holders shall have
offered to the Trustee reasonable indemnity. (sec. 6.3) Subject to such
provisions for the indemnification of the Trustee, the Holders of a majority in
aggregate principal amount of the Outstanding Notes will have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power conferred on the
Trustee. (sec. 5.12)
If an Event of Default shall occur and be continuing, either the Trustee or
the Holders of at least 25% in principal amount of the Outstanding Notes may
accelerate the maturity of all Notes; provided, however, that after such
acceleration, but before a judgment or decree based on acceleration, the Holders
of a majority in aggregate principal amount of Outstanding Notes may, under
certain circumstances, rescind and annul such acceleration if all Events of
Default, other than the non-payment of accelerated principal, have been cured or
waived as provided in the Indenture. (sec.5.2) For information as to waiver of
defaults, see "Modification and Waiver."
No Holder of any Note will have any right to institute any proceeding with
respect to the Indenture or for any remedy thereunder, unless such Holder shall
have previously given to the Trustee written notice of a continuing Event of
Default and unless also the Holders of at least 25% in aggregate principal
amount of the Outstanding Notes shall have made written request, and offered
reasonable indemnity, to the Trustee to institute such proceeding as trustee,
and the Trustee shall not have received from the Holders of a majority in
aggregate principal amount of the Outstanding Notes a direction inconsistent
with such request and shall have failed to institute such proceeding within 60
days. (sec.5.7) However, such limitations do not apply to a suit instituted by a
Holder of a Note for the enforcement of payment of the principal of and premium,
if any, or interest on such Note on or after the respective due dates expressed
in such Note or of the right to convert such Note in accordance with the
Indenture. (sec.5.8)
The Company will be required to furnish to the Trustee annually a statement
as to the performance by the Company of certain of its obligations under the
Indenture and as to any default in such performance. (sec.10.7)
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company
and the Trustee with the consent of the Holders of a majority in aggregate
principal amount of the Outstanding Notes; provided, however, that no such
modification or amendment may, without the consent of the Holder of each
Outstanding Note affected thereby, (a) change the Stated Maturity of the
principal of, or any installment of interest on, any Note, (b) reduce the
principal amount of, or the premium or interest on, any Note, (c) reduce the
amount payable upon an optional redemption or the consideration payable to any
Holder converting after a notice of redemption has been given, (d) modify the
provisions with respect to the repurchase right of the Holders in a manner
adverse to the Holders, (e) change the place or currency of payment of principal
of, or premium or interest on, any Note, (f) impair the right to institute suit
for the enforcement of any payment on or with respect to any Note, (g) adversely
affect the right to convert Notes, (h) modify the subordination provisions in a
manner adverse to the Holders of the Notes, (i) reduce the above-stated
percentage of Outstanding Notes necessary to modify or amend the Indenture or
(j) reduce the percentage of aggregate principal amount of Outstanding Notes
necessary for waiver of compliance with certain provisions of the Indenture or
for waiver of certain defaults. (sec.9.2)
24
<PAGE> 26
The Holders of a majority in aggregate principal amount of the Outstanding
Notes may waive compliance by the Company with certain restrictive provisions of
the Indenture. (sec.10.8) The Holders of a majority in aggregate principal
amount of the Outstanding Notes may waive any past default under the Indenture,
except a default in the payment of principal, premium or interest. (sec.5.13)
SATISFACTION AND DISCHARGE
The Company may discharge its obligations under the Indenture while Notes
remain Outstanding if (i) all Outstanding Notes will become due and payable at
their scheduled maturity within one year or (ii) all Outstanding notes are
scheduled for redemption within one year, and, in either case, the Company has
deposited with the Trustee an amount sufficient to pay and discharge all
Outstanding Notes on the date of their scheduled maturity or the scheduled date
of redemption. (sec.4.1)
GOVERNING LAW
The Indenture and the Notes provide that they are to be governed in
accordance with the laws of the Commonwealth of Massachusetts. (sec.1.12)
THE TRUSTEE
The Indenture contains certain limitations on the right of the Trustee, in
the event it becomes a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any such
claim as security or otherwise. The Trustee will be permitted to engage in other
transactions; provided, however, that if it acquires any conflicting interest
(as defined), it must eliminate such conflict or resign. (sec.sec.6.8 and 6.13)
In case an Event of Default shall occur (and shall not be cured), the
Trustee will be required to use the degree of care of a prudent person in the
conduct of his own affairs in the exercise of its powers. Subject to such
provisions, the Trustee will be under no obligation to exercise any of its
rights or powers under the Indenture at the request of any of the Holders of
Notes, unless they shall have offered to the Trustee reasonable security or
indemnity. (sec.sec.6.1 and 6.3)
State Street Bank and Trust Company, the Trustee under the Indenture, is
the trustee under the indenture relating to the Company's 6 5/8% Notes due 2000.
25
<PAGE> 27
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 300,000,000 shares
of Common Stock, $.16 2/3 par value per share, and 500,000 shares of preferred
stock, $1.00 par value per share (the "Preferred Stock").
COMMON STOCK
As of October 28, 1995, there were 76,354,704 shares of Common Stock
outstanding and held of record by approximately 4,474 stockholders.
Holders of Common Stock are entitled to one vote for each share held on all
matters submitted to a vote of stockholders, and do not have cumulative voting
rights. Accordingly, holders of a majority of the shares of Common Stock
entitled to vote in any election of directors may elect all of the directors
standing for election. Holders of Common Stock are entitled to receive ratably
such dividends, if any, as may be declared by the Board of Directors out of
funds legally available therefor, subject to any preferential dividend rights of
outstanding Preferred Stock. Upon the liquidation, dissolution or winding up of
the Company, the holders of Common Stock are entitled to receive ratably the net
assets of the Company available after the payment of all debts and other
liabilities and subject to the prior rights of any outstanding Preferred Stock.
Holders of the Common Stock have no preemptive, subscription, redemption or
conversion rights. The outstanding shares of Common Stock are fully paid and
nonassessable. The rights, preferences and privileges of holders of Common Stock
are subject to, and may be adversely affected by, the rights of the holders of
shares of any series of Preferred Stock which the Company may designate and
issue in the future. There are no shares of Preferred Stock outstanding.
PREFERRED STOCK
The Board of Directors of the Company is authorized, subject to certain
limitations prescribed by law, without further stockholder approval to issue
from time to time up to an aggregate of 500,000 shares of Preferred Stock in one
or more series and to fix or alter the designations, preferences, rights and any
qualifications, limitations or restrictions of the shares of each such series
thereof, including the dividend rights, dividend rates, conversion rights,
voting rights, terms of redemption (including sinking fund provisions),
redemption price or prices, liquidation preferences and the number of shares
constituting any series or designation of such series. The issuance of Preferred
Stock may have the effect of delaying, deferring or preventing a change of
control of the Company. The Company has no present plans to issue any shares of
Preferred Stock.
MASSACHUSETTS LAW AND CERTAIN PROVISIONS OF THE COMPANY'S RESTATED ARTICLES OF
ORGANIZATION AND BY-LAWS
Because the Company has more than 200 stockholders of record, it is subject
to Chapter 110F of the Massachusetts General Laws, an anti-takeover law. In
general, this statute prohibits a publicly held Massachusetts corporation from
engaging in a "business combination" with an "interested stockholder" for a
period of three years after the date of the transaction in which the person
becomes an interested stockholder, unless (i) the interested stockholder obtains
the approval of the Board of Directors prior to becoming an interested
stockholder, (ii) the interested stockholder acquires 90% of the outstanding
voting stock of the corporation (excluding shares held by certain affiliates of
the corporation) at the time it becomes an interested stockholder, or (iii) the
business combination is approved by both the Board of Directors and the holders
of two-thirds of the outstanding voting stock of the corporation (excluding
shares held by the interested stockholder). An "interested stockholder" is a
person who, together with affiliates and associates, owns (or at any time within
the prior three years did own) 5% or more of the outstanding voting stock of the
corporation. A "business combination" includes a merger, a stock or asset sale,
and certain other transactions resulting in a financial benefit to the
interested stockholders.
Massachusetts General Laws Chapter 156B, Section 50A generally requires
that publicly-held Massachusetts corporation have a classified board of
directors consisting of three classes as nearly equal in size as
26
<PAGE> 28
possible, unless the corporation elects to opt out of the statute's coverage.
The Company's By-Laws contain provisions which give effect to Section 50A.
The Company's By-Laws include a provision excluding the Company from the
applicability of Massachusetts General Laws Chapter 110D, entitled "Regulation
of Control Share Acquisitions". In general, this statute provides that any
stockholder of a corporation subject to this statute who acquires 20% or more of
the outstanding voting stock of a corporation may not vote such stock unless the
stockholders of the corporation so authorize. The Board of Directors may amend
the Company's By-Laws at any time to subject the Company to this statute
prospectively.
The Restated Articles of Organization of the Company, as amended (the
"Articles of Organization") provide that the directors and officers of the
Company shall be indemnified by the Company to the fullest extent authorized by
Massachusetts law, as it now exists or may in the future be amended, against all
liabilities and expenses incurred in connection with service for or on behalf of
the Company. In addition, the Articles of Organization provide that the
directors of the Company will not be personally liable for monetary damages to
the Company for breaches of their fiduciary duty as directors, unless they
violated their duty of loyalty to the Company or its stockholders, acted in bad
faith, knowingly or intentionally violated the law, authorized illegal dividends
or redemptions or derived an improper personal benefit from their action as
directors. This provision does not eliminate director liability under Federal
securities laws or preclude non-monetary relief under state law.
STOCKHOLDER RIGHTS PLAN
The Company adopted a Stockholder Rights Plan on January 28, 1988, which
was amended on June 14, 1989 (the "Rights Plan"). Pursuant to the Rights Plan,
each share of Common Stock has an associated right (a "Right"). Each Right
entitles the registered holder to purchase from the Company one share of Common
Stock at a purchase price of $40.00 (as adjusted to account for the 50% Common
Stock dividend distributed by the Company on January 4, 1995) per share, subject
to adjustment (the "Purchase Price").
The Rights will be exercisable upon the earlier of (i) ten business days
following a public announcement that a person or group has acquired, or obtained
the right to acquire, beneficial ownership of 20% or more of the outstanding
Common Stock of the Company (an "Acquiring Person"), or (ii) ten business days
following the commencement of a tender offer or exchange offer, the consummation
of which would result in a person or group owning 30% or more of the outstanding
Common Stock (the earlier of such dates being called the "Distribution Date").
Until a Right is exercised, the holder thereof has no rights as a stockholder of
the Company. Until the Distribution Date (or earlier redemption or expiration of
the Rights), Rights are transferred with and only with the Common Stock.
In certain circumstances specified in the Rights Plan, including certain
circumstances occurring after any person or group becomes an Acquiring Person,
each holder of a Right, other than Rights beneficially owned by the Acquiring
Person, will thereafter have the right to receive upon exercise that number of
shares of Common Stock having a market value of two times the Purchase Price,
and in the event that the Company is acquired in a business combination
transaction or 50% or more of its assets are sold, each holder of a Right will
thereafter have the right to receive upon exercise that number of shares of
Common Stock of the acquiring company which at the time of the transaction will
have a market value of two times the Purchase Price.
The Rights have certain anti-takeover effects, in that they would cause
substantial dilution to a person or group that attempts to acquire a significant
interest in the Company on terms not approved by the Board of Directors. The
Board of Directors of the Company may in certain circumstances redeem the Rights
in whole at a price of $.0133 per Right, as adjusted.
27
<PAGE> 29
<TABLE>
UNDERWRITING
The Underwriters named below have severally agreed, subject to the terms
and conditions of the Underwriting Agreement, to purchase from the Company the
respective principal amounts of Notes set forth opposite their names below. The
Underwriting Agreement provides that the obligations of the Underwriters to pay
for and accept delivery of the Notes are subject to certain conditions
precedent, and that the Underwriters are committed to purchase all of the Notes
if they purchase any of the Notes.
<CAPTION>
PRINCIPAL
UNDERWRITER AMOUNT
----------- ---------
<S> <C>
Montgomery Securities................................................ $
Goldman, Sachs & Co.................................................. $
------------
Total........................................................... $200,000,000
============
</TABLE>
The Underwriters have advised the Company that they propose initially to
offer the Notes to the public on the terms set forth on the cover page of this
Prospectus. The Underwriters may allow to selected dealers a concession of not
more than % of the principal amount of Notes, and the Underwriters may allow,
and such dealers may reallow, a discount of not more than % of the principal
amount of the Notes to other dealers. The public offering price and the
concession and discount to dealers may be changed by the Underwriters after the
initial public offering of the Notes. The Notes are offered subject to receipt
and acceptance by the Underwriters, and to certain other conditions, including
the right to reject orders in whole or in part.
The Company has granted the Underwriters an option for 30 days to purchase
up to an additional $30,000,000 principal amount of Notes solely to cover
over-allotments, if any, at the same price per Note as the initial $200,000,000
principal amount of Notes to be purchased by the Underwriters. To the extent the
Underwriters exercise this option, each of the Underwriters will be committed to
purchase such additional Notes in approximately the same proportion as set forth
in the above table.
The Underwriting Agreement provides that the Company will indemnify the
Underwriters against certain liabilities, including civil liabilities under the
Securities Act, or will contribute to payments the Underwriters may be required
to make in respect thereof.
The Company has agreed that, for a period of 90 days after the date of this
Prospectus, it will not issue, offer, sell, grant options to purchase or
otherwise dispose of any of the Company's equity securities or any other
securities convertible into or exchangeable with its Common Stock or other
equity security, except for certain issuances under the Company's stock plans.
In addition, Mr. Ray Stata, the Chairman of the Board and Chief Executive
Officer of the Company, and Mr. Jerald G. Fishman, the President and Chief
Operating Officer of the Company, have each agreed not to publicly sell or
dispose of more than 110,000 shares of Common Stock, or any securities
convertible into or exercisable for Common Stock, for a period of 30 days after
the date of this Prospectus.
The Notes are a new issue of securities for which there is currently no
public market. The Notes have been approved for listing on the New York Stock
Exchange, subject to notice of issuance. However, no assurance can be given as
to the liquidity of or trading market for the Notes.
LEGAL MATTERS
The validity of the Notes and the shares of Common Stock issuable upon
conversion thereof will be passed upon for the Company by Hale and Dorr, Boston,
Massachusetts. Certain legal matters relating to the offering of the Notes will
be passed upon for the Underwriters by Ropes & Gray, Boston, Massachusetts. Paul
P. Brountas, a partner of Hale and Dorr, is the Clerk of the Company.
EXPERTS
The consolidated financial statements of Analog Devices, Inc. appearing in
Analog Devices, Inc.'s Annual Report (Form 10-K) for the year ended October 29,
1994 have been audited by Ernst & Young LLP, independent auditors, as set forth
in their report thereon (which includes an explanatory paragraph that describes
claims and actions brought against the Company discussed in Note 6 to the
consolidated financial statements) included therein and incorporated herein by
reference. Such consolidated financial statements are incorporated herein by
reference in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
28
<PAGE> 30
===============================================================================
No dealer, salesman or other person is authorized to give any information or
to make any representation in connection with this offering not contained in
this Prospectus, and any information or representation not contained herein must
not be relied upon as having been authorized by the Company or the Underwriters.
This Prospectus does not constitute an offer to sell or a solicitation of an
offer to buy of any securities other than the Notes or an offer to any person in
any jurisdiction where such an offer would be unlawful. Neither the delivery of
this Prospectus nor any sale made hereunder shall, under any circumstances,
create any implication that there has been no change in the affairs of the
Company since the date hereof.
<TABLE>
----------------------------
TABLE OF CONTENTS
----------------------------
<CAPTION>
Page
-----
<S> <C>
Available Information..................... 2
Incorporation of Certain Documents by
Reference............................... 2
Prospectus Summary........................ 3
Risk Factors.............................. 6
Use of Proceeds........................... 9
Price Range of Common Stock and Dividend
Policy.................................. 9
Capitalization............................ 10
Selected Consolidated Financial Data...... 11
Business.................................. 13
Description of Notes...................... 19
Description of Capital Stock.............. 26
Underwriting.............................. 28
Legal Matters............................. 28
Experts................................... 28
</TABLE>
===============================================================================
===============================================================================
$200,000,000
[ANALOG LOGO]
% CONVERTIBLE SUBORDINATED
NOTES DUE 2000
------------------------
PROSPECTUS
------------------------
MONTGOMERY SECURITIES
GOLDMAN, SACHS & CO.
, 1995
===============================================================================
<PAGE> 31
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses in connection with the
sale and distribution of the securities being registered, other than the
underwriting discount. All amounts shown are estimates except the Securities and
Exchange Commission registration fee.
<TABLE>
<S> <C>
SEC Registration Fee..................................................... $ 79,310
NASD Filing Fee.......................................................... 23,500
Blue Sky Fees and Expenses............................................... 10,000
Trustee's Fees and Expenses.............................................. 12,000
Accounting Fees and Expenses............................................. 70,000
Legal Fees and Expenses.................................................. 125,000
NYSE Listing Fee......................................................... 17,500
Printing and Engraving................................................... 50,000
Rating Agency Fee........................................................ 125,000
Miscellaneous............................................................ 12,690
--------
Total.................................................................... $525,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article 6A of the Registrant's Articles of Organization, as amended (the
"Articles of Organization") provides for indemnification of directors and
officers to the full extent permitted under Massachusetts law. Section 67 of
Chapter 156B of the Massachusetts General Laws provides that a corporation has
the power to indemnify a director, officer, employee or agent of the corporation
and certain other persons serving at the request of the corporation and certain
other persons serving at the request of the corporation in related capacities
against amounts paid and expenses incurred in connection with an action or
proceeding to which he is or is threatened to be made a party by reason of such
position, if such person shall have acted in good faith and in a manner he
reasonably believed to be in the best interests of the corporation, provided
that, no indemnification shall be made with respect to any matter as to which
such person shall have been adjudged not to be entitled to indemnification under
Section 67.
Article 6A also provides for indemnification of directors and officers of
the Registrant against liabilities and expenses in connection with any legal
proceedings to which they may be made a party or with which they may become
involved or threatened by reason of having been an officer or director of the
Registrant or of any other organization at the request of the Registrant.
Article 6A generally provides that a director or officer of the Registrant (i)
shall be indemnified by the Registrant for all expenses of such legal
proceedings unless he has been adjudicated not to have acted in good faith in
the reasonable belief that his action was in the best interests of the
Registrant, and (ii) shall be indemnified by the Registrant for the expenses,
judgments, fines and amounts paid in settlement and compromise of such
proceedings. No indemnification will be made to cover costs of settlements and
compromises if the Board determines by a majority vote of a quorum consisting of
disinterested directors (or, if such quorum is not obtainable, by a majority of
the disinterested directors of the Registrant), that such settlement or
compromise is not in the best interests of the Registrant.
Article 6A permits the payment by the Registrant of expenses incurred in
defending a civil or criminal action in advance of its final disposition,
subject to receipt of an undertaking by the indemnified person to repay such
payment if it is ultimately determined that such person is not entitled to
indemnification under the Articles of Organization. No advance may be made if
the Board of Directors determines, by a majority vote of a quorum consisting of
disinterested directors (or, if such quorum is not obtainable, by a majority of
the disinterested directors of the Registrant), that such person did not act in
good faith in the reasonable belief that his action was in the best interest of
the Registrant.
II-1
<PAGE> 32
Article 6D of the Registrant's Articles of Organization provides that no
director shall be liable to the Registrant or its stockholders for monetary
damages for breach of his 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 which involve
intentional misconduct or a knowing violation of law, (iii) under Section 61 or
62 of Chapter 156B, or (iv) for any transaction from which the director derived
an improper personal benefit.
The Registrant has directors and officers liability insurance for the
benefit of its directors and officers.
The Underwriting Agreement provides for indemnification by the Underwriters
of directors, officers and controlling persons of the Registrant against certain
liabilities, including liabilities under the Securities Act of 1933, as amended,
under certain circumstances.
<TABLE>
ITEM 16. EXHIBITS.
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
1.01 Form of Underwriting Agreement.
*4.01 Articles of Organization of the Registrant, as amended (incorporated herein by
reference to the Registrant's Form 10-Q for the fiscal quarter ended April 29,
1995).
*4.02 By-Laws of the Registrant, as amended (incorporated herein by reference to the
Registrant's Form 10-K for the fiscal year ended October 31, 1992).
*4.03 Form of Indenture between the Registrant and State Street Bank and Trust Company, as
Trustee.
*4.04 Specimen Note (included in pages 13 to 19 of the Indenture filed as Exhibit 4.03).
*4.05 Rights Agreement, as amended, between the Registrant and The First National Bank of
Boston, as Rights Agent (incorporated herein by reference to a Form 8 filed on June
27, 1989 amending the Registration Statement on Form 8-A relating to Common Stock
Purchase Rights).
*5.01 Opinion of Hale and Dorr.
*12.01 Statement of Computation of Ratios of Earnings to Fixed Charges.
*23.01 Consent of Hale and Dorr (included in Exhibit 5.01).
23.02 Consent of Ernst & Young LLP.
*24.01 Powers of Attorney.
*25.01 Statement of Eligibility of Trustee on Form T-1.
<FN>
- ---------------
* Previously Filed.
</TABLE>
ITEM 17. UNDERTAKINGS.
(a) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions described under "Item 15 --
Indemnification of Directors and Officers" 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.
(b) The undersigned Registrant hereby undertakes that:
II-2
<PAGE> 33
(1) For purposes of determining any liability under the Securities Act
of 1933, 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.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(c) The undersigned Registrant hereby undertakes to file an application for
the purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act in accordance with the
rules and regulations prescribed by the Commission under Section 305(b)(2) of
the Act.
(d) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Act, each filing of the Registrant's annual
report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934
(and, where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the bona fide
offering thereof.
II-3
<PAGE> 34
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Norwood, Commonwealth of Massachusetts, on this 8th day of December, 1995.
ANALOG DEVICES, INC.
By: /S/ JOSEPH E. MCDONOUGH
----------------------------
JOSEPH E. MCDONOUGH
VICE PRESIDENT-FINANCE AND CHIEF
FINANCIAL OFFICER
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
(i) Principal Executive Officers )
)
RAY STATA* Chairman of the Board, Chief )
-------------------------------------- Executive Officer and Director )
RAY STATA )
)
JERALD G. FISHMAN* President, Chief Operating )
-------------------------------------- Officer and Director )
JERALD G. FISHMAN )
)
(ii) Principal Financial Officer and Principal Accounting Officer )
)
/S/ JOSEPH E. MCDONOUGH Vice President-Finance and )
-------------------------------------- Chief Financial Officer )
JOSEPH E. MCDONOUGH )
)
(iii) Board of Directors )
)
JOHN L. DOYLE* Director ) December 8, 1995
-------------------------------------- )
JOHN L. DOYLE )
)
SAMUEL H. FULLER* Director )
-------------------------------------- )
SAMUEL H. FULLER )
)
PHILLIP L. LOWE* Director )
-------------------------------------- )
PHILLIP L. LOWE )
)
GORDON C. MCKEAGUE* Director )
-------------------------------------- )
GORDON C. MCKEAGUE )
)
JOEL MOSES* Director )
-------------------------------------- )
JOEL MOSES )
)
LESTER C. THUROW* Director )
-------------------------------------- )
LESTER C. THUROW )
<FN>
*By: /S/ JOSEPH E. MCDONOUGH
-----------------------------
JOSEPH E. MCDONOUGH
ATTORNEY-IN-FACT
</TABLE>
II-4
<PAGE> 35
<TABLE>
EXHIBIT INDEX
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<C> <S>
1.01 Form of Underwriting Agreement.
*4.01 Articles of Organization of the Registrant, as amended (incorporated herein by
reference to the Registrant's Form 10-Q for the fiscal quarter ended April 29,
1995).
*4.02 By-Laws of the Registrant, as amended (incorporated herein by reference to the
Registrant's Form 10-K for the fiscal year ended October 31, 1992).
*4.03 Form of Indenture between the Registrant and State Street Bank and Trust Company,
as Trustee.
*4.04 Specimen Note (included in pages 13 to 19 of the Indenture filed as Exhibit 4.03).
*4.05 Rights Agreement, as amended, between the Registrant and The First National Bank of
Boston, as Rights Agent (incorporated herein by reference to a Form 8 filed on June
27, 1989 amending the Registration Statement on Form 8-A relating to Common Stock
Purchase Rights).
*5.01 Opinion of Hale and Dorr.
*12.01 Statement of Computation of Ratios of Earnings to Fixed Charges.
*23.01 Consent of Hale and Dorr (included in Exhibit 5.01).
23.02 Consent of Ernst & Young LLP.
*24.01 Powers of Attorney (included on page II-4).
*25.01 Statement of Eligibility of Trustee on Form T-1.
<FN>
- ---------------
* Previously Filed.
</TABLE>
<PAGE> 1
$200,000,000
ANALOG DEVICES, INC.
___% Convertible Subordinated Notes due 2000
UNDERWRITING AGREEMENT
----------------------
December __, 1995
MONTGOMERY SECURITIES
GOLDMAN, SACHS & CO.
c/o Montgomery Securities
600 Montgomery Street
San Francisco, California 94111
Dear Sirs:
Section 1. Introductory. Analog Devices, Inc., a Massachusetts
corporation (the "Company"), proposes to issue and sell to the Underwriters
named in Schedule I hereto (the "Underwriters") an aggregate of $200,000,000
principal amount of the ___% Convertible Subordinated Notes due 2000 of the
Company (the "Firm Notes"). In addition, the Company proposes to grant to the
Underwriters an option to purchase up to an aggregate of $30,000,000 principal
amount of the Securities (the "Option Notes") as provided in Section 4 hereof.
The Firm Notes and, to the extent such option is exercised, the Option Notes
are hereinafter collectively referred to as the "Notes."
You have advised the Company that you propose to make a public offering of
the Notes on the effective date of the registration statement hereinafter
referred to, or as soon thereafter as in your judgment is advisable.
The Company hereby confirms its agreement with respect to the purchase of
the Notes by you as follows:
<PAGE> 2
Section 2. Representations and Warranties of the Company. The Company
represents and warrants to you that:
(a) A registration statement on Form S-3 (File No. 33- ) with
respect to the Notes has been prepared by the Company in conformity with
the requirements of the Securities Act of 1933, as amended (the "Act"),
and the rules and regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission") thereunder and has
been filed with the Commission. The Company has also taken such actions
as are necessary to qualify the Indenture dated as of December __, 1995
(the "Indenture") between the Company and State Street Bank and Trust
Company, as Trustee (the "Trustee"), under the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"), and the rules and
regulations of the Commission thereunder. The Company has prepared and
has filed or proposes to file prior to the effective date of such
registration statement an amendment or amendments to such registration
statement, which amendment or amendments have been or will be similarly
prepared. There have been delivered to you two signed copies of such
registration statement and amendments, together with two copies of each
exhibit filed therewith. Conformed copies of such registration statement
and amendments (but without exhibits) and of the related preliminary
prospectus have been delivered to you in such reasonable quantities as you
have requested. The Company will next file with the Commission one of the
following: (i) prior to effectiveness of such registration statement, a
further amendment thereto, including the form of final prospectus, or (ii)
a final prospectus in accordance with Rules 430A and 424(b) of the Rules
and Regulations. As filed, such amendment and form of final prospectus,
or such final prospectus, shall include all Rule 430A Information and,
except to the extent that you shall agree in writing to a modification,
shall be in all substantive respects in the form furnished to you prior to
the date and time that this Agreement was executed and delivered by the
parties hereto, or, to the extent not completed at such date and time,
shall contain only such specific additional information and other changes
(beyond that contained in the latest Preliminary Prospectus) as the
Company shall have previously advised you in writing would be included or
made therein.
The term "Registration Statement" as used in this Agreement shall
mean such registration statement (including the documents incorporated by
reference thereto and all exhibits thereto but excluding the Form T-1 and
including any registration statement filed pursuant to Rule 462(b) under
the Act) at the time such registration statement becomes effective and, in
the event any post-effective amendment thereto becomes effective prior to
the First Closing Date (as hereinafter defined), shall also mean such
registration statement as so amended; provided, however, that such term
shall also include all Rule 430A Information deemed to be included in such
registration statement at the time such registration statement becomes
effective as provided by Rule 430A of the Rules and Regulations. The term
"Preliminary Prospectus" shall mean any preliminary prospectus referred to
in the preceding paragraph and any preliminary prospectus included in the
Registration Statement
-2-
<PAGE> 3
at the time it becomes effective that omits Rule 430A Information. The
term "Prospectus" as used in this Agreement shall mean the prospectus
relating to the Notes in the form in which it is first filed with the
Commission pursuant to Rule 424(b) of the Rules and Regulations or, if no
filing pursuant to Rule 424(b) of the Rules and Regulations is required,
shall mean the form of final prospectus included in the Registration
Statement at the time such registration statement becomes effective. The
term "Rule 430A Information" means information with respect to the Notes
and the offering thereof permitted to be omitted from the Registration
Statement when it becomes effective pursuant to Rule 430A of the Rules and
Regulations. Any reference herein to any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Form S-3 under the Act as of
the date of the Preliminary Prospectus or the Prospectus, as the case may
be.
(b) The Commission has not issued any order preventing or suspending
the use of any Preliminary Prospectus, and each Preliminary Prospectus has
conformed in all material respects to the requirements of the Act, the
Rules and Regulations and the Trust Indenture Act and, as of its date, has
not included any untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; and at the
time the Registration Statement becomes effective, and at all times
subsequent thereto up to and including each Closing Date hereinafter
mentioned, the Registration Statement and the Prospectus, and any
amendments or supplements thereto, will contain all material statements
and information required to be included therein by the Act, the Rules and
Regulations and the Trust Indenture Act and will in all material respects
conform to the requirements of the Act, the Rules and Regulations and the
Trust Indenture Act, and neither the Registration Statement nor the
Prospectus, nor any amendment or supplement thereto, will include any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading; provided, however, no representation or warranty contained
in this subsection 2(b) shall be applicable to information contained in or
omitted from any Preliminary Prospectus, the Registration Statement, the
Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by you,
specifically for use in the preparation thereof. The documents
incorporated by reference in the Prospectus, when they were filed with the
Commission, conformed in all material respects to the requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and the
rules and regulations of the Commission thereunder, and none of such
documents contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading; and any further documents so filed
and incorporated by reference in the Prospectus or any further amendment
or supplement thereto, when such documents are filed with the Commission,
will conform to all material respects to the requirements of the
Exchange Act and the rules and
-3-
<PAGE> 4
regulations of the Commission thereunder and will not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading; provided, however, that this representation and warranty shall
not apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by you
expressly for use therein.
(c) The Company does not own or control, directly or indirectly, any
corporation, association or other entity other than the subsidiaries
listed in Exhibit 21.1 to its 1994 Annual Report on Form 10-K and other
than the following companies: (i) Analog Devices Proprietary Limited (ii)
Analog Devices India Private Limited, (iii) Analog Devices Realty
Holdings, Inc., (iv) Analog Devices Gen. Trias, Inc, (v) Analog Devices
International Financial Services Company and (vi) Analog Devices Foreign
Sales Corporation. The Company and each of its subsidiaries have been
duly incorporated and are validly existing as corporations in good
standing under the laws of their respective jurisdictions of incorporation
(except with respect to subsidiaries incorporated in jurisdictions where
the concept of good standing is not recognized), with full power and
authority (corporate and other) to own and lease their properties and
conduct their respective businesses as described in the Prospectus; the
Company owns all of the outstanding capital stock of its subsidiaries free
and clear of all claims, liens, charges and encumbrances; the Company and
each of its significant subsidiaries as defined in rule 1-02(w) of
Regulation S-X under the act and the exchange act and as set forth on
Schedule II attached hereto (the "Material Subsidiaries") are in
possession of and operating in compliance with all authorizations,
licenses, permits, consents, certificates and orders material to the
conduct of their respective businesses, all of which are valid and in full
force and effect; the Company and each of its subsidiaries are duly
qualified to do business and in good standing as foreign corporations in
each jurisdiction in which the ownership or leasing of properties or the
conduct of their respective businesses requires such qualification, except
for jurisdictions in which the failure to so qualify would not have a
material adverse effect upon the Company and its subsidiaries taken as a
whole; and no proceeding has been instituted in any such jurisdiction,
revoking, limiting or curtailing, or seeking to revoke, limit or curtail,
such power and authority or qualification.
(d) The Company's authorized and outstanding capital stock is as set
forth under the heading "Capitalization" in the Prospectus as of the dates
stated therein; the issued and outstanding shares of Common Stock have
been duly authorized and validly issued, are fully paid and nonassessable,
are duly listed on the New York Stock Exchange, were not issued in
violation of any preemptive rights or other rights to subscribe for or
purchase securities, and conform to the description thereof contained in
the Prospectus. All of the shares of Common Stock issuable upon
conversion of the Notes have been duly authorized and duly reserved for
issuance upon such conversion and, when issued upon conversion of the
Notes pursuant to the terms of the Indenture, will be validly issued and
outstanding, fully paid and nonassessable with no personal liability
attached to the ownership thereof. None of the shares of Common Stock
issuable upon conversion of the Notes when delivered will be subject to
any lien, claim, encumbrance, restriction upon voting or transfer,
preemptive right
-4-
<PAGE> 5
or any other claim of any third party except such as are described in the
Prospectus. All issued and outstanding shares of capital stock of each
Material Subsidiary of the Company have been duly authorized and validly
issued and are fully paid and nonassessable and are owned directly or
indirectly by the Company, free and clear of all liens, encumbrances,
equities or claims. Except as disclosed in or contemplated by the
Prospectus and the financial statements of the Company, and the related
notes thereto, included in the Prospectus, the Company does not have
outstanding any options to purchase, or any preemptive rights or other
rights to subscribe for or to purchase, any securities or obligations
convertible into, or any contracts or commitments to issue or sell, shares
of its capital stock or any such options, rights, convertible securities
or obligations other than options granted in the ordinary course of
business under benefit plans described in the prospectus and the financial
statements of the company.
(e) The Notes have been duly authorized and, when issued, delivered
and paid for in the manner set forth in this Agreement, will be duly
executed, authenticated and delivered and will constitute valid and
legally binding obligations of the Company entitled to the benefits
provided by the Indenture under which they are to be issued, which will be
in substantially the form filed as an exhibit to the Registration
Statement subject, as to enforcement, to bankruptcy, insolvency,
fraudulent transfer, moratorium, reorganization and similar laws of
general applicability relating to or affecting creditors' rights and to
general equity principles; the Indenture has been duly authorized and duly
qualified under the Trust Indenture Act and, when executed and delivered
by the Company and the Trustee, the Indenture will constitute a valid and
legally binding instrument enforceable in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency, fraudulent
transfer, moratorium, reorganization and similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles, and the Notes and the Indenture will conform to the
descriptions thereof in the Prospectus.
(f) The Company has full legal right, power and authority to enter
into this Agreement, the Notes and the Indenture and perform the
transactions contemplated hereby and thereby. The Company has all
necessary corporate power and authority to issue the Common Stock issuable
upon conversion of the Notes. This Agreement, the Notes and the Indenture
have been duly authorized, executed and delivered by the Company and
constitute valid and binding obligations of the Company in accordance with
their terms. The making and performance of this Agreement, the Notes and
the Indenture by the Company and the consummation of the transactions
herein and therein contemplated (including the issuance of Common Stock
upon the conversion of the Notes) will not violate any provisions of the
certificate of incorporation or bylaws, or other organizational documents,
of the Company or any of its subsidiaries, and will not conflict with,
result in the creation or imposition of any lien, charge or encumbrance
upon any of the assets of the Company or any of its subsidiaries pursuant
to the terms of or the breach or violation of, or constitute, either by
-5-
<PAGE> 6
itself or upon notice or the passage of time or both, a default under any
agreement, mortgage, deed of trust, lease, franchise, license, indenture,
permit or other instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries or any of their respective properties may be bound or
affected, any statute or any authorization, judgment, decree, order,
rule or regulation of any court or any regulatory body, administrative
agency or other governmental body applicable to the Company or any of
its subsidiaries or any of their respective properties. No consent,
approval, authorization or other order of any court, regulatory body,
administrative agency or other governmental body is required for the
execution and delivery of this Agreement, the Notes and the Indenture
or the consummation of the transactions contemplated by this Agreement
and the Indenture, except for compliance with the Act, the Exchange Act,
the Trust Indenture Act, the Blue Sky laws applicable to the public
offering of the Notes by you and the clearance of such offering
with the National Association of Securities Dealers, Inc. (the "NASD").
(g) Ernst & Young LLP, who have expressed their opinion with respect
to the consolidated financial statements and schedules filed with the
Commission as a part of the Registration Statement and included in the
Prospectus and in the Registration Statement, are independent accountants
as required by the Act and the Rules and Regulations.
(h) The consolidated financial statements and schedules of the
Company, and the related notes thereto, included in the Registration
Statement and the Prospectus present fairly in all material respects the
financial position of the Company as of the respective dates of such
financial statements and schedules, and the results of operations and
changes in financial position of the Company for the respective periods
covered thereby. Such statements, schedules and related notes have been
prepared in accordance with generally accepted accounting principles
applied on a consistent basis. No other financial statements or schedules
are required to be included in the Registration Statement. The selected
financial data set forth in the Prospectus under the captions
"Capitalization" and "Selected Consolidated Financial Data" fairly present
the information set forth therein on the basis stated in the Registration
Statement.
(i) Except as disclosed in the Prospectus, and except as to
violations, breaches or defaults which individually or in the aggregate
would not be material to the Company, neither the Company nor any of its
subsidiaries is in violation or default of any provision of its articles
of organization or bylaws, or other organizational documents, or is in
breach of or default with respect to any provision of any agreement,
judgment, decree, order, mortgage, deed of trust, lease, franchise,
license, indenture, permit or other instrument to which it is a party or
by which it or any of its properties are bound; and there does not exist
any state of facts which constitutes an event of default on the part of
the Company or any such subsidiary as defined in such documents or which,
with notice or lapse of time or both, would constitute such an event of
default.
-6-
<PAGE> 7
(j) There are no contracts or other documents required to be
described in the Registration Statement or to be filed as exhibits to the
Registration Statement by the Act or by the Rules and Regulations, or to
be filed as exhibits to the documents incorporated by reference by the
Exchange Act or by the rules and regulations thereunder, which have not
been described or filed as required.
(k) Except as disclosed in the Prospectus, there are no legal or
governmental actions, suits or proceedings pending or, to the best of the
Company's knowledge, threatened to which the Company or any of its
subsidiaries is or may be a party or of which property owned or leased by
the Company or any of its subsidiaries is or may be the subject, or
related to environmental or discrimination matters, which actions, suits
or proceedings might, individually or in the aggregate, prevent or
materially adversely affect the transactions contemplated by this
Agreement or result in a material adverse change in the condition
(financial or otherwise), properties, business, results of operations or
prospects of the Company and its subsidiaries taken as a whole; and no
labor disturbance by the employees of the Company or any of its
subsidiaries exists or is imminent which might be expected to affect
adversely such condition, properties, business, results of operations or
prospects.
(l) The Company and its Material Subsidiaries have good and
marketable title to all the properties and assets reflected as owned by
them in the financial statements hereinabove described (or elsewhere in
the Prospectus), subject to no lien, mortgage, pledge, charge or
encumbrance of any kind except (i) those, if any, reflected in such
financial statements (or elsewhere in the Prospectus), or (ii) those which
do not materially adversely affect the values of such properties and
assets and do not adversely affect the use made and proposed to be made of
such property by the Company and its Material Subsidiaries. The Company
and each Material Subsidiary holds its leased properties under valid and
binding leases, with such exceptions as are not materially significant in
relation to the business of the Company. Except as disclosed in the
Prospectus, the Company owns or leases all such properties as are
necessary to its operations as now conducted or as proposed to be
conducted.
(m) Since the respective dates as of which information is given in
the Registration Statement and Prospectus, and except as described in or
specifically contemplated by the Prospectus: (i) the Company and its
subsidiaries have not sustained any material loss or interference with
their respective businesses or properties from fire, flood, windstorm,
accident or other calamity, which is not covered by insurance, or from any
labor dispute or court or government action, order or decree, otherwise
then as set forth in the Prospectus; (ii) the Company has not paid or
declared any dividends or other distributions with respect to its capital
stock and the Company and its subsidiaries are not in default in the
payment of principal or interest on any outstanding debt obligations;
(iii) there has not been any change in the capital stock of, or
indebtedness material to, the Company and its subsidiaries (other than in
the ordinary course of business); and (iv) there has not been any
material adverse
-7-
<PAGE> 8
change or a development involving a material adverse change in the
condition (financial or otherwise), business, properties, results of
operations, management or prospects of the Company and its subsidiaries
taken as a whole.
(n) Except as disclosed in or specifically contemplated by the
Prospectus and except to the extent that the lack of any of the following
would not have a material adverse effect on the condition (financial or
otherwise), business, results of operations or prospects of the Company,
the Company and its subsidiaries have sufficient trademarks, trade names,
patent rights, mask works, copyrights, licenses, approvals and
governmental authorizations to conduct their businesses as now conducted;
the expiration of any trademarks, trade names, patent rights, mask works,
copyrights, licenses, approvals or governmental authorizations would not
have a material adverse effect on the condition (financial or otherwise),
business, results of operations or prospects of the Company or its
subsidiaries; and the Company has no knowledge of any material
infringement by it or its subsidiaries of trademark, trade name rights,
patent rights, mask works, copyrights, licenses, trade secret or other
similar rights of others, and there is no claim being made against the
Company or its subsidiaries regarding trademark, trade name, patent, mask
work, copyright, license, trade secret or other infringement which could
have a material adverse effect on the condition (financial or otherwise),
business, results of operations or prospects of the Company and its
subsidiaries.
(o) The Company has not been advised, and has no reason to believe,
that either it or any of its subsidiaries is not conducting business in
compliance with all applicable laws, rules and regulations of the
jurisdictions in which it is conducting business, including, without
limitation, all applicable local, state and federal environmental laws and
regulations, except where failure to be so in compliance would not
materially adversely affect the condition (financial or otherwise),
business, results of operations or prospects of the Company and its
subsidiaries taken as a whole.
(p) The Company and its subsidiaries have filed all necessary
federal, state and foreign income and franchise tax returns (or has timely
filed for extensions thereof) and have paid all taxes shown as due
thereon, except in all cases for any such tax that is being contested in
good faith by the Company; and the Company has no knowledge of any tax
deficiency which has been or might be asserted or threatened against the
Company or its subsidiaries which could materially and adversely affect
the business, operations or properties of the Company and its subsidiaries
taken as a whole.
(q) The Company has complied with all applicable laws, rules and
regulations of the jurisdictions in which it is conducting business
relating to the import and export of raw materials, goods and other items,
except where failure to be so in compliance would not materially adversely
affect the condition (financial or otherwise), business, results of
operations or prospects of the Company and its subsidiaries taken as a
whole.
-8-
<PAGE> 9
(r) The Company is not an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
(s) The Company has not distributed and will not distribute prior to
the First Closing Date any offering material in connection with the
offering and sale of the Notes other than the Prospectus, the Registration
Statement and the other materials permitted by the Act.
(t) The Company has not taken and will not take, directly or
indirectly, any action designed to or that might be reasonably expected to
cause or result in stabilization or manipulation of the price of the
Common Stock to facilitate the sale or resale of the Notes.
(u) The conditions for the use of Form S-3 as set forth in the
General Instructions thereto, have been satisfied in connection with the
offering.
Section 3. Representations and Warranties of the Underwriter. You
represent and warrant to the Company that the information set forth (i) on the
cover page of the Prospectus with respect to price, underwriting discounts and
terms of the offering and (ii) under "Underwriting" in the Prospectus was
furnished to the Company by you for use in connection with the preparation of
the Registration Statement and the Prospectus and is correct in all material
respects.
Section 4. Purchase, Sale and Delivery of Notes. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to issue and sell to
you an aggregate of $200,000,000 principal amount of the Firm Notes. You agree
to purchase from the Company all of the Firm Notes. The purchase price for the
Firm Notes to be paid by you to the Company shall be $______.
Delivery of the Firm Notes to be purchased by you and payment therefor
shall be made at the offices of Hale and Dorr, 60 State Street, Boston,
Massachusetts (or such other place as may be agreed upon by the Company and
you) at such time and date, not later than the third full business day
following the first date that any of the Notes are released by you for sale to
the public, as you shall designate by at least 48 hours' prior notice to the
Company (or at such other time and date, not later than one week after such
third full business day as may be agreed upon by the Company and you (the
"First Closing Date"); provided, however, that if the Prospectus is at any time
prior to the First Closing Date recirculated to the public, the First Closing
Date shall occur upon the later of the third full business day following the
first date that any of the Notes are released by you for sale to the public or
the date that is 48 hours after the date that the Prospectus has been so
recirculated.
Delivery of the Firm Notes shall be made by or on behalf of the Company to
you with respect to the Firm Notes to be sold by the Company against payment by
you of the purchase price therefor by certified or official bank checks payable
in next day funds to the order of the Company. The Notes shall be registered
in such names and denominations as you shall have requested at least two
-9-
<PAGE> 10
full business days prior to the First Closing Date, and shall be made
available for checking and packaging on the business day preceding the First
Closing Date at a location in Boston, Massachusetts, as may be designated by
you. Time shall be of the essence, and delivery at the time and place
specified in this Agreement is a further condition to your obligations.
In addition, on the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company hereby grants an option to you to purchase up to an
aggregate of $30,000,000 principal amount of the Option Notes at the purchase
price to be paid for the Firm Notes, for use solely in covering any
over-allotments made by you in the sale and distribution of the Firm Notes.
The option granted hereunder may be exercised at any time (but not more than
once) within 30 days after the first date that any of the Notes are released by
you for sale to the public (within the meaning of the last sentence of Section
12 hereof), upon written notice by you to the Company setting forth the
aggregate number of Optional Notes as to which you are exercising the option,
the names and denominations in which the certificates for such Notes are to be
registered and the time and place at which such Notes will be delivered. Such
time of delivery (which may not be earlier than the First Closing Date), being
herein referred to as the "Second Closing Date," shall be determined by you,
but if at any time other than the First Closing Date shall not be earlier than
three nor later than five full business days after delivery of such notice of
exercise. The Option Notes will be made available for checking and packaging
on the business day preceding the Second Closing Date at a location in Boston,
Massachusetts, as may be designated by you. The manner of payment for and
delivery of the Option Notes shall be the same as for the Firm Notes purchased
from the Company as specified in the two preceding paragraphs. At any time
before lapse of the option, you may cancel such option by giving written notice
of such cancellation to the Company. If the option is cancelled or expires
unexercised in whole or in part, the Company will deregister under the Act the
number of Option Notes as to which the option has not been exercised.
Subject to the terms and conditions hereof, you propose to make a public
offering of Notes as soon after the effective date of the Registration
Statement as in your judgment is advisable and at the public offering price set
forth on the cover page of and on the terms set forth in the Prospectus.
Section 5. Covenants of the Company. The Company covenants and agrees
that:
(a) The Company will use its best efforts to cause the Registration
Statement and any amendment thereof, if not effective at the time and date
that this Agreement is executed and delivered by the parties hereto, to
become effective. If the Registration Statement has become or becomes
effective pursuant to Rule 430A of the Rules and Regulations, or the
filing of the Prospectus is otherwise required under Rule 424(b) of the
Rules and Regulations, the Company will file the Prospectus, properly
completed, pursuant to the applicable paragraph of Rule 424(b) of the
Rules and Regulations within the time period prescribed and will provide
evidence satisfactory to you of such timely filing. The Company
-10-
<PAGE> 11
will promptly advise you in writing (i) of the receipt of any comments of
the Commission, (ii) of any request of the Commission for amendment of or
supplement to the Registration Statement (either before or after it
becomes effective), any Preliminary Prospectus or the Prospectus or for
additional information, (iii) when the Registration Statement shall have
become effective and (iv) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or of the
institution of any proceedings for that purpose. If the Commission shall
enter any such stop order at any time, the Company will use its best
efforts to obtain the lifting of such order at the earliest possible
moment. The Company will not file any amendment or supplement to the
Registration Statement (either before or after it becomes effective), any
Preliminary Prospectus or the Prospectus of which you have not been
furnished with a copy a reasonable time prior to such filing or to which
you reasonably object or which is not in compliance with the Act and the
Rules and Regulations.
(b) The Company will prepare and file with the Commission, promptly
upon your request, any amendments or supplements to the Registration
Statement or the Prospectus which in your judgment may be necessary or
advisable to enable you to continue the distribution of the Notes and will
use its best efforts to cause the same to become effective as promptly as
possible. The Company will fully and completely comply with the
provisions of Rule 430A of the Rules and Regulations with respect to
information omitted from the Registration Statement in reliance upon such
Rule.
(c) If at any time within the nine-month period referred to in
Section 10(a)(3) of the Act during which a prospectus relating to the
Notes is required to be delivered under the Act any event occurs, as a
result of which the Prospectus, including any amendments or supplements,
would include an untrue statement of a material fact, or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, or if it is necessary at any time to
amend the Prospectus, including any amendments or supplements, to comply
with the Act or the Rules and Regulations, the Company will promptly
advise you thereof and will promptly prepare and file with the Commission,
at its own expense, an amendment or supplement which will correct such
statement or omission or an amendment or supplement which will effect such
compliance and will use its best efforts to cause the same to become
effective as soon as possible; and, in case you are required to deliver a
prospectus after such nine-month period, the Company upon request, but at
your expense, will promptly prepare such amendment or amendments to the
Registration Statement and such Prospectus or Prospectuses as may be
necessary to permit compliance with the requirements of Section 10(a)(3)
of the Act.
(d) As soon as practicable, but not later than 45 days after the end
of the first quarter ending after one year following the "effective date
of the Registration Statement" (as defined in Rule 158(c) of the Rules and
Regulations), the Company will make generally available
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<PAGE> 12
to its security holders an earning statement (which need not be audited)
covering a period of 12 consecutive months beginning after the
effective date of the Registration Statement which will satisfy the
provisions of the last paragraph of Section 11(a) of the Act.
(e) During such period as a prospectus is required by law to be
delivered in connection with sales by you or a dealer, the Company, at its
expense, but only for the nine-month period referred to in Section
10(a)(3) of the Act, will furnish to you or mail to your order copies of
the Registration Statement, the Prospectus, the Preliminary Prospectus and
all amendments and supplements to any such documents in each case as soon
as available and in such quantities as you may reasonably request, for the
purposes contemplated by the Act.
(f) The Company shall cooperate with you and your counsel in order
to qualify or register the Notes for sale under (or obtain exemptions from
the application of) the Blue Sky laws of such jurisdictions as you
designate, will comply with such laws and will continue such
qualifications, registrations and exemptions in effect so long as
reasonably required for the distribution of the Notes; PROVIDED, HOWEVER,
that the Company shall not be required to qualify as a foreign corporation
or to file a general consent to service of process in any such
jurisdiction where it is not presently qualified or where it would be
subject to taxation as a foreign corporation. The Company will advise you
promptly following receipt of notice of the suspension of the
qualification or registration of (or any such exemption relating to) the
Notes for offering, sale or trading in any jurisdiction or any initiation
or threat of any proceeding for any such purpose, and in the event of the
issuance of any order suspending such qualification, registration or
exemption, the Company, with your cooperation, will use its best efforts
to obtain the withdrawal thereof.
(g) During the period of five years hereafter, the Company will
furnish to you: (i) as soon as practicable after the end of each fiscal
year, copies of the Annual Report of the Company containing the balance
sheet of the Company as of the close of such fiscal year and statements of
income, stockholders' equity and cash flows for the year then ended and
the opinion thereon of the Company's independent public accountants; (ii)
as soon as practicable after the filing thereof, copies of each proxy
statement, Annual Report on Form 10-K, Quarterly Report on Form 10-Q,
Report on Form 8-K or other report filed by the Company with the
Commission, the NASD or any securities exchange; and (iii) as soon as
available, copies of any report or communication of the Company mailed
generally to holders of its Common Stock.
(h) Other than in accordance with and pursuant to the stock option,
restricted stock and stock purchase plans as described in the Prospectus
or the exercise of outstanding warrants, during the period of 90 days
after the first date that any of the Notes are released by you for sale to
the public, without your prior written consent (which consent may be
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<PAGE> 13
withheld at your sole discretion), the Company will not issue, offer,
sell, grant options to purchase or otherwise dispose of any of the
Company's equity securities or any other securities convertible into
or exchangeable with its Common Stock or other equity security.
(i) The Company will apply the net proceeds of the sale of the Notes
sold by it substantially in accordance with its statements under the
caption "Use of Proceeds" in the Prospectus.
(j) The Company will use its best efforts to cause the Notes to be
sold by it to be listed on the New York Stock Exchange.
You may, in your sole discretion, waive in writing the performance by the
Company of any one or more of the foregoing covenants or extend the time for
their performance.
Section 6. Payment of Expenses. Whether or not the transactions
contemplated hereunder are consummated or this Agreement becomes effective or
is terminated, the Company agrees to pay all costs, fees and expenses incurred
in connection with the performance of its obligations hereunder and in
connection with the transactions contemplated hereby, including without
limiting the generality of the foregoing (i) all expenses incident to the
issuance and delivery of the Notes (including all printing and engraving
costs), (ii) all fees and expenses of the Trustee and any agent of the Trustee,
(iii) all necessary issue, transfer and other stamp taxes in connection with
the issuance and sale of the Notes to you, (iv) all fees and expenses of the
Company's counsel and the Company's independent accountants, (v) all costs and
expenses incurred in connection with the preparation, printing, filing,
shipping and distribution of the Registration Statement, each Preliminary
Prospectus and the Prospectus (including all exhibits and financial statements)
and all amendments and supplements provided for herein, (vi) all filing fees,
reasonable attorneys' fees and expenses incurred by the Company or you in
connection with qualifying or registering (or obtaining exemptions from the
qualification or registration of) all or any part of the Notes for offer and
sale under the securities or Blue Sky laws of the states or other jurisdictions
of the United States and the provinces of Canada, (vii) the filing fee of the
NASD, and (viii) all other fees, costs and expenses referred to in Item 14 of
the Registration Statement. Except as provided in this Section 6, Section 8
and Section 10 hereof, you shall pay all of your own expenses, including the
fees and disbursements of your counsel (excluding those relating to
qualification, registration or exemption under the Blue Sky laws and the Blue
Sky memorandum referred to above).
Section 7. Conditions of the Obligations of the Underwriter. Your
obligations to purchase and pay for the Firm Notes on the First Closing Date
and the Option Notes on the Second Closing Date shall be subject to the
accuracy of the representations and warranties on the part of the Company
herein set forth as of the date hereof and as of the First Closing Date or the
Second Closing Date, as the case may be, to the accuracy of the statements of
Company officers made
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<PAGE> 14
pursuant to the provisions hereof, to the performance by the Company of its
obligations hereunder, and to the following additional conditions:
(a) The Registration Statement shall have become effective not later
than 5:00 P.M., Washington, D.C. Time, on the date of this Agreement, or
at such later time as shall have been consented to by you; if the filing
of the Prospectus, or any supplement thereto, is required pursuant to Rule
424(b) of the Rules and Regulations, the Prospectus shall have been filed
in the manner and within the time period required by Rule 424(b) of the
Rules and Regulations; and prior to such Closing Date, no stop order
suspending the effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall have been instituted or
shall be pending or, to the knowledge of the Company or you, shall be
contemplated by the Commission; and any request of the Commission for
inclusion of additional information in the Registration Statement, or
otherwise, shall have been complied with to your satisfaction.
(b) You shall be satisfied that since the respective dates as of
which information is given in the Registration Statement and Prospectus,
(i) there shall not have been any material change in the capital stock of
the Company or any of its subsidiaries or any material change in the
indebtedness of the Company or any of its subsidiaries taken as a whole
(other than in the ordinary course of business), (ii) no loss or damage
(whether or not insured) to the property of the Company or any of its
subsidiaries shall have been sustained which materially and adversely
affects the condition (financial or otherwise), business, results of
operations or prospects of the Company and its subsidiaries, (iii) no
legal or governmental action, suit or proceeding affecting the Company or
any of its subsidiaries which materially affects or may materially affect
the transactions contemplated by this Agreement shall have been instituted
or threatened and (iv) there shall not have been any material adverse
change in the condition (financial or otherwise), business, management,
results of operations or prospects of the Company and its subsidiaries
taken as a whole, which makes it impractical or inadvisable in your
judgment to proceed with the public offering or purchase the Notes as
contemplated hereby.
(c) There shall have been furnished to you on each Closing Date, in
form and substance satisfactory to you, except as otherwise expressly
provided below:
(i) An opinion of Hale and Dorr, counsel for the Company,
addressed to you dated the First Closing Date or the Second Closing Date,
as the case may be, in form and substance satisfactory to you, to the
effect that:
(1) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of The
Commonwealth of
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<PAGE> 15
Massachusetts, with power and authority (corporate and other) to
own its properties and conduct its business as described in the
Prospectus;
(2) The Company has an authorized capitalization as set forth
in the Prospectus, and all of the issued and outstanding shares of
Common Stock of the Company have been duly authorized, and all of the
shares of Common Stock issuable upon conversion of the Notes have
been duly authorized and duly reserved for issuance upon such
conversion; all of the issued and outstanding shares of Common Stock
of the Company are, and all of the shares of Common Stock issuable
upon conversion of the Notes, when issued and delivered upon the
conversion of the Notes pursuant to the terms of the Indenture, will
be validly issued and outstanding, fully paid and non-assessable;
other than as described in the Prospectus, the holders of outstanding
shares of capital stock of the Company are not entitled as such to
any preemptive or other rights to subscribe for or to purchase, and
no restrictions exist upon the voting or transfer of, any shares of
the Common Stock issuable upon conversion of the Notes, pursuant to
applicable law or the Company's corporate charter and by-laws or any
agreements or documents filed with the Commission as exhibits to the
Registration Statement or any document incorporated therein, and
neither the filing of the Registration Statement, the offering or
sale of the Notes nor the conversion of the Notes as contemplated by
this Agreement gives rise under any agreement or instrument filed
with the Commission as an exhibit to the Registration Statement or
any document incorporated therein to any rights, other than those
which have been waived or satisfied, for or relating to the
registration of any shares of Common Stock;
(3) Each Material Subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation (except
with respect to any such subsidiaries incorporated in jurisdictions
where the concept of good standing is not recognized); and all of the
issued shares of capital stock of each such Material Subsidiary have
been duly and validly authorized and issued, are fully paid and
non-assessable, and (except for directors' qualifying shares or such
shares as may be required by local laws to be owned by residents of
the jurisdiction of incorporation) are owned of record directly or
indirectly by the Company, to its knowledge free and clear of all
liens, encumbrances, equities or claims (such counsel being entitled,
in the case of material subsidiaries, to rely exclusively in respect
of the opinion in this clause upon the opinion of Houben Advocaten of
Breda, the Netherlands, and in respect of the matters of fact upon
certificates of officers of the Company or its subsidiaries, provided
that such counsel shall state that they believe that both you and
they are justified in relying upon such certificates);
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<PAGE> 16
(4) To such counsel's knowledge there are no legal or
governmental actions, suits or proceedings pending against the
company that are required to be described in the prospectus that are
not described as required and, to such counsel's knowledge, no such
actions, suits or proceedings are threatened by governmental
authorities or by others;
(5) The Company has corporate power adequate for the execution,
delivery and performance of this Agreement, and this Agreement has
been duly authorized, executed and delivered by the Company;
(6) The Notes have been duly authorized and, when duly
executed, authenticated, issued in accordance with the Indenture and
delivered by the Company and paid for in accordance with the terms
thereof will constitute valid and legally binding obligations of the
Company entitled to the benefits provided by the Indenture, subject,
as to enforcement, to bankruptcy, insolvency, fraudulent transfer,
moratorium, reorganization and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles;
(7) The Indenture has been duly authorized, executed and
delivered by the parties thereto and constitutes a legal and legally
binding instrument, enforceable in accordance with its terms,
subject, as to enforcement to bankruptcy, insolvency, fraudulent
transfer, moratorium, reorganization and similar laws of general
applicability relating to or affecting creditors' rights and to
general equity principles; and the Indenture has been duly qualified
under the Trust Indenture Act;
(8) The statements in the Prospectus under the captions
"Prospectus Summary", "Description of Notes" and "Description of
Capital Stock", insofar as such statements purport to summarize
certain provisions of documents or agreements specifically referred
to therein or matters of law, are correct in all material respects;
(9) The issue and sale of the Notes and the compliance by the
Company with all of the provisions of the Notes, the Indenture and
this Agreement and the consummation of the transactions herein and
therein contemplated will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument filed as an exhibit to the
Registration Statement, nor will such actions result in any violation
of the provisions of the Restated Articles or Organization or By-laws
of the Company or any statute or any order specifically naming the
Company, any rule or regulation of any court or
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<PAGE> 17
governmental agency or body of the United States having jurisdiction
over the Company or any of its properties; except for such conflicts,
breaches, violations and defaults as are not reasonably likely,
individually or in the aggregate, to have (a) a material adverse
effect on the financial position, stockholders' equity, results of
operations, business or prospects of the Company and its
subsidiaries, taken as a whole or (b) any adverse effect on the
consummation of the transactions contemplated by this Agreement;
(10) No consent, approval, authorization, order, registration
or qualification of or with any such court or governmental agency or
body is required for the issue and sale of the Notes or the
consummation by the Company of the transactions contemplated by this
Agreement or the Indenture, except such as have been obtained under
the Act and the Trust Indenture Act and such consents, approvals,
authorizations, registrations or qualifications as may be required
under state securities or Blue Sky laws (as to the applicability of
which no opinion need be expressed) in connection with the purchase
and distribution of the Securities by the Underwriters;
(11) The documents incorporated by reference in the Prospectus
or any further amendment or supplement thereto made by the Company
prior to the Time of Delivery (other than the financial statements
and financial data and related schedules therein, as to which such
counsel need express no opinion), when they become effective or were
filed with the Commission, as the case may be, complied as to form in
all material respects with the requirements of the Exchange Act, and
the rules and regulations of the Commission thereunder;
(12) The Registration Statement and the Prospectus and any
further amendments and supplements thereto made by the Company prior
to the Time of Delivery (other than the financial statements and
financial data and related schedules therein, as to which such
counsel need express no opinion) comply as to form in all material
respects with the requirements of the Act and the Trust Indenture Act
and the rules and regulations thereunder and they do not know of any
amendment to the Registration Statement required to be filed or of
any contracts or other documents of a character required to be filed
as an exhibit to the Registration Statement or required to be
incorporated by reference into the Prospectus or required to be
described in the Registration Statement or the Prospectus which are
not filed or incorporated by reference or described as required; and
(13) The Registration Statement has become effective under the
Act; to the knowledge of such counsel, no stop order suspending
effectiveness of the
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<PAGE> 18
Registration Statement has been issued or any proceeding therefor
instituted or threatened by the Commission.
Such counsel shall state, without passing upon or assuming any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement or the Prospectus, that nothing has
come to their attention that would cause them to believe (a) that, as of the
effective date of the Registration Statement, the Registration Statement (or as
of its date, any amendment or supplement thereto and made by the Company prior
to the date of such opinion) contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
to make the statements therein not misleading or (b) that, as of the date of
the Prospectus as most recently amended or supplemented, the Prospectus (or any
such amendment or supplement thereto) contains any untrue statement of a
material fact or omits to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading or (c) that it is
necessary, as of the date of such opinion, to supplement or amend the
Registration Statement or the Prospectus. Such counsel need express no belief
as to the financial statements, including the notes and schedules thereto, or
any financial data set forth or referred to in the Registration Statement or
the Prospectus or as to any statements in or omissions from any such documents
made in reliance upon and in conformity with written information furnished to
the Company by the Underwriters specifically for use therein, or as to any
statements in or omissions from the part of the Registration Statement which
shall constitute the Statement of Eligibility and Qualification under the Trust
Indenture Act of the Trustee under the Indenture.
(ii) An opinion of William Wise, General Counsel of the Company,
dated the First Closing Date or the Second Closing Date, as the case may
be, in form and substance satisfactory to you to the effect that the
Company has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each
other jurisdiction in which it owns or leases properties, or conducts any
business, so as to require such qualification, except where the failure to
be in good standing or to so qualify would not have a material adverse
effect on the financial position, stockholders' equity, results of
operations, business or prospects of the Company and its subsidiaries
taken as a whole.
(iii) Such opinion or opinions of Ropes & Gray, as counsel for you,
dated the First Closing Date or the Second Closing Date, as the case may
be, with respect to the incorporation of the Company, the sufficiency of
all corporate proceedings and other legal matters relating to this
Agreement, the validity of the Notes, the Registration Statement and the
Prospectus and other related matters as you may reasonably require, and
the Company shall have furnished to such counsel such documents and shall
have exhibited to them such papers and records as they may reasonably
request for the purpose of enabling them to pass
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<PAGE> 19
upon such matters. In connection with such opinions, such counsel may
rely on representations or certificates of officers of the Company and
governmental officials.
(iv) A certificate of the Company executed by the Chairman of the
Board or the President and Chief Operating Officer and the chief financial
or accounting officer of the Company, dated the First Closing Date or the
Second Closing Date, as the case may be, to the effect that:
(1) The representations and warranties of the Company set forth
in Section 2 of this Agreement are true and correct as of the date of
this Agreement and as of the First Closing Date or the Second Closing
Date, as the case may be, and the Company has complied with all the
agreements and satisfied all the conditions on its part to be
performed or satisfied on or prior to such Closing Date;
(2) The Commission has not issued any order preventing or
suspending the use of the Prospectus or any Preliminary Prospectus
filed as a part of the Registration Statement or any amendment
thereto; no stop order suspending the effectiveness of the
Registration Statement has been issued; and to the best of the
knowledge of the respective signers, no proceedings for that purpose
have been instituted or are pending or contemplated under the Act;
(3) Each of the respective signers of the certificate has
carefully examined the Registration Statement and the Prospectus; in
his opinion and to the best of his knowledge, the Registration
Statement and the Prospectus and any amendments or supplements
thereto contain all statements required to be stated therein
regarding the Company and its subsidiaries; and neither the
Registration Statement nor the Prospectus nor any amendment or
supplement thereto includes any untrue statement of a material fact
or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading;
(4) Since the initial date on which the Registration Statement
was filed, no agreement, written or oral, transaction or event has
occurred which should have been set forth in an amendment to the
Registration Statement or in a supplement to or amendment of any
prospectus which has not been disclosed in such a supplement or
amendment;
(v) On the date before this Agreement is executed and also on the
First Closing Date and the Second Closing Date a letter addressed to you
from Ernst & Young LLP, independent accountants, the first one to be dated
the day before the date of this Agreement,
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<PAGE> 20
the second one to be dated the First Closing Date and the third one (in
the event of a second closing) to be dated the Second Closing Date, in
form and substance satisfactory to you.
(vi) On or before the date of this Agreement, letters from Ray Stata
and Jerald G. Fishman, in form and substance satisfactory to you,
containing exceptions agreed upon, confirming that for a period of 30 days
after the first date that any of the Notes are released by you for sale to
the public, such person will not directly or indirectly sell or offer to
sell or otherwise dispose of any shares of Common Stock or any right to
acquire such shares without your prior written consent, which consent may
be withheld at your sole discretion.
(vii) On or after the date hereof (i) no downgrading shall have
occurred in the rating accorded the Company's debt securities (including
the Notes) by any "nationally recognized statistical rating organization,"
as that term is defined by the Commission for purposes of Rule 436(g)(2)
under the Act and (ii) no such organization shall have publicly announced
that it has under surveillance or review, with possible negative
implications, its rating of any of the Company's debt securities
(including the Notes).
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are reasonably satisfactory
to you and to Ropes & Gray, your counsel. The Company shall furnish you with
such manually signed or conformed copies of such opinions, certificates,
letters and documents as you request. Any certificate signed by any officer of
the Company and delivered to you or your counsel shall be deemed to be a
representation and warranty by the Company to you as to the statements made
therein.
If any condition to the your obligations hereunder to be satisfied prior
to or at the First Closing Date or the Second Closing Date is not so satisfied,
this Agreement at your election will terminate upon notification by you to the
Company without liability on your part or the part of the Company except for
the expenses to be paid or reimbursed by the Company pursuant to Sections 6 and
8 hereof and except to the extent provided in Section 10 hereof.
Section 8. Reimbursement of Underwriter's Expenses. Notwithstanding any
other provisions hereof, if this Agreement shall be terminated by you pursuant
to Section 7, or if the sale to you of the Notes at the First Closing Date or
the Second Closing Date is not consummated because of any refusal, inability or
failure on the part of the Company to perform any agreement herein or to comply
with any provision hereof, the Company agrees to reimburse you upon demand for
all out-of-pocket expenses that shall have been reasonably incurred by you in
connection with the proposed purchase and the sale of the Notes, including but
not limited to fees and disbursements of counsel, printing expenses, travel
expenses, postage, telegraph charges and telephone charges relating directly to
the offering contemplated by the Prospectus. Any such termination shall be
without liability of any party to any other party except that the provisions of
this Section, Section 6 and Section 10 shall at all times be effective and
shall apply.
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<PAGE> 21
Section 9. Effectiveness of Registration Statement. You and the Company
will use your and its best efforts to cause the Registration Statement to
become effective, to prevent the issuance of any stop order suspending the
effectiveness of the Registration Statement and, if such stop order be issued,
to obtain as soon as possible the lifting thereof.
Section 10. Indemnification. (a) The Company agrees to indemnify and
hold harmless you and each person, if any, who controls you within the meaning
of the Act against any losses, claims, damages, liabilities or expenses, joint
or several, to which you or such controlling person may become subject, under
the Act, the Trust Indenture Act, the Exchange Act, or other federal or state
statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of the Company), insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof as contemplated below) arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state in any of
them a material fact required to be stated therein or necessary to make the
statements in any of them not misleading, or arise out of or are based in whole
or in part on any inaccuracy in the representations and warranties of the
Company contained herein or any failure of the Company to perform its
obligations hereunder or under law; and will reimburse you and each such
controlling person for any legal and other expenses as such expenses are
reasonably incurred by you or such controlling person in connection with
investigating, defending, settling, compromising or paying any such loss,
claim, damage, liability, expense or action; provided, however, that the
Company will not be liable in any such case to the extent that any such loss,
claim, damage, liability or expense arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
the Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto in reliance upon and in conformity with the
information furnished to the Company pursuant to Section 3 hereof; and
provided, further, that the Company shall not be liable to you under the
indemnity agreement in this Section 10(a) with respect to any Preliminary
Prospectus to the extent that any such loss, claim, damage, liability or
expense results from the fact you sold Notes to a person as to whom it shall be
established that there was not sent or given, at or prior to the written
confirmation of such sale, a copy of the Prospectus or of the Prospectus as
then amended or supplemented in any case where such delivery is required by the
Act if the Company has previously furnished copies thereof to you and the loss,
claim, damage, liability or expense results from an untrue statement or
omission of a material fact contained in the Preliminary Prospectus which was
corrected in the Prospectus or in the Prospectus as then amended or
supplemented. In addition to its other obligations under this Section 10(a),
the Company agrees that, as an interim measure during the pendency of any
claim, action, investigation, inquiry or other proceeding arising out of or
based upon any statement or omission, or any alleged statement or omission, or
any inaccuracy in the representations and warranties of the Company herein or
failure to perform its obligations hereunder, all as described in this Section
10(a), it will reimburse you on a quarterly basis for all reasonable legal or
other
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<PAGE> 22
expenses incurred in connection with investigating or defending any such claim,
action, investigation, inquiry or other proceeding, notwithstanding the absence
of a judicial determination as to the propriety and enforceability of the
Company's obligation to reimburse you for such expenses and the possibility
that such payments might later be held to have been improper by a court of
competent jurisdiction. To the extent that any such interim reimbursement
payment is so held to have been improper, you shall promptly return it to the
Company, together with interest, compounded daily, determined on the basis of
the prime rate (or other commercial lending rate for borrowers of the highest
credit standing) announced from time to time by Bank of America NT&SA, San
Francisco, California (the "Prime Rate"). Any such interim reimbursement
payments which are not made to you within 30 days of a request for
reimbursement shall bear interest at the Prime Rate from the date of such
request. This indemnity agreement will be in addition to any liability which
the Company may otherwise have.
(b) You will indemnify and hold harmless the Company, each of its
directors, each of its officers who signed the Registration Statement and each
person, if any, who controls the Company within the meaning of the Act, against
any losses, claims, damages, liabilities or expenses to which the Company, or
any such director, officer or controlling person may become subject, under the
Act, the Trust Indenture Act, the Exchange Act, or other federal or state
statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with your written
consent), insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof as contemplated below) arise out of or are based
upon any untrue or alleged untrue statement of any material fact contained in
the Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in the
Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, in reliance upon and in conformity with the
information furnished to the Company pursuant to Section 3 hereof; and will
reimburse the Company, or any such director, officer or controlling person for
any legal and other expense reasonably incurred by the Company, or any such
director or officer or any such controlling person in connection with
investigating, defending, settling, compromising or paying any such loss,
claim, damage, liability, expense or action. In addition to your other
obligations under this Section 10(b), you agree that, as an interim measure
during the pendency of any claim, action, investigation, inquiry or other
proceeding arising out of or based upon any statement or omission, or any
alleged statement or omission, described in this Section 10(b) which relates to
information furnished to the Company pursuant to Section 3 hereof, you will
reimburse the Company (and, to the extent applicable, each officer, director or
controlling person) on a quarterly basis for all reasonable legal or other
expenses incurred in connection with investigating or defending any such claim,
action, investigation, inquiry or other proceeding, notwithstanding the absence
of a judicial determination as to the propriety and enforceability of your
obligation to reimburse the Company (and, to the extent applicable, each
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<PAGE> 23
officer, director or controlling person) for such expenses and the possibility
that such payments might later be held to have been improper by a court of
competent jurisdiction. To the extent that any such interim reimbursement
payment is so held to have been improper, the Company (and, to the extent
applicable, each officer, director or controlling person) shall promptly
return it to you together with interest, compounded daily, determined on the
basis of the Prime Rate. Any such interim reimbursement payments which are not
made to the Company within 30 days of a request for reimbursement shall bear
interest at the Prime Rate from the date of such request. This indemnity
agreement will be in addition to any liability which you may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party under this
Section, notify the indemnifying party in writing of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party for contribution or
otherwise than under the indemnity agreement contained in this Section or to
the extent it is not prejudiced as a proximate result of such failure. In case
any such action is brought against any indemnified party and such indemnified
party seeks or intends to seek indemnity from an indemnifying party, the
indemnifying party will be entitled to participate in, and, to the extent that
it may wish, jointly with all other indemnifying parties similarly notified, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party; provided, however, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be a conflict
between the positions of the indemnifying party and the indemnified party in
conducting the defense of any such action or that there may be legal defenses
available to it and/or other indemnified parties which are different from or
additional to those available to the indemnifying party, the indemnified party
or parties shall have the right to select separate counsel to assume such legal
defenses and to otherwise participate in the defense of such action on behalf
of such indemnified party or parties. Upon receipt of notice from the
indemnifying party to such indemnified party of its election so to assume the
defense of such action and approval by the indemnified party of counsel, the
indemnifying party will not be liable to such indemnified party under this
Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed such counsel in connection with the
assumption of legal defenses in accordance with the proviso to the next
preceding sentence (it being understood, however, that the indemnifying party
shall not be liable for the expenses of more than one separate counsel,
approved by you in the case of paragraphs (a) and (b), representing the
indemnified parties who are parties to such action) or (ii) the indemnifying
party shall not have employed counsel reasonably satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of commencement of the action, in each of which cases the fees and
expenses of counsel shall be at the expense of the indemnifying party.
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<PAGE> 24
(d) If the indemnification provided for in this Section 10 is required by
its terms but is for any reason held to be unavailable to or otherwise
insufficient to hold harmless an indemnified party under paragraphs (a), (b) or
(c) in respect of any losses, claims, damages, liabilities or expenses referred
to herein, then each applicable indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of any losses,
claims, damages, liabilities or expenses referred to herein (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and you from the offering of the or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company and you in connection with the
statements or omissions or inaccuracies in the representations and warranties
herein which resulted in such losses, claims, damages, liabilities or expenses,
as well as any other relevant equitable considerations. The respective
relative benefits received by the Company and you shall be deemed to be in the
same proportion, in the case of the Company, as the total price paid to the
Company for the Notes sold by them to you (net of underwriting commissions but
before deducting expenses), and in your case as the underwriting commissions
received by you, bears to the total of such amounts paid to the Company and
received by you as underwriting commissions. The relative fault of the Company
and you shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact or the inaccurate or the alleged
inaccurate representation and/or warranty relates to information supplied by
the Company or you and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in subparagraph (c) of this Section 10,
any legal or other fees or expenses reasonably incurred by such party in
connection with investigating or defending any action or claim. The provisions
set forth in subparagraph (c) of this Section 10 with respect to notice of
commencement of any action shall apply if a claim for contribution is to be
made under this subparagraph (d); provided, however, that no additional notice
shall be required with respect to any action for which notice has been given
under subparagraph (c) for purposes of indemnification. The Company and you
agree that it would not be just and equitable if contribution pursuant to this
Section 10 were determined solely by pro rata allocation or by any other method
of allocation which does not take account of the equitable considerations
referred to in this paragraph. Notwithstanding the provisions of this Section
10, you shall not be required to contribute any amount in excess of the amount
of the total underwriting commissions received by you in connection with the
Notes underwritten by you and distributed to the public. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) It is agreed that any controversy arising out of the operation of the
interim reimbursement arrangements set forth in Sections 10(a) and 10(b)
hereof, including the amounts of any requested reimbursement payments and the
method of determining such amounts, shall be settled by arbitration conducted
under the provisions of the Constitution and Rules of the Board of Governors
of the New
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<PAGE> 25
York Stock Exchange, Inc. or pursuant to the Code of Arbitration Procedure of
the NASD. Any such arbitration must be commenced by service of a written
demand for arbitration or written notice of intention to arbitrate, therein
electing the arbitration tribunal. In the event the party demanding
arbitration does not make such designation of an arbitration tribunal in such
demand or notice, then the party responding to said demand or notice is
authorized to do so. Such an arbitration would be limited to the operation of
the interim reimbursement provisions contained in Sections 10(a) and 10(b)
hereof and would not resolve the ultimate propriety or enforceability of the
obligation to reimburse expenses which is created by the provisions of such
Sections 10(a) and 10(b) hereof.
Section 11. Default of Underwriter. It shall be a condition to this
Agreement and the obligation of the Company to sell and deliver the Notes
hereunder that, except as hereinafter in this paragraph provided, you shall
purchase and pay for all the Notes agreed to be purchased hereunder upon tender
of all such shares in accordance with the terms hereof. If you default in your
obligation to purchase Notes hereunder on either the First or Second Closing
Date and arrangements satisfactory to you and the Company for the purchase of
such Notes by other persons are not made within 48 hours after such default,
this Agreement will terminate without liability on the part of the Company
except for the expenses to be paid by the Company pursuant to Section 6 hereof
and except to the extent provided in Section 10 hereof.
In the event that Notes to which a default relates are to be purchased by
another party or parties, you or the Company shall have the right to postpone
the First or Second Closing Date, as the case may be, for not more than five
business days in order that the necessary changes in the Registration
Statement, Prospectus and any other documents, as well as any other
arrangements, may be effected. As used in this Agreement, any reference to you
in your capacity as an underwriter shall include any person substituted for you
in whole or in part under this Section. Nothing herein will relieve you from
liability for your default.
Section 12. Effective Date. This Agreement shall become effective
immediately as to Sections 6, 8, 10, 13 and 14 and, as to all other provisions,
(i) if at the time of execution of this Agreement the Registration Statement
has not become effective, at 2:00 P.M., California time, on the first full
business day following the effectiveness of the Registration Statement, or (ii)
if at the time of execution of this Agreement the Registration Statement has
been declared effective, at 2:00 P.M., California time, on the first full
business day following the date of execution of this Agreement; but this
Agreement shall nevertheless become effective at such earlier time after the
Registration Statement becomes effective as you may determine on and by notice
to the Company or by release of any of the Notes for sale to the public. For
the purposes of this Section 12, the Notes shall be deemed to have been so
released upon the release for publication of any newspaper advertisement
relating to the Notes or upon the release by you of telegrams (i) advising that
the Notes are released for public offering, or (ii) offering the Notes for sale
to securities dealers, whichever may occur first.
-25-
<PAGE> 26
Section 13. Termination. Without limiting the right to terminate this
Agreement pursuant to any other provision hereof:
(a) This Agreement may be terminated by the Company by notice to you
or by you by notice to the Company at any time prior to the time this
Agreement shall become effective as to all its provisions, and any such
termination shall be without liability on the part of the Company to you
(except for the expenses to be paid or reimbursed by the Company pursuant
to Sections 6 and 8 hereof and except to the extent provided in Section 10
hereof) or of you to the Company (except to the extent provided in Section
10 hereof).
(b) This Agreement may also be terminated by you on or prior to the
First Closing Date by notice to the Company (i) if additional material
governmental restrictions, not in force and effect on the date hereof,
shall have been imposed upon trading in securities generally or minimum or
maximum prices shall have been generally established on the New York Stock
Exchange or on the American Stock Exchange or in the over the counter
market by the NASD, or trading in securities generally shall have been
suspended on either such Exchange or in the over the counter market by the
NASD, or a general banking moratorium shall have been established by
federal, New York or California authorities, (ii) if an outbreak of major
hostilities or other national or international calamity or any substantial
change in political, financial or economic conditions shall have occurred
or shall have accelerated or escalated to such an extent, as, in your
reasonable judgment, to affect materially and adversely the marketability
of the Notes, (iii) if any adverse event shall have occurred or shall
exist which makes untrue or incorrect in any material respect any
statement or information contained in the Registration Statement or
Prospectus or which is not reflected in the Registration Statement or
Prospectus but should be reflected therein in order to make the statements
or information contained therein not misleading in any material respect,
or (iv) if there shall be any action, suit or proceeding pending or
threatened (except as described in the Prospectus, and then only to the
extent there has not occurred since the date of the Prospectus any
development or prospective development relating to any such action, suit
or proceeding so described), or there shall have been any development or
prospective development involving particularly the business or properties
or securities of the Company or any of its subsidiaries or the
transactions contemplated by this Agreement, which, in your reasonable
judgment, may materially and adversely affect the Company's business or
earnings and makes it impracticable or inadvisable to offer or sell the
Notes. Any termination pursuant to this subsection (b) shall be without
liability on your part to the Company or on the part of the Company to you
(except for expenses to be paid or reimbursed by the Company pursuant to
Sections 6 and 8 hereof and except to the extent provided in Section 10
hereof).
Section 14. Representations and Indemnities to Survive Delivery. The
respective indemnities, agreements, representations, warranties and other
statements of the Company, of its
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<PAGE> 27
officers and of you set forth in or made pursuant to this Agreement will remain
in full force and effect, regardless of any investigation made by or on behalf
of you or the Company or any of its or their partners, officers or directors
or any controlling person, as the case may be, and will survive delivery of
and payment for the Notes sold hereunder and any termination of this Agreement.
Section 15. Notices. All communications hereunder shall be in writing
and, if sent to you, shall be mailed, delivered or telegraphed and confirmed to
you at 600 Montgomery Street, San Francisco, California 94111, Attention: Mr.
Joseph M. Schell with a copy to Ropes & Gray, One International Place, Boston,
Massachusetts 02110, Attention: Keith F. Higgins, Esq.; and if sent to the
Company shall be mailed, delivered or telegraphed and confirmed to the Company
at Analog Devices, Inc., Three Technology Way, Norwood, Massachusetts
02062-9106, Attention: President, with a copy to Hale and Dorr, 60 State
Street, Boston, Massachusetts 02109, Attention: Paul P. Brountas, Esq. and
Mark G. Borden, Esq. The Company or you may change the address for receipt of
communications hereunder by giving notice to the other.
Section 16. Successors. This Agreement will inure to the benefit of and
be binding upon the parties hereto, including any substitute party pursuant to
Section 11 hereof, and to the benefit of the officers and directors and
controlling persons referred to in Section 10, and in each case their
respective successors, personal representatives and assigns, and no other
person will have any right or obligation hereunder. No such assignment shall
relieve any party of its obligations hereunder. The term "successors" shall not
include any purchaser of the Notes as such from you merely by reason of such
purchase.
Section 17. Partial Unenforceability. The invalidity or unenforceability
of any Section, paragraph or provision of this Agreement shall not affect the
validity or enforceability of any other Section, paragraph or provision hereof.
If any Section, paragraph or provision of this Agreement is for any reason
determined to be invalid or unenforceable, there shall be deemed to be made
such minor changes (and only such minor changes) as are necessary to make it
valid and enforceable.
Section 18. Applicable Law. This Agreement shall be governed by and
construed in accordance with the internal laws (and not the laws pertaining to
conflicts of laws) of the Commonwealth of Massachusetts.
Section 19. General. This Agreement constitutes the entire agreement of
the parties to this Agreement and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations with respect
to the subject matter hereof. This Agreement may be executed in several
counterparts, each one of which shall be an original, and all of which shall
constitute one and the same document.
In this Agreement, the masculine, feminine and neuter genders and the
singular and the plural include one another. The section headings in this
Agreement are for the convenience of the parties
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<PAGE> 28
only and will not affect the construction or interpretation of this Agreement.
This Agreement may be amended or modified, and the observance of any term of
this Agreement may be waived, only by a writing signed by the Company and you.
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed copies hereof, whereupon
it will become a binding agreement among the Company and you, all in accordance
with its terms.
Very truly yours,
ANALOG DEVICES, INC.
By:
--------------------
Jerald G. Fishman
President and Chief
Operating Officer
The foregoing Underwriting Agreement is hereby
confirmed and accepted by us in San Francisco,
California as of the date first above written.
MONTGOMERY SECURITIES
By:
-------------------------------------------
Managing Director
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<PAGE> 29
<TABLE>
<CAPTION>
SCHEDULE I
Principal Amount of
Underwriter Notes to be Purchased
----------- ---------------------
<S> <C>
Montgomery Securities. . . . . . . . . . . . . .
Goldman, Sachs & Co. . . . . . . . . . . . . . . ------------
Total. . . . . . . . . . . . . . . . . . . . . . $200,000,000
============
</TABLE>
A-1
<PAGE> 30
SCHEDULE II
Material Subsidiaries
---------------------
Analog Devices, B.V., a limited liability company organized under the laws of
the Netherlands
Analog Devices, Holdings, B.V., a limited liability company organized under the
laws of the Netherlands
A-2
<PAGE> 1
EXHIBIT 23.02
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Experts" and
"Selected Consolidated Financial Data" in the Registration Statement (Form S-3)
and related Prospectus of Analog Devices, Inc. for the registration of
$230,000,000 convertible subordinated notes and to the incorporation by
reference therein of our report dated November 29, 1994, with respect to the
consolidated financial statements of Analog Devices, Inc. included in its Annual
Report (Form 10-K) for the year ended October 29, 1994, filed with the
Securities and Exchange Commission. Our report mentioned above includes the
following explanatory paragraph: As discussed in Note 6 to the consolidated
financial statements, claims and actions have been brought against Analog
Devices, Inc. and the ultimate outcome of these claims and actions cannot
presently be determined. Accordingly, no such provision for any liability, if
any, that may result has been made in the financial statements.
ERNST & YOUNG LLP
Boston Massachusetts
December 7, 1995
