As filed with the Securities and Exchange Commission on December 20, 1996
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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AVANT! CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 94-3133226
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1208 East Arques Avenue
Sunnyvale, California 94086
(408) 738-8881
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
GERALD C. HSU
Chairman of the Board, President and Chief Executive Officer
Avant! Corporation
1208 East Arques Avenue
Sunnyvale, California 94086
(408) 738-8881
(Name and address, including zip code, and telephone number,
including area code, of agent for service)
------------------
Copies to:
ROBERT V. GUNDERSON, JR.
Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP
155 Constitution Drive
Menlo Park, California 94025
------------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. |_|
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, 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. |_|
<TABLE>
CALCULATION OF REGISTRATION FEE
- ------------------------------------ ------------------ ------------------ ------------------ -----------------
<CAPTION>
Title of each class of Securities Proposed Maximum Proposed Maximum Amount of
to be Registered Amount to be Offering Price per Aggregate Offering Registration Fee
Registered Security (1) Price(1)
- ------------------------------------ ------------------ ------------------ ------------------ -----------------
<S> <C> <C> <C> <C>
Common Stock, $.0001 par value 1,828,495 shares(2) $29.25 $53,483,479 $16,208
- ------------------------------------ ------------------ ------------------ ------------------ -----------------
<FN>
(1) The price of $29.25 per share, which was the average of the high and low
prices of the Common Stock on The Nasdaq Stock Market on December 16, 1996
is set forth solely for the purpose of calculating the registration fee in
accordance with Rule 457(c) of the Securities Act of 1933, as amended.
(2) Includes 16,608 shares of Common Stock to be issued upon exercise of
certain rights on behalf of the Selling Stockholders.
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.
</FN>
</TABLE>
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<PAGE>
The information contained herein is subject to change, completion or amendment
without notice. A registration statement relating to these securities has been
filed with the Securities and Exchange Commission. These securities may not be
sold nor may an offer to buy be accepted prior to the time the registration
statement becomes effective. This prospectus shall not constitute an offer to
sell or the solicitation of an offer to buy, nor shall there be any sale of
these securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of any
such state.
Subject to Completion, dated December 20, 1996
1,828,495 Shares
AVANT! CORPORATION
Common Stock
-----------------
This Prospectus relates to the public offering, which is not being
underwritten, of 1,828,495 shares (the "Shares") of Common Stock, $.0001 par
value (the "Common Stock") of Avant! Corporation ("Avant!" or the "Company").
The Shares are outstanding shares that may be sold from time to time by or on
behalf of certain stockholders of the Company (the "Selling Stockholders"). The
Selling Stockholders acquired the Shares in a private transaction in which the
Company acquired FrontLine Design Automation, Inc.
The Shares may be offered by the Selling Stockholders from time to time
in transactions in the over-the-counter market, on the Nasdaq National Market,
in privately negotiated transactions, or by 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 Stockholders may effect such transactions by
selling the Shares to or through broker-dealers and such broker-dealers may
receive compensation in the form of discounts, concessions or commissions from
the Selling Stockholders 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). See "Selling Stockholders" and "Plan of Distribution."
The Company will not receive any of the proceeds from the sale of the
Shares by the Selling Stockholders. The Company has agreed to bear certain
expenses in connection with the registration of the Shares being offered by the
Selling Stockholders. In addition, the Company has agreed to indemnify the
Selling Stockholders with respect to the Shares offered hereby against certain
liabilities, including certain liabilities under the Securities Act of 1933, as
amended (the "Securities Act"), or, if such indemnity is unavailable, to
contribute toward amounts required to be paid in respect of such liabilities.
On December 16, 1996, the average of the high and low price for the
Company's Common Stock was $29.25 per share. The Company's Common Stock is
traded on the Nasdaq National Market under the symbol "AVNT."
-------------------------------
The Selling Stockholders and any broker-dealers or agents that
participate with the Selling Stockholders in the distribution of the Shares may
be deemed to be "underwriters" within the meaning of Section 2(11) of the
Securities Act, and any commissions received by them and any profit on the
resale of the Shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.
-------------------------------
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 4.
-------------------------------
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.
-------------------------------
The date of this Prospectus is _______________, 1997
<PAGE>
AVAILABLE INFORMATION
Avant! is subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith, it files reports, proxy statements and other information
with the Securities and Exchange Commission (the "SEC"). Such reports, proxy
statements and other information may be inspected and copied at the public
reference facilities maintained by the SEC at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the SEC's regional offices
located at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511 and at Seven World Trade Center (13th Floor), New York, New
York 10048. Copies of such materials may be obtained by mail from the Public
Reference Section of the SEC at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. The SEC also makes electronic
filings publicly available on the Internet within 24 hours of acceptance. The
SEC's Internet address is http://www.sec.gov. The SEC web site also contains
reports, proxy and information statements, and other information regarding
registrants that file electronically with the SEC. Avant! Common Stock is quoted
on the Nasdaq National Market, and the reports, proxy statements and other
information referred to above can also be inspected at the offices of Nasdaq
Operations, 1735 K Street, N.W., Washington, D.C. 20006.
Avant! has filed with the SEC a registration statement on Form S-3,
including this Prospectus and other information (herein, together with all
amendments, exhibits and schedules, referred to as the "Registration
Statement"), with respect to the Shares offered hereby. This Prospectus does not
contain all the information set forth in the Registration Statement, certain
parts of which are omitted in accordance with the rules and regulations of the
SEC, and to which reference is hereby made. Statements made in this Prospectus
as to the contents of any document referred to are not necessarily complete.
With respect to each such document filed as an exhibit to the Registration
Statement, reference is made to the exhibit for a more complete description of
the matter involved, and each such statement shall be deemed qualified in its
entirety by such reference. The Registration Statement, including the exhibits
and schedules thereto, may be inspected at the public reference facilities
maintained by the SEC at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Copies of such material may be obtained from the Public
Reference Section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549,
at prescribed rates.
INFORMATION INCORPORATED BY REFERENCE
The following documents previously filed by the Company with the
Commission (File No. 0-25864) pursuant to the Exchange Act are incorporated
herein by reference:
1. The Company's Annual Report on Form 10-K, as amended, for the
year ended December 31, 1995, filed with the SEC on March 29,
1996;
2. The Company's Proxy Statement for the Annual Meeting of
Stockholders held on May 30, 1996, filed with the SEC on April
26, 1996;
3. The Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1996, filed with the SEC on May 14, 1996;
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4. The Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1996, filed with the SEC on August 14, 1996;
5. The Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1996, filed with the SEC on November 14,
1996;
6. The Company's Current Reports on Form 8-K dated October 16,
1996, October 24, 1996, November 13, 1996, November 27, 1996
and December 20, 1996; and
7. The description of the Company's Common Stock contained in its
Registration Statement on Form 8-A as filed with the SEC on
April 12, 1995.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus but
prior to the termination of the offering to which this Prospectus relates shall
be deemed to be incorporated by reference in this Prospectus and to be part
hereof from the date of filing of such documents. Any statement contained in a
document 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
incorporated herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, in its unmodified form, to
constitute a part of this Prospectus.
Upon written or oral request, the Company will provide without charge
to each person to whom a copy of the Prospectus is delivered a copy of the
documents incorporated by reference herein (other than exhibits to such
documents unless such exhibits are specifically incorporated by reference
herein). Requests should be submitted in writing or by telephone at (408)
738-8881 to John P. Huyett, Chief Financial Officer, Avant! Corporation, 1208
East Arques Avenue, Sunnyvale, California 94086.
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RISK FACTORS
This Prospectus, including the documents incorporated by reference
herein, contains forward-looking statements that involve risks and
uncertainties. The statements contained in this Prospectus or incorporated by
reference herein that are not purely historical are forward-looking statements
within the meaning of Section 27A of the Securities Act and Section 21E of the
Exchange Act, including without limitation statements regarding the Company's
expectations, beliefs, intentions or strategies regarding the future. All
forward-looking statements included in this document or incorporated by
reference herein are based on information available to the Company on the date
hereof, and the Company assumes no obligation to update any such forward-looking
statements. The Company's actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including those set forth in "Risk Factors" and elsewhere in this Prospectus. In
evaluating the Company's business, prospective investors should consider
carefully the following factors in addition to the other information set forth
in this Prospectus and incorporated by reference herein.
Litigation Risk
On December 6, 1995, Cadence Design Systems, Inc. ("Cadence") filed an
action against Avant! and certain of its officers in the United States District
Court for the Northern District of California alleging copyright infringement,
unfair competition, misappropriation of trade secrets, conspiracy, breach of
contract, inducing breach of contract and false advertising. The essence of the
complaint is that certain Avant! employees who formerly were Cadence employees
misappropriated and improperly copied source code for certain important
functions of Avant! place and route products from Cadence, and that Avant! has
competed unfairly by making false statements concerning Cadence and its
products. The action also alleges that Avant! induced certain individual
defendants to breach their agreements of employment and confidentiality with
Cadence. In addition to actual and punitive damages, Cadence seeks to enjoin the
sale of certain place and route products and has filed a motion to obtain a
preliminary injunction pending trial of the action. Avant! filed its opposition
to Cadence's motion on June 28, 1996. Cadence filed a reply to Avant!'s
opposition on August 27, 1996. The preliminary injunction hearing took place on
September 10, 1996. No ruling on the preliminary injunction motion has been
issued as of the date hereof.
On January 16, 1996, Avant! filed a counterclaim alleging antitrust
violations, racketeering, false advertising, defamation, trade libel, unfair
competition, unfair trade practices, negligent and intentional interference with
prospective economic advantage and intentional interference with contractual
relations.
The Santa Clara County District Attorney's office also is investigating
the allegations of misappropriation of trade secrets set forth in Cadence's
lawsuit, described above. On December 5, 1995, a search warrant was executed at
Avant!'s Sunnyvale, California, facility to determine whether there was evidence
of criminal conduct. No criminal charges have been filed against Avant!,
Avnat!'s management or its employees, but no assurance can be given that such
charges will not be filed in the future. A criminal complaint, if filed against
Avant!, Avant!'s management or its employees, could result in a loss of
management and other personnel and could have other material adverse effects on
the Company. On each of December 15 and 19, 1995, class action filings were made
against Avant! alleging certain securities law violations, including omission
and/or misrepresentation of material facts. The alleged omissions and/or
misrepresentations are largely consistent with the allegations outlined in the
Cadence claim.
It is Avant!'s position that the plaintiffs' claims are without merit.
Avant! believes it has sufficient defenses to all of the plaintiffs' claims and
intends to defend itself vigorously. If, however, Avant!'s defenses are
unsuccessful, Avant! may be enjoined from selling certain place and route
products and may be required to pay damages to Cadence. In such event, Avant!'s
business, operating results and financial condition would be materially
adversely affected. In particular, Avant!'s place and route products in dispute,
ArcCell-BV and ArcCell-XO (which have been replaced by Aquarius-BV and
Aquarius-XO), accounted for approximately 20% of Avant!'s total supplemental
consolidated revenues for the three-year period ended December 31, 1995.
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In addition, it is likely that an adverse judgment against Avant! would result
in a steep decline in the market price of Avant! Common Stock. Although the
Company believes, based on information it presently possesses, that the
conclusion of these claims will not have a material adverse effect on the
Company's supplemental consolidated financial position, there can be no
assurance that an adverse judgement, if granted, in any claim would not have a
material adverse effect on the Company's business, supplemental consolidated
financial position, or supplemental consolidated results of operations.
In the opinion of Avant! management, based on information it presently
possesses, the conclusion of these claims will not have a material adverse
effect on Avant!'s supplemental consolidated financial position.
Meta has a long-standing technology relationship with Cadence pursuant
to which, among other things, Meta and Cadence cross-license certain aspects of
their respective technologies including Meta's MASTER Toolbox and HSPICE
products in order to develop certain interfaces between Cadence's products and
Meta's selling and supporting such products. Meta licenses Cadence's maskwork
layout software for use by Meta-Labs services for generating maskworks for
MetaTestchip. In light of Avant!'s pending litigation with Cadence, it is almost
certain that Cadence will sever its relationship with Meta following the Meta
Acquisition. In such event, Meta would experience delays in generating new
MetaTestchips as a result of the need to transition to Avant!'s layout software.
Further, Meta currently integrates a portion of Cadence technology with HSPICE
to provide a data output format for Cadence's waveform viewing products and uses
certain Cadence products to provide Cadence product support for MASTER Toolbox
which may no longer be available at a reasonable price or profit after the Meta
Acquisition. Additionally, Cadence sells Spectre circuit simulation software
which directly competes with Meta's HSPICE product. Accordingly, termination of
Meta's relationship with Cadence could have a material adverse effect upon the
Company's business, operating results and financial condition.
The preceding pending litigation and any future litigation against the
Company or its employees, regardless of the outcome, is expected to result in
substantial costs and expenses to the Company and significant diversion of
attention by the Company's technical and management personnel. Accordingly, any
such litigation could have a material adverse effect on the Company's business,
operating results or financial condition.
Uncertainty Relating to Integration of Operations and Product Lines; Management
of Growth
The integration of Anagram's, Meta's and FrontLine's business and
personnel presents difficult challenges for Avant!'s management. Each of Avant!,
Anagram, Meta and FrontLine entered into their respective merger agreements with
the expectation that their merger will result in synergies for the Company. The
Company, however, is more complex and diverse than either Avant!, Anagram, Meta
or FrontLine individually, and the combination and continued operation of their
distinct business operations will be difficult. While the management and Boards
of Avant!, Anagram, Meta and FrontLine believe that the contemporaneous
combination of Avant!, Anagram, Meta and FrontLine can be effected in a manner
that will realize the value of the Company, the management group of the Company
has limited experience in combinations of this complexity or size. Accordingly,
there can be no assurance that the process of effecting these business
combinations can be effectively managed to realize the synergies anticipated to
result therefrom.
Following the acquisition of Anagram, Meta and FrontLine (collectively,
the "Acqusitions"), in order to maintain and increase profitability, the Company
will need to successfully integrate and streamline overlapping functions.
Avant!, Anagram, Meta and FrontLine each have different systems and procedures
in many operational areas that must be rationalized and integrated. There can be
no assurance that such integration will be accomplished effectively,
expeditiously or efficiently. The difficulties of such integration may be
increased by the necessity of coordinating geographically separated divisions.
The integration of certain operations following the Acquisitions will require
the dedication of management resources that may temporarily distract attention
from the day-to-day business of the Company. The business of the Company may
also be disrupted by employee uncertainty and lack of focus during such
integration. Failure to effectively accomplish the integration of the operations
of Avant!, Anagram, Meta and FrontLine could have a material adverse effect on
the Company's business, operating results and financial condition. Moreover,
uncertainty in the marketplace or customer hesitation relating to the
Acquisitions could negatively affect the Company's business, operating results
and financial condition.
Avant!, Anagram, Meta and FrontLine entered into their respective
merger agreements in order to achieve potential mutual benefits from combining
each of their respective expertise and product lines for the physical design of
high-density, high-performance ICs. Realization of these potential benefits will
require, among other things, integrating the Company's respective product
offerings and coordinating the Company's sales and marketing and
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research and development efforts. Failure to efficiently achieve such
integration could have a material adverse effect on the Company's business,
operating results and financial condition.
Each of Avant!, Anagram, Meta and FrontLine has experienced periods of
rapid growth and expansion that has placed and will continue to place
significant strains upon their respective management systems and resources. In
addition, certain of the Company's senior management personnel have worked
together only for a short period of time and must learn to work together
effectively. The Company's ability to compete effectively and to manage future
growth, if any, will require the Company to continue to implement and improve
operational, financial and management information systems on a timely basis and
to expand, train, motivate and manage its work force. There can be no assurance
that the Company's personnel, systems, procedures and control will be adequate
to support the Company's operations.
Dependence Upon Key Personnel
The Company's future operating results depend in significant part upon
the continued service of its key management and technical personnel. Few of the
Company's employees are bound by employment or non-competition agreements, and
due to the intense competition for such personnel as well as the uncertainty
caused by the integration of Avant!'s, Anagram's, Meta's and FrontLine's
businesses, it is possible that the Company will be unable to retain such key
technical and managerial personnel. There are only a limited number of qualified
ICDA engineers, and competition for such individuals is intense. If the Company
is unable to attract, hire and retain qualified personnel in the future, the
development of new products and the management of an increasingly complex
business would be impaired, which would materially adversely affect the
Company's business, operating results and financial condition. Additionally, if
a criminal complaint is filed against the Company, the Company's management or
any of its employees relating to the matters underlying the pending litigation
between Avant! and Cadence, thereby resulting in a loss of Avant! personnel,
then the Company's business, operating results and financial condition may be
materially adversely affected. See "--Litigation Risk."
Competition
The ICDA software market in which Avant! competes is intensely
competitive and subject to rapid change. Avant! currently faces competition from
major ICDA vendors, including Cadence, which currently holds a dominant share of
the market for IC physical design software, Mentor Graphics Corporation
("Mentor"), Viewlogic Systems Incorporated ("Viewlogic") and EPIC Design
Technology, Inc. ("EPIC"). As the Company expands its product offerings to
include other library generation tools and other electronic design automation
("EDA") tools, it will compete increasingly with these established EDA vendors.
Certain of these established vendors have a longer operating history and
significantly greater financial, technical and marketing resources, greater name
recognition and a larger installed customer base than the Company. Each of these
competitors will likely be able to respond more quickly to new or emerging
technologies and changes in customer requirements and to devote greater
resources to the development, promotion and sale of their products than the
Company. Moreover, the industry in which the Company competes is undergoing a
trend toward consolidation that is expected to result in large, more financially
flexible competitors with a broad range of product offerings. In addition to
competition from EDA vendors, the Company also faces competition from
semiconductor companies that have internal design groups that develop their own
customized place and route and simulation tools for their own particular needs
and therefore may be reluctant to purchase products offered by the Company or
other independent vendors. There can be no assurance that the Company will be
able to compete successfully against current and future competitors or that
competitive pressures faced by the Company will not have a material adverse
effect on its business, operating results and financial condition. If the
Company is unable to compete successfully against current and future
competitors, the Company's business, operating results and financial condition
will be materially adversely affected.
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Potential Fluctuations in Quarterly Results
The quarterly operating results of the Company may vary substantially
from period to period depending on factors such as the outcome of outstanding
litigation, increased competition, the size, timing and structure of significant
licenses, the timing of revenue recognition under its time-based license
agreements, the timing of new or enhanced product announcements, introductions,
or delays in the introductions, of new or enhanced versions of the Company's
products, changes in pricing policies by the Company or its competitors, market
acceptance of new and enhanced versions of the Company's products, the
cancellation of time-based licenses or maintenance agreements, the
unavailability of technology of third parties which is incorporated in certain
of the products of the Company, the mix of direct and indirect sales, changes in
operating expenses, changes in the Company's strategy, seasonal factors,
personnel changes, foreign currency exchange rates and general economic factors.
Due to the foregoing factors, and particularly the variability of the size,
timing and structure of significant licenses, quarterly revenue and operating
results are difficult to forecast. In particular, Avant! has adopted a flexible
pricing strategy pursuant to which Avant! offers both perpetual and time-based
software licenses to customers, depending on customer requirements and financial
constraints. Because each time-based license may have a different structure and
could be subject to cancellation, future revenue is unpredictable. In addition,
Meta's quarterly operating results have in the past fluctuated as a result of
seasonality of customer buying patterns, with revenues for the first quarter of
a year often lower than those for the last quarter of the preceding year, and a
significant portion of revenue in a quarter typically is received in the last
few weeks or days of that quarter. The Company's expense levels are based, in
part, on expectations as to future revenue levels. Accordingly, net income, if
any, may be disproportionately affected by a reduction in revenue because only a
small portion of the Company's expenses fluctuate with revenue. If revenue
levels are below expectations, the Company's business, operating results and
financial condition are likely to be materially adversely affected. Such
shortfalls in the Company's revenue or operating results from levels expected by
public market analysts and investors could have an immediate and significant
material adverse effect on the market price of Avant!'s Common Stock.
Additionally, the Company may not learn of such revenue shortfalls or earnings
shortfalls or other failures to meet market expectations for results of
operations until late in a fiscal quarter, which could result in an even more
immediate and material adverse effect on the trading price of Avant!'s Common
Stock. In such event, the market price of Avant!'s Common Stock would be
materially adversely affected. Due to the foregoing, Avant! 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.
See "Selected Consolidated Financial Data."
Potential Volatility of Stock Price
The market price of Avant!'s Common Stock is likely to be highly
volatile and may be significantly affected by many factors, including the
outcome of outstanding litigation, actual or anticipated fluctuations in the
Company's operating results, announcements of technological innovations and new
products by competitors, new contractual relationships with strategic partners
by the Company or its competitors, proposed acquisitions by the Company or
competitors and financial results that fail to meet public market analyst
expectations of performance. In addition, the U.S. equity markets have from time
to time experienced significant price and volume fluctuations that have
particularly affected the market prices for the common stocks of technology
companies. These broad market fluctuations may materially adversely affect the
market price of Avant!'s Common Stock in future periods.
See "Market Price of Avant! Common Stock; Dividends."
Cost of Integration; Transaction Expenses
Transaction costs relating to the Acqusitions and the anticipated
combination of certain operations of Avant!, Anagram, Meta and FrontLine are
expected to result in one-time charges to the Company's earnings. Although it
will not be feasible to determine the actual amount of these charges until the
operational and transition plans are completed, the management of Avant!
believes that the aggregate charge will be approximately $8.9 million before
taxes, although such amount may be increased by unanticipated additional
expenses incurred in connection with the Acquisitions. This aggregate charge is
expected to include the estimated costs associated with financial advisory,
accounting and legal fees, printing expenses, filing fees and other
merger-related costs. While the
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exact timing of these expenses cannot be determined at this time, Avant!
incurred $920,000 of such costs in the quarter ended September 30, 1996 and the
management of Avant! anticipates the remaining charge to earnings will be
recorded in the quarter ending December 31, 1996. The effects of these costs
have not been reflected in the unaudited condensed combined statements of
income, except to the extent such costs were actually incurred in the quarter
ended September 30, 1996.
Potential Dilutive Effect to Stockholders
Although Avant! believes that beneficial synergies will result from the
Acquisitions, there can be no assurance that the combining of Avant!'s,
Anagram's, Meta's and FrontLine's businesses, even if achieved in an efficient
and effective manner, will result in combined results of operations and
financial condition superior to that which would have been achieved by each
company independently, or as to the period of time required to achieve such
result. The issuance of Avant! Common Stock in connection with the Acquisitions
is likely to have a dilutive effect on Avant!'s earnings per share and there is
no assurance that Avant! stockholders would not achieve greater returns on
investment were Avant! to remain an independent company.
Shares Eligible for Public Sale
Sales of substantial amounts of Avant! Common Stock in the public
market after the consummation of the Acqusitions could materially adversely
affect prevailing market prices of Avant!'s Common Stock. The shares of Avant!
Common Stock issued in the Acquisitions are eligible for immediate sale in the
public market, subject to certain limitations under the Securities Act
applicable to affiliates of the Company and certain agreements to be entered
into by certain affiliates of the acquired companies which prohibit such persons
from disposing of any Avant! Common Stock during the period immediately
following the respective closing of the transactions.
Product Concentration
The Company expects that revenue from the licensing and support of
Aquarius, the Company's place and route software product family, Hercules, the
Company's design verification software product, and ADM and HSPICE, the
Company's circuit simulation and analysis products, respectively, will account
for a substantial percentage of the Company's revenues for the foreseeable
future. As a result, the Company's business, operating results and financial
condition are significantly dependent upon continued market acceptance and
purchases of Aquarius, Hercules, ADM and HSPICE. A decline in demand for any of
these products as a result of competition, technological change or other factors
would have a material adverse effect on the business, operating results and
financial condition of the Company. There can be no assurance that Aquarius,
Hercules, ADM or HSPICE will achieve continued market acceptance, or that the
Company will be successful in marketing such products or any new or enhanced
products. Failure to develop or acquire additional products, or to successfully
market such products on a profitable basis, could have a material adverse effect
on the Company's business, operating results and financial condition.
Risks Associated with International Licensing
International revenue accounted for approximately 33% and 32% of the
Company's supplemental consolidated revenue in 1994 and 1995, respectively. The
Company expects that international license and service revenue will continue to
account for a significant portion of the Company's total revenue. The Company's
international revenue involves a number of risks, including the impact of
possible recessionary environments in economies outside the U.S., longer
receivables collection periods and greater difficulty in accounts receivable
collection, difficulties in staffing and managing foreign operations, political
and economic instability, unexpected changes in regulatory requirements, reduced
protection of intellectual property rights in some countries and tariffs and
other trade barriers. Currency exchange fluctuations in countries in which the
Company licenses its products could also materially adversely affect the
Company's business, operating results and financial condition by resulting in
pricing that is not competitive with products priced in local currencies.
Furthermore, there can b e no assurance
8
<PAGE>
that in the future the Company will be able to continue to price its products
and services internationally in U.S. dollars because of changing sovereign
restrictions on importation and exportation of foreign currencies as well as
other practical considerations. In addition, the laws of certain countries do
not protect the Company's products and intellectual property rights to the same
extent as do the laws of the U.S. Accordingly, there can be no assurance that
these factors will not have a material adverse effect on the Company's future
international sales and, consequently, on the Company's business, operating
results and financial condition. In addition, there can be no assurance that the
Company will be able to sustain or increase revenue derived from international
licensing and service or that the foregoing factors will not have a material
adverse effect on the Company's future international license and service
revenue, and, consequently, on the Company's business, operating results and
financial condition.
Dependence Upon Distributors and Manufacturer's Representatives
The Company relies on distributors and manufacturer's representatives
("Third Party Sellers") for licensing and support of its products in China,
Japan, Korea, Singapore and Taiwan. A substantial portion of Avant!'s
international license and service revenue results from a limited number of these
Third Party Sellers. During 1994 and 1995 revenue from three distributors and
two manufacturer's representatives accounted for an aggregate of approximately
11% of Avant!'s total supplemental consolidated revenue. There can be no
assurance that Avant!'s current Third Party Sellers will choose to or be able to
market or service and support the Company's products effectively, that economic
conditions or industry demand will not materially adversely affect these or
other Third Party Sellers or that these Third Party Sellers will not devote
greater resources to marketing and supporting products of the Company's
competitors. In particular, the Company has opened a sales office in Tokyo,
Japan, which may affect its relationship with a distributor and the
distributor's performance as a distributor of the Company's products.
Additionally, because the Company's products are used by highly skilled
professional engineers, a Third Party Seller must possess sufficient technical,
marketing and sales resources in order to be effective and must devote these
resources to a lengthy sales cycle, customer training and product service and
support. Only a limited number of Third Party Sellers possess such resources.
Accordingly, the loss of or a decision by Avant! not to renew agreements with,
or a significant reduction in revenue from, one of Avant!'s Third Party Sellers
or any other Third Party Sellers on which the Company's revenues may, in the
future, become dependent, could have a material adverse effect on the Company's
business, operating results and financial condition.
New Products and Rapid Technological Change
The ICDA industry is characterized by extremely rapid technological
change, frequent new product introductions and enhancements, evolving industry
standards and rapidly changing customer requirements. The Company's future
business, operating results and financial condition will depend in part upon its
ability to enhance its current products and to develop and introduce new
products on a timely and cost-effective basis that will keep pace with
technological developments and evolving industry standards and methodologies, as
well as address the increasingly sophisticated needs of the Company's customers.
New technologies developed by the Company or its competitors could render
existing products obsolete. The Company's success will depend upon its ability
to enhance existing products and to introduce new products on a timely and
cost-effective basis that meet changing customer requirements. There can be no
assurance that the Company will be successful in developing new products or
enhancing existing products or that such new or enhanced products will receive
market acceptance. On occasion, the Company has experienced delays in the
scheduled introductions of new and enhanced products, and there can be no
assurance that it will be able to introduce products on a timely basis in the
future. Delays in the scheduled availability of products, for technological or
other reasons, or a lack of market acceptance of such products, or the Company's
failure to accurately anticipate customer demand, would have a material adverse
effect on its business, operating results and financial condition.
Dependence Upon Semiconductor and Electronics Industries; General Economic and
Market Conditions
Avant! is dependent upon the semiconductor and, more generally, the
electronics industries. Each of these industries is characterized by rapid
technological change, short product life cycles, fluctuations in manufacturing
9
<PAGE>
capacity and pricing and gross margin pressures. Segments of these industries
have from time to time experienced significant economic downturns characterized
by decreased product demand, production over-capacity, price erosion, work
slowdowns and layoffs. Over the past few years, these industries have
experienced an extended period of significant economic growth, although during
1996 certain sectors of the semiconductor industry have experienced slower
growth than in 1995. There can be no assurance that economic growth in these
industries will continue, and if it does not, any downturn could be especially
severe on the Company. During such downturns, the number of new IC design
projects often decreases. Because acquisitions of new licenses from the Company
are largely dependent upon the commencement of new design projects, any slowdown
in these industries could have a material adverse effect on the Company's
business, operating results and financial condition. The Company's business,
operating results and financial condition may in the future reflect substantial
fluctuations from period to period as a consequence of patterns and general
economic conditions in either the semiconductor or electronics industry.
Limitations on Protection of Intellectual Property and Proprietary Rights
The Company relies on a combination of patents, trade secret, copyright
and trademark laws, as well as contractual commitments, to protect its
proprietary rights in its software products. The Company generally enters into
confidentiality or license agreements with its employees, distributors and
customers, and limits access to and distribution of its software, documentation
and other proprietary information. Despite these precautions, there can be no
assurance that a third party will not copy or otherwise obtain and use the
Company's products or technology without authorization, or develop similar
technology independently. In particular, the Company has on occasion distributed
its products pursuant to "shrink wrap" licenses. There can be no assurance that
such licenses are enforceable. In addition, effective copyright and trade secret
protection may be unavailable or limited in certain foreign countries. The
Company expects that software companies will increasingly be subject to
infringement claims as the number of products and competitors in the industry in
which Avant! currently competes grows and the functionality of products in
different industry segments overlaps. In particular, Avant!'s current litigation
with Cadence involves such infringement claims. Responding to such claims,
regardless of merit, could be time-consuming, result in costly litigation, cause
product shipment delays or require the Company to enter into royalty or
licensing agreements. Such royalty or licensing agreements, if required, may not
be available on terms acceptable to the Company or at all, which could have a
material adverse effect upon the Company's business, operating results and
financial condition. There can be no assurance that infringement claims will not
be asserted against the Company in the future or that any such claims will not
require the Company to enter into royalty arrangements or result in costly
litigation, which could materially adversely affect the Company's business,
operating results and financial condition. See "--Litigation Risk."
Risk of Product Defects
Software products as complex as those offered by the Company may
contain defects or failures when introduced or when new versions are released.
Avant! has in the past discovered software defects in certain of its products
and may experience delays or lost revenue to correct such defects in the future.
There can be no assurance 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, operating results and financial condition.
Dependence Upon Relationship with Synopsys
Avant! currently has a cooperative technical and marketing agreement
with Synopsys, Inc. ("Synopsys") that expires by its terms in March 1997, and is
automatically renewed for one year unless either party gives notice otherwise.
The agreement provides that Synopsys will share certain technical information
with Avant! concerning Synopsys' high level design automation products, which
information has assisted Avant! in the development and marketing of its
products. Synopsys has no obligation to continue to provide similar information
in the future, and if
10
<PAGE>
Synopsys were to stop sharing technical information with Avant!, to favor
competitors of Avant! or to develop software products that are competitive with
those of Avant!, Avant!'s business, operating results and financial condition
could be materially adversely affected. While Avant! believes its relationship
with Synopsys is good, there can be no assurance that the Acquisitons will not
have an adverse effect on the existing relationship with Synopsys.
Concentration of Stock Ownership; Change of Control Provisions
Based on the stock ownership of the Company as of November 30, 1996,
the directors and principal stockholders of the Company and their affiliates
will beneficially own a significant amount of the outstanding Avant! Common
Stock. As a result, these stockholders will be able to exercise significant
influence over all matters requiring stockholder approval, including the
election of directors and approval of significant corporate transactions. Such
concentration of ownership may have the effect of delaying or preventing a
change in control of Avant!. In addition, the Company's Board of Directors will
have the authority to issue up to 5,000,000 shares of Preferred Stock, to
determine the powers, preferences and rights and the qualifications, limitations
or restrictions granted to or imposed upon any unissued series of Preferred
Stock and to fix the number of shares constituting any series and the
designation of such series, without any further vote or action by the Company's
stockholders. The Preferred Stock could be issued with voting, liquidation,
dividend and other rights superior to the rights of the Common Stock. The
issuance of Preferred Stock under certain circumstances could have the effect of
delaying or preventing a change in control of the Company.
11
<PAGE>
THE COMPANY
Avant! develops, markets and supports integrated circuit design
automation ("ICDA") software for the physical design, layout, verification,
simulation and analysis of high-density, high-performance integrated circuits
("ICs"). Avant!'s objective is to establish a significant market position as a
supplier of physical design software for the ICDA market. To achieve this
objective, Avant! has adopted its mission, which is to provide innovative
technology, products, and business models that enable customers to solve the
toughest problems in deep submicron IC design, improve their productivity and
achieve a high return on their investment. To effect its mission, Avant! has
adopted the strategies of maintaining focus on technological innovation and
creating strategic relationships with customers. The principal executive offices
of Avant! are located at 1208 East Arques Avenue, Sunnyvale, California 94086.
Avant!'s telephone number is (408)738-8881.
Recent Developments
On August 2, 1996 Avant! announced Version 2.0 of its deep submicron
product families which include the Aquarius family of place and route tools; the
Planet family of floorplanning tools; the Star family of simulation, timing,
analysis and RC extraction tools; the Solar family of synthesis-oriented layout
refinement tools; and the Hercules family of physical verification tools. The
Aquarius family consists of Aquarius-BV, which supersedes ArcCell-BV,
Aquarius-XO, which supersedes ArcCell-XO, and Aquarius-GA, which supersedes
ArcGate. The Hercules product family supersedes Avant!'s VeriCheck product
family. The Star family is a new product that analyzes the performance of deep
submicron ICs, including the most complex, high-performance microprocessors. The
Star product family is a full-chip extraction, delay analysis and data reduction
tool for IC designers to use during physical design. Star is tightly integrated
with Avant!'s hierarchical layout and verification tools, Aquarius and Hercules,
to provide efficient, accurate and predictable IC performance. The Solar family
is a new product that optimizes the performance and area of ICs to meet new deep
submicron "golden file" needs. Solar is tightly integrated with Avant!'s
Aquarius family of place and route tools.
In September 1996, Avant! acquired Anagram, Inc. ("Anagram"), a
developer of simulation and analysis ICDA software for high-performance deep
submicron ICs (the "Anagram Acquisition"). Anagram's objective is to establish a
significant market position as a supplier of easy-to-use, high-capacity circuit
simulation and high-accuracy timing analysis software. Anagram's flagship
product, ADM, is a high-capacity circuit simulator for deep submicron processor,
graphics, memory, communications, and mixed-signal IC designs. ADM is designed
to be compatible with the most commonly used ICDA tools and to be easily
integrated in the customer's existing design environment and methodology.
Anagram's products help increase IC performance and reliability and increase
designer productivity by enabling designers to characterize large blocks; to
accurately simulate mixed-signal, dynamic logic and memory circuits where
performance, signal integrity and power analyses are essential; and to reuse
high-performance intellectual property without changing the design process.
Anagram's ADM circuit simulation and analysis tool is currently being integrated
into the Star product family. Upon the closing of the Anagram Acquisition,
Anagram became a wholly owned subsidiary of Avant! and all of the fully-diluted
shares of Anagram capital stock and stock options were exchanged for an
aggregate of approximately 2,414,000 shares of Avant! Common Stock and Avant!
stock options. The Anagram Acquisition was accounted for as a pooling of
interests. See "Risk Factors--Uncertainty Relating to Integration of Operations
and Product Lines; Management of Growth," "--Cost of Integration; Transaction
Expenses" and "Avant! Business--Recent Developments."
In October 1996, Avant! acquired Meta-Software, Inc. ("Meta"), a
developer of library generation software products for use in IC design (the
"Meta Acquisition"). Meta's products include HSPICE, an industry leading circuit
simulator in use at over 1,500 commercial customer sites worldwide, and MASTER
Toolbox, an automated cell characterization and library generation program
introduced in late 1994. Meta's products assist IC designers in ascertaining
whether semiconductor devices based on their designs will meet functional and
performance specifications when fabricated in silicon. Avant! believes that
Meta's products can be used to reduce time to market, enhance IC performance,
lower design costs and validate designs across multiple foundries. Upon the
closing of the Meta Acquisition, Meta became a wholly owned subsidiary of Avant!
and all of the fully-diluted shares of Meta capital stock and stock options were
exchanged for an aggregate of approximately 5,080,000 shares of Avant! Common
Stock and Avant! stock options. The Meta Acquisition was accounted for as a
pooling of interests. See "Risk Factors--Uncertainty Relating to
12
<PAGE>
Integration of Operations and Product Lines; Management of Growth," "--Cost of
Integration; Transaction Expenses" and "Avant! Business--Recent Developments."
In November 1996, Avant! acquired FrontLine Design Automation, Inc.
("FrontLine"), a developer of Verilog simulation solutions to improve the
productivity of hardware logic designers (the "FrontLine Acquisition").
FrontLine has developed a unified HDL simulation architechture with Verilog
compatibility that offers (i) multiple levels of abstraction; (ii) multiple
simulation of algorithms; and (iii) multiple HDL compilation techniques.
FrontLine's products run on UNIX and Windows, and provide a multi-engine
architecture with high-performance cycle based and event driven simulation
support. The tools are used by designers of complex integrated circuits and
field programmable gate arrays to verify the functionality of their chips and
systems prior to manufacturing. Upon the closing of theFrontLine Acquisition,
FrontLine became a wholly owned subsidiary of Avant! and all of the
fully-diluted shares of FrrontLine capital stock and stock options were
exchanged for an aggregate of 2,222,222 shares of Avant! Common Stock and Avant!
stock options. The FrontLine Acquisition was accounted for as a pooling of
interests. See "Risk Factors--Uncertainty Relating to Integration of Operations
and Product Lines; Management of Growth," "--Cost of Integration; Transaction
Expenses" and "Avant! Business--Recent Developments."
13
<PAGE>
MANAGEMENT
The executive officers and directors of Avant! are as follows:
Name Age Position
- ---- --- --------
Gerald C. Hsu 49 President, Chief Executive Officer and Chairman
of the Board of Directors
Y. Eric Cho 48 Senior Vice President of Corporate Operations
and Director
John P. Huyett 42 Vice President of Financial & Administrative
Services, Chief Financial Officer and Treasurer
Shawn M. Hailey 46 Senior Vice President of Business Development
and Director
Eric A. Brill(1) 46 Director and Secretary
Tench Coxe(1) 37 Director
Tatsuya Enomoto 55 Director
- --------------
(1) Member of Audit and Compensation Committees.
Mr. Hsu joined Avant! in March 1994 as President, Chief Executive
Officer and a director, and has been Chairman of the Avant! Board of Directors
since November 1995. From July 1991 to March 1994, Mr. Hsu was employed by
Cadence, where his last position was President and General Manager of the IC
Design Group. From June 1988 to July 1991, Mr. Hsu was employed by Sun
Microsystems, Inc., an engineering workstation company, where his last position
was Director of Strategic Business Development. Mr. Hsu holds an S.M. in Ocean
Engineering from the Massachusetts Institute of Technology, an M.S. in Mechanics
and Hydraulics from the University of Iowa and a B.S. in Applied Mathematics
from the National Chung-Hsing University.
Dr. Cho co-founded Avant! in February 1991 and has been a director of
Avant! since such date. From January 1996 to the present, Dr. Cho has served as
the Senior Vice President of Corporate Operations. From October 1993 until
January 1996, he served as the Vice President of Asian Operations. From the
inception of Avant! until October 1993, Dr. Cho served as Vice President of
Sales and Marketing. From the inception of Avant! until November 1996, Dr. Cho
served as Secretary. From September 1986 to February 1991, Dr. Cho was employed
by Cadence where his last position was a Marketing Director of the IC Division.
Dr. Cho holds an M.B.A. from New York University, an M.S. and a Ph.D. in
Electrical Engineering and Computer Science from the University of California,
Berkeley and a B.S. in Electrical Engineering from the National Chiao-Tung
University, Taiwan.
Mr. Huyett has served as Vice President of Financial & Administrative
Services, Chief Financial Officer and Treasurer since he joined Avant! in
connection with the merger of Integrated Silicon Solutions, Inc. ("ISS") with
and into Avant! in November 1995. From July 1993 to November 1995, Mr. Huyett
served as Vice President of Finance and Chief Financial Officer of ISS. Mr.
Huyett also served as Treasurer and
14
<PAGE>
Secretary of ISS from October 1994 to November 1995. Prior to July 1993, Mr.
Huyett was a partner with KPMG Peat Marwick LLP, independent auditors to Avant!.
Mr. Hailey has served as Senior Vice President of Business Development
and a director since he joined Avant! in connection with the merger of Meta with
and into Avant! in October 1996. Mr. Hailey was the President, Chief Executive
Officer and Chairman of the Board of Directors of Meta since its inception in
1978. Prior to 1978, Mr. Hailey held engineering and management positions
involving circuit design at Advanced Micro Devices, Inc., where he established
the MOS Microprocessor Department and the EPROM group.
Mr. Brill has been the Secretary and director of Avant! since November
1996. Mr. Brill is a coporate and securities attorney whose practice focuses
principally on technology companies and private investment partnerships. He has
been in private practice since 1993, and previously practiced with the San
Francisco law firm of Farella, Braun & Martel. Mr. Brill holds a B.S. in History
from Cleveland State University and a J.D. from the Harvard Law School.
Mr. Coxe has been a director of Avant! since February 1992. Mr. Coxe is
a general partner of the general partner of Sutter Hill Ventures, a venture
capital investment firm, and has been associated with Sutter Hill Ventures since
1987. Mr. Coxe holds a B.A. in Economics from Dartmouth College and an M.B.A.
from the Harvard Business School.
Dr. Enomoto has been the President of Mitsubishi Electric Semiconductor
Software Corporation, a semiconductor engineering company and a subsidiary of
Mitsubishi Electric Corporation ("MELCO"), since June 1993. From 1962 to June
1993, Dr. Enomoto was employed by MELCO where his last position was General
Manager of the ASIC Design Engineering Center. Dr. Enomot holds a Ph.D. in
Engineering from the University of Tokyo.
15
<PAGE>
SELLING STOCKHOLDERS
The following table sets forth certain information, as of December 20,
1996, with respect to the number of shares of Common Stock owned by each of the
Selling Stockholders. All shares held by the Selling Stockholders as of December
20, 1996 are being offered for sale hereby. The Shares are being registered to
permit public secondary trading of the Shares, and the Selling Stockholders may
offer the Shares for resale from time to time. See "Plan of Distribution."
The Shares being offered by the Selling Stockholders were acquired from
the Company in the FrontLine Acquisition, pursuant to the Agreement and Plan of
Reorganization dated October 9, 1996, whereby DSM Acquisition Corporation, a
Delaware corporation and a wholly owned subsidiary of the Company, was merged
with and into FrontLine, and all outstanding shares of capital stock of
FrontLine were converted into shares of Common Stock of the Company. The Common
Stock was issued pursuant to an exemption from the registration requirements of
the Securities Act provided by Rule 506 under Regulation D, as promulgated by
the Securities Act. Each Selling Stockholder that acquired Shares from the
Company represented to the Company that it was acquiring the Shares for
investment and with no present intention of distributing the Shares.
The Company has filed with the Commission, under the Securities Act, a
Registration Statement on Form S-3, of which this Prospectus forms a part, with
respect to the resale of the Shares from time to time on The Nasdaq Stock Market
or in privately-negotiated transactions. The Company has agreed to keep such
Registration Statement effective for two years from the date of effectiveness of
this Prospectus, subject to certain restrictions, or, if earlier, until the
distribution contemplated in this Prospectus has been completed.
<TABLE>
The Shares offered by this Prospectus may be offered from time to time
by the Selling Stockholders named below:
<CAPTION>
Shares Beneficially Owned
Prior to Offering
---------------------------
Number of Number of Shares
Name of Selling Stockholder Shares Percent Being Offered
- --------------------------- ------ ------- -------------
<S> <C> <C> <C>
Agarwala, Badruddin 83,658 * 83,658
Agarwala, Badruddin, Custodian for Lamya 51,900 * 51,900
Agarwala
Apte, Sushama, as Custodian for Amit Apte 6,393 * 6,393
Apte, Sushama, as Custodian for Salin Apte 6,228 * 6,228
Curtin, Richard 2,307 * 2,307
Desai, W.L. 1,262 * 1,262
Dholakia, Anjana 6,872 * 6,872
Dholakia, Ansum S. 13,840 * 13,840
Dholakia, Sachi S. 13,840 * 13,840
16
<PAGE>
Shares Beneficially Owned
Prior to Offering
----------------------------
Number of Number of Shares
Name and Address of Selling Stockholder Shares Percent Being Offered
- --------------------------------------- ------ ------- -------------
Dholakia, Suresh 94,615 * 94,615
Dixon, Scott 25,791 * 25,791
Duet Technologies, Inc. 6,560 * 6,560
Functionality, Inc.(1) 10,380 * 10,380
Goel Family Partnership 512,180 2.3 512,180
Goel Pooneet 155,700 * 155,700
Goel Priyanka 155,700 * 155,700
Holland, Sheila 5,190 * 5,190
Jhaveri, D.J. 17,300 * 17,300
Jhaveri, J.B. 20,414 * 20,414
Jhaveri, Krishna 118,143 * 118,143
Jhaveri, Neeta 10,380 * 10,380
Jhaveri, Krishna, as Custodian for Kunal 25,950 * 25,950
Jhaveri
Jhaveri, Krishna, as Custodian for Ruchi 25,950 * 25,950
Jhaveri
Jinjuvadia, Kusum R. 13,840 * 13,840
Kaul, Sanjiv 8,650 * 8,650
Khorakiwala, Taizoon 25,950 * 25,950
Mehta, P.J. 17,300 * 17,300
Mehta, V.P. 17,300 * 17,300
Mody, Arti 1,682 * 1,682
Mody, C.J. 34,600 * 34,600
Mody, N.C. 34,600 * 34,600
Mody, Rajiv C. 121,949 * 121,949
Mody, Rajiv, as Custodian for Naman Mody 25,950 * 25,950
17
<PAGE>
Shares Beneficially Owned
Prior to Offering
----------------------------
Number of Number of Shares
Name and Address of Selling Stockholder Shares Percent Being Offered
- --------------------------------------- ------ ------- -------------
Mody, Rajiv, as Custodian for Sakhee Mody 25,950 * 25,950
Pacific Design, Inc.(2) 11,793 * 11,793
Rajpura, Bakul D. 13,840 * 13,840
Rajpura, Bharti B. 13,840 * 13,840
Samejima, Muneyoshi 86,062 * 86,062
Shar, Leonard E. 2,076 * 2,076
Vaidyanathan, Vijay 830 * 830
ZyMac 1,730 * 1,730
<FN>
- -------------------
* Less than 1%
(1) These shares of Common Stock may be acquired upon the exercise of certain
rights, which rights have not fully vested as of the date hereof.
(2) Includes 6,228 shares of Common Stock which may be acquired upon the
exercise of certain rights, which rights have not fully vested as of the
date hereof.
</FN>
</TABLE>
18
<PAGE>
PLAN OF DISTRIBUTION
All or a portion of the Shares offered hereby by the Selling
Stockholders may be delivered and/or sold from time to time in transactions in
the over-the-counter market, on the Nasdaq National Market, in privately
negotiated transactions, or by 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. After
the effectiveness of the Registration Statement of which this Prospectus is a
part, the Selling Stockholders may make short sales of the Company's Common
Stock and may use the Shares to cover the resulting short positions. The Selling
Stockholders may effect such transactions by selling the Shares to or through
broker-dealers and such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the Selling Stockholders 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). The Selling
Stockholders and any broker-dealers that participate in the distribution may
under certain circumstances be deemed to be "underwriters" within the meaning of
the Securities Act, and any commissions received by such broker-dealers and any
profits realized on the resale of Shares may be deemed to be underwriting
discounts and commissions under the Securities Act. The Selling Stockholders may
agree to indemnify such broker-dealers against certain liabilities, including
liabilities under the Securities Act. In addition, the Company has agreed to
indemnify the Selling Stockholders with respect to the Shares offered hereby
against certain liabilities, including certain liabilities under the Securities
Act, or, if such indemnity is unavailable, to contribute toward amounts required
to be paid in respect of such liabilities.
Any broker-dealer participating in such transactions as agent may
receive commissions from the Selling Stockholders (and, if it acts as agent for
the purchase of such Shares, from such purchaser). Broker-dealers may agree with
the Selling Stockholders to sell a specified number of Shares at a stipulated
price per share, and, to the extent such a broker-dealer is unable to do so
acting as agent for the Selling Stockholders, to purchase as principal any
unsold Shares. Broker-dealers who acquire Shares as principal may thereafter
resell such Shares from time to time in transactions (which may involve crosses
and block transactions and which may involve sales to and through other
broker-dealers, including transactions of the nature described above) in the
over-the-counter market, on the Nasdaq National Market, in privately negotiated
transactions, or by 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, and in
connection with such resales may pay to or receive from the purchasers of such
Shares commissions computed as described above.
The Selling Stockholders will be subject to applicable provisions of
the Exchange Act, and the rules and regulations thereunder, including, without
limitation, Rules 10b-6 and 10b-7, which provisions may limit the timing of bids
for and purchases of shares of the Company's Common Stock by the Selling
Stockholders.
The Selling Stockholders will pay all commissions and other expenses
associated with the sale of securities by them. The Shares offered hereby are
being registered pursuant to contractual obligations of the Company, and the
Company has agreed to bear certain expenses in connection with the registration
and sale of the Shares being offered by the Selling Stockholders. The Company
has not made any underwriting arrangements with respect to the sale of Shares
offered hereby.
LEGAL MATTERS
The legality of the securities offered hereby will be passed upon for
the Company by Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP,
Menlo Park, California.
19
<PAGE>
EXPERTS
The consolidated balance sheets of Avant! Corporation and subsidiaries
as of December 31, 1994 and 1995 and the consolidated statements of income,
stockholders' equity, and cash flows for each of the years in the three-year
period ended December 31, 1995 incorporated in this Prospectus by reference from
the Company's Form 8-K filed on December 19, 1996 have been audited by KPMG Peat
Marwick LLP, independent certified public accountants, and are incorporated
herein by reference in reliance upon the report of KPMG Peat Marwick LLP, and
upon the authority of such firm as experts in accounting and auditing.
The supplemental consolidated balance sheets from Avant! Corporation
and subsidiaries as of December 31, 1994 and 1995 and the supplemental
consolidated statements of income, stockholders' equity, and cash flows for each
of the years in the three-year period ended December 31, 1995 incorporated in
this Prospectus by reference from the Company's Form 8-K filed on December 19,
1996 have been audited by KPMG Peat Marwick LLP, independent certified public
accountants, and are incorporated herein by reference in reliance upon the
report of KPMG Peat Marwick LLP, and upon the authority of such firm as experts
in accounting and auditing.
20
<PAGE>
No dealer, salesperson, Selling Stockholder or
any other person has been authorized to give any
information or to make any representations in
connection with this offering other than those
contained in this Prospectus and, if given or
made, such information or representations must 1,828,495 Shares
not be relied upon as having been authorized by
the Company, any Selling Stockholder or by any
other person. This Prospectus does not constitute
an offer to sell or a solicitation of any offer
to buy any of the securities offered hereby by
anyone in any jurisdiction in which such offer or
solicitation is not authorized or in which the
person making such offer or solicitation is not
qualified to do so or to any person to whom it is AVANT! CORPORATION
unlawful to make such offer or solicitation.
Neither the delivery of this Prospectus nor any
sale made hereunder shall, under any
circumstances, create any implication that the
information contained herein is correct as of any
time subsequent to the date of the Prospectus.
Common Stock
----------------------------
-------------
TABLE OF CONTENTS
Page ___________, 1997
----
Available Information 2 --------------
Information Incorporated by Reference 2
Risk Factors 4
The Company 12
Management 14
Selling Stockholders 16
Plan of Distribution 19
Legal Matters 19
Experts 20
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The fees and expenses incurred by the Company in connection with the
offering are payable by the Company and, other than filing fees, are estimated
as follows:
Securities and Exchange Commission Registration Fee...... $ 16,208
Legal Fees and Expenses.................................. 75,000
Accounting Fees and Expenses............................. 130,000
Miscellaneous............................................ 53,792
--------
Total............................................... 275,000
========
Item 15. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation law ("DGCL") empowers a
Delaware corporation to indemnify any persons who are, or are threatened to be
made, parties to any threatened, pending or completed legal action, suit or
proceedings, whether civil, criminal, administrative or investigative (other
than action by or in the right of such corporation), by reason of the fact that
such person was an officer or director of such corporation, or is or was serving
at the request of such corporation as a director, officer, employee or agent of
another corporation or enterprise. The indemnity may include expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or
proceeding, provided that such officer or director acted in good faith and in a
manner he reasonably believed to be in or not opposed to the corporation's best
interests, and, for criminal proceedings, had no reasonable cause to believe his
conduct was illegal. A Delaware corporation may indemnify officers and directors
in an action by or in the right of the corporation under the same conditions,
except that no indemnification is permitted without judicial approval if the
officer or director is adjudged to be liable to the corporation in the
performance of his duty. Where an officer or director is successful on the
merits or otherwise in the defense of any action referred to above, the
corporation must indemnify him against the expenses which such officer or
director actually and reasonably incurred.
In accordance with the DGCL, Avant!'s Certificate of Incorporation
("Certificate") contains a provision to limit the personal liability of the
directors of the Registrant for violations of their fiduciary duty. This
provision eliminates each director's liability to the Registrant or its
stockholders for monetary damages except (i) for any breach of the director's
duty of loyalty to the Registrant or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the DGCL providing for liability of
directors for unlawful payment of dividends or unlawful stock purchases or
redemptions, or (iv) for any transaction from which a director derived an
improper personal benefit. The effect of this provision is to eliminate the
personal liability of directors for monetary damages for actions involving a
breach of their fiduciary duty of care, including any such actions involving
gross negligence.
Article IX of Avant!'s Certificate and Article VII, Section 6 of
Avant!'s Bylaws provide for indemnification of the officers and directors of the
Registrant to the fullest extent permitted by applicable law.
The Registrant has entered into indemnification agreements with each
director and executive officer which provide indemnification to such directors
and executive officers under certain circumstances for acts or omissions which
may not be covered by directors' and officers' liability insurance.
II-1
<PAGE>
Item 16. Exhibits.
(a) Exhibits
Exhibit
Number Description
- ------- -----------
2.1 Agreement and Plan of Reorganization dated as of August 18, 1996
among the Registrant, AGM Acquisition Corporation and Anagram, Inc.
(1)
2.2 Agreement and Plan of Reorganization dated as of August 22, 1996
among the Registrant, Natasha Merger Corporation and Meta-Software,
Inc. (1)
2.3 Agreement and Plan of Reorganization dated as of October 9, 1996
among the Registrant, DSM Acquisition Corporation and FrontLine
Design Automation, Inc. (2)
4.1 Amended and Restated Investors' Rights Agreement between the
Registrant and certain investors dated September 24, 1994. (3)
4.2 Registration Rights Agreement between the Registrant and certain
investors dated November 27, 1996.
4.3 Specimen certificate of the Registrant's Common Stock. (3)
5.1 Opinion of Gunderson Dettmer Stough Villeneuve Franklin &
Hachigian, LLP.
23.1 Consent of Gunderson Dettmer Stough Villeneuve Franklin &
Hachigian, LLP (included in Exhibit 5.1).
23.2 Consent of KPMG Peat Marwick LLP.
24.1 Power of Attorney. (See page II-4)
27.1 Financial Data Schedule (4)
(1) Incorporated by reference from the Registrant's Registration Statement
(File No. 333-11659) on Form S-4 as declared effective on September 30,
1996.
(2) Incorporated by reference from the Registrant's Current Report on Form 8-K
filed with the SEC on October 24, 1996.
(3) Incorporated by reference from the Registrant's Registration Statement
(File No. 33-91128) on Form S-1 as declared effective on June 6, 1995.
(4) Incorporated by reference from the Registrant's Current Report on Form 8-K
filed with the SEC on December 20, 1996.
(b) Financial Statement Schedules
Schedule II--Valuation and Qualifying Accounts
Schedules not listed above have been omitted because the information
required to be set forth herein is not applicable or is shown in the financial
statements or notes thereto.
II-2
<PAGE>
Item 17. Undertakings
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement: (i) to include any
prospectus required by section 10(a)(3) of the Securities Act; (ii) to reflect
in the prospectus any facts or events arising after the effective date of the
Registration Statement (or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement; and (iii) to include any
material information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change to such
information in the Registration Statement; provided, however, that (i) and (ii)
do not apply if the Registration Statement is on Form S-3 or Form S-8, and the
information required to be included in a post-effective amendment by (i) and
(ii) is contained in periodic reports filed with or furnished to the Commission
by the Registrant pursuant to Section 13 or Section 15(d) of the Exchange Act
that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, 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.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
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 Sunnyvale, State of California on this 16th day of
December, 1996.
AVANT! CORPORATION
By: /s/ Gerald C. Hsu
-----------------------------------------
Gerald C. Hsu
Chairman of the Board, President and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned officers and directors of Avant! Corporation, a
Delaware corporation, do hereby constitute and appoint jointly and severally, Y.
Eric Cho and Gerald C. Hsu, and each of them, the lawful attorneys and agents,
with power and authority to do any and all acts and things and to execute any
and all instruments which said attorneys and agents determine may be necessary
or advisable or required to enable said corporation to comply with the
Securities Act, and any rules or regulations or requirements of the Securities
and Exchange Commission in connection with this Registration Statement. Without
limiting the generality of the foregoing power and authority, the powers granted
include the power and authority to sign the names of the undersigned officers
and directors in the capacities indicated below to this Registration Statement,
to any and all amendments, both pre-effective and post-effective, and
supplements to this Registration Statement, and to any and all instruments or
documents filed as part of or in conjunction with this Registration Statement or
amendments or supplements thereof, and each of the undersigned hereby ratifies
and confirms all that said attorneys and agents or any of them shall do or cause
to be done by virtue hereof. This Power of Attorney may be signed in several
counterparts.
II-4
<PAGE>
IN WITNESS WHEREOF, each of the undersigned has executed this Power of
Attorney as of the date indicated.
<TABLE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Gerald C. Hsu Chairman of the Board, President and Chief December 18, 1996
- ---------------------------------------- Executive Officer (Principal Executive
Gerald C. Hsu Officer)
/s/ John P. Huyett Vice President of Financial & Administrative December 18, 1996
- ---------------------------------------- Services, Chief Financial Officer and
John P. Huyett Treasurer (Principal Financial and
Accounting Officer )
/s/ Eric Cho Senior Vice President of Corporate December 18, 1996
- ---------------------------------------- Operations and Director
Y. Eric Cho
/s/ Shawn M. Hailey Senior Vice President of Business
- ---------------------------------------- Development and Director December 18, 1996
Shawn M. Hailey
/s/ Eric A. Brill Director and Secretary December 18, 1996
- ----------------------------------------
Eric A. Brill
/s/ Tench Coxe Director December 18, 1996
- ----------------------------------------
Tench Coxe
/s/ Tatsuya Enomoto Director December 18, 1996
- ----------------------------------------
Tatsuya Enomoto
</TABLE>
II-5
<PAGE>
Exhibit Index
Exhibit
Number Description
- ------- -----------
2.1 Agreement and Plan of Reorganization dated as of August 18, 1996
among the Registrant, AGM Acquisition Corporation and Anagram, Inc.
(1)
2.2 Agreement and Plan of Reorganization dated as of August 22, 1996
among the Registrant, Natasha Merger Corporation and Meta-Software,
Inc. (1)
2.3 Agreement and Plan of Reorganization dated as of October 9, 1996
among the Registrant, DSM Acquisition Corporation and FrontLine
Design Automation, Inc. (2)
4.1 Amended and Restated Investors' Rights Agreement between the
Registrant and certain investors dated September 24, 1994. (3)
4.2 Registration Rights Agreement between the Registrant and certain
investors dated November 27, 1996.
4.3 Specimen certificate of the Registrant's Common Stock. (3)
5.1 Opinion of Gunderson Dettmer Stough Villeneuve Franklin &
Hachigian, LLP.
23.1 Consent of Gunderson Dettmer Stough Villeneuve Franklin &
Hachigian, LLP (included in Exhibit 5.1).
23.2 Consent of KPMG Peat Marwick LLP.
24.1 Power of Attorney. (See page II-4)
27.1 Financial Data Schedule (4)
(1) Incorporated by reference from the Registrant's Registration Statement
(File No. 333-11659) on Form S-4 as declared effective on September 30,
1996.
(2) Incorporated by reference from the Registrant's Current Report on Form 8-K
filed with the SEC on October 24, 1996.
(3) Incorporated by reference from the Registrant's Registration Statement
(File No. 33-91128) on Form S-1 as declared effective on June 6, 1995.
(4) Incorporated by reference from the Registrant's Current Report on Form 8-K
filed with the SEC on December 20, 1996.
II-6
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT is made as of the 27th day
of November, 1996, by and between Avant! Corporation, a Delaware corporation
(the "Company"), and Badruddin Agarwala, on behalf of the shareholders and the
holders of warrants listed on Schedule A hereto (collectively, the
"Shareholders" and individually, a "Shareholder") of FrontLine Design
Automation, Inc., a California corporation ("FrontLine").
RECITALS
WHEREAS, the Company and FrontLine are parties to the
Agreement and Plan of Reorganization dated October 9, 1996 (together with all
exhibits, schedules, supplements and any amendments thereto, the "Plan of
Reorganization"), pursuant to which the Company shall acquire all the
outstanding shares of capital stock of FrontLine in exchange for shares of
common stock (the "Common Stock") of the Company (the "Merger");
WHEREAS, the parties to the Plan of Reorganization have
determined that in light of recent federal legislation it is in the best
interests of the parties thereto to grant certain registration rights to the
Shareholders as set forth herein; and
WHEREAS, all terms not otherwise defined herein shall have the
same meanings ascribed to them in the Plan of Reorganization;
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Registration Rights The Company covenants and agrees as
follows:
1.1 Definitions. For purposes of this Section 1:
(a) The term "Act" means the Securities Act of 1933,
as amended.
(b) The term "1934 Act" shall mean the Securities
Exchange Act of 1934, as amended.
(c) The terms "register," "registered," and
"registration" refer to a registration effected by preparing and filing a
registration statement or similar document in compliance with the Act, and the
declaration or ordering of effectiveness of such registration statement or
document.
(d) The term "Registrable Securities" means the
Common Stock of the Company issued to the Shareholders in the Merger and shares
of Common Stock of the Company issuable upon exercise of outstanding warrants,
and any Common Stock of the Company issued as a dividend or other distribution
with respect to such Common Stock.
<PAGE>
(e) The term "Rule 144" shall mean Rule 144
promulgated under the Act, as amended, or any similar successor rule thereto
that may be promulgated by the SEC.
(f) The term "SEC" shall mean the Securities and
Exchange Commission.
1.2 Registration.
(a) If by December 16, 1996 the SEC (A) takes a
position in a definitive pronouncement (i.e. a no-action letter or
interpretative release), that (i) a Nasdaq National Market company may not rely
on a fairness hearing pursuant to Section 25142 of the California Corporations
Code to avail itself of an exemption under Section 3(a)(10) of the Act, or (ii)
any securities issued pursuant to such a fairness hearing and in reliance upon
Section 3(a)(10) are deemed to be restricted securities and therefore will not
be freely transferable, or (B) fails to take a position in a definitive
pronouncement with respect to the matters described in clause (A), then Avant!
shall file on that date with the SEC a registration statement covering all of
the Registrable Securities, and shall use its best efforts to have such
registration statement declared effective within two days of the publication
(within the meaning of Accounting Series Release No. 135 as amended, of the SEC)
of financial results covering at least one month of combined operations of the
Company and FrontLine, approximately January 21, 1997.
(b) Notwithstanding the foregoing, if the Company
shall furnish to the Shareholders a certificate signed by the Chief Executive
Officer of the Company stating that in the good faith judgment of the Board of
Directors of the Company, it would be detrimental to the Company and its
stockholders for such registration statement to be filed, and it is therefore
essential to defer the filing of such registration statement, the Company shall
have the right to defer filing the registration statement referred to in Section
1.2(a) until December 26, 1996.
(c) In no event shall the Company's insider trading
window be opened unless the registration statement has been declared effective
by the SEC.
1.3. Company Registration. If (but without any obligation to
do so) the Company proposes to register (including for this purpose a
registration effected by the Company for stockholders other than the
Shareholder) any of its stock or other securities under the Act in connection
with the public offering of such securities solely for cash (other than a
registration relating solely to the sale of securities to participants in a
Company stock plan, a registration on any form which is not available for the
resale of the Registrable Securities, a registration statement on Form S-4 or
any successor form, or a registration in which the only Common Stock being
registered is Common Stock issuable upon conversion of debt securities which are
also being registered), the Company shall, at such time, promptly give the
Shareholders written notice of such registration. Upon the written request of
the Shareholders given within ten (10) days after mailing of such notice by the
Company in accordance with Section 2.5, the Company shall cause to be registered
under the Act all of the Registrable Securities that the Shareholder has
requested to be registered. In connection with any registration pursuant to this
Section 1.3 which involves the underwritten offering of the Company's
securities, the Company shall not be required to include any of the
Shareholder's securities under such registration statement unless
2
<PAGE>
the Shareholder agrees to enter into an underwriting agreement in the form
agreed upon between the Company and the underwriters selected by it (or by other
persons entitled to select the underwriters), and then only in such quantity as
the underwriters determine in their sole discretion will not jeopardize the
success of the offering by the Company. Each Shareholder acknowledges and agrees
that at the underwriters' sole discretion the Registrable Securities may be
excluded entirely from such offering. In addition, if a registration is to be
effected pursuant to a request by another holder of Common Stock of the Company,
the Shareholder's right to participate in any such registration shall be subject
to the prior consent of such holder which consent may be withheld in the
holder's sole discretion.
1.4 Obligations of the Company. Whenever required under this
Section 1 to effect the registration of any Registrable Securities, the Company
shall:
(a) Prepare and file with the SEC, a registration
statement with respect to such Registrable Securities and use best efforts to
cause such registration statement to become effective, and, subject to the
provisions below, use best efforts to, keep such registration statement
effective for a period of two years or, if earlier, until the distribution
contemplated in the registration statement has been completed. If at any time
after a registration statement becomes effective, the Company advises the
Shareholders in writing that due to the existence of material information that
has not been disclosed to the public and included in the registration statement
it is thus necessary to amend the registration statement (including by reporting
such information under the 1934 Act), the Shareholders shall suspend any further
sale of Registrable Securities pursuant to the registration statement until the
registration statement has been amended. In such event, the Company shall use
best efforts to amend the registration statement as soon as reasonably
practicable and in no event later than the earlier of (i) 10 days after the
Company has advised Shareholders to suspend sales (which 10 day period may be
extended, one time only, an additional 10 days (the "Additional Suspension") if
the Board of Directors of the Company in its good faith judgment determines that
such disclosure would be substantially detrimental to the Company; provided,
however, that the Company shall only have the right to effect an Additional
Suspension not more than twice in any twelve month period) or (ii) the
commencement of any period in which directors and officers of the Company are
allowed to buy or sell Common Stock of the Company pursuant to the Company's
insider trading policy. The Company shall not impose a suspension on the sale of
Registrable Securities by the Shareholders unless the Company's insider trading
window is closed. When selling Registrable Securities, a Shareholder shall
follow the procedures set forth in Section 1.9 and may presume that no
suspension is in effect if a trade is made in the manner described in that
section.
(b) Subject to subsection 1.4(a), prepare and file
with the SEC such amendments and supplements to such registration statement and
the prospectus used in connection with such registration statement as may be
necessary to comply with the provisions of the Act with respect to the
disposition of all securities covered by such registration statement.
(c) Furnish to the Shareholders requesting
registration such numbers of copies of a prospectus, including a preliminary
prospectus, in conformity with the
3
<PAGE>
requirements of the Act, and such other documents as they may reasonably request
in order to facilitate the disposition of Registrable Securities owned by them.
(d) Use best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Shareholders holding a majority of the Registrable Securities; provided that the
Company shall not be required in connection therewith or as a condition thereto
to qualify to do business or to file a general consent to service of process in
any such states or jurisdictions, unless the Company is already subject to
service in such jurisdiction and except as may be required by the Act.
1.5 Information from Shareholders. It shall be a condition
precedent to the obligations of the Company to take any action pursuant to this
Section 1 with respect to the Registrable Securities of a Shareholder that such
Shareholder shall furnish to the Company such information regarding himself or
herself, the Registrable Securities held by him or her, and the intended method
of disposition of such securities as shall be reasonably requested by the
Company and required to effect the registration of the Registrable Securities.
1.6 Expenses of Registration. All expenses of the
Shareholders, except commissions, including (without limitation) all
registration, filing and qualification fees, printers' and accounting fees, fees
and disbursements of counsel for the Company shall be borne by the Company;
provided, however, that the Company shall not be required to pay any
professional fees of the Shareholders other than the fees of a special counsel
to the Shareholders (not to exceed $15,000).
1.7 No Assignment of Registration Rights. The registration
rights provided hereunder are not assignable, except to a transferee upon the
death of a Shareholder, a personal legal representative in the event of
incapacity of the Shareholder or otherwise by operation of law. Notwithstanding
the foregoing, the registration rights provided hereunder may be assigned by a
Shareholder to a transferee or assignee of such securities who shall, upon such
transfer or assignment, be deemed a "Shareholder" under this Agreement; provided
that the Company is, within a reasonable period of time after such transfer,
furnished with written notice of the name and address of such transferee or
assignee and the Registrable Securities with respect to such registration rights
are being assigned; provided, further, that such assignment shall be effective
only if immediately following such transfer (A) the further disposition of such
securities by the transferee or assignee is restricted under the Act, (B) that
such transferee or assignee is a member of the immediate family of the
Shareholder or a trust for the benefit of any Shareholder that is an individual
(or for the benefit of an immediate family member of such Shareholder), and (C)
that such transfer or assignment consists of at least 25,000 shares of the
Registrable Securities or all of the Registrable Securities held by such
Shareholder.
1.8 Indemnification. In the event any Registrable Securities
are included in a registration statement under this Section 1:
(a) The Company will indemnify and hold harmless
each Shareholder and any controlling person of such Shareholder against any
losses, claims, damages, or liabilities
4
<PAGE>
(joint or several) to which he may become subject under the Act, the 1934 Act,
or other federal or State laws, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based upon any
of the following statements, omissions or violations (collectively a
"Violation"): (i) any untrue statement or alleged untrue statement of a material
fact contained in such registration statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto, (ii) any omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein not misleading, or (iii) any violation or alleged violation by the
Company of the Act, the 1934 Act, or any rule or regulation promulgated under
the Act, or the 1934 Act or other federal or State law; and the Company will pay
to Shareholder, as incurred, any legal or other expenses reasonably incurred by
him in connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this subsection 1.8 (a) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability, or action if such settlement is effected
without the consent of the Company, which consent shall not be unreasonably
withheld, nor shall the Company be liable in any such case for any such loss,
claim, damage, liability, or action to the extent that it arises out of or is
based upon a Violation which occurs in reliance upon and in conformity with
information furnished expressly for use in connection with such registration by
Shareholder. In addition, the Company shall not be liable for any untrue
statement or omission in any prospectus if a supplement or amendment thereto
correcting such untrue statement or omission was delivered to Shareholder prior
to the pertinent sale or sales by Shareholder.
(b) Each Shareholder will indemnify and hold
harmless the Company, each of its directors, each of its officers who has signed
the registration statement, each person, if any, who controls the Company within
the meaning of the Act, any other Shareholder selling securities in such
registration statement and any controlling person of any such Shareholder,
against any losses, claims, damages, or liabilities (joint or several) to which
any of the foregoing persons may become subject, under the Act, or the 1934 Act
or other federal or state law, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by Shareholder expressly for use in connection with such registration;
and Shareholder will pay, as incurred, any legal or other expenses reasonably
incurred by any person intended to be indemnified pursuant to this subsection
1.8(b), in connection with investigating or defending any such loss, claim,
damage, liability, or action; provided, however, that the indemnity agreement
contained in this subsection 1.8(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of Shareholder, which consent shall
not be unreasonably withheld; provided, that, in no event shall any indemnity
under this subsection 1.8(b) exceed the gross proceeds from the offering
received by Shareholder.
(c) Promptly after receipt by an indemnified party
under this Section 1.8 of notice of the commencement of any action (including
any governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section 1.8,
deliver to the indemnifying party a written notice of the commencement thereof
and the indemnifying party shall have the right to participate in, and, to
5
<PAGE>
the extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume the defense thereof with counsel
mutually satisfactory to the parties; provided, however, that an indemnified
party (together with all other indemnified parties which may be represented
without conflict by one counsel) shall have the right to retain one separate
counsel, with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
1.8, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 1.8.
(d) If the indemnification provided for in this
Section 1.8 is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim, damage, or expense
referred to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party hereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such loss, liability, claim, damage, or
expense in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
in connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
(e) The obligations of the Company and Shareholder
under this Section 1.8 shall survive the completion of any offering of
Registrable Securities in a registration statement under this Section 1, and
otherwise.
(f) Notwithstanding the foregoing, to the extent
that the provisions on indemnification and contribution contained in the
underwriting agreement entered into in connection with the underwritten public
offering are in conflict with the foregoing provisions, the provisions in the
underwriting agreement shall control.
1.9 Termination of Registration Rights. The registration rights
provided in this Section 1 shall terminate with respect to a particular
Shareholder if: (A) the Registrable Securities owned by such Shareholder have
been held for the necessary holding period under Rule 144 and all shares of
Registrable Securities held by such Shareholder may be sold pursuant to Rule 144
in any three (3) month period, or (B) the SEC takes a position in a definitive
pronouncement after the date hereof that (i) a Nasdaq National Market company
may rely on a fairness hearing pursuant to Section 25142 of the California
Corporations Code to avail itself of an exemption under Section 3(a)(10) of the
Act, or (ii) any securities issued pursuant to such a
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fairness hearing and in reliance upon Section 3(a)(10) are not deemed to be
restricted securities and therefore will be freely transferable. Upon the
termination of registration rights pursuant to Section 1.9 (B), the Company
shall have the right to withdraw the registration statement, or any portion
thereof, covering the Registrable Securities.
1.10 Notice by Selling Shareholders. Each Shareholder who
intends to sell any or all of his shares of Registrable Securities pursuant to
the provisions of this Section 1 shall give advance telephonic notice to John
Huyett, the Company's Chief Financial Officer (408-738-8881), of such intention
and shall be free to sell any or all of his shares of Registrable Securities if
such Shareholder has not received notice to the contrary within three (3)
business hours of such telephonic notice.
2. Miscellaneous.
2.1 General. Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
2.2 Governing Law. This Agreement shall be governed by and
construed under the laws of the State of California as applied to agreements
among California residents entered into and to be performed entirely within
California.
2.3 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
2.4 Titles and Subtitles. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
2.5 Notices. Unless otherwise provided, any notice required
or permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon facsimile (with confirmed receipt), or personal delivery
to the party to be notified at the address indicated for such party on the
signature page hereof, or at such other address as such party may designate by
ten (10) days' advance written notice to the other parties.
2.6 Expenses. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees, costs and necessary
disbursements in addition to any other relief to which such party may be
entitled.
2.7 Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the
Shareholders holding a majority of the Registrable Securities.
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2.8 Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
2.9 Entire Agreement. This Agreement constitutes the full and
entire understanding and agreement between the parties with regard to the
subject hereof.
2.10 Removal of Restrictive Legends. In the event that the
registration rights terminate in accordance with Section 1.8(B), then the
Company shall remove any restrictive legends on certificates evidencing the
Registrable Securities except for such legends relating to restrictions under
applicable affiliates agreements.
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IN WITNESS WHEREOF, the parties have executed this
Registration Rights Agreement as of the date first above written.
AVANT! CORPORATION
By: /s/ JOHN P. HUYETT
--------------------------------------------------
John P. Huyett, Chief Financial Officer and
Vice President of Financial and Administrative
Services, and Treasurer
Address:
Avant! Corporation
1208 East Arques Avenue
Sunnyvale, CA 94086
BADRUDDIN AGARWALA, ON BEHALF OF
FRONTLINE SHAREHOLDERS
Signature /S/ BADRUDDIN AGARWALA
-------------------------------
Address: 42684 Brentwood Court
--------------------------------
Fremont, CA 94533
----------------------------------------
Copy to: Heller, Erhman, White & McAuliffe
525 University Avenue
Palo Alto, CA 94301
Facsimile 415-324-0638
Attention: Richard Friedman
December 20, 1996
Avant! Corporation
1208 East Arques Avenue
Sunnyvale, California 94086
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-3 to be filed by
Avant! Corporation (the "Company") with the Securities and Exchange Commission
on December 20, 1996, as thereafter amended or supplemented (the "Registration
Statement"), in connection with the registration under the Securities Act of
1933, as amended, of certain shares of the Company's Common Stock (the "Shares")
previously issued to the shareholders of FrontLine Design Automation, Inc.
("FrontLine") in connection with the merger of a wholly owned subsidiary of the
Company with and into FrontLine. As your legal counsel, we have examined the
proceedings taken and are familiar with the proceedings proposed to be taken by
you in connection with the sale and issuance of the Shares.
It is our opinion that the Shares are legally and validly issued, fully
paid and non-assessable.
We consent to the use of this opinion as an exhibit to said
Registration Statement, and further consent to the use of our name wherever
appearing in said Registration Statement, including the prospectus constituting
a part thereof, and in any amendment or supplement thereto.
Very truly yours,
/s/ Gunderson Dettmer Stough
Villeneuve Franklin & Hachigian, LLP
------------------------------------
GUNDERSON DETTMER STOUGH
VILLENEUVE FRANKLIN & HACHIGIAN, LLP
Exhibit 23.2
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Avant! Corporation
We consent to incorporation by reference in the registration statement on Form
S-3 dated December 20, 1996 of Avant! Corporation of our report dated December
16, 1996, relating to the supplemental consolidated balance sheets of Avant!
Corporation and subsidiaries as of December 31, 1994 and 1995 and the related
supplemental consolidated statements of income, shareholders' equity, and cash
flows for each of the years in the three-year period ended December 31, 1995,
and the related supplemental financial statement schedule, which report appears
in the Form 8-K dated December 20, 1996 of Avant! Corporation. We also consent
to incorporation by reference in the registration statement on Form S-3 dated
December 20, 1996 of Avant! Corporation of our report dated December 16, 1996,
relating to the consolidated balance sheets of Avant! Corporation and
subsidiaries as of December 31, 1994, and 1995, and the related consolidated
statements of income, shareholders' equity, and cash flows for each of the years
in the three-year period ended December 31, 1995, and the related financial
statement schedule, which report appears in the Form 8-K dated December 20, 1996
of Avant! Corporation.
KPMG Peat Marwick LLP
San Jose, California
December 20, 1996
