<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 20, 1998
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
AVANT! CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<S> <C>
DELAWARE 94-3133226
(State or Other Jurisdiction (I.R.S. Employer Identification
of Incorporation or Number)
Organization)
</TABLE>
46871 BAYSIDE PARKWAY
FREMONT, CALIFORNIA 94538
(510) 413-8000
(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
46871 BAYSIDE PARKWAY
FREMONT, CALIFORNIA 94538
(510) 413-8000
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
THE COMMISSION IS REQUESTED TO SEND COPIES OF ALL COMMUNICATIONS TO:
ROBERT V. GUNDERSON, JR., ESQ.
STEVEN M. SPURLOCK, ESQ.
ANTHONY J. MCCUSKER, ESQ.
GUNDERSON DETTMER STOUGH
VILLENEUVE FRANKLIN & HACHIGIAN, LLP
155 CONSTITUTION DRIVE
MENLO PARK, CALIFORNIA 94025
(650) 321-2400
--------------------------
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. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED SECURITY(1) PRICE(1) REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, $0.001 par value...... 1,256,005 shares $17.25 $21,666,086.25 $6,023.17
</TABLE>
(1) The price of $17.25 per share, which was the average of the high and low
prices of the Common Stock on the Nasdaq National Market on November 18,
1998 is set forth solely for the purpose of calculating the registration fee
in accordance with Rule 457(f)(1) of the Securities Act of 1933, as amended.
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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION, DATED NOVEMBER , 1998
1,256,005 SHARES
AVANT! CORPORATION
COMMON STOCK
------------------
THIS PROSPECTUS RELATES TO THE PUBLIC OFFERING OF 1,256,005 SHARES OF THE COMMON
STOCK OF AVANT! CORPORATION. THIS OFFERING IS NOT BEING UNDERWRITTEN.
------------------------
INVESTING IN THE COMMON STOCK INVOLVES CONSIDERABLE RISKS.
SEE "RISK FACTORS" BEGINNING ON PAGE 4.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
From time to time, the shares (the "Shares") of Common Stock (the "Common
Stock") may be offered by certain stockholders (the "Selling Stockholders") of
Avant! Corporation ("Avant!" or the "Company") in transactions (i) on the Nasdaq
National Market, (ii) in privately negotiated transactions, or (iii) by a
combination of such methods of sale. Such sales may occur at fixed prices that
are subject to change, at prevailing market prices or at negotiated prices.
Selling Stockholders may sell Shares through broker-dealers, and such
broker-dealers may receive compensation in the form of discounts, concessions or
commissions from the Selling Stockholders, the purchasers of the Shares, or
both. Selling Stockholders may also sell Shares to broker-dealers buying for
their own account, and these broker-dealers may receive similar compensation
from such Selling Stockholders. Compensation received by such broker-dealers may
exceed that which is considered customary. See "Selling Stockholders" and "Plan
of Distribution."
Avant! 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 and sale of the Shares being offered by the
Selling Stockholders.
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.
------------------------
On November 18, 1998, the closing bid price of the Company's Common Stock on
the Nasdaq National Market was $17.25 per share. The Common Stock is traded on
the Nasdaq National Market under the symbol "AVNT."
------------------------
THE DATE OF THIS PROSPECTUS IS NOVEMBER , 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Prospectus Summary......................................................................................... 3
Risk Factors............................................................................................... 4
Use of Proceeds............................................................................................ 17
Selling Stockholders....................................................................................... 18
Plan of Distribution....................................................................................... 22
Description of Capital Stock............................................................................... 23
Legal Matters.............................................................................................. 27
Experts.................................................................................................... 27
Available Information...................................................................................... 28
Information Incorporated by Reference...................................................................... 28
</TABLE>
2
<PAGE>
PROSPECTUS SUMMARY
YOU SHOULD READ THE FOLLOWING SUMMARY TOGETHER WITH THE MORE DETAILED
INFORMATION APPEARING ELSEWHERE IN THIS PROSPECTUS AND THE DOCUMENTS
INCORPORATED BY REFERENCE IN THIS PROSPECTUS.
THIS PROSPECTUS, INCLUDING THE DOCUMENTS INCORPORATED BY REFERENCE HEREIN,
CONTAINS FORWARD-LOOKING STATEMENTS. STATEMENTS CONTAINED IN THIS PROSPECTUS OR
INCORPORATED BY REFERENCE HEREIN THAT ARE NOT PURELY HISTORICAL ARE
FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27 OF THE SECURITIES
ACT AND SECTION 21 OF THE EXCHANGE ACT, INCLUDING WITHOUT LIMITATION STATEMENTS
REGARDING AVANT!'S EXPECTATIONS, BELIEFS, INTENTIONS OR STRATEGIES REGARDING THE
FUTURE. ALL FORWARD-LOOKING STATEMENTS INCLUDED IN THIS DOCUMENT ARE BASED ON
INFORMATION AVAILABLE TO AVANT! ON THE DATE HEREOF, AND AVANT! ASSUMES NO
OBLIGATION TO UPDATE ANY SUCH FORWARD-LOOKING STATEMENTS. A FORWARD-LOOKING
STATEMENT INVOLVES A PREDICTION, THE ACCURACY OF WHICH IS SUBJECT TO RISKS AND
UNCERTAINTIES. AVANT!'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE
ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS,
INCLUDING, BUT NOT LIMITED TO, THOSE SET FORTH IN THIS PROSPECTUS UNDER "RISK
FACTORS." YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED IN THE "RISK
FACTORS" SECTION, IN ADDITION TO THE OTHER INFORMATION SET FORTH IN THIS
PROSPECTUS AND INCORPORATED BY REFERENCE HEREIN, BEFORE MAKING AN INVESTMENT
DECISION.
THE COMPANY
Avant! Corporation ("Avant!" or the "Company") develops, markets and
supports integrated circuit design automation ("ICDA") software (also known as
electronic design automation or "EDA") for the physical design of high-density,
high-performance integrated circuits ("ICs"). Our product architecture is
designed to solve the problems inherent in submicron (less than 1.0-micron
feature size) and deep submicron (less than 0.5-micron feature size) IC design.
When compared to previous generations of ICDA software, our products offer
improved time-to-market, reduced development and manufacturing costs and
enhanced IC performance. Our products--Aquarius, Apollo, Hercules, Planet,
H-spice, Polaris and Star-- are designed to be compatible with the most commonly
used ICDA tools and to be easily integrated into our customer's existing design
environment and methods. We market our products to major customer accounts
worldwide through our direct sales force, distributors and manufacturer's
representatives, and we offer comprehensive customer service, training and
support. End users of our products include a number of leading electronics
companies, such as Matsushita, Motorola, National Semiconductor, Fujitsu,
Toshiba, Mitsubishi, Hitachi, Samsung and Sony. Our principal executive offices
are located at 46871 Bayside Parkway, Fremont, California 94538, and our
telephone number is (510) 413-8000.
3
<PAGE>
RISK FACTORS
AN INVESTMENT IN THE COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. IN
ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS, PROSPECTIVE
INVESTORS SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS BEFORE INVESTING
IN THE COMMON STOCK. ALL STATEMENTS, TREND ANALYSIS AND OTHER INFORMATION
CONTAINED IN THIS PROSPECTUS AND IN THE DOCUMENTS INCORPORATED BY REFERENCE IN
THIS PROSPECTUS RELATIVE TO MARKETS FOR AVANT!'S PRODUCTS AND TRENDS IN TOTAL
REVENUES, GROSS MARGIN AND ANTICIPATED EXPENSE LEVELS, AS WELL AS OTHER
STATEMENTS INCORPORATING WORDS SUCH AS "ANTICIPATE," "BELIEVE," "PLAN,"
"ESTIMATE," "EXPECT" AND "INTEND" AND OTHER SIMILAR EXPRESSIONS, CONSTITUTE
FORWARD-LOOKING STATEMENTS. THESE FORWARD-LOOKING STATEMENTS ARE SUBJECT TO
BUSINESS AND ECONOMIC RISKS, AND AVANT!'S ACTUAL RESULTS OF OPERATIONS MAY
DIFFER MATERIALLY FROM THOSE CONTAINED IN THE FORWARD-LOOKING STATEMENTS. THE
CAUTIONARY STATEMENTS APPLY TO ALL FORWARD-LOOKING STATEMENTS WHEREVER THEY
APPEAR IN THIS PROSPECTUS AND IN THE DOCUMENTS INCORPORATED BY REFERENCE IN THIS
PROSPECTUS.
LITIGATION RISK
Avant! and its subsidiaries are engaged in various litigation matters,
including:
- A civil action brought by Cadence Design Systems, Inc.;
- A criminal complaint filed against Avant! and certain of its employees by
the Santa Clara County District Attorney's office;
- A grand jury investigation;
- Securities class action claims stemming from Cadence litigation and the
criminal complaint;
- Civil actions brought by Silvaco Data Systems, Inc.;
- A civil action brought by Katherine Ngai Pesic and Ivan Pesic; and
- A civil action brought by Microunity Systems Engineering, Inc.
The results of these various matters could seriously harm Avant!'s business,
financial condition and results of operations.
CADENCE LITIGATION.
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 of Avant!'s employees who were
formerly Cadence employees allegedly misappropriated and improperly copied
source code for certain important functions of Avant!'s place and route products
from Cadence, and that Avant! has allegedly 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. A trial date has not been set. On
July 25, 1997, the District Court stayed the Cadence civil action pending
4
<PAGE>
completion of the criminal proceedings described below, except for limited
discovery on certain matters approved by the District Court. Avant! posted a $5
million bond pending the resumption of the civil action. In an order dated May
21, 1998, the District Court continued the stay previously entered.
In addition to actual and punitive damages, which were not quantified by
Cadence, Cadence is seeking to enjoin the sale of Avant!'s place and route
products pending trial of the action. On March 18, 1997, the District Court
granted in part and denied in part Cadence's motion for a preliminary
injunction. Cadence appealed the order denying a preliminary injunction. On
September 23, 1997, the United States Court of Appeals for the Ninth Circuit
overruled the District Court's denial of Cadence's motion with respect to
Avant!'s ArcCell product, a product Avant! no longer sells, and held that a
preliminary injunction should be granted against the further sale of the ArcCell
product. The Court of Appeals did not enjoin Avant!'s Aquarius place and route
products, but rather remanded this aspect of Cadence's motion to the District
Court for further consideration. The Court of Appeals stated that, if Avant!'s
Aquarius products are determined to infringe Cadence products, the sale of
Aquarius products should be enjoined. Avant! requested a rehearing on the issue,
but on November 21, 1997, the Ninth Circuit denied this request. On December 19,
1997, the District Court entered an injunction against continued sales or
licensing of any product or work copied or derived from Cadence's Design
Framework II, specifically including, but not limited to, ArcCell products. The
injunction also barred Avant! from possessing or using any copies or any portion
of the source code or object code for ArcCell or any other product, to the
extent that portion is copied or derived from Cadence's Design Framework II.
(Avant! had stopped selling or licensing ArcCell products or code in mid 1996.)
The injunction also required Avant! to inform its customers of the injunction,
to obtain confirmation as to whether the customers have a functioning copy of
ArcCell or other such product, and to provide certain information to the court.
On January 25, 1998, the District Court entered a modified preliminary
injunction "to remove any implication that the Company's customers are
authorized by the preliminary injunction to continue to use the enjoined
products without exposure to claims of copyright violation." Cadence continues
to claim that Avant!'s Aquarius products infringe Cadence's Design Framework II
and the District Court is allowing Cadence to take discovery concerning Avant!'s
Aquarius and Apollo products. At the December 19, 1997 hearing, the District
Court did not rule on Cadence's request to enjoin the sale, license or support
of Avant!'s Aquarius place and route products from which Avant! derives a
significant portion of its total revenue. On February 28, 1998, the District
Court requested an additional briefing regarding whether Aquarius should be
enjoined. On May 21, 1998, the District Court entered an order denying Cadence's
request to enjoin the sale of Aquarius and denying Cadence's request to lift the
stay of the civil action. On July 8, 1998, Cadence applied again for an
injunction against the sale of Aquarius on the basis that Aquarius contains code
that is substantially similar to Cadence's Design Framework II and that Aquarius
contains specific protected ideas from Cadence's Design Framework II. On October
28, 1998, the District Court held a hearing on Cadence's motion for a
preliminary injunction against Aquarius. The judge also heard argument about
whether and to what extent the stay of the civil case should be lifted. The
judge did not rule on either issue. It is possible that the District Court will
grant a preliminary injunction with respect to the sale or use of the Aquarius
products, and such a ruling would seriously harm Avant!'s business, financial
position and results of operations.
On January 16, 1996, Avant! filed a counterclaim against Cadence alleging:
- Antitrust violations;
- Racketeering;
- False advertising;
- Defamation;
- Trade libel;
- Unfair competition;
5
<PAGE>
- Unfair trade practices;
- Negligent and intentional interference with prospective economic
advantage; and
- Intentional interference with contractual relations.
On December 19, 1997, Avant! stipulated to temporarily dismissing its
counterclaim in order to file more detailed allegations. Avant! refiled its
counterclaim on January 29, 1998. The District Court's May 21, 1998 order also
stayed Avant!'s counterclaims against Cadence.
Avant! believes it has defenses to all of Cadence's claims and intends to
defend itself vigorously. If, however, Avant!'s defenses are unsuccessful,
Avant! may ultimately be permanently enjoined from selling certain place and
route products and may be required to pay damages to Cadence. In addition, upon
further consideration by the District Court, Avant! could be preliminarily
enjoined from selling its Aquarius or Apollo place and route products. In such
event, Avant!'s business, financial condition and results of operations would be
seriously harmed. In addition, it is likely that an adverse judgment against
Avant! would result in a steep decline in the market price of Avant!'s Common
Stock. Although it is reasonably possible that Avant! may incur a loss upon
conclusion of these claims, an estimate of any loss or range of loss cannot be
made, based on information Avant! presently possesses. An adverse judgement, if
granted on any claim, would seriously harm Avant!'s business, financial position
and results of operations. Furthermore, it is possible that Avant!'s
relationships with its customers and/or partners will be seriously harmed in the
future as a result of the Cadence litigation.
CRIMINAL COMPLAINT.
The Santa Clara County District Attorney's office is also investigating the
allegations of misappropriation of trade secrets set forth in Cadence's lawsuit,
described above. On April 11, 1997, the Santa Clara County District Attorney
filed a criminal complaint alleging felony level offenses for allegedly
violating various California Penal Code Sections relating to the theft of trade
secrets against, among others, Avant! and the following employees and/or
directors of Avant!:
- Gerald C. Hsu, President, Chief Executive Officer and Chairman of the
Board of Directors;
- Y. Eric Cho, a former officer and former member of the Board of Directors;
- Y. Z. Liao, Corporate Fellow;
- Stephen Wuu, CEO Staff Operations;
- Leigh Huang, Marketing Manager; and
- Eric Cheng, Research and Development Manager.
Avant! and the individuals listed above have pleaded not guilty and are awaiting
further proceedings. Avant! and the individual defendants have filed a motion to
recuse the District Attorney's office from prosecuting the case.
In October 1998, the District Attorney informed the defendants in the
criminal action that a grand jury is investigating certain possible offenses,
including:
- Theft of trade secrets;
- Conspiracy to commit trade secret theft;
- Making payments, promises, or offers in exchange for trade secrets;
- Fraud in the failure to disclose theft of trade secrets in relation with
the offer of stock; and
- Whether the alleged offenses resulted in a loss in excess of $2.5 million.
6
<PAGE>
The criminal complaint or the grand jury investigation could result in
additional defense costs and criminal fines against Avant!, as well as the
potential incarceration of certain members of its management team. Such outcomes
would seriously harm Avant!'s business, financial condition and results of
operations and may also result in:
- Canceled or postponed orders;
- Increased future expenditures;
- The loss of management and other key personnel;
- Additional stockholder litigation; and
- Loss of goodwill.
SILVACO LITIGATION.
In March 1993, Meta Software Inc. ("Meta"), which Avant! acquired in October
1996 and which is now a wholly owned subsidiary of Avant!, filed a complaint in
the Superior Court of California for Santa Clara County against Silvaco Data
Systems, Inc. and related parties (collectively, "Silvaco") seeking monetary
damages and injunctive relief. Meta's complaint alleged, among other things,
that Silvaco breached its representation agreement with Meta by withholding
customer payments for products and services that had been delivered, and by
failing to pay royalties on software that Silvaco sold to others. In August
1995, Meta was awarded $529,828 under the Superior Court's judicial arbitration
program. Both parties rejected the award and requested a trial de novo on the
issues involved. In August 1995, Silvaco filed a cross-complaint against Meta
alleging, among other things, that Meta owed Silvaco royalties and license fees
pursuant to a product development and marketing program and unpaid commissions
related to Silvaco's sale of Meta's products and services under such program.
Meta filed an answer to the cross-complaint denying the allegations contained
therein. In July 1996, Silvaco filed a first amended cross-complaint, adding
Shawn Hailey, then the President, Chief Executive Officer and a major
shareholder of Meta, and, from October 1996 when Meta was acquired by Avant!
until July 1997, the Senior Vice President of Avant!'s Silicon Division, as a
personal defendant, and further alleging:
- Defamation;
- Interference with economic advantage;
- Unfair competition; and
- Abuse of process by acts or statements made by Meta or its agents.
In August 1997, the Superior Court entered a default judgment against Mr.
Hailey for failure to timely answer the complaint. In October 1997, Mr. Hailey's
application for relief from the default judgment was denied. In August 1997, the
Superior Court entered a default judgment against Meta as to the defamation and
interference with economic advantage claims. On October 31, 1997, Meta's
application for relief from the default judgment was denied. On October 28,
1997, Silvaco first presented its theory of damages and a trial began on
November 3, 1997. On November 4, 1997, the Superior Court dismissed Meta's
remaining affirmative claims. On November 5, 1997, the Superior Court awarded
Silvaco $20 million in damages against Mr. Hailey and Meta related to the
defamation and interference with economic advantage claims, and on November 6,
1997, the Superior Court awarded Silvaco $11.4 million in damages related to the
unfair competition claim. On November 12, 1997, the Superior Court awarded
nominal damages to Silvaco related to the product development claim. Silvaco's
claims based on the marketing program and abuse of process were dismissed. A
default judgment in the aggregate amount of $31.4 million was entered against
Avant!. Avant! filed appeals on behalf of Mr. Hailey, and, on its own behalf. As
required, Avant! posted a bond on behalf of itself and Mr. Hailey in excess of
the amount necessary to satisfy the judgment. The bond is collateralized by a
$23,583,000 letter of credit.
7
<PAGE>
Meta intends to pursue all remedies available to it in connection with the
litigation with Silvaco. Meta believes it has substantial appellate issues that
could cause the judgment to be reversed and remanded to the trial court for
further proceedings. Should Meta be permitted to participate fully in further
trial court proceedings, Meta believes it would have substantial defenses to
Silvaco's claims. However, such remedies may not be successful. Although it is
reasonably possible Avant! will incur a loss in relation to this claim, it is
currently unable to estimate the actual loss or range of loss. Payment of the
damages previously awarded, and damages which may be awarded in the future,
would seriously harm Avant!'s business, financial condition and results of
operations.
On March 31, 1998, Silvaco filed an additional lawsuit, against Avant! and
Roy Jewell, Avant!'s CEO Staff, Corporate Development, in the Superior Court of
California for Santa Clara County. The second amended complaint alleges causes
of action for:
- Defamation;
- Negligent and intentional interference with economic advantage;
- Unfair competition;
- Lanham Act violations; and
- Consumer fraud.
The alleged causes of action are based on statements allegedly made by Avant!
that Silvaco claims disparaged Silvaco and its TCAD products. Silvaco is seeking
$20 million in compensatory damages, punitive damages and an injunction. Avant!
believes it has defenses to these claims and intends to defend itself
vigorously. Although it is reasonably possible that Avant! will incur a loss in
relation to these claims, it is currently unable to estimate the actual loss or
range of loss. In the event Avant!'s defenses are unsuccessful, Avant! may be
required to pay damages to the plaintiffs, and such a judgment would seriously
harm Avant!'s business, financial condition and results of operations.
PESIC LITIGATION.
In September 1996, Katherine Ngai Pesic and Ivan Pesic commenced an action
in the Superior Court of California for Santa Clara County naming as defendants
Avant! (as successor in interest to Meta), Shawn Hailey, Meta's former Chief
Executive Officer, and Thomas N. White, Jr. and George S. Cole, both of whom
were Meta's former counsel in the Meta v. Silvaco matter discussed above. The
action asserts claims for invasion of privacy under California common law and
the California Constitution and seeks compensatory and punitive damages. Avant!
has answered the complaint, but no trial date has been set. Avant! believes it
has defenses to these claims and intends to defend itself vigorously. Although
it is reasonably possible that Avant! will incur a loss in relation to these
claims, it is currently unable to estimate the actual loss or range of loss. In
the event that Avant!'s defenses are unsuccessful, Avant! may be required to pay
damages to the plaintiffs, and such a judgment could seriously harm Avant!'s
business, financial condition and results of operations.
MICROUNITY LITIGATION.
On October 14, 1997, Microunity Systems Engineering, Inc. ("Microunity")
filed in the United States District Court for the Northern District of
California a complaint against Precim Corporation ("Precim"). Precim was a
wholly owned subsidiary of Technology Modeling Associates ("TMA"), which was
acquired by Avant! in January 1998. This lawsuit alleges liability for:
- Patent infringement;
- Unfair competition; and
- Tortious interference with prospective economic advantage.
8
<PAGE>
The action requests unspecified damages and an injunction against Precim. Precim
has answered the complaint and filed counterclaims against Microunity seeking a
declaration that the patents at issue are invalid and that Precim does not
infringe. Trial has been scheduled for September 20, 1999. Precim believes it
has defenses to these claims and intends to defend itself vigorously. Although
it is reasonably possible that Avant! will incur a loss in relation to these
claims, it is currently unable to estimate the actual loss or range of loss. In
the event Precim's defenses are unsuccessful, Precim may be required to pay
damages to the plaintiffs, and such a judgment could seriously harm Avant!'s
business, financial condition and results of operations.
SECURITIES CLASS ACTION CLAIMS.
On December 15, 1995, Paul Margetis and Helen Margetis filed in the United
States District Court for the Northern District of California a securities fraud
class action complaint against Avant!. In addition, on December 19, 1995, Fred
Tarca filed in the United States District Court for the Northern District of
California a class action complaint against Avant! for violations of the federal
securities laws. These class action lawsuits allege certain securities law
violations, including omissions and/or misrepresentation of material facts. The
alleged omissions and/or misrepresentations are largely consistent with those
outlined in the Cadence claim, described above. In February 1997, plaintiff
Tarca voluntarily dismissed his action and the Margetis plaintiffs were
certified as class representatives in their action. On July 25, 1997, a federal
judge stayed the Margetis action, except for certain documentary and third-party
discovery, pending resolution of the Cadence suit.
On May 30, 1997, Joanne Hoffman filed in the United States District Court
for the Northern District of California a purported class action alleging
securities claims on behalf of purchasers of Avant!'s stock between March 29,
1996 and April 11, 1997, the date of the filing of the criminal complaints
against Avant! and six of its employees and/or officers. Plaintiff alleges that
Avant! and various of its officers misled the market as to the likelihood of
criminal charges being filed and as to the validity of the Cadence allegations.
Avant! moved to dismiss the Hoffman complaint for failure to state a claim, but
the District Court in December 1997 denied the motion. The District Court has
also granted plaintiff's motions for appointment as lead plaintiff, and to
certify the case as a class action. Recently, the District Court granted
Avant!'s motion to consolidate or coordinate the Hoffman action for pretrial
purposes with the earlier-filed Margetis action.
Avant! believes it has defenses to all of the securities class action claims
described above, and intends to defend itself vigorously. It is possible,
however, that Avant!'s defenses will not be successful. Although it is
reasonably possible that Avant! will incur a loss in relation to these claims,
it is currently unable to estimate the actual loss or range of loss, either
individually or in aggregate. In the event Avant!'s defenses are unsuccessful,
Avant! may be required to pay damages to the securities class action plaintiffs,
and such a judgment would seriously harm Avant!'s business, financial condition
and results of operations.
UNCERTAINTY RELATING TO INTEGRATION OF MULTIPLE OPERATIONS AND PRODUCT LINES
Avant! has recently acquired interHDL, Inc. ("interHDL") and ACEO
Technology, Inc. ("ACEO"). The integration of interHDL's and ACEO's business and
personnel presents difficult challenges for Avant!'s management. While Avant!'s
management believes that the combination of Avant!, interHDL and ACEO can be
effected in a manner that will realize the value of the combined entities, it is
possible that Avant!'s management will not effectively manage these business
combinations to realize the anticipated synergies.
Avant! acquired interHDL and ACEO, among other reasons, in order to achieve
potential benefits from combining Avant!'s, interHDL's and ACEO's respective
expertise and product lines. Realization of these potential benefits will
require, among other things, integrating the companies' respective product
offerings and coordinating the combined company's sales and marketing and
research and development
9
<PAGE>
efforts. Avant! and its newly acquired companies each have different systems and
procedures in various operational areas that must be integrated. Avant! may not
be successful in completing such integration effectively, expeditiously or
efficiently. The difficulties of such integration may be increased by the
necessity of coordinating geographically separated divisions, integrating
personnel with disparate business backgrounds and combining different corporate
cultures. The integration of certain operations will require the dedication of
management resources, temporarily distracting attention from Avant!'s day-to-day
business. The business of the combined company may also be disrupted by employee
uncertainty and lack of focus during the integration process. Accordingly,
Avant! may not be able to retain all of its key technical, sales and other key
personnel. Avant!'s failure to effectively integrate its operations with its
newly acquired companies could seriously harm Avant!'s business, financial
condition and results of operations.
MANAGEMENT OF EXPANDING OPERATIONS
Avant! has experienced periods of rapid growth and significant expansion of
its operations that have placed a significant strain upon its management systems
and resources. In addition, Avant! has recently hired a significant number of
employees, and plans to further increase its total headcount. Avant! also plans
to expand the geographic scope of its customer base and operations. This
expansion has resulted and will continue to result in substantial demands on
Avant!'s management resources. Avant!'s ability to compete effectively and to
manage future expansion of its operations, if any, will require Avant! to
continue to improve its financial and management controls, reporting systems and
procedures on a timely basis and expand, train and manage its employee work
force. Avant! may not be successful in addressing such risks, and the failure to
do so would seriously harm Avant!'s business, financial condition and results of
operations.
DEPENDENCE UPON KEY PERSONNEL
Avant!'s future operating results depend in significant part upon the
continued service of key management and technical personnel. Few of Avant!'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 businesses, it is possible that Avant! will fail 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 Avant! is unable to attract, hire and retain qualified personnel in
the future, the development of new products and the management of our
increasingly complex business would be impaired. This would seriously harm
Avant!'s business, operating results and financial condition. Additionally, if
the criminal complaint filed relating to the matters underlying the pending
litigation between Avant! and Cadence results in a loss of Avant! personnel,
then Avant!'s business, financial condition and results of operations would be
seriously harmed. See "Risk Factors-- 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, Synopsys, Inc. ("Synopsys") and Mentor Graphics
Corporation ("Mentor"). As Avant! expands its product offerings to include other
library generation tools and other EDA tools, it will compete increasingly with
these EDA vendors. Each of these major ICDA vendors has a longer operating
history, significantly greater financial, technical and marketing resources,
greater name recognition and a larger installed customer base than Avant!. In
addition, 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 Avant!. These competitors also have established relationships with
current and potential
10
<PAGE>
customers of Avant!, and they can devote substantial resources aimed at
preventing Avant! from enhancing relationships with existing customers or
establishing relationships with potential customers. Moreover, the ICDA software
industry is undergoing a trend toward consolidation that is expected to result
in large, more financially flexible competitors with a broad range of product
offerings. Alliances among competitors could present particularly formidable
competition to Avant! by combining their resources.
Furthermore, because there are relatively low barriers to entry in the
software industry, Avant! expects additional competition from other established
and emerging companies. Competition from EDA companies that currently offer only
functional or logic design products and that choose to enter the physical design
market could present particularly formidable competition due to:
- their relationships with Avant!'s current and potential customers;
- their ability to offer a complete integrated IC design solution which
Avant! does not currently offer; and
- their knowledge of the EDA industry.
Avant!'s current or potential competitors may develop products comparable or
superior to those developed by Avant! or adapt more quickly than Avant! to new
technologies, evolving industry trends or changing customer requirements.
Increased competition could result in price reductions, reduced margins or loss
of market share, any of which could seriously harm Avant!'s business, operating
results or financial condition. Avant! may be unable to compete successfully
against current and future competitors, and competitive pressures faced by
Avant! could seriously harm Avant!'s business, operating results and financial
condition.
Avant! also competes with the internal ICDA development groups of its
existing and potential customers, many of whom design and develop customized
design tools for their particular needs and therefore may be reluctant to
purchase products offered by independent vendors, such as Avant!.
Avant! believes that the principal competitive factors on which it competes
in its market include:
- First to market capabilities;
- Product performance;
- Price;
- Support of industry standards;
- Ease of use; and
- Customer technical support and service.
Avant! believes that it currently competes favorably overall with respect to
these factors.
In addition, competitors and potential competitors may resort to litigation
as a means of competition. Cadence has initiated litigation against Avant! and
certain of its officers and employees alleging trade secret misappropriation and
other claims. See "--Litigation Risk." It is possible that other competitors of
Avant!, in particular Cadence, may initiate additional litigation against Avant!
and its officers, directors, employees or consultants. The pending litigation
against Avant! and any future litigation against Avant! or its employees,
regardless of the outcome, may result in substantial costs and expenses and
significant diversions of effort by Avant!'s technical and management personnel.
Any such litigation could seriously harm Avant!'s business, financial condition
and results of operations.
11
<PAGE>
POTENTIAL FLUCTUATIONS IN QUARTERLY RESULTS
The quarterly operating results of Avant! have varied, and it is anticipated
that the quarterly operating results of Avant! will vary, substantially from
period to period depending on various factors, many of which are outside
Avant!'s control. Factors that could affect Avant!'s quarterly operating results
include:
- The outcome of the litigation described in the "Risk Factors--Litigation
Risk" section;
- Increased competition;
- The size, timing and structure of significant licenses;
- The timing of revenue recognition under our time-based license agreements;
- The timing of new or enhanced product announcements, introductions, or
delays in the introductions of new or enhanced versions of Avant!'s
products;
- Changes in pricing policies by Avant! or its competitors;
- Market acceptance of new and enhanced versions of Avant!'s products;
- Conditions in the semiconductor industry;
- Cancellation of time-based licenses or maintenance agreements;
- The unavailability of technology of third parties;
- The mix of direct and indirect sales;
- Changes in operating expenses;
- Changes in Avant!'s strategy;
- Personnel changes;
- Economic conditions in the Asian and other markets;
- Avant!'s ability to continue to market its products in Asian and other
markets;
- 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.
Avant!'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 in a quarter because only a small portion of
Avant!'s expenses fluctuate with revenue. If revenue levels are below
expectations, Avant!'s business, operating results and financial condition are
likely to be seriously harmed. Such shortfalls in Avant!'s revenue or operating
results from levels expected by public market analysts and investors could
seriously harm the trading price of Avant!'s Common Stock. Additionally, Avant!
may not learn of such revenue shortfalls, earnings shortfalls or other failure
to meet market expectations until late in a fiscal quarter, which could result
in an even more immediate and serious harm to the trading price of the Avant!
common stock. In such event, the market price of Avant!'s Common Stock would be
seriously harmed.
12
<PAGE>
Due to the foregoing, Avant! believes that period to period comparisons of
their results of operations are not necessarily meaningful and should not be
relied upon as indications of future performance.
POTENTIAL VOLATILITY OF STOCK PRICE
The trading price of Avant!'s Common Stock has fluctuated significantly in
the past, and the trading price of the Shares is likely to be highly volatile
and could be subject to wide fluctuations in price in response to such factors
as:
- The outcome of the litigation described in the "Risk Factors--Litigation
Risk" section;
- Actual or anticipated fluctuations in Avant!'s operating results;
- Announcements of technological innovations and new products by Avant! or
its competitors;
- New contractual relationships with strategic partners by Avant! or its
competitors;
- Proposed acquisitions by Avant! or its competitors; and
- Financial results that fail to meet public market analyst expectations of
performance.
In addition, the stock market in general, and The Nasdaq National Market and
the market for technology companies in particular has experienced extreme price
and volume fluctuations that have often been related or disproportionate to the
operating performance of such companies. These broad market and industry factors
may seriously harm the market price of Avant! Common Stock in future periods.
LENGTHY SALES CYCLE
Because of the substantial complexity and cost of Avant!'s products,
licensing them to customers typically involves a significant technical
evaluation and commitment of cash and other resources, with the attendant delays
frequently associated with internal procedures to approve large expenditures and
to evaluate and accept new technologies that affect key operations. In addition,
certain of Avant!'s foreign customers have lengthy purchasing cycles that may
increase the amount of time Avant! must dedicate to placing its products with
these customers. For these and other reasons, the sales cycle associated with
the licensing of Avant!'s products has been and is expected to continue to be
lengthy and subject to a number of significant risks, including budgetary
constraints and internal acceptance evaluations that are beyond Avant!'s
control. Because of the lengthy sales cycle and the large size of customers'
average orders, if revenue projected from a specific customer for a particular
period is not realized in that period, Avant!'s operating results for that
period could be seriously harmed.
PRODUCT CONCENTRATION
During each of the years 1994-1997 Avant! derived substantially all of its
total revenue from the licensing and support of the following products:
- Aquarius (our cell-based place and route software product);
- Apollo (our successor product to Aquarius);
- Hercules (our hierarchical physical verification software product);
- Star-Hspice (our circuit simulator);
- Star-Sim (our high-capacity circuit simulation and high-accuracy timing
analysis software); and
- Polaris (our Verilog simulation product).
Absent any extraordinary results from existing litigation, Avant! currently
expects that these products will continue to account for a significant portion
of its revenue for the foreseeable future. As a result, Avant!'s business,
operating results and financial condition are significantly dependent upon the
continued market acceptance of these products.
13
<PAGE>
Avant! believes that a number of conditions are necessary for continued
market acceptance of our products. These conditions include:
- Satisfactory performance of Avant!'s existing products;
- Successful development of advanced features;
- Easy adaptability into the user's design environment;
- Continued demonstration of Avant!'s technical, managerial, service and
support expertise; and
- The customer's assessment of Avant!'s financial resources.
A decline in demand for Avant's existing products as a result of
competition, technological change or other factors, or Avant!'s failure to
successfully market such products or any new or enhanced products on a
profitable basis, could seriously harm Avant!'s business, financial condition
and results of operations.
Avant! derives a significant portion of its total revenue from the licensing
and support of its Aquarius products which are the subject of pending litigation
with Cadence. See "Risk Factors--Litigation Risk."
SUBSTANTIAL DEPENDENCE ON INTERNATIONAL SALES
International revenue, principally from Asian customers, accounted for
approximately 32%, 34%, 44% and 20% of Avant!'s total revenue in 1995, 1996,
1997 and the first nine months of 1998, respectively. Avant! expects that
international license and service revenue, particularly in Asia, will continue
to account for a significant portion of its total revenue. Avant!'s
international business activities are subject to a variety of potential risks,
including:
- The impact of recessionary environments in foreign economies;
- 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 Avant! licenses its
products could also seriously harm Avant!'s business, financial condition and
results of operations by resulting in pricing that is not competitive with
products priced in local currencies. Furthermore, Avant! many not 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 Avant!'s products and intellectual
property rights to the same extent as do the laws of the United States. In
addition, it is possible that Avant! may fail to sustain or increase revenue
derived from international licensing and service or that the foregoing factors
will seriously harm Avant!'s future international license and service revenue,
and, consequently, seriously harm Avant!'s business, financial condition and
results of operations.
DEPENDENCE UPON DISTRIBUTORS AND MANUFACTURER'S REPRESENTATIVES
Avant! relies on distributors and manufacturer's representatives ("Third
Party Sellers") for the licensing and support of its products in Asia. A
substantial portion of Avant!'s international license and service revenue
results from a limited number of these Third Party Sellers, although Avant! had
no individual customer representing over 10% of revenue in any of the years
1994-1997, or the first nine
14
<PAGE>
months of 1998. In 1997, Avant! consolidated its Japanese sales channel by
forming a distributor ("MainGate"), owned by Avant!, Gerald C. Hsu, Avant!'s
Chairman of the Board, President and Chief Executive Officer, and other parties
(including other Avant! employees and former employees of Avant!'s third party
distributors). Avant!'s reliance on Third Party Sellers subjects it to a number
of risks. For example, Avant!'s current Third Party Sellers or MainGate may not
choose to or be able to market, service or support Avant!'s products
effectively, economic conditions or industry demand may seriously harm these or
other Third Party Sellers or these Third Party Sellers or MainGate may devote
greater resources to marketing and supporting products of Avant!'s competitors.
Additionally, because Avant!'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 significant reduction in revenue from, one of Avant!'s Third Party
Sellers, or MainGate or any other Third Party Sellers on which Avant!'s revenues
may, in the future, become dependent, could seriously Avant!'s business,
financial condition and results of operations.
RAPID TECHNOLOGICAL CHANGE
The ICDA industry is characterized by:
- Extremely rapid technological change;
- Frequent new product introductions and enhancements; and
- Evolving industry standards and rapidly changing customer requirements.
The evolving nature of the ICDA industry could render Avant!'s existing
products and services obsolete. Avant!'s success will depend, in part, on its
ability to:
- Enhance its existing products and services;
- Develop and introduce new products and services on a timely and
cost-effective basis that will keep pace with technological developments
and evolving industry standards; and
- Address the increasingly sophisticated needs of its customers.
Avant! may not successfully develop new products or enhance existing
products that gain market acceptance or meet customer requirements or emerging
industry standards. If Avant! is unable, for technical, legal, financial or
other reasons, to adapt in a timely manner, in response to changing market
conditions or customer requirements, its business, financial condition and
results of operations could be seriously harmed. On occasion, Avant! has
experienced delays in the scheduled introductions of new and enhanced products,
and Avant! may be unable 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 Avant!'s failure to
accurately anticipate customer demand, would seriously harm its business,
financial condition and results of operations.
DEPENDENCE UPON SEMICONDUCTOR AND ELECTRONICS INDUSTRIES; GENERAL ECONOMIC AND
MARKET CONDITIONS
Avant! is dependent upon the semiconductor industry and, more generally, the
electronics industry. Both of these industries are characterized by;
- Rapid technological change;
- Short product life cycles;
- Fluctuations in manufacturing capacity; and
- Pricing and gross margin pressures.
15
<PAGE>
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. However, such economic growth in these industries may not
continue, and if it does not, any downturn could be especially severe on Avant!.
During such downturns, the number of new IC design projects often decreases.
Because acquisitions of new licenses from Avant! are largely dependent upon the
commencement of new design projects, any slowdown in these industries could
seriously harm Avant!'s business, financial condition and results of operations.
In addition, Avant!'s business, financial condition and results of operations
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
Avant! relies on a combination of patents, trade secrets, copyrights,
trademarks and contractual commitments to protect its proprietary rights in its
software products. Avant! 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, a third party may still copy or
otherwise obtain and use Avant!'s products or technology without authorization,
or develop similar technology independently. In addition, effective patent,
copyright and trade secret protection may be unavailable or limited in certain
foreign countries. Avant! expects that software companies will increasingly be
subject to infringement claims as the number of products and competitors in the
ICDA industry 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 consume valuable time, result in costly litigation, cause product
shipment delays or require Avant! to enter into royalty or licensing agreements.
Such royalty or licensing agreements, if available, may not be available on
terms acceptable to Avant!. A forced license could seriously harm Avant!'s
business, financial condition and results of operations.
RISK OF PRODUCT DEFECTS
Software products as complex as those offered by Avant! 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. Despite testing by
Avant!, errors may still 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 seriously harm Avant!'s business,
financial condition and results of operations.
YEAR 2000 COMPLIANCE
Many currently installed computer systems and software products are coded to
accept only two digit entries in the date code field and cannot distinguish 21st
century dates from 20th century dates. This could result in system failure or
miscalculations causing disruptions of operations, including, among other
things, a temporary inability to process transactions, send invoices or engage
in similar normal business activities. As a result, many companies' software and
computer systems may need to be upgraded or replaced in order to comply with
such "Year 2000" requirements. During 1998, Avant! undertook an evaluation of
its currently supported products to determine if they are Year 2000 compliant.
The results of this evaluation revealed that most currently supported products
are Year 2000 compliant. Avant! intends to upgrade or replace the currently
supported products not currently Year 2000 compliant with fix patch or upgrade.
Any failure by Avant! to make its products Year 2000 compliant could result in:
- A decrease in sales of our products;
16
<PAGE>
- An increase in the allocation of resources to address the Year 2000
problems of our customers without additional revenue commensurate with
such dedication of resources; and
- An increase in litigation costs relating to losses suffered by our
customers due to such Year 2000 problems.
During 1998, Avant! conducted a preliminary review of our internal computer
systems to identify the systems that could be affected by the Year 2000 issue
and to develop a plan to resolve the issue. Avant! has adopted SAP R/3 software
as an enterprise system managing its financial and logistical operations in the
United States. SAP R/3 software has been certified by SAP as Year 2000
compliant. Some other third party software systems and applications currently
used by Avant!, however, are not Year 2000 compliant. Avant! intends to stop
using these software products or upgrade or replace them as part of Avant!'s
growth plans. Avant! only performs Year 2000 compliance testing on its critical
internal support systems. Inoperability related to Year 2000 problems of
internal systems that are certified Year 2000 compliant by the vendor and not
tested by Avant! could seriously harm Avant!'s operational efficiency. Avant! is
also currently engaged in setting up a plan to make our European accounting
system, currently not on SAP, Year 2000 compliant. Our failure to complete such
work prior to December 31, 1999 could seriously harm our business, financial
condition and results of operations. Furthermore, the purchasing patterns of
customers or potential customers may be affected by Year 2000 issues as
companies expend significant resources to correct their current systems for Year
2000 compliance. These expenditures may result in reduced funds available to
purchase products and services such as those offered by us, which could
seriously harm our business, operating results and financial condition.
Avant! does not presently have a contingency plan for handling Year 2000
problems that are not detected and corrected prior to their occurrences. Upon
completion of testing and implementation activities, Avant! will be able to
assess the areas requiring contingency planning and expects to develop
appropriate planning at that time. Any failure of Avant! to address any
unforeseen Year 2000 problems would seriously harm Avant!'s business, financial
condition and results of operations.
USE OF PROCEEDS
Avant! will not receive any proceeds from the sale of the Shares by the
Selling Stockholders.
17
<PAGE>
SELLING STOCKHOLDERS
The following table sets forth certain information, as of November 13, 1998,
with respect to the number of shares of Common Stock owned by the Selling
Stockholders and as adjusted to give effect to the sale of the Shares offered
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 Company's acquisition of interHDL, pursuant to the Agreement and
Plan of Reorganization dated November 4, 1998, as amended on November 12, 1998.
The Common Stock was issued pursuant to an exemption from the registration
requirements of the Securities Act. The Selling Stockholders represented to the
Company that they were 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 National
Market or in privately-negotiated transactions. The Company has agreed to use
its best efforts to keep such Registration Statement effective until November
13, 1999 or, if earlier, the date that all Shares have been sold.
The Shares offered by this Prospectus may be offered from time to time by
the Selling Stockholders named below:
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED OWNED
PRIOR TO OFFERING AFTER THE OFFERING
--------------------- NUMBER OF ------------------------
NUMBER OF SHARES NUMBER OF
NAME AND ADDRESS OF SELLING STOCKHOLDERS SHARES PERCENT(1) BEING OFFERED SHARES PERCENT(1)
- -------------------------------------------------- --------- ---------- ------------- ---------- -----------
<S> <C> <C> <C> <C> <C>
IRA ABRAMOV ...................................... 1,907 * 1,907 0 *
575 South Rengstorff Avenue #176
Mountain View, California 94040
OFER ACHLER ...................................... 572 * 572 0 *
3168 South Court
Palo Alto, California 94306
RENEE ANDERSON ................................... 5,085 * 5,085 0 *
707 Continental Circle #311
Mountain View, California 94040
SANJAY BAJAJ ..................................... 8,104 * 8,104 0 *
548 Firloch Avenue #1
Sunnyvale, California 94086
SUDHINDAR BALAKRISHNA ............................ 3,016 * 3,016 0 *
175 Calvert Drive #R-202
Cupertino, California 95014
RICHARD ALLAN & SANDRA RAE BOSENKO LIVING 145,765 * 145,765 0 *
TRUST ..........................................
701 SE Columbia Shores Blvd. #320
Vancouver, Washington 98661
JUSTINE W. CHEN .................................. 1,033 * 1,033 0 *
6618 Mt. Holly Drive
San Jose, California 95120
LILI A. CLAY ..................................... 516 * 516 0 *
510 Walker Drive #7
Mountain View, California 94043
PAUL COLWILL ..................................... 2,582 * 2,582 0 *
1550 Majorca Drive
Morgan Hill, California 95037
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED OWNED
PRIOR TO OFFERING AFTER THE OFFERING
--------------------- NUMBER OF ------------------------
NUMBER OF SHARES NUMBER OF
NAME AND ADDRESS OF SELLING STOCKHOLDERS SHARES PERCENT(1) BEING OFFERED SHARES PERCENT(1)
- -------------------------------------------------- --------- ---------- ------------- ---------- -----------
<S> <C> <C> <C> <C> <C>
ALAIN DARGELAS ................................... 5,681 * 5,681 0 *
1957 California Street #23
Mountain View, California 94040
DENNIS DECOSTE ................................... 47,675 * 47,675 0 *
220 Wavecrest Avenue
Santa Cruz, California 95060
RODNEY SCOTT DIXON ............................... 9,455 * 9,455 0 *
22465 Linda Ann Court
Cupertino, California 95014
WILLIAM A. DUKE .................................. 9,026 * 9,026 0 *
1711 Santa Lucia Avenue
San Bruno, California 94066
BRUCE EASTMAN .................................... 45,768 * 45,768 0 *
1070 Bryant Avenue
Mountain View, California 94040
ANTHONY H. FRANCOIS .............................. 2,244 * 2,244 0 *
1081 Sargent Drive
Sunnyvale, California 94087
DILIP GANPULE .................................... 6,674 * 6,674 0 *
1655 Alexander Court
Los Altos, California 94024
SAEID GHAFOURI ................................... 146,839 * 146,839 0 *
1304 Tiffany Canyon Court
San Jose, California 95120
CLAUDE B. HAGOPIAN ............................... 834 * 834 0 *
505 Cypress Point Drive #301
Mountain View, California 94043
TYEE HARPSTER .................................... 178 * 178 0 *
680 Manzanita Way
Woodside, California 94062
ANLING HSU ....................................... 953 * 953 0 *
1275 Portland Avenue
Los Altos, California 94024
JYH-HUEI HUANG ................................... 381 * 381 0 *
281 West Meadow Drive
Palo Alto, California 94306
LAURIE ISAACSON .................................. 15,256 * 15,256 0 *
P.O. Box 20670
Castro Valley, California 94546
KEVIN JORGENSEN .................................. 23,837 * 23,837 0 *
6587 Winterset Way
San Jose, California 95120
DANIEL J. KOCHER ................................. 9,535 * 9,535 0 *
1272 Sharon Park Drive
Menlo Park, California 94025
MEIR LEVINGER .................................... 5,721 * 5,721 0 *
575 South Rengstorff Avenue Apt. #113
Mountain View, California 94040
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED OWNED
PRIOR TO OFFERING AFTER THE OFFERING
--------------------- NUMBER OF ------------------------
NUMBER OF SHARES NUMBER OF
NAME AND ADDRESS OF SELLING STOCKHOLDERS SHARES PERCENT(1) BEING OFFERED SHARES PERCENT(1)
- -------------------------------------------------- --------- ---------- ------------- ---------- -----------
<S> <C> <C> <C> <C> <C>
YAN LIN .......................................... 1,907 * 1,907 0 *
427 Acalanes Drive Apt. 6
Sunnyvale, California 94086
RUBEN MAGANAS .................................... 953 * 953 0 *
550 Piercy Road
San Jose, California 94306
MEIRAV NITZAN .................................... 3,814 * 3,814 0 *
575 South Rengstorff Avenue #148
Mountain View, California 94040
DAN Z. PERI ...................................... 7,469 * 7,469 0 *
3418 South Court
Palo Alto, California 94306
ARUN RAMACHANDRAN ................................ 41,163 * 41,163 0 *
7525 Heatherwood Drive
Cupertino, California 95014
MARISSA REIS ..................................... 3,814 * 3,814 0 *
676 Bellflower #38
Sunnyvale, California 94086
BEN RENDEL ....................................... 2,860 * 2,860 0 *
22 Tel Chai Str
Ranana 43405
Israel
RONALD A. ROHRER ................................. 19,070 * 19,070 0 *
2310 Vintage Hill Drive
Durham, North Carolina 27712
MICHELLE ROSENBERG ............................... 1,787 * 1,787 0 *
1039L El Monte Avenue #232
Mountain View, California 94040
STEVEN E. SCHER .................................. 1,986 * 1,986 0 *
137 Dartmouth Drive #4
San Mateo, California 94402
BEN SHELEF ....................................... 953 * 953 0 *
19046 Laurel Drive
Los Gatos, California 95033
RAJVIR SINGH ..................................... 157,407 * 157,407 0 *
1055 Fremont Avenue
Los Altos, California 94024
SWADESH SINGH .................................... 47 * 47 0 *
1055 Fremont Avenue
Los Altos, California 94024
DANIEL C. SKILKEN ................................ 1,907 * 1,907 0 *
17960 Andrews Street
Monte Sereno, California 95030
JEFFREY L. SOBIERAJ .............................. 5,244 * 5,244 0 *
36 Via Di Nola
Laguna Niguel, California 92677
WARREN STAPLETON ................................. 31,465 * 31,465 0 *
15935 Camino Del Cerro
Los Gatos, California 95032
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED OWNED
PRIOR TO OFFERING AFTER THE OFFERING
--------------------- NUMBER OF ------------------------
NUMBER OF SHARES NUMBER OF
NAME AND ADDRESS OF SELLING STOCKHOLDERS SHARES PERCENT(1) BEING OFFERED SHARES PERCENT(1)
- -------------------------------------------------- --------- ---------- ------------- ---------- -----------
<S> <C> <C> <C> <C> <C>
WARREN STAPLETON AND PAMELA STAPLETON ............ 7,866 * 7,866 0 *
15935 Camino Del Cerro
Los Gatos, California 95032
ELIEZER STERNHEIM ................................ 345,326 1.05% 345,326 0 *
3489 South Court Street
Palo Alto, California 94306
YONA STERNHEIM ................................... 47 * 47 0 *
3489 South Court Street
Palo Alto, California 94306
LEK TAYLOR ....................................... 2,065 * 2,065 0 *
2305 Old Post Way
San Jose, California 95132
PETER S. TESHIMA ................................. 41,080 * 41,080 0 *
2947 Shannon Court
Santa Clara, California 95051
ASHWATH THIRUMALAI ............................... 2,065 * 2,065 0 *
100 North Whisman Road, #230
Mountain View, California 94043
TRICONT ASSOCIATES, LTD. ......................... 68,652 * 68,652 0 *
P.O. Box 3412
Jerusalem, Israel 91033
JEFFREY M. WEINBERG .............................. 4,628 * 4,628 0 *
1239 Sabal Drive
San Jose, California 95132
JEFFREY M. WEINBERG & MELINDA L. WEINBERG ........ 2,840 * 2,840 0 *
1239 Sabal Drive
San Jose, California 95132
VANCE WILLIAM .................................... 953 * 953 0 *
1402 East San Fernando Street
San Jose, California 95116
--------- --- ------------- - -
TOTALS.......................................... 1,256,005 3.82% 1,256,005 0 *
--------- --- ------------- - -
--------- --- ------------- - -
</TABLE>
- ------------------------
* Less than 1%
(1) Based upon 32,868,662 shares of Common Stock outstanding on November 13,
1998. This Registration Statement shall also cover any additional shares of
Common Stock which become issuable in connection with the shares registered
for sale hereby by reason of any stock dividend, stock split,
recapitalization or other similar transaction effected without the receipt
of consideration which results in an increase in the number of Avant!'s
outstanding shares of Common Stock.
21
<PAGE>
PLAN OF DISTRIBUTION
The Company is registering the Shares offered by the Selling Stockholders
hereunder pursuant to contractual registration rights contained in the
Registration Rights Agreement, dated November 13, 1998, by and among the Company
and the Selling Stockholders (the "Registration Rights Agreement"). 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 as described below. The Company has
agreed to use its best efforts to keep such Registration Statement effective
until November 13, 1999 or, if earlier, the date that all the Shares have been
sold.
The Company will receive no proceeds from this offering. The Shares offered
hereby may be sold 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 which may be changed, at market prices prevailing at the time of sale, at
prices related to 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 and/or the
purchasers of the Shares for whom such broker-dealers may act as agents or to
whom they sell as principals, or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions).
In order to comply with the securities laws of certain states, if
applicable, the Shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
The Selling Stockholders and any broker-dealers or agents that participate
with the Selling Stockholders in the distribution of the Shares may under
certain circumstances be deemed to be "underwriters" within the meaning of the
Securities Act, and any commissions received by them and any profit realized on
the resale of the Shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. The Selling Stockholders may
agree to indemnify such broker-dealers against certain liabilities, including
liabilities under Securities Act.
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.
Brokers-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.
Under applicable rules and regulations under the 1934 Act, any person
engaged in the distribution of the Shares may not simultaneously engage in
market making activities with respect to the Common Stock of the Company for a
period of two business days prior to the commencement of such distribution. In
addition and without limiting the foregoing, the Selling Stockholders will be
subject to applicable provisions of the 1934 Act and the rules and regulations
thereunder, including, without limitation, Rules 10b-6 and 10b-7, which
provisions may limit the timing of purchases and sales of shares of the
Company's Common Stock by the Selling Stockholders.
22
<PAGE>
The Selling Stockholders will pay all commissions and other expenses
associated with the sale of Shares by them. The Shares offered hereby are being
registered pursuant to contractual obligations of the Company under the
Registration Rights Agreement, 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.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of Avant! consists of 50,000,000 shares of
Avant! Common Stock, and 5,000,000 shares of Preferred Stock ("Preferred
Stock"), $.0001 par value. As of November 13, 1998, there were 32,868,662 shares
of Common Stock issued and outstanding and no shares of Preferred Stock issued
and outstanding.
COMMON STOCK
Holders of shares of Avant! Common Stock are entitled to one vote per share
on all matters to be voted on by stockholders. Subject to the preferences that
may be applicable to any outstanding Preferred Stock, holders of Avant! Common
Stock are entitled to receive ratably such dividends, if any, as may be declared
from time to time by the Avant! Board of Directors out of funds legally
available therefor. In the event of a liquidation, dissolution, or winding up of
Avant!, holders of Avant! Common Stock are entitled to share ratably in all
assets remaining after payment of liabilities, subject to prior distribution
rights of the Preferred Stock, if any, then outstanding. Holders of Avant!
Common Stock have no preemptive or conversion rights or other subscription
rights. No redemption or sinking fund provisions apply to the Common Stock. All
outstanding shares of Avant! Common Stock are fully paid and nonassessable.
PREFERRED STOCK
Avant!'s Certificate of Incorporation authorizes 5,000,000 shares of
Preferred Stock. The Avant! Board of Directors has the authority to cause Avant!
to issue the Preferred Stock in one or more series and to fix the rights,
preferences, privileges and restrictions thereof, including dividend rights,
conversion rights, voting rights, terms of redemption, liquidation preferences
and the number of shares constituting any series or the designation of such
series, without any further vote or action by the stockholders. In connection
with the Rights Agreement (described below), Avant! has authorized a series of
75,000 shares of Preferred Stock designated Series A Junior Participating
Preferred Stock. For a description of the terms of the Series A Junior
Participating Preferred Stock, see "--Preferred Stock Rights Plan." The issuance
of Preferred Stock may have the effect of delaying, deferring or preventing a
change in control of Avant! without further action by the stockholders and could
adversely affect the rights and powers, including voting rights, of the holders
of Avant! Common Stock. In certain circumstances, this could have the effect of
decreasing the market price of the Avant! Common Stock. At present, Avant! has
no plans to issue any of the Preferred Stock.
ANTITAKEOVER EFFECTS OF RIGHTS PLAN, PROVISIONS OF THE CERTIFICATE OF
INCORPORATION, BYLAWS AND DELAWARE LAW
PREFERRED STOCK RIGHTS PLAN
On September 4, 1998, the Board of Directors of Avant! declared a dividend
of one preferred share purchase right (a "Right") for each share of Common Stock
outstanding on October 2, 1998 (the "Record Date") to the stockholders of record
on that date. Each Right entitles the registered holder to purchase from Avant!
one one-thousandth of a share of Series A Junior Participating Preferred Stock,
par value $0.0001 per share (the "Preferred Shares"), of Avant!, at a price of
$100.00 per one one-thousandth of a Preferred Share (the "Purchase Price"),
subject to adjustment. The description and terms of the Rights are
23
<PAGE>
set forth in a Rights Agreement (the "Rights Agreement") between Avant! and
Harris Trust Company of California, as Rights Agent (the "Rights Agent").
Until the earlier to occur of (A) 10 days following a public announcement
that a person or group of affiliated or associated persons (an "Acquiring
Person") has acquired beneficial ownership of 15% or, in the case of (i) a
Grandfathered Stockholder, as defined in the Rights Agreement, other than a
Second Tier Grandfathered Stockholder, as defined in the Rights Agreement, 20%,
or (B) a Second Tier Grandfathered Stockholder, the greater of 15% or such
percentage as is beneficially owned by each Amerindo Holder, as defined in the
Rights Agreement, plus 1%, or more of the outstanding Common Stock or (ii) 10
business days (or such later date as may be determined by action of the Board of
Directors prior to such time as any entity becomes an Acquiring Person)
following the commencement of, or announcement of an intention to make, a tender
offer or exchange offer the consummation of which would result in the beneficial
ownership by a person or group of 15% or, in the case of (i) a Grandfathered
Stockholder other than a Second Tier Grandfathered Stockholder, 20%, or (ii) a
Second Tier Grandfathered Stockholder, the greater of 15% or such percentage as
is beneficially owned by each Amerindo Holder plus 1%, or more of such
outstanding Common Stock (the earlier of such dates being called the
"Distribution Date"), the Rights will be evidenced, with respect to any of the
Common Stock certificates outstanding as of the Record Date, by such Common
Stock certificate with a copy of this Summary of Rights attached thereto.
The Rights Agreement provides that, until the Distribution Date, the Rights
will be transferred with and only with the Common Stock. Until the Distribution
Date (or earlier redemption or expiration of the Rights), new Common Stock
certificates issued after the Record Date or upon transfer or new issuance of
Common Stock will contain a notation incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier redemption or expiration of
the Rights), the surrender for transfer of any certificates for Common Stock
outstanding as of the Record Date, even without such notation or a copy of this
Summary of Rights being attached thereto, will also constitute the transfer of
the Rights associated with the Common Stock represented by such certificate. As
soon as practicable following the Distribution Date, separate certificates
evidencing the Rights ("Right Certificates") will be mailed to holders of record
of the Common Stock as of the close of business on the Distribution Date and
such separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights will
expire on September 4, 2008 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed by Avant!,
in each case, as described below.
The Purchase Price payable, and the number of Preferred Shares or other
securities or property issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Shares, (ii) upon the grant to holders of the Preferred Shares of certain rights
or warrants to subscribe for or purchase Preferred Shares at a price, or
securities convertible into Preferred Shares with a conversion price, less than
the then current market price of the Preferred Shares or (iii) upon the
distribution to holders of the Preferred Shares of evidences of indebtedness or
assets (excluding regular periodic cash dividends paid out of earnings or
retained earnings or dividends payable in Preferred Shares) or of subscription
rights or warrants (other than those referred to above).
The number of outstanding Rights and the number of one one-thousandths of a
Preferred Share issuable upon exercise of each Right are also subject to
adjustment in the event of a stock split of the Common Stock or a stock dividend
on the Common Stock payable in shares of Common Stock or subdivisions,
consolidations or combinations of the Common Stock occurring, in any such case,
prior to the Distribution Date.
Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a quarterly dividend
payment of 1000 times the dividend declared per share of
24
<PAGE>
Common Stock. In the event of liquidation, the holders of the Preferred Shares
will be entitled to an aggregate payment of 1000 times the aggregate payment
made per share of Common Stock. Each Preferred Share will have 1000 votes,
voting together with the Common Stock. In the event of any merger, consolidation
or other transaction in which Common Stock is exchanged, each Preferred Share
will be entitled to receive 1000 times the amount received per share of Common
Stock. These rights are protected by customary antidilution provisions.
Because of the nature of the Preferred Shares' dividend, liquidation and
voting rights, the value of the one one-thousandth interest in a Preferred Share
purchasable upon exercise of each Right should approximate the value of one
share of Common Stock.
From and after the occurrence of an event described in Section 11(a)(ii) of
the Rights Agreement, if the Rights evidenced by this Right Certificate are or
were at any time on or after the earlier of (x) the date of such event and (y)
the Distribution Date (as such term is defined in the Rights Agreement) acquired
or beneficially owned by an Acquiring Person or an Associate or Affiliate of an
Acquiring Person (as such terms are defined in the Rights Agreement), such
Rights shall become void, and any holder of such Rights shall thereafter have no
right to exercise such Rights.
In the event that, at any time after an entity becomes an Acquiring Person,
Avant! is acquired in a merger or other business combination transaction or 50%
or more of its consolidated assets or earning power are sold, proper provision
will be made so that each holder of a Right will thereafter have the right to
receive, upon the exercise thereof at the then current exercise price of the
Right, that number of shares of common stock of the acquiring company which at
the time of such transaction will have a market value of two times the exercise
price of the Right. In the event that any entity becomes an Acquiring Person,
proper provision shall be made so that each holder of a Right, other than Rights
beneficially owned by the Acquiring Person and its Affiliates and Associates
(which will thereafter be void), will thereafter have the right to receive upon
exercise that number of shares of Common Stock having a market value of two
times the exercise price of the Right. If Avant! does not have a sufficient
number of shares of Common Stock to satisfy such obligation to issue Common
Stock, or if the Board of Directors so elects, Avant! shall deliver upon payment
of the exercise price of a Right an amount of cash or securities equivalent in
value to the Common Stock issuable upon exercise of a Right; provided that, if
Avant! fails to meet such obligation within 30 days following the later of (x)
the first occurrence of an event triggering the right to purchase Common Stock
and (y) the date on which Avant!'s right to redeem the Rights expires, Avant!
must deliver, upon exercise of a Right but without requiring payment of the
exercise price then in effect, Common Stock (to the extent available) and cash
equal in value to the difference between the value of the Common Stock otherwise
issuable upon the exercise of a Right and the exercise price then in effect. The
Board of Directors may extend the 30-day period described above for up to an
additional 60 days to permit the taking of action that may be necessary to
authorize sufficient additional shares of Common Stock to permit the issuance of
Common Stock upon the exercise in full of the Rights.
At any time after any entity becomes an Acquiring Person and prior to the
acquisition by any person or group of a majority of the outstanding shares of
Common Stock, the Board of Directors of Avant! may exchange the Rights (other
than Rights owned by such person or group which have become void), in whole or
in part, at an exchange ratio of one share of Common Stock per Right (subject to
adjustment).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Preferred Shares will be issued (other than
fractions which are integral multiples of one one-thousandth of a Preferred
Share, which may, at the election of Avant!, be evidenced by depositary
receipts) and in lieu thereof, an adjustment in cash will be made based on the
market price of the Preferred Shares on the last trading day prior to the date
of exercise.
At any time prior to the time any entity becomes an Acquiring Person, the
Board of Directors of Avant! may redeem the Rights in whole, but not in part, at
a price of $0.01 per Right (the "Redemption
25
<PAGE>
Price"). The redemption of the Rights may be made effective at such time, on
such basis and with such conditions as the Board of Directors in its sole
discretion may establish. Immediately upon any redemption of the Rights, the
right to exercise the Rights will terminate and the only right of the holders of
Rights will be to receive the Redemption Price.
The terms of the Rights may be amended by the Board of Directors of Avant!
without the consent of the holders of the Rights, except that from and after
such time as any person becomes an Acquiring Person no such amendment may
adversely affect the interests of the holders of the Rights (other than the
Acquiring Person and its Affiliates and Associates).
Until a Right is exercised, the holder thereof, as such, will have no rights
as a stockholder of Avant!, including, without limitation, the right to vote or
to receive dividends.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire Avant!
without conditioning the offer on the Rights being redeemed. However, the Rights
should not interfere with any tender offer or merger approved by Avant! because
the Rights may be redeemed by the Board of Directors at any time prior to such
time as any entity becomes an Acquiring Person.
CERTIFICATE OF INCORPORATION AND BYLAWS
Avant!'s Certificate of Incorporation provides that all stockholder action
must be effected at a duly called meeting and not by a consent in writing. In
addition, Avant!'s Amended and Restated Bylaws do not permit stockholders of
Avant! to call a special meeting of stockholders and also require stockholders
to give timely prior notice for director nominations or other business that a
stockholder wishes to properly bring before a meeting of stockholders. These
provisions of the Certificate of Incorporation and Bylaws could discourage
potential acquisition proposals and could delay or prevent a change in control
of Avant!. Such provisions are intended to enhance the likelihood of continuity
and stability in the composition of the Avant! Board of Directors and in the
policies formulated by the Avant! Board of Directors and to discourage certain
types of transactions that may involve an actual or threatened change of control
of Avant!. In addition, these provisions are designed to reduce the
vulnerability of Avant! to an unsolicited acquisition proposal and are intended
to discourage certain tactics that may be used in proxy fights. However, such
provisions could have the effect of discouraging others from making tender
offers for Avant!'s shares and, as a consequence, they also may inhibit
fluctuations in the market price of Avant!'s shares that could result from
actual or rumored takeover attempts. Such provisions also may have the effect of
preventing changes in the management of Avant!.
DELAWARE ANTITAKEOVER STATUTE
Avant! is subject to Section 203 of the Delaware General Corporation Law
("Section 203") which, subject to certain exceptions, prohibits a Delaware
corporation from engaging in any business combination with any interested
stockholder for a period of three years following the date that such stockholder
became an interested stockholder, unless: (i) prior to such date, the board of
directors of the corporation approved either the business combination or the
transaction that resulted in the stockholder becoming an interested stockholder;
(ii) upon consummation of the transaction that resulted in the stockholder
becoming an interested stockholder, the interested stockholder owned at least
85% of the voting stock of the corporation outstanding at the time the
transaction commenced, excluding for purposes of determining the number of
shares outstanding those shares owned (x) by persons who are directors and also
officers and (y) by employee stock plans in which employee participants do not
have the right to determine confidentially whether shares held subject to the
plan will be tendered in a tender or exchange offer; or (iii) on or subsequent
to such date, the business combination is approved by the board of directors and
authorized at an annual or special meeting of stockholders, and not by written
consent, by the affirmative vote of at least 66 2/3% of the outstanding voting
stock that is not owned by the interested stockholder.
26
<PAGE>
Section 203 defines "business combination" to include: (i) any merger or
consolidation involving the corporation and the interested stockholder; (ii) any
sale, transfer, pledge or other disposition of 10% or more of the assets of the
corporation involving the interested stockholder; (iii) subject to certain
exceptions, any transaction that results in the issuance or transfer by the
corporation of any stock of the corporation to the interested stockholder; (iv)
any transaction involving the corporation that has the effect of increasing the
proportionate share of the stock of any class or series of the corporation
beneficially owned by the interested stockholder; or (v) the receipt by the
interested stockholder of the benefit of any loans, advances, guarantees,
pledges or other financial benefits provided by or through the corporation. In
general, Section 203 defines an interested stockholder as any entity or person
beneficially owning 15% or more of the outstanding voting stock of the
corporation and any entity or person affiliated with or controlling or
controlled by such entity or person.
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.
EXPERTS
The consolidated balance sheets of Avant! and its subsidiaries as of
December 31, 1997 and 1996 and the consolidated statements of income,
stockholders' equity, and cash flows for each of the years in the three year
period ended December 31, 1997 incorporated in this Prospectus by reference from
the Company's Annual Report on Form 10-K for the year ended December 31, 1997
are incorporated herein by reference in reliance upon the reports of KPMG Peat
Marwick LLP and Arthur Andersen LLP, independent certified public accountants,
and upon the authority of said firms as experts in accounting and auditing.
No dealer, salesperson, Selling Stockholders or any other person has been
authorized to give any information or 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 not be relied upon as having
been authorized by the Company, the Selling Stockholders or 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 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.
27
<PAGE>
AVAILABLE INFORMATION
Avant! is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and, in accordance therewith,
files reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy statements and other
information filed with the Commission can be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549, and the following regional
offices of the Commission: New York Regional Office, Seven World Trade Center,
13th Floor, New York, New York 10048; and Chicago Regional Office, Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60621.
Copies of such material may also be obtained from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, upon
payment of prescribed fees. The public may obtain information on the operation
of the Public Reference Section of the Commission by calling the Commission at
1-800-SEC-0300. The Commission also makes electronic filings publicly available
on the Internet within 24 hours of acceptance. The Commission's Internet address
is http://www.sec.gov. The Commission web site also contains reports, proxy and
information statements, and other information regarding registrants that file
electronically with the Commission. The Common Stock of the Company is quoted on
the Nasdaq National Market. Reports, proxy and information statements and other
information concerning the Company may be inspected at the National Association
of Securities Dealers, Inc. at 1735 K Street, N.W., Washington, D.C. 20006.
The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments, exhibits and schedules, referred to
as the "Registration Statement") under the Securities Act of 1933, as amended
(the "Securities Act") with the Commission, with respect to the Shares offered
hereby. This Prospectus does not contain all of the information set forth in the
Registration Statement and the exhibits thereto, certain parts of which are
omitted in accordance with the rules and regulations of the Commission, and to
which reference is hereby made. Statements contained in this Prospectus
regarding the contents of any contract or other document to which reference is
made are not necessarily complete, and in each instance reference is made to the
copy of such contract or other document filed as an exhibit to the Registration
Statement, each such statement being qualified in 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
Commission 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 Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
upon the payment of the fees prescribed by the Commission.
INFORMATION INCORPORATED BY REFERENCE
The following documents previously filed by the Company with the Commission
(File No. 0-25864) are hereby incorporated by reference and made a part of this
Prospectus:
1. The Company's Annual Report on Form 10-K for the year ended December 31,
1997;
2. The Company's Quarterly Report on Form 10-Q for the quarters ended March
31, 1998, June 30, 1998 and September 30, 1998;
3. The Company's Current Reports on Form 8-K dated January 30, 1998,
September 18, 1998 and November 19, 1998;
4. The Company's Current Report on Form 8-K/A dated June 11, 1998; and
5. The description of the Company's Common Stock contained in its
Registration Statement on Form 8-A as filed with the Commission on April
12, 1995.
28
<PAGE>
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the 1934 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 and made a part of this Prospectus as of their
respective filing dates. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is
incorporated herein modifies, supersedes or replaces such statement. Any
statement so modified or superseded shall not be deemed, except as so modified,
superseded or replaced, to constitute a part of this Prospectus.
The information relating to the Company contained in this Prospectus does
not purport to be comprehensive and should be read together with the information
contained in the documents incorporated by reference herein.
Upon written or oral request, the Company will provide without charge to
each person, including any beneficial owner, 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
(510) 413-8000 to General Counsel, Avant! Corporation, at the principal
executive offices of the Company, 46871 Bayside Parkway, Fremont, California
94538.
------------------------
This Prospectus includes trademarks of the Company and other corporations.
------------------------
29
<PAGE>
1,256,005 SHARES
AVANT! CORPORATION
COMMON STOCK
------------------
NOVEMBER , 1998
------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth all expenses, other than the underwriting
discounts and commissions, payable by the Registrant in connection with the sale
of the Common Stock being registered. All the amounts shown are estimates except
for the registration fee.
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee............ $ 6,023.17
Legal Fees and Expenses........................................ 150,000.00
Accounting Fees and Expenses................................... 25,000.00
Transfer Agent and Registrar Fees.............................. 2,500.00
Miscellaneous.................................................. 1,476.83
----------
Total........................................................ $185,000.00
----------
----------
</TABLE>
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
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 Avant! for violations of their fiduciary duty as a director. This
provision eliminates each director's liability to Avant! or its stockholders for
monetary damages except (i) for any breach of the director's duty of loyalty to
Avant! 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 XI of Avant!'s Certificate and Article VII, Section 6 of Avant!'s
Bylaws provide for indemnification of the officers and directors of Avant! to
the fullest extent permitted by applicable law.
Avant! 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.
The exhibits listed in the Exhibit Index as filed as part of this
Registration Statement.
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
2.1 Agreement and of Reorganization dated November 4, 1998, as amended on November 12, 1998, by and among
the Company, Artemis Merger Corporation and interHDL, Inc. (1)
3.1* Amended and Restated Certificate of Incorporation, as amended to date.
3.2 Amended and Restated Bylaws. (2)
3.3 Certificate of Designation. (3)
4.1 Registration Rights Agreement, dated November 13, 1998.
4.2 Specimen Common Stock Certificate. (4)
4.3 Rights Agreement, dated September 4, 1998 between the Company and Harris Trust Company of California.
(3)
5.1 Opinion of Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP.
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP (included in the opinion filed
as Exhibit 5.1).
23.3 Consent of Arthur Andersen LLP.
24.1 Power of Attorney (reference is made to the signature page of this Registration Statement).
</TABLE>
- ------------------------
* To be filed by amendment.
(1) Incorporated by reference from the Company's Registration Statement on Form
8-K filed with the SEC on November 19, 1998.
(2) Incorporated by reference from the Company's Registration Statement on Form
8-K filed with the SEC on September 18, 1998.
(3) Incorporated by reference from the Company's Registration Statement on Form
8-A filed with the SEC on September 18, 1998.
(4) Incorporated by reference from the Company's Registration Statement on Form
S-1 (File No. 33-91128) as declared effective on June 6, 1995.
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.
II-2
<PAGE>
(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 provisions described in Item 15, 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
1934 Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the 1934 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 Fremont, State of California, on this 20th day of
November, 1998.
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 each person whose signature appears
below constitutes and appoints jointly and severally, Gerald C. Hsu and Charles
L. St. Clair, 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 Avant! Corporation, a Delaware 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.
IN WITNESS WHEREOF, each of the undersigned has executed this Power of
Attorney as of the date indicated.
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.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- --------------------
<C> <S> <C>
/s/ GERALD C. HSU Chairman of the Board,
- ------------------------------ President and Chief November 20, 1998
Gerald C. Hsu Executive Officer
Head of Finance and
/s/ LINDA CHINN Administration (Principal
- ------------------------------ Financial and Accounting November 20, 1998
Linda Chinn Officer)
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- --------------------
<C> <S> <C>
/s/ ERIC A. BRILL
- ------------------------------ Director November 20, 1998
Eric A. Brill
/s/ CHARLES L. ST. CLAIR
- ------------------------------ Director November 20, 1998
Charles L. St. Clair
/s/ MORIYUKI CHIMURA
- ------------------------------ Director November 20, 1998
Moriyuki Chimura
</TABLE>
II-5
<PAGE>
EXHIBIT 4.1
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of the
13th day of November, 1998, (the "Closing Date") by and between Avant!
Corporation, a Delaware corporation (the "Company"), and each of the persons
listed on Schedule A hereto (collectively, the "Shareholders").
RECITALS
WHEREAS, the Company, Artemis Merger Corporation, a California
corporation and subsidiary of the Company and interHDL, Inc., a California
corporation ("interHDL") are parties to the Agreement and Plan of
Reorganization, dated the Closing Date (together with all exhibits,
schedules, supplements and any amendments thereto, the "Merger Agreement"),
pursuant to which interHDL shall become a wholly owned subsidiary of the
Company (the "Merger");
WHEREAS, pursuant to the Merger, the Shareholders shall exchange the
shares of capital stock of interHDL held by such Shareholders for cash and
shares of common stock of the Company (the "Common Stock");
WHEREAS, the execution and delivery of this Agreement is a condition to
the Closing of the Merger; and
WHEREAS, all terms not otherwise defined herein shall have the same
meanings ascribed to them in the Merger Agreement;
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 term "Holder" means a Shareholder or any transferee of
a Shareholder to whom registration rights granted under this Agreement are
assigned pursuant to Section 1.6 of this Agreement.
(d) The terms "register," "registered," and "registration"
refer to a registration effected by preparing and filing a registration
statement or similar document in
<PAGE>
compliance with the Act, and the declaration or ordering of effectiveness of
such registration statement or document.
(e) The term "Registrable Securities" means the Common Stock
of the Company issued to the Shareholders in the Merger, and any Common Stock
of the Company issued as a dividend or other distribution with respect to
such Common Stock.
(f) 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.
(g) The term "SEC" shall mean the Securities and Exchange
Commission.
1.2 REGISTRATION.
(a) The Company shall use all commercially reasonable efforts
to effect as soon as practicable at its own expense (excluding any brokers
fees or commissions) a registration statement on Form S-3 and any related
qualification or compliance with respect to all of the Registrable Securities
so as to permit or facilitate the sale and distribution of all of the
Registrable Securities as are specified by such Shareholder in writing upon
execution hereof. The Company agrees to request the immediate acceleration
of the effectiveness of the registration statement as soon as practicable but
no less than within three (3) business days of any notification by the SEC of
its decision not to review the registration statement or its determination
that it has completed its review of the registration statement and has no
further comments for the Company.
(b) The Company agrees it will not include any additional
securities of the Company other than the Registerable Securities and will not
permit any other person or entity to include any additional securities in the
registration statement to be filed pursuant to this Section 1.
1.3 OBLIGATIONS OF THE COMPANY. Whenever required under this
Section 1 to effect the registration of any Registrable Securities, the
Company shall:
(a) Within five (5) business days of the Closing Date,
prepare and file with the SEC a registration statement with respect to such
Registrable Securities and use its best efforts to cause such registration
statement to become effective, and, subject to the provisions below, use its
best efforts to keep such registration statement effective for one (1) year
from the Closing Date 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 the registration statement shall contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading, or any prospectus comprising a part of such registration
statement shall contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein, in
2
<PAGE>
light of the circumstances under which they were made, not misleading or the
occurrence or existence of any pending corporate development that, in the
reasonable discretion of the Company, makes it appropriate to suspend the
availability of the registration statement and the related prospectus, the
Company shall give notice to the Shareholders that the availability of the
registration statement is suspended and the Shareholders shall suspend any
further sale of Registrable Securities pursuant to the registration statement
until the Shareholders have been informed in writing that the registration
statement is available. The Company shall be entitled to exercise its right
to suspend the availability of the registration statement for a period
exceeding not more than thirty (30) days in any six (6) month period, not to
exceed in the aggregate sixty (60) days in any twelve (12) month period.
However, the Company may not suspend the registration statement unless the
Company contemporaneously closes its trading window for Company insiders.
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 1.3(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 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 its 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; 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.
(e) Amend its listing application with the Nasdaq Stock
Market to include the Registerable Securities as soon as practicable after
the Closing Date.
(f) Notify each Shareholder, promptly after the Company shall
have received notice thereof, of the date and time the registration statement
and each post-effective amendment thereto has become effective or a
supplement to any prospectus forming a part of such registration statement
has been filed.
1.4 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 the information requested
on Appendix 1.4 hereto, which shall include such information regarding
himself or herself, the Registrable Securities held by him or her, and the
intended method of
3
<PAGE>
disposition of such securities, and such other information as shall be
reasonably requested by the Company and required to effect the registration
of the Registrable Securities.
1.5 EXPENSES OF REGISTRATION. All expenses of the Shareholders,
except underwriting discounts (if any) or 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 legal and accounting fees incurred by any Shareholders.
1.6 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the
Company to register Registrable Securities pursuant to this Agreement may be
assigned by a Shareholder to a transferee of Registrable Securities only if:
(a) the Company is, prior to such transfer, furnished with written notice of
the name and address of such transferee and the Registerable Securities with
respect to which such registration rights are being assigned and a copy of a
duly executed written instrument in form reasonably satisfactory to the
Company by which such transferee assumes all of the obligations and
liabilities of its transferor hereunder and agrees itself to be bound hereby;
(b) immediately following such transfer the disposition of such Registerable
Securities by the transferee is restricted under the Act; and (c) such
assignment includes all of the Registerable Securities originally issued to
the transferee; PROVIDED, HOWEVER, that such share limitation shall not apply
to transfers by a Shareholder to shareholders, partners, members of the
shareholder (including spouses and ancestors, lineal descendants, and
siblings (or trusts for the benefit of any of the foregoing) of such
shareholders, partners, or members who acquire Registerable Securities by
right, will or intestate succession) if all such transferees or assignees
agree in writing to appoint a single representative as their attorney-in-fact
for the purpose of receiving any notices and exercising their rights under
this Agreement.
1.7 INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under this Section 1:
(a) Each Shareholder will, if Registrable Securities held by
such Shareholder are included in the securities as to which such registration
is being effected, 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 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, any rule or regulation promulgated under the Act or the
1934 Act or other federal or State law, in each case to the extent that such
Violation is
4
<PAGE>
contained in any written information furnished by Shareholder for inclusion
in 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 1.7(a), in connection with investigating or
defending any such loss, claim, damage, liability, or action; provided,
however, that the indemnity agreement contained in this subsection 1.7(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 Shareholder, which consent shall not be unreasonably withheld;
PROVIDED, THAT, in no event shall any indemnity under this subsection 1.7(a)
exceed the net proceeds from the offering received by Shareholder.
(b) The Company will indemnify and hold harmless each
Shareholder whose Registrable Securities were included in the securities as
to which a registration was effected, as well as each such Shareholder's
officers, directors, partners, legal counsel and persons controlling such
Shareholder, against any losses, claims, damages, or liabilities (joint or
several) to which any of the foregoing persons may be 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 of the following statements, omissions or violations
(collectively, a "Violation"): (i) any untrue statement or alleged untrue
statement of a material fact contained in a 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 such Shareholder 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, in each case to the extent that such Violation is based on any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with any written information furnished by the
Company in an instrument duly executed by such Shareholder.
(c) Promptly after receipt by an indemnified party under this
Section 1.7 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 1.7,
deliver to the indemnifying party a written notice of the commencement
thereof and the indemnifying party shall have the right to participate in at
the indemnifying party's expense, and, to 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
at the indemnifying party's expense; 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
conflicts of interests between such indemnified party and any other party
represented by such counsel in such proceeding. No indemnifying party, in
defense of any such claim or litigation, shall, except with the consent of
each indemnified party, consent to entry of any judgement or enter into any
settlement which does not include as an unconditional term thereof the giving
by
5
<PAGE>
the claimant or plaintiff to the indemnified party of a release from all
liability in respect to such claim or litigation.
(d) If the indemnification provided for in this Section 1.7
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.
Notwithstanding the provisions of this paragraph (d), no Shareholder shall be
required to contribute any amount in excess of the amount of net proceeds
received by such Shareholder from the sale of such Shareholder's Registerable
Securities. Moreover, no person or entity guilty of fraudulent
misrepresentation within the meaning of Section 11(f) of the Act shall be
entitled to contribution from any person or entity who was not guilty of such
fraudulent misrepresentation.
(e) The obligations of each Shareholder under this Section
1.7 shall survive the completion of any offering of Registrable Securities in
a registration statement under this Agreement.
(f) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in an underwriting
agreement (if any) entered into in connection with the underwritten public
offering are in conflict with the foregoing provisions, the provisions in the
underwriting agreement shall control.
1.8 TERMINATION OF REGISTRATION RIGHTS. The registration rights
provided in this Section 1 shall terminate with respect to a particular
Shareholder if 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. Upon the termination of registration
rights pursuant to this Section 1.8, the Company shall have the right to
withdraw the registration statement, or any portion thereof, covering the
Registrable Securities held by such particular Shareholder.
1.9 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 written notice to David
Stanley, the Company's General Counsel, of such intention and shall be free
to sell any or all of his shares of Registrable Securities if such
6
<PAGE>
Shareholder has not received notice to the contrary within three (3) business
days of the receipt by Mr. Stanley of such written 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 without giving effect to
the conflicts of laws principles thereof.
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.
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.
7
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first above written.
AVANT! CORPORATION:
By:
-------------------------------------
Gerald C. Hsu,
President and Chief Executive Officer
Address: 46871 Bayside Parkway
Fremont, California 94538
SHAREHOLDERS:
By:
-------------------------------------
Address:
--------------------------------
--------------------------------
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
<PAGE>
SCHEDULE A
<PAGE>
APPENDIX 1.4
SHAREHOLDER INFORMATION:
All information furnished below by the undersigned for use in the
Registration Statement on Form S-3 is, and on the date such shares registered
thereunder, will be true, correct, and complete in all material respects, and
does not, and on the date on which the undersigned sells such shares, will
not, contain any untrue statement of a material fact or omit to state any
material fact necessary to make such information not misleading. By
completing and returning this information statement, the undersigned hereby
consents to the use of his or her name, address, and share ownership
information in the Form S-3 of Avant! Corporation.
A. DATE.
Fill in Date:
------------------------------
B. NAME. Print:
Print and sign name or names
exactly as name or names appear on ------------------------------
share certificate. If certificate is held
in more than one name, all must sign.
------------------------------
Sign:
------------------------------
------------------------------
C. ADDRESS.
Fill in your address:
------------------------------
------------------------------
------------------------------
<PAGE>
D. Stock Owned.
Of Record Beneficially
Fill in number of shares of
Common Stock owned of record
and beneficially.
------------------- -------------------
E. AGGREGATE NUMBER OF SHARES OF COMMON STOCK TO BE SOLD:
Shares
------------
F. STATUS.
The undersigned is an individual ( ), partnership ( ), corporation ( ),
or other, as more fully described below ( ). The undersigned is not acting
in a fiduciary capacity or as a nominee in selling shares in the public
offering, except as indicated below.
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<PAGE>
EXHIBIT 5.1
November 20, 1998
Avant! Corporation
46871 Bayside Parkway
Fremont, California 94538
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-3 originally filed by
Avant! Corporation (the "Company") with the Securities and Exchange Commission
(the "Commission") on November 20, 1998, as thereafter amended or supplemented
(the "Registration Statement"), in connection with the registration under the
Securities Act of 1933, as amended, of up to 1,256,005 shares of the Company's
Common Stock of certain stockholders of the Company (the "Shares"). As your
counsel in connection with this transaction, 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
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Avant! Corporation
We consent to incorporation by reference herein of our report dated May 22,
1998, relating to the consolidated balance sheets of Avant! Corporation and
subsidiaries as of December 31, 1997 and 1996, 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, 1997, and the related schedule,
which report appears in the June 11, 1998 current report on Form 8-K/A of Avant!
Corporation, and to the reference to our firm under the heading "Experts" in the
prospectus.
/s/ KPMG PEAT MARWICK LLP
Mountain View, California
November 20, 1998
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement on Form S-3 of our report dated January
24, 1997 on the December 31, 1996 consolidated financial statements of
Technology Modeling Associates, Inc. included in Avant! Corporation's Form 8-K/A
filed with the Securities Exchange Commission on June 11, 1998.
/s/ ARTHUR ANDERSEN LLP
San Jose, California
November 20, 1998
