<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 18, 1996
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
WIND RIVER SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 94-2873391
(State of Incorporation) (I.R.S. Employer
Identification
No.)
</TABLE>
1010 ATLANTIC AVENUE
ALAMEDA, CALIFORNIA 94501
(510) 748-4100
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------------------------
RICHARD W. KRABER
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
WIND RIVER SYSTEMS, INC.
1010 ATLANTIC AVENUE
ALAMEDA, CALIFORNIA 94501
(510) 748-4100
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------
COPIES TO:
<TABLE>
<S> <C>
Alan C. Mendelson, Esq. Joshua L. Green, Esq.
Cooley Godward Castro Huddleson & Robert v. W. Zipp, Esq.
Tatum Venture Law Group
Five Palo Alto Square 2800 Sand Hill Road
3000 El Camino Real Menlo Park, California 94025
Palo Alto, California 94306 (415) 854-4488
(415) 843-5000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
------------------------
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
- --------------
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
- --------------
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
AMOUNT TO MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF BE OFFERING PRICE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED (1) PER SHARE (2) PRICE (2) FEE
<S> <C> <C> <C> <C>
Common Stock, $.001 par value...... 3,795,000 shares $31.25 $118,593,750 $40,895
</TABLE>
(1) Assumes exercise of the Underwriters' over-allotment option to purchase up
to 495,000 shares of Common Stock.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) of the Securities Act of 1933 based upon the average
of the high and low prices of the Common Stock as reported on the Nasdaq
National Market on June 11, 1996.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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- --------------------------------------------------------------------------------
<PAGE>
EXPLANATORY NOTE
This Registration Statement contains two forms of prospectuses. The first
prospectus relates to a public offering in the United States of an aggregate of
2,475,000 shares of Common Stock (the "U.S. Offering"). The second prospectus
relates to a concurrent offering outside the United States of an aggregate of
825,000 shares of Common Stock (the "International Offering"). The prospectuses
for each of the U.S. Offering and the International Offering will be identical
with the exception of the alternate front and back cover pages for the
International Offering. Such alternate pages appear in this Registration
Statement immediately following the complete prospectus for the U.S. Offering.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION, DATED JUNE 18, 1996
[LOGO]
3,300,000 SHARES
COMMON STOCK
Of the 3,300,000 shares of Common Stock, $.001 par value, offered hereby,
2,475,000 shares are being offered initially in the United States (the "U.S.
Offering") by the U.S. Underwriters and 825,000 shares are being offered
initially outside the United States (the "International Offering," and
together with the U.S. Offering, the "Offering") by the International
Underwriters (together with the U.S. Underwriters, the "Underwriters"). See
"Underwriting." Of the shares offered hereby, 1,650,000 shares are being sold
by Wind River Systems, Inc. ("Wind River" or the "Company"), and 1,650,000
shares are being sold by certain stockholders of the Company (the "Selling
Stockholders"). The Company will not receive any of the proceeds from the sale
of shares by the Selling Stockholders. See "Principal and Selling
Stockholders."
The Company's Common Stock is traded on the Nasdaq National Market under the
symbol "WIND." On June 14, 1996, the last reported sales price of the
Company's Common Stock on the Nasdaq National Market was $33.75 per share. See
"Price Range of Common Stock and Dividend Policy."
FOR INFORMATION CONCERNING CERTAIN FACTORS WHICH SHOULD BE CONSIDERED BY
PROSPECTIVE INVESTORS, SEE "RISK FACTORS" COMMENCING ON PAGE 5.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<S> <C> <C> <C> <C>
UNDERWRITING PROCEEDS
PRICE DISCOUNTS AND PROCEEDS TO TO SELLING
TO PUBLIC COMMISSIONS(1) COMPANY(2) STOCKHOLDERS
Per Share $ $ $ $
Total(3) $ $ $ $
</TABLE>
(1) The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."
(2) Before deducting expenses payable by the Company, estimated at $400,000.
(3) The Company has granted the Underwriters a 30-day option to purchase up
to an additional 495,000 shares of Common Stock solely to cover
over-allotments. If all such shares are purchased, the total Price to
Public, Underwriting Discounts and Commissions, Proceeds to Company and
Proceeds to Selling Stockholders will be $ , $ , $ and
$ , respectively. See "Underwriting."
The shares of Common Stock are offered by the Underwriters, subject to prior
sale, when, as and if delivered to and accepted by them, and subject to the
approval of certain legal matters by counsel and certain other conditions. The
Underwriters reserve the right to withdraw, cancel or modify such offer and to
reject orders in whole or in part. It is expected that delivery of the shares
of Common Stock will be made in New York, New York against payment therefor on
or about , 1996.
DEUTSCHE MORGAN GRENFELL
HAMBRECHT & QUIST
UBS SECURITIES
WESSELS, ARNOLD & HENDERSON
The date of this Prospectus is , 1996
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Judiciary Plaza, Room 1024, Washington, D.C. 20549, and at the Commission's
following Regional Offices: Northwest Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661; and Seven World Trade Center, 13th Floor,
New York, New York 10048. Copies of such material can be obtained at prescribed
rates from the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Judiciary Plaza, Washington, D.C. 20549. The Company's Common Stock is
traded on the Nasdaq National Market, and reports, proxy statements and other
information concerning the Company also may be inspected at the offices of the
National Association of Securities Dealers, Inc., 1735 K Street, N.W.,
Washington, D.C. 20006.
------------------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, filed with the Commission under the Exchange Act,
are hereby incorporated by reference into this Prospectus:
(a) The Company's Annual Report on Form 10-K, as amended by Form 10-K/A, for
the fiscal year ended January 31, 1996;
(b) The Company's Quarterly Report on Form 10-Q for the quarter ended April
30, 1996; and
(c) The description of the Company's Common Stock set forth in its
Registration Statement on Form 8-A filed with the Commission on March 12, 1993.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering shall be deemed to be incorporated by reference
herein and to be a part hereof from the date of filing of such documents. Any
statement contained in this Prospectus or in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any subsequently-filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon written or oral
request of such person, a copy of any and all of the documents that have been
incorporated by reference herein (not including exhibits to such documents
unless such exhibits are specifically incorporated by reference herein or into
such documents). Such request may be directed to Wind River Systems, Inc.,
Attention: Chief Financial Officer, 1010 Atlantic Avenue, Alameda, California
94501, telephone number (510) 748-4100.
------------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
------------------------
IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP
MEMBERS OR THEIR AFFILIATES MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN
THE COMMON STOCK OF THE COMPANY ON THE NASDAQ NATIONAL MARKET IN ACCORDANCE WITH
RULE 10B-6A UNDER THE EXCHANGE ACT. SEE "UNDERWRITING."
------------------------
VXWORKS-REGISTERED TRADEMARK-, WIND-REGISTERED TRADEMARK- and WIND RIVER
SYSTEMS-REGISTERED TRADEMARK- are registered trademarks and CROSSWIND, IXWORKS,
TORNADO, TORNADO FOR I(2)0, VXMP, VXSIM, VXVMI, WIND FOUNDATION CLASSES,
WINDNET, WINDVIEW AND WINDX are trademarks of the Company. All other brand names
or trademarks appearing in this Prospectus are the property of their respective
holders.
2
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND FINANCIAL DATA APPEARING ELSEWHERE IN THIS PROSPECTUS, AND IN
THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE. UNLESS OTHERWISE INDICATED, THE
INFORMATION CONTAINED IN THE PROSPECTUS (I) DOES NOT GIVE EFFECT TO THE EXERCISE
OF THE UNDERWRITERS' OVER-ALLOTMENT OPTION AND (II) HAS BEEN ADJUSTED TO GIVE
EFFECT TO A THREE-FOR-TWO STOCK SPLIT EFFECTED BY MEANS OF A STOCK DIVIDEND ON
MAY 24, 1996.
THE COMPANY
Wind River develops, markets and supports advanced software operating
systems and development tools that allow customers to create complex, robust,
real-time software applications for embedded computers. An embedded computer is
a microprocessor that is incorporated into a larger device and is dedicated to
responding to external events by performing specific tasks quickly, predictably
and reliably. Some examples of such devices are telecommunications products such
as PABX, routers, central office switches and call processing systems; office
products such as fax machines, laser printers and photocopiers; vehicle
anti-lock brakes and navigation systems; consumer products such as camcorders,
video games and set-top boxes; medical instrumentation and imaging systems; and
industrial automation equipment such as robots. Wind River's products and
services enable customers to enhance product performance, standardize designs
across projects, reduce research and development costs and shorten product
development cycles. The Company's TORNADO product represents the latest
generation of development environments for embedded and real-time applications.
TORNADO provides the developer of embedded systems a robust development and
deployment environment for a wide variety of host platforms and microprocessor
targets. Wind River has strategic relationships with most of the major
semiconductor companies, including ARM, Hewlett-Packard, Hitachi, Intel,
Motorola, Siemens, Silicon Graphics and Sun Microsystems. In addition, in
January 1996, Intel and Wind River entered into an agreement pursuant to which
Intel has agreed to supply an evaluation copy of TORNADO FOR I(2)O to each
customer purchasing an Intel i960 RP I/O microprocessor and a copy of IXWORKS on
each such microprocessor sold. IXWORKS is a real-time operating system for
creating I(2)O-specification compliant intelligent I/O systems for servers,
network devices and storage adaptor cards. Wind River is also currently working
on various initiatives to capitalize on the increasing use of the Internet. The
Company's products have been deployed by a broad range of organizations, ranging
from companies in the following industries: telecommunications and
datacommunications; office automation and computers; medical and industrial; and
aerospace, research and defense. Wind River's customers include ABB, Bay
Networks, StrataCom (Cisco Systems), General Motors, Hewlett-Packard, Hitachi,
Hughes Network Systems, Intel, Lockheed-Martin, Motorola, NEC, Northern Telecom,
Rockwell, Siemens, Silicon Graphics, Sun Microsystems and Texas Instruments.
THE OFFERING
<TABLE>
<S> <C>
U.S. Offering............................................... 2,475,000 shares
International Offering...................................... 825,000 shares
Total................................................... 3,300,000 shares (including 1,650,000 shares by the Company and
1,650,000 by the Selling Stockholders)
Common Stock to be Outstanding
after the Offering......................................... 15,679,751 shares(1)
Use of Proceeds............................................. The net proceeds are expected to be added to working capital
and used for general corporate purposes.
Nasdaq National Market Symbol............................... WIND
</TABLE>
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE
MONTHS
ENDED
YEARS ENDED JANUARY 31, APRIL 30,
----------------------------------------------------- ---------
1992 1993 1994 1995 1996 1995
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED INCOME STATEMENT DATA:
Total revenues............................................... $ 17,085 $ 25,053 $ 27,341 $ 32,100 $ 44,000 $ 8,700
Operating income............................................. 1,725 3,059 523 3,452 8,130 914
Net income................................................... 1,093 1,721 332 2,460 5,383 667
Net income per share......................................... .11 .16 .02 .17 .35 .04
Common shares used in the calculation of net income per
share(2).................................................... 9,611 10,455 13,317 14,300 15,491 15,065
<CAPTION>
1996
---------
<S> <C>
CONSOLIDATED INCOME STATEMENT DATA:
Total revenues............................................... $ 12,600
Operating income............................................. 2,198
Net income................................................... 1,470
Net income per share......................................... .09
Common shares used in the calculation of net income per
share(2).................................................... 15,992
</TABLE>
<TABLE>
<CAPTION>
APRIL 30, 1996
--------------------------
ACTUAL AS ADJUSTED(3)
--------- ---------------
<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and short-term investments.................................................................... $ 27,909 $ 80,273
Working capital.................................................................................... 27,233 79,597
Total assets....................................................................................... 46,464 98,828
Stockholders' equity............................................................................... 32,830 85,194
</TABLE>
- ------------
(1) Excludes 2,417,323 shares of Common Stock issuable upon exercise of
outstanding stock options at a weighted average exercise price of $4.20 per
share and 150,000 shares of Common Stock issuable upon exercise of an
outstanding warrant of an exercise price of $7.39.
(2) See Note 1 of Notes to Consolidated Financial Statements incorporated by
reference in this Prospectus.
(3) Adjusted to reflect the sale by the Company of shares of Common Stock hereby
at an assumed public offering price of $33.75 per share, after deducting
underwriting discounts and commissions and the expenses of the offering, and
the application of the estimated net proceeds therefrom. See "Use of
Proceeds" and "Capitalization."
3
<PAGE>
THE COMPANY
Wind River Systems, Inc. ("Wind River" or the "Company") develops, markets
and supports advanced software operating systems and development tools that
allow customers to create complex, robust, real-time software applications for
embedded computers. An embedded computer is a microprocessor that is
incorporated into a larger device and is dedicated to responding to external
events by performing specific tasks quickly, predictably and reliably. Some
examples of such devices are telecommunications products such as PABX, routers,
central office switches and call processing systems; office products such as fax
machines, laser printers and photocopiers; vehicle anti-lock brakes and
navigation systems; consumer products such as camcorders, video games and
set-top boxes; medical instrumentation and imaging systems; and industrial
automation equipment such as robots. Wind River's flagship product, TORNADO,
enables customers to enhance product performance, standardize designs across
projects, reduce research and development costs and shorten product development
cycles.
To succeed in today's increasingly competitive markets, manufacturers using
embedded computers must bring complex applications for embedded systems to
market rapidly and economically. Development of real-time embedded applications
has evolved from a relatively modest programming task to a complex engineering
effort. As more powerful and affordable 32-bit microprocessors have become
available, products based on them have become richer in features and
functionality. In addition, the complexity of embedded software is increasing
dramatically, while the time available for product development is decreasing.
More sophisticated development tools are required to develop these more complex
applications, frequently including a real-time operating system ("RTOS") that
provides far more functionality, higher performance and greater productivity
than that necessary or feasible for programming prior generations of
microprocessors. Wind River's flexible operating systems and powerful
development tools allow customers to create and standardize complex real-time
embedded software applications quickly and efficiently.
TORNADO is a scalable, cross-development environment that enables engineers
to develop embedded applications on a host workstation or PC and download the
code via a network or other communications channel to an RTOS that runs on all
significant 32- and 64-bit embedded target microprocessors. TORNADO consists of
three integrated components: the TORNADO toolset, a set of cross-development
tools and utilities; the VXWORKS run-time system, a high performance, scalable
RTOS that executes on the target processor; and a full range of communications
options. TORNADO offers a completely open and extensible environment that
facilitates the integration of a wide variety of third-party tools as well as
the customization of TORNADO tools by the developer. With a wide selection of
processors and board support packages, VXWORKS provides broad portability and
adheres to a variety of computing standards. In addition, in January 1996, Intel
and Wind River entered into an agreement pursuant to which Intel has agreed to
supply an evaluation copy of TORNADO FOR I20 to each customer purchasing an
Intel i960 RP I/O microprocessor and a copy of IXWORKS on each such
microprocessor sold. IXWORKS is an RTOS for developing I2O-specification
compliant intelligent I/O systems for servers, network devices and storage
adaptor cards. The Company also has product initiatives for Internet
applications.
The Company believes that strategic relationships with semiconductor
manufacturers and embedded device manufacturers are significant strengths of the
Company and key to future success in the embedded systems marketplace. Wind
River has strategic relationships with most of the major semiconductor companies
including ARM, Hewlett-Packard, Hitachi, Intel, Motorola, Siemens, Silicon
Graphics and Sun Microsystems. This strategy has allowed the Company to leverage
its partners' sales channels to give its products the widest possible market
exposure. The Company also enters into joint marketing and sales agreements with
certain developers of third-party applications as a means to enhance its
products with industry-specific functionality.
Wind River markets its products and services in North America and Europe
primarily through its own direct sales organization, which consists of sales
persons and field application engineers. Wind River has 10 licensed
international distributors principally to serve customers in regions not
serviced by the Company's direct sales force or its Japanese master
distributors. Wind River's customers include ABB, Bay Networks, StrataCom (Cisco
Systems), General Motors, Hewlett-Packard, Hitachi, Hughes Network Systems,
Intel, Lockheed-Martin, Motorola, NEC, Northern Telecom, Rockwell, Siemens,
Silicon Graphics, Sun Microsystems and Texas Instruments.
The Company was incorporated in California in 1983 and reincorporated in
Delaware in April 1993. The Company's principal executive offices are located at
1010 Atlantic Avenue, Alameda, California 94501 and its telephone number at that
location is (510) 748-4100.
4
<PAGE>
RISK FACTORS
EXCEPT FOR THE HISTORICAL INFORMATION CONTAINED HEREIN, THE DISCUSSION IN
THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF
SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, THAT INVOLVE RISKS AND
UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE
DISCUSSED HERE. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES
INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED BELOW, AS WELL AS THOSE
DISCUSSED ELSEWHERE IN THIS PROSPECTUS AND IN ANY DOCUMENTS INCORPORATED HEREIN
BY REFERENCE. IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS, THE
FOLLOWING FACTORS SHOULD BE CONSIDERED CAREFULLY IN EVALUATING AN INVESTMENT IN
THE COMMON STOCK OFFERED BY THIS PROSPECTUS.
RELIANCE ON CORE FAMILY OF PRODUCTS. Revenue from sales of the TORNADO and
VXWORKS family of products and services accounted for approximately 77% of the
Company's revenues in each of the fiscal year ended January 31, 1996, and the
three months ended April 30, 1996. The Company's future results depend heavily
on continued market acceptance of these products in the Company's current
markets and successful application in new markets. Any factor adversely
affecting the market for the TORNADO and VXWORKS family of products and services
could have a material adverse effect on the Company's business, financial
condition and results of operations. Because in certain instances the Company
receives a royalty based on the number of VXWORKS operating systems sold by its
customers, the Company is also dependent upon its customers' success in
developing and introducing new products and systems that incorporate VXWORKS. To
the extent that such customers are not successful, the Company may not be able
to meet its objectives and its business, financial condition and results of
operations would be materially and adversely affected.
RISKS ASSOCIATED WITH NEW AND CHANGING MARKETS. The Company is continuously
engaged in product development for new or changing markets. In particular, the
Company has invested significant time and effort, together with a consortium of
industry participants, in the development of I2O, a new specification that is
intended to create an open standard set of interface specifications for high
performance I/O systems. The specification is intended to be used by system,
network and peripheral interface card and operating systems vendors to simplify
the task of building and maintaining high-performance I/ O subsystems. The
Company also has developed IXWORKS, an RTOS for use in conjunction with the I2O
specification. The success of the I2O specification and the IXWORKS product line
depends heavily on its adoption by a broad segment of the industry. The Company
also is expending substantial time and financial resources to develop embedded
operating software and development tools for Internet applications. The
commercial Internet market has only recently begun to develop, is rapidly
changing and is characterized by an increasing number of new entrants with
competitive products. Moreover, there is an increasing number of new Internet
protocols to which the Company's products must be ported. It is unclear which of
these competing protocols ultimately will achieve market acceptance. If the
Company develops products directed at Internet protocols that ultimately fail to
be widely adopted, the Company's business, financial condition and results of
operations may be materially and adversely affected. It is difficult to predict
with any assurance whether demand for any of these products will develop or
increase in the future. If these markets, or any other new market targeted by
the Company in the future, fail to develop, develop more slowly than anticipated
or become saturated with competitors, if the Company's products are not
developed in a timely manner, or if the Company's products and services do not
achieve or sustain market acceptance, the Company's business, financial
condition and results of operations would be materially and adversely affected.
See "The Company" and "Business--Products" and "--Product Development and
Engineering."
SIGNIFICANT FLUCTUATIONS IN OPERATING RESULTS. The Company has experienced
significant period-to-period fluctuations in revenues and operating results and
anticipates that such fluctuations will continue. These fluctuations may be
attributable to a number of factors, including the volume and timing of orders
received during the quarter, the timing and acceptance of new products and
product enhancements by the Company or its competitors, unanticipated sales and
buyouts of run-time licenses, stages of product life cycles, purchasing patterns
of customers and distributors, market acceptance of products sold by the
Company's customers, competitive conditions in the industry, business cycles
affecting the
5
<PAGE>
markets in which the Company's products are sold, extraordinary events, such as
acquisitions, including related charges, and economic conditions generally or in
specific geographic areas. The future operating results of the Company may
fluctuate as a result of these and other factors, including the Company's
ability to continue to develop innovative and competitive products. In addition,
the Company has not entered into long-term agreements with its customers, and
the timing of license fees is difficult to predict. The procurement process of
the Company's customers is often several months or longer from initial inquiry
to order and may involve competing considerations. Further, as licensing of the
Company's products increasingly becomes a more strategic decision made at higher
management levels, there can be no assurance that sales cycles for the Company's
products will not lengthen. Product revenue in any quarter depends on the volume
and timing of orders received in that quarter. The Company has at times
recognized a substantial portion of its total revenue from sales booked and
shipped in the latter part of the quarter; thus, the magnitude of quarterly
fluctuations may not become evident until late in a particular quarter. Because
the Company's staffing and operating expenses are based on anticipated total
revenue levels and a high percentage of the Company's costs are fixed in the
short term, small variations between anticipated orders and actual orders, as
well as non-recurring or large orders, could cause disproportionate variations
in the Company's operating results from quarter to quarter. Revenues also are
typically higher in the fourth quarter than in other quarters of the fiscal
year, which ends on January 31, primarily as a result of purchases by customers
prior to the calendar year end, as well as from customers who purchase at the
commencement of a new calendar year. These trends are expected to continue.
A number of additional factors may in the future cause the Company's
revenues and operating results to vary significantly from period to period.
These factors include: software "bugs" or other product quality problems;
changes in operating expenses; changes in Company strategy; personnel changes;
foreign currency exchange rates; and mix of products sold. Although the Company
has been profitable for the last several years on an annual basis, there can be
no assurance that the Company will be able to continue its growth in revenue or
sustain its profitability on a quarterly or annual basis. Due to all of the
foregoing factors, the Company believes that period-to-period comparisons of its
results of operations are not necessarily meaningful and should not be relied
upon as an indication of future performance. It is possible that, in some future
quarters, the Company's operating results will be below the expectations of
stock market analysts and investors. In such event, the price of the Common
Stock would likely be materially and adversely affected.
DEPENDENCE ON VME MARKET. A significant percentage of the Company's
revenues historically has been derived from sales of systems built to the VME
(versabus module eurocard) standard. These systems typically are used in high
cost, low volume applications, including military, telecommunications, space and
research applications. Although the Company believes that revenues from sales of
products designed for embedded systems applications will account for an
increasing percentage of the Company's revenues in the future, the Company
expects revenues from the VME market to continue to be significant for the
foreseeable future. Academic institutions and defense industry participants,
which generate a significant portion of the Company's VME revenues, are
dependent on government funding, the continued availability of which is
uncertain. Any unanticipated termination of government funding of VME customers
could have a material adverse effect on the Company's business, financial
condition and results of operations. See "Business--Customers."
COMPETITION. The embedded real-time software industry is highly competitive
and is characterized by rapidly advancing technology. The Company believes that
the principal competitive factors in the industry are functionality,
reliability, service, reputation and pricing. In order to maintain or improve
its position in the industry, the Company must continue to enhance its current
products and develop new products and product extensions rapidly. The Company
believes that its principal competition comes from companies that develop
real-time embedded software development systems in-house rather than purchasing
such systems from independent software vendors such as the Company. Many of
these organizations have substantial internal programming resources with the
capability to develop specific products for their needs. The Company also
competes with other independent software vendors,
6
<PAGE>
including Integrated Systems, Inc., Mentor Graphics, Inc. (through acquisition
of Microtec/Ready Sytems), Microware Systems Corporation and JavaSoft, a
division of Sun Microsystems, Inc. In addition, hardware or other software
vendors could seek to expand their product offerings by designing and selling
products that directly compete with or adversely affect sales of the Company's
products. Many of the Company's existing and potential competitors have
substantially greater financial, technical, marketing and sales resources than
the Company. In addition, the Company is aware of ongoing efforts by competitors
to emulate the performance and functionality of the Company's products and there
can be no assurance that competitors will not develop equivalent or superior
technology to that of the Company. Because a substantial percentage of the
Company's revenues have been derived from sales of the TORNADO and VXWORKS
family of products and services, the effects of competition could be more
adverse than would be the case if the Company had a broader product offering. In
addition, competitive pressures could cause the Company to reduce the prices of
its products, which would result in reduced profit margins. There can be no
assurance that the Company will be able to compete effectively against its
current and future competitors. If the Company is unable to compete
successfully, its business, financial condition and results of operations would
be materially and adversely affected. See "Business--Competition."
MANAGEMENT OF GROWTH; DEPENDENCE ON KEY PERSONNEL; NEED FOR ADDITIONAL
PERSONNEL. The Company has experienced, and expects to continue to experience,
significant growth in the number of employees, the scope and complexity of its
operating and financial systems and the geographic area of its operations. The
Company's continued success will depend significantly on its ability to
integrate new operations and new personnel. There can be no assurance that the
Company will be successful in achieving such integration efficiently. In
addition, the Company anticipates the need to relocate its management,
engineering, marketing, sales and customer support operations to a new facility
within the next several years. There can be no assurance that any such
relocation will be accomplished efficiently, or that the Company's operations
will not be materially and adversely affected by such relocation. The Company's
future performance depends to a significant degree upon the continued
contributions of its key management, product development, marketing, sales,
customer support and operations personnel, several of whom have joined the
Company only recently. In addition, the Company believes its future success will
depend in large part upon its ability to attract and retain highly-skilled
managerial, product development, marketing, sales, customer support and
operations personnel, many of whom are in great demand. Competition for such
personnel is particularly intense in the San Francisco Bay Area, where the
Company is headquartered, and there can be no assurance that the Company will be
successful in attracting and retaining such personnel. The failure of the
Company to attract, integrate and retain the necessary personnel would have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Business--Employees" and "Management."
RAPID TECHNOLOGICAL CHANGE; DEPENDENCE ON NEW PRODUCTS. The embedded
real-time software industry faces a fragmented market characterized by ongoing
technological developments, evolving industry standards and rapid changes in
customer requirements. The Company's success depends and will continue to depend
upon its ability to continue to develop and introduce in a timely manner new
products that take advantage of technological advances, to identify and adhere
to emerging standards, to continue to improve the functionality of its TORNADO
development environment and the scalability and functionality of the VXWORKS
product, to offer its products across a spectrum of microprocessor families used
in the embedded systems market and to respond promptly to customers'
requirements. The Company has from time to time experienced delays in the
development of new products and the enhancement of existing products. Such
delays are commonplace in the software industry. There can be no assurance that
the Company will be successful in developing and marketing, on a timely basis or
at all, competitive products, product enhancements and new products that respond
to technological change, changes in customer requirements and emerging industry
standards, or that the Company's enhanced or new products will adequately
address the changing needs of the marketplace. The inability of the Company, due
to resource constraints or technological or other reasons, to develop and
introduce new products or product enhancements in a timely manner could have a
material adverse effect on the Company's business, financial condition or
results of operations. From time to
7
<PAGE>
time, the Company or its competitors may announce new products, capabilities or
technologies that have the potential to replace or shorten the life cycles of
the Company's existing products. There can be no assurance that announcements of
currently planned or other new products by the Company or others will not cause
customers to defer purchasing existing Company products. Any failure by the
Company to anticipate or respond adequately to changing market conditions, or
any significant delays in product development or introduction, would have a
material adverse effect on the Company's business, financial condition and
results of operations.
In addition, until recently, the Company's products were primarily used on
the UNIX operating system. In September 1995, the Company introduced a Windows
NT and Windows 95 version of its products, and is targeting this platform for a
significant portion of its growth in the forseeable future. The market for this
platform has different characteristics and includes more competitors than the
UNIX market. As a result, there can be no assurance that the Company will be
successful with these new products in the Windows NT or Windows 95 market, or
that significant new competition will not enter the market or develop. To the
extent that the Company is not successful in this regard, its business,
financial condition and results of operations will be materially and adversely
affected. See "Business--Product Development and Engineering."
RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS. In the fiscal years ended
January 31, 1994, 1995 and 1996, the Company derived approximately 37%, 31% and
35%, respectively, of its total revenue from sales outside of North America. The
Company expects that international sales will continue to generate a significant
percentage of its total revenue in the foreseeable future. The Company also
expects to make substantial investments to expand further its international
operations and to increase its direct sales force in Europe and Asia. There can
be no assurance that these investments will result in commensurate increases in
the Company's international sales. International operations are subject to
certain risks, including foreign government regulation; more prevalent software
piracy; longer payment cycles; unexpected changes in, or imposition of,
regulatory requirements, tariffs, import and export restrictions and other
barriers and restrictions; greater difficulty in accounts receivable collection;
potentially adverse tax consequences; the burdens of complying with a variety of
foreign laws; staffing and managing foreign operations; political and economic
instability; changes in diplomatic and trade relationships; possible
recessionary environments in economies outside the United States; and other
factors beyond the control of the Company. Sales by the Company's foreign
subsidiaries are denominated in the local currency, and an increase in the
relative value of the dollar against such currencies would reduce the Company's
revenues in dollar terms or make the Company's products more expensive and,
therefore, potentially less competitive in foreign markets. There can be no
assurance that the Company's future results of operations will not be adversely
affected by currency fluctuations. The Company relies on distributors for sales
of its products in certain foreign countries and, accordingly, is dependent on
their ability to promote and support the Company's products and, in some cases,
to translate them into foreign languages. The Company's international
distributors generally offer products of several different companies, including
in some cases products that are competitive with the Company's products, and
such distributors are not subject to any minimum purchase or resale
requirements. There can be no assurance that the Company's international
distributors will continue to purchase the Company's products or provide them
with adequate levels of support. See "Business--Marketing, Sales and
Distribution."
RISKS OF PRODUCT DEFECTS; PRODUCT AND OTHER LIABILITY. As a result of their
complexity, software products may contain undetected errors or compatibility
issues, particularly when first introduced or as new versions are released.
There can be no assurance that, despite testing by the Company and testing and
use by current and potential customers, errors will not be found in new products
after commencement of commercial shipments. The occurrence of such errors could
result in loss of or delay in market acceptance of the Company's products, which
could have a material adverse effect on the Company's business, financial
condition and results of operations. The increasing use of the Company's
products for applications in systems that interact directly with the general
public, particularly applications in transportation, medical systems and other
markets where the failure of the embedded system could
8
<PAGE>
cause substantial property damage or personal injury, could expose the Company
to significant product liability claims. In addition, the Company's products may
be used for applications in mission-critical business systems where the failure
of the embedded system could be linked to substantial economic loss. The
Company's license and other agreements with its customers typically contain
provisions designed to limit the Company's exposure to potential product
liability and other claims. The limitation of liability provisions contained in
the Company's agreements are not effective in all circumstances and in all
jurisdictions. Although the Company has not experienced any product liability or
economic loss claims to date, the sale and support of the Company's products
entails the risk of such claims. The Company carries insurance against product
liability risks and errors or omissions coverage, although there can be no
assurance that such insurance will continue to be available to the Company on
commercially reasonable terms or at all. A product liability claim or claim for
economic loss brought against the Company in excess of or outside the limits of
its insurance coverage, or a product recall involving the Company's software,
could have a material adverse effect on the Company's business, financial
condition and results of operations. See "Business--Product Development and
Engineering."
LIMITED PROTECTION OF PROPRIETARY TECHNOLOGY. The Company's success is
heavily dependent upon its proprietary technology. To protect its proprietary
rights, the Company relies on a combination of copyright, trade secret, patent
and trademark laws, nondisclosure and other contractual restrictions on copying,
distribution and technical measures. The Company seeks to protect its software,
documentation and other written materials through trade secret and copyright
laws, which provide only limited protection. In addition, the Company has two
United States patent applications pending. There can be no assurance that
patents will issue from the Company's pending applications or that any claims
allowed will be of sufficient scope or strength (or be issued in all countries
where the Company's products can be sold) to provide meaningful protection or
any commercial advantage to the Company. As part of its confidentiality
procedures, the Company generally enters into nondisclosure agreements with its
employees, consultants, distributors and corporate partners and limits access to
and distribution of its software, documentation and other proprietary
information. End user licenses of the Company's software are frequently in the
form of shrink wrap license agreements, which are not signed by licensees, and
therefore may be unenforceable under the laws of many jurisdictions. Despite the
Company's efforts to protect its proprietary rights, it may be possible for
unauthorized third parties to copy the Company's products or to reverse engineer
or obtain and use information that the Company regards as proprietary. There can
be no assurance that the Company's competitors will not independently develop
technologies that are substantially equivalent or superior to the Company's
technologies. Policing unauthorized use of the Company's products is difficult,
and while the Company is unable to determine the extent to which software piracy
of its products exists, software piracy can be expected to be a persistent
problem. In addition, effective protection of intellectual property rights may
be unavailable or limited in certain countries. The status of United States
patent protection in the software industry is not well defined and will evolve
as the United States Patent and Trademark Office grants additional patents.
Patents have been granted on fundamental technologies in software, and patents
may issue that relate to fundamental technologies incorporated into the
Company's products.
As the number of patents, copyrights, trademarks and other intellectual
property rights in the Company's industry increases, products based on its
technology may increasingly become the subject of infringement claims. There can
be no assurance that third parties will not assert infringement claims against
the Company in the future. Any such claims with or without merit could be time
consuming, result in costly litigation, cause product shipment delays or require
the Company to enter into royalty or licensing agreements. Such royalty or
licensing agreements, if required, may not be available on terms acceptable to
the Company, or at all, which could have a material adverse effect on the
Company's business, financial condition and results of operations. In addition,
the Company may initiate claims or litigation against third parties for
infringement of the Company's proprietary rights or to establish the validity of
the Company's proprietary rights. Litigation to determine the validity of any
claims, whether or not such litigation is determined in favor of the Company,
could result in significant expense to the Company and divert the efforts of the
Company's technical and management personnel from productive tasks. In the event
of an adverse ruling in any such litigation, the Company might be required to
pay
9
<PAGE>
substantial damages, discontinue the use and sale of infringing products, expend
significant resources to develop non-infringing technology or obtain licenses to
infringing technology. See "Business-- Proprietary Rights."
VOLATILITY OF STOCK PRICE. The market price of the Company's Common Stock
has fluctuated in the past, and is likely to fluctuate in the future. The
Company believes that various factors, including quarterly fluctuations in
results of operations, announcements of new products by the Company or by its
competitors, and changes in the software industry in general cause, and may
continue to cause the market price of the Common Stock to fluctuate, perhaps
substantially. In addition, in recent years the stock market in general, and the
shares of technology companies in particular, have experienced extreme price
fluctuations. This volatility has had a substantial effect on the market prices
of securities issued by the Company and other high technology companies, often
for reasons unrelated to the operating performance of the specific companies.
The market prices of many high technology companies' stocks, including the stock
of the Company, are at or near their historical highs and reflect price/
earnings ratios substantially above historical norms. There can be no assurance
that the market price of the Common Stock will remain at or near its current
level. In the past, following periods of volatility in the market price of a
company's securities, securities class action litigation has often been
instituted against that company. Such litigation, if instituted against the
Company, could result in substantial costs and a diversion of management
attention and resources, which would have a material adverse effect on the
Company's business, financial condition and results of operations, even if the
Company is successful in such suits. These market fluctuations, as well as
general economic, political and market conditions such as recessions, may
adversely affect the market price of the Common Stock. See "Price Range of
Common Stock and Dividend Policy."
ANTI-TAKEOVER EFFECTS OF CERTIFICATE OF INCORPORATION, BYLAWS AND DELAWARE
LAW. The Company's Board of Directors has the authority to issue up to
2,000,000 shares of Preferred Stock and to determine the price, rights,
preferences, and privileges of those shares without any further vote or action
by the stockholders. The rights of the holders of Common Stock will be subject
to, and may be adversely affected by, the rights of the holders of any Preferred
Stock that may be issued in the future. The issuance of Preferred Stock, while
providing desirable flexibility in connection with possible acquisitions and
other corporate purposes, could have the effect of making it more difficult for
a third party to acquire a majority of the outstanding voting stock of the
Company. The Company has no present plans to issue shares of Preferred Stock. In
addition, the Company is subject to the provisions of Section 203 of the
Delaware General Corporation Law, an anti-takeover law. Furthermore, certain
provisions of the Company's Certificate of Incorporation and By-laws may have
the effect of delaying or preventing changes in control or management of the
Company, which could adversely affect the market price of the Common Stock.
10
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 1,650,000 shares of
Common Stock offered by the Company hereby are estimated to be $52,364,000
($68,193,000 if the Underwriters' over-allotment option is exercised in full)
assuming the shares offered hereby are sold at a public offering price of $33.75
per share and after deducting estimated underwriting discounts and commissions
and offering expenses. The Company will not receive any of the proceeds from the
sale of the shares of Common Stock offered by the Selling Stockholders. The
Company expects to use the net proceeds of this offering for general corporate
purposes, including working capital and possible acquisition of office
facilities and businesses, products or technologies complementary to the
Company's current business. The Company has no present plans, commitments or
agreements, and is not currently involved in any negotiations with respect to
any such acquisitions. Pending such uses, the Company intends to invest the net
proceeds from this offering in interest-bearing investment grade securities.
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
The Company's Common Stock is traded on the Nasdaq National Market under the
symbol "WIND." The following table sets forth, for the fiscal quarters
indicated, the range of high and low sales prices for the Common Stock on the
Nasdaq National Market for the periods indicated, adjusted to give effect to a
three-for-two stock split effected as a stock dividend on May 24, 1996 to
stockholders of record on May 10, 1996. These prices do not include retail
markups, markdowns or commissions.
<TABLE>
<CAPTION>
HIGH LOW
--------- ---------
<S> <C> <C>
Fiscal Year Ended January 31, 1995
First Quarter.......................................................... $ 4.67 $ 2.92
Second Quarter......................................................... 4.75 3.42
Third Quarter.......................................................... 6.08 3.83
Fourth Quarter......................................................... 6.67 5.00
Fiscal Year Ended January 31, 1996
First Quarter.......................................................... 10.08 5.67
Second Quarter......................................................... 11.83 7.17
Third Quarter.......................................................... 18.33 10.33
Fourth Quarter......................................................... 20.42 16.00
Fiscal Year Ending January 31, 1997
First Quarter.......................................................... 27.00 18.33
Second Quarter (through June 14, 1996)................................. 36.38 25.33
</TABLE>
As of June 14, 1996, there were approximately 264 holders of record of the
Common Stock. On June 14, 1996, the last sale price reported on the Nasdaq
National Market for the Company's Common Stock was $33.75 per share.
The Company has never declared or paid any cash dividends on its capital
stock. The Company currently intends to retain future earnings to finance the
growth and development of its business and, therefore, does not anticipate
paying any cash dividends in the foreseeable future.
11
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of April
30, 1996, and as adjusted to reflect the receipt by the Company of the net
proceeds from the sale of 1,650,000 shares of Common Stock offered by the
Company hereby at a public offering price of $33.75 per share and after
deducting estimated underwriting discounts and commissions and operating
expenses:
<TABLE>
<CAPTION>
APRIL 30, 1996
-----------------------
ACTUAL AS ADJUSTED
--------- ------------
(IN THOUSANDS)
<S> <C> <C>
Stockholders' equity:
Common Stock, par value $.001, 20,000 shares authorized; 14,180 issued and
13,880 outstanding; 15,530 issued and outstanding, as adjusted(1)............ $ 14 $ 16
Additional paid in capital.................................................... 25,038 72,568
Cumulative translation adjustments............................................ (198) (198)
Retained earnings............................................................. 12,808 12,808
Less treasury stock, 300 shares at cost....................................... (4,832) --
--------- ------------
Total stockholders' equity.............................................. $ 32,830 $ 85,194
--------- ------------
Total capitalization.................................................. $ 32,830 $ 85,194
--------- ------------
--------- ------------
</TABLE>
- ------------
(1) Excludes 2,704,305 shares of Common Stock issuable upon exercise of stock
options outstanding at April 30, 1996 at a weighted average exercise price
of $4.08 per share and 150,000 shares of Common Stock issuable upon
exercise of a warrant outstanding at April 30, 1996 at an exercise price of
$7.39. The Company is soliciting stockholder approval, at its Annual
Meeting of Stockholders to be held on July 23, 1996, of an amendment to the
Company's Certificate of Incorporation to increase the number of authorized
shares of Common Stock to 75,000,000 from 20,000,000.
12
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected consolidated financial data should be read in
conjunction with the consolidated financial statements and notes thereto
incorporated by reference in this Prospectus. The consolidated statement of
income data for the three-year period ended January 31, 1996 and the
consolidated balance sheet data at January 31, 1995 and 1996 are derived from
and should be read in conjunction with the audited consolidated financial
statements and notes thereto incorporated by reference in this Prospectus. The
consolidated statement of income data for the years ended January 31, 1992 and
1993 and the consolidated balance sheet data at January 31, 1992, 1993 and 1994
are derived from audited consolidated financial statements not included or
incorporated by reference herein. The consolidated statement of income data for
the three months ended April 30, 1995 and 1996 and consolidated balance sheet
data at April 30, 1996 are derived from unaudited consolidated financial
statements that have been prepared on the same basis as the audited financial
statements and, in the opinion of management, include all adjustments
(consisting only of normal recurring adjustments) necessary for a fair
presentation of the Company's financial position and results of operations for
such periods. Results of operations of interim periods are not necessarily
indicative of results to be expected for the full fiscal year.
<TABLE>
<CAPTION>
THREE MONTHS
YEARS ENDED JANUARY 31, ENDED APRIL 30,
----------------------------------------------------- --------------------
1992 1993 1994 1995 1996 1995 1996
--------- --------- --------- --------- --------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF INCOME DATA:
Revenues:
Product....................................... $ 15,051 $ 21,229 $ 22,393 $ 23,196 $ 31,200 $ 6,032 $ 8,531
Services...................................... 2,034 3,824 4,948 8,904 12,800 2,668 4,069
--------- --------- --------- --------- --------- --------- ---------
Total revenues.............................. 17,085 25,053 27,341 32,100 44,000 8,700 12,600
--------- --------- --------- --------- --------- --------- ---------
Costs and expenses:
Cost of product............................... 1,055 1,870 2,241 2,336 3,746 674 1,089
Cost of services.............................. 1,686 2,366 2,726 3,656 5,530 1,187 1,561
Selling and marketing......................... 7,481 10,434 13,654 14,614 17,905 3,935 5,139
Product development and engineering........... 3,088 4,373 4,222 4,656 5,531 1,234 1,595
General and administrative.................... 2,050 2,109 3,975 3,386 3,158 756 1,018
Write-off of receivable from related party
distributor................................. -- 842 -- -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Total costs and expenses.................... 15,360 21,994 26,818 28,648 35,870 7,786 10,402
--------- --------- --------- --------- --------- --------- ---------
Operating income................................ 1,725 3,059 523 3,452 8,130 914 2,198
Other income (expense).......................... (22) (188) 130 453 661 162 192
--------- --------- --------- --------- --------- --------- ---------
Income before taxes............................. 1,703 2,871 653 3,905 8,791 1,076 2,390
Provision for income taxes...................... 610 1,150 321 1,445 3,408 409 920
--------- --------- --------- --------- --------- --------- ---------
Net income.................................. $ 1,093 $ 1,721 $ 332 $ 2,460 $ 5,383 $ 667 $ 1,470
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Net income per share............................ $ 0.11 $ 0.16 $ 0.02 $ 0.17 $ 0.35 $ 0.04 $ 0.09
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Shares used in computing net income per
share(1)....................................... 9,611 10,455 13,317 14,300 15,491 15,065 15,992
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
<CAPTION>
JANUARY 31, APRIL 30,
----------------------------------------------------- --------------------
1992 1993 1994 1995 1996 1995 1996
--------- --------- --------- --------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and short-terms investments................ $ 1,616 $ 6,415 $ 20,653 $ 20,851 $ 29,837 $ 23,913 $ 27,909
Working capital................................. 3,370 5,637 21,486 24,220 27,817 25,554 27,233
Total assets.................................... 10,489 14,712 33,880 39,183 45,480 40,217 46,464
Total stockholders' equity...................... 4,031 6,671 24,612 28,345 32,813 29,950 32,830
</TABLE>
- ------------
(1) See Note 1 of Notes to Consolidated Financial Statements incorporated by
reference herein, for information regarding the number of shares used in
calculating net income per share.
13
<PAGE>
QUARTERLY RESULTS
The following table presents certain unaudited quarterly statement of income
data for the nine quarters ended April 30, 1996. In the opinion of management,
this information has been prepared on the same basis as the audited consolidated
financial statements incorporated by reference in this Prospectus and includes
all necessary adjustments (consisting only of normal recurring adjustments) that
the Company considers necessary to present fairly such information. The table
should be read in conjunction with the audited consolidated financial statements
of the Company and notes thereto incorporated by reference in this Prospectus.
The Company's quarterly results have in the past been subject to fluctuations
and, as a result, the operating results for any quarter are not necessarily
indicative of results for any future period.
<TABLE>
<CAPTION>
QUARTERS ENDED
-----------------------------------------------------------------------------------------
APRIL 30, JULY 31, OCT. 31, JAN. 31, APRIL 30, JULY 31, OCT. 31,
1994 1994 1994 1995 1995 1995 1995
----------- ----------- ----------- ----------- ----------- ----------- -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Product............................ $ 4,533 $ 4,417 $ 6,172 $ 8,075 $ 6,032 $ 7,002 $ 7,995
Services........................... 2,004 2,658 1,944 2,298 2,668 3,098 3,405
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total revenues................... 6,537 7,075 8,116 10,373 8,700 10,100 11,400
----------- ----------- ----------- ----------- ----------- ----------- -----------
Costs and expenses:
Cost of product.................... 405 565 689 677 674 749 797
Cost of services................... 704 765 992 1,195 1,187 1,233 1,550
Selling and marketing.............. 3,350 3,499 3,489 4,278 3,935 4,234 4,369
Product development and
engineering...................... 1,255 1,023 1,081 1,297 1,234 1,332 1,410
General and administrative......... 752 934 805 894 756 819 831
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total costs and expenses......... 6,466 6,786 7,056 8,341 7,786 8,367 8,957
----------- ----------- ----------- ----------- ----------- ----------- -----------
Operating income..................... 71 289 1,060 2,032 914 1,733 2,443
Other income......................... 24 138 165 126 162 213 55
----------- ----------- ----------- ----------- ----------- ----------- -----------
Income before taxes.................. 95 427 1,225 2,158 1,076 1,946 2,498
Provision for income taxes........... 17 167 452 809 409 739 961
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net income....................... $ 78 $ 260 $ 773 $ 1,349 $ 667 $ 1,207 $ 1,537
----------- ----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net income per share................. $ 0.01 $ 0.02 $ 0.05 $ 0.09 $ 0.04 $ 0.08 $ 0.10
----------- ----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- ----------- -----------
Shares used in computing net income
per share........................... 13,803 14,117 14,591 14,685 15,065 15,456 15,678
AS A PERCENTAGE OF TOTAL REVENUES
-----------------------------------------------------------------------------------------
Revenues:
Product............................ 69% 62% 76% 78% 69% 69% 70%
Services........................... 31 38 24 22 31 31 30
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total revenues................... 100 100 100 100 100 100 100
----------- ----------- ----------- ----------- ----------- ----------- -----------
Costs and expenses:
Cost of product.................... 6 8 8 7 8 7 7
Cost of services................... 11 11 12 12 14 12 14
Selling and marketing.............. 51 49 43 41 45 42 38
Product development and
engineering...................... 19 14 13 13 14 13 12
General and administrative......... 12 13 10 9 9 8 7
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total costs and expenses......... 99 96 87 80 89 83 79
----------- ----------- ----------- ----------- ----------- ----------- -----------
Operating income..................... 1 4 13 20 11 17 21
Other income......................... 0 2 2 1 2 2 0
----------- ----------- ----------- ----------- ----------- ----------- -----------
Income before taxes.................. 1 6 15 21 12 19 22
Provision for income taxes........... 0 2 6 8 5 7 8
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net income....................... 1% 4% 10% 13% 8% 12% 13%
----------- ----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- ----------- -----------
<CAPTION>
JAN. 31, APRIL 30,
1996 1996
----------- -----------
<S> <C> <C>
Revenues:
Product............................ $ 10,171 $ 8,531
Services........................... 3,629 4,069
----------- -----------
Total revenues................... 13,800 12,600
----------- -----------
Costs and expenses:
Cost of product.................... 1,526 1,089
Cost of services................... 1,560 1,561
Selling and marketing.............. 5,367 5,139
Product development and
engineering...................... 1,554 1,595
General and administrative......... 752 1,018
----------- -----------
Total costs and expenses......... 10,759 10,402
----------- -----------
Operating income..................... 3,041 2,198
Other income......................... 231 192
----------- -----------
Income before taxes.................. 3,272 2,390
Provision for income taxes........... 1,299 920
----------- -----------
Net income....................... $ 1,973 $ 1,470
----------- -----------
----------- -----------
Net income per share................. $ 0.13 $ 0.09
----------- -----------
----------- -----------
Shares used in computing net income
per share........................... 15,759 15,992
Revenues:
Product............................ 74% 68%
Services........................... 26 32
----------- -----------
Total revenues................... 100 100
----------- -----------
Costs and expenses:
Cost of product.................... 11 9
Cost of services................... 11 12
Selling and marketing.............. 39 41
Product development and
engineering...................... 11 13
General and administrative......... 5 8
----------- -----------
Total costs and expenses......... 78 83
----------- -----------
Operating income..................... 22 17
Other income......................... 2 2
----------- -----------
Income before taxes.................. 24 19
Provision for income taxes........... 9 7
----------- -----------
Net income....................... 14% 12%
----------- -----------
----------- -----------
</TABLE>
14
<PAGE>
BUSINESS
Wind River Systems develops, markets and supports advanced software
operating systems and development tools that allow customers to create complex,
robust, real-time software applications for embedded computers. An embedded
computer is a microprocessor that is incorporated into a larger device and is
dedicated to responding to external events by performing specific tasks quickly,
predictably and reliably. Wind River's products and services enable customers to
enhance product performance, standardize designs across projects, reduce
research and development costs and shorten product development cycles. The
Company's TORNADO product represents the latest generation of development
environments for embedded and real time applications. TORNADO provides the
developer of embedded systems a robust development and deployment environment
for a wide variety of host platforms and microprocessor targets.
INDUSTRY BACKGROUND
Embedded systems consist of a microprocessor and related software,
incorporated into a larger device, dedicated to performing a specific set of
tasks. Embedded systems provide an immediate, predictable response to an
unpredictable sequence of external events. As more powerful microprocessors have
become available and decreased in price, embedded systems are being used in a
wider range of applications and are facilitating the development of entirely new
products. Today, embedded systems are found in many consumer products such as
telecommunications products such as PABX, routers, central office switches and
call processing systems; office products such as fax machines, laser printers
and photocopiers; vehicle anti-lock brakes and navigation systems; consumer
products such as camcorders, video games and set-top boxes; medical
instrumentation and imaging systems; and industrial automation equipment such as
robots. Emerging Embedded Internet applications for interactive entertainment,
network computers, remote maintenance and other areas may offer significant
opportunities for embedded systems.
To succeed in today's increasingly competitive markets, manufacturers using
embedded computers must bring complex applications for embedded systems to
market rapidly and economically. Developing real-time embedded applications has
evolved from a relatively modest programming task to a complex engineering
effort. As more powerful and affordable 32-bit microprocessors have become
available, products based on them have become richer in features and
functionality. In addition, the complexity of embedded software is increasing
dramatically, while the time available for product development is decreasing.
More sophisticated development tools are required to develop these more complex
applications, frequently including an RTOS that provides far more functionality,
higher performance and greater productivity than that necessary or feasible for
programming prior generations of microprocessors. Wind River's flexible
operating systems and powerful development tools allow customers to create and
standardize complex real-time embedded software applications quickly and
efficiently.
As real-time embedded applications increase in complexity, the costs
associated with software development, support and training of engineers are
rising rapidly. In addition, time-to-market, conformance to standards and
product reliability have become critical issues for companies developing real-
time embedded applications.
WIND RIVER DEVELOPMENT ENVIRONMENT AND OPERATING SYSTEM
The Company's operating systems and development tools allow customers to
create complex real-time embedded software applications more quickly, more
economically and with less risk than creating such applications using internally
developed systems and tools. The Company's TORNADO product represents the latest
generation of development and execution environments for embedded and real-time
applications. TORNADO provides the developer of embedded systems a robust
development and deployment environment for a wide variety of host platforms and
microprocessor targets. The TORNADO product consists of three integrated
components: the TORNADO toolset, a set of cross-development tools and utilities;
the VXWORKS run-time system, a high performance, scalable RTOS which executes on
the
15
<PAGE>
target processor; and a full range of communications software options such as
Ethernet, serial line, ICE or ROM emulator for the target connection to the
host. The Wind River environment is designed with the following characteristics:
OPEN, EXTENSIBLE ENVIRONMENT. The Company's TORNADO product is an open
environment that enables additional tool integrations from both the developer
and third party vendors. A set of application programs interfaces (APIs) is
available and published on the Internet for reference, from the GUI to the
connection implementation. The Company believes that this open environment may
make TORNADO the widespread development tool for embedded and real-time
applications.
SCALABLE RTOS. Real-time embedded software applications can range from
small, memory-constrained stand-alone applications to large distributed
applications. The Company's VXWORKS RTOS is built on a microkernel architecture
that requires only 8 kilobytes for a minimal configuration, and also supports
large, complex applications. With VXMP, the extended multiprocessor package for
VXWORKS, applications created on the TORNADO platform can be scaled to
supporting multi-processor hardware.
PORTABLE. The Company's development environment runs on all significant 32-
and 64-bit embedded target microprocessors. The Company's VXWORKS product is a
high performance RTOS built upon an open architecture, and provides support for
a number of industry standards, enabling developers to easily design efficient
multi-vendor systems and migrate to different processors with minimal effort.
The Company believes that the emergence of complex 32-bit microprocessor
platforms, coupled with pressure for faster time-to-market targets for
developers, makes open-platform, highly portable development and execution
environments, such as the Company's TORNADO product, an attractive alternative
to developing proprietary tools and applications.
CONFIGURABLE. The Company's VXWORKS RTOS (and optional components -- e.g.
VXVMP, VXVMI, STREAMS, SNMP) is a highly modular design which allows optional
features and device drivers, both those supplied by Wind River as well as
provided by third parties, to be included or omitted at the developer's
discretion. This allows customers to create a customized RTOS to fit their
hardware and application that incorporates only necessary functions. This
enables the customer to optimally size the RTOS using Wind River's configuration
tool--WINDCONFIG--which makes selection of features and management of
alternative configurations easy.
HIGHLY FUNCTIONAL. Wind River believes it has a broad integrated suite of
tools. In addition to its core toolset and options, Wind River has created
visual development tools for real-time embedded systems. WINDVIEW, a development
and analytical tool, VXSIM, a complete prototype and simulation tool and
STETHOSCOPE, a real time visualization, profiling and debugging tool. The
TORNADO suite of host-based debugging tools is specifically designed to solve
the problems faced by developers of embedded systems. These tools share a common
GUI, and all the tools connect through a central server that handles all the
communication with the target.
The core toolset includes the CROSSWIND debugger and the GNU toolkit, shell
and link loader. Wind River also has a broad suite of options for applications
requiring multiprocessing (VXMP), virtual memory support (VXVMI) target resident
debugging, customization of target hardware (BSP Porting kit) or advanced
networking functionality (WINDNET).
UNIX, WINDOWS NT AND WINDOWS 95 SUPPORT. The Company's TORNADO environment
supports Unix, Windows NT and Windows 95 development environments, and is the
only RTOS to have earned the Windows 95 logo. The Company has maintained a
strong presence in providing development tools and the VXWORKS RTOS for the UNIX
operating system. The Company also recognizes the importance of Windows NT and
Windows 95 as potentially dominant network operating systems, and in September
1995 began to support Windows NT and Windows 95 with the introduction of the
TORNADO development environment.
16
<PAGE>
PRODUCTS
Wind River's operating systems and development tools allow customers to
create complex real-time embedded software applications more quickly, more
economically and with less risk than creating such applications using internally
developed systems and tools.
TORNADO. Wind River's flagship product is TORNADO, a development
environment for embedded applications available for UNIX, Windows NT and Windows
95 development platforms. TORNADO was introduced in September 1995 and
subsequently won the Electronic Design News award for Innovation of the Year.
TORNADO is a scalable, cross-development environment that enables engineers to
develop embedded applications on a host workstation or PC and download the code
via a network or other communications channel to an RTOS that runs on all
significant 32- and 64-bit embedded target microprocessor.
TORNADO consists of three integrated components: the TORNADO toolset, a set
of cross-development tools and utilities; the VXWORKS run-time system, a high
performance, scalable RTOS which executes on the target processor; and a full
range of communications options.
The TORNADO development toolset consists of a launcher, a GNU compiler for C
and C++ programs, a remote source level debugger, a user-interface shell, a
browser, and a variety of other software tools that run on the development host.
TORNADO also offers a completely open and extensible environment that
facilitates the integration of a wide variety of third-party tools as well as
the customization of TORNADO tools by the developer.
VXWORKS. VXWORKS is a high performance, scalable RTOS based on an
object-oriented microkernel design. The run-time system offers over 1,100
functions from real-time kernel functions to networking to utility routines such
as buffer and list management for accelerating application development. With a
wide selection of processors and board support packages, VXWORKS provides broad
portability and adheres to a variety of computing standards, including POSIX
1003.1/1b, ANSI C, and TCP/IP.
For communications, the development toolset can connect to an embedded
target over a variety of options, including Ethernet, serial line, in-circuit
emulator, ROM emulator, or custom. TORNADO eliminates many of the dependencies
of a traditional cross-development environment. With TORNADO, developers can use
any host-target communication strategy and the available tool functionality is
the same regardless of the target processor resources.
I2O PRODUCT INITIATIVE. In January 1996, Intel and Wind River entered into
an agreement pursuant to which Intel has agreed to supply an evaluation copy of
TORNADO FOR I2O to each customer purchasing an Intel i960 RP I/O microprocessor
and a copy of IXWORKS on each such microprocessor sold. I2O is being proposed by
a consortium of leading enterprise computing vendors with the intent of defining
and promoting an open standard set of interface specifications for
high-performance I/O systems. The specification will be used by system, network
and peripheral interface card and operating system vendors to simplify the task
of building and maintaining high-performance I/O subsystems. The I2O
specification makes it possible for systems to distribute I/O functions across
multiple processors, dramatically improving I/O and overall system performance.
Additionally, the specification allows vendors of network and peripheral
interface cards to write a single device driver that will be compatible with a
comprehensive range of operating systems (OS), OS releases, and vendor OS
implementations. A license for the Company's IXWORKS operating system, a version
of VXWORKS made specifically for the Intel i960 RP microprocessor, will be
included with every i960 RP that Intel ships. IXWORKS provides manufacturers the
elements they need to quickly design I2O specification-compliant intelligent I/O
into servers and network and storage adapter cards. Along with the license for
IXWORKS, Intel will deliver purchasers of the Intel i960 RP I/O microprocessor a
CD-ROM that includes a 30-day evaluation copy of TORNADO FOR I2O. The Company
believes that its relationship with Intel on the I2O specification project may
open up a new, potentially significant market opportunity for its products. See
"Risk Factors -- Risks Associated with New and Changing Markets."
17
<PAGE>
INTERNET INITIATIVE. Wind River is currently working on various initiatives
to capitalize on the increasing use of the Internet. The Company believes that
there may be significant opportunities to increase the market size and scope for
its products via the Java paradigm. The Company is also customizing many of its
applications to better serve datacommunications/telecommunications customers
that are building the Internet infrastructure.
ADDITIONAL PRODUCTS
In addition to its core products, Wind River offers the following additional
products:
VXWORKS Options. VXWORKS options include VXWINDOWS, the VXVMI virtual
memory interface, and the VXMP multi-processing package. VXWINDOWS, which
includes the X Windows System client software together with OSF-Motif, allows
developers to build graphical VXWORKS applications. VXVMI virtual memory
interface provides run-time memory management and debugging facilities and an
application program interface standardized across different microprocessing
architectures. The VXMP multi-processing package allows applications to be
scaled beyond the performance of single microprocessors by allowing tasks on
different microprocessors to synchronize and communicate.
WINDNET. WINDNET is Wind River's networking environment, comprising both
core technology from Wind River--such as TCP/IP, STREAMS, and the WINDNET SNMP
network management product-- and numerous integrated products from third party
partners providing various protocols, ATM, network management, and distributed
computing solutions.
VXSIM EMBEDDED SYSTEM SIMULATOR. VXSIM is a comprehensive prototyping and
simulation tool that provides full VXWORKS simulation on a UNIX workstation.
VXSIM enables application development to begin before hardware becomes available
and allows software testing to occur early in the development cycle, when errors
are less costly to correct.
WINDVIEW. WindView is a diagnostic and analysis tool that provides detailed
visibility into the dynamic operation of an embedded system. With it, the user
can quickly and easily visualize the complicated interaction among tasks,
interrupt service routines and system objects in an application. This
information is presented through a GUI.
STETHOSCOPE. The Company is a reseller of STETHOSCOPE, a real-time data
visualization, profiling and debugging tool that lets the end user examine and
analyze an embedded application while it is running. STETHOSCOPE features a
multi-window environment that allows program variables to be plotted dynamically
on a workstation.
WINDC++ OBJECT-ORIENTED LANGUAGE SUPPORT. WINDC++ provides a cost-effective
basic set of capabilities for real-time C++ development. It includes the cfront
C++ Language System from Centerline Software, an integrated source code
debugger, an I/O streams class library for formatted and buffered I/O and a
runtime support library. WINDC++ is integrated with TORNADO and VXWORKS.
WIND FOUNDATION CLASSES. Wind Foundation Classes, designed specifically to
accompany TORNADO, provide the C++ programming classes needed by a growing
number of customers.
BOARD SUPPORT PACKAGE PORTING KIT. The VXWORKS operating system can be used
with a wide variety of processor types and target environments. They isolate all
hardware-specific functionality into a special section of code called the Board
Support Package or BSP. The BSP Porting Kit provides assistance to the developer
porting TORNADO or VXWORKS to custom hardware or to a commercial board not
supported by Wind River. It includes comprehensive documentation, a software
validation suite, project management tools and a template BSP to provide a
convenient starting point. To assist third-party developers, Wind River also
offers a service in which it tests and validates the resulting BSP.
SERVICES AND SUPPORT
Wind River provides comprehensive customer service and support that help
customers realize the value and potential of the Company's products.
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<PAGE>
TRAINING CLASSES. Wind River offers several training courses and workshops
relating to the use of its products. The courses are provided several times each
month and are taught by Wind River trainers at the Company's training facilities
in Alameda, California and Orlando, Florida. Outside North America, the courses
are given under license from the Company by distributors and training
contractors. Training courses can also be provided at a customer site.
TECHNICAL SUPPORT. The Company's technical support staff assists customers
with problems and questions in the installation and use of the Company's
products. Technical support is provided by Wind River's staff of support
engineers in North America, by staff support engineers and/or local distributors
in Europe and by the Company's Japanese subsidiary. Technical support is bundled
with product updates and maintenance and is offered on an annual fee basis. Wind
River's TORNADO includes a tool for submitting problem reports via the Internet.
ENGINEERING SERVICES. A number of services are provided on a
fee-for-service basis, including BSP validation, application level consulting,
customization, and porting to strategic semiconductor architectures. These are
coordinated and performed by the Engineering Services Group in North America and
Japan, though they may on occasion be supported by engineering or outside
subcontractors in North America and Europe.
STRATEGIC ALLIANCES
The Company believes that strategic relationships with semiconductor
manufacturers and embedded device manufacturers are significant strengths of the
Company and key to future success in the embedded systems marketplace. Wind
River has strategic relationships with most of the major semiconductor companies
including ARM, Hewlett-Packard, Hitachi, Intel, Motorola, Siemens, Silicon
Graphics and Sun Microsystems. This strategy has allowed the Company to leverage
its partners' sales channels to give its products the widest possible market
exposure. The Company also enters into joint marketing and sales agreements with
certain developers of third-party applications as a means to enhance its
products with industry-specific functionality. In addition, in January 1996,
Intel and Wind River entered into an agreement pursuant to which Intel has
agreed to supply an evaluation copy of TORNADO FOR I2O to each customer
purchasing an Intel i960 RP I/O microprocessor and a copy of IXWORKS on each
such microprocessor sold.
CUSTOMERS
The Company's products have been deployed by a broad range of organizations,
ranging from companies in the following industries: telecommunications and
datacommunications; office automation and computers; medical and industrial; and
aerospace, research and defense. No single customer accounted for more than 5%
of the Company's total revenues in fiscal 1996, and the top 12 customers in the
aggregate accounted for less than 20%. The following organizations are
representative end users of the Company's products:
<TABLE>
<S> <C>
TELECOMMUNICATIONS/DATACOMMUNICATIONS
- ------------------------------------------------------------------------------------
Applied Signal Technology Motorola Computer Group
Ascom Timeplex Inc. NetEdge Systems
AT&T Network Equipment Technologies
Bay Networks Newbridge Networks
Dialogic Corp Nortel Inc.
Ericsson Orbital Sciences Corp
General Instrument Corp. Qualcomm Inc.
Hitachi Computer Products (America), Inc. StrataCom (Cisco Systems)
Hughes Network Systems Texas Instruments
Hyundai Electronics America TRW, Inc.
Loral Communications Systems ZeitNet Inc.
</TABLE>
19
<PAGE>
<TABLE>
<S> <C>
OFFICE AUTOMATION AND COMPUTERS
- ------------------------------------------------------------------------------------
Apple Computers Intel Corp
Computer Sciences Corp. Legacy Storage Systems
Cray Research SamSung Electronics Co.
Digital Equipment Corporation Scitex Digital Video
Electronic Data Systems Corp. (EDS) Silicon Graphics, Inc
Hewlett-Packard Whittaker Communications
IBM Xerox Corp.
INDUSTRIAL AND MEDICAL
- ------------------------------------------------------------------------------------
ADAC Laboratories Heidelberger Drucksmaschinen AG
Allen-Bradley Co., Inc. Keithley Instruments, Inc.
Applied Materials KLA Instruments Corp
Eastman Kodak Company MTS Systems Corp.
Eaton Corp. Picker International
Fluke Corporation Siemens
General Motors SpaceLabs Medical
Harris Controls Division Tektronix Inc.
AEROSPACE, RESEARCH AND DEFENSE
- ------------------------------------------------------------------------------------
Boeing Los Alamos National Labs
E-Systems Lockheed-Martin
Fermi Labs McDonnell Douglas Aerospace
GTE Government Systems Corp. NASA
Harris Rockwell
Jet Propulsion Laboratory Sandia National Laboratories
Johns Hopkins University Stanford University
</TABLE>
Many of the Company's customers are building systems to the VME standard.
These systems typically are used in high cost, low-volume applications,
including military, telecommunications, space and research applications. A
significant percentage of the Company's revenues have been derived historically
from sales of products designed for VME applications, and the Company expects
revenues from the VME market to be significant for the foreseeable future.
Academic institutions and defense industry participants, which generate a
significant portion of the Company's VME revenues, are dependent on government
funding, the continued availability of which is uncertain. Any unanticipated
termination of government funding of VME customers could have a material and
adverse effect on the Company's business, financial condition and results of
operations. See "Risk Factors -- Dependence on VME Market."
MARKETING, SALES AND DISTRIBUTION
In North America and Europe, Wind River markets its products and services
primarily through its own direct sales organization which consists of
salespersons and field application engineers. Wind River has 44 domestic direct
salespersons and field application engineers located throughout North America,
14 direct salespersons and field application engineers located at wholly-owned
subsidiaries in France, Germany and the United Kingdom and 12 engineering, sales
support and marketing employees in Japan.
The Company distributes its products in Japan through Wind River Systems,
K.K. ("WRSKK"), a joint venture in which the Company owns a 70% equity interest.
Innotech Corporation ("Innotech"), Kobe Steel Ltd. and Nissin Electric Ltd., the
other partners in the joint venture, each owns a 10% equity interest. The
Company has licensed its products exclusively to WRSKK for distribution in
Japan. WRSKK
20
<PAGE>
has in turn entered into master distributor agreements with its three joint
venture partners that provide the right to appoint sub-distributors. See Note 2
of Notes to Consolidated Financial Statements incorporated by reference herein.
Wind River has licensed 13 international distributors principally to serve
customers in regions not serviced by the Company's direct sales force or its
Japanese master distributors. The Company also has established strategic
relationships with computer, semiconductor and software vendors and works
closely with a number of system integrators worldwide that enable Wind River to
further broaden the geographic and market scope for its products.
Revenues from international sales represented approximately 37%, 31% and 35%
of the Company's total revenue in fiscal 1994, 1995 and 1996, respectively. See
Note 9 of Notes to Consolidated Financial Statements for a summary of operations
by geographic region.
COMPETITION
The embedded real-time software industry is highly competitive and is
characterized by rapidly advancing technology. The Company believes that the
principal competitive factors in the industry are functionality, reliability,
service, reputation and pricing. In order to maintain or improve its position in
the industry, the Company must continue to enhance its current products and
develop new products and product extensions rapidly. The Company believes that
its principal competition comes from companies that develop real-time embedded
software development systems in-house rather than purchasing such systems from
independent software vendors such as the Company. Many of these organizations
have substantial internal programming resources with the capability to develop
specific products for their needs. The Company also competes with other
independent software vendors, including Integrated Systems, Inc., Mentor
Graphics, Inc. (through acquisition of Microtec/Ready Sytems), Microware Systems
Corporation and JavaSoft, a division of Sun Microsystems, Inc. In addition,
hardware or other software vendors could seek to expand their product offerings
by designing and selling products that directly compete with or adversely affect
sales of the Company's products. Many of the Company's existing and potential
competitors have substantially greater financial, technical, marketing and sales
resources than the Company. In addition, the Company is aware of ongoing efforts
by competitors to emulate the performance and functionality of the Company's
products and there can be no assurance that competitors will not develop
equivalent or superior technology to that of the Company. Because a substantial
percentage of the Company's revenues have been derived from sales of the TORNADO
and VXWORKS family of products and services, the effects of competition could be
more adverse than would be the case if the Company had a broader product
offering. In addition, competitive pressures could cause the Company to reduce
the prices of its products, which would result in reduced profit margins. There
can be no assurance that the Company will be able to compete effectively against
its current and future competitors. If the Company is unable to compete
successfully, its business, financial condition and results of operations would
be materially and adversely affected.
The Company believes that it competes favorably in its markets on the basis
of product functionality, price/performance characteristics, product
portability, ease of use, sales and marketing strength, financial stability,
support services and corporate reputation. See "Risk Factors--Competition."
PRODUCT DEVELOPMENT AND ENGINEERING
Wind River believes that its success will depend in large part on its
ability to maintain and enhance its current product line, develop new products,
maintain technological competitiveness and meet an ever-expanding range of
customer requirements. The Company's product development and engineering group
includes 63 full-time employees. During fiscal 1994, 1995 and 1996, product
development and engineering expenses were $4.2 million, $4.7 million and $5.5
million, respectively, excluding capitalized software development costs.
Capitalized software development costs for these periods were $426,000, $506,000
and $490,000, respectively. The Company anticipates that it will continue to
commit substantial resources to research and product development in the future.
21
<PAGE>
The embedded real-time software industry faces a fragmented market
characterized by ongoing technological developments, evolving industry standards
and rapid changes in customer requirements. The Company's success depends and
will continue to depend upon its ability to continue to develop and introduce in
a timely manner new products that take advantage of technological advances, to
identify and adhere to emerging standards, to continue to improve the
functionality of its TORNADO development environment and the scalability and
functionality of the VXWORKS product, to offer its products across a spectrum of
microprocessor families used in the embedded systems market and to respond
promptly to customers' requirements. The Company has from time to time
experienced delays in the development of new products and the enhancement of
existing products. Such delays are commonplace in the software industry. There
can be no assurance that the Company will be successful in developing and
marketing, on a timely basis or at all, competitive products, product
enhancements and new products that respond to technological change, changes in
customer requirements and emerging industry standards, or that the Company's
enhanced or new products will adequately address the changing needs of the
marketplace.
As a result of their complexity, software products may contain undetected
errors or compatibility issues, particularly when first introduced or as new
versions are released. There can be no assurance that, despite testing by the
Company and testing and use by current and potential customers, errors will not
be found in new products after commencement of commercial shipments. The
occurrence of such errors could result in loss of or delay in market acceptance
of the Company's products, which could have a material adverse effect on the
Company's business, financial condition and results of operations. The
increasing use of the Company's products for applications in systems that
interact directly with the general public, particularly applications in
transportation, medical systems and other markets where the failure of the
embedded system could cause substantial property damage or personal injury,
could expose the Company to significant product liability claims. In addition,
the Company's products may be used for applications in mission-critical business
systems where the failure of the embedded system could be linked to substantial
economic loss. See "Risk Factors--Risk of Product Defects; Product and Other
Liability" and "--Rapid Technological Change; Dependence on New Products."
PROPRIETARY RIGHTS
The Company's success is heavily dependent upon its proprietary technology.
To protect its proprietary rights, the Company relies on a combination of
copyright, trade secret, patent and trademark laws, nondisclosure and other
contractual restrictions on copying, distribution and technical measures. The
Company seeks to protect its software, documentation and other written materials
through trade secret and copyright laws, which provide only limited protection.
In addition, the Company has two United States patent applications pending.
There can be no assurance that patents will issue from the Company's pending
applications or that any claims allowed will be of sufficient scope or strength
(or be issued in all countries where the Company's products can be sold) to
provide meaningful protection or any commercial advantage to the Company. As
part of its confidentiality procedures, the Company generally enters into
nondisclosure agreements with its employees, consultants, distributors and
corporate partners and limits access to and distribution of its software,
documentation and other proprietary information. End user licenses of the
Company's software are frequently in the form of shrink wrap license agreements,
which are not signed by licensees, and therefore may be unenforceable under the
laws of many jurisdictions. Despite the Company's efforts to protect its
proprietary rights, it may be possible for unauthorized third parties to copy
the Company's products or to reverse engineer or obtain and use information that
the Company regards as proprietary. There can be no assurance that the Company's
competitors will not independently develop technologies that are substantially
equivalent or superior to the Company's technologies. Policing unauthorized use
of the Company's products is difficult, and while the Company is unable to
determine the extent to which software piracy of its products exists, software
piracy can be expected to be a persistent problem. In addition, effective
protection of intellectual property rights may be unavailable or limited in
certain countries. The status of United States patent protection in the software
industry is not well defined and will evolve as the United States Patent and
Trademark Office grants additional patents. Patents have been granted on
fundamental technologies in software, and patents may issue that relate to
fundamental technologies incorporated
22
<PAGE>
into the Company's products. Wind River believes that, due to the rapid pace of
innovation within its industry, factors such as the technological and creative
skills of its personnel are more important to establishing and maintaining a
technology leadership position within the industry than are the various legal
protections of its technology.
As the number of patents, copyrights, trademarks and other intellectual
property rights in the Company's industry increases, products based on its
technology may increasingly become the subject of infringement claims. There can
be no assurance that third parties will not assert infringement claims against
the Company in the future. Any such claims with or without merit could be time
consuming, result in costly litigation, cause product shipment delays or require
the Company to enter into royalty or licensing agreements. Such royalty or
licensing agreements, if required, may not be available on terms acceptable to
the Company, or at all, which could have a material adverse effect on the
Company's business, financial condition and results of operations. In addition,
the Company may initiate claims or litigation against third parties for
infringement of the Company's proprietary rights or to establish the validity of
the Company's proprietary rights. Litigation to determine the validity of any
claims, whether or not such litigation is determined in favor of the Company,
could result in significant expense to the Company and divert the efforts of the
Company's technical and management personnel from productive tasks. In the event
of an adverse ruling in any such litigation, the Company might be required to
pay substantial damages, discontinue the use and sale of infringing products,
expend significant resources to develop non-infringing technology or obtain
licenses to infringing technology. See "Risk Factors--Limited Protection of
Proprietary Technology."
EMPLOYEES
The Company has 208 employees, including 112 in sales, marketing and support
activities, 63 in product development and engineering and 33 in management,
operations, finance and administration. Of these employees, 170 were located in
North America and 38 were located outside of North America. None of the
Company's employees is represented by a labor union or is subject to a
collective bargaining agreement. Wind River has never experienced a work
stoppage. See "Risk Factors--Management of Growth; Dependence on Key Personnel;
Need for Additional Personnel."
23
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
Set forth below is information regarding directors and executive officers of
the Company.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
- ------------------------ --- ----------------------------------------------------------
<S> <C> <C>
Jerry L. Fiddler 44 Chairman of the Board
Ronald A. Abelmann 58 President and Chief Executive Officer and Director
David N. Wilner 42 Chief Technical Officer and Director
Robert L. Wheaton 49 Senior Vice President of Sales
David G. Fraser 32 Vice President of Engineering
Richard W. Kraber 55 Vice President of Finance, Chief Financial Officer and
Secretary
David Larrimore 44 Vice President of Marketing
Graham Shenton 56 Managing Director of European Operations
William B. Elmore(1) 43 Director
David B. Pratt(1) 56 Director
</TABLE>
- ------------
(1) Member of the Audit Committee and Compensation Committee
MR. FIDDLER co-founded the Company in February 1983, and currently serves as
Chairman of the Board. From February 1983 to March 1994, he also served as Chief
Executive Officer of the Company. Prior to founding the Company, he was a
computer scientist in the Real-Time Systems Group at Lawrence Berkeley
Laboratory. Mr. Fiddler holds a B.A. in music and photography and an M.S. in
computer science from the University of Illinois.
MR. ABELMANN joined the Company in March 1994 as Chief Executive Officer,
President and Director. From 1987 to 1993, he served as the founding Chief
Executive Officer of Vantage Analysis Systems, a developer of VHDL-based
simulation software for design automation. Prior to then, he served as Group
Vice President and General Manager for the Instrument Division of Varian
Associates. Mr. Abelmann holds B.S. and M.S. degrees in applied physics from the
University of California at Los Angeles, and an M.B.A. from Stanford University.
MR. WILNER co-founded the Company in February 1983 and currently serves as
Chief Technical Officer and a Director. Prior to founding the Company, he was a
senior staff scientist in the Real-Time Systems Group at Lawrence Berkeley
Laboratory. Mr. Wilner holds a B.S. in computer science from the University of
California at Berkeley.
MR. WHEATON joined the Company in March 1992 and currently serves as Senior
Vice President of Sales. From 1989 to 1991, he served as the Vice President,
Marketing of ShareBase Corporation, a relational database hardware and software
company. From 1988 to 1989, he served as the Western Regional Manager of
Powersoft Corporation, a computer software company. Mr. Wheaton holds a B.S. in
automotive engineering from Western Michigan University.
MR. FRASER joined the Company in September 1991 and currently serves as Vice
President of Engineering. From 1988 to 1991, he served as a product marketing
manager at Unisys/Convergent. From 1985 to 1988, he was a software engineer at
Hewlett-Packard in England. Mr. Fraser holds a B.S. in computing science from
Glasgow University, Scotland.
MR. KRABER joined the company in August 1995 and currently serves as Vice
President of Finance and Chief Financial Officer. From 1991 to 1995, he served
as Chief Operating Officer and Chief Financial Officer of Peerless Lighting, an
industrial lighting products company. Prior to then, he was Chief Financial
Officer for GardenAmerica and a consultant and engagement manager for McKinsey &
Company. Mr. Kraber has a B.S. in mathematics from Stanford University and an
M.B.A. from Harvard University.
24
<PAGE>
MR. LARRIMORE joined the company in May 1995 and currently serves as Vice
President of Marketing. From 1991 to 1995, he was Vice President of Marketing
for Destiny Technology, a computer software company. Prior to then, he held a
consulting position with McKinsey & Company and a management position with Dow
Chemical. Mr. Larrimore holds a B.S. in chemical engineering from the Georgia
Institute of Technology and an M.B.A from Stanford University.
MR. SHENTON joined the Company in July 1994 and currently serves as Managing
Director of European Operations. From 1990 until the date he joined the Company,
he was Managing Director of Vantage Analysis Systems Europe, Ltd., a developer
of VHDL-based simulation software for design automation. From 1986 to 1989, he
was Managing Director of IMP Europe, Ltd., a semiconductor design and
application firm. Mr. Shenton holds a B.E. degree from Sydney University,
Australia and an M.E. degree from the University of New South Wales, Australia.
MR. ELMORE became a director of the Company in August 1990. He is currently
a general partner of Foundation Capital, a venture capital investment firm. From
1987 to 1995, he was a general partner of Inman & Bowman and Inman & Bowman
Entrepreneurs, venture capital investment firms. Mr. Elmore holds a B.S. and an
M.S. in electrical engineering from Purdue University and an M.B.A. from
Stanford University. Mr. Elmore currently serves on the board of directors of
ParcPlace--Digitalk, Inc.
MR. PRATT became a director of the Company in April 1995. He has been an
officer of Adobe Systems Incorporated, a developer of software for printing and
publishing, since 1988. He is currently a Senior Vice President and Chief
Operating Officer at Adobe. From 1987 to 1988, he was Executive Vice President
and Chief Operating Officer of Logitech Corporation. From 1986 to 1987, he was
Senior Vice President and Chief Operating Officer of Quantum Corporation. Mr.
Pratt holds a B.S.E.E. degree from the Massachusetts Institute of Technology and
an M.B.A. from the University of Chicago. Mr. Pratt currently serves on the
board of directors of Radius, Inc.
25
<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth certain information regarding the ownership
of the Company's Common Stock as of May 31, 1996 by (i) each person known to the
Company to own beneficially more than 5% of the Company's Common Stock; (ii)
each director and executive officer; (iii) all directors and executive officers
as a group; and (iv) other Selling Stockholders.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO OWNED AFTER
OFFERING(1) SHARES OFFERING(1)(2)
------------------------ BEING ------------------------
BENEFICIAL OWNERS NUMBER PERCENT OFFERED NUMBER PERCENT
- ------------------------------------------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Jerry L. Fiddler(3).............................. 2,706,831 19.49% 900,000 1,806,831 11.63%
David N. Wilner(4)............................... 1,932,093 13.91 500,000 1,432,093 9.22
Ronald A. Abelmann(5)............................ 269,459 1.91 -- 269,459 1.71
William B. Elmore(6)............................. 133,164 * -- 133,164 *
Robert L. Wheaton(7)............................. 107,801 * -- 107,801 *
Graham Shenton(8)................................ 83,018 * -- 83,018 *
David G. Fraser(9)............................... 60,895 * -- 60,985 *
David Larrimore(10).............................. 32,657 * -- 32,657 *
David Pratt(11).................................. 5,250 * -- 5,250 *
Richard W. Kraber................................ -- -- -- -- --
All officers and directors as a group (10
persons)(12).................................... 5,331,168 37.03 1,400,000 3,931,168 24.50
<CAPTION>
OTHER SELLING STOCKHOLDERS
- -------------------------------------------------
<S> <C> <C> <C> <C> <C>
Robert Fiddler, Custodian for Eli Fiddler UGMA... 60,000 * 60,000 -- --
Robert Fiddler, Custodian for Asher Fiddler
UGMA............................................ 60,000 * 60,000 -- --
Robert Fiddler, Trustee of the
Fiddler/Alden Childrens' Trust.................. 300,000 2.16 130,000 170,000 1.09
</TABLE>
- ------------
* Less than 1%.
(1) This table is based upon information supplied by officers, directors, and
principal and selling stockholders. Unless otherwise indicated in the
footnotes to this table and subject to community property laws where
applicable, each of the stockholders named in this table has sole voting and
investment power with respect to the shares indicated as beneficially owned.
Applicable percentages are based on 13,883,053 shares outstanding on May 31,
1996, adjusted as required by rules promulgated by the Commission.
(2) Adjusted to reflect the sale of 1,650,000 shares by the Company hereby.
(3) Includes 2,700,738 shares held by Mr. Fiddler and his spouse, Melissa K.
Alden, trustees of the The Fiddler and Alden Family Trust (the "Family
Trust") and 6,093 shares subject to stock options exercisable within 60 days
of May 31, 1996 held by Mr. Fiddler. Of the 900,000 shares being offered,
750,000 will be sold by Mr. Fiddler and Ms. Alden as Trustees of the Family
Trust. It is intended that, prior to the consummation of the offering,
175,000 of the shares held in the Family Trust will be donated to Jerry L.
Fiddler and Melissa K. Alden, as Trustees of the Fiddler and Alden 1996 CR
Trust (the "Charitable Trust.") Such shares will be sold by such Trustees as
selling stockholders in the offering. Upon completion of the offering, the
Family Trust will hold 1,800,738 shares and the Charitable Trust will hold
no shares. Mr. Fiddler is Chairman of the Board of the Company.
(4) Includes 172,500 shares held in trust for Mr. Wilner's minor child. Also
includes 6,093 shares subject to stock options exercisable within 60 days of
May 31, 1996. Mr. Wilner is Chief Technical Officer and a Director of the
Company.
(5) Includes 238,439 shares subject to stock options exercisable within 60 days
of May 31, 1996.
(6) Includes 3,750 shares subject to stock options exercisable within 60 days
of May 31, 1996.
(7) Includes 107,801 shares subject to stock options exercisable within 60 days
of May 31, 1996.
(8) Includes 59,556 shares subject to stock options exercisable within 60 days
of May 31, 1996.
(9) Includes 56,993 shares subject to stock options exercisable within 60 days
of May 31, 1996.
(10) Includes 30,624 shares subject to stock options exercisable within 60 days
of May 31, 1996.
(11) Includes 3,750 shares subject to stock options exercisable within 60 days
of May 31, 1996.
(12) Includes 513,099 shares subject to stock options held by officers and
directors exercisable within 60 days of May 31, 1996.
26
<PAGE>
UNDERWRITING
The U.S. Underwriters named below, for whom Deutsche Morgan Grenfell/C.J.
Lawrence Inc., Hambrecht & Quist LLC, UBS Securities LLC and Wessels, Arnold &
Henderson, L.L.C. are acting as representatives (the "U.S. Representatives"),
and the International Underwriters named below, for whom Morgan Grenfell & Co.,
Limited, Hambrecht & Quist LLC, UBS Limited and Wessels, Arnold & Henderson,
L.L.C. are acting as representatives (the "International Representatives") have
severally agreed, subject to the terms and conditions contained in the
Underwriting Agreement (the form of which is filed as an exhibit to the
Company's Registration Statement, of which this Prospectus is a part), to
purchase from the Company and the Selling Stockholders the respective number of
shares of Common Stock indicated below opposite their respective names. The
Underwriters are committed to purchase all of the shares, if they purchase any.
<TABLE>
<CAPTION>
NUMBER OF
U.S. UNDERWRITERS SHARES
- ------------------------------------------------------------------------------------------- -----------
<S> <C>
Deutsche Morgan Grenfell/C. J. Lawrence Inc................................................
Hambrecht & Quist LLC......................................................................
UBS Securities LLC.........................................................................
Wessels, Arnold & Henderson, L.L.C. .......................................................
-----------
Subtotal............................................................................... 2,475,000
-----------
<CAPTION>
INTERNATIONAL UNDERWRITERS
- -------------------------------------------------------------------------------------------
<S> <C>
Morgan Grenfell & Co., Limited.............................................................
Hambrecht & Quist LLC......................................................................
UBS Limited................................................................................
Wessels, Arnold & Henderson, L.L.C.........................................................
-----------
Subtotal............................................................................... 825,000
-----------
Total.................................................................................. 3,300,000
-----------
-----------
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters thereunder are subject to approval of certain legal matters by
counsel and to various other conditions.
The U.S. Underwriters and the International Underwriters have entered into
an Intersyndicate Agreement (the "Intersyndicate Agreement") that provides for
the coordination of their activities. Pursuant to the Intersyndicate Agreement,
sales may be made between the U.S. Underwriters and the International
Underwriters of such number of shares of Common Stock as may be mutually agreed.
The price of any shares of Common Stock so sold shall be the public offering
price, less an amount not greater than the selling concession.
Under the terms of the Intersyndicate Agreement, the International
Underwriters and any dealer to whom they sell shares of Common Stock will not
offer to sell or sell shares of Common Stock to persons who are United States
persons or to persons they believe intend to resell to persons who are United
27
<PAGE>
States persons, and the U.S. Underwriters and any dealer to whom they sell
shares of Common Stock will not offer to sell or sell shares of Common Stock to
any non-United States person or to persons they believe intend to resell to
non-United States persons, except, in each case, for transactions pursuant to
such agreement. As used herein, "United States person" means any national or
resident of the United States or any corporation, pension, profit-sharing or
other trust or other entity organized under the laws of the United States or of
any political subdivision thereof (other than a branch located outside of the
United States of any United States person) and includes any United States branch
of a person who is otherwise not a United States person and "United States"
means the United States of America, its territories, its possessions and all
areas subject to its jurisdiction.
The Underwriters propose to offer the Common Stock to the public on the
terms set forth on the cover page of this Prospectus. The Price to Public and
Underwriting Discount will be identical in the U.S. and International Offerings.
The Underwriters may allow to selected dealers (who may include the
Underwriters) a concession of not more than $ per share. The selected dealers
may reallow a concession of not more than $ to certain other dealers. After
the public offering, the price and concessions and re-allowances to dealers and
other selling terms may be changed by the Underwriters. The Common Stock is
offered subject to receipt and acceptance by the Underwriters, and to certain
other conditions, including the right to reject orders in whole or in part. The
Underwriters do not intend to sell any of the shares of Common Stock offered
hereby to accounts over which they exercise discretionary authority.
The Company has granted an option to the Underwriters to purchase up to a
maximum of 495,000 additional shares of Common Stock to cover over-allotments,
if any, at the public offering price, less the underwriting discount set forth
on the cover page of this Prospectus. Such option may be exercised at any time
until 30 days after the date of the Underwriting Agreement. To the extent the
Underwriters exercise this option, each of the Underwriters will be committed,
subject to certain conditions, to purchase such additional shares in
approximately the same proportion as set forth in the above table. The
Underwriters may purchase such shares only to cover over-allotments made in
connection with the Offering.
Pursuant to the Intersyndicate Agreement, each International Underwriter has
represented that it has not offered or sold, and has agreed not to offer or
sell, any shares of Common Stock, directly or indirectly, in Canada in
contravention of the securities laws of Canada or any province or territory
thereof and has represented that any offer of shares of Common Stock in Canada
will be made only pursuant to an exemption from the requirement to file a
prospectus in the province or territory of Canada in which such offer is made.
Each International Underwriter has further agreed to send to any dealer who
purchases from it any shares of Common Stock a notice stating in substance that,
by purchasing such shares such dealer represents and agrees that it has not
offered or sold, and will not offer or sell, directly or indirectly, any of such
shares in Canada or to, or for the benefit of, any resident of Canada in
contravention of the securities laws of Canada or any province or territory
thereof and that any offer of shares of Common Stock in Canada will be made only
pursuant to an exemption from the requirement to file a prospectus in the
province or territory of Canada in which such offer is made, and that such
dealer will deliver to any other dealer to whom it sells any of such shares of
Common Stock a notice to the foregoing effect.
Pursuant to the Intersyndicate Agreement, each International Underwriter has
represented and agreed that (i) it has not offered or sold and will not offer or
sell any shares of Common Stock offered hereby to persons in the United Kingdom
except to persons whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments (as principal or agent) for the purpose of
their business or otherwise in circumstances which have not resulted and will
not result in an offer to the public in the United Kingdom within the meaning of
the Public Offers of Securities Regulations 1995 (the "Regulations"), (ii) it
has complied and will comply with all applicable provisions of the Financial
Services Act 1986 and the Regulations with respect to anything done by it in
relation to the shares of Common Stock offered hereby in, from or otherwise
involving the United Kingdom, and (iii) it has only issued or passed on and will
only issue or pass on to any person in the United Kingdom any document
28
<PAGE>
received by it in connection with the issue of the shares of Common Stock
offered hereby if that person is a kind described in Article 11(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1995
or is a person to whom such document may otherwise lawfully be issued or passed
on.
Pursuant to the Intersyndicate Agreement, each International Underwriter has
represented and agreed that it has not offered or sold, and will not offer or
sell, directly or indirectly, in Japan or to or for the account or any resident
thereof, any shares of Common Stock acquired in connection with this offering,
except for offers or sales to Japanese International Underwriters or dealers and
except pursuant to any exemption from the regulation requirement of the
Securities and Exchange Law of Japan. Each International Underwriter has further
agreed to send to any dealer who purchases from it any of such shares of Common
Stock a notice stating in substance that such dealer may not offer or sell any
of such shares, directly or indirectly, in Japan or to or for the account of any
resident thereof, except pursuant to any exemption from the registration
requirement of the Securities and Exchange Law of Japan, and that such dealer
will send to any other dealer to whom it sells any shares a notice to the
foregoing effect.
Pursuant to the Intersyndicate Agreement, each International Underwriter has
represented and agreed that it has not offered or sold, and will not offer and
sell, directly or indirectly, or offer or sell to any person for re-offering or
resale, directly or indirectly any shares of Common Stock to any resident of the
Republic of Korea (as the term is defined under the Foreign Exchange Management
Law of the Republic of Korea), or in the Republic of Korea, except pursuant to
applicable laws and regulations of the Republic of Korea.
The Underwriting Agreement provides that the Company and the Selling
Stockholders will indemnify the several Underwriters against certain liabilities
including civil liabilities under the Securities Act of 1933, as amended, or
will contribute to payments the Underwriters may be required to make in respect
thereof.
In connection with the Offering, the Company and, except for Jerry L.
Fiddler and David N. Wilner, each of the Company's directors and executive
officers have agreed not to offer, sell or otherwise dispose of any shares of
Common Stock for a period of 90 days after the later of: (i) the date of this
Prospectus; or (ii) the first date on which shares of Common Stock are offered
hereby to the public, without the prior written consent of Deutsche Morgan
Grenfell/C.J. Lawrence Inc. The Selling Stockholders and Jerry L. Fiddler have
agreed not to offer, sell or otherwise dispose of any shares of Common Stock for
a period of 120 days after the later of (i) the date of this Prospectus or (ii)
the first date on which shares of Common Stock are offered hereby to the public,
without the prior written consent of Deutsche Morgan Grenfell/C.J. Lawrence Inc.
Pursuant to regulations promulgated by the Securities and Exchange
Commission, market makers in the Common Stock who are Underwriters or
prospective underwriters ("passive market makers") may, subject to certain
limitations, make bids for or purchases of shares of Common Stock until the
earlier of the time of commencement (the "Commencement Date") of offers or sales
of the Common Stock contemplated by this Prospectus or the time at which a
stabilizing bid for such shares is made. In general, on and after the date two
business days prior to the Commencement Date (i) such passive market maker's net
daily purchases of the Common Stock may not exceed 30% of its average daily
trading volume in such stock for the two full consecutive calendar months
immediately preceding the filing date of the Registration Statement of which
this Prospectus forms a part, (ii) such passive market maker may not effect
transactions in, or display bids for, the Common Stock at a price that exceeds
the highest bid for the Common Stock by persons who are not passive market
makers and (iii) bids made by passive market makers must be identified as such.
29
<PAGE>
LEGAL MATTERS
The validity of the issuance of the shares of Common Stock offered hereby
will be passed upon for the Company and the Selling Stockholders by Cooley
Godward Castro Huddleson & Tatum, Palo Alto, California. Certain legal matters
in connection with this offering will be passed upon for the Underwriters by
Venture Law Group, A Professional Corporation, Menlo Park, California.
EXPERTS
The consolidated financial statements incorporated in this Prospectus by
reference to the Annual Report on Form 10-K of Wind River Systems, Inc., as
amended by the Form 10-K/A, for the year ended January 31, 1996, have been so
incorporated in reliance on the report of Price Waterhouse LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
ADDITIONAL INFORMATION
A registration statement on Form S-3 with respect to the Common Stock
offered hereby (the "Registration Statement") has been filed with the Commission
under the Act. This Prospectus does not contain all of the information contained
in such Registration Statement and the exhibits and schedules thereto, certain
portions of which have been omitted pursuant to the rules and regulations of the
Commission. For further information with respect to the Company and the Common
Stock offered hereby, reference is made to the Registration Statement and the
exhibits and schedules thereto. Statements contained in this Prospectus
regarding the contents of any contract or any other document are not necessarily
complete and, in each instance, reference is hereby made to the copy of such
contract or document filed as an exhibit to the Registration Statement. The
Registration Statement, including exhibits thereto, may be inspected without
charge at the Securities and Exchange Commission's principal office in
Washington, D.C., and copies of all or any part thereof may be obtained from the
Public Reference Section, Securities and Exchange Commission, Washington, D.C.,
20549, upon payment of the prescribed fees.
30
<PAGE>
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL, OR A SOLICITATION OF ANY OFFER TO BUY, THE COMMON STOCK IN ANY
JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS
OF THE COMPANY SINCE THE DATE HEREOF.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................................................... 2
Incorporation of Certain Documents by Reference........................... 2
Prospectus Summary........................................................ 3
The Company............................................................... 4
Risk Factors.............................................................. 5
Use of Proceeds........................................................... 11
Price Range of Common Stock and Dividend Policy........................... 11
Capitalization............................................................ 12
Selected Consolidated Financial Data...................................... 13
Business.................................................................. 15
Management................................................................ 24
Principal and Selling Stockholders........................................ 26
Underwriting.............................................................. 27
Legal Matters............................................................. 30
Experts................................................................... 30
Additional Information.................................................... 30
</TABLE>
[LOGO]
3,300,000 SHARES
COMMON STOCK
DEUTSCHE MORGAN GRENFELL
HAMBRECHT & QUIST
UBS SECURITIES
WESSELS, ARNOLD & HENDERSON
PROSPECTUS
, 1996
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION, DATED JUNE 18, 1996
[LOGO]
3,300,000 SHARES
COMMON STOCK
Of the 3,300,000 shares of Common Stock, $.001 par value, offered hereby,
825,000 shares are being offered initially outside the United States (the
"International Offering") by the International Underwriters and 2,475,000
shares are being offered initially in the United States (the "U.S. Offering"
and together with the International Offering, the "Offering") by the U.S.
Underwriters (together with the International Underwriters, the
"Underwriters"). See "Underwriting." Of the shares offered hereby, 1,650,000
shares are being sold by Wind River Systems, Inc. ("Wind River" or the
"Company"), and 1,650,000 shares are being sold by certain stockholders of the
Company (the "Selling Stockholders"). The Company will not receive any of the
proceeds from the sale of shares by the Selling Stockholders. See "Principal
and Selling Stockholders."
The Company's Common Stock is traded on the Nasdaq National Market under the
symbol "WIND." On June 14, 1996, the last reported sales price of the
Company's Common Stock on the Nasdaq National Market was $33.75 per share. See
"Price Range of Common Stock and Dividend Policy."
FOR INFORMATION CONCERNING CERTAIN FACTORS WHICH SHOULD BE CONSIDERED BY
PROSPECTIVE INVESTORS, SEE "RISK FACTORS" COMMENCING ON PAGE 5.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<S> <C> <C> <C> <C>
UNDERWRITING PROCEEDS
PRICE DISCOUNTS AND PROCEEDS TO TO SELLING
TO PUBLIC COMMISSIONS(1) COMPANY(2) STOCKHOLDERS
Per Share $ $ $ $
Total(3) $ $ $ $
</TABLE>
(1) The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."
(2) Before deducting expenses payable by the Company, estimated at $ .
(3) The Company has granted the Underwriters a 30-day option to purchase up
to an additional 495,000 shares of Common Stock solely to cover
over-allotments. If all such shares are purchased, the total Price to
Public, Underwriting Discounts and Commissions, Proceeds to Company and
Proceeds to Selling Stockholders will be $ , $ , $ and
$ , respectively. See "Underwriting."
The shares of Common Stock are offered by the Underwriters, subject to prior
sale, when, as and if delivered to and accepted by them, and subject to the
approval of certain legal matters by counsel and certain other conditions. The
Underwriters reserve the right to withdraw, cancel or modify such offer and to
reject orders in whole or in part. It is expected that delivery of the shares
of Common Stock will be made in New York, New York against payment therefor on
or about , 1996.
DEUTSCHE MORGAN GRENFELL
HAMBRECHT & QUIST
UBS LIMITED
WESSELS, ARNOLD & HENDERSON
The date of this Prospectus is , 1996
<PAGE>
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL, OR A SOLICITATION OF ANY OFFER TO BUY, THE COMMON STOCK IN ANY
JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS
OF THE COMPANY SINCE THE DATE HEREOF.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................................................... 2
Incorporation of Certain Documents by Reference........................... 2
Prospectus Summary........................................................ 3
The Company............................................................... 4
Risk Factors.............................................................. 5
Use of Proceeds........................................................... 11
Price Range of Common Stock and Dividend Policy........................... 11
Capitalization............................................................ 12
Selected Consolidated Financial Data...................................... 13
Business.................................................................. 15
Management................................................................ 24
Principal and Selling Stockholders........................................ 26
Underwriting.............................................................. 27
Legal Matters............................................................. 30
Experts................................................................... 30
Additional Information.................................................... 30
</TABLE>
[LOGO]
3,300,000 SHARES
COMMON STOCK
DEUTSCHE MORGAN GRENFELL
HAMBRECHT & QUIST
UBS LIMITED
WESSELS, ARNOLD & HENDERSON
PROSPECTUS
, 1996
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth all expenses, other than the underwriting
discounts and commissions, payable by the Registrant in connection with the sale
of the Common Stock being registered. All the amounts shown are estimates except
for the registration fee and the NASD filing fee.
<TABLE>
<S> <C>
Registration fee....................................................... 40,895
NASD filing fee........................................................ 12,360
Nasdaq listing fee..................................................... 17,500
Blue sky qualification fees and expenses............................... 15,000
Printing and engraving expenses........................................ 50,000
Legal fees and expenses................................................ 150,000
Accounting fees and expenses........................................... 30,000
Transfer agent and registrar fees...................................... 10,000
Miscellaneous.......................................................... 74,245
----------
Total.............................................................. $ 400,000
----------
----------
</TABLE>
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Under Section 145 of the Delaware General Corporation Law, the Registrant
has broad powers to indemnify its directors and officers against liabilities
they may incur in such capacities, including liabilities under the Securities
Act of 1933, as amended ("Securities Act"). The Registrant's Bylaws also provide
that the Registrant will indemnify its directors and executive officers and may
indemnify its other officers, employees and other agents to the fullest extent
permitted by Delaware law.
The Registrant's Restated Certificate of Incorporation ("Restated
Certificate") provides that the liability of its directors for monetary damages
shall be eliminated to the fullest extent permissible under Delaware law.
Pursuant to Delaware law, this includes elimination of liability for monetary
damages for breach of the directors' fiduciary duty of care to the Registrant
and its stockholders. These provisions do not eliminate the directors' duty of
care and, in appropriate circumstances, equitable remedies such as injunctive or
other forms of non-monetary relief will remain available under Delaware law. In
addition, each director will continue to be subject to liability for breach of
the director's duty of loyalty to the Registrant, for acts or omissions not in
good faith or involving intentional misconduct, for knowing violations of law,
for any transaction from which the director derived an improper personal
benefit, and for payment of dividends or approval of stock repurchases or
redemptions that are unlawful under Delaware law. The provision also does not
affect a director's responsibilities under any other laws, such as the federal
securities laws or state or federal environmental laws.
The Registrant has entered into agreements with its directors and officers
that require the Company to indemnify such persons to the fullest extent
authorized or permitted by the provisions of the Restated Certificate and
Delaware law against expenses, judgments, fines, settlements and other amounts
actually and reasonably incurred (including expenses of a derivative action) in
connection with any proceeding, whether actual or threatened, to which any such
person may be made a party by reason of the fact that such person is or was a
director, officer, employee or other agent of the Registrant or any of its
affiliated enterprises. Delaware law permits such indemnification, provided such
person acted in good faith and in a manner such person reasonably believed to be
in or not opposed to the best interest of the Registrant and, with respect to
any criminal proceeding, had no reasonable cause to believe his or her conduct
was unlawful. The indemnification agreements also set forth certain procedures
that will apply in the event of a claim for indemnification thereunder.
II-1
<PAGE>
At present, there is no pending litigation or proceeding involving a
director or officer of the Registrant as to which indemnification is being
sought nor is the Registrant aware of any threatened litigation that may result
in claims for indemnification by any officer or director.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ----------- ----------------------------------------------------------------------------------------------
<S> <C>
1.1 Form of Underwriting Agreement.
5.1 Opinion of Cooley Godward Castro Huddleson & Tatum.
23.1 Consent of Price Waterhouse LLP.
23.2 Consent of Cooley Godward Castro Huddleson & Tatum. Reference is made to Exhibit 5.1.
24.1 Power of Attorney. Reference is made to page II-3.
</TABLE>
- ---------
(B) SCHEDULES.
<TABLE>
<S> <C>
None
</TABLE>
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Exchange Act) that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial BONA FIDE offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the provisions described in Item 14 or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer, or controlling
person of the Registrant in the successful defense of any action, suit, or
proceeding) is asserted by such director, officer, or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
The undersigned Registrant undertakes that: (1) for purposes of determining
any liability under the Securities Act, the information omitted from the form of
prospectus as filed as part of the registration statement in reliance upon Rule
430A and contained in the form of prospectus filed by the Registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of the registration statement as of the time it was declared effective, and
(2) for the purpose of determining any liability under the Securities Act, each
post-effective amendment that contains a form of prospectus shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Alameda, State of California, on the 17th day of
June, 1996.
WIND RIVER SYSTEMS, INC.
By /s/ RONALD A. ABELMANN
-----------------------------------
Ronald A. Abelmann
CHIEF EXECUTIVE OFFICER, PRESIDENT
AND DIRECTOR
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Ronald A. Abelmann and Richard W. Kraber, and
each or any one of them, his true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments and registration statements filed pursuant to Rule
462) to this Registration Statement, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
or his substitutes or substitute, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
- ----------------------------------- ------------------------- ----------------
/s/ RONALD A. Chief Executive Officer,
ABELMANN President and Director
- ----------------------------------- (Principal Executive June 17, 1996
Ronald A. Abelmann Officer)
/s/ RICHARD W.
KRABER Chief Financial Officer
- ----------------------------------- (Principal Financial and June 17, 1996
Richard W. Kraber Accounting Officer)
/s/ JERRY L.
FIDDLER
- ----------------------------------- Chairman of the Board June 17, 1996
Jerry L. Fiddler
/s/ DAVID N.
WILNER Director and Chief
- ----------------------------------- Technical Officer June 17, 1996
David N. Wilner
/s/ WILLIAM B.
ELMORE
- ----------------------------------- Director June 17, 1996
William B. Elmore
/s/ DAVID B.
PRATT
- ----------------------------------- Director June 17, 1996
David B. Pratt
II-3
<PAGE>
EXHIBIT 1.1
3,300,000 Shares
WIND RIVER SYSTEMS, INC.
COMMON STOCK ($.001 PAR VALUE)
UNDERWRITING AGREEMENT
July ___, 1996
<PAGE>
July ___, 1996
Deutsche Morgan Grenfell/C.J. Lawrence Inc.
Hambrecht & Quist LLC
UBS Securities LLC
Wessels, Arnold & Henderson, L.L.C.
c/o Deutsche Morgan Grenfell/C.J. Lawrence Inc.
31 West 52nd Street
New York, New York 10019-6160
Morgan Grenfell & Co., Limited
Hambrecht & Quist LLC
UBS Limited
Wessels, Arnold & Henderson, L.L.C.
c/o Morgan Grenfell & Co., Limited
6-8 Bishopsgate
Podium Floor
London EC2P 2AT
England
Dear Sirs:
Wind River Systems, Inc., a Delaware corporation (the "Company"), proposes
to issue and sell to the several Underwriters (as defined below), and certain
stockholders of the Company (the "Selling Stockholders") named in Schedule
III hereto severally propose to sell to the several Underwriters, 3,300,000
shares of the Company's Common Stock, $.001 par value, (the "Firm Shares"),
of which 1,650,000 shares are to be issued and sold by the Company and
1,650,000 shares are to be sold by the Selling Stockholders, each of whom is
selling the number of shares set forth opposite such Selling Stockholder's
name in Schedule III hereto.
It is understood that, subject to the conditions hereinafter stated,
2,475,000 Firm Shares (the "U.S. Firm Shares") will be sold to the several
U.S. Underwriters named in Schedule I hereto (the "U.S. Underwriters") in
connection with the offering and sale of such U.S. Firm Shares in the United
States to United States Persons (as such terms are defined in the
Intersyndicate Agreement of even date herewith), and 825,000 Firm Shares (the
"International Shares") will be sold to the several International
Underwriters named in Schedule II hereto (the "International Underwriters")
in connection with the offering and sale of such International Shares outside
the United States to persons other than United States Persons. Deutsche
Morgan Grenfell/C.J. Lawrence Inc., Hambrecht & Quist LLC, UBS Securities
Inc. and Wessels, Arnold & Henderson, L.L.C. shall act as representatives
(the "U.S. Representatives") of the several U.S. Underwriters, and Morgan
Grenfell & Co., Limited, Hambrecht & Quist LLC, UBS Limited and Wessels,
Arnold & Henderson, L.L.C. shall act as representatives (the "International
Representatives") of the several International Underwriters. The U.S.
Underwriters and the International Underwriters are hereinafter collectively
referred to as the "Underwriters."
The Company also proposes to issue and sell to the several U.S. Underwriters
not more than an additional 495,000 shares of its Common Stock, $.001 par
value (the "Additional Shares"), if and to the extent that the U.S.
Representatives shall have determined to exercise, on behalf of the U.S.
-2-
<PAGE>
Underwriters, the right to purchase such shares of Common Stock granted to
the U.S. Underwriters in Article III hereof. The Firm Shares and the
Additional Shares are referred to hereinafter collectively as the "Shares."
The shares of Common Stock, $.001 par value, of the Company to be outstanding
after giving effect to the sales contemplated hereby are referred to
hereinafter as the "Common Stock." The Company and the Selling
Stockholders are referred to hereinafter individually as a "Seller" or
collectively as the "Sellers."
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement relating to the Shares. The
registration statement contains two prospectuses to be used in connection
with the offering and sale of Shares: the U.S. prospectus, to be used in
connection with the offering and sale of Shares in the United States to United
States Persons, and the international prospectus, to be used in connection with
the offering and sale of Shares outside the United States to persons other than
United States Persons. The international prospectus is identical to the U.S.
prospectus, except for the outside front cover page and outside back cover
page. The registration statement as amended at the time it becomes effective,
including the information (if any) deemed to be part of the registration
statement at the time of effectiveness pursuant to Rule 430A under the
Securities Act of 1933, as amended (the "Securities Act"), is referred to
hereinafter as the "Registration Statement;" the U.S. prospectus and the
international prospectus in the respective forms first used to confirm sales
of Shares are referred to hereinafter collectively as the "Prospectus." The
term "preliminary prospectus" means any preliminary form of Prospectus, and,
as used herein, the terms Registration Statement, Prospectus, and preliminary
prospectus shall include, in each case, the documents incorporated by
reference therein. The terms "supplement," "amendment," and "amend" as used
herein shall include all documents deemed to be incorporated by reference in
the Prospectus that are filed subsequent to the date of the Prospectus by the
Company with the Commission pursuant to the Securities Exchange Act of 1934,
as amended (the "Exchange Act"). If the Company files a registration
statement to register a portion of the Shares and relies on Rule 462(b) for
such registration statement to become effective upon filing with the
Commission (the "Rule 462 Registration Statement"), then any reference to the
"Registration Statement" shall be deemed to refer to both the registration
statement referred to above (Commission File No. 333-_________) and the Rule
462 Registration Statement, in each case as amended from time to time.
I.
The Company, the Selling Stockholders and Jerry L. Fiddler hereby,
jointly and severally, represent and warrant to each of the Underwriters that:
(a) The Registration Statement has become effective, no stop order
suspending the effectiveness of the Registration Statement is in effect
and no proceedings for such purpose are pending before or threatened by the
Commission.
(b) (i) Each document filed or to be filed pursuant to the Exchange Act
and incorporated by reference in the Prospectus complied or will comply when so
filed in all material respects with the Exchange Act and the rules and
regulations of the Commission thereunder; (ii) the Registration Statement and
the Prospectus comply and, as amended or supplemented, if applicable, will
comply in all material respects with the Securities Act and the rules and
regulations of the Commission thereunder; (iii) the Registration Statement at
the effective date of the Registration Statement, did not contain and, as
amended or supplemented, if applicable, will not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, and (iv)
the Prospectus does not contain and, as amended or supplemented, if
applicable, will not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the
-3-
<PAGE>
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that the representations and warranties
set forth in this paragraph (b) do not apply to statements or omissions in the
Registration Statement or the Prospectus based upon information relating to any
Underwriter furnished to the Company in writing by such Underwriter through
you expressly for use therein.
(c) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property and
to conduct its business as described in the Prospectus, and is duly qualified
to transact business and is in good standing in each jurisdiction in which
the conduct of its business or its ownership or leasing of property requires
such qualification, except to the extent that the failure to be so qualified
or be in good standing would not have a material adverse effect on the
Company and its Subsidiaries (as defined below), taken as a whole.
(d) Wind River Systems, E.C., S.A.R.L., Wind River Systems GmbH, Wind
River Systems U.K., Limited, Wind River Systems K.K., and Wind River Systems
International, Inc. (individually, a "Subsidiary" and collectively, the
"Subsidiaries") are the only subsidiaries of the Company. Each of the
Subsidiaries has been duly incorporated, is validly existing as a corporation
in good standing under the laws of its jurisdiction of incorporation, has the
corporate power and authority to own its property and conduct its business as
described in the Prospectus, and is duly qualified to transact business and
is in good standing in each jurisdiction in which the conduct of its business
or its ownership or leasing of property requires such qualification, except
to the extent that the failure to be so qualified or be in good standing
would not have a material adverse effect on the Company and its Subsidiaries,
taken as a whole. All of the issued and outstanding capital stock of each of
the Subsidiaries (other than the director qualifying shares) have been duly
and validly authorized and issued, are fully-paid and non-assessable and,
except for Wind River Systems K.K., 70% of the issued and outstanding capital
stock of which is owned by the Company and 10% of the issued and outstanding
capital stock of which is owned by each of Innotech Corporation, Kobe Steel
Ltd. and Nissin Electric Ltd. are owned directly by the Company, free and
clear of all liens, encumbrances and claims. The Company does not own,
directly or indirectly, an interests in any corporation, partnership,
business, trust or other entity, other than the Subsidiaries.
(e) The Company had an authorized and outstanding capitalization as set
forth under the heading "Capitalization" in the Prospectus as of the date set
forth therein, and the authorized capital stock of the Company conforms in
all material respects to the description thereof contained in the Prospectus.
Except as set forth in the Prospectus, neither the Company nor any of the
Subsidiaries has outstanding any options to purchase, or any preemptive
rights or other rights to subscribe for or to purchase, any securities or
obligations convertible into, or any contracts or commitments to issue or
sell, shares of its capital stock or any such options, rights, convertible
securities or obligations. All outstanding shares of capital stock of the
Company (including the Shares to be sold by the Selling Stockholders), and
options and other rights to acquire capital stock of the Company, have been
issued in compliance with the registration and qualification provisions of
applicable federal and state securities laws and were not issued in violation
of any rights of first refusal, or preemptive, co-sale, or other similar
rights.
(f) There is no owner of any securities of the Company that has any
rights, not effectively satisfied or waived, to require registration of
any shares of capital stock of the Company in connection with the filing of
the Registration Statement.
-4-
<PAGE>
(g) The Shares have been duly and validly authorized and, when issued
and delivered in accordance with the terms of this Agreement, will be validly
issued, fully-paid and non-assessable, and conform in all material respects
to the description thereof contained in the Prospectus. The issuance of such
Shares will not be subject to any rights of first refusal or preemptive,
co-sale, or similar rights.
(h) This Agreement has been duly authorized, executed, and delivered by
the Company, and constitutes a valid, legal, and binding obligation of the
Company.
(i) The execution and delivery by the Company of, and the performance
by the Company of its obligations under, this Agreement will not contravene
any provision of applicable law or the certificate of incorporation or
by-laws of the Company or any agreement or other instrument binding upon the
Company or any of its Subsidiaries that is material to the Company and its
Subsidiaries, taken as a whole, or any judgment, order, or decree of any
governmental body, agency, or court having jurisdiction over the Company or
any Subsidiary. No consent, authorization, approval, order, certificate, or
permit of, or qualification with, any governmental body or governmental
agency is required for the performance by the Company of its obligations
under this Agreement, except such as may be required by the securities or
Blue Sky laws of the various states in connection with the offer and sale of
the Shares by the U.S. Underwriters.
(j) There are no legal, regulatory, or governmental proceedings pending
or, to the Company's knowledge, threatened to which the Company or any of its
Subsidiaries is a party or to which any of the properties of the Company or
any of its Subsidiaries is subject that are required to be described in the
Registration Statement or the Prospectus and are not so described, or any
statutes, regulations, contracts, or other documents that are required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not described or filed as
required.
(k) The Company and each of its Subsidiaries has all necessary
consents, authorizations, approvals, orders, certificates, and permits of,
and qualifications with, and has made all declarations and filings with, all
federal, state, local, and other governmental authorities, all
self-regulatory organizations, and all courts and other tribunals, to own,
lease, license, and use its properties and assets and to conduct its business
in the manner described in the Prospectus, except to the extent that the
failure to so obtain or file would not have a material adverse effect on the
Company and its Subsidiaries, taken as a whole. Neither the Company nor any
of its Subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such consent, authorization, approval,
order, certificate, or permit which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling, or finding, would result in a
material adverse change in the condition, financial or otherwise, or in the
earnings, business, operations, or prospects of the Company and its
Subsidiaries, taken as a whole.
(l) Each preliminary prospectus filed as part of the Registration
Statement as originally filed or as part of any amendment thereto, or filed
pursuant to Rule 424 or Rule 462 under the Securities Act, complied when so
filed in all material respects with the Securities Act and the rules and
regulations of the Commission thereunder.
(m) The Company is not an "investment company" or an entity
"controlled" by an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended.
(n) The Company and its Subsidiaries (i) are in compliance with any and
all applicable foreign, federal, state, and local laws and regulations
relating to the protection of human health
-5-
<PAGE>
and safety, the environment or hazardous or toxic substances or wastes,
pollutants, or contaminants ("Environmental Laws"), (ii) have received all
permits, licenses, or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses, and (iii) are in
compliance with all terms and conditions of any such permit, license, or
approval, except to the extent that such noncompliance with Environmental
Laws, failure to receive required permits, licenses, or other approvals or
failure to comply with the terms and conditions of such permits, licenses, or
approvals would not, singly or in the aggregate, have a material adverse
effect on the Company and the Subsidiaries, taken as a whole.
(o) Subsequent to the respective dates as of which information is given
in the Registration Statement and the Prospectus, (i) neither the Company nor
any of its Subsidiaries has incurred any material liability or obligation,
direct or contingent, nor entered into any material transaction not in the
ordinary course of business; (ii) the Company has not purchased any of its
outstanding capital stock, nor declared, paid, or otherwise made any dividend
or distribution of any kind on its capital stock other than ordinary and
customary dividends; (iii) there has not been any material change in the
capital stock, short-term debt, or long-term debt of the Company and its
Subsidiaries, except in each case as described in or contemplated by the
Prospectus; and (iv) there has not occurred any material adverse change or
any development involving a prospective material adverse change in the
condition, financial or otherwise, or in the earnings, business, operations,
or prospects of the Company and its Subsidiaries, taken as a whole.
(p) The Company and its Subsidiaries have good and marketable title in
fee simple to all real property and good and marketable title to all personal
property owned by them that is material to the business of the Company and
its Subsidiaries, in each case free and clear of all liens, encumbrances, and
defects, except such as do not materially affect the value of such property
and do not materially interfere with the use made and proposed to be made of
such property by the Company and its Subsidiaries. Any real property held
under lease by the Company and its Subsidiaries is held by them under valid,
subsisting, and enforceable leases, with such exceptions as are not material
and do not interfere with the use made and proposed to be made of such
property by the Company and its Subsidiaries.
(q) The Company and its Subsidiaries own or possess, or can acquire on
reasonable terms, all material patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems, or
procedures), trademarks, service marks, and trade names currently employed by
them in connection to conduct the business described in the Prospectus,
except to the extent that the failure to own, possess or acquire any of the
foregoing would not have a material adverse effect on the Company and its
Subsidiaries, taken as a whole. Except as described in the Prospectus,
neither the Company nor any of its Subsidiaries has received any notice of
infringement of or conflict with asserted rights of others with respect to
any of the foregoing which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling, or finding, could have a material adverse
effect on the Company and its Subsidiaries, taken as a whole.
(r) No material labor dispute with the employees of the Company or its
Subsidiaries exists, except as described in or contemplated by the
Prospectus, or, to the knowledge of the Company or any of its Subsidiaries,
is imminent. The Company is not aware of any existing, threatened, or
imminent labor disturbance by the employees of any of its principal
suppliers, manufacturers, or contractors that would have a material adverse
effect on the Company and its Subsidiaries, taken as a whole.
(s) The Company and each of its Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which they are
engaged. Neither the Company nor any such Subsidiary has been refused any
insurance coverage sought or applied for. Neither the Company nor any such
Subsidiary has reason to
-6-
<PAGE>
believe that it will not be able to renew its existing insurance coverage as
and when such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business at a cost that would
not have a material adverse effect on the Company and its Subsidiaries, taken
as a whole, except as described in or contemplated by the Prospectus.
(t) The Company and each of its Subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management's general or
specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability; and
(iii) the recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with respect
to any differences.
(u) As of the date the Registration Statement becomes effective, the
Shares will be authorized for quotation on the Nasdaq National Market upon
official notice of issuance.
(v) Price Waterhouse LLP, who have certified certain financial
statements of the Company and its Subsidiaries, are independent accountants
as required by the Securities Act and the rules and regulations of the
Commission thereunder.
(w) The Company has complied with all provisions of Section 517.075,
Florida Statutes (Chapter 92-198, Laws of Florida).
II.
Each Selling Stockholder, severally and not jointly, represents and
warrants to each of the Underwriters that:
(a) This Agreement has been duly authorized, executed and delivered by
or on behalf of such Selling Stockholder and constitutes a valid, legal, and
binding obligation of such Selling Stockholder.
(b) The execution and delivery by such Selling Stockholder of, and the
performance by such Selling Stockholder of its obligations under, this
Agreement, the Custody Agreement by and between such Selling Stockholder and
[American Stock Transfer, as Custodian,] relating to the deposit of the
Shares to be sold by such Selling Stockholder (the "Custody Agreement"), the
Power of Attorney appointing [Jerry L. Fiddler] and [Richard W. Kraber] as
such Selling Stockholder's attorneys-in-fact to the extent set forth therein,
relating to the transactions contemplated hereby and by the Registration
Statement (the "Power of Attorney") and the Lock-up Agreement signed by each
such Selling Stockholder (the "Lock-up Agreement"), will not contravene any
provision of applicable law, or the organization documents, certificate of
incorporation, or bylaws of such Selling Stockholder, or any agreement or
other instrument binding upon such Selling Stockholder or any judgment,
order, or decree of any governmental body, agency, or court having
jurisdiction over such Selling Stockholder, and no consent, authorization,
approval, order, certificate, or permit of, or qualification with, any
governmental body or agency is required for the performance by such Selling
Stockholder of its obligations under this Agreement, the Custody Agreement,
Power of Attorney, or Lock-up Agreement of such Selling Stockholder, except
such as have already been obtained or such as may be required by the
securities or Blue Sky laws of the various states in connection with the
offer and sale of the Shares.
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(c) Such Selling Stockholder has, and on the Closing Date will have,
the legal right and power, and all authorization and approval required by
law, to enter into this Agreement, the Custody Agreement, the Power of
Attorney and the Lock-up Agreement and to sell, transfer and deliver the
Shares to be sold by such Selling Stockholder.
(d) Such Selling Stockholder's Custody Agreement, Power of Attorney and
Lock-up Agreement have been duly authorized, executed and delivered by such
Selling Stockholder and are valid, legal, and binding agreements of such
Selling Stockholder.
(e) Upon delivery of and payment for the Shares to be sold by such
Selling Stockholder as provided in this Agreement and upon registration of
such Shares in the names of the Underwriters (or their nominees) in the stock
records of the Company, the Underwriters will be the owners of such Shares,
free and clear of any claims, liens, or encumbrances.
III.
The Sellers, severally and not jointly, hereby agree to sell to the
several Underwriters, and the Underwriters, upon the basis of the
representations and warranties herein contained, but subject to the
conditions hereinafter stated, agree, severally and not jointly, to purchase
from the Sellers the respective numbers of Firm Shares set forth in Schedules
I, II, and III hereto opposite their names at $[ ] a share (the "Purchase
Price").
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to
issue sell to the U.S. Underwriters up to 495,000 Additional Shares, and the
U.S. Underwriters shall have a one-time right to purchase, severally and not
jointly, up to 495,000 Additional Shares at the Purchase Price. Additional
Shares may be purchased as provided in Article V hereof solely for the
purpose of covering over-allotments made in connection with the offering of
the Firm Shares. If any Additional Shares are to be purchased, each U.S.
Underwriter agrees, severally and not jointly, to purchase from the Company
the number of Additional Shares (subject to such adjustments to eliminate
fractional shares as the U.S. Representatives may determine) that bears the
same proportion to the total number of Additional Shares to be purchased as
the number of U.S. Firm Shares set forth in Schedule I hereto opposite the
name of such U.S. Underwriter bears to the total number of U.S. Firm Shares.
The Additional Shares to be purchased by the U.S. Underwriters hereunder and
the U.S. Firm Shares are hereinafter collectively referred to as the U.S.
Shares.
Except with respect to the Shares to be sold hereunder, each of the
Selling Stockholders hereby agrees that, without the prior written consent of
Deutsche Morgan Grenfell/C.J. Lawrence Inc., it will not, during the period
ending 120 days after the date of the Prospectus, (1) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right, or warrant to purchase,
or otherwise transfer or dispose of, directly or indirectly, any shares of
Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or (2) enter into any swap or similar agreement
that transfers, in whole or in part, the economic risk of ownership of the
Common Stock, whether any such transaction described in clause (1) or (2)
above is to be settled by delivery of Common Stock or such other securities,
in cash or otherwise.
Except with respect to (a) the Shares to be sold hereunder and (b) any
shares of such Common Stock sold by the Company upon the exercise of an
option or warrant or the conversion of a security outstanding on the date
hereof, the Company hereby agrees that, without the prior written consent of
Deutsche Morgan Grenfell/C.J. Lawrence Inc., it will not, during the period
ending 90 days after the
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date of the Prospectus, (x) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right, or warrant to purchase, or
otherwise transfer or dispose of, directly or indirectly, any shares of
Common Stock or any securities convertible into or exercisable or
exchangeable for such Common Stock or (y) enter into any swap or similar
agreement that transfers, in whole or in part, the economic risk of ownership
of the Common Stock, whether any such transaction described in (x) or (y)
above is to be settled by delivery of Common Stock or such other securities,
in cash or otherwise.
IV.
The Sellers are advised by you that the Underwriters propose to make a
public offering of their respective portions of the Shares as soon after the
Registration Statement and this Agreement have become effective as is in your
judgment advisable. The Sellers are further advised by you that the Shares are
to be offered to the public initially at U.S. $[ ] a share (the public
offering price) and to certain dealers selected by you at a price that
represents a concession not in excess of U.S. $[ ]a share under the public
offering price, and that any Underwriter may allow, and such dealers may
reallow, a concession, not in excess of U.S. $[ ] a share, to any
Underwriter or to certain other dealers.
Each U.S. Underwriter hereby makes to and with the Company the
representations and agreements of such U.S. Underwriter contained in the fifth
and sixth paragraphs of Article III of the Intersyndicate Agreement of even
date herewith. Each International Underwriter hereby makes to and with the
Company the representations and agreements of such International Underwriter
contained in the seventh, eighth, ninth and tenth paragraphs of Article III of
such Intersyndicate Agreement.
V.
Payment for the Firm Shares to be sold by each Seller shall be made by
certified or official bank check or checks payable to the order of such Seller
in New York Clearing House funds at the office of Cooley Godward Castro
Huddleson & Tatum, Five Palo Alto Square, Palo Alto, California, at 7:00 A.M.,
local time, on July [ ], 1996, or at such other time on the same or such
other date, not later than July [ ], 1996, as shall be designated in
writing by you. The time and date of such payment are referred to hereinafter
as the "Closing Date."
Payment for any Additional Shares shall be made by certified or official
bank check or checks payable to the order of the Company in New York Clearing
House funds at the office of Cooley Godward Castro Huddleson & Tatum, Five Palo
Alto Square, Palo Alto, California 7:00 A.M., local time, on such date (which
may be the same as the Closing Date but shall in no event be earlier than the
Closing Date nor later than ten business days after the giving of the notice
referred to hereinafter) as shall be designated in a written notice from the
U.S. Representatives to the Company of their determination, on behalf of the
U.S. Underwriters, to purchase a number, specified in said notice, of
Additional Shares. The time and date of such payment are referred to
hereinafter as the "Option Closing Date." The notice of the determination to
exercise the option to purchase Additional Shares and of the Option Closing
Date may be given at any time within 30 days after the date of this Agreement.
Certificates for the Firm Shares and Additional Shares shall be in
definitive form and registered in such names and in such denominations as you
shall request in writing not later than two full business days prior to the
Closing Date or the Option Closing Date, as the case may be. The certificates
evidencing the Firm Shares and Additional Shares shall be delivered to you on
the Closing Date or the Option Closing Date, as the case may be, for the
respective accounts of the several Underwriters, with any
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transfer taxes payable in connection with the transfer of the Shares to the
Underwriters duly paid, against payment of the purchase price therefor.
VI.
The obligations of the Sellers and the several obligations of the
Underwriters hereunder are subject to the condition that the Registration
Statement shall have become effective not later than the date hereof.
The several obligations of the Underwriters hereunder are subject to the
following further conditions:
(a) Subsequent to the execution and delivery of this Agreement and prior
to the Closing Date (i) there shall not have occurred any downgrading, nor
shall any notice have been given of any intended or potential downgrading or of
any review for a possible change that does not indicate the direction of the
possible change, in the rating accorded any of the Company's securities by any
"nationally recognized statistical rating organization," as such term is
defined for purposes of Rule 436(g)(2) under the Securities Act, and (ii) there
shall not have occurred any change, or any development involving a prospective
change, in the condition, financial or otherwise, or in the earnings, business,
operations, or prospects, of the Company and its Subsidiaries, taken as a
whole, from that set forth in the Registration Statement, that, in your
judgment, is material and adverse and that makes it, in your judgment,
impracticable to market the Shares on the terms and in the manner contemplated
in the Prospectus.
(b) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer of the
Company, to the effect set forth in clause (a)(i) above, and that the
representations and warranties of the Company contained in this Agreement are
true and correct as of the Closing Date, and that the Company has complied with
all of the agreements and satisfied all of the conditions on its part to be
performed or satisfied hereunder on or before the Closing Date.
(c) You shall have received on the Closing Date an opinion of Cooley
Godward Castro Huddleson & Tatum, counsel for the Company, dated the Closing
Date, to the effect that:
(i) The Company and each of the Subsidiaries has been duly
incorporated, is validly existing as a corporation in good standing under
the laws of the jurisdiction of its incorporation, has the corporate
power and corporate authority to own its property and to conduct its
business as described in the Prospectus, and is duly qualified to
transact business and is in good standing in each jurisdiction in which
the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to be
so qualified or be in good standing would not have a material adverse
effect on the Company and its Subsidiaries, taken as a whole.
(ii) All of the issued and outstanding capital stock of each of the
Subsidiaries (other than the director qualifying shares) have been duly
and validly authorized and issued, are fully-paid and non-assessable and,
except for Wind River Systems K.K., 70% of the issued and outstanding
capital stock of which is owned by the Company and 10% of the issued and
outstanding capital stock of which is owned by each of Innotech
Corporation, Kobe Steel Ltd. and Nissin Electric Ltd. are owned directly
by the Company, free and clear of all liens, encumbrances and claims. To
such counsel's
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knowledge, the Company does not control, directly or indirectly, any
corporation, partnership, joint venture, association, or other business
organization, other than the Subsidiaries.
(iii) The authorized capital stock of the Company conforms in all
material respects as to legal matters to the description thereof
contained in the Prospectus.
(iv) The outstanding shares of Common Stock (including the Shares
to be sold by the Selling Stockholders) have been duly authorized, are
validly issued, non-assessable and, to such counsel's knowledge,
fully-paid.
(v) The Shares to be sold by the Company have been duly authorized
and, when issued and delivered in accordance with the terms of this
Agreement, will be validly issued, fully-paid, and non-assessable, and to
such counsel's knowledge, the issuance of such Shares will not be subject
to any right of first refusal or preemptive, co-sale, or similar right.
(vi) The Company has the corporate power and authority to enter into
this Agreement and to issue, sell and deliver to the Underwriters the
Shares to be issued and sold by it hereunder. This Agreement has been
duly authorized, executed and delivered by the Company.
(vii) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement will
not contravene (A) any provision of applicable law or the certificate of
incorporation or by-laws of the Company, or (B) to such counsel's
knowledge, any agreement or other instrument binding upon the Company or
any of its Subsidiaries that is material to the Company its Subsidiaries,
taken as a whole, or any judgment, or decree of any governmental body,
agency or court having jurisdiction over, the Company or any Subsidiary.
To such counsel's knowledge, no consent, authorization, approval, order,
certificate, or permit of or qualification with, any governmental body or
agency is required for the execution and delivery by the Company of, and
the performance by the Company of its obligations under, this Agreement,
except such as may be required by the securities or Blue Sky laws of the
various states and jurisdictions in connection with the offer and sale of
the Shares.
(viii) The statements (1) in the Prospectus under the caption
"Underwriters" (to the extent of the description of this Agreement) and
(2) in the Registration Statement in Items 14 and 15, in each case
insofar as such statements constitute summaries of the legal matters,
documents or proceedings referred to therein, fairly and accurately
present the information called for with respect to such legal matters,
documents and proceedings and fairly and accurately summarize the matters
referred to therein, in all material respects.
(ix) Such counsel does not know of any legal or governmental
proceeding pending or threatened to which the Company or any of its
Subsidiaries is a party or to which any of the properties of the Company
or any of its Subsidiaries is subject that is required to be described in
the Registration Statement or the Prospectus and is not so described, or
of any statutes, regulations, contracts, or other documents that are
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required to be described in the Registration Statement or the Prospectus
or to be filed as exhibits to the Registration Statement that are not
described or filed as required.
(x) The Company is not an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended.
(xi) The Registration Statement and Prospectus (except for financial
statements and schedules and other financials included therein as to
which such counsel need not express any opinion) comply as to form in all
material respects with the Securities Act and the rules and regulations
of the Commission thereunder.
(xii) To such counsel's knowledge, except as disclosed or provided
in the Prospectus, there is no owner of any securities of the Company
that has any rights, not effectively satisfied or waived, to require
registration of any shares of capital stock of the Company in connection
with the filing of the Registration Statement.
(xiii) To such counsel's knowledge: (A) the Registration Statement
has become effective under the Securities Act, no stop order proceedings
with respect thereto have been instituted or are pending or threatened
under the Securities Act, and nothing has come to such counsel's
attention to lead it to believe that such proceedings are contemplated;
and (B) any required filing of the Prospectus and any supplement thereto
pursuant to Rule 424(b) of the rules and regulations has been made in the
manner and within the time period required by such Rule 424(b).
(xiv) The Shares to be sold to the Underwriters have been duly
authorized for quotation on the Nasdaq National Market.
Counsel rendering the foregoing opinion may rely as to questions of law
not involving the laws of the United States and the laws of the state of
California, upon opinions of local counsel satisfactory in form and substance
to counsel for the Underwriters. Copies of any opinions so relied upon shall
be delivered to you and your counsel and the foregoing opinion shall also state
that counsel believes that it is justified in relying on such other opinion.
In addition, such counsel shall state that in addition to rendering legal
advice and assistance to the Company and in the course of the preparation of
the Registration Statement and the Prospectus, involving, among other things,
discussions and inquiries concerning various legal matters and the review of
certain corporate records, documents, and proceedings, such counsel also
participated in conferences with certain officers and other representatives of
the Company, including its independent certified public accountants, and with
the Underwriters and their counsel, at which the contents of the Registration
Statement and the Prospectus and related matter were discussed; provided, such
counsel may state they have not independently verified the accuracy,
completeness, or fairness of the information contained in the Registration
Statement and Prospectus.
Such counsel shall also state that based upon its participation as
described in the preceding paragraph, (i) they believe each document filed
pursuant to the Exchange Act and incorporated by reference into the Prospectus
(except for Financial Statement and Schedules and other financial data derived
therefrom as to which they express no belief) complied when so filed as to form
in all material respects with the Exchange Act and the rules and regulations of
the Commission thereunder, (ii) they
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believe that the Registration Statement and the Prospectus (except for
financial statements, and schedules and other financial and statistical data
derived therefrom as to which they need express no belief) complied as to form
in all material respects with the requirements of the Securities Act and the
rules and regulations of the Commission thereunder, and (iii) they confirm that
nothing has come to the attention of such counsel that causes them to believe
that the Registration Statement (except as to the financial statements, notes
thereto and schedules and other statistical and financial data stated
therein, as to which such counsel need not express any opinion or belief), at
the effective date of the Registration Statement, contained any untrue
statement of a material fact or omitted to state a material fact required to
be stated therein or necessary to make a statements therein not misleading,
or that the Prospectus (except as to the financial statements, notes thereto
and schedules and other statistical and financial data therein, as to which
counsel need not express any opinion or belief), as of its date or at the
Closing Date, contained or contains any untrue statement of a material fact
or omitted or omits to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(d) The Underwriters shall have received on the Closing Date an opinion
of Cooley Godward Castro Huddleson & Tatum, counsel for the Selling
Stockholders, dated the Closing Date, to the effect that:
(i) This Agreement has been duly authorized, executed and delivered
by or on behalf of each of the Selling Stockholders.
(ii) The execution and delivery by the Selling Stockholder of, and
the performance by such Selling Stockholder of its obligations under, this
Agreement, the Lock-up Agreement, the Custody Agreement and the Power of
Attorney of such Selling Stockholder will not contravene (A) any provision
of applicable law, or the organization documents, certificates of
incorporation or by-laws of such Selling Stockholder (if such Selling
Stockholder is a corporation, partnership, trust or other entity), or, (B)
to such counsel's knowledge, any agreement or other instrument binding
upon, or any judgment, order or decree of any governmental body, agency or
court having jurisdiction over, such Selling Stockholder. To such
counsel's knowledge, no consent, authorization, approval, order,
certificate, or permit of, or qualification with, any governmental body or
agency is required for the performance by such Selling Stockholder of its
obligations under this Agreement, the Lock-up Agreement, the Custody
Agreement, or the Power of Attorney of such Selling Stockholder, except
such as have been obtained or as may be required by the securities or
Blue Sky laws of the various states in connection with offer and sale of
the Shares.
(iii) Each of the Selling Stockholders has the legal right and power,
and all authorization and approval required by law, to enter into this
Agreement, the Lock-up Agreement, the Custody Agreement, and the Power of
Attorney of such Selling Stockholder and to sell, transfer, and deliver
the Shares to be sold by such Selling Stockholder and, to such counsel's
knowledge, such sale, transfer, or delivery is not subject any right of
first refusal or other contractual restriction.
(iv) This Agreement, the Lock-up Agreement, the Custody Agreement, and
the Power of Attorney of each of the Selling Stockholders have been duly
authorized, executed, and delivered by such Selling Stockholder and are
valid, legal, and binding agreements of such Selling Stockholder,
enforceable in accordance with their respective terms, except as the
enforcement hereof may be limited by applicable
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bankruptcy, insolvency, reorganization, moratorium, or other similar laws
affecting creditors' rights generally, or by general equitable principles;
and
(v) Upon delivery of and payment for the Shares to be sold by the
respective Selling Stockholders as provided in this Agreement and upon
registration of such Shares in the names of the Underwriters (or their
nominees) in the stock records of the Company, the Underwriters will be
the owners of such Shares, free and clear of any liens, claims, or
encumbrances, assuming for the purpose of this opinion that the
Underwriters are purchasing such Shares in good faith and without notice
of any defect in the title of any such Selling Stockholders to the Shares
being purchased from such Selling Stockholders;
In rendering its opinions in paragraph (d) above, Cooley Godward Castro
Huddleson & Tatum may, with respect to factual matters relating to the Selling
Stockholders rely and state that it is relying solely upon the representations
and warranties of such Selling Stockholders contained herein and/or in their
Powers of Attorney, Custody Agreements, or other agreements or certificates;
provided, that in each such instance such counsel further states that such
representations and warranties are not known by such Counsel to be materially
inaccurate.
Counsel rendering the foregoing opinion may rely as to questions of law
not involving the laws of the United States and the laws of the state of
California, upon opinions of local counsel satisfactory in form and substance
to counsel for the Underwriters. Copies of any opinions so relied upon shall
be delivered to you and your counsel and the foregoing opinion shall also
state that counsel believes that it is justified in relying on such other
opinion.
The opinions of Cooley Godward Castro Huddleson & Tatum referred to in
paragraphs (c) and (d) above, shall be rendered to you at the request of the
Company and shall so state therein.
(e) You shall have received on the Closing Date an opinion of Venture Law
Group, counsel for the Underwriters, dated the Closing Date, covering the
matters referred to in subparagraphs (v), (vi), (vii) (but only as to the
statements in the Prospectus under and "Underwriters") and (xii) of
paragraph (c) above and with regard to the second and third paragraphs
following (xiv) of paragraph (c) above.
(f) You shall have received, on each of the date hereof and the Closing
Date, a letter dated the date hereof or the Closing Date, as the case may be,
in form and substance satisfactory to you, from Price Waterhouse LLP,
independent public accountants, containing statements and information of the
type ordinarily included in accountants' "comfort letters" to underwriters
with respect to the financial statements and certain financial information
contained in the Registration Statement and the Prospectus.
(g) The Lock-up Agreements between you and certain stockholders, officers
and directors of the Company relating to sales of shares of Common Stock or any
securities convertible into or exercisable or exchangeable for such Common
Stock, delivered to you on or before the date hereof, shall be in full force
and effect on the Closing Date.
(h) The Shares shall have been duly authorized for quotation on the
Nasdaq National Market.
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(i) The Company shall have complied with the provisions of Article VII(a)
hereof with respect to the furnishing of Prospectuses on the business day
following the date of this Agreement, in such quantities as you reasonably
request.
All of the agreements, opinions, certificates and letters mentioned above
or elsewhere in this Agreement shall be deemed in compliance with the
provisions hereof only if Venture Law Group, counsel for the Underwriters,
shall be reasonably satisfied that they comply in form and scope.
The several obligations of the U.S. Underwriters to purchase Additional
Shares hereunder are subject to the delivery to the U.S. Representatives on
the Option Closing Date of such documents as they may reasonably request with
respect to the good standing of the Company, the due authorization and
issuance of the Additional Shares, other matters related to the issuance of
the Additional Shares, and an opinion or opinions of Cooley Godward Castro
Huddleson & Tatum and a letter or letters from Price Waterhouse L.L.P., in
form and substance satisfactory to Venture Law Group, counsel for the
Underwriters.
VII.
In further consideration of the agreements of the Underwriters herein
contained, the Company covenants as follows:
(a) To prepare the Prospectus in a form approved by the Underwriters and
file such Prospectus pursuant to Rule 424(b) under the Securities Act not later
than the Commission's close of business on the second business day following
the execution and delivery of this Agreement, or, if applicable, such earlier
time as may be required by Rule 430A(a)(3) under the Securities Act, and to
promptly advise the Underwriters (i) when any amendment to the Registration
Statement shall have become effective, (ii) of any request by the Commission
for any amendment of the Registration Statement or supplement to the
Prospectus, or for any additional information, (iii) of the prevention or
suspension of the use of any preliminary prospectus or the Prospectus or of
the issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or in the institution or threatening of any
proceeding for that purpose, and (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Shares for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose. The Company shall not file or prepare any
amendment of the Registration Statement or supplement to the Prospectus
unless the Company has furnished the Underwriters a copy for its review
within a reasonable amount of time prior to filing or use, and shall not file
or use any such proposed amendment or supplement to which the Underwriters
reasonably object. The Company shall use its best efforts to prevent the
issuance of any such stop order and, if issued, to obtain as soon as possible
the withdrawal thereof.
(b) To furnish to you, without charge, two signed copies of the
Registration Statement (including exhibits thereto) and for delivery to each
other Underwriter a conformed copy of the Registration Statement (without
exhibits thereto) and, during the period mentioned in paragraph (c) below, as
many copies of the Prospectus and any supplements and amendments thereto or to
the Registration Statement as you may reasonably request. In the case of the
Prospectus, to furnish copies of the Prospectus in New York City, prior to
5:00 p.m. on the business day following the date of this Agreement, in such
quantities as you reasonably request.
(c) If, during such period after the first date of the public offering of
the Shares as the Prospectus is required by law to be delivered in connection
with sales by an Underwriter or dealer, any
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event shall occur or condition exist as a result of which it is necessary to
amend or supplement the Prospectus in order to ensure that the Prospectus does
not include any untrue statement of material fact or omit to state a material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is necessary
to amend or supplement the Prospectus to comply with law, forthwith to prepare,
file with the Commission, and furnish, at its own expense, to the Underwriters
and to the dealers (whose names and addresses you will furnish to the Company)
to which Shares may have been sold by you on behalf of the Underwriters and to
any other dealers upon request, either amendments or supplements to the
Prospectus which shall correct such statement or omission or effect such
compliance.
(d) To qualify the Shares for offer and sale under the securities or Blue
Sky laws of such jurisdictions as you shall reasonably request and to pay all
expenses (including fees and disbursements of counsel) in connection with
such qualification and in connection with any review of the offering of the
Shares by the National Association of Securities Dealers, Inc.
(e) To make generally available to the Company's security holders and to
the Underwriters as soon as practicable but not later than 45 days after the
end of the 12-month period beginning at the end of the fiscal quarter of the
Company during which the "effective date" (as defined in Rule 158 under the
Securities Act) occurs (or 90 days if such 12-month period coincides with the
Company's fiscal year), an earnings statement covering such 12-month period
ending that satisfies the provisions of Section 11(a) of the Securities Act
and the rules and regulations of the Commission thereunder.
(f) Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all
expenses incident to the performance of its obligations under this Agreement,
including: (i) the fees, disbursements, and expenses of the Company's counsel
and the Company's accountants in connection with the registration and
delivery of the Shares under the Securities Act and all other fees or
expenses in connection with the preparation and filing of the Registration
Statement, any preliminary prospectus, the Prospectus and amendments and
supplements to any of the foregoing, including all printing costs associated
therewith, and the mailing and delivering of copies thereof to the
Underwriters and dealers, in the quantities hereinabove specified, (ii) all
costs and expenses related to the transfer and delivery of the Shares to the
Underwriters, including any transfer or other taxes payable thereon, (iii)
the cost of printing or producing any Blue Sky or Legal Investment memorandum
in connection with the offer and sale of the Shares under state securities
laws and all expenses in connection with the qualification of the Shares for
offer and sale under state securities laws as provided in Article VII hereof,
including filing fees and the fees and disbursements of counsel for the
Underwriters in connection with such qualification and in connection with the
Blue Sky or Legal Investment memorandum, (iv) all filing fees and
disbursements of counsel to the Underwriters incurred in connection with the
review and qualification of the offering by the National Association of
Securities Dealers, Inc., (v) all fees and expenses incident to listing the
Shares on the Nasdaq National Market and other national securities exchanges
and foreign stock exchanges, if applicable, (vi) the cost of printing
certificates representing the Shares, (vii) the costs and charges of any
transfer agent, registrar or depository, and (viii) the costs and expenses of
the Company relating to the investor presentations on any "road show"
undertaken in connection with the marketing of the offering, including,
without limitation, expenses associated with the production of road show
slides and graphics, fees and expenses of any consultants engaged in
connection with the road show presentations with the prior approval of the
Company, travel and lodging expense of the representatives and officers of
the Company and any such consultants, and the cost of any aircraft chartered
in connection with the road show.
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(g) During a period of three years from the effective date of the
Registration Statement, to furnish to the Underwriters copies of (i) all
reports to its stockholders; and (ii) all reports, financial statements, and
proxy or information statements filed by the Company with the Commission or
any national securities exchange.
(h) To apply the proceeds from the sale of the Shares as set forth under
"Use of Proceeds" in the Prospectus.
(i) To maintain in effect the quotation of the Shares on the Nasdaq
National Market for a period of three years after the date hereof or until
such earlier date as the Shares shall be listed for regular trading privileges
on another national securities exchange approved by you.
(j) To file with the Commission such reports on Form SR as may be
required pursuant to Rule 463 of the Regulations under the Securities Act.
(k) To comply with all registration, filing and reporting requirements
of the Exchange Act.
(l) To comply with all provisions of all undertakings contained in the
Registration Statement.
(m) To refrain from issuing, prior to the Closing Date, any press release
or other communication directly or indirectly and to refrain from holding,
prior to the Closing Date, any press conference with respect to the Company, or
its financial condition, results of operations, business, properties, assets,
or prospects, or this offering, without your prior written consent.
(n) To refrain from taking, directly or indirectly (except for any action
taken by the Underwriters), any action designed to or that might reasonably
be expected to cause or result in stabilization or manipulation of the price
of the Common Stock to facilitate the sale or resale of the Shares, except as
stated in this Agreement and in the Prospectus.
VIII.
Each Selling Stockholder, severally and not jointly, agrees to pay or
cause to be paid all taxes, if any, on the transfer and sale of the Shares
being sold by such Selling Stockholder. The Company agrees to pay or cause to
be paid all costs and expenses incident to the performance of the obligations
of the Selling Stockholders under this Agreement, including, but not limited
to, all expenses incident to the delivery of the Shares, the fees and expenses
of counsel and accountants for the Selling Stockholders, the costs and expenses
incident to the preparation, printing and filing of the Registration Statement
(including all exhibits thereto) and the Prospectus and any amendments or
supplements thereto, the expenses of qualifying the Shares under the
securities or Blue Sky laws of various jurisdictions, all fees payable in
connection with any review of the offering of the Shares by the National
Association of Securities Dealers, Inc., and the cost of furnishing to the
Underwriters the required copies of the Registration Statement and Prospectus
and any amendments or supplements thereto.
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<PAGE>
IX.
The Company, the Selling Stockholders and Jerry L. Fiddler agree,
jointly and severally, to indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act,
from and against any and all losses, claims, damages, and liabilities
(including, without limitation, any legal or other expenses reasonably
incurred by any Underwriter or any such controlling person in connection with
defending or investigating any such action or claim) caused by any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or any amendment thereof, any preliminary prospectus
or the Prospectus (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto), or caused by any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as such losses, claims, damages, or liabilities are caused by any
such untrue statement or omission or alleged untrue statement or omission
based upon information relating to any Underwriter furnished to the Company
in writing by such Underwriter through you expressly for use therein;
provided, however, that the foregoing indemnity agreement with respect to any
preliminary prospectus shall not inure to the benefit of any Underwriter from
whom the person asserting any such losses, claims, damages, or liabilities
purchased Shares, or any person controlling such Underwriter, if a copy of
the Prospectus (as then amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) was not sent or given by or
on behalf of such Underwriter to such person if required by law so to have
been delivered at or prior to the written confirmation of the sale of the
Shares to such person, and if the Prospectus (as so amended or supplemented)
would have cured the defect giving rise to such losses, claims, damages or
liabilities.
The aggregate liability of each Selling Stockholder under the
representations and warranties contained in Article I and II hereof and under
the indemnity, contribution and reimbursement agreements contained in Article
IX hereof shall be limited to an amount equal to the proceeds received by
such Selling Stockholder (net of the underwriting discount), from the
Underwriters in the offering, and the aggregate liability of Jerry L. Fiddler
under the representations and warranties contained in Article I hereof and
under the idemnity, contribution and reimbursement agreements contained in
Article IX hereof shall be limited to an amount equal to the proceeds
received by all of the Selling Stockholders (other than David N. Wilner) (net
of underwriting discount), from the underwriters in the offering.
Notwithstanding the foregoing, (i) the Selling Stockholders shall not be
required to provide indemnification under this Article IX unless (A) the
Underwriter seeking indemnification shall have first made a written demand
for payment on the Company with respect to any losses, claims, damages, or
liabilities and the Company shall have failed to make such demanded payment
(1) within 30 days after receipt of a written demand for fees and expenses of
counsel and other litigation costs and (2) within 90 days after rece34ipt of
a written demand for all other losses, claims, damages or liabilities,
including, without limitation, any final settlements or judgments, and (ii)
Jerry L. Fiddler shall not be required to provide indemnification under this
Article IX unless (A) the Underwriter shall have first made a written demand
for payment on one or more of the Selling Stockholders (other than David N.
Wilner) with respect to any losses, claims, damages, or liabilities and such
Selling Stockholder shall have failed to make such demanded payment (1)
within 30 days after receipt of a written demand for fees and expenses of
counsel and other litigation costs and (2) within 90 days after receipt of a
written demand for all other losses, claims, damages, or liabilities,
including, without limitation, any final settlements or judgments. The
Selling Stockholders and Jerry L. Fidler will be subrogated to the rights of
the Underwriters under this Article IX to the extent of any indemnity
payments made pursuant to this Article IX.
Each Underwriter agrees, severally and not jointly, to indemnify and hold
harmless the Company, its directors, its officers who sign the Registration
Statement, and each person, if any, who controls the Company within the
meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act, and the Selling Stockholders from and against any and all
losses, claims, damages, and liabilities (including, without limitation, any
legal or other expenses reasonably incurred by any Underwriter or any such
controlling person in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or any amendment
thereof, any preliminary prospectus or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or
supplements thereto), or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, but only with reference to information
relating to
-18-
<PAGE>
such Underwriter furnished to the Company in writing by such
Underwriter through you expressly for use in the Registration Statement, any
preliminary prospectus, the Prospectus or any amendments or supplements
thereto.
In case any proceeding (including any governmental investigation) shall
be instituted involving any person in respect of which indemnity may be
sought pursuant to this Article IX, such person (the "indemnified party")
shall promptly notify the person against whom such indemnity may be sought
(the "indemnifying party") in writing and the indemnifying party, upon
request of the indemnified party, shall retain counsel reasonably
satisfactory to the indemnified party to represent the indemnified party and
any others the indemnifying party may designate in such proceeding and shall
pay the fees and disbursements of such counsel related to such proceeding. In
any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the
expense of such indemnified party unless (i) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of such counsel
or (ii) the named parties to such proceeding (including any impleaded
parties) include both the indemnifying party and indemnified party and
representation of both parties by the same counsel would be inappropriate due
to actual or potential differing interests between them. It is understood
that the indemnifying party shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for (a) the fees and
expenses of more than one separate firm (in addition to any local counsel)
for all Underwriters and all persons, if any, who control Underwriters within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act, (b) the fees and expenses of more than one separate firm (in
addition to any local counsel) for the Company, its directors, its officers
who sign the Registration Statement and each person, if any, who controls the
Company within the meaning of either such Sections and (c) the fees and
expenses of more than one separate firm (in addition to any local counsel)
for all Selling Stockholders and all persons, if any, who control Selling
Stockholders within the meaning of either such Section, and that all such
fees and expenses shall be reimbursed as they are incurred. In the case of
any such separate firm for the Underwriters and such control persons of
Underwriters, such firm shall be designated in writing by Deutsche Morgan
Grenfell/C.J. Lawrence Inc. In the case of any such separate firm for the
Company, and such directors, officers and control persons of the Company,
such firm shall be designated in writing by the Company. In the case of any
such separate firm for the Selling Stockholders and such controlling persons
of Selling Stockholders, such firm shall be designated in writing by the persons
named as attorneys-in-fact for the Selling Stockholders under the Powers of
Attorney. The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an indemnified party shall have requested
an indemnifying party to reimburse the indemnified party for fees and expenses
of counsel as contemplated by the third sentence of this paragraph, the
indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the date of such
settlement. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such
proceeding.
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<PAGE>
If the indemnification provided for in this Article IX is unavailable to
an indemnified party or insufficient in respect of any losses, claims,
damages or liabilities referred to therein, then each indemnifying party
under such paragraph, in lieu of indemnifying such indemnified party
thereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities
(i) in such proportion as is appropriate to reflect the relative benefits
received by the Sellers and the Underwriters from the offering of the Shares
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault
of the Sellers and of the Underwriters in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative benefits
received by the Company, the Selling Stockholders and the Underwriters in
connection with the offering of the Shares shall be deemed to be in the same
respective proportions as the net proceeds from the offering of the Shares
(before deducting expenses) received by each of the Company and the Selling
Stockholders and the total underwriting discounts and commissions received by
the Underwriters, in each case as set forth in the table on the cover of the
Prospectus, bear to the aggregate public offering price of the Shares. The
relative fault of the Sellers and the Underwriters shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Sellers or by the
Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Underwriters' respective obligations to contribute pursuant to this
Article IX are several in proportion to the respective number of Shares they
have purchased hereunder, and not joint.
The Sellers and the Underwriters agree that it would not be just or
equitable if contribution pursuant to this Article were determined by
pro rata allocation (even if the Underwriters were treated as one entity
for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as
a result of the losses, claims, damages and liabilities referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any
such action or claim. Notwithstanding the provisions of this Article, no
Underwriter shall be required to contribute any amount in excess of the
amount by which the total price at which the Shares underwritten by it and
distributed to the public were offered to the public exceeds the amount of
any damages that such Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Article IX are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
The indemnity and contribution provisions contained in this Article IX and
the representations and warranties of the Company contained in this Agreement
shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of
any Underwriter or any person controlling any Underwriter or by or on behalf
of the Company, its officers or directors or any person controlling the
Company, and (iii) acceptance of and payment for any of the Shares.
-20-
<PAGE>
X.
This Agreement shall be subject to termination by notice given by the
Underwriters to the Company, if after the execution and delivery of this
Agreement and prior to the Closing Date, in the sole and absolute judgment of
Deutsche Morgan Grenfell/C.J. Lawrence Inc. if (i) the Company shall have
sustained a material or substantial loss by fire, flood, accident, hurricane,
earthquake, theft, sabotage or other calamity or malicious act which, whether
or not said loss shall have been insured, will make it inadvisable to proceed
with the offering; (ii) there has been, since the respective dates as of
which information is given in the Registration Statement and the Prospectus,
any material adverse change in the condition, financial or otherwise, or in
the earnings, business, operations, or prospects of the Company and its
Subsidiaries, taken as a whole, whether or not arising in the ordinary course
of business; (iii) trading generally shall have been suspended or materially
limited on or by, as the case may be, any of the New York Stock Exchange, the
American Stock Exchange, the National Association of Securities Dealers,
Inc., the Chicago Board of Options Exchange, the Chicago Mercantile Exchange
or the Chicago Board of Trade; (iv) trading of any securities of the Company
shall have been suspended on any exchange or in any over-the-counter market,
(v) a general moratorium on commercial banking activities in New York shall
have been declared by either Federal or New York State authorities; (vi)
there shall have occurred any outbreak or escalation of hostilities or any
change in financial markets or any calamity or crisis that, in your judgment,
is material and adverse; or (vii) any of the conditions specified in Article
VI shall not have been fulfilled when and as required by this Agreement.
If this Agreement is terminated pursuant to any of its provisions, the
Company shall not be under any liability to any Underwriter, and no
Underwriter shall be under any liability to the Company, except that (y) if
this Agreement is terminated by the Underwriters or the Underwriters because
of any failure, refusal, or inability on the part of the Company to comply
with terms or to fulfill any of the conditions of this Agreement, the Company
will reimburse the Underwriters for all out-of-pocket expenses (including the
reasonable fees and disbursements of their counsel) incurred by them in
connection with the proposed purchase and sale of the Shares or in
contemplation of performing their obligations hereunder and (z) no
Underwriter who shall have failed or refused to purchase the Shares agreed to
be purchased by it under this Agreement, without some reason sufficient
hereunder to justify cancellation or termination of its obligations under
this Agreement, shall be relieved of liability to the Company or to the other
Underwriters for damages occasioned by its failure or refusal.
XI.
If, on the Closing Date or the Option Closing Date, as the case may be,
any one or more of the Underwriters shall fail or refuse to purchase Shares
that it or they have agreed to purchase hereunder on such date, and the
aggregate number of Shares which such defaulting Underwriters or Underwriters
agreed but failed or refused to purchase is not more than one-tenth of the
aggregate number of the Shares to be purchased on such date, the other
Underwriters shall be obligated severally in the proportions that the number
of Firm Shares set forth opposite their respective names in Schedule I or
Schedule II bears to the aggregate number of Firm Shares set forth opposite
the names of all such nondefaulting Underwriters, or in such other
proportions as you may specify, to purchase the Shares which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase on such
date, provided, however, that in no event shall the number of Shares that any
Underwriter has agreed to purchase pursuant to Article III be increased
pursuant to this Article XI by an amount in excess of one-ninth of such
number of Shares without the written consent of such Underwriter. If, on the
Closing Date or the Option Closing Date, as the case may be, any Underwriter
or Underwriters shall fail or refuse to purchase Shares and the aggregate
number of
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<PAGE>
Shares with respect to which such default occurs is more than one-tenth of
the aggregate number of Shares to be purchased on such date, and arrangements
satisfactory to you and the Company for the purchase of such Shares are not
made within 36 hours after such default, this Agreement shall terminate
without liability on the part of any non-defaulting Underwriter or the
Company. In any such case either you or the Company shall have the right to
postpone the Closing Date or the Option Closing Date, as the case may be, but
in no event for longer than seven days, in order that the required changes,
if any, in the Registration Statement and in the Prospectus or in any other
documents or arrangements may be effected. Any action taken under this
paragraph shall not relieve any defaulting Underwriter from liability in
respect of any default of such Underwriter under this Agreement.
XII.
This Agreement shall become effective upon the execution and delivery
hereof by the parties hereto.
The respective agreements, representations, warranties, indemnities, and
other statements of the Company or its officers, the Selling Stockholders,
and of the Underwriters set forth in or made pursuant to this Agreement shall
remain in full force and effect, regardless of any indemnification made by or
on behalf of any Underwriter, any Selling Stockholder the Company or any of
the officers, directors, or controlling persons referred to in Article IX
hereof, and shall survive delivery of and payment for the Shares. The
provisions of Articles VII(f), IX, and X shall survive the termination or
cancellation of this Agreement.
This Agreement shall become effective upon its execution and delivery
except that the Underwriters may, at their option, delay its effectiveness
until 11:00 a.m., New York time, on the first full business day following the
effective date of the Registration Statement, or at such earlier time after
the effective date of the Registration Statement as the Underwriters, in
their discretion, shall first commence the public offering by the
Underwriters of any of the Stock. The time of commencement of the public
offering shall mean the time of release by the Underwriters of the first
newspaper advertisement with respect to the Shares, or the time when the
Shares are first generally offered by the Underwriters to dealers by letter,
fax, or other means of written communication, whichever shall first occur.
This Agreement may be terminated by the Underwriters at any time before it
becomes effective as provided above, except that Articles VII(f), IX, and X
shall remain in effect notwithstanding such termination.
This Agreement has been and is made for the benefit of the Underwriters,
the Company, the Selling Stockholders, and their respective successors and
assigns, and, to the extent expressed herein, for the benefit of persons
controlling any of the Underwriters or the Company, and directors and
officers of the Company, and their respective successors and assigns, and no
other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include any
purchaser of Shares from any Underwriter merely because of such purchase.
All notices and communications hereunder shall be in writing and mailed or
delivered or by telephone or telegraph if subsequently confirmed in writing,
(a) if to the Underwriters, c/o Deutsch Morgan Grenfell/C. J. Lawrence Inc.,
31 West 52nd Street, New York, New York 10019-6160, and (b) if to the Company
or the Selling Stockholders, to the Company's agent for service as such
agent's address appears on the cover page of the Registration Statement.
This Agreement may be signed in two or more counterparts, each of which
shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.
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<PAGE>
This Agreement shall be governed by and construed in accordance with the
internal laws of the State of New York.
Very truly yours,
WIND RIVER SYSTEMS, INC.
By ________________________________
Ronald A. Abelmann, President & CEO
THE SELLING STOCKHOLDERS NAMED
ON SCHEDULE III HERETO
By ________________________________
Attorney in Fact
By ________________________________
Jerry L. Fiddler
Accepted, July ___, 1996
DEUTSCHE MORGAN GRENFELL/C.J. LAWRENCE, INC.
HAMBRECHT & QUIST LLC
UBS SECURITIES LLC
WESSELS, ARNOLD & HENDERSON, L.L.C.
Acting severally on behalf of themselves
and the several U.S. Underwriters
named in Schedule I hereto.
By DEUTSCHE MORGAN GRENFELL/C.J. LAWRENCE INC.
By ____________________________________
<PAGE>
MORGAN GRENFELL & CO., LIMITED
HAMBRECHT & QUIST LLC
UBS LIMITED
WESSELS, ARNOLD & HENDERSON, L.L.C.
Acting severally on behalf of themselves
and the several International Underwriters
named in Schedule II hereto.
By MORGAN GRENFELL & CO., LIMITED
By ____________________________________
<PAGE>
Schedule I
U.S. UNDERWRITERS
Number of
Firm Shares
Underwriter To Be Purchased
- ----------- ---------------
Deutsche Morgan Grenfell/C.J. Lawrence Inc.
Hambrecht & Quist LLC
UBS Securities LLC
Wessels, Arnold & Henderson, L.L.C.
__________
Total U.S. Firm Shares ........................................ 2,475,000
__________
__________
<PAGE>
Schedule II
INTERNATIONAL UNDERWRITERS
Number of
Firm Shares
Underwriter To Be Purchased
- ----------- ---------------
Morgan Grenfell & Co., Limited
Hambrecht & Quist LLC
UBS Limited
Wessels, Arnold & Henderson, L.L.C.
_________
Total International Shares ................................. 825,000
__________
__________
<PAGE>
SCHEDULE III
SELLING STOCKHOLDERS
Number of
Firm Shares to
Selling Stockholder Be Offered
- ------------------- --------------
Jerry L. Fiddler and Melissa K. Alden,
Trustees of the Fiddler and Alden
Family Trust 725,000
David N. Wilner 500,000
Jerry L. Fiddler and Melissa K. Alden,
Trustees of the Fiddler and Alden 1996 CR Trust 175,000
Robert Fiddler, Trustee of the
Fiddler/Alden Children's Trust 130,000
Robert Fiddler, Custodian for Eli
Spruance Fiddler 60,000
Robert Fiddler, Custodian for
Asher Fiddler 60,000
---------
Total 1,650,000
---------
---------
<PAGE>
[Letterhead]
June 17, 1996
Wind River Systems, Inc.
1010 Atlantic Avenue
Alameda, California 94501
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the filing by Wind River Systems, Inc. (the "Company") of a Registration
Statement on Form S-3 (the "Registration Statement") with the Securities and
Exchange Commission covering the offering of up to 3,795,000 shares, including
495,000 shares subject to the Underwriters' over-allotment option, of the
Company's Common Stock, $.001 par value, (the "Shares").
In connection with this opinion, we have examined the Registration Statement and
related Prospectus, your Certificate of Incorporation and By-laws, as amended,
and such other documents, records, certificates, memoranda and other instruments
as we deem necessary as a basis for this opinion. We have assumed the
genuineness and authenticity of all documents submitted to us as originals, the
conformity to originals of all documents submitted to us as copies thereof, the
due execution and delivery of all documents where due execution and delivery are
prerequisites to the effectiveness thereof, and that the Shares will be sold at
a price approved by the Pricing Committee of the Board of Directors.
On the basis of the foregoing, and in reliance thereon, we are of the opinion
that the Shares, when sold and issued in accordance with the Registration
Statement and related Prospectus, will be validly issued, fully paid and
nonassessable.
We consent to the reference to our firm under the caption "Legal Matters" in the
Prospectus included in the Registration Statement and to the filing of this
opinion as an exhibit to the Registration Statement.
Very truly yours,
COOLEY GODWARD CASTRO
HUDDLESON & TATUM
/s/ Andrea Vachss
Andrea Vachss
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report dated
February 23, 1996 appearing on page 14 of Wind River Systems, Inc.'s Annual
Report on Form 10-K, as amended by the Form 10-K/A, for the year ended January
31, 1996. We also consent to the reference to us under the heading "Experts" in
such Prospectus.
PRICE WATERHOUSE LLP
San Jose, California
June 17, 1996