-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MMPvpiseFQOKNNvw8eNJVH2JIS2LtmVqO1nwpr7muMU3kDiFK9vTlmitUMNc8hJD TcAfnMQkLduGldjGpvY8Og== /in/edgar/work/20000915/0000891618-00-004619/0000891618-00-004619.txt : 20000923 0000891618-00-004619.hdr.sgml : 20000923 ACCESSION NUMBER: 0000891618-00-004619 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20000915 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ATMEL CORP CENTRAL INDEX KEY: 0000872448 STANDARD INDUSTRIAL CLASSIFICATION: [3674 ] IRS NUMBER: 770051991 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: SEC FILE NUMBER: 333-45282 FILM NUMBER: 724142 BUSINESS ADDRESS: STREET 1: 2325 ORCHARD PKWY CITY: SAN JOSE STATE: CA ZIP: 95131 BUSINESS PHONE: 4084410311 MAIL ADDRESS: STREET 1: 2325 ORCHARD PKWY CITY: SAN JOSE STATE: CA ZIP: 95131 S-3/A 1 f65436a1s-3a.txt AMENDMENT #1 TO THE S-3 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 15, 2000 REGISTRATION NO. 333-45282 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ AMENDMENT NO. 1 TO FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------------ ATMEL CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 77-0051991 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
2325 ORCHARD PARKWAY SAN JOSE, CALIFORNIA 95131 (408) 441-0311 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) ------------------------ DONALD COLVIN VICE PRESIDENT, FINANCE AND CHIEF FINANCIAL OFFICER ATMEL CORPORATION 2325 ORCHARD PARKWAY SAN JOSE, CALIFORNIA 95131 (408) 441-0311 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE) ------------------------ COPIES TO: MARK A. BERTELSEN, ESQ. DAVID HUBB, ESQ. JOSEPH F. DANIELS, ESQ. MARK CAWLEY, ESQ. WILSON SONSINI GOODRICH & ROSATI GRAY CARY WARE & FREIDENRICH LLP PROFESSIONAL CORPORATION 400 HAMILTON AVENUE 650 PAGE MILL ROAD PALO ALTO, CALIFORNIA 94301 PALO ALTO, CALIFORNIA 94304 (650) 833-2000 (650) 493-9300
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to time after the effective date of this Registration Statement. 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. [ ] 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 SEC, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL THE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. PROSPECTUS (Subject to Completion) Issued September 15, 2000 4,000,000 Shares LOGO COMMON STOCK ------------------------ ATMEL CORPORATION IS OFFERING 4,000,000 SHARES OF ITS COMMON STOCK IN A GLOBAL OFFERING. THE GLOBAL OFFERING CONSISTS OF A PUBLIC OFFERING IN FRANCE, AN OFFERING TO INSTITUTIONAL INVESTORS IN THE REST OF THE WORLD, AND A PUBLIC OFFERING IN THE UNITED STATES. OUR COMMON STOCK HAS BEEN APPROVED FOR LISTING ON THE PREMIER MARCHE OF THE PARIS STOCK EXCHANGE, AND TRADING IN OUR COMMON STOCK WILL COMMENCE THERE CONCURRENT WITH THIS OFFERING. ------------------------ OUR COMMON STOCK IS QUOTED ON THE NASDAQ NATIONAL MARKET UNDER THE SYMBOL "ATML." ON SEPTEMBER 14, 2000 THE REPORTED LAST SALE PRICE OF OUR COMMON STOCK ON THE NASDAQ NATIONAL MARKET WAS $18 9/16 PER SHARE. ------------------------ INVESTING IN THE COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON PAGE 6. ------------------------ PRICE $ A SHARE AND E A SHARE ------------------------
UNDERWRITING PROCEEDS TO PRICE TO DISCOUNTS AND ATMEL PUBLIC COMMISSIONS CORPORATION -------- --------------- ----------- Per Share.............................................. $ $ $ Total.................................................. $ $ $
Atmel Corporation has granted the underwriters the right to purchase up to an additional 600,000 shares to cover over-allotments. The Securities and Exchange Commission and state securities regulators have not approved or disapproved these securities, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. Morgan Stanley & Co. Incorporated expects to deliver the shares to purchasers on , 2000. ------------------------ MORGAN STANLEY DEAN WITTER ODDO PINATTON September , 2000 3 TABLE OF CONTENTS
PAGE ---- Prospectus Summary.................... 1 The Offering.......................... 4 Summary Consolidated Financial Information......................... 5 Risk Factors.......................... 6 Special Note Regarding Forward-Looking Statements.......................... 14 Use of Proceeds....................... 15 Dividend Policy....................... 15 Price Range of Common Stock........... 15
PAGE ---- Capitalization........................ 16 Selected Consolidated Financial Data................................ 17 Quarterly Consolidated Financial Data................................ 18 Market Information.................... 19 Share Certificates and Transfer....... 20 Taxation.............................. 21 Underwriters.......................... 24 Legal Matters......................... 25 Experts............................... 25 Where You Can Find More Information... 25
You should rely only on the information contained or incorporated by reference in this prospectus. We have not authorized anyone to provide you with information different from that contained herein. We are offering to sell, and seeking offers to buy, shares of common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of the common stock. This prospectus has not been and will not be submitted to the clearance procedures of the French Commission des Operations de Bourse and accordingly may not be used in connection with any offer or sale of our common stock in France. For the purposes of the French public offering and the listing of our common stock on the Paris Stock Exchange, we prepared a preliminary prospectus in French that has received the visa (no. 00-1493) of the Commission des Operations de Bourse dated September 14, 2000. In this prospectus "Atmel," "we," "us" and "our" refer to Atmel Corporation and its subsidiaries. ALL OF THE INFORMATION IN THIS PROSPECTUS ASSUMES NO EXERCISE OF THE UNDERWRITERS' OVER-ALLOTMENT OPTION AND GIVES EFFECT TO TWO-FOR-ONE STOCK SPLITS EFFECTED IN THE FORM OF A 100% STOCK DIVIDEND TO STOCKHOLDERS OF RECORD AS OF DECEMBER 3, 1999 AND AUGUST 11, 2000. ------------------------ PRESENTATION OF FINANCIAL INFORMATION We publish our consolidated financial statements in U.S. dollars. As used in this prospectus, "dollar" or "$" means the currency of the United States of America, and "Euro" or "E" means the Euro, the common currency of most of the member states of the European Union. 4 PROSPECTUS SUMMARY You should read the following summary together with the more detailed information concerning our company and the common stock being sold in this offering and our financial statements and related material appearing in this prospectus and in the documents incorporated by reference in this prospectus. Because this is only a summary, you should read the rest of this prospectus, including the documents incorporated by reference in this prospectus, before you invest in our common stock. Read this entire prospectus carefully, especially the risks described under "Risk Factors." We are a global semiconductor company that designs, develops, manufactures and sells a wide range of highly-integrated semiconductor integrated circuit products. We have been instrumental in developing and commercializing non-volatile memory, or memory that continues to store information after power is turned off. We have leveraged our expertise in non-volatile memories and incorporated it with new technologies to meet the evolving and growing needs of our customers. We offer complex system-on-a-chip solutions for a broad array of markets by combining our leading-edge complementary metal-oxide semiconductor, or CMOS, bipolar CMOS, or BiCMOS, and silicon geranium, or SiGe, process technologies with system-level building blocks such as microcontrollers, digital signal processors, or DSPs, analog cells and non-volatile memory. We believe our capabilities in these areas enable our customers to rapidly introduce leading-edge electronic products that are differentiated by higher performance, advanced features, lower cost, smaller form factor, longer battery life and/or more memory. Our products are used primarily in the following markets: Communications. Communications, including wireless and wireline telecommunications and data networking, is currently our largest end-user market, representing nearly half of our revenues for the year ended December 31, 1999. The rapid global acceptance of the wireless phone has resulted in an increased demand for our products. For the wireless market, we provide non-volatile memory, microcontrollers and ASICs that are used in GSM and CDMA mobile phones and their base stations, as well as two-way pagers, mobile radios and 900 MHz cordless phones, and their respective base stations. We also have a complete range of products based on Bluetooth, a new short-range wireless protocol that enables instant connectivity between electronic devices. High production volumes in the wireless communications market have also made it more cost-effective for our customers to incorporate certain advanced technologies into their lower-cost or lower-volume products, such as those in the consumer electronics segment. Our principal customers in the wireless market include Ericsson, Kenwood, Lucent, Motorola, Nokia, Panasonic, Philips, Qualcomm, Samsung and Sony. The data networking and wireline telecommunications markets are experiencing significant growth based on the rapid adoption of the Internet. For these markets, we provide ASIC, non-volatile memory and programmable logic products that are used in the switches, routers, cable modem termination systems and DSL access multiplexers that are currently being used to build Internet infrastructure. Our principal data networking and wireline telecommunications customers include Alcatel, Cisco, Lucent, Nortel, Siemens, 3Com and Xircom. Consumer Electronics. Our products are also used in a broad variety of consumer electronics products. We provide multimode audio processors and MPEG2-based decoders with programmable transport for complex digital audio streams used in digital TVs, set-top boxes and DVD players. For digital cameras, we provide a single-chip digital camera solution. We provide demodulators and decoders for cable modems. We also offer medium-access controllers for wireless LANs and baseband controllers and network protocol stacks for voice-over Internet protocol, or VoIP, telephone terminals. In addition, we provide secure, encryption-enabled, integrated, tamper-resistant circuits for smart cards. Our principal consumer electronics customers include GemPlus, LG Electronics, Matsushita, Mitsubishi, Philips, Samsung, Schlumberger, Sony and Toppan. Computing, Storage and Imaging. The computing and computing peripherals markets are also growing because of the rapid adoption of the Internet. For computing applications, we provide Flash, universal serial bus, or USB, hubs and ASICs for personal computers and servers. For storage applications, we provide servo controllers, read channels and data interfaces for data storage subsystems, hard drives and DVD players. We provide ASICs, non-volatile memory and microcontrollers for laser printers, inkjet printers, copy machines 1 5 and scanners. Our principal customers in these markets include ACER, Compaq, FujiFilm, Hewlett-Packard, IBM, Lexmark, Maxtor, Microsoft, Polaroid, Seagate, Toshiba and Western Digital. We manufacture more than 90% of our products in our own wafer fabrication facilities, or fabs. We believe that our ability to manufacture a broad range of leading-edge products allows us to offer higher performance, better service and shorter production cycles at a more competitive cost. We strive to continuously expand and upgrade our facilities to meet customer demand. We have developed a broad portfolio of manufacturing capabilities across multiple process technologies, including our proprietary CMOS, Logic, CMOS Logic, bipolar, BiCMOS, SiGe, SiGe BiCMOS, Analog, BCDMOS and radiation tolerant process technologies. We have strategic relationships with industry leaders like Anadigics and M/A-COM to develop products using the SiGe process technology, and today have many foundry customers for SiGe products. We consider SiGe a key technology for our success in providing products to serve the telecommunication and data networking markets. Our wafer fabrication facilities are as follows: - Colorado Springs, Colorado: two 6-inch wafer fabs; - Rousset, France: 8-inch wafer fab; - Heilbronn, Germany: 6-inch wafer fab; - Nantes, France: 6-inch wafer fab; and - Irving, Texas: 8-inch wafer fab (equipment not yet installed). Our business has four segments, each of which requires different design, development and marketing resources to produce and sell semiconductor integrated circuits. - ASIC -- The products in our ASIC segment include full custom application-specific integrated circuits, custom gate arrays and semi-custom cell-based integrated circuits designed to meet specialized customer requirements for their high-performance devices in a broad variety of applications. - Logic -- The products in our Logic segment include microcontrollers, eraseable programmable logic devices, or EPLDs, and field programmable gate arrays, or FPGAs, for sale to customers who use them in a broad variety of applications. - Non-volatile Memories -- The products in our Non-volatile Memories segment include Flash, electrically eraseable programmable read-only memories, or EEPROMs, and eraseable programmable read only memories, or EPROMs, for use in a broad variety of customer applications. - Temic -- The Temic segment is a wholly-owned European subsidiary producing analog, microcontroller and specialty products to service the automotive, telecommunications, consumer and industrial markets. Although some of its products overlap with one or more of the other segments, the Temic segment is managed as a discrete business. During the first six months of 2000, 34% of our sales were made to customers in North America, 30% to customers in Europe, 33% to customers in Asia and 3% to customers in other regions. We distribute our products directly through 17 U.S. sales offices and 24 international sales offices. In addition, we use distributors for indirect distribution, including All American, Arrow Electronics, Avnet, Insight and Pioneer. We were originally incorporated in California in December 1984. In October 1999 we were reincorporated in Delaware. Our principal offices are located at 2325 Orchard Parkway, San Jose, California 95131 and our telephone number is (408) 441-0311. RECENT DEVELOPMENTS TCS Acquisition. In May 2000, we acquired Thomson-CSF Semiconducteurs Specifique, or TCS, which had been a wholly-owned subsidiary of Thomson-CSF. TCS, which has been renamed Atmel Grenoble, specializes in the development and manufacture of ASICs, including image sensors, as well as analog, digital 2 6 and radio frequency ASICs, and products manufactured using SiGe processes. TCS products are used in such applications as digital cameras, fingerprint sensors, and GPS and RF chips, which we believe will provide us with an enhanced ability to provide integrated solutions for the wireless and consumer end markets. Redemption of Outstanding Convertible Notes. On June 2, 2000, we redeemed our 3.25% Convertible Subordinated Guaranteed Step-Up Notes due in 2002. The aggregate principal amount outstanding was $150 million. Note holders had the option to convert their notes into shares of our common stock or redeem them for cash. We redeemed notes with a principal amount of $2,000 for $2,161, and the holders of notes in the remaining principal amount elected to convert their notes into 8,450,578 shares of our common stock, or 16,901,156 shares after giving effect to the two-for-one stock split. Stock Split. On July 14, 2000, our board of directors approved a two-for-one stock split, to be effected in the form of a 100% stock dividend. Stockholders of record at the close of business on August 11, 2000 were issued a certificate representing one additional share for each share already held. These certificates were distributed on August 25, 2000. 3 7 THE OFFERING Common stock offered....... We are offering a total of 4,000,000 shares in a public offering made by this prospectus in the United States, an open price offering (offre a prix ouvert) and a global placement (placement global) in France under a separate French prospectus, and an offering to institutional investors outside the United States and France. Over-allotment option...... 600,000 shares Public offering price...... $ and E a share The public offering price in dollars has been determined by the underwriters in consultation with us. The public offering price in Euros has been determined by converting the public offering price in dollars using the Key Currency Cross Rate as of September , 2000 as quoted in the Wall Street Journal, which was Euros per dollar. Common stock outstanding after the offering......... 464,945,184 shares(1) will be outstanding immediately following this offering. Use of proceeds............ We will use the proceeds of this offering for working capital and other general corporate purposes. See "Use of Proceeds." Lock-up.................... We have agreed to restrictions on the offering and sale of our shares for a period of 90 days following this offering. For more details, see "Underwriters." Nasdaq National Market symbol and U.S. trading codes.................... Our common stock is traded in the U.S. on the Nasdaq National Market under the symbol "ATML", and the following trading codes: - ISIN: US0495131049 - CUSIP: 049513104 Paris Stock Exchange Listing.................... Our common stock has been approved for listing on the Premier Marche of the Paris Stock Exchange, and trading in our common stock will commence there concurrent with this offering under the following codes: - SICOVAM: 012203 - ISIN: FRF0000122038 - Common Code: AML Risk Factors............... See "Risk Factors" starting on page 6 to read about factors you should consider before buying the shares. - --------------- (1) Based upon shares outstanding as of June 30, 2000, and assuming no exercise of options after June 30, 2000. Excludes 17,730,600 shares of common stock available for grant pursuant to Atmel Corporation's employee stock plans. As of June 30, 2000, options to purchase 21,493,374 shares of common stock were outstanding under these plans. 4 8 SUMMARY CONSOLIDATED FINANCIAL INFORMATION (IN THOUSANDS, EXCEPT PER SHARE DATA)
SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, ------------------------------------ -------------------- 1997 1998 1999 1999 2000 -------- ---------- ---------- -------- -------- CONSOLIDATED STATEMENT OF OPERATIONS DATA: Net revenues..................... $958,282 $1,111,092 $1,330,161 $601,179 $907,944 Total expenses................... 933,233 1,130,749 1,187,183 551,053 745,501 Operating income (loss).......... 25,049 (19,657) 142,978 50,126 162,443 Income (loss) before taxes....... 6,001 (50,931) 128,821 50,158 161,213 Net income (loss)................ $ 1,801 $ (50,038) $ 53,379 $ 3,034 $103,177 Net income (loss) per share: Basic.......................... $ .00 $ (.13) $ .13 $ .01 $ .23 ======== ========== ========== ======== ======== Diluted........................ $ .00 $ (.13) $ .13 $ .01 $ .22 ======== ========== ========== ======== ========
AS OF JUNE 30, 2000 ---------------------------- ACTUAL AS ADJUSTED(1) ---------- -------------- CONSOLIDATED BALANCE SHEET DATA: Cash, cash equivalents and short-term investments........... $1,094,441 $1,165,052 Working capital............................................. 1,215,934 1,286,545 Total assets................................................ 3,026,093 3,096,704 Long-term obligations, net of current portion............... 756,481 756,481 Stockholders' equity........................................ 1,671,337 1,741,948
- ------------ (1) Adjusted to give effect to the sale of the 4,000,000 shares of common stock in this offering and an assumed public offering price of $18.56 per share after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. 5 9 RISK FACTORS You should carefully consider the risks described below before making an investment decision. The risks described below are not the only ones facing our company. Additional risks not presently known to us or that we currently believe are immaterial may also impair our business operations. Our business could be harmed by any of these risks. The trading price of our common stock could decline due to any of these risks, and you may lose all or part of your investment. In assessing these risks, you should also refer to the other information contained or incorporated by reference in this prospectus, including our financial statements and related notes. OUR REVENUE AND OPERATING RESULTS FLUCTUATE SIGNIFICANTLY DUE TO A VARIETY OF FACTORS, WHICH MAY RESULT IN VOLATILITY OR A DECLINE IN OUR STOCK PRICE Our future operating results will be subject to quarterly variations based upon a wide variety of factors, many of which are not within our control. These factors include: - the cyclical nature of both the semiconductor industry and the markets addressed by our products; - fluctuations in manufacturing yields; - the timing of introduction of new products; - the timing of customer orders; - price erosion; - changes in mix of products sold; - the extent of utilization of manufacturing capacity; - product obsolescence; - availability of supplies and raw materials; - price competition and other competitive factors; and - fluctuations in currency exchange rates. Any unfavorable changes in any of these factors could harm our operating results. In particular, we believe that our future sales growth will depend substantially on the success of our new products. Our new products are generally incorporated into our customers' products or systems at the design stage. However, design wins may precede volume sales by a year or more. We may not be successful in achieving design wins or any design win may not result in future revenues, which depend in large part on the success of the customer's end product or system. We expect the average selling price of each of our products to decline as individual products mature and competitors enter the market. To offset average selling price decreases, we rely primarily on reducing costs in the manufacturing of those products, increasing unit sales to absorb fixed costs and introducing new, higher priced products which incorporate advanced features or integrated technologies to address new or emerging markets. To the extent that such cost reductions and new product introductions do not occur in a timely manner, our operating results could be harmed. From time to time, our quarterly revenues and operating results can become more dependent upon orders booked and shipped within a given quarter and, accordingly, our quarterly results can become less predictable and subject to greater variability. In addition, our continued success will depend in large part on the continued growth of various electronics industries that use semiconductors, including manufacturers of computers, telecommunications equipment, automotive electronics, industrial controls, consumer electronics, data networking equipment and military equipment, and economic growth generally. Our success will also depend upon a better supply and demand balance within the semiconductor industry. In 1997, 1998 and early 1999, the semiconductor industry experienced a significant downturn, characterized by, among other things, diminished product demand, production overcapacity and decline of average 6 10 selling prices of products. While our revenues in 1998 increased as compared to 1997, the increase was primarily attributable to the inclusion of revenues from Temic's business, which we acquired in March 1998. Excluding the results of Temic, our revenues decreased in 1998 as compared with 1997, reflecting the cyclical downturn in the worldwide semiconductor industry throughout 1997 and 1998. While sales of our ASIC and logic-related products increased during this period, continued price reduction of our commodity non-volatile memory products (caused by continued weakened business conditions and excess manufacturing capacity in the semiconductor industry) more than offset the impact of higher sales of ASIC and logic-related products in 1998. These non-volatile memory products included our commodity EPROMs and Flash memories. These business conditions in the worldwide semiconductor industry also contributed to our decision to implement a restructuring plan, which we announced in the second quarter of fiscal 1998. The restructuring plan, which resulted in a nonrecurring charge of approximately $66.3 million, included a ten percent work force reduction and an impairment charge to write down the value of certain manufacturing equipment and machinery with older process technology. We also recognized an in-process research and development charge of $23.4 million relating to the Temic acquisition during the second quarter of fiscal 1998. IF WE DO NOT SUCCESSFULLY INCREASE OUR MANUFACTURING CAPACITY, WE MAY FACE CAPACITY CONSTRAINTS THAT COULD HARM OUR BUSINESS We currently manufacture our products at our wafer fabrication facilities located in Colorado Springs, Colorado, Heilbronn, Germany, Nantes, France, and Rousset, France. In addition, we currently expect our new facility in Irving, Texas, to be operational and producing wafers by the first quarter of 2001. We believe that we will be able to substantially meet our production needs from these facilities through the end of the fourth quarter of 2002, although this date may vary depending on, among other things, our rate of growth. We will be required to hire, train and manage additional production personnel in order to increase production capacity as planned. We will also be required to successfully implement new manufacturing technologies, such as 0.25-micron, 0.18-micron and chemical and mechanical planarization in our wafer manufacturing facilities to increase our manufacturing capacity and yields. If we cannot expand our capacity on a timely basis, we could experience significant capacity constraints that would prevent us from meeting customer demand. In addition, the depreciation and other expenses that we will incur in connection with the expansion of our manufacturing capacity may reduce our gross margins in future periods. We are exploring alternatives for the further expansion of our manufacturing capacity, which could likely occur during or after 2000, including: - expanding our current wafer fabrication facilities; - purchasing or building one or more additional wafer fabrication facilities; and - entering into strategic relationships to obtain additional capacity. Any of these alternatives could require a significant investment by us, and none of the alternatives for expanding our manufacturing capacity may be available on a timely basis. The cost of expanding our manufacturing capacity at the Irving, Texas facility or elsewhere is expected to be funded through a combination of available cash resources, cash from operations and additional lease, debt or equity financing. We may not be able to obtain the additional financing necessary to fund the expansion of our manufacturing facilities. Expanding our wafer fabrication capacity involves significant risks, including: - shortages of materials and skilled labor; - unavailability of semiconductor manufacturing and testing equipment; - unforeseen environmental or engineering problems; - work stoppages; - approvals and requirements of governmental and regulatory agencies; and - unanticipated cost increases. 7 11 Any one of these risks could delay the building, equipping and production start-up of a new facility or the expansion of an existing facility, and could involve significant additional costs or reduce our anticipated revenues. In addition, the timing of commencement of operation of our Irving, Texas facility will depend upon the availability, timely delivery, successful installation and testing of complex process equipment. As a result of these and other factors, any expanded or new facility may not be completed and in volume production on time or within budget. Furthermore, we may be unable to achieve adequate manufacturing yields in any expanded or new facility in a timely manner, and our revenues may not increase in proportion to the anticipated increase in manufacturing capacity associated with any expanded or new facility. IF WE ARE UNABLE TO EFFECTIVELY UTILIZE OUR WAFER MANUFACTURING CAPACITY AND FAIL TO ACHIEVE ACCEPTABLE MANUFACTURING YIELDS, OUR BUSINESS WOULD BE HARMED The fabrication of our integrated circuits is a highly complex and precise process, requiring production in a tightly controlled, clean environment. Minute impurities, difficulties in the fabrication process, defects in the masks used to print circuits on a wafer or other factors can cause a substantial percentage of wafers to be rejected or numerous die on each wafer to be nonfunctional. We may experience problems in achieving acceptable yields in the manufacture of wafers, particularly in connection with the expansion of our manufacturing capacity and related transitions. The interruption of wafer fabrication or the failure to achieve acceptable manufacturing yields at any of our wafer fabrication facilities would harm our business. In 1997 and 1998, we made substantial capital expenditures to increase our wafer fabrication capacity at our facilities in Colorado Springs, Colorado and Rousset, France, and acquired two wafer fabrication facilities in connection with our acquisition of Temic. In 1998, our gross margin declined significantly as a result of the increase in fixed costs and operating expenses related to this expansion of capacity, and lower product margins in many of our non-volatile memory products due to severe price decline. In 1999, the declining gross margin trend reversed, primarily due to a higher unit sales volume over which to spread fixed costs and operating expenses, the inclusion of Temic's positive gross margin for all of 1999 compared to only ten months in 1998, and average selling prices that stabilized in 1999. The improved market conditions that we experienced in 1999 and the first six months of 2000 may not continue or may not permit us to fully utilize our wafer fabrication capacity, and our increases in fixed costs and operating expenses related to manufacturing overcapacity may harm our operating results. If net revenues do not continue to increase sufficiently in future periods, our business could be harmed. We experienced production delays and yield difficulties in connection with earlier expansions of our wafer fabrication capacity. Production delays, difficulties in achieving acceptable yields at any of our fabrication facilities or overcapacity could materially and adversely affect our operating results. THE CYCLICAL NATURE OF THE SEMICONDUCTOR INDUSTRY COULD CREATE FLUCTUATIONS IN OUR OPERATING RESULTS, AS WE EXPERIENCED IN 1997 AND 1998 The semiconductor industry has historically been cyclical, characterized by wide fluctuations in product supply and demand. From time to time, the industry has also experienced significant downturns, often in connection with, or in anticipation of, maturing product cycles and declines in general economic conditions. Downturns of this type occurred in 1997 and 1998. These downturns have been characterized by diminished product demand, production overcapacity and accelerated decline of average selling prices, and in some cases have lasted for more than a year. Our business could be harmed by industry-wide fluctuations in the future. The commodity memory portion of the semiconductor industry, from which we derived approximately half of our revenues through 1998, approximately 46% of our revenues in 1999, and 53% of our revenues in the first six months of 2000, continued to suffer from excess capacity in 1998, which led to substantial price reduction during this period. While these conditions improved in 1999 and to date in 2000, if they were to resume our growth and operating results would be harmed. In addition, in the past, our operating results were harmed by industry-wide fluctuations in the demand for semiconductors, which resulted in under-utilization of our manufacturing capacity. Our business could be harmed in the future by cyclical conditions in the semiconductor industry or by slower growth in any of the markets served by our customer products. 8 12 OUR MARKETS ARE HIGHLY COMPETITIVE, AND IF WE DO NOT COMPETE EFFECTIVELY, WE MAY SUFFER PRICE REDUCTIONS, REDUCED REVENUES, REDUCED GROSS MARGINS AND LOSS OF MARKET SHARE We compete in markets that are intensely competitive and characterized by rapid technological change, product obsolescence and price decline. Throughout our product line, we compete with a number of large semiconductor manufacturers, such as AMD, Fujitsu, Intel, Sharp and STMicroelectronics. These competitors have substantially greater financial, technical, marketing and management resources than we do. As we have introduced our new Flash products, we are increasingly competing directly with these competitors, and we may not be able to compete effectively. We also compete with emerging companies that are attempting to sell their products in specialized markets that our products address. We compete principally on the basis of the technical innovation and performance of our products, including their speed, density, power usage, reliability and specialty packaging alternatives, as well as on price and product availability. During recent periods, we have experienced significant price competition in our non-volatile memory business and especially for EPROM and Flash products. We expect continuing competitive pressures in our markets from existing competitors and new entrants, which, among other things, could further accelerate the trend of decreasing average selling prices for our products. In addition to the factors described above, our ability to compete successfully depends on a number of factors, including the following: - our success in designing and manufacturing new products that implement new technologies and processes; - our ability to offer integrated solutions using our advanced non-volatile memory process with other technologies; - the rate at which customers incorporate our products into their systems; - product introductions by our competitors; - the number and nature of our competitors in a given market; and - general market and economic conditions. Many of these factors are outside of our control, and we may not be able to compete successfully in the future. WE MUST KEEP PACE WITH TECHNOLOGICAL CHANGE TO REMAIN COMPETITIVE The average selling prices of our products historically have decreased over the products' lives and are expected to continue to do so. As a result, our future success depends on our ability to develop and introduce new products which compete effectively on the basis of price and performance and which address customer requirements. We are continually in the process of designing and commercializing new and improved products to maintain our competitive position. The success of new product introductions is dependent upon several factors, including timely completion and introduction of new product designs, achievement of acceptable fabrication yields and market acceptance. Our development of new products and our customers' decision to design them into their systems can take as long as three years, depending upon the complexity of the device and the application. Accordingly, new product development requires a long-term forecast of market trends and customer needs, and the successful introduction of our products may be adversely affected by competing products or technologies serving markets addressed by our products. Our qualification process involves multiple cycles of testing and improving a product's functionality to ensure that our products operate in accordance with design specifications. If we experience delays in the introduction of new products, our future operating results could be harmed. In addition, new product introductions frequently depend on our development and implementation of new process technologies, and our future growth will depend in part upon the successful development and market acceptance of these process technologies. Our integrated solution products will require more technically sophisticated sales and marketing personnel to market these products successfully to customers. We are developing new products with smaller feature sizes, the fabrication of which will be substantially more 9 13 complex than fabrication of our current products. If we are unable to design, develop, manufacture, market and sell new products successfully, our operating results will be harmed. Our new product development, process development, or marketing and sales efforts may not be successful, our new products may not achieve market acceptance, and price expectations for our new products may not be achieved, any of which could harm our business. OUR OPERATING RESULTS ARE HIGHLY DEPENDENT ON OUR INTERNATIONAL SALES AND OPERATIONS, WHICH EXPOSES US TO VARIOUS POLITICAL AND ECONOMIC RISKS Foreign product sales to customers accounted for approximately 65%, 65% and 66% of net revenues in 1998, 1999 and the first six months of 2000, respectively. We expect that revenues derived from international sales will continue to represent a significant portion of net revenues. In addition, in recent years, we have significantly expanded our international operations, most recently through our acquisitions of Temic in 1998 and a subsidiary of Thomson-CSF in May 2000. International sales and operations are subject to a variety of risks, including: - greater difficulty in protecting intellectual property; - greater difficulty in staffing and managing foreign operations; - greater risk of uncollectible accounts; - longer collection cycles; - potential unexpected changes in regulatory practices, including export license requirements, trade barriers, tariffs and tax laws; - sales seasonality; and - general economic and political conditions in these foreign markets. Further, we purchase a significant portion of our raw materials and equipment from foreign suppliers, and we incur labor and other operating costs in foreign currencies, particularly at our French and German manufacturing facilities. As a result, our costs will fluctuate along with the currencies and general economic conditions in the countries in which we do business, which could harm our operating results. Approximately 76%, 77% and 78% of our sales in 1998, 1999 and the first six months of 2000, respectively, were denominated in U.S. dollars. During these periods our products became less price competitive in countries with currencies declining in value against the dollar. In 1998, our revenues declined by approximately $7.0 million due to the strengthening of the U.S. dollar against foreign currencies in the markets in which we sell products. In addition, in 1998 business conditions in Asia were severely affected by banking and currency issues which adversely affected our operating results. Furthermore, accounts receivable increased $42.5 million in 1997 due to our extending longer payment terms to customers and a more difficult collection environment because of the financial turmoil in Asia. While these conditions stabilized in 1999 and to date in 2000, the continuance or worsening of adverse business and financial conditions in Asia, where 34% of our revenues were generated during 1999 and 33% were generated in the first six months of 2000, would likely harm our operating results. WHEN WE TAKE FOREIGN ORDERS DENOMINATED IN LOCAL CURRENCIES, WE RISK RECEIVING LESS DOLLARS WHEN THESE CURRENCIES WEAKEN AGAINST THE DOLLAR, AND MAY NOT BE ABLE TO ADEQUATELY HEDGE AGAINST THIS RISK When we take a foreign order denominated in a local currency we will receive fewer dollars than we initially anticipated if that local currency weakens against the dollar before we collect our funds. In addition to reducing revenue, this risk will negatively affect our operating results. In Europe, where our significant operations have costs denominated in European currencies, these negative impacts on revenue can be partially offset by positive impacts on costs. However, in Japan, while our yen denominated sales are also subject to exchange rate risk, we do not have significant operations with which to counterbalance our exposure. 10 14 Sales denominated in yen were 8% of our revenue in the first half of 2000. Sales denominated in foreign currencies were 22% in the first half of 2000, compared to 23% in the comparable period of 1999. We also face the risk that our accounts receivables denominated in foreign currencies will be devalued if such foreign currencies weaken quickly and significantly against the dollar. Though we hedge our accounts receivables in yen using a loan denominated in yen of approximately equal amount, this strategy may not be successful, which would harm our operating results. IF WE FAIL TO MAINTAIN SATISFACTORY RELATIONSHIPS WITH MOTOROLA AND OTHER KEY CUSTOMERS, OUR BUSINESS MAY BE HARMED In 1997, 1998, 1999 and the first six months of 2000, 13%, 14%, 12% and 10%, respectively, of our net revenues were derived from sales to Motorola. Our ability to maintain close, satisfactory relationships with Motorola and other large customers is important to our business. A reduction, delay, or cancellation of orders from Motorola or our other large customers would harm our business. Moreover, our customers may vary order levels significantly from period to period, and customers may not continue to place orders with us in the future at the same levels as in prior periods. The loss of one or more of our key customers, or reduced orders by any of our key customers, could harm our business and results of operations. OUR FAILURE TO SUCCESSFULLY INTEGRATE BUSINESSES OR PRODUCTS WE HAVE ACQUIRED COULD DISRUPT OR HARM OUR ONGOING BUSINESS We have from time to time acquired complementary businesses, products and technologies. Achieving the anticipated benefits of an acquisition depends, in part, upon whether the integration of the acquired business, products or technology is accomplished in an efficient and effective manner. Moreover, successful acquisitions in the semiconductor industry may be more difficult to accomplish than in other industries because such acquisitions require, among other things, integration of product offerings, manufacturing operations and coordination of sales and marketing and research and development efforts. The difficulties of such integration may be increased by the need to coordinate geographically separated organizations, the complexity of the technologies being integrated, and the necessity of integrating personnel with disparate business backgrounds and combining two different corporate cultures. The integration of operations following an acquisition requires the dedication of management resources that may distract attention from the day-to-day business, and may disrupt key research and development, marketing or sales efforts. The inability of management to successfully integrate any future acquisition could harm our business. Furthermore, products acquired in connection with acquisitions may not gain acceptance in our markets, and we may not achieve the anticipated or desired benefits of such transactions. WE CURRENTLY ARE AND MAY BE SUBJECT TO FURTHER THIRD PARTY INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS THAT COULD BE COSTLY TO DEFEND AND RESULT IN LOSS OF SIGNIFICANT RIGHTS The semiconductor industry is characterized by vigorous protection and pursuit of intellectual property rights or positions, which have on occasion resulted in significant and often protracted and expensive litigation. We have from time to time received, and may in the future receive, communications from third parties asserting patent or other intellectual property rights covering our products or processes. In the past, we have received specific allegations from major companies alleging that certain of our products infringe patents owned by such companies, and we have been involved in such litigation which harmed our operating results. Further, in order to avoid the significant costs associated with litigation involving such claims, we may obtain licenses for the use of the technologies that are the subject of these claims and be required to make corresponding royalty payments, which may harm our operating results. In July 2000, we were named as a defendant in a lawsuit brought by STMicroelectronics alleging that we were infringing nine of its patents covering manufacturing processes as well as various products, including memory products, microcontroller products, and smart card products. Although we intend to vigorously defend against these claims, we may not prevail given the complex technical issues and inherent uncertainties in patent and intellectual property litigation. Moreover, the cost of defending against such litigation, both in terms of management time and attention, legal fees and product delays, could be substantial, whatever the 11 15 outcome. If this or any other patent or other intellectual property claim against us was successful, we may be prohibited from using the technologies subject to these claims, and if we are unable to obtain a license on acceptable terms, license a substitute technology, or design new technology to avoid infringement, our business and operating results may be significantly harmed. OUR LONG-TERM DEBT COULD HARM OUR ABILITY TO OBTAIN ADDITIONAL FINANCING, AND OUR ABILITY TO MEET OUR DEBT OBLIGATIONS WILL BE DEPENDENT UPON OUR FUTURE PERFORMANCE We financed our 1997 capital expenditures with long-term debt. Long-term debt less current portion more than doubled during that year, increasing from $278.6 million at December 31, 1996 to $571.4 million at December 31, 1997. Long-term debt less current portion increased again in 1998 to $771.1 million at December 31, 1998, due primarily to the issuance of $115.0 million of debt securities and $142.2 million of lease financing related to asset acquisitions. At December 31, 1999, our long-term debt less current portion was approximately $654.0 million as we reduced our capital expenditures from prior years. As of June 30, 2000, our long term debt less current portion increased to $756.5 million, the result of increased building and equipment purchases. The increase in our debt-to-equity ratio could materially and adversely affect our ability to obtain additional financing for working capital, acquisitions or other purposes and could make us more vulnerable to industry downturns and competitive pressures. Our ability to meet our debt obligations will depend upon our future performance, which will be subject to the financial, business and other factors affecting our operations, many of which are beyond our control. Since a substantial portion of our operations are conducted through our subsidiaries, the cash flow and the consequent ability to service debt are partially dependent upon the earnings of our subsidiaries and the distribution of those earnings, or upon loans or other payments of funds by those subsidiaries, to us. These subsidiaries are separate and distinct legal entities and have no obligation, contingent or otherwise, to pay any amounts due pursuant to our long-term debt or to make any funds available therefor, whether by dividends, distributions, loans or other payments. In addition, the payment of dividends or distributions and the making of loans and advances to us by any of our subsidiaries could in the future be subject to statutory or contractual restrictions and other various business considerations and contingent upon the earnings of those subsidiaries. Any right held by us to receive any assets of any of our subsidiaries upon its liquidation or reorganization will be effectively subordinated to the claims of that subsidiary's creditors, including trade creditors, except to the extent that we are recognized as a creditor of such subsidiary, in which case our claims would still be subordinate to any security interest in the assets of such subsidiary and any indebtedness of such subsidiary senior to that held by us. WE MAY NEED TO RAISE ADDITIONAL CAPITAL THAT MAY NOT BE AVAILABLE Semiconductor companies that maintain their own fabrication facilities have substantial capital requirements. We made capital expenditures of $312.1 million in 1997, $187.7 million in 1998, $171.8 million in 1999, and approximately $399.1 million through June 30, 2000, and intend to continue to make capital investments to support business growth and achieve manufacturing cost reductions and improved yields. Our capital expenditure plan for 2000, which was originally set at approximately $550.0 million, has recently been increased to approximately $1.0 billion, a portion of which we intend to fund from the proceeds of this offering. We may seek additional equity or debt financing to fund further expansion of our wafer fabrication capacity or to fund other projects. The timing and amount of such capital requirements cannot be precisely determined at this time and will depend on a number of factors, including demand for products, product mix, changes in semiconductor industry conditions and competitive factors. Additional debt or equity financing may not be available when needed or, if available, may not be available on satisfactory terms. WE DEPEND ON INDEPENDENT ASSEMBLY CONTRACTORS WHICH MAY NOT HAVE ADEQUATE CAPACITY TO FULFILL OUR NEEDS AND WHICH MAY NOT MEET OUR QUALITY AND DELIVERY OBJECTIVES We manufacture wafers for our products at our fabrication facilities, and the wafers are then sorted and tested at our facilities. After wafer testing, we ship the wafers to one of our independent assembly contractors located in China, Malaysia, the Philippines, South Korea, Taiwan and Thailand where the wafers are 12 16 separated into die, packaged and, in some cases, tested. Our reliance on independent contractors to assemble, package and test our products involves significant risks, including reduced control over quality and delivery schedules, the potential lack of adequate capacity and discontinuance or phase-out of the contractors' assembly processes. These independent contractors may not continue to assemble, package and test our products for a variety of reasons. Moreover, because our assembly contractors are located in foreign countries, we are subject to certain risks generally associated with contracting with foreign suppliers, including currency exchange fluctuations, political and economic instability, trade restrictions and changes in tariff and freight rates. Accordingly, we may experience problems in timelines and the adequacy or quality of product deliveries, any of which could have a material adverse effect on our results of operations. WE ARE SUBJECT TO ENVIRONMENTAL REGULATIONS WHICH COULD IMPOSE UNANTICIPATED REQUIREMENTS ON OUR BUSINESS IN THE FUTURE. ANY FAILURE TO COMPLY WITH CURRENT OR FUTURE ENVIRONMENTAL REGULATIONS MAY SUBJECT US TO LIABILITY OR SUSPENSION OF OUR MANUFACTURING OPERATIONS We are subject to a variety of federal, state and local governmental regulations related to the discharge or disposal of toxic, volatile or otherwise hazardous chemicals used in our manufacturing processes. While we believe that we have all environmental permits necessary to conduct our business and that our activities conform to present environmental regulations, increasing public attention has been focused on the environmental impact of semiconductor operations. Although we have not experienced any material adverse effect on our operations from environmental regulations, any changes in such regulations may impose the need for additional capital equipment or other requirements. If for any reason we fail to control the use of, or to restrict adequately the discharge of, hazardous substances under present or future regulations, we could be subject to substantial liability or our manufacturing operations could be suspended. WE DEPEND ON CERTAIN KEY PERSONNEL, AND THE LOSS OF ANY KEY PERSONNEL MAY SERIOUSLY HARM OUR BUSINESS Our future success depends in large part on the continued service of our key technical and management personnel and on our ability to continue to attract and retain qualified employees, particularly those highly skilled design, process and test engineers involved in the manufacture of existing products and the development of new products and processes. The competition for such personnel is intense, and the loss of key employees, none of whom is subject to an employment agreement for a specified term or a post-employment non-competition agreement, could harm our business. WE ARE NOT PROTECTED BY LONG-TERM CONTRACTS WITH OUR CUSTOMERS We do not typically enter into long-term contracts with our customers, and we cannot be certain as to future order levels from our customers. When we do enter into a long-term contract, the contract is generally terminable at the convenience of the customer. In the event of an early termination by one of our major customers, it is unlikely that we will be able to rapidly replace that revenue source, which would harm our financial results. FAILURE TO MANAGE OUR GROWTH MAY SERIOUSLY HARM OUR BUSINESS Our business has grown in recent years through both internal expansion and acquisitions, and continued growth may cause a significant strain on our infrastructure and internal systems. To manage our growth effectively, we must continue to improve and expand our management information systems, and we have commenced an implementation of a new SAP enterprise resource planning and management system for our worldwide operations in 2000. Our success depends to a significant extent on the management skills of our executive officers. If we are unable to manage growth effectively, our results of operations will be harmed. OUR STOCK PRICE HAS FLUCTUATED IN THE PAST AND MAY CONTINUE TO FLUCTUATE IN THE FUTURE The market price of our common stock has experienced significant fluctuations and may continue to fluctuate significantly. The market price of our common stock may be significantly affected by factors such as 13 17 the announcement of new products or product enhancements by us or our competitors, technological innovations by us or our competitors, quarterly variations in our results of operations, changes in earnings estimates by market analysts and general market conditions or market conditions specific to particular industries. Statements or changes in opinions, ratings, or earnings estimates made by brokerage firms or industry analysts relating to the market in which we do business or relating to us specifically could result in an immediate and adverse effect on the market price of our stock. In addition, in recent years the stock market has experienced extreme price and volume fluctuations. These fluctuations have had a substantial effect on the market prices for many high technology companies, often unrelated to the operating performance of the specific companies. PROVISIONS IN OUR CERTIFICATE OF INCORPORATION MAY HAVE ANTI-TAKEOVER EFFECTS Our board of directors has the authority to issue up to 5,000,000 shares of preferred stock and to determine the price, voting rights, preferences and privileges and restrictions of those shares without the approval of our stockholders. The rights of the holders of common stock will be subject to, and may be harmed by, the rights of the holders of any shares of preferred stock that may be issued in the future. The issuance of preferred stock may delay, defer or prevent a change in control, by making it more difficult for a third party to acquire a majority of our stock. In addition, the issuance of preferred stock could have a dilutive effect on our stockholders. We have no present plans to issue shares of preferred stock. SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS Some of the statements in this prospectus and in the documents incorporated by reference in this prospectus constitute forward-looking statements. In some cases, you can identify forward-looking statements by terms such as may, will, should, expect, plan, intend, forecast, anticipate, believe, estimate, predict, potential, continue or the negative of these terms or other comparable terminology. The forward-looking statements contained in this prospectus involve known and unknown risks, uncertainties and situations that may cause our or our industry's actual results, level of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these statements. These factors include those listed under "Risk Factors" and elsewhere in this prospectus. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. You should not place undue reliance on these forward-looking statements. 14 18 USE OF PROCEEDS The net proceeds we will receive from the sale of 4,000,000 shares of common stock being offered by us are estimated to be approximately $70.6 and E82.2, or $81.2 and E94.5 if the underwriters' over-allotment option is exercised in full, assuming a public offering price of $18.56 and E21.60 per share and after deducting the estimated underwriting discounts and commissions and estimated expenses payable by us.((1)) We intend to use the net proceeds of this offering for working capital and general corporate purposes. Pending these uses, we intend to invest the net proceeds in investment grade, interest bearing securities. DIVIDEND POLICY We have never declared or paid any cash dividend on our capital stock and do not anticipate paying any cash dividends on capital stock in the foreseeable future. We currently intend to retain future earnings, if any, for use in our business. PRICE RANGE OF COMMON STOCK The following table presents the high and low closing sale price per share for our common stock as quoted on the Nasdaq National Market for the periods indicated.
HIGH LOW ---- --- FISCAL YEAR ENDED DECEMBER 31, 1998: First Quarter............................................... $ 5 1/8 $ 3 1/2 Second Quarter.............................................. 5 1/16 3 3/16 Third Quarter............................................... 3 21/32 1 65/128 Fourth Quarter.............................................. 4 3/32 1 51/64 FISCAL YEAR ENDED DECEMBER 31, 1999: First Quarter............................................... 4 29/32 3 33/64 Second Quarter.............................................. 6 19/32 4 9/32 Third Quarter............................................... 10 15/32 6 19/32 Fourth Quarter.............................................. 15 3/16 7 11/16 FISCAL YEAR ENDING DECEMBER 31, 2000: First Quarter............................................... 29 3/4 12 17/32 Second Quarter.............................................. 28 15/16 14 31/32 Third Quarter (through September 14, 2000).................. 20 13/16 13 13/32
A recent reported last sale price per share for our common stock on the Nasdaq National Market is set forth on the cover page of this prospectus. At June 30, 2000, there were approximately 1,693 holders of record of our common stock. - --------------- (1) Our estimated net proceeds as stated in Euros are based on the assumed public offering price in Euros, which was determined by converting the assumed public offering price in dollars using the Key Currency Cross Rate as of September 13, 2000 as quoted in the Wall Street Journal, which was 1.16390 Euros per dollar. 15 19 CAPITALIZATION The following table sets forth our capitalization as of June 30, 2000: - On an actual basis, after giving retroactive effect to the two-for-one split of our outstanding common stock effected in August 2000; and - As adjusted to give effect to the sale of the 4,000,000 shares of common stock we are offering hereby at an assumed public offering price of $18.56 per share and E21.60 per share after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.(1)
JUNE 30, 2000 --------------------------- ACTUAL AS ADJUSTED ----------- ------------ (IN THOUSANDS, EXCEPT SHARE DATA) Long-term debt less current portion......................... $ 756,481 $ 756,481 ---------- ---------- Stockholders' equity: Preferred stock, $.001 par value, 5,000,000 shares authorized; 500,000 designated series A preferred stock, none issued..................................... -- -- Common stock, $.001 par value, 500,000,000 shares authorized; 460,945,184 shares outstanding at June 30, 2000, 464,945,184 shares outstanding as adjusted(2).... 1,178,004 1,248,615 Accumulated other comprehensive income.................... (65,316) (65,316) Retained earnings......................................... 558,649 558,649 ---------- ---------- Total stockholders' equity............................. 1,671,337 1,741,948 ---------- ---------- Total capitalization................................... $2,427,818 $2,498,429 ========== ==========
- ------------ (1) The assumed public offering price in Euros was determined by converting the assumed public offering price in dollars using the Key Currency Cross Rate as of September 13, 2000 as quoted in the Wall Street Journal, which was 1.16390 Euros per dollar. (2) Excludes 21,493,374 shares issuable upon exercise of outstanding stock options as of June 30, 2000. 16 20 SELECTED CONSOLIDATED FINANCIAL DATA The following table presents selected balance sheet and statement of operations data as of and for the fiscal years ended December 31, 1995 through 1999 and for the six month periods ended June 30, 1999 and 2000. The information for the six month periods is unaudited and has been prepared on the same basis as our annual consolidated financial statements. In our opinion, the quarterly information reflects all adjustments, consisting only of normal recurring adjustments necessary for a fair presentation of the information for the periods presented. This data gives retroactive effect to two-for-one splits of our outstanding common stock effected as a 100% stock dividend to stockholders of record as of the close of business on December 3, 1999 and August 11, 2000. Effective January 1, 1999 we changed our fiscal year from a 52 or 53-week year ending on the Monday nearest the last day in December of each year to a calendar year ending December 31. Our fiscal quarters also changed from 13-week quarters to calendar quarters. For presentation purposes, we have indicated that our prior fiscal years ended on December 31. The results of operations for the six months ended June 30, 2000 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2000, or any other future period.
SIX MONTHS ENDED YEAR ENDED DECEMBER 31, JUNE 30, ------------------------------------------------------------ ----------------------- 1995 1996 1997 1998 1999 1999 2000 -------- ---------- ---------- ---------- ---------- ---------- ---------- (IN THOUSANDS, EXCEPT PER SHARE DATA) CONSOLIDATED STATEMENT OF OPERATIONS DATA: Net revenues........................... $634,241 $1,070,288 $ 958,282 $1,111,092 $1,330,161 $ 601,179 $ 907,944 Expenses: Cost of sales........................ 323,530 539,215 602,239 717,147 826,301 380,375 523,429 Research and development............. 69,795 110,239 137,896 174,808 193,750 90,353 124,529 Selling, general and administrative..................... 73,474 115,362 150,098 149,069 167,132 80,325 97,543 Restructuring and in-process research and development charges............ -- -- 43,000 89,725 -- -- -- -------- ---------- ---------- ---------- ---------- ---------- ---------- Total expenses......................... 466,799 764,816 933,233 1,130,749 1,187,183 551,053 745,501 -------- ---------- ---------- ---------- ---------- ---------- ---------- Operating income (loss)................ 167,442 305,472 25,049 (19,657) 142,978 50,126 162,443 Other income (expenses), net........... 4,820 3,681 (19,048) (31,274) (14,157) 32 (1,230) -------- ---------- ---------- ---------- ---------- ---------- ---------- Income (loss) before taxes............. 172,262 309,153 6,001 (50,931) 128,821 50,158 161,213 Benefit from (provision for) income taxes................................ (58,569) (107,431) (4,200) 893 (46,374) (18,056) (58,036) -------- ---------- ---------- ---------- ---------- ---------- ---------- Income (loss) before cumulative effect of accounting change................. 113,693 201,722 1,801 (50,038) 82,447 32,102 103,177 Cumulative effect of accounting change, net of tax effect.................... -- -- -- -- (29,068) (29,068) -- -------- ---------- ---------- ---------- ---------- ---------- ---------- Net income (loss)...................... $113,693 $ 201,722 $ 1,801 $ (50,038) $ 53,379 $ 3,034 $ 103,177 ======== ========== ========== ========== ========== ========== ========== Net income (loss) per share: Basic................................ $ .30 $ .51 $ .00 $ (.13) $ .13 $ .01 $ .23 ======== ========== ========== ========== ========== ========== ========== Diluted.............................. $ .29 $ .50 $ .00 $ (.13) $ .13 $ .01 $ .22 ======== ========== ========== ========== ========== ========== ========== CONSOLIDATED BALANCE SHEET DATA: Cash, cash equivalents and short-term investments.......................... $179,988 $ 157,278 $ 333,068 $ 323,565 $ 412,462 $ 320,439 $1,094,441 Working capital........................ 132,597 123,621 410,085 492,172 487,496 529,661 1,215,934 Total assets........................... 919,621 1,455,914 1,822,040 1,962,737 2,014,910 1,858,976 3,026,093 Long-term obligations, net of current portion.............................. 88,455 278,576 571,389 771,069 654,033 714,722 756,481 Stockholders' equity................... 588,768 789,751 786,434 732,195 801,479 769,624 1,671,337
17 21 QUARTERLY CONSOLIDATED FINANCIAL DATA The following tables set forth our unaudited quarterly statements of operations data for each of the six quarters ended June 30, 2000, such data expressed as a percentage of our net revenues, and our unaudited consolidated net revenues by segment, for each of these six quarters. This quarterly information is unaudited and has been prepared on the same basis as our annual consolidated financial statements. This data gives retroactive effect to two-for-one splits of our outstanding common stock effected as a 100% stock dividend to stockholders of record as of the close of business on December 3, 1999 and August 11, 2000. In our opinion, this quarterly information reflects all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the information for the periods presented. The operating results for any quarter are not necessarily indicative of results for any future period.
QUARTER ENDED ------------------------------------------------------------------ MARCH 31, JUNE 30, SEPT. 30, DEC. 31, MARCH 31, JUNE 30, 1999 1999 1999 1999 2000 2000 --------- -------- --------- -------- --------- -------- (IN THOUSANDS, EXCEPT PER SHARE DATA) Net revenues........................................... $290,037 $311,142 $340,244 $388,738 $429,186 $478,758 Expenses: Cost of sales........................................ 186,165 194,210 211,767 234,159 252,722 270,707 Research and development............................. 47,229 43,124 46,296 57,101 61,913 62,616 Selling, general and administrative.................. 35,920 44,405 46,321 40,486 45,110 52,433 -------- -------- -------- -------- -------- -------- Total expenses......................................... 269,314 281,739 304,384 331,746 359,745 385,756 -------- -------- -------- -------- -------- -------- Operating income (loss)................................ 20,723 29,403 35,860 56,992 69,441 93,002 Other income (expense), net............................ 5,367 (5,335) (8,820) (5,369) (4,048) 2,818 -------- -------- -------- -------- -------- -------- Income (loss) before taxes............................. 26,090 24,068 27,040 51,623 65,393 95,820 Benefit from (provision for) income taxes.............. (9,392) (8,664) (9,734) (18,584) (23,541) (34,495) -------- -------- -------- -------- -------- -------- Income (loss).......................................... 16,698 15,404 17,306 33,039 41,852 61,325 Cumulative effect of accounting change, net of tax effect............................................... (29,068) -- -- -- -- -- -------- -------- -------- -------- -------- -------- Net income (loss)...................................... $(12,370) $ 15,404 $ 17,306 $ 33,039 $ 41,852 $ 61,325 ======== ======== ======== ======== ======== ======== Net income (loss) per share: Basic................................................ $ (.03) $ .04 $ .04 $ .08 $ .10 $ .14 ======== ======== ======== ======== ======== ======== Diluted.............................................. $ (.03) $ .04 $ .04 $ .08 $ .09 $ .13 ======== ======== ======== ======== ======== ========
AS A PERCENTAGE OF NET REVENUES ------------------------------------------------------------------ MARCH 31, JUNE 30, SEPT. 30, DEC. 31, MARCH 31, JUNE 30, 1999 1999 1999 1999 2000 2000 --------- -------- --------- -------- --------- -------- Net revenues............................................ 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Expenses: Cost of sales......................................... 64.2 62.4 62.2 60.2 58.9 56.5 Research and development.............................. 16.3 13.8 13.6 14.7 14.4 13.1 Selling, general and administrative................... 12.4 14.3 13.6 10.4 10.5 11.0 ----- ----- ----- ----- ----- ----- Total expenses.......................................... 92.9 90.5 89.4 85.3 83.8 80.6 Operating income (loss)................................. 7.1 9.5 10.6 14.7 16.2 19.4 Other income (expense), net............................. 1.8 (1.7) (2.6) (1.4) (0.9) 0.6 ----- ----- ----- ----- ----- ----- Income (loss) before taxes.............................. 8.9 7.8 8.0 13.3 15.3 20.0 Benefit from (provision for) income taxes............... (3.2) (2.8) (2.9) (4.8) (5.5) (7.2) ----- ----- ----- ----- ----- ----- Income (loss)........................................... 5.7 5.0 5.1 8.5 9.8 12.8 Cumulative effect of accounting change, net of tax effect................................................ (10.0) -- -- -- -- -- ----- ----- ----- ----- ----- ----- Net income (loss)....................................... (4.3)% 5.0% 5.1% 8.5% 9.8% 12.8% ===== ===== ===== ===== ===== =====
QUARTER ENDED ------------------------------------------------------------------ MARCH 31, JUNE 30, SEPT. 30, DEC. 31, MARCH 31, JUNE 30, 1999 1999 1999 1999 2000 2000 --------- -------- --------- -------- --------- -------- (IN THOUSANDS) Non-volatile Memories.................................. $124,083 $136,852 $163,933 $192,260 $227,684 $252,188 Temic.................................................. 66,070 68,111 66,842 74,267 69,942 74,230 ASIC................................................... 79,624 79,373 83,754 92,310 101,516 117,180 Logic.................................................. 20,260 26,806 25,715 29,901 30,044 35,160 -------- -------- -------- -------- -------- -------- Total net revenues................................... $290,037 $311,142 $340,244 $388,738 $429,186 $478,758 ======== ======== ======== ======== ======== ========
18 22 MARKET INFORMATION Our common stock is listed on The Nasdaq Stock Market's National Market under the symbol ATML. Our common stock has also been approved for listing on the Premier Marche of the Paris Stock Exchange, and trading of our common stock will commence there concurrent with this offering. THE PARIS STOCK EXCHANGE Securities listed on the Premier Marche or the Second Marche of the Paris Stock Exchange are officially traded through authorized financial institutions that are members of the Paris Stock Exchange. Since April 3, 2000, securities have been traded continuously on each business day from 9:00 a.m. to 5:30 p.m. (Paris time), with a pre-opening session from 7:45 a.m. to 9:00 a.m. There is a determination of the closing price at 5:35 p.m. (Paris time). Any trade of a security that occurs after a stock exchange session closes is recorded on the next business day at the previous session's closing price for that security. The Paris Stock Exchange has introduced continuous electronic trading during trading hours for most listed securities. The Paris Stock Exchange is managed and operated by ParisBourse(SBF) S.A., a market enterprise. ParisBourse(SBF) S.A. publishes a daily official price list that includes price information on listed securities. In France, most large public companies list their securities on the Premier Marche and most small and medium sized companies list their securities on the Second Marche. Securities also may be traded on the Nouveau Marche, a regulated electronic market that was established to allow small capitalization and start-up companies to access the stock market. ParisBourse(SBF) S.A. manages and operates each of the Premier Marche, the Second Marche and the Nouveau Marche. ParisBourse(SBF) S.A. places securities listed on the Premier Marche or the Second Marche in one of the three categories, depending on their trading volume. We expect that our shares will be placed in the category known as Continu A, which includes the most actively traded securities. The minimum daily trading volume required for a security to be in Continu A is twenty trades or FF 250,000, equal to Euro 38,112. ParisBourse(SBF) S.A. may suspend trading in a security listed on the Premier Marche if the quoted price of the security exceeds specific price limits defined by its regulations. In particular, if the quoted price of a Continu A security varies by more than 10% from the previous day's closing price, ParisBourse(SBF) S.A. may suspend trading in that security for up to 15 minutes. It may suspend trading further for up to 15 minutes if the price again varies by more than 5%. ParisBourse(SBF) S.A. also may suspend trading of a security listed on the Premier Marche in other limited circumstances, including, for example, where there is unusual trading activity in the security. In addition, in exceptional cases, the Conseil des Marches Financiers may also suspend trading. Trades of securities listed on the Premier Marche may be settled in the cash settlement market (marche au comptant) and, beginning September 25, 2000, also through a deferred settlement service (service de reglement differe) if either the security traded is included in the Societe des Bourses Francaises 120 Index, or its issuer has a total market capitalization of at least E 1,000,000,000 and the average of the aggregate daily value of trades in the security exceeds E 1,000,000. Deferred settlement orders will involve additional fees which are determined by the deferred settlement services. Cash settlements take place on the third trading day following the trade. Deferred settlements will take place on the last trading day of the month in which the trade is made, unless you elect on or before the fifth trading day before the end of the month, or the determination date (date de liquidation), to pay additional fees to postpone the settlement until the determination date of the following month. Equity securities traded through a deferred settlement service will be considered to have been transferred only upon the date they have been registered in the purchaser's account, which is the date of the last trading day of the month in which the trade is settled. Under French securities regulations, any sale of a security traded through a deferred service during the month of a dividend payment date will be deemed to occur after the dividend has been paid. If the sale takes place before, but during the month of, a dividend payment date, the purchaser's account will be credited with an amount equal to the dividend paid and the seller's account will be debited by the same amount. 19 23 SHARE CERTIFICATES AND TRANSFER Our common stock will be issued in registered form only in the United States of America. The stock register is maintained in Boston, Massachusetts by Equiserve, L.P., or the Boston Registry. Holders of our common stock of Boston Registry may hold their shares through DTC, in which case their shares are registered with Equiserve, L.P. in the name of Cede & Co., the nominee of DTC. Holders of our common stock may elect to hold their shares directly through SICOVAM, or indirectly through SICOVAM via Euroclear or Clearstream Banking (formerly known as Cedel). Shares held directly or indirectly through SICOVAM will be recorded in the books of BNP, New York Branch, in the name of SICOVAM. BNP PARIBAS, New York Branch, will itself hold such shares through DTC. The centralizing agent for the shares in France will be BNP PARIBAS, Paris Branch. Our common stock is traded on the Nasdaq National Market under the symbol "ATML". Our common stock has also been approved for listing on the Premier Marche of the Paris Stock Exchange, and trading of our common stock will commence there concurrent with this offering. Only those shares of our common stock held through SICOVAM may be traded on the Paris Stock Exchange, and our common stock will be traded there only in bearer form. Transfer of shares of Boston Registry may be registered on the books of the Company at the office of Equiserve, L.P. and certificates for shares of Boston Registry may be exchanged at such office for certificates for shares of Boston Registry of other authorized denominations. Transfer of shares within any of DTC, SICOVAM, Euroclear or Clearstream Banking, or between any of DTC, SICOVAM, Euroclear or Clearstream Banking will be made by book-entry transfer in accordance with the applicable clearing systems' rules and procedures. Transfers of shares between registered holders of common stock and any of SICOVAM, Euroclear or Clearstream Banking will be made by the relevant clearing systems and by Equiserve, L.P. and BNP, New York Branch, in accordance with the procedures described below. Upon a request to transfer shares of Boston Registry to SICOVAM or Euroclear or Clearstream Banking, the transferor will instruct Equiserve, L.P. to cancel the certificates representing the appropriate number of shares and appropriately adjust its register. Equiserve, L.P. will register the shares in the name of Cede & Co., the nominee of DTC. DTC will credit the account of BNP, New York Branch, with such shares, which itself will credit the account of SICOVAM. SICOVAM will itself credit the shares to the account of its relevant member, including, as the case may be, Euroclear or Clearstream Banking. Upon a request to transfer shares held directly or indirectly through SICOVAM to the Boston Registry, the account of SICOVAM with BNP, New York Branch, would be debited by the number of such shares as well as the account of BNP, New York Branch, with DTC. Cede & Co. will request Equiserve, L.P. to appropriately adjust its register. Equiserve, L.P. will countersign and deliver a certificate for shares of Boston Registry to the appropriate new registered owner and appropriately adjust its register. Holders through Euroclear or Clearstream Banking should submit instructions in accordance with, respectively, Euroclear's or Clearstream Banking's rules and procedures. Shareholders will be charged a fee by Equiserve, L.P. for the issuance or cancellation of certificates of shares of Boston Registry in connection with transfers of shares from the Boston Registry to SICOVAM, Euroclear or Clearstream Banking or vice-versa. The International Securities Identification Number, or ISIN, for our common stock of Boston Registry is US0495131049 and for shares held through SICOVAM, FRF0000122038. The CUSIP number for our common stock of Boston Registry is 049513104. The SICOVAM number is 012203. 20 24 TAXATION GENERAL The following is a general discussion of the material United States federal income and estate tax consequences of the ownership and disposition of our common stock that may be relevant to you if you are a non-United States Holder. In general, a "non-United States Holder" is any person or entity that is, for United States federal income tax purposes, a foreign corporation, a nonresident alien individual, a foreign partnership or a foreign estate or trust. This discussion is based on current law, which is subject to change, possibly with retroactive effect, or different interpretations. This discussion is limited to non-United States Holders who hold shares of common stock as capital assets. Moreover, this discussion is for general information only and does not address all of the tax consequences that may be relevant to you in light of your personal circumstances, nor does it discuss special tax provisions which may apply to you if you relinquished United States citizenship or residence. If you are an individual, you may, in many cases, be deemed to be a resident alien, as opposed to a nonresident alien, by virtue of being present in the United States for at least 31 days in the calendar year and for an aggregate of at least 183 days during a three-year period ending in the current calendar year (counting for such purposes all of the days present in the current year, one-third of the days present in the immediately preceding year, and one-sixth of the days present in the second preceding year). Individuals who are lawful permanent residents of the United States ("green card holders") are also considered to be resident aliens, without regard to the number of days present in the United States during the calendar year. Resident aliens are subject to United States federal income tax as if they were United States citizens. Each prospective purchaser of our common stock is advised to consult a tax advisor with respect to current and possible future tax consequences of purchasing, owning and disposing of our common stock as well as any tax consequences that may arise under the laws of any United States state, municipality or other taxing jurisdiction. DIVIDENDS If dividends are paid, as a non-United States Holder, you will be subject to withholding of United States federal income tax at a 30% rate on the gross amount of the dividend or a lower rate as may be specified by an applicable income tax treaty. To claim the benefit of a lower rate under an income tax treaty, you must comply with certain certification and disclosure requirements. If dividends are considered effectively connected with the conduct of a trade or business by you within the United States and, where a tax treaty applies, are attributable to a United States permanent establishment of yours, those dividends will not be subject to withholding tax, but instead will be subject to United States federal income tax on a net basis at applicable graduated individual or corporate rates, provided that you comply with certain certification and disclosure requirements. If you are a foreign corporation, any effectively connected dividends may, under certain circumstances, be subject to an additional "branch profits tax" at a rate of 30% or a lower rate as may be specified by an applicable income tax treaty. Unless the payor has knowledge to the contrary, dividends paid prior to January 1, 2001 to an address outside the United States are presumed to be paid to a resident of such country for purposes of the withholding discussed above and for purposes of determining the applicability of a tax treaty rate. However, recently finalized Treasury Regulations pertaining to United States federal withholding tax provide that you must comply with certification procedures, or, in the case of payments made outside the United States with respect to an offshore account, certain documentary evidence procedures, directly or under certain circumstances through an intermediary, to obtain the benefits of a reduced rate under an income tax treaty with respect to dividends paid after December 31, 2000. In the case of common stock held by a foreign partnership, the certification requirements would generally be applied to the partners and the partnership may be required to provide certain information, including a United States taxpayer identification number. 21 25 If you are eligible for a reduced rate of United States withholding tax pursuant to an income tax treaty, you may obtain a refund of any excess amounts withheld by filing an appropriate claim for refund with the IRS. GAIN ON DISPOSITION OF COMMON STOCK As a non-United States Holder, you generally will not be subject to United States federal income tax on any gain recognized on the sale or other disposition of common stock unless: - the gain is considered effectively connected with the conduct of a trade or business by you within the United States and, where a tax treaty applies, is attributable to a United States permanent establishment of yours (and, in which case, if you are a foreign corporation, you may be subject to an additional branch profits tax equal to 30% or a lower rate as may be specified by an applicable income tax treaty); - you are an individual who holds the common stock as a capital asset and are present in the United States for 183 or more days in the taxable year of the sale or other disposition and other conditions are met; or - we are or have been a "United States real property holding corporation", or a USRPHC, for United States federal income tax purposes. We believe that we are not currently, and are likely not to become, a USRPHC. If we were to become a USRPHC, then gain on the sale or other disposition of common stock by you generally would not be subject to United States federal income tax provided: - the common stock was "regularly traded" on an established securities market; and - you do not actually or constructively own more than 5% of our common stock during the shorter of the five-year period preceding the disposition or your holding period. FEDERAL ESTATE TAX If you are an individual, common stock held at the time of your death will be included in your gross estate for United States federal estate tax purposes, and may be subject to United States federal estate tax, unless an applicable estate tax treaty provides otherwise. INFORMATION REPORTING AND BACKUP WITHHOLDING TAX We must report annually to the IRS and to each of you the amount of dividends paid to you and the tax withheld with respect to those dividends, regardless of whether withholding was required. Copies of the information returns reporting those dividends and withholding may also be made available to the tax authorities in the country in which you reside under the provisions of an applicable income tax treaty or other applicable agreements. Backup withholding is generally imposed at the rate of 31% on certain payments to persons that fail to furnish the necessary identifying information to the payer. Backup withholding generally will not apply to dividends paid prior to January 1, 2001 to a Non-United States Holder at an address outside the United States. unless the payor has knowledge that the payee is a United States person. In the case of dividends paid after December 31, 2000, the recently finalized Treasury Regulations provide that you generally will be subject to withholding tax at a 31% rate unless you certify your non-United States status. The payment of proceeds of a sale of common stock effected by or through a United States office of a broker is subject to both backup withholding and information reporting unless you provide the payor with your name and address and you certify your non-United States status or you otherwise establish an exemption. In general, backup withholding and information reporting will not apply to the payment of the proceeds of a sale of common stock by or through a foreign office of a broker. If, however, such broker is, for United States federal income tax purposes, a United States person, a controlled foreign corporation, or a foreign person that derives 50% or more of its gross income for certain periods from the conduct of a trade or business in the United States, or, in addition, for periods after December 31, 2000, a foreign partnership that at any time 22 26 during its tax year either is engaged in the conduct of a trade or business in the United States or has as partners one or more United States persons that, in the aggregate, hold more than 50% of the income or capital interest in the partnership, such payments will be subject to information reporting, but not backup withholding, unless such broker has documentary evidence in its records that you are a non-United States Holder and certain other conditions are met or you otherwise establish an exemption. Any amounts withheld under the backup withholding rules generally will be allowed as a refund or a credit against your United States federal income tax liability provided the required information is furnished in a timely manner to the IRS. 23 27 UNDERWRITERS Under the terms and subject to the conditions contained in an underwriting agreement dated the date of this prospectus, the underwriters named below have severally agreed to purchase, and Atmel has agreed to sell to them, the number of shares indicated below.
NUMBER OF NAME SHARES ---- --------- Morgan Stanley & Co. Incorporated........................... Oddo-Pinatton............................................... Total.............................................
The underwriters are offering the shares subject to their acceptance of the shares from Atmel and subject to prior sale. The underwriting agreement provides that the obligations of the several underwriters to pay for and accept delivery of the common shares offered hereby are subject to the approval of certain legal matters by their counsel and to certain other conditions. The underwriters are obligated to make and pay for all of the shares offered by this prospectus, other than those covered by the over-allotment option described below, if any such shares are taken. The shares sold by the underwriters to the public outside of the U.S. will initially be offered at the public offering price of E . Any shares sold by the underwriters to the public in the U.S. will initially be offered at the public offering price of $ . Any shares sold by the underwriters to international securities dealers will be sold at a price that represents a concession not in excess of E per share from the public offering price in France, and to U.S. securities dealers at a price that represents a concession not in excess of $ a share from the public offering price in the U.S. Our common stock has been approved for listing on the Premier Marche of the Paris Stock Exchange, and trading in our common stock will commence there concurrent with this offering. See "Market Information." We have agreed that, without the prior written consent of Morgan Stanley & Co. Incorporated on behalf of the underwriters, during the period ending 90 days after the date of this prospectus, we will not, directly or indirectly: - Offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any shares of common stock or any securities convertible into or exercisable or exchangeable for common stock; or - Enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of common stock, whether any such transaction described above is to be settled by delivery of common stock or such other securities, in case or otherwise. The restrictions described in the previous paragraph do not apply to: - The sale to the underwriters of the shares under the underwriting agreement; - The issuance by us of shares of common stock in the French public offering; - The issuance by us of shares of common stock upon the exercise of an option or warrant or the conversion of a security outstanding on the date of this prospectus which is described in the prospectus; or - The issuance of shares of common stock or options to purchase shares of common stock pursuant to our employee benefit plans that are in existence on the date of the prospectus and consistent with past practices. 24 28 In order to facilitate the offering, the underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of the shares. Specifically, the underwriters may over-allot in connection with the offering, creating a short position in the common stock for their own account. In addition, to cover over-allotments or to stabilize the price of the shares, the underwriters may bid for, and purchase, shares in the open market. Finally, the underwriting syndicate may reclaim selling concessions allowed to an underwriter or a dealer for distributing shares in the offering if the syndicate repurchases previously distributed shares in transactions to cover syndicate short positions, in stabilization transactions or otherwise. Any of these activities may stabilize or maintain the market price of the stock above independent market levels. The underwriters are not required to engage in these activities and may end any of these activities at any time. These transactions may be effected on the Paris Stock Exchange, the Nasdaq National Market, the over-the-counter market outside the U.S. or otherwise. The underwriting agreement provides that we and the underwriters will indemnify each other against certain liabilities, including liabilities under the Securities Act. This prospectus may be used by the underwriters and other dealers in connection with offers and sales of shares in the U.S. and with offers and sales of shares initially sold by the underwriters outside the U.S. in the offering insofar as such shares are resold from time to time in the U.S. in transactions that require registration under the Securities Act. This prospectus has not been submitted to the clearance procedures of the Commission des Operations de Bourse and accordingly may not be used in connection with any offer to purchase, subscribe or sell any shares in France. For the purpose of the offering of shares in France, we have prepared a prospectus in French which has received the approval ("visa") of the Commission des Operations de Bourse. Morgan Stanley & Co. Incorporated was the initial purchaser of $296,000,000 aggregate principal amount of our Zero Coupon Convertible Subordinated Debentures due 2018. These debentures were purchased in April 1998 and resold to "qualified institutional buyers" pursuant to Rule 144A under the Securities Act. Morgan Stanley & Co. Incorporated received a customary fee in connection with this transaction. LEGAL MATTERS The validity of the issuance of the shares of common stock we are offering by this prospectus will be passed upon for us by Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo Alto, California. Certain legal matters specified by the underwriters in connection with this offering will be passed upon for the underwriters by Gray Cary Ware & Freidenrich LLP, Palo Alto, California and Stibbe Simont Monahan Duhot & Giroux, Paris, France. EXPERTS Our consolidated financial statements as of December 31, 1999 and 1998 and for each of the years in the three-year period ended December 31, 1999, incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1999 have been so incorporated in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting. WHERE YOU CAN FIND MORE INFORMATION We file reports, proxy statements and other information with the Commission, in accordance with the Securities Exchange Act of 1934. You may read and copy our reports, proxy statements and other information filed by us at the public reference facilities of the Commission in Washington, D.C., New York, New York and Chicago, Illinois. Please call the Commission at 1-800-SEC-0330 for further information about the public reference rooms. Our reports, proxy statements and other information filed with the Commission are available to the public over the Internet at the Commission's World Wide Web site at http://www.sec.gov. Our web address is http://www.atmel.com. 25 29 The Commission allows us to "incorporate by reference" the information we filed 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 a part of this prospectus, and information that we file later with the Commission will automatically update and supersede this information. We incorporate by reference the documents listed below and any future filings made by us with the Commission under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act until our offering is complete. - The description of the common stock in our Registration Statement on Form 8-A filed on February 20, 1991 (as amended on March 14, 1991), under Section 12(g) of the Exchange Act; - The description of our Preferred Shares Rights Agreement, in our Registration Statement on Form 8-A/12G filed on September 15, 1998, as amended on Form 8-A/12G/A filed on December 6, 1999, under Section 12(g) of the Exchange Act; - Our Current Report on Form 8-K, dated January 20, 2000; - Our Annual Report on Form 10-K filed on March 15, 2000 for the fiscal year ended December 31, 1999; - Our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2000 and June 30, 2000; and - Our definitive Proxy Statement on Schedule 14A filed on March 17, 2000. Any statement contained in a document that is incorporated by reference will be modified or superseded for all purposes to the extent that a statement contained in this prospectus (or in any other document that is subsequently filed with the Commission and incorporated by reference) modifies or is contrary to that previous statement. Any statement so modified or superseded will not be deemed a part of this prospectus except as so modified or superseded. You may request a copy of these filings, at no cost, by writing or telephoning us at the following address: Investor Relations, Atmel Corporation, 2325 Orchard Parkway, San Jose, California 95131, (408) 441-0311. 26 30 PART II INFORMATION NOT REQUIRED IN THE PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION The aggregate estimated (other than the registration fee) expenses to be paid by the Registrant in connection with this offering are as follows: Securities and Exchange Commission registration fee......... $ 22,624 NASD filing fee............................................. 9,070 Nasdaq additional listing fee............................... 17,500 Accounting fees and expenses................................ 50,000 Legal fees and expenses..................................... 120,000 Printing and engraving...................................... 70,000 Blue sky fees and expenses.................................. 10,000 Transfer agent fees and expenses............................ 250 -------- Total..................................................... $299,444 ========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS OF ATMEL CORPORATION CERTIFICATE OF INCORPORATION Article XI of our Certificate of Incorporation provides that, to the fullest extent permitted by Delaware law, as the same now exists or may hereafter be amended, a director shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. Delaware law provides that directors of a corporation will not be personally liable for monetary damages for breach of their fiduciary duties as directors, except for liability: - for any breach of their duty of loyalty to the corporation or its stockholders, - for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, - for unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware General Corporation Law, or - for any transaction from which the director derived an improper personal benefit. BYLAWS Our bylaws provide that our directors, officers and agents shall be indemnified against expenses including attorneys' fees, judgments, fines, settlements actually and reasonably incurred in connection with any proceeding arising out of their status as such, if such director, officer or agent acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of Atmel Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such conduct was unlawful. We have entered into agreements to indemnify our directors and officers, in addition to the indemnification provided for in our Certificate of Incorporation and Bylaws. These agreements, among other things, indemnify our directors and officers for certain expenses, including attorney's fees, judgments, fines and settlement amounts incurred by any such person in any action or proceeding, including any action by or in the right of Atmel, arising out of such person's services as a director or officer of Atmel, any subsidiary of Atmel or any other company or enterprise to which the person provides services at the request of Atmel. The form(s) of proposed Underwriting Agreement(s) to be filed as (an) Exhibit(s) hereto or incorporated by reference herein may include provisions regarding the indemnification of our officers and directors by the several Underwriters. II-1 31 ITEM 16. EXHIBITS The following exhibits are filed herewith or incorporated by reference herein:
EXHIBIT NUMBER EXHIBIT TITLE ------- ------------- 1.1 Form of Underwriting Agreement. 3.1 Certificate of Incorporation.(1) 3.2 Bylaws.(1) 5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation.* 23.1 Consent of PricewaterhouseCoopers LLP, independent accountants. 23.2 Consent of Wilson Sonsini Goodrich & Rosati, Professional Corporation (included in Exhibit 5.1).
- ------------ * Previously filed. (1) Incorporated by reference to the Registration Statement on Form 8-A/12G/A filed on December 6, 1999, under Section 12(g) of the Exchange Act. ITEM 17. UNDERTAKINGS 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 Securities Exchange Act of 1934 that is incorporated by reference in this Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the provisions described under Item 15 above, 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: (1) 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. (2) For the purposes of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-2 32 SIGNATURES Pursuant to the requirements of the Securities Act, 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 Amendment No. 1 to Registration Statement on Form S-3 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Jose, State of California, on September 14, 2000. ATMEL CORPORATION By: /s/ GEORGE PERLEGOS ------------------------------------ Name: George Perlegos Title: President and Chief Executive Officer and Chairman of the Board of Directors Pursuant to the requirements of the Securities Act, this Amendment No. 1 to Registration Statement has been signed by the following persons in the capacities and on the dates indicated:
SIGNATURE TITLE DATE --------- ----- ---- /s/ GEORGE PERLEGOS President, Chief Executive Officer September 14, 2000 - ------------------------------------ and Chairman of the Board of George Perlegos Directors (Principal Executive Officer) * Vice President, Finance, and Chief September 14, 2000 - ------------------------------------ Financial Officer (Principal Donald Colvin Financial Officer and Accounting Officer) * Director September 14, 2000 - ------------------------------------ Gust Perlegos * Director September 14, 2000 - ------------------------------------ Tsung-Ching Wu * Director September 14, 2000 - ------------------------------------ Norm Hall * Director September 14, 2000 - ------------------------------------ T. Peter Thomas *By: /s/ GEORGE PERLEGOS - ------------------------------------ George Perlegos Attorney-in-Fact
II-3 33 EXHIBIT INDEX
EXHIBIT NUMBER EXHIBIT TITLE - ------- ------------- 1.1 Form of Underwriting Agreement. 3.1 Certificate of Incorporation.(1) 3.2 Bylaws.(1) 5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation.* 23.1 Consent of PricewaterhouseCoopers LLP, independent accountants. 23.2 Consent of Wilson Sonsini Goodrich & Rosati, Professional Corporation (included in Exhibit 5.1).
- ------------ * Previously filed. (1) Incorporated by reference to the Registration Statement on Form 8-A/12G/A filed on December 6, 1999, under Section 12(g) of the Exchange Act. EX-1.1 2 f65436a1ex1-1.txt EXHIBIT 1.1 1 EXHIBIT 1.1 4,000,000 SHARES ATMEL CORPORATION COMMON STOCK, $0.001 PAR VALUE PER SHARE UNDERWRITING AGREEMENT [September __], 2000 1 2 [September __], 2000 Morgan Stanley & Co. Incorporated Oddo-Pinatton c/o Morgan Stanley & Co. Incorporated 1585 Broadway New York, New York 10036 Dear Sirs and Mesdames: Atmel Corporation is a Delaware corporation (the "COMPANY"), with an issued share capital of [$__________] represented by [460,945,184] shares of common stock, par value $0.001 per share. Under the Certificate of Incorporation of the Company, the Board of Directors has full power and authority to issue up to 500,000,000 shares of common stock and is not required to offer such shares first to existing shareholders of the Company. In accordance with such authority, the Board resolved on [[__~__], 2000] to increase the share capital of the Company and to issue 4,000,000 additional shares of common stock (the "FIRM SHARES"). The Company has appointed Morgan Stanley Dean Witter (France), SA and Oddo-Pinatton as sponsors (etablissements introducteurs) for the listing of the Firm Shares and the Option Shares (as defined below) on the Premier marche (Compartiment des valeurs etrangeres) of the Paris Bourse. In connection with such listing, up to 800,000 shares are offered in an open-price public offering (offre a prix ouvert, or "OPO") (the "OPO SHARES") in France (the "FRENCH PUBLIC OFFERING"). [In accordance with French law, a notice was published in the Bulletin des annonces legales et obligatories on [ ] with respect to the French Public Offering and the listing of the Shares on the Premier marche, Compartiment des valeurs etrangeres of the Paris Bourse. The French Public Offering was open for three Paris stock exchange days beginning on [_____________], during which prospective investors in French could submit binding orders to purchase Shares.] The Company is also offering to issue and sell 3,200,000 Shares (the "PLACEMENT SHARES") in a placement (the "PLACEMENT") to institutional investors in France and outside France through the several Underwriters named in Schedule I hereto (the "UNDERWRITERS"). The Company has also granted the Underwriters an option to purchase an additional 600,000 shares (the "OPTION SHARES") from the Company solely to cover over-allotments in the Placement. The Firm Shares and the Option Shares are hereafter together referred to as the "SHARES". The Underwriters have the right to subscribe for Shares in the French Public Offering and offer such Shares for resale outside the United States in the Placement. The shares of common stock of the Company to be outstanding after giving effect to the French Public Offering and the Placement contemplated hereby are hereinafter referred to as the "COMMON STOCK". 2 3 The Company has filed with the Securities and Exchange Commission (the "COMMISSION") a registration statement relating to the Shares. The registration statement as amended at the time it becomes effective, including the information (if any) deemed to be part of the registration statement at the time of effectiveness pursuant to Rule 430A under the Securities Act of 1933, as amended (the "SECURITIES ACT"), is hereinafter referred to as the "REGISTRATION STATEMENT". The Prospectus in the form first used to confirm sales of Shares in the United States is hereinafter referred to as the "US PROSPECTUS" (including, in the case of all references to the Registration Statement and the US Prospectus, documents incorporated therein by reference). If the Company has filed an abbreviated registration statement to register additional shares of Common Stock pursuant to Rule 462(b) under the Securities Act (the "RULE 462 REGISTRATION STATEMENT"), then any reference herein to the term "Registration Statement" shall be deemed to include such Rule 462 Registration Statement. The Company has filed with the Commission des Operations de Bourse (the "COB") a preliminary prospectus in French (the "PRELIMINARY FRENCH PROSPECTUS") and a final prospectus in French (the "FRENCH PROSPECTUS") for the listing and the sale of the Shares issued and to be issued outside the United States following the French Public Offering and the Placement. The Preliminary French Prospectus and the French Prospectus are together referred to herein as the "FRENCH PROSPECTUSES." The Registration Statement, the US Prospectus and the French Prospectuses are together referred to herein as the PROSPECTUSES. 1. Representations and Warranties. The Company represents and warrants to and agrees with each of the Underwriters that: (a) The Registration Statement has become effective; no stop order suspending the effectiveness of the Registration Statement is in effect, and no proceedings for such purpose are pending before or, to the Company's knowledge, threatened by the Commission. (b) (i) Each document filed or to be filed with the Commission pursuant to the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and incorporated by reference in the Registration Statement and the US Prospectus complied or will comply when so filed in all material respects with the Exchange Act and the applicable rules and regulations of the Commission thereunder, (ii) the Registration Statement, when it became effective, did not contain and, as amended or supplemented, if applicable, will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (iii) the Registration Statement and the US Prospectus comply and, as amended or supplemented, if applicable, will comply in all material respects with the Securities Act and the applicable rules and regulations of the Commission thereunder, and (iv) the US Prospectus does not contain and, as amended or supplemented, if applicable, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, except that the representations and warranties set forth in this paragraph do not apply to statements or omissions in the Registration Statement or the US Prospectus based upon 3 4 information relating to any Underwriter furnished to the Company in writing by such Underwriter through you expressly for use therein. (c) The Company has been duly incorporated, is validly existing as a corporation in good standing under the laws of the State of Delaware, has the corporate power and authority to own its property and to conduct its business as described in the Prospectuses and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not have a material adverse effect on the Company and its subsidiaries, taken as a whole. (d) Each subsidiary of the Company has been duly incorporated, is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has the corporate power and authority to own its property and to conduct its business as described in the Prospectuses and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not have a material adverse effect on the Company and its subsidiaries, taken as a whole; all of the issued shares of capital stock of each subsidiary of the Company have been duly and validly authorized and issued, are fully paid and non-assessable and (other than director or qualifying shares for foreign subsidiaries and fifty percent of the issued and outstanding shares of capital stock of Temic Semiconductor GmbH, which are owned by a subsidiary of Vishay Intertechnology, Inc.) are owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims. Other than Atmel ES2, S.A., Atmel ES2, B.V. and Temic Semiconductor GmbH, the Company has no subsidiaries that are "significant subsidiaries" as defined in Rule 1-02(w) of Regulation S-X of the Securities Act (a "SIGNIFICANT SUBSIDIARY"). (e) This Agreement has been duly authorized, executed and delivered by the Company. (f) The authorized capital stock of the Company conforms in all material respects as to legal matters to the description thereof contained in the Prospectuses. (g) The shares of Common Stock outstanding prior to the issuance of the Shares have been duly authorized and are validly issued, fully paid and non-assessable. There are no options, warrants or other rights to purchase, agreements or other obligations to issue, or rights to convert any obligations into or exchange any securities for, shares of capital stock of or ownership interests in the Company outstanding, except as described in the Prospectuses or issued under the benefit plans described in the Prospectuses; (h) The Shares have been duly authorized and, when issued and delivered in accordance with the terms of this Agreement, will be validly issued, fully paid and non-assessable, and the issuance of such Shares will not be subject to any preemptive or similar rights. 4 5 (i) The execution and delivery by the Company of, and the performance by the Company of its obligations under, this Agreement will not contravene any provision of applicable law or the certificate of incorporation or by-laws of the Company or any agreement or other instrument binding upon the Company or any of its subsidiaries that is material to the Company and its subsidiaries, taken as a whole, or any judgment, order or decree of any governmental body, agency or court having jurisdiction over the Company or any subsidiary, and no consent, approval, authorization or order of, or qualification with, any governmental body or agency is required for the performance by the Company of its obligations under this Agreement, except such as may be required by the securities or Blue Sky laws of the various states in connection with the offer and sale of the Shares and except such consents, approvals, authorizations, orders or qualifications which, if not obtained, would not have a material adverse effect on the Company and its subsidiaries, taken as a whole. (j) There has not occurred any material adverse change, or any development involving a prospective material adverse change, in the condition, financial or otherwise, or in the earnings, business or operations of the Company and its subsidiaries, taken as a whole, from that set forth in the Prospectuses (exclusive of any amendments or supplements thereto subsequent to the date of this Agreement). (k) There are no legal or governmental proceedings pending or, to the Company's knowledge, threatened to which the Company or any of its subsidiaries is a party or to which any of the properties of the Company or any of its subsidiaries is subject that are required to be described in the Prospectuses and are not so described or any statutes, regulations, contracts or other documents that are required to be described in the Prospectuses or to be filed as exhibits to the Registration Statement that are not described or filed as required. (l) Each preliminary prospectus filed as part of the registration statement as originally filed or as part of any amendment thereto, or filed pursuant to Rule 424 under the Securities Act, complied when so filed in all material respects with the Securities Act and the applicable rules and regulations of the Commission thereunder, except to the extent such failure to comply was corrected by a subsequent filing. (m) The Company is not, and after giving effect to the offering and sale of the Shares and the application of the proceeds thereof as described in the Prospectuses will not be, required to register as an "investment company" as such term is defined in the Investment Company Act of 1940, as amended. (n) The Company has prepared the Preliminary French Prospectus, dated [__*__], 2000 (including any and all exhibits thereto and any information incorporated by reference therein), and the French Prospectus, dated [__*__], 2000 (including any and all exhibits thereto and any information incorporated by reference therein), to be used in connection with the French Public Offering; the COB issued visa No. [__*__] on [__*__], 2000 in respect of the Preliminary French Prospectus and visa No. [__*__] on [__*__], 2000 in respect of the French Prospectus; such documents, together with all other documents required for the French Public Offering and the listing of the Shares on the Premier marche, Compartiment des valeurs etrangeres of the Paris Bourse (the "PREMIER MARCHE"), have been or will be filed with the COB 5 6 and ParisBourseSBF S.A. ("PARISBOURSE") on or prior to the Closing Date in accordance with all applicable regulations; the Shares have been approved for listing on the Premier Marche pursuant to a notice (avis d'admission) of ParisBourse dated [__*__], 2000, which notice has not been revoked or withdrawn and is in full force and effect, and no opposition to listing has been notified by the COB; (o) each of the Preliminary French Prospectus and the French Prospectus conforms in all material respects to all requirements of applicable French laws and regulations, including regulations of the COB and ParisBourse; neither the Preliminary French Prospectus nor the French Prospectus nor any amendments or supplements thereto, at the time the Preliminary French Prospectus and the French Prospectus or any such amendments or supplements were issued, and on the Closing Date, included or will include an untrue statement of a material fact or omitted or will omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance on and in conformity with the information relating to any Underwriter furnished in writing to the Company by such Underwriter exclusively for use therein. (p) The Company and its subsidiaries (i) are in compliance with any and all applicable foreign, federal, state and local laws and regulations relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants ("ENVIRONMENTAL LAWS"), (ii) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses and (iii) are in compliance with all terms and conditions of any such permit, license or approval, except where such noncompliance with Environmental Laws, failure to receive required permits, licenses or other approvals or failure to comply with the terms and conditions of such permits, licenses or approvals would not, singly or in the aggregate, have a material adverse effect on the Company and its subsidiaries, taken as a whole. (q) There are no costs or liabilities associated with the remedy of any violation of Environmental Laws (including, without limitation, any capital or operating expenditures required for clean-up, closure of properties or compliance with Environmental Laws or any permit, license or approval, any related constraints on operating activities and any potential liabilities to third parties) which would, singly or in the aggregate, have a material adverse effect on the Company and its subsidiaries, taken as a whole. (r) There are no contracts, agreements or understandings between the Company and any person granting such person the right to require the Company to include such securities with the Shares registered pursuant to the Registration Statement, which rights have not been waived. (s) The Common Stock has been approved for listing on the Nasdaq National Market. (t) Except in each case as described in the Prospectuses, subsequent to the respective dates as of which information is given in the Prospectuses, (i) neither the Company 6 7 nor any of its subsidiaries has incurred any material liability or obligation, direct or contingent, nor entered into any material transaction, in such case, not in the ordinary course of business; (ii) other than repurchases of shares pursuant to the Company's employee benefit plans, the Company has not purchased any of its outstanding capital stock, nor declared, paid or otherwise made any dividend or distribution of any kind on its capital stock other than ordinary and customary dividends; and (iii) there has not been any material change in the capital stock, short-term debt or long-term debt of the Company or any of its subsidiaries. (u) The Company and each of its subsidiaries possess all consents, approvals, orders, certificates, authorizations and permits issued by, and have made all declarations and filings with, all appropriate federal, state or foreign governmental or self-regulatory authorities and all courts and other tribunals necessary to conduct their respective businesses and to own, lease, license and use its properties in the manner described in the Prospectuses, except to the extent that the failure to obtain or file would not have a material adverse effect on the Company and its subsidiaries, taken as a whole, and neither the Company nor any of its subsidiaries has received any notice of proceedings relating to the revocation or modification of any such consent, approval, order, certificate, authorization or permit that, singly or in the aggregate, if the subject of any unfavorable decision, ruling or finding, or failure to obtain or file, would have a material adverse effect on the Company and its subsidiaries, taken as a whole, except as described in the Prospectuses. (v) The Company and its subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management's general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management's general or specific authorization; and (iv) the recorded assets are compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. (w) To the Company's knowledge, PricewaterhouseCoopers LLP are independent public accountants with respect to the Company and its subsidiaries as required by the Securities Act. (x) The Company and its subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which they are engaged; the Company and its subsidiaries have not been refused any insurance coverage sought or applied for; and neither the Company nor any of its subsidiaries has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a material adverse effect on the Company and its subsidiaries, taken as a whole, in each case, except as described in the Prospectuses. (y) The Company and its subsidiaries own or possess adequate licenses or other rights to use all material patents, copyrights, trademarks, service marks, trade names, 7 8 technology, know-how, trademarks, service marks and trade names (the "INTELLECTUAL PROPERTY") currently employed by them in the conduct of their respective businesses in the manner described in the Prospectuses or could obtain such licenses or rights on terms that would not have a material adverse effect on the Company and its subsidiaries, taken as a whole and, except as disclosed in the Prospectuses, neither of the Company nor any of its subsidiaries has received any notice of infringement of or conflict with asserted rights of others with respect to any Intellectual Property which could reasonably be expected to have a material adverse effect on the Company and its subsidiaries, taken as a whole. (z) the audited consolidated financial statements and notes thereto incorporated by reference in the Registration Statement and the U.S. Prospectus present fairly the financial position of the Company as of the dates indicated, and the results of operations, shareholders' equity and cash flows of the Company for the periods specified; such financial statements have been prepared in accordance with generally accepted accounting principles in the United States ("U.S. GAAP"), applied on a consistent basis throughout the periods involved (except as specified therein); the supporting schedules, if any, incorporated by reference in the Registration Statement and the U.S. Prospectus present fairly in accordance with U.S. GAAP the information required to be stated therein; the selected consolidated financial data and summary consolidated financial data of the Company included in the Registration Statement and the US Prospectus present fairly the information shown therein and have been compiled on a basis consistent with that of the audited financial statements incorporated by reference in the Registration Statement and the US Prospectus; (aa) the audited consolidated financial statements and notes thereto included in the French Prospectus, present fairly the financial position of the Company as of the dates indicated, and the results of options, shareholders' equity and cash flows of the Company for the periods specified; such financial statements have been prepared in accordance with the requirements of all applicable French laws and generally accepted accounting principles in France ("GAAP"), applied on a consistent basis throughout the periods involved (except as specified therein); the "Presentation des Comptes" of the Company included in the French Prospectus present fairly the information shown therein and have been compiled on a basis consistent with that of the audited financial statements included in the French Prospectus. (bb) neither the Company nor any of its subsidiaries has taken, directly or indirectly, any action which was designed to or which has constituted or which might reasonably be expected to cause or result in stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Shares; (cc) the Company meets the requirements for use of Form S-3 under the Securities Act and filed with the Commission a registration statement on Form S-3 (No. _________); 2. Agreements to Issue and Subscribe. The Company hereby agrees to issue to the several Underwriters, and each Underwriter, upon the basis of the representations and warranties herein contained, but subject to the conditions hereinafter stated, agrees, severally and not jointly, to subscribe for the respective numbers of Placement Shares set forth in Schedule II hereto 8 9 opposite its names at a purchase price of [__*__] per Placement Share (the "PURCHASE PRICE") on the Closing Date (as defined in Section 4 below). On the basis of the representations and warranties contained in this Agreement, and subject to its terms and conditions, the Company agrees to sell to the Underwriters the Option Shares, and the Underwriters shall have a one-time right to purchase, severally and not jointly, up to 600,000 Option Shares at the Purchase Price. If you, on behalf of the Underwriters, elect to exercise such option, you shall so notify the Company in writing not later than 30 days after the date of this Agreement, which notice shall specify the number of Option Shares to be purchased by the Underwriters and the date on which such shares are to be purchased. Such date may be the same as the Closing Date (as defined below) but not earlier than the Closing Date nor later than ten business days after the date of such notice. Option Shares may be purchased as provided in Section 4 hereof solely for the purpose of covering over-allotments made in connection with the offering of the Firm Shares. If any Option Shares are to be purchased, each Underwriter agrees, severally and not jointly, to purchase the number of Option Shares (subject to such adjustments to eliminate fractional shares as you may determine) that bears the same proportion to the total number of Option Shares to be purchased as the number of Firm Shares set forth in Schedule I hereto opposite the name of such Underwriter bears to the total number of Firm Shares. The Company hereby agrees to issue to the Underwriters, and each Underwriter, upon the basis of the representations and warranties herein contained, but subject to the conditions hereinafter stated, agrees, severally and not jointly, to subscribe for those of the OPO Shares that have not been subscribed for by the investors by the end of the French Public Offering, up to the maximum of OPO Shares set forth opposite its name in Schedule II hereto, at the Purchase Price, on the Closing Date. The Company hereby agrees that, without the prior written consent of Morgan Stanley & Co. Incorporated on behalf of the Underwriters, it will not, during the period ending 90 days after the date of the Prospectuses, (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Common Stock, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Common Stock or such other securities, in cash or otherwise. The foregoing sentence shall not apply to (A) the issuance by the Company of the Placement Shares to the Underwriters hereunder, (B) the issuance by the Company of the OPO Shares in the French Public Offering mentioned hereunder, (C) the issuance by the Company of shares of Common Stock upon the exercise of an option or warrant or the conversion of a security outstanding on the date hereof which is described in the Prospectuses or (D) the issuance of shares of Common Stock or options to purchase Common Stock pursuant to any employee benefit plan that is in existence on the date hereof and consistent with past practices. 9 10 3. Terms of Public Offering. The Board of Directors resolved on [__*__] 2000 that 4,000,000 Shares may be issued and subscribed for subject to the terms of this Agreement, including 800,000 OPO Shares, (including any Shares initially offered in the Placement that are being offered in the French Public Offering following a reduction in the aggregate number of Shares offered in the Placement) and 3,200,000 Placement Shares (excluding any Shares initially offered in the Placement that are being offered in the French Public Offering following a reduction in the aggregate number of Shares initially offered in the Placement). [On [__*__] 2000, the number of Placement Shares was reduced by [__*__] Shares in order to increase the number of OPO Shares offered for sale in the French Public Offering.](1) The Company is advised by you that the Underwriters propose to make a public offering of their respective portions of the Shares as soon after the Registration Statement and this Agreement have become effective as in your judgment is advisable. [The Company is further advised by you that the Shares are to be offered to the public initially at $_____________ a share (the "PUBLIC OFFERING PRICE") and to certain dealers selected by you at a price that represents a concession not in excess of $______ a share under the Public Offering Price, and that any Underwriter may allow, and such dealers may reallow, a concession, not in excess of $_____ a share, to any Underwriter or to certain other dealers.] 4. Payment and Delivery. The closing date of the sale of the Placement Shares and the OPO Shares if any, to the Underwriters (the "CLOSING DATE") will be [__*__], 2000 at [__*__] ([Paris/New York time]) (the "ORIGINAL CLOSING DATE"), or such later date as shall be designated in writing by you provided that such other date shall not be in any event later than [__*__], 2000, and provided further, that the closing date of the French Public Offering shall not be later than the Original Closing Date without the prior approval of ParisBourse. Payment for the Firm Shares shall be made to the Company by the Underwriters (i) with respect to Shares being purchased outside of the United States, in Euros immediately available and (ii) with respect to Shares being purchased in the United States, in US federal funds immediately available, against delivery of _____ Firm Shares for the respective accounts of the several Underwriters' on the Closing Date as defined above. Payment for any Option Shares shall be made to the Company in the same manner against delivery of such Option Shares for the respective accounts of the several Underwriters at 10:00 a.m., New York City time or Paris time, as the case may be, on the date specified in the notice described in Section 2 or at such other time on the same or on such other date, in any event not later than _______, 2000 as shall be designated in writing by you. The time and date of such payment are hereinafter referred to as the "OPTION CLOSING DATE". Certificates for the Shares shall be in definitive form and registered in such names and in such denominations as you shall request in writing not later than one full business day prior to the Closing Date or the Option Closing Date, as the case may be. The certificates evidencing the Firm Shares and Option Shares shall be delivered to you on the Closing Date or the Option Closing Date, as the case may be, for the respective accounts of the several Underwriters, with (1) Insert if appropriate. 10 11 any transfer taxes payable in connection with the transfer of the Shares to the Underwriters duly paid, against payment of the Purchase Price therefor. 5. Conditions to the Underwriters' Obligations. The obligations of the Company to sell the Shares to the Underwriters and the several obligations of the Underwriters to purchase and pay for the Shares on the Closing Date are subject to the condition that no later than 5:00 P.M. New York City time on the date hereof (i) the Registration Statement shall have become effective; (ii) the French Prospectus shall have received the visa from the COB; and (iii) notice of the results of the French Public Offering shall have been published by ParisBourse. The several obligations of the Underwriters are subject to the following further conditions: (a) Subsequent to the execution and delivery of this Agreement and prior to the Closing Date: (i) there shall not have occurred any downgrading, nor shall any notice have been given of any intended or potential downgrading or of any review for a possible change that does not indicate the direction of the possible change, in the rating accorded any of the Company's securities by any "nationally recognized statistical rating organization," as such term is defined for purposes of Rule 436(g)(2) under the Securities Act; and (ii) there shall not have occurred any change, or any development involving a prospective change, in the condition, financial or otherwise, or in the earnings, business or operations of the Company and its subsidiaries, taken as a whole, from that set forth in the Prospectuses (exclusive of any amendments or supplements thereto subsequent to the date of this Agreement) that, in your judgment, is material and adverse and that makes it, in your judgment, impracticable to market the Shares on the terms and in the manner contemplated in the Prospectuses. (iii) The French Prospectus shall have received the visa from the COB; notice of the results of the French Public Offering (avis de resultat) shall have been published by ParisBourse. (b) The Underwriters shall have received on the Closing Date a certificate, dated the Closing Date and signed by an executive officer of the Company, to the effect set forth in Section 5(a) above and to the effect that the representations and warranties of the Company contained in this Agreement are true and correct as of the Closing Date and that the Company has complied with all of the agreements and satisfied all of the conditions on its part to be performed or satisfied hereunder on or before the Closing Date. The officer signing and delivering such certificate may rely upon the best of his or her knowledge as to proceedings threatened. (c) The Underwriters shall have received on the Closing Date an opinion of Wilson Sonsini Goodrich & Rosati and an opinion from Cleary Gottlieb Steen & Hamilton, outside counsel for the Company, dated the Closing Date, to the effect that: 11 12 (i) the Company has been duly incorporated, is validly existing as a corporation in good standing under the laws of the State of Delaware, has the corporate power and authority to own its property and to conduct its business as described in the Prospectuses and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not have a material adverse effect on the Company and its subsidiaries, taken as a whole; (ii) the authorized capital stock of the Company conforms as to legal matters to the description thereof contained in the Prospectuses; (iii) the shares of Common Stock outstanding prior to the issuance of the Shares have been duly authorized and are validly issued, fully paid and non-assessable; (iv) the Shares have been duly authorized and, when issued and delivered in accordance with the terms of this Agreement, will be validly issued, fully paid and non-assessable, and the issuance of such Shares will not be subject to any preemptive or, to the knowledge of such counsel, similar rights; (v) this Agreement has been duly authorized, executed and delivered by the Company; (vi) the execution and delivery by the Company of, and the performance by the Company of its obligations under, this Agreement do not and will not contravene any provision of applicable law or the certificate of incorporation or by-laws of the Company or, to such counsel's knowledge, any agreement or other instrument binding upon the Company or any of its subsidiaries that is material to the Company and its subsidiaries, taken as a whole, or, to such counsel's knowledge, any judgment, order or decree of any governmental body, agency or court having jurisdiction over the Company or any Significant Subsidiary, and no consent, approval, authorization or order of, or qualification with, any governmental body or agency is required for the performance by the Company of its obligations under this Agreement, except such as may be required by the securities or Blue Sky laws of the various states in connection with the offer and sale of the Shares by the Underwriters and except where such consent, authorization, approval, order or qualification, which, if not obtained would not have a material adverse effect on the Company and its subsidiaries, taken as a whole; (vii) the statements (A) in the US Prospectus under the section "Underwriters" to the extent of the description of this Agreement, (B) describing the Common Stock and the Company's Preferred Shares Rights Agreement incorporated in the US Prospectus by reference to Form 8-A filed with the Commission pursuant to the Exchange Act, and (C) incorporated in the Registration Statement in Item 15, in each case insofar as such statements constitute summaries of the legal matters, documents or proceedings referred to therein, fairly present the information required under the 12 13 Securities Act and the rules and regulations thereunder with respect to such legal matters, documents and proceedings and fairly summarize the matters referred to therein; (viii) the statements in the French Prospectus in chapters II and III in so far as such statements constitute summaries of the legal matters documents or proceedings referred to therein, fairly summarize the matters referred to therein; (ix) such counsel does not know of any legal or governmental proceedings pending or threatened to which the Company or any of its Significant Subsidiaries is a party or to which any of the properties of the Company or any of its subsidiaries is subject that are required under the Securities Act and the rules and regulations thereunder to be described in the Registration Statement or the US Prospectus or that are required under applicable French Laws and regulations, including regulations of the COB and Paris Bourse, to be described in the French Prospectus, and are not so described, and, to such counsel's knowledge, there are no statutes, regulations, contracts or other documents that are required under the Securities Act and the rules and regulations thereunder to be described in the Registration Statement or the Prospectus or to be filed as exhibits to the Registration Statement that are not described or filed as required; (x) the Company is not and, after giving effect to the offering and sale of the Shares and the application of the proceeds thereof as described in the Prospectuses, will not be required to register as an "investment company" as such term is defined in the Investment Company Act of 1940, as amended; (xi) such counsel (A) is of the opinion that each document of the Company filed with the Commission pursuant to the Exchange Act and incorporated by reference in the Registration Statement and the US Prospectus (except for financial statements and schedules and other financial and statistical data included therein as to which such counsel need not express any opinion) complied as to form when so filed in all material respects with the Exchange Act, and the applicable rules and regulations of the Commission thereunder, (B) is of the opinion that the Registration Statement and the US Prospectus (except for financial statements and schedules and other financial and statistical data included therein as to which such counsel need not express any opinion) comply as to form in all material respects with the Securities Act and the applicable rules and regulations of the Commission thereunder, (C) has no reason to believe that (except for financial statements and schedules and other financial and statistical data as to which such counsel need not express any belief) the Registration Statement (and the US Prospectus included therein) at the time the Registration Statement became effective contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and (D) has no reason to believe that (except for financial statements and schedules and other financial and statistical data as to which such counsel need not express any belief) the US Prospectus contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. 13 14 (d) The Underwriters shall have received on the Closing Date an opinion of counsel for each of the Significant Subsidiaries reasonably acceptable to the Underwriters, dated the Closing Date to the effect that: (i) Such Significant Subsidiary has been duly incorporated, is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has the corporate power and authority to own its property and to conduct its business as described in the Prospectuses and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not have a material adverse effect on the Company and its subsidiaries, taken as a whole; and (ii) all of the issued shares of capital stock of such Significant Subsidiary have been duly and validly authorized and issued, are fully paid and non-assessable and are owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims. (e) The Underwriters shall have received on the Closing Date an opinion of Gray Cary Ware & Freidenrich LLP, U.S. counsel for the Underwriters, dated the Closing Date covering the matters referred to in Section 5(c)(iv), 5(c)(v), 5(c)(vii) but only as to the statements in the Prospectus under "Underwriters" and clauses (B), (C) and (D) of 5(c)(xi) above. (f) The Underwriters shall have received on the Closing Date an opinion of Stibbe, Simont, Monahan, Duhot & Giroux, French counsel for the Underwriters, dated the Closing Date, substantially in the form of the draft opinion attached as Schedule III hereto, and such counsel shall have received such papers and information as they may reasonably request to enable them to provide such opinion. (g) With respect to Section 5(c)(xi) above, Wilson Sonsini Goodrich & Rosati and Cleary Gottlieb Steen & Hamilton may state that their opinion and belief are based upon their participation in the preparation of the Registration Statement, the US Prospectus and the French Prospectus and any amendments or supplements thereto and documents incorporated by reference and review and discussion of the contents thereof, but are without independent check or verification, except as specified. With respect to clauses (B) (C) and (D) of 5(c)(xi) above, Gray Cary Ware & Freidenrich LLP may state that their opinion and belief are based upon their participation in the preparation of the Registration Statement and the US Prospectus and any amendments or supplements thereto (other than documents incorporated by reference) and review and discussion of the contents thereof (including documents incorporated by reference), but are without independent check or verification, except as specified. (h) The opinions of Wilson Sonsini Goodrich & Rosati and Cleary Gottlieb Steen & Hamilton described in Section 5(c) above and the opinion of counsel for each Significant Subsidiary described in Section 5(e) above shall be rendered to the Underwriters at the request of the Company and shall so state therein. 14 15 (i) The Underwriters shall have received, on each of the date hereof and the Closing Date, a letter dated the date hereof or the Closing Date, as the case may be, in form and substance satisfactory to the Underwriters, from PricewaterhouseCoopers LLP, independent accountants, containing statements and information of the type ordinarily included in accountants' "comfort letters" to underwriters with respect to the financial statements and certain financial information contained in, or incorporated by reference into, the US Prospectus; provided that the letter delivered on the Closing Date shall use a "cut-off date" not earlier than the date hereof. The several obligations of the Underwriters to purchase Option Shares hereunder are subject to the delivery to you on the Option Closing Date of such documents as you may reasonably request with respect to the good standing of the Company, the due authorization and issuance of the Option Shares and other matters related to the issuance of the Option Shares. 6. Covenants of the Company. In further consideration of the agreements of the Underwriters herein contained, the Company covenants with each Underwriter as follows: (a) To furnish you, without charge, signed copies of the Registration Statement and the US Prospectus (including exhibits thereto and documents incorporated by reference therein) and for delivery to each other Underwriter a copy of the Registration Statement (without exhibits thereto but including documents incorporated by reference therein) and to furnish to you in [Paris and New York], without charge, prior to 10:00 a.m. [New York City Time] on the business day next succeeding the date of this Agreement and during the period mentioned in Section 6(c) below, as many copies of the French Prospectus and the US Prospectus, any documents incorporated by reference therein, and any supplements and amendments thereto or to the Registration Statement and the Prospectuses as you may reasonably request. The terms "supplement" and "amendment" or "amend" as used in this Agreement shall include all documents subsequently filed with the Commission pursuant to the Exchange Act that are deemed to be incorporated by reference in the Registration Statement. (b) Before amending or supplementing the Registration Statement or the US Prospectus or French Prospectus, to furnish to you a copy of each such proposed amendment or supplement and not to file any such proposed amendment or supplement to which you reasonably object, and to file with the Commission within the applicable period specified in Rule 424(b) under the Securities Act any prospectus required to be filed pursuant to such Rule. (c) If, during such period after the first date of the public offering of the Shares as in the opinion of counsel for the Underwriters the US Prospectus is required by law to be delivered in connection with sales by an Underwriter or dealer, any event shall occur or condition exist as a result of which it is necessary to amend or supplement the US Prospectus in order to make the statements therein, in the light of the circumstances when the US Prospectus is delivered to a purchaser, not misleading, or if, in the reasonable opinion of counsel for the Underwriters, it is necessary to amend or supplement the US Prospectus to comply with applicable law, forthwith to prepare, file with the Commission and furnish, at its own expense, to the Underwriters and to the dealers (whose names and addresses you will furnish to the Company) to which Shares may have been sold by you on behalf of the Underwriters and to any 15 16 other dealers upon request, either amendments or supplements to the US Prospectus so that the statements in the US Prospectus as so amended or supplemented will not, in the light of the circumstances when the US Prospectus is delivered to a purchaser, be misleading or so that the US Prospectus, as amended or supplemented, will comply with law. (d) To endeavor to qualify the Shares for offer and sale under the securities or Blue Sky laws of such jurisdictions as you shall reasonably request. (e) To make generally available to the Company's security holders and to you, as soon as practicable, an earnings statement covering the twelve-month period ending [September 30, 2001] that satisfies the provisions of Section 11(a) of the Securities Act and the rules and regulations of the Commission thereunder. (f) Whether or not the transactions contemplated in this Agreement are consummated or this Agreement is terminated, to pay or cause to be paid all expenses incident to the performance of its obligations under this Agreement, including: (i) the fees, disbursements and expenses of the Company's counsel and the Company's accountants in connection with the registration and delivery of the Shares under the Securities Act and all other fees or expenses in connection with the preparation and filing of the Prospectuses, any preliminary prospectuses and amendments and supplements to any of the foregoing, including all printing costs associated therewith, and the mailing and delivering of copies thereof to the Underwriters and dealers, in the quantities hereinabove specified, (ii) all costs and expenses related to the transfer and delivery of the Shares to the Underwriters, including any transfer or other taxes payable thereon, (iii) the cost of printing or producing any Blue Sky or Legal Investment memorandum in connection with the offer and sale of the Shares under state securities laws and all expenses in connection with the qualification of the Shares for offer and sale under state securities laws as provided in Section 6(d) hereof, including filing fees and the reasonable fees and disbursements of counsel for the Underwriters in connection with such qualification and in connection with the Blue Sky or Legal Investment memorandum, (iv) all filing fees and the reasonable fees and disbursements of counsel to the Underwriters incurred in connection with the review and qualification of the offering of the Shares by the National Association of Securities Dealers, Inc., (v) all costs and expenses incident to listing the Shares on the Nasdaq National Market, (vi) all costs and expenses incident to listing the Shares on the Premier marche, Compartiment des valeurs etrangeres) of the Paris Bourse, (vii) the cost of printing certificates representing the Shares, (viii) the costs and charges of any transfer agent, registrar or depositary, (ix) the costs and expenses of the Company relating to investor presentations on any "road show" undertaken in connection with the marketing of the offering of the Shares, including, without limitation, expenses associated with the production of road show slides and graphics, fees and expenses of any consultants engaged in connection with the road show presentations with the prior approval of the Company, travel and lodging expenses of the representatives and officers of the Company and any such consultants, and the cost of any aircraft chartered in connection with the road show, and (ix) all other costs and expenses incident to the performance of the obligations of the Company hereunder for which provision is not otherwise made in this Section. It is understood, however, that except as provided in this Section, Section 7 entitled "Indemnity and Contribution", and the last paragraph of Section 9 below, the Underwriters will pay all of their costs and expenses, including fees and disbursements of their counsel, stock transfer taxes 16 17 payable on resale of any of the Shares by them and any advertising expenses connected with any offers they may make. (g) To use its best efforts to obtain the listing of the Shares on the Premier Marche on or prior to the Closing Date and to maintain such listing so long as any Shares remain outstanding. (h) To use its best efforts to cause the Shares to be admitted to clearance through Sicovam S.A. ("SICOVAM") as central depositary; and (i) Not to take, directly or indirectly, any action designed to or which has constituted or which might reasonably be expected to cause or result in stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Shares. 7. Indemnity and Contribution. (a) The Company agrees to indemnify and hold harmless each Underwriter and each person, if any, who controls any Underwriter within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any and all losses, claims, damages and liabilities (including, without limitation, any legal or other expenses reasonably incurred in connection with defending or investigating any such action or claim) caused by any untrue statement or alleged untrue statement of a material fact contained in the Prospectuses (as amended or supplemented if the Company shall have furnished any amendments or supplements thereto), or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages or liabilities are caused by any such untrue statement or omission or alleged untrue statement or omission based upon information relating to any Underwriter furnished to the Company in writing by such Underwriter through you expressly for use therein; provided, however, that the foregoing indemnity agreement with respect to any preliminary prospectus shall not inure to the benefit of any Underwriter, or any person controlling such Underwriter, from whom the person asserting any such losses, claims, damages or liabilities purchased Shares, if a copy of the US Prospectus or the French Prospectus as the case may be, (as then amended or supplemented if the Company shall have furnished any amendments or supplements thereto) was not sent or given by or on behalf of such Underwriter to such person, if required by law so to have been delivered, at or prior to the written confirmation of the sale of the Shares to such person, and if the US Prospectus or the French Prospectus, as the case may be, (as so amended or supplemented) would have cured the defect giving rise to such losses, claims, damages or liabilities. (b) Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless the Company, its directors, its officers who sign the Registration Statement and each person, if any, who controls the Company within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent as the foregoing indemnity from the Company to such Underwriter, but only with reference to information relating to such Underwriter furnished to the Company in writing by such Underwriter through you expressly for 17 18 use in the Registration Statement, any preliminary prospectus, the US Prospectus, the French Prospectus, or any amendments or supplements thereto. (c) In case any proceeding (including any governmental investigation) shall be instituted involving any person in respect of which indemnity may be sought pursuant to Section 7 (a) or 7 (b), such person (the "INDEMNIFIED PARTY") shall promptly notify the person against whom such indemnity may be sought (the "INDEMNIFYING PARTY") in writing and the indemnifying party, upon request of the indemnified party, shall retain counsel reasonably satisfactory to the indemnified party to represent the indemnified party and any others the indemnifying party may designate in such proceeding and shall pay the fees and disbursements of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that the indemnifying party shall not, in respect of the legal expenses of any indemnified party in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all such indemnified parties and that all such fees and expenses shall be reimbursed as they are incurred. Such firm shall be designated in writing by Morgan Stanley & Co. Incorporated, in the case of parties indemnified pursuant to Section 7(a), and by the Company, in the case of parties indemnified pursuant to Section 7(b). The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel as contemplated by the second and third sentences of this paragraph, the indemnifying party agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by such indemnifying party of the aforesaid request and (ii) such indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding. (d) To the extent the indemnification provided for in Section 7(a) or 7 (b) is unavailable to an indemnified party or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then each indemnifying party under such paragraph, in lieu of indemnifying such indemnified party thereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one 18 19 hand and the Underwriters on the other hand from the offering of the Shares or (ii) if the allocation provided by clause 7 (d)(i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause 7 (d)(i) above but also the relative fault of the Company on the one hand and of the Underwriters on the other hand in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the Underwriters on the other hand in connection with the offering of the Shares shall be deemed to be in the same respective proportions as the net proceeds from the offering of the Shares (before deducting expenses) received by the Company and the total underwriting discounts and commissions received by the Underwriters, in each case as set forth in the table on the cover of the Prospectus, bear to the aggregate public offering price of the Shares. The relative fault of the Company on the one hand and the Underwriters on the other hand shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or by the Underwriters and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Underwriters' respective obligations to contribute pursuant to this Section 7 are several in proportion to the respective number of Shares they have purchased hereunder, and not joint. (e) The Company and the Underwriters agree that it would not be just or equitable if contribution pursuant to this Section 7 were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in Section 7(d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages and liabilities referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 7, no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Shares underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages that such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The remedies provided for in this Section 8 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or in equity. (f) The indemnity and contribution provisions contained in this Section 7 and the representations, warranties and other statements of the Company contained in this Agreement shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of any Underwriter or any person controlling any Underwriter or by or on behalf of the Company, its officers or directors or any person controlling the Company and (iii) acceptance of and payment for any of the Shares. 19 20 8. Termination. This Agreement shall be subject to termination by notice given by you to the Company, if (a) after the execution and delivery of this Agreement and prior to the Closing Date (i) trading generally shall have been suspended or materially limited on or by, as the case may be, any of the New York Stock Exchange, the American Stock Exchange, the National Association of Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago Mercantile Exchange, the Chicago Board of Trade or the Premier marche (Reglement mensuel, Compartiment des valeurs etrangeres) of the Paris Bourse, (ii) trading of any securities of the Company shall have been suspended on any exchange or in any over-the-counter market, (iii) a general moratorium on commercial banking activities in New York or France shall have been declared by any Federal or New York State or French authorities or (iv) there shall have occurred any outbreak or escalation of hostilities or any change in financial markets or any calamity or crisis that, in your judgment, is material and adverse and (b) in the case of any of the events specified in clauses 8 (a)(i) through 8 (a)(iv), such event, singly or together with any other such event, makes it, in your judgment, impracticable to market the Shares on the terms and in the manner contemplated in the Prospectuses. 9. Effectiveness; Defaulting Underwriters. This Agreement shall become effective upon the execution and delivery hereof by the parties hereto. (a) If, on the Closing Date, any one or more of the Underwriters shall fail or refuse to purchase Shares that it has or they have agreed to purchase hereunder on such date, and the aggregate number of Shares which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase is not more than one-tenth of the aggregate number of the Shares to be purchased on such date, the other Underwriters shall be obligated severally in the proportions that the number of Shares set forth opposite their respective names in Schedules I and II bear to the aggregate number of Shares set forth opposite the names of all such non-defaulting Underwriters, or in such other proportions as you may specify, to purchase the Shares which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase on such date; provided that in no event shall the number of Shares that any Underwriter has agreed to purchase pursuant to this Agreement be increased pursuant to this Section 9 by an amount in excess of one-ninth of such number of Shares without the written consent of such Underwriter. If, on the Closing Date, any Underwriter or Underwriters shall fail or refuse to purchase Shares and the aggregate number of Shares with respect to which such default occurs is more than one-tenth of the aggregate number of Shares to be purchased, and arrangements satisfactory to you and the Company for the purchase of such Shares are not made within 36 hours after such default, this Agreement shall terminate without liability on the part of any non-defaulting Underwriter or the Company. In any such case either you or the Company shall have the right to postpone the Closing Date, but in no event for longer than seven days, in order that the required changes, if any, in the Registration Statement and in the US Prospectus or in any other documents or arrangements may be effected. Any action taken under this paragraph shall not relieve any defaulting Underwriter from liability in respect of any default of such Underwriter under this Agreement. (b) If this Agreement shall be terminated by the Underwriters, or any of them, because of any failure or refusal on the part of the Company to comply with the terms or to fulfill any of the conditions of this Agreement, or if for any reason the Company shall be unable to 20 21 perform its obligations under this Agreement, the Company will reimburse the Underwriters or such Underwriters as have so terminated this Agreement with respect to themselves, severally, for all out-of-pocket expenses (including the fees and disbursements of their counsel) reasonably incurred by such Underwriters in connection with this Agreement or the offering contemplated hereunder. 10. Counterparts. This Agreement may be signed in two or more counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. 11. Applicable Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York. 12. Headings. The headings of the sections of this Agreement have been inserted for convenience of reference only and shall not be deemed a part of this Agreement. Very truly yours, ATMEL CORPORATION By: -------------------------------------- Name: Title: Accepted as of the date hereof Acting severally on behalf of themselves Morgan Stanley & Co. Incorporated Oddo-Pinatton By: By: --------------------------- -------------------------------------- Name: Name: Title: Title: 21 22 SCHEDULE I
NUMBER OF UNDERWRITERS PLACEMENT SHARES [[__*__] Morgan Stanley & Co. Incorporated Oddo-Pinatton [[__*__] Total =========
23 SCHEDULE II
NUMBER OF UNDERWRITERS PREFERRED OPO [__*__] Morgan Stanley & Co. Incorporated Oddo-Pinatton [__*__] Total [__*__] ========
24 SCHEDULE III Morgan Stanley & Co. Incorporated 1585 Broadway New York, New York 10036 Paris, [__*__], 2000 Re: Atmel Corporation Initial primary offering and listing on the premier marche of PARISBOURSE SBF SA Dear Sirs, We have acted as legal advisors to Morgan Stanley & Co. Incorporated (the "UNDERWRITER") in relation to French law in connection with the issue of up to [2,000,000] shares (the "Shares") of Atmel Corporation (the "COMPANY") and the offering to the public in France of the Shares. In connection with the issue and the sale of the Shares, We have examined the following documents: 1. the Prospectus Preliminaire which has been approved by the Commission des Operations de Bourse ( the "COB") on [__*__] 2000 under visa n degrees [__*__]; 2. the Prospectus Definitif which has been approved by the COB on [__*__] 2000 under visa n degrees [__*__]; 3. the notice published in the Bulletin des annonces legales et obligatories; 4. on all such other documents, laws, decrees and published administrative regulations as we have deemed necessary or appropriate for the purposes of the opinions expressed herein. In considering the above documents, we have assumed (a) the genuineness of all signatures thereon or on the originals thereof and the conformity to original documents of all copies submitted to us as copies, facsimile copies or certified copies; (b) that the Company has full power, authority and legal rights to issue the Shares to incur and perform its obligations thereunder; (c) that the Company has duly authorised the issue, creation and offering of the Shares in accordance with the description included in the Prospectus Preliminaire and in the Prospectus Definitif; and (d) that the offering and selling restrictions contained in Prospectus Preliminaire and in the Prospectus Definitif have been and will be complied with in respect of all the Shares. 25 As we are members of the French Bar and do not represent ourselves to be familiar with the laws of the State of Delaware or the laws of any jurisdiction other than France, we do not pass upon and express no opinion with respect to the matters governed by or to be determined on the basis of any such laws. We are rendering the opinions expressed below solely on the basis of and upon matters of French law and regulations. On the basis of the foregoing and subject to the qualifications set out below, and subject further to any mater not disclosed to us by the parties concerned, and having regard to such legal considerations as we deem relevant, we are of the opinion that under the laws of the Republic of France as in effect on the date hereof: (i) the offering in France of the Shares in accordance with the terms of the Prospectus Preliminaire and of the Prospectus Definitif is not contrary to French law; (ii) there are no consents, authorisations, decisions or other orders of any regulatory authorities in the Republic of France, other than those which have been obtained, required in connection with the issue of the Shares by the Company or the performance by the Company of its obligations thereunder; (iii) the statements in the Prospectus Preliminaire and in the Prospectus Definitif under the captions ["2.2.1 Renseignements relatifs a l'emission d'Actions"] and ["2.2.3. Regime fiscal des Actions"] present fairly the information required by the COB and as regards the matter referred to caption [2.2.3.] fairly summarize, in all material respects, the matters referred to therein; (iv) as of [__*__] 2000 and [__*__] 2000, respectively, the Prospectus Preliminaire and the Prospectus Definitif complied with applicable French legal requirements. The qualifications to which this opinion is subject are as follows: It should be understood that we have not been responsible for investigating or verifying the accuracy of the facts, or the reasonableness of any statements of opinion, contained in the Prospectus Preliminaire and in the Prospectus Definitif or whether any material fact had been omitted from the Prospectus Preliminaire and in the Prospectus Definitif at the date on which the COB granted its visas to such documents. This opinion is addressed to, and is for the benefit solely of Morgan Stanley & Co. Incorporated. Accordingly, it may not be relied upon by any other person or for any purpose other than in connection with the issue and the sale by the Company of the Shares and is not to be used, circulated, quoted or referred to for any other purpose. Yours faithfully, [_____*_____] EX-23.1 3 f65436a1ex23-1.txt EXHIBIT 23.1 1 EXHIBIT 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in this Registration Statement on Form S-3 of our report dated January 20, 2000, except for Note 15 which is as of February 3, 2000, relating to the financial statements, which appears in Atmel Corporation's Annual Report on Form 10-K for the year ended December 31, 1999. We also consent to the incorporation by reference of our report dated January 20, 2000, except for Note 15 which is as of February 3, 2000, relating to the financial statement schedule, which appears in such Annual Report on Form 10-K. We also consent to the reference to us under the headings "Experts" in such Registration Statement. /s/ PricewaterhouseCoopers LLP - -------------------------------- PricewaterhouseCoopers LLP San Jose, California September 15, 2000 -----END PRIVACY-ENHANCED MESSAGE-----