<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 18, 1995
REGISTRATION NO. 33-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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ALTERA CORPORATION
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
CALIFORNIA 77-0016691
(State or other jurisdiction of incorporation (I.R.S. Employer Identification Number)
or organization)
</TABLE>
2610 ORCHARD PARKWAY
SAN JOSE, CALIFORNIA 95134
(408) 894-7000
(Address, including zip code and telephone number, including area code, of
Registrant's principal executive offices)
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RODNEY SMITH
PRESIDENT AND CHIEF EXECUTIVE OFFICER
2610 ORCHARD PARKWAY
SAN JOSE, CALIFORNIA 95134
(408) 894-7000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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COPIES TO:
<TABLE>
<S> <C>
THOMAS C. DEFILIPPS, ESQ. THOMAS W. FURLONG, ESQ.
WILSON, SONSINI, GOODRICH & ROSATI GEORGE H. HOHNSBEEN II, ESQ.
PROFESSIONAL CORPORATION GRAY CARY WARE & FREIDENRICH,
650 PAGE MILL ROAD A PROFESSIONAL CORPORATION
PALO ALTO, CALIFORNIA 94304 400 HAMILTON AVENUE
(415) 493-9300 PALO ALTO, CALIFORNIA 94301
(415) 328-6561
</TABLE>
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Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration Statement.
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If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
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CALCULATION OF REGISTRATION FEE
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PROPOSED
PROPOSED MAXIMUM
TITLE OF EACH CLASS MAXIMUM AGGREGATE AMOUNT OF
OF SECURITIES AMOUNT TO BE OFFERING PRICE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED(1) PER SHARE(1) PRICE(1) FEE
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<S> <C> <C> <C> <C>
Common Stock, no par value... 701,350 shares $65.875 $46,201,432 $15,932
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(1) Estimated solely for the purpose of computing the amount of the registration
fee pursuant to Rule 457(c) promulgated under the Securities Act of 1933,
based on the average of the low and high prices for the Common Stock as
reported on The Nasdaq Stock Market on September 15, 1995.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED SEPTEMBER 18, 1995
PROSPECTUS
701,350 SHARES
LOGO
COMMON STOCK
---------------------------
All of the 701,350 shares of Common Stock, no par value (the "Common
Stock"), of Altera Corporation ("Altera" or the "Company"), offered hereby are
being offered by Intel Corporation (the "Selling Shareholder"). The Company will
not receive any of the proceeds of the sale of the shares offered hereby. See
"Selling Shareholder" and "Underwriting."
The Common Stock is listed on The Nasdaq Stock Market under the symbol
"ALTR." On September 15, 1995, the last reported sale price of the Company's
Common Stock on The Nasdaq Stock Market was $66.50 per share.
---------------------------
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 3 OF THIS PROSPECTUS.
---------------------------
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.
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PRICE TO PROCEEDS TO
PUBLIC UNDERWRITING DISCOUNTS SELLING SHAREHOLDER(2)
AND COMMISSIONS(1)
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<S> <C> <C> <C>
Per Share......................... $ $ $
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Total............................. $ $ $
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(1) The Company and the Selling Shareholder have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."
(2) Excludes offering expenses of approximately $86,000 being paid by the
Company.
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The shares of Common Stock offered by this Prospectus are offered by the
Underwriters subject to prior sale, to withdrawal, cancellation or modification
of the offer without notice, to delivery to and acceptance by the Underwriters
and to certain other conditions. It is expected that the delivery of the
certificates for the shares of Common Stock will be made at the offices of
Lehman Brothers Inc., New York, New York, on or about , 1995.
---------------------------
SMITH BARNEY INC. LEHMAN BROTHERS
September , 1995
<PAGE> 3
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, files reports, proxy and information statements, and other
information with the Securities and Exchange Commission (the "Commission"). Such
reports, proxy and information statements and other information can be inspected
and copied at the public reference facilities maintained by the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and
at the Commission's regional offices at Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661 and Seven World Trade
Center, Suite 1300, New York, New York 10048. Copies of such materials can be
obtained from the public reference section of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates. The Company's Common Stock is
quoted on The Nasdaq Stock Market. Reports, proxy statements and other
information concerning the Company can be inspected at the National Association
of Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006.
This Prospectus constitutes a part of a Registration Statement on Form S-3
(together with all amendments and exhibits, referred to as the "Registration
Statement") filed by the Company 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 with respect to the Company and the Common Stock offered
hereby, reference is made to the Registration Statement. Statements contained
herein concerning the provisions of any document are not necessarily complete,
and in each instance, reference is made to the copy of such document filed as an
exhibit to the Registration Statement or otherwise filed with the Commission.
Each such statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company with the Commission
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 31,
1994; (2) the Company's Proxy Statement dated March 16, 1995; (3) the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1995; and (4) the
Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1995, as
amended by Form 10-Q/A filed on or about September 18, 1995; and (5) the
description of the Company's Common Stock contained in its Registration
Statement on Form 8-A filed pursuant to Section 12 of the Exchange Act on March
30, 1988, and any further amendment or report filed hereafter for the purpose of
updating any such description.
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 the Common Stock
hereunder shall be deemed to be incorporated by reference herein and to be a
part hereof from the date of the filing of such reports and documents. The
Company hereby undertakes to provide without charge to each person, including
any beneficial owner, to whom a copy of this Prospectus is delivered, upon
written or oral request of such person a copy of any or all of the foregoing
documents incorporated herein by reference (exclusive of exhibits, unless such
exhibits are specifically incorporated by reference into such documents).
Requests for such documents should be submitted in writing to Chief Financial
Officer, Altera Corporation, 2610 Orchard Parkway, San Jose, California
95134-2020 or by telephone at (408) 894-7000.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document that also is or is deemed to be
incorporated by reference herein modified or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of the Registration Statement or this
Prospectus.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ STOCK MARKET, IN THE
OVER-THE COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS AND THEIR RESPECTIVE
AFFILIATES MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK
ON THE NASDAQ STOCK MARKET IN ACCORDANCE WITH RULE 10B-6A UNDER THE SECURITIES
EXCHANGE ACT OF 1934. SEE "UNDERWRITING.
2
<PAGE> 4
RISK FACTORS
The following risk factors should be considered carefully in addition to
the other information contained in this Prospectus before purchasing the Common
Stock offered hereby.
DEPENDENCE ON WAFER SUPPLIERS AND LIMITED AVAILABILITY
The Company does not directly manufacture finished silicon wafers. Its
products, however, require wafers manufactured with state-of-the-art fabrication
techniques. Accordingly, the Company's strategy has been to maintain
relationships with larger semiconductor manufacturers for the production of its
wafers. Finished wafers for each of the Company's products are currently
manufactured by one, or in a few instances, two of the Company's foundry
suppliers. The Company has supply arrangements for the production of wafers with
Sharp Corporation of Japan ("Sharp"), Cypress Semiconductor Corporation
("Cypress"), Texas Instruments Incorporated ("Texas Instruments"), Taiwan
Semiconductor Manufacturing Corporation ("TSMC"), and the Selling Shareholder
through a combination of long-term contracts and current purchase orders. The
Company currently purchases a majority of its wafers from Sharp. The Company
recently began obtaining wafers from TSMC, which is now commencing commercial
volume production of the Company's products. Although management expects that
TSMC's manufacturing processes will enable the Company to lower its costs,
particularly on the FLEX 8000 family, there can be no assurance that these cost
reductions will be achieved.
The Company depends upon its foundries to produce wafers at acceptable
yields and to deliver them to the Company in a timely manner. The manufacture of
advanced CMOS semiconductor wafers is a highly complex process, and the Company
has from time to time experienced difficulties in obtaining acceptable yields
and timely delivery from its suppliers. Good production yields are particularly
important to the Company's business and financial results, including its ability
to meet customers' demand for products and to maintain profit margins. The
manufacture of semiconductor products is sensitive to a wide variety of factors,
including the level of contaminants in the manufacturing environment, impurities
in the materials used, and the performance of personnel and equipment. As is
common in the semiconductor industry, the Company has from time to time
experienced in the past and expects that it will experience in the future,
production yield problems. Accordingly, no assurance can be given that the
Company will not experience significant production yield problems with one or
more of its product lines. Production throughput times also vary considerably
among the Company's wafer suppliers. The Company has experienced delays from
time to time in processing some of its products and recently experienced long
lead times from vendors on some of its newer products. Any prolonged inability
to obtain adequate yields or deliveries could adversely affect the Company's
operating results. The Company expects that, as is customary in the
semiconductor business in order to maintain or enhance competitive position, it
will in the future seek to convert its fabrication process arrangements to
larger wafer sizes, to more advanced process technologies, or to new suppliers.
Such conversions entail inherent technological risks that can adversely affect
yields and delivery times. In addition, if for any reason the Company were
required to seek alternative sources of supply, shipments could be delayed
significantly while such sources are qualified for volume production, and any
significant delay would have a material adverse effect on the Company's
operating results.
The Company has at times been unable to fully satisfy customer demand
because of insufficient wafer allocation from its foundries. The Company is
currently scheduling orders that it will accept based on available production
capacity. The Company's long-term growth will depend in large part on increasing
its wafer capacity allocation from current foundries, adding additional
foundries, and improving yields of die per wafer from its foundries through
reductions in the die size of the Company's products and implementation of
advanced process technologies. Wafer capacity in the semiconductor industry,
particularly in the Company's advanced process geometries, is presently limited
and in high demand. There can be no assurance that the Company will be able to
satisfy its future wafer needs from current or alternative manufacturing
sources. Any increase in general demand for wafers within the industry, or any
reduction of existing wafer supply from any of the Company's foundry sources,
could materially adversely affect the Company's business. Furthermore, there can
be no assurance that the Company will be able to obtain an increased number of
functional die per wafer.
3
<PAGE> 5
In an effort to secure additional wafer capacity, the Company from time to
time considers a number of alternatives, including, without limitation, equity
investments in, or loans, deposits, or other financial commitments to,
independent wafer manufacturers in exchange for production capacity, or the use
of contracts which firmly commit the Company to purchase specified quantities of
wafers over extended periods. Any such transactions could require the Company to
seek equity or debt financing to fund such activities and, in certain
circumstances, to grant product or technology rights in return for production
capacity. There can be no assurance that any such additional financing could be
obtained on terms acceptable to the Company, if at all, or that the grant of any
such product or technology rights would not materially adversely affect the
Company's business.
The Company also has at times been unable, and may in the future be unable,
to fully satisfy customer demand because of other production constraints. These
constraints include the ability of suppliers and subcontractors to provide
materials and services used in the manufacture of the Company's products and to
assemble and test those products in a timely manner, as well as the ability of
the Company to process products for shipment. The Company's future growth will
depend in part on its ability to locate and qualify additional suppliers and
subcontractors and to increase its own capacity to ship products, and there can
be no assurance that the Company will be able to do so. Any increase in these
constraints on the Company's production could materially adversely affect the
Company's business.
PATENTS AND PROPRIETARY RIGHTS; CURRENT PATENT LITIGATION
The Company owns more than 50 United States patents and has additional
pending United States patent applications on its semiconductor products. The
Company also has technology licensing agreements with AMD, Cypress, Texas
Instruments, and the Selling Shareholder giving the Company royalty-free rights
to design, manufacture, and package products using certain patents they control.
Other companies have filed applications for, or have been issued, other patents
and may develop, or obtain proprietary rights relating to, products or processes
competitive with those of the Company. From time to time the Company may find it
desirable to obtain additional licenses from the holders of patents relating to
products or processes competitive with those of the Company. Although its
patents and patent applications may have value in discouraging competitive entry
into the Company's market segment and the Company believes that its current
licenses will assist it in developing additional products, there can be no
assurance that any additional patents will be granted to the Company, that the
Company's patents will provide meaningful protection from competition, or that
any additional products will be developed based on any of the licenses that the
Company currently holds. In addition, there can be no assurance that such
additional licenses could be obtained on terms or conditions acceptable to the
Company or that such licenses, if obtained, would lead to the development of
additional products. The Company believes that its future success will depend
primarily upon the technical competence and creative skills of its personnel,
rather than on its patents, licenses, or other proprietary rights.
The Company, in the normal course of business, from time to time receives
and makes inquiries with respect to possible patent infringements. As a result
of inquiries received from companies, it may be necessary or desirable for the
Company to obtain additional licenses relating to one or more of its current or
future products. There can be no assurance that such additional licenses could
be obtained, and, if obtainable, could be obtained on conditions that would not
have a material and adverse effect on the Company's operating results. If the
inquiring companies were to allege infringement of their patents, as is the case
in the Company's current litigation with two of its competitors, there can be no
assurance that any necessary licenses could be obtained, and, if obtainable,
would be on terms or conditions that would not have a material adverse effect on
the Company. In addition, if litigation ensued, there can be no assurance that
these companies would not succeed in obtaining significant monetary damages or
an injunction against the manufacture and sale of one or more of the Company's
product families. It may be necessary or desirable for the Company to incur
litigation expenses to enforce its intellectual property rights. There is no
assurance that any such litigation would be successful or that the Company's
patents would be upheld if challenged.
In June 1993, Xilinx, Inc. ("Xilinx") brought suit against the Company
seeking monetary damages and injunctive relief based on the Company's alleged
infringement of certain patents held by Xilinx. In June 1993, the Company
brought suit against Xilinx, seeking monetary damages and injunctive relief
based on Xilinx's
4
<PAGE> 6
alleged infringement of certain patents held by the Company. In April 1995, the
Company filed a separate lawsuit against Xilinx in Delaware, Xilinx's state of
incorporation, seeking monetary damages and injunctive relief based on Xilinx's
alleged infringement of one of the Company's patents. In May 1995, Xilinx
counterclaimed against the Company in Delaware, asserting defenses and seeking
monetary damages and injunctive relief based on the Company's alleged
infringement of certain patents held by Xilinx. Due to the nature of the
litigation with Xilinx and because the lawsuits are still in the pre-trial
stage, the Company's management cannot estimate the total expenses, the possible
loss, if any, or the range of loss that may ultimately be incurred in connection
with the allegations. Management cannot ensure that Xilinx will not succeed in
obtaining significant monetary damages or an injunction against the manufacture
and sale of the Company's MAX 5000, MAX 7000, FLEX 8000, or MAX 9000 families of
products, or succeed in invalidating any of the Company's patents. There can be
no assurance that any of the results of any of these proceedings will not have a
material adverse effect on the Company.
In August 1994, Advanced Micro Devices ("AMD") brought suit against the
Company seeking monetary damages and injunctive relief based on the Company's
alleged infringement by the MAX 7000 product family of certain patents held by
AMD. In September 1994, Altera answered the complaint asserting that it is
licensed to use the patents which AMD claims are infringed and filed a
counterclaim against AMD alleging infringement of certain patents held by the
Company. In May 1995, AMD amended its complaint to assert that the Classic, MAX
5000, FLEX 8000, MAX 9000, FLEX 10K, and FLASHlogic product families infringe
certain AMD patents. The Company also amended its counterclaim to assert that
AMD's products infringe an additional patent owned by the Company. Due to the
nature of the litigation with AMD, and because the lawsuit is at an early stage,
the Company's management cannot estimate the total expense, the possible loss,
if any, or the range of loss that may ultimately be incurred in connection with
the allegations. Management cannot ensure that AMD will not succeed in obtaining
significant monetary damages or an injunction against the manufacture and sale
of the Classic, MAX 5000, MAX 7000, FLEX 8000, MAX 9000, FLEX 10K, and
FLASHlogic product families, or succeed in invalidating any of the Company's
patents. There can be no assurance that any of the results of any of these
proceedings will not have a material adverse effect on the Company.
FACTORS AFFECTING OPERATING RESULTS
The Company's quarterly and annual operating results are affected by a wide
variety of factors that could materially and adversely affect revenues and
profitability, including the Company's access to advanced process technologies,
the timing and extent of process development costs, the Company's ability to
introduce new products on a timely basis, the volume and timing of orders
received, market acceptance of the Company's and its customers' products, the
timing of new product announcements and introductions by the Company or its
competitors, changes in the mix of products sold, the timing and extent of
research and development expenses, the availability and cost of wafers from
outside foundries, fluctuations in manufacturing yields, competitive pricing
pressures, cyclical semiconductor industry conditions, fluctuations in foreign
currency exchange rates (particularly with Japan), changes in domestic or
international distribution arrangements, and developments in pending patent
litigation. A majority of the Company's net revenues are derived from sales of a
limited number of products. Historically, average selling prices in the
semiconductor industry have decreased over the life of any particular product as
the technology matures, as availability and competition increase, and as new,
more advanced products are introduced. The Company expects this trend to
continue, and there can be no assurance that the average selling prices of the
Company's products will not be subject to significant pricing pressures in the
future. The Company's business is characterized by short-term orders and
shipment schedules, and customer orders typically can be canceled or rescheduled
without significant penalty to the customer. Due to the absence of substantial
noncancelable backlog, the Company typically plans its production and inventory
levels based on internal estimates of customer demand; customer demand is highly
unpredictable and can fluctuate substantially. In addition, the Company is
limited in its ability to reduce costs quickly in response to any revenue
shortfalls. As a result of the foregoing or other factors, there can be no
assurance that the Company will not experience material and adverse fluctuations
in future operating results on a quarterly or annual basis.
5
<PAGE> 7
MANAGEMENT OF GROWTH AND DEPENDENCE ON KEY PERSONNEL
The Company has experienced rapid growth in the number of its employees,
the scope of its operations, and the geographic breadth of its operations. This
growth has resulted in new and increased responsibilities for management
personnel and has placed added pressure on the Company's operating and financial
systems. The Company's ability to support the growth of its business and to
implement appropriate management information systems will be substantially
dependent upon its having in place highly trained resources to conduct research
and development, product implementation, sales activity, financial management,
and customer support services. Accordingly, the Company's future operating
results will depend on the ability of its officers and other key employees to
continue to conduct business effectively and to improve the Company's
operations. The Company will need to hire additional management and technical
personnel, integrate its new employees into its overall operations, and continue
to improve its operational, financial, and management systems. There can be no
assurance that the Company will be able to manage its recent or any future
expansion successfully, and any inability to do so would have a material adverse
effect on the Company's results of operations. The success of the Company is
also dependent in large part upon the continued service of its key management,
technical, sales, and support employees and on its ability to continue to
attract and retain additional qualified employees. The competition for such
employees is intense and the loss of any of such employees could have a material
adverse effect on the Company.
TECHNOLOGICAL DEVELOPMENTS
The Company must continue to make significant investments in research and
development in order to continue to develop new products, enhance existing
products and achieve market acceptance for such products, particularly in light
of the industry pattern of price erosion for mature products. Recently, the
Company has introduced enhanced members of its existing MAX 7000 and FLEX 8000
families and its MAX 9000 architecture and has announced its FLEX 10K product
family. The commercial success of these products will depend upon the
achievement of targeted yield, product cost, and performance levels and the
development of manufacturing, marketing, and support capabilities. Even if such
goals are accomplished, there can be no assurance that these products will
achieve significant market acceptance. If the Company were unable to
successfully define, develop, and introduce competitive new products, and
enhance its existing products, its future operating results would be adversely
affected.
COMPETITION
The semiconductor industry overall is intensely competitive and is
characterized by rapid technological change, rapid rates of product
obsolescence, and price erosion resulting from both product obsolescence and
price competition. The Company competes directly with a number of fast-growing
domestic companies that devote a significant portion of their resources to new
product development and existing product enhancement. The semiconductor industry
also includes many large domestic and foreign companies that have substantially
greater financial, technical, and marketing resources than the Company. Although
the Company does not currently experience direct competition from many of these
larger companies, many offer products that are competitive with the Company's
products or have announced their intentions to enter the market. Some of these
companies have proprietary wafer manufacturing ability, preferred vendor status
with many of the Company's customers, extensive marketing power and name
recognition, much greater financial resources than those of the Company, and
other significant advantages over the Company. The Company expects that as the
dollar volume of the programmable logic market grows, the attractiveness of this
market to larger, more powerful competitors will continue to increase. In
addition, the Company competes with some of the wafer suppliers to whom it has
licensed portions of its technology. The Company also faces indirect competition
from many semiconductor companies that manufacture products satisfying similar
customer needs. Substantial direct or indirect competition could have a material
adverse effect on the Company's operating results.
6
<PAGE> 8
FOREIGN CURRENCY FLUCTUATION
The Company currently purchases a majority of its wafers from Sharp under
yen-denominated purchase contracts, and the appreciation of the yen against the
dollar has resulted in higher costs to the Company. The Company has from time to
time engaged in a variety of foreign exchange hedging strategies to mitigate the
exposure of its yen-denominated contracts. This hedging has included the
purchase of yen forward contracts and options and the use of offsetting yen
receipts. In the first quarter of 1995, the value of the dollar dropped sharply
against the yen, and the Company's operating results were adversely affected due
to the resulting increase in material costs. Although the value of the dollar
has recently strengthened with respect to the yen, there can be no assurance
that it will not deteriorate again or that any hedging strategies undertaken
will be effective. In addition, the Company has not engaged in any contracts or
use of financial instruments that will mitigate the Company's exposure to
increases in the value of the yen beyond December 1995. Any further appreciation
of the yen will unfavorably impact the Company's material cost. The Company
expects the impact of foreign currency exchange rates to be more significant in
the future.
FOREIGN MANUFACTURING AND ASSEMBLY
The Company currently depends on foreign foundry suppliers for the
manufacture of a majority of its finished silicon wafers. In addition, after
wafer manufacturing is completed and each wafer is tested, the devices are
assembled by subcontractors in Korea, Hong Kong, Malaysia, and the Philippines.
Some devices are also tested by subcontractors in Asia. Although the Company's
subcontractors have not recently experienced any serious work stoppages, the
social and political situations in these countries are volatile, and any
prolonged work stoppages or other inability of the Company to manufacture and
assemble its products would have a material adverse effect on the Company's
operating results. Furthermore, economic risks, such as changes in tax laws,
tariffs, or freight rates, or interruptions in air transportation, could have a
material adverse effect on the Company's operating results.
EXPORT SALES
During each of the last three years, export sales constituted nearly half
of the Company's total sales revenue. Currently, almost all export sales are
denominated in U.S. dollars, but the Company is considering doing an increased
amount of business in local currencies in the future. The Company's export sales
are subject to those risks common to all export activities, including
governmental regulation, possible imposition of tariffs or other trade barriers,
and currency fluctuations. Certain export sales must be licensed by the Office
of Export Administration of the U.S. Department of Commerce. From time to time,
the Company has experienced delays in obtaining the necessary licenses, but to
date such delays have not had a material adverse effect on the Company's
business. There can be no assurance that such delays will not occur in the
future, however, or that if such delays do occur, that they will not have a
material adverse effect on the Company's business or operating results.
VOLATILITY OF STOCK PRICE
The Company's Common Stock has experienced substantial price volatility and
such volatility may occur in the future, particularly as a result of quarter to
quarter variations in the actual or anticipated financial results of the Company
or of other companies in the semiconductor industry, or in the markets served by
the Company, or announcements by the Company or its competitors regarding new
product introductions. In addition, any shortfall or changes in revenue, gross
margins, earnings or other financial results from analysts or market
expectations could cause the price of the Company's Common Stock to fluctuate
significantly. In recent years, the stock market has experienced extreme price
and volume fluctuations that have affected the market price of many technology
companies' stocks in particular and that have often been unrelated or
disproportionate to the operating performance of these companies. These factors
may adversely affect the market price of the Common Stock.
7
<PAGE> 9
CYCLICAL NATURE OF SEMICONDUCTOR INDUSTRY
The semiconductor industry is highly cyclical and has been subject to
significant downturns at various times that have been characterized by
diminished product demand, production overcapacity, and accelerated erosion of
average selling prices. In recent periods, the markets for the Company's
products have been characterized by excess demand over supply and the resulting
favorable product pricing. These conditions represent a departure from the
long-term trend of declining average selling prices in the semiconductor market.
Any material increase in industry-wide production capacity, shift in industry
capacity toward products competitive with the Company's products, reduced demand
or reduced growth in demand, or other factors could result in a rapid decline in
product pricing and have a material adverse effect on the Company's operating
results.
8
<PAGE> 10
THE COMPANY
Founded in 1983, Altera is a leader in developing, marketing, and selling
high-performance, high-density programmable logic devices ("PLDs") and
associated software tools for logic development. The Company's products offer
customers the benefits of low development costs, short lead times, and standard
product inventories when compared to application-specific integrated circuits
("ASICs").
Altera's semiconductor products are standard products that are configured
by the Company's customers for specific applications. The Company offers a broad
general purpose integrated circuit product line, ranging in density from 150 to
16,000 gates, as well as design tools that interface with a large number of
industry-standard electronic design automation environments. In March 1995, the
Company announced the FLEX 10K architecture, which will be capable of addressing
designs as large as 100,000 gates. Logic designs using Altera chips can be
created on both personal computers and engineering workstations, giving
customers the freedom to create designs in the environment of their choice.
Altera's PLDs are based on patented architectures which, when combined with
advanced CMOS (complementary-metal-oxide semiconductor) technology, provide high
speed and high logic density.
Over the past decade, CMOS programmable logic has had a significant impact
on electronic design. PLDs help the Company's customers to meet their
performance and cost objectives while avoiding the significant development
costs, long development lead times, and dedicated custom product inventories
associated with ASICs. Using the Company's PLDs, engineers can complete numerous
iterations of a product design and test and verify the design until it meets
their expectations, while still delivering new products to market in record
time. Since 1984, when the Company introduced the first CMOS PLD, the market for
such devices has grown to over one billion dollars in 1994. Today, Altera sells
seven different PLD product families with over 500 chip/package alternatives
designed to provide customers a product combination suitable for their specific
requirements.
A cornerstone of the Company's strategy is the market penetration of its
low-cost proprietary software design tools. By improving the productivity of its
customers, the Company seeks to develop a base of customers who use the
Company's software to design their own products. Each development software
package can be used repeatedly for different designs on an ongoing basis. A
number of these designs may become incorporated into the customer's products,
thereby generating expanded PLD sales. The Company's software works only with
Altera-designed logic devices, thus providing the Company a competitive
advantage when dealing with customers that use its development system. The
Company currently has licensed its development system software packages to over
20,000 users, although at any given time only a portion of these software
packages may be active.
Altera markets its PLD components and software to a broad range of
customers through electronics distributors, direct sales personnel, and
independent sales representatives. In 1994, sales to distributors and export
sales constituted 74% and 48% of the Company's sales, respectively. The
Company's customers include companies in the communications, computer, and
industrial markets.
Altera's manufacturing strategy has been to procure wafers for its
components from leading manufacturers under technology exchange and foundry
agreements, which has spared the Company the expense of establishing its own
wafer fabrication facility. The Company currently obtains the majority of its
wafer supply from Sharp Corporation of Japan and also obtains wafers from the
Selling Shareholder, Cypress, Texas Instruments, and most recently from TSMC.
The Company owns a minority interest in Cypress Semiconductor (Texas), Inc.,
which operates a wafer fabrication facility in Round Rock, Texas. The Company
intends to expand existing sources and establish additional sources of wafer
supply for its products as such arrangements are required to meet customer
demand.
On August 21, 1995, Thomas J. Nicoletti, formerly Vice President, Finance
and Chief Financial Officer of the Company, became its Vice President, Business
Development and Investor Relations, and Nathan M. Sarkisian, formerly the
Company's Corporate Controller, became its Vice President, Finance and Chief
Financial Officer.
9
<PAGE> 11
UNDERWRITING
Under the terms of and subject to the conditions in the Underwriting
Agreement, the form of which is filed as an exhibit to the Registration
Statement of which this Prospectus forms a part, the Underwriters named below
have agreed, severally but not jointly, to purchase from the Selling
Shareholder, and the Selling Shareholder has agreed to sell to each Underwriter,
the aggregate number of shares of Common Stock set forth opposite their
respective names below:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
-------------------------------------------------------------------------- ---------
<S> <C>
Lehman Brothers Inc.......................................................
Smith Barney Inc..........................................................
---------
Total........................................................... 701,350
========
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters to pay for and accept delivery of the shares of Common Stock
offered hereby are subject to certain conditions contained therein, and that, if
any of the foregoing shares of Common Stock are purchased by the Underwriters
pursuant to the Underwriting Agreement, all the shares of Common Stock agreed to
be purchased by the Underwriters pursuant to the Underwriting Agreement must be
so purchased.
The Company and the Selling Shareholder have been advised that the
Underwriters propose to offer part of the shares of Common Stock directly to the
public at the public offering price set forth on the cover page of this
Prospectus and part to certain selected dealers at such public offering 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 brokers or dealers. After commencement of the public offering, the
offering price and other selling terms may be changed by the Underwriters.
The Company and the Selling Shareholder have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act, and to contribute to payments the Underwriters may be required
to make in respect thereof.
The Company has agreed that without the written consent of the Underwriters
it will not offer, sell, contract to sell or otherwise dispose of any shares of
Common Stock or any securities convertible or exchangeable therefor, for a
period of 30 days from the date of the Underwriting Agreement, subject to
limited exceptions.
From time to time, Lehman Brothers Inc. has provided, and may continue to
provide, investment banking, underwriting, financial advisory and other services
to the Selling Shareholder and its affiliates, for which services Lehman
Brothers Inc. has received customary indemnification rights, underwriting
discounts and fees. From time to time, Smith Barney Inc. has provided, and may
continue to provide, such services to the Company, for which services Smith
Barney Inc. has received customary indemnification rights, underwriting
discounts and fees.
Smith Barney Inc. currently acts as a market maker for the Common Stock and
may engage in "passive market making" in the Common Stock on The Nasdaq Stock
Market in accordance with Rule 10b-6A under the Exchange Act. Rule 10b-6A
permits, upon the satisfaction of certain conditions, underwriters and selling
group members participating in a distribution that are also market makers in the
security being distributed to engage in limited market making transactions
during the period when Rule 10b-6 under the Exchange Act would otherwise
prohibit such activity. Rule 10b-6A prohibits underwriters and selling group
members engaged in passive market making generally from entering a bid or
effecting a purchase at a price that exceeds the highest bid for those
securities displayed on The Nasdaq Stock Market by a market marker that is not
participating in the distribution. Under Rule 10b-6A, each underwriter or
selling group member engaged in passive market making is subject to a daily net
purchase limitation equal to 30% of such entity's average daily trading volume
during the two full consecutive calendar months immediately preceding the date
of the filing of the registration statement under the Securities Act pertaining
to the security to be distributed.
10
<PAGE> 12
SELLING SHAREHOLDER
Prior to the offering contemplated hereby the Selling Shareholder owned
1,402,700 shares of the Common Stock of the Company, representing approximately
3.2% of the outstanding shares of the Company as of August 31, 1995. The Company
issued these shares to the Selling Shareholder pursuant to an Asset Purchase
Agreement by and among the Company, as Purchaser, and the Selling Shareholder,
as Seller, dated as of July 12, 1994, as amended by First Amendment to Asset
Purchase Agreement dated as of October 1, 1994 (the "Acquisition Agreement") and
in connection with the Company's acquisition of the Selling Shareholder's PLD
product line, including associated capital equipment, inventory and certain
intellectual property (the "Acquisition"). The Acquisition was effective October
1, 1994. Immediately following the consummation of the Acquisition, Robert Reed,
Senior Vice President and General Manager of the Selling Shareholder, was named
to the Board of Directors of the Company.
Pursuant to the terms of an Investor Agreement entered into between the
Company and the Selling Shareholder in connection with the execution of the
Acquisition Agreement (the "Investor Agreement"), the Company agreed that,
beginning on October 1, 1995, it would, at the request of the Selling
Shareholder, use its best efforts to cause to be registered such number of
shares owned by the Selling Shareholder as may be so requested. The Company also
agreed to pay the costs and expenses (excluding certain selling costs) of the
first such registration. The Investor Agreement also includes certain
indemnification arrangements between the Company and the Selling Shareholder. As
part of the Acquisition and by separate agreements, the Selling Shareholder
agreed to supply the Company with associated PLD wafers for at least three
years, as well as to license the Company to make PLDs under certain of its
patents. The Company agreed to license back to the Selling Shareholder on a
limited basis certain acquired intellectual property which the Company
purchased, and agreed to buy up to $2.5 million of the Selling Shareholder's
labeled products.
On September 18, 1995, the Company waived the provisions of the Investor
Agreement restricting the Selling Shareholder from exercising its registration
rights earlier than October 1, 1995, and, pursuant to the Selling Shareholder's
request, undertook to cause the registration of the shares offered hereby.
Immediately following the sale of the shares offered hereby, the Selling
Shareholder will own 701,350 shares of Common Stock constituting approximately
1.6% of the outstanding shares of the Company as of August 31, 1995, and will
continue to have certain registration rights under the Investor Agreement with
respect to such shares.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for the
Company by Wilson, Sonsini, Goodrich & Rosati, Professional Corporation, Palo
Alto, California. Gray Cary Ware & Freidenrich, A Professional Corporation, Palo
Alto, California, are acting as counsel for the Underwriters in connection with
certain legal matters relating to the Common Stock offered hereby.
EXPERTS
The consolidated financial statements incorporated by reference in this
Prospectus and elsewhere in the Registration Statement have been audited by
Price Waterhouse LLP, independent accountants, as indicated in their reports
with respect thereto, and are included in reliance upon the authority of such
firm as experts in accounting and auditing.
11
<PAGE> 13
---------------------------------------------------------
---------------------------------------------------------
NO DEALER, SALESMAN, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING SHAREHOLDER OR THE
UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES
OTHER THAN THOSE TO WHICH IT RELATES OR AN OFFER TO SELL, OR A SOLICITATION OF
AN OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION WHERE SUCH AN OFFER OR
SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE
DATE HEREOF.
---------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................ 2
Incorporation of Certain Documents by
Reference.......................... 2
Risk Factors......................... 3
The Company.......................... 9
Underwriting......................... 10
Selling Shareholder.................. 11
Legal Matters........................ 11
Experts.............................. 11
</TABLE>
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
---------------------------------------------------------
701,350 SHARES
LOGO
COMMON STOCK
---------------------------
PROSPECTUS
September , 1995
---------------------------
SMITH BARNEY INC.
LEHMAN BROTHERS
---------------------------------------------------------
---------------------------------------------------------
<PAGE> 14
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the various expenses, all of which will be
paid by the registrant in connection with the sale and distribution of the
securities being registered, other than underwriting discounts and commissions,
if any. All of the amounts shown are estimates except the Commission and the
NASD fees.
<TABLE>
<S> <C>
Commission Registration Fee................................................ $15,932
NASD Filing Fee............................................................ 5,331
Blue Sky Fees and Expenses................................................. 500
Legal Fees and Expenses.................................................... 40,000
Accounting Fees and Expenses............................................... 20,000
Printing and Engraving Expenses............................................ 2,500
Transfer Agent and Registrar Fees.......................................... 1,000
Miscellaneous.............................................................. 737
-------
Total............................................................ $86,000
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 317 of the California Corporations Code authorizes a court to
award, or a corporation's board of directors to grant, indemnity to directors
and officers in terms sufficiently broad to permit such indemnification under
certain circumstances for liabilities (including reimbursement for expenses
incurred) arising under the Securities Act. Article IV of the registrant's
Restated Articles of Incorporation, as amended, and Article VI of the
registrant's Bylaws provide for indemnification of its directors and officers,
and permit indemnification of employees and other agents to the maximum extent
permitted by the California Corporations Code. In addition, the registrant has
entered into indemnification agreements with its officers and directors.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
------
<C> <S> <C>
1.1 -- Underwriting Agreement.
5.1 -- Opinion of Wilson, Sonsini, Goodrich & Rosati, Professional Corporation.
23.1 -- Consent of Price Waterhouse LLP.
23.2 -- Consent of Wilson, Sonsini, Goodrich & Rosati, Professional Corporation (included
in Exhibit 5.1).
24.1 -- Power of Attorney (included on page II-3).
</TABLE>
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
That, for purposes of determining any liability under the Securities
Act, each filing of the registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Exchange Act (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Exchange Act) that is incorporated by reference in 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 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Commission such indemnification is
II-1
<PAGE> 15
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in
the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such
issue.
For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon 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.
For the purpose of determining any liability under the Securities Act,
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-2
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant,
Altera Corporation, a corporation organized and existing under the laws of
California, 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 September 18,
1995.
ALTERA CORPORATION
By: /s/ RODNEY SMITH
------------------------------------
Rodney Smith,
President and Chief Executive
Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Rodney Smith and Nathan Sarkisian,
jointly and severally, his attorneys-in-fact, each with the power of
substitution, for him in any and all capacities, to sign any amendments to this
Registration Statement on Form S-3 (including post-effective amendments), and to
file the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that each of said attorneys-in-fact, or his substitute or
substitutes, may 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 by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------------------------------------------- ---------------------------- -------------------
<C> <S> <C>
/s/ RODNEY SMITH Chairman of the Board of September 18, 1995
--------------------------------------------- Directors, President and
Rodney Smith Chief Executive Officer
(principal executive
officer)
/s/ NATHAN M. SARKISIAN Vice President, Finance and September 18, 1995
--------------------------------------------- Chief Financial Officer
Nathan M. Sarkisian (principal financial and
accounting officer)
/s/ MICHAEL A. ELLISON Director September 18, 1995
---------------------------------------------
Michael A. Ellison
/s/ PAUL NEWHAGEN Director September 18, 1995
---------------------------------------------
Paul Newhagen
/s/ WILLIAM E. TERRY Director September 18, 1995
---------------------------------------------
William E. Terry
</TABLE>
II-3
<PAGE> 17
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------ ---------------------------------------------------------------------------------
<S> <C> <C>
1.1 -- Underwriting Agreement.
5.1 -- Opinion of Wilson, Sonsini, Goodrich & Rosati, Professional Corporation.
23.1 -- Consent of Price Waterhouse LLP.
23.2 -- Consent of Wilson, Sonsini, Goodrich & Rosati, Professional Corporation (included
in Exhibit 5.1).
24.1 -- Power of Attorney (included on page II-3).
</TABLE>
<PAGE> 1
701,350 SHARES
ALTERA CORPORATION
COMMON STOCK
UNDERWRITING AGREEMENT
September __, 1995
LEHMAN BROTHERS INC.
SMITH BARNEY INC.
c/o Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285
Dear Sirs:
Intel Corporation (the "Selling Shareholder") proposes to sell an
aggregate of 701,350 shares (the "Stock") of the Common Stock, no par value
(the "Common Stock") of Altera Corporation, a California corporation (the
"Company"). All of the Stock is being sold by the Selling Shareholder. This
is to confirm the agreement concerning the purchase of the Stock from the
Selling Shareholder by the Underwriters named in Schedule 1 hereto (the
"Underwriters").
1. Representations, Warranties and Agreements of the Company.
The Company represents, warrants and agrees that:
(a) A registration statement on Form S-3, and any
amendment thereto, with respect to the Stock has (i) been prepared by
the Company in conformity with the requirements of the United States
Securities Act of 1933 (the "Securities Act") and the rules and
regulations (the "Rule and Regulations") of the United States
Securities and Exchange Commission (the "Commission") thereunder,
(ii) been filed with the Commission under the Securities Act, and
(iii) become effective under the Securities Act. Copies of such
registration statement and any amendment thereto have been delivered
by the Company to you as the Underwriters. As used in this Agreement,
"Effective Time" means the date and the time as of which such
registration statement, or the most recent post-effective amendment
thereto, if any, was declared effective by the Commission; "Effective
Date" means the date of the Effective Time; "Preliminary Prospectus"
means each prospectus included in such registration statement, or
amendments thereof, before it became effective under the Securities
Act and any prospectus filed with the Commission by the Company with
the consent of the Underwriters pursuant to Rule 424(a) of the Rules
and Regulations; "Registration Statement" means such registration
statement, as amended at the Effective Time, including any documents
incorporated by reference therein at such time and all information
contained in the final prospectus filed with the Commission pursuant
to Rule 424(b) of the Rules and Regulations in accordance with Section
6(a) hereof and deemed to be a part of
1
<PAGE> 2
the registration statement as of the Effective Time pursuant to
paragraph (b) of Rule 430A of the Rules and Regulations; and
"Prospectus" means such final prospectus, as first filed with the
Commission pursuant to paragraph (1) or (4) of Rule 424(b) of the
Rules and Regulations. Reference made herein to any Preliminary
Prospectus or to the Prospectus shall be deemed to refer to and
include any documents incorporated by reference therein pursuant to
Item 12 of Form S-3 under the Securities Act, as of the date of such
Preliminary Prospectus or the Prospectus, as the case may be and any
reference to any amendment or supplement to any Preliminary Prospectus
or the Prospectus shall be deemed to refer to and include any document
filed under the United States Securities Exchange Act of 1934 (the
"Exchange Act") after the date of such Preliminary Prospectus or the
Prospectus, as the case may be, and incorporated by reference in such
Preliminary Prospectus or the Prospectus, as the case may be; and any
reference to any amendment to the Registration Statement shall be
deemed to include any annual report of the Company filed with the
Commission pursuant to Section 13(a) or 15(d) of the Exchange Act
after the Effective Time that is incorporated by reference in the
Registration Statement. The Commission has not issued any order
preventing or suspending the use of any Preliminary Prospectus.
(b) The Registration Statement conforms, and the
Prospectus and any further amendments or supplements to the
Registration Statement or the Prospectus will, when they become
effective or are filed with the Commission, as the case may be,
conform in all respects to the requirements of the Securities Act and
the Rules and Regulations and do not and will not, as of the
applicable effective date (as to the Registration Statement and any
amendment thereto) and as of the applicable filing date (as to the
Prospectus and any amendment or supplement thereto) contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; provided that no representation or warranty is made as to
information contained in or omitted from the Registration Statement or
the Prospectus in reliance upon and in conformity with written
information furnished to the Company through the Underwriters by or on
behalf of any Underwriter specifically for inclusion therein.
(c) The documents incorporated by reference in the
Prospectus, when they were filed with the Commission, conformed in all
material respects to the requirements of the Exchange Act and the
rules and regulations of the Commission thereunder, and none of such
documents contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; and any further documents
so filed and incorporated by reference in the Prospectus, when such
documents are filed with Commission will conform in all material
respects to the requirements of the Exchange Act, and the rules and
regulations of the Commission thereunder and will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading.
2
<PAGE> 3
(d) The Company and each of its subsidiaries (as defined in
Section 18 hereof) have been duly incorporated and are validly existing
as corporations in good standing under the laws of their respective
jurisdictions of incorporation, are duly qualified to do business and
are in good standing as foreign corporations in each jurisdiction in
which their respective ownership or lease of property or the conduct of
their respective businesses requires such qualification, except where
the failure to so register or qualify does not have a material adverse
effect on the condition (financial or other), business, prospects,
properties, net worth, or results of operations of the Company and its
subsidiaries taken as a whole (a "Material Adverse Effect"). The
Company and each of its subsidiaries have all power and authority
necessary to own or hold their respective properties and to conduct the
businesses in which they are engaged; and none of the subsidiaries of
the Company is a "significant subsidiary", as such term is defined in
Rule 405 of the Rules and Regulations.
(e) The Company has an authorized capitalization as set
forth in the Prospectus, and all of the issued shares of capital stock
of the Company (including the Stock) have been duly and validly
authorized and issued, are fully paid and non-assessable and conform to
the description thereof contained in the Prospectus; and all of the
issued shares of capital stock of each subsidiary of the Company have
been duly and validly authorized and issued and are fully paid and
non-assessable and (except for directors' qualifying shares) are owned
directly or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims.
(f) This Agreement has been duly authorized, executed and
delivered by the Company.
(g) The execution, delivery and performance of this
Agreement by the Company and the consummation of the transactions
contemplated hereby will not, in any material respect, conflict with
or result in a breach or violation of any of the terms or provisions
of, or constitute a default under, any material indenture, mortgage,
deed of trust, loan agreement or other material agreement or
instrument to which the Company or any of its subsidiaries is a party
or by which the Company or any of its subsidiaries is bound or to
which any of the property or assets of the Company or any of its
subsidiaries is subject, nor will such actions result in any violation
of the provisions of the charter or by-laws of the Company or any of
its subsidiaries or, in any material respect, any statute or any
order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Company or any of its subsidiaries or any
of their properties or assets; and except for the registration of the
Stock under the Securities Act and such consents, approvals,
authorizations, registrations or qualifications as may be required
under the Exchange Act and applicable state securities laws in
connection with the purchase and distribution of the Stock by the
Underwriters, no consent, approval, authorization or order of, or
filing or registration with, any such court or governmental agency or
body is required for the execution, delivery and performance of this
Agreement by the Company and the consummation of the transactions
contemplated hereby.
3
<PAGE> 4
(h) Except as described in the Prospectus, there are no
contracts, agreements or understandings between the Company and any
person granting such person the right (other than rights which have
been waived or satisfied) to require the Company to file a
registration statement under the Securities Act with respect to any
securities of the Company owned or to be owned by such person or to
require the Company to include such securities in the securities
registered pursuant to the Registration Statement or in any securities
being registered pursuant to any other registration statement filed by
the Company under the Securities Act.
(i) Except as described in the Prospectus, the Company
has not sold or issued any shares of Common Stock during the six-month
period preceding the date of the Prospectus, including any sales
pursuant to Rule 144A under, or Regulations D or S of, the Securities
Act, other than shares issued pursuant to employee benefit plans,
qualified stock options plans or other employee compensation plans or
pursuant to outstanding options, rights or warrants.
(j) Neither the Company nor any of its subsidiaries has
sustained, since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus, any material
loss or interference with its business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Prospectus; and, since such
date, there has not been any change in the capital stock or long-term
debt of the Company or any of its subsidiaries or any material adverse
change, or any development involving a prospective material adverse
change, in or affecting the general affairs, management, financial
position, shareholders' equity or results of operations of the Company
and its subsidiaries, otherwise than as set forth or contemplated in
the Prospectus.
(k) The financial statements (including the related notes
and supporting schedules) filed as part of the Registration Statement
or included or incorporated by reference in the Prospectus present
fairly the financial condition and results of operations of the
entities purported to be shown thereby, at the dates and for the
periods indicated, and have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis
throughout the periods involved, except as otherwise stated therein.
(l) Price Waterhouse LLP, who have certified certain
financial statements of the Company, whose report appears in the
Prospectus or is incorporated by reference therein and who have
delivered the initial letter referred to in Section 9(g) hereof, are
independent public accountants as required by the Securities Act and
the Rules and Regulations.
(m) The Company and each of 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
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<PAGE> 5
materially interfere with the use made and proposed to be made of such
property by the Company and its subsidiaries; and all real property
and buildings held under lease by the Company and its subsidiaries are
held by them under valid, subsisting and enforceable leases, with such
exceptions as are not material and do not materially interfere with
the use made and proposed to be made of such property and buildings by
the Company and its subsidiaries.
(n) The Company and each of its subsidiaries carry, or
are covered by, insurance in such amounts and covering such risks as
is adequate for the conduct of their respective businesses and the
value of their respective properties and as is customary for companies
engaged in similar businesses in similar industries.
(o) Except as described in the Prospectus, the Company
and each of its subsidiaries own or possess adequate rights to use all
material patents, patent applications, trademarks, service marks,
trade names, trademark registrations, service mark registrations,
copyrights and licenses necessary for the conduct of their respective
businesses, except where failure to own or possess the same would not
reasonably be expected to have a Material Adverse Effect, and have no
reason to believe that the conduct of their respective businesses will
conflict with, and have not received any notice of any claim of
conflict with, any such rights of others, except where any such claim
would not reasonably be expected to have a Material Adverse Effect.
(p) Except as described in the Prospectus, there are no
legal or governmental proceedings pending to which the Company or any
of its subsidiaries is a party or of which any property or assets of
the Company or any of its subsidiaries is the subject which, if
determined adversely to the Company or any of its subsidiaries, would
reasonably be expected to have a Material Adverse Effect; and to the
best of the Company's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others
which, if determined adversely to the Company or any of its
subsidiaries, would reasonably be expected to have a Material Adverse
Effect.
(q) The conditions for use of Form S-3, as set forth in
the General Instructions thereto, have been satisfied.
(r) There are no contracts or other documents which are
required to be described in the Prospectus or filed as exhibits to the
Registration Statement by the Securities Act or by the Rules and
Regulations which have not been described in the Prospectus or filed
as exhibits to the Registration Statement or incorporated therein by
reference as permitted by the Rules and Regulations.
(s) No relationship, direct or indirect, exists between
or among the Company on the one hand, and the directors, officers,
shareholders, customers or suppliers of the Company on the other hand,
which is required to be described in the Prospectus which is not so
described.
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<PAGE> 6
(t) No labor disturbance by the employees of the Company
exists or, to the knowledge of the Company, is imminent which might be
expected to have a Material Adverse Effect.
(u) The Company is in compliance in all material respects
with all presently applicable provisions of the Employee Retirement
Income Security Act of 1974, as amended, including the regulations and
published interpretations thereunder ("ERISA"); no "reportable event"
(as defined in ERISA) has occurred with respect to any "pension plan"
(as defined in ERISA) for which the Company would have any liability;
the Company has not incurred and does not expect to incur liability
under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of
the Internal Revenue Code of 1986, as amended, including the
regulations and published interpretations thereunder (the "Code"); and
each "pension plan" for which the Company would have any liability
that is intended to be qualified under Section 401(a) of the Code is
so qualified in all material respects and nothing has occurred,
whether by action or by failure to act, which would cause the loss of
such qualification.
(v) The Company has filed all federal, state and local
income and franchise tax returns required to be filed through the date
hereof and has paid all taxes due thereon, and no tax deficiency has
been determined adversely to the Company or any of its subsidiaries
which has had, nor does the Company have any knowledge of any tax
deficiency which, if determined adversely to the Company or any of its
subsidiaries, might have a Material Adverse Effect.
(w) Since the date as of which information is given in
the Prospectus through the date hereof, and except as may otherwise be
disclosed in the Prospectus, the Company has not (i) issued or granted
any securities, (ii) incurred any liability or obligation, direct or
contingent, other than liabilities and obligations which were incurred
in the ordinary course of business, (iii) entered into any transaction
not in the ordinary course of business or (iv) declared or paid any
dividend on its capital stock.
(x) The Company (i) makes and keeps accurate books and
records and (ii) maintains internal accounting controls which provide
reasonable assurance that (A) transactions are executed in accordance
with management's authorization, (B) transactions are recorded as
necessary to permit preparation of its financial statements and to
maintain accountability for its assets, (C) access to its assets is
permitted only in accordance with management's authorization and (D)
the reported accountability for its assets is compared with existing
assets at reasonable intervals.
(y) Neither the Company nor any of its subsidiaries (i)
is in violation of its charter or by-laws, (ii) is in default in any
material respect, and no event has occurred which, with notice or
lapse of time or both, would constitute such a default, in the due
performance or observance of any term, covenant or condition contained
in any material indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which it is a party or by which
6
<PAGE> 7
it is bound or to which any of its properties or assets is subject,
except where any such default would not reasonably be expected to have
a Material Adverse Effect, or (iii) is in violation in any material
respect of any law, ordinance, governmental rule, regulation or court
decree to which it or its property or assets may be subject or has
failed to obtain any material license, permit, certificate, franchise
or other governmental authorization or permit necessary to the
ownership of its property or to the conduct of its business, except
where any such violation or failure would not reasonably be expected
to have a Material Adverse Effect.
(z) Neither the Company nor any of its subsidiaries, nor
any director, officer, agent, employee or other person associated with
or acting on behalf of the Company or any of its subsidiaries, has
used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expense relating to political
activity; made any direct or indirect unlawful payment to any foreign
or domestic government official or employee from corporate funds;
violated or is in violation of any provision of the Foreign Corrupt
Practices Act of 1977; or made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment.
(aa) To the best knowledge of the Company, each of the
Company and its subsidiaries (i) is in compliance with any and all
applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment
or hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), (ii) has received all permits, licenses or
other approvals required of them under applicable Environmental Laws
to conduct their respective businesses as currently conducted and
(iii) is in compliance with all terms and conditions of any such
permit, license or approval, except where such noncompliance with
Environmental Laws, failure to receive required permits, licenses or
other approvals or failure to comply with the terms and conditions of
such permits, licenses or approvals would not, singly or in the
aggregate, have a Material Adverse Effect.
(ab) Neither the Company nor any subsidiary is an
"investment company" within the meaning of such term under the
Investment Company Act of 1940 and the rules and regulations of the
Commission thereunder.
(ac) The Common Stock is listed and duly admitted to
trading on the Nasdaq National Market (the "NASDAQ/NM"), and the
Company has received notification that the listing by the NASDAQ/NM of
the Stock has been approved, subject to official notice of issuance of
the Stock.
2. Representations, Warranties and Agreements of the Selling
Shareholder. The Selling Shareholder represents, warrants and agrees that:
7
<PAGE> 8
(a) The Selling Shareholder has, and immediately prior to
the Delivery Date (as defined in Section 5 hereof) the Selling
Shareholder will have good and valid title to the shares of Stock to
be sold by the Selling Shareholder hereunder on such date, free and
clear of all liens, encumbrances, equities or claims; and upon
delivery of such shares and payment therefor pursuant hereto, good and
valid title to such shares, free and clear of all liens, encumbrances,
equities or claims, will pass to the several Underwriters.
(b) The Selling Shareholder has placed in custody under a
custody agreement (the "Custody Agreement") with ______________ , as
custodian (the "Custodian"), for delivery under this Agreement,
certificates in negotiable form (with signature guaranteed by a
commercial bank or trust company having an office or correspondent in
the United States or a member firm of the New York or American Stock
Exchanges) representing the shares of Stock to be sold by the Selling
Shareholder hereunder.
(c) The Selling Shareholder has full right, power and
authority to enter into this Agreement and the Custody Agreement; the
execution, delivery and performance of this Agreement and the Custody
Agreement by the Selling Shareholder and the consummation by the
Selling Shareholder of the transactions contemplated hereby and
thereby will not conflict with or result in a material breach or
violation of any of the terms or provisions of, or constitute a
default under, any material indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Selling
Shareholder is a party or by which the Selling Shareholder is bound or
to which any of the property or assets of the Selling Shareholder is
subject, nor will such actions result in any violation of the
provisions of the charter or by-laws of the Selling Shareholder or any
statute or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Selling Shareholder or the
property or assets of the Selling Shareholder; and, except for the
registration of the Stock under the Securities Act and such consents,
approvals, authorizations, registrations or qualifications as may be
required under the Exchange Act and applicable state securities laws
in connection with the purchase and distribution of the Stock by the
Underwriters, and NASD approval of the terms of the underwriting,
no consent, approval, authorization or order of, or filing or
registration with, any such court or governmental agency or
body is required for the execution, delivery and performance of this
Agreement or the Custody Agreement by the Selling Shareholder and the
consummation by the Selling Shareholder of the transactions
contemplated hereby and thereby.
(d) All information furnished by or on behalf of such
Selling Shareholder in writing expressly for use in the Registration
Statement and Prospectus is, and on the Delivery Date will be, true,
correct, and complete in any material respects, and does not, and on
the Delivery Date will not contain any untrue statement of a material
fact or omit to state any material fact necessary to make such
information not misleading.
8
<PAGE> 9
(e) The Selling Shareholder has not taken and will not
take, directly or indirectly, any action which is designed to or which
has constituted or which might reasonably be expected to cause or
result in the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the shares
of the Stock.
3. Purchase of the Stock by the Underwriters. On the basis of
the representations and warranties contained in, and subject to the
terms and conditions of, this Agreement, the Selling Shareholder
hereby agrees to sell 701,350 shares of the Stock to the several
Underwriters and each of the Underwriters, severally and not jointly,
agrees to purchase the number of shares of the Stock set opposite that
Underwriter's name in Schedule 1 hereto. The price of the Stock shall
be $______________ per share.
The Selling Shareholder shall not be obligated to deliver any
of the Stock to be delivered on the Delivery Date except upon payment
for all the Stock to be purchased on the Delivery Date as provided
herein.
4. Offering of Stock by the Underwriters. Upon authorization by
the Underwriters of the release of the Stock, the several Underwriters
propose to offer the Stock for sale upon the terms and conditions set
forth in the Prospectus.
5. Delivery of and Payment for the Stock. Delivery of and
payment for the Stock shall be made at the office of Wilson, Sonsini,
Goodrich & Rosati, 650 Page Mill Road, Palo Alto, California, not
later than 10:00 A.M., local time, on the [fourth] full business day
following the date of this Agreement or at such other date or place as
shall be determined by agreement between the Underwriters and the
Selling Shareholder. This date and time are sometimes referred to as
the "Delivery Date." On the Delivery Date, the Selling Shareholder
shall deliver or cause to be delivered certificates representing the
Stock to the Underwriters for the account of each Underwriter against
payment to or upon the order of the Selling Shareholder of the
purchase price by wire transfer payable in immediately available funds
to an account designated in writing by the Selling Shareholder;
provided that the amount of such payment shall be reduced by one days'
interest on the amount of gross proceeds at the Fed funds rate (the
Underwriters' cost of borrowing such funds) plus any other expenses
associated with suc payment of immediately available funds. Time
shall be of the essence, and delivery at the time and place specified
pursuant to this Agreement is a further condition of the obligation of
each Underwriter hereunder. Upon delivery, the Stock shall be
registered in such names and in such denominations as the Underwriters
shall request in writing not less than two full business days prior to
the Delivery Date. For the purpose of expediting the checking and
packaging of the certificates for the Stock, the Company shall make
the certificates representing the Stock available for inspection by
the Underwriters in New York, New York, not later than 2:00 P.M., New
York City time, on the business day prior to the Delivery Date.
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<PAGE> 10
6. Further Agreements of the Company. The Company agrees:
(a) To prepare the Prospectus in a form approved by the
Underwriters and to file such Prospectus pursuant to Rule 424(b) under
the Securities Act not later than Commission's close of business on
the second business day following the execution and delivery of this
Agreement or, if applicable, such earlier time as may be required by
Rule 430A(a)(3) under the Securities Act; to make no further amendment
or any supplement to the Registration Statement or to the Prospectus
prior to the Delivery Date except as permitted herein; to advise the
Underwriters, promptly after it receives notice thereof, of the time
when any amendment to the Registration Statement has been filed or
becomes effective or any supplement to the Prospectus or any amended
Prospectus has been filed and to furnish the Underwriters with copies
thereof; to file promptly all reports and any definitive proxy or
information statements required to be filed by the Company with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of the Prospectus and for so long
as the delivery of a prospectus is required in connection with the
offering or sale of the Stock; to advise the Underwriters, promptly
after it receives notice thereof, of the issuance by the Commission of
any stop order or of any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus, of the suspension of the
qualification of the Stock for offering or sale in any jurisdiction,
of the initiation or threatening of any proceeding for any such
purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or the Prospectus or for
additional information; and, in the event of the issuance of any stop
order or of any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus or suspending any such
qualification, to use promptly its best efforts to obtain its
withdrawal;
(b) To furnish promptly to each of the Underwriters and
to counsel for the Underwriters a signed copy of the Registration
Statement as originally filed with the Commission, and each amendment
thereto filed with the Commission, including all consents and exhibits
filed therewith;
(c) To deliver promptly to the Underwriters such number
of the following documents as the Underwriters shall reasonably
request: (i) conformed copies of the Registration Statement as
originally filed with the Commission and each amendment thereto (in
each case excluding exhibits other than this Agreement, (ii) each
Preliminary Prospectus, the Prospectus and any amended or supplemented
Prospectus and (iii) any document incorporated by reference in the
Prospectus (excluding exhibits thereto); and, if the delivery of a
prospectus is required at any time after the Effective Time in
connection with the offering or sale of the Stock or any other
securities relating thereto and if at such time any events shall have
occurred as a result of which the Prospectus as then amended or
supplemented would include an untrue statement of a material fact or
omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made when such Prospectus is delivered, not misleading, or, if
for any other reason it shall be necessary to amend or supplement the
Prospectus or to file
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<PAGE> 11
under the Exchange Act any document incorporated by reference in the
Prospectus in order to comply with the Securities Act or the Exchange
Act, to notify the Underwriters and, upon their request, to file such
document and to prepare and furnish without charge to each Underwriter
and to any dealer in securities as many copies as the Underwriters may
from time to time reasonably request of an amended or supplemented
Prospectus which will correct such statement or omission or effect
such compliance.
(d) To file promptly with the Commission any amendment to
the Registration Statement or the Prospectus or any supplement to the
Prospectus that may, in the judgment of the Company or the
Underwriters, be required by the Securities Act or requested by the
Commission;
(e) Prior to filing with the Commission any amendment to
the Registration Statement or supplement to the Prospectus, any
document incorporated by reference in the Prospectus or any Prospectus
pursuant to Rule 424 of the Rules and Regulations, to furnish a copy
thereof to the Underwriters and counsel for the Underwriters and
obtain the consent of the Underwriters to the filing;
(f) As soon as practicable after the Effective Date to
make generally available to the Company's security holders and to
deliver to the Underwriters an earnings statement of the Company and
its subsidiaries (which need not be audited) complying with Section
11(a) of the Securities Act and the Rules and Regulations, provided
that, to the extent permitted by Rule 158, the Company may use the
filing of its periodic reports at the times required by the rules
governing such reports, to comply with the requirements of this
Section 6(f);
(g) Promptly from time to time to take such action as the
Underwriters may reasonably request to qualify the Stock for offering
and sale under the securities laws of such jurisdictions as the
Selling Shareholder may request and to comply with such laws so as to
permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the
distribution of the Stock (but, in any event, no later than ________
__, 1995); provided that in connection therewith the Company shall not
be required to qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction;
(h) For a period of thirty days from the date of
the Prospectus, not to, directly or indirectly, offer for sale, sell
or otherwise dispose of (or enter into any transaction or device which
is designed to, or could be expected to, result in the disposition by
any person at any time in the future of) any shares of Common Stock
(other than the Stock and shares issued pursuant to employee benefit
plans, qualified stock option plans or other employee compensation
plans existing on the date hereof or pursuant to currently outstanding
options, warrants or rights), or sell or grant options, rights or
warrants with respect to any shares of Common Stock (other than the
grant of options pursuant to option plans existing on the date
hereof), without the prior written consent of Lehman Brothers Inc.;
and
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<PAGE> 12
(i) To take such steps as shall be necessary to ensure
that neither the Company nor any subsidiary shall become an
"investment company" within the meaning of such term under the
Investment Company Act of 1940 and the rules and regulations of the
Commission thereunder.
7. Further Agreements of the Selling Shareholder. The Selling
Shareholder agrees:
(a) That the Stock to be sold by the Selling Shareholder
hereunder, which is represented by the certificates held in custody
for the Selling Shareholder, is subject to the interest of the
Underwriters, that the arrangements made by the Selling Shareholder
for such custody are to that extent irrevocable, and that the
obligations of the Selling Shareholder hereunder shall not be
terminated by any act of the Selling Shareholder, by operation of law
or the occurrence of any other event.
(b) To deliver to the Underwriters prior to the Delivery
Date a properly completed and executed United States Treasury
Department Form W-9.
(c) To pay all Federal, state, local, stock transfer and
other taxes, if any, on the sale of the Stock being sold by the
Selling Shareholder to the Underwriters.
8. Expenses. The Company agrees to pay (a) the costs incident to
the preparation, printing and filing under the Securities Act of the
Registration Statement and any amendments and exhibits thereto; (b)
the costs of distributing the Registration Statement as originally
filed and each amendment thereto and any post-effective amendments
thereof (including, in each case, exhibits), any Preliminary
Prospectus, the Prospectus and any amendment or supplement to the
Prospectus or any document incorporated by reference therein, all as
provided in this Agreement; (c) the costs of producing and
distributing this Agreement and any other related documents in
connection with the offering, purchase, sale and delivery of the
stock; (d) the costs of delivering and distributing the Custody
Agreement; (e) the filing fees incident to securing any required
review by the National Association of Securities Dealers, Inc. of the
terms of sale of the Stock; (f) any applicable listing or other fees;
(g) the fees and expenses of qualifying the Stock under the securities
laws of the several jurisdictions as provided in Section 6(g) and of
preparing, printing and distributing a Blue Sky Memorandum (including
related fees and expenses of counsel to the Underwriters); and (h) all
other costs and expenses incident to the performance of the
obligations of the Company and the Selling Shareholder under this
Agreement; provided that, except as provided in this Section 8 and in
Section 14 the Underwriters shall pay their own costs and expenses,
including the costs and expenses of their counsel, any transfer taxes
on the Stock which they may sell and the expenses of advertising any
offering of the Stock made by the Underwriters.
9. Conditions of Underwriters' Obligations. The respective
obligations of the Underwriters hereunder are subject to the accuracy,
when made and on the
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<PAGE> 13
Delivery Date, of the representations and warranties of the Company
and the Selling Shareholder contained herein, to the performance by
the Company and the Selling Shareholder of their respective
obligations hereunder, and to each of the following additional terms
and conditions:
(a) The Prospectus shall have been timely filed with the
Commission in accordance with Section 6(a); no stop order suspending
the effectiveness of the Registration Statement or any part thereof
shall have been issued and no proceeding for that purpose shall have
been initiated or threatened by the Commission; and any request of the
Commission for inclusion of additional information in the Registration
Statement or the Prospectus or otherwise shall have been complied
with.
(b) No Underwriter shall have discovered and disclosed to
the Company on or prior to the Delivery Date that the Registration
Statement or the Prospectus or any amendment or supplement thereto
contains an untrue statement of a fact which, in the opinion of Gray
Cary Ware & Freidenrich, counsel for the Underwriters, is material or
omits to state a fact which, in the opinion of such counsel, is
material and is required to be stated therein or is necessary to make
the statements therein not misleading.
(c) All corporate proceedings and other legal matters
incident to the authorization, form and validity of this Agreement,
the Custody Agreement, the Stock, the Registration Statement and the
Prospectus, and all other legal matters relating to this Agreement and
the transactions contemplated hereby shall be reasonably satisfactory
in all material respects to counsel for the Underwriters, and the
Company and the Selling Shareholder shall have furnished to such
counsel all documents and information that they may reasonably request
to enable them to pass upon such matters.
(d) Wilson, Sonsini, Goodrich & Rosati shall have
furnished to the Underwriters its opinion, as counsel to the Company,
addressed to the Underwriters and dated the Delivery Date, in form and
substance reasonably satisfactory to the Underwriters, to the effect
that:
(i) The Company and each of the Significant
Subsidiaries have been duly incorporated and are validly existing as
corporations in good standing under the laws of their respective
jurisdictions of incorporation, and have all power and authority
necessary to own or hold their respective properties and conduct the
businesses in which they are engaged;
(ii) The Company has an authorized capitalization
as set forth in the Prospectus, and all of the issued shares of
capital stock of the Company (including the shares of Stock being
delivered on the Delivery Date) have been duly and validly authorized
and issued, are fully paid and non-assessable and conform to the
description thereof contained in the Prospectus; and all of the issued
shares of capital stock of each Significant Subsidiary have been duly
and validly authorized and issued and are fully paid, non-assessable
and (except for
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<PAGE> 14
directors' qualifying shares) are owned directly or indirectly by the
Company, free and clear of all liens, encumbrances, equities or
claims;
(iii) There are no preemptive or other rights to
subscribe for or to purchase, nor any restriction upon the voting or
transfer of, any shares of the Stock pursuant to the Company's charter
or by-laws or any agreement or other instrument known to such counsel;
(iv) To the best of such counsel's knowledge and
other than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property or assets of the
Company or any of its subsidiaries is the subject which, if determined
adversely to the Company or any of its subsidiaries, might have a
Material Adverse Effect; and, to the best of such counsel's knowledge,
no such proceedings are threatened by governmental authorities or by
others;
(v) The Registration Statement was declared
effective under the Securities Act as of the date and time specified
in such opinion, the Prospectus was filed with the Commission pursuant
to the subparagraph of Rule 424(b) of the Rules and Regulations
specified in such opinion on the date specified therein and no stop
order suspending the effectiveness of the Registration Statement has
been issued and, to the knowledge of such counsel, no proceeding for
that purpose is pending or threatened by the Commission;
(vi) The Registration Statement and the Prospectus
and any further amendments or supplements thereto made by the Company
prior to the Delivery Date (other than the financial statements and
related schedules therein, as to which such counsel need express no
opinion) comply as to form in all material respects with the
requirements of the Securities Act and the Rules and Regulations; and
the documents incorporated by reference in the Prospectus (other than
the financial statements and related schedules therein, as to which
such counsel need express no opinion), when they were filed with the
Commission complied as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations of the
Commission thereunder;
(vii) This Agreement has been duly authorized,
executed and delivered by the Company; and constitutes a valid and
binding agreement of the Company enforceable against the Company in
accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a
proceeding in equity or at law) or an implied covenant of good faith
and fair dealing;
(viii) Compliance by the Company with all of the
provisions of this Agreement and the consummation of the transactions
contemplated hereby will not, in any material respect, conflict with
or result in a breach or violation
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<PAGE> 15
of any of the terms or provisions of, or constitute a default under,
any material indenture, mortgage, deed of trust, loan agreement or
other material agreement or instrument to which the Company or any of
its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject that is an exhibit to
any Incorporated Document, nor will such actions result in any
violation of the provisions of the charter or by-laws of the Company
or any of its subsidiaries or, in any material respect, any statute or
any order, rule or regulation known to such counsel of any court or
governmental agency or body having jurisdiction over the Company or
any of its subsidiaries or any of their properties or assets; and,
except for the registration of the Stock under the Securities Act and
such consents, approvals, authorizations, registrations or
qualifications as may be required under the Exchange Act and
applicable state securities laws in connection with the purchase and
distribution of the Stock by the Underwriters, no consent, approval,
authorization or order of, or filing or registration with, any such
court or governmental agency or body is required for the execution,
delivery and performance of this Agreement by the Company and the
consummation of the transactions contemplated hereby; and
(ix) To the best of such counsel's knowledge,
except for the residual rights of the Selling Shareholder under the
Investor's Rights Agreement dated as of __________, 1994 between the
Company and the Selling Shareholder, there are no contracts,
agreements or understandings between the Company and any person
granting such person the right (other than rights which have been
waived or satisfied) to require the Company to file a registration
statement under the Securities Act with respect to any securities of
the Company owned or to be owned by such person or to require the
Company to include such securities in the securities registered
pursuant to the Registration Statement or in any securities being
registered pursuant to any other registration statement filed by the
Company under the Securities Act.
In rendering such opinion, such counsel may (i) state that its
opinion is limited to matters governed by the Federal laws of the
United States of America and the laws of the State of California; (ii)
rely (to the extent such counsel deems proper and specifies in its
opinion), as to matters involving the application of laws of any other
state or country upon the opinion of other counsel of good standing,
provided that such other counsel is satisfactory to counsel for the
Underwriters and furnishes a copy of its opinion to the Underwriters.
Such counsel shall also have furnished to the Underwriters a written
statement, addressed to the Underwriters and dated the Delivery Date,
in form and substance satisfactory to the Underwriters, to the effect
that (x) such counsel has acted as counsel to the Company on a regular
basis (although the Company is also represented by its General Counsel
and, with respect to certain other matters, by other outside counsel),
has acted as counsel to the Company in connection with previous
financing transactions and has acted as counsel to the Company in
connection with the preparation of the Registration Statement, and (y)
based on the foregoing, no facts have come to the attention of such
counsel which lead it to believe that (I) the Registration Statement,
as of the Effective Date, contained any untrue statement of a material
fact or
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<PAGE> 16
omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading, or
that the Prospectus as of its date or as of the Delivery Date contained
or contains any untrue statement of a material fact or omitted or omits
to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances
under which they were made, not misleading or (II) any document
incorporated by reference in the Prospectus when they were filed with
the Commission contained an untrue statement of a material fact or
omitted to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading. The foregoing opinion and statement may be
qualified by a statement to the effect that such counsel does not
assume any responsibility for the accuracy, completeness or fairness of
the statements contained in the Registration Statement or the
Prospectus except for the statements made in the Prospectus under the
captions "Description of Capital Stock" and, insofar as such statements
relate to the Stock and concern legal matters.
(e) The Underwriters shall have received on the Delivery
Date a certificate of C. Wendell Bergere, Esq., General Counsel of the
Company, dated the Delivery Date and addressed to the Underwriters and
Wilson, Sonsini, Goodrich & Rosati, P.C. to the effect that:
(i) The Company is duly registered and qualified
to conduct its business and is in good standing as a foreign
corporation in each jurisdiction or place where the nature of its
properties or the conduct of its business requires such registration
or qualification, except where the failure so to register or qualify
or to be in good standing does not have a Material Adverse Effect;
(ii) Each subsidiary is duly registered and
qualified to conduct its business and is in good standing as a foreign
corporation in each jurisdiction or place where the nature of its
properties or the conduct of its business requires such registration
or qualification, except where the failure so to register or qualify
or to be in good standing does not have a Material Adverse Effect;
(iii) Neither the Company nor any of the
subsidiaries is in violation in any material respect of its respective
certificate or articles of incorporation or by-laws, or other
organizational documents, or to the best knowledge of such counsel, is
in default in any material respect in the performance of any material
obligation, agreement or condition contained in any bond, debenture,
note or other evidence of indebtedness or in any material agreement,
indenture, lease or other instrument to which the Company or any of
the subsidiaries is a party or by which any of them or any of their
respective properties may be bound, except as disclosed in the
Prospectus and except to the extent that any such violation or default
would not have a Material Adverse Effect; and there are no material
agreements, contracts, indentures, leases or other instruments, that
are not described in the Prospectus (or any amendment or supplement
thereto) or that are required to be filed as an exhibit to any
incorporated document that are not filed as required;
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<PAGE> 17
(iv) To the best knowledge of such counsel,
neither the Company nor any of the subsidiaries is in violation of any
law, ordinance, administrative or governmental rule or regulation
applicable to the Company or any of the subsidiaries or of any decree
of any court or governmental agency or body having jurisdiction over
the Company or any of the subsidiaries, except to the extent that any
such violation would not have a Material Adverse Effect;
(v) To the best knowledge of such counsel, except
as disclosed in the Prospectus, neither the Company nor any of the
subsidiaries has received any notice of infringement of or conflict
with (and knows of no infringement of or conflict with) asserted
rights of others with respect to any patents, patent rights,
copyrights, licenses, inventions, trademarks, service marks, trade
names and other proprietary rights necessary to conduct its business
as now operated and in the manner described in the Prospectus which,
singly or in the aggregate, would have a Material Adverse Effect; and
(vi) The statements in the Prospectus under the
caption "Risk Factors - Patents and Proprietary Rights; Current Patent
Litigation," in "Business - Patents and Licenses," and "Business -
Litigation", and in "Item 3 - Legal Proceedings" of the Company's most
recent annual report on Form 10-K and in "Item 3 - Legal Proceedings"
of the Company's most recent quarterly report on Form 10-Q included or
incorporated by reference in the Prospectus, insofar as such
statements constitute a summary of the legal matters, documents or
proceedings referred to therein, fairly present the information called
for with respect to such legal matters, documents and proceedings and
fairly summarize the matters referred to therein.
(f) The counsel for the Selling Shareholder shall have
furnished to the Underwriters a written opinion, as counsel to the
Selling Shareholder, addressed to the Underwriters and dated the
Delivery Date, in form and substance reasonably satisfactory to the
Underwriters, to the effect that:
(i) The Selling Shareholder has full right, power
and authority to enter into this Agreement and the Custody Agreement;
the execution, delivery and performance of this Agreement and the
Custody Agreement by the Selling Shareholder and the consummation by
the Selling Shareholder of the transactions contemplated hereby and
thereby will not, in any material respect, conflict with or result in a
breach or violation of any of the terms or provisions of, or constitute
a default under, any material indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument identified to such counsel
on an officer's certificate as being material to which the Selling
Shareholder is a party or by which the Selling Shareholder is bound or
to which any of the property or assets of the Selling Shareholder is
subject, nor will such actions result in any material violation of the
charter or by-laws of the Selling Shareholder or any statute or any
order, rule or regulation known to such counsel of any court or
governmental agency or body having jurisdiction over the Selling
Shareholder or the property or assets of the Selling Shareholder; and,
except for the registration of the Stock under the Securities Act and
such consents, approvals, authorizations, registrations or
qualifications as may be required under the
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<PAGE> 18
Exchange Act and applicable state securities laws in connection with
the purchase and distribution of the Stock by the Underwriters, and
NASD approval of the terms of the underwriting, no consent, approval,
authorization or order of, or filing or registration with, any such
court or governmental agency or body is required for the execution,
delivery and performance of this Agreement or the Custody Agreement by
the Selling Shareholder and the consummation by the Selling Shareholder
of the transactions contemplated hereby and thereby;
(ii) This Agreement has been duly authorized,
executed and delivered by or on behalf of the Selling Shareholder and
constitutes a valid and binding agreement of the Selling Shareholder,
enforceable in accordance with its terms;
(iii) A Custody Agreement has been duly authorized,
executed and delivered by the Selling Shareholder and constitutes a
valid and binding agreement of the Selling Shareholder, enforceable
in accordance with its terms except as limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally and except that the enforceability of the
Custody Agreement is subject to the effect of general principles of
equity including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing and the possible
unavailability of specific performance or injunctive relief,
regardless whether considered in a proceeding in equity or at law;
(iv) Immediately prior to the Delivery Date, the
Selling Shareholder had good and valid title to the shares of Stock to
be sold by the Selling Shareholder under this Agreement, free and
clear of all liens, encumbrances, equities or claims, and full right,
power and authority to sell, assign, transfer and deliver such shares
to be sold by the Selling Shareholder hereunder; and
(v) Assuming each Underwriter purchases the
Shares to be sold by the Selling Shareholder for value in good faith
and without notice of any adverse claim, the delivery by the Selling
Shareholder to the Underwriters of stock certificates evidencing such
Shares will pass valid title to such Shares to the Underwriters, free
of any adverse claim as to which the Underwriters have no knowledge.
In rendering such opinion, such counsel may (i) state that its
opinion is limited to matters governed by the Federal laws of the
United States of America, the laws of the State of California and the
corporate laws of the jurisdiction in which the Selling Shareholder is
organized (and that such counsel is not admitted in the jurisdiction
in which the Selling Shareholder is organized) and (ii) in rendering
the opinions in Section 9(e)(i) and (iv) above, rely upon certificates
of the Selling Shareholder in respect of matters of fact as to
material agreements, and ownership of and liens, encumbrances,
equities or claims on the shares of Stock sold by the Selling
Shareholder, provided that such counsel shall furnish copies thereof
to the Underwriters.
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<PAGE> 19
(g) The Underwriters shall have received from Gray Cary
Ware & Freidenrich, counsel for the Underwriters, such opinion or
opinions, dated the Delivery Date, with respect to the issuance and
sale of the Stock, the Registration Statement, the Prospectus and
other related matters as the Underwriters may reasonably require, and
the Company shall have furnished to such counsel such documents as
they reasonably request for the purpose of enabling them to pass upon
such matters.
(h) At the time of execution of this Agreement, the
Underwriters shall have received from Price Waterhouse LLP a letter,
in form and substance satisfactory to the Underwriters, addressed to
the Underwriters and dated the date hereof (i) confirming that they
are independent public accountants within the meaning of the
Securities Act and are in compliance with the applicable requirements
relating to the qualification of accountants under Rule 2-01 of
Regulation S-X of the Commission, (ii) stating, as of the date hereof
(or, with respect to matters involving changes or developments since
the respective dates as of which specified financial information is
given in the Prospectus, as of a date not more than five days prior to
the date hereof), the conclusions and findings of such firm with
respect to the financial information and other matters ordinarily
covered by accountants' "comfort letters" to underwriters in
connection with registered public offerings.
(i) With respect to the letter of Price Waterhouse LLP
referred to in the preceding paragraph and delivered to the
Underwriters concurrently with the execution of this Agreement (the
"initial letter"), the Company shall have furnished to the
Underwriters a letter (the "bring-down letter") of such accountants,
addressed to the Underwriters and dated the Delivery Date (i)
confirming that they are independent public accountants within the
meaning of the Securities Act and are in compliance with the
applicable requirements relating to the qualification of accountants
under Rule 2-01 of Regulation S-X of the Commission, (ii) stating, as
of the date of the bring-down letter (or, with respect to matters
involving changes or developments since the respective dates as of
which specified financial information is given in the Prospectus, as
of a date not more than five days prior to the date of the bring-down
letter), the conclusions and findings of such firm with respect to the
financial information and other matters covered by the initial letter
and (iii) confirming in all material respects the conclusions and
findings set forth in the initial letter.
(j) The Company shall have furnished to the Underwriters
a certificate, dated the Delivery Date, of its Chairman of the Board,
its President or a Vice President and its Chief Financial Officer
stating that:
(i) The representations, warranties and
agreements of the Company in Section 1 are true and correct as of the
Delivery Date; the Company has complied with all its agreements
contained herein; and the conditions set forth in Sections 9(a) and
9(l) have been fulfilled; and
(ii) They have carefully examined the Registration
Statement and the Prospectus and, in their opinion (A) as of the
Effective Date, the
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<PAGE> 20
Registration Statement and Prospectus did not include any untrue
statement of a material fact and did not omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and (B) since the Effective Date no event has
occurred which should have been set forth in a supplement or amendment
to the Registration Statement or the Prospectus.
(k) The Selling Shareholder shall have furnished
to the Underwriters on the Delivery Date a certificate, dated
the Delivery Date, signed by, or on behalf of, the Selling
Shareholder stating that the representations, warranties and
agreements of the Selling Shareholder contained herein are
true and correct as of the Delivery Date and that the Selling
Shareholder has complied with all agreements contained herein to be
performed by the Selling Shareholder at or prior to the Delivery Date.
(l) (i) Neither the Company nor any of its
subsidiaries shall have sustained since the date of the latest audited
financial statements included or incorporated by reference in the
Prospectus any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated in the
Prospectus or (ii) since such date there shall not have been any
change in the capital stock or long-term debt of the Company or any of
its subsidiaries or any change, or any development involving a
prospective change, in or affecting the general affairs, management,
financial position, shareholders' equity or results of operations of
the Company and its subsidiaries, otherwise than as set forth or
contemplated in the Prospectus, the effect of which, in any such case
described in clause (i) or (ii), is, in the judgment of the
Underwriters, so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Stock being delivered on the Delivery Date on the terms and in the
manner contemplated in the Prospectus.
(m) Subsequent to the execution and delivery of this
Agreement (i) no downgrading shall have occurred in the rating
accorded the Company's debt securities by any "nationally recognized
statistical rating organization", as that term is defined by the
Commission for purposes of Rule 436(g)(2) of the Rules and Regulations
and (ii) no such organization shall have publicly announced that it
has under surveillance or review, with possible negative implications,
its rating of any of the Company's debt securities.
(n) Subsequent to the execution and delivery of this
Agreement there shall not have occurred any of the following: (i)
trading in securities generally on the New York Stock Exchange or the
American Stock Exchange or in the over-the-counter market, or trading
in any securities of the Company on any exchange or in the
over-the-counter market, shall have been suspended or minimum prices
shall have been established on any such exchange or such market by the
Commission, by such exchange or by any other regulatory body or
governmental authority having jurisdiction, (ii) a banking moratorium
shall have been declared by Federal or state authorities, (iii) the
United States shall
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<PAGE> 21
have become engaged in hostilities, there shall have been an
escalation in hostilities involving the United States or there shall
have been a declaration of a national emergency or war by the United
States or (iv) there shall have occurred such a material adverse
change in general economic, political or financial conditions (or the
effect of international conditions on the financial markets in the
United States shall be such) as to make it, in the judgment of a
majority in interest of the several Underwriters, impracticable or
inadvisable to proceed with the public offering or delivery of the
Stock being delivered on the Delivery Date on the terms and in the
manner contemplated in the Prospectus.
(v) The NASDAQ/NM shall have approved the Stock for listing,
subject only to official notice of issuance.
All opinions, letters, evidence and certificates mentioned
above or elsewhere in this Agreement shall be deemed to be in
compliance with the provisions hereof only if they are in form and
substance reasonably satisfactory to counsel for the Underwriters.
10. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless each
Underwriter (including any Underwriter in its role as qualified
independent underwriter pursuant to the rules of the National
Association of Securities Dealers, Inc.), its officers and employees
and each person, if any, who controls any Underwriter within the
meaning of the Securities Act, from and against any loss, claim,
damage or liability, joint or several, or any action in respect
thereof (including, but not limited to, any loss, claim, damage,
liability or action relating to purchases and sales of Stock), to
which that Underwriter, officer, employee or controlling person may
become subject, under the Securities Act or otherwise, insofar as such
loss, claim, damage, liability or action arises out of, or is based
upon, (i) any untrue statement or alleged untrue statement of a
material fact contained (A) in any Preliminary Prospectus, the
Registration Statement or the Prospectus or in any amendment or
supplement thereto or (B) in any blue sky application or other
document prepared or executed by the Company (or based upon any
written information furnished by the Company) specifically for the
purpose of qualifying any or all of the Stock under the securities
laws of any state or other jurisdiction (any such application,
document or information being hereinafter called a "Blue Sky
Application"), (ii) the omission or alleged omission to state in any
Preliminary Prospectus, the Registration Statement or the Prospectus,
or in any amendment or supplement thereto, or in any Blue Sky
Application any material fact required to be stated therein or
necessary to make the statements therein not misleading or (iii) any
act or failure to act or any alleged act or failure to act by any
Underwriter in connection with, or relating in any manner to, the
Stock or the offering contemplated hereby, and which is included as
part of or referred to in any loss, claim, damage, liability or action
arising out of or based upon matters covered by clause (i) or (ii)
above (provided that the Company shall not be liable under this clause
(iii) to the extent that it is determined in a final judgment by a
court of competent jurisdiction that such loss, claim, damage,
liability or action resulted directly from any such acts or failures
to act undertaken or omitted to be taken by such Underwriter through
its gross negligence or willful misconduct), and shall reimburse each
Underwriter and each such officer, employee or controlling person
promptly
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<PAGE> 22
upon demand for any legal or other expenses reasonably incurred by
that Underwriter, officer, employee or controlling person in
connection with investigating or defending or preparing to defend
against any such loss, claim, damage, liability or action as such
expenses are incurred; provided, however, that the Company shall not
be liable in any such case to the extent that any such loss, claim,
damage, liability or action arises out of, or is based upon, any
untrue statement or alleged untrue statement or omission or alleged
omission made in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or in any such amendment or supplement,
or in any Blue Sky Application, in reliance upon and in conformity
with written information concerning such Underwriter furnished to the
Company through the Underwriters by or on behalf of any Underwriter
specifically for inclusion therein. The foregoing indemnity agreement
is in addition to any liability which the Company may otherwise have
to any Underwriter or to any officer, employee or controlling person
of that Underwriter.
(b) The Selling Shareholder shall indemnify and hold
harmless each Underwriter, its officers and employees, and each
person, if any, who controls any Underwriter within the meaning of the
Securities Act, from and against any loss, claim, damage or liability,
joint or several, or any action in respect thereof (including, but not
limited to, any loss, claim, damage, liability or action relating to
purchases and sales of Stock), to which that Underwriter, officer,
employee or controlling person may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue
statement or alleged untrue statement of a material fact contained in
any Preliminary Prospectus, the Registration Statement or the
Prospectus or in any amendment or supplement thereto or (ii) the
omission or alleged omission to state in any Preliminary Prospectus,
Registration Statement or the Prospectus, or in any amendment or
supplement thereto, any material fact required to be stated therein or
necessary to make the statements therein not misleading, but in each
case only to the extent that the untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon
and in conformity with written information concerning the Selling
Shareholder furnished by or on behalf of the Selling Shareholder
specifically for inclusion therein, and shall reimburse each
Underwriter, its officers and employees and each such controlling
person for any legal or other expenses reasonably incurred by that
Underwriter, its officers and employees or controlling person in
connection with investigating or defending or preparing to defend
against any such loss, claim, damage, liability or action as such
expenses are incurred; provided, however, that the Selling Shareholder
shall not be liable in any such case to the extent that any such loss,
claim, damage, liability or action arises out of, or is based upon,
any untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus, the Registration
Statement or the Prospectus or in any such amendment or supplement in
reliance upon and in conformity with written information concerning
such Underwriter furnished to the Company through the Underwriters by
or on behalf of any Underwriter specifically for inclusion therein;
and provided, further, that the liability of each Selling Shareholder
under the foregoing indemnity agreement shall be limited to
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<PAGE> 23
an amount equal to the initial public offering price of the Stock sold
by the Selling Shareholder, less the underwriting discounts and
commissions, as set forth on the front cover page of the Prospectus.
The foregoing indemnity agreement is in addition to any liability
which the Selling Shareholder may otherwise have to any Underwriter or
any officer, employee or controlling person of that Underwriter.
(c) Each Underwriter, severally and not jointly, shall
indemnify and hold harmless the Company and the Selling Shareholder,
their respective officers and employees, each of their respective
directors, and each person, if any, who controls the Company and/or the
Selling Shareholder within the meaning of the Securities Act, from and
against any loss, claim, damage or liability, joint or several, or any
action in respect thereof, to which the Company and/or the Selling
Shareholder or any such director, officer or controlling person may
become subject, under the Securities Act or otherwise, insofar as such
loss, claim, damage, liability or action arises out of, or is based
upon, (i) any untrue statement or alleged untrue statement of a
material fact contained (A) in any Preliminary Prospectus, the
Registration Statement or the Prospectus or in any amendment or
supplement thereto, or (B) in any Blue Sky Application or (ii) the
omission or alleged omission to state in any Preliminary Prospectus,
the Registration Statement or the Prospectus, or in any amendment or
supplement thereto, or in any Blue Sky Application any material fact
required to be stated therein or necessary to make the statements
therein not misleading, but in each case only to the extent that the
untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written
information concerning such Underwriter furnished to the Company by or
on behalf of that Underwriter specifically for inclusion therein, and
shall reimburse the Company, the selling Shareholder and any such
director, officer or controlling person for any legal or other expenses
reasonably incurred by the Company, the Selling Shareholder or any such
director, officer or controlling person in connection with
investigating or defending or preparing to defend against any such
loss, claim, damage, liability or action as such expenses are incurred.
The foregoing indemnity agreement is in addition to any liability which
any Underwriter may otherwise have to the Company, the Selling
Shareholder or any such director, officer, employee or controlling
person.
(d) Promptly after receipt by an indemnified party under
this Section 11 of notice of any claim or the commencement of any
action, the indemnified party shall, if a claim in respect thereof is
to be made against the indemnifying party under this Section 11,
notify the indemnifying party in writing of the claim or the
commencement of that action; provided, however, that the failure to
notify the indemnifying party shall not relieve it from any liability
which it may have under this Section 11 except to the extent it has
been materially prejudiced by such failure and, provided further, that
the failure to notify the indemnifying party shall not relieve it from
any liability which it may have to an indemnified party otherwise than
under this Section 11. If any such claim or action shall be brought
against an indemnified party, and it shall notify the indemnifying
party thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it wishes, jointly with any other
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<PAGE> 24
similarly notified indemnifying party, to assume the defense thereof
with counsel reasonably satisfactory to the indemnified party. After
notice from the indemnifying party to the indemnified party of its
election to assume the defense of such claim or action, the
indemnifying party shall not be liable to the indemnified party under
this Section 11 for any legal or other expenses subsequently incurred
by the indemnified party in connection with the defense thereof other
than reasonable costs of investigation; provided, however, that the
Underwriters shall have the right to employ counsel to represent
jointly the Underwriters and their respective officers, employees and
controlling persons who may be subject to liability arising out of any
claim in respect of which indemnity may be sought by the Underwriters
against the Company or the Selling Shareholder under this Section 11
if, in the reasonable judgment of the Underwriters, it is advisable
for the Underwriters, officers, employees and controlling persons to
be jointly represented by separate counsel, and in that event the fees
and expenses of such separate counsel shall be paid by the Company or
the Selling Shareholder. No indemnifying party shall (i) without the
prior written consent of the indemnified parties (which consent shall
not be unreasonably withheld), 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, or (ii) be
liable for any settlement of any such action effected without its
written consent (which consent shall not be unreasonably withheld),
but if settled with the consent of the indemnifying party or if there
be a final judgment of the plaintiff in any such action, the
indemnifying party agrees to indemnify and hold harmless any
indemnified party from and against any loss or liability by reason of
such settlement or judgment.
(e) If the indemnification provided for in this Section
11 shall for any reason be unavailable to or insufficient to hold
harmless an indemnified party under Section 11(a), 11(b) or 11(c) in
respect of any loss, claim, damage or liability, or any action in
respect thereof, referred to therein, then each indemnifying party
shall, in lieu of indemnifying such indemnified party, contribute to
the amount paid or payable by such indemnified party as a result of
such loss, claim, damage or liability, or action in respect thereof,
(i) in such proportion as shall be appropriate to reflect the relative
benefits received by the Company and the Selling Shareholder on the
one hand and the Underwriters on the other from the offering of the
Stock or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above
but also the relative fault of the Company and the Selling Shareholder
on the one hand and the Underwriters on the other with respect to the
statements or omissions which resulted in such loss, claim, damage or
liability, or action in respect thereof, as well as any other relevant
equitable considerations. The relative benefits received by the
Company and the Selling Shareholder on the one hand and the
Underwriters on the other with respect to such offering shall
24
<PAGE> 25
be deemed to be in the same proportion as the total net proceeds from
the offering of the Stock purchased under this Agreement (before
deducting expenses) received by the Selling Shareholder, on the one
hand, and the total underwriting discounts and commissions received by
the Underwriters with respect to the shares of the Stock purchased
under this Agreement, on the other hand, bear to the total gross
proceeds from the offering of the shares of the Stock under this
Agreement, in each case as set forth in the table on the cover page of
the Prospectus. The relative fault shall be determined by reference
to whether the untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to
information supplied by the Company, the Selling Shareholder or the
Underwriters, the intent of the parties and their relative knowledge,
access to information and opportunity to correct or prevent such
statement or omission. The Company, the Selling Shareholder and the
Underwriters agree that it would not be just and equitable if
contributions pursuant to this Section were to be determined by pro
rata allocation (even if the Underwriters were treated as one entity
for such purpose) or by any other method of allocation which does not
take into account the equitable considerations referred to herein.
The amount paid or payable by an indemnified party as a result of the
loss, claim, damage or liability, or action in respect thereof,
referred to above in this Section shall be deemed to include, for
purposes of this Section 11(e), any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of
this Section 11(e), no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which the
Stock underwritten by it and distributed to the public was offered to
the public exceeds the amount of any damages which such Underwriter
has otherwise paid or become liable to pay by reason of any untrue or
alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
The Underwriters' obligations to contribute as provided in this
Section 11(e) are several in proportion to their respective
underwriting obligations and not joint.
(f) The Underwriters severally confirm and the Company
acknowledges that the statements with respect to the public offering of
the Stock by the Underwriters set forth in the last paragraph on the
cover page of, the legend concerning over-allotments on the inside
front cover page of and the information regarding the Underwriters
appearing under the caption "Underwriting" in, the Prospectus are
correct and constitute the only information concerning such
Underwriters furnished in writing to the Company by or on behalf of the
Underwriters specifically for inclusion in the Registration Statement
and the Prospectus.
(g) The Selling Shareholder confirms that the statements
with respect to the Selling Shareholder appearing under the caption
"Selling Shareholder" in the Prospectus are correct and constitute the
only information furnished in writing to the Company specifically for
inclusion in the Registration Statement and Prospectus.
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11. Termination. The obligations of the Underwriters hereunder
may be terminated by the Underwriters by notice given to and received
by the Company and the Selling Shareholder prior to delivery of and
payment for the Stock if, prior to that time, any of the events
described in Sections 9(l), 9(m) or 9(n), shall have occurred or if
the Underwriters shall decline to purchase the Stock for any reason
permitted under this Agreement.
12. Reimbursement of Underwriters' Expenses. If (a) the Selling
Shareholder shall fail to tender the Stock for delivery to the
Underwriters by reason of any failure, refusal or inability on the
part of the Company or the Selling Shareholder to perform any
agreement on its part to be performed, or because any other condition
of the Underwriters' obligations hereunder required to be fulfilled by
the Company or the Selling Shareholder is not fulfilled, the Company
and the Selling Shareholder will reimburse the Underwriters for all
reasonable out-of-pocket expenses (including fees and disbursements of
counsel) incurred by the Underwriters in connection with this
Agreement and the proposed purchase of the Stock for which each is
responsible based upon which party failed to perform its obligations
hereunder, and upon demand the Company and/or the Selling Shareholder
shall pay to the Underwriters the respective amounts thereof for which
each is so responsible. If this Agreement is terminated pursuant to
Section 12 by reason of the default of one or more Underwriters,
neither the Company nor the Selling Shareholder shall be obligated to
reimburse any defaulting Underwriter on account of those expenses.
13. Notices, etc. All statements, requests, notices and
agreements hereunder shall be in writing, and:
(a) if to the Underwriters, shall be delivered or sent by
mail, telex or facsimile transmission to Lehman Brothers Inc., Three
World Financial Center, New York, New York 10285, Attention:
Syndicate Department (Fax: 212-526-6588), with a copy, in the case of
any notice pursuant to Section 11(d), to the Director of Litigation,
Office of the General Counsel, Lehman Brothers Inc., 3 World Financial
Center, 10th Floor, New York, NY 10285;
(b) if to the Company, shall be delivered or sent by
mail, telex or facsimile transmission to the address of the Company
set forth in the Registration Statement, Attention: C. Wendell Bergere
(Fax: 408-894-8000);
(c) if to the Selling Shareholder, shall be delivered or
sent by mail, telex or facsimile transmission to the Selling
Shareholder at the address set forth on Schedule 2 hereto.
Any such statements, requests, notices or agreements shall take effect
at the time of receipt thereof. The Company, and the Selling
Shareholder shall be entitled to act and rely upon any request,
consent, notice or agreement given or made on behalf of the
Underwriters by Lehman Brothers Inc. on behalf of the Underwriters and
the Company and the Underwriters shall be entitled to act and
26
<PAGE> 27
rely upon any request, consent, notice or agreement given or made on
behalf of the Selling Shareholder by the Custodian.
14. Persons Entitled to Benefit of Agreement. This Agreement
shall inure to the benefit of and be binding upon the Underwriters,
the Company, the Selling Shareholder and their respective successors.
This Agreement and the terms and provisions hereof are for the sole
benefit of only those persons, except that (A) the representations,
warranties, indemnities and agreements of the Company and the Selling
Shareholder contained in this Agreement shall also be deemed to be for
the benefit of the person or persons, if any, who control any
Underwriter within the meaning of Section 15 of the Securities Act and
(B) the indemnity agreement of the Underwriters contained in Section
10(c) of this Agreement shall be deemed to be for the benefit of
directors of the Company, officers of the Company who have signed the
Registration Statement and any person controlling the Company within
the meaning of Section 15 of the Securities Act. Nothing in this
Agreement is intended or shall be construed to give any person, other
than the persons referred to in this Section 14, any legal or
equitable right, remedy or claim under or in respect of this Agreement
or any provision contained herein.
15. Survival. The respective indemnities, representations,
warranties and agreements of the Company, the Selling Shareholder and
the Underwriters contained in this Agreement or made by or on behalf
on them, respectively, pursuant to this Agreement, shall survive the
delivery of and payment for the Stock and shall remain in full force
and effect, regardless of any investigation made by or on behalf of
any of them or any person controlling any of them.
16. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF CALIFORNIA.
17. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the
executed counterparts shall each be deemed to be an original but all
such counterparts shall together constitute one and the same
instrument.
18. Definition of the Terms "Business Day" and "Subsidiary". For
purposes of this Agreement, (a) "business day" means any day on which
the New York Stock Exchange, Inc. is open for trading and (b)
"subsidiary" has the meaning set forth in Rule 405 of the Rules and
Regulations.
19. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the
meaning or interpretation of, this Agreement.
If the foregoing correctly sets forth the agreement among the
Company, the Selling Shareholder and the Underwriters, please indicate
your acceptance in the space provided for that purpose below.
27
<PAGE> 28
Very truly yours,
ALTERA CORPORATION
By
--------------------------------
The Selling Shareholder:
INTEL CORPORATION
By:
-------------------------------
Accepted:
28
<PAGE> 29
LEHMAN BROTHERS INC.
SMITH BARNEY INC.
By LEHMAN BROTHERS INC.
By
--------------------------------
Authorized Representative
30
<PAGE> 30
SCHEDULE 1
<TABLE>
<CAPTION>
Number of
Underwriters Shares
------------ ---------
<S> <C>
Lehman Brothers Inc. . . . . . . . . . . . . . . . . . . . . . . . 350,675
Smith Barney Inc. . . . . . . . . . . . . . . . . . . . . . . . . 350,675
-------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . 701,350
=======
</TABLE>
1
<PAGE> 31
SCHEDULE 2
<TABLE>
<CAPTION>
Intel Corporation Number of Shares
----------------- ----------------
[Address]
---------
<S> <C>
701,350
Total . . . . . . . . . . . . . . . . . . . . . . . 701,350
=======
</TABLE>
2
<PAGE> 1
EXHIBIT 5.1
September 18, 1995
Altera Corporation
2610 Orchard Parkway
San Jose, CA 95134
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-3 to be filed by you
with the Securities and Exchange Commission on September 18, 1995 (the
"Registration Statement"), in connection with the registration under the
Securities Act of 1933, as amended, of 701,350 shares of your Common Stock (the
"Shares"), all of which are authorized and have been previously issued to Intel
Corporation. The Shares are to be sold by Intel Corporation to the underwriters
for resale to the public as described in the Registration Statement pursuant to
the Underwriting Agreement filed as an exhibit thereto. As your counsel in
connection with this transaction, we have examined the proceedings taken and are
familiar with the proceedings proposed to be taken by you in connection with the
sale of the Shares.
It is our opinion that upon conclusion of the proceedings being taken or
contemplated by us, as your counsel, to be taken prior to the sale 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 sold in the manner described
in the Registration Statement, will be legally and validly issued, fully paid
and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement, and further consent to the use of our name wherever appearing in the
Registration Statement, including the prospectus constituting a part hereof, and
any amendment thereto.
Very truly yours,
WILSON, SONSINI, GOODRICH & ROSATI
Professional Corporation
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report dated
January 18, 1995 which appears on page 28 of the 1994 Annual Report to
Shareholders of Altera Corporation, which is incorporated by reference in Altera
Corporation's Annual Report on Form 10-K for the year ended December 31, 1994.
We also consent to the reference to us under the heading "Experts" in such
Prospectus.
PRICE WATERHOUSE LLP
San Jose, California
September 18, 1995
