<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 7, 1995
REGISTRATION NO. 33-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------
VLSI TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 1109 MCKAY DRIVE 94-2597282
(State or other jurisdiction of SAN JOSE, CALIFORNIA 95131 (I.R.S. Employer
incorporation or organization) Telephone: (408) 434-3100 Identification No.)
</TABLE>
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
ALFRED J. STEIN
CHAIRMAN OF THE BOARD, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
VLSI TECHNOLOGY, INC.
1109 MCKAY DRIVE
SAN JOSE, CA 95131
TELEPHONE (408) 434-3100
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------------
COPIES TO:
<TABLE>
<S> <C>
LARRY W. SONSINI, Esq. CHRISTOPHER L. KAUFMAN, Esq.
ANN YVONNE WALKER, Esq. ORA FRUEHAUF, Esq.
Wilson, Sonsini, Goodrich & Rosati Latham & Watkins
Professional Corporation 505 Montgomery Street, Suite 1900
650 Page Mill Road San Francisco, California 94111
Palo Alto, California 94304-1050 (415) 391-0600
(415) 493-9300
</TABLE>
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
---------------------
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. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM
AMOUNT OFFERING AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE PRICE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED (1) PER UNIT (2) PRICE (2) FEE
<S> <C> <C> <C> <C>
Common Stock, $0.01 par value..... 2,875,000 $24.875/sh. $71,515,625 $24,661
</TABLE>
(1) Includes 375,000 shares that the Underwriters have the option to purchase to
cover over-allotments, if any. Also includes Preferred Share Purchase Rights
associated with the Common Stock.
(2) Estimated solely for the purpose of computing the amount of the registration
fee, based on the average of the high and low prices for the Common Stock as
reported on the Nasdaq Stock Market on May 31, 1995, in accordance with Rule
457(c) promulgated under the Securities Act of 1933.
---------------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
<PAGE>
SUBJECT TO COMPLETION
JUNE 7, 1995
PROSPECTUS
2,500,000 SHARES
[LOGO]
COMMON STOCK
($.01 PAR VALUE)
All of the 2,500,000 shares of Common Stock, $0.01 par value (the "Common
Stock"), offered hereby (the "Offering") are being offered by VLSI Technology,
Inc. ("VLSI" or the "Company") for sale through the several Underwriters named
herein. The Common Stock of the Company is quoted on the Nasdaq Stock Market
under the symbol "VLSI." The last reported sale price of the Company's Common
Stock on the Nasdaq Stock Market on June 6, 1995 was $26.00 per share. See
"Price Range of Common Stock and Dividend Policy."
SEE "RISK FACTORS" COMMENCING AT PAGE 5 FOR CERTAIN FACTORS RELEVANT TO AN
INVESTMENT IN THE COMMON STOCK 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 DISCOUNT COMPANY (1)
<S> <C> <C> <C>
Per Share................................................. $ $ $
Total (2)................................................. $ $ $
<FN>
- --------------------------------------------------------------------------------
(1) Before deducting expenses paid or payable by the Company estimated to be
$325,000.
(2) The Company has granted to the Underwriters a 30-day option to purchase up
to 375,000 additional shares of Common Stock solely to cover
over-allotments, if any. If the Underwriters exercise such option in full,
the total Price to Public, Underwriting Discount and Proceeds to Company
will be $ , $ , and $ , respectively. See "Underwriting."
</TABLE>
The shares of Common Stock are offered subject to receipt and acceptance by the
Underwriters and to the Underwriters' right to reject any order in whole or in
part and to withdraw, cancel or modify the offer without notice. It is expected
that delivery of the certificates for the shares of Common Stock will be made at
the office of Salomon Brothers Inc, Seven World Trade Center, New York, New
York, or through the facilities of The Depository Trust Company on or about
, 1995.
SALOMON BROTHERS INC
BEAR, STEARNS & CO. INC.
HAMBRECHT & QUIST
MONTGOMERY SECURITIES
THE DATE OF THIS PROSPECTUS IS , 1995.
<PAGE>
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, proxy and information statements and other information
with the Securities and Exchange Commission (the "Commission"). Such reports,
proxy and information statements and other information may be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
Commission's Regional Offices located at Seven World Trade Center, 13th Floor,
New York, New York 10048 and at Northwest 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 at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates.
The Company has filed a registration statement on Form S-3 (herein, together
with all amendments and exhibits, referred to as the "Registration Statement")
with the Commission under the Securities Act of 1933, as amended (the
"Securities Act"). This Prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information, reference is hereby made to the Registration Statement.
INFORMATION INCORPORATED BY REFERENCE
The following documents filed by VLSI with the Commission (File No. 0-11879)
pursuant to the Exchange Act are incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
December 30, 1994.
2. The Company's Quarterly Report on Form 10-Q for the quarter ended March
31, 1995.
3. The description of the Company's Common Stock contained in its
Registration Statement on Form 8-A filed with the Commission on April 20,
1984, as amended, and the description of the Company's Preferred Share
Purchase Rights issued and issuable pursuant to its stockholder rights
plan, contained in the Registration Statement on Form 8-A filed with the
Commission on November 20, 1989, as amended.
In addition, all reports and other documents subsequently filed by the Company
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the
date of this Prospectus and prior to the termination of the offering of Common
Stock shall be deemed to be incorporated by reference in this Prospectus from
the date of filing such documents. Any statement contained in a document
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 subsequently filed document that also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement 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, including any beneficial owner, to whom this
Prospectus is delivered, upon the written or oral request of such person, a copy
of any and all of the documents that are incorporated herein by reference (other
than exhibits to such documents, unless such exhibits are specifically
incorporated by reference into such documents). Requests for such documents
should be directed to Gregory K. Hinckley, Vice President, Finance, and Chief
Financial Officer at the principal executive offices of VLSI Technology, Inc.,
1109 McKay Drive, San Jose, California 95131 or by telephone at (408) 434-3100.
---------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP MEMBERS
MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK ON NASDAQ
IN ACCORDANCE WITH RULE 10B-6A UNDER THE SECURITIES EXCHANGE ACT OF 1934. SEE
"UNDERWRITING."
---------------------
The VLSI name and logo, Polar-TM- and FSB are trademarks of the Company.
This Prospectus also includes trademarks of companies other than VLSI.
The following companies are mentioned in this Prospectus: Alcatel Alsthom
Compagnie Generale d'Electricite ("Alcatel"), AT&T Corp. ("AT&T"), Apple
Computer, Inc. ("Apple"), Cadence Design Systems, Inc. ("Cadence"), Chips and
Technologies, Inc. ("Chips and Technologies"), Cisco Systems, Inc. ("Cisco"),
Compaq Computer Corporation ("Compaq"), DSC Communications Corporation ("DSC"),
Digital Equipment Corporation ("DEC"), Telefonaktiebolaget LM Ericsson
("Ericsson"), Hewlett-Packard Company ("Hewlett-Packard"), Hitachi, Ltd.
("Hitachi"), Hughes Corporation ("Hughes"), Intel Corporation ("Intel"),
International Business Machines Corporation ("IBM"), LSI Logic Corporation
("LSI"), Matsushita Electric Industrial Co., Ltd. ("Matsushita"), Mentor
Graphics Corporation ("Mentor Graphics"), Motorola, Inc. ("Motorola"), National
Semiconductor Corporation ("National Semiconductor"), NEC Corporation ("NEC"),
Newbridge Networks Corporation ("Newbridge"), NexGen, Inc. ("NexGen"), Oak
Technology, Inc. ("Oak Technology"), Packard Bell Electronics, Inc. ("Packard
Bell"), Pioneer Electronic Corporation ("Pioneer"), Rockwell International
Corporation ("Rockwell"), Sagem SA ("Sagem"), Silicon Graphics, Inc. ("Silicon
Graphics"), Sony Corporation ("Sony"), Tellabs, Inc. ("Tellabs"), Texas
Instruments Incorporated ("Texas Instruments" or "TI"), Thomson Consumer
Electronic ("Thomson"), Toshiba Corporation ("Toshiba") and UB Networks, Inc.
("UB Networks").
2
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND CONSOLIDATED FINANCIAL STATEMENTS APPEARING ELSEWHERE IN, OR
INCORPORATED BY REFERENCE INTO, THIS PROSPECTUS.
THE COMPANY
VLSI is a leader in the design, manufacture and sale of highly complex
application specific integrated circuits ("ASICs") -- custom designed chips for
an individual customer -- and application specific standard products ("ASSPs")
- -- semi-custom chips designed for a particular market application that may be
used by several different customers. The Company targets high volume markets in
which it has built significant expertise and can use its library of proprietary
cells and highly integrated building blocks to assist customers in designing
products and bringing them to market rapidly. VLSI's target markets include the
computing, communications and consumer and entertainment markets. VLSI
emphasizes high performance applications where its products are critical
elements of complex electronic systems. VLSI targets key OEM customers who are
leaders in their respective industries. The Company's major customers include
Compaq, Apple, Ericsson, Hewlett-Packard, Tellabs, Alcatel and Silicon Graphics.
VLSI produces a significant portion of its wafers (approximately 73% in
1994) at its own facilities and augments internal manufacturing capacity with
the foundry services of third-party wafer subcontractors. The Company believes
that this strategy improves quality, cost-effectiveness, responsiveness to
customers, access to capacity, ability to implement leading edge process
technology and time to market, as compared to semiconductor companies that lack
fabrication facilities. The semiconductor industry is, however, currently facing
capacity constraints in wafer manufacturing and the availability of third-party
wafer foundries has diminished significantly. Due to this manufacturing capacity
shortage, as well as increased customer demand, the Company is seeking to
accelerate the expansion and upgrading of its internal and external
manufacturing capacity.
Through its subsidiary, COMPASS Design Automation, Inc. ("COMPASS"), VLSI
offers an integrated suite of electronic design automation ("EDA") software
tools, foundry-flexible libraries and support services for use by systems and
circuit designers at other semiconductor and systems companies as well as at the
Company in creating complex integrated circuits.
The Company's principal executive offices are located at 1109 McKay Drive,
San Jose, California 95131, and the Company's telephone number is (408)
434-3100.
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered by the Company.......... 2,500,000 shares (1)
Common Stock to be outstanding after the
Offering................................... 39,371,246 shares (1)(2)
Nasdaq Stock Market Symbol................... VLSI
Use of Proceeds.............................. To add wafer fabrication capacity
<FN>
- ------------------------
(1) Assumes that the Underwriters' over-allotment option is not exercised. See
"Underwriting."
(2) Based on 36,871,246 shares outstanding as of March 31, 1995. Does not
include shares reserved for issuance. See footnote 1 to the table under the
heading "Capitalization."
</TABLE>
3
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
(in thousands, except per share data)
<TABLE>
<CAPTION>
FISCAL YEAR (1) QUARTER ENDED (2)
------------------------------------------------ ----------------------------------
1990 (3) 1991 1992 (4) 1993 (5) 1994 APRIL 1, 1994 MARCH 31, 1995
-------- -------- -------- -------- -------- ----------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS
DATA:
Net revenues.......................... $324,828 $413,376 $428,498 $515,946 $587,091 $138,123 $163,035
Operating income (loss)............... (6,062) 23,173 (19,282) 27,082 46,749 8,348 15,631
Net income (loss)..................... (12,740) 9,873 (32,217) 15,883 31,697 5,361 10,250
Fully diluted net income (loss) per
share................................ $ (0.52) $ 0.37 $ (1.12) $ 0.45 $ 0.85 $ 0.15 $ 0.26
Weighted average common and common
equivalent shares outstanding........ 24,339 26,657 28,865 35,276 37,446 36,802 41,798
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, 1995
-----------------------------
ACTUAL AS ADJUSTED (6)
--------- ------------------
<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Working capital.................................................................. $ 137,914 $ 199,502
Total assets..................................................................... 504,537 566,125
Short-term debt, including current portion of long-term obligations.............. 13,946 13,946
Long-term debt and noncurrent capital lease obligations.......................... 94,108 94,108
Stockholders' equity............................................................. 267,266 328,854
<FN>
- ------------------------------
(1) From 1990 through 1993, VLSI's fiscal year end was the last Saturday of
December. In 1994, the Company changed its fiscal year end to the last
Friday of December. The actual dates of the Company's fiscal year ends in
the table above are December 29, 1990, December 28, 1991, December 26,
1992, December 25, 1993 and December 30, 1994. The fiscal year ended
December 30, 1994 was a 53-week year. The current fiscal year is a 52-week
year ending on December 29, 1995.
(2) The quarter ended April 1, 1994 was a 14-week quarter. The quarter ended
March 31, 1995 was a 13-week quarter.
(3) Includes a special charge of $12.8 million reflecting the estimated cost of
corporate reorganization related to exiting the memory business.
(4) Includes a special charge of $22.5 million related to the de-emphasis of
older technologies, costs of streamlining sales distribution channels,
costs of relocating certain offices, writedowns of nonperforming assets and
costs associated with intellectual property matters.
(5) Includes a special charge of $1.0 million representing a write-off of
purchased in-process research and development expenses related to the
acquisition of certain assets.
(6) Assumes that the Underwriters' over-allotment option is not exercised. See
"Underwriting." Adjusted to reflect the sale of the 2,500,000 shares of
Common Stock offered hereby at an assumed price of $26.00 per share. The
estimated net proceeds have been added to working capital pending their
use. See "Use of Proceeds."
</TABLE>
4
<PAGE>
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION PROVIDED IN THIS PROSPECTUS AND IN THE
DOCUMENTS INCORPORATED BY REFERENCE HEREIN, THE FOLLOWING FACTORS SHOULD BE
CAREFULLY CONSIDERED IN EVALUATING THE COMPANY AND ITS BUSINESS BEFORE
PURCHASING THE COMMON STOCK OFFERED BY THIS PROSPECTUS.
FLUCTUATIONS IN OPERATING RESULTS. The Company believes that its future
operating results will be subject to quarterly variations based upon a wide
variety of factors, including the cyclical nature of both the semiconductor
industry and the markets addressed by the Company's products, price erosion,
competitive factors, fluctuations in manufacturing yields, the timing of new
product introductions, changes in product mix, the availability and extent of
utilization of manufacturing capacity, product obsolescence, scheduling,
rescheduling and cancellation of large orders, the ability to develop and
implement new technologies, changes in effective tax rates and litigation
expenses. The Company's COMPASS subsidiary, like other companies in the EDA
business, is particularly subject to significant fluctuations in revenues due to
limited backlog and its reliance on large orders placed late in the quarter. The
Company increases its level of operating expenses and investment in
manufacturing capacity in anticipation of future growth in revenues. To the
extent this revenue growth does not materialize, the Company's operating results
would be adversely affected. In circumstances where the Company is operating at
less than full capacity or has targeted a market segment as a long-term
strategic focus, the Company may choose, in the face of severe pricing pressure,
to manufacture products at low or no profitability. The Company's second quarter
financial results will be adversely affected by a $19.4 million charge to
earnings relating to a May 1995 verdict against VLSI in a patent infringement
lawsuit. See
"-- TI Litigation; Intellectual Property Matters" and "Recent Developments -- TI
Litigation."
MANUFACTURING CAPACITY LIMITATIONS. The Company's manufacturing facilities
are operating at capacity. As a result, VLSI's growth is constrained and the
Company has experienced difficulty in meeting some delivery dates requested by
customers. Prolonged inability of VLSI to deliver products in a timely manner
could result in the loss of customers and materially adversely affect results of
operations. In addition, the Company is experiencing manufacturing
inefficiencies associated with the operation of its facilities at capacity while
simultaneously working to expand or upgrade that capacity. Significant lead time
is required to acquire and install additional wafer fabrication equipment. To
the extent that the Company is unable to procure and install such equipment in a
timely manner, the increase in wafer production capacity at its facilities would
be delayed.
In addition, available third-party wafer fabrication, assembly, testing and
packaging capacity has become very limited in recent months. The Company relied
on two outside suppliers for approximately 27% of its 1994 wafer production.
Although the Company has ongoing relationships with these suppliers, the Company
has only one contract for guaranteed capacity. The other supplier has notified
the Company that it will sequentially reduce its allocation of wafers to VLSI
from the third quarter of 1995 through the second quarter of 1996 and has
indicated that it does not intend to supply wafers to the Company thereafter.
There can be no assurance that such supplier will not further reduce its
allocation to VLSI. The Company will be required to find alternative sources of
wafer supply to replace the capacity previously provided by such supplier. If
the Company is unable to replace such wafer supplier, its sales of products
would be diminished, which could have a material adverse impact on the Company's
operations. In addition, the Company relies on three suppliers for almost all
assembly operations and a significant portion of test operations and any
reduction in allocation from these suppliers would adversely affect the
Company's operations.
MANUFACTURING RISKS. The fabrication of integrated circuits is an extremely
complex and precise process consisting of hundreds of separate steps and
requiring production in a highly controlled, clean environment. Minute
impurities, errors in any step of the fabrication process, defects in the masks
used to print circuits on a wafer or other factors can cause a substantial
percentage of wafers to be rejected or numerous die on each wafer to be
nonfunctional. The Company may experience problems in achieving acceptable
yields in the manufacture of wafers, particularly in connection with any
expansion of its capacity or change in its processing steps. For example, in
late 1992, the Company switched processes
5
<PAGE>
at one step in the manufacturing line, which caused certain VLSI chips to fail.
The Company's replacement of these chips at no charge to the customers adversely
affected results of operations in the first quarter of 1993.
In addition to manufacturing in its own facilities, VLSI has wafer
manufacturing arrangements with two integrated circuit manufacturing companies.
These wafer subcontractors are themselves subject to all of the manufacturing
risks that are applicable to VLSI's own wafer manufacturing operations. The
Company also subcontracts virtually all of its integrated circuit packaging and
a significant portion of its final testing to third parties, principally ANAM
Industrial Company in Korea, ASE Corporation in Taiwan, Advanced Semiconductor
Assembly Technology in Hong Kong and Mitsui Incorporated in Japan. In addition,
the Company's foreign subcontract manufacturing arrangements are subject to
risks such as changes in government policies, transportation delays, increased
tariffs, fluctuations in foreign exchange rates, and export and tax controls.
Any problems experienced in obtaining acceptable wafers from third party wafer
subcontractors on a timely basis to augment the Company's internal manufacturing
capacity or in the integrated circuit packaging, assembly and test operations
performed by subcontractors could delay shipments of the Company's products and
materially adversely affect the Company's results of operations.
The Company's success is also dependent upon its ability to develop and
implement new manufacturing process technologies. Semiconductor design and
process methodologies are subject to rapid technological change, requiring large
expenditures for research and development. Most of the Company's products are
currently manufactured using sub-micron CMOS processes. The Company believes
that the transition to smaller geometry process technologies will be important
to remaining competitive. The Company is in the process of expanding and
upgrading its manufacturing facility in San Jose, California to convert
production to a 6-inch CMOS wafer process. The Company's San Antonio facility,
which is currently using both 0.6-micron and 0.8-micron processes, is being
converted to 100% 0.5-micron CMOS process capability. These conversion
activities could result in a disruption to the facilities' manufacturing cycles,
thereby lowering the output of the facilities as well as wafer yields. Any lack
of success of the Company's facilities conversion efforts would have a material
adverse effect on future operating results and, in particular, delay of planned
increased production of 6-inch CMOS wafers at the San Jose facility, currently
scheduled for the third quarter of 1995, could adversely affect near-term
results.
The Company is party to a joint development agreement with Hitachi, which
expires in 1997. Under such agreement, the Company and Hitachi work together to
develop advanced sub-micron processes for the manufacture of integrated
circuits. In addition, the Company is dependent on Hitachi for assistance in
developing other state-of-the-art manufacturing processes. Any failure or
disruption of the Company's joint development activities could have a material
adverse effect upon the Company's ability to implement state-of-the-art
manufacturing processes.
The Company's San Jose facility, which accounted for approximately 42% of
its total internal production in the first quarter of 1995, is located near
major earthquake faults and in an area that has in the recent past experienced
an extended drought. Even though the Company utilizes both of its fabrication
plants and two subcontractors to manufacture its wafers and has the ability to
shift manufacturing from one plant to another for many of its products,
disruption of operations at either of the Company's production facilities or at
those of its subcontractors for any reason, such as fire or earthquake, would
cause delays in shipments until the Company could shift the products from the
affected facility or subcontractor to another facility.
FUTURE CAPITAL NEEDS. Semiconductor companies such as VLSI have substantial
ongoing capital requirements to obtain internal or external manufacturing
capacity. In order to remain competitive, the Company must continue to make
significant investments in capital equipment and expansion of facilities, as
well as in research and development. Development and implementation of
sub-micron manufacturing processes is particularly capital intensive, requiring
significant investments in new state-of-the-art equipment. The Company currently
anticipates that its capital expenditures for 1995 will be approximately $200
million. The Company believes that the net proceeds from the sale of the Common
Stock in
6
<PAGE>
this offering, together with existing cash balances, cash flow from operations,
available equipment financing and proceeds from the expected exercise by Intel
of its warrant for an aggregate exercise price of approximately $31.3 million,
will be sufficient to meet the Company's liquidity and capital requirements
through 1996. However, the Company is currently exploring methods of increasing
both its internal and external manufacturing capacity. As a result, the Company
may be required or choose to seek additional equity or debt financing to fund
further expansion of its internal or external wafer fabrication capacity or for
other purposes. The timing and amount of such capital requirements cannot be
precisely determined and will depend on a number of factors, including demand
for the Company's products, product mix, changes in semiconductor industry
conditions and competitive factors. There can be no assurance that such
additional financing will be available when needed or, if available, will be on
satisfactory terms. The failure to obtain financing would hinder the Company's
ability to make continued investments in capital equipment and facilities, which
could materially adversely affect the Company's results of operations.
DEPENDENCE ON PERSONAL COMPUTER INDUSTRY. The Company estimates that total
sales to the personal computer market during 1994 represented approximately 47%
of the Company's net revenues. With five of the Company's top ten customers in
1994 operating in the personal computer industry, a deterioration of business
conditions in the personal computer industry would have a material adverse
effect on VLSI's operations. The personal computer market is volatile and is
subject to significant shifts in demand and severe pricing pressures. In
addition, the market for the Company's personal computer devices is
characterized by rapid technological change and product obsolescence. The
Company's results in the PC market will also be dependent in part on the
Company's ability to respond quickly to new microprocessor architectures adopted
by major OEMs. The Company's need to anticipate customer product transitions
also leads to potential inventory exposure, which could adversely affect the
Company's financial results.
CYCLICAL NATURE OF THE SEMICONDUCTOR INDUSTRY. The semiconductor industry
has historically been characterized by wide fluctuations in product supply and
demand. From time to time, the industry has also experienced significant
downturns, often in connection with, or in anticipation of, declines in general
economic conditions. These downturns, which in some cases have lasted for more
than a year, have been characterized by diminished product demand, production
over-capacity and subsequent accelerated erosion of average sales prices. The
Company, like other semiconductor manufacturers with fabrication facilities, has
high fixed costs for its manufacturing facilities and believes that its
operating results were adversely affected by an industry-wide downturn in the
demand for semiconductors in 1990. This downturn coincided with the recession in
the U.S. economy and slower growth in various electronics industries using
semiconductors, including market segments in which the Company was engaged at
the time.
NEW PRODUCT RISKS. The Company's future success depends on its ability to
continue to develop and introduce new products that compete effectively on the
basis of price and performance and that satisfy customer requirements. New
product development often requires long-term forecasting of market trends,
development and implementation of new processes and technologies and substantial
capital commitments. If the Company is unable to design, develop, manufacture
and market new products successfully and in a timely manner, its operating
results will be materially adversely affected. No assurance can be given that
the Company's product and process development efforts will be successful or that
new products will achieve market acceptance. For example, the Company expended
considerable financial and technical resources during 1993 and part of 1994
toward the development of its Polar product, a device intended for the handheld
computer market integrating Intel's 386SL microprocessor. Because the handheld
market developed more slowly than initial expectations, the Company and Intel,
its partner in the Polar development effort, canceled the Polar project and
terminated the amended July 8, 1992 Technology Agreement between the companies.
COMPETITION. The semiconductor industry in general and the markets in which
the Company competes in particular are intensely competitive, exhibiting both
rapid technological change and ongoing price erosion as technologies mature. The
Company competes with large domestic and foreign companies that
7
<PAGE>
have substantially greater financial, technical, marketing and management
resources than the Company, such as AT&T, IBM, Intel, LSI, Motorola, TI and
Toshiba. Competition is particularly intense in X86 core logic chip sets where
Intel, a dominant supplier of microprocessors to the PC industry, has become the
major supplier of Pentium PC chip sets, as well as motherboards, which is likely
to cause increased pricing and margin pressure on such chip sets. Competition
faced by COMPASS in the EDA market comes primarily from a few large established
vendors, such as Cadence and Mentor Graphics. There is no assurance that the
Company will be able to compete successfully in the future.
CONCENTRATION OF CUSTOMER BASE. Approximately two-thirds of the Company's
net revenues for 1994 were derived from sales to its top 20 customers, a large
percentage of which are in the personal computer business. As a result of the
concentration of the Company's customer base, loss or cancellation of business
from any of these major customers, significant changes in scheduled deliveries
to any of these customers or decreases in the prices of products sold to any of
these customers could materially adversely affect the Company's results of
operations. These risks of customer concentration are exacerbated by the fact
that the Company's agreements with its customers for the purchase of products
are generally terminable by such customers at any time and permit customers to
cancel orders previously placed for the Company's products without penalty. For
example, in the fourth quarter of 1993, Apple, which accounted for 19% of 1993
net revenues, postponed and, in certain cases, canceled, approximately $20
million of shipments originally planned for delivery in 1994, adversely
affecting VLSI's 1994 results of operations. Shipments to another customer,
Compaq, accounted for 22% of net revenues in 1994 and 11% of net revenues in the
first quarter of 1995.
TI LITIGATION; INTELLECTUAL PROPERTY MATTERS. The Company is one of three
defendants in a major patent infringement suit brought by Texas Instruments with
respect to patents that have now expired, which suit resulted in a May 1995 jury
verdict against VLSI for damages of $19.4 million. The Company intends to
contest the verdict. However, the Company will record a charge to earnings of
$19.4 million in the second quarter of 1995. Based on the jury's finding that
the alleged infringement was intentional, TI may also request that the judge
award treble damages. In the event that treble damages are awarded, the judgment
could result in a material reduction in liquidity, as well as an increased
impact on the Company's reported results of operations. See "Recent Developments
- -- TI Litigation."
The semiconductor industry is generally characterized by vigorous protection
and pursuit of intellectual property rights and positions, which have on
occasion resulted in protracted litigation that utilizes cash and management
resources, which can have a significant adverse effect on operating results.
There can be no assurance that additional intellectual property claims will not
be made against the Company in the future or that the Company will not be
prohibited from using the technologies subject to such claims or be required to
obtain licenses and make corresponding royalty payments for past or future use.
There can be no assurance that any such licenses could be obtained on
commercially reasonable terms.
AVAILABILITY OF RAW MATERIALS. Raw materials essential to the Company's
business are generally available from multiple sources. However, due to
increased levels of demand, there may be an industrywide shortage of raw silicon
wafers. A prolonged inability to obtain silicon wafers or any other raw
materials could have a material adverse impact on the Company's business.
ENVIRONMENTAL REGULATIONS. The Company is subject to a variety of federal,
state and local governmental regulations related to the storage, use, discharge
and disposal of toxic, volatile or otherwise hazardous chemicals used in its
manufacturing process. Increasing public attention has been focused on the
environmental impact of semiconductor manufacturing operations. The Company's
San Jose, California facilities are located near residential areas, which could
increase the incidence of environmental complaints or investigations. There can
be no assurance that changes in environmental regulations will not impose the
need for additional capital equipment or other requirements. Any failure by the
Company to control the use of, or adequately to restrict the discharge of,
hazardous substances under present or future regulations could subject VLSI to
substantial liability or could cause its manufacturing operations to be
suspended. Such liability or suspension of manufacturing operations could have a
material adverse effect on the Company's operating results.
8
<PAGE>
VOLATILITY OF STOCK PRICE. The Company's Common Stock has experienced and
can be expected to experience substantial price volatility. In addition, the
stock market in general has experienced extreme price and volume fluctuations,
which have particularly affected the market price of many technology companies
and which have often been unrelated to the operating performance of those
companies. See "Price Range of Common Stock and Dividend Policy."
EFFECT OF POTENTIAL STOCK SALES. Intel has the right to demand registration
of 2,677,604 shares of Common Stock issuable upon exercise of a fully
exercisable warrant. Such rights may be exercised by Intel at any time, subject
to the Company's ability to delay registration for 90 days if Intel makes the
demand during an offering by the Company or the Company initiates an offering
within 30 days of Intel's demand. There can be no assurance that Intel will not
elect to exercise its demand right during or shortly after this offering, which
election could adversely affect the market price of the Company's Common Stock.
In addition, as of March 31, 1995, approximately 3,742,984 vested and unvested
shares of the Company's Common Stock (the "Option Shares") were subject to
employee and director stock options having exercise prices below the market
price of the Common Stock shown on the cover page of this Prospectus. Many
optionees may choose to exercise their options and sell the Common Stock
acquired upon exercise in the coming months due to the significant spread
between the exercise prices and current market prices. Shares of the Company's
Common Stock are currently trading in excess of the conversion price of the
Company's convertible subordinated debentures. This could lead to conversion
into shares of VLSI Common Stock, either voluntary or in response to a call for
redemption by the Company. Sales of large numbers of shares by Intel, optionees,
holders of convertible debentures who convert into Common Stock or others may
have a depressing effect on the market price for the Company's Common Stock. See
"Capitalization."
9
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of Common Stock offered hereby
are estimated to be approximately $61,587,500 ($70,874,375 if the Underwriters'
over-allotment option is exercised in full). The proceeds will be used primarily
for adding internal or external wafer fabrication capacity. In particular, the
Company intends to install additional manufacturing equipment and build out the
third of four modules in its San Antonio fabrication facility to increase
manufacturing capacity. Although the Company does not currently intend to use
the proceeds of this offering for the acquisition of the business, products or
technologies of other companies, it may in the future enter into agreements for
such acquisitions. There are no pending agreements or arrangements concerning
material acquisitions. Pending such uses, the net proceeds will be invested in
investment grade securities.
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
The Company's Common Stock has been traded on the over-the-counter market
under the Nasdaq Stock Market symbol VLSI since the Company's initial public
offering in 1983. The following table sets forth, for the periods indicated, the
high and low closing prices for the Common Stock on the Nasdaq Stock Market. The
last reported sale price for the Common Stock of the Company on June 6, 1995 as
reported by the Nasdaq Stock Market is set forth on the cover page of this
Prospectus. At March 31, 1995, the Company had approximately 1,695 holders of
record of its Common Stock and 36,871,246 shares outstanding. See also "Risk
Factors--Volatility of Stock Price" and "--Effect of Potential Stock Sales."
<TABLE>
<CAPTION>
HIGH LOW
----- -----
<S> <C> <C>
1992:
First Quarter................................................................. $10 $ 7 1/2
Second Quarter................................................................ 9 1/8 6 7/8
Third Quarter................................................................. 8 1/2 6 1/8
Fourth Quarter................................................................ 8 7
1993:
First Quarter................................................................. $ 8 7/8 $ 6 3/4
Second Quarter................................................................ 8 7/8 6 1/2
Third Quarter................................................................. 18 5/8 9 1/2
Fourth Quarter................................................................ 18 5/8 9 3/4
1994:
First Quarter................................................................. $16 $ 9 5/8
Second Quarter................................................................ 15 3/8 12 1/8
Third Quarter................................................................. 15 15/16 11
Fourth Quarter................................................................ 13 1/8 10 1/2
1995:
First Quarter................................................................. 18 3/16 11 11/16
Second Quarter (through June 6, 1995)......................................... 29 5/8 16 3/4
</TABLE>
The Company has never paid cash dividends on its Common Stock. The Company
presently intends to retain all cash for use in the operation and expansion of
the Company's business and does not anticipate paying any cash dividends in the
near future. Certain of VLSI's debt agreements prohibit the payment of dividends
without the lender's consent.
10
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization and short-term debt of the
Company at March 31, 1995, and as adjusted to give effect to the receipt of the
estimated net proceeds from the sale of the 2,500,000 shares of Common Stock
offered hereby at an assumed offering price of $26.00 per share.
<TABLE>
<CAPTION>
MARCH 31, 1995
-------------------------
ACTUAL AS ADJUSTED
----------- ------------
(IN THOUSANDS)
<S> <C> <C>
Short-term debt:
Current portion of long-term debt.................................................... $ 7,703 $ 7,703
Current capital lease obligations.................................................... 6,243 6,243
----------- ------------
Total short-term debt.............................................................. $ 13,946 $ 13,946
----------- ------------
----------- ------------
Long-term debt:
7% Convertible Subordinated Debentures due May 1, 2012............................... $ 57,500 $ 57,500
Other long-term debt................................................................. 32,374 32,374
Noncurrent capital lease obligations................................................. 4,234 4,234
----------- ------------
Total long-term debt............................................................... 94,108 94,108
----------- ------------
Stockholders' equity:
Preferred Shares, $.01 par value, Authorized: 2,000,000 shares; no shares issued and
outstanding......................................................................... -- --
Common Stock, $.01 par value, Authorized: 99,000,000 shares; Issued and outstanding:
36,871,246 shares; 39,371,246 shares, as adjusted(1)................................ 369 394
Junior Common Stock, $.01 par value, Authorized: 1,000,000 shares; no shares issued
and outstanding..................................................................... -- --
Additional paid-in capital........................................................... 233,486 295,049
Retained earnings.................................................................... 33,411 33,411
----------- ------------
Total stockholders' equity......................................................... 267,266 328,854
----------- ------------
Total capitalization............................................................. $ 361,374 $ 422,962
----------- ------------
----------- ------------
<FN>
- ------------------------
(1) Excludes (i) 1,740,691 shares of Common Stock subject to outstanding
options under the Company's 1982 Incentive Stock Option Plan, which plan
has expired as to future grants, (ii) 4,393,371 shares of Common Stock
reserved for issuance upon exercise of stock options under the Company's
1992 Stock Plan, of which 1,877,293 shares are subject to outstanding
options and 2,516,078 shares are available for future grant as of March 31,
1995, (iii) 523,838 shares of Common Stock reserved for issuance under the
Company's employee stock purchase plan, (iv) 285,000 shares of Common Stock
reserved for issuance upon exercise of stock options under the Company's
1986 Directors' Stock Option Plan, of which 125,000 shares are subject to
outstanding options and 160,000 shares are available for future grant, (v)
2,613,636 shares reserved for issuance upon conversion of the Company's 7%
Convertible Subordinated Debentures due May 1, 2012, and (vi) 2,677,604
shares of Common Stock reserved for issuance under a warrant granted to
Intel.
</TABLE>
11
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The consolidated statement of operations data set forth below for the years
ended December 26, 1992, December 25, 1993 and December 30, 1994 and the
consolidated balance sheet data at December 25, 1993 and December 30, 1994 are
derived from the financial statements of the Company, audited by Ernst & Young
LLP, independent auditors, that are incorporated herein by reference, and are
qualified by reference to such financial statements. The consolidated statement
of operations data for the years ended December 29, 1990, and December 28, 1991,
and the consolidated balance sheet data at December 29, 1990, December 28, 1991
and December 26, 1992 are derived from financial statements of the Company that
also have been audited by Ernst & Young LLP but are not incorporated herein by
reference. The financial data at March 31, 1995 and for the three-month periods
ended April 1, 1994 and March 31, 1995 are derived from unaudited financial
statements, which include all adjustments, consisting only of normal recurring
accruals, that 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 three months ended March 31, 1995 are
not necessarily indicative of the results that may be expected for future
periods or for the year ending December 29, 1995. The data should be read in
conjunction with the consolidated financial statements, related notes and other
financial information included herein or incorporated herein by reference.
<TABLE>
<CAPTION>
FISCAL YEAR (1)(2) QUARTER ENDED (3)
-------------------------------------------------------- -----------------------------------
1990 1991 1992 1993 1994 APRIL 1, 1994 MARCH 31, 1995
-------- -------- -------- -------- -------- ---------------- --------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Net revenues.............. $324,828 $413,376 $428,498 $515,946 $587,091 $138,123 $163,035
Cost of sales............. 215,757 275,414 293,392 327,774 356,858 86,940 98,961
-------- -------- -------- -------- -------- ---------------- --------------
Gross profit............ 109,071 137,962 135,106 188,172 230,233 51,183 64,074
Operating expenses:
Research and
development............ 35,521 39,167 50,442 65,431 78,889 18,705 20,668
Marketing, general and
administrative......... 66,862 75,622 81,446 94,651 104,595 24,130 27,775
Special charge.......... 12,750(4) -- 22,500(5) 1,008(6) -- -- --
-------- -------- -------- -------- -------- ---------------- --------------
Operating income (loss)... (6,062) 23,173 (19,282) 27,082 46,749 8,348 15,631
Interest income and other
expenses (net)........... 2,395 (1,161) (3,282) 1,512 3,301 802 881
Interest expense.......... (9,073) (9,234) (9,053) (8,063) (8,343) (2,004) (1,862)
-------- -------- -------- -------- -------- ---------------- --------------
Income (loss) before
provision for taxes on
income................... (12,740) 12,778 (31,617) 20,531 41,707 7,146 14,650
Provision for taxes on
income................... -- 2,905 600 4,648 10,010 1,785 4,400
-------- -------- -------- -------- -------- ---------------- --------------
Net income (loss)......... $(12,740) $ 9,873 $(32,217) $ 15,883 $ 31,697 $ 5,361 $ 10,250
-------- -------- -------- -------- -------- ---------------- --------------
-------- -------- -------- -------- -------- ---------------- --------------
Fully diluted net income
(loss) per share......... $ (0.52) $ 0.37 $ (1.12) $ 0.45 $ 0.85 $ 0.15 $ 0.26
-------- -------- -------- -------- -------- ---------------- --------------
-------- -------- -------- -------- -------- ---------------- --------------
Weighted average common
and common equivalent
shares outstanding....... 24,339 26,657 28,865 35,276 37,446 36,802 41,798
<CAPTION>
FISCAL YEAR (1)(2) QUARTER ENDED (3)
-------------------------------------------------------- -----------------------------------
1990 1991 1992 1993 1994 APRIL 1, 1994 MARCH 31, 1995
-------- -------- -------- -------- -------- ---------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net revenues.............. 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales............. 66.4 66.6 68.5 63.5 60.8 62.9 60.7
-------- -------- -------- -------- -------- ---------------- --------------
Gross profit............ 33.6 33.4 31.5 36.5 39.2 37.1 39.3
Operating expenses:
Research and
development............ 10.9 9.5 11.8 12.7 13.4 13.6 12.7
Marketing, general and
administrative......... 20.7 18.3 19.0 18.3 17.8 17.5 17.0
Special charge.......... 3.9(4) -- 5.2(5) 0.2(6) -- -- --
-------- -------- -------- -------- -------- ---------------- --------------
Operating income (loss)... (1.9) 5.6 (4.5) 5.3 8.0 6.0 9.6
Interest expense and
other, net............... 2.0 2.5 2.9 1.3 0.9 0.8 0.6
Provision for taxes on
income................... -- 0.7 0.1 0.9 1.7 1.3 2.7
-------- -------- -------- -------- -------- ---------------- --------------
Net income (loss)......... (3.9)% 2.4% (7.5)% 3.1% 5.4% 3.9% 6.3%
-------- -------- -------- -------- -------- ---------------- --------------
-------- -------- -------- -------- -------- ---------------- --------------
</TABLE>
<TABLE>
<CAPTION>
AT FISCAL YEAR END (1)
------------------------------------------------ AT
1990 1991 1992 1993 1994 MARCH 31, 1995
-------- -------- -------- -------- -------- --------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Working capital........................................... $ 65,960 $ 76,127 $102,149 $114,423 $138,704 $137,914
Total assets.............................................. 327,340 364,018 368,208 412,223 490,216 504,537
Short-term debt, including current portion of long-term
obligations.............................................. 34,945 39,661 15,707 14,606 15,516 13,946
Long-term debt and non-current capital lease
obligations.............................................. 89,277 92,633 83,178 85,855 96,804 94,108
Stockholders' equity...................................... 147,110 161,628 185,008 212,508 255,430 267,266
<FN>
- ----------------------------------
(1) From 1990 through 1993, VLSI's fiscal year end was the last Saturday of
December. In 1994, the Company changed its fiscal year end to the last
Friday of December. The actual dates of the Company's fiscal year ends in
the table above are December 29, 1990, December 28, 1991, December 26,
1992, December 25, 1993 and December 30, 1994. The fiscal year ended
December 30, 1994 was a 53-week year. The current fiscal year is a 52-week
year ending on December 29, 1995.
(2) During 1994, the Company reclassified costs associated with its Technology
Centers from research and development to cost of sales and marketing,
general and administrative in order to make the presentation of the
Company's financial statements more comparable with the financial
statements of its closest competitors and to better reflect the nature of
these costs. Amounts reclassified in 1990, 1991, 1992, 1993 and 1994 total
$18.1 million, $18.8 million, $19.1 million, $18.4 million and $22.7
million, respectively. Cost of sales were increased $14.1 million, $14.7
million, $14.9 million, $14.2 million and $17.9 million for 1990, 1991,
1992, 1993 and 1994, respectively. Marketing, general and administrative
expenses were increased $4.0 million, $4.1 million, $4.2 million, $4.2
million and $4.8 million for 1990, 1991, 1992, 1993 and 1994, respectively.
(3) The quarter ended April 1, 1994 was a 14-week quarter. The quarter ended
March 31, 1995 was a 13-week quarter.
(4) Represents a special charge of $12.8 million reflecting the estimated cost
of corporate reorganization related to exiting the memory business.
(5) Represents a special charge of $22.5 million related to the de-emphasis of
older technologies, costs of streamlining sales distribution channels,
costs of relocating certain offices, writedowns of nonperforming assets and
costs associated with intellectual property matters.
(6) Represents a special charge of $1.0 million reflecting a write-off of
purchased in-process research and development related to the acquisition of
certain assets.
</TABLE>
12
<PAGE>
BUSINESS
VLSI is a leader in the design, manufacture and sale of highly complex
application specific integrated circuits ("ASICs")--custom designed chips for an
individual customer--and application specific standard products
("ASSPs")--semi-custom chips designed for a particular market application that
may be used by several different customers. The Company targets high-volume
markets in which it has built significant expertise and can use its library of
proprietary cells and highly integrated building blocks to assist customers in
designing products and bringing them to market rapidly. VLSI's target markets
include the computing, communications and consumer and entertainment markets.
VLSI emphasizes high performance applications where its products are critical
elements of complex electronic systems. VLSI targets key OEM customers who are
leaders in their respective industries. The Company's major customers include
Compaq, Apple, Ericsson, Hewlett-Packard, Tellabs, Alcatel and Silicon Graphics.
VLSI produces a significant portion of its wafers (approximately 73% in
1994) at its own facilities and augments internal manufacturing capacity with
the foundry services of third-party subcontractors. The Company believes that
this strategy improves quality, cost-effectiveness, responsiveness to customers,
access to capacity, ability to implement leading edge process technology and
time to market, as compared to semiconductor companies that lack fabrication
facilities. The semiconductor industry is, however, currently facing capacity
constraints in wafer manufacturing and the availability of third-party wafer
foundries has diminished significantly. Due to this manufacturing capacity
shortage, as well as increased customer demand, the Company is seeking to
accelerate the expansion and upgrading of its internal and external
manufacturing capacity.
Through its subsidiary, COMPASS Design Automation, Inc. ("COMPASS"), VLSI
offers an integrated suite of electronic design automation ("EDA") software
tools, foundry-flexible libraries and support services for use by systems and
circuit designers at other semiconductor and systems companies, as well as at
the Company, in creating complex integrated circuits.
BUSINESS STRATEGY
VLSI's objective is to design and manufacture highly-integrated, complex
semiconductor devices that allow its customers to develop and bring to market
higher value-added systems and products. Key elements in its strategy to achieve
this objective include:
- TARGET HIGH-VOLUME MARKETS. VLSI targets high-volume markets in which it
has built significant expertise and can utilize its library of proprietary
cells and high-level building blocks to assist customers in designing and
bringing the customers' products to market rapidly. VLSI believes that
this allows the Company to offer more value to the customer at higher
gross margins for the Company.
- FOCUS ON LARGE, INDUSTRY-LEADING OEM CUSTOMERS. VLSI focuses its
manufacturing and research and development resources on products for OEM
customers that are leaders in their respective industries. During 1994,
approximately two-thirds of the Company's net revenues were derived from
sales to its top 20 customers, including Compaq, Apple, Ericsson,
Hewlett-Packard, Tellabs, Alcatel and Silicon Graphics.
- EMPHASIZE STANDARD CELL ASICS AND ASSPS. VLSI emphasizes standard cell
ASICs and ASSPs as compared to gate arrays and other design methodologies.
The Company believes that the standard cell approach is a superior
methodology for satisfying the size, performance and power consumption
requirements of the highly complex products that form VLSI's target
markets.
- LEVERAGE LIBRARY OF STANDARD CELLS TO REDUCE CUSTOMERS' TIME TO MARKET.
VLSI's Functional System Block ("FSB") library, an expanding collection of
pre-designed cells and high-level building blocks, provides frequently
used integrated circuit functions. The FSB library allows VLSI and its
customers to more rapidly design and integrate products, thereby reducing
VLSI's customers' time to market. VLSI's library of FSBs includes Graphics
Controllers (LCD and CRT), a DES Encryption FSB, a PCI FSB, SCSI
Controllers, an ARM RISC-based microprocessor (low
13
<PAGE>
power, high performance embedded control applications), power management,
communications (including standards such as DECT, CT2, GSM and PHS),
signal converters, forward error correction, digital demodulation, MPEG2
and digital signal processing.
- PROVIDE ENGINEERING DESIGN SUPPORT. The Company seeks to differentiate
itself from its competitors not only through the quality of its products,
but also through the level of its technological support and service. VLSI
operates a network of geographically dispersed Technology Centers where
experienced engineers with a specific technical focus work with customers
to develop designs for new products and to provide continuing after-sale
customer support. In 1993, VLSI established a Customer Excellence program,
which is designed to foster relationships with customers through the use
of teams focused on elements such as customer satisfaction, manufacturing
competence and technical excellence.
- EMPLOY BOTH INTERNAL AND EXTERNAL MANUFACTURING CAPACITY. VLSI produces a
significant portion of its wafers (approximately 73% in 1994) at its own
facilities and augments internal manufacturing capacity with the foundry
services of third-party wafer subcontractors. The Company believes that
this strategy improves quality, cost-effectiveness, responsiveness to
customers, access to capacity, ability to implement leading edge process
technology and time to market, as compared to semiconductor companies that
lack fabrication facilities. The semiconductor industry is, however,
currently facing capacity constraints in wafer manufacturing and the
availability of third-party wafer foundries has diminished significantly.
Due to this manufacturing capacity shortage, as well as increased customer
demand, the Company is seeking to accelerate the expansion and upgrading
of its internal and external manufacturing capacity.
14
<PAGE>
PRODUCTS AND MARKETS
VLSI shipped over 2,000 different products in 1994. The following table
illustrates certain current VLSI products, their applications and customers, all
as selected by the Company in its discretion.
SELECTED VLSI PRODUCTS AND CUSTOMERS
<TABLE>
<CAPTION>
TARGET MARKET SELECTED PRODUCTS AND DESCRIPTION SELECTED CUSTOMER(S)
<S> <C> <C>
COMPUTING
ASICs and ASSPs for personal Core logic chip sets for Pentium personal computers AT&T, Compaq, DEC,
computers, workstations and Hewlett-Packard,
mass storage application Packard Bell
Core logic and multimedia ASICs for various Macintosh Apple and Apple
Power PC systems licensees
Core logic chip set for NexGen microprocessor NexGen
ASICs for Onyx high-end 3D Graphics and high volume Silicon Graphics
entry-level workstations
COMMUNICATIONS
ASICs and ASSPs for wireless ASICs for Titan digital access cross connect system Tellabs
communication and network and
voice application
ASICs and ASSPs for ATM and hub/router based solutions Cisco, Newbridge, UB
Networks
ARM-based microcontroller for Marco-TM- wireless Motorola
communicator
Ericsson
Signal processing and call control chips for GSM phones
ASICs for digital subscriber loop and central office Alcatel, DSC
application
CONSUMER & ENTERTAINMENT
ASICs and ASSPs for digital Forward error correction chip and QPSK demodulator for Hughes, Matsushita,
satellite and cable set top satellite set top box NEC, Pioneer, Sagem,
box, arcade and video game Sony, Thomson
application
High performance encryption engine chip AT&T
EDA
Electronic design automation of Top-down design tools, which include ASIC Synthesizer-TM- National
complex ASICs, ICs and ASSPs and Datapath Compiler-TM- Semiconductor,
Oak Technology,
Silicon Graphics
Physical design tools, which include a floorplanning tool Rockwell
and a place and route tool Tellabs, Thomson
Sub-micron physical library products Chips and
Technologies,
Hitachi, NEC, TI
</TABLE>
15
<PAGE>
RECENT DEVELOPMENTS
SALE OF STOCK BY INTEL
In January and February 1995, Intel sold an aggregate of 5,355,207 shares of
Common Stock of the Company that it had acquired pursuant to the Intel/VLSI
Stock and Warrant Purchase Agreement dated July 8, 1992. As a result, Intel is
no longer a stockholder of the Company, although it currently holds a fully
exercisable warrant to purchase an aggregate of 2,677,604 shares of Common Stock
at an exercise price of $11.69 per share and expiring in August 1995. See "Risk
Factors--Effect of Potential Stock Sales."
DEVELOPMENT OF 0.35-MICRON PROCESS TECHNOLOGY WITH HITACHI
In April 1995, the Company and Hitachi announced the joint development of a
new 0.35-micron process technology for ASICs. The Company believes that the new
process technology will be used for ASICs in the computing, communications and
consumer and entertainment markets. The Company's development and initial
fabrication of ASICs using the 0.35-micron process is taking place at the
Company's San Antonio, Texas facility. The Company and Hitachi are parties to a
joint development agreement for the development of 0.35-micron and smaller
geometry process technologies, which expires in 1997. See "Risk Factors --
Manufacturing Risks."
TI LITIGATION
In July 1990, Texas Instruments filed two actions against the Company and
four other defendants, Analog Devices, Inc., Integrated Device Technology, Inc.
("IDT"), LSI Logic Corporation and Cypress Semiconductor Corporation (the
Company and such other defendants are collectively referred to as the "TI
Defendants"). IDT settled its cases with TI in late December 1992.
In the action filed before the United States International Trade Commission
("ITC"), TI sought to exclude from importation into the U.S. all TI Defendants'
products manufactured outside the U.S. that allegedly utilize a plastic
encapsulation process described in U.S. Patent No. 4,043,027 (the "027 patent").
On October 15, 1991, the Administrative Law Judge ("ALJ") found the 027 patent
to be valid and infringed by the Company's old plastic encapsulation gating
process. However, a new plastic encapsulation gating process developed and used
by the TI Defendants was found not to infringe the 027 patent. In December 1991,
the full ITC determined that it would not consider TI's appeal to overturn the
ALJ's decision on noninfringement of the new process. The United States Court of
Appeals for the Federal Circuit affirmed the ITC decision in March 1993. The 027
patent has since expired.
TI also filed a patent infringement action against the TI Defendants in the
United States District Court for the Northern District of Texas seeking an
injunction against the sale and/or manufacture by the TI Defendants of products
that allegedly infringe the 027 patent. The action also sought damages for
alleged past infringement of the 027 patent and now expired U.S. Patent No.
43,716,764. A trial for this matter was held in April 1995, which resulted in a
May 1995 verdict against VLSI for $19.4 million. The Company intends to contest
the verdict. However, the Company will record a charge to earnings of $19.4
million in the second quarter of 1995. Based on the jury's finding that the
alleged infringement was intentional, TI may also request that the judge award
treble damages. In the event that treble damages are awarded, the judgment could
result in a material reduction in liquidity, as well as an increased impact on
the Company's reported results of operations.
16
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
(the "Underwriting Agreement"), the Company has agreed to sell to each of the
Underwriters named below (the "Underwriters"), for whom Salomon Brothers Inc,
Bear, Stearns & Co. Inc., Hambrecht & Quist LLC and Montgomery Securities are
acting as Representatives (the "Representatives"), and each of the Underwriters
has severally agreed to purchase from the Company, the number of shares set
forth opposite its name below:
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERWRITERS TO BE PURCHASED
- ------------------------------------------------------------------------------------ ------------------
<S> <C>
Salomon Brothers Inc ...............................................................
Bear, Stearns & Co. Inc. ...........................................................
Hambrecht & Quist LLC...............................................................
Montgomery Securities...............................................................
----------
Total............................................................................. 2,500,000
----------
----------
</TABLE>
In the Underwriting Agreement, the several Underwriters have agreed, subject
to the terms and conditions set forth therein, to purchase all the shares of
Common Stock offered hereby if any such shares are purchased.
The Company has been advised by the Representatives that they propose
initially to offer part of the shares of Common Stock offered hereby directly to
the public at the public offering price set forth on the cover page of this
Prospectus and part to certain dealers at such price less a concession not in
excess of $ per share. The Underwriters may allow, and such dealers may
reallow, a concession not in excess of $ per share to certain other
dealers. After the closing of the offering, the public offering price and such
concessions may be changed.
The Company has granted to the Underwriters an option, exercisable during
the 30-day period after the date of this Prospectus, to purchase up to an
additional 375,000 shares of Common Stock at the same price per share as the
initial 2,500,000 shares to be purchased by the Underwriters. The Underwriters
may exercise such option only to cover over-allotments in the sale of the shares
of Common Stock that the Underwriters have agreed to purchase. To the extent
that the Underwriters exercise such option, each Underwriter will have a firm
commitment, subject to certain conditions, to purchase option shares in the same
proportion as the number of shares of Common Stock to be purchased and offered
by such Underwriter in the table above bears to the total number of shares of
Common Stock initially offered by the Underwriters hereby.
17
<PAGE>
The Company has agreed that it will not, without the prior written consent
of Salomon Brothers Inc, sell, offer or contract to sell or otherwise dispose of
directly or indirectly (except as required upon the exercise of warrants), or
announce the offering of, any shares of Common Stock or any securities
convertible into, or exchangeable for, Common Stock, except those offered
hereby, for a period of 90 days from the date of the Underwriting Agreement. The
foregoing notwithstanding, the Company may during such period issue or sell
shares of its Common Stock pursuant to the Company's existing stock option and
stock purchase plans. Furthermore, all directors and executive officers of the
Company have agreed that they will not offer, sell or contract to sell, or
otherwise dispose of, any shares of Common Stock for a period of 90 days from
the date of the Underwriting Agreement without the prior written consent of
Salomon Brothers Inc (other than shares disposed of as BONA FIDE gifts or shares
of Common Stock delivered to the Company in order to exercise, but not dispose
of shares of Common Stock received pursuant to the exercise of, stock options).
In connection with the offering, certain Underwriters and selling group
members who are qualifying registered market makers on Nasdaq may engage in
passive market-making transactions in the Common Stock on Nasdaq in accordance
with Rule 10b-6A under the Exchange Act during the two business day period
before commencement of offers or sales of the Common Stock in the offering.
Passive market making transactions must comply with certain volume and price
limitations and be identified as such. In general, a passive market maker may
display its bid at a price not in excess of the highest independent bid for the
security, and if all independent bids are lowered below the passive market
maker's bid, then such bid must be lowered when certain purchase limits are
exceeded.
The Underwriting Agreement provides that the Company will indemnify the
several Underwriters against certain liabilities, including liabilities under
the Act, or contribute to payments the Underwriters may be required to make in
respect thereof.
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for the
Company by Wilson, Sonsini, Goodrich & Rosati, Professional Corporation, Palo
Alto, California, and for the Underwriters by Latham & Watkins, San Francisco,
California.
EXPERTS
The consolidated financial statements and schedule of VLSI Technology, Inc.
included in the Company's Annual Report (Form 10-K) for the year ended December
30, 1994, have been audited by Ernst & Young LLP, independent auditors, as set
forth in their report thereon included therein and incorporated herein by
reference. Such consolidated financial statements and schedule have been
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
18
<PAGE>
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS, AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY OR ANY OF THE UNDERWRITERS. 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 AS OF WHICH INFORMATION IS GIVEN IN THIS PROSPECTUS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER
TO BUY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
-------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Available Information.......................... 2
Information Incorporated by Reference.......... 2
Prospectus Summary............................. 3
Risk Factors................................... 5
Use of Proceeds................................ 10
Price Range of Common Stock and Dividend
Policy....................................... 10
Capitalization................................. 11
Selected Consolidated Financial Data........... 12
Business....................................... 13
Recent Developments............................ 16
Underwriting................................... 17
Legal Matters.................................. 18
Experts........................................ 18
</TABLE>
2,500,000 SHARES
[LOGO]
COMMON STOCK
($.01 PAR VALUE)
SALOMON BROTHERS INC
BEAR, STEARNS & CO. INC.
HAMBRECHT & QUIST
MONTGOMERY SECURITIES
PROSPECTUS
DATED , 1995
<PAGE>
VLSI TECHNOLOGY, INC.
REGISTRATION STATEMENT ON FORM S-3
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the various costs and expenses payable by the
Company, other than underwriting discounts and commissions, with respect to the
sale and distribution of the securities being registered. All of the amounts
shown are estimates except the Securities and Exchange Commission registration
fee and the NASD filing fee.
<TABLE>
<S> <C>
SEC Registration Fee............................................. $ 24,661
NASD Filing Fee.................................................. 7,651
Nasdaq Additional Listing Fee.................................... 17,500
Blue Sky Fees and Expenses....................................... 7,500
Legal Fees and Expenses.......................................... 100,000
Accounting Fees and Expenses..................................... 60,000
Printing and Engraving........................................... 75,000
Transfer Agent and Registrar Fees................................ 5,000
Miscellaneous.................................................... 27,688
---------
Total........................................................ $ 325,000
---------
---------
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company has the power, pursuant to Section 145 of the Delaware General
Corporation Law, to limit the liability of directors to the Company for certain
breaches of fiduciary duty and to indemnify its directors, officers and other
persons for certain acts. The Company's Restated Certificate of Incorporation,
as amended, includes the following provision:
"11. LIMITATION OF DIRECTORS' LIABILITY. To the fullest extent permitted
by the Delaware General Corporation Law as the same exists or as it may
hereafter be amended, a director of the Corporation shall not be personally
liable to the Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director. Neither any amendment nor repeal of
this Article 11, nor the adoption of any provision of this Certificate of
Incorporation inconsistent with this Article 11, shall eliminate or reduce
the effect of this Article 11 in respect of any matter occurring, or any
cause of action, suit or claim that, but for this Article 11, would accrue
or arise, prior to such amendment, repeal or adoption of an inconsistent
provision."
Article VI of the Bylaws of the Company provides that the Company shall
indemnify certain agents of the Company against judgments, fines, settlements
and other expenses arising from such person's agency relationship with the
Company provided that the standard of conduct set forth therein is met. The
effect of Article VI is to require that the Company provide indemnification to
such agents to the maximum extent permitted by the Delaware General Corporation
Law. Agents covered by this indemnification provision include current and former
directors and officers of the Company, as well as persons who serve at the
request of the Company as directors, officers, employees or agents of another
enterprise.
In addition, the Company has entered into indemnification agreements with
each of its directors and certain of its officers. The indemnification
agreements are based on the provisions of Section 145 of the Delaware General
Corporation Law and attempt to provide the directors and officers of the Company
with the maximum indemnification allowed under Delaware law. In certain
instances, they may result in an expansion of the substantive protection
available to such individuals under the Restated Certificate of Incorporation
and the Bylaws.
The Company currently maintains directors' and officers' liability
insurance, but the policy does not provide coverage for liabilities arising
under the Securities Act.
II-1
<PAGE>
Reference is also made to Section 8 of the Underwriting Agreement contained
in Exhibit 1.1 hereto, indemnifying officers and directors of the Registrant
against certain liabilities.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------- --------------------------------------------------------------------------------------------------------
<S> <C>
1.1 Preliminary Form of Underwriting Agreement.
2.1(1) Plan of Liquidation and Dissolution of VISIC, Inc.
2.2(2) VISIC, Inc. Liquidating Trust Agreement, dated as of December 18, 1990.
4.1(3) Restated Certificate of Incorporation of the Company, filed September 16, 1987.
4.2(4) Certificate of Designation of Rights, Preferences and Privileges of Series A Participating Preferred
Stock, filed August 12, 1992.
4.3(4) Certificate of Amendment of Restated Certificate of Incorporation, filed August 20, 1992.
4.4 Certificate of Amendment of Restated Certificate of Incorporation, filed May 5, 1995.
4.5(5) Indenture, dated as of May 1, 1987, between the Company and Citibank N.A., Trustee, with respect to
issuance of $57,500,000 of 7% Convertible Subordinated Debentures due May 1, 2012.
4.6(5) Form of 7% Convertible Subordinated Debenture due May 1, 2012.
4.7(4) First Amended and Restated Rights Agreement, dated as of August 12, 1992, by and between the Company and
the First National Bank of Boston, as Rights Agent, and Amendment No. 1 thereto dated August 24, 1992.
4.8(4) Warrant dated August 25, 1992 issued to Intel Corporation.
5.1 Opinion of Wilson, Sonsini, Goodrich & Rosati, Professional Corporation, regarding legality of
securities being registered.
23.1 Consent of Ernst & Young LLP, Independent Auditors (see page II-5).
23.2 Consent of Counsel (included in Exhibit 5.1).
24.1 Power of Attorney (see page II-4).
<FN>
- ------------------------
(1) Incorporated by reference from Exhibit to the Company's Quarterly Report on
Form 10-Q for the fiscal quarter ended September 29, 1990.
(2) Incorporated by reference from Exhibit to the Company's Annual Report on
Form 10-K for the fiscal year ended December 29, 1990.
(3) Incorporated by reference from Exhibit to the Company's Annual Report on
Form 10-K for the fiscal year ended December 27, 1987.
(4) Incorporated by reference from Exhibit to the Company's Quarterly Report on
Form 10-Q for the fiscal quarter ended September 26, 1992.
(5) Incorporated by reference from Exhibit to the Company's Registration
Statement on Form S-3 (File No. 33-13463).
</TABLE>
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 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 initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to provisions described in Item 15 hereof or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
II-2
<PAGE>
Commission such indemnification is against public policy as expressed in the 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 of whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(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.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
VLSI Technology, Inc., a corporation organized and existing under the laws of
the State of Delaware, certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of San Jose, State of California, on the 6th day of
June, 1995.
VLSI Technology, Inc.
By: /s/ ALFRED J. STEIN
------------------------------------
Alfred J. Stein,
CHAIRMAN OF THE BOARD, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
KNOW ALL PERSONS BY THESE PRESENTS, that each of the undersigned does hereby
constitute and appoint Gregory K. Hinckley and Thomas C. Tokos, and each of
them, his lawful attorneys-in-fact, with full power of substitution and
resubstitution and with power and authority to do any and all acts and things
and to execute any and all instruments which said attorneys-in-fact, and any one
of them, determine may be necessary or advisable or required to enable said
corporation to comply with the Securities Act of 1933, as amended, and any rules
or regulations of requirements of the Securities and Exchange Commission in
connection with this Registration Statement. Without limiting the generality of
the foregoing power and authority, the powers granted include the power and
authority to sign the names of the undersigned officer and directors in the
capacities indicated below to this Registration Statement, to any and all
amendments and supplements hereto, and to any and all instrument or documents
filed as part of or in connection with such Registration Statement, and each of
the undersigned hereby ratifies and confirms all that said attorneys-in-fact, or
any of them, shall do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------------- ------------------------- -------------
<C> <S> <C>
Chairman of the Board,
Chief Executive Officer
/s/ ALFRED J. STEIN and President June 6, 1995
------------------------------------------- (Principal Executive
(Alfred J. Stein) Officer) and Director
Vice President, Finance
/s/ GREGORY K. HINCKLEY and Chief Financial
------------------------------------------- Officer (Principal June 6, 1995
(Gregory K. Hinckley) Financial Officer)
/s/ BALAKRISHNAN S. IYER Vice President and
------------------------------------------- Controller (Principal June 6, 1995
(Balakrishnan S. Iyer) Accounting Officer)
------------------------------------------- Director June , 1995
(Pierre S. Bonelli)
------------------------------------------- Director June , 1995
(Robert P. Dilworth)
/s/ JAMES J. KIM
------------------------------------------- Director June 7, 1995
(James J. Kim)
/s/ HORACE H. TSIANG
------------------------------------------- Director June 6, 1995
(Horace H. Tsiang)
</TABLE>
II-4
<PAGE>
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Selected
Consolidated Financial Data" and "Experts" in this Registration Statement (Form
S-3) and the related Prospectus of VLSI Technology, Inc. for the registration of
2,875,000 shares of its common stock and to the incorporation by reference
therein of our report dated January 17, 1995, with respect to the consolidated
financial statements and schedule of VLSI Technology, Inc. included in its
Annual Report (Form 10-K) for the year ended December 30, 1994, filed with the
Securities and Exchange Commission.
ERNST & YOUNG LLP
San Jose, California
June 6, 1995
II-5
<PAGE>
VLSI TECHNOLOGY, INC.
REGISTRATION STATEMENT ON FORM S-3
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------- -----------------------------------------------------------------------------------------
<S> <C> <C>
1.1 Preliminary Form of Underwriting Agreement.
2.1(1) Plan of Liquidation and Dissolution of VISIC, Inc.
2.2(2) VISIC, Inc. Liquidating Trust Agreement, dated as of December 18, 1990.
4.1(3) Restated Certificate of Incorporation of the Company, filed September 16, 1987.
4.2(4) Certificate of Designation of Rights, Preferences and Privileges of Series A
Participating Preferred Stock, filed August 12, 1992.
4.3(4) Certificate of Amendment of Restated Certificate of Incorporation, filed August 20, 1992.
4.4 Certificate of Amendment of Restated Certificate of Incorporation, filed May 5, 1995.
4.5(5) Indenture, dated as of May 1, 1987, between the Company and Citibank N.A., Trustee, with
respect to issuance of $57,500,000 of 7% Convertible Subordinated Debentures due May 1,
2012.
4.6(5) Form of 7% Convertible Subordinated Debenture due May 1, 2012.
4.7(4) First Amended and Restated Rights Agreement, dated as of August 12, 1992, by and between
the Company and the First National Bank of Boston, as Rights Agent, and Amendment No. 1
thereto dated August 24, 1992.
4.8(4) Warrant dated August 25, 1992 issued to Intel Corporation.
5.1 Opinion of Wilson, Sonsini, Goodrich & Rosati, Professional Corporation, regarding
legality of securities being registered.
23.1 Consent of Ernst & Young LLP, Independent Auditors (see page II-5).
23.2 Consent of Counsel (included in Exhibit 5.1).
24.1 Power of Attorney (see page II-4).
<FN>
- ------------------------
(1) Incorporated by reference from Exhibit to the Company's Quarterly Report on
Form 10-Q for the fiscal quarter ended September 29, 1990.
(2) Incorporated by reference from Exhibit to the Company's Annual Report on
Form 10-K for the fiscal year ended December 29, 1990.
(3) Incorporated by reference from Exhibit to the Company's Annual Report on
Form 10-K for the fiscal year ended December 27, 1987.
(4) Incorporated by reference from Exhibit to the Company's Quarterly Report on
Form 10-Q for the fiscal quarter ended September 26, 1992.
(5) Incorporated by reference from Exhibit to the Company's Registration
Statement on Form S-3 (File No. 33-13463).
</TABLE>
<PAGE>
Exhibit 1.1
VLSI TECHNOLOGY, INC.
2,500,000 Shares*
Common Stock
($.01 par value)
Underwriting Agreement
New York, New York
, 1995
SALOMON BROTHERS INC
BEAR, STEARNS & CO. INC.
HAMBRECHT & QUIST LLC
MONTGOMERY SECURITIES
As Representatives of the several Underwriters,
c/o SALOMON BROTHERS INC
Seven World Trade Center
New York, New York 10048
Ladies and Gentlemen:
VLSI Technology, Inc., a Delaware corporation (the "Company"),
proposes to sell to the underwriters named in Schedule I hereto (the
"Underwriters"), for whom you (the "Representatives") are acting as
representatives, 2,500,000 shares of Common Stock, $.01 par value ("Common
Stock"), of the Company (said shares to be issued and sold by the Company being
hereinafter called the "Underwritten Securities"). The Company also proposes to
grant to the Underwriters an option to purchase up to 375,000 additional
shares of Common Stock (the "Option Securities"; the Option Securities, together
with the Underwritten Securities, being hereinafter called the "Securities").
1. REPRESENTATIONS AND WARRANTIES. The Company represents and
warrants to, and agrees with, each Underwriter as set forth below in this
Section 1. Certain terms used in this Section 1 are defined in paragraph (c)
hereof.
(a) The Company meets the requirements for use of Form S-3 under
the
____________________
* Plus an option to purchase from VLSI Technology, Inc. up to 375,000
additional shares to cover over-allotments.
<PAGE>
Securities Act of 1933 (the "Act") and has filed with the Securities and
Exchange Commission (the "Commission") a registration statement (file
number 33-_________) on such Form, including a related preliminary prospectus,
for the registration under the Act of the offering and sale of the Securities.
The Company may have filed one or more amendments thereto, including the related
preliminary prospectus, each of which has previously been furnished to you. The
Company will next file with the Commission one of the following: (i) prior to
effectiveness of such registration statement, a further amendment to such
registration statement, including the form of final prospectus, (ii) a final
prospectus in accordance with Rules 430A and 424(b)(1) or (4), or (iii) a final
prospectus in accordance with Rules 415 and 424(b)(2) or (5). In the case of
clause (ii), the Company has included in such registration statement, as amended
at the Effective Date, all information (other than Rule 430A Information)
required by the Act and the rules thereunder to be included in the Prospectus
with respect to the Securities and the offering thereof. As filed, such
amendment and form of final prospectus, or such final prospectus, shall contain
all Rule 430A Information, together with all other such required information,
with respect to the Securities and the offering thereof and, except to the
extent the Representatives shall agree in writing to a modification, shall be in
all substantive respects in the form furnished to you prior to the Execution
Time or, to the extent not completed at the Execution Time, shall contain only
such specific additional information and other changes (beyond that contained in
the latest Preliminary Prospectus) as the Company has advised you, prior to the
Execution Time, will be included or made therein.
(b) On the Effective Date, the Registration Statement did or will,
and when the Prospectus is first filed (if required) in accordance with Rule
424(b) and on the Closing Date, the Prospectus (and any supplements thereto)
will, comply in all material respects with the applicable requirements of the
Act and the Securities Exchange Act of 1934 (the "Exchange Act") and the
respective rules thereunder; on the Effective Date, the Registration Statement
did not or will not contain any 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; and, on the Effective Date, the Prospectus,
if not filed pursuant to Rule 424(b), did not or will not, and on the date of
any filing pursuant to Rule 424(b) and on the Closing Date, the Prospectus
(together with any supplement thereto) will not, include any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; PROVIDED, HOWEVER, that the Company makes no
representations or warranties as to the information contained in or omitted from
the Registration Statement or the Prospectus (or any supplement thereto) in
reliance upon and in conformity with information furnished in writing to the
Company by or on behalf of any Underwriter through the Representatives
specifically for inclusion in the Registration Statement or the Prospectus (or
any supplement thereto).
(c) The terms that follow, when used in this Agreement, shall have
the meanings indicated. The term "the Effective Date" shall mean each date that
the Registration Statement and any post-effective amendment or amendments
thereto became or become effective. "Execution Time" shall mean the date and
time that this Agreement is executed and delivered by the parties hereto.
"Preliminary Prospectus" shall mean any preliminary prospectus referred to
2
<PAGE>
in paragraph (a) above and any preliminary prospectus included in the
Registration Statement at the Effective Date that omits Rule 430A Information.
"Prospectus" shall mean the prospectus relating to the Securities that is first
filed pursuant to Rule 424(b) after the Execution Time or, if no filing pursuant
to Rule 424(b) is required, shall mean the form of final prospectus relating to
the Securities included in the Registration Statement at the Effective Date.
"Registration Statement" shall mean the registration statement referred to in
paragraph (a) above, including documents incorporated by reference therein
pursuant to Item 12 of Form S-3 that were filed under the Exchange Act on or
before the Effective Date of the Registration Statement, exhibits and financial
statements, as amended at the Execution Time (or, if not effective at the
Execution Time, in the form in which it shall become effective) and, in the
event any post-effective amendment thereto becomes effective prior to the
Closing Date (as hereinafter defined), shall also mean such registration
statement as so amended. Such term shall include any Rule 430A Information
deemed to be included therein at the Effective Date as provided by Rule 430A.
"Rule 415", "Rule 424", "Rule 430A" and "Regulation S-K" refer to such rules or
regulation under the Act. "Rule 430A Information" means information with
respect to the Securities and the offering thereof permitted to be omitted from
the Registration Statement when it becomes effective pursuant to Rule 430A. Any
reference herein to the Registration Statement, a Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 that were filed under the
Exchange Act on or before the Effective Date of the Registration Statement or
the issue date of such Preliminary Prospectus or the Prospectus, as the case may
be; and any reference herein to the terms "amend", "amendment" or "supplement"
with respect to the Registration Statement, any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include the filing of any document
under the Exchange Act after the Effective Date of the Registration Statement,
or the issue date of any Preliminary Prospectus or the Prospectus, as the case
may be, that is deemed to be incorporated therein by reference.
(d) The documents incorporated by reference in the Prospectus, when
they became effective or were filed with the Commission, as the case may be,
complied in all material respects with the requirements of the Exchange Act and
the rules 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, in the light of the
circumstances under which they were made, 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 become effective or
are filed with the Commission, as the case may be, will comply in all material
respects to the requirements of the Exchange Act and the rules 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, in the light of the circumstances under which they were made, not
misleading; PROVIDED, HOWEVER, that the Company makes no representations or
warranties as to the information contained in or omitted from such documents
made in reliance upon and in conformity with information furnished in writing to
the Company by or on behalf of any Underwriter through the Representatives
specifically for inclusion in such documents.
3
<PAGE>
(e) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary Prospectus,
at the time of filing thereof, complied in all material respects with the
requirements of the Act and the Exchange Act and the respective rules
thereunder, and did not contain 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, in the light of the circumstances under which they were
made, not misleading; PROVIDED, HOWEVER, that the Company makes no
representations or warranties as to the information contained therein or omitted
therefrom made in reliance upon and in conformity with information furnished in
writing to the Company by or on behalf of any Underwriter through the
Representatives specifically for inclusion therein.
(f) Each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of the jurisdiction in which it is chartered or organized, with full
corporate power and authority to own its properties and conduct its business as
described in the Prospectus, and is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each jurisdiction that
requires such qualification wherein it owns or leases material properties or
conducts material business, except for those failures to be so qualified or in
good standing that will not in the aggregate have a material adverse effect on
the Company and its subsidiaries considered as a whole.
(g) All the outstanding shares of capital stock of each subsidiary
have been duly and validly authorized and issued and are fully paid and
nonassessable, and, except as otherwise set forth in the Prospectus, all
outstanding shares of capital stock of the subsidiaries are owned by the Company
either directly or through wholly owned subsidiaries (except for directors'
qualifying shares or shares held by nominees as required by the laws of certain
non-United States jurisdictions and except for shares of common stock of COMPASS
Design Automation, Inc. ("COMPASS") held by employees or former employees of the
Company or COMPASS) free and clear of any perfected security interest and any
other security interests, claims, liens or encumbrances.
(h) The Company's authorized equity capitalization is as set forth
in the Prospectus; the capital stock of the Company conforms to the description
thereof contained in the Registration Statement; the outstanding shares of
capital stock of the Company and options and warrants to purchase capital stock
of the Company have been duly and validly authorized and issued and the
outstanding shares of capital stock of the Company are fully paid and
nonassessable; the Securities have been duly and validly authorized, and, when
issued and delivered to and paid for by the Underwriters pursuant to this
Agreement, will be duly and validly issued and fully paid and nonassessable;
the Securities have been approved for quotation on the National Association of
Securities Dealers, Inc. Automated Quotation ("Nasdaq") National Market; the
certificates for the Securities are in valid and sufficient form; and the
holders of outstanding shares of capital stock of the Company are not entitled
to preemptive or other rights to subscribe for the Securities.
(i) The consolidated financial statements of the Company, together
with the notes thereto, included in the Registration Statement and Prospectus
comply in all material respects with the requirements of the Act and fairly
present the financial condition of the Company
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as of the dates indicated and the results of operations and changes in cash
flows for the periods therein specified in conformity with generally accepted
accounting principles consistently applied throughout the periods involved
(except as otherwise stated therein); and the supporting schedules included in
the Registration Statement present fairly the information required to be stated
therein. No other financial statements or schedules are required to be included
in the Registration Statement or Prospectus. Ernst & Young LLP, which has
expressed its opinion with respect to the financial statements and schedules
filed as a part of the Registration Statement and included in the Registration
Statement and Prospectus, are independent public accountants as required by the
Act and the rules thereunder. The financial information appearing in the
Prospectus under the captions "Prospectus Summary--Summary Consolidated
Financial Data," "Capitalization" and "Selected Consolidated Financial Data" are
fairly stated in all material respects as of the dates and for the periods
indicated.
(j) No holders of securities of the Company other than Intel
Corporation have rights to the registration of such securities under the
Registration Statement. Except as disclosed in the Registration Statement and
the Prospectus, there are no options, warrants, agreements, contracts or other
rights in existence to purchase or acquire from the Company, or any instruments
convertible into or exchangeable for, any shares of the capital stock of the
Company. The descriptions of the Company's stock option, stock bonus and other
stock plans or arrangements, and of the options or other rights granted and
exercised thereunder, included in the Registration Statement accurately and
fairly present in all material respects the information required to be disclosed
with respect to such plans, arrangements, options and rights.
(k) This Agreement has been duly authorized, executed and delivered
by the Company.
(l) Neither the issue and sale of the Securities, nor the
consummation of any other of the transactions herein contemplated, nor the
fulfillment of the terms hereof will conflict with, result in a breach or
violation of, or constitute a default under (i) any law (other than state blue
sky laws, as to which the Company makes no representation) or (ii) the charter
or by-laws of the Company or (iii) the terms of any indenture or other material
agreement or instrument to which the Company or any of its subsidiaries is a
party or bound or (iv) any judgment, order or decree applicable to the Company
or any of its subsidiaries of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over the Company or any of
its subsidiaries.
(m) No consent, approval, authorization or order of or with any
third party (whether acting in an individual, fiduciary or other capacity) or
any court or governmental agency or body is required for the issue and sale of
the Securities or the consummation of the transactions contemplated herein,
except such as have been obtained under the Act and such as may be required
under the blue sky laws of any jurisdiction in connection with the purchase and
distribution of the Securities by the Underwriters and such other approvals as
have been obtained.
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(n) There is no pending or threatened action, suit or proceeding
before any court or governmental agency, authority or body or any arbitrator
involving the Company or any of its subsidiaries of a character required to be
disclosed in the Registration Statement which is not adequately disclosed in the
Prospectus, and there is no franchise, contract or other document of a character
required to be described in the Registration Statement or Prospectus, or to be
filed as an exhibit, which is not described or filed as required; and the
statements in the Prospectus under the headings "Risk Factors -- TI Litigation;
Intellectual Property Matters" and "Recent Developments -- TI Litigation"
fairly summarize the matters therein described.
(o) Except as disclosed in the Prospectus, the Company and each of
its subsidiaries holds, and is operating in compliance in all material respects
with, all franchises, grants, authorizations, licenses (other than intellectual
property licenses, which are addressed in subparagraph (r) below), permits,
easements, consents, certificates and orders of any governmental or
self-regulatory body required for the conduct of its business and all such
franchises, grants, authorizations, licenses, permits, easements, consents,
certifications and orders are valid and in full force and effect; and the
Company and each of its subsidiaries is in compliance with all applicable
federal, state, local and foreign laws, regulations, orders and decrees that are
material to its business as described in the Registration Statement and
Prospectus. Neither the Company nor any of its subsidiaries has transported,
stored or disposed of any hazardous material or substance in a manner that would
give rise to any material liability under current law, and neither the Company
nor any of its subsidiaries has received any inquiries from any governmental or
regulatory body or any claims in any way relating to any such liability for
disposal of hazardous materials or substances.
(p) Neither the Company nor any of its subsidiaries is in violation
of its respective charter or bylaws or in breach of or otherwise in default (nor
has any event occurred which, with notice or lapse of time or both, would
constitute a violation or default) in the performance of any material
obligation, agreement or condition contained in any bond, debenture, note,
indenture, loan agreement or any other material contract, lease or other
instrument to which it is subject or by which it may be bound, or to which any
of the material property or assets of the Company or any of its subsidiaries is
subject.
(q) The Company and its subsidiaries have good and marketable title
in fee simple to all real property and good and marketable title to all personal
property owned by them, in each case free and clear of all liens, encumbrances
and defects except such as are described in the Prospectus or such as do not
materially affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company and its
subsidiaries; any real property and buildings held under lease by the Company
and its subsidiaries and any other material property held under lease by the
Company and its subsidiaries are held by them under valid, subsisting and
enforceable leases with only such exceptions with respect to any particular
lease as are not material and do not interfere with the use made and proposed to
be made of such property by the Company and its subsidiaries.
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<PAGE>
(r) The Company and each of its subsidiaries has applied for, owns
or possesses (or can obtain on commercially reasonable terms) adequate rights to
use all patents, patent applications, trademarks, service marks, tradenames,
trademark registrations, service mark registrations, copyrights, licenses,
inventions, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures) and
rights necessary for the conduct of its business as currently carried on; except
as disclosed in the Prospectus, no name that the Company or any of its
subsidiaries uses and no other aspect of the business of the Company or any of
its subsidiaries will involve or give rise to any infringement of, or license or
similar fees for, in either case that would have a material adverse effect on
the Company and its subsidiaries, considered as a whole, any patents, patent
applications, trademarks, service marks, tradenames, trademark registrations,
service mark registrations, copyrights, licenses, inventions, trade secrets or
other similar rights of others material to the business or prospects of the
Company and its subsidiaries, considered as a whole; except as disclosed in the
Prospectus, neither the Company nor any of its subsidiaries has received any
notice alleging any such infringement or fee; and except as disclosed in the
Prospectus, neither the Company nor any of its subsidiaries has any claim
against a third party with respect to the infringement by such third party of
patents, patent applications, trademarks, service marks, tradenames, trademark
registrations, service mark registrations, copyrights, licenses, inventions,
trade secrets or other similar rights of the Company or such subsidiary material
to the business or prospects of the Company and its subsidiaries considered as a
whole.
(s) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorization;
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(t) Except as disclosed in the Prospectus, since the date of the
latest audited financial statements included or incorporated by reference in the
Prospectus, (i) neither the Company nor any of its subsidiaries has incurred any
material liability or obligation (indirect, direct or contingent) or entered
into any material verbal or written agreement or other transaction that is not
in the ordinary course of business or that could reasonably be expected to
result in a material reduction in the future earnings of the Company and its
subsidiaries; (ii) neither the Company nor any of its subsidiaries has
sustained any loss or interference with its business or properties from fire,
flood, windstorm, accident or other calamity (whether or not covered by
insurance); (iii) there has been no material increase in the long-term debt of
the Company; and (iv) there has been no change in the capital stock of the
Company (except for any increase, if any, due to the exercise of the warrant
issued to Intel Corporation or of any employee or director stock option or the
issuance of shares of Common Stock under the Company's employee stock purchase
plan) and no dividend or distribution of any kind declared, paid or made by
the Company on any
7
<PAGE>
class of its capital stock.
(u) The Company and its subsidiaries maintain insurance of the
types and in the amounts generally deemed adequate for their respective
businesses, including, but not limited to, general liability insurance and
insurance covering real and personal property owned or leased by the Company or
any of its subsidiaries against theft, damage, destruction, acts of vandalism
and all other risks customarily insured against, all of which insurance is in
full force and effect.
(v) The Company is not, and upon receipt and pending application of
the net proceeds from the sale of the Common Stock in the manner described in
the Prospectus will not be, an "investment company" or a company "controlled" by
an investment company within the meaning of the Investment Company Act of 1940,
as amended.
(w) The Company is not presently doing business with the government
of Cuba or with any person or affiliate located in Cuba.
2. PURCHASE AND SALE. (a) Subject to the terms and conditions
and in reliance upon the representations and warranties herein set forth, the
Company agrees to sell to each Underwriter, and each Underwriter agrees,
severally and not jointly, to purchase from the Company, at a purchase price of
$ per share, the amount of the Underwritten Securities set forth opposite
such Underwriter's name in Schedule I hereto.
(b) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Company hereby grants an
option to the several Underwriters to purchase, severally and not jointly, up to
375,000 shares of Option Securities at the same purchase price per share as
the Underwriters shall pay for the Underwritten Securities. Said option may be
exercised only to cover over-allotments in the sale of the Underwritten
Securities by the Underwriters. Said option may be exercised in whole or in
part at any time (but not more than once) on or before the 30th day after the
date of the Prospectus upon written or telegraphic notice by the Representatives
to the Company setting forth the number of shares of the Option Securities as to
which the several Underwriters are exercising the option and the settlement date
(determined in accordance with Section 3 hereof). Delivery of certificates for
the shares of Option Securities, and payment therefor, shall be made as provided
in Section 3 hereof. The number of shares of the Option Securities to be
purchased by each Underwriter shall be the same percentage of the total number
of shares of the Option Securities to be purchased by the several Underwriters
as such Underwriter is purchasing of the Underwritten Securities, subject to
such adjustments as you in your absolute discretion shall make to eliminate any
fractional shares.
3. DELIVERY AND PAYMENT. Delivery of and payment for the
Underwritten Securities and the Option Securities (if the option provided for in
Section 2(b) hereof shall have been exercised on or before the second business
day prior to the Closing Date) shall be made at 10:00 a.m., New York City time,
on , 1995, or, with the consent of the Company, such later date (not
later than , 1995) as the Representatives shall designate, which date and
time
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<PAGE>
may be postponed by agreement between the Representatives and the Company or as
provided in Section 9 hereof (such date and time of delivery and payment for the
Securities being herein called the "Closing Date"). Delivery of the Securities
shall be made to the Representatives for the respective accounts of the several
Underwriters against payment by the several Underwriters through the
Representatives of the purchase price thereof to or upon the order of the
Company by certified or official bank check or checks drawn on or by a New York
Clearing House bank and payable in next day funds. Delivery of the Underwritten
Securities and the Option Securities shall be made at such location as the
Representatives shall reasonably designate at least one business day in advance
of the Closing Date and payment for such Securities shall be made at the office
of Wilson, Sonsini, Goodrich & Rosati, Palo Alto, California. Certificates for
the Securities shall be registered in such names and in such denominations as
the Representatives may request not less than two full business days in advance
of the Closing Date.
The Company agrees to have the Securities available for inspection,
checking and packaging by the Representatives in New York, New York, not later
than 1:00 p.m. on the business day prior to the Closing Date.
If the option provided for in Section 2(b) hereof is exercised after
the second business day prior to the Closing Date, the Company will deliver (at
the expense of the Company) to the Representatives, at One New York Plaza, New
York, New York, on the date specified by the Representatives (which shall be
within three business days after exercise of said option), certificates for the
Option Securities in such names and denominations as the Representatives shall
have requested against payment of the purchase price thereof to or upon the
order of the Company by certified or official bank check or checks drawn on or
by a New York Clearing House bank and payable in next day funds. If settlement
for the Option Securities occurs after the Closing Date, the Company will
deliver to the Representatives on the settlement date for the Option Securities,
and the obligation of the Underwriters to purchase the Option Securities shall
be conditioned upon receipt of, supplemental opinions, certificates and letters
confirming as of such date the opinions, certificates and letters delivered on
the Closing Date pursuant to Section 6 hereof.
4. OFFERING BY UNDERWRITERS. It is understood that the several
Underwriters propose to offer the Securities for sale to the public as set forth
in the Prospectus.
5. AGREEMENTS. The Company agrees with the several Underwriters
that:
(a) The Company will use its best efforts to cause the Registration
Statement, if not effective at the Execution Time, and any amendment thereof, to
become effective. Prior to the termination of the offering of the Securities,
the Company will not file any amendment to the Registration Statement or
supplement to the Prospectus unless the Company has furnished you a copy for
your review prior to filing and will not file any such proposed amendment or
supplement to which you reasonably object. Subject to the foregoing sentence,
if the Registration Statement has become or becomes effective pursuant to Rule
430A, or filing of the Prospectus is
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<PAGE>
otherwise required under Rule 424(b), the Company will cause the Prospectus,
properly completed, and any supplement thereto to be filed with the Commission
pursuant to the applicable paragraph of Rule 424(b) within the time period
prescribed and will provide evidence satisfactory to the Representatives of such
timely filing. The Company will promptly advise the Representatives (i) when
the Registration Statement, if not effective at the Execution Time, and any
amendment thereto, shall have become effective, (ii) when the Prospectus, and
any supplement thereto, shall have been filed (if required) with the Commission
pursuant to Rule 424(b), (iii) when, prior to termination of the offering of the
Securities, any amendment to the Registration Statement shall have been filed or
become effective, (iv) of any request by the Commission for any amendment to the
Registration Statement or supplement to the Prospectus or for any additional
information, (v) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or the institution or
threatening of any proceeding for that purpose and (vi) of the receipt by the
Company of any notification with respect to the suspension of the qualification
of the Securities for sale in any jurisdiction or the initiation or threatening
of any proceeding for such purpose. The Company will use its best efforts to
prevent the issuance of any such stop order and, if issued, to obtain as soon as
possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the Securities is
required to be delivered under the Act, any event occurs as a result of which
the Prospectus as then supplemented would include any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or if it shall be necessary to amend the Registration
Statement or supplement the Prospectus to comply with the Act or the Exchange
Act or the respective rules thereunder, the Company promptly will prepare and
file with the Commission, subject to the second sentence of paragraph (a) of
this Section 5, an amendment or supplement that will correct such statement or
omission or effect such compliance.
(c) As soon as practicable, the Company will make generally
available to its securityholders and to the Representatives an earnings
statement or statements of the Company and its subsidiaries that will satisfy
the provisions of Section 11(a) of the Act and Rule 158 under the Act.
(d) The Company, without charge, will furnish to counsel for
the Underwriters a signed copy of the Registration Statement (including exhibits
thereto), to each Representative a copy of the Registration Statement (including
exhibits thereto) and to each other Underwriter a copy of the Registration
Statement (without exhibits thereto) and, so long as delivery of a prospectus by
an Underwriter or dealer may be required by the Act, as many copies of each
Preliminary Prospectus and the Prospectus and any supplement thereto as the
Representatives may reasonably request. The Company will pay the expenses of
printing or other production of all documents relating to the offering.
(e) The Company will arrange for the qualification of the
Securities for sale under the laws of such jurisdictions as the Representatives
may designate, will maintain such
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<PAGE>
qualifications in effect so long as required for the distribution of the
Securities and will pay the fee of the National Association of Securities
Dealers, Inc. (the "NASD"), in connection with its review of the offering.
(f) The Company will not, for a period of 90 days following the
Execution Time, without the prior written consent of Salomon Brothers Inc
offer, sell or contract to sell, or otherwise dispose of, directly or
indirectly, or announce the offering of, any other shares of capital stock of
the Company or any securities convertible into, or exchangeable for, shares of
capital stock of the Company; PROVIDED, HOWEVER, that the Company may issue and
sell Common Stock pursuant to any employee or director stock option or purchase
plan of the Company in effect at the Execution Time and the Company may issue
Common Stock issuable upon the exercise of options or warrants outstanding at
the Execution Time.
(g) The Company either has caused to be delivered to the
Representatives or will cause to be delivered to the Representatives prior to
the effective date of the Registration Statement a letter from each of the
Company's directors and executive officers stating that such person agrees that
he or she will not for a period of 90 days following the Execution Time, without
the prior written consent of Salomon Brothers Inc, offer, sell, contract to
sell or otherwise dispose of any shares of capital stock of the Company or any
securities convertible into or exchangeable for, shares of capital stock of the
Company (other than such securities disposed of as bona fide gifts or
delivered to the Company in order to exercise, but not dispose of shares of
Common Stock received pursuant to the exercise of, stock options pursuant to
the terms of such stock options).
(h) The Company will not incur any liability for any finder's or
broker's fee or agent's commission in connection with the execution and delivery
of this Agreement or the consummation of the transactions contemplated hereby.
(i) The Company will inform the Florida Department of Banking and
Finance at any time prior to the consummation of the distribution of the
Securities by the Underwriters if it commences engaging in business with the
government of Cuba or with any person or affiliate located in Cuba. Such
information will be provided within 90 days after the commencement thereof or
after a change occurs with respect to previously reported information.
(j) The Company agrees to notify the Nasdaq National Market of the
offering of Securities and to pay the fees required by Schedule D to the NASD
By-Laws in connection therewith.
6. CONDITIONS TO THE OBLIGATIONS OF THE UNDERWRITERS. The
obligations of the Underwriters to purchase the Underwritten Securities and the
Option Securities, as the case may be, shall be subject to the accuracy of the
representations and warranties on the part of the Company contained herein as of
the Execution Time, the Closing Date and any settlement date pursuant to Section
3 hereof, to the accuracy of the statements of the Company made in any
certificates pursuant to the provisions hereof, to the performance by the
Company of its obligations hereunder and to the following additional conditions:
(a) If the Registration Statement has not become effective prior to
the Execution Time, unless the Representatives agree in writing to a later time,
the Registration Statement will become effective not later than (i) 6:00 p.m.
New York City time, on the date of determination of the public offering price,
if such determination occurred at or prior to 3:00 p.m. New York City time on
such date or (ii) 12:00 Noon on the business day following the day on which the
public offering price was determined, if such determination occurred after
3:00 p.m. New York City time on such date; if filing of the Prospectus, or any
supplement thereto, is required pursuant to Rule 424(b), the Prospectus, and any
such supplement, will be filed in the manner and within
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<PAGE>
the time period required by Rule 424(b); and 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 threatened.
(b) The Company shall have furnished to the Representatives the
opinion of Wilson, Sonsini, Goodrich & Rosati, counsel for the Company, dated
the Closing Date, to the effect that:
(i) each of the Company and COMPASS has been duly incorporated and
is validly existing as a corporation in good standing under the laws of the
jurisdiction in which it is chartered or organized, with full corporate
power and authority to own its properties and conduct its business as
described in the Prospectus;
(ii) the Company's authorized capital stock is as set forth in the
Prospectus; the capital stock of the Company conforms to the description
thereof contained in the Registration Statement; the Securities have been
duly and validly authorized, and, when issued and delivered to and paid for
by the Underwriters pursuant to this Agreement, will be duly and validly
issued and fully paid and nonassessable; and the certificates for the
Securities are in valid and sufficient form;
(iii) this Agreement has been duly authorized, executed and delivered
by the Company;
(iv) neither the issue and sale of the Securities, nor the
consummation of any other of the transactions herein contemplated nor the
fulfillment of the terms hereof will conflict with, result in a breach or
violation of, or constitute a default under (A) the charter or by-laws of
the Company or (B) the terms of the Intel/VLSI Stock and Warrant Purchase
Agreement dated July 8, 1992, the Warrant dated August 25, 1992, issued to
Intel Corporation or the Indenture dated as of May 1, 1987 by and between
the Company and Citibank, N.A., as trustee, with respect to the Company's
7% Convertible Subordinated Debentures due May 1, 2012 or (C) any material
judgment, order or decree known to such counsel to be applicable to the
Company or COMPASS of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over the Company or
COMPASS;
(v) no consent, approval, authorization or order of any third party
(whether acting in an individual, fiduciary or other capacity) or of any
court or governmental agency or body is required for the issue and sale of
the Securities or the consummation of the transactions contemplated herein,
except such as have been obtained under the Act and such as may be required
under the blue sky laws of any jurisdiction in connection with the purchase
and distribution of the Securities by the Underwriters and such other
approvals (specified in such opinion) as have been obtained;
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(vi) the Company is not, and upon receipt and pending application of
the net proceeds from the sale of the Common Stock in the manner described
in the Prospectus will not be, an "investment company" or a company
"controlled" by an investment company within the meaning of the Investment
Company Act of 1940, as amended;
(vii) the documents incorporated by reference in the Prospectus or
any further amendment or supplement thereto made by the Company prior to
such Closing Date (other than the financial statements and related
schedules and other financial and statistical information contained
therein, as to which such counsel need express no opinion), when they
became effective or were filed with the Commission, as the case may be
(unless such documents have thereafter been amended, in which case when so
amended), complied as to form in all material respects with the
requirements of the Exchange Act and the rules thereunder; and such counsel
has no reason to believe that any such documents, when such documents
became effective or were so filed, as the case may be (or if amended, when
so amended), contained, in the case of documents which were filed under the
Exchange Act with the Commission, an untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made when
such documents were so filed (or if amended, when so amended), not
misleading; and
(viii) the Registration Statement has become effective under the Act;
any required filing of the Prospectus, and any supplements thereto,
pursuant to Rule 424(b) has been made in the manner and within the time
period required by Rule 424(b); to the best knowledge of such counsel, no
stop order suspending the effectiveness of the Registration Statement has
been issued, no proceedings for that purpose have been instituted or
threatened; and the Registration Statement and the Prospectus (other than
the financial statements and related schedules and other financial and
statistical information contained therein, as to which such counsel need
express no opinion) comply as to form in all material respects with the
applicable requirements of the Act and the Exchange Act and the respective
rules thereunder.
In addition, such counsel shall state that such counsel has no reason to
believe that at the Effective Date the Registration Statement contained any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading or that the Prospectus, as of its date and as of the Closing
Date, included or includes any untrue statement of a material fact or
omitted or omits to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(c) The Company shall have furnished to the Representatives the
opinion of Thomas C. Tokos, Assistant General Counsel of the Company, dated the
Closing Date, to the effect that:
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(i) each of the Company, COMPASS and VLSI Tech. Gmbh ("VLSI Tech.")
has been duly incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction in which it is chartered or
organized, with full corporate power and authority to own its properties
and conduct its business as described in the Prospectus, and is duly
qualified to do business as a foreign corporation and is in good standing
under the laws of each jurisdiction that requires such qualification
wherein it owns or leases material properties or conducts material
business, except for those failures to be so qualified that will not in
the aggregate have a material adverse effect on the Company and its
subsidiaries considered as a whole;
(ii) all the outstanding shares of capital stock of COMPASS and VLSI
Tech. have been duly and validly authorized and issued and are fully paid
and nonassessable, and, except as otherwise set forth in the Prospectus,
all outstanding shares of capital stock of COMPASS and VLSI Tech. are owned
by the Company either directly or through wholly owned subsidiaries (except
for directors' qualifying shares or shares held by nominees as required by
the laws of certain non-United States jurisdictions and except for shares
of common stock of COMPASS held by employees or former employees of the
Company or COMPASS) free and clear of any perfected security interest and,
to the knowledge of such counsel, after due inquiry, any other security
interests, claims, liens or encumbrances;
(iii) the Company's authorized capital stock is as set forth in the
Prospectus; the capital stock of the Company conforms to the description
thereof contained in the Registration Statement; the outstanding shares of
capital stock of the Company and options and warrants to purchase capital
stock of the Company have been duly and validly authorized and issued and
the outstanding shares of capital stock of the Company are fully paid and
nonassessable; the Securities have been duly and validly authorized, and,
when issued and delivered to and paid for by the Underwriters pursuant to
this Agreement, will be duly and validly issued and fully paid and
nonassessable; the certificates for the Securities are in valid and
sufficient form; and the holders of outstanding shares of capital stock of
the Company are not entitled to preemptive or other rights to subscribe for
the Securities;
(iv) to the knowledge of such counsel, there is no pending or
threatened in writing action, suit or proceeding before any court or
governmental agency, authority or body or any arbitrator involving the
Company or any of its subsidiaries of a character required to be disclosed
in the Registration Statement which is not adequately disclosed in the
Prospectus, and there is no franchise, contract or other document of a
character required to be described in the Registration Statement or
Prospectus, or to be filed as an exhibit, which is not described or filed
as required; and the statements in the Prospectus under the headings "Risk
Factors -- TI Litigation; Intellectual Property Matters" and "Recent
Developments -- TI Litigation" fairly summarize the matters therein
described;
(v) this Agreement has been duly authorized, executed and delivered
by the Company;
14
<PAGE>
(vi) neither the issue and sale of the Securities, nor the
consummation of any other of the transactions herein contemplated, nor the
fulfillment of the terms hereof will conflict with, result in a breach or
violation of, or constitute a default under (A) any law known to such
counsel (other than state blue sky laws, as to which such counsel need not
express an opinion) or (B) the respective charter or by-laws of the
Company or COMPASS or (C) the terms of any indenture or other material
agreement or instrument known to such counsel and to which the Company or
any of its subsidiaries is a party or bound or (D) any material judgment,
order or decree known to such counsel to be applicable to the Company or
any of its subsidiaries of any court, regulatory body, administrative
agency, governmental body or arbitrator having jurisdiction over the
Company or any of its subsidiaries;
(vii) no holders of securities of the Company other than Intel
Corporation have rights to the registration of such securities under the
Registration Statement; and
(viii) the Registration Statement has become effective under the Act;
any required filing of the Prospectus, and any supplements thereto,
pursuant to Rule 424(b) has been made in the manner and within the time
period required by Rule 424(b); and to the best knowledge of such counsel,
no stop order suspending the effectiveness of the Registration Statement
has been issued, and no proceedings for that purpose have been instituted
or threatened.
In addition, such counsel shall state that such counsel has no reason to
believe that at the Effective Date the Registration Statement contained any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading or that the Prospectus, as of its date and as of the Closing
Date, included or includes any untrue statement of a material fact or
omitted or omits to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
In rendering the opinions required by (b) or (c), such counsel may rely (A)
as to matters involving the application of laws of any jurisdiction other
than the State of California or the United States, to the extent they deem
proper and specified in such opinion, upon the opinion of other counsel of
good standing whom they believe to be reliable and who are satisfactory to
counsel for the Underwriters and (B) as to matters of fact, to the extent
they deem proper, on certificates of responsible officers of the Company
and public officials. References to the Prospectus in paragraphs (b) and
(c) include any supplements thereto at the Closing Date.
(d) The Representatives shall have received from Latham & Watkins,
counsel for the Underwriters, such opinion or opinions, dated the Closing Date,
with respect to the issuance and sale of the Securities, the Registration
Statement, the Prospectus (together with any supplement thereto) and other
related matters as the Representatives may reasonably require, and
15
<PAGE>
the Company shall have furnished to such counsel such documents as they request
for the purpose of enabling them to pass upon such matters.
(e) The Company shall have furnished to the Representatives a
certificate of the Company, signed by the Chief Executive Officer and the
principal financial or accounting officer of the Company, dated the Closing
Date, to the effect that the signers of such certificate have carefully
examined the Registration Statement, the Prospectus, any supplement to the
Prospectus and this Agreement and that:
(i) the representations and warranties of the Company in this
Agreement are true and correct in all material respects on and as of the
Closing Date with the same effect as if made on the Closing Date and the
Company has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to the
Closing Date;
(ii) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or, to the Company's knowledge, threatened; and
(iii) since the date of the most recent financial statements included
in the Prospectus (exclusive of any supplement thereto), there has been no
material adverse change in the condition (financial or other), earnings,
business or properties of the Company and its subsidiaries, whether or not
arising from transactions in the ordinary course of business, except as set
forth in or contemplated in the Prospectus (exclusive of any supplement
thereto).
(f) At the Execution Time and at the Closing Date, Ernst & Young
LLP shall have furnished to the Representatives a letter or letters, dated
respectively as of the Execution Time and as of the Closing Date, in form and
substance satisfactory to the Representatives, confirming that they are
independent accountants within the meaning of the Act and the Exchange Act and
the respective applicable published rules and regulations thereunder and stating
in effect that:
(i) in their opinion the audited financial statements and financial
statement schedules included or incorporated in the Registration Statement
and the Prospectus and reported on by them comply in form in all material
respects with the applicable accounting requirements of the Act and the
Exchange Act and the related published rules and regulations;
(ii) on the basis of a reading of the latest unaudited financial
statements made available by the Company and its subsidiaries; carrying out
certain specified procedures (but not an examination in accordance with
generally accepted auditing standards) which would not necessarily reveal
matters of significance with respect to the comments set forth in such
letter; a reading of the minutes of the meetings of the stockholders,
directors and
16
<PAGE>
compensation and audit committees of the Company; and inquiries of certain
officials of the Company who have responsibility for financial and
accounting matters of the Company and its subsidiaries as to transactions
and events subsequent to December 30, 1994, nothing came to their attention
that caused them to believe that:
(1) any unaudited financial statements included or
incorporated in the Registration Statement and the Prospectus do
not comply in form in all material respects with applicable
accounting requirements and with the published rules and
regulations of the Commission with respect to financial
statements included or incorporated by reference in quarterly
reports on Form 10-Q under the Exchange Act; and said unaudited
financial statements are not in conformity with generally
accepted accounting principles applied on a basis substantially
consistent with that of the audited financial statements included
or incorporated by reference in the Registration Statement and
the Prospectus; or
(2) with respect to the period subsequent to March 31,
1995, there were any changes, at a specified date not more than
five business days prior to the date of the letter, in the long-
term debt, including non-current capital lease obligations, of
the Company and its subsidiaries or capital stock of the Company
or decreases in the stockholders' equity or total current assets
of the Company as compared with the amounts shown on the March
31, 1995 consolidated balance sheet included or incorporated by
reference in the Registration Statement and the Prospectus, or
for the period from March 31, 1995 to such specified date there
were any decreases, as compared with the corresponding period in
the preceding year in net revenues or income before income taxes
or in total or per share amounts of income before extraordinary
items or net income of the Company and its subsidiaries, except
in all instances for changes or decreases set forth in such
letter, in which case the letter shall be accompanied by an
explanation by the Company as to the significance thereof unless
said explanation is not deemed necessary by the Representatives;
and
(iii) they have performed certain other specified procedures as a
result of which they determined that certain information of an accounting,
financial or statistical nature (which is limited to accounting, financial
or statistical information derived from the general accounting records of
the Company and its subsidiaries) set forth in the Registration Statement
and the Prospectus, including the information set forth under the captions
"Prospectus Summary -- Summary Consolidated Financial Data,"
"Capitalization" and "Selected Consolidated Financial Data" in the
Prospectus, the information included or incorporated by reference in the
Company's Annual Report on Form 10-K for the fiscal year ended December 30,
1994, incorporated by
17
<PAGE>
reference in the Registration Statement and the Prospectus, and the
information included in the Management's Discussion and Analysis of
Financial Condition and Results of Operations, included or incorporated by
reference in the Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1995, incorporated by reference in the Registration
Statement and the Prospectus, agrees with the accounting records of the
Company and its subsidiaries, excluding any questions of legal
interpretation.
References to the Prospectus in this paragraph (f) include any
supplement thereto at the date of the letter.
(g) Subsequent to the Execution Time or, if earlier, the dates as
of which information is given in the Registration Statement (exclusive of any
amendment thereof) and the Prospectus (exclusive of any supplement thereto),
there shall not have been (i) any change or decrease specified in the letter or
letters referred to in paragraph (f) of this Section 6 or (ii) any change, or
any development involving a prospective change, in or affecting the business or
properties of the Company and its subsidiaries the effect of which, in any case
referred to in clause (i) or (ii) above, is, in the judgment of the
Representatives, so material and adverse as to make it impractical or
inadvisable to proceed with the offering or delivery of the Securities as
contemplated by the Registration Statement (exclusive of any amendment thereof)
and the Prospectus (exclusive of any supplement thereto).
(h) Prior to the Closing Date, the Company shall have furnished to
the Representatives such further information, certificates and documents as the
Representatives may reasonably request.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Representatives and counsel for the Underwriters, this
Agreement and all obligations of the Underwriters hereunder may be canceled at,
or at any time prior to, the Closing Date by the Representatives. Notice of
such cancellation shall be given to the Company in writing or by telephone or
telegraph confirmed in writing.
7. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If the sale of the
Securities provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 6 hereof is not satisfied,
because of any termination pursuant to Section 10 hereof or because of any
refusal, inability or failure on the part of the Company to perform any
agreement herein or comply with any provision hereof other than by reason of a
default by any of the Underwriters, the Company will reimburse the Underwriters
severally upon demand for all out-of-pocket expenses (including reasonable fees
and disbursements of counsel) that shall have been incurred by them in
connection with the proposed purchase and sale of the Securities.
18
<PAGE>
8. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless each
Underwriter, the directors, officers, employees and agents of each Underwriter
and each person who controls any Underwriter within the meaning of either the
Act or the Exchange Act against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become subject
under the Act, the Exchange Act or other Federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact contained in
the registration statement for the registration of the Securities as originally
filed or in any amendment thereof, or in any Preliminary Prospectus or the
Prospectus, or in any amendment thereof 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, and agrees to reimburse each such indemnified party, as
incurred, for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; PROVIDED, HOWEVER, that the Company will not be liable in
any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon any such untrue statement or alleged untrue
statement or omission or alleged omission made therein in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
any Underwriter through the Representatives specifically for inclusion therein.
This indemnity agreement will be in addition to any liability that the Company
may otherwise have.
(b) Each Underwriter severally agrees to indemnify and hold
harmless the Company, each of its directors, each of its officers, employees and
agents and each person who controls the Company within the meaning of either the
Act or the Exchange Act, to the same extent as the foregoing indemnity from the
Company to each Underwriter, but only with reference to written information
relating to such Underwriter furnished to the Company by or on behalf of such
Underwriter through the Representatives specifically for inclusion in the
documents referred to in the foregoing indemnity. This indemnity agreement will
be in addition to any liability that any Underwriter may otherwise have. The
Company acknowledges that the statements set forth in the last paragraph of the
cover page and in the first, third and sixth paragraphs under the caption
"Underwriting" in any Preliminary Prospectus and the Prospectus constitute the
only information furnished in writing by or on behalf of the several
Underwriters for inclusion in any Preliminary Prospectus or the Prospectus, and
you, as the Representatives, confirm that such statements are correct.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve it from liability under paragraph (a) or (b) above unless and
to the extent it did not otherwise learn of such action and such failure results
in the forfeiture by the indemnifying party
19
<PAGE>
of substantial rights and defenses and (ii) will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraph (a) or (b) above. The
indemnifying party shall be entitled to appoint counsel of the indemnifying
party's choice at the indemnifying party's expense to represent the indemnified
party in any action for which indemnification is sought (in which case the
indemnifying party shall not thereafter be responsible for the fees and expenses
of any separate counsel retained by the indemnified party or parties except as
set forth below); PROVIDED, HOWEVER, that such counsel shall be satisfactory to
the indemnified party. Notwithstanding the indemnifying party's election to
appoint counsel to represent the indemnified party in an action, the indemnified
party shall have the right to employ separate counsel (including local counsel),
and the indemnifying party shall bear the reasonable fees, costs and expenses of
such separate counsel if (i) the use of counsel chosen by the indemnifying party
to represent the indemnified party would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties that are different
from or additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of the institution of such action or (iv) the indemnifying party
shall authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party. An indemnifying party will not, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement, compromise or
consent includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or
(b) of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company and the Underwriters agree to
contribute to the aggregate losses, claims, damages and liabilities (including
legal or other expenses reasonably incurred in connection with investigating or
defending same) (collectively "Losses") to which the Company and one or more of
the Underwriters may be subject in such proportion as is appropriate to reflect
the relative benefits received by the Company and by the Underwriters from the
offering of the Securities; PROVIDED, HOWEVER, that in no case shall any
Underwriter (except as may be provided in any agreement among underwriters
relating to the offering of the Securities) be responsible for any amount in
excess of the underwriting discount or commission applicable to the Securities
purchased by such Underwriter hereunder. If the allocation provided by the
immediately preceding sentence is unavailable for any reason, the Company and
the Underwriters shall contribute in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Company and of the Underwriters in connection with the statements or omissions
that resulted in such Losses as well as any other relevant equitable
considerations. Benefits received by the Company shall be deemed to be equal to
the total net proceeds from the
20
<PAGE>
offering (before deducting expenses), and benefits received by the Underwriters
shall be deemed to be equal to the total underwriting discounts and commissions,
in each case as set forth on the cover page of the Prospectus. Relative fault
shall be determined by reference to whether any alleged untrue statement or
omission relates to information provided by the Company or the Underwriters.
The Company and the Underwriters agree that it would not be just and equitable
if contribution were determined by pro rata allocation or any other method of
allocation that does not take account of the equitable considerations referred
to above. Notwithstanding the provisions of this paragraph (d), 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. For purposes of this Section 8, each person
who controls an Underwriter within the meaning of either the Act or the Exchange
Act and each director, officer, employee and agent of an Underwriter shall have
the same rights to contribution as such Underwriter, and each person who
controls the Company within the meaning of either the Act or the Exchange Act,
each officer of the Company who shall have signed the Registration Statement and
each director of the Company shall have the same rights to contribution as the
Company, subject in each case to the applicable terms and conditions of this
paragraph (d).
9. DEFAULT BY AN UNDERWRITER. If any one or more Underwriters
shall fail to purchase and pay for any of the Securities agreed to be purchased
by such Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions that the amount of Securities set
forth opposite their names in Schedule I hereto bears to the aggregate amount of
Securities set forth opposite the names of all the remaining Underwriters) the
Securities that the defaulting Underwriter or Underwriters agreed but failed to
purchase; PROVIDED, HOWEVER, that in the event that the aggregate amount of
Securities that the defaulting Underwriter or Underwriters agreed but failed to
purchase shall exceed 10% of the aggregate amount of Securities set forth in
Schedule I hereto, the remaining Underwriters shall have the right to purchase
all, but shall not be under any obligation to purchase any, of the Securities,
and if such nondefaulting Underwriters do not purchase all the Securities, this
Agreement will terminate without liability to any nondefaulting Underwriter or
the Company. In the event of a default by any Underwriter as set forth in this
Section 9, the Closing Date shall be postponed for such period, not exceeding
seven days, as the Representatives shall determine in order that the required
changes in the Registration Statement and the Prospectus or in any other
documents or arrangements may be effected. Nothing contained in this Agreement
shall relieve any defaulting Underwriter of its liability, if any, to the
Company and any nondefaulting Underwriter for damages occasioned by its default
hereunder.
10. TERMINATION. This Agreement shall be subject to termination in
the absolute discretion of the Representatives, by notice given to the Company
prior to delivery of and payment for the Securities, if prior to such time (i)
trading in the Company's Common Stock shall have been suspended by the
Commission or the Nasdaq National Market or trading in securities generally on
the New York Stock Exchange or the Nasdaq National Market shall have been
suspended or limited or minimum prices shall have been established on such
Exchange or Market,
21
<PAGE>
(ii) a banking moratorium shall have been declared either by Federal or New York
State authorities or (iii) there shall have occurred any outbreak or escalation
of hostilities, declaration by the United States of a national emergency or war
or other calamity or crisis the effect of which on financial markets is such as
to make it, in the judgment of the Representatives, impracticable or inadvisable
to proceed with the offering or delivery of the Securities as contemplated by
the Prospectus (exclusive of any supplement thereto).
11. REPRESENTATIONS AND INDEMNITIES TO SURVIVE. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers and of the Underwriters 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 any Underwriter or the Company or any of
the officers, directors, employees, agents or controlling persons referred to in
Section 8 hereof, and will survive delivery of and payment for the Securities.
The provisions of Sections 7 and 8 hereof shall survive the termination or
cancellation of this Agreement.
12. NOTICES. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Representatives, will be mailed,
delivered or telegraphed and confirmed to them, care of Salomon Brothers Inc, at
Seven World Trade Center, New York, New York, 10048 at attention of the legal
department; or, if sent to the Company, will be mailed, delivered or telegraphed
and confirmed to it at attention of the legal department.
13. SUCCESSORS. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
officers, directors, employees, agents and controlling persons referred to in
Section 8 hereof, and no other person will have any right or obligation
hereunder.
14. APPLICABLE LAW. This Agreement will be governed by and
construed in accordance with the laws of the State of New York.
22
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company and the several Underwriters.
Very truly yours,
VLSI TECHNOLOGY, INC.
By:
-------------------------------------
Name:
Title:
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
SALOMON BROTHERS INC
BEAR, STEARNS & CO. INC.
HAMBRECHT & QUIST LLC
MONTGOMERY SECURITIES
By: Salomon Brothers Inc
By:
-------------------------------------
Name:
Title: Vice President
For themselves and the other
several Underwriters named in
Schedule I to the foregoing
Agreement.
23
<PAGE>
SCHEDULE I
Number of Shares
of Underwritten
Securities
Underwriters to be Purchased
------------ ----------------
Salomon Brothers Inc . . . . . . . . . . . . . .
Bear, Stearns & Co. Inc. . . . . . . . . . . . .
Hambrecht & Quist LLC . . . . . . . . . . . . . .
Montgomery Securities . . . . . . . . . . . . . .
--------------
Total . . . . . . . . . . . 2,500,000
--------------
--------------
<PAGE>
Exhibit 4.4
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
VLSI TECHNOLOGY, INC.
VLSI TECHNOLOGY, INC., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), does hereby certify as follows:
FIRST: The name of the Corporation is VLSI TECHNOLOGY, INC.
SECOND: The Certificate of Incorporation of the Corporation was filed with the
Secretary of State of the State of Delaware (the "Secretary of State") on May 6,
1987; a Restated Certificate of Incorporation was filed with the Secretary of
State on September 16, 1987 (the "Restated Certificate of Incorporation"); and
a Certificate of Amendment of Restated Certificate of Incorporation was filed
with the Secretary of State on August 20, 1992 (the "Prior Amendment").
THIRD: The Board of Directors of the Corporation, at a meeting duly called
and held on February 28, 1995, adopted resolutions (i) proposing certain
amendments (the "Amendments") to the Restated Certificate of Incorporation,
which Amendments increase the authorized capital stock of the Corporation, and
(ii) declaring said Amendments to be advisable and directing that said
Amendments be presented to the stockholders of the Corporation for consideration
thereof. The resolutions setting forth the proposed Amendments are as follows:
"RESOLVED: that the Board of Directors deems it advisable to amend the
Restated Certificate of Incorporation of the Corporation;
<PAGE>
RESOLVED FURTHER: that the following Amendments to the Corporation's
Restated Certificate of Incorporation are hereby approved by this Board of
Directors, and such Amendments shall be presented to the stockholders of
the Corporation at the next annual meeting of stockholders for
consideration and approval thereof:
Subparagraphs (a) and (b) of paragraph 4 of the Restated Certificate
of Incorporation, as amended by the First Amendment, are hereby
amended to read as follows:
(a) CLASSES OF STOCK. This Corporation is authorized to issue
two classes of shares designated respectively "Common Shares" and
"Preferred Shares". The total number of shares which this
Corporation shall have the authority to issue is One Hundred Two
Million (102,000,000), of which One Hundred Million (100,000,000)
shall be Common Shares and Two Million (2,000,000) shall be
Preferred Shares. Each Common Share and each Preferred Share
shall have a par value per share of $.01, and the aggregate par
value of the Common Shares and the Preferred Shares shall be
$1,000,000 and $20,000, respectively, for an aggregate par value
of $1,020,000.
(b) COMMON SHARES. The Common Shares authorized by this
Certificate of Incorporation shall be issued in series. The
first series of Common Shares shall be designated "Common Stock"
and shall consist of Ninety-Nine Million (99,000,000) shares.
All other series of Common Shares (other than Common Stock) shall
be designated, as a group, "Junior Common Stock", and shall
consist in the aggregate of One Million (1,000,000) shares. The
first series of Junior Common Stock shall be designated "Series B
Common Stock" and shall have the rights, preferences, privileges
and restrictions set forth in subparagraph (e) of this paragraph
4."
FOURTH: At the Annual Meeting of the Stockholders held on April 27, 1995,
which was duly called and held upon notice duly given in accordance with Section
222 of the General Corporation Law of the State of Delaware, a majority of the
shares of the Corporation's Common Stock outstanding as of the record date for
said Annual Meeting of Stockholders was voted in favor of the Amendments,
representing the necessary number of shares as required by statute. The only
class and series of shares outstanding is Common Stock.
FIFTH: The Amendments were duly adopted in accordance with the provisions of
Section 242 of the General Corporation Law of the State of Delaware.
-2-
<PAGE>
IN WITNESS WHEREOF, said VLSI TECHNOLOGY, INC. has caused this Certificate
of Amendment to be signed by Alfred J. Stein, its Chairman of the Board,
President and Chief Executive Officer, and Thomas F. Mulvaney, its Secretary,
this 28th day of April, 1995.
BY: /s/ Alfred J. Stein
------------------------------------
Alfred J. Stein,
Chairman of the Board, President and
Chief Executive Officer
ATTEST: /s/ Thomas F. Mulvaney
---------------------------------
Thomas F. Mulvaney,
Secretary
[CORPORATE SEAL]
-3-
<PAGE>
EXHIBIT 5.1
[WILSON, SONSINI, GOODRICH & ROSATI LETTERHEAD]
June 7, 1995
VLSI Technology, Inc.
1109 McKay Drive
San Jose, California 95131
RE: REGISTRATION STATEMENT ON FORM S-3
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-3 proposed to be filed
by you with the Securities and Exchange Commission on or about June 7, 1995, in
connection with the registration under the Securities Act of 1933, as amended,
of 2,875,000 shares of your Common Stock, $0.01 par value (the "Shares"), all of
which are authorized but heretofore unissued, including an over-allotment option
for 375,000 shares held by the underwriters. The Shares are to be sold to the
underwriters for resale to the public as described in the Registration Statement
pursuant to the Underwriting Agreement filed as Exhibit 1.1 thereto. As your
outside legal counsel, in connection with this transaction, we have examined the
proceedings taken or proposed to be taken in connection with said sale and
issuance of the Shares.
It is our opinion that, upon completion of the proceedings being taken or
contemplated by us, as your outside legal counsel, to be taken prior to the
issuance of the Shares, and upon completion of the proceedings being taken in
order to permit such transactions to be carried out in accordance with the
securities laws of the various states where required, the Shares, when issued
and sold in the manner referred to in the Registration Statement, will be
legally and validly issued, fully paid and non-assessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement, including the prospectus constituting a part thereof, and any
amendment thereto.
Very truly yours,
WILSON, SONSINI, GOODRICH & ROSATI
Professional Corporation
/s/ WILSON, SONSINI, GOODRICH & ROSATI
