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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 2, 1997
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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ANALOGY, INC.
(Exact name of registrant as specified in charter)
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<S> <C> <C>
OREGON 93-0840631
(State or other jurisdiction (I.R.S. Employer
of Identification
incorporation or organization) Number)
</TABLE>
9205 S.W. GEMINI DRIVE
BEAVERTON, OREGON 97008
(503) 626-9700
(Address, including zip code and telephone number,
including area code, of registrant's principal executive offices)
------------------------
GARY P. ARNOLD
PRESIDENT AND CHIEF EXECUTIVE OFFICER
ANALOGY, INC.
9205 S.W. GEMINI DRIVE, BEAVERTON, OREGON 97008
(503) 626-9700
(Name, address, including zip code and telephone number,
including area code, of agent for service)
------------------------
WITH COPIES TO:
WILLIAM C. CAMPBELL, ESQ.
Ater Wynne Hewitt Dodson & Skerritt, LLP
222 S.W. Columbia, Suite 1800
Portland, Oregon 97201
(503) 226-1191
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE REGISTRATION STATEMENT BECOMES EFFECTIVE.
------------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box: /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / / ________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / ________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
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CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SHARES AMOUNT TO BE AGGREGATE PRICE AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, no par value
per share................................. 1,050,000 $3.90625 $4,101,562.50 $1,242.90
</TABLE>
(1) Estimated in accordance with Rule 457(c) solely for the purpose of computing
the amount of the registration fee based on the average of the high and low
prices of the Company's Common Stock as reported on the Nasdaq National
Market on June 25, 1997.
--------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
PROSPECTUS
1,050,000 SHARES
COMMON STOCK
ANALOGY, INC.
---------------
This Prospectus relates to a total of 1,050,000 shares (the "Shares") of
common stock, no par value per share (the "Common Stock") of Analogy, Inc., an
Oregon corporation ("Analogy" or the "Company"), which may be offered and resold
from time to time pursuant to this Prospectus. Of these, 650,000 shares were
issued by the Company to the selling shareholders (the "Selling Shareholders")
in connection with the acquisition by the Company by means of a merger (the
"Merger") of Symmetry Design Systems, Inc., a California corporation
("Symmetry"). The remaining 400,000 shares are issuable upon the exercise of
Common Stock Purchase Warrants (the "Warrants") issued to employees of Symmetry
pursuant to employment agreements entered into in connection with the Merger.
The Company is registering the Shares as required pursuant to certain
registration rights granted to the respective Selling Shareholders. The Company
will receive all of the proceeds from the exercise of the Warrants, but will not
receive any of the proceeds from the sale of the Shares by the Selling
Shareholders. The Company has agreed to bear certain expenses of registration of
the Shares. See "Plan of Distribution." The Common Stock is listed on the Nasdaq
National Market under the symbol "ANLG." The last reported sales price of the
Company's Common Stock on the Nasdaq National Market on July 1, 1997 was $4.4375
per share.
The Selling Shareholders have advised the Company that the Shares may be
offered and resold from time to time in one or more transactions that may take
place on the Nasdaq National Market, in privately negotiated transactions or
otherwise, or a combination of such methods of sale, at fixed prices that may be
changed, at market prices prevailing at the time of sale, at prices related to
such prevailing market prices or at negotiated prices. The Selling Shareholders
may effect such transactions by selling the Shares directly or by or through
agents or broker-dealers who may receive compensation in the form of discounts,
concessions or commissions from the Selling Shareholders and/or the purchasers
of the Shares for whom such broker-dealers may act as agent or to whom they sell
as principal, or both (which compensation as to a particular broker-dealer might
be in excess of customary commissions). Any broker-dealer acquiring the Shares
from the Selling Shareholders may sell such securities in its normal market
making activities, through other brokers on a principal or agency basis, in
negotiated transactions, to its customers or through a combination of such
methods. See "Selling Shareholders" and "Plan of Distribution."
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 5.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
No underwriting commissions or discounts will be paid by the Company in
connection with this offering. Estimated expenses payable by the Company in
connection with this offering are $30,742.90. The aggregate proceeds to the
Selling Shareholders from the sale of the Shares will be the purchase price of
the Shares sold less the aggregate agents' commissions and underwriters'
discounts, if any, and other expenses of issuance and distribution not borne by
the Company. See "Plan of Distribution."
The Selling Shareholders and any underwriters, broker-dealers or agents that
participate in the distribution of the Shares may be deemed to be "underwriters"
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act"), and any discounts, commissions or concessions received by them and any
provided pursuant to the sale of the Shares by them may be deemed to be
underwriting discounts or commissions under the Securities Act. The Company has
agreed to indemnify the Selling Shareholders and certain other persons against
certain liabilities, including liabilities under the Securities Act.
THE DATE OF THIS PROSPECTUS IS , 1997.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Judiciary Plaza, Washington D.C. 20549, and at the Commission's
following Regional Offices: Chicago Regional Office, Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511; and New York Regional
Office, 7 World Trade Center, Suite 1300, New York, New York, 10048. Copies of
such material can be obtained at prescribed rates from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549. The Commission maintains a Web site that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission. The address of such
Web site is http://www.sec.gov. The Company's Common Stock is quoted on the
Nasdaq National Market and such reports, proxy statements and other information
can also be inspected at the offices of The Nasdaq Operations, 1735 K Street,
N.W., Washington, D.C. 20006.
This Prospectus constitutes a part of a registration statement filed on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") by the Company with the Commission under the
Securities Act. This Prospectus does not contain all of the information
contained in the Registration Statement, and reference is hereby made to the
Registration Statement and related exhibits for further information with respect
to the Company. Statements contained in this Prospectus regarding the contents
of any document or contract may be incomplete and, in each instance, reference
is made to the copy of such document or contract filed as an exhibit to the
Registration Statement. For further information with respect to the Company and
the Common Stock offered hereby, reference is made to such Registration
Statement and the exhibits and schedules filed as a part of the Registration
Statement. A copy of the Registration Statement, including exhibits and
schedules thereto may be inspected without charge at the public reference
facilities maintained by the Commission at 450 Fifth Street, NW, Judiciary
Plaza, Washington, D.C. 20549, and copies of all or any part thereof may be
obtained from the Commission upon the payment of certain fees prescribed by the
Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission pursuant to the Exchange
Act are hereby incorporated by reference:
1. The Company's Annual Report on Form 10-K for the fiscal year ended March
31, 1997;
2. Proxy Statement for the Annual Meeting of Shareholders held July 22,
1997; and
3. The description of Common Stock in the Company's Registration Statement
on Form 8-A, as filed with the Commission on February 12, 1996, including any
amendment or report filed for the purposes of updating such description.
4. All other reports filed pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Exchange Act after the date of this Prospectus and prior to the termination
of the offering of the Shares made hereby shall be deemed to be incorporated by
reference herein and to be a part of this Prospectus from the date of filing of
such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document 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 documents, unless such exhibits are specifically
incorporated by reference into such documents or into this Prospectus) will be
provided without charge to each person, including any beneficial owner, to whom
this Prospectus is delivered, upon a written or oral request. Such requests
should be directed to Analogy, Inc., 9205 S.W. Gemini Drive, Beaverton, Oregon
97008, Attn: Terrence A. Rixford, Vice President Finance and Administration,
telephone number (503) 626-9700.
<PAGE>
TABLE OF CONTENTS
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PAGE
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Available Information...................................................................................... 1
Incorporation of Certain Documents by Reference............................................................ 1
The Company................................................................................................ 3
The Offering............................................................................................... 4
Risk Factors............................................................................................... 5
Use of Proceeds............................................................................................ 11
Dividend Policy............................................................................................ 11
Selling Shareholders....................................................................................... 12
Plan of Distribution....................................................................................... 13
Experts.................................................................................................... 13
</TABLE>
NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN AS CONTAINED IN THIS
PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR BY THE SELLING
SHAREHOLDERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES BY ANY PERSON IN ANY JURISDICTION
WHERE SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCE CREATE ANY
IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE
SUBSEQUENT TO THE DATE HEREOF.
2
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THE COMPANY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND FINANCIAL STATEMENTS APPEARING ELSEWHERE IN THIS PROSPECTUS OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS.
Analogy develops, markets and supports high-performance software and model
libraries for the top-down design and behavioral simulation of mixed-signal and
mixed-technology systems. Analogy's Saber simulator supports top-down design of
mixed-signal, mixed-technology systems using the Company's proprietary analog
hardware description language, MAST. The Saber simulator and its accompanying
MAST models are used in the design of electronic, mechanical, hydraulic and
optical components and systems. This multi-functional simulator provides
manufacturers of products incorporating mixed-signal, mixed-technology systems
with productivity increases similar to those Integrated Circuit ("IC") designers
experienced through the adoption of digital simulators. The Saber simulator is
used in many industries for products as diverse as deep sub-micron ICs, video
recorders, hydraulic presses, engine controls in automobiles, anti-lock brake
systems and avionics systems.
Analogy's products include its core Saber simulator and co-simulation
products; model libraries of electronic, hydraulic, mechanical and optical
devices; schematic capture and analysis tools and framework integration
products. The Company's software products are licensed to customers. The
Company's model libraries are provided on an annual subscription basis, under
which the customer receives periodic updates as new models are generated.
Support is provided based on annual or other periodic contracts. A minimum,
single-user configuration would include Saber, SaberScope and either SaberSketch
or a Frameway Integration product. List price of such a minimum configuration
for a single user, plus a one-year subscription to the Company's model
libraries, would start at approximately $38,000. Options can increase the single
user price to over $80,000. Minimum configuration multi-user systems start at
$85,000 for three users.
The Company markets its products worldwide through a staff that, as of March
31, 1997, consisted of 62 Company-employed field sales and support personnel.
The Company manages its worldwide sales operations from its Beaverton, Oregon
headquarters. The Company markets its products in North America and Europe
through a direct sales and support organization. U.S. sales offices are located
in these metropolitan areas: Boston, Chicago, Detroit, Huntsville (Alabama), Los
Angeles, Rochester (New York), San Francisco and Washington, D.C., as well as at
the Company's headquarters in Beaverton, Oregon. In Europe the Company
maintains, through wholly-owned subsidiaries, sales and support offices near
Paris, London, Munich and Stockholm. The Company also maintains a direct sales
office in Singapore and sells through distributors in Japan and Korea.
The Company's end-users include manufacturers in the automotive,
telecommunications, medical and consumer electronics, test and instrumentation,
aerospace, defense and IC industries, such as General Motors, Ericsson, Ford
Motor Company, Motorola, NEC, Siemens A.G. and Texas Instruments.
The Company was founded in 1985 and is incorporated under laws of the State
of Oregon. Its executive offices are located at 9205 S.W. Gemini Drive,
Beaverton, Oregon 97008, and its telephone number is 503-626-9700.
3
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THE OFFERING
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Shares offered.......................... Up to 1,050,000 shares(1), all of which are being
offered by the Selling Shareholders
Common Stock outstanding after this
offering.............................. 9,534,737 shares(2)
Use of proceeds......................... The net proceeds received by the Company from the
exercise of the Warrants will be considered
uncommitted funds that may be used by the Company
for general corporate purposes.The Company will
not receive any of the proceeds from the sale of
the Shares by the Selling Shareholders.
Nasdaq National Market symbol........... ANLG
</TABLE>
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(1) Includes (i) 590,784 shares issued to the Selling Shareholders pursuant to
the Agreement and Plan of Merger dated as of October 23, 1996, as amended
(the "Merger Agreement"), by and among the Company, Analogy Acquisition
Corporation, an Oregon corporation and Symmetry; (ii) 59,216 shares of
Common Stock issued to the Selling Shareholders pursuant to the Merger
Agreement which are currently held in escrow subject to certain
indemnification obligations thereunder, a portion of which will be released
from escrow, subject to such indemnification obligations, on November 28,
1997, and the remainder of which will be released from escrow, subject to
such indemnification obligations on November 28, 1998; and (iii) 400,000
shares issuable upon exercise of the Warrants, at an exercise price of
$4.125 per share, exercisable over a 24-month period which commenced on
November 22, 1996, subject to certain terms and conditions of such Warrants.
(2) Assumes the exercise in full of all of the Warrants.
4
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RISK FACTORS
PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED HEREBY SHOULD CAREFULLY
CONSIDER THE FOLLOWING RISK FACTORS IN ADDITION TO THE OTHER INFORMATION
PRESENTED IN THIS PROSPECTUS. THIS PROSPECTUS CONTAINS CERTAIN INFORMATION AND
TREND ANALYSIS THAT CONSTITUTE "FORWARD-LOOKING STATEMENTS" AS DEFINED IN
SECTION 27A OF THE SECURITIES ACT OF 1993, AS AMENDED, WHICH INVOLVE RISKS AND
UNCERTAINTIES. SUCH FORWARD LOOKING STATEMENTS INCLUDE, BUT ARE NOT LIMITED TO,
STATEMENTS INCLUDING THE WORDS "ANTICIPATE," "BELIEVE," "PLAN," "ESTIMATE,"
"EXPECT," "INTEND" AND OTHER SIMILAR EXPRESSIONS. THE COMPANY'S ACTUAL RESULTS
MAY DIFFER MATERIALLY FROM THE RESULTS DESCRIBED IN THE FORWARD-LOOKING
STATEMENTS. FACTORS THAT MIGHT CAUSE SUCH A DIFFERENCE INCLUDE, BUT ARE NOT
LIMITED TO, THOSE DISCUSSED IN THE FOLLOWING RISK FACTORS AND ELSEWHERE IN THIS
PROSPECTUS.
POTENTIAL FLUCTUATIONS IN QUARTERLY RESULTS
The Company's quarterly operating results have in the past and may in the
future vary significantly depending on factors such as the receipt and timing of
significant orders, increased competition, the timing of new product
announcements, changes in pricing policies by the Company or its competitors,
lengthy sales cycles, lack of market acceptance or delays in the introduction of
new or enhanced versions of the Company's products, seasonal factors, the mix of
direct and indirect sales and general economic conditions. In particular, the
Company's quarterly operating results have in the past fluctuated as a result of
the large percentage of orders that are not received by the Company until near
the end of the quarter. Substantially all of the Company's product licensing
revenue in each quarter results from orders booked in that quarter. The
Company's expense levels are based, in part, on its expectations as to future
revenue. If revenue levels are below expectations, operating results are likely
to be adversely affected. In addition, net income may be disproportionately
affected by a reduction in revenue because only a small portion of the Company's
expenses varies with its revenue. Seasonal factors, particularly in Europe, and
cyclical economic patterns in the automotive or other end-user industries also
contribute to quarter-to-quarter fluctuations. Due to the foregoing factors, the
Company believes that period-to-period comparisons of its results of operations
are not necessarily meaningful and should not be relied upon as indications of
future performance. Additionally, a significant portion of the Company's revenue
in a quarter typically is received in the last few weeks of that quarter. As a
result, the Company may not learn of, or be able to confirm, revenue or earnings
shortfalls until late in the quarter or following the end of the quarter. Any
shortfall in revenue or earnings from expected levels or other failure to meet
expectations of the financial markets regarding results of operations could have
an immediate and significant adverse effect on the trading price of the
Company's Common Stock in any given period. No assurance can be given that the
Company will be able to grow in future periods or that it will be able to
sustain its historical rate of revenue growth or, even if revenue grows, that
its operations will remain profitable.
DEPENDENCE UPON SPECIFIC INDUSTRIES; ECONOMIC AND MARKET CONDITIONS
The percentage of the Company's total United States revenue derived from the
automotive industry for fiscal 1997 was 15.5%. The automotive industry has
historically been characterized by high cyclicality, technological change,
fluctuations in manufacturing capacity and pricing and gross margin pressures.
This industry has from time to time experienced significant economic downturns
characterized by decreased product demand, production over-capacity, price
erosion, work slowdowns and layoffs. No assurance can be given that the
automotive industry will experience economic growth, will not experience a
downturn or that any downturn will not be severe. The Company also has
historically derived a significant portion of its revenue from the aerospace and
defense industries, which have been characterized by significant technological
changes, high cyclicality and the potential for significant downturns in
business activity resulting from changes in economic conditions or governmental
policies. The Company's future results of operations may fluctuate from period
to period as a consequence of such industry patterns in these or other
industries in which the Company's sales may be concentrated in future periods,
general economic conditions affecting the timing of orders from major customers
and other factors affecting capital
5
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spending. No assurance can be given that such factors will not have a material
adverse effect upon the Company's business, financial condition and results of
operations.
Sales to Electronic Data Systems Corp. ("EDS"), which serves as a
distributor to certain automotive industry users, including General Motors,
accounted for 13.6% of the Company's revenue in fiscal 1996, however,
uncertainty regarding capital spending by General Motors resulted in reductions
in orders from EDS, and revenue from EDS was therefore not significant in fiscal
1997. In addition, sales to agencies or departments of the U.S. government
accounted for 18.1% of the Company's revenue in fiscal 1997. The loss of orders
from EDS has had, and the loss of or any reduction in orders by any other
significant customer could have, an adverse effect on the Company's business,
financial condition and results of operations. No assurance can be given that
such risks will not affect the Company's financial condition or results of
operations in the future.
UNCERTAINTY OF MARKET ACCEPTANCE OF BEHAVIORAL MODELING TECHNOLOGY FOR SYSTEMS
SIMULATION
The Company's operating results are dependent upon the increased adoption of
behavioral modeling design methodologies for a variety of mixed-signal and
mixed-technology applications in industries other than the IC industry. Sales by
the Company have depended, and will continue to depend, upon designers of
mixed-signal and mixed-technology systems adopting methods of design analysis
and simulation which use behavioral modeling techniques. Product designers have
historically relied on other methods of design analysis and simulation such as
prototyping and simulation of the distinct components of a system. There is no
assurance that designers will be willing to change these established methods of
design analysis and simulation. Even if designers are willing to change
methodologies, there can be no assurance that they will be willing to invest in
the Company's behavioral modeling tools, the Company's tools will be well-suited
for their applications or customers will not develop behavioral modeling tools
internally or buy them from other suppliers that may enter the market. No
assurance can be given that markets for the Company's products will develop
further, or if they do, that the Company's products will achieve further market
acceptance. Failure of the Company's products to achieve further market
acceptance would have a material adverse effect on the Company's business,
financial condition and results of operations.
CHANGES IN PLATFORM AVAILABILITY AND PRICING POLICIES
The Company recently introduced versions of its products that run on
personal computers in addition to the versions for UNIX-based workstations that
have historically been available. Increased market acceptance of personal
computer-based design software could result in slower growth or even a decline
in sales of the Company's UNIX-based software versions. If the Company's
customers are unwilling to pay prices similar to those of the Company's
UNIX-based software for personal computer-based versions of the Company's
software with substantially similar capabilities, and the Company does not
correspondingly increase sales volume, the Company may experience a decline in
license revenues. The Company has also introduced annual license pricing in
addition to its long-term licenses for its products. If the Company's customers
choose to acquire annual licenses in preference to long-term licenses and do not
renew annual licenses for multiple periods, a decline in per-seat revenue may
result. Any decrease in average license fees or increase in non-renewal rates
for the Company's products for any reason, including without limitation the
foregoing possibilities, could have a material adverse effect on the Company's
business, financial condition and results of operations.
SPONSORED RESEARCH AND DEVELOPMENT
The Company has received a multi-year grant from the National Institute of
Standards and Technology, entered into multi-year model development agreements
with the U.S. Air Force, a multi-year cooperative agreement with the Defense
Advanced Research Projects Agency, and has entered into contracts with other
parties that in the aggregate provide substantial funding to the Company for
research and development. The failure of governmental entities to continue to
fund such research and development
6
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programs or the inability to obtain research and development funding, from
whatever source, in future periods could adversely affect the Company, as
certain research and development activities would have to be curtailed or be
funded by the Company, thus diverting resources from other projects.
DEPENDENCE ON INTEGRATION WITH THIRD PARTY FRAMEWORKS; UNCERTAINTY OF CONTINUED
ABILITY TO INTEGRATE
The adoption of the Company's simulation and analysis tools will depend on
the Company's continued ability to integrate its products successfully with
other software tools for design and verification. That ability in turn depends
on satisfactory business relationships with such vendors and the continuation by
such vendors of policies that support linkages to products such as those of the
Company. No assurance can be given that the Company will enjoy such
relationships or continue to be able to integrate successfully its products with
the products of the major electronic design automation ("EDA") vendors. In the
past, the Company was a plaintiff in an intellectual property dispute with a
major EDA vendor. No assurance can be given that similar disputes will not recur
or, if disputes recur, that such disputes will not adversely affect the
Company's business relationships with major EDA vendors or the willingness of
such vendors to support third party integration. The inability of the Company to
integrate its products with other software tools for design and verification,
whether due to its business relationships, the unwillingness of major EDA
vendors to support integration or other factors, would have a material adverse
effect on the Company's business, financial condition and results of operations.
TECHNOLOGICAL CHANGE
The design analysis and simulation industry is characterized by rapid
technological change, frequent new product introductions and evolving industry
standards. The introduction of products embodying new technologies and the
emergence of new industry standards can render existing products obsolete and
unmarketable. The Company's future success will depend upon its ability to
enhance its current products and to develop or acquire new products that keep
pace with technological developments and emerging industry standards and address
the increasingly sophisticated needs of its customers. No assurance can be given
that the Company will be successful in developing, introducing and marketing
product enhancements or new products or that its product enhancements or new
products will adequately meet the requirements of the marketplace and achieve
market acceptance. In the past, the Company has experienced delays in its
introduction of product enhancements and new products. If the Company is unable,
for technological or other reasons, to develop and introduce products in a
timely manner in response to changing market conditions or customer
requirements, the Company's business, financial condition and results of
operations would be materially and adversely affected.
DEPENDENCE UPON KEY PERSONNEL
The Company's future success depends in significant part upon the continued
service of its key technical and management personnel, none of whom is bound by
an employment agreement. The Company's future success also depends on its
continuing ability to attract and retain highly qualified technical, managerial
and sales personnel. In recent months, the Company has had to devote increasing
resources to locating and attracting qualified personnel, especially personnel
with technology skills and training. Competition for such personnel is intense
and there is no assurance that the Company can retain its key employees or that
it can attract, assimilate or retain other highly qualified technical,
managerial and sales personnel in the future. Any inability to hire or retain
necessary personnel could have a material adverse effect on the Company's
business, financial condition and results of operations. In addition, the
Company does not maintain key person life insurance with respect to any of its
employees.
COMPETITION
The Company experiences significant, well-financed competition for
simulation solutions in particular subsets of its overall systems marketplace.
Such competition is particularly intense within the IC industry
7
<PAGE>
and printed circuit board industry, where both SPICE and digital simulators are
widely used. Most of the major suppliers of EDA design frameworks have
introduced simulation products (including some analog and mixed-signal
behavioral modeling products) to serve the IC designer. In addition, the Company
anticipates that such suppliers may in the future introduce new products or
re-focus existing products to compete directly with the Company in the broader
systems market for mixed-technology applications. New competitors could also
emerge from other sources. Major vendors of EDA frameworks, and some of the
other potential entrants, have significantly greater financial and marketing
resources than the Company, significantly larger installed bases than the
Company, strong customer loyalty and strong technological bases from which to
draw. No assurance can be given that the emergence of such competition in the
market for mixed-signal and mixed-technology simulators will not occur. Such
competition could have a material adverse effect upon the Company's business,
financial condition and results of operations. No assurance can be given that
the Company will be able to compete successfully against current and future
competitors or that competitive pressures faced by the Company will not
materially adversely affect its business, financial condition and results of
operations.
RISK OF PRODUCT DEFECTS
Software products as complex as those offered by the Company may contain
undetected errors or "bugs" when introduced or when new versions are released.
The Company has in the past discovered software defects in certain of its
products after commercial release. No assurance can be given that, despite
testing by the Company, errors will not be found in new products or releases
after commencement of commercial shipments, resulting in loss of market share or
failure to achieve market acceptance. Any such occurrence could have a material
adverse effect upon the Company's business, financial condition and results of
operations. The Company's warranty costs have not been significant to date, but
no assurance can be given that such costs will not increase in future periods or
that any such increase would not have a material adverse effect on the Company's
financial condition and results of operations.
RELIANCE ON NEW OR ENHANCED PRODUCTS FOR REVENUE GROWTH
The Company's future operating results are dependent in part upon the
development or acquisition, and market acceptance, of new or enhanced products.
No assurance can be given that any such products will be developed or acquired
or will achieve market acceptance. Failure by the Company to develop or acquire
additional products or any failure of new or enhanced products to achieve market
acceptance on a profitable basis could have a material adverse effect on the
Company's business, financial condition and results of operations. In addition,
because the Company intends to offer additional products as part of a family of
products based on the Saber simulator, a decline in the demand for the Saber
simulator could have a material adverse effect on sales of the Company's other
products.
PROPRIETARY RIGHTS
The Company's success is heavily dependent upon maintenance and protection
of its proprietary technology. The Company relies on a combination of patents,
copyrights, trade secrets and trademarks to protect its technology. The Company
has obtained six U.S. and two Canadian patents on various aspects of its
products including parameter extraction, mixed mode simulation, waveform
calculation, and behavioral modeling. The Company's practice has been to enter
into confidentiality agreements with all employees and signed license agreements
that include nondisclosure provisions with all distributors and customers.
Despite these activities, no assurance can be given that the steps taken by the
Company will provide adequate protection of its technology or that competitors
will not be able to develop similar or functionally equivalent technology.
Patents issued to the Company could be invalidated, circumvented or challenged,
or the rights granted thereunder may not provide competitive advantages to the
Company. Additionally, no assurance can be given that foreign copyright and
trade secret laws will protect the Company's patents and other intellectual
property rights. No assurance can be given that others will not develop products
that are similar to or duplicate the Company's products or will not design
around patents issued to the Company.
8
<PAGE>
In addition, litigation may be necessary to enforce the Company's patents
and other intellectual property rights, to protect the Company's trade secrets,
to determine the validity and scope of the proprietary rights of others or to
defend against claims of infringement. Such litigation could result in
substantial costs and diversion of resources and could have a material adverse
effect on the Company's business, financial condition and results of operations.
The Company has experienced a dispute with a major EDA vendor concerning the
Company's intellectual property that resulted in litigation. No assurance can be
given that infringement or invalidity claims (or claims for indemnification
resulting from infringement claims against third parties, such as customers)
will not be asserted against the Company or that any such assertions would not
have a material adverse affect on the Company's business, financial condition or
results of operations.
INTERNATIONAL SALES
International sales represented 41% of the Company's total revenue in fiscal
1997, and the Company expects that international sales will continue to account
for a significant portion of its total revenue in future periods. The Company
intends to continue expanding its operations outside of the United States, which
will require significant management attention and financial resources.
International sales are subject to inherent risks, including changes in demand
resulting from fluctuating exchange and interest rates, unexpected changes in
regulatory requirements, tariffs and taxes, price controls or other restrictions
on foreign currencies, difficulties in staffing and managing foreign operations,
longer payment cycles, greater difficulty in accounts receivable collection and
political and economic instability. In particular, the Company's European
operations have historically experienced a seasonal reduction in revenue in the
quarter ended September 30, due primarily to European holidays in July and
August. In most significant overseas markets, the Company prices its products in
the local currency, which can lead to a reduction in dollar-denominated revenue
if these currencies weaken against the dollar. In general, the Company pays the
direct expenses of its international operations in the local currency, which can
lead to a reduction in dollar-denominated profitability if these currencies
strengthen against the dollar. The Company has not engaged in hedging
transactions. Currency exchange fluctuations in countries in which the Company
conducts its international operations could have a material adverse effect on
the Company's business, financial condition and results of operations. Moreover,
gains and losses on the conversion to U.S. dollars of receivables and payables
denominated in foreign currencies experienced by the Company in connection with
its international operations may have a material adverse effect on, and
contribute to fluctuations in, the Company's results of operations. There can be
no assurance that these factors will not have a material adverse effect on the
Company's revenue from international operations and, consequently, on the
Company's business, financial condition and results of operations.
VOLATILITY OF STOCK PRICE
The market price of the Company's Common Stock has been highly volatile and
may continue to be so in the future. The market price of the Company's Common
Stock could be subject to significant fluctuations in response to various
factors and events, including without limitation, quarterly variations in the
Company's operating results and the difference between actual results and the
results expected by investors and analysts, announcements of technological
innovations or new products by the Company or its competitors, general
conditions in the design simulation and analysis industry, the EDA industry, or
the industries in which Analogy's customers compete. These factors, as well as
general economic conditions, such as recessions or high interest rates, and
general market conditions, could adversely affect the market price of the Common
Stock.
POTENTIAL ISSUANCE OF PREFERRED STOCK
The Board of Directors has the authority to issue up to 5,000,000 shares of
undesignated Preferred Stock and to determine the preferences, limitations and
relative rights of shares of Preferred Stock and to
9
<PAGE>
fix the number of shares constituting any series and the designation of such
series, without any further vote or action by the Company's shareholders. The
Preferred Stock could be issued with voting, liquidation, dividend and other
rights superior to the rights of the Common Stock. The potential issuance of
Preferred Stock may delay or prevent a change in control of the Company,
discourage bids for the Common Stock at a premium over the market price, and
adversely affect the market price and the voting and other rights of the holders
of the Common Stock.
EFFECT OF CERTAIN ANTI-TAKEOVER PROVISIONS
Certain provisions of the Company's Third Restated Articles of Incorporation
("Restated Articles"), Second Restated Bylaws ("Restated Bylaws") and the Oregon
Business Corporation Act will effectively make it more difficult for a party to
acquire control of the Company through either a tender offer or a proxy contest
for the election of directors. The Oregon Control Share Act and the Business
Combination Act limit the ability of parties who acquire a significant amount of
voting stock to exercise control of the Company. In addition, the Company's
Restated Articles and Restated Bylaws contain provisions which (i) classify the
Board of Directors into three classes, with one class being elected each year,
(ii) provide that directors may be removed by shareholders only for cause and
only upon the vote of 75% of the votes then entitled to be cast for the election
of directors and (iii) require the approval of holders of 67% of the outstanding
shares of the Company entitled to vote to effect a merger or consolidation of
the Company, the sale, lease or exchange of all or substantially all of the
Company's assets or the dissolution or liquidation of the Company. These
provisions may have the effect of lengthening the time required for a person to
acquire control of the Company through a proxy contest for the election of a
majority of the Board of Directors, may discourage bids for the Common Stock at
a premium over the market price and may deter efforts to obtain control of the
Company.
CHANGE IN CONTROL AGREEMENT
The Company and Gary P. Arnold, the Company's President and Chief Executive
Officer, have entered into a Control Change Agreement. Under this Agreement,
upon a Control Change (defined as a sale of a majority of the voting stock in,
or substantially all of the assets of, the Company to an entity controlled by
persons other than those who have a majority ownership or effective control of
the Company prior to the sale), the vesting schedule of all stock options held
by Mr. Arnold is accelerated so that all of his options become fully
exercisable. In addition, if Mr. Arnold is terminated without cause during a
Control Change Window (defined as the period beginning 60 days before the date
that a letter of intent, term sheet or other similar document regarding a
Control Change transaction is first presented to the Company and ending one year
after the closing of the transaction in which the Control Change occurs), all of
Mr. Arnold's stock options will become exercisable prior to the termination date
and the Company must pay Mr. Arnold 2.99 times his average annual salary during
the period of his employment with the Company or during the immediately
preceding five years, whichever is shorter. Any termination of Mr. Arnold in
connection with a Change of Control would result in a substantial payment by the
Company to Mr. Arnold, a portion of which may not be a deductible expense for
income tax purposes, which would have an adverse effect on the Company's
financial condition and results of operations. In addition, the existence of
such Control Change Agreement may discourage bids for the Common Stock or assets
of the Company at a premium over market prices and may deter efforts to obtain
control of the Company. Furthermore, any acceleration of vesting with respect to
Mr. Arnold's stock options may result in dilution to existing shareholders.
SHARES ELIGIBLE FOR FUTURE SALE
Sales of the Company's Common Stock in the public market after this offering
could adversely affect the market price of the Company's Common Stock. Upon
completion of this offering, the Company will have approximately 9,534,737
shares of Common Stock outstanding, substantially all of which, upon
10
<PAGE>
completion of this offering, will be freely transferable without restriction or
registration under the Securities Act, unless such shares are held by
"affiliates" of the Company, as that term is defined in Rule 144 under the
Securities Act. Approximately 1,346,039 shares are issuable upon exercise of
outstanding options granted under the Company's stock option plans as of the
date of this Prospectus. The Company has filed Registration Statements on Form
S-8 covering an aggregate of 1,441,419 shares of Common Stock reserved for
issuance under its stock option plans, permitting the resale of such shares
issued upon the exercise of such options in the public market without
restriction under the Securities Act. The Company has also filed a Registration
Statement on Form S-8 covering 300,000 shares that have been reserved for
issuance under its 1996 Employee Stock Purchase Plan permitting the resale of
such shares in the public market without restriction under the Securities Act.
The future sale or the expectation of future sales of the Company's Common Stock
in the public market could adversely affect the market price of the Common Stock
and could impair the Company's ability to raise capital through the sale of the
Common Stock.
USE OF PROCEEDS
The net proceeds received by the Company from the exercise of the Warrants
will be considered uncommitted funds that may be used by the Company for general
corporate purposes. The Company will not receive any of the proceeds from the
sale of the Shares. All of the proceeds from the sale of the Shares will be
received by the Selling Shareholders.
DIVIDEND POLICY
The Company has never declared or paid cash dividends on its Common Stock.
The Company intends to retain earnings from operations for use in the operation
and expansion of its business and does not anticipate paying cash dividends with
respect to the Common Stock in the foreseeable future.
11
<PAGE>
SELLING SHAREHOLDERS
The following table sets forth (i) the names of the Selling Shareholders,
(ii) the number of shares of Common Stock beneficially owned by each Selling
Shareholder prior to this offering, and (iii) the number of shares of Common
Stock to be offered for resale by each Selling Shareholder. This information is
based upon information provided by the Selling Shareholders. Assuming each
Selling Shareholder sells all of the Shares registered on his or her behalf
pursuant to this Registration Statement, no Selling Shareholder (other than Alan
B. Grebene as to the 7,000 shares not subject to this offering, unless such
shares are otherwise sold) would own any shares of the Common Stock after
completion of this offering. To the best of the Company's knowledge, all persons
listed below have sole voting and investment power with respect to their shares
of Common Stock, except to the extent such authority is shared by spouses under
applicable law, and to the extent such authority is limited by the escrow
arrangements with respect to 59,216 shares of Common Stock.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED NUMBER OF SHARES
PRIOR TO OFFERING(1) OF COMMON STOCK TO
--------------------- BE OFFERED FOR
NAME NUMBER PERCENT RESALE
- ---------------------------------------- ----------- ------- --------------------
<S> <C> <C> <C>
Qing Chang(*)........................... 2,314 + 2,314
Alan B. Grebene(2)...................... 534,283(3) 5.5% 495,833
Xinping He.............................. 3,758 + 3,758
Chenmin Hu(*)........................... 289,233(4) 3.2% 289,233
Andrew Hughes(*)........................ 123,962(5) 1.4% 123,962
Yu Liu.................................. 3,013 + 3,013
Zheng Shi(*)............................ 2,314 + 2,314
Martin Walker........................... 115,689 1.3% 115,689
John A. Wilson.......................... 2,314 + 2,314
Wenge Wu(*)............................. 5,785 + 5,785
E-Hui Xu(*)............................. 5,785 + 5,785
</TABLE>
- ------------------------
(*) Has been an employee of Symmetry Design Systems, Inc., the Company's
wholly-owned subsidiary, since November 28, 1996.
(1) Includes 590,784 shares of Common Stock issued pursuant to the Merger
Agreement. Also includes 59,216 shares of Common Stock issued pursuant to
the Merger Agreement which are currently held in escrow subject to certain
indemnification obligations thereunder, a portion of which will be released
from escrow, subject to such indemnification obligations, on November 28,
1997, and the remainder of which will be released from escrow, subject to
such indemnification obligations, on November 28, 1998.
(2) Mr. Grebene has been a member of the Board of Directors and the President of
Symmetry Design Systems, Inc., the Company's wholly-owned subsidiary, since
November 28, 1996.
(3) Includes 31,450 shares of Common Stock currently held in escrow subject to
certain indemnification obligations under the Merger Agreement over which
Mr. Grebene has voting power under proxies granted pursuant to such escrow.
Also includes an aggregate of 218,180 shares of Common Stock issuable upon
exercise of a Common Stock Purchase Warrant dated November 22, 1996, at an
exercisable price of $4.125 per share, exercisable in accordance with the
following schedule subject to the terms and conditions of such warrant: (i)
54,545 shares on May 22, 1997; (ii) 54,545 shares on November 22, 1997;
(iii) 54,545 shares on May 22, 1998; and (iv) 54,545 shares on November 22,
1998.
(4) Includes an aggregate of 127,270 shares of Common Stock issuable upon
exercise of a Common Stock Purchase Warrant dated November 22, 1996, at an
exercise price of $4.125 per share, exercisable in accordance with the
following schedule subject to the terms and conditions of such warrant:
12
<PAGE>
(i) 31,817 shares on May 22, 1997; (ii) 31,818 shares on November 22, 1997;
(iii) 31,817 shares on May 22, 1998; and (iv) 31,818 shares on November 22,
1998.
(5) Includes an aggregate of 54,550 shares of Common Stock issuable upon
exercise of a Common Stock Purchase Warrant dated November 22, 1996, at an
exercise price of $4.125 per share, exercisable in accordance with the
following schedule subject to the terms and conditions of such warrant: (i)
13,637 shares on May 22, 1997; (ii) 13,638 shares on November 22, 1997;
(iii) 13,637 shares on May 22, 1998; and (iv) 13,638 shares on November 22,
1998.
(+) Less than one percent (1%)
PLAN OF DISTRIBUTION
The Shares may be offered and resold by the Selling Shareholders from time
to time in one or more transactions that may take place on the Nasdaq National
Market, in privately negotiated transactions or otherwise, or a combination of
such methods of sale, at fixed prices that may be changed, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. The Selling Shareholders may effect such
transactions by selling the Shares directly or by or through agents or
broker-dealers who may receive compensation in the form of discounts,
concessions or commissions from the Selling Shareholders and/or the purchasers
of the Shares for whom such broker-dealers may act as agent or to whom they sell
as principal or both (which compensation to a particular broker-dealer might be
in excess of customary commissions). Any broker-dealer acquiring the Shares from
the Selling Shareholders may sell such securities in its normal market making
activities, through other brokers on a principal or agency basis, in negotiated
transactions, to its customers or through a combination of such methods.
The Selling Shareholders and any underwriters, broker-dealers or agents that
participate in the distribution of the Shares may be deemed to be "underwriters"
within the meaning of the Securities Act, and any discounts, commissions or
concessions received by them and any provided pursuant to the sale of the Shares
by them might be deemed to be underwriting discounts and commissions under the
Securities Act. In order to comply with the securities laws of certain states,
if applicable, the Shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
The Company entered into an agreement with the Selling Shareholders to
register their Shares under applicable federal and state securities laws. The
Company will pay substantially all of the expenses incident to the offering and
sale of the Shares to the public, other than commissions, concessions and
discounts of underwriters, dealers or agents. Such expenses (excluding such
commissions and discounts) are estimated to be $30,742.90. Such agreement also
provides for cross-indemnification of the Selling Shareholders and the Company
to the extent permitted by law, for losses, claims, damages, liabilities and
expenses arising, under certain circumstances, out of any registration of the
Shares.
EXPERTS
The consolidated financial statements of Analogy, Inc. as of March 31, 1997
and 1996, and for each of the years in the three-year period ended March 31,
1997, have been incorporated by reference herein and in the Registration
Statement in reliance upon the report of KPMG Peat Marwick LLP, independent
certified public accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
13
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses payable by the Company in
connection with the sale, issuance and distribution of the securities being
registered, other than underwriting discounts and commissions. All amounts are
estimates except the Commission's registration fee. None of these expenses will
be paid by the Selling Shareholders.
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee............. $1,242.90
Accounting Fees and Expenses.................................... 7,500.00*
Legal Fees and Expenses......................................... 15,000.00*
Blue Sky Fees and Expenses...................................... 2,000.00*
Miscellaneous Expenses.......................................... 5,000.00*
---------
Total....................................................... $30,742.90*
---------
---------
</TABLE>
- ------------------------
* Estimate.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
As an Oregon corporation the Company is subject to the Oregon Business
Corporation Act ("OBCA") and the exculpation from liability and indemnification
provisions contained therein. Pursuant to Section 60.047(2)(d) of the OBCA,
Article V of the Company's Third Restated Articles of Incorporation (the
"Restated Articles") eliminates the liability of the Company's directors to the
Company or its shareholders, except for any liability related to breach of the
duty of loyalty, actions not in good faith and certain other liabilities.
Article VI of the Restated Articles requires the Company to indemnify its
directors and officers to the fullest extent not prohibited by law.
Section 60.387 et seq. of the OBCA allows corporations to indemnify their
directors and officers against liability where the director or officer has acted
in good faith and with a reasonable belief that actions taken were in the best
interests of the corporation or at least not adverse to the corporation's best
interests and, if in a criminal proceeding, the individual had no reasonable
cause to believe the conduct in question was unlawful. Under the OBCA,
corporations may not indemnify against liability in connection with a claim by
or in the right of the corporation but may indemnify against the reasonable
expenses associated with such claims. Corporations may not indemnify against
breaches of the duty of loyalty. The OBCA provides for mandatory indemnification
of directors against all reasonable expenses incurred in the successful defense
of any claim made or threatened whether or not such claim was by or in the right
of the corporation. Finally, a court may order indemnification if it determines
that the director or officer is fairly and reasonably entitled to
indemnification in view of all the relevant circumstances whether or not the
director or officer met the good faith and reasonable belief standards of
conduct set out in the statute.
The OBCA also provides that the statutory indemnification provisions are not
deemed exclusive of any other rights to which directors or officers may be
entitled under a corporation's articles of incorporation or bylaws, any
agreement, general or specific action of the board of directors, vote of
shareholders or otherwise.
The Company has entered into indemnity agreements with each executive
officer of the Company and each member of the Company's Board of Directors.
These indemnity agreements provide for indemnification of the indemnitee to the
fullest extent allowed by law.
The Company also maintains liability insurance policies which provide for
indemnification of the Company's directors and officers against certain civil
liabilities, including liabilities under the Securities Act.
II-1
<PAGE>
ITEM 16. EXHIBITS
(a) Exhibits
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
- ----------- ------------------------------------------------------------------------------------
<S> <C>
2.1 Agreement and Plan of Merger dated as of October 23, 1996, by and among Analogy,
Inc., Analogy Acquisition Corporation and Symmetry Design Systems, Inc.*
2.2 First Amendment to Agreement and Plan of Merger dated as of November 22, 1996, by
and among Analogy, Inc., Analogy Acquisition Corporation and Symmetry Design
Systems, Inc.**
4.1 Registration Rights Agreement dated as of November 22, 1996 by and among Analogy,
Inc., Alan B. Grebene, Martin G. Walker, Chenmin Hu, Xinping He, Yu Liu, Andrew L.
Hughes, Wenge Wu, Zheng Shi, John A. Wilson, Qing Chang and E-Hui Xu***
4.2 Common Stock Purchase Warrant dated November 22, 1996, granted by Analogy, Inc. to
Alan Grebene
4.3 Common Stock Purchase Warrant dated November 22, 1996, granted by Analogy, Inc. to
Andrew Hughes
4.4 Common Stock Purchase Warrant dated November 22, 1996, granted by Analogy, Inc. to
Chenmin Hu
5.0 Opinion of Ater Wynne Hewitt Dodson & Skerritt, LLP as to the legality of the
securities being registered
23.1 Consent of Ater Wynne Hewitt Dodson & Skerritt, LLP (included in legal opinion filed
as Exhibit 5.0)
23.2 Consent of KPMG Peat Marwick LLP
24.0 Power of Attorney (included in signature page in Part II of the Registration
Statement)
27.0 Financial Data Schedule****
</TABLE>
- ------------------------
*Incorporated by reference to Exhibit 2.1 to the Company's Current Report on
Form 8-K dated November 22, 1996.
**Incorporated by reference to Exhibit 2.2 to the Company's Current Report on
Form 8-K dated November 22, 1996.
***Incorporated by reference to Exhibit 4.1 to the Company's Current Report on
Form 8-K dated November 22, 1996.
****Incorporated by reference to Exhibit 27.0 to the Company's Annual Report on
Form 10-K for its fiscal year ended March 31, 1997.
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 to include any
material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change
to such information in the registration statement;
II-2
<PAGE>
ITEM 17. UNDERTAKINGS (CONTINUED)
(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 therein,
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; and
(4) That, for purposes of determining any liability under the Securities Act
of 1933, each filing of the registrant's annual report pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(5) 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 Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection
with the securities being registered hereunder, the registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE>
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 Portland, State of Oregon, on July 2, 1997.
ANALOGY, INC.
By: /s/ GARY P. ARNOLD
-----------------------------------
Gary P. Arnold
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Gary P. Arnold and Terrence A. Rixford and each
of them singly, as true and lawful attorneys-in-fact and agents with full power
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities to sign the Registration Statement filed herewith and any
or all amendments to said Registration Statement (including post-effective
amendments and new registration statements pursuant to Rule 462 or otherwise),
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission granting unto
said attorneys-in-fact and agents full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
foregoing, as full to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or his substitute, may lawfully do or cause to be done by
virtue hereof.
Witness our hands on the date set forth below.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been duly signed by the following persons in the
capacities indicated on July 2, 1997.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------------------------------ ---------------------------------------------------------
<C> <S>
/s/ GARY P. ARNOLD
------------------------------------------- President, Chief Executive Officer and Director
Gary P. Arnold (Principal Executive Officer)
/s/ TERRENCE A. RIXFORD
------------------------------------------- Vice President-Finance and Administration (Principal
Terrence A. Rixford Financial and Accounting Officer)
/s/ ROBERT L. CATTOI
------------------------------------------- Director
Robert L. Cattoi
/s/ JOHN H. FAEHNDRICH
------------------------------------------- Director
John H. Faehndrich
/s/ NEIL E. GOLDSCHMIDT
------------------------------------------- Director
Neil E. Goldschmidt
/s/ CHARLES E. SPORCK
------------------------------------------- Director
Charles E. Sporck
/s/ FRANK ROEHR
------------------------------------------- Director
Frank Roehr
/s/ DR. MARTIN VLACH
------------------------------------------- Director
Dr. Martin Vlach
</TABLE>
II-4
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
2.1 Agreement and Plan of Merger dated as of October 23, 1996, by and among Analogy, Inc., Analogy
Acquisition Corporation and Symmetry Design Systems, Inc.*
2.2 First Amendment to Agreement and Plan of Merger dated as of November 22, 1996, by and among Analogy,
Inc., Analogy Acquisition Corporation and Symmetry Design Systems, Inc.**
4.1 Registration Rights Agreement dated as of November 22, 1996 by and among Analogy, Inc., Alan B. Grebene,
Martin G. Walker, Chenmin Hu, Xinping He, Yu Liu, Andrew L. Hughes, Wenge Wu, Zheng Shi, John A.
Wilson, Qing Chang and E-Hui Xu***
4.2 Common Stock Purchase Warrant dated November 22, 1996, granted by Analogy, Inc. to Alan Grebene
4.3 Common Stock Purchase Warrant dated November 22, 1996, granted by Analogy, Inc. to Andrew Hughes
4.4 Common Stock Purchase Warrant dated November 22, 1996, granted by Analogy, Inc. to Chenmin Hu
5.0 Opinion of Ater Wynne Hewitt Dodson & Skerritt, LLP as to the legality of the securities being
registered
23.1 Consent of Ater Wynne Hewitt Dodson & Skerritt, LLP (included in legal opinion filed as Exhibit 5.0)
23.2 Consent of KPMG Peat Marwick LLP
24.0 Power of Attorney (included in signature page in Part II of the Registration Statement)
27.0 Financial Data Schedule****
</TABLE>
- ------------------------
*Incorporated by reference to Exhibit 2.1 to the Company's Current Report on
Form 8-K dated November 22, 1996.
**Incorporated by reference to Exhibit 2.2 to the Company's Current Report on
Form 8-K dated November 22, 1996.
***Incorporated by reference to Exhibit 4.1 to the Company's Current Report on
Form 8-K dated November 22, 1996.
****Incorporated by reference to Exhibit 27.0 to the Company's Annual Report on
Form 10-K for its fiscal year ended March 31, 1997.
II-5
<PAGE>
NEITHER THIS WARRANT NOR ANY OF THE SECURITIES ISSUABLE HEREUNDER HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND AS SUCH
MAY NOT BE OFFERED, SOLD, OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED
EXCEPT PURSUANT TO A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO SUCH
WARRANT OR SECURITIES, OR UNLESS SOLD IN FULL COMPLIANCE WITH RULE 144
PROMULGATED UNDER THE ACT OR UNLESS THE COMPANY SHALL RECEIVE AN OPINION FROM
COUNSEL TO HOLDER, REASONABLY SATISFACTORY TO THE COMPANY TO THE EFFECT THAT
SUCH REGISTRATION IS NOT REQUIRED.
ANALOGY, INC.
Common Stock Purchase Warrant
November 22, 1996
THIS CERTIFIES THAT, for value received, Alan Grebene ("Grebene") is
entitled to purchase up to Two Hundred Eighteen Thousand One Hundred Eighty
(218,180) shares (the "Shares") of Common Stock of Analogy, Inc., an Oregon
corporation (the "Company"), at a price per share of $ 4.125 (such price and
such other price as shall result, from time to time, from adjustments specified
below is referred to herein as the "Warrant Price"), subject to the provisions
and upon the terms and conditions hereinafter set forth. As used herein, the
term "Common Stock" shall mean the Company's duly authorized Common Stock, no
par value, and the term "Grant Date" shall mean the date set forth above.
1. TERM.
a. WHEN EXERCISABLE. Subject to the terms hereof, the purchase
rights represented by this Warrant vest and become exercisable, in accordance
with the following schedule:
54,545 Shares on that date which is 6 months from the date hereof;
54,545 Shares on that date which is 12 months from the date hereof;
54,545 Shares on that date which is 18 months from the date hereof;
and
54,545 Shares on that date which is 24 months from the date hereof;
provided, however, that in the event Grebene's employment with the Company or
any affiliate thereof is terminated for "cause" (as defined in that certain
Employment Agreement by and between Symmetry Design Systems, Inc. and Alan
Grebene dated as of November 22, 1996 (the "Employment Agreement")) or
voluntarily by Grebene prior to November 22, 1998, the purchase rights
represented by this Warrant shall vest and be exercisable if and only as vested
and exercisable on the date of such termination and in accordance with the last
sentence of this Paragraph 1; and provided, further, that in the event Grebene's
employment with the Company or any affiliate thereof is terminated without
"cause" (as defined in the
1
<PAGE>
Employment Agreement) prior to November 22, 1998, the purchase rights
represented by this Warrant shall continue to vest and become exercisable in
accordance with the foregoing schedule and the last sentence of this Paragraph
1. Grebene may exercise the purchase rights represented by this Warrant (to the
extent the same are vested and exercisable), no later than the 180th day
following (i) the termination date of Grebene's employment with the Company or
any affiliate thereof if such termination was for "cause" or voluntary, or (ii)
the period ending November 22, 1998 if Grebene's employment with the Company or
any affiliate thereof was terminated without "cause."
b. ACCELERATION OF EXERCISABLITY. Notwithstanding the
provisions of subparagraph 1(a) above, in the case of (i) any merger of the
Company with or into another corporation where the Company is not the survivor
of such merger, (ii) any sale of all or substantially all of the assets of the
Company, (iii) any acquisition by any person, entity or group within the meaning
of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), of the beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of securities of the Company
representing in excess of fifty percent (50%) of the voting power entitled to
vote in the election of directors, or (iv) the death or permanent disability of
Grebene, then, upon the effective date of such merger, sale or acquisition, or
upon the date of such death or determination of permanent disability, 100% of
the Shares shall be vested and immediately exercisable.
2. METHOD OF EXERCISE; NET ISSUE EXERCISE.
a. METHOD OF EXERCISE: PAYMENT: ISSUANCE OF NEW WARRANT. The
purchase right represented by this Warrant may be exercised by Grebene, in whole
or in part, at any time or from time to time, at the election of Grebene, by the
surrender of this Warrant (with the notice of exercise form attached hereto as
EXHIBIT A duly executed) at the principal office of the Company and by the
payment to the Company, by cash, check or wire transfer, of an amount equal to
the then applicable Warrant Price per share multiplied by the number of Shares
then being purchased.
b. NET ISSUE EXERCISE. In lieu of exercising this Warrant
under subparagraph 2(a) above, Grebene may elect to receive shares equal to the
value of this Warrant (or the portion thereof being canceled) by surrender of
this Warrant at the principal office of the Company, together with notice of
such election, in which event the Company shall issue to Grebene a number of
Shares computed using the following formula:
X= Y(A-B)
------
A
Where: X= The number of Shares to be issued to Grebene
Y= the number of Shares to be exercised under this Warrant at the
time of such exercise (which number shall not exceed the
total number
2
<PAGE>
of Shares exercisable under this Warrant at the time of such
tender.)
A= the fair market value of one share of Common Stock at the time of
such exercise.
B= the per share Warrant Price (as adjusted through the date of such
exercise.)
For purposes of this subparagraph 2(b), the fair market value of the Common
Stock shall be determined as follows:
(a) if traded on a securities exchange, the fair
market value shall be the average of the closing prices over the ten (10) day
trading period immediately preceding three days before the day the current fair
market value of the securities is being determined; or
(b) if actively traded over-the-counter, the fair
market value shall be deemed to be the average of the closing bid and asked
prices quoted on the Nasdaq system (or similar system) over the ten (10) day
trading period immediately preceding three days before the day the current fair
market value of the securities is being determined.
The person or persons in whose name(s) any certificate(s) representing
Shares shall be issuable upon exercise of this Warrant shall be deemed to have
become the holder(s) of record of, and shall be treated for all purposes as the
record holder(s) of, the shares represented thereby (and such shares shall be
deemed to have been issued) immediately prior to the close of business on the
date or dates upon which this Warrant is exercised. In the event of any
exercise of the rights represented by this Warrant, certificates for the shares
of stock so purchased shall be delivered to Grebene as soon as possible and in
any event within fifteen (15) days of receipt of such exercise and, unless this
Warrant has been fully exercised or expired, a new Warrant representing the
portion of the Shares, if any, with respect to which this Warrant shall not then
have been exercised shall also be issued to Grebene as soon as possible and in
any event within such fifteen (15)-day period.
3. STOCK FULLY PAID; RESERVATION OF SHARES. All Shares that may be
issued upon the exercise of the rights represented by this Warrant will, upon
issuance, be fully paid and nonassessable, and free from all taxes, liens and
charges with respect to the issue thereof. During the period within which the
rights represented by this Warrant may be exercised, the Company will at all
times have authorized and reserved for the purpose of issuance upon exercise of
the purchase rights evidenced by this Warrant, a sufficient number of Shares to
provide for the exercise of the rights represented by this Warrant.
4. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SHARES. The number and
kind of securities purchasable upon the exercise of the Warrant and the Warrant
Price shall be subject to adjustment from time to time upon the occurrence of
certain events as follows:
3
<PAGE>
a. RECLASSIFICATION OR MERGER. In case of any
recapitalization, reclassification, change or conversion of Common Stock
issuable upon exercise of this Warrant (other than a change in par value, or
from par value to no par value, or from no par value to par value, or as a
result of a subdivision or combination), or in case of any merger of the Company
with or into another corporation (other than a merger with another corporation
in which the Company is the continuing and surviving corporation and which does
not result in any reclassification or change of outstanding securities issuable
upon exercise of this Warrant), or in case of any sale of all or substantially
all of the assets of the Company, the Company, or such successor or purchasing
corporation, as the case may be, shall execute a new Warrant (in form and
substance satisfactory to Grebene) providing that Grebene shall have the right
to exercise such new Warrant and upon such exercise to receive, in lieu of each
share of Common Stock theretofore issuable upon exercise of this Warrant, the
kind and amount of shares of stock, other securities, money and property
receivable upon such reclassification, change or merger by a holder of one share
of Common Stock. Such new Warrant shall provide for adjustments that shall be
as nearly equivalent as may be practicable to the adjustments provided for in
this Paragraph 4. The provisions of this subparagraph 4(a) shall similarly
apply to successive reclassification, changes, mergers and transfers.
b. SUBDIVISION OR COMBINATION OF SHARES. If the Company at any
time while this Warrant remains outstanding and unexpired shall subdivide or
combine its Common Stock, the Warrant Price and the number of shares of Common
Stock issuable upon exercise hereof shall be proportionately adjusted such that
the aggregate exercise price of this Warrant shall at all times remain equal,
and such that Grebene will be entitled to receive, after such subdivision or
combination, that number of shares Grebene would have been entitled to received
in connection with such subdivision or combination if Grebene had exercised this
Warrant immediately prior to the effective date of such subdivision or
combination.
c. STOCK DIVIDENDS. If the Company at any time while this
Warrant is outstanding and unexpired shall pay a dividend payable in shares of
Common Stock (except any distribution specifically provided for in the foregoing
subparagraphs 4(a) and 4(b), then (i) the Warrant Price shall be adjusted, from
and after the date of determination of shareholders entitled to receive such
dividend or distribution, to that price determined by multiplying the Warrant
Price in effect immediately prior to such date of determination by a fraction
(x) the numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to such dividend or distribution, and (y) the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately after such dividend or distribution and (ii) the number
of shares of Common Stock subject to this Warrant shall be proportionately
adjusted such that the aggregate exercise price of this Warrant shall at all
times remain equal.
d. NO IMPAIRMENT. The Company will not, by amendment of its
Articles of Incorporation or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action,
4
<PAGE>
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Company, but will at all times in good
faith assist in the carrying out of all the provisions of this Paragraph 4 and
in the taking of all such action as may be necessary or appropriate in order to
protect the rights of Grebene as the holder of this Warrant against impairment.
e. NOTICES OF SIGNIFICANT EVENTS. At any time while this
Warrant is outstanding and unexpired, in the event the Company undertakes the
payment of any dividend or other distribution or a merger or consolidation of
the Company with or into any other corporation, or any proposed sale, lease or
conveyance of all or substantially all of the assets of the Company, or any
proposed liquidation, dissolution or winding up of the Company, or any proposed
amendment to the Company's Articles of Incorporation, or any public offering of
its Common Stock the Company shall mail to Grebene, at least twenty (20) days
prior to the date of consummating such event, a notice specifying the event and
the date on which such event is then proposed to be consummated, and before
which it will not be consummated.
5. NOTICE OF ADJUSTMENTS. Whenever, while this Warrant is
outstanding and unexpired, the Warrant Price shall be adjusted pursuant to the
provisions hereof, the Company shall within thirty (30) days of such adjustment
deliver a certificate signed by its chief financial officer to Grebene as the
registered holder hereof setting forth, in reasonable detail, the event
requiring the adjustment, the amount of the adjustment, the method by which such
adjustment was calculated, and the Warrant Price after giving effect to such
adjustment.
6. FRACTIONAL SHARES. No fractional shares of Common Stock will be
issued in connection with any exercise hereunder, but in lieu of such fractional
shares, the Company shall make a cash payment therefor upon the basis of the
Warrant Price then in effect.
7. RIGHTS AS SHAREHOLDER. Grebene, as the holder of this Warrant,
shall not be entitled to vote or receive dividends and shall not be deemed the
holder of Common Stock, nor shall anything contained herein be construed to
confer upon Grebene as the holder of this Warrant, any of the rights of a
shareholder of the Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof, or to receive
notice of meetings, or to receive dividends or subscription rights or otherwise
until this Warrant shall have been exercised and the shares of Common Stock
purchasable upon the exercise hereof shall have become deliverable, as provided
herein.
8. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to Grebene as follows:
a. The Company is a corporation duly organized and active under
the laws of the State of Oregon and has all requisite corporate power and
authority to carry on its business as now conducted.
5
<PAGE>
b. This Warrant has been duly authorized by all necessary
corporate action by the Company and has been duly executed by the Company, and
this Warrant represents the valid and binding obligation of the Company
enforceable in accordance with the terms set forth herein, except as may be
limited by bankruptcy or other similar laws related to creditors' rights or
equitable remedies.
c. The Shares purchasable upon the exercise hereof have been
duly authorized and reserved for issuance by the Company and when issued in
accordance with the terms hereof, will be validly issued, fully paid and
nonassessable and will be issued in compliance with all applicable federal and
state securities laws.
d. The execution and delivery of this Warrant does not, and the
issuance of the shares of Common Stock upon exercise of this Warrant in
accordance with the terms hereof will not, violate or be inconsistent with the
Company's Articles of Incorporation and the Company's Bylaws, does not and will
not contravene any law, governmental rule or regulation, judgment or order
currently applicable to the Company, and does not and will not contravene any
provision of, or constitute a default under, any indenture, mortgage, contract,
or other instrument of which the Company is a party or by which it is bound or
require the consent or approval of, the giving of notice to, the registration
with or the taking of any action in respect of or by, any federal state or local
governmental authority or agency or other person.
9. REPRESENTATIONS AND WARRANTIES OF GREBENE. Grebene hereby
represents and warrants to the Company the following:
a. Grebene is aware of the Company's business affairs and
financial condition, and has acquired information about the Company sufficient
to reach an informed and knowledgeable decision to acquire this Warrant and the
Shares issuable upon exercise of this Warrant. Grebene is acquiring this
Warrant and the Shares issuable upon exercise of this Warrant for its own
account for investment purposes only and not with a view to any "distribution"
thereof that would not otherwise be in compliance with the Act.
b. Grebene understands that neither this Warrant nor the Shares
have been registered under the Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of Grebene's investment intent as expressed herein.
c. Grebene understands that this Warrant and the Shares
issuable upon the exercise of this Warrant must be held indefinitely unless
subsequently registered under the Act and any applicable state securities laws,
or unless exemptions from registration are otherwise available.
d. Grebene is aware of the provisions of Rule 144, promulgated
under the Act, which, in substance, permits limited public resale of "restricted
securities"
6
<PAGE>
acquired, directly or indirectly, from the issuer thereof (or from an affiliate
of such issuer), in a non-public offering subject to the satisfaction of certain
conditions.
e. With respect to any offer, sale or other disposition of this
Warrant or any Shares acquired pursuant to the exercise of this Warrant prior to
registration of such Warrant or Shares, Grebene and each subsequent holder of
this Warrant agrees to (i) give written notice to the Company prior thereto,
describing the manner thereof and (ii) if reasonably requested by the Company,
an opinion of counsel, reasonably satisfactory to the Company, confirming that
such offer, sale or other disposition may be effected without registration or
qualification under the Act as then in effect or any federal or state law then
in effect.
10. MODIFICATION AND WAIVER. This Warrant and any provision hereof
may be changed, waived, discharged or terminated only if expressly set forth in
an instrument in writing signed by the Company and Grebene.
11. NOTICES. Unless otherwise provided, any notice required or
permitted herein shall be given in writing and shall be deemed effectively given
upon personal delivery or fax to the party to be notified or three (3) days
after deposit with the United States Post Office, by registered or certified
mail, postage prepaid and addressed to the party to be notified at the address
indicated for such party on the signature page hereof, or such other address as
such party may designate by 10 days advance written notice to the other party.
12. BINDING EFFECT ON SUCCESSORS. This Warrant shall be binding upon
any corporation succeeding the Company by merger, consolidation or acquisition
of all or substantially all of the Company's assets, and all of the obligations
of the Company relating to the Common Stock issuable upon the exercise of this
Warrant shall survive the exercise and termination of this Warrant, and all of
the covenants and agreements of the Company shall inure to the benefit of the
successors and assigns of the holder hereof. The Company will, at the time of
the exercise of this Warrant, in whole or in part, upon request of the holder
hereof but at the Company's expense, acknowledge in writing its continuing
obligation to the holder hereof in respect of any rights to which the holder
hereof shall continue to be entitled after such exercise in accordance with this
Warrant; provided, that the failure of the holder hereof to make any such
request shall not affect the continuing obligation of the Company to the holder
hereof in respect of such rights.
13. LOST WARRANTS OR STOCK CERTIFICATES. The Company covenants to
the holder hereof that upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction, or mutilation of this Warrant or any
stock certificate and in the case of any such loss, theft or destruction, upon
receipt of an indemnity reasonably satisfactory to the Company, or in the case
of any such mutilation upon surrender and cancellation of such Warrant or stock
certificate, the Company will make and deliver a new Warrant or stock
certificate, of like tenor, in lieu of the lost, stolen, destroyed, or mutilated
Warrant or stock certificate.
7
<PAGE>
14. DESCRIPTIVE HEADINGS. The descriptive headings of the several
paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant.
15. GOVERNING LAW. This Warrant shall be governed by, and construed
under, the laws of the State of Oregon as applied to agreements among Oregon
residents entered into and to be performed entirely within Oregon.
16. REGISTRATION RIGHTS. The Shares shall be entitled to those
registration rights set forth in that certain Registration Rights Agreement
dated as of the date hereof by and among the Company and the shareholders
identified therein (the "Registration Rights Agreement"); provided, however,
that the Company may, at its discretion, register the Shares by filing a
Registration Statement on Form S-8 with the Securities and Exchange Commission,
covering the Shares, prior to the filing of any registration statement pursuant
to the Registration Rights Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
effective as of the date first above written.
ANALOGY, INC.
By: /s/ Gary P. Arnold
-----------------------------------------------
Gary P. Arnold
President and Chief Executive Officer
Address: 9205 S.W. Gemini Drive
Beaverton, Oregon 97008
/s/ Alan Grebene
- -------------------------
Alan Grebene
8
<PAGE>
EXHIBIT A
NOTICE OF EXERCISE
To: Analogy, Inc.
9205 S.W. Gemini Drive
Beaverton, Oregon 97008
Attn: ___________________________________
1. The undersigned hereby elects to purchase _____________ shares of
Common Stock of Analogy, Inc. pursuant to the terms of the attached Warrant, and
tenders herewith payment of the purchase price of such shares in full.
2. Please issue a certificate or certificates representing said
shares in the name of the undersigned or in such other name or names as are
specified below.
Name:
_____________________________________________
Address: ___________________________________
___________________________________
9
<PAGE>
NEITHER THIS WARRANT NOR ANY OF THE SECURITIES ISSUABLE HEREUNDER HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND AS SUCH
MAY NOT BE OFFERED, SOLD, OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED
EXCEPT PURSUANT TO A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO SUCH
WARRANT OR SECURITIES, OR UNLESS SOLD IN FULL COMPLIANCE WITH RULE 144
PROMULGATED UNDER THE ACT OR UNLESS THE COMPANY SHALL RECEIVE AN OPINION FROM
COUNSEL TO HOLDER, REASONABLY SATISFACTORY TO THE COMPANY TO THE EFFECT THAT
SUCH REGISTRATION IS NOT REQUIRED.
ANALOGY, INC.
Common Stock Purchase Warrant
November 22, 1996
THIS CERTIFIES THAT, for value received, Andrew Hughes ("Hughes") is
entitled to purchase up to Fifty Four Thousand Five Hundred Fifty (54,550)
shares (the "Shares") of Common Stock of Analogy, Inc., an Oregon corporation
(the "Company"), at a price per share of $ 4.125 (such price and such other
price as shall result, from time to time, from adjustments specified below is
referred to herein as the "Warrant Price"), subject to the provisions and upon
the terms and conditions hereinafter set forth. As used herein, the term
"Common Stock" shall mean the Company's duly authorized Common Stock, no par
value, and the term "Grant Date" shall mean the date set forth above.
1. TERM.
a. WHEN EXERCISABLE. Subject to the terms hereof, the purchase
rights represented by this Warrant vesting and becoming exercisable, in
accordance with the following schedule:
13,637 Shares on that date which is 6 months from the date hereof;
13,638 Shares on that date which is 12 months from the date hereof;
13,637 Shares on that date which is 18 months from the date hereof;
and
13,638 Shares on that date which is 24 months from the date hereof;
provided, however, that in the event Hughes' employment with the Company or any
affiliate thereof is terminated for "cause" (as defined in that certain
Employment Agreement by and between Symmetry Design Systems, Inc. and Andrew
Hughes dated as of November 22, 1996 (the "Employment Agreement")) or
voluntarily by Hughes prior to November 22, 1998, the purchase rights
represented by this Warrant shall vest and be exercisable if and only as vested
and exercisable on the date of such termination and in accordance with the last
sentence of this Paragraph 1; and provided, further, that in the event Hughes'
employment with the Company or any affiliate thereof is terminated without
"cause" (as defined in the
1
<PAGE>
Employment Agreement) prior to November 22, 1998, the purchase rights
represented by this Warrant shall continue to vest and become exercisable in
accordance with the foregoing schedule and the last sentence of this Paragraph
1. Hughes may exercise the purchase rights represented by this Warrant (to the
extent the same are vested and exercisable), no later than the 180th day
following (i) the termination date of Hughes' employment with the Company or any
affiliate thereof if such termination was for "cause" or voluntary, or (ii) the
period ending November 22, 1998 if Hughes' employment with the Company or any
affiliate thereof was terminated without "cause."
b. ACCELERATION OF EXERCISABLITY. Notwithstanding the
provisions of subparagraph 1(a) above, in the case of (i) any merger of the
Company with or into another corporation where the Company is not the survivor
of such merger, (ii) any sale of all or substantially all of the assets of the
Company, (iii) any acquisition by any person, entity or group within the meaning
of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), of the beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of securities of the Company
representing in excess of fifty percent (50%) of the voting power entitled to
vote in the election of directors, or (iv) the death or permanent disability of
Hughes, then, upon the effective date of such merger, sale or acquisition, or
upon the date of such death or determination of permanent disability, 100% of
the Shares shall be vested and immediately exercisable.
2. METHOD OF EXERCISE; NET ISSUE EXERCISE.
a. METHOD OF EXERCISE: PAYMENT: ISSUANCE OF NEW WARRANT. The
purchase right represented by this Warrant may be exercised by Hughes, in whole
or in part, at any time or from time to time, at the election of Hughes, by the
surrender of this Warrant (with the notice of exercise form attached hereto as
EXHIBIT A duly executed) at the principal office of the Company and by the
payment to the Company, by cash, check or wire transfer, of an amount equal to
the then applicable Warrant Price per share multiplied by the number of Shares
then being purchased.
b. NET ISSUE EXERCISE. In lieu of exercising this Warrant
under subparagraph 2(a) above, Hughes may elect to receive shares equal to the
value of this Warrant (or the portion thereof being canceled) by surrender of
this Warrant at the principal office of the Company, together with notice of
such election, in which event the Company shall issue to Hughes a number of
Shares computed using the following formula:
X= Y(A-B)
------
A
Where: X= The number of Shares to be issued to Hughes
Y= the number of Shares to be exercised under this Warrant at the
time of such exercise (which number shall not exceed the
total number
2
<PAGE>
of Shares exercisable under this Warrant at the time of such
tender.)
A= the fair market value of one share of Common Stock at the time of
such exercise.
B= the per share Warrant Price (as adjusted through the date of such
exercise.)
For purposes of this subparagraph 2(b), the fair market value of the Common
Stock shall be determined as follows:
(a) if traded on a securities exchange, the fair
market value shall be the average of the closing prices over the ten (10) day
trading period immediately preceding three days before the day the current fair
market value of the securities is being determined; or
(b) if actively traded over-the-counter, the fair
market value shall be deemed to be the average of the closing bid and asked
prices quoted on the Nasdaq system (or similar system) over the ten (10) day
trading period immediately preceding three days before the day the current fair
market value of the securities is being determined.
The person or persons in whose name(s) any certificate(s) representing
Shares shall be issuable upon exercise of this Warrant shall be deemed to have
become the holder(s) of record of, and shall be treated for all purposes as the
record holder(s) of, the shares represented thereby (and such shares shall be
deemed to have been issued) immediately prior to the close of business on the
date or dates upon which this Warrant is exercised. In the event of any
exercise of the rights represented by this Warrant, certificates for the shares
of stock so purchased shall be delivered to Hughes as soon as possible and in
any event within fifteen (15) days of receipt of such exercise and, unless this
Warrant has been fully exercised or expired, a new Warrant representing the
portion of the Shares, if any, with respect to which this Warrant shall not then
have been exercised shall also be issued to Hughes as soon as possible and in
any event within such fifteen (15)-day period.
3. STOCK FULLY PAID; RESERVATION OF SHARES. All Shares that may be
issued upon the exercise of the rights represented by this Warrant will, upon
issuance, be fully paid and nonassessable, and free from all taxes, liens and
charges with respect to the issue thereof. During the period within which the
rights represented by the Warrant may be exercised, the Company will at all
times have authorized and reserved for the purpose of issuance upon exercise of
the purchase rights evidenced by this Warrant, a sufficient number of Shares to
provide for the exercise of the rights represented by this Warrant.
4. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SHARES. The number and
kind of securities purchasable upon the exercise of the Warrant and the Warrant
Price shall be subject to adjustment form time to time upon the occurrence of
certain events as follows:
3
<PAGE>
a. RECLASSIFICATION OR MERGER. In case of any
recapitalization, reclassification, change or conversion of Common Stock
issuable upon exercise of this Warrant (other than a change in par value, or
from par value to no par value, or from no par value to par value, or as a
result of a subdivision or combination), or in case of any merger of the Company
with or into another corporation (other than a merger with another corporation
in which the Company is the continuing and surviving corporation and which does
not result in any reclassification or change of outstanding securities issuable
upon exercise of this Warrant), or in case of any sale of all or substantially
all of the assets of the Company, the Company, or such successor or purchasing
corporation, as the case may be, shall execute a new Warrant (in form and
substance satisfactory to Hughes) providing that Hughes shall have the right to
exercise such new Warrant and upon such exercise to receive, in lieu of each
share of Common Stock theretofore issuable upon exercise of this Warrant, the
kind and amount of shares of stock, other securities, money and property
receivable upon such reclassification, change or merger by a holder of one share
of Common Stock. Such new Warrant shall provide for adjustments that shall be
as nearly equivalent as may be practicable to the adjustments provided for in
this Paragraph 4. The provisions of this subparagraph 4(a) shall similarly
apply to successive reclassification, changes, mergers and transfers.
b. SUBDIVISION OR COMBINATION OF SHARES. If the Company at any
time while this Warrant remains outstanding and unexpired shall subdivide or
combine its Common Stock, the Warrant Price and the number of shares of Common
Stock issuable upon exercise hereof shall be proportionately adjusted such that
the aggregate exercise price of this Warrant shall at all time remain equal, and
such that Hughes will be entitled to receive, after such subdivision or
combination, that number of shares Hughes would have been entitled to received
in connection with such subdivision or combination if Hughes had exercised this
Warrant immediately prior to the effective date of such subdivision or
combination..
c. STOCK DIVIDENDS. If the Company at any time while this
Warrant is outstanding and unexpired shall pay a dividend payable in shares of
Common Stock (except any distribution specifically provided for in the foregoing
subparagraphs 4(a) and 4(b), then (i) the Warrant Price shall be adjusted, from
and after the date of determination of shareholders entitled to receive such
dividend or distribution, to that price determined by multiplying the Warrant
Price in effect immediately prior to such date of determination by a fraction
(x) the numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to such dividend or distribution, and (y) the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately after such dividend or distribution and (ii) the number
of shares of Common Stock subject to this Warrant shall be proportionately
adjusted such that the aggregate exercise price of this Warrant shall at all
times remain equal.
d. NO IMPAIRMENT. The Company will not, by amendment of its
Articles of Incorporation or through any reorganization, recapitalization,
transfer or assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or
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performed hereunder by the Company, but will at all times in good faith assist
in the carrying out of all the provisions of this Paragraph 4 and in the taking
of all such action as may be necessary or appropriate in order to protect the
rights of Hughes as the holder of this Warrant against impairment.
e. NOTICES OF SIGNIFICANT EVENTS. At any time while this
Warrant is outstanding and unexpired, in the event the Company undertakes the
payment of any dividend or other distribution or a merger or consolidation of
the Company with or into any other corporation, or any proposed sale, lease or
conveyance of all or substantially all of the assets of the Company, or any
proposed liquidation, dissolution or winding up of the Company, or any proposed
amendment to the Company's Articles of Incorporation, or any public offering of
its Common Stock the Company shall mail to Hughes, at least twenty (20) days
prior to the date of consummating such event, a notice specifying the event and
the date on which such event is then proposed to be consummated, and before
which it will not be consummated.
5. NOTICE OF ADJUSTMENTS. Whenever, while this Warrant is
outstanding and unexpired, the Warrant Price shall be adjusted pursuant to the
provisions hereof, the Company shall within thirty (30) days of such adjustment
deliver a certificate signed by its chief financial officer to Hughes as the
registered holder hereof setting forth, in reasonable detail, the event
requiring the adjustment, the amount of the adjustment, the method by which such
adjustment was calculated, and the Warrant Price after giving effect to such
adjustment.
6. FRACTIONAL SHARES. No fractional shares of Common Stock will be
issued in connection with any exercise hereunder, but in lieu of such fractional
shares, the Company shall make a cash payment therefor upon the basis of the
Warrant Price then in effect.
7. RIGHTS AS SHAREHOLDER. Hughes, as the holder of the Warrant,
shall not be entitled to vote or receive dividends and shall not be deemed the
holder of Common Stock, nor shall anything contained herein be construed to
confer upon Hughes as the holder of this Warrant, any of the rights of a
shareholder of the Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof, or to receive
notice of meetings, or to receive dividends or subscription rights or otherwise
until this Warrant shall have been exercised and the shares of Common Stock
purchasable upon the exercise hereof shall have become deliverable, as provided
herein.
8. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to Hughes as follows:
a. The Company is a corporation duly organized and active under
the laws of the State of Oregon and has all requisite corporate power and
authority to carry on its business as now conducted.
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b. This Warrant has been duly authorized by all necessary
corporate action by the Company and has been duly executed by the Company, and
this Warrant represents the valid and binding obligation of the Company
enforceable in accordance with the terms set forth herein, except as may be
limited by bankruptcy or other similar laws related to creditors' rights or
equitable remedies.
c. The Shares purchasable upon the exercise hereof have been
duly authorized and reserved for issuance by the Company and when issued in
accordance with the terms hereof, will be validly issued, fully paid and
nonassessable and will be issued in compliance with all applicable federal and
state securities laws.
d. The execution and delivery of this Warrant does not, and the
issuance of the shares of Common Stock upon exercise of this Warrant in
accordance with the terms hereof will not violate or be inconsistent with the
Company's Articles of Incorporation and the Company's Bylaws, does not and will
not contravene any law, governmental rule or regulation, judgment or order
currently applicable to the Company, and does not and will not contravene any
provision of, or constitute a default under, any indenture, mortgage, contract,
or other instrument of which the Company is a party or by which it is bound or
require the consent or approval of, the giving of notice to, the registration
with or the taking of any action in respect of or by, any federal state or local
governmental authority or agency or other person.
9. REPRESENTATIONS AND WARRANTIES OF HUGHES. Hughes hereby
represents and warrants to the Company the following:
a. Hughes is aware of the Company's business affairs and
financial condition, and has acquired information about the Company sufficient
to reach an informed and knowledgeable decision to acquire this Warrant and the
Shares issuable upon exercise of this Warrant. Hughes is acquiring this Warrant
and the Shares issuable upon exercise of this Warrant for its own account for
investment purposes only and not with a view to any "distribution" thereof that
would not otherwise be in compliance with the Act.
b. Hughes understands that neither this Warrant nor the Shares
have been registered under the Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of Hughes' investment intent as expressed herein.
c. Hughes understands that this Warrant and the Shares issuable
upon the exercise of this Warrant must be held indefinitely unless subsequently
registered under the Act and any applicable state securities laws, or unless
exemptions from registration are otherwise available.
d. Hughes is aware of the provisions of Rule 144, promulgated
under the Act, which, in substance, permits limited public resale of "restricted
securities"
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acquired, directly or indirectly, from the issuer thereof (or from an affiliate
of such issuer), in a non-public offering subject to the satisfaction of certain
conditions.
e. With respect to any offer, sale or other disposition of this
Warrant or any Shares acquired pursuant to the exercise of this Warrant prior to
registration of such Warrant or Shares, Hughes hereof and each subsequent holder
of this Warrant agrees to (i) give written notice to the Company prior thereto,
describing the manner thereof and (ii) if reasonably requested by the Company,
an opinion of counsel, reasonably satisfactory to the Company, confirming that
such offer, sale or other disposition may be effected without registration or
qualification under the Act as then in effect or any federal or state law then
in effect.
10. MODIFICATION AND WAIVER. This Warrant and any provision hereof
may be changed, waived, discharged or terminated only if expressly set forth in
an instrument in writing signed by the Company and Hughes.
11. NOTICES. Unless otherwise provided, any notice required or
permitted herein shall be given in writing and shall be deemed effectively given
upon personal delivery or fax to the party to be notified or three (3) days
after deposit with the United States Post Office, by registered or certified
mail, postage prepaid and addressed to the party to be notified at the address
indicated for such party on the signature page hereof, or such other address as
such party may designate by 10 days advance written notice to the other party.
12. BINDING EFFECT ON SUCCESSORS. This Warrant shall be binding upon
any corporation succeeding the Company by merger, consolidation or acquisition
of all or substantially all of the Company's assets, and all of the obligations
of the Company relating to the Common Stock issuable upon the exercise of this
Warrant shall survive the exercise and termination of this Warrant, and all of
the covenants and agreements of the Company shall inure to the benefit of the
successors and assigns of the holder hereof. The Company will, at the time of
the exercise of this Warrant, in whole or in part, upon request of the holder
hereof but at the Company's expense, acknowledge in writing its continuing
obligation to the holder hereof in respect of any rights to which the holder
hereof shall continue to be entitled after such exercise in accordance with this
Warrant; provided, that the failure of the holder hereof to make any such
request shall not affect the continuing obligation of the Company to the holder
hereof in respect of such rights.
13. LOST WARRANTS OR STOCK CERTIFICATES. The Company covenants to
the holder hereof that upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction, or mutilation of this Warrant or any
stock certificate and in the case of any such loss, theft or destruction, upon
receipt of an indemnity reasonably satisfactory to the Company, or in the case
of any such mutilation upon surrender and cancellation of such Warrant or stock
certificate, the Company will make and deliver a new Warrant or stock
certificate, of like tenor, in lieu of the lost, stolen, destroyed, or mutilated
Warrant or stock certificate.
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14. DESCRIPTIVE HEADINGS. The descriptive headings of the several
paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant.
15. GOVERNING LAW. This Warrant shall be governed by, and construed
under, the laws of the State of Oregon as applied to agreements among Oregon
residents entered into and to be performed entirely within Oregon.
16. REGISTRATION RIGHTS. The Shares shall be entitled to those
registration rights set forth in that certain Registration Rights Agreement
dated as of the date hereof by and among the Company and the shareholders
identified therein (the "Registration Rights Agreement"); provided, however,
that the Company may, at its discretion, register the Shares by filing a
Registration Statement on Form S-8 with the Securities and Exchange Commission,
covering the Shares, prior to the filing of any registration statement pursuant
to the Registration Rights Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
effective as of the date first above written.
ANALOGY, INC.
By: /s/ Gary P. Arnold
----------------------------------------------
Gary P. Arnold
President and Chief Executive Officer
Address: 9205 S.W. Gemini Drive
Beaverton, Oregon 97008
/s/ Andrew Hughes
- -------------------------
Andrew Hughes
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<PAGE>
EXHIBIT A
NOTICE OF EXERCISE
To: Analogy, Inc.
9205 S.W. Gemini Drive
Beaverton, Oregon 97008
Attn: ____________________________________
1. The undersigned hereby elects to purchase __________ shares of
Common Stock of Analogy, Inc. pursuant to the terms of the attached Warrant, and
tenders herewith payment of the purchase price of such shares in full.
2. Please issue a certificate or certificates representing said
shares in the name of the undersigned or in such other name or names as are
specified below.
Name:
_____________________________________________
Address: ___________________________________
___________________________________
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<PAGE>
NEITHER THIS WARRANT NOR ANY OF THE SECURITIES ISSUABLE HEREUNDER HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND AS SUCH
MAY NOT BE OFFERED, SOLD, OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED
EXCEPT PURSUANT TO A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO SUCH
WARRANT OR SECURITIES, OR UNLESS SOLD IN FULL COMPLIANCE WITH RULE 144
PROMULGATED UNDER THE ACT OR UNLESS THE COMPANY SHALL RECEIVE AN OPINION FROM
COUNSEL TO HOLDER, REASONABLY SATISFACTORY TO THE COMPANY TO THE EFFECT THAT
SUCH REGISTRATION IS NOT REQUIRED.
ANALOGY, INC.
Common Stock Purchase Warrant
November 22, 1996
THIS CERTIFIES THAT, for value received, Chenmin Hu ("Hu") is entitled
to purchase up to One Hundred Twenty Seven Thousand Two Hundred Seventy
(127,270) shares (the "Shares") of Common Stock of Analogy, Inc., an Oregon
corporation (the "Company"), at a price per share of $ 4.125 (such price and
such other price as shall result, from time to time, from adjustments specified
below is referred to herein as the "Warrant Price"), subject to the provisions
and upon the terms and conditions hereinafter set forth. As used herein, the
term "Common Stock" shall mean the Company's duly authorized Common Stock, no
par value, and the term "Grant Date" shall mean the date set forth above.
1. TERM.
a. WHEN EXERCISABLE. Subject to the terms hereof, the purchase
rights represented by this Warrant vesting and becoming exercisable, in
accordance with the following schedule:
31,817 Shares on that date which is 6 months from the date hereof
31,818 Shares on that date which is 12 months from the date hereof;
31,817 Shares on that date which is 18 months from the date hereof;
and
31,818 Shares on that date which is 24 months from the date hereof;
provided, however, that in the event Hu's employment with the Company or any
affiliate thereof is terminated for "cause" (as defined in that certain
Employment Agreement by and between Symmetry Design Systems, Inc. and Chenmin Hu
dated as of November 22, 1996 (the "Employment Agreement")) or voluntarily by Hu
prior to November 22, 1998, the purchase rights represented by this Warrant
shall vest and be exercisable if and only as vested and exercisable on the date
of such termination and in accordance with the last sentence of this Paragraph
1; and provided, further, that in the event Hu's employment with the Company or
any affiliate thereof is terminated without "cause" (as defined in the
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<PAGE>
Employment Agreement) prior to November 22, 1998, the purchase rights
represented by this Warrant shall continue to vest and become exercisable in
accordance with the foregoing schedule and the last sentence of this Paragraph
1. Hu may exercise the purchase rights represented by this Warrant (to the
extent the same are vested and exercisable), no later than the 180th day
following (i) the termination date of Hu's employment with the Company or any
affiliate thereof if such termination was for "cause" or voluntary, or (ii) the
period ending November 22, 1998 if Hu's employment with the Company or any
affiliate thereof was terminated without "cause."
b. ACCELERATION OF EXERCISABLITY. Notwithstanding the
provisions of subparagraph 1(a) above, in the case of (i) any merger of the
Company with or into another corporation where the Company is not the survivor
of such merger, (ii) any sale of all or substantially all of the assets of the
Company, (iii) any acquisition by any person, entity or group within the meaning
of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), of the beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of securities of the Company
representing in excess of fifty percent (50%) of the voting power entitled to
vote in the election of directors, or (iv) the death or permanent disability of
Hu, then, upon the effective date of such merger, sale or acquisition, or upon
the date of such death or determination of permanent disability, 100% of the
Shares shall be vested and immediately exercisable.
2. METHOD OF EXERCISE; NET ISSUE EXERCISE.
a. METHOD OF EXERCISE: PAYMENT: ISSUANCE OF NEW WARRANT. The
purchase right represented by this Warrant may be exercised by Hu, in whole or
in part, at any time or from time to time, at the election of Hu, by the
surrender of this Warrant (with the notice of exercise form attached hereto as
EXHIBIT A duly executed) at the principal office of the Company and by the
payment to the Company, by cash, check or wire transfer, of an amount equal to
the then applicable Warrant Price per share multiplied by the number of Shares
then being purchased.
b. NET ISSUE EXERCISE. In lieu of exercising this Warrant
under subparagraph 2(a) above, Hu may elect to receive shares equal to the value
of this Warrant (or the portion thereof being canceled) by surrender of this
Warrant at the principal office of the Company, together with notice of such
election, in which event the Company shall issue to Hu a number of Shares
computed using the following formula:
X= Y(A-B)
------
A
Where: X= The number of Shares to be issued to Hu
Y= the number of Shares to be exercised under this Warrant at the
time of such exercise (which number shall not exceed the
total number of Shares exercisable under this Warrant at the
time of such tender.)
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<PAGE>
A= the fair market value of one share of Common Stock at the time of
such exercise.
B= the per share Warrant Price (as adjusted through the date of such
exercise.)
For purposes of this subparagraph 2(b), the fair market value of the Common
Stock shall be determined as follows:
(a) if traded on a securities exchange, the fair
market value shall be the average of the closing prices over the ten (10) day
trading period immediately preceding three days before the day the current fair
market value of the securities is being determined; or
(b) if actively traded over-the-counter, the fair
market value shall be deemed to be the average of the closing bid and asked
prices quoted on the Nasdaq system (or similar system) over the ten (10) day
trading period immediately preceding three days before the day the current fair
market value of the securities is being determined.
The person or persons in whose name(s) any certificate(s) representing
Shares shall be issuable upon exercise of this Warrant shall be deemed to have
become the holder(s) of record of, and shall be treated for all purposes as the
record holder(s) of, the shares represented thereby (and such shares shall be
deemed to have been issued) immediately prior to the close of business on the
date or dates upon which this Warrant is exercised. In the event of any
exercise of the rights represented by this Warrant, certificates for the shares
of stock so purchased shall be delivered to Hu as soon as possible and in any
event within fifteen (15) days of receipt of such exercise and, unless this
Warrant has been fully exercised or expired, a new Warrant representing the
portion of the Shares, if any, with respect to which this Warrant shall not then
have been exercised shall also be issued to Hu as soon as possible and in any
event within such fifteen (15)-day period.
3. STOCK FULLY PAID; RESERVATION OF SHARES. All Shares that may be
issued upon the exercise of the rights represented by this Warrant will, upon
issuance, be fully paid and nonassessable, and free from all taxes, liens and
charges with respect to the issue thereof. During the period within which the
rights represented by the Warrant may be exercised, the Company will at all
times have authorized and reserved for the purpose of issuance upon exercise of
the purchase rights evidenced by this Warrant, a sufficient number of Shares to
provide for the exercise of the rights represented by this Warrant.
4. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SHARES. The number and
kind of securities purchasable upon the exercise of the Warrant and the Warrant
Price shall be subject to adjustment form time to time upon the occurrence of
certain events as follows:
a. RECLASSIFICATION OR MERGER. In case of any
recapitalization, reclassification, change or conversion of Common Stock
issuable upon exercise of this
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<PAGE>
Warrant (other than a change in par value, or from par value to no par value, or
from no par value to par value, or as a result of a subdivision or combination),
or in case of any merger of the Company with or into another corporation (other
than a merger with another corporation in which the Company is the continuing
and surviving corporation and which does not result in any reclassification or
change of outstanding securities issuable upon exercise of this Warrant), or in
case of any sale of all or substantially all of the assets of the Company, the
Company, or such successor or purchasing corporation, as the case may be, shall
execute a new Warrant (in form and substance satisfactory to Hu) providing that
Hu shall have the right to exercise such new Warrant and upon such exercise to
receive, in lieu of each share of Common Stock theretofore issuable upon
exercise of this Warrant, the kind and amount of shares of stock, other
securities, money and property receivable upon such reclassification, change or
merger by a holder of one share of Common Stock. Such new Warrant shall provide
for adjustments that shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Paragraph 4. The provisions of this
subparagraph 4(a) shall similarly apply to successive reclassification, changes,
mergers and transfers.
b. SUBDIVISION OR COMBINATION OF SHARES. If the Company at any
time while this Warrant remains outstanding and unexpired shall subdivide or
combine its Common Stock, the Warrant Price and the number of shares of Common
Stock issuable upon exercise hereof shall be proportionately adjusted such that
the aggregate exercise price of this Warrant shall at all time remain equal, and
such that Hu will be entitled to receive, after such subdivision or combination,
that number of shares Hu would have been entitled to received in connection with
such subdivision or combination if Hu had exercised this Warrant immediately
prior to the effective date of such subdivision or combination.
c. STOCK DIVIDENDS. If the Company at any time while this
Warrant is outstanding and unexpired shall pay a dividend payable in shares of
Common Stock (except any distribution specifically provided for in the foregoing
subparagraphs 4(a) and 4(b), then (i) the Warrant Price shall be adjusted, from
and after the date of determination of shareholders entitled to receive such
dividend or distribution, to that price determined by multiplying the Warrant
Price in effect immediately prior to such date of determination by a fraction
(x) the numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to such dividend or distribution, and (y) the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately after such dividend or distribution and (ii) the number
of shares of Common Stock subject to this Warrant shall be proportionately
adjusted such that the aggregate exercise price of this Warrant shall at all
times remain equal.
d. NO IMPAIRMENT. The Company will not, by amendment of its
Articles of Incorporation or through any reorganization, recapitalization,
transfer or assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Company, but will at all times in good faith assist in the carrying out of all
the provisions of this Paragraph 4 and in the taking of all such action as
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<PAGE>
may be necessary or appropriate in order to protect the rights of Hu as the
holder of this Warrant against impairment.
e. NOTICES OF SIGNIFICANT EVENTS. At any time while this
Warrant is outstanding and unexpired, in the event the Company undertakes the
payment of any dividend or other distribution or a merger or consolidation of
the Company with or into any other corporation, or any proposed sale, lease or
conveyance of all or substantially all of the assets of the Company, or any
proposed liquidation, dissolution or winding up of the Company, or any proposed
amendment to the Company's Articles of Incorporation, or any public offering of
its Common Stock the Company shall mail to Hu, at least twenty (20) days prior
to the date of consummating such event, a notice specifying the event and the
date on which such event is then proposed to be consummated, and before which it
will not be consummated.
5. NOTICE OF ADJUSTMENTS. Whenever, while this Warrant is
outstanding and unexpired, the Warrant Price shall be adjusted pursuant to the
provisions hereof, the Company shall within thirty (30) days of such adjustment
deliver a certificate signed by its chief financial officer to Hu as the
registered holder hereof setting forth, in reasonable detail, the event
requiring the adjustment, the amount of the adjustment, the method by which such
adjustment was calculated, and the Warrant Price after giving effect to such
adjustment.
6. FRACTIONAL SHARES. No fractional shares of Common Stock will be
issued in connection with any exercise hereunder, but in lieu of such fractional
shares, the Company shall make a cash payment therefor upon the basis of the
Warrant Price then in effect.
7. RIGHTS AS SHAREHOLDER. Hu, as the holder of the Warrant, shall
not be entitled to vote or receive dividends and shall not be deemed the holder
of Common Stock, nor shall anything contained herein be construed to confer upon
Hu as the holder of this Warrant, any of the rights of a shareholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to shareholders at any meeting thereof, or to receive notice of
meetings, or to receive dividends or subscription rights or otherwise until this
Warrant shall have been exercised and the shares of Common Stock purchasable
upon the exercise hereof shall have become deliverable, as provided herein.
8. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to Hu as follows:
a. The Company is a corporation duly organized and active under
the laws of the State of Oregon and has all requisite corporate power and
authority to carry on its business as now conducted.
b. This Warrant has been duly authorized by all necessary
corporate action by the Company and has been duly executed by the Company, and
this Warrant represents the valid and binding obligation of the Company
enforceable in accordance with
5
<PAGE>
the terms set forth herein, except as may be limited by bankruptcy or other
similar laws related to creditors' rights or equitable remedies.
c. The Shares purchasable upon the exercise hereof have been
duly authorized and reserved for issuance by the Company and when issued in
accordance with the terms hereof, will be validly issued, fully paid and
nonassessable and will be issued in compliance with all applicable federal and
state securities laws.
d. The execution and delivery of this Warrant does not, and the
issuance of the shares of Common Stock upon exercise of this Warrant in
accordance with the terms hereof will not violate or be inconsistent with the
Company's Articles of Incorporation and the Company's Bylaws, does not and will
not contravene any law, governmental rule or regulation, judgment or order
currently applicable to the Company, and does not and will not contravene any
provision of, or constitute a default under, any indenture, mortgage, contract,
or other instrument of which the Company is a party or by which it is bound or
require the consent or approval of, the giving of notice to, the registration
with or the taking of any action in respect of or by, any federal state or local
governmental authority or agency or other person.
9. REPRESENTATIONS AND WARRANTIES OF HU. Hu hereby represents and
warrants to the Company the following:
a. Hu is aware of the Company's business affairs and financial
condition, and has acquired information about the Company sufficient to reach an
informed and knowledgeable decision to acquire this Warrant and the Shares
issuable upon exercise of this Warrant. Hu is acquiring this Warrant and the
Shares issuable upon exercise of this Warrant for its own account for investment
purposes only and not with a view to any "distribution" thereof that would not
otherwise be in compliance with the Act.
b. Hu understands that neither this Warrant nor the Shares have
been registered under the Act in reliance upon a specific exemption therefrom,
which exemption depends upon, among other things, the bona fide nature of Hu's
investment intent as expressed herein.
c. Hu understands that this Warrant and the Shares issuable
upon the exercise of this Warrant must be held indefinitely unless subsequently
registered under the Act and any applicable state securities laws, or unless
exemptions from registration are otherwise available.
d. Hu is aware of the provisions of Rule 144, promulgated under
the Act, which, in substance, permits limited public resale of "restricted
securities" acquired, directly or indirectly, from the issuer thereof (or from
an affiliate of such issuer), in a non-public offering subject to the
satisfaction of certain conditions.
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<PAGE>
e. With respect to any offer, sale or other disposition of this
Warrant or any Shares acquired pursuant to the exercise of this Warrant prior to
registration of such Warrant or Shares, Hu hereof and each subsequent holder of
this Warrant agrees to (i) give written notice to the Company prior thereto,
describing the manner thereof and (ii) if reasonably requested by the Company,
an opinion of counsel, reasonably satisfactory to the Company, confirming that
such offer, sale or other disposition may be effected without registration or
qualification under the Act as then in effect or any federal or state law then
in effect.
10. MODIFICATION AND WAIVER. This Warrant and any provision hereof
may be changed, waived, discharged or terminated only if expressly set forth in
an instrument in writing signed by the Company and Hu.
11. NOTICES. Unless otherwise provided, any notice required or
permitted herein shall be given in writing and shall be deemed effectively given
upon personal delivery or fax to the party to be notified or three (3) days
after deposit with the United States Post Office, by registered or certified
mail, postage prepaid and addressed to the party to be notified at the address
indicated for such party on the signature page hereof, or such other address as
such party may designate by 10 days advance written notice to the other party.
12. BINDING EFFECT ON SUCCESSORS. This Warrant shall be binding upon
any corporation succeeding the Company by merger, consolidation or acquisition
of all or substantially all of the Company's assets, and all of the obligations
of the Company relating to the Common Stock issuable upon the exercise of this
Warrant shall survive the exercise and termination of this Warrant, and all of
the covenants and agreements of the Company shall inure to the benefit of the
successors and assigns of the holder hereof. The Company will, at the time of
the exercise of this Warrant, in whole or in part, upon request of the holder
hereof but at the Company's expense, acknowledge in writing its continuing
obligation to the holder hereof in respect of any rights to which the holder
hereof shall continue to be entitled after such exercise in accordance with this
Warrant; provided, that the failure of the holder hereof to make any such
request shall not affect the continuing obligation of the Company to the holder
hereof in respect of such rights.
13. LOST WARRANTS OR STOCK CERTIFICATES. The Company covenants to
the holder hereof that upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction, or mutilation of this Warrant or any
stock certificate and in the case of any such loss, theft or destruction, upon
receipt of an indemnity reasonably satisfactory to the Company, or in the case
of any such mutilation upon surrender and cancellation of such Warrant or stock
certificate, the Company will make and deliver a new Warrant or stock
certificate, of like tenor, in lieu of the lost, stolen, destroyed, or mutilated
Warrant or stock certificate.
14. DESCRIPTIVE HEADINGS. The descriptive headings of the several
paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant.
7
<PAGE>
15. GOVERNING LAW. This Warrant shall be governed by, and construed
under, the laws of the State of Oregon as applied to agreements among Oregon
residents entered into and to be performed entirely within Oregon.
16. REGISTRATION RIGHTS. The Shares shall be entitled to those
registration rights set forth in that certain Registration Rights Agreement
dated as of the date hereof by and among the Company and the shareholders
identified therein (the "Registration Rights Agreement"); provided, however,
that the Company may, at its discretion, register the Shares by filing a
Registration Statement on Form S-8 with the Securities and Exchange Commission,
covering the Shares, prior to the filing of any registration statement pursuant
to the Registration Rights Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
effective as of the date first above written.
ANALOGY, INC.
By: /s/ Gary P. Arnold
----------------------------------------------
Gary P. Arnold
President and Chief Executive Officer
Address: 9205 S.W. Gemini Drive
Beaverton, Oregon 97008
/s/ Chenmin Hu
- -------------------------
Chenmin Hu
8
<PAGE>
EXHIBIT A
NOTICE OF EXERCISE
To: Analogy, Inc.
9205 S.W. Gemini Drive
Beaverton, Oregon 97008
Attn: ________________________________
1. The undersigned hereby elects to purchase __________ shares of
Common Stock of Analogy, Inc. pursuant to the terms of the attached Warrant, and
tenders herewith payment of the purchase price of such shares in full.
2. Please issue a certificate or certificates representing said
shares in the name of the undersigned or in such other name or names as are
specified below.
Name:
_____________________________________________
Address: ___________________________________
___________________________________
9
<PAGE>
Exhibit 5.0
ATER WYNNE HEWITT DODSON & SKERRITT, LLP
222 SW Columbia, Suite 1800
Portland, Oregon 97201
Phone (503) 226-1191
Fax (503) 226-0079
July 2, 1997
Board of Directors
Analogy, Inc.
9205 S.W. Gemini Drive
Beaverton, Oregon 97008
Gentlemen:
In connection with the registration of 1,050,000 shares (the "Shares")
of common stock, no par value (the "Common Stock"), of Analogy, Inc., an
Oregon corporation (the "Company"), under the Registration Statement on Form
S-3 to be filed with the Securities and Exchange Commission on July 2, 1997
(the "Registration Statement"), and the proposed offer and sale of the Common
Stock pursuant to the Registration Statement, we have examined such corporate
records, certificates of public officials and officers of the Company and
other documents as we have considered necessary or proper for the purpose of
this opinion. Of the Shares (i) 650,000 were issued by the Company in a
private placement pursuant to the merger (the "Merger") of the Company's
wholly-owned subsidiary with and into Symmetry Design Systems, Inc. effective
November 28, 1996 (the "Common Shares"), and (ii) 400,000 are issuable upon
the exercise of warrants issued by the Company in a private placement in
connection with the Merger (the "Warrant Shares").
Based on the foregoing and having regard to legal issues which we deem
relevant, it is our opinion that (i) the Common Shares are validly issued,
fully paid and non-assessable, and (ii) the Warrant Shares, when sold and
issued in accordance with the Registration Statement will be validly issued,
fully paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the above-
mentioned Registration Statement and to the reference to this firm under the
caption "Legal Matters" in the prospectus constituting a part of the
Registration Statement. This consent shall not be construed to cause this firm
to be in the category of persons whose consent is required to be filed pursuant
to Section 7 of the Securities Act of 1933, as amended, or the rules thereunder.
Very truly yours,
/s/ Ater Wynne Hewitt Dodson & Skerritt, LLP
Ater Wynne Hewitt Dodson & Skerritt, LLP
<PAGE>
EXHIBIT 23.2
Independent Auditors' Consent
The Board of Directors
Analogy, Inc.
We consent to the use of our report incorporated herein by reference and
to the reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
-------------------------
Portland, Oregon
July 2, 1997
