<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 30, 1997 or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from __________ to __________
Commission file number 0-16617
ALTERA CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 77-0016691
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
101 Innovation Drive, San Jose, California 95134
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (408) 544-7000
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for at least the past 90 days.
Yes [X] No[ ]
Number of shares of common stock outstanding at August 4, 1997: 88,734,689
<PAGE> 2
ALTERA CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED
JUNE 30, 1997
PART I
FINANCIAL INFORMATION AND
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
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ALTERA CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
June 30, Dec.31,
1997 1996
-------- -------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 66,467 $ 70,788
Short-term investments 306,959 210,062
--------- ---------
Total cash, cash equivalents, and
short-term investments 373,426 280,850
Accounts receivable, less allowance
for doubtful accounts of $2,765 and $2,399 57,992 68,486
Inventories 71,988 75,798
Deferred income taxes 58,402 45,402
Other current assets 17,999 2,451
--------- ---------
Total current assets 579,807 472,987
Property and equipment, net 130,336 89,804
Investments and other assets 204,915 215,421
-------- --------
$915,058 $778,212
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 27,115 $ 13,279
Accrued liabilities 127,113 89,209
Obligations 56,160 56,160
Accrued compensation 13,110 14,136
Income taxes payable -- 5,183
-------- --------
Total current liabilities 223,498 177,967
Convertible notes 230,000 230,000
-------- --------
Total liabilities 453,498 407,967
-------- --------
Stockholders' equity:
Common stock; $0.001 par value: 400,000
shares authorized, 88,540 and 87,604
shares issued and outstanding 89 88
Additional paid-in capital 108,085 90,556
Retained earnings 353,386 279,601
-------- --------
Total stockholders' equity 461,560 370,245
-------- --------
$915,058 $778,212
======== ========
</TABLE>
See accompanying notes to financial information
3
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ALTERA CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------------- -------------------------
June 30, June 30, June 30, June 30,
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Sales $164,115 $116,295 $306,554 $253,393
-------- -------- -------- --------
Costs and expenses:
Cost of sales 61,243 44,849 115,337 97,903
Research and development 14,439 11,343 26,754 23,866
Selling, general, and administrative 29,500 22,574 54,260 45,894
-------- -------- -------- --------
Total costs and expenses 105,182 78,766 196,351 167,663
-------- -------- -------- --------
Operating income 58,933 37,529 110,203 85,730
Interest and other income, net 1,262 387 1,591 1,310
-------- -------- -------- --------
Income before taxes 60,195 37,916 111,794 87,040
Provision for income taxes 20,466 13,651 38,009 31,335
-------- -------- -------- --------
Net income $ 39,729 $ 24,265 $73,785 $55,705
======== ======== ======== ========
Income per share:
Primary $ 0.42 $ 0.27 $ 0.79 $ 0.61
======== ======== ======== ========
Fully diluted $ 0.40 $ 0.26 $ 0.75 $ 0.59
======== ======== ======== ========
Shares and equivalents used in calculation
of income per share:
Primary 93,625 91,548 93,388 91,778
======== ======== ======== ========
Fully diluted 102,655 100,538 102,573 100,746
======== ======== ======== ========
</TABLE>
See accompanying notes to financial information
4
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ALTERA CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
----------------
June 30, June 30,
1997 1996
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 73,785 $ 55,705
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 12,760 9,691
Deferred income taxes (13,000) (6,501)
Changes in assets and liabilities:
Accounts receivable, net 10,494 14,470
Inventories 3,810 (45,703)
Other current and non-current assets (8,828) 2,260
Accounts payable 13,836 4,406
Accrued liabilities 37,904 12,827
Accrued compensation (1,026) (5,276)
Income taxes payable (5,183) (3,316)
--------- ---------
Cash provided by operating activities 124,552 38,563
--------- ---------
Cash flows from investing activities:
Purchases of property and equipment (48,818) (15,841)
Net change in short-term investments (96,897) 98,526
Long-term investments (688) (44,120)
--------- ---------
Cash provided by (used for) investing activities (146,403) 38,565
--------- ---------
Cash flows from financing activities:
Tax benefit from employee stock dispositions 9,530 -
Net proceeds from issuance of common stock 8,000 4,650
Payment on notes payable - (57,120)
--------- ---------
Cash provided by (used for) financing activities 17,530 (52,470)
--------- ---------
Net increase (decrease) in cash and cash equivalents (4,321) 24,658
Cash and cash equivalents at beginning of period 70,788 79,409
--------- ---------
Cash and cash equivalents at end of period $ 66,467 $ 104,067
========= =========
Supplemental disclosure of cash flow information:
Cash paid during the period for income taxes $ 54,795 $ 39,000
Cash paid during the period for interest $ 6,613 $ 6,613
</TABLE>
See accompanying notes to financial information
5
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ALTERA CORPORATION
NOTES TO FINANCIAL INFORMATION
(Unaudited)
Note 1 - Interim Statements:
In the opinion of the Company, the accompanying unaudited financial data contain
all adjustments, consisting only of normal, recurring adjustments, necessary to
present fairly the financial information included therein. This financial data
should be read in conjunction with the audited financial statements and notes
thereto included in the Company's Annual Report to Shareholders for the year
ended December 31, 1996. Results for the interim period presented are not
necessarily indicative of results for the entire year.
Certain prior year amounts have been reclassified to conform to the current
year's presentation.
Note 2 - Balance Sheet Detail:
<TABLE>
<CAPTION>
(In thousands)
June 30, Dec. 31,
1997 1996
--------- ---------
<S> <C> <C>
Inventories:
Purchased parts and raw materials $ 1,495 $ 1,773
Work-in-process 47,098 56,870
Finished goods 23,395 17,155
--------- ---------
$ 71,988 $ 75,798
========= =========
Property and equipment:
Land $ 19,925 19,925
Building 66,504 32,955
Equipment 84,924 75,453
Office furniture and equipment 12,548 9,508
Leasehold improvements 3,517 3,493
--------- ---------
187,418 141,334
Accumulated depreciation and
amortization (57,082) (51,530)
--------- ---------
$ 130,336 $ 89,804
========= =========
</TABLE>
Note 3 - Income Per Share:
Primary income per share is computed using the weighted average number of common
and dilutive common equivalent shares outstanding during the period. Dilutive
common equivalent shares consist of the assumed net shares issuable upon the
exercise of dilutive stock options using the treasury stock method. The
convertible subordinated notes issued in June 1995 are not common stock
equivalents and, therefore, have been excluded from the computation of primary
earnings per share.
Fully diluted net income per share assumes the conversion of the convertible
subordinated notes into shares of common stock, the elimination of the related
interest requirements, net of income taxes, and the dilutive effect of the stock
options.
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ALTERA CORPORATION
NOTES TO FINANCIAL INFORMATION (continued)
(Unaudited)
Note 4 - Pro Forma Net Income Per Share:
The Company computes its net income per share as stated in Note 3 in accordance
with provisions of the Accounting Principles Board's Opinion No. 15 (APB 15),
"Earnings per Share". In February 1997, the Financial Accounting Standards Board
released FAS 128, "Earnings per Share". The new standard supersedes APB 15 and
is effective for fiscal years beginning after December 15, 1997.
Under FAS 128, primary and fully diluted net income per share will be replaced
by basic and diluted net income per share. Basic net income per share is
computed based only on the weighted average number of common shares outstanding
during the period and does not give effect to the dilutive effect of common
equivalent shares, such as stock options. Diluted net income per share is
computed in the same manner as fully diluted net income per share, except that
the dilutive effect of the stock options is always based on the average market
price of the stock during the period, not the higher of the average and the
period end market price as required under APB 15.
Had the Company computed its net income per share based on FAS 128, the pro
forma amounts for basic and diluted net income per share would have been as
follows:
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Basic Net Income Per Share:
Net income $ 39,729 $ 24,265 $ 73,785 $ 55,705
======== ======== ======== ========
Weighted average common shares
outstanding 88,340 87,412 88,106 87,334
======== ======== ======== ========
Basic Net Income Per Share $ 0.45 $ 0.28 $ 0.84 $ 0.64
======== ======== ======== ========
Diluted Net Income Per Share:
Net income $ 39,729 $ 24,265 $ 73,785 $ 55,705
Convertible subordinated notes interest,
net of income taxes and capitalized
interest 1,455 1,896 3,079 3,816
-------- -------- -------- --------
$ 41,184 $ 26,161 $ 76,864 $ 59,521
======== ======== ======== ========
Weighted average common shares
outstanding 88,340 87,412 88,106 87,334
Dilutive stock options 5,285 4,136 5,282 4,422
Assumed conversions of subordinated note 8,990 8,990 8,990 8,990
-------- -------- -------- --------
102,615 100,538 102,378 100,746
======== ======== ======== ========
Diluted Net Income Per Share $ 0.40 $ 0.26 $ 0.75 $ 0.59
======== ======== ======== ========
</TABLE>
7
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ALTERA CORPORATION
NOTES TO FINANCIAL INFORMATION (continued)
(Unaudited)
Note 5 - Stockholders' Equity:
Effective June 19, 1997, Altera Corporation reincorporated as a Delaware
corporation with authorized capital of 400,000,000 shares of Common Stock,
$0.001 par value.
Note 6 - New Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board (FASB) issued SFAS No.
130 "Reporting Comprehensive Income." SFAS No. 130 establishes standards for
reporting and display of comprehensive income and its components in a financial
statement that is displayed with the same prominence as other financial
statements for periods beginning after December 15, 1997. Comprehensive income,
as defined, includes all changes in equity (net assets) during a period from
nonowner sources. Examples of items to be included in comprehensive income which
are excluded from net income include cumulative translation adjustments
resulting from consolidation of foreign subsidiaries' financial statements and
unrealized gains and losses on available-for-sale securities. Reclassification
of financial statements for earlier periods for comparative purposes is
required. The Company will adopt SFAS No. 130 beginning in 1998 and does not
expect such adoption to have a material effect on the consolidated financial
statements.
In June 1997, the FASB issued SFAS No. 131 (FAS 131) "Disclosures about Segments
of an Enterprise and Related Information." This statement establishes standards
for the way companies report information about operating segments in annual
financial statements for periods beginning after December 15, 1997. It also
establishes standards for related disclosures about products and services,
geographic areas, and major customers. The company will adopt SFAS 131 beginning
in 1998 and does not expect such adoption to have a material effect on the
consolidated financial statements.
8
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ALTERA CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Sales. Second quarter 1997 sales of $164.1 million were 41.1% higher
than the $116.3 million reported for the same period last year, and were up
15.2% from the first quarter 1997 sales of $142.4 million. Sales were higher
than the second quarter of 1996 primarily as a result of significantly higher
sales of the Company's MAX 7000, FLEX 10K and FLEX 8000 product families, which
were partially offset by reduced sales in the more mature MAX 5000 product
family. As compared to the first quarter of 1997, sales of virtually all of the
Company's product families increased or remained at the same level. The most
significant increases in sales from the first to second quarter of 1997 were
achieved in the MAX 7000, FLEX 10K and FLEX 8000 product families.
Geographically, the increase in sales from the first to the second quarter in
1997 was primarily driven by North America and Europe. Japan sales declined
approximately 2.7%, whereas Asia Pacific had a slight increase. Sales were
higher than the second quarter of 1996 for North America, Europe, Asia Pacific,
and Japan.
A significant portion of second quarter shipments was also ordered in
the second quarter (turns orders). Management expects that this relatively high
percentage of turns orders will persist and that it is consistent with the
Company's objective of helping customers bring new products to market quickly.
However, this high percentage of turns bookings limits the Company's ability to
forecast sales levels in future quarters, including the current quarter.
Historically, the third quarter has demonstrated seasonally slower sales growth
and management expects, at this point, for that trend to continue in the current
quarter. Third quarter revenues may also be affected by recently announced book
price reductions in the MAX 7000 and FLEX 10K product families. Management
believes that these reduced prices may result in increased demand and strengthen
the Company's market share over the long term. However, reduced prices may
negatively affect the Company's short-term revenue growth, and there can be no
assurance that increased demand and market share will be achieved in the longer
term. Additionally, new product introductions from competitors may also cause
pricing pressures which could affect revenue growth.
During the second quarter of 1997, the Company's inventories on hand
increased from $62.0 million at March 31, 1997 to $72.0 million at June 30,
1997. The build up of inventory is intended to reduce lead times in newer
product families and support potential growth in overall sales. The Company is
continuing to build inventory in the current quarter.
Gross Margin. The gross margin percentage in the second quarter of
62.7% was up from 62.0% during the prior quarter, and 61.4% in the same period a
year ago. Gross margins increased, despite lower
9
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selling prices, as a result of lower manufacturing costs due to improved yields,
process advancements, increased manufacturing activity and lower wafer costs.
Although yields measured as a total for all product families improved
for the first six months, yields for the FLEX 10K product family actually
decreased in the second quarter. The Company continues to spend significant
research and development resources to improve production yields on both new and
established products. Difficulties in production yields often occur in the
fabrication processes when the Company is beginning production of new products.
These difficulties can potentially result in significantly higher costs and
lower product availability. Management expects to continue to introduce new and
established products using new process technologies and may encounter similar
start-up difficulties during the transition to such process technologies.
Further, production throughput times vary considerably among the Company's wafer
suppliers and the Company may experience delays from time to time in processing
some of its products which also may result in higher costs and lower product
availability. In addition, gross margins may be negatively affected by lower
manufacturing volumes which result in manufacturing inefficiencies.
Research and Development. Research and development expenditures were
$14.4 million for the quarter ended June 30, 1997, or $2.1 million higher than
the prior quarter, and $3.1 million higher than the same period a year ago. The
research and development expenditures include expenditures for headcount,
prototype and pre-production costs, development of process technology,
development of software to support new products and design environments, and
development of new packages. As a percentage of sales, the research and
development expenditures were 8.8% for the second quarter of 1997, compared to
9.8% for the same quarter in 1996 and 8.6% for the first quarter of 1997.
Historically, the level of research and development expenditures as a percentage
of sales has fluctuated in part due to the timing of the purchase of masks and
wafers used in development and prototyping of new products. The Company
currently expects that, in the long term, research and development expenses will
continue to increase in absolute dollars but may fluctuate as a percentage of
sales.
The Company expects to continue to make significant investments in
prototyping of the FLEX 6000 and FLEX 10K product families. Also, the Company is
focusing its efforts on the development of programmable logic chips, related
development software and hardware, and advanced semiconductor wafer fabrication
processes. However, even if the Company accomplishes its goals for the
development of new products and manufacturing processes, there is no assurance
that these products will achieve market acceptance, that the new manufacturing
processes will be successful, or that the suppliers will provide the Company
with the quality or quantity of wafers and materials that the Company requires.
The Company must continue to develop and introduce new products in a timely
manner to help counter the industry's historical trend of prices declining as
products mature.
Selling, General, and Administrative. Second quarter selling, general,
and administrative expenses of $29.5 million are $6.9 million higher than the
same quarter a year ago, and $4.7 million higher than the
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prior quarter. A significant portion of the increase in the second quarter of
1997 from the prior quarter was the result of additional legal accruals for
litigation costs related to the patent suits with Xilinx. In addition, increases
as compared to the prior quarters are also attributable to higher marketing and
field sales headcount, increases in advertising and promotional expenditures,
and higher commissions due to increased sales. Selling, general, and
administrative expenses include commission and incentive expenses, advertising
and promotional expenditures, legal, and salary expenses related to field sales,
marketing, and administrative personnel.
Operating Income. Second quarter 1997 operating income of $58.9
million, representing 35.9% of sales, was lower than the 36.0% achieved during
the first quarter of 1997 and higher than the 32.3% for the same quarter a year
ago. The year-to-year increase in operating income as a percentage of revenue
basis was affected by the increase in the Company's gross margin and the
decreases in R&D and SG&A expenses.
Interest and Other Income. Interest and other income increased compared
to the first quarter of 1997 and the same quarter a year ago. Interest and other
income consists of interest income on cash balances available for investment
offset by interest expense related to the Convertible Subordinated Notes (such
interest expense is net of capitalized interest incurred during the construction
of the new headquarters). The increase in interest and other income from the
first quarter of 1997 to the second quarter of 1997 is a result of increased
cash balances available for investment as well as increased capitalization of
interest expenses.
Income Taxes. The Company's provision for income taxes was 34% for the
second quarter of 1997 compared to 36% for the quarter ended June 30, 1996. The
decrease in the income tax rate is due in part to increased research and
development credits and tax-exempt interest income in 1997 compared to 1996.
Future Results. Future operating results will depend on the Company's
ability to develop, manufacture, and sell complicated semiconductor components
and complex software that offer customers greater value than products of
competing vendors. The Company's efforts in this regard may not be successful.
Also, a number of factors outside of the Company's control, including general
economic conditions and cycles in world markets, exchange rate fluctuations, or
a lack of growth in the Company's end markets could impact future results. The
Company is highly dependent upon subcontractors to manufacture silicon wafers
and perform assembly and testing services. Disruptions or adverse supply
conditions arising from market conditions, political strife, labor disruptions,
natural or man-made disasters, other factors, and normal process variations
could have a material adverse effect on the Company's future operating results.
Competitive break-throughs and particularly competitive pricing could also
impact future operating results. Additionally, litigation relating to
competitive patents and intellectual property could have an adverse impact on
the Company's financial condition or operating results.
The Company owns more than 100 United States patents and has additional
pending United States patent applications on its semiconductor products. The
Company also has technology licensing agreements
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<PAGE> 12
with AMD, Cypress Semiconductor, Intel, and Texas Instruments 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. 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 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, that such licenses would be on terms or conditions
that would not have a material adverse effect on the Company. In addition, if
litigation were initiated, 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 significant litigation
expenses to enforce its intellectual property rights.
Liquidity and Capital Resources
The Company's cash, cash equivalents and short-term investments
increased by $92.5 million in the first six months of 1997, from $280.9 million
at December 31, 1996 to $373.4 million at June 30, 1997. The increase is mainly
attributable to net income of $73.8 million, adjusted by non-cash items
including depreciation and amortization of $12.8 million, and increases in
accounts payable and accrued liabilities totaling $51.7 million. Additional
sources were decreases in accounts receivable and inventory, and the issuance of
common stock to employees, totaling $22.3 million. Offsetting these sources of
cash was primarily an increase in fixed assets of $48.8 million and an increase
of $13.0 million in deferred income taxes during the first six months.
12
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During the first six months ended June 30, 1997, the Company invested
$48.8 million in property and equipment, primarily consisting of computer and
test equipment (approximately $9.8 million) and the construction of the new
corporate headquarters (approximately $36.6 million). In addition, during the
fourth quarter of 1997, the Company will be completing its investment in
WaferTech, L.L.C. in the amount of $56.2 million.
The Company believes that its cash, cash equivalents, and short-term
investments, combined with cash generated from ongoing operations, will be
adequate to finance the Company's operations, the remaining investment in
WaferTech, and capital expenditures for at least the next year.
Impact of Currency and Inflation. The Company purchases the majority of
its materials and services in U.S. Dollars, and most of its foreign sales are
transacted in U.S. dollars. However, Altera does have Yen denominated purchase
contracts with Sharp Corporation of Japan for processed silicon wafers. In
recent years, the Company did not hold or purchase any foreign exchange
contracts for the purchase or sale of foreign currencies but may choose to enter
into such contracts in the future should conditions appear favorable. Effects of
inflation on Altera's financial results have not been significant.
Safe Harbor Notice
This Report on Form 10-Q contains "forward looking statements" within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Forward looking statements are generally
preceded by words such as "expects," "suggests," "believes," "anticipates," or
"intends." The Company's future results of operations and the other forward
looking statements contained in this Report involve a number of risks and
uncertainties, many of which are outside the Company's control. Some of these
risks and uncertainties are described in the section of this Report entitled
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and in the Company's Annual Report on Form 10-K on file with the
Securities and Exchange Commission. Other factors that could cause actual
results to differ materially from projected results include but are not limited
to risks associated with the Company's dependence on third-party wafer
suppliers, the Company's ability to achieve continued cost reductions and
maintain gross margins, the Company's ability to achieve and maintain
appropriate inventory levels and respond successfully to changes in product
demand, the ability of price reductions to increase demand and strengthen the
Company's market share over the long term, successful development of new
products through investment in research and development and application of new
process technologies to old and new product lines, recruitment and retention of
qualified personnel, market acceptance of and demand for the Company's products,
competition for and pressure on pricing of the Company's products, changes in
customer ordering patterns, litigation involving intellectual property rights,
issuance of new patents and acquisition of other intellectual property rights,
and general market conditions.
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ALTERA CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED
JUNE 30, 1997
PART II
OTHER INFORMATION
14
<PAGE> 15
ITEM 1. LEGAL PROCEEDINGS.
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 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. Subsequently, the
Delaware case has been transferred to California. 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 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 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. Although no
assurances can be given as to the results of these cases, based on the present
status, management does not believe that such results will have a material
adverse effect on the Company's financial condition or results of operations.
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 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 a June 1996 trial
bifurcated from the infringement claims, the Company prevailed in its defense
that it is licensed under some or all of the patents asserted by AMD in the
suit. A second phase of the bifurcated licensing trial will determine the
specific AMD patents that are covered by the license. Due to the nature of the
litigation with AMD, and because the infringement portion of the lawsuit is
still in the pre-trial 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 remaining in the suit. Although no assurances can
be given as to the results of this case, based on its present status, management
does not believe that any of such results will have a material adverse effect on
the Company's financial condition or results of operations.
15
<PAGE> 16
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders of the Company was held on May 7,
1997 at 10:00 a.m., and was then adjourned to June 18, 1997 at 10:00 a.m. The
following matters were acted upon at the meeting:
<TABLE>
<CAPTION>
BROKER
MATTER FOR VOTES VOTES WITHHELD/ NON-
ACTED UPON VOTES AGAINST ABSTENTIONS VOTES
---------- ----- ------- ----------- -----
<S> <C> <C> <C> <C>
1. Rodney Smith 78,879,539 1,079,787 0 0
Michael A. Ellison 79,758,231 201,095 0 0
Paul Newhagen 79,750,989 208,337 0 0
Robert W. Reed 79,859,349 99,977 0 0
William E. Terry 79,859,549 99,777 0 0
Deborah D. Triant 79,504,827 454,499 0 0
2. Approval of amendment of the 1996 51,427,609 28,366,898 164,819 0
Stock Option Plan to increase the
Common Stock available for issuance
from 4,000,000 to 5,300,000.
3. Reincorporation in Delaware and
Authorized Shares of Common Stock of
Delaware Corporation.
A. Approval of the re-incorporation 46,060,134 32,304,773 141,107 6,047,417
of the Company as a Delaware
Corporation.
B. Approval to set the number of 49,551,309 28,965,156 173,838 1,269,023
authorized shares of Common Stock
of the Delaware Corporation at
400,000,000.
4. Ratification of the appointment of 79,827,373 54,635 77,318 0
Price Waterhouse LLP as independent
accountants for the Company for the
fiscal year ending December 31, 1997.
</TABLE>
16
<PAGE> 17
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
<TABLE>
<CAPTION>
(a) Exhibits
<S> <C> <C>
3.1 Certificate of Incorporation filed with the Delaware Secretary of State on March
25, 1997 (which became the Certificate of Incorporation of the Registrant on June
19, 1997).
3.2 By-laws of the Registrant as adopted May 5, 1997 (which became the By-laws of the
Registrant on June 19, 1997).
4.4 First Supplemental Indenture dated as of June 19, 1997 to Indenture dated as of
June 15, 1995.
10.50 Agreement and Plan of Merger dated June 18, 1997.
11.1 Computation of earnings per share.
27. Financial Data Schedule.
(b) Reports on Form 8-K
None.
</TABLE>
17
<PAGE> 18
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ALTERA CORPORATION
/s/ Nathan Sarkisian
-------------------------------
Nathan Sarkisian, Vice President
(duly authorized officer), and
Chief Financial Officer
(principal financial officer)
Date: August 13, 1997
18
<PAGE> 19
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Exhibits
- -------- --------
<S> <C>
3.1 Certificate of Incorporation filed with the Delaware Secretary of State on March
25, 1997 (which became the Certificate of Incorporation of the Registrant on June
19, 1997).
3.2 By-laws of the Registrant as adopted May 5, 1997 (which became the By-laws of the
Registrant on June 19, 1997).
4.4 First Supplemental Indenture dated as of June 19, 1997 to Indenture dated as of
June 15, 1995.
10.50 Agreement and Plan of Merger dated June 18, 1997.
11.1 Computation of earnings per share.
27. Financial Data Schedule.
</TABLE>
19
<PAGE> 1
CERTIFICATE OF INCORPORATION
OF
ALTERA CORPORATION
I, the undersigned, for the purposes of incorporating and organizing a
corporation under the General Corporation Law of the State of Delaware, do
execute this Certificate of Incorporation and do hereby certify as follows:
FIRST. The name of the corporation is Altera Corporation.
SECOND. The address of the corporation's registered office in the
State of Delaware is One Rodney Square, 10th Floor, Tenth and King Streets,
in the City of Wilmington, County of New Castle, 19801. The name of its
registered agent at such address is RL&F Service Corp.
THIRD. The purpose of the corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
FOURTH. The total number of shares of stock which the corporation
shall have authority to issue is four hundred million (400,000,000). All
such shares are to be Common Stock, par value of $0.001 per share.
FIFTH. The incorporator of the corporation is Jesse A. Finkelstein,
P.O. Box 551, Wilmington, DE 19899.
SIXTH. Unless and except to the extent that the by-laws of the
corporation shall so require, the election of directors of the corporation
need not be by written ballot.
SEVENTH. In furtherance and not in limitation of the powers conferred
by the laws of the State of Delaware, the Board of Directors of the
corporation is expressly authorized to adopt, alter, amend and repeal the
by-laws of the corporation, subject to the power of the stockholders of the
corporation to alter or repeal any by-law whether adopted by them or
otherwise.
EIGHTH. A director of the corporation shall not be liable to the
corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except to the extent such exemption from
liability or limitation thereof is not permitted under the General
Corporation Law of the State of Delaware as the same exists or may
hereafter be amended. Any amendment, modification or repeal of the
foregoing sentence shall not adversely affect any right or protection of a
director of the corporation hereunder in respect of any act or omission
occurring prior to the time of such amendment, modification or repeal.
NINTH. No action that is required or permitted to be taken by the
stockholders of the Corporation at any annual or special meeting of
stockholders may be effected by written consent of stockholders in lieu of
a meeting of stockholders. Notwithstanding anything contained in this
Certificate of Incorporation to the contrary, the affirmative vote of at
least 80 percent (80%) in voting power of the then outstanding voting stock
of the Corporation, voting together as a single class, shall be required to
amend, repeal or adopt any provision inconsistent with the Article Ninth.
TENTH. The corporation reserves the right at any time, and from time
to time, to amend, alter, change or repeal any provision contained in this
Certificate of Incorporation, and other provisions authorized by the laws
of the State of Delaware at the time in force may be added or inserted, in
the manner now or hereafter prescribed by law; and all rights, preferences
and privileges of whatsoever nature conferred upon stockholders, directors
or any other persons whomsoever by and pursuant to this Certificate of
Incorporation in its present form or as hereafter amended are granted
subject to the rights reserved in this article.
ELEVENTH. The powers of the incorporator are to terminate upon the
filing of this Certificate of Incorporation with the Secretary of State of
the State of Delaware. The names and mailing addresses of
<PAGE> 2
the persons who are to serve as the initial directors of the corporation
until the first annual meeting of stockholders of the corporation, or until
their successors are duly elected and qualified, are:
<TABLE>
<S> <C>
Rodney Smith Altera Corporation
2610 Orchard Parkway, San Jose, CA 95134
Michael A. Ellison 1211 88th Place NE
Bellevue, WA 98004
Paul Newhagen Altera Corporation
2610 Orchard Parkway, San Jose, CA 95134
Robert W. Reed 861 San Martin Place
Fremont, CA 94539
William E. Terry 925 Laurel Glen
Palo Alto, CA 94304
Deborah Triant CheckPoint Software Technologies, Inc.
400 Seaport Court, Suite 105
Redwood City, CA 94063
</TABLE>
Except as otherwise provided in this Article Eleventh, the number of
directors shall be as specified in the bylaws.
The undersigned incorporator hereby acknowledges that the foregoing
certificate of incorporation is his act and deed on March 25, 1997.
/s/ Jesse A. Finkelstein
--------------------------------------
Jesse A. Finkelstein
Incorporator
-2-
<PAGE> 1
BY-LAWS
OF
ALTERA CORPORATION
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
ARTICLE I
OFFICES AND RECORDS
SECTION 1.1. Delaware Office. The principal office of the Corporation in
the State of Delaware shall be located in the City of Wilmington, County of New
Castle, and the name and address of its registered agent is RL&F Service Corp.,
Tenth Floor, One Rodney Square, Tenth and King Streets, Wilmington, Delaware.
SECTION 1.2. Other Offices. The Corporation may have such other offices,
either within or without the State of Delaware, as the Board of Directors may
designate or as the business of the Corporation may from time to time require.
SECTION 1.3. Books and Records. The books and records of the Corporation
may be kept at the Corporation's headquarters in San Jose, California or at such
other locations outside the State of Delaware as may from time to time be
designated by the Board of Directors.
ARTICLE II
STOCKHOLDERS
SECTION 2.1. Annual Meetings. An annual meeting of stockholders shall be
held for the election of directors at such date, time and place, either within
or without the State of Delaware, as may be designated by resolution of the
Board of Directors from time to time. Any other proper business may be
transacted at the annual meeting.
SECTION 2.2. Special Meetings. Special meetings of stockholders for any
purpose or purposes may be called at any time by the Board of Directors, or by a
committee of the Board of Directors that has been duly designated by the Board
of Directors and whose powers and authority, as expressly provided in a
resolution of the Board of Directors, include the power to call such meetings,
but such special meetings may not be called by any other person or persons.
SECTION 2.3. Notice of Meetings. Whenever stockholders are required or
permitted to take any action at a meeting, a written notice of the meeting shall
be given that shall state the place, date and hour of the meeting and, in the
case of a special meeting, the purpose or purposes for which the meeting is
called. Unless otherwise provided by law, the Certificate of Incorporation or
these by-laws, the written notice of any meeting shall be given not less than
ten nor more than sixty days before the date of the meeting to each stockholder
entitled to vote at such meeting. If mailed, such notice shall be deemed to be
given when deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the Corporation.
SECTION 2.4. Adjournments. Any meeting of stockholders, annual or special,
may adjourn from time to time to reconvene at the same or some other place, and
notice need not be given of any such adjourned meeting if the time and place
thereof are announced at the meeting at which the adjournment is taken. At the
adjourned meeting the Corporation may transact any business which might have
been transacted at the original meeting. If the adjournment is for more than
thirty days, or if after the adjournment a new record date is fixed for the
adjourned meeting, notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
SECTION 2.5. Quorum. Except as otherwise provided by law, the Certificate
of Incorporation or these by-laws, at each meeting of stockholders the presence
in person or by proxy of the holders of shares of stock
<PAGE> 2
having a majority of the votes which could be cast by the holders of all
outstanding shares of stock entitled to vote at the meeting shall be necessary
and sufficient to constitute a quorum. In the absence of a quorum, the
stockholders so present may, by majority vote, adjourn the meeting from time to
time in the manner provided in Section 2.4 of these by-laws until a quorum shall
attend. Shares of its own stock belonging to the Corporation or to another
corporation, if a majority of the shares entitled to vote in the election of
directors of such other corporation is held, directly or indirectly, by the
Corporation, shall neither be entitled to vote nor be counted for quorum
purposes; provided, however, that the foregoing shall not limit the right of the
Corporation to vote stock, including but not limited to its own stock, held by
it in a fiduciary capacity.
SECTION 2.6. Organization. Meetings of stockholders shall be presided over
by the Chairman of the Board, if any, or in his absence by the Vice Chairman of
the Board, if any, or in his absence by the President, or in his absence by a
Vice President, or in the absence of the foregoing persons by a chairman
designated by the Board of Directors, or in the absence of such designation by a
chairman chosen at the meeting. The Secretary shall act as secretary of the
meeting, but in his absence the chairman of the meeting may appoint any person
to act as secretary of the meeting.
SECTION 2.7. Voting; Proxies. Except as otherwise provided by the
Certificate of Incorporation, each stockholder entitled to vote at any meeting
of stock-holders shall be entitled to one vote for each share of stock held by
him which has voting power upon the matter in question. Each stockholder
entitled to vote at a meeting of stockholders may authorize another person or
persons to act for him by proxy, but no such proxy shall be voted or acted upon
after three years from its date, unless the proxy provides for a longer period.
A proxy shall be irrevocable if it states that it is irrevocable and if, and
only as long as, it is coupled with an interest sufficient in law to support an
irrevocable power. A stockholder may revoke any proxy which is not irrevocable
by attending the meeting and voting in person or by filing an instrument in
writing revoking the proxy or by delivering a proxy in accordance with
applicable law bearing a later date to the Secretary of the Corporation. Voting
at meetings of stockholders need not be by written ballot; provided, however,
that any election for directors must be by ballot if demanded by any stockholder
at the meeting before the election has begun. At all meetings of stockholders
for the election of directors a plurality of the votes cast shall be sufficient
to elect directors. All other elections and questions shall, unless otherwise
provided by law, the Certificate of Incorporation or these By-laws, be decided
by the vote of the holders of shares of stock having a majority of the votes
which could be cast by the holders of all shares of stock outstanding and
entitled to vote thereon.
SECTION 2.8. Fixing Date for Determination of Stockholders of Record. In
order that the Corporation may determine the stockholders entitled to notice of
or to vote at any meeting of stockholders or any adjournment thereof, or
entitled to receive payment of any dividend or other distribution or allotment
of any rights, or entitled to exercise any rights in respect of any change,
conversion or exchange of stock or for the purpose of any other lawful action,
the Board of Directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted by
the Board of Directors and which record date: (1) in the case of determination
of stockholders entitled to vote at any meeting of stockholders or adjournment
thereof, shall, unless otherwise required by law, not be more than sixty nor
less than ten days before the date of such meeting and (2) in the case of any
other action, shall not be more than sixty days prior to such other action. If
no record date is fixed: (1) the record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be at the
close of business on the day next preceding the day on which notice is given,
or, if notice is waived, at the close of business on the day next preceding the
day on which the meeting is held and (2) the record date for determining
stockholders for any other purpose shall be at the close of business on the day
on which the Board of Directors adopts the resolution relating thereto. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
SECTION 2.9. List of Stockholders Entitled to Vote. The Secretary shall
prepare and make, at least ten days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for
2
<PAGE> 3
any purpose germane to the meeting, during ordinary business hours, for a period
of at least ten days prior to the meeting, either at a place within the city
where the meeting is to be held, which place shall be specified in the notice of
the meeting, or if not so specified, at the place where the meeting is to be
held. The list shall also be produced and kept at the time and place of the
meeting during the whole time thereof and may be inspected by any stockholder
who is present. Upon the willful neglect or refusal of the directors to produce
such a list at any meeting for the election of directors, they shall be
ineligible for election to any office at such meeting. The stock ledger shall be
the only evidence as to who are the stockholders entitled to examine the stock
ledger, the list of stockholders or the books of the Corporation, or to vote in
person or by proxy at any meeting of stockholders.
SECTION 2.10. No Action By Consent of Stockholders. No action that is
required to be taken by the stockholders of the Corporation at any annual or
special meeting of stockholders may be effected by written consent of
stockholders in lieu of a meeting.
SECTION 2.11. Conduct of Meetings. The Board of Directors of the
Corporation may adopt by resolution such rules and regulations for the conduct
of the meeting of stockholders as it shall deem appropriate. Except to the
extent inconsistent with such rules and regulations as adopted by the Board of
Directors, the chairman of any meeting of stockholders shall have the right and
authority to prescribe such rules, regulations and procedures and to do all such
acts as, in the judgment of such chairman, are appropriate for the proper
conduct of the meeting. Such rules, regulations or procedures, whether adopted
by the Board of Directors or prescribed by the chairman of the meeting, may
include, without limitation, the following: (i) the establishment of an agenda
or order of business for the meeting; (ii) rules and procedures for maintaining
order at the meeting and the safety of those present; (iii) limitations on
attendance at or participation in the meeting to stockholders of record of the
Corporation, their duly authorized and constituted proxies or such other persons
as the chairman of the meeting shall determine; (iv) restrictions on entry to
the meeting after the time fixed for the commencement thereof; and (v)
limitations on the time allotted to questions or comments by participants.
Unless and to the extent determined by the Board of Directors or the chairman of
the meeting, meetings of stockholders shall not be required to be held in
accordance with the rules of parliamentary procedure.
SECTION 2.12 Inspectors of Elections; Opening and Closing the Polls. The
Board of Directors by resolution may appoint one or more inspectors, which
inspector or inspectors may include individuals who serve the Corporation in
other capacities, including, without limitation, as officers, employees, agents
or representatives of the Corporation, to act at the meeting and make a written
report thereof. One or more persons may be designated as alternate inspectors to
replace any inspector who fails to act. If no inspector or alternate has been
appointed to act, or if all inspectors or alternates who have been appointed are
unable to act, at a meeting of stockholders, the chairman of the meeting shall
appoint one or more inspectors to act at the meeting. Each inspector, before
discharging his or her duties, shall take and sign an oath faithfully to execute
the duties of inspector with strict impartiality and according to the best of
his or her ability. The inspectors shall have the duties prescribed by the
General Corporation Law of the State of Delaware. The chairman of the meeting
shall fix and announce at the meeting the date and time of the opening and the
closing of the polls for each matter upon which the stockholders will vote at a
meeting.
ARTICLE III
BOARD OF DIRECTORS
SECTION 3.1. General Powers. The business and affairs of the Corporation
shall be managed by or under the direction of its Board of Directors. In
addition to the powers and authorities by these By-laws expressly conferred upon
them, the Board of Directors may exercise all such powers of the Corporation and
do all such lawful acts and things as are not by law, by the Certificate of
Incorporation or by these By-laws required to be exercised or done by the
stockholders.
SECTION 3.2. Number; Qualifications. The Board of Directors shall consist
of one or more members, the number to be determined from time to time by
resolution of the Board of Directors. Directors need not be stockholders.
3
<PAGE> 4
SECTION 3.3. Election; Resignation; Removal; Vacancies. At the first annual
meeting of stockholders and at each annual meeting thereafter, the stockholders
shall elect directors each of whom shall hold office for a term of one year or
until his successor is elected and qualified. Any director, or the entire Board
of Directors, may be removed, with or without cause, by the affirmative vote of
the holders of a majority of shares then entitled to vote at the election of
directors. Any director may resign at any time upon written notice to the
Corporation. Such resignation shall be effective upon receipt unless the notice
specifies a later time for that resignation to become effective. Any newly
created directorship resulting from an increase in the authorized number of
directors or any vacancy occurring in the Board of Directors by reason of death,
resignation, retirement, disqualification, removal from office or any other
cause may be filled by the affirmative vote of the remaining members of the
Board of Directors, though less than a quorum of the Board of Directors, and
each director so elected shall hold office until the expiration of the term of
office of the director whom he has replaced or until his successor is elected
and qualified. No decrease in the number of directors constituting the whole
Board shall shorten the term of any incumbent director.
SECTION 3.4. Regular Meetings. Regular meetings of the Board of Directors
may be held at such places within or without the State of Delaware and at such
times as the Board of Directors may from time to time determine, and if so
determined notices thereof need not be given.
SECTION 3.5. Special Meetings. Special meetings of the Board of Directors
may be held at any time or place within or without the State of Delaware
whenever called by the Chairman of the Board, the President, or by any two
members of the Board of Directors. Notice of the time and place of a special
meeting of the Board of Directors shall be delivered by the person or persons
calling the meeting personally, by facsimile or by telephone to each director or
sent by first-class mail, telegram, charges prepaid, addressed to each director
at that directors' address as it is shown on the records of the Corporation. If
the notice is mailed, it shall be deposited in the United States mail at least
four (4) days before the time of the holding of the meeting. If the notice is
delivered personally or by telephone or telegraph, it shall be delivered at
least forty-eight (48) hours before the time of the holding of the special
meeting. If by facsimile transmission, such notice shall be transmitted at least
twenty-four (24) hours before the time of holding of the special meeting. Any
oral notice given personally or by telephone may be communicated either to the
director or to a person at the office of the director who the person giving the
notice has reason to believe will promptly communicate it to the director. The
notice need not specify the purpose or purposes of the special meeting or the
place of the special meeting, if the meeting is to be held at the principal
office of the Corporation.
SECTION 3.6. Telephonic Meetings Permitted. Members of the Board of
Directors, or any committee designated by the Board of Directors, may
participate in a meeting thereof by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to this
by-law shall constitute presence in person at such meeting.
SECTION 3.7. Quorum; Vote Required for Action; Adjournment. At all meetings
of the Board of Directors fifty percent (50%) of the whole Board of Directors
shall constitute a quorum for the transaction of business. Except in cases in
which the Certificate of Incorporation or these By-laws otherwise provide, the
vote of a majority of the directors present at a meeting at which a quorum is
present shall be the act of the Board of Directors. A majority of the directors
present, whether or not a quorum, may adjourn any meeting to another time and
place. Notice of the time and place of holding an adjourned meeting need not be
given unless the meeting is adjourned for more than twenty-four (24) hours. If
the meeting is adjourned for more than twenty-four (24) hours, then notice of
the time and place of the adjourned meeting shall be given to the directors who
were not present at the time of the adjournment in the manner specified in
Section 3.5.
SECTION 3.8. Organization. Meetings of the Board of Directors shall be
presided over by the Chairman of the Board, if any, or in his absence by the
Vice Chairman of the Board, if any, or in his absence by the President, or in
their absence by a chairman chosen at the meeting. The Secretary shall act as
secretary of the meeting, but in his absence the chairman of the meeting may
appoint any person to act as secretary of the meeting.
SECTION 3.9. Informal Action by Directors. Unless otherwise restricted by
the Certificate of Incorporation or these By-laws, any action required or
permitted to be taken at any meeting of the Board of Directors, or
4
<PAGE> 5
of any committee thereof, may be taken without a meeting if all members of the
Board of Directors or such committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the Board of Directors or such committee.
SECTION 3.10. Fees and Compensation of Directors. Directors and members of
committees may receive such compensation, if any, for their services and such
reimbursement of expenses as may be fixed or determined by resolution of the
Board of Directors. This Section 3.10 shall not be construed to preclude any
director from serving the Corporation in any other capacity as an officer,
agent, employee or otherwise and receiving compensation for those services.
SECTION 3.11. Approval of Loans to Officers. The Corporation may lend money
to, or guarantee any obligation of, or otherwise assist any officer or other
employee of the Corporation or of its subsidiary, including any officer or
employee who is a director of the Corporation or its subsidiary, whenever, in
the judgment of the directors, such loan, guaranty or assistance may reasonably
be expected to benefit the Corporation. The loan, guaranty or other assistance
may be with or without interest and may be unsecured, or secured in such manner
as the Board of Directors shall approve, including without limitation, a pledge
of shares of stock of the Corporation. Nothing in this section contained shall
be deemed to deny, limit or restrict the powers of guaranty or warranty of the
Corporation at common law or under any statutes.
ARTICLE IV
COMMITTEES
SECTION 4.1. Committees. The Board of Directors may, by resolution passed
by a majority of the whole Board of Directors, designate one or more committees,
each committee to consist of one or more of the directors of the Corporation.
The Board of Directors may designate one or more directors as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of the committee. In the absence or disqualification of a member of the
committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in place of any such absent or disqualified member. Any such committee,
to the extent permitted by law and to the extent provided in the resolution of
the Board of Directors, shall have and may exercise all the powers and authority
of the Board of Directors in the management of the business and affairs of the
Corporation, and may authorize the seal of the Corporation to be affixed to all
papers which may require it.
SECTION 4.2. Committee Rules. Unless the Board of Directors otherwise
provides, each committee designated by the Board of Directors may make, alter
and repeal rules for the conduct of its business. In the absence of such rules
each committee shall conduct its business in the same manner as the Board of
Directors conducts its business pursuant to Article III of these By-laws.
ARTICLE V
OFFICERS
SECTION 5.1. Officers. The officers of the Corporation shall be a
president, a secretary, and a chief financial officer. The Corporation may also
have, at the discretion of the Board of Directors, a chairman of the board, one
or more vice presidents, one or more assistant secretaries, one or more
assistant treasurers, and such other officers as may be appointed in accordance
with the provisions of Section 5.3 of these By-laws. Any number of offices may
be held by the same person.
SECTION 5.2. Election of Officers. The officers of the Corporation except
such officers as may be appointed in accordance with the provisions of Section
5.3 or Section 5.5 of these By-laws, shall be chosen by the board, subject to
the rights, if any, of an officer under any contract of employment.
SECTION 5.3. Subordinate Officers. The Board of Directors may appoint, or
may empower the president to appoint, such other officers as the business of the
Corporation may require, each of whom shall hold office for such period, have
such authority, and perform such duties as are provided in these By-laws or as
the Board of Directors may from time to time determine.
5
<PAGE> 6
SECTION 5.4. Removal and Resignation of Officers. Subject to the rights, if
any, of an officer under any contract of employment, any officer may be removed,
either with or without cause, by the Board of Directors at any regular or
special meeting of the board or, except in case of an officer chosen by the
Board of Directors, by any officer upon whom such power of removal may be
conferred by the Board of Directors.
Any officer may resign at any time by giving written notice to the
Corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the Corporation under any contract to which the officer is a
party.
SECTION 5.5. Vacancies in Offices. A vacancy in any office because of
death, resignation, removal, disqualification or any other cause shall be filled
in the manner prescribed in these By-laws for regular appointments to that
office.
SECTION 5.6. Chairman of the Board. The chairman of the board, if such an
officer be elected, shall, if present, preside at meetings of the Board of
Directors and exercise and perform such other powers and duties as may from time
to time be assigned to him by the Board of Directors or as may be prescribed by
these By-laws. If there is no president, then the chairman of the board shall
also be the chief executive officer of the Corporation and shall have the powers
and duties prescribed in Section 5.7 of these By-laws.
SECTION 5.7. President. Subject to such supervisory powers, if any, as may
be given by the Board of Directors to the chairman of the board, if there be
such an officer, the president shall be the chief executive officer of the
Corporation and shall, subject to the control of the Board of Directors, have
general supervision, direction, and control of the business and the officers of
the Corporation. He shall preside at all meetings of the shareholders and, in
the absence or nonexistence of a chairman of the board, at all meetings of the
Board of Directors. He shall have the general powers and duties of management
usually vested in the office of president of a Corporation, and shall have such
other powers and duties as may be prescribed by the Board of Directors or these
By-laws.
SECTION 5.8. Vice Presidents. In the absence or disability of the
president, the vice presidents, if any, in order of their rank as fixed by the
Board of Directors or, if not ranked, a vice president designated by the Board
of Directors, shall perform all the duties of the president and when so acting
shall have all the powers of, and be subject to all the restrictions upon, the
president. The vice presidents shall have such other powers and perform such
other duties as from time to time may be prescribed for them respectively by the
Board of Directors, these By-laws, the president or the chairman of the board.
SECTION 5.9. Secretary. The secretary shall keep or cause to be kept, at
the principal executive office of the Corporation or such other place as the
Board of Directors may direct, a book of minutes of all meetings and actions of
directors, committees of directors and shareholders. The minutes shall show the
time and place of each meeting, whether regular or special (and, if special, how
authorized and the notice given), the names of those present at directors'
meetings or committee meetings, the number of shares present or represented at
shareholders' meetings, and the proceeding thereof.
The secretary shall keep, or cause to be kept, at the principal executive
office of the Corporation or at the office of the Corporation's transfer agent
or registrar, as determined by resolution of the Board of Directors, a share
register, or a duplicate share register, showing the names of all shareholders
and their addresses, the number and classes of shares held by each, the number
and date of certificates evidencing such shares, and the number and date of
cancellation of every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all meetings of
the shareholders and of the Board of Directors required to be given by law or by
these By-laws. He shall keep the seal of the Corporation, if one be adopted, in
safe custody and shall have such other powers and perform such other duties as
may be prescribed by the Board of Directors or by these By-laws.
SECTION 5.10. Chief Financial Officer. The chief financial officer shall
keep and maintain, or cause to be kept and maintained, adequate and correct
books and records of accounts of the properties and business transactions of the
Corporation, including accounts of its assets, liabilities, receipts,
disbursements, gains,
6
<PAGE> 7
losses, capital, retained earnings, and shares. The books of account shall at
all reasonable times be open to inspection by any director.
The chief financial officer shall deposit all money and other valuables in
the name and to the credit of the Corporation with such depositories as may be
designated by the Board of Directors. He shall disburse the funds of the
Corporation as may be ordered by the Board of Directors, shall render to the
president and directors, whenever they request it, an account of all of his
transactions as chief financial officer and of the financial condition of the
Corporation, and shall have such other powers and perform such other duties as
may be prescribed by the Board of Directors or these By-laws.
ARTICLE VI
STOCK
SECTION 6.1. Certificates. Every holder of stock shall be entitled to have
a certificate signed by or in the name of the Corporation by the Chairman or
Vice Chairman of the Board of Directors, if any, or the President or a Vice
President, and by the Treasurer or an Assistant Treasurer, or the Secretary or
an Assistant Secretary, of the Corporation certifying the number of shares owned
by him in the Corporation. Any of or all the signatures on the certificate may
be a facsimile. In case any officer, transfer agent or registrar who has signed
or whose facsimile signature has been placed upon a certificate shall have
ceased to be such officer, transfer agent, or registrar before such certificate
is issued, it may be issued by the Corporation with the same effect as if he
were such officer, transfer agent, or registrar at the date of issue.
SECTION 6.2. Lost, Stolen or Destroyed Stock Certificates; Issuance of New
Certificates. The Corporation may issue a new certificate of stock in the place
of any certificate theretofore issued by it, alleged to have been lost, stolen
or destroyed, and the Corporation may require the owner of the lost, stolen or
destroyed certificate, or his legal representative, to give the Corporation a
bond sufficient to indemnify it against any claim that may be made against it on
account of the alleged loss, theft or destruction of any such certificate or the
issuance of such new certificate.
ARTICLE VII
INDEMNIFICATION
SECTION 7.1. Right to Indemnification. The Corporation shall indemnify and
hold harmless, to the fullest extent permitted by applicable law as it presently
exists or may hereafter be amended, any person who was or is made or is
threatened to be made a party or is otherwise involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative (a
"proceeding") by reason of the fact that he, or a person for whom he is the
legal representative, is or was a director or officer of the Corporation or is
or was serving at the request of the Corporation as a director, officer,
employee or agent of another Corporation or of a partnership, joint venture,
trust, enterprise or nonprofit entity, including service with respect to
employee benefit plans, against all liability and loss suffered and expenses
(including attorneys' fees) reasonably incurred by such person. Notwithstanding
the preceding sentence, the Corporation shall be required to indemnify a person
in connection with a proceeding (or part thereof) initiated by such person only
if the proceeding (or part thereof) was authorized by the Board of Directors of
the Corporation.
SECTION 7.2. Prepayment of Expenses. The Corporation shall pay the expenses
(including attorneys' fees) incurred in defending any proceeding in advance of
its final disposition, provided, however, that the payment of expenses incurred
by a director or officer in advance of the final disposition of the proceeding
shall be made only upon receipt of an undertaking by the director or officer to
repay all amounts advanced if it should be ultimately determined that the
director or officer is not entitled to be indemnified under this Article VII or
otherwise.
SECTION 7.3. Claims. If a claim for indemnification or payment of expenses
under this Article VII is not paid in full within sixty days after a written
claim therefor has been received by the Corporation, the claimant may file suit
to recover the unpaid amount of such claim and, if successful in whole or in
part, shall be entitled to be paid the expense of prosecuting such claim. In any
such action the Corporation shall have the burden of proving that the claimant
was not entitled to the requested indemnification or payment of expenses under
applicable law.
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<PAGE> 8
SECTION 7.4. Non-Exclusivity of Rights. The rights conferred on any person
by this Article VII shall not be exclusive of any other rights which such person
may have or hereafter acquire under any statute, provision of the Certificate of
Incorporation, these By-laws, agreement, vote of stockholders or disinterested
directors or otherwise.
SECTION 7.5. Other Indemnification. The Corporation's obligation, if any,
to indemnify any person who was or is serving at its request as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust, enterprise or nonprofit entity shall be reduced by any amount such person
may collect as indemnification from such other corporation, partnership, joint
venture, trust, enterprise or nonprofit enterprise.
SECTION 7.6. Amendment or Repeal. Any repeal or modification of the
foregoing provisions of this Article VII shall not adversely affect any right or
protection hereunder of any person in respect of any act or omission occurring
prior to the time of such repeal or modification.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1. Fiscal Year. The fiscal year of the Corporation shall be
determined by resolution of the Board of Directors.
SECTION 8.2. Seal. The corporate seal shall have the name of the
Corporation inscribed thereon and shall be in such form as may be approved from
time to time by the Board of Directors.
SECTION 8.3. Waiver of Notice of Meetings of Stockholders, Directors and
Committees. Any written waiver of notice, signed by the person entitled to
notice, whether before or after the time stated therein, shall be deemed
equivalent to notice. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends a meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at nor the purpose of any
regular or special meeting of the stockholders, directors, or members of a
committee of directors need be specified in any written waiver of notice.
SECTION 8.4. Interested Directors; Quorum. No contract or transaction
between the Corporation and one or more of its directors or officers, or between
the Corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof which
authorizes the contract or transaction, or solely because his or their votes are
counted for such purpose, if: (1) the material facts as to his relationship or
interest and as to the contract or transaction are disclosed or are known to the
Board of Directors or the committee, and the Board of Directors or committee in
good faith authorizes the contract or transaction by the affirmative votes of a
majority of the disinterested directors, even though the disinterested directors
be less than a quorum; or (2) the material facts as to his relationship or
interest and as to the contract or transaction are disclosed or are known to the
stockholders entitled to vote thereon, and the contract or transaction is
specifically approved in good faith by vote of the stockholders; or (3) the
contract or transaction is fair as to the Corporation as of the time it is
authorized, approved or ratified, by the Board of Directors, a committee
thereof, or the stockholders. Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the Board of Directors or
of a committee which authorizes the contract or transaction.
SECTION 8.5. Form of Records. Any records maintained by the Corporation in
the regular course of its business, including its stock ledger, books of
account, and minute books, may be kept on, or be in the form of, punch cards,
magnetic tape, photographs, microphotographs, or any other information storage
device, provided that the records so kept can be converted into clearly legible
form within a reasonable time.
SECTION 8.6. Amendment of By-Laws. These By-laws may be altered or
repealed, and new By-laws made, by the Board of Directors, but the stockholders
may make additional by-laws and may alter and repeal any by-laws whether adopted
by them or otherwise.
8
<PAGE> 9
2640-PS-97
<PAGE> 1
EXHIBIT 4.4
ALTERA CORPORATION
AND
STATE STREET BANK AND TRUST COMPANY
Trustee
FIRST SUPPLEMENTAL INDENTURE
Dated as of June 19, 1997
To
INDENTURE
Dated as of June 15, 1995
5-3/4% Convertible Subordinated Notes Due 2002
<PAGE> 2
FIRST SUPPLEMENTAL INDENTURE (hereinafter, the "First Supplemental
Indenture"), dated as of June 19, 1997, between ALTERA CORPORATION, a Delaware
corporation ("Altera Delaware"), and STATE STREET BANK AND TRUST COMPANY, a
trust company duly organized and existing under the laws of The Commonwealth of
Massachusetts, as successor in interest to the corporate trust business of THE
FIRST NATIONAL BANK OF BOSTON, a national banking association organized and
existing under the laws of the United States of America ("Bank of Boston"), and
Trustee under the Indenture (as hereinafter defined).
W I T N E S S E T H:
WHEREAS, Altera Corporation, a California corporation ("Altera
California"), and Bank of Boston have heretofore entered into that certain
Indenture, dated as of June 15, 1995, providing for the issuance of 5-3/4%
Convertible Subordinated Notes Due 2002 (the "Notes"), in the aggregate
principal amount not to exceed Two Hundred Thirty Million Dollars ($230,000,000)
(such indenture, as supplemented or amended in accordance with its terms, herein
the "Indenture"); and
WHEREAS, pursuant to an Agreement and Plan of Merger dated as of June
19, 1997, between Altera California and Altera Delaware, Altera California will
be merged with and into Altera Delaware (the "Merger"), with Altera Delaware as
the surviving corporation; and
WHEREAS, Sections 12.2 and 15.6 of the Indenture provide that upon
any merger (including the Merger) to which Altera California is a party and in
which Altera California is not the surviving corporation, the successor
corporation shall deliver to the Trustee a supplemental indenture containing
specified terms; and
WHEREAS, Section 11.1 of the Indenture provides that a supplemental
indenture authorized by the provisions of such Sections 12.2 and 15.6 may be
executed by the successor corporation and the Trustee without the consent of the
holders of the Notes at the time outstanding, notwithstanding the provisions of
Section 11.2 of the Indenture; and
WHEREAS, in accordance with Section 12.3 of the Indenture, Altera
Delaware has delivered to the Trustee an Officers' Certificate and an Opinion of
Counsel, each stating that the Merger and this First Supplemental Indenture
comply with Article XII of the Indenture; and
WHEREAS, all acts and things necessary to constitute this First
Supplemental Indenture a valid and binding agreement for the purposes and
objects herein expressed, have been duly done and taken, and the execution and
delivery of this First Supplemental Indenture have been in all respects duly
authorized by Altera Delaware; and
WHEREAS, the foregoing recitals are made as statements of Altera
Delaware and not of the Trustee;
NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH:
That in consideration of the premises and for other good and valuable
consideration, the receipt of which is hereby acknowledged, Altera Delaware
covenants and agrees with the Trustee for
1
<PAGE> 3
the equal and proportionate benefit of the respective Holders from time to time
of the Notes as follows:
Section 1. For purposes of this First Supplemental Indenture, except as
otherwise herein expressly provided or unless the context otherwise requires,
the capitalized terms and expressions used herein shall have the same meaning as
corresponding terms and expressions used in the Indenture.
Section 2. Altera Delaware hereby expressly assumes the due and
punctual payment of the principal of and premium, if any, and interest on all of
the Notes and the due and punctual performance of the covenants and conditions
of the Indenture to be performed by Altera Delaware.
Section 3. Upon execution of this First Supplemental Indenture, the
Notes shall be convertible into shares of Common Stock of Altera Delaware,
rather than shares of common stock of Altera California, at an adjusted
Conversion Price of $25.585, subject to further adjustment as provided in
Article XV, and otherwise on the same terms and basis (and subject to the same
adjustments under the Indenture) as the Notes were convertible into common stock
of Altera California prior to the effectiveness of the Merger, and on and after
the effective time of the Merger references in the Indenture to "Common Stock"
shall be deemed to be references to Common Stock of Altera Delaware.
Section 4. The Trustee accepts the amendment of the Indenture effected
by this First Supplemental Indenture and agrees to execute the trusts created by
the Indenture as hereby amended, but only upon the terms and conditions set
forth in the Indenture.
Section 5. Except as hereby expressly amended, the Indenture and the
Notes issued thereunder are in all respects ratified and confirmed and all the
terms, conditions and provisions thereof shall remain in full force and effect.
Section 6. For all purposes of this First Supplemental Indenture,
except as otherwise herein expressly provided or unless the context otherwise
requires the terms and expressions used herein shall have the same meanings as
corresponding terms and expressions used in the Indenture.
Section 7. This First Supplemental Indenture shall form a part of the
Indenture for all purposes, and every holder of Notes heretofore or hereafter
authenticated and delivered shall be bound hereby.
Section 8. This First Supplemental Indenture may be executed in any
number of counterparts, each of which shall be an original, but such
counterparts shall together constitute but one and the same instrument.
Section 9. This First Supplemental Indenture shall be deemed to be a
contract made under the laws of the State of New York, and for all purposes
shall be construed in accordance with the laws of New York.
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<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly signed, and their respective seals to be
hereunto affixed and attested, all as of the date first written above.
ALTERA CORPORATION,
a Delaware corporation
By: /s/ Nathan Sarkisian
-------------------------------
Title: Vice President-Finance, Chief
Financial Officer,
Attest:
/s/ C. Wendell Bergere
- -------------------------------
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By: /s/Eric Donaghey
-------------------------------
Title: Assistant Vice President
Attest:
/s/ Traci M. Hopkins
- -------------------------------
Assistant Secretary
3
<PAGE> 1
AGREEMENT AND PLAN OF MERGER
OF ALTERA CORPORATION
A DELAWARE CORPORATION
AND
ALTERA CORPORATION
A CALIFORNIA CORPORATION
THIS AGREEMENT AND PLAN OF MERGER dated as of June 18, 1997, (the
"Agreement") is between Altera Corporation, a Delaware corporation
("Altera-Delaware") and Altera Corporation, a California corporation
("Altera-California"). Altera-Delaware and Altera-California are sometimes
referred to herein as the "Constituent Corporations."
RECITALS
A. Altera-Delaware is a corporation duly organized and existing under the
laws of the State of Delaware and has an authorized capital of 400,000,000
shares, all of which are designated "Common Stock", $0.001 par value. As of the
date hereof, 1,000 shares of Common Stock were issued and outstanding, all of
which were held by Altera-California.
B. Altera-California is a corporation duly organized and existing under the
laws of the State of California and has an authorized capital of 160,000,000
shares, all of which are designated "Common Stock". As of March 13, 1997,
88,133,415 shares of Common Stock were issued and outstanding.
C. The Board of Directors of Altera-California has determined that, for the
purpose of effecting the reincorporation of Altera-California in the State of
Delaware, it is advisable and in the best interests of Altera-California that
Altera-California merge with and into Altera-Delaware upon the terms and
conditions herein provided.
D. The respective Boards of Directors of Altera-Delaware and
Altera-California have approved this Agreement and have directed that this
Agreement be submitted to a vote of their respective stockholders and executed
by the undersigned officers.
NOW, THEREFORE, in consideration of the mutual agreements and covenants set
forth herein, Altera-Delaware and Altera-California hereby agree, subject to the
terms and conditions hereinafter set forth, as follows:
I. MERGER
1.1 Merger. In accordance with the provisions of this Agreement, the
Delaware General Corporation Law and the California General Corporation Law,
Altera-California shall be merged with and into Altera-Delaware (the "Merger"),
the separate existence of Altera-California shall cease and Altera-Delaware
shall be, and is herein sometimes referred as, the "Surviving Corporation", and
the name of the Surviving Corporation shall be Altera Corporation.
1.2 Filing and Effectiveness. The Merger shall become effective when the
following actions shall have been completed:
(a) This Agreement and the Merger shall have been adopted and approved
by the stockholders of each Constituent Corporation in accordance with the
requirements of the Delaware General Corporation Law and the California
General Corporation Law;
(b) All of the conditions precedent to the consummation of the Merger
specified in this Agreement shall have been satisfied or duly waived by the
party entitled to satisfaction thereof;
<PAGE> 2
(c) An executed Agreement and Plan of Merger meeting the requirements
of the Delaware General Corporation Law shall have been filed with the
Secretary of State of the State of Delaware; and
(d) An executed Agreement and Plan of Merger meeting the requirements
of California General Corporation Law shall have been filed with the
Secretary of State of the State of California.
The date and time when the Merger shall become effective, as aforesaid, is
herein called the "Effective Date of the Merger" or the "Effective Date."
1.3 Effect of the Merger. Upon the Effective Date of the Merger, the
separate existence of Altera-California shall cease and Altera-Delaware, as the
Surviving Corporation, (i) shall continue to possess all of Altera-California's
assets, rights, powers and property as constituted immediately prior to the
Effective Date of the Merger, (ii) shall be subject to all actions previously
taken by its and Altera-California's Board of Directors, (iii) shall succeed,
without other transfer, to all of the assets, rights, powers and property of
Altera-California in the manner more fully set forth in Section 259 of the
Delaware General Corporation Law, (iv) shall continue to be subject to all of
the debts, liabilities and obligations of Altera-Delaware as constituted
immediately prior to the Effective Date of the Merger, and (v) shall succeed,
without other transfer, to all of the debts, liabilities and obligations of
Altera-California in the same manner as if Altera-Delaware had itself incurred
them, all as more fully provided under the applicable provisions of the Delaware
General Corporation Law and the California Corporations Code.
II. CHARTER DOCUMENTS, DIRECTORS AND OFFICERS
2.1 Certificate of Incorporation. The Certificate of Incorporation of
Altera-Delaware as in effect immediately prior to the Effective Date of the
Merger shall continue in full force and effect as the Certificate of
Incorporation of the Surviving Corporation until duly amended in accordance with
the provisions thereof and of applicable law.
2.2 Bylaws. The Bylaws of Altera-Delaware as in effect immediately prior
to the Effective Date of the Merger shall continue in full force and effect as
the Bylaws of the Surviving Corporation until duly amended in accordance with
the provisions thereof and applicable law.
2.3 Directors. The directors of Altera-Delaware immediately preceding the
Effective Date shall become the directors of the Surviving Corporation on or
after the Effective Date to serve until the expiration of their terms and until
their successors are elected and qualified.
2.4 Officers. The officers of Altera-Delaware immediately preceding the
Effective Date shall become the officers of the Surviving Corporation on or
after the Effective Date to serve at the pleasure of its Board of Directors.
III. MANNER OF CONVERSION OF STOCK
3.1 Altera-California Common Shares. Upon the Effective Date of the
Merger, each share of Altera-California Common Stock issued and outstanding
immediately prior thereto shall by virtue of the Merger and without any action
by the Constituent Corporations, the holder of such shares or any other person,
be converted into and exchanged for one (1) fully paid and nonassessable share
of Common Stock, $0.001 par value, of the Surviving Corporation.
3.2 Altera-California Options, Stock Purchase Rights and Convertible
Securities.
(a) Upon the Effective Date of the Merger, the Surviving Corporation shall
assume the obligations of Altera-California under, and continue, its 1987 Stock
Option Plan, 1996 Stock Option Plan, 1988 Director Option Plan, 1987 Employee
Stock Purchase Plan and all other employee benefit plans of Altera-California.
Each outstanding and unexercised option, other right to purchase, or security
convertible into, Altera-California Common Stock (a "Right") shall become,
subject to the provisions in Section 3.2(c), an option, right to purchase or a
security convertible into the Surviving Corporation's Common Stock on the basis
of one (1) share of the Surviving Corporation's Common Stock for each one (1)
share of Altera-California Common Stock issuable pursuant to any such Right, on
the same terms and conditions and at an exercise price equal to the exercise
price applicable to any such Altera-California Right at the Effective Date of
the Merger. This
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<PAGE> 3
Section 3.3(a) shall not apply to outstanding shares of Altera-California Common
Stock. Such outstanding shares of Common Stock are subject to Section 3.1.
(b) A number of shares of the Surviving Corporation's Common Stock shall be
reserved for issuance upon the exercise of options, stock purchase rights and
convertible securities equal to the number of shares of Altera-California Common
Stock so reserved immediately prior to the Effective Date of the Merger.
(c) The assumed Rights shall not entitle any holder thereof to a fractional
share upon exercise or conversion (unless the holder was entitled to a
fractional interest immediately prior to the Merger). In lieu thereof, any
fractional share interests to which a holder of an assumed Right would otherwise
be entitled upon exercise or conversion shall be aggregated (but only with other
similar Rights which have the same per share terms). To the extent that after
such aggregation, the holder would still be entitled to a fractional share with
respect thereto upon exercise or conversion, the holder shall be entitled upon
the exercise or conversion of all such assumed Rights pursuant to their terms
(as modified herein), to one full share of Common Stock in lieu of such
fractional share. With respect to each class of such similar Rights, no holder
will be entitled to more than one full share in lieu of a fractional share upon
exercise or conversion.
Notwithstanding the foregoing, with respect to options issued under the
Altera-California's 1987 and 1996 Stock Option Plans, as amended, that are
assumed in the Merger, the number of shares of Common Stock to which the holder
would be otherwise entitled upon exercise of each such assumed option following
the Merger shall be rounded down to the nearest whole number and the exercise
price shall be rounded up to the nearest whole cent. In addition, no "additional
benefits" (within the meaning of Section 424(a)(2) of the Internal Revenue Code
of 1986, as amended) shall be accorded to the optionees pursuant to the
assumption of their options.
3.3 Altera-Delaware Common Stock. Upon the Effective Date of the Merger,
each share of Common Stock, $0.001 par value, of Altera-Delaware issued and
outstanding immediately prior thereto shall, by virtue of the Merger and without
any action by Altera-Delaware, the holder of such shares or any other person, be
canceled and returned to the status of authorized but unissued shares.
3.4 Exchange of Certificates. After the Effective Date of the Merger, each
holder of an outstanding certificate representing shares of Altera-California
Common Stock may be asked to surrender the same for cancellation to an exchange
agent, whose name will be delivered to holders prior to any requested exchange
(the "Exchange Agent"), and each such holder shall be entitled to receive in
exchange therefor a certificate or certificates representing the number of
shares of the Surviving Corporation's Common Stock, as the case may be, into
which the surrendered shares were converted as herein provided. Until so
surrendered, each outstanding certificate theretofore representing shares of
Altera-California Common Stock shall be deemed for all purposes to represent the
number of shares of the Surviving Corporation's Common Stock into which such
shares of Altera-California Common Stock were converted in the Merger.
The registered owner on the books and records of the Surviving Corporation
or the Exchange Agent of any such outstanding certificate shall, until such
certificate shall have been surrendered for transfer or conversion or otherwise
accounted for to the Surviving Corporation or the Exchange Agent, have and be
entitled to exercise any voting and other rights with respect to and to receive
dividends and other distributions upon the shares of Common Stock of the
Surviving Corporation represented by such outstanding certificate as provided
above.
Each certificate representing Common Stock of the Surviving Corporation so
issued in the Merger shall bear the same legends, if any, with respect to the
restrictions on transferability as the certificates of Altera-California so
converted and given in exchange therefore, unless otherwise determined by the
Board of Directors of the Surviving Corporation in compliance with applicable
laws.
If any certificate for shares of the Surviving Corporation's stock is to be
issued in a name other than that in which the certificate surrendered in
exchange therefor is registered, it shall be a condition of issuance thereof
that the certificate so surrendered shall be properly endorsed and otherwise in
proper form for transfer, that such transfer otherwise be proper and comply with
applicable securities laws and that the person requesting such transfer pay to
the Exchange Agent any transfer or other taxes payable by reason of issuance
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<PAGE> 4
of such new certificate in a name other than that of the registered holder of
the certificate surrendered or establish to the satisfaction of the Surviving
Corporation that such tax has been paid or is not payable.
IV. GENERAL
4.1 Covenants of Altera-Delaware. Altera-Delaware covenants and agrees
that it will, on or before the Effective Date of the Merger:
(a) Qualify to do business as a foreign corporation in the State of
California and in connection therewith irrevocably appoint an agent for
service of process as required under the provisions of Section 2105 of the
California General Corporation Law.
(b) File any and all documents with the California Franchise Tax Board
necessary for the assumption by Altera-Delaware of all of the franchise tax
liabilities of Altera-California.
(c) Take such other actions as may be required by the California
General Corporation Law.
4.2 Further Assurances. From time to time, as and when required by
Altera-Delaware or by its successors or assigns, there shall be executed and
delivered on behalf of Altera-California such deeds and other instruments, and
there shall be taken or caused to be taken by it such further and other actions
as shall be appropriate or necessary in order to vest or perfect in or conform
of record or otherwise by Altera-Delaware the title to and possession of all the
property, interests, assets, rights, privileges, immunities, powers, franchises
and authority of Altera-California and otherwise to carry out the purposes of
this Agreement, and the officers and directors of Altera-Delaware are fully
authorized in the name and on behalf of Altera-California or otherwise to take
any and all such action and to execute and deliver any and all such deeds and
other instruments.
4.3 Abandonment. At any time before the Effective Date of the Merger, this
Agreement may be terminated and the Merger may be abandoned for any reason
whatsoever by the Board of Directors of either Altera-California or of
Altera-Delaware, or of both, notwithstanding the approval of this Agreement by
the shareholders of Altera-California or by the sole stockholder of
Altera-Delaware, or by both.
4.4 Amendment. The Boards of Directors of the Constituent Corporations may
amend this Agreement at any time prior to the filing of this Agreement (or
certificate in lieu thereof) with the Secretary of State of the State of
Delaware, provided that an amendment made subsequent to the adoption of this
Agreement by the stockholders of either Constituent Corporation shall not: (i)
alter or change the amount or kind of shares, securities, cash, property and/or
rights to be received in exchange for or on conversion of all or any of the
shares of any class or series thereof of such Constituent Corporation, (ii)
alter or change any term of the Certificate of Incorporation of the Surviving
Corporation to be effected by the Merger, or (iii) alter or change any of the
terms and conditions of this Agreement if such alteration or change would
adversely affect the holders of any class or series of capital stock of any
Constituent Corporation.
4.5 Registered Office. The registered office of the Surviving Corporation
in the State of Delaware is One Rodney Square, 10th Floor, Tenth and King
Streets, Wilmington, County of New Castle, Delaware 19801, and RL&F Service
Corp. is the registered agent of the Surviving Corporation at such address.
4.6 Agreement. Executed copies of this Agreement will be on file at the
principal place of business of the Surviving Corporation at 2610 Orchard
Parkway, San Jose, California 95134, and copies thereof will be furnished to any
stockholder of either Constituent Corporation, upon request and without cost.
4.7 Governing Law. This Agreement shall in all respects be construed,
interpreted and enforced in accordance with and governed by the laws of the
State of Delaware and, so far as applicable, the merger provisions of the
California General Corporation Law.
4
<PAGE> 5
IN WITNESS WHEREOF, this Agreement having first been approved by the
resolutions of the Board of Directors of Altera-California and Altera-Delaware
is hereby executed on behalf of each of such two corporations and attested by
their respective officers thereunto duly authorized.
ALTERA CORPORATION
a Delaware corporation
By: /s/ Rodney Smith
--------------------------------------
Rodney Smith, President and
Chief Executive Officer
ATTEST:
/s/ C. Wendell Bergere
- --------------------------------------
C. Wendell Bergere, Secretary
ALTERA CORPORATION
a California corporation
By: /s/ Rodney Smith
--------------------------------------
Rodney Smith, President and
Chief Executive Officer
ATTEST:
/s/ C. Wendell Bergere
- --------------------------------------
C. Wendell Bergere, Secretary
5
<PAGE> 1
EXHIBIT 11.1
ALTERA CORPORATION
COMPUTATION OF EARNINGS PER SHARE
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------ -----------------
June 30, June 30, June 30, June 30,
1997 1996 1997 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
PRIMARY:
Weighted average shares outstanding 88,340 87,412 88,106 87,334
Net effect of dilutive stock options 5,285 4,136 5,282 4,444
------- ------- ------- -------
Total 93,625 91,548 93,388 91,778
======= ======= ======= =======
Net income $ 39,729 $ 24,265 $ 73,785 $ 55,705
======= ======= ======= =======
Income per share $ 0.42 $ 0.27 $ 0.79 $ 0.61
======= ======= ======= =======
FULLY DILUTED:
Weighted average shares outstanding 88,340 87,412 88,106 87,334
Net effect of dilutive stock options 5,325 4,136 5,477 4,422
Assumed conversion of convertible subordinated
notes 8,990 8,990 8,990 8,990
------- ------- ------- -------
Total 102,655 100,538 102,573 100,746
======= ======= ======= =======
Net income $ 39,729 $ 24,265 $ 73,785 $ 55,705
Add:
Convertible subordinated notes interest, net
of income taxes and capitalized interest 1,455 1,896 3,079 3,816
------- ------- ------- -------
Adjusted net income $ 41,184 $ 26,161 $ 76,864 $ 59,521
======= ======= ======= =======
Income per share $ 0.40 $ 0.26 $ 0.75 $ 0.59
======= ======= ======= =======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 66,467
<SECURITIES> 306,959
<RECEIVABLES> 57,992
<ALLOWANCES> 2,765
<INVENTORY> 71,988
<CURRENT-ASSETS> 579,807
<PP&E> 187,418
<DEPRECIATION> (57,082)
<TOTAL-ASSETS> 915,058
<CURRENT-LIABILITIES> 223,498
<BONDS> 230,000
0
0
<COMMON> 89
<OTHER-SE> 461,471
<TOTAL-LIABILITY-AND-EQUITY> 915,058
<SALES> 306,554
<TOTAL-REVENUES> 306,554
<CGS> 115,337
<TOTAL-COSTS> 115,337
<OTHER-EXPENSES> 81,014
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,034
<INCOME-PRETAX> 111,794
<INCOME-TAX> 38,009
<INCOME-CONTINUING> 73,785
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 73,785
<EPS-PRIMARY> 0.79
<EPS-DILUTED> 0.75
</TABLE>
