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As filed with the Securities and Exchange Commission on April 30, 1998
Registration No. 333-48037
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Amendment No. 1
to
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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NOVELLUS SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
California 77-0024666
(State or other jurisdiction (I.R.S. employer
of incorporation or organization) identification number)
3970 North First Street
San Jose, California 95134
(408) 943-9700
(Address, including ZIP code, and telephone
number, including area code, of registrant's principal
executive offices)
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Robert H. Smith
Executive Vice President, Chief Financial Officer and Secretary
Novellus Systems, Inc.
3970 North First Street
San Jose, California 95134
(408) 943-9700
(Name, address, including ZIP code, and telephone
number, including area code, of agent for
service)
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Copies To:
Michael C. Phillips, Esq.
William D. Sherman, Esq.
Christopher S. Dewees, Esq.
MORRISON & FOERSTER LLP
755 Page Mill Road
Palo Alto, California 94304
(650) 813-5600
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: |X|
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE AN 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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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED APRIL 30, 1998
$300,000,000
NOVELLUS SYSTEMS, INC.
COMMON STOCK, PREFERRED STOCK, DEPOSITARY SHARES,
WARRANTS, DEBT SECURITIES AND WARRANTS TO
PURCHASE DEBT SECURITIES
Novellus Systems, Inc., a California corporation ("Novellus" or the
"Company"), may issue and sell from time to time up to $300,000,000 in the
aggregate of (a) shares of its Common Stock, no par value ("Common Stock"), (b)
shares of its Preferred Stock, no par value ("Preferred Stock"), in one or more
series, (c) its depositary shares ("Depositary Shares"), (d) its warrants to
purchase shares of Common Stock or Preferred Stock ("Warrants"), (e) its debt
securities ("Debt Securities"), and (f) its warrants to purchase Debt Securities
("Debt Warrants"), or any combination of the foregoing, either individually or
as units consisting of one or more of the foregoing, each on terms and
conditions to be determined at the time of offering. The Common Stock, Preferred
Stock, Depositary Shares, Warrants, Debt Securities and Debt Warrants are
collectively referred to herein as "Securities." All specific terms of the
offering and sale of Securities, including the specific (a) designation, rights,
preferences, privileges and restrictions of Preferred Stock, including dividend
rate or rates (or method of ascertaining the same), dividend payment dates,
voting rights, liquidation preference, and any conversion, exchange, redemption
or sinking fund provisions, (b) designation, rights, and restrictions of the
Debt Securities, including whether the Debt securities are senior or
subordinated, the currency or currency units in which Debt Securities are
denominated, the aggregate principal amount, the maturity, rate and time of
payment of interest, any conversion, exchange, redemption or sinking fund
provisions, and (c) initial underwriters, if any, to be utilized in connection
with the offering of Securities, will be set forth in an accompanying Prospectus
Supplement (the "Prospectus Supplement"). With regard to the Warrants and Debt
Warrants, if any, the Prospectus Supplement will contain a description of the
Common Stock, Preferred Stock and Debt Securities, respectively, for which each
warrant may be exercisable and the offering price, exercise price, duration,
detachability, call provisions and other principal terms of the warrants.
Novellus reserves the sole right to accept and, together with its agents from
time to time, to reject in whole or in part any proposed purchase of Securities
to be made directly or through agents.
Novellus may offer the Securities directly, through agents designated
from time to time by Novellus, or to or through underwriters or dealers. If any
agents or underwriters are involved in the sale of the Securities, their names
and any applicable purchase price, fee, commission or discount arrangement
between or among them, will be set forth, or will be calculable from the
information set forth, in the applicable Prospectus Supplement. See "Plan of
Distribution." No Securities may be sold without delivery of the applicable
Prospectus Supplement describing the method and terms of the offering of the
Securities.
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FOR CERTAIN FACTORS RELEVANT TO AN INVESTMENT IN THE SECURITIES, SEE
"RISK FACTORS" BEGINNING ON PAGE 4.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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The date of this Prospectus is __________, ____.
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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 the Company files reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission"). Such
reports, proxy statements and other information filed can be inspected and
copied at the Commission's Public Reference Section , 450 Fifth Street, N.W.,
Washington, D.C., 20549, and at the following regional offices of the
Commission: Seven World Trade Center, 13th Floor, New York, New York 10048 and
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
material can be obtained from the Public Reference Section of the Commission,
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The
Commission also maintains a site on the World Wide Web at http://www.sec.gov
that contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. The
Company's Common Stock is traded on the Nasdaq National Market under the symbol
"NVLS." The foregoing material also should be available for inspection at the
National Association of Securities Dealers, Inc., 1735 K Street, N.W.,
Washington DC 20006.
The Company has filed with the Commission a registration statement on
Form S-3 (the "Registration Statement"), of which this Prospectus is a part,
under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the Securities. This Prospectus does not contain all of the
information set forth in the Registration Statement, certain portions of which
have been omitted as permitted by the rules and regulations of the Commission.
Statements contained in this Prospectus as to the contents of any contract or
other documents are not necessarily complete, and in each instance reference is
made to the copy of such contract or other document filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference and the exhibits and schedules thereto. For further information
regarding the Company and the Securities, reference is hereby made to the
Registration Statement and such exhibits and schedules which may be obtained
from the Commission at its principal office in Washington, D.C. upon payment of
the fees prescribed by the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The documents listed below have been filed by the Company under the
Exchange Act with the Commission and are incorporated herein by reference:
a. The Company's Annual Report on Form 10-K for the year ended December
31, 1997 (including relevant portions of the Company's definitive proxy
statement for the 1998 annual meeting of shareholders specifically incorporated
by reference in Part III of such Form 10-K); and
b. The Company's Registration Statement on Form 8-A filed with the
Commission on September 1, 1988.
Each document filed by the Company pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering of all Securities to which this
Prospectus relates shall be deemed to be incorporated by reference in this
Prospectus and to be part hereof from the date of filing such documents. Any
statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
(or in the applicable Prospectus Supplement) or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
Copies of all documents which are incorporated herein by reference (not
including the exhibits to such information, unless such exhibits are
specifically incorporated by reference in such information) will be provided
without charge to each person, including any beneficial owner, to whom this
Prospectus is delivered upon written or oral request. Requests should be
directed to the Company's Executive Vice President and Chief Financial Officer,
Novellus Systems, Inc., 3970 North First Street, San Jose, California 95134,
telephone number: (408) 943-9700.
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As used herein, the terms "Company" and "Novellus" mean Novellus
Systems, Inc., a California corporation.
THE COMPANY
Novellus is a leading supplier of high productivity chemical vapor
deposition ("CVD") systems used in the fabrication of integrated circuits. CVD
systems are used to deposit all of the dielectric (insulating) layers and
certain of the conductive metal layers on the surface of a semiconductor wafer.
The overall growth in the semiconductor industry and the increasing number of
layers used in complex integrated circuits have led to increased demand for
advanced CVD equipment. The Company's products are differentiated by their
simultaneous ability to provide superior film quality while providing high
productivity and low cost of ownership in the advanced CVD market. The Company's
strategy is to focus on major semiconductor manufacturers, and the Company has
sold one or more of its systems to each of the 20 largest semiconductor
manufacturers in the world. On June 20, 1997, the Company completed the
acquisition of the Thin Film Systems business ("TFS") of Varian Associates, Inc.
("Varian"). TFS manufactures and markets equipment for physical vapor deposition
("PVD"), a critical technology in the production of advanced semiconductor logic
and memory devices.
The semiconductor industry has experienced significant growth in recent
years due to the continued growth of the personal computer market, the expansion
of the telecommunications industry, the emergence of new applications such as
consumer electronics products, wireless communications devices and mobile
computers and the increased semiconductor content in these electronics systems.
Significant performance advantages and lower prices for integrated circuits have
contributed to the growth and expansion of the semiconductor industry. In
response to the growth in demand for integrated circuits, the semiconductor
industry has continued to increase its manufacturing capacity through the
expansion of existing facilities and construction of new facilities.
The fabrication of integrated circuits requires a number of complex and
repetitive processing steps, including deposition, photolithography and etch.
Deposition is a process in which a film of either electrically insulating or
electrically conductive material is deposited on the surface of a wafer. The two
principal methods of this film deposition are CVD, which can be used to deposit
both insulating and conductive films, and PVD, which is used primarily for
sputtering conductive metals onto the wafer surface. In the CVD process, wafers
are typically placed in a reaction chamber and a variety of pure and precisely
metered gases are introduced while some form of energy is added to activate a
chemical reaction on the wafer surface. The result of this reaction is the
deposition of a film on the wafer.
CVD processes are used to deposit all of the dielectric films in an
integrated circuit. The dielectric layers in an integrated circuit include the
initial interlayer, portions of the interconnect layers and the final
passivation layer. CVD is also used for deposition of conductive metal layers,
particularly those metals that are more difficult to deposit in smaller line
width geometry devices through conventional PVD or other deposition technology.
CVD technology is particularly effective for depositing blanket tungsten as a
"plug" layer that connects one conductive metal layer to another in a
multi-level integrated circuit. For such applications, tungsten is replacing
aluminum, which has certain physical properties that reduce its efficacy for the
smaller interconnect holes of devices with smaller line width geometries.
Since the introduction of its original Concept One-Dielectric system in
1987, the Company has developed and now offers a family of processing systems
for the CVD dielectric and metal markets. The Concept One-Dielectric deposits a
variety of insulating or "dielectric" films on wafers including Oxide, Nitride
and TEOS. In 1990, the Company introduced a modified version of the Concept
One-Dielectric, the Concept One-W, which also uses a CVD process to deposit
blanket tungsten metal films on wafers primarily as the metal interconnect
between conductor layers in the integrated circuit layers. In November 1991, the
Company introduced the Concept Two, which is a modular, integrated production
system capable of depositing both dielectric and conductive metal layers by
combining one or more processing chambers around a common, automated robotic
wafer handler. In February 1996, the Company introduced SPEED on the Concept Two
platform. Targeted at advanced intermetal dielectric (IMD) deposition, SPEED is
the semiconductor industry's first high density plasma deposition solution
capable of high volume manufacturing.
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The INOVA(TM) system, which is in the final stages of development, is an
advanced PVD system that delivers Maxfill aluminum and superior Ti/Ti-nitride
film quality with excellent particle performance. Maxfill is an innovative,
low-pressure, low-k compatible process for aluminum via fill. The Ti/TiN process
is in production with Controlled Divergence Technology (CDS). The INOVA(TM) is a
multi-chamber single wafer processing system. INOVA(TM) Tantalum films are
designed to enable barriers for copper metallization.
In December 1997, the Company introduced its Concept 3(TM) family of
chemical vapor deposition systems for dielectric and tungsten applications on
300mm wafers. The new Concept 3(TM) products are the C3-SPEED(TM), the
C3-SEQUEL(TM), and the C-3 ALTUS(TM).
The Company markets and sells its systems worldwide, primarily through a
direct sales force. The Company seeks to increase its market share in the
worldwide CVD and PVD market and strengthen its position as a leading supplier
of advanced equipment. The Company's sales objective is to work closely with
major semiconductor manufacturers to secure purchase orders for multiple systems
as they expand existing facilities and build next generation wafer fabrication
facilities.
The Company was incorporated in California in 1984. The Company's
headquarters are located at 3970 North First Street, San Jose, California 95134,
and its telephone number (408) 943-9700.
USE OF PROCEEDS
Unless otherwise indicated in the applicable Prospectus Supplement, the
Company intends to use the net proceeds of any sale of Securities for general
corporate purposes including, without limitation, at its option, the repayment
of debt.
RISK FACTORS
The following risk factors should be considered carefully in addition to
the other information contained in this Prospectus before purchasing the
Securities offered hereby. The statements contained in this Prospectus that are
not purely historical are "forward-looking statements" within the meaning of
Section 27A of the Securities Exchange Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Such forward-looking statements include, but
are not limited to, statements regarding the Company's expectations,
anticipations, hopes, beliefs, intentions or strategies regarding the future. It
is important to note that actual results could differ materially from those
projected in any forward-looking statements as a result of a number of factors,
including those detailed below as well as those set forth elsewhere in this
Prospectus and from time to time in the Company's Reports on Form 10-K, 10-Q,
8-K and Annual Reports to Shareholders. The forward-looking statements are made
as of the date hereof and the Company assumes no obligation to update the
forward-looking statements, or to update the reasons why actual results could
differ materially from those projected in the forward-looking statements.
VOLATILITY OF THE SEMICONDUCTOR MARKET
The Company's business depends predominantly on capital expenditures of
semiconductor manufacturers, which, in turn, depend on the current and
anticipated market demand for integrated circuits and products utilizing
integrated circuits. The semiconductor industry has historically been very
cyclical and has experienced periodic downturns, which have had a material
adverse effect on the semiconductor industry's demand for semiconductor
processing equipment, including equipment manufactured and marketed by the
Company. No assurance can be given that the Company's net sales and operating
results will not be adversely affected if downturns or slowdowns in the rate of
capital investment in the semiconductor industry occur in the future. In
addition, the semiconductor equipment industry is highly competitive, and
subject to rapid change and new products and enhancements.
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VARIABILITY OF QUARTERLY OPERATING RESULTS
The Company has experienced and expects to continue to experience
significant fluctuations in its quarterly operating results. During each
quarter, the Company customarily sells a relatively small number of systems that
typically sell for prices in excess of $1 million. The Company's backlog at the
beginning of each quarter does not necessarily include all system sales needed
to achieve expected net sales for that quarter. Consequently, the Company will
often be dependent on obtaining orders for shipment in the same quarter that the
order is received. Because the Company builds its systems according to forecast,
the absence of significant backlog for an extended period of time could hinder
the Company's ability to plan production and inventory levels, which could
adversely affect operating results. The Company's net sales and operating
results could also be adversely affected for a particular quarter if an
anticipated order for even a few systems is not received in time to permit
shipment during that quarter. Moreover, customers may reschedule or cancel
shipments, with, in the case of cancellations, little or no penalties, and
production difficulties could delay shipments. A delay in a shipment in any
quarter, due, for example, to an unanticipated shipment rescheduling, to
cancellations by customers or to unexpected manufacturing difficulties
experienced by the Company, may cause net sales in such quarter to fall
significantly below the Company's expectations and may thus materially adversely
affect the Company's operating results for such quarter. The timing of new
product announcements and releases by the Company may also contribute to
fluctuations in quarterly operating results, particularly in cases where new
product offerings cause customers to defer ordering products from the Company's
existing product lines. The Company's results of operations also could be
affected by new product announcements and releases by the Company's competitors,
the volume, mix and timing of orders received during a period, availability and
pricing of key components, fluctuations in foreign exchange rates, and
conditions in the semiconductor equipment industry. The Company's operating
results also fluctuate based on gross profit realized on system sales. Gross
profit as a percentage of net sales may vary based on a variety of factors,
including the mix and average selling prices of products sold and costs to
manufacture upgrades and to customize systems. Because the Company's operating
expenses are based on anticipated net sales levels, and a high percentage of
those expenses are relatively fixed, a variation in the timing of recognition of
net sales and the level of gross profit from a single transaction can cause
material variations in operating results from quarter to quarter.
HIGHLY COMPETITIVE INDUSTRY
The semiconductor equipment industry is highly competitive. The Company
faces substantial competition in the markets in which it competes from both
established competitors and potential new entrants. In the CVD and PVD markets,
the Company's principal competitor is Applied Materials, Inc., which is a major
supplier of CVD and PVD systems that has established a substantial base of CVD,
PVD and other equipment in large semiconductor manufacturers. Certain of the
Company's competitors have greater financial, marketing, technical or other
resources, broader product lines, greater customer service capabilities and
larger and more established sales organizations and customer bases than the
Company. The Company may also face future competition from new market entrants
from overseas and domestic sources. The Company expects its competitors to
continue to improve the design and performance of their products. There can be
no assurance that the Company's competitors will not develop enhancements to or
future generations of competitive products that will offer superior price or
performance features, and there can be no assurance that the Company will be
successful, or as successful as its competitors, in selecting, developing,
manufacturing, and marketing its new products, or enhancing its existing
products. Failure to successfully develop new products could materially
adversely affect the Company's business, financial condition, and results of
operations. In addition, a substantial investment is required by customers to
install and integrate capital equipment into a semiconductor production line. As
a result, once a semiconductor manufacturer has selected a particular vendor's
capital equipment, the Company believes that the manufacturer will be generally
reliant upon that equipment for the specific production line application.
Accordingly, the Company may experience difficulty in selling a product to a
particular customer for a significant period of time if that customer selects a
competitor's product. Increased competitive pressure could lead to lower prices
for the Company's products, thereby adversely affecting the Company's operating
results. There can be no assurance that the Company will be able to compete
successfully in the future.
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PRODUCT CONCENTRATION
The Company's deposition products are almost exclusively targeted for
the CVD and PVD markets. Substantially all of the Company's net sales to date
have been attributable to sales of the Company's Concept One and Concept Two
product lines, and optional upgrades to these systems. Should the demand for, or
pricing of, these product lines decline, due to the introduction of superior
systems by competitors, changes in the semiconductor industry or other factors,
the Company's results of operations would be materially adversely affected. The
ability of the Company to diversify its operations through the addition of new
process capabilities to the existing systems or through the introduction and
sale of new products is dependent on the success of the Company's continuing
research and development activities, as well as its marketing efforts. No
assurance can be given that the Company will be able to develop or acquire,
introduce or market new products in a timely or cost-effective manner or that
any new products or improvements will achieve sustained market acceptance.
CUSTOMER CONCENTRATION AND LENGTHY SALES CYCLES
Historically, the Company has sold a significant proportion of its
systems in any particular period to a limited number of customers. Sales to the
Company's ten largest customers in 1997, 1996 and 1995 accounted for
approximately 53%, 59% and 58% of net sales, respectively. The Company expects
that sales of its products to relatively few customers will continue to account
for a high percentage of its net sales in the foreseeable future. None of the
Company's customers has entered into a long-term agreement requiring it to
purchase the Company's products. The Company believes that sales to certain of
its customers will decrease in the near future as those customers complete
current purchasing requirements for new or expanded fabrication facilities. The
composition of the group comprising the Company's largest customers has varied
from year to year. The loss of a significant customer or any reduction
in orders from any significant customer, including reductions due to customer
departures from recent buying patterns, market, economic or competitive
conditions in the semiconductor industry or in the industries that manufacture
products utilizing integrated circuits, could adversely affect the Company's
business, financial condition and results of operations. In addition, sales of
the Company's systems depend, in significant part, upon the decision of a
prospective customer to increase manufacturing capacity or to expand current
manufacturing capacity, both of which typically involve a significant capital
commitment. The Company has from time to time experienced delays in finalizing
system sales following initial system qualification. Due to these and other
factors, the Company's systems typically have a lengthy sales cycle during which
the Company may expend substantial funds and management effort.
RAPID TECHNOLOGICAL CHANGE; IMPORTANCE OF TIMELY PRODUCT INTRODUCTION
The semiconductor manufacturing industry is subject to rapid
technological change and new product introductions and enhancements. The
Company's ability to remain competitive in this market will depend in part upon
its ability to develop new and enhanced systems and to introduce these systems
at competitive prices and on a timely and cost-effective basis. The success of
the Company in developing, introducing and selling new and enhanced systems
depends upon a variety of factors, including product selection, timely and
efficient completion of product design and development, timely and efficient
implementation of manufacturing and assembly processes, product performance in
the field and effective sales and marketing. There can be no assurance that the
Company will be successful in selecting, developing, manufacturing and marketing
new products or in enhancing its existing products. As is typical in the
semiconductor capital equipment market, the Company has experienced delays from
time to time in the introduction of, and certain technical and manufacturing
difficulties with, certain of its systems and enhancements and may experience
delays and technical and manufacturing difficulties in future introductions or
volume production of new systems or enhancements. The Company's inability to
complete the development or meet the technical specifications of any of its new
systems or enhancements or to manufacture and ship these systems or enhancements
in volume in a timely manner would materially adversely affect the Company's
business, financial condition and results of operations, as well as its
relationships with customers. In addition, the Company may incur substantial
unanticipated costs to ensure the functionality and reliability of its future
product introductions early in the product's life cycle. If new products have
reliability or quality problems, reduced orders or higher manufacturing costs,
delays in collecting accounts receivable and additional service and warranty
expense may
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result. Any of such events could materially adversely affect the Company's
business, financial condition and results of operations.
PATENTS AND PROPRIETARY RIGHTS
The Company intends to continue to pursue the legal protection of its
technology primarily through patent and trade secret protection. The Company
currently holds over 100 patents, and intends to file additional patent
applications as appropriate. There can be no assurance that patents will issue
from any of these pending applications or that any claims allowed from existing
or pending patents will be sufficiently broad to protect the Company's
technology. While the Company intends to protect its intellectual property
rights vigorously, there can be no assurance that any patents held by the
Company will not be challenged, invalidated or circumvented, or that the rights
granted thereunder will provide competitive advantages to the Company. The
Company also relies on trade secrets and proprietary technology that it seeks to
protect, in part, through confidentiality agreements with employees, consultants
and other parties. There can be no assurance that these agreements will not be
breached, that the Company will have adequate remedies for any breach, or that
the Company's trade secrets will not otherwise become known to or independently
developed by others.
There has also been substantial litigation regarding patent and other
intellectual property rights in semiconductor related industries. The Company is
currently involved in such litigation (See "-- Pending Litigation"), and,
although it is not aware of any infringement by its products of any patent or
proprietary rights of others, it could become involved in additional litigation
in the future. Although the Company does not believe the outcome of the current
litigation will have a material impact on the Company's financial condition or
results of operations, no assurances can be given that this litigation or future
litigation will not have such an impact. In addition to the current litigation,
further commercialization of the Company's products could provoke additional
claims of infringement from third parties. In the future, litigation may be
necessary to enforce patents issued to the Company, to protect trade secrets or
know-how owned by the Company or to defend the Company against claimed
infringement of the rights of others and to determine the scope and validity of
the proprietary rights of others. Any such litigation could result in
substantial cost and diversion of effort by the Company, which by itself could
have a material adverse effect on the Company's financial condition and
operating results. Further, adverse determinations in such litigation could
result in the Company's loss of proprietary rights, subject the Company to
significant liabilities to third parties, require the Company to seek licenses
from third parties or prevent the Company from manufacturing or selling its
products, any of which could have a material adverse effect on the Company's
financial condition and results of operations.
DEPENDENCE ON LIMITED SOURCE SUPPLIERS
Certain of the components and subassemblies included in the Concept
One-Dielectric, Concept One-W and Concept Two are obtained from a limited group
of suppliers. Although the Company seeks to reduce its dependence on these
limited source suppliers, disruption or termination of certain of these sources
could occur and such disruptions could have at least a temporary adverse effect
on the Company's operations. Moreover, a prolonged inability to obtain certain
components could have a material adverse effect on the Company's business and
results of operations and could result in damage to customer relationships.
RISKS ASSOCIATED WITH INTERNATIONAL SALES
Export sales accounted for approximately 47%, 64%, and 56% of net sales
in 1997, 1996, and 1995, respectively. The Company anticipates that export sales
will account for a significant portion of net sales in the foreseeable future.
As a result, a significant portion of the Company's sales will be subject to
certain risks, including tariffs and other barriers, difficulties in staffing
and managing foreign subsidiary operations, difficulties in managing
distributors, potentially adverse tax consequences, and the possibility of
difficulty in accounts receivable collection. The Company is also subject to the
risks associated with the imposition of legislation and regulations relating to
the import or export of semiconductor products. The Company cannot predict
whether quotas, duties, taxes, or other charges or restrictions will be
implemented by the United States or any other country upon the importation or
exportation of the Company's products in the future. There can be no assurance
that any of these
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factors or the adoption of restrictive policies will not have a material adverse
effect on the Company's business, financial condition or results of operations.
Moreover, each region in the global semiconductor equipment market exhibits
unique characteristics that can cause capital equipment investment patterns to
vary significantly from period to period. Although international markets provide
the Company with significant growth opportunities, periodic economic downturns,
trade balance issues, political instability and fluctuations in interest and
foreign currency exchange rates are all risks that could affect global products
and service demand. Many Pacific Rim countries are currently experiencing
banking and currency difficulties that could lead to economic recession in those
countries. Specifically, the decline in value of the Korean currency, together
with difficulties obtaining credit, could result in a decline in the purchasing
power of the Company's Korean customers. This in turn could result in the
cancellation or delay of orders for the Company's products from Korean
customers, thus adversely affecting the Company's business, financial condition
or results of operations. In addition, if Japan's economy weakens further,
investments by Japanese customers may be negatively affected and it is possible
that economic recovery in other Pacific Rim countries could be delayed.
In addition to the concerns described above, sales of systems shipped by
the Company's Japanese subsidiary are denominated in Japanese Yen. The Company
sells the systems to its Japanese subsidiary in U.S. Dollars. It then enters
into forward foreign exchange contracts to hedge against the short-term impact
of foreign currency fluctuations of intercompany accounts payable denominated in
U.S. Dollars recorded by the Japanese subsidiary in order to manage this
exposure. However, there can be no assurance that future changes in the Japanese
Yen will not have a material effect on the Company's business, financial
condition or results of operations.
DEPENDENCE ON KEY PERSONNEL AND MANAGEMENT OF GROWTH
The Company's success depends to a significant extent upon a limited
number of key employees and other members of senior management of the Company.
The loss of the service of one or more of these key employees could have a
material adverse effect on the Company. Although the Company has recently
experienced significant growth in net sales, there can be no assurance that the
Company will be able to continue to maintain or increase the level of net sales
in future periods. This growth has placed, and is expected to continue to place,
a significant strain on the Company's management and operations. The success of
the Company's future operations depends in large part on the Company's ability
to recruit and retain engineers and technicians, as well as marketing, sales,
service and other key personnel, who in each case are in great demand. There can
be no assurance that the Company will be successful in retaining or recruiting
key personnel. The Company's inability to effectively manage growth, should it
occur, or to attract and retain the personnel it requires, could have a material
adverse effect on the Company's results of operations.
POSSIBLE VOLATILITY OF STOCK PRICE
The stock price of the Securities may be subject to wide fluctuations
and possible rapid increases or declines in a short time period. These
fluctuations may be due to factors specific to the Company such as variations in
quarterly operating results or changes in analysts' earnings estimates, or to
factors relating to the semiconductor industry or to the securities markets in
general, which, in recent years, have experienced significant price
fluctuations. These fluctuations often have been unrelated to the operating
performance of the specific companies whose stocks are traded. Investors in the
Securities should be willing to incur the risk of such fluctuations. Sales of
substantial amounts of Securities in the public market after any offering of
Securities could adversely affect the market price of outstanding Securities.
PENDING LITIGATION
Applied Materials, Inc. vs. Varian Associates Inc. (Case No. C-97-20523
RMW) and Novellus Systems, Inc. v. Applied Materials, Inc. (Case No. C-97-20551
RMW).
On June 7, 1997, prior to the consummation of the purchase of the Thin
Film Systems Business ("TFS") of Varian Associates ("Varian"), Applied
Materials, Inc. ("Applied") filed a complaint (the "Applied Complaint") against
Varian in the United States District Court for the Northern District of
California San Jose Division, Civil
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Action No. C-97-20523 RMW, alleging, among other things, infringement by Varian
(including the making, using, selling and/or offering for sale of certain
products and systems made by TFS) of United States Patent Nos. 5,171,412,
5,186,718, 5,496,455 and 5,540,821 (the "Applied Patents"), which patents are
owned by Applied.
Immediately after consummation of the TFS purchase, the Company filed a
complaint (the "Company Complaint") against Applied in the same Court, Civil
Action No. C-97-20551 RMW, alleging infringement by Applied (including the
making, using, selling and/or offering for sale of certain products and systems)
of the United States Patent Nos. 5,314,597, 5,330,628, and 5,635,036 (the
"Company Patents"), which patents the Company acquired from Varian in the TFS
purchase. In the Company Complaint, the Company also alleged that it is entitled
to declarations from Applied that the Company does not infringe the Applied
Patents and/or that the Applied Patents are invalid and/or unenforceable.
Applied has filed counterclaims alleging that the Company infringes the Applied
Patents.
Also after consummation of the TFS purchase, but some time after the
Company filed the Company Complaint, Applied amended the Applied Complaint to
add the Company as a defendant. The Company has requested that the Court dismiss
the Company as a defendant in Applied's lawsuit against Varian. The Court has
not yet required the Company to file an answer to the Applied Complaint.
In addition to a request for a permanent injunction against further
infringement, the Applied Complaint and Applied's counterclaims to the Company
Complaint include requests for damages for alleged prior infringement and treble
damages for alleged "willful" infringement. In connection with the consummation
of the TFS purchase, Varian agreed, under certain circumstances, to reimburse
the Company for certain of its legal and other expenses in connection with the
defense and prosecution of this litigation, and to indemnify the Company for a
portion of any losses incurred by the Company arising from this litigation
(including losses resulting from a permanent injunction). The Company and Varian
believe that there are meritorious defenses to Applied's allegations, including
among other things, that the Company's operations (including TFS products and
systems) do not infringe the Applied Patents and/or that the Applied Patents are
invalid and/or unenforceable. However, the resolution of intellectual property
disputes is often fact intensive and, therefore, inherently uncertain. Although
the Company believes that the ultimate outcome of the dispute with Applied will
not have a material adverse effect on the Company's business or results of
operations (taking into account both the defenses available to the Company and
Varian's reimbursement and indemnity obligations), there can be no assurances
that Applied will not ultimately prevail in this dispute and that, in such an
event, Varian's reimbursement and indemnity obligations will not be sufficient
to fully reimburse the Company for its losses.
The Company Complaint against Applied also includes requests for damages
for prior infringement and treble damages for "willful" infringement, in
addition to a request for a permanent injunction for further infringement.
Although the Company believes that it will prevail against Applied, there can be
no assurances that the Company will prevail in its litigation against Applied.
Other Litigation
In addition, in the normal course of business, the Company from time to
time receives inquiries with regard to possible other patent infringements. The
Company believes it is unlikely that the outcome of the patent infringement
inquiries will have a material adverse effect on the Company's financial
position or results of operations.
There has been substantial litigation regarding patent and other
intellectual property rights in semiconductor-related industries. Although the
Company is not aware of any infringement by its products of any patents or
proprietary rights of others except as claimed by Applied, further
commercialization of the Company's products could provoke claims of infringement
from third parties. In the future, litigation may be necessary to enforce
patents issued to the Company, to protect trade secrets or know-how owned by the
Company or to defend the Company against claimed infringement of the rights of
others and to determine the scope and validity of the proprietary rights of
others. Any such litigation could result in substantial cost and diversion of
effort by the Company, which by itself could have a material adverse effect on
the Company's financial condition and operating
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results. Further, adverse determinations in such litigation could result in the
Company's loss of proprietary rights, subject the Company to significant
liabilities to third parties, require the Company to seek licenses from third
parties or prevent the Company from manufacturing or selling its products, any
of which could have a material adverse effect on the Company's financial
condition and results of operations.
CONCENTRATION OF CREDIT RISK
The Company uses financial instruments that potentially subject it to
concentrations of credit risk. Such instruments include cash equivalents,
short-term investments, accounts receivable, and financial instruments used in
hedging activities. The Company invests its cash in cash deposits, money market
funds, commercial paper, certificates of deposit, readily marketable debt
securities, or medium term notes. The Company places its investments with
high-credit-quality financial institutions and limits the credit exposure from
any one financial institution or instrument. To date, the Company has not
experienced material losses on these investments. The Company performs ongoing
credit evaluations of its customers' financial condition and generally requires
no collateral. The Company has an exposure to nonperformance by counterparties
on the foreign exchange contracts used in hedging activities. These
counterparties are large international financial institutions and to date, no
such counterparty has failed to meet its financial obligations to the Company.
The Company does not believe there is a significant risk of nonperformance by
these counterparties because the Company continuously monitors its positions
and the credit ratings of such counterparties and the amount and contracts it
enters into with any one party. However, there can be no assurance that there
will not be significant nonperformance by these counterparties and that this
would not materially adversely affect the Company's business, financial
condition and results of operations.
YEAR 2000 COMPLIANCE
The Company is aware of the issues associated with the programming code
in existing computer systems as the millennium (year 2000) approaches. The "year
2000" problem is pervasive and complex as virtually every computer operation
will be affected in some way by the rollover of the two digit year value to 00.
The concern is whether computer systems will properly recognize date sensitive
information when the year changes to 2000. Systems that do not properly
recognize such information could generate erroneous data or cause a system to
fail. The Company is currently utilizing both internal and external resources to
correct or reprogram, and test the systems it owns or operates for the year 2000
problems. To date, the Company has had communications with its customers that
plans are being developed to address the issues as it pertains to its own
products. In addition, the Company believes it has identified all internal
information systems that require updates to be year 2000 compliant, and has
commenced a program to upgrade its current internal information system. Having
completed the first stage of the upgrade for most of the Company in 1997, the
Company is now preparing to upgrade its internal information system to the year
2000 compatible release as it becomes available from the vendor. Management
estimates that the remaining Company's year 2000 compliance expense will be
approximately $3.0 million. The Company does not anticipate that there is a
significant issue as it pertains to its vendors, due to the Company's strategy
of ensuring that it has alternate vendors for key components. The Company
expects its year 2000 date conversion project, with respect to its own systems,
to be completed on a timely basis. However, there can be no assurance that the
systems of other companies on which the Company's systems and business rely also
will be timely converted or that any such failure to convert by another company
would not have a material adverse effect on the Company's business, financial
condition or results of operations. In addition, there can be no assurance that
the Company will be successful in addressing the year 2000 issues as they
pertain to its own products and its own internal information systems, and that
failure to do so would not have a material adverse effect on the Company's
business, financial condition or results of operations.
DESCRIPTION OF SECURITIES
The authorized capital stock of the Company consists of 80,000,000
shares of Common Stock, no par value, and 10,000,000 shares of Preferred Stock,
no par value.
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COMMON STOCK
As of February 27, 1998, there were 33,824,931 shares of Common Stock
outstanding, held of record by approximately 765 shareholders. The holders of
Common Stock are entitled to one vote per share on all matters to be voted upon
by the shareholders, except that upon giving the legally required notice,
shareholders may cumulate their votes in the election of directors. Subject to
preferences that may be applicable to any outstanding Preferred Stock, the
holders of Common Stock are entitled to receive ratably such dividends, if any,
as may be declared from time to time by the Board of Directors out of funds
legally available therefor. In the event of a liquidation, dissolution or
winding up of the Company, the holders of Common Stock are entitled to share
ratably in assets remaining after payment of liabilities, subject to prior
distribution rights of Preferred Stock, if any, then outstanding. The Common
Stock has no preemptive or conversion rights or other subscription right. There
are no redemption or sinking fund provisions applicable to the Common Stock. All
outstanding shares of Common Stock are fully paid and non-assessable, and the
shares of Common Stock to be issued upon completion of any offering will be
fully paid and non-assessable.
PREFERRED STOCK
Under the Company's Restated Articles of Incorporation, as amended, the
Company's Board of Directors may direct the issuance of up to 10,000,000 shares
of Preferred Stock in one or more series and with rights, preferences,
privileges and restrictions, including dividend rights, voting rights,
conversion rights, terms of redemption and liquidation preferences, that may be
fixed or designated by the Board of Directors without any further vote or action
by Novellus' shareholders. The issuance of Preferred Stock may have the effect
of delaying, deferring or preventing a change in control of Novellus. Preferred
Stock, upon issuance against full payment of the purchase price therefor, will
be fully paid and nonassessable. The specific terms of a particular series of
Preferred Stock will be described in the Prospectus Supplement relating to that
series. The description of Preferred Stock set forth below and the description
of the terms of a particular series of Preferred Stock set forth in a Prospectus
Supplement do not purport to be complete and are qualified in their entirety by
reference to the provisions in the provisions of the amendment to the Company's
Restated Articles of Incorporation relating to that series. The applicable
Prospectus Supplement will contain a description of certain United States
Federal income tax consequences relating to the purchase and ownership of the
series of Preferred Stock described in such Prospectus Supplement.
The rights, preferences, privileges and restrictions of the Preferred
Stock of each series will be fixed in the provisions in the amendment to the
Company's Restated Articles of Incorporation relating to such series. A
Prospectus Supplement, relating to each series, will specify the terms of the
Preferred Stock as follows:
(a) The maximum number of shares to constitute the series and the
distinctive designation thereof;
(b) The annual dividend rate, if any, on shares of the series,
whether such rate is fixed or variable or both, the date or dates
from which dividends will begin to accrue or accumulate and
whether dividends will be cumulative;
(c) The price at and the terms and conditions on which the shares of
the series may be redeemed, including the time during which
shares of the series may be redeemed and any accumulated
dividends thereon that the holders of shares of the series shall
be entitled to receive upon the redemption thereof;
(d) The liquidation preference, if any, and any accumulated dividends
thereon, that the holders of shares of the series shall be
entitled to receive upon the liquidation, dissolution or winding
up of the affairs of Novellus;
(e) Whether or not the shares of the series will be subject to
operation of a retirement or sinking fund, and, if so, the extent
and manner in which any such fund shall be applied to the
purchase or
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redemption of the shares of the series for retirement or for
other corporate purposes, and the terms and provisions relating
to the operation of such fund;
(f) The terms and conditions, if any, on which the shares of the
series shall be convertible into, or exchangeable for, shares of
any other class or classes of capital stock of Novellus or any
series of any other class or classes, or of any other series of
the same class, including the price or prices or the rate or
rates of conversion or exchange and the method, if any, of
adjusting the same;
(g) The voting rights, if any, on the shares of the series; and
(h) Any or all other preferences and relative, participating,
operational or other special rights or qualifications,
limitations or restrictions thereof.
DEPOSITARY SHARES
The description set forth below and in any Prospectus Supplement of
certain provisions of the Deposit Agreement (as defined below) and of the
Depositary Shares and Depositary Receipts does not purport to be complete and is
subject to and qualified in its entirety by reference to the forms of Deposit
Agreement and Depositary Receipts relating to each series of the Preferred Stock
which have been or will be filed with the Commission in connection with the
offering of such series of the Preferred Stock.
General
Novellus may, at its option, elect to offer fractional interests in
shares of Preferred Stock, rather than shares of Preferred Stock. In the event
such option is exercised, Novellus will provide for the issuance by a Depositary
to the public of receipts for Depositary Shares, each of which will represent a
fractional interest as set forth in the Prospectus Supplement relating to a
particular series of the Preferred Stock.
The shares of any series of the Preferred Stock underlying the
Depositary Shares will be deposited pursuant to an agreement (the "Deposit
Agreement") between Novellus and a bank or trust company with its principal
office in the United States (the "Depositary"). The Prospectus Supplement
relating to a series of Depositary Shares shall contain the name and address of
the Depositary. Subject to the terms of the Deposit Agreement, each owner of a
Depositary Share will be entitled, in proportion to the applicable fractional
interest in a share of Preferred Stock underlying such Depositary Shares, to all
the rights and preferences of the Preferred Stock underlying such Depositary
Shares (including dividend, voting, redemption, conversion and liquidation
rights). The Depositary Shares will be evidenced by Depositary Receipts issued
pursuant to the Deposit Agreement.
Pending the preparation of definitive engraved Depositary Receipts, the
Depositary may, upon the written order of Novellus, issue temporary Depositary
Receipts substantially identical to (and entitling the holders thereof to all
the rights pertaining to) the definitive Depositary Receipts but not in
definitive form. Definitive Depositary Receipts will be prepared thereafter
without unreasonable delay, and temporary Depositary Receipts will be
exchangeable for definitive Depositary Receipts at Novellus' expense.
Upon surrender of Depositary Receipts at the office of the Depositary
and upon payment of the charges provided in the Deposit Agreement and subject to
the terms thereof, a holder of Depositary Shares is entitled to have the
Depositary deliver to such holder the whole shares of Preferred Stock underlying
the Depositary Shares evidenced by the surrendered Depositary Receipts.
Dividends and Other Distributions
The Depositary will distribute all cash dividends or other cash
distributions received in respect of the Preferred Stock to the record holders
of Depositary Shares relating to such Preferred Stock in proportion to the
numbers of such Depositary Shares owned by such holders on the relevant record
date. The Depositary shall distribute only such amount, however, as can be
distributed without attributing to any holder of Depositary Shares a
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fraction of one cent, and any balance not so distributed shall be added to and
treated as part of the next sum received by the Depositary for distribution to
record holders of Depositary Shares.
In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of Depositary Shares
entitled thereto, unless the Depositary determines that it is not feasible to
make such distribution, in which case the Depositary may, with the approval of
Novellus, sell such property and distribute the net proceeds from such sale to
such holders.
Redemption of Depositary Shares
If a series of the Preferred Stock underlying the Depositary Shares is
subject to redemption, the Depositary Shares will be redeemed from the proceeds
received by the Depositary resulting from the redemption, in whole or in part,
of such series of the Preferred Stock held by the Depositary. The Depositary
shall mail notice of redemption not less than 30 and not more than 60 days prior
to the date fixed for redemption to the record holders of the Depositary Shares
to be so redeemed at their respective addresses appearing in the Depositary's
books. The redemption price per Depositary Share will be equal to the applicable
fraction of the redemption price per share payable with respect to such series
of the Preferred Stock. Whenever Novellus redeems shares of Preferred Stock held
by the Depositary, the Depositary will redeem as of the same redemption date the
number of Depositary Shares relating to shares of Preferred Stock so redeemed.
If less than all of the Depositary Shares are to be redeemed, the Depositary
Shares to be redeemed will be selected by lot or pro rata as may be determined
by the Depositary.
After the date fixed for redemption, the Depositary Shares so called for
redemption will no longer be deemed to be outstanding and all rights of the
holders of the Depositary Shares will cease, except the right to receive the
moneys payable upon such redemption and any money or other property to which the
holders of such Depositary Shares were entitled upon such redemption upon
surrender to the Depositary of the Depositary Receipts evidencing such
Depositary Shares.
Voting the Preferred Stock
Upon receipt of notice of any meeting at which the holders of the
Preferred Stock are entitled to vote, the Depositary will mail the information
contained in such notice of meeting to the record holders of the Depositary
Shares relating to such Preferred Stock. Each record holder of such Depositary
Shares on the record date (which will be the same date as the record date for
the Preferred Stock) will be entitled to instruct the Depositary as to the
exercise of the voting rights pertaining to the number of shares of Preferred
Stock underlying such holder's Depositary Shares. The Depositary will endeavor,
insofar as practicable, to vote the number of shares of Preferred Stock
underlying such Depositary Shares in accordance with such instructions, and
Novellus will agree to take all action which may be deemed necessary by the
Depositary in order to enable the Depositary to do so. The Depositary will
abstain from voting shares of Preferred Stock to the extent it does not receive
specific instructions from the holders of Depositary Shares relating to such
Preferred Stock.
Amendment and Termination of the Deposit Agreement
The form of Depositary Receipt evidencing the Depositary Shares and any
provision of the Deposit Agreement may at any time be amended by agreement
between Novellus and the Depositary. However, any amendment which materially and
adversely alters the rights of the existing holders of Depositary Shares will
not be effective unless such amendment has been approved by the record holders
of at least a majority of the Depositary Shares then outstanding. A Deposit
Agreement may be terminated by Novellus or the Depositary only if (1) all
outstanding Depositary Shares relating thereto have been redeemed or (2) there
has been a final distribution in respect of the Preferred Stock of the relevant
series in connection with any liquidation, dissolution or winding up of Novellus
and such distribution has been distributed to the holders of the related
Depositary Shares.
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Charges of Depositary
Novellus will pay all transfer and other taxes and governmental charges
arising solely from the existence of the depositary arrangements. Novellus will
pay charges of the Depositary in connection with the initial deposit of the
Preferred Stock and any redemption of the Preferred Stock. Holders of Depositary
Shares will pay transfer and other taxes and governmental charges and such other
charges as are expressly provided in the Deposit Agreement to be for their
accounts.
Miscellaneous
The Depositary will forward to the holders of Depositary Shares all
reports and communications from Novellus which are delivered to the Depositary
and which Novellus is required to furnish to the holders of the Preferred Stock.
Neither the Depositary nor Novellus will be liable if it is prevented or
delayed by law or any circumstance beyond its control in performing its
obligations under the Deposit Agreement. The obligations of Novellus and the
Depositary under the Deposit Agreement will be limited to performance in good
faith of their duties thereunder and they will not be obligated to prosecute or
defend any legal proceeding in respect of any Depositary Shares or Preferred
Stock unless satisfactory indemnity is furnished. They may rely upon written
advice of counsel or accountants, or information provided by persons presenting
Preferred Stock for deposit, holders of Depositary Shares or other persons
believed to be competent and on documents believed to be genuine.
Resignation and Removal of Depositary
The Depositary may resign at any time by delivering to Novellus notice
of its election to do so, and Novellus may at any time remove the Depositary,
any such resignation or removal to take effect upon the appointment of a
successor Depositary and its acceptance of such appointment. Such successor
Depositary must be appointed within 90 days after delivery of the notice of
resignation or removal and must be a bank or trust company having its principal
office in the United States.
WARRANTS
The Company may issue Warrants for the purchase of Preferred Stock or
Common Stock. The following statements with respect to the Warrants are
summaries of, and subject to, the detailed provisions of a warrant agreement
("Stock Warrant Agreement") to be entered into by Novellus and a warrant agent
to be selected at the time of issue (the "Stock Warrant Agent").
General
The Warrants, evidenced by warrant certificates (the "Stock Warrant
Certificates"), may be issued under the Stock Warrant Agreement independently or
together with any Securities offered by any Prospectus Supplement and may be
attached to or separate from such Securities. If Warrants are offered, the
Prospectus Supplement will describe the terms of the Warrants. including the
following: (1) the offering price, if any, (2) the designation and terms of the
Common or Preferred Stock purchasable upon exercise of the Warrants; (3) the
number of shares of Common or Preferred Stock purchasable upon exercise of one
Warrant and the initial price at which such shares may be purchased upon
exercise; (4) the date on which the right to exercise the Warrants shall
commence and the date on which such right shall expire; (5) Federal income tax
consequences; (6) call provisions, if any; (7) the currency, currencies or
currency units in which the offering price, if any, and exercise price are
payable; (8) the antidilution provisions of the Warrants; and (9) any other
terms of the Warrants. The shares of Common Stock or Preferred Stock issuable
upon exercise of the Warrants will, when issued in accordance with the Stock
Warrant Agent, be fully paid and nonassessable.
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Exercise of Warrants
Warrants may be exercised by surrendering to the Stock Warrant Agent the
Stock Warrant Certificate signed by the warrantholder, or its duly authorized
agent indicating the warrantholder's election to exercise all or a portion of
the Warrants evidenced by the certificate. Surrendered Warrants shall be
accompanied by payment of the aggregate exercise price of the Warrants to be
exercised, as set forth in the Prospectus Supplement, which payment may be made
in the form of cash or a check equal to the exercise price. Certificates
evidencing duly exercised Warrants will be delivered by the Stock Warrant Agent
to the transfer agent for the Common Stock. Upon receipt thereof, the transfer
agent shall deliver or cause to be delivered, to or upon the written order of
the exercising warrantholder, a certificate representing the number of shares of
Common Stock purchased. If fewer than all of the Warrants evidenced by any
certificate are exercised, the Stock Warrant Agent shall deliver to the
exercising warrantholder a new Warrant certificate representing the unexercised
Warrants.
Antidilution Provisions
The exercise price payable and the number of shares of Common Stock or
Preferred Stock purchasable upon the exercise of each Warrant will be subject to
adjustment in certain events, including the issuance of a stock dividend to
holders of Common Stock or Preferred Stock, respectively, or a combination,
subdivision or reclassification of Common Stock or Preferred Stock,
respectively. In lieu of adjusting the number of shares of Common Stock or
Preferred Stock purchasable upon exercise of each Warrant, Novellus may elect to
adjust the number of Warrants. No adjustment in the number of shares purchasable
upon exercise of the Warrants will be required until cumulative adjustments
require an adjustment of at least 1% thereof. Novellus may, at its option,
reduce the exercise price at any time. No fractional shares will be issued upon
exercise of Warrants, but Novellus will pay the cash value of any fractional
shares otherwise issuable. Notwithstanding the foregoing, in case of any
consolidation, merger, or sale or conveyance of the property of Novellus as an
entirety or substantially as an entirety, the holder of each outstanding Warrant
shall have the right to the kind and amount of shares of stock and other
securities and property (including cash) receivable by a holder of the number of
shares of Common or Preferred Stock into which such Warrants were exercisable
immediately prior thereto.
No Rights as Stockholders
Holders of Warrants will not be entitled, by virtue of being such
holders, to vote, to consent. to receive dividends, to receive notice as
stockholders with respect to any meeting of stockholders for the election of
directors of Novellus or any other matter, or to exercise any rights whatsoever
as stockholders of Novellus.
DEBT SECURITIES
General
Novellus may offer under this Prospectus Senior Debt Securities (as
defined below) or Subordinated Debt Securities (as defined below) or any
combination of the foregoing. The Debt Securities offered hereby will represent
unsecured general obligations of Novellus, and will either (1) rank prior to all
subordinated indebtedness of Novellus and pari passu with all other indebtedness
of Novellus outstanding on the date of the Prospectus Supplement relating to
such Debt Securities (the "Senior Debt Securities") or (2) be subordinate in
right of payment to certain other debt obligations of Novellus outstanding on
the date of the Prospectus Supplement (the "Subordinated Debt Securities"). The
Senior Debt Securities and the Subordinated Debt Securities will each be issued
under indentures. In this Prospectus, any indenture relating to Senior Debt
Securities is referred to as a "Senior Indenture," any indenture relating to
Subordinated Debt Securities is referred to as a "Subordinated Indenture" and
the Senior Indenture and the Subordinated Indenture are collectively referred to
as "Indentures." The following summary of certain Provisions that will be
contained in the Indentures, if any Debt Securities are issued, does not purport
to be complete and is qualified in its entirety by reference to the applicable
Indenture and the applicable Prospectus Supplement.
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None of the Indentures will limit the amount of Debt Securities that may
be issued thereunder, and each Indenture will provide that Debt Securities may
be issued thereunder up to an aggregate principal amount authorized from time to
time by Novellus and may be payable in any currency or currency unit designated
by Novellus or in amounts determined by reference to an index. Reference is made
to the Prospectus Supplement for the following terms and other information to
the extent applicable with respect to the Debt Securities being offered thereby:
(1) the designation, aggregate principal amount. authorized denominations and
priority of such Debt Securities; (2) the percentage of the principal amount at
which such Debt Securities will be issued; (3) the currency, currencies or
currency units in which, or index with respect to which, the principal of, and
any interest on, such Debt Securities may be payable; (4) the date on which such
Debt Securities will mature; (5) the rate per annum at which such Debt
Securities will bear if any, or the method of determination of such rate; (6)
the dates from and on which such interest, it any, will accrue and be payable
and the designated record dates for such interest payments; (7) whether such
Debt Securities are to be issued in whole or in part in the form of one or more
global securities (each a "Global Security") and, if so, the identity of a
depositary (the "Debt Depositary") for such Global Security or Securities; (8)
any redemption terms; (9) any conversion or exchange provisions; and (10) other
specific terms.
If any of the Debt Securities are sold for foreign currencies or foreign
currency units, the restrictions, elections, tax consequences, specific terms
and other information with respect to such issue of Debt Securities and such
currencies or currency units will be set forth in the Prospectus Supplement
relating thereto.
The Debt Securities may be issued in fully registered form without
coupons ("Fully Registered Securities"), or in a form registered as to principal
only with coupons or in bearer form with coupons. Unless otherwise specified in
the Prospectus Supplement, the Debt Securities will be only Fully Registered
Securities. In addition, Debt Securities of a series may be issuable in the form
of one or more Global Securities, which will be denominated in an amount equal
to all or a portion of the aggregate principal amount of such Debt Securities.
See "--Global Securities."
One or more series of Debt Securities may be sold at a substantial
discount below their stated principal amount, bearing no interest or interest at
a rate that at the time of issuance is below market rates. Federal income tax
consequences and special considerations applicable to any such series will be
described in the Prospectus Supplement relating thereto.
Global Securities
The Debt Securities of a series may be issued in whole or in part in the
form of one or more Global Securities that will be deposited with, or on behalf
of, the Debt Depositary identified in the Prospectus Supplement relating to such
series. Unless and until it is exchanged in whole or in part for Debt Securities
in individually certificated form, a Global Security may not be transferred
except as a whole to a nominee of the Debt Depositary for such Global Security,
or by a nominee for the Debt Depositary to the Debt Depositary, or to a
successor of the Debt Depositary or a nominee of such successor.
The specific terms of the depositary arrangement with respect to any
series of Debt Securities and the rights of, and limitations on, owners of
beneficial interests in a Global Security representing all or a portion of a
series of Debt Securities will be described in the Prospectus Supplement
relating to such series.
Conversion and Exchange
The term, if any, on which Debt Securities of any series are convertible
into or exchangeable for Common Stock or Preferred Stock will be set forth in
the Prospectus Supplement relating thereto. Such terms may include provisions
for conversion or exchange, either mandatory, at the option of the holder, or at
the option of Novellus, in which the number of shares of Common Stock or
Preferred Stock to be received by the holders of the Debt Securities would be
calculated according to the market price of Common Stock or Preferred Stock as
of a time stated in the Prospectus Supplement.
-16-
<PAGE> 19
Modification of Indentures
Each Indenture, the rights and obligations of Novellus and the rights of
the Holders may be modified with respect to one or more series of Debt
Securities issued under such Indenture with the consent of the Holders of not
less than a majority in principal amount of the outstanding Debt Securities of
each such series affected by the modification or amendment. No modification of
the terms of payment of principal or interest and no modification reducing the
percentage required for modification, is effective against any Holder without
his consent.
Events of Default
Each Indenture will provide that the following are events of default
with respect to any series of Debt Securities issued thereunder: (1) default in
the payment of the principal of any Debt Security of such series when and as the
same shall be due and payable; (2) default in making a sinking fund payment, if
any, when and as the same shall be due and payable by the terms of the Debt
Securities of such series; (3) default for 30 days in the payment of any
installment of interest on any Debt Securities of such series; (4) default for
90 days after notice in the performance in any material respect of any other
covenants in respect of the Debt Securities of such series contained in the
Indenture; (5) certain events of bankruptcy, insolvency or reorganization, or
court appointment of a receiver, liquidator or trustee of Novellus or its
property; and (6) any other event of default provided in the applicable Board of
Directors' resolution or supplemental indenture under which such series of Debt
Securities is issued. An event of default with respect to a particular series of
Debt Securities issued under an Indenture will not necessarily constitute an
Event of Default with respect to any other series of Debt Securities issued
under such Indenture. The trustee under an Indenture may withhold notice to the
Holder of any series of Debt Securities of any default with respect to such
series (except in the payment of principal or interest) if it considers such
withholding in the interests of such Holders.
If an event of default with respect to any series of Debt Securities
shall have occurred and be continuing, the appropriate trustee under the
Indenture or the Holders of not less than 25% in aggregate principal amount of
the Debt Securities of such series may declare the principal or in the case of
discounted Debt Securities, such portion thereof as may be described in the
Prospectus Supplement, of all the Debt Securities of such series to be due and
payable immediately.
Novellus will file at least annually with each trustee under the
Indenture a certificate, signed by specified officers, stating whether or not
such officers have knowledge of any default, and, if so, specifying each such
default and the nature thereof.
Subject to provisions relating to its duties in case of default, a
trustee under the Indentures shall be under no obligation to exercise any of its
rights or powers under the applicable Indenture at the request, order or
direction of any Holders, unless such Holders shall have offered to such trustee
reasonable indemnity. Subject to such provisions for indemnification, the
Holders of a majority in principal amount of the Debt Securities of any series
may direct the time, method and place of conducting any proceeding for any
remedy available to the appropriate trustee, or exercising any trust or power
conferred upon such trustee, with respect to the Debt Securities of such series.
Payment and Transfer
Principal of, and premium and interest, if any, on, Fully Registered
Securities will be payable at the corporate trust office of the trustee or any
other office maintained by Novellus for such purposes, provided that payment of
interest, if any, will be made, unless otherwise provided in the applicable
Prospectus Supplement, by check mailed to the persons in whose names such Debt
Securities are registered at the close of business on the day or days specified
in the Prospectus Supplement. The principal of, and premium and interest, if
any, on, debt Securities in other forms will be payable in the manner and at the
place or places as designated by Novellus and specified in the applicable
Prospectus Supplement.
-17-
<PAGE> 20
Fully Registered Securities may be transferred or exchanged at the
corporate trust office of the trustee or at any other office or agency
maintained by Novellus for such purposes, subject to the limitations in the
applicable Indenture, without the payment of any service charge except for any
tax or governmental charge incidental thereto. Provisions with respect to the
transfer and exchange of Debt Securities in other forms will be set forth in the
applicable Prospectus Supplement.
Defeasance
The Indenture will provide that it will cease to be of further effect
with respect to a certain series of Debt Securities (except for certain
obligations to register the transfer or exchange of Securities) if (1) Novellus
delivers to the trustee for the Securities of such series for cancellation all
Debt Securities of all series and the coupons, if any, appertaining thereto, or
(2) if Novellus deposits into trust with the Trustee money or United States
government obligations, that, through the payment of interest thereon and
principal thereof in accordance with their terms, will provide money in an
amount sufficient to pay all the principal of and interest on, the Debt
Securities of such series on the dates Such payments are due or redeemable in
accordance with the terms of such Debt Securities.
Senior Debt Securities
The Senior Debt Securities will constitute part of the Senior
Indebtedness (as defined below) of Novellus and will rank pari passu with all
outstanding senior debt. Except as set forth in the applicable Prospectus
Supplement, the outstanding Subordinated Indebtedness (as defined below) has
been, or will be, subordinated, as to payment of principal, and premium and
interest, if any, to Senior Indebtedness, including the Senior Debt Securities.
Subordinated Debt Securities
Except as described in the applicable Prospectus Supplement, the
Subordinated Debt Securities will be junior and subordinate in right of payment
to all Senior Indebtedness of Novellus, whether outstanding at the date of the
Subordinated Indenture or incurred after such date. The term "Senior
Indebtedness" will be defined to mean (1) all indebtedness of Novellus for money
borrowed (including purchase-money obligations with an original maturity in
excess of one year and synthetic lease obligations) or evidence by debentures,
notes or other corporate debt securities or similar instruments issued by
Novellus, (2) indebtedness or obligations of Novellus constituting a guarantee
of indebtedness of or an obligation of others of the type referred to in (1)
above, or (3) any modification, extension, renewal or refunding of any of the
indebtedness or obligations referred to in (1) or (2) above, except any
indebtedness or obligation or modification, extension, renewal or refunding
that, under the express provisions of the instrument creating or evidencing it,
or pursuant to which it is outstanding, is not superior in right of payment to
the Subordinated Debt Securities. "Subordinated Indebtedness" will be defined to
mean all indebtedness of Novellus that is subordinate and junior in right of
payment to any other indebtedness of Novellus.
Upon any distribution of assets of Novellus in connection with any
dissolution, winding up, liquidation or reorganization of Novellus, the holders
of all Senior Indebtedness will first be entitled to receive payment in full of
principal of, and interest, if any, on, such Senior Indebtedness before the
holders of Subordinated Debt Securities are entitled to receive any payment
thereon. If any Subordinated Debt Security is declared due and payable because
of the occurrence of an Event of Default, under circumstances when the
provisions of the foregoing sentence are not applicable, the trustee under a
Subordinated Indenture or the Holders of Subordinated Debt Securities shall be
entitled to payment only after there shall first have been paid in full the
Senior Indebtedness outstanding at the time such Subordinated Debt Security so
becomes due and payable because of such Event of Default. During the continuance
of any default with respect to Senior Indebtedness, or if a default would be
caused by any payment upon or in respect of the Subordinated Debt Securities, or
if any Subordinated Debt Securities are declared or become payable before their
stated maturity because of an Event of Default, no payment may be made by
Novellus or be due or payable upon or in respect of the Subordinated Debt
Securities until all Senior Indebtedness has been paid in full.
-18-
<PAGE> 21
This subordination will not prevent the occurrence of any Event of
Default. There is no limitation on the issuance of additional Senior
lndebtedness in a Subordinated Indenture.
WARRANTS TO PURCHASE DEBT SECURITIES
The following statements with respect to the Debt Warrants are summaries
of, and subject to, the detailed provisions of a warrant agreement (the "Debt
Warrant Agreement") to be entered into by Novellus and a warrant agent to be
selected at the time of issue (the "Debt Warrant Agent").
General
The Debt Warrants, evidenced by warrant certificates (the "Debt Warrant
Certificates"), may be issued under the Debt Warrant Agreement independently or
together with any Debt Securities offered by any Prospectus Supplement and may
be attached to or separate from such Debt Securities. If Debt Warrants are
offered, the Prospectus Supplement will describe the terms of the warrants,
including the following: (1) the offering price, if any-, (2) the designation,
aggregate principal amount and terms of the Debt Securities purchasable upon
exercise of the warrants; (3) if applicable, the designation and terms of the
Debt Securities with which the Debt Warrants are issued and the number of Debt
Warrants issued with each such Debt Security; (4) if applicable, the date on and
after which the Debt Warrants and the related Debt Securities will be separately
transferable; (5) the principal amount of Debt Securities purchasable upon
exercise of one Debt Warrant and the price at which such principal amount of
Debt Securities may be purchased upon exercise; (6) the date on which the right
to exercise the Debt Warrants shall commence and the date on which such right
shall expire; (7) Federal income tax consequences; (8) whether the warrants
represented by the Debt Warrant certificates will be issued in registered or
bearer form; (9) the currency, currencies or currency units in which the
offering price, if any, and exercise price are payable; (10) the antidilution
provisions of the Debt Warrants; and (11) any other terms of the Debt Warrants.
Debt Warrant certificates may be exchanged for new Debt Warrant
certificates of different denominations and may (if in registered form) be
presented for registration of transfer at the corporate trust office of the Debt
Warrant Agent, which will be listed in the Prospectus Supplement, or at such
other office as may be set forth therein. Warrantholders do not have any of the
rights of holders of Debt Securities (except to the extent that the consent of
Warrantholders may be required for certain modifications of the terms of an
Indenture and the series of Debt Securities issuable upon exercise of the Debt
Warrants) and are not entitled to payments of principal of and interest, if any,
on the Debt Securities.
Exercise of Debt Warrants
Debt Warrants may be exercised by surrendering the Debt Warrant
certificate at the corporate trust office of the Debt Warrant Agent, with the
form of election to purchase on the reverse side of the Debt Warrant Certificate
properly completed and executed, and by payment in full of the exercise price,
as set forth in the Prospectus Supplement. Upon the exercise of Debt Warrants,
the Debt Warrant Agent will, as soon as practicable, deliver the Debt Securities
in authorized denominations in accordance with the instructions of the
exercising warrantholder and at the sole cost and risk of such holder. If less
than all of the Debt Warrants evidenced by the warrant certificate are
exercised, a new Debt Warrant certificate will be issued for the remaining
amount of Debt Warrants.
-19-
<PAGE> 22
PLAN OF DISTRIBUTION
The Company may sell the Securities to one or more underwriters for
public offering and sale by them or may sell the Securities to investors
directly or through agents, which agents may be affiliated with the Company. Any
such underwriter or agent involved in the offer and sale of the Securities will
be named in the applicable Prospectus Supplement.
Sales of Securities offered pursuant to any applicable Prospectus
Supplement may be effected from time to time in one or more transactions at a
fixed price or prices which may be changed, at prices related to the prevailing
market prices at the time of sale, or at negotiated prices. The Company also
may, from time to time, authorize underwriters acting as the company's agents to
offer and sell the Securities upon the terms and conditions as set forth in the
applicable Prospectus Supplement. In connection with the sale of Securities,
underwriters may be deemed to have received compensation from the Company in the
form of underwriting discounts or commissions and may also receive commissions
from purchasers of Securities for whom they may act as agent. Underwriters may
sell Securities to or through dealers, and such dealers may receive compensation
in the form of discounts, concessions or commissions from the underwriters
and/or commissions from the purchasers for whom they may act as agent.
Any underwriting compensation paid by the Company to underwriters or
agents in connection with the offering of Securities, and any discounts,
concessions or commissions allowed by underwriters to participating dealers,
will be set forth in the applicable Prospectus Supplement. Underwriters, dealers
and agents participating in the distribution of the Securities may be deemed to
be underwriters, and any discounts and commissions received by them and any
profit realized by them on resale of the Securities may be deemed to be
underwriting discounts and commissions under the Securities Act. Underwriters,
dealers and agents may be entitled, under agreements entered into with the
Company, to indemnification against and contribution toward certain civil
liabilities, including liabilities under the Securities Act. Any such
indemnification agreements will be described in the applicable Prospectus
Supplement.
Unless otherwise specified in the related Prospectus Supplement, each
series of Securities will be a new issue with no established trading market,
other than the Common Stock which is listed on NASDAQ. Any shares of Common
Stock sold pursuant to a Prospectus Supplement will be listed on such exchange,
subject to official notice of issuance. The Company may elect to list any series
of Preferred Stock, Depositary Shares, Warrants, Debt Securities or Debt
Warrants on any exchange, but it is not obligated to do so. It is possible that
one or more underwriters may make a market in a series of Securities, but will
not be obligated to do so and may discontinue any market making at any time
without notice. Therefore, no assurance can be given as to the liquidity of the
trading market for the Securities.
If so indicated in the applicable Prospectus Supplement, the Company may
authorize dealers acting as the Company's agent to solicit offers by certain
institutions to purchase Securities from the Company at the public offering
price set forth in such Prospectus Supplement pursuant to delayed delivery
contracts ("Contracts") providing for payment and delivery on the date or dates
stated in such Prospectus Supplement. Each Contract will be for an amount not
less than, and the aggregate principal amount of Securities sold pursuant to
Contracts shall be not less nor more than, the respective amounts stated in the
applicable Prospectus Supplement. Institutions with whom Contracts, when
authorized, may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions, and other institutions but will in all cases be subject to the
approval of the Company. Contracts will not be subject to any conditions except
(i) the purchase by an institution of the offered Securities covered by its
Contracts shall not at the time of delivery be prohibited under the laws of any
jurisdiction in the United States to which such institution is subject, and (ii)
if the Securities are being sold to underwriters, the Company shall have sold to
such underwriters the total principal amount of the Securities less the
principal amount thereof covered by Contracts.
Certain of the underwriters and their affiliates may be customers of,
engage in transactions with and perform services for, the Company in the
ordinary course of business.
-20-
<PAGE> 23
LEGAL MATTERS
The validity of the Securities offered hereby will be passed upon for
the Company by Morrison & Foerster LLP, Palo Alto, California.
EXPERTS
The consolidated financial statements of Novellus Systems, Inc.
appearing in Novellus Systems, Inc.'s Annual Report (Form 10-K) for the year
ended December 31, 1997, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report included therein and incorporated herein
by reference. Such consolidated financial statements are incorporated herein by
reference in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
-21-
<PAGE> 24
================================================================================
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus and, if given or
made, such information or representations must not be relied upon as having been
authorized. This Prospectus does not constitute an offer to sell or the
solicitation of an offer to buy any securities other than the securities to
which it relates or an offer to sell or the solicitation of an offer to buy such
securities in any circumstances in which such offer or solicitation is unlawful.
Neither the delivery of this Prospectus nor any sale made hereunder shall, under
any circumstances, create any implication that there has been no change in the
affairs of the Company since the date hereof or that the information contained
herein or therein is correct as of any time subsequent to its date.
TABLE OF CONTENTS
PAGE
----
Available Information................................................ 2
Incorporation of Certain Documents by
Reference......................................................... 2
The Company.......................................................... 3
Use of Proceeds...................................................... 4
Risk Factors......................................................... 4
Description of Securities............................................ 10
Plan of Distribution................................................. 20
Legal Matters........................................................ 21
Experts.............................................................. 21
$300,000,000
NOVELLUS SYSTEMS, INC.
-------------------------------
PROSPECTUS
-------------------------------
_____ ___, 1998
================================================================================
<PAGE> 25
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
ITEM 16. EXHIBITS
Number
- -----------
4.1* Form of amendment to Restated Articles of Novellus Systems, Inc. for
a series of Preferred Stock
4.2* Form of Warrant Agreement
4.3* Form of Deposit Agreement
4.4** Form of Indenture
4.5* Form of Debt Warrant Agreement
5.1** Opinion of Morrison & Foerster LLP
23.1 Consent of Ernst & Young LLP
23.3** Consent of Morrison & Foerster LLP (included in Exhibit 5.1)
24.1** Power of Attorney
- ---------------------------
* To be filed by amendment or incorporated by reference in connection with the
offering of the applicable Securities.
** Previously filed as an exhibit to the Company's Registration Statement on
Form S-3 filed on March 16, 1998 (Registration No. 333-48037) with the
corresponding exhibit number, and incorporated by reference herein.
<PAGE> 26
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in this registration statement or any
material change to such information in the registration statement; provided,
however, that paragraphs (i) and (ii) do not apply if the information required
to be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to Section 13 or Section 15(d)
of the Securities Exchange Act of 1934 that are incorporated by reference to
this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
The undersigned Registrant hereby futher undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4), or
497(h) under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) For the purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in this registration statement shall be deemed to be a
new registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, 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 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 Act and will
be governed by the final adjudication of such issue.
<PAGE> 27
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 San Jose, State of California, on the 30th day of
April, 1998.
NOVELLUS SYSTEMS, INC.
By: /s/ ROBERT M. SMITH
------------------------------------
Robert M. Smith
Executive Vice President,
Finance and Administration
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to Registration Statement has been signed by the following
persons in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- -------------------------------- -------------------------- ----------------
<S> <C> <C>
RICHARD S. HILL* Chairman of the Board and April 30, 1998
- -------------------------------- Chief Executive Officer
Richard S. Hill
/s/ ROBERT H. SMITH Director, Executive Vice April 30, 1998
- -------------------------------- President, Finance and
Robert H. Smith Administration, Chief
Financial Officer and
Secretary
/s/ J. MICHAEL DODSON Vice President, Corporate April 30, 1998
- -------------------------------- Controller and Principal
J. Michael Dodson Accounting Officer
JOSEPH VAN POPPELEN*
- -------------------------------- Director April 30, 1998
Joseph Van Poppelen
GLEN POSSLEY*
- -------------------------------- Director April 30, 1998
Glen Possley
D. JAMES GUZY*
- -------------------------------- Director April 30, 1998
D. James Guzy
TOM LONG*
- -------------------------------- Director April 30, 1998
Tom Long
DAVID LITSTER*
- -------------------------------- Director April 30, 1998
David Litster
*By: /s/ ROBERT M. SMITH April 30, 1998
----------------------------
Robert M. Smith
Attorney-in-Fact
</TABLE>
<PAGE> 28
EXHIBIT INDEX
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION NUMBERED PAGE
- --------- ------------------------------------------------- -------------
4.1* Form of amendment to Restated Articles of
Novellus Systems, Inc. for a series of Preferred
Stock
4.2* Form of Warrant Agreement
4.3* Form of Deposit Agreement
4.4** Form of Indenture
4.5* Form of Debt Warrant Agreement
5.1** Opinion of Morrison & Foerster LLP
23.1 Consent of Ernst & Young LLP
23.3** Consent of Morrison & Foerster LLP (included in
Exhibit 5.1)
24.1** Power of Attorney
- ---------------------------
* To be filed by amendment or incorporated by reference in connection with the
offering of the applicable Securities.
** Previously filed as an exhibit to the Company's Registration Statement on
Form S-3 filed on March 16, 1998 (Registration No. 333-48037) with the
corresponding exhibit number, and incorporated by reference herein.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and
to the use of our report dated January 16, 1998 in Amendment No. 1 to the
Registration Statement (Form S-3 No. 333-48037) and related Prospectus of
Novellus Systems, Inc. for the registration of $300,000,000 of its Common Stock,
Preferred Stock, Depository Shares, Warrants, Debt Securities and Warrants to
Purchase Debt Securities.
/s/ ERNST & YOUNG LLP
San Jose, California
April 30, 1998
