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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 22, 1999
REGISTRATION NO. 333-67629
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
AVANT! CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
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<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. / /
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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SUBJECT TO COMPLETION, DATED JANUARY , 1999
1,256,005 SHARES
AVANT! CORPORATION
COMMON STOCK
------------------
The selling stockholders of Avant! Corporation listed on pages 15-18 of this
prospectus are offering and selling 1,256,005 shares of Avant! common stock
under this prospectus.
The selling stockholders obtained their shares of Avant! common stock on
November 13, 1998, by virtue of a merger of interHDL, Inc. with and into Artemis
Merger Corporation, a wholly-owned subsidiary of Avant!.
The selling stockholders may offer their Avant! stock through public or
private transactions, on or off The Nasdaq National Market, at prevailing market
prices, or at privately negotiated prices.
The common stock is traded on The Nasdaq National Market under the symbol
"AVNT." On January 21, 1999, the closing bid price of the common stock on The
Nasdaq National Market was $23.25 per share.
------------------------
The shares of Avant! common stock offered or sold under this prospectus have not
been approved by the SEC or any state securities commission, nor have these
organizations determined that this prospectus is accurate or complete. Any
representation to the contrary is a criminal offense.
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The date of this Prospectus is January , 1999
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TABLE OF CONTENTS
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PAGE
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Business of Avant!......................................................................................... 3
Risk Factors............................................................................................... 4
Forward Looking Statements................................................................................. 14
Use of Proceeds............................................................................................ 14
Selling Stockholders....................................................................................... 15
Plan of Distribution....................................................................................... 19
Description of Capital Stock............................................................................... 19
Legal Matters.............................................................................................. 22
Experts.................................................................................................... 22
Where You Can Find More Information........................................................................ 23
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THE BUSINESS OF AVANT!
At Avant!, we develop, market and support computer software for integrated
circuit design automation--also known as electronic design automation. This
software is used for the design of integrated circuits, particularly integrated
circuits that are extremely small, or with "submicron"-sized (smaller than 1
micron) and "deep submicron"-sized features (smaller than 0.5 micron). Our
products are used in the design of a variety of integrated circuits, including
microprocessors, memory chips and application-specific integrated circuits.
Compared to previous generations of integrated circuit design automation
software, our products offer improved time to market, reduced development and
manufacturing costs and enhanced integrated circuit performance. 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.
------------------------
This prospectus includes trademarks of Avant! and other corporations.
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RISK FACTORS
LITIGATION RISK
Avant! and its subsidiaries are engaged in various litigation matters,
including: a civil action brought by Cadence Design Systems, Inc.; the criminal
indictment of Avant! and certain of its employees, officers and directors;
securities class action claims stemming from the Cadence litigation and the
criminal indictment; 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 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
diversion of effort by Avant!'s management. These various matters could
seriously harm Avant!'s business, financial condition and results of operations.
- CADENCE LITIGATION.
On December 6, 1995, 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. Trial has been
scheduled for October 12, 1999.
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 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, Avant!'s 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.) On December 7, 1998,
the District Court entered an injunction against Avant! prohibiting Avant! from
directly or indirectly marketing, selling, leasing, licensing, copywriting or
transferring the Aquarius, Aquarius XO and Aquarius BV products. The injunction
permits Avant! to support until February 5, 1999 customers who are currently
utilizing an Aquarius product. The injunction also prohibits Avant! from
marketing, selling, leasing, licensing, copying or transferring any translation
code for an Aquarius product that infringes any protected right of Cadence. With
certain exceptions related to the pending litigation, beginning February 5,
1999, the injunction prohibits Avant! from possessing or using any copies of any
portion of the source code or object code for the Aquarius products to the
extent that such portion is copied or derived from the Design Framework II
product of Cadence. The injunction further includes certain notice and reporting
requirements to be fulfilled by Avant!. The preliminary injunction against
Avant!'s Aquarius products could seriously harm Avant!'s business, financial
condition 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, 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.
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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 monetary damages to Cadence. In
addition, upon further consideration by the District Court, Avant! could be
preliminarily enjoined from selling its Apollo place and route products. 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. Accordingly, 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 INDICTMENT.
On December 16, 1998, after a grand jury investigation, the Santa Clara
County District Attorney's office filed a criminal indictment alleging felony
level offenses related to the allegations of misappropriation of trade secrets
set forth in Cadence's lawsuit against, among others, Avant! and the following
current or former 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 Avant!'s Board of
Directors;
- Y. Z. Liao, Corporate Fellow;
- Stephen Wuu, CEO Staff Operations;
- Leigh Huang, former marketing manager;
- Eric Cheng, Research and Development Manager; and
- Mike Tsai, a former officer and former member of Avant!'s Board of
Directors.
The indictment charges the defendants listed above with conspiring to commit
trade secret theft, trade secret theft, inducing the theft of a trade secret,
conspiracy to commit fraudulent practices in connection with the offer or sale
of a security and fraudulent practices in connection with the offer or sale of a
security. The criminal indictment could result in additional defense costs and
criminal fines against Avant!, as well as the potential incarceration of certain
members of its management team and board of directors. 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., 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. seeking monetary damages and injunctive relief. In August 1995,
Silvaco filed a cross-complaint against Meta and Shawn Hailey, then the
President and Chief Executive Officer of 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. In November 1997, a
judgment in the aggregate amount of $31.4 million was entered against Avant!.
Avant! filed appeals on its own behalf and on behalf of Mr. Hailey. If Avant!'s
appeal is unsuccessful, Avant! will be required to pay substantial monetary
damages to Silvaco. 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 lawsuit alleges causes of action for
defamation, negligent and intentional interference with economic advantage,
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unfair competition, Lanham Act violations and consumer fraud. 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. In the event Avant!'s defenses are unsuccessful, Avant! may be
required to pay damages to Silvaco, 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!
believes it has defenses to these claims and intends to defend itself
vigorously. 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. filed in the
United States District Court for the Northern District of California a complaint
against Precim Corporation. Precim was a wholly owned subsidiary of Technology
Modeling Associates, Inc. which was acquired by Avant! in January 1998. This
lawsuit alleges liability for patent infringement, unfair competition and
tortious interference with prospective economic advantage. The action requests
unspecified monetary 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. Avant! believes it
has defenses to these claims and intends to defend itself vigorously. In the
event Avant!'s defenses are unsuccessful, Avant! may be required to pay damages
to Microunity, 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!. This lawsuit alleges 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 addition, on May 30,
1997, Joanne Hoffman filed in the United States District Court for the Northern
District of California a class action lawsuit 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 a criminal complaint against Avant! and six of
its employees and/or officers. Plaintiff alleges that Avant! and its officers
misled the market as to the likelihood of criminal charges being filed and as to
the validity of the Cadence allegations. The District Court has granted Avant!'s
motion to coordinate the Hoffman action for pretrial purposes with the
earlier-filed Margetis action. Avant! believes it has defenses to these
securities class action claims, and intends to defend itself vigorously. 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. and ACEO Technology, Inc. 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
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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, to acquire the
existing technology of these companies, including technology under development.
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.
RISKS ASSOCIATED WITH MANAGING AN EXPANDING BUSINESS
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.
RISKS ASSOCIATED WITH THE LOSS OF KEY PERSONNEL
Avant!'s future operating results depend in significant part upon the
continued service of key management and technical personnel. Several of Avant!'s
key personnel have been criminally indicted on charges relating to the matters
underlying the pending litigation between Avant! and Cadence. If any of the
individuals criminally indicted are found guilty and incarcerated or are
otherwise unable to continue to provide services to Avant!, its business,
financial condition and results of operations could be seriously harmed. See
"--Litigation Risk." In addition, 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 and pending litigation, it is possible that Avant! will fail to
retain such key technical and managerial personnel. Moreover, there are only a
limited number of qualified integrated circuit design automation 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 Avant!'s increasingly complex business would be
impaired. This would seriously harm Avant!'s business, operating results and
financial condition.
RISKS ASSOCIATED WITH INTENSELY COMPETITIVE INDUSTRY
The integrated circuit design automation software market in which Avant!
competes is intensely competitive and subject to rapid change. Avant! currently
faces competition from major integrated circuit design automation vendors,
including Cadence, which currently holds a dominant share of the market for
integrated circuit physical design software, Synopsys, Inc. and Mentor Graphics
Corporation. Avant! may not be able to maintain a competitive position against
these competitors. This is particularly true because each of these companies has
a longer operating history, significantly greater financial, technical and
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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 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 integrated circuit design automation 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!. Furthermore, because there are relatively low barriers to
entry in the software industry, Avant! expects additional competition from other
established and emerging companies. Avant! also competes with the internal
integrated circuit design automation 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!'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! believes that it competes favorably with respect to the principal
competitive factors on which it competes which include:
- First to market capabilities;
- Product performance;
- Price;
- Support of industry standards;
- Ease of use; and
- Customer technical support and service.
POTENTIAL FLUCTUATIONS IN QUARTERLY RESULTS
We are unable to accurately forecast our future revenues primarily because
of the emerging nature of the market in which we compete and because of the
unpredictability of the various litigation matters to which we are a party. Our
revenues and operating results generally depend on the size, timing and
structure of significant licenses. These factors have historically been, and are
likely to continue to be, difficult to forecast. In particular, we have adopted
a flexible pricing strategy pursuant to which we offer 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 received under
these licenses is unpredictable. In addition, our current and future expense
levels are based largely on our operating plans and estimates of future revenues
and are, to a large extent, fixed. We may be unable to adjust spending
sufficiently quickly to compensate for any unexpected revenue shortfall.
Accordingly, any significant shortfall in revenues in relation to our planned
expenditures would seriously harm our business, financial condition and results
of operations. Such shortfalls in our revenue or operating results from levels
expected by public market analysts and investors could seriously harm the
trading price of our common stock. Additionally, we may not learn of such
revenue shortfalls, earnings shortfalls or other failure to meet market
expectations until late in a fiscal
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quarter, which could result in an even more immediate and serious harm to the
trading price of our common stock.
Our quarterly operating results have varied, and it is anticipated that our
quarterly operating results will vary, substantially from period to period
depending on various factors, many of which are outside our control. Factors
that could affect our 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 length of our sales cycle;
- 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 our products;
- The timing of new or enhanced product announcements or the introduction of
new or enhanced products by our competitors;
- Changes in pricing policies by us or our competitors;
- Market acceptance of new and enhanced versions of our products;
- Conditions in the semiconductor and electronics industries;
- 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 our strategy;
- Personnel changes;
- Economic conditions in the Asian and other markets;
- Our ability to continue to market our products in Asian and other markets;
- Foreign currency exchange rates; and
- General economic factors.
Due to the foregoing factors, we cannot predict with any significant degree
of certainty our quarterly revenue and operating results. Further, we believe
that period-to-period comparisons of our operating results are not necessarily a
meaningful indication 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 common stock 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;
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- 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.
DEPENDENCE UPON A LIMITED NUMBER OF PRODUCTS
During each of the fiscal 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 adverse 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 and upon Avant!'s ability to
continue to sell, license and support each of these products.
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.
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;
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- 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 for the
licensing and support of its products in Asia. A substantial portion of Avant!'s
international license and service revenue is generated from a limited number of
these representatives, although Avant! had no individual customer representing
over 10% of revenue in any of the years 1994-1997, or the first nine months of
1998. In 1997, Avant! consolidated its Japanese sales channel by forming
MainGate, a distributor 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 distributors and manufacturer's representatives subjects it
to a number of risks. For example, Avant!'s current distributors, manufacturer's
representatives 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 distributors and manufacturer's
representatives or these distributors, manufacturer's representatives 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 distributor or manufacturer's representative
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 distributors
or manufacturer's representatives possess such resources. Accordingly, the loss
of, or a significant reduction in revenue from, one of Avant!'s distributors,
manufacturer's representatives or MainGate or any other distributor or
manufacturer's representative on which Avant!'s revenues may, in the future,
become dependent, could seriously harm Avant!'s business, financial condition
and results of operations.
11
<PAGE>
RISKS ASSOCIATED WITH DOING BUSINESS IN AN INDUSTRY CHARACTERIZED BY RAPID
TECHNOLOGICAL CHANGE
Because the semiconductor industry has made significant technological
advances recently, integrated circuit design automation companies, such as
Avant!, that license software to semiconductor companies have been required to
continuously develop new products and enhancements for existing products to keep
pace with the evolving industry standards and rapidly changing customer
requirements. The evolving nature of the integrated circuit design automation
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.
If Avant! is unable, for technical, legal, financial or other reasons, to
respond in a timely manner to changing market conditions or customer
requirements, its business, financial condition and results of operations could
be seriously harmed.
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. 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. While these industries have experienced an extended
period of significant economic growth over the past few years, such economic
growth may not continue, and if it does not, any downturn could be especially
severe on Avant!. During such downturns, the number of new integrated circuit
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.
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
integrated circuit design automation 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.
12
<PAGE>
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
- State of Readiness
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;
- 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 Avant!, which could
seriously harm Avant!'s business, operating results and financial condition.
- Costs
Avant! does not have a project tracking system that tracks the cost and time
that its own internal employees spend on the Year 2000 project. Based on
Avant!'s assessment, the costs incurred to date have had no material impact on
Avant!'s results of operations. Avant! expects that costs directly related to
Year
13
<PAGE>
2000 compliance in excess of normal upgrade and maintenance costs will not
exceed approximately $250,000 for both costs incurred to date and future costs.
- Contingency Plans
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.
FORWARD LOOKING STATEMENTS
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. Avant! believes that all forward looking statements included in this
document comply with the requirements of the Securities Act and the Exchange
Act. 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.
USE OF PROCEEDS
All net proceeds from the sale of the Avant! common stock will go to the
stockholders who offer and sell their shares. Accordingly, Avant! will not
receive any proceeds from the sale of the shares by the selling stockholders.
14
<PAGE>
SELLING STOCKHOLDERS
The following table sets forth certain information, as of January 12, 1999,
with respect to the number of shares of common stock owned by the selling
stockholders named below 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." Based upon
33,183,951 shares of common stock outstanding on January 12, 1999, Eliezer
Sternheim is the only selling stockholder that owns more than 1% of the
outstanding stock of Avant!.
The shares being offered by the selling stockholders were acquired from
Avant! in Avant!'s acquisition of interHDL, Inc. pursuant to an Agreement and
Plan of Reorganization dated November 4, 1998, as amended on November 12, 1998.
The shares of common stock were issued pursuant to an exemption from the
registration requirements of the Securities Act of 1933, as amended. The selling
stockholders represented to Avant! that they were acquiring the shares for
investment and with no present intention of distributing the shares.
Avant! has filed with the Securities and Exchange Commission, under the
Securities Act of 1933, as amended, 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. Avant! 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>
NUMBER OF NUMBER OF
SHARES SHARES
BENEFICIALLY BENEFICIALLY
OWNED NUMBER OF OWNED
PRIOR TO SHARES AFTER THE
NAME AND ADDRESS OF SELLING STOCKHOLDERS OFFERING BEING OFFERED OFFERING
- -------------------------------------------------- --------- ------------- ----------
<S> <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>
15
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
SHARES SHARES
BENEFICIALLY BENEFICIALLY
OWNED NUMBER OF OWNED
PRIOR TO SHARES AFTER THE
NAME AND ADDRESS OF SELLING STOCKHOLDERS OFFERING BEING OFFERED OFFERING
- -------------------------------------------------- --------- ------------- ----------
<S> <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
YAN LIN .......................................... 1,907 1,907 0
427 Acalanes Drive Apt. 6
Sunnyvale, California 94086
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
SHARES SHARES
BENEFICIALLY BENEFICIALLY
OWNED NUMBER OF OWNED
PRIOR TO SHARES AFTER THE
NAME AND ADDRESS OF SELLING STOCKHOLDERS OFFERING BEING OFFERED OFFERING
- -------------------------------------------------- --------- ------------- ----------
<S> <C> <C> <C>
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
WARREN STAPLETON AND PAMELA STAPLETON ............ 7,866 7,866 0
15935 Camino Del Cerro
Los Gatos, California 95032
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
SHARES SHARES
BENEFICIALLY BENEFICIALLY
OWNED NUMBER OF OWNED
PRIOR TO SHARES AFTER THE
NAME AND ADDRESS OF SELLING STOCKHOLDERS OFFERING BEING OFFERED OFFERING
- -------------------------------------------------- --------- ------------- ----------
<S> <C> <C> <C>
ELIEZER STERNHEIM ................................ 345,326 345,326 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 1,256,005 0
--------- ------------- -
--------- ------------- -
</TABLE>
18
<PAGE>
PLAN OF DISTRIBUTION
The shares offered hereby may be sold by the selling stockholders at various
times in one or more of the following transactions:
- in the over-the-counter market;
- on The Nasdaq National Market;
- in privately negotiated transactions; or
- in a combination of any of the above transactions.
The selling stockholders may sell their shares at market prices prevailing
at the time of sale, at prices related to such prevailing market prices, at
negotiated prices or at fixed prices.
The selling stockholders may use broker-dealers to sell their shares. If
this happens, broker-dealers will either receive discounts or commissions from
the selling stockholders, or they will receive commissions from purchasers of
shares for whom they acted as agents.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of Avant! consists of 75,000,000 shares of
common stock, and 5,000,000 shares of preferred stock, $.0001 par value. As of
January 12, 1999, there were 33,183,951 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 "--Antitakeover Effects of Rights Plan,
Provisions of the Certificate of Incorporation, Bylaws and Delaware Law;
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.
19
<PAGE>
ANTITAKEOVER EFFECTS OF RIGHTS PLAN, PROVISIONS OF THE CERTIFICATE OF
INCORPORATION, BYLAWS AND DELAWARE LAW
PREFERRED STOCK RIGHTS PLAN
On September 4, 1998, our Board of Directors declared a dividend of one
preferred share purchase right for each share of common stock outstanding on
October 2, 1998. Each preferred share purchase right entitles the registered
holder to purchase from Avant! one one-thousandth of a share of Series A Junior
Participating Preferred Stock of Avant! at a price of $100.00 per one
one-thousandth of a preferred share, subject to adjustment. The description and
terms of the preferred share purchase rights are set forth in a Rights Agreement
between Avant! and Harris Trust Company of California, as Rights Agent.
Until the earlier to occur of (a) the tenth day after the public
announcement or public disclosure of a flip in event (as described below) or (b)
ten business days (or such later date as may be determined by action of the
Board of Directors prior to a flip in event) following the commencement of, or
announcement of an intention to make, a tender or exchange offer the
consummation of which would result in a flip in event, the preferred share
purchase rights will be transferred with and only with the common stock. The
earliest to occur of these events is defined in the Rights Agreement as a
Distribution Date.
A flip in event will result if a person or group of affiliated or associated
persons has acquired beneficial ownership of 15% or, in the case of (a) 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. A person or
group of affiliated or associated persons that has acquired the amounts of
common stock referred to in this paragraph is an Acquiring Person.
As soon as practicable following the Distribution Date, separate
certificates evidencing the preferred share purchase rights will be mailed to
holders of record of the common stock as of the close of business on the
Distribution Date and the certificates representing the preferred share purchase
rights alone will evidence the preferred share purchase rights.
The preferred share purchase rights are not exercisable until the
Distribution Date. The preferred share purchase rights will expire on September
4, 2008, unless the expiration date is extended or unless the preferred share
purchase rights are earlier redeemed by Avant!.
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 from certain transactions and
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.
The preferred shares' dividend, liquidation and voting rights are structured
so that the value of the one one-thousandth interest in a preferred share
purchasable upon exercise of each preferred share purchase right should
approximate the value of one share of common stock.
From and after the occurrence of a flip in event, if the preferred share
purchase rights are or were at any time on or after the earlier of (a) the date
of such event and (b) the Distribution Date acquired or beneficially owned by an
Acquiring Person or an Associate or Affiliate of an Acquiring Person, such
preferred share purchase rights shall become void, and any holder of such
preferred share purchase rights shall thereafter have no right to exercise such
preferred share purchase rights.
After a flip in event, each holder of a preferred share purchase right,
other than preferred share purchase rights beneficially owned by the Acquiring
Person (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 preferred share purchase right. If
Avant! does not have a sufficient
20
<PAGE>
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 preferred share purchase right an amount of cash or
securities equivalent in value to the common stock issuable upon exercise of a
preferred share purchase right. If Avant! fails to meet such obligation within
30 days following a flip in event, Avant! must deliver, upon exercise of a
preferred share purchase 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 preferred share purchase right and the exercise price
then in effect.
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 preferred share purchase right will
thereafter have the right to receive, upon the exercise thereof at the then
current exercise price of the preferred share purchase 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
preferred share purchase right.
At any time after a flip in event 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 preferred share purchase rights (other than
preferred share purchase 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 preferred share purchase right (subject to adjustment).
At any time prior to a flip in event the Board of Directors of Avant! may
redeem the preferred share purchase rights in whole, but not in part, at a price
of $0.01 per right. Immediately upon any redemption of the rights, the right to
exercise the preferred share purchase rights will terminate and the only right
of the holders of preferred share purchase rights will be to receive the
redemption price.
The terms of the preferred share purchase rights may be amended by the Board
of Directors of Avant! without the consent of the holders of the preferred share
purchase rights, except that from and after a flip in event no such amendment
may adversely affect the interests of the holders of the preferred share
purchase rights (other than the Acquiring Person).
Until a preferred share purchase 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 preferred share purchase rights have certain anti-takeover effects. The
preferred share purchase rights will cause substantial dilution to a person or
group that attempts to acquire Avant! without conditioning the offer on the
preferred share purchase rights being redeemed. However, the preferred share
purchase rights should not interfere with any tender offer or merger approved by
Avant! because the preferred share purchase 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
21
<PAGE>
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
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: (a) 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; (b) 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 (c) 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.
Section 203 defines "business combination" to include: (a) any merger or
consolidation involving the corporation and the interested stockholder; (b) any
sale, transfer, pledge or other disposition of 10% or more of the assets of the
corporation involving the interested stockholder; (c) 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; (d)
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 (e) 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 Avant!
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
Avant!'s June 11, 1998 Current Report on Form 8-K/A are incorporated herein by
reference in reliance upon the reports of KPMG LLP, independent certified public
accountants, and upon the authority of said firm as experts in accounting and
auditing.
The consolidated financial statements of Technology Modeling Associates,
Inc. as of December 31, 1996 incorporated in this prospectus by reference from
Avant!'s June 11, 1998 Current Report on Form 8-K/A are incorporated by
reference in reliance upon the reports of Arthur Andersen LLP, independent
certified public accountants and upon the authority of said firm as experts in
accounting and auditing.
22
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available to the public
from the SEC's website at "http://www.sec.gov."
The SEC allows us to "incorporate by reference" the information we file with
them, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is considered
to be part of this prospectus, and information that we file later with the SEC
will automatically update and supersede this information. We incorporate by
reference the documents listed below and any future filings we will make with
the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act
of 1934:
1. Annual Report on Form 10-K for the fiscal year ended December 31, 1997;
2. Quarterly Report on Form 10-Q for the quarters ended March 31, 1998,
June 30, 1998 and September 30, 1998;
3. Current Reports on Form 8-K dated January 30, 1998, September 18, 1998,
November 19, 1998 and December 22, 1998;
4. Current Report on Form 8-K/A dated June 11, 1998; and
5. The description of Avant!'s Common Stock contained in its Registration
Statement on Form 8-A as filed with the Commission on April 12, 1995.
You may request a copy of these filings, at no cost, by writing our Investor
Relations organization at the following address:
Avant! Corporation
46871 Bayside Parkway
Fremont, California 94538
Attn: Investor Relations
This prospectus is part of a registration statement we filed with the SEC.
You should rely only on the information or representations provided in this
prospectus. We have authorized no one to provide you with different information.
We are not making an offer of these securities in any state where the offer is
not permitted. You should not assume that the information in this prospectus is
accurate as of any date other than the date on the front of the document.
23
<PAGE>
1,256,005 SHARES
AVANT! CORPORATION
COMMON STOCK
------------------
JANUARY , 1999
------------------------
<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................................... 50,000.00
Transfer Agent and Registrar Fees.............................. 2,500.00
Miscellaneous.................................................. 1,476.83
----------
Total........................................................ $210,000.00
----------
----------
</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 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>
- ------------------------
* Previously filed
(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 22nd day of
January, 1999.
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 January 22, 1999
Gerald C. Hsu Executive Officer
Head of Finance and
/s/ PETER TESHIMA Administration (Principal
- ------------------------------ Financial and Accounting January 22, 1999
Peter Teshima Officer)
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- --------------------
<C> <S> <C>
/s/ ERIC A. BRILL
- ------------------------------ Director January 22, 1999
Eric A. Brill
/s/ CHARLES L. ST. CLAIR
- ------------------------------ Director January 22, 1999
Charles L. St. Clair
/s/ MONYUKI CHIMURA
- ------------------------------ Director January 22, 1999
Monyuki Chimura
/s/ DAN TAYLOR
- ------------------------------ Director January 22, 1999
Dan Taylor
</TABLE>
II-5
<PAGE>
EXHIBIT 3.1
RESTATED
CERTIFICATE OF INCORPORATION
OF
ARCSYS, INC.
A DELAWARE CORPORATION
(PURSUANT TO SECTION 245 OF THE
DELAWARE GENERAL CORPORATION LAW)
ARCSYS, INC., a corporation organized and existing under and by virtue of
the General Corporation Law of the State of Delaware (the "General Corporation
Law"), hereby certifies as follows:
FIRST: That the name of this corporation is ArcSys, Inc., and that this
corporation was originally incorporated on February 28, 1991, pursuant to the
General Corporation Law.
SECOND: The Amended and Restated Certificate of Incorporation of this
corporation shall be restated to read in full as follows:
ARTICLE I
The name of this corporation is ArcSys, Inc.
ARTICLE II
The address of the registered office of this corporation in the State of
Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle.
The name of its registered agent at such address is The Corporation Trust
Company.
ARTICLE III
The nature of the business or purposes to be conducted or promoted is to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware.
ARTICLE IV
This corporation is authorized to issue two classes of stock to be
designated common stock ("Common Stock") and preferred stock ("Preferred
Stock"). The number of shares of Common Stock authorized to be issued is
Twenty-Five Million (25,000,000), par value $0.0001 per share, and the number of
shares of Preferred Stock authorized to be issued is Five Million (5,000,000),
par value $0.0001 per share.
The Preferred Stock may be issued from time to time in one or more series,
without further stockholder approval. The Board of Directors is hereby
authorized, in the resolution or resolutions adopted by the Board of Directors
providing for the issue of any wholly unissued series of Preferred Stock, within
the limitations and restrictions stated in this Restated Certificate of
Incorporation, to fix or alter the dividend rights, dividend rate, conversion
rights, voting rights, rights and terms of redemption (including sinking fund
provisions), the redemption price or prices, and the liquidation preferences of
any wholly unissued series of Preferred Stock, and the number of shares
constituting any such series and the designation thereof, or any of them, and to
increase or decrease the number of shares of any series subsequent to the issue
of shares of that series, but not below the number of shares of such series then
outstanding. In case the number of shares of any series shall be so decreased,
the shares constituting such decrease shall resume the status that they had
prior to the adoption of the resolution originally fixing the number of shares
of such series.
<PAGE>
ARTICLE V
Except as otherwise provided in this Restated Certificate of Incorporation,
in furtherance and not in limitation of the powers conferred by statue, the
Board of Directors is expressly authorized to make, repeal, alter, amend, and
rescind any or all the Bylaws of this corporation.
ARTICLE VI
The number of directors of this corporation shall be fixed from time to time
by a bylaw or amendment thereof duly adopted by the Board of Directors or by the
stockholders.
ARTICLE VII
Election of directors need not be by written ballot unless the Bylaws of
this corporation shall so provide.
ARTICLE VIII
Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws may provide. The books of this corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the Bylaws of this corporation.
ARTICLE IX
A director of this corporation shall, to the fullest extent permitted by the
Delaware General Corporation Law as it now exists or as it may hereafter be
amended, not be liable to this corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director. Neither any amendment nor
repeal of this Article, nor the adoption of any provision of this Restated
Certificate of Incorporation inconsistent with this Article, shall eliminate or
reduce the effect of this Article in respect of any matter occurring, or any
cause of action, suit or claim that, but for this Article, would accrue or
arise, prior to such amendment, repeal or adoption of any inconsistent
provision.
ARTICLE X
No action required to be taken or that may be taken at any annual or special
meeting of the stockholders of this corporation may be taken without a meeting,
and the power of stockholders to consent in writing, without a meeting, to the
taking of any action is specifically denied.
ARTICLE XI
To the fullest extent permitted by applicable law, this corporation is also
authorized to provide indemnification of (and advancement of expenses to) such
agents (and any other persons to which Delaware law permits this corporation to
provide indemnification) through Bylaw provisions, agreements with such agents
or other persons, vote of stockholders or disinterested directors or otherwise,
in excess of the indemnification and advancement otherwise permitted by Section
145 of the General Corporation Law of the State of Delaware, subject only to
limitations created by applicable Delaware law (statutory or non-statutory),
with respect to actions for breach of duty to this corporation, its
stockholders, and others.
Any repeal or modification of any of the foregoing provisions of this
Article shall not adversely affect any right or protection of a director,
officer, agent or other person existing at the time of, or increase the
liability of any director of this corporation with respect to any acts or
omissions of such director, officer or agent occurring prior to such repeal or
modification.
<PAGE>
ARTICLE XII
This corporation reserves the right to amend, alter, change or repeal any
provision contained in this Restated Certificate of Incorporation, in the manner
now or hereafter prescribed by statute, and all right conferred upon
stockholders herein are granted subject to this reservation.
* * * *
THIRD: The Restated Certificate of Incorporation as set forth above has
been duly adopted by this corporation's Board of Directors in accordance with
the provisions of Section 245 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, ARCSYS, INC. has caused this Restated Certificate of
Incorporation to be signed by its President and attested to by its Secretary
this 12th day of June, 1995.
ARCSYS, INC.
/s/ GERALD C. HSU
------------------------------------------------------------------
Gerald C. Hsu
PRESIDENT AND CHIEF
EXECUTIVE OFFICER
ATTEST
/s/ Y. ERIC CHO
- ------------------------
Y. Eric Cho
SECRETARY
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE
RESTATED CERTIFICATE OF INCORPORATION
OF
ARCSYS, INC.
ArcSys, Inc., a corporation organized and existing under and by virtue of
the General Corporation Law of the State of Delaware.
DOES HEREBY CERTIFY:
FIRST: The Board of Directors duly adopted a resolution proposing to amend
the Restated Certificate of Incorporation of this corporation, declaring said
amendment to be advisable and in the best interests of this corporation and its
stockholders, and authorizing the appropriate officers of this corporation to
subject the resolution to the stockholders of said corporation entitled to vote
in respect thereof for their approval. The resolution setting forth said
amendment is as follows:
"RESOLVED, that the Restated Certificate of Incorporation of this
corporation be amended by changing ARTICLE 1 so that, as amended, said provision
shall be and read as follows:
"ARTICLE I
The name of this corporation is Avant! Corporation."
SECOND: The amendment was duly adopted in accordance with the provisions of
Section 242 of the General Corporation Law of the State of Delaware by a
majority vote of the stockholders holding the requisite number of shares as
required by statute.
IN WITNESS WHEREOF, this Certificate of Amendment of the Restated
Certificate of Incorporation has been signed by the President and Secretary of
this corporation this 27th day of November, 1995.
ARCSYS, INC.
/s/ Gerald C. Hsu_________
Gerald C. Hsu, PRESIDENT
ATTEST
/s/ Y. Eric Cho_________
Y. Eric Cho, SECRETARY
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE
RESTATED CERTIFICATE OF INCORPORATION
OF
AVANT! CORPORATION
Avant! Corporation, a corporation organized and existing under the laws of
the State of Delaware (the "Corporation"), pursuant to the provisions of the
General Corporation Law of the State of Delaware (the "DGCL"), DOES HEREBY
CERTIFY as follows:
FIRST: The Restated Certificate of Incorporation of the Corporation is
hereby amended by deleting the first paragraph of ARTICLE IV of the Restated
Certificate of Incorporation in its present form and substituting therefor a new
first paragraph of ARTICLE IV in the following form:
"This corporation is authorized to issue two classes of stock, to be
designated, respectively, "Common Stock" and "Preferred Stock." The total number
of shares that this corporation is authorized to issue is Seventy-Five Million
(75,000,000) shares of capital stock. Of such authorized shares, Seventy Million
(70,000,000) shares shall be designed "Common Stock," and have a par value of
$0.0001 per share, and Five Million (5,000,000) shares shall be designated
"Preferred Stock," and have a par value of $0.0001 per share.
SECOND: The amendment to the Restated Certificate of Incorporation of the
Corporation set forth in this Certificate of Amendment has been duly adopted in
accordance with the provisions of Section 242 of the DGCL by (a) the Board of
Directors of the Corporation having duly adopted a resolution setting forth such
amendment and declaring its advisability and submitting it to the stockholders
of the Corporation for their approval, and (b) the stockholders of the
Corporation having duly adopted such amendment by vote of the holders of a
majority of the outstanding stock entitled to vote thereon at a regular meeting
of stockholders called and held upon notice in accordance with Section 222 of
the DGCL.
IN WITNESS WHEREOF, the undersigned has executed this Certificate on this
16th day of June, 1997.
AVANT! CORPORATION
By:/s/ Gerald C. Hsu__________________
Gerald C. Hsu
CHAIRMAN OF THE BOARD, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
<PAGE>
CERTIFICATE OF DESIGNATION
OF
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
OF
AVANT! CORPORATION
------------------------
(PURSUANT TO SECTION 151 OF THE
DELAWARE GENERAL CORPORATION LAW)
------------------------
Avant! Corporation, a corporation organized and existing under the General
Corporation Law of the State of Delaware (hereinafter called the "Corporation"),
hereby certifies that the following resolution was adopted by the Board of
Directors of the Corporation as required by Section 151 of the General
Corporation Law at a meeting duly called and held on September 4, 1998:
RESOLVED, that pursuant to the authority granted to and vested in the Board
of Directors of this Corporation (hereinafter called the "Board of Directors" or
the "Board") in accordance with the provisions of the Restated Certificate of
Incorporation of the Corporation (the "Restated Certificate of Incorporation"),
the Board of Directors hereby creates a series of Preferred Stock, par value
$0.0001 per share (the "Preferred Stock"), of the Corporation and hereby states
the designation and number of shares, and fixes the relative rights,
preferences, and limitations thereof as follows:
Section 1. DESIGNATION AND AMOUNT. The shares of this series shall be
designated as "Series A Junior Participating Preferred Stock" (the "Series A
Preferred Stock") and the number of shares constituting the Series A Preferred
Stock shall be 75,000. Such number of shares may be increased or decreased by
resolution of the Board of Directors; PROVIDED, that no decrease shall reduce
the number of shares of Series A Preferred Stock to a number less than the
number of shares then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights or warrants or upon
the conversion of any outstanding securities issued by the Corporation
convertible into Series A Preferred Stock.
Section 2. DIVIDENDS AND DISTRIBUTIONS.
(A) Subject to the rights of the holders of any shares of any series of
Preferred Stock (or any other stock) ranking prior and superior to the Series A
Preferred Stock with respect to dividends, the holders of shares of Series A
Preferred Stock shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the last day of March, June, September and December
in each year (each such date being referred to herein as a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend Payment Date after
the first issuance of a share or fraction of a share of Series A Preferred
Stock, in an amount (if any) per share (rounded to the nearest cent), subject to
the provision for adjustment hereinafter set forth, equal to 1,000 times the
aggregate per share amount of all cash dividends, and 1,000 times the aggregate
per share amount (payable in kind) of all non-cash dividends or other
distributions, other than a dividend payable in shares of Common Stock, par
value $0.0001 per share (the "Common Stock"), of the Corporation or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share of
Series A Preferred Stock. In the event the Corporation shall at any time declare
or pay any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding shares
of Common Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the amount to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event under the
preceding sentence shall be adjusted by multiplying such amount by a fraction,
the numerator of which is the number of shares of Common Stock outstanding
<PAGE>
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the
Series A Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock).
(C) Dividends due pursuant to paragraph (A) of this Section shall begin
to accrue and be cumulative on outstanding shares of Series A Preferred Stock
from the Quarterly Dividend Payment Date next preceding the date of issue of
such shares, unless the date of issue of such shares is prior to the record date
for the first Quarterly Dividend Payment Date, in which case dividends on such
shares shall begin to accrue from the date of issue of such shares, or unless
the date of issue is a Quarterly Dividend Payment Date or is a date after the
record date for the determination of holders of shares of Series A Preferred
Stock entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall begin to
accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but
unpaid dividends shall not bear interest. Dividends paid on the shares of Series
A Preferred Stock in an amount less than the total amount of such dividends at
the time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of shares of
Series A Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not more than 60 days
prior to the date fixed for the payment thereof.
Section 3. VOTING RIGHTS. The holders of shares of Series A Preferred
Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
share of Series A Preferred Stock shall entitle the holder thereof to 1,000
votes on all matters submitted to a vote of the stockholders of the Corporation.
In the event the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the number of votes per share to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event shall be adjusted
by multiplying such number by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided the Restated Certificate of
Incorporation, including any other Certificate of Designations creating a series
of Preferred Stock or any similar stock, or by law, the holders of shares of
Series A Preferred Stock and the holders of shares of Common Stock and any other
capital stock of the Corporation having general voting rights shall vote
together as one class on all matters submitted to a vote of stockholders of the
Corporation.
(C) Except as set forth herein, or as otherwise required by law,
holders of Series A Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled to
vote with holders of Common Stock as set forth herein) for taking any corporate
action.
Section 4. CERTAIN RESTRICTIONS.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series A Preferred Stock outstanding shall have
been paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other distributions, on
any shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock;
<PAGE>
(ii) declare or pay dividends, or make any other distributions, on
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except dividends paid ratably on the Series A Preferred Stock and all such
parity stock on which dividends are payable or in arrears in proportion to the
total amounts to which the holders of all such shares are then entitled; or
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock, provided that the
Corporation may at any time redeem, purchase or otherwise acquire shares of any
such junior stock in exchange for shares of any stock of the Corporation ranking
junior (as to dividends and upon dissolution, liquidation or winding up) to the
Series A Preferred Stock.
(B) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. REACQUIRED SHARES. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
subject to the conditions and restrictions on issuance set forth herein or in
the Restated Certificate of Incorporation, including any Certificate of
Designations creating a series of Preferred Stock or any similar stock, or as
otherwise required by law.
Section 6. LIQUIDATION, DISSOLUTION OR WINDING UP. Upon any liquidation,
dissolution or winding up of the Corporation the holders of shares of Series A
Preferred Stock shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 1,000
times the aggregate amount to be distributed per share to holders of shares of
Common Stock plus an amount equal to any accrued and unpaid dividends. In the
event the Corporation shall at any time declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the aggregate amount to which holders of shares of Series A Preferred
Stock were entitled immediately prior to such event under the preceding sentence
shall be adjusted by multiplying such amount by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
Section 7. CONSOLIDATION, MERGER, ETC. In case the Corporation shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share of
Series A Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 1,000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series A Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. AMENDMENT. The Restated Certificate of Incorporation shall not
be amended in any manner, including in a merger or consolidation, which would
alter, change, or repeal the powers,
<PAGE>
preferences or special rights of the Series A Preferred Stock so as to affect
them adversely without the affirmative vote of the holders of at least
two-thirds of the outstanding shares of Series A Preferred Stock, voting
together as a single class.
Section 9. RANK. The Series A Preferred Stock shall rank, with respect to
the payment of dividends and upon liquidation, dissolution and winding up,
junior to all series of Preferred Stock.
IN WITNESS WHEREOF, this Certificate of Designation is executed on behalf of
the Corporation by its President this 4th day of September, 1998.
AVANT! CORPORATION
/s/ GERALD C. HSU
------------------------------------------------------------------
Gerald C. Hsu
PRESIDENT AND CHIEF
EXECUTIVE OFFICER
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Avant! Corporation
We consent to incorporation by reference herein of our reports 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 reports appear 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 LLP
Mountain View, California
January 22, 1999
<PAGE>
EXHIBIT 23.3
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
January 20, 1999
