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<SEC-DOCUMENT>0000907687-03-000030.txt : 20030407
<SEC-HEADER>0000907687-03-000030.hdr.sgml : 20030407
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ACCESSION NUMBER: 0000907687-03-000030
CONFORMED SUBMISSION TYPE: 10-K
PUBLIC DOCUMENT COUNT: 12
CONFORMED PERIOD OF REPORT: 20030105
FILED AS OF DATE: 20030407
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: ACTEL CORP
CENTRAL INDEX KEY: 0000907687
STANDARD INDUSTRIAL CLASSIFICATION: SEMICONDUCTORS & RELATED DEVICES [3674]
IRS NUMBER: 770097724
STATE OF INCORPORATION: CA
FISCAL YEAR END: 0102
FILING VALUES:
FORM TYPE: 10-K
SEC ACT: 1934 Act
SEC FILE NUMBER: 000-21970
FILM NUMBER: 03641561
BUSINESS ADDRESS:
STREET 1: 955 EAST ARQUES AVE
CITY: SUNNYVALE
STATE: CA
ZIP: 94086
BUSINESS PHONE: 4087391010
MAIL ADDRESS:
STREET 1: 955 EAST ARQUES AVE
STREET 2: 955 EAST ARQUES AVE
CITY: SUNNYVALE
STATE: CA
ZIP: 94086
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<FILENAME>form10k.txt
<DESCRIPTION>ACTEL CORPORATION ANNUAL REPORT ON FORM 10-K
<TEXT>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------------------
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended January 5, 2003
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 0-21970
--------------------------------------
ACTEL CORPORATION
(Exact name of Registrant as specified in its charter)
California 77-0097724
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
955 East Arques Avenue
Sunnyvale, California 94086-4533
(Address of principal executive offices) (Zip Code)
(408) 739-1010
(Registrant's telephone number, including area code)
--------------------------------------
Securities registered pursuant to Section
12 (b) of the Act:
None
Securities registered pursuant to Section
12(g) of the Act:
Common Stock, $.001 par value
(Title of class)
--------------------------------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Annual Report on Form 10-K or any
amendment to this Annual Report on Form 10-K. X
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes X No
The aggregate market value of the voting stock held by non-affiliates of
the Registrant, based upon the closing price for shares of the Registrant's
Common Stock on July 5, 2002, as reported by the National Market System of the
National Association of Securities Dealers Automated Quotation System, was
approximately $371,000,000. In calculating such aggregate market value, shares
of Common Stock owned of record or beneficially by all officers, directors, and
persons known to the Registrant to own more than five percent of any class of
the Registrant's voting securities were excluded because such persons may be
deemed to be affiliates. The Registrant disclaims the existence of control or
any admission thereof for any purpose.
Number of shares of Common Stock outstanding as of April 3, 2003:
24,443,368.
--------------------------------------
DOCUMENTS INCORPORATED BY REFERENCE
The following documents are incorporated by reference in Parts II, III, and
IV of this Annual Report on Form 10-K: (i) portions of Registrant's annual
report to security holders for the fiscal year ended January 5, 2003 (Parts II
and IV), and (ii) portions of Registrant's proxy statement for its annual
meeting of shareholders to be held on May 23, 2003 (Part III).
================================================================================
In this Annual Report on Form 10-K, Actel Corporation and its consolidated
subsidiaries are referred to as "we," "us," and "our."
You should read the information in this Annual Report with the Risk Factors
at the end of Part I. Unless otherwise indicated, the information in this Annual
Report is given as of April 4, 2003, and we undertake no obligation to update
any of the information, including forward-looking statements. {Forward-looking
statements made under the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 are bracketed.} The Risk Factors could cause
actual results to differ materially from those projected in the forward-looking
statements.
<PAGE>
PART I
ITEM 1. BUSINESS
Overview
We design, develop, and market field programmable gate arrays (FPGAs) and
supporting products and services. FPGAs are used by manufacturers of
communications, computer, consumer, industrial, military and aerospace, and
other electronic systems to differentiate their products and get them to market
faster. We are the leading supplier of FPGAs based on flash and antifuse
technologies. Our strategy is to offer innovative solutions to markets in which
our technologies have a competitive advantage, including the value-added,
high-reliability, and high-speed FPGA markets. In support of our FPGAs, we offer
a security resource center; intellectual property (IP) cores; development
systems; programming hardware; design diagnostics and debugging tool kits;
demonstration boards; conversion products; and design and programming services.
We shipped our first FPGAs in 1988 and thousands of our development tools
are in the hands of customers, including Abbott Laboratories (Abbott Labs);
Alcatel; BAE Systems (BAE); The Boeing Company; Cisco Systems, Inc. (Cisco);
General Electric Company (GE); Hewlett-Packard Company (HP); Honeywell
International Inc. (Honeywell); LG Electronics Inc. (LG); Lockheed Martin
Corporation (Lockheed Martin); Marconi Corporation plc (Marconi); Nokia; Nortel
Networks Corporation (Nortel); Raytheon Company (Raytheon); Siemens AG
(Siemens); and Varian Medical Systems, Inc. (Varian).
We have foundry relationships with BAE in the United States; Chartered
Semiconductor Manufacturing Pte Ltd (Chartered) in Singapore; Infineon
Technologies AG (Infineon) in Germany; Matsushita Electronics Company (MEC) in
Japan; United Microelectronics Corporation (UMC) in Taiwan; and Winbond
Electronics Corp. (Winbond) in Taiwan. Wafers purchased from our suppliers are
assembled, tested, marked, and inspected by us and/or our subcontractors before
shipment to customers.
We market our products through a worldwide, multi-tiered sales and
distribution network. In 2002, sales made through distributors accounted for
approximately 65% of our net revenues. Two distributors, Pioneer-Standard
Electronics, Inc. (Pioneer) and Unique Technologies, Inc. (Unique), accounted
for 48% of our net revenues in 2002. On March 1, 2003, we consolidated our
distribution channel by terminating our agreement with Pioneer, which accounted
for 26% of our net revenues in 2002. The loss of Unique as a distributor could
have a materially adverse effect on our business, financial condition, or
results of operations. In addition to Unique, our North American sales network
includes 22 sales offices and 20 sales representative firms. Our European,
Pan-Asia, and International sales networks include nine sales offices and 24
distributors and sales representative firms. In 2002, sales to customers outside
North America accounted for 38% of net revenues.
During 2002, we introduced leading-edge flash (ProASIC Plus) and antifuse
(Axcelerator) FPGA product families and completed the introduction of our
leading-edge high-reliability FPGA product family (RTSX-S). We also launched a
Web site devoted to FPGA security issues, confirming our commitment to provide
innovative single-chip, nonvolatile, secure solutions to our customers.
On September 18, 2002, we announced the reactivation of our stock
repurchase program. During 2002, we repurchased 663,482 shares of our Common
Stock for $7.9 million. On February 10, 2003, we announced the appointment of
Hank Perret to our Board of Directors. Mr. Perret will serve as our Audit
Committee Financial Expert. He is the chief financial officer and general
manager of the Voice Network Access product line at Legerity, Inc. Before
joining Legerity, Mr. Perret was our Vice President of Finance & Administration
and Chief Financial Officer.
We were incorporated in California in 1985. Our principal facilities and
executive offices are located at 955 East Arques Avenue, Sunnyvale, California
94086-4533, and our telephone number at that address is (408) 739-1010. On
February 27, 2003, we entered into a ten-year lease agreement under which we
leased two buildings comprising 158,352 square feet located at 2051 and 2061
Stierlin Court, Mountain View, California 94043. We expect to move our principal
facilities and executive offices to Mountain View in 2003.
Our website is located at http://www.actel.com. We provide free of charge
through a link on our website access to our Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, as well as
amendments to those reports, as soon as reasonably practicable after the reports
are electronically filed with or furnished to the Securities and Exchange
Commission (SEC).
The Actel name and logo and Libero are our registered trademarks. This
Annual Report also includes unregistered trademarks of ours as well as
registered and unregistered trademarks of other companies.
Industry Background
The three principal types of integrated circuits (ICs) used in most digital
electronic systems are microprocessor, memory, and logic circuits.
Microprocessors are used for control and computing tasks; memory devices are
used to store program instructions and data; and logic devices are used to adapt
these processing and storage capabilities to a specific application. Logic
circuits are found in virtually every electronic system.
The logic design of competing electronic systems is often a principal area
of differentiation. Unlike the microprocessor and memory markets, which are
dominated by a relatively few standard designs, the logic market is highly
fragmented and includes, among many other segments, low-capacity standard
transistor-transistor logic circuits (TTLs) and custom-designed application
specific ICs. TTLs are standard logic circuits that can be purchased "off the
shelf" and interconnected on a printed circuit board (PCB), but they tend to
limit system performance and increase system size and cost compared with logic
functions integrated at the circuit (rather than the PCB) level. Application
specific ICs are customized circuits that offer electronic system manufacturers
the benefits of increased circuit integration: improved system performance,
reduced system size, and lower system cost.
Application specific ICs include conventional gate arrays, standard cells,
and programmable logic devices (PLDs). Conventional gate arrays and standard
cell circuits (ASICs) are customized to perform desired logical functions at the
time the device is manufactured. Since they are "hard wired" at the wafer
foundry by use of masks, ASICs are subject to the time and expense risks
associated with any development cycle involving a foundry. Typically, ASICs are
first delivered in production volumes months after the successful production of
acceptable prototypes. In addition, ASICs cannot be modified after they are
manufactured, which subjects them to the risk of inventory obsolescence and
constrains the system manufacturer's ability to change the logic design. PLDs,
on the other hand, are manufactured as standard devices and customized "in the
field" by electronic system manufacturers using computer-aided engineering (CAE)
design and programming systems. PLDs are being used by a growing number of
electronic system manufacturers as a solution to their increasing demands for
differentiation, rapid time to market, and manufacturing flexibility.
PLDs include simple PLDs, complex PLDs (CPLDs), and FPGA. CPLDs and FPGAs
have gained market share because they generally offer greater capacity, lower
total cost per usable logic gate, and lower power consumption than TTLs and
simple PLDs, and faster time to market and lower development costs than ASICs.
As mask costs continue to rise, CPLDs and particularly FPGAs are becoming a
cost-effective alternative to ASICs at higher volumes. Even in high volumes, the
time-to-market and manufacturing-flexibility benefits of CPLDs and FPGAs
outweigh their price premium over ASICs of comparable capacity for many
electronic system manufacturers.
Before a CPLD or FPGA can be programmed, there are various steps that must
be accomplished by a designer using CAE design software. These steps include
defining the function of the circuit, verifying the design, and laying out the
circuit. Traditionally, logic functions were defined using schematic capture
software, which permits the designer to essentially construct a circuit diagram
on the computer. As CPLD and FPGA have increased in capacity, the time required
to create schematic diagrams using schematic capture tools has often become
unacceptably long. To address this problem, designers are increasingly turning
to hardware description languages (HDLs), also known as high-level description
(HLD). VHDL and Verilog are the most common HDLs, which permit the designer to
describe the circuit functions at an abstract level and to verify the
performance of logic functions at that level. The HDL description of the desired
CPLD or FPGA device function can then be fed into logic synthesis software that
automatically converts the abstract description to a gate-level representation
equivalent to that produced by schematic capture tools. After a gate-level
representation of the logic function has been created and verified, it must be
translated or "laid out" onto the generic logic modules of the CPLD or FPGA.
This is achieved by placing the logic gates and routing their interconnections,
a process referred to as "place and route." After the layout of the device has
been verified by timing simulation, the CPLD or FPGA can be programmed. Multiple
suppliers of electronic design automation (EDA) tools provide software to
effectively accomplish these place and route and simulation tasks for CPLDs and
FPGAs.
Electronic system manufacturers program a CPLD or FPGA to perform the
desired logical functions by using a device programmer to change the state of
the device's programming elements (such as antifuses or memory cells) through
the application of an electrical signal. Programmers are typically available
from both the company supplying the device and third parties, and programming
services are often available from both the company supplying the device and its
distributors. Most CPLDs are programmed with erasable programmable read only
memories or other "floating gate" technologies. Many FPGAs are programmed with
static random access memory (SRAM) technology. Our FPGAs use flash and antifuse
programming elements. After programming, the functionality and performance of
the programmed CPLD or FPGA in the electronic system must be verified.
To a large extent, the characteristics of a CPLD or FPGA are dictated by
the technology used to make the device programmable. CPLDs and FPGAs based on
programming elements controlled by floating gates or SRAMs must be configured by
a separate boot device, such as the serial programmable read only memory (PROM)
commonly used with SRAM FPGAs. The need to boot these devices makes them less
reliable and secure and means they are not functional immediately on power-up,
lose their circuit configurations in the absence of power, and often require a
separate boot device. In addition, SRAM FPGAs and CPLDs based on look-up tables
(LUTs) tend to consume more power. FPGAs based on flash and antifuse programming
elements do not need to be booted-up and are reliable, secure,
"live-at-power-up," nonvolatile, single-chip solutions that operate at low
power. These are all characteristics shared by "hard-wired" ASICs.
The technology used to make a CPLD or FPGA programmable also dictates
whether the device is reprogrammable and whether it is volatile. CPLDs and FPGAs
based on programming elements controlled by floating gates or SRAMs are
reprogrammable but lose their circuit configuration in the absence of electrical
power. FPGAs based on antifuse programming elements are one-time programmable
and retain their circuit configuration permanently, even in the absence of
power. FPGAs based on programming elements controlled by flash memory are
reprogrammable and retain their circuit configuration in the absence of power.
Strategy
Our flash and antifuse technologies are different from, and have certain
advantages over, the SRAM and other technologies used in competing PLDs. Our
strategy is to offer innovative solutions to markets in which our technologies
have a competitive advantage, including the value-added, high-reliability, and
high-speed FPGA markets.
Value-Added Market
The market for value-added FPGAs, which is driven primarily by cost, is
addressed by all of our flash FPGAs and by our general-purpose antifuse FPGAs.
In addition to low cost, our FPGAs add the value of ASICs to the benefits
provided by other PLDs. Like other PLDs, our FPGAs reduce design risk, inventory
investment, and time to market. Unlike other PLDs, our FPGAs are nonvolatile,
"live-at-power-up," low-power, single-chip solutions. In addition, logic
designers can choose to use either ASIC or FPGA software tools and design
methodologies, and the architectures of our FPGAs enable the utilization of
predefined IP cores, which can be reused across multiple designs or product
versions. During 2002, we introduced our second-generation ProASIC Plus family,
which more than doubled the size of our reprogrammable flash FPGA offering.
High-Reliability Market
The high reliability market, which is driven primarily by nonvolatility,
security, and resistance to radiation effects, is addressed by our military,
avionics, and space-grade FPGAs. We are probably the world's leading supplier of
high reliability PLDs. Our antifuse and flash FPGAs are nonvolatile, highly
secure, and not susceptible to configuration corruption caused by radiation.
During 2002, we completed the introduction of our RTSX-S family of FPGAs, which
was developed specifically to address radiation-induced single-event upsets in
space. We also announced our plan to leverage our new antifuse-based AX
architecture for our next-generation FPGA family developed specifically for
space applications.
High-Speed Market
Much of the communications market is driven by speed, which has been a
strength of our antifuse FPGAs. During 2002, we introduced our new high-density,
high-speed Axcelerator FPGA family. The family is built on our new AX
architecture, which we developed with two key objectives in mind:
- to eliminate the performance bottleneck created when FPGAs with
traditionally slow internal core architectures are used in high-speed
communications and bridging applications; and
- to provide a scalable, logic-integration platform upon which we could
develop next-generation solutions for high-speed communications and
bridging applications.
By developing a scalable architecture with high internal core performance, we
addressed the performance bottleneck and created a platform suitable for future
antifuse product generations.
Products and Services
Our product line consists of FPGAs, including
- reprogrammable FPGAs based on flash technology,
- one-time programmable FPGAs based on antifuse technology, and
- high-reliability (HiRel) FPGAs.
In 2002, FPGAs accounted for 96% of our net revenues, almost all of which was
derived from the sale of antifuse FPGAs. In support of our FPGAs, we offer a
security resource center; IP cores; development systems; programming hardware;
design diagnostics and debugging tool kits; demonstration boards; ASIC
conversion products; and design and programming services.
FPGAs
The capacity of FPGAs is measured in "gates," which traditionally meant
four transistors. As FPGAs grew larger and more complex, counting gates became
more challenging and no standard counting technique emerged. The appearance of
FPGAs with memory further complicated matters because memory gates cannot be
counted in the same way as logic gates. Unless otherwise indicated, we mean
"maximum system equivalent gates" when we use "gate" or "gates" to describe the
capacity of FPGAs.
To meet the diverse requirements of our customers, we offer all of our
FPGAs (except the two Rad Hard devices) in a variety of speed grades, package
types, and/or ambient (environmental) temperature tolerances. Commercial devices
are guaranteed to operate at ambient temperatures ranging from 0(degree)C to
+70(0)C. Industrial devices are guaranteed to operate at ambient temperatures
ranging from -40(degree)C to +85(degree)C. Military devices are guaranteed to
operate at ambient temperatures ranging from -55(degree)C to +125(0)C. We refer
to devices qualified to military temperature specifications as "high
reliability" or "HiRel" devices.
Flash FPGAs
Our flash-based FPGAs include the ProASIC Plus and ProASIC families.
The combination of a fine-grained, single-chip ASIC-like architecture and
nonvolatile flash configuration memory makes our flash-based FPGAs
attractive low-cost ASIC alternatives for low- and medium-speed
applications. Our flash-based FPGA families bring the advantages of ASICs
and the benefits of PLDs to designers of high-density logic. Like ASICs,
our flash FPGAs are single-chip, live at power-up, and operate at low
power. Like other PLDs, our flash FPGAs reduce time to market and minimize
design risk and investment. Unlike other PLDs available on the market
today, which are either volatile or non-reprogrammable, our flash FPGAs are
nonvolatile and reprogrammable.
Our flash FPGAs also exhibit a high level of portability between PLD
and ASIC design flows. This makes it possible for designers to create
high-density systems using existing ASIC or FPGA design flows and tools,
shortening time to production. The ASIC-like design flow of our flash
devices also facilitates conversion to an ASIC. In addition, the design
methodology enables designers to use IP cores from proprietary and
third-party sources, eliminating much of the architecture-specific
re-engineering required by other PLDs.
ProASIC Plus
On January 7, 2002, we announced the launch of the ProASIC Plus
family, our second-generation of flash-based FPGAs. The family
consists of seven devices: the 75,000-gate APA075, the 150,000-gate
APA150, the 300,000-gate APA300, the 450,000-gate APA450, the
600,000-gate APA600, 750,000-gate APA750, and the 1,000,000-gate
APA1000. ProASIC Plus devices include added features and improved
two-port embedded SRAM, user-configurable inputs and outputs (I/Os),
and in-system programmability (ISP). On October 28, 2002, we announced
the availability of all seven members of the ProASIC Plus family
qualified to industrial temperature specifications. The family is
currently manufactured on a 0.22-micron process at UMC. The ProASIC
Plus family can be ordered in approximately 90 speed, package, and
temperature variations.
ProASIC
The ProASIC family of FPGAs, which was first shipped for revenue
in 1999, consists of four products: the 100,000-gate A500K050, the
290,000-gate A500K130, the 370,000-gate A500K180, and the 475,000-gate
A500K270. The family is currently manufactured on a 0.25-micron
embedded flash process at Infineon. The ProASIC family can be ordered
in approximately 30 speed, package, and temperature variations.
Antifuse FPGAs
Our antifuse-based FPGAs include the Axcelerator, eX, SX-A, SX, MX,
and legacy families, all of which are nonvolatile, secure, reliable, live
at power-up, single-chip solutions. Our antifuse FPGA devices span six
process generations, with each offering higher performance, lower power
consumption, and improved economies of scale.
Axcelerator
On July 1, 2002, we announced the launch of the Axcelerator
family, our new antifuse-based FPGAs targeted at high-speed
communications and bridging applications. Based on a 0.15-micron,
seven-layer metal process, the Axcelerator family consists of five
devices: the 125,000-gate AX125, the 250,000-gate AX250, the
500,000-gate AX500, the 1,000,000-gate AX1000, and the 2,000,000-gate
AX2000. The Axcelerator family can be ordered in approximately 100
speed, package, and temperature variations.
The Axcelerator family was designed to deliver high performance
with low power consumption, high logic utilization, and exceptional
design security. Axcelerator devices can deliver up to 500 MHz
internal operating speeds and are positioned as the world's fastest
general-purpose FPGAs.
eX
The eX family of FPGAs, which was first shipped for revenue in
2001, consists of three devices: the 3,000-gate eX64, the 6,000-gate
eX128, and the 12,000-gate eX256. The family is currently manufactured
on a 0.25-micron antifuse process at UMC. The eX family can be ordered
in approximately 60 speed, package, and temperature variations.
The eX family was designed for the e-appliance market of
internet-related consumer electronics and includes a sleep mode to
conserve battery power. eX devices also provide a small form factor,
high design security, and an undemanding design process. The eX family
is positioned as a single-chip programmable replacement for
low-capacity ASICs.
SX-A and SX
The SX-A family of FPGAs, which was first shipped for revenue in
1999, consists of four products: the 12,000-gate A54SX08A, the
24,000-gate A54SX16A, the 48,000-gate A54SX32A, and the 108,000-gate
A54SX72A. The family is manufactured on a 0.22-micron antifuse process
at UMC and on a 0.25-micron antifuse process at MEC. The SX-A family
can be ordered in approximately 250 speed, package, and temperature
variations.
The SX family of FPGAs, which was first shipped for revenue in
1998, consists of four products: the 12,000-gate A54SX08, the
24,000-gate A54SX16 and A54SX16P, and the 48,000-gate A54SX32. The SX
family is manufactured on a 0.35-micron antifuse process at Chartered.
The SX family can be ordered in approximately 210 speed, package, and
temperature variations.
SX was the first family to be built on our fine-grained, "sea of
modules" metal-to-metal architecture. The SX-A and SX families are
positioned as programmable devices with ASIC-like speed, power
consumption, and pricing in volume production. In addition, the SX-A
family offers I/O capabilities that provide full support for
"hot-swapping." Hot swapping allows system boards to be exchanged
while systems are running, a capability important to many portable,
consumer, networking, telecommunication, and fault-tolerant computing
applications.
MX
The MX family of FPGAs, which was first shipped for revenue in
1997, consists of six products: the 3,000-gate A40MX02, the 6,000-gate
A40MX04, the 14,000-gate A42MX09, the 24,000-gate A42MX16, the
36,000-gate A42MX24, and the 54,000-gate A42MX36. The family is
manufactured on 0.45-micron antifuse processes at Chartered and
Winbond. The MX family can be ordered in approximately 300 speed,
package, and temperature variations. The MX family is positioned as a
line of low-cost, single-chip, mixed-voltage programmable ASICs for
5.0-volt applications.
Legacy Products
The MX family includes the best features of our legacy FPGAs and
over time should replace those earlier products in new 5.0-volt
commercial designs. Legacy products include the DX, XL, ACT 3, ACT 2,
and ACT 1 families.
DX and XL
The 3200DX family of FPGAs, which was first shipped for
revenue in 1995, consists of five products: the 12,000-gate
A3265DX, the 20,000-gate A32100DX, the 24,000-gate A32140DX, the
36,000-gate A32200DX, and the 52,000-gate A32300DX. The DX family
is manufactured on a 0.6-micron antifuse process at Chartered and
can be ordered in approximately 175 speed, package, and
temperature variations.
The 1200XL family of FPGAs, which was first shipped for
revenue in 1995, consists of three products: the 6,000-gate
A1225XL, the 9,000-gate A1240XL, and the 16,000-gate A1280XL. The
XL family is manufactured on a 0.6-micron antifuse process at
Chartered and can be ordered in approximately 130 speed, package,
and temperature variations.
The DX and XL families were designed to integrate system
logic previously implemented in multiple programmable logic
circuits. The DX family also offers fast dual-port SRAM, which is
typically used for high-speed buffering.
ACT 3
The ACT 3 family of FPGAs, which was first shipped for
revenue in 1993, consists of five products: the 3,000-gate A1415,
the 6,000-gate A1425, the 9,000-gate A1440, the 11,000-gate
A1460, and the 20,000-gate A14100. The family is manufactured on
a 0.6-micron antifuse process at Chartered and a 0.8-micron
antifuse process at Winbond. The ACT 3 family can be ordered in
approximately 215 speed, package, and temperature variations. The
family was designed for applications requiring high speed and a
high number of I/Os.
ACT 2
The ACT 2 family of FPGAs, which was first shipped for
revenue in 1991, consists of three products: the 6,000-gate
A1225, the 9,000-gate A1240, and the 16,000-gate A1280. The
family is manufactured on 1.0- and 0.9-micron antifuse processes
at MEC and can be ordered in approximately 80 speed, package, and
temperature variations. ACT 2 was our second-generation FPGA
family and featured a two-module architecture optimized for
combinatorial and sequential logic designs.
ACT 1
The ACT 1 family of FPGAs, which was first shipped for
revenue in 1988, consists of two products: the 2,000-gate A1010
and the 4,000-gate A1020. The family is manufactured on 1.0- and
0.9-micron antifuse processes at MEC and can be ordered in
approximately 125 speed, package, and temperature variations. ACT
1 was the original family of antifuse FPGAs.
HiRel FPGAs
We are probably the world's largest supplier of high reliability
FPGAs. Since 1990, our FPGAs have been designed into numerous military and
aerospace applications, including command and data handling, attitude
reference and control, communication payload, and scientific instrument
interfaces. Our space-qualified FPGAs have been on board more than 100
launches and accepted for flight-unit applications on more than 300
satellites.
All of our antifuse FPGAs (except for the three eX devices) are
offered in plastic packages qualified to military temperature
specifications. We have received complete Qualified Manufacturers Listing
(QML) certification for the full line of plastic-packaged antifuse FPGAs,
which can be integrated into design applications that would otherwise
require higher-cost ceramic-packaged devices. The QML plastic certification
also permits customers to integrate commercial and military production
without compromising quality or reliability.
Our military/avionics (Mil/Av), radiation tolerant (Rad Tolerant), and
radiation hardened (Rad Hard) families are offered in hermetic packages.
Mil/Av
Our Mil/Av family of FPGAs consists of fifteen products: the
2,000-gate A1010B, the 4,000-gate A1020B, the 6,000-gate A1425A, the
11,000-gate A1460A, the 16,000-gate A1280A and A1280XL, the
20,000-gate A14100A and A32100DX, the 24,000-gate A32140DX and
A54SX16, the 36,000-gate A32200DX, the 48,000-gate A54SX32 and
A54SX32A, the 54,000-gate A42MX36, and the 108,000-gate A54SX72A.
Mil/Av FPGAs are shipped with Class B (MIL-STD-883) qualification.
Mil/Av devices are appropriate for avionics, munitions, harsh
industrial environments, and ground-based equipment when radiation
survivability is not critical.
On October 7, 2002, we announced the availability of our 54SX72A
and 54SX32A antifuse FPGAs qualified to military specifications. We
also announced Defense Supply Center Columbus (DSCC) approval to ship
the devices under standard military drawing (SMD) numbers.
Rad Tolerant
Our Rad Tolerant family of FPGAs consists of eight products: the
4,000-gate RT1020, the 6,000-gate RT1425A, the 11,000-gate RT1460A,
the 16,000-gate RT1280A, the 20,000-gate RT14100A, the 24,000-gate
RT54SX16, the 48,000-gate RT54SX32S, and the 108,000-gate RT54SX72S.
Rad Tolerant FPGAs are offered with Class B through Class E (extended
flow/space) qualification, and total dose radiation test reports are
provided on each segregated lot of devices.
Rad Tolerant FPGAs are designed to meet the logic requirements
for all types of military, commercial, and civilian space
applications, including satellites, launch vehicles, and deep-space
probes. They provide cost-effective alternatives to radiation-hardened
devices when radiation survivability is important but not essential.
In addition, Rad Tolerant devices have design- and pin-compatible
commercial versions for prototyping.
On April 3, 2002, we announced the qualification, shipment, and
DSSC approval of our RT54SX72S antifuse FPGA, the second member of our
RTSX-S family. Our RTSX-S family was specifically designed to address
heavy ion-induced single-event upsets (SEUs) in space. The family was
the industry's first qualified FPGA solution using SEU-hardened
latches. This eliminates the need for software-based triple module
redundancy (TMR). Software-based TMR can use up to two-thirds of a
device's available logic (or capacity) for redundancy, which is
unavailable for the user's design. The RT54SX72S FPGA more than
doubled the capacity of the first member of the RTSX-S family, the
RT54SX32S. When the RT54SX32S first shipped in July 2001, it also more
than doubled the amount of programmable logic previously available for
applications requiring high SEU resistance.
On September 10, 2002, we announced our plan to leverage our
recently introduced antifuse-based AX architecture for our
next-generation radiation-tolerant FPGA offering. {The high-density,
high-performance FPGAs will offer key features optimized for the space
market, such as hardened latches that offer practical SEU immunity
and, for the first time, usable error-corrected onboard memory. These
solutions will meet the density, performance, and radiation-resistance
requirements of many payload applications, an area previously
dominated by ASICs, allowing us to aggressively target these
applications in low-, mid-, and geosynchronous-earth orbit satellites
and deep space missions.} This announcement underscores our continuing
commitment to provide high-quality, radiation-tolerant solutions for
space applications.
Rad Hard
The Rad Hard family of FPGAs, which was first shipped for revenue
in 1996, consists of two products: the 4,000-gate RH1020 and the
16,000-gate RH1280. The family is manufactured on a radiation-hardened
0.8-micron antifuse process by BAE at its QML facility in Manassas,
Virginia. Rad Hard devices are shipped with full QML Class V
screening. The Rad Hard family was designed to meet the demands of
applications requiring guaranteed levels of radiation survivability.
Rad Hard FPGAs are appropriate for military and civilian satellites,
deep space probes, planetary missions, and other applications in which
radiation survivability is essential.
Supporting Products and Services
In support of our FPGAs, we offer a security resource center; IP cores;
development systems; programming hardware; design diagnostics and debugging tool
kits; demonstration boards; ASIC conversion products; and design and programming
services.
On July 1, 2002, we announced the availability of comprehensive support for
our new high-density, high-speed Axcelerator FPGA family. Upon introduction, the
Axcelerator family was supported by our Libero integrated design environment,
Designer place-and-route tool suite, Silicon Explorer II debugging and
verification tool kit, Silicon Sculptor II programmer, and an evaluation
platform. We also announced Axcelerator support from leading EDA vendors Mentor
Graphics Corp. (Mentor Graphics), Synopsys, Inc. (Synopsys), and Synplicity,
Inc. (Synplicity) for synthesis and simulation.
Security Resource Center
On September 9, 2002, we announced the launching of the first Web site
dedicated to the growing problem of design theft. Our Security Resource
Center provides customers, design engineers, and managers with information
on the fundamentals of security issues and secure FPGA solutions, including
technology tutorials, market overviews, white papers, government links, and
extensive glossaries. The Web site will enable the design community to
increase its awareness of critical design principles and methodologies as
well as common security threats, such as overbuilding, reverse engineering,
cloning, and denial of service. In addition to design security, our
Security Resource Center contains information on "firm errors," which are
configuration memory upsets from neutrons and alpha particles. Historically
a concern only for military, avionics, and space applications, firm errors
have become more of a problem for ground-based applications with each
manufacturing process generation.
Design Security
Mask sets for advanced technology ASICs now often cost $1 million
or more. As mask costs continue to rise, FPGAs are increasingly used
as a cost-effective alternative to ASICs for implementing complex
design functions. With the increase in FPGA adoption, devices have
grown in size and complexity, making the security of the devices more
important. More often than not, the key IP that differentiates an
electronic system from competitive offerings is implemented in
programmable logic. Given these trends, the vulnerability of each
system's unique value-added IP is now often a direct function of the
security capabilities of the system's FPGA.
The Actel solution is a range of nonvolatile, single-chip FPGAs
that offer virtually unbreakable design security. Decapping and
stripping of our flash devices reveals only the structure of the flash
cell, not the contents. Similarly, the antifuses that form the
interconnections within our antifuse FPGAs do not leave an observable
signature that can be electrically probed or visually inspected.
Antifuse FPGAs also do not need a start-up bitstream, eliminating the
possibility of configuration data being intercepted. In addition to
the inherent strengths of our flash and antifuse architectures,
special security fuses are hidden throughout the fabric of our flash
and antifuse devices. These FlashLock and FuseLock security fuses
prevent internal probing and overwriting. The security fuses cannot be
accessed or bypassed without destroying the rest of the device, making
both invasive and subtler noninvasive attacks ineffective against our
FPGAs.
Firm Errors
SRAM memories are susceptible to neutron-induced errors. When
SRAM memories are used for data storage, these neutron-induced errors
are called "soft errors." When SRAM memories are used to store the
configuration of an FPGA, however, these neutron-induced errors are
called "firm errors." A firm error affects the device's configuration,
which may cause the device to malfunction. In addition, firm errors
are not transient but will persist until detected and corrected. There
is a significant and growing risk of functional failure in SRAM-based
FPGAs due to the corruption of configuration data.
In ground-based applications where reliability is a concern -
such as medical equipment, radar systems, and telecommunications
switches and routers - neutron-induced functional interrupts could
significantly reduce system availability. In airborne applications,
where control of aircraft engines, flight control surfaces, and even
weapons systems are entrusted to FPGAs, the corruption of the systems'
functionality that may result from a configuration firm error could
have disastrous consequences. Radiation testing data show that our
antifuse and flash FPGAs are not subject to loss of configuration due
to neutron-induced upsets. This makes them more suitable for
ground-based and airborne applications in which reliability is
important or essential.
IP Cores
IP cores are an integral part of our solution offering. Our
CompanionCore Alliance program leverages IP cores generated, verified,
and supported by us, called DirectCores, as well as strategic
third-party CompanionCore products. Our offering includes 24 bus
interface, 23 communications, 14 processor and peripheral, 22 data
security, five memory control, and six multimedia and error correction
IP cores. Our DirectCore and CompanionCore offerings are available in
either RTL or netlist formats and target the communications, consumer,
military, industrial, and aerospace markets. These cores complement
the nonvolatile, secure, and low-power characteristics of our flash
and antifuse FPGAs.
On December 11, 2002, we announced the addition of more than 50
DirectCore and CompanionCore IP cores optimized for use with our
ProASIC Plus and Axcelerator FPGAs. The new cores were developed by us
and seven CompanionCore Alliance members: Amphion Semiconductor, Inc.
(Amphion); CAST, Inc. (CAST); GDA Technologies, Inc.; Helion
Technology Ltd. (Helion); Inicore, Inc. (Inicore); Memec Design; and
MorethanIP GmbH (MorethanIP). The Alliance is a cooperative effort
between us and independent third-party IP core developers to produce
and provide industry-standard synthesizable semiconductor IP cores
that are optimized for use in our FPGAs.
DirectCores
On May 6, 2002, the Virtual Component Exchange (VCX)
announced that we had expanded our IP offerings available on the
VCX TradeFloor. More specifically, we offered access to our
DirectCore portfolio on the VCX Exchange. We joined the VCX
Exchange in 2001 to market our VariCore embedded programmable
gate array IP cores. On July 29, 2002, Design and Reuse (D&R)
announced that we had joined D&R's IP Provider Partner Program, a
Web-based semiconductor IP directory. On the D&R website,
customers will have the ability to search for and access our IP
cores. Both of these developments extended our reach to the
global FPGA design community.
On September 10, 2002, we announced the development and
availability of a MIL-STD-1553B remote-terminal core for space,
avionics, and military applications in which high-reliability and
system redundancy are essential. With the Core1553BRT IP core, we
offer the only radiation-tolerant MIL-STD-1553B FPGA solution now
available. The MIL-STD-1553B bus has been deployed for data
communications purposes in civilian and military aircraft since
the 1970s. Its major benefit is dual redundant signal paths,
which makes it suitable for flight-critical systems.
Twelve DirectCore IP cores are available for evaluation or
licensing from us or through our distributors or sales
representatives. We offer evaluation, single-use, and
unlimited-use licenses for all of our cores.
CompanionCores
On November 25, 2002, we announced the availability of new
Advanced Encryption Standard (AES) and Data Encryption Standard
(DES) IP cores optimized for our nonvolatile Axcelerator,
ProASIC, ProASIC Plus, RTSX-S, and SX-A FPGA architectures.
Through our partners Amphion and Helion, our customers have
access to design services and a range of encryption cores
certified by the National Institute of Standards and Technology
(NIST) that support AES, DES, and triple DES (3DES) algorithms.
These flexible IP cores offer users high-performance data
encryption for wireless and wire-line communications, including
e-commerce, secure enterprise networks, and personal security
devices.
A total of 82 CompanionCores are available from our
CompanionCore Alliance partners. Thirteen CompanionCores are
offered by Amphion; three by CAST; nine by Helion; 25 by Inicore;
26 by Memic Design; and six by MorethanIP. A number of licensing
models are available from our Alliance partners, including
evaluation licenses in most cases.
Development Systems
Our strategy is to provide design software integrated with
existing EDA software and design flows. We work closely with our EDA
partners through our Actel Alliance program to provide early technical
information on our new releases so that Alliance members can offer
timely support. The Alliance includes Aldec, Inc.; Cadence Design
Systems, Inc. (Cadence); Innoveda, Inc.; Mentor Graphics; SynaptiCAD,
Inc. (SynaptiCAD); Synopsys; and Synplicity.
On March 25, 2002, we announced jointly with Celoxica Limited
that its new DK1.1 design suite supports our FPGAs. DK1.1 will provide
our customers with a high-level methodology for designing and
implementing complex algorithms in our FPGAs. On April 8, 2002, we
announced that the Cadence NC family of simulators and BuildGates
synthesis tool fully supported our new ProASIC Plus family of
flash-based FPGAs.
Libero Software
Our Libero tool suite is a comprehensive design environment
that integrates leading design tools and streamlines the design
flow; manages all design and report files; and passes necessary
design data between tools. The Libero integrated design
environment (IDE) includes:
- Mentor Graphics' ViewDraw schematic capture tool;
- SynaptiCAD's WaveFormer Lite test bench generation
system;
- Mentor Graphics' ModelSim simulation and design
verification software;
- Synplicity's Synplify synthesis software;
- our Silicon Explorer verification and logic analyzer
tool; and
- our Designer place-and-route software.
On February 25, 2002, we announced the release of an
enhanced version of our Libero IDE to support our new ProASIC
Plus family. This enhanced version enabled designers to take
advantage of the many improvements and added features of ProASIC
Plus devices. On June 24, 2002, we announced the availability of
an updated version of our Libero IDE containing enhanced tools
for synthesis from Synplicity, test bench generation from
SynaptiCAD, and place-and-route and verification from us.
On February 12, 2003, we announced improvements to the
synthesis tools from Synplicity and the place-and-route tools
from us. Other enhancements included the addition of FlashLock
support for the Permanent Lock feature in ProASIC Plus FPGAs,
which permits designers to disable the ability to reprogram or
reverse engineer the devices. This protects customers from having
their designs and IP copied.
Designer Software
Our Designer software is an interactive design
implementation tool that allows designers to import a netlist
generated from a third party CAE tool, place and route (layout)
the design to achieve the timing required, and generate a
programming file to program our FPGAs. Our Designer tool delivers
place and route with both automated and manual flows, provides
support for fixed pins, creates customized macros, and ensures
accurate timing throughout the development cycle. Our
place-and-route tool supports all the established EDA standards
and popular synthesis, schematic, and simulation tools from the
leading EDA vendors, including Cadence, Mentor Graphics,
Synopsys, and Synplicity.
On June 10, 2002, we announced an enhanced release of our
Designer software. This release featured a new power analysis
tool and a utility that permits designers to display the netlist
in a hierarchical manner. In addition, the performance of the
timing analysis and layout utilities was increased significantly.
Programming Hardware
Programmers execute instructions included in files obtained from
our Designer software to program our FPGAs. All of our FPGAs can be
programmed by the Silicon Sculptor II programmer. Our flash FPGAs can
also be programmed by the Flash Pro programmer. In addition, we
support programmers offered by BP Microsystems Inc. We also offer
programming adapters, which must be used with the Silicon Sculptor II
programmer, and surface-mount sockets, which make it easier to
prototype designs using our antifuse FPGAs.
Flash Pro Programmer
On January 7, 2002, we announced the availability of the
Flash Pro programmer, which provides ISP for our flash-based FPGA
families. Designers can configure our ProASIC Plus and ProASIC
devices using only the portable Flash Pro programmer and a cable
connected to either the parallel or USB port of a personal
computer (PC). The ISP feature permits devices to be programmed
after they are mounted on a PCB.
Silicon Sculptor II Programmer
The Silicon Sculptor II programmer is a compact,
single-device programmer with stand-alone software for the PC.
Silicon Sculptor II was designed to allow concurrent programming
of multiple units from the same PC with speeds equal to (or
faster than) those of our previous multi-device programmers.
Design Diagnostics and Debugging Tool Kits
Our design diagnostics and debugging tool kits permit designers
to improve productivity and reduce time to market by removing the
guesswork typically associated with the process of system
verification. We offer different tools kits for our flash and antifuse
products.
Silicon Explorer II Tool
Our antifuse FPGAs contain internal circuitry that provides
built-in access to every node in a design, enabling real-time
observation and analysis of a device's internal logic nodes.
Silicon Explorer II, an easy to use integrated verification and
logic analysis tool kit for the PC, accesses the probe circuitry.
The tool kit allows designers to complete the design verification
process at their desks. Silicon Explorer II Lite is a less
expensive version of Silicon Explorer II for customers who have
invested in a logic analysis system.
FS2 CLAM System
On September 23, 2002, we announced the availability of the
FS2 Configurable Logic Analyzer Module (CLAM) System for
real-time logic analysis of designs using our flash-based FPGAs.
Embedded in our flash devices, the CLAM System enables users to
more easily test and debug their logic designs.
Demonstration Boards
Our demonstration boards permit users to evaluate particular
products. In addition to the Axcelerator and ProASIC Plus evaluation
platforms discussed below, we offer an evaluation kit for our 33 MHz
Target + DMA peripheral component interface (PCI) core. In addition, a
ProASIC Plus system design board is available from Inicore.
Axcelerator Evaluation Platform
The Axcelerator evaluation platform allows the user to
evaluate and test various Axcelerator features, such as
low-voltage differential signal (LVDS) I/Os. The modularity of
the platform permits the designer to build systems to their own
special requirements and test their FPGA design.
ProASIC Plus Evaluation Platform
The ProASIC Plus Evaluation Platform may be used to evaluate
the capabilities of our ProASIC Plus FPGA family. There are two
evaluation platforms available: one includes an APA300 device and
the other has a socket that allows the user to evaluate any
ProASIC Plus device in a plastic quad flat pack (PQ) package with
208 pins. A programming header is included to support ISP
programming using the Flash Pro or Silicon Sculptor programmers.
ProASIC Plus In-System Programming Demonstration Platform
On August 12, 2002, we announced the availability of a
low-cost evaluation board for our flash-based ProASIC Plus FPGAs
that supports internal ISP. Developed in conjunction with First
Silicon Solutions (FS2), the evaluation board has an on-board
socket that allows the user to evaluate any ProASIC Plus device
in a ball grid array (BG) package with 456 pins.
ASIC Conversion Products
We offer a conversion path for high-volume designs using our
flash FPGAs by remapping the functionality of the FPGA into a
cost-effective standard cell ASIC. These pin-for-pin replacements are
designed from the existing FPGA database, which reduces the risk
typically associated with ASIC design conversions. Compared with
alternative conversion paths, such as to masked PLDs or conventional
gate arrays, migration to a standard cell ASIC offers greater
densities and lower costs.
We also offer a solution that permits customers to convert ASICs
(or other obsolete components) to FPGA designs while preserving the
existing ASIC footprint on a production board. Semiconductor device
obsolescence is a growing problem in the electronics industry. Using
one of our FPGAs and a thin adapter board, this pin-compatible
component replacement solution can significantly extend the useful
life of customer designs.
Services
We offer design and volume programming services. With our
acquisition of the Protocol Design Services Group from GateField
Corporation (GateField) in August 1998, we became the first FPGA
provider to offer system-level design expertise to our customers. We
also program significant volumes of FPGAs each month for our
customers. This makes our devices "virtual ASICs" from the customer's
point of view, while also being cost-effective solutions for low- to
medium-volume applications.
Design Services
Our Protocol Design Services organization operates out of a
secure facility located in Mt. Arlington, New Jersey, and is
certified to handle government, military, and proprietary
designs. Our Design Services Group provides varying levels of
design services to customers, including FPGA, ASIC, and system
design; software development and implementation; and development
of prototypes, first articles, and production units. Our Design
Services team has participated in the development of optical
networks, routers, cellular phones, digital cameras, embedded DSP
systems, automotive electronics, navigation systems, compilers,
custom processors, and avionics systems.
Volume Programming Services
We offer high volume programming for all device and package
types in our programming center, which is located at our factory
in Sunnyvale, California. Our facility is ISO-9002, PURE, QML,
and STACK certified (see "BUSINESS -- Manufacturing and
Assembly"), permitting us to meet customer requirements for
high-quality programmed devices. Complete documentation and
tractability are provided throughout the programming process,
including first article approval. As part of the programming
process, we offer ink marking for customer-specific marking
needs. We also offer tape and reel packaging, which consists of a
pocketed carrier tape sealed with a protective cover. Volume
programming charges are based on the type of device and quantity
per order.
Markets and Applications
In 2002, FPGAs accounted for 96% of our net revenues, almost all of which
was derived from the sale of antifuse FPGAs. FPGAs can be used in a broad range
of applications across nearly all electronic system market segments. Most
customers use our FPGAs in low to medium volumes in the final production form of
their products. Some high-volume electronic system manufacturers use our FPGAs
as a prototyping vehicle and convert production to lower-cost ASICs, while
others with time-to-market constraints use our FPGAs in the initial production
and then convert to lower-cost ASICs. As product life cycles shorten, masks sets
and foundry capacity become more expensive, and manufacturing efficiencies for
FPGAs increase, some high-volume electronic system manufacturers elect to retain
FPGAs in volume production because conversion to ASICs may not yield
sufficiently attractive savings before the electronic system reaches the end of
its life.
On March 4, 2002, we announced jointly with NetVision, a supplier of giant
light-emitting diode (LED) screens, that NetVision had selected our SX-A FPGAs
for its new giant color outdoor LED screens. The screens utilize A54SX72A
devices for display circuit control and color correction management. Netvision's
circuit design specifications required a logic integration device that offered
high performance, design security, and low power consumption.
Military and Aerospace
In 2002, military and aerospace applications accounted for an estimated 41%
of our net revenues. Rigorous quality and reliability standards, stringent
volume requirements, and the need for design security are characteristics of the
military and aerospace market. Our FPGAs have high quality and reliability and
are almost impossible to copy or reverse engineer, making them appropriate for
many military and aerospace applications. For these reasons, we are probably the
world's leading supplier of military and aerospace PLDs. Our customers in the
military and aerospace market include: BAE; Raytheon; Honeywell; and Lockheed
Martin.
Our antifuse FPGAs are especially well suited for space applications, due
to the high radiation tolerance of the antifuse and our FPGA architecture. Our
antifuse FPGAs were first designed into a space mission in 1991. Since then,
thousands of our programmable logic circuits have performed flight-critical
functions aboard manned space vehicles, earth observation satellites, and
deep-space probes. Our FPGAs often perform mission-critical functions on
important scientific missions in space. They have, for example, been aboard
numerous Mars exploration missions, were included in the controlling electronics
for the Mars Pathfinder Rover, and are performing functions on the Hubbell Space
Telescope. We participate in programs administered by the Goddard, Johnson, and
Marshall Space Flight Centers of the National Aeronautics Space Administration
(NASA), including the Space Shuttle and the International Space Station, as well
as in programs at California Institute of Technology's Jet Propulsion
Laboratory. Our success has not been limited to the United States, however. Our
FPGAs can be found in spacecraft launched by virtually every civilian space
agency around the world, including the European Space Agency (ESA) and the
Japanese National Space Development Agency.
On July 15, 2002, we announced that our high-reliability FPGAs had been
chosen by the German Aerospace Center (DLR) for its Bi-Spectral Infrared
Detection (BIRD) satellite, the world's first satellite that uses infrared
sensor technology to detect and investigate high-temperature events on Earth,
such as forest fires, volcanic activities, and burning oil wells and coal seams.
More than 20 of our high-reliability FPGAs will be used in many mission-critical
functions on the BIRD satellite, including payload data handling, memory
management, interfacing and control, and co-processing as well as sensor control
in the infrared camera.
Communications
In 2002, communications applications accounted for an estimated 25% of our
net revenues. Increasingly complex equipment must frequently be designed to fit
in the space occupied by previous product generations. In addition, the
communications environment rewards short development times and early market
entry. The high density, high performance, and low power consumption of our
antifuse FPGAs make them suitable for use in high-speed communications
equipment. The high capacity, low cost, low power consumption, and
reprogrammability of our flash FPGAs make them appropriate for use in other
communications applications. Our customers in the communications market include:
Cisco; Marconi; Nokia; and Nortel.
On June 24, 2002, we announced our membership in the HyperTransport
Technology Consortium, an organization aimed at promoting the development and
adoption of the HyperTransport interface standard. We have joined multiple
standards committees as part of our strategy to remove system design bottlenecks
and dramatically increase the performance of next-generation, high-speed
communications designs.
Industrial
In 2002, industrial control and instrumentation applications accounted for
an estimated 17% of our net revenues. Industrial control and instrumentation
applications often require complex electronic functions tailored to specific
needs. FPGAs offer programmability and high density, making them attractive to
this segment of the electronic equipment market. Our customers in the industrial
market include: Abbott Labs; GE Medical Systems; Siemens; and Varian.
On March 14, 2002, we announced that Silicon Recognition had chosen to
implement a version of its zero instruction set computing (ZISC) solution with
our A500K050 and A500K130 ProASIC devices. Silicon Recognition's proprietary
ZISC solution is designed to provide ultra-fast pattern recognition and
information classification for next-generation, real-time smart devices, such as
security cameras and health-monitoring equipment.
Consumer
In 2002, consumer applications accounted for an estimated 12% of our net
revenues. The high performance, low power consumption, and low cost of antifuse
FPGAs make them appropriate for use in products enabling the portability of the
internet, or "e-appliances," and other high-volume electronic systems targeted
for consumers. E-appliance applications include MP3 "music-off-the-internet"
players, digital cable set-top boxes, DSL and cable modems, digital cameras,
digital film, multimedia products, and smart-card readers. Like the
communications market, the market for consumer and e-appliance products places a
premium on early market entry for new products and is characterized by short
product life cycles. Our customers in the consumer market include: Channel;
Datel, Inc.; IC Boss; LG; and Shinyoung Precision Co., Ltd.
Computer
In 2002, computer systems and peripherals accounted for an estimated 5% of
our net revenues. The computer systems market is intensely competitive, placing
a premium on early market entry for new products. FPGAs reduce the time to
market and facilitate early completion of production models so that development
of hardware and software can occur in parallel. Our customers in the computer
market include: Allied Telesis K.K.; Dialogic Corporation; HP; and Sky Computer.
On January 28, 2003, we announced that Dr. Kaiser Systemhaus had selected
our high-speed, low-power SX-A FPGAs for use in the construction of its
PRODASAFE, a BIOS extension produced as a PCI-compatible PC plug-in card. The
PRODASAFE card protects the operating system, application programs, and
configurations from illegal manipulation, alteration, and viruses. Our secure,
nonvolatile 54SX08A FPGA serves as an interface between the boot-PROM and the
PCI bus to provide necessary protection functions for the PC.
Sales and Distribution
We maintain a worldwide, multi-tiered selling organization that includes a
direct sales force, independent sales representatives, and electronics
distributors. Our North American sales force consists of 48 sales and
administrative personnel and field application engineers (FAEs) operating from
20 sales offices located in major metropolitan areas. Direct sales personnel
call on target accounts and support direct original equipment manufacturers
(OEMs). Besides overseeing the activities of direct sales personnel, our sales
managers also oversee the activities of 18 sales representative firms operating
from 42 office locations. The sales representatives concentrate on selling to
major industrial companies in North America. To service smaller, geographically
dispersed accounts in North America, we have a distributor agreement with
Unique. Unique has 33 offices in North America.
We generate a significant portion of our revenues from international sales.
Sales to European customers accounted for 23% of net revenues in 2002. Our
European sales organization consists of 24 employees operating from four sales
offices and 14 distributors and sales representatives having 25 offices
(including Unique, which has seven offices in Europe). Sales to Japan and other
international customers accounted for 15% of net revenues in 2002. Our Pan-Asia
and Rest of World (ROW) sales organization consists of 13 employees operating
from five sales offices and 12 distributors and sales representatives having 24
offices (including Unique, which has eight offices in Pan-Asia and ROW). On June
17, 2002, we announced the signing of agreements with four new distributors:
Secom Telecom in China; AMSC and Jepico Corporation in Japan; and Maxtek
Technology in Taiwan. These appointments evidence our commitment to support
markets with increased demand creation.
Sales made through distributors accounted for approximately 65% of our net
revenues in 2002. Unique accounted for 22% of our revenues in 2002. On March 1,
2003, we consolidated our distribution channel by terminating our agreement with
Pioneer, which accounted for 26% of our net revenues in 2002. The loss of Unique
as a distributor could have a materially adverse effect on our business,
financial condition, or results of operations. As is common in the semiconductor
industry, we generally grant price protection to distributors. Under this
policy, distributors are granted a credit upon a price reduction for the
difference between their original purchase price for products in inventory and
the reduced price. From time to time, distributors are also granted credit on an
individual basis for approved price reductions on specific transactions to meet
competition. We also generally grant distributors limited rights to return
products. To date, product returns under this policy have not been material. We
maintain reserves against which these credits and returns are charged. Because
of our price protection and return policies, we do not recognize revenue on
products sold to distributors until the products are resold to end customers.
Our sales cycle for the initial sale of a design system is generally
lengthy and often requires the ongoing participation of sales, engineering, and
managerial personnel. After a sales representative or distributor evaluates a
customer's logic design requirements and determines if there is an application
suitable for our FPGAs, the next step typically is a visit to the qualified
customer by a regional sales manager or an FAE from us or one of our
distributors or sales representatives. The sales manager or FAE may then
determine that additional analysis is required by engineers based at our
headquarters.
Backlog
At January 5, 2003, our backlog was $17.3 million, compared with $22.3
million at January 6, 2002. We include in our backlog all OEM orders scheduled
for delivery over the next nine months and all distributor orders scheduled for
delivery over the next six months. We sell standard products that may be shipped
from inventory within a short time after receipt of an order. Our business, and
to a large extent that of the entire semiconductor industry, is characterized by
short-term order and shipment schedules rather than volume purchase contracts.
In accordance with industry practice, our backlog generally may be cancelled or
rescheduled by the customer on short notice without significant penalty. As a
result, our backlog may not be indicative of actual sales and therefore should
not be used as a measure of future revenues.
Customer Service and Support
We believe that first-rate customer service and technical support are
essential for success in the FPGA market. We facilitate service and support
through service team meetings that address particular aspects of the overall
service strategy and support. The most significant areas of customer service and
technical support are regularly measured. Our customer service organization
emphasizes prompt, accurate responses to questions about product delivery and
order status.
Our FAEs located in Canada, England, France, Germany, Hong Kong, Italy,
Japan, South Korea, Taiwan, and the United States provide technical support to
customers worldwide. This network of experts is augmented by FAEs working for
our sales representatives and distributors throughout the world. Customers in
any stage of design may also obtain assistance from our technical support
hotline or online interactive automated technical support system. In addition,
we offer technical seminars on our products and comprehensive training classes
on our software.
We generally warrant that our FPGAs will be free from defects in material
and workmanship for one year, and that our software will conform to published
specifications for 90 days. To date, we have not experienced significant
warranty returns.
Manufacturing and Assembly
Our strategy is to utilize third-party manufacturers for our wafer
requirements, which permits us to allocate our resources to product design,
development, and marketing. Our FPGAs in production are manufactured by:
- BAE in Manassas, Virginia, using 0.8-micron design rules;
- Chartered in Singapore using 0.6-, 0.45-, and 0.35-micron design
rules;
- Infineon in Germany using 0.25-micron design rules;
- MEC in Japan using 1.0-, 0.9-, 0.8-, and 0.25-micron design rules;
- UMC in Taiwan using 0.22- and 0.15-micron design rules; and
- Winbond in Taiwan using 0.8- and 0.45-micron design rules.
Wafers purchased from our suppliers are assembled, tested, marked, and
inspected by us and/or our subcontractors before shipment to customers. We
assemble most of our plastic commercial products in Hong Kong, South Korea, and
Singapore. Hermetic package assembly, which is often required for military
applications, is performed at one or more subcontractor manufacturing
facilities, some of which are in the United States.
We are committed to continuous improvement in our products, processes, and
systems and to conforming our quality and reliability systems to internationally
recognized standards and requirements. We are ISO 9002, QML, STACK, and PURE
certified. ISO 9002 and QML certification are granted by DSCC. ISO certification
provides a globally recognized benchmark that our devices have been certified
for integrity in the manufacturing and test process. QML certification confirms
that we have an approved quality system and control of our processes and
procedures according to the standards set forth in the MIL-PRF-38535. In
addition, many suppliers of microelectronic components have implemented QML as
their primary worldwide business standard. STACK International members consist
of a distinguished worldwide group of major electronic equipment manufacturers
serving the high-reliability and communications markets. Certification as a
STACK International supplier confirms that our standard qualification procedure
and product monitor program and manufacturing process meet or exceed the
required specification. PURE, which stands for PEDs (plastic encapsulated
devices) Used in Rugged Environments, is an association of European equipment
makers dedicated to quality and reliability. Our PURE certification is for PQ
packages.
On January 28, 2002, we announced the availability of lead-free packaging
options for our ProASIC, eX, and SX-A FPGA families. The lead-free packages
offer environment-friendly alternatives to standard lead-based packages at the
same prices. On November 18, 2002, we announced that we would offer "green"
packaging options for our ProASIC, ProASIC Plus, eX, and SX-A FPGA families by
the end of 2002, and that we plan to deliver "green" packaging solutions for all
other flash and antifuse FPGA families by the end of 2003. A "green" package is
free of lead, halogenated compounds, and antimony oxides. These announcements
demonstrate our commitment to comply with global environmental initiatives aimed
at the replacement of lead in the production of electronic devices.
Strategic Relationships
We enjoy ongoing strategic relationships with our customers, distributors
and sales representatives, and foundries, assembly houses, and other suppliers
of goods and services, including the following:
FS2
On January 7, 2002, we jointly announced with FS2 the availability of the
Flash Pro programmer, which provides ISP for our flash-based FPGA families. See
"BUSINESS -- Products and Services -- Supporting Products and Services -- Design
and Development Tools -- Programmers -- Flash Pro." The low-cost Flash Pro
programmer gives users access to the improved ISP capability of our ProASIC Plus
FPGAs for in-the-field upgrades of industrial, communications, networking, and
avionics applications.
On September 23, 2002, we announced the availability of the FS2 CLAM System
for real-time logic analysis of designs using our flash-based ProASIC and
ProASIC Plus FPGAs. See "BUSINESS -- Products and Services -- Supporting
Products and Services -- Design and Development Tools -- Design Diagnostics and
Debugging Tool Kits -- FS2 CLAM System." In addition to the traditional internal
on-chip option, FS2's CLAM System also offers off-chip trace and triggering
support, which reduces the time required to debug and optimize the system while
minimizing the use of system gate resources and available device pins.
On August 12, 2002, we announced the availability of a low-cost evaluation
board for our ProASIC Plus FPGAs. See "BUSINESS -- Products and Services --
Supporting Products and Services -- Design and Development Tools --
Demonstration Boards -- ProASIC Plus In-System Programming Demonstration
Platform." The board allows designers to evaluate the ISP feature of our ProASIC
Plus devices and to explore various chip characteristics, such as I/O operation.
Infineon
On August 8, 2002, we jointly announced with Infineon cooperation in the
development of flash FPGA solutions for production in 0.13-micron processes.
{Building on our ProASIC FPGA family and Infineon's process technology and
manufacturing expertise, the development program will extend the capability of
flash-based FPGA technology in both current and new ASIC alternative market
segments, such as smart card, automotive, industrial control, and mobile
communication applications.} Under the terms of the development and
manufacturing agreements between the companies, we gain access to a defined
wafer manufacturing capacity for high-performance flash FPGA products with
Infineon's 0.13-micron embedded flash production process. Infineon, in turn,
gains access to our flash-based FPGA architectures for use in next-generation
product applications, such as chip card IC products. {In chip card applications,
scaling down to 0.13-micron process geometries can accelerate processing of
security algorithms by 50 percent or more. Finer process geometries also reduce
chip size to about one-third of the area of today's standard chip card ICs.}
Mentor Graphics
On January 7, 2002, we announced jointly with Mentor Graphics that Mentor's
LeonardoSpectrum synthesis tool supported our new ProASIC Plus family of
flash-based FPGAs. LeonardoSpectrum offers optimization and technology mapping
of HDL designs to architecture-specific resources in ProASIC Plus devices.
On July 1, 2002, Mentor Graphics announced complete front-end design
support for our new Axcelerator family, including the HDL Designer Series tool
suite for design creation, analysis, and management; the ModelSim tool for
simulation and debug; the LeonardoSpectrum synthesis environment for synthesis;
and the FPGA Advantage design flow for complete FPGA design flow support.
Synplicity
On January 7, 2002, we jointly announced with Synplicity that Synplicity's
Synplify software products were optimized to support our new ProASIC Plus
family. Synplicity's Synplify product performs technology mapping of HDL-based
designs directly into ProASIC Plus devices.
On July 1, 2002, Synplicity announced that its Synplify Pro synthesis
software was optimized to support our new Axcelerator FPGA device family.
Synplicity's Synplify Pro software performs technology mapping of HDL- based
designs directly into Actel's Axcelerator architecture. The software produces an
Axcelerator-optimized netlist and maps it directly into our Libero IDE.
Research and Development
In 2002, we spent $39.3 million on research and development, which
represented 29% of net revenues. Our research and development expenditures are
divided among circuit design, software development, and process technology
activities, all of which are involved in the development of new products based
on existing or emerging technologies. In the areas of circuit design and process
technology, our research and development activities also involve continuing
efforts to reduce the cost and improve the performance of current products,
including "shrinks" of the design rules under which such products are
manufactured. Our software research and development activities include enhancing
the functionality, usability, and availability of high-level CAE tools and IP
cores in a complete and automated desktop design environment on popular PC and
workstation platforms.
During 2002, we introduced our leading-edge flash (see "BUSINESS --
Products and Services -- Flash FPGAs -- ProASIC Plus) and antifuse (see
"BUSINESS -- Products and Services -- Antifuse FPGAs -- Axcelerator) product
families and completed the introduction of our leading-edge high-reliability
product family (see "BUSINESS -- Products and Services -- HiRel FPGAs -- Rad
Tolerant). We publicly disclosed in 2002 that we are working on next-generation
flash (see "BUSINESS -- Strategic Partners -- Infineon) and high reliability
(see "BUSINESS -- Products and Services -- HiRel FPGAs -- Rad Tolerant)
products.
Competition
The FPGA market is highly competitive, and we expect that it will increase
as the market grows. Our competitors include suppliers of standard TTLs and
custom-designed ASICs, including conventional gate arrays and standard cells,
simple PLDs, CPLDs, and FPGAs. Of these, we compete principally with suppliers
of ASICs, CPLDs, and FPGAs.
The primary advantages of ASICs are high capacity, high density, high
speed, and low cost in production volumes. These advantages are offset by long
design cycles and high designs costs, including mask set and nonrecurring
engineering (NRE) charges. We compete with ASIC suppliers by offering lower
design costs (including low or no NREs), shorter design cycles, and reduced
inventory risks. Some customers elect to design and prototype with our products
and then convert to ASICs to achieve lower costs for volume production. For this
reason, we also face competition from companies that specialize in converting
CPLDs and FPGAs, including our products, into ASICs.
We also compete with suppliers of CPLDs. Suppliers of these devices include
Altera Corporation (Altera), which purchased the PLD business of Intel
Corporation in 1994, and Lattice-Vantis Semiconductor Corporation (Lattice),
which purchased the CPLD businesses of Vantis Corporation in 1999. The circuit
architecture of CPLDs may give them a performance advantage in certain lower
capacity applications, although we believe that our FPGAs compete favorably with
CPLDs. However, Altera and Lattice are larger than us, offer broader product
lines to more extensive customer bases, and have significantly greater
financial, technical, sales, and other resources. In addition, many newer CPLDs
are reprogrammable, which permits customers to reuse a circuit multiple times
during the design process. While our flash FPGAs are reprogrammable, antifuse
FPGAs are one-time programmable, permanently retaining their programmed
configuration. No assurance can be given that we will be able to overcome these
competitive disadvantages.
We compete most directly with established FPGA suppliers, such as Xilinx,
Inc. (Xilinx), Altera, and Lattice, which purchased the FPGA business of Agere
Systems, Inc. in 2002. We announced our intention to develop SRAM-based FPGA
products in 1996 and abandoned the development in 1999. While we believe our
products and technologies are superior to those of Xilinx (as well as Altera and
Lattice) in many applications requiring greater internal speed, lower cost,
nonvolatility, lower power, and/or greater security, Xilinx is significantly
larger than us, offers a broader product line to a more extensive customer base,
and has substantially greater financial, technical, sales, and other resources.
In addition, the FPGAs of Xilinx, Altera, and Lattice are reprogrammable. While
our flash FPGAs are reprogrammable, antifuse FPGAs are one-time programmable. No
assurance can be given that we will be able to overcome these competitive
disadvantages.
Several companies have marketed antifuse-based FPGAs, including QuickLogic
Corporation (QuickLogic). In 1995, we acquired the antifuse FPGA business of TI,
which was the only second-source supplier of our products. Xilinx, which is a
licensee of certain of our patents, introduced antifuse-based FPGAs in 1995 and
abandoned its antifuse FPGA business in 1996. Cypress Semiconductor Corporation,
which was a licensed second source of QuickLogic, sold its antifuse FPGA
business to QuickLogic in 1997. We believe that we compete favorably with
QuickLogic, which is also a licensee of certain of our patents. See "BUSINESS --
Patents and Licenses."
To date, we are the only supplier of flash-based FPGAs. In 1998, we entered
into a strategic alliance with GateField under which we acquired the exclusive
right to market and sell standard ProASIC products in process geometries of
0.35-micron and less. In 1999, we introduced the flash-based ProASIC family of
FGPAs. In 2000, we acquired GateField in a merger.
We believe that important competitive factors in our market are price;
performance; capacity (total number of usable gates); density (concentration of
usable gates); ease of use and functionality of development tools; installed
base of development tools; reprogrammability; strength of sales organization and
channels; security; power consumption; adaptability of products to specific
applications and IP; ease, speed, cost, and consistency of programming; length
of research and development cycle (including migration to finer process
geometries); number of I/Os; reliability; wafer fabrication and assembly
capacity; availability of packages, adapters, sockets, programmers, and IP;
technical service and support; and utilization of intellectual property laws.
Our failure to compete successfully in any of these or other areas could have a
materially adverse effect on our business, financial condition, or results of
operations.
Patents and Licenses
As of March 31, 2003, we had 220 United States patents and applications
pending for an additional 62 United States patents. We also had 67 foreign
patents and applications pending for 42 patents outside the United States. Our
patents cover, among other things, our basic circuit architectures, antifuse and
flash structures, and programming methods. We expect to continue filing patent
applications as appropriate to protect our proprietary technologies. We believe
that patents, along with such factors as innovation, technological expertise,
and experienced personnel, will become increasingly important.
In connection with the settlement of patent litigation in 1993, we entered
into a Patent Cross License Agreement with Xilinx (Xilinx Agreement), under
which Xilinx was granted a license under certain of our patents that permits
Xilinx to make and sell antifuse-based PLDs, and we were granted a license under
certain Xilinx patents to make and sell SRAM-based PLDs. Xilinx introduced
antifuse-based FPGAs in 1995 and abandoned its antifuse FPGA business in 1996.
We announced our intention to develop SRAM-based FPGA products in 1996 and
abandoned the development in 1999.
In 1995, we entered into a License Agreement with BTR, Inc. (BTR) pursuant
to which BTR licensed its proprietary technology to us for development and use
in FPGAs and certain multichip modules. As partial consideration for the grant
of the license, we pay to BTR non-refundable advance royalties. We have also
employed the principals of BTR to assist us in our development and
implementation of the licensed technology.
In connection with the settlement of patent litigation in 1998, we entered
into a Patent Cross License Agreement with QuickLogic that protects the products
of both companies that were first offered for sale on or before September 4,
2000, or are future generations of such products.
As is typical in the semiconductor industry, we have been and expect to be
notified from time to time of claims that it may be infringing patents owned by
others. During 2002, we held discussions regarding potential patent infringement
issues with several third parties. When probable and reasonably estimable, we
have made provision for the estimated settlement costs of claims for alleged
infringement. As we sometimes have in the past, we may obtain licenses under
patents that we are alleged to infringe. While we believe that reasonable
resolution will occur, there can be no assurance that these claims will be
resolved or that the resolution of these claims will not have a materially
adverse effect on our business, financial condition, or results of operations.
In addition, our evaluation of the impact of these pending disputes could change
based upon new information learned by us. {Subject to the foregoing, we do not
believe that the resolution of any pending patent dispute is likely to have a
materially adverse effect on our business, financial condition, or results of
operations.}
Employees
At the end of 2002, we had 538 full-time employees, including 148 in
marketing, sales, and customer support; 182 in research and development; 155 in
operations; 16 in Protocol Design Services; and 37 in administration and
finance. Net revenues were approximately $250,000 per employee for 2002. We have
no employees represented by a labor union, have not experienced any work
stoppages, and believe that our employee relations are satisfactory.
Risk Factors
Our shareholders and prospective investors should carefully consider, along
with the other information in this Annual Report on Form 10-K, the following:
Our future revenues and operating results are likely to fluctuate and may
fail to meet expectations, which could cause our stock price to decline.
Our quarterly revenues and operating results are subject to fluctuations
resulting from general economic conditions and a variety of risks specific to us
or characteristic of the semiconductor industry, including booking and shipment
uncertainties, supply problems, and price erosion. These and other factors make
it difficult for us to accurately project quarterly revenues and operating
results, which may fail to meet our expectations. Any failure to meet
expectations could cause our stock price to decline significantly.
A variety of booking and shipping uncertainties may cause us to fall
short of our quarterly revenue expectations.
When we fall short of our quarterly revenue expectations, our
operating results are likely to be adversely affected because most of our
expenses do not vary with revenues.
We derive a large percentage of our quarterly revenues from
bookings received during the quarter and from shipments made in
the final weeks of the quarter, making quarterly revenues
difficult to predict.
Our backlog (which generally may be cancelled or deferred by
customers on short notice without significant penalty) at the
beginning of a quarter typically accounts for about half of our
revenues during the quarter. This means that we generate about half of
our quarterly revenues from orders received during the quarter and
"turned" for shipment within the quarter, and that any shortfall in
"turns" orders will have an immediate and adverse impact on quarterly
revenues. There are many factors that can cause a shortfall in turns
orders, including declines in general economic conditions or the
businesses of our customers, excess inventory in the channel, or
conversion of our products to ASICs or other competing products for
price or other reasons.
Historically, we shipped a disproportionately large percentage of
our quarterly revenues in the final weeks of the quarter, which also
makes it difficult to accurately project quarterly revenues. Any
failure to effect scheduled shipments by the end of a quarter would
have an immediate and adverse impact on quarterly revenues.
Our military and aerospace shipments tend to be large and are
subject to complex scheduling uncertainties, making quarterly
revenues difficult to predict.
Orders from the military and aerospace customers tend to be large
and irregular, which creates operational challenges and contributes to
fluctuations in our net revenues and gross margins. These sales are
also subject to more extensive governmental regulations, including
greater import and export restrictions. Historically, it has been
difficult to predict if and when export licenses will be granted, if
required. In addition, products for military and aerospace
applications require processing and testing that is more lengthy and
stringent than for commercial applications, which increases the
complexity of scheduling and forecasting as well as the risk of
failure. It is often not possible to determine before the end of
processing and testing whether products intended for military or
aerospace applications will fail and, if they do fail, a significant
period of time is often required to process and test replacements. All
of these factors make it difficult to accurately estimate quarterly
revenues.
We derive a majority of our quarterly revenues from products
resold by our distributors, making quarterly revenues difficult
to predict.
We typically generate more than half of our quarterly revenues
from sales made through distributors. Since we do not recognize
revenue on the sale of a product to a distributor until the
distributor resells the product, our quarterly revenues are dependent
on, and subject to fluctuations in, shipments by our distributors. We
are also highly dependent on the timeliness and accuracy of our resale
reports from our distributors. Late or inaccurate resale reports
contribute to our difficulty in predicting and reporting our quarterly
revenues and results of operations, particularly in the last month of
the quarter.
A shortage of products available for sale may adversely affect
quarterly revenues, and unexpected increases in the cost of our
products may adversely affect quarterly operating results.
In a typical semiconductor manufacturing process, silicon wafers
produced by a foundry are sorted and cut into individual die, which are
then assembled into individual packages and tested. The manufacture,
assembly, and testing of semiconductor products is highly complex and
subject to a wide variety of risks, including defects in masks, impurities
in the materials used, contaminants in the environment, and performance
failures by personnel and equipment. Semiconductor products intended for
military and aerospace applications and new products, such as our ProASIC
Plus and Axcelerator FPGA families, are often more complex and/or more
difficult to produce, increasing the risk of manufacturing-related defects.
In addition, we may not discover defects or other errors in new products
until after we have commenced volume production. Our failure to effect
scheduled shipments by the end of a quarter due to unexpected supply
constraints would have an immediate and adverse impact on quarterly
revenues
As is also common in the semiconductor industry, our independent wafer
suppliers from time to time experience lower than anticipated yields of
usable die. Wafer yields can decline without warning and may take
substantial time to analyze and correct, particularly for a company like us
that does not operate our own manufacturing facility, but instead utilizes
independent facilities, almost all of which are offshore. Yield problems
are most common on new processes or at new foundries, particularly when new
technologies are involved. In addition, our FPGAs are manufactured using
customized processing steps, which may increase the incidence of production
yield problems as well as the amount of time need to achieve satisfactory,
sustainable wafer yields on new processes and new products. Lower than
expected yields of usable die reduce our gross margin, which could
adversely affect our quarterly operating results.
Reductions in the average selling prices of our products may adversely
affect quarterly revenues or operating results.
The semiconductor industry is characterized by intense competition.
The average selling price of a product typically declines significantly
between introduction and maturity. To win designs, we generally must price
new products on the assumption that manufacturing cost reductions will be
achieved, which often do not occur as soon as expected. In addition, we
sometimes are required by competitive pressures to reduce the prices of our
new products more quickly than cost reductions can be achieved. We also
sometimes approve price reductions on specific sales for strategic or other
reasons. Declines in the average selling prices of our products will reduce
quarterly revenues unless offset by greater unit sales or a shift in the
mix of products sold toward higher-priced products. Declines in the average
selling prices of our products will also reduce quarterly gross margin
unless offset by reductions in manufacturing costs or by a shift in the mix
of products sold toward higher-margin products.
In preparing our financial statements, we make good faith estimates and
judgments that may change or turn out to be erroneous.
In preparing our financial statements in conformity with accounting
principles generally accepted in the United States, we must make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues, and
expenses and the related disclosure of contingent assets and liabilities. The
most difficult estimates and subjective judgments that we make concern
inventories, impairment of investments in other companies, intangible assets and
goodwill, income taxes, and legal matters. We base our estimates on historical
experience and on various other assumptions that we believe to be reasonable
under the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ materially from
these estimates. In addition, if these estimates or their related assumptions
change in the future, it can have a material affect on our operating results.
Our revenues and operating results have been and may again be adversely
affected by downturns in the general economy, in the semiconductor
industry, in our major markets, or at our major customers.
We have experienced substantial period-to-period fluctuations in revenues
and results of operations due to conditions in the overall economy, in the
general semiconductor industry, in our major markets, or at our major customers.
We may again experience these fluctuations, which could be adverse and may be
severe.
Our revenues and operating results may be adversely affected by future
downturns in the semiconductor industry.
The semiconductor industry historically has been cyclical and
periodically subject to significant economic downturns, which are
characterized by diminished product demand, accelerated price erosion, and
overcapacity. Beginning in the fourth quarter of 2000, we experienced, and
the semiconductor industry in general experienced, reduced bookings and
backlog cancellations due to excess inventories at communications,
computer, and consumer equipment manufacturers and a general softening in
the overall economy. The downturn, which has been severe and prolonged,
resulted in lower revenues, which has had a disproportionate effect on
profitability. Any further downturn or future downturns in the
semiconductor industry may likewise have an adverse effect on our revenues
and results of operations.
Our revenues and operating results may be adversely affected by future
downturns in the communications market.
We estimate that sales of our products to customers in the
communications market accounted for 25% of our net revenues for 2002,
compared with 49% for 2001 and 56% for 2000. The communications market has
experienced economic downturns at various times and, since the fourth
quarter of 2000, may have suffered its worst downturn ever. As a result, we
have experienced reduced revenues and results of operations. Any future
downturns in the communications market may likewise have an adverse effect
on our revenues and results of operations.
Our revenues and/or operating results may be adversely affected by
future downturns or other changes in the military and aerospace
market.
We estimate that sales of our products to customers in the military
and aerospace industries, which carry higher overall gross margins than
sales of products to other customers, accounted for 41% of our net revenues
for 2002, compared with 26% for 2001. In general, we believe that the
military and aerospace industries have accounted for a significantly
greater percentage of our net revenues since the introduction of our Rad
Hard FPGAs in 1996 and our Rad Tolerant FPGAs in 1998. Any future downturn
in the military and aerospace market may have an adverse effect on our
revenues and results of operations.
In 1994, Secretary of Defense William Perry directed the Department of
Defense to avoid government-unique requirements when making purchases and
rely more on the commercial marketplace. Under the "Perry initiative," the
Department of Defense must strive to increase access to commercial
state-of-the-art technology and facilitate the adoption by its suppliers of
business processes characteristic of world-class suppliers. Integration of
commercial and military development and manufacturing facilitates the
development of "dual-use" processes and products and contributes to an
expanded industrial base that is capable of meeting defense needs at lower
costs. To that end, many of the cost-driving specifications that had been
part of military procurements for many years were cancelled in the interest
of buying best-available commercial products. If this trend toward the use
of commercial off-the-shelf products continues, it may erode the revenues
and/or margins that we derive from sales to customers in the military and
aerospace industries, which could have a materially adverse effect on our
business, financial condition, or results of operations.
Our revenues and operating results may be adversely affected by future
downturns at our major customers.
A relatively small number of customers are responsible for a
significant portion our net revenues. We have experienced periods in which
sales to our major customers fluctuated as a percentage of our net revenues
due to push-outs or cancellations of orders, or delays or failures to place
expected orders. For example, Nortel accounted for 11% of our net revenues
in 2000, compared with 2% in 2001 and 1% in 2002. We believe that sales to
a limited number of customers will continue to account for a substantial
portion of net revenues in future periods. The loss of a major customer, or
decreases or delays in shipments to major customers, could have a
materially adverse effect on our business, financial condition, or results
of operations.
Increased pricing pressure on new products may cause our gross margin to
decline.
Our gross margin is the difference between the cost of our products and the
revenues we receive from the sale of our products. To win designs, we generally
must price new products on the assumption that manufacturing cost reductions
will be achieved, which often do not occur as soon as expected. In addition, we
sometimes are required by competitive pressures to reduce the prices of our new
products more quickly than cost reductions can be achieved. We also sometimes
approve price reductions on specific sales for strategic or other reasons. One
of the most important variables affecting the cost of our products is
manufacturing yields. With our customized antifuse and flash manufacturing
process requirements, we almost invariably experience difficulties and delays in
achieving satisfactory, sustainable yields on new products. Until satisfactory
yields are achieved, gross margins on news products will generally be lower than
on mature products. Depending upon the rate at which sales of these new products
ramp and the extent to which they displace mature products, the lower gross
margins could have a materially adverse effect on our operating results.
The price we can charge for a product is constrained principally by our
competitors. While competition has always been intense, we believe price
competition has become more acute. This may be due in part to the transition
toward high-level design methodologies. Designers can now wait until later in
the design process before selecting a PLD or ASIC and it is easier to convert
between competing PLDs or between PLDs and ASICs. The increased price
competition may be due in part to the increasing penetration of PLDs into
cost-sensitive markets previously dominated by ASICs. These competitive
pressures may cause us to reduce the prices of our new products more quickly
than we can achieve cost reductions, which would reduce our gross margin and may
have a materially adverse effect on our operating results.
We may not win sufficient designs, or the designs we win may not generate
sufficient revenues, for us to maintain or expand our business.
In order for us to sell an FPGA to a customer, the customer must
incorporate the FPGA into the customer's product in the design phase. We devote
substantial resources, which we may not recover through product sales, to
persuade potential customers to incorporate our FPGAs into new or updated
products and to support their design efforts (including, among other things,
providing development systems). These efforts usually precede by many months
(and often a year or more) the generation of FPGA sales, if any. The value of
any design win, moreover, depends in large part upon the ultimate success of our
customer's product in its market. Our failure to win sufficient designs, or the
failure of the designs we win to generate sufficient revenues, could have a
materially adverse effect on our business, financial condition, or results of
operations.
We may be unsuccessful in defining, developing, or selling competitive new
or improved products at acceptable margins.
The market for our products is characterized by rapid technological change,
product obsolescence, and price erosion, making the timely introduction of new
or improved products critical to our success. Our failure to design, develop,
and sell new or improved products that satisfy customer needs, compete
effectively, and generate acceptable margins may adversely affect our business,
financial condition, or results of operations. While most of our product
development programs have achieved a level of success, some have not. For
example:
- We announced our intention to develop SRAM-based FPGA products in 1996
and abandoned the development in 1999 principally because the product
would no longer have been competitive.
- We introduced our VariCore embeddable reprogrammable gate array (EPGA)
logic core based on SRAM technology in 2001. Revenues from VariCore
EPGAs have not materialized to date and the development of a more
advanced VariCore EPGA has been postponed. In this case, a market that
we believed would develop has yet to emerge.
- In 2001, we also launched our BridgeFPGA initiative to address the I/O
problems created within the high-speed communications market by the
proliferation of interface standards. The adoption of these interface
standards has created the need for designers to implement bridging
functions to connect incompatible interface standards. We introduced
the first BridgeFPGA product, a high-speed antifuse FPGA with
dedicated high-speed I/O circuits that can support multiple interface
standards, in 2002 (see "BUSINESS-- Products and Services-- Antifuse
FPGAs-- Axcelerator). However, the development of subsequent
BridgeFPGA products, which were expected to include embedded
high-speed interface protocol controllers, was postponed in 2002. This
was due principally to the prolonged downturn in the high-speed
communications market.
Numerous factors can cause the development or introduction of new
products to fail.
To develop and introduce a product, we must successfully accomplish
all of the following:
- anticipate future customer demand and the technology that will be
available to meet the demand;
- define the product and its architecture, including the
technology, silicon, programmer, IP, software, and packaging
specifications;
- obtain access to advanced manufacturing process technologies;
- design and verify the silicon;
- develop and release evaluation software;
- lay out the architecture and implement programming;
- tape out the product;
- generate a mask of the product and evaluate the software;
- manufacture the product at the foundry;
- verify the product; and
- qualify the process, characterize the product, and release
production software.
We can offer you no assurance that our development and introduction
schedules for new products or the supporting software or hardware will be
met, that new products will gain market acceptance, or that we will respond
effectively to new technological changes or new product announcements by
others. Any failure to successfully define, develop, market, manufacture,
assemble, test, or program competitive new products could have a materially
adverse effect on its business, financial condition, or results of
operations.
New products are subject to greater technical and operational risks.
Our future success is highly dependent upon the timely development and
introduction of competitive new products at acceptable margins. However,
there are greater technological and operational risks associated with new
products. The inability of our wafer suppliers to produce advanced
products; delays in commencing or maintaining volume shipments of new
products; the discovery of product, process, software, or programming
failures; and any related product returns could each have a materially
adverse effect on our business, financial condition, or results of
operation.
As is common in the semiconductor industry, we have experienced from
time to time in the past, and expect to experience in the future,
difficulties and delays in achieving satisfactory, sustainable yields on
new products. The fabrication of antifuse and flash wafers is a complex
process that requires a high degree of technical skill, state-of-the-art
equipment, and effective cooperation between us and the foundry to produce
acceptable yields. Minute impurities, errors in any step of the fabrication
process, defects in the masks used to print circuits on a wafer, and other
factors can cause a substantial percentage of wafers to be rejected or
numerous die on each wafer to be non-functional. Yield problems increase
the cost of as well as time it takes us to bring our new products to
market, which can create inventory shortages and dissatisfied customers.
Any prolonged inability to obtain adequate yields or deliveries could have
a materially adverse effect on our business, financial condition, or
results of operations.
We face intense competition and have some competitive disadvantages that we
may not be able to overcome.
The semiconductor industry is intensely competitive. Our existing
competitors include suppliers of ASICs, CPLDs, and FPGAs. Our principal
competitors are Xilinx, a supplier of SRAM-based FPGAs; Altera, a supplier of
CPLDs and SRAM-based FPGAs; Lattice, a supplier of CPLDs and SRAM-based FPGAs;
and QuickLogic, a supplier of antifuse-based FPGAs. We also face competition
from companies that specialize in converting FPGAs, including our products, into
ASICs. See "BUSINESS -- Competition."
All existing FPGAs not based on antifuse technology and certain CPLDs are
reprogrammable. The nonvolatility of our antifuse FPGAs is necessary or
desirable in some applications, but logic designers generally prefer to
prototype with a reprogrammable logic device. This is because the designer can
reuse the device if an error is made. The visibility associated with discarding
a one-time programmable device often causes designers to select a reprogrammable
device even when the alternative one-time programmable device offers significant
advantages. This bias in favor of designing with reprogrammable logic devices
appears to increase as the size of the design increases. Although we now offer
reprogrammable flash devices, we may not be able to overcome this competitive
disadvantage.
Our antifuse-based FPGAs and (to a lesser extent) flash-based ProASIC FPGAs
are manufactured using customized steps that are added to otherwise standard
manufacturing processes of independent wafer suppliers. There is considerably
less operating history for the customized process steps than for the foundries'
standard manufacturing processes. Our dependence on customized processing steps
means that, in contrast with competitors using standard manufacturing processes,
we generally have more difficulty establishing relationships with independent
wafer manufacturers; take longer to qualify a new wafer manufacturer; take
longer to achieve satisfactory, sustainable wafer yields on new processes; may
experience a higher incidence of production yield problems; must pay more for
wafers; and generally will not obtain early access to the most advanced
processes. Any of these factors could be a material disadvantage against
competitors using standard manufacturing processes. As a result of these
factors, our products typically have been fabricated using processes one or two
generations behind the processes used by competing products. As a consequence,
we generally have not fully realized the benefits of our technologies. We are
attempting to accelerate the rate at which our products are reduced to finer
process geometries and are working with our wafer suppliers to obtain earlier
access to advanced processes, but we may not be able to overcome these
competitive disadvantages.
Many of our current competitors have broader product lines, more extensive
customer bases, and significantly greater financial, technical, manufacturing,
and marketing resources than us. Additional competition is possible from major
domestic and international semiconductor suppliers. All such companies are
larger and have broader product lines, more extensive customer bases, and
substantially greater financial and other resources than us, including the
capability to manufacture their own wafers. We may not be able to overcome these
competitive disadvantages.
We may also face competition from suppliers of logic products based on new
or emerging technologies. While we seek to monitor developments in existing and
emerging technologies, we may not be able to compete successfully with suppliers
offering products based on new or emerging technologies. In any event, given the
intensity of the competition and the research and development efforts being
conducted, our technologies may not remain competitive.
Our business and operations may be disrupted by events that are beyond our
control or the control of our business partners.
Our performance is subject to events or conditions beyond our control, and
the performance of each of our foundries, suppliers, subcontractors,
distributors, agents, and customers is subject to events or conditions beyond
their control. These events or conditions include labor disputes, acts of public
enemies or terrorists, war or other military conflicts, blockades,
insurrections, riots, epidemics, quarantine restrictions, landslides, lightning,
earthquakes, fires, storms, floods, washouts, arrests, civil disturbances,
restraints by or actions of governmental bodies acting in a sovereign capacity
(including export or security restrictions on information, material, personnel,
equipment, or otherwise), breakdowns of plant or machinery, and inability to
obtain transport or supplies. This type of disruption could result in our
inability to ship products in a timely manner and have a materially adverse
effect on our business, financial condition, or results of operations.
Our corporate offices are located in California, which was subject to power
outages and shortages during 2001. More extensive power shortages in the state
could disrupt our operations and interrupt our research and development
activities. Our foundry partners in Japan and Taiwan and our operations in
California are located in areas that have been seismically active in the recent
past. In addition, the countries outside of the United States in which our
foundry partners and assembly and other subcontractors are located have
unpredictable and potentially volatile economic, social, or political
conditions, including the risks of conflict between Taiwan and the People's
Republic of China or between North Korea and South Korea. In addition, an
outbreak of Severe Acute Respiratory Syndrome (SARS) has been reported in Hong
Kong, Singapore, and China. The occurrence of these or similar events or
circumstances could disrupt our operations and may have a materially adverse
effect on our business, financial condition, or results of operations.
Our business depends on numerous independent third parties whose interests
may diverge from our interests.
We rely heavily on, but generally have little control over, our independent
foundries, suppliers, subcontractors, and distributors.
Our independent wafer manufacturers may be unable or unwilling to
satisfy our needs in a timely manner, which could harm our business
and expose us to the risk of identifying and qualifying substitute
suppliers.
We do not manufacture any of the semiconductor wafers used in the
production of our FPGAs. Our wafers are manufactured by BAE in the United
States, Chartered in Singapore, Infineon in Germany, MEC in Japan, UMC in
Taiwan, and Winbond in Taiwan. Our reliance on independent wafer
manufacturers to fabricate our wafers involves significant risks, including
lack of control over capacity allocation, delivery schedules, the
resolution of technical difficulties limiting production or reducing
yields, and the development of new processes. Although we have supply
agreements with several of our wafer manufacturers, a shortage of raw
materials or production capacity could lead any of our wafer suppliers to
allocate available capacity to other customers, or to internal uses, which
could impair our ability to meet our product delivery obligations.
If our current independent wafer manufacturers were unable or
unwilling to manufacture our products as required, we would have to
identify and qualify additional foundries. No additional wafer foundries
may be able or available to satisfy our requirements on a timely basis.
Even if we are able to identify a new third party manufacturer, the costs
associated with manufacturing our products may increase. In any event, the
qualification process typically takes one year or longer, which could cause
product shipment delays, and qualification may not even be successful. In
addition, the semiconductor industry has from time to time experienced
shortages of manufacturing capacity. To secure an adequate supply of
wafers, we may consider various transactions, including the use of
substantial nonrefundable deposits, contractual purchase commitments,
equity investments, or the formation of joint ventures.
Our independent assembly subcontractors may be unable or unwilling to
meet our requirements, which could delay product shipments and result
in the loss of customers or revenues.
We rely primarily on foreign subcontractors for the assembly and
packaging of our products and, to a lesser extent, for testing of our
finished products. Our reliance on independent subcontractors involves
certain risks, including lack of control over capacity allocation and
delivery schedules. We generally rely on one or two subcontractors to
provide particular services and have from time to time experienced
difficulties with the timeliness and quality of product deliveries. We have
no long-term contracts with our subcontractors and certain of those
subcontractors sometimes operate at or near full capacity. Any significant
disruption in supplies from, or degradation in the quality of components or
services supplied by, our subcontractors could have a materially adverse
effect on our business, financial condition, or results of operations.
Our independent software and hardware developers and suppliers may be
unable or unwilling to satisfy our needs in a timely manner, which
could impair the introduction of new products or the support of
existing products.
We are dependent on independent software and hardware developers for
the development, supply, maintenance, and support of some of our IP cores,
development systems, programming hardware, design diagnostics and debugging
tool kits, demonstration boards, and ASIC conversion products (or certain
elements of those products). Our reliance on independent software and
hardware developers involves certain risks, including lack of control over
development and delivery schedules and the availability of customer
support. Any failure of or significant delay by our independent developers
to complete software and/or hardware under development in a timely manner
could disrupt the release of our software and/or the introduction of our
new FPGAs, which might be detrimental to the capability of our new products
to win designs. Any failure of or significant delay by our independent
suppliers to provide updates or customer support could disrupt our ability
to ship products or provide customer support services, which might result
in the loss of revenues or customers. Any of these disruptions could have a
materially adverse effect on our business, financial condition, or results
of operations.
Our future performance will depend in part on the effectiveness of our
independent distributors in marketing, selling, and supporting our
products.
In 2002, sales made through distributors accounted for approximately
65% of our net revenues. Although we have contracts with our distributors,
the agreements are terminable by either party on short notice. Two of our
distributors, Pioneer and Unique, accounted for 48% of our net revenues in
2002. On March 1, 2003, we consolidated our distribution channel by
terminating our agreement with Pioneer, which accounted for 26% of our net
revenues in 2002. We also consolidated our distribution channel in 2001 by
terminating our agreement with Arrow, which accounted for 13% of our net
revenues in 2001. The loss of Unique as a distributor could have a
materially adverse effect on our business, financial condition, or results
of operations.
Distributors generally offer products of several different companies,
including products that compete with our products. Accordingly, there are
risks that distributors may reduce their efforts to sell our products or
give higher priority to competing products. A reduction in sales efforts by
one or more of our current distributors or a termination of relationship
with any of our current distributors could have a materially adverse effect
on our business, financial condition, or results of operations.
Our distributors have occasionally built inventories in anticipation
of significant growth in sales and, when such growth did not occur as
rapidly as anticipated, substantially reduced the amount of product ordered
from us in subsequent quarters. Such a slowdown in orders generally reduces
our gross margin on future sales of newer products because we are unable to
take advantage of any manufacturing cost reductions while the distributor
depletes its inventory at lower average selling prices. In addition, the
failure of one or more of our distributors to pay for products ordered from
us or to discontinue operations because of financial difficulties or for
other reasons could have a materially adverse effect on our business,
financial condition, or results of operations.
We depend on international operations for almost all of our products and on
international sales for a significant portion of our revenue, both of which
are subject to all of the risks and uncertainties associated with the
conduct of international business.
We purchase almost all of our wafers from foreign foundries and have almost
all of our commercial products assembled, packaged, and tested by subcontractors
located outside the United States. These activities are subject to the
uncertainties associated with international business operations, including trade
barriers and other restrictions, changes in trade policies, governmental
regulations, currency exchange fluctuations, reduced protection for intellectual
property, war and other military activities, terrorism, changes in social,
political, or economic conditions, and other disruptions or delays in production
or shipments, any of which could have a materially adverse effect on our
business, financial condition, or results of operations.
Sales to customers outside North America accounted for 38% of net revenues
in 2002. We expect that international sales will continue to represent a
significant portion of our total revenues. International sales are subject to
the risks described above as well as generally longer payment cycles, greater
difficulty collecting accounts receivable, and currency restrictions. We also
maintain foreign sales offices to support our international customers,
distributors, and sales representatives, which are subject to local regulation.
The Strom Thurmond National Defense Authorization Act for 1999 required,
among other things, that communications satellites and related items (including
components) be controlled on the U.S. Munitions List. The effect of the Act was
to transfer jurisdiction over commercial communications satellites from the
Department of Commerce to the Department of State and to expand the scope of
export licensing applicable to commercial satellites. The need to obtain
additional export licenses has caused significant delays in the shipment of some
of our FPGAs. Any future restrictions or charges imposed by the United States or
any other country upon the exportation or importation of our products could have
a materially adverse effect on our business, financial condition, or results of
operations.
Any acquisition we make may harm our business, financial condition, or
operating results.
We have a mixed history of success in our acquisitions. For example:
- In 1999, we acquired AutoGate Logic, Inc. (AGL) for consideration
valued at $7.2 million. We acquired AGL for technology used in the
unsuccessful development of an SRAM-based FPGA.
- In 2000, Actel acquired Prosys Technology, Inc. (Prosys) for
consideration valued at $26.2 million. We acquired Prosys for
technology used in our VariCore EPGA logic core, which was introduced
in 2001 but for which no market has yet emerged.
- Also in 2000, we completed our acquisition of GateField for
consideration valued at $45.7 million. We acquired GateField for its
flash technology and ProASIC FPGA family. We introduced the
next-generation ProASIC Plus product family in 2002 and are currently
the only company offering nonvolatile, reprogrammable FPGAs.
In pursuing our business strategy, we may acquire other products,
technologies, or businesses from third parties. Identifying and negotiating
these acquisitions may divert substantial management time away from our
operations. An acquisition could absorb substantial cash resources, require us
to incur or assume debt obligations, and/or involve the issuance of additional
our equity securities. The issuance of additional equity securities may dilute,
and could represent an interest senior to the rights of, the holders of our
Common Stock. An acquisition could involve significant write-offs (possibility
resulting in a loss for the fiscal year(s) in which taken) and would require the
amortization of any identifiable intangibles over a number of years, which would
adversely affect earnings in those years. Any acquisition would require
attention from our management to integrate the acquired entity into our
operations, may require us to develop expertise outside our existing business,
and could result in departures of management from either us or the acquired
entity. An acquired entity may have unknown liabilities, and our business may
not achieve the results anticipated at the time it is acquired by us. The
occurrence of any of these circumstances could disrupt our operations and may
have a materially adverse effect on our business, financial condition, or
results of operations.
We may face significant business and financial risk from claims of
intellectual property infringement asserted against us, and we may be
unable to adequately enforce our intellectual property rights.
As is typical in the semiconductor industry, we are notified from time to
time of claims that we may be infringing patents owned by others. During 2002,
we held discussions regarding potential patent infringement issues with several
third parties. As we sometimes have in the past, we may obtain licenses under
patents that we are alleged to infringe. Although patent holders commonly offer
licenses to alleged infringers, no assurance can be given that licenses will be
offered or that we will find the terms of any offered licenses acceptable. We
cannot assure you that any claim of infringement will be resolved or that the
resolution of any claims will not have a materially adverse effect on our
business, financial condition, or results of operations. Our failure to obtain a
license for technology allegedly used by us could result in litigation.
In addition, we have agreed to defend our customers from and indemnify them
against claims that our products infringe the patent or other intellectual
rights of third parties. All litigation, whether or not determined in favor of
us, can result in significant expense and divert the efforts of our technical
and management personnel. In the event of an adverse ruling in any litigation
involving intellectual property, we could suffer significant (and possibly
treble) monetary damages, which could have a materially adverse effect on our
business, financial condition, or results of operations. We may also be required
to discontinue the use of infringing processes; cease the manufacture, use, and
sale or licensing of infringing products; expend significant resources to
develop non-infringing technology; or obtain licenses under patents that we are
infringing. In the event of a successful claim against us, our failure to
develop or license a substitute technology on commercially reasonable terms
could also have a materially adverse effect on our business, financial
condition, and results of operations.
We have devoted significant resources to research and development and
believe that the intellectual property derived from such research and
development is a valuable asset important to the success of our business. We
rely primarily on patent, trademark, and copyright laws combined with
nondisclosure agreements and other contractual provisions to protect our
proprietary rights. We cannot assure you that the steps we have taken will be
adequate to protect our proprietary rights. In addition, the laws of certain
territories in which our products are developed, manufactured, or sold,
including Asia and Europe, may not protect our products and intellectual
property rights to the same extent as the laws of the United States. Our failure
to enforce our patents, trademarks, or copyrights or to protect our trade
secrets could have a materially adverse effect on our business, financial
condition, or results of operations.
We may be unable to retain or attract the personnel necessary to
successfully operate or grow our business.
Our success is dependent in large part on the continued service of our key
managerial, engineering, marketing, sales, and support employees. Particularly
important are highly skilled design, process, software, and test engineers
involved in the manufacture of existing products and the development of new
products and processes. The loss of our key employees could have a materially
adverse effect on our business, financial condition, or results of operations.
In the past we have experienced growth in the number of our employees and
the scope of our operations, resulting in increased responsibilities for
management personnel. To manage future growth effectively, we will need to
attract, hire, train, motivate, manage, and retain a growing number of
employees. During strong business cycles, we expect to experience difficulty in
filling our needs for qualified engineers and other personnel. Any failure to
attract and retain qualified employees, or to manage our growth effectively,
could delay product development and introductions or otherwise have a materially
adverse effect on our business, financial condition, or results of operations.
We have some arrangements that may not be neutral toward a potential change
of control and our Board of Directors could adopt others.
We have adopted an Employee Retention Plan that provides for payment of a
benefit to our employees who hold unvested stock options in the event of a
change of control. Payment is contingent upon the employee remaining employed
for six months after the change of control (unless employment is terminated
other than for cause). Each of our executive officers has also entered into a
Management Continuity Agreement, which provides for the acceleration of stock
options unvested at the time of a change of control in the event the executive
officer's employment is actually or constructively terminated other than for
cause following the change of control. While these arrangements are intended to
make executive officers and other employees neutral towards a potential change
of control, they could have the effect of biasing some or all executive officers
or employees in favor of a change of control.
Our Articles of Incorporation authorize the issuance of up to 5,000,000
shares of "blank check" Preferred Stock with designations, rights, and
preferences determined by our Board of Directors. Accordingly, our Board is
empowered, without approval by holders of our Common Stock, to issue Preferred
Stock with dividend, liquidation, redemption, conversion, voting, or other
rights that could adversely affect the voting power or other rights of the
holders of our Common Stock. Issuance of Preferred Stock could be used to
discourage, delay, or prevent a change in control. In addition, issuance of
Preferred Stock could adversely affect the market price of our Common Stock.
Our stock price may decline significantly, possibly for reasons unrelated
to our operating performance.
The stock markets have experienced extreme price and volume volatility in
recent years. This volatility has had a substantial effect on the market prices
of the securities issued by technology companies, at times for reasons unrelated
to the operating performance of the specific companies.
Our Common Stock has also been subject to extreme price and volume
fluctuations in recent years. Our Common Stock may continue to fluctuate
substantially on the basis of many factors, including:
- quarterly fluctuations in our financial results or the financial
results of our competitors or other semiconductor companies;
- changes in the expectations of analysts regarding our financial
results or the financial results of our competitors or other
semiconductor companies;
- announcements of new products or technical innovations by us or by our
competitors; and
- general conditions in the semiconductor industry, financial markets,
or economy.
We have no intention to pay cash dividends in the foreseeable future.
We have never declared or paid any cash dividends on our capital stock. We
intend to retain any earnings for use in our business and do not anticipate
paying any cash dividends in the future.
Executive Officers of the Registrant
The following table identifies each of our executive officers as of April
4, 2003:
Name Age Position
- --------------------- --- -----------------------------------------------------
John C. East......... 58 President and Chief Executive Officer
Esmat Z. Hamdy....... 53 Senior Vice President of Technology & Operations
Jon A. Anderson...... 44 Vice President of Finance and Chief Financial Officer
Anthony Farinaro..... 40 Vice President & General Manager of Design Services
Paul V. Indaco....... 52 Vice President of Worldwide Sales
Dennis G. Kish....... 39 Vice President of Marketing
Barbara L. McArthur.. 52 Vice President of Human Resources
Fares N. Mubarak..... 41 Vice President of Engineering
David L. Van De Hey.. 47 Vice President & General Counsel and Secretary
Mr. East has served as our President and Chief Executive Officer since
December 1988. From April 1979 until joining us, Mr. East served in various
positions with Advanced Micro Devices, a semiconductor manufacturer, including
Senior Vice President of Logic Products from November 1986 to November 1988.
From December 1976 to March 1979, he served as Operations Manager for Raytheon
Semiconductor. From September 1968 to December 1976, Mr. East served in various
marketing, manufacturing, and engineering positions for Fairchild Camera and
Instrument Corporation, a semiconductor manufacturer.
Dr. Hamdy is one of our founders, was our Vice President of Technology from
August 1991 to March 1996 and Senior Vice President of Technology from March
1996 to September 1996, and has been our Senior Vice President of Technology and
Operations since September 1996. From November 1985 to July 1991, he held a
number of management positions with our technology and development group. From
January 1981 to November 1985, Dr. Hamdy held various positions at Intel
Corporation, a semiconductor manufacturer, lastly as project manager.
Mr. Anderson joined us in March 1998 as Controller and has been our Vice
President of Finance and Chief Financial Officer since August 2001. From 1987
until joining us, he held various financial positions at National Semiconductor,
a semiconductor company, with the most recent position of Director of Finance,
Local Area Networks Division. From 1982 to 1986, he was an auditor with Touche
Ross & Co., a public accounting firm.
Mr. Farinaro joined us in August 1998 as Vice President & General Manager
of Design Services. From February 1990 until joining us, he held various
engineering and management positions with GateField (formally Zycad Corporation
until 1997), a semiconductor company, with the most recent position of Vice
President of Application & Design Services. From 1985 to 1990, Mr. Farinaro held
various engineering and management positions at Singer Kearfott, an aerospace
electronics company, and its spin-off, Plessey Electronic Systems Corporation.
Mr. Indaco joined us in March 1999 as Vice President of Worldwide Sales.
From January 1996 until joining us, he served as Vice President of Sales for
Chip Express, a semiconductor manufacturer. From September 1994 to January 1996,
Mr. Indaco was Vice President of Sales for Redwood Microsystems, a semiconductor
manufacturer. From February 1984 to September 1994, he held senior sales
management positions with LSI Logic, a semiconductor manufacturer. From June
1978 to February 1984, Mr. Indaco held various field engineering sales and
marketing positions with Intel Corporation, a semiconductor manufacturer. From
June 1976 to June 1978, he held various marketing positions with Texas
Instruments, a semiconductor manufacturer.
Mr. Kish joined us in December 1999 as Vice President of Strategic Product
Marketing and became our Vice President of Marketing in July 2000. Prior to
joining us, he held senior management positions at Synopsys, an EDA company, and
Atmel, a semiconductor manufacturer. Before that, Mr. Kish held sales and
engineering positions with Texas Instruments, a semiconductor manufacturer.
Ms. McArthur joined us in July of 2000 as Vice President of Human
Resources. From 1997 until joining us, she was Vice President of Human Resources
at Talus Solutions. Before that, Ms. McArthur held senior human resource
positions at Applied Materials from 1993 to 1997, at 3Com Corporation from 1987
to 1993, and at Saga Corporation from 1978 to 1986.
Mr. Mubarak joined us in November 1992, was our Director of Product and
Test Engineering until October 1997, and has been our Vice President of
Engineering since October 1997. From 1989 until joining us, he held various
engineering and engineering management positions with Samsung Semiconductor
Inc., a semiconductor manufacturer, and its spin-off, IC Works, Inc. From 1984
to 1989, Mr. Mubarak held various engineering, product planning, and engineering
management positions with Advanced Micro Devices, a semiconductor manufacturer.
Mr. Van De Hey joined us in July 1993 as Corporate Counsel, became our
Secretary in May 1994, and has been our Vice President & General Counsel since
August 1995. From November 1988 to September 1993, he was an associate with
Wilson, Sonsini, Goodrich & Rosati, Professional Corporation, a law firm in Palo
Alto, California, and our outside legal counsel. From August 1985 until October
1988, he was an associate with the Cleveland office of Jones, Day, Reavis &
Pogue, a law firm.
Subject to their rights under any contract of employment or other
agreement, executive officers serve at the discretion of the Board of Directors.
ITEM 2. PROPERTIES
Our facilities are located in Sunnyvale, California, in three buildings
that comprise approximately 138,000 square feet. These buildings are leased
through June 2003. We have a renewal option for an additional five-year term,
which we have decided not to exercise. On February 27, 2003, we entered into a
ten-year lease agreement under which we leased two buildings comprising 158,352
square feet located at 2051 and 2061 Stierlin Court, Mountain View, California
94043. We expect to move our principal administrative, marketing, sales,
customer support, design, research and development, and testing functions to
Mountain View in 2003.
We also lease sales offices in the metropolitan areas of Atlanta, Boston,
Chicago, Dallas, Denver, Hong Kong, Houston, London, Los Angeles, Milan,
Minneapolis/St. Paul, Munich, New York, Orlando, Paris, Ottawa (Ontario),
Philadelphia, Raleigh, Seattle, Seoul, Taipei, Tokyo, and Washington D.C., as
well as the facilities of the Design Services Group in Mt. Arlington, New
Jersey, and the facility formerly occupied by GateField in Fremont, California.
We believe our facilities will be adequate for our needs in 2003.
ITEM 3. LEGAL PROCEEDINGS
There are no pending legal proceedings of a material nature to which we are
a party or of which any of our property is the subject. We know of no legal
proceeding contemplated by any governmental authority.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this report.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER MATTERS
Our Common Stock has been traded on the Nasdaq National Market under the
symbol "ACTL" since our initial public offering on August 2, 1993. On March 25,
2003, there were 176 shareholders of record. Since many shareholders have their
shares held of record in the names of their brokerage firms, we estimate the
actual number of shareholders to be about 10,000. The following table sets forth
for the periods indicated the high and low sale prices per share of our Common
Stock as reported on the Nasdaq National Market.
<TABLE>
<CAPTION>
2002 2001
------------------------- -------------------------
High Low High Low
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
First Quarter............................................. $ 22.40 $ 17.32 $ 31.81 $ 17.38
Second Quarter............................................ 28.61 17.45 26.90 16.69
Third Quarter............................................. 21.75 9.85 25.00 15.27
Fourth Quarter............................................ 21.43 9.87 22.14 15.54
</TABLE>
On April 4, 2003, the reported last sale of our Common Stock on the Nasdaq
National Market was $17.95.
We have never declared or paid a cash dividend on our Common Stock and do
not anticipate paying any cash dividends in the foreseeable future. Any future
declaration of dividends is within the discretion of our Board of Directors and
will be dependent on our earnings, financial condition, and capital requirements
as well as any other factors deemed relevant by our Board of Directors.
The information under the caption "Equity Compensation Plan Information"
under the main caption "PROPOSAL NO. 2 -- APPROVAL OF AMENDED AND RESTATED 1993
EMPLOYEE STOCK PURCHASE PLAN" in our definitive Proxy Statement for the Annual
Meeting of Shareholders to be held on May 23, 2003, as filed on or about April
8, 2003, with the SEC (2003 Proxy Statement), is incorporated herein by this
reference.
ITEM 6. SELECTED FINANCIAL DATA
The information appearing under the caption "Selected Consolidated
Financial Data" in our Annual Report to Shareholders for the fiscal year ended
January 5, 2003 (2002 Annual Report), is incorporated herein by this reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Except for the information appearing under the caption "Quarterly
Information," which is not incorporated by reference in this Annual Report on
Form 10-K, the information appearing under the main caption "Management's
Discussion and Analysis of Financial Conditions and Results of Operations" in
our 2002 Annual Report is incorporated herein by this reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information appearing under the caption "Market Risk" under the main
caption "Management's Discussion and Analysis of Financial Conditions and
Results of Operations" in our 2002 Annual Report is incorporated herein by this
reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information appearing under the captions "Consolidated Balance Sheets,"
"Consolidated Statements of Operations," "Consolidated Statements of
Shareholders' Equity," "Consolidated Statements of Cash Flows," "Notes to
Consolidated Financial Statements," and "Report of Ernst & Young LLP,
Independent Auditors" in our 2002 Annual Report is incorporated herein by this
reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
Except for the information specifically incorporated by reference from our
2003 Proxy Statement in Parts II and III of this Annual Report on Form 10-K, our
2003 Proxy Statement shall not be deemed to be filed as part of this Report.
Without limiting the foregoing, the information under the captions "Compensation
Committee Report," "Audit Committee Report," and "Company Stock Performance"
under the main caption "OTHER INFORMATION" in our 2003 Proxy Statement are not
incorporated by reference in this Annual Report on Form 10-K.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information regarding the identification and business experience of our
directors under the caption "Nominees" under the main caption "PROPOSAL NO. 1 --
ELECTION OF DIRECTORS" in our 2003 Proxy Statement and the information under the
main caption "COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF
1934" in our 2003 Proxy Statement are incorporated herein by this reference. For
information regarding the identification and business experience of our
executive officers, see "Executive Officers of the Registrant" at the end of
Item 1 in Part I of this Annual Report on Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
The information under the caption "Director Compensation" under the main
caption "PROPOSAL NO. 1 -- ELECTION OF DIRECTORS" in our 2003 Proxy Statement
and the information under the caption "Executive Compensation" under the main
caption "OTHER INFORMATION" in our 2003 Proxy Statement are incorporated herein
by this reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information under the caption "Share Ownership" under the main caption
"INFORMATION CONCERNING SOLICITATION AND VOTING" in our 2003 Proxy Statement,
the information under the caption "Equity Compensation Plan Information" under
the main caption "PROPOSAL NO. 2 -- APPROVAL OF AMENDED AND RESTATED 1993
EMPLOYEE STOCK PURCHASE PLAN" in our 2003 Proxy Statement, and the information
under the caption "Security Ownership of Management" under the main caption
"OTHER INFORMATION" in our 2003 Proxy Statement are incorporated herein by this
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information under the caption "Certain Transactions" under the main
caption "OTHER INFORMATION" in our 2003 Proxy Statement is incorporated herein
by this reference.
ITEM 14. CONTROLS AND PROCEDURES
Quarterly Evaluation of Our Disclosure Controls and Internal Controls
Within the 90 days prior to the date of this Annual Report on Form 10-K, we
evaluated the effectiveness of the design and operation of our "disclosure
controls and procedures" (Disclosure Controls) and our "internal controls and
procedures for financial reporting" (Internal Controls). This evaluation (the
Controls Evaluation) was performed under the supervision and with the
participation of management, including our Chief Executive Officer (CEO) and
Chief Financial Officer (CFO).
CEO and CFO Certifications
Immediately following the Signatures section of this Annual Report, there
are "Certifications" of the CEO and the CFO. The Certifications (Rule 13a-14
Certifications) are required in accord with Rule 13a-14 of the Securities
Exchange Act of 1934 (Exchange Act). This Controls and Procedures section of the
Annual Report includes the information concerning the Controls Evaluation
referred to in the Rule 13a-14 Certifications and it should be read in
conjunction with the Rule 13a-14 Certifications for a more complete
understanding of the topics presented.
Disclosure Controls and Internal Controls
Disclosure Controls are procedures designed to ensure that information
required to be disclosed in our reports filed under the Exchange Act, such as
this Annual Report, is recorded, processed, summarized, and reported within the
time periods specified in the SEC's rules and forms. Disclosure Controls are
also designed to ensure that such information is accumulated and communicated to
our management, including the CEO and CFO, as appropriate to allow timely
decisions regarding required disclosure. Internal Controls are procedures
designed to provide reasonable assurance that (1) our transactions are properly
authorized; (2) our assets are safeguarded against unauthorized or improper use;
and (3) our transactions are properly recorded and reported, all to permit the
preparation of our financial statements in conformity with generally accepted
accounting principles.
Limitations on the Effectiveness of Controls
Our management, including the CEO and CFO, does not expect that our
Disclosure Controls or our Internal Controls will prevent all error and all
fraud. A control system, no matter how well designed and operated, can provide
only reasonable, not absolute, assurance that the control system's objectives
will be met. Further, the design of a control system must reflect the fact that
there are resource constraints, and the benefits of controls must be considered
relative to their costs. Because of the inherent limitations in all control
systems, no evaluation of controls can provide absolute assurance that all
control issues and instances of fraud, if any, within the company have been
detected. These inherent limitations include the realities that judgments in
decision-making can be faulty, and that breakdowns can occur because of simple
error or mistake. Controls can also be circumvented by the individual acts of
some persons, by collusion of two or more people, or by management override of
the controls. The design of any system of controls is based in part upon certain
assumptions about the likelihood of future events, and there can be no assurance
that any design will succeed in achieving its stated goals under all potential
future conditions. Over time, controls may become inadequate because of changes
in conditions or deterioration in the degree of compliance with its policies or
procedures. Because of the inherent limitations in a cost-effective control
system, misstatements due to error or fraud may occur and not be detected.
Scope of the Controls Evaluation
The evaluation of our Disclosure Controls and our Internal Controls
included a review of the controls' objectives and design, our implementation of
the controls, and the effect of the controls on the information generated for
use in this Annual Report. In the course of the Controls Evaluation, we sought
to identify data errors, controls problems, or acts of fraud and confirm that
appropriate corrective actions, including process improvements, were being
undertaken. This type of evaluation is performed on a quarterly basis so that
the conclusions of management, including the CEO and CFO, concerning controls
effectiveness can be reported in our Quarterly Reports on Form 10-Q and Annual
Report on Form 10-K. Our Internal Controls are also evaluated on an ongoing
basis personnel in our Finance organization, as well as by our independent
auditors, who evaluate our Internal Controls in connection with determining
their auditing procedures related to their report on our annual financial
statements and not to provide assurance on our Internal Controls. The overall
goals of these various evaluation activities are to monitor our Disclosure
Controls and our Internal Controls, and to modify them as necessary; our intent
is to maintain the Disclosure Controls and the Internal Controls as dynamic
systems that change as conditions warrant.
Among other matters, we sought in our evaluation to determine whether there
were any "significant deficiencies" or "material weaknesses" in our Internal
Controls, and whether we had identified any acts of fraud involving personnel
with a significant role in our Internal Controls. This information was important
both for the Controls Evaluation generally, and because items 5 and 6 in the
Rule 13a-14 Certifications of the CEO and CFO require that the CEO and CFO
disclose that information to our Board's Audit Committee and our independent
auditors, and report on related matters in this section of the Annual Report. In
professional auditing literature, "significant deficiencies" are referred to as
"reportable conditions," which are control issues that could have a significant
adverse effect on the ability to record, process, summarize, and report
financial data in the financial statements. Auditing literature defines
"material weakness" as a particularly serious reportable condition where the
internal control does not reduce to a relatively low level the risk that
misstatements caused by error or fraud may occur in amounts that would be
material in relation to the financial statements and the risk that such
misstatements would not be detected within a timely period by employees in the
normal course of performing their assigned functions. We also sought to deal
with other controls matters in the Controls Evaluation, and in each case if a
problem was identified, we considered what revision, improvement, and/or
correction to make in accordance with our ongoing procedures.
From the date of the Controls Evaluation to the date of this Annual Report,
there have been no significant changes in Internal Controls or in other factors
that could significantly affect Internal Controls, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Conclusions
Based upon the Controls Evaluation, our CEO and CFO have concluded that,
subject to the limitations noted above, our Disclosure Controls are effective to
ensure that material information relating to Actel Corporation and its
consolidated subsidiaries is made known to management, including the CEO and
CFO, particularly during the period when our periodic reports are being
prepared, and that our Internal Controls are effective to provide reasonable
assurance that our financial statements are fairly presented in conformity with
generally accepted accounting principles.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this Annual Report on Form
10-K:
(1) Financial Statements. The following consolidated financial
statements of Actel Corporation included in our 2002 Annual Report are
incorporated by reference in Item 8 of this Annual Report on Form 10-K:
Consolidated balance sheets at December 31, 2002 and 2001
Consolidated statements of operations for each of the three years
in the period ended December 31, 2002
Consolidated statements of shareholders' equity and other
comprehensive income/(loss) for each of the three years in the
period ended December 31, 2002
Consolidated statements of cash flows for each of the three years
in the period ended December 31, 2002
Notes to consolidated financial statements
(2) Financial Statement Schedule. The financial statement schedule
listed under 14(d) hereof is filed with this Annual Report on Form 10-K.
(3) Exhibits. The exhibits listed under Item 14(c) hereof are filed
with, or incorporated by reference into, this Annual Report on Form 10-K.
(b) Reports on Form 8-K. None.
(c) Exhibits. The following exhibits are filed as part of, or incorporated
by reference into, this Report on Form 10-K:
<TABLE>
<CAPTION>
<S> <C>
Exhibit Number Description
3.1 Restated Articles of Incorporation, as amended.
3.2 Restated Bylaws.
10.1 (2) Form of Indemnification Agreement for directors and officers (filed as Exhibit 10.1 to the
Registrant's Registration Statement on Form S-1 (File No. 33-64704), declared effective on
August 2, 1993).
10.2 (2) 1986 Incentive Stock Option Plan, as amended and restated (filed as Exhibit 10.1 to the
Registrant's Quarterly Report on Form 10-Q (File No. 0-21970) for the fiscal quarter ended
July 7, 2002).
10.3 (2) Amended and Restated 1993 Directors' Stock Option Plan.
10.4 (2) Amended and Restated 1993 Employee Stock Purchase Plan.
10.5 1995 Employee and Consultant Stock Plan, as amended and restated (filed as Exhibit 10.2 to
the Registrant's Quarterly Report on Form 10-Q (File No. 0-21970) for the fiscal quarter
ended July 7, 2002).
10.6 (2) Employee Retention Plan, as amended and restated (filed as Exhibit 10.6 to the Registrant's
Annual Report on Form 10-K (File No. 0-21970) for the fiscal year ended January 6, 2002).
10.7 (2) Deferred Compensation Plan, as amended and restated (filed as Exhibit 10.7 to the
Registrant's Annual Report on Form 10-K (File No. 0-21970) for the fiscal year ended
December 31, 2000).
10.8 Form of Distribution Agreement (filed as Exhibit 10.13 to the Registrant's Registration
Statement on Form S-1 (File No. 33-64704), declared effective on August 2, 1993).
10.9 (1) Patent Cross License Agreement dated April 22, 1993 between the Registrant and Xilinx, Inc.
(filed as Exhibit 10.14 to the Registrant's Registration Statement on Form S-1 (File No.
33-64704), declared effective on August 2, 1993).
10.10 Manufacturing Agreement dated February 3, 1994 between the Registrant and Chartered Semiconductor
Manufacturing Pte Ltd (filed as Exhibit 10.17 to the Registrant's Annual Report on Form 10-K (File No.
0-21970) for the fiscal year ended January 2, 1994).
10.11 (1) Product Development and Marketing Agreement dated August 1, 1994, between the Registrant and Loral
Federal Systems Company (filed as Exhibit 10.19 to the Registrant's Quarterly Report on Form 10-Q
(File No.0-21970) for the fiscal quarter ended October 2, 1994).
10.12 (1) Foundry Agreement dated as of June 29, 1995, between the Registrant and Matsushita Electric
Industrial Co., Ltd and Matsushita Electronics Corporation (filed as Exhibit 10.25 to the
Registrant's Quarterly Report on Form 10-Q (File No. 0-21970) for the fiscal quarter ended
July 2, 1995).
10.13 Lease Agreement for the Registrant's offices in Sunnyvale, California, dated May 10, 1995
(filed as Exhibit 10.19 to the Registrant's Annual Report on Form 10-K (File No.
0-21970) for the fiscal year ended December 31, 1995).
10.14 (1) License Agreement dated as of March 6, 1995, between the Registrant and BTR, Inc. (filed as
Exhibit 10.20 to the Registrant's Annual Report on Form 10-K (File No. 0-21970) for the
fiscal year ended December 29, 1996).
10.15 Asset Purchase Agreement dated August 14, 1998, between GateField Corporation and Actel Corporation
(filed as Exhibit 2.1 to GateField Corporation's Current Report on Form 8-K (File No. 0-13244)
on August 14, 1998, and incorporated herein by this reference).
10.16 (1) Patent Cross License Agreement dated August 25, 1998, between Actel Corporation and
QuickLogic Corporation. (filed as Exhibit 10.19 to the Registrant's Annual Report on
Form 10-K (File No. 0-21970) for the fiscal year ended January 3, 1999).
10.17 Amended And Restated Agreement and Plan of Merger by and among Actel Corporation, GateField Acquisition
Corporation, and GateField Corporation dated as of May 31, 2000 (filed as Annex I to GateField
Corporation's Definitive Proxy Statement on Schedule 14A (File No.0-13244) on June 9, 2000,
and incorporated herein by this reference).
10.18 Agreement and Plan of Reorganization by and between Actel Corporation and Prosys Technology, Inc.,
Jung-Cheun "Frank" Lien, Sheng "Jason" Feng, Chung Sun, Eddy Huang, and Nan Horng Yeh dated as of
June 2, 2000 (filed as Exhibit 10.1 to the Registrant's Current Report on Form 8-K
(File No. 0-21970) on June 16, 2000, and incorporated herein by this reference).
10.19 Development Agreement by and between Actel Corporation and Infineon Technologies AG
effective as of June 6, 2002.
10.20 Supply Agreement by and between Actel Corporation and Infineon Technologies AG effective as
of June 6, 2002.
10.21 Office Lease Agreement for the Registrant's facilities in Mountain View, California, dated
February 27, 2003.
13 Portions of Registrant's Annual Report to Shareholders for the fiscal year ended January 5,
2003, incorporated by reference into this Report on Form 10-K.
21 Subsidiaries of Registrant.
23 Consent of Ernst & Young LLP, Independent Auditors.
99.1 Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
</TABLE>
- ------------------------
(1) Confidential treatment requested as to a portion of this Exhibit.
(2) This Exhibit is a management contract or compensatory plan or
arrangement.
(d) Financial Statement Schedule. The following financial statement
schedule of Actel Corporation is filed as part of this Report on Form 10-K and
should be read in conjunction with the Consolidated Financial Statements of
Actel Corporation, including the notes thereto, and the Report of Independent
Auditors with respect thereto:
Schedule Description Page
----------- ------------------------------------ -----------
II Valuation and qualifying accounts 51
All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable and therefore have
been omitted.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
ACTEL CORPORATION
Date: April 4, 2003 By: /s/ John C. East
---------------------------
John C. East
President and Chief Executive
Officer
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints John C. East, Jon A. Anderson, and
David L. Van De Hey, and each of them acting individually, as his
attorney-in-fact, each with full power of substitution, for him in any and all
capacities, to sign any and all amendments to this Annual Report on Form 10-K
and to file the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that each of said attorneys-in-fact, or his substitute or
substitutes, may do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Annual Report on Form 10-K has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
------------------------------------------------ ---------------
<S> <C> <C>
/s/ John C. East
- -------------------------------------------- President and Chief Executive Officer
(John C. East) (Principal Executive Officer) and Director April 4, 2003
/s/ Jon A. Anderson
- ----------------------------------------- Vice President of Finance and Chief Financial
(Jon A. Anderson) Officer (Principal Financial and Accounting
Officer) April 4, 2003
/s/ James R. Fiebiger
- -----------------------------------------
(James R. Fiebiger) Director April 4, 2003
/s/ Jos C. Henkens
- -----------------------------------------
(Jos C. Henkens) Director April 4, 2003
/s/ Henry L. Perret
- -----------------------------------------
(Henry L. Perret) Director April 4, 2003
/s/ Jacob S. Jacobsson
- -----------------------------------------
(Jacob S. Jacobsson) Director April 4, 2003
/s/ Frederic N. Schwettmann
- -----------------------------------------
(Frederic N. Schwettmann) Director April 4, 2003
/s/ Robert G. Spencer
- -----------------------------------------
(Robert G. Spencer) Director April 4, 2003
</TABLE>
<PAGE>
CERTIFICATIONS
I, John C. East, certify that:
1. I have reviewed this annual report on Form 10-K of Actel Corporation;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this annual report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: April 4, 2003 /s/ John C. East
------------------------------------
John C. East
President and Chief Executive Officer
I, Jon A. Anderson, certify that:
1. I have reviewed this annual report on Form 10-K of Actel Corporation;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this annual report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: April 4, 2003 /s/ Jon A. Anderson
---------------------------------------------
Jon A. Anderson
Vice President of Finance and Chief Financial
Officer
<PAGE>
SCHEDULE II
ACTEL CORPORATION
--------------------------------------
Valuation and Qualifying Accounts
(in thousands)
<TABLE>
<CAPTION>
Balance at Balance at
beginning end of
of period Provision Write-Offs period
<S> <C> <C> <C> <C>
Allowance for doubtful accounts:
Year ended December 31, 2000.............................. $ 1,079 $ 91 $ 100 $ 1,070
Year ended December 31, 2001.............................. 1,070 572 314 1,328
Year ended December 31, 2002.............................. 1,328 86 336 1,078
</TABLE>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3
<SEQUENCE>3
<FILENAME>exhibit31articles.txt
<DESCRIPTION>EXHIBIT 3.1 (RESTATED ARTICLES OF INCORPORATION)
<TEXT>
RESTATED ARTICLES OF INCORPORATION OF
ACTEL CORPORATION
(AS AMENDED JANUARY 3, 2003)
ARTICLE 1
The name of the corporation is ACTEL CORPORATION.
ARTICLE 2
The purpose of the corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
California other than the banking business, the trust company business, or the
practice of a profession permitted to be incorporated by the California
Corporations Code.
ARTICLE 3
Section 3.1 Two Classes of Stock. This corporation is authorized to issue
two classes of shares, designated "Preferred Stock" and "Common Stock",
respectively. The total number of shares which this corporation shall have
authority to issue is Sixty-Million (60,000,000), with par value of $0.001 per
share. The number of shares of Preferred Stock authorized to be issued is Five
Million (5,000,000), and the number of shares of Common Stock authorized to be
issued is Fifty-Five Million (55,000,000).
Section 3.2. Authority of Board To Fix Rights, Preferences, etc. of
Preferred Stock. The Preferred Stock may be issued from time to time in one or
more series. The Board of Directors is hereby authorized, within the limitations
and restrictions stated in these Articles of Incorporation, to determine or
alter the rights, preferences, privileges, or restrictions stated in these
Articles of Incorporation; to determine or alter the rights, preferences,
privileges, and restrictions granted to or imposed upon any wholly unissued
series of Preferred Stock and the number of shares constituting any such series
and the designation thereof, or any of them; and to increase or decrease the
number of shares of any series subsequent to the issue of shares of that series,
but not below the number of shares of such series then outstanding. In case the
number of shares of any series shall be so decreased, the shares constituting
such decrease shall resume the status which they had prior to the adoption of
the resolution originally fixing the number of shares of such series.
ARTICLE 4
QUORUM FOR BOARD OF DIRECTORS MEETINGS
A quorum of the Board of Directors of the corporation for the transaction
of business shall consist of the greater of (a) a majority of those persons
elected to and serving on the Board of Directors or (b) three persons.
ARTICLE 5
LIABILITY OF DIRECTORS
Section 5.1. Limitation of Directors' Liability. The liability of the
directors of this corporation for monetary damages shall be eliminated to the
fullest extent permissible under California Law.
Section 5.2. Indemnification of Corporate Agents. This corporation is
authorized to indemnify the directors and officers of this corporation to the
fullest extent permissible under California law.
Section 5.3. Repeal or Modification. Any repeal or modification of the
foregoing provisions of this Article 5 shall not adversely affect any right of
indemnification or limitation of liability of an agent of this corporation
relating to acts or omissions occurring prior to such repeal or modification.
ARTICLE 6
ADVANCE NOTICE
Advance notice of new business and shareholder nominations for the election
of directors shall be given in the manner and to the extent provided in the
bylaws of this corporation.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3
<SEQUENCE>4
<FILENAME>exhibit32bylaws.txt
<DESCRIPTION>EXHIBIT 3.1 (RESTATED BYLAWS)
<TEXT>
AMENDED AND RESTATED BYLAWS
OF
ACTEL CORPORATION
ARTICLE I
CORPORATE OFFICES
1.1 PRINCIPAL OFFICE
The board of directors shall fix the location of the principal executive
office of the corporation at any place within or outside the State of
California. If the principal executive office is located outside such state and
the corporation has one or more business offices in such state, then the board
of directors shall fix and designate a principal business office in the State of
California.
1.2 OTHER OFFICES
The board of directors may at any time establish branch or subordinate
offices at any place or places where the corporation is qualified to do
business.
ARTICLE II
MEETINGS OF SHAREHOLDERS
2.1 PLACE OF MEETINGS
Meetings of shareholders shall be held at any place within or outside the
State of California designated by the board of directors. In the absence of any
such designation, shareholders' meetings shall be held at the principal
executive office of the corporation.
2.2 ANNUAL MEETING
The annual meeting of shareholders shall be held each year on a date and at
a time designated by the board of directors. In the absence of such designation,
the annual meeting of shareholders shall be held on the second Tuesday of
February in each year at 10:00 a.m. However, if such day falls on a legal
holiday, then the meeting shall be held at the same time and place on the next
succeeding full business day. At the meeting, directors shall be elected, and
any other proper business may be transacted.
2.3 SPECIAL MEETINGS
Special meetings of the shareholders, for the purpose of taking any action
permitted by the shareholders under the Corporations Code of California (the
"Code"), may be called at any time by the board, the chairman of the board, the
president, or, subject to the provisions of this Section 2.3, one or more
shareholders holding not less than ten percent (10%) of the votes entitled to be
cast at the meeting. For a special meeting of the shareholders to be properly
brought by any person or persons other than the board, the chairman of the
board, or the president, pursuant to the preceding sentence, the person or
persons calling the meeting must have given timely notice thereof in writing to
the secretary of the corporation and the business proposed to be conducted at
such meeting must otherwise be a proper matter for shareholder action.
To be timely, such notice shall be delivered to the secretary at the
principal executive offices of the corporation not later than the close of
business on the 35th day nor earlier than the close of business on the 60th day
prior to the date of the meeting proposed by the person or persons calling the
meeting. Such notice shall set forth (a) the proposed date and time of the
meeting, (b) as to each person whom the person or persons calling the meeting
propose to nominate for election or reelection as a director, all information
relating to such nominee that is required to be disclosed in solicitations of
proxies for election of directors in an election contest, or is otherwise
required, in each case pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended (or any successor thereto) and Rule 14a-11 thereunder
(or any successor thereto) (including such nominee's written consent to being
named in the proxy statement as a nominee and to serving as a director if
elected); (c) as to any other business that the person or persons calling the
meeting proposes to bring before the meeting, a brief description of the
business desired to be brought before the meeting, the reasons for conducting
such business at the meeting and any material interest in such business of such
person or persons and any other person or entity, if any, on whose behalf the
proposal is made; and (d) as to any shareholders giving the notice (i) the name
and address of such shareholders, as they appear on the corporation's books and
(ii) the class and number of shares of the corporation that are owned
beneficially and of record by such shareholders. Upon notice meeting the
requirements of this Section 2.3 by any person or persons entitled to call a
special meeting of shareholders, the corporation shall cause notice to be given
to shareholders entitled to vote that a meeting will be held. Notice of special
meetings shall be given in the manner set forth in Section 2.4 of these bylaws
and shall comply with Section 601(b) of the Code.
2.4 NOTICE OF SHAREHOLDERS' MEETINGS
All notices of meetings of shareholders shall be sent or otherwise given in
accordance with Section 2.5 of these bylaws not less than ten (10) (or, if sent
by third-class mail pursuant to Section 2.5 of these bylaws, thirty (30)) nor
more than sixty (60) days before the date of the meeting. The notice shall
specify the place, date, and hour of the meeting and (i) in the case of a
special meeting, the general nature of the business to be transacted (no
business other than that specified in the notice may be transacted) or (ii) in
the case of the annual meeting, those matters which the board of directors, at
the time of giving the notice, intends to present for action by the shareholders
(but subject to the provisions of the next paragraph of this Section 2.4 any
proper matter may be presented at the meeting for such action). The notice of
any meeting at which directors are to be elected shall include the name of any
nominee or nominees who, at the time of the notice, the board intends to present
for election.
If action is proposed to be taken at any meeting for approval of (i) a
contract or transaction in which a director has a direct or indirect financial
interest, pursuant to Section 310 of the Code, (ii) an amendment of the articles
of incorporation, pursuant to Section 902 of the Code, (iii) a reorganization of
the corporation, pursuant to Section 1201 of the Code, (iv) a voluntary
dissolution of the corporation, pursuant to Section 1900 of the Code, or (v) a
distribution in dissolution other than in accordance with the rights of
outstanding preferred shares, pursuant to Section 2007 of the Code, then the
notice shall also state the general nature of that proposal.
2.5 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE
Written notice of any meeting of shareholders shall be given either (i)
personally or (ii) by first-class mail or (iii) by third-class mail but only if
the corporation has outstanding shares held of record by five hundred (500) or
more persons (determined as provided in Section 605 of the Code) on the record
date for the shareholders' meeting, or (iv) by telegraphic or other written
communication. Notices not personally delivered shall be sent charges prepaid
and shall be addressed to the shareholder at the address of that shareholder
appearing on the books of the corporation or given by the shareholder to the
corporation for the purpose of notice. If no such address appears on the
corporation's books or is given, notice shall be deemed to have been given if
sent to that shareholder by mail or telegraphic or other written communication
to the corporation's principal executive office, or if published at least once
in a newspaper of general circulation in the county where that office is
located. Notice shall be deemed to have been given at the time when delivered
personally or deposited in the mail or sent by telegram or other means of
written communication.
If any notice addressed to a shareholder at the address of that shareholder
appearing on the books of the corporation is returned to the corporation by the
United States Postal Service marked to indicate that the United States Postal
Service is unable to deliver the notice to the shareholder at that address, then
all future notices or reports shall be deemed to have been duly given without
further mailing if the same shall be available to the shareholder on written
demand of the shareholder at the principal executive office of the corporation
for a period of one (1) year from the date of the giving of the notice.
An affidavit of the mailing or other means of giving any notice of any
shareholders' meeting, executed by the secretary, assistant secretary or any
transfer agent of the corporation giving the notice, shall be prima facie
evidence of the giving of such notice.
2.6 QUORUM
The presence in person or by proxy of the holders of a majority of the
shares entitled to vote thereat constitutes a quorum for the transaction of
business at all meetings of shareholders, provided that if the shareholders of
any class shall be entitled to take any action, including the election of
directors, solely as a class, the presence in person or by proxy of the holders
of a majority of the shares of such class entitled to vote thereat shall
constitute a quorum for the taking of any such actions at a meeting of
shareholders. The shareholders present at a duly called or held meeting at which
a quorum is present may continue to do business until adjournment,
notwithstanding the withdrawal of enough shareholders to leave less than a
quorum, if any action taken (other than adjournment) is approved by at least a
majority of the shares required to constitute a quorum.
2.7 ADJOURNED MEETING; NOTICE
Any shareholders' meeting, annual or special, whether or not a quorum is
present, may be adjourned from time to time by the vote of the majority of the
shares represented at that meeting, either in person or by proxy. In the absence
of a quorum, no other business may be transacted at that meeting except as
provided in Section 2.6 of these bylaws.
When any meeting of shareholders, either annual or special, is adjourned to
another time or place, notice need not be given of the adjourned meeting if the
time and place are announced at the meeting at which the adjournment is taken.
However, if a new record date for the adjourned meeting is fixed or if the
adjournment is for more than forty-five (45) days from the date set for the
original meeting, then notice of the adjourned meeting shall be given. Notice of
any such adjourned meeting shall be given to each shareholder of record entitled
to vote at the adjourned meeting in accordance with the provisions of Sections
2.4 and 2.5 of these bylaws. At any adjourned meeting the corporation may
transact any business that might have been transacted at the original meeting.
2.8 VOTING
The shareholders entitled to vote at any meeting of shareholders shall be
determined in accordance with the provisions of Section 2.11 of these bylaws,
subject to the provisions of Sections 702 through 704 of the Code (relating to
voting shares held by a fiduciary, in the name of a corporation or in joint
ownership).
The shareholders' vote may be by voice vote or by ballot; provided,
however, that any election for directors must be by ballot if demanded by any
shareholder at the meeting and before the voting has begun.
Except as provided in the last paragraph of this Section 2.8, or as may be
otherwise provided in the articles of incorporation, each outstanding share,
regardless of class, shall be entitled to one vote on each matter submitted to a
vote of the shareholders. Any shareholder entitled to vote on any matter may
vote part of the shares in favor of the proposal and refrain from voting the
remaining shares or, except when the matter is the election of directors, may
vote them against the proposal; but, if the shareholder fails to specify the
number of shares which the shareholder is voting affirmatively, it will be
conclusively presumed that the shareholder's approving vote is with respect to
all shares which the shareholder is entitled to vote.
If a quorum is present, the affirmative vote of the majority of the shares
represented and voting at a duly held meeting (which shares voting affirmatively
also constitute at least a majority of the required quorum) shall be the act of
the shareholders, unless the vote of a greater number or a vote by classes is
required by the Code or by the articles of incorporation.
At a shareholders' meeting at which directors are to be elected, a
shareholder shall be entitled to cumulate votes (i.e., cast for any candidate a
number of votes greater than the number of votes which such shareholder normally
is entitled to cast) if the candidates' names have been placed in nomination
prior to commencement of the voting and the shareholder has given notice prior
to commencement of the voting of the shareholder's intention to cumulate votes.
If any shareholder has given such a notice, then every shareholder entitled to
vote may cumulate votes for candidates in nomination either (i) by giving one
candidate a number of votes equal to the number of directors to be elected
multiplied by the number of votes to which that shareholder's shares are
normally entitled or (ii) by distributing the shareholder's votes on the same
principle among any or all of the candidates, as the shareholder thinks fit. The
candidates receiving the highest number of affirmative votes, up to the number
of directors to be elected, shall be elected; votes against any candidate and
votes withheld shall have no legal effect. A shareholder shall only cumulate
votes with respect to those directors for whom such shareholder shall be
entitled to vote in the event of a provision in the articles of incorporation
requiring directors to be elected by shareholders of a particular class.
2.9 VALIDATION OF MEETINGS; WAIVER OF NOTICE; CONSENT
The transactions of any meeting of shareholders, either annual or special,
however called and noticed, and wherever held, shall be as valid as though had
at a meeting duly held after regular call and notice, if a quorum be present
either in person or by proxy, and if, either before or after the meeting, each
person entitled to vote, who was not present in person or by proxy, signs a
written waiver of notice or a consent to the holding of the meeting or an
approval of the minutes thereof. The waiver of notice or consent or approval
need not specify either the business to be transacted or the purpose of any
annual or special meeting of shareholders, except that if action is taken or
proposed to be taken for approval of any of those matters specified in the
second paragraph of Section 2.4 of these bylaws, the waiver of notice or consent
or approval shall state the general nature of the proposal. All such waivers,
consents, and approvals shall be filed with the corporate records or made a part
of the minutes of the meeting.
Attendance by a person at a meeting shall also constitute a waiver of
notice of and presence at that meeting, except when the person objects at the
beginning of the meeting to the transaction of any business because the meeting
is not lawfully called or convened. Attendance at a meeting is not a waiver of
any right to object to the consideration of matters required by the Code to be
included in the notice of the meeting but not so included, if that objection is
expressly made at the meeting.
2.10 SHAREHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Any action which may be taken at any annual or special meeting of
shareholders may be taken without a meeting and without prior notice, if a
consent in writing, setting forth the action so taken, is signed by the holders
of outstanding shares having not less than the minimum number of votes that
would be necessary to authorize or take that action at a meeting at which all
shares entitled to vote on that action were present and voted.
In the case of election of directors, such a consent shall be effective
only if signed by the holders of all outstanding shares entitled to vote for the
election of directors. However, a director may be elected at any time to fill
any vacancy on the board of directors, provided that it was not created by
removal of a director and that it has not been filled by the directors, by the
written consent of the holders of a majority of the outstanding shares entitled
to vote for the election of directors.
All such consents shall be maintained in the corporate records. Any
shareholder giving a written consent, or the shareholder's proxy holders, or a
transferee of the shares, or a personal representative of the shareholder, or
their respective proxy holders, may revoke the consent by a writing received by
the secretary of the corporation before written consents of the number of shares
required to authorize the proposed action have been filed with the secretary.
If the consents of all shareholders entitled to vote have not been
solicited in writing and if the unanimous written consent of all such
shareholders has not been received, then the secretary shall give prompt notice
of the corporate action approved by the shareholders without a meeting. Such
notice shall be given to those shareholders entitled to vote who have not
consented in writing and shall be given in the manner specified in Section 2.5
of these bylaws. In the case of approval of (i) a contract or transaction in
which a director has a direct or indirect financial interest, pursuant to
Section 310 of the Code, (ii) indemnification of a corporate "agent," pursuant
to Section 317 of the Code, (iii) a reorganization of the corporation, pursuant
to Section 1201 of the Code, and (iv) a distribution in dissolution other than
in accordance with the rights of outstanding preferred shares, pursuant to
Section 2007 of the Code, the notice shall be given at least ten (10) days
before the consummation of any action authorized by that approval.
Any shareholder of record or other person or entity seeking to have the
shareholders authorize or take corporate action by written consent shall, by
written notice to the secretary, request the board of directors to fix a record
date pursuant to Section 2.11 hereof. The board of directors may, at any time
within ten (10) days after the date on which such a request is received, adopt a
resolution fixing the record date (unless a record date has previously been
fixed pursuant to Section 2.11 hereof). If no record date has been fixed by the
board of directors pursuant to Section 2.11 hereof or otherwise within ten (10)
days of the date on which such a request is received, the record date for
determining shareholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the board of directors is required by
applicable law, shall be the first date on which a signed written consent
setting forth the action taken or proposed to be taken is delivered to the
corporation by delivery to its principal place of business or to any officer or
agent of the corporation having custody of the book in which proceedings of
meetings of shareholders are recorded. Delivery shall be by hand or by certified
or registered mail, return receipt requested. If no record date has been fixed
by the board of directors and prior action by the board of directors is required
by applicable law, the record date for determining shareholders entitled to
consent to corporate action in writing without a meeting shall be at the close
of business on the date on which the board of directors adopts the resolution
taking such prior action.
In the event of the delivery, in the manner provided by this Section 2.10,
to the corporation of the requisite written consent or consents to take
corporate action and/or any related revocation or revocations, the corporation
may engage independent inspectors of elections for the purpose of performing
promptly a ministerial review of the validity of the consents and revocations.
For the purpose of permitting the inspectors to perform such review, in the
event such inspectors are appointed, no action by written consent without a
meeting shall be effective until such date as such appointed independent
inspectors certify to the corporation that the consents delivered to the
corporation in accordance herewith represent at least the minimum number of
votes that would be necessary to take the corporate action. Nothing contained in
this Section 2.10 shall in any way be construed to suggest or imply that the
board of directors or any shareholder shall not be entitled to contest the
validity of any consent or revocation thereof, whether before or after any
certification by any independent inspectors, or to take any other action
(including, without limitation, the commencement, prosecution or defense of any
litigation with respect thereto, and the seeking of injunctive relief in such
litigation).
Every written consent shall bear the date of signature of each shareholder
who signs the consent and no written consent shall be effective to take the
corporate action referred to therein unless, within sixty (60) days of the
earliest dated written consent received in accordance with this Section 2.10, a
written consent or consents signed by a sufficient number of holders to take
such action are delivered to the corporation in the manner prescribed herein.
2.11 RECORD DATE FOR SHAREHOLDER NOTICE, VOTING, AND GIVING CONSENTS
For purposes of determining the shareholders entitled to notice of any
meeting or to vote thereat or entitled to give consent to corporate action
without a meeting, the board of directors may fix, in advance, a record date,
which shall not be more than sixty (60) days nor less than ten (10) days before
the date of any such meeting nor more than sixty (60) days before any such
action without a meeting, and in such event only shareholders of record on the
date so fixed are entitled to notice and to vote or to give consents, as the
case may be, notwithstanding any transfer of any shares on the books of the
corporation after the record date, except as otherwise provided in the Code.
If the board of directors does not so fix a record date:
(a) the record date for determining shareholders entitled to notice of
or to vote at a meeting of shareholders shall be at the close of business
on the business day next preceding the day on which notice is given or, if
notice is waived, at the close of business on the business day next
preceding the day on which the meeting is held; and
(b) the record date for determining shareholders entitled to give
consent to corporate action in writing without a meeting, (i) when no prior
action by the board has been taken, shall be the day on which the first
written consent is given, or (ii) when prior action by the board has been
taken, shall be at the close of business on the day on which the board
adopts the resolution relating to that action, or the sixtieth (60th) day
before the date of such other action, whichever is later.
The record date for any other purpose shall be as provided in ARTICLE
VIII of these bylaws.
2.12 PROXIES
Every person entitled to vote for directors, or on any other matter, shall
have the right to do so either in person or by one or more agents authorized by
a written proxy signed by the person and filed with the secretary of the
corporation. A proxy shall be deemed signed if the shareholder's name is placed
on the proxy (whether by manual signature, typewriting, telegraphic transmission
or otherwise) by the shareholder or the shareholder's attorney-in-fact. A
validly executed proxy which does not state that it is irrevocable shall
continue in full force and effect unless (i) the person who executed the proxy
revokes it prior to the time of voting by delivering a writing to the
corporation stating that the proxy is revoked or by executing a subsequent proxy
and presenting it to the meeting or by voting in person at the meeting, or (ii)
written notice of the death or incapacity of the maker of that proxy is received
by the corporation before the vote pursuant to that proxy is counted; provided,
however, that no proxy shall be valid after the expiration of eleven (11) months
from the date of the proxy, unless otherwise provided in the proxy. The dates
contained on the forms of proxy presumptively determine the order of execution,
regardless of the postmark dates on the envelopes in which they are mailed. The
revocability of a proxy that states on its face that it is irrevocable shall be
governed by the provisions of Sections 705(e) and 705(f) of the Code.
2.13 INSPECTORS OF ELECTION
Before any meeting of shareholders, the board of directors may appoint an
inspector or inspectors of election to act at the meeting or its adjournment. If
no inspector of election is so appointed, then the chairman of the meeting may,
and on the request of any shareholder or a shareholder's proxy shall, appoint an
inspector or inspectors of election to act at the meeting. The number of
inspectors shall be either one (1) or three (3). If inspectors are appointed at
a meeting pursuant to the request of one (1) or more shareholders or proxies,
then the holders of a majority of shares or their proxies present at the meeting
shall determine whether one (1) or three (3) inspectors are to be appointed. If
any person appointed as inspector fails to appear or fails or refuses to act,
then the chairman of the meeting may, and upon the request of any shareholder or
a shareholder's proxy shall, appoint a person to fill that vacancy.
Such inspectors shall:
(a) determine the number of shares outstanding and the voting power of
each, the number of shares represented at the meeting, the existence of a
quorum, and the authenticity, validity, and effect of proxies;
(b) receive votes, ballots or consents;
(c) hear and determine all challenges and questions in any way arising
in connection with the right to vote;
(d) count and tabulate all votes or consents;
(e) determine when the polls shall close;
(f) determine the result; and
(g) do any other acts that may be proper to conduct the election or
vote with fairness to all shareholders.
2.14 ADVANCE NOTICE OF SHAREHOLDER NOMINEES
Nominations of persons for election to the board of directors of the
corporation may be made at a meeting of shareholders by or at the direction of
the board of directors or by any shareholder of the corporation entitled to vote
in the election of directors at the meeting who complies with the notice
procedures set forth in this Section. Such nominations, other than those made by
or at the direction of the board of directors, shall be made pursuant to timely
notice in writing to the secretary of the corporation. To be timely, a
shareholder's notice shall be delivered to or mailed and received at the
principal executive offices of the corporation not less than ninety (90) nor
more than one hundred and twenty (120) days prior to the first anniversary of
the day on which notice of the date of the prior year's annual meeting was
mailed.
Such shareholder's notice shall set forth (a) as to each person, if any,
whom the shareholder proposes to nominate for election or re-election as a
director: (i) the name, age, business address and residence address of such
person, (ii) the principal occupation or employment of such person, (iii) the
class and number of shares of the corporation that are beneficially owned by
such person, (iv) any other information relating to such person that would be
required by law to be disclosed in solicitations of proxies for election of
directors, and (v) such person's written consent to being named as a nominee and
to serving as a director if elected; and (b) as to the shareholder giving the
notice: (i) the name and address, as they appear on the corporation's books, of
such shareholder, and (ii) the class and number of shares of the corporation
that are beneficially owned by such shareholder, and (iii) a description of all
arrangements or understandings between such shareholder and each nominee and any
other person or persons (naming such person or persons) relating to the
nomination. At the request of the board of directors, any person nominated by
the board for election as a director shall furnish to the secretary of the
corporation that information required to be set forth in the shareholder's
notice of nomination that pertains to the nominee.
No person shall be eligible for election as a director of the corporation
unless nominated in accordance with the procedures set forth in this Section.
The chair of the meeting shall, if the facts warrant, determine and declare at
the meeting that a nomination was not made in accordance with the procedures
prescribed by these Bylaws, and if the chair should so determine, he or she
shall so declare at the meeting and the defective nomination shall be
disregarded.
2.15 ADVANCE NOTICE OF SHAREHOLDER BUSINESS
At an annual meeting of the shareholders, only such business shall be
conducted as shall have been properly brought before the meeting. To be properly
brought before an annual meeting, business must be: (a) as specified in the
notice of meeting (or any supplement thereto) given by or at the direction of
the board of directors, (b) otherwise properly brought before the meeting by or
at the direction of the board of directors, or (c) otherwise properly brought
before the meeting by a shareholder. Business to be brought before an annual
meeting by a shareholder shall not be considered properly brought if the
stockholder has not given timely notice thereof in writing to the secretary of
the corporation. To be timely, a shareholder's notice must be delivered to or
mailed and received at the principal executive offices of the corporation not
less than ninety (90) nor more than one hundred and twenty (120) days prior to
the first anniversary of the day on which notice of the date of the prior year's
annual meeting was mailed.
A shareholder's notice to the secretary shall set forth as to each matter
the shareholder proposes to bring before the annual meeting: (i) a brief
description of the business desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting, (ii) the name
and address of the shareholder proposing such business, (iii) the class and
number of shares of the corporation that are beneficially owned by the
shareholder, (iv) any material interest of the shareholder in such business, and
(v) any other information that is required by law to be provided by the
shareholder in his or her capacity as a proponent of a stockholder proposal.
Notwithstanding anything in these bylaws to the contrary, no business shall be
conducted at any annual meeting except in accordance with the procedures set
forth in this Section. The chair of the annual meeting shall, if the facts
warrant, determine and declare at the meeting that business was not properly
brought before the meeting and in accordance with the provisions of this
Section, and, if the chair should so determine, he or she shall so declare at
the meeting that any such business not properly brought before the meeting shall
not be transacted.
ARTICLE III
DIRECTORS
3.1 POWERS
Subject to the provisions of the Code and any limitations in the articles
of incorporation and these bylaws relating to action required to be approved by
the shareholders or by the outstanding shares, the business and affairs of the
corporation shall be managed and all corporate powers shall be exercised by or
under the direction of the board of directors.
3.2 NUMBER OF DIRECTORS
Unless otherwise provided in the Articles of Incorporation of the
corporation, the number of directors of the corporation shall be not less than
five (5) nor more than nine (9), and the exact number of directors shall be
seven (7) from January 17 until May 23, 2003, and shall thereafter be six (6)
until changed, within the limits specified above, by a bylaw amending this
Section 3.2, duly adopted by the board of directors or by the shareholders. The
indefinite number of directors may be changed, or a definite number may be fixed
without provision for an indefinite number, by a duly adopted amendment to the
articles of incorporation or by an amendment to this bylaw duly adopted by the
vote or written consent of holders of a majority of the outstanding shares
entitled to vote; provided, however, that an amendment reducing the fixed number
or the minimum number of directors to a number less than five (5) cannot be
adopted if the votes cast against its adoption at a meeting, or the shares not
consenting in the case of an action by written consent, are equal to more than
sixteen and two-thirds percent (16-2/3%) of the outstanding shares entitled to
vote thereon. No amendment may change the stated maximum number of authorized
directors to a number greater than two (2) times the stated minimum number of
directors minus one (1).
No reduction of the authorized number of directors shall have the effect of
removing any director before that director's term of office expires.
3.3 ELECTION AND TERM OF OFFICE OF DIRECTORS
Directors shall be elected at each annual meeting of shareholders to hold
office until the next annual meeting. Each director, including a director
elected to fill a vacancy, shall hold office until the expiration of the term
for which elected and until a successor has been elected and qualified.
3.4 RESIGNATION AND VACANCIES
Any director may resign effective on giving written notice to the chairman
of the board, the president, the secretary or the board of directors, unless the
notice specifies a later time for that resignation to become effective. If the
resignation of a director is effective at a future time, the board of directors
may elect a successor to take office when the resignation becomes effective.
Except as otherwise provided in the Articles of Incorporation of the
corporation vacancies in the board of directors may be filled by a majority of
the remaining directors, even if less than a quorum, or by a sole remaining
director; however, a vacancy created by the removal of a director by the vote or
written consent of the shareholders or by court order may be filled only by the
affirmative vote of a majority of the shares represented and voting at a duly
held meeting at which a quorum is present (which shares voting affirmatively
also constitute a majority of the required quorum), or by the unanimous written
consent of all shares entitled to vote thereon. Each director so elected shall
hold office until the next annual meeting of the shareholders and until a
successor has been elected and qualified.
A vacancy or vacancies in the board of directors shall be deemed to exist,
among other things, (i) in the event of the death, resignation or removal of any
director, (ii) if the board of directors by resolution declares vacant the
office of a director who has been declared of unsound mind by an order of court
or convicted of a felony, (iii) if the authorized number of directors is
increased, or (iv) if the shareholders fail, at any meeting of shareholders at
which any director or directors are elected, to elect the number of directors to
be elected at that meeting.
Except as otherwise provided in the Articles of Incorporation of the
corporation, the shareholders may elect a director or directors at any time to
fill any vacancy or vacancies not filled by the directors, but any such election
other than to fill a vacancy created by removal, if by written consent, shall
require the consent of the holders of a majority of the outstanding shares
entitled to vote thereon.
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE
Regular meetings of the board of directors may be held at any place within
or outside the State of California that has been designated from time to time by
resolution of the board. In the absence of such a designation, regular meetings
shall be held at the principal executive office of the corporation. Special
meetings of the board may be held at any place within or outside the State of
California that has been designated in the notice of the meeting or, if not
stated in the notice or if there is no notice, at the principal executive office
of the corporation.
Any meeting, regular or special, may be held by conference telephone or
similar communication equipment, so long as all directors participating in the
meeting can hear one another; and all such directors shall be deemed to be
present in person at the meeting.
3.6 REGULAR MEETINGS
Regular meetings of the board of directors may be held without notice if
the times of such meetings are fixed by the board of directors.
3.7 SPECIAL MEETINGS; NOTICE
Special meetings of the board of directors for any purpose or purposes may
be called at any time by the chairman of the board, the president, any vice
president, the secretary or any two directors.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director or sent by first-class mail or
telegram, charges prepaid, addressed to each director at that director's address
as it is shown on the records of the corporation. If the notice is mailed, it
shall be deposited in the United States mail at least four (4) days before the
time of the holding of the meeting. If the notice is delivered personally or by
telephone or telegram, it shall be delivered personally or by telephone or to
the telegraph company at least forty-eight (48) hours before the time of the
holding of the meeting. Any oral notice given personally or by telephone may be
communicated either to the director or to a person at the office of the director
who the person giving the notice has reason to believe will promptly communicate
it to the director. The notice need not specify the purpose or the place of the
meeting, if the meeting is to be held at the principal executive office of the
corporation.
3.8 QUORUM
Except as otherwise provided in the Articles of Incorporation of this
corporation, a majority of the authorized number of directors shall constitute a
quorum for the transaction of business, except to adjourn as provided in Section
3.10 of these bylaws. Every act or decision done or made by a majority of the
directors present at a duly held meeting at which a quorum is present shall be
regarded as the act of the board of directors, subject to the provisions of
Section 310 of the Code (as to approval of contracts or transactions in which a
director has a direct or indirect material financial interest), Section 311 of
the Code (as to appointment of committees), Section 317(e) of the Code (as to
indemnification of directors), the articles of incorporation, and other
applicable law.
A meeting at which a quorum is initially present may continue to transact
business notwithstanding the withdrawal of directors, if any action taken is
approved by at least a majority of the required quorum for that meeting.
3.9 WAIVER OF NOTICE
Notice of a meeting need not be given to any director (i) who signs a
waiver of notice or a consent to holding the meeting or an approval of the
minutes thereof, whether before or after the meeting, or (ii) who attends the
meeting without protesting, prior thereto or at its commencement, the lack of
notice to such directors. All such waivers, consents, and approvals shall be
filed with the corporate records or made part of the minutes of the meeting. A
waiver of notice need not specify the purpose of any regular or special meeting
of the board of directors.
3.10 ADJOURNMENT
A majority of the directors present, whether or not constituting a quorum,
may adjourn any meeting to another time and place.
3.11 NOTICE OF ADJOURNMENT
Notice of the time and place of holding an adjourned meeting need not be
given unless the meeting is adjourned for more than twenty-four (24) hours. If
the meeting is adjourned for more than twenty-four (24) hours, then notice of
the time and place of the adjourned meeting shall be given before the adjourned
meeting takes place, in the manner specified in Section 3.7 of these bylaws, to
the directors who were not present at the time of the adjournment.
3.12 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Any action required or permitted to be taken by the board of directors may
be taken without a meeting, provided that all members of the board individually
or collectively consent in writing to that action. Such action by written
consent shall have the same force and effect as a unanimous vote of the board of
directors. Such written consent and any counterparts thereof shall be filed with
the minutes of the proceedings of the board.
3.13 FEES AND COMPENSATION OF DIRECTORS
Directors and members of committees may receive such compensation, if any,
for their services and such reimbursement of expenses as may be fixed or
determined by resolution of the board of directors. This Section 3.13 shall not
be construed to preclude any director from serving the corporation in any other
capacity as an officer, agent, employee or otherwise and receiving compensation
for those services.
3.14 APPROVAL OF LOANS TO OFFICERS
The corporation may, upon the approval of the board of directors alone,
make loans of money or property to, or guarantee the obligations of, any officer
of the corporation or its parent or subsidiary, whether or not a director, or
adopt an employee benefit plan or plans authorizing such loans or guaranties
provided that (i) the board of directors determines that such a loan or guaranty
or plan may reasonably be expected to benefit the corporation, (ii) the
corporation has outstanding shares held of record by 100 or more persons
(determined as provided in Section 605 of the Code) on the date of approval by
the board of directors, and (iii) the approval of the board of directors is by a
vote sufficient without counting the vote of any interested director or
directors. The sale of shares of the corporation to employees or directors of
the corporation or any subsidiary or parent of the corporation for promissory
notes pursuant to a stock purchase or stock option plan or agreement shall not
be considered a loan of money or property to, or guarantee of the obligation of,
such employees or directors for purposes of this Section 3.14.
ARTICLE IV
COMMITTEES
4.1 COMMITTEES OF DIRECTORS
The board of directors may, by resolution adopted by a majority of the
authorized number of directors, designate one (1) or more committees, each
consisting of two or more directors, to serve at the pleasure of the board. The
board may designate one (1) or more directors as alternate members of any
committee, who may replace any absent member at any meeting of the committee.
The appointment of members or alternate members of a committee requires the vote
of a majority of the authorized number of directors. Any committee, to the
extent provided in the resolution of the board, shall have all the authority of
the board, except with respect to:
(a) the approval of any action which, under the Code, also requires
shareholders' approval or approval of the outstanding shares;
(b) the filling of vacancies on the board of directors or in any
committee;
(c) the fixing of compensation of the directors for serving on the
board or any committee;
(d) the amendment or repeal of these bylaws or the adoption of new
bylaws;
(e) the amendment or repeal of any resolution of the board of
directors which by its express terms is not so amendable or repealable;
(f) a distribution to the shareholders of the corporation, except at a
rate or in a periodic amount or within a price range determined by the
board of directors; or
(g) the appointment of any other committees of the board of directors
or the members of such committees.
4.2 MEETINGS AND ACTION OF COMMITTEES
Meetings and actions of committees shall be governed by, and held and taken
in accordance with, the provisions of ARTICLE III of these bylaws, Section 3.5
(place of meetings), Section 3.6 (regular meetings), Section 3.7 (special
meetings and notice), Section 3.8 (quorum), Section 3.9 (waiver of notice),
Section 3.10 (adjournment), Section 3.11 (notice of adjournment), and Section
3.12 (action without meeting), with such changes in the context of those bylaws
as are necessary to substitute the committee and its members for the board of
directors and its members; provided, however, that the time of regular meetings
of committees may be determined either by resolution of the board of directors
or by resolution of the committee, that special meetings of committees may also
be called by resolution of the board of directors, and that notice of special
meetings of committees shall also be given to all alternate members, who shall
have the right to attend all meetings of the committee. The board of directors
may adopt rules for the government of any committee not inconsistent with the
provisions of these bylaws.
ARTICLE V
OFFICERS
5.1 OFFICERS
The officers of the corporation shall be a president, a secretary, and a
chief financial officer. The corporation may also have, at the discretion of the
board of directors, a chairman of the board, one or more vice presidents, one or
more assistant secretaries, one or more assistant treasurers, and such other
officers as may be appointed in accordance with the provisions of Section 5.3 of
these bylaws. Any number of offices may be held by the same person.
5.2 ELECTION OF OFFICERS
The officers of the corporation, except such officers as may be appointed
in accordance with the provisions of Section 5.3 or Section 5.5 of these bylaws,
shall be chosen by the board, subject to the rights, if any, of an officer under
any contract of employment.
5.3 SUBORDINATE OFFICERS
The board of directors may appoint, or may empower the president to
appoint, such other officers as the business of the corporation may require,
each of whom shall hold office for such period, have such authority, and perform
such duties as are provided in these bylaws or as the board of directors may
from time to time determine.
5.4 REMOVAL AND RESIGNATION OF OFFICERS
Subject to the rights, if any, of an officer under any contract of
employment, any officer may be removed, either with or without cause, by the
board of directors at any regular or special meeting of the board or, except in
case of an officer chosen by the board of directors, by any officer upon whom
such power of removal may be conferred by the board of directors.
Any officer may resign at any time by giving written notice to the
corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the corporation under any contract to which the officer is a
party.
5.5 VACANCIES IN OFFICES
A vacancy in any office because of death, resignation, removal,
disqualification or any other cause shall be filled in the manner prescribed in
these bylaws for regular appointments to that office.
5.6 CHAIRMAN OF THE BOARD
The chairman of the board, if such an officer be elected, shall, if
present, preside at meetings of the board of directors and exercise and perform
such other powers and duties as may from time to time be assigned to him by the
board of directors or as may be prescribed by these bylaws. If there is no
president or if designated by the board of directors, then the chairman of the
board shall also be the chief executive officer of the corporation and shall
have the powers and duties prescribed in Section 5.7 of these bylaws.
5.7 PRESIDENT
Subject to such supervisory powers, if any, as may be given by the board of
directors to the chairman of the board, if there be such an officer, the
president shall be the chief executive officer of the corporation and shall,
subject to the control of the board of directors, have general supervision,
direction, and control of the business and the officers of the corporation. He
shall preside at all meetings of the shareholders and, in the absence or
nonexistence of a chairman of the board, at all meetings of the board of
directors. He shall have the general powers and duties of management usually
vested in the office of president of a corporation, and shall have such other
powers and duties as may be prescribed by the board of directors or these
bylaws.
5.8 VICE PRESIDENTS
In the absence or disability of the president, the vice presidents, if any,
in order of their rank as fixed by the board of directors or, if not ranked, a
vice president designated by the board of directors, shall perform all the
duties of the president and when so acting shall have all the powers of, and be
subject to all the restrictions upon, the president. The vice presidents shall
have such other powers and perform such other duties as from time to time may be
prescribed for them respectively by the board of directors, these bylaws, the
president or the chairman of the board.
5.9 SECRETARY
The secretary shall keep or cause to be kept, at the principal executive
office of the corporation or such other place as the board of directors may
direct, a book of minutes of all meetings and actions of directors, committees
of directors and shareholders. The minutes shall show the time and place of each
meeting, whether regular or special (and, if special, how authorized and the
notice given), the names of those present at directors' meetings or committee
meetings, the number of shares present or represented at shareholders' meetings,
and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal executive
office of the corporation or at the office of the corporation's transfer agent
or registrar, as determined by resolution of the board of directors, a share
register, or a duplicate share register, showing the names of all shareholders
and their addresses, the number and classes of shares held by each, the number
and date of certificates evidencing such shares, and the number and date of
cancellation of every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all meetings of
the shareholders and of the board of directors required to be given by law or by
these bylaws. He shall keep the seal of the corporation, if one be adopted, in
safe custody and shall have such other powers and perform such other duties as
may be prescribed by the board of directors or by these bylaws.
5.10 CHIEF FINANCIAL OFFICER
The chief financial officer shall keep and maintain, or cause to be kept
and maintained, adequate and correct books and records of accounts of the
properties and business transactions of the corporation, including accounts of
its assets, liabilities, receipts, disbursements, gains, losses, capital,
retained earnings, and shares. The books of account shall at all reasonable
times be open to inspection by any director.
The chief financial officer shall deposit all money and other valuables in
the name and to the credit of the corporation with such depositaries as may be
designated by the board of directors. He shall disburse the funds of the
corporation as may be ordered by the board of directors, shall render to the
president and directors, whenever they request it, an account of all of his
transactions as chief financial officer and of the financial condition of the
corporation, and shall have such other powers and perform such other duties as
may be prescribed by the board of directors or these bylaws.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES
AND OTHER AGENTS
6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS
The corporation shall, to the maximum extent and in the manner permitted by
the Code, indemnify each of its directors and officers against expenses (as
defined in Section 317(a) of the Code), judgments, fines, settlements, and other
amounts actually and reasonably incurred in connection with any proceeding (as
defined in Section 317(a) of the Code), arising by reason of the fact that such
person is or was an agent of the corporation. For purposes of this Section 6.1,
a "director" or "officer" of the corporation includes any person (i) who is or
was a director or officer of the corporation, (ii) who is or was serving at the
request of the corporation as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise, or (iii) who was a
director or officer of a corporation which was a predecessor corporation of the
corporation or of another enterprise at the request of such predecessor
corporation.
6.2 INDEMNIFICATION OF OTHERS
The corporation shall have the power, to the extent and in the manner
permitted by the Code, to indemnify each of its employees and agents (other than
directors and officers) against expenses (as defined in Section 317(a) of the
Code), judgments, fines, settlements, and other amounts actually and reasonably
incurred in connection with any proceeding (as defined in Section 317(a) of the
Code), arising by reason of the fact that such person is or was an agent of the
corporation. For purposes of this Section 6.2, an "employee" or "agent" of the
corporation (other than a director or officer) includes any person (i) who is or
was an employee or agent of the corporation, (ii) who is or was serving at the
request of the corporation as an employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, or (iii) who was an
employee or agent of a corporation which was a predecessor corporation of the
corporation or of another enterprise at the request of such predecessor
corporation.
ARTICLE VII
RECORDS AND REPORTS
7.1 MAINTENANCE AND INSPECTION OF SHARE REGISTER
The corporation shall keep either at its principal executive office or at
the office of its transfer agent or registrar (if either be appointed), as
determined by resolution of the board of directors, a record of its shareholders
listing the names and addresses of all shareholders and the number and class of
shares held by each shareholder.
A shareholder or shareholders of the corporation who holds at least five
percent (5%) in the aggregate of the outstanding voting shares of the
corporation or who holds at least one percent (1%) of such voting shares and has
filed a Schedule 14A with the Securities and Exchange Commission relating to the
election of directors, may (i) inspect and copy the records of shareholders'
names, addresses, and shareholdings during usual business hours on five (5)
days' prior written demand on the corporation, (ii) obtain from the transfer
agent of the corporation, on written demand and on the tender of such transfer
agent's usual charges for such list, a list of the names and addresses of the
shareholders who are entitled to vote for the election of directors, and their
shareholdings, as of the most recent record date for which that list has been
compiled or as of a date specified by the shareholder after the date of demand.
Such list shall be made available to any such shareholder by the transfer agent
on or before the later of five (5) days after the demand is received or five (5)
days after the date specified in the demand as the date as of which the list is
to be compiled.
The record of shareholders shall also be open to inspection on the written
demand of any shareholder or holder of a voting trust certificate, at any time
during usual business hours, for a purpose reasonably related to the holder's
interests as a shareholder or as the holder of a voting trust certificate.
Any inspection and copying under this Section 7.1 may be made in person or
by an agent or attorney of the shareholder or holder of a voting trust
certificate making the demand.
7.2 MAINTENANCE AND INSPECTION OF BYLAWS
The corporation shall keep at its principal executive office or, if its
principal executive office is not in the State of California, at its principal
business office in California the original or a copy of these bylaws as amended
to date, which bylaws shall be open to inspection by the shareholders at all
reasonable times during office hours. If the principal executive office of the
corporation is outside the State of California and the corporation has no
principal business office in such state, then the secretary shall, upon the
written request of any shareholder, furnish to that shareholder a copy of these
bylaws as amended to date.
7.3 MAINTENANCE AND INSPECTION OF OTHER CORPORATE RECORDS
The accounting books and records and the minutes of proceedings of the
shareholders, of the board of directors, and of any committee or committees of
the board of directors shall be kept at such place or places as are designated
by the board of directors or, in absence of such designation, at the principal
executive office of the corporation. The minutes shall be kept in written form,
and the accounting books and records shall be kept either in written form or in
any other form capable of being converted into written form.
The minutes and accounting books and records shall be open to inspection
upon the written demand of any shareholder or holder of a voting trust
certificate, at any reasonable time during usual business hours, for a purpose
reasonably related to the holder's interests as a shareholder or as the holder
of a voting trust certificate. The inspection may be made in person or by an
agent or attorney and shall include the right to copy and make extracts. Such
rights of inspection shall extend to the records of each subsidiary corporation
of the corporation.
7.4 INSPECTION BY DIRECTORS
Every director shall have the absolute right at any reasonable time to
inspect all books, records, and documents of every kind as well as the physical
properties of the corporation and each of its subsidiary corporations. Such
inspection by a director may be made in person or by an agent or attorney. The
right of inspection includes the right to copy and make extracts of documents.
7.5 ANNUAL REPORT TO SHAREHOLDERS; WAIVER
The board of directors shall cause an annual report to be sent to the
shareholders not later than one hundred twenty (120) days after the close of the
fiscal year adopted by the corporation. Such report shall be sent at least
fifteen (15) days (or, if sent by third-class mail, thirty-five (35) days)
before the annual meeting of shareholders to be held during the next fiscal year
and in the manner specified in Section 2.5 of these bylaws for giving notice to
shareholders of the corporation.
The annual report shall contain (i) a balance sheet as of the end of the
fiscal year, (ii) an income statement, (iii) a statement of changes in financial
position for the fiscal year, and (iv) any report of independent accountants or,
if there is no such report, the certificate of an authorized officer of the
corporation that the statements were prepared without audit from the books and
records of the corporation.
The foregoing requirement of an annual report shall be waived so long as
the shares of the corporation are held by fewer than one hundred (100) holders
of record.
7.6 FINANCIAL STATEMENTS
If no annual report for the fiscal year has been sent to shareholders, then
the corporation shall, upon the written request of any shareholder made more
than one hundred twenty (120) days after the close of such fiscal year, deliver
or mail to the person making the request, within thirty (30) days thereafter, a
copy of a balance sheet as of the end of such fiscal year and an income
statement and statement of changes in financial position for such fiscal year.
If a shareholder or shareholders holding at least five percent (5%) of the
outstanding shares of any class of stock of the corporation makes a written
request to the corporation for an income statement of the corporation for the
three-month, six-month or nine-month period of the then current fiscal year
ended more than thirty (30) days before the date of the request, and for a
balance sheet of the corporation as of the end of that period, then the chief
financial officer shall cause that statement to be prepared, if not already
prepared, and shall deliver personally or mail that statement or statements to
the person making the request within thirty (30) days after the receipt of the
request. If the corporation has not sent to the shareholders its annual report
for the last fiscal year, the statements referred to in the first paragraph of
this Section 7.6 shall likewise be delivered or mailed to the shareholder or
shareholders within thirty (30) days after the request.
The quarterly income statements and balance sheets referred to in this
section shall be accompanied by the report, if any, of any independent
accountants engaged by the corporation or by the certificate of an authorized
officer of the corporation that the financial statements were prepared without
audit from the books and records of the corporation.
7.7 REPRESENTATION OF SHARES OF OTHER CORPORATIONS
The chairman of the board, the president, any vice president, the chief
financial officer, the secretary or assistant secretary of this corporation, or
any other person authorized by the board of directors or the president or a vice
president, is authorized to vote, represent, and exercise on behalf of this
corporation all rights incident to any and all shares of any other corporation
or corporations standing in the name of this corporation. The authority herein
granted may be exercised either by such person directly or by any other person
authorized to do so by proxy or power of attorney duly executed by such person
having the authority.
ARTICLE VIII
GENERAL MATTERS
8.1 RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING
For purposes of determining the shareholders entitled to receive payment of
any dividend or other distribution or allotment of any rights or the
shareholders entitled to exercise any rights in respect of any other lawful
action (other than action by shareholders by written consent without a meeting),
the board of directors may fix, in advance, a record date, which shall not be
more than sixty (60) days before any such action. In that case, only
shareholders of record at the close of business on the date so fixed are
entitled to receive the dividend, distribution or allotment of rights, or to
exercise such rights, as the case may be, notwithstanding any transfer of any
shares on the books of the corporation after the record date so fixed, except as
otherwise provided in the Code.
If the board of directors does not so fix a record date, then the record
date for determining shareholders for any such purpose shall be at the close of
business on the day on which the board adopts the applicable resolution or the
sixtieth (60th) day before the date of that action, whichever is later.
8.2 CHECKS; DRAFTS; EVIDENCES OF INDEBTEDNESS
From time to time, the board of directors shall determine by resolution
which person or persons may sign or endorse all checks, drafts, other orders for
payment of money, notes or other evidences of indebtedness that are issued in
the name of or payable to the corporation, and only the persons so authorized
shall sign or endorse those instruments.
8.3 CORPORATE CONTRACTS AND INSTRUMENTS; HOW EXECUTED
The board of directors, except as otherwise provided in these bylaws, may
authorize any officer or officers, or agent or agents, to enter into any
contract or execute any instrument in the name of and on behalf of the
corporation; such authority may be general or confined to specific instances.
Unless so authorized or ratified by the board of directors or within the agency
power of an officer, no officer, agent or employee shall have any power or
authority to bind the corporation by any contract or engagement or to pledge its
credit or to render it liable for any purpose or for any amount.
8.4 CERTIFICATES FOR SHARES
A certificate or certificates for shares of the corporation shall be issued
to each shareholder when any of such shares are fully paid. The board of
directors may authorize the issuance of certificates for shares partly paid
provided that these certificates shall state the total amount of the
consideration to be paid for them and the amount actually paid. All certificates
shall be signed in the name of the corporation by the chairman of the board or
the vice chairman of the board or the president or a vice president and by the
chief financial officer or an assistant treasurer or the secretary or an
assistant secretary, certifying the number of shares and the class or series of
shares owned by the shareholder. Any or all of the signatures on the certificate
may be facsimile.
In case any officer, transfer agent or registrar who has signed or whose
facsimile signature has been placed on a certificate ceases to be that officer,
transfer agent or registrar before that certificate is issued, it may be issued
by the corporation with the same effect as if that person were an officer,
transfer agent or registrar at the date of issue.
8.5 LOST CERTIFICATES
Except as provided in this Section 8.5, no new certificates for shares
shall be issued to replace a previously issued certificate unless the latter is
surrendered to the corporation and cancelled at the same time. The board of
directors may, in case any share certificate or certificate for any other
security is lost, stolen or destroyed, authorize the issuance of replacement
certificates on such terms and conditions as the board may require; the board
may require indemnification of the corporation secured by a bond or other
adequate security sufficient to protect the corporation against any claim that
may be made against it, including any expense or liability, on account of the
alleged loss, theft or destruction of the certificate or the issuance of the
replacement certificate.
8.6 CONSTRUCTION; DEFINITIONS
Unless the context requires otherwise, the general provisions, rules of
construction, and definitions in the Code shall govern the construction of these
bylaws. Without limiting the generality of this provision, the singular number
includes the plural, the plural number includes the singular, and the term
"person" includes both a corporation and a natural person.
ARTICLE IX
AMENDMENTS
9.1 AMENDMENT BY SHAREHOLDERS
New bylaws may be adopted or these bylaws may be amended or repealed by the
vote or written consent of holders of a majority of the outstanding shares
entitled to vote; provided, however, that if the articles of incorporation of
the corporation set forth the number of authorized directors of the corporation,
then the authorized number of directors may be changed only by an amendment of
the articles of incorporation.
9.2 AMENDMENT BY DIRECTORS
Subject to the rights of the shareholders as provided in Section 9.1 of
these bylaws, bylaws, other than a bylaw or an amendment of a bylaw changing the
authorized number of directors (except to fix the authorized number of directors
pursuant to a bylaw providing for a variable number of directors), may be
adopted, amended or repealed by the board of directors.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>5
<FILENAME>exhibit103directorplan.txt
<DESCRIPTION>EXHIBIT 10.3 (1993 DIRECTORS' STOCK OPTION PLAN)
<TEXT>
ACTEL CORPORATION
1993 DIRECTORS' STOCK OPTION PLAN
Amended and Restated as of May 23, 2003
[subject to shareholder approval]
1. Purposes of the Plan. The purposes of this Directors' Stock Option Plan
are to attract and retain the best available personnel for service as Directors
of the Company, to provide additional incentive to the Outside Directors of the
Company to serve as Directors, and to encourage their continued service on the
Board.
All options granted hereunder shall be "nonstatutory stock options".
2. Definitions. As used herein, the following definitions shall apply:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "Common Stock" shall mean the Common Stock of the Company.
(d) "Company" shall mean Actel Corporation, a California corporation.
(e) "Continuous Status as a Director" shall mean the absence of any
interruption or termination of service as a Director.
(f) "Director" shall mean a member of the Board.
(g) "Effective Date" shall have the meaning as set forth in Section 6
below.
(h) "Employee" shall mean any person, including officers and
Directors, employed by the Company or any Parent or Subsidiary of the
Company. The payment of a director's fee by the Company shall not be
sufficient in and of itself to constitute "employment" by the Company.
(i) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(j) "First Option" shall have the meaning as set forth in Section
4(b)(ii) below.
(k) "Option" shall mean a stock option granted pursuant to the Plan.
(l) "Optioned Stock" shall mean the Common Stock subject to an Option.
(m) "Optionee" shall mean an Outside Director who receives an Option.
(n) "Outside Director" shall mean a Director who is not an Employee.
(o) "Parent" shall mean a "parent corporation", whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(p) "Plan" shall mean this 1993 Directors' Stock Option Plan.
(q) "Share" shall mean a share of the Common Stock, as adjusted in
accordance with Section 11 of the Plan.
(r) "Subsequent Option" shall have the meaning as set forth in Section
4(b)(iii) below.
(s) "Subsidiary" shall mean a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 11 of
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 230,000 Shares (the "Pool") of Common Stock, increased
annually (subsequent to the January 23, 1998, amendment and restatement of the
Plan) on the first day of each fiscal year by (x) 100,000 less (y) the number of
shares available for issuance under the Director Plan on the last day of the
immediately preceding fiscal year. The Shares may be authorized, but unissued,
or reacquired Common Stock.
If an Option should expire or become unexercisable for any reason without
having been exercised in full, the unpurchased Shares which were subject thereto
shall not in any event be returned to the Plan and shall not become available
for future grant under the Plan. If Shares which were acquired upon exercise of
an Option are subsequently repurchased by the Company, such Shares shall not in
any event be returned to the Plan and shall not become available for future
grant under the Plan.
4. Administration of and Grants of Options under the Plan.
(a) Administrator. Except as otherwise required herein, the Plan shall
be administered by the Board.
(b) Procedure for Grants. The Board may grant Options to Outside
Directors hereunder, and on such terms, as are decided in its discretion.
Additionally, Options shall automatically be granted hereunder in
accordance with the following provisions:
(i) After May 23, 2003, each person who first becomes an Outside
Director shall be automatically granted an Option to purchase 12,500
Shares (the "First Option") on the date on which such person first
becomes an Outside Director, whether through election by the
shareholders of the Company or appointment by the Board of Directors
to fill a vacancy.
(ii) Beginning on May 23, 2003, each Outside Director shall be
automatically granted an Option to purchase 12,500 Shares (a
"Subsequent Option") on the date of each annual meeting of the
Company's shareholder in which the Outside Director is elected to
serve on the Board.
(iii) Notwithstanding the provisions of subsections (i) and (ii)
hereof, in the event that a grant would cause the number of Shares
subject to outstanding Options plus the number of Shares previously
purchased upon exercise of Options to exceed the Pool, then each such
automatic grant shall be for that number of Shares determined by
dividing the total number of Shares remaining available for grant by
the number of Outside Directors on the automatic grant date. Any
further grants shall then be deferred until such time, if any, as
additional Shares become available for grant under the Plan through
action of the shareholders to increase the number of Shares which may
be issued under the Plan or through cancellation or expiration of
Options previously granted hereunder.
(iv) Notwithstanding the provisions of subsections (i) and (ii)
hereof, any grant of an Option made before the Company has obtained
shareholder approval of the Plan in accordance with Section 17 hereof
shall be conditioned upon obtaining such shareholder approval of the
Plan in accordance with Section 17 hereof.
(v) The terms of a First Option granted hereunder shall be as
follows:
(A) the First Option shall be exercisable only while the
Outside Director remains a Director of the Company, except as set
forth in Section 9 hereof.
(B) the exercise price per Share shall be 100% of the fair
market value (as defined in Section 8(b) hereunder) per Share on
the date of grant of the First Option.
(C) the First Option shall vest and become exercisable as to
one hundred percent (100%) of the Shares subject to the First
Option on the date of the Company's second annual shareholder
meeting following the date of grant, subject to the provisions
set forth in Section 9 below. Notwithstanding the foregoing, with
respect to a First Option that was outstanding before May 23,
2003, and has an exercise price less than 75% of the fair market
value of the Company's Common Stock on May 23, 2003, such First
Option shall vest and become exercisable as to 25% of the Shares
subject to the First Option on the date of the Company's annual
shareholder meetings occurring in each of the first, second,
third, and fourth calendar years following the calendar year in
which the date of grant occurred, subject to the provisions set
forth in Sections 9 and 11 below.
(vi) The terms of a Subsequent Option granted hereunder shall be
as follows:
(A) the Subsequent Option shall be exercisable only while
the Outside Director remains a Director of the Company, except as
set forth in Section 9 hereof.
(B) the exercise price per Share shall be 100% of the fair
market value per Share on the date of grant of the Subsequent
Option.
(C) the Subsequent Option shall become exercisable as to one
hundred percent (100%) of the Shares subject to the Subsequent
Option on the date of the Company's annual shareholder meeting
occurring in the year following the date of grant, subject to the
provisions set forth in Section 9 below. Notwithstanding the
foregoing, with respect to a Subsequent Option that was
outstanding before May 23, 2003, and has an exercise price less
than 75% of the fair market value of the Company's Common Stock
on May 23, 2003, such Subsequent Option shall vest and become
exercisable as to 100% of the Shares subject to the Subsequent
Option on the date of the Company's annual shareholder meetings
occurring in the fourth calendar year following the calendar year
in which the date of grant occurred, subject to the provisions
set forth in Sections 9 and 11 below.
(c) Powers of the Board. Subject to the provisions and restrictions of
the Plan, the Board shall have the authority, in its discretion: (i) to
grant discretionary stock options to Outside Directors, upon such terms as
are determined by the Board in its discretion, (ii) to determine, upon
review of relevant information and in accordance with Section 8(b) of the
Plan, the fair market value of the Common Stock; (iii) to determine the
exercise price per share of Options to be granted, which exercise price
shall be determined in accordance with Section 8(a) of the Plan; (iv) to
interpret the Plan and to prescribe, amend and rescind rules and
regulations relating to the Plan; (v) to authorize any person to execute on
behalf of the Company any instrument required to effectuate the grant of an
Option previously granted hereunder; and (vi) to make all other
determinations deemed necessary or advisable for the administration of the
Plan. Notwithstanding anything in this Plan to the contrary, the Board
shall have not have the power or authority without obtaining shareholder
approval to substitute new Options for previously granted Options or reduce
the price of any Option if such substitution or reduction would result in
variable award accounting.
(d) Effect of Board's Decision. All decisions, determinations and
interpretations of the Board shall be final and binding on all Optionees
and any other holders of any Options granted under the Plan.
(e) Suspension or Termination of Option. If the President or his or
her designee reasonably believes that an Optionee has committed an act of
misconduct, the President may suspend the Optionee's right to exercise any
option pending a determination by the Board of Directors (excluding the
Outside Director accused of such misconduct). If the Board of Directors
(excluding the Outside Director accused of such misconduct) determines an
Optionee has committed an act of embezzlement, fraud, dishonesty,
nonpayment of an obligation owed to the Company, breach of fiduciary duty
or deliberate disregard of the Company rules resulting in loss, damage or
injury to the Company, or if an Optionee makes an unauthorized disclosure
of any Company trade secret or confidential information, engages in any
conduct constituting unfair competition, induces any Company customer to
breach a contract with the Company or induces any principal for whom the
Company acts as agent to terminate such agency relationship, neither the
Optionee nor his or her estate shall be entitled to exercise any option
whatsoever. In making such determination, the Board of Directors (excluding
the Outside Director accused of such misconduct) shall act fairly and shall
give the Optionee an opportunity to appear and present evidence on
Optionee's behalf at a hearing before the Board or a committee of the
Board.
5. Eligibility. Options may be granted only to Outside Directors. An
Outside Director who has been granted an Option may, if he or she is otherwise
eligible, be granted an additional Option or Options.
The Plan shall not confer upon any Optionee any right with respect to
continuation of service as a Director or nomination to serve as a Director, nor
shall it interfere in any way with any rights which the Director or the Company
may have to terminate his or her directorship at any time.
6. Term of Plan; Effective Date. The Plan shall become effective on the
date on which the Company's registration statement on Form S-1 (or any successor
form thereof) is declared effective by the Securities and Exchange Commission
(the "Effective Date"). It shall continue in effect until August 2, 2013, unless
sooner terminated under Section 13 of the Plan, subject to the limitations set
forth in this Plan.
7. Term of Option. The term of each Option shall be ten (10) years from the
date of grant thereof.
8. Exercise Price and Consideration.
(a) Exercise Price. The per Share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be 100% of the fair market
value per Share on the date of grant of the Option.
(b) Fair Market Value. The fair market value per Share shall be the
mean of the bid and asked prices of the Common Stock in the
over-the-counter market on the date of grant, as reported in The Wall
Street Journal (or, if not so reported, as otherwise reported by the
National Association of Securities Dealers Automated Quotation ("NASDAQ")
System) or, in the event that the Common Stock is traded on the NASDAQ
National Market System or listed on a stock exchange, the fair market value
per Share shall be the closing price on such system or exchange on the date
of grant of the Option, as reported in The Wall Street Journal, provided,
however, that if such market or exchange is closed on the date of the grant
of the Option then the fair market value per Share shall be based on the
most recent date on which such trading occurred immediately prior to the
date of the grant of the Option; provided, further, that for purposes of
First Options granted on the Effective Date, the fair market value per
share shall be the initial public offering price as set forth in the final
prospectus filed with the Securities and Exchange Commission pursuant to
Rule 424 under the Securities Act of 1933, as amended.
(c) Form of Consideration. The consideration to be paid for the Shares
to be issued upon exercise of an Option shall consist entirely of cash,
check, other Shares having a fair market value on the date of surrender
equal to the aggregate exercise price of the Shares as to which said Option
shall be exercised (which, if acquired from the Company, shall have been
held for at least six months), delivery of a properly executed exercise
notice together with instructions to a broker to deliver promptly to the
Company the amount of sale proceeds required to pay the exercise price, or
any combination of such methods of payment and/or any other consideration
or method of payment as shall be permitted under applicable corporate law.
9. Exercise of Option.
(a) Procedure for Exercise; Rights as a Shareholder. Any Option
granted hereunder shall be exercisable at such times as are set forth in
Section 4(b) hereof or, with respect to a discretionary grant, as decided
by the Board in its discretion; provided, however, that no Options shall be
exercisable until shareholder approval of the Plan in accordance with
Section 17 hereof has been obtained.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for
the Shares with respect to which the Option is exercised has been received
by the Company. Full payment may consist of any consideration and method of
payment allowable under Section 8(c) of the Plan. Until the issuance (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the stock certificate
evidencing such Shares, no right to vote or receive dividends or any other
rights as a shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. A share certificate for the
number of Shares so acquired shall be issued to the Optionee as soon as
practicable after exercise of the Option. No adjustment will be made for a
dividend or other right for which the record date is prior to the date the
stock certificate is issued, except as provided in Section 11 of the Plan.
Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter may be available, both for purposes of
the Plan and for sale under the Option, by the number of Shares as to which
the Option is exercised.
(b) Termination of Status as a Director. If an Outside Director ceases
to serve as a Director on or after May 23, 2003, he or she may, but only
within four (4) years (or such other period of time as is determined by the
Board) after the date he or she ceases to be a Director of the Company,
exercise his or her Option to the extent that he or she was entitled to
exercise it at the date of such termination. Notwithstanding the foregoing,
in no event may the Option be exercised after its term set forth in Section
7 has expired. To the extent that such Outside Director was not entitled to
exercise an Option at the date of such termination, or does not exercise
such Option (which he or she was entitled to exercise) within the time
specified herein, the Option shall terminate. Notwithstanding the
foregoing, with respect to an Option that was outstanding before May 23,
2003, and has an exercise price less than 75% of the fair market value of
the Company's Common Stock on May 23, 2003, an Outside Director shall have
only three (3) months (or such other period of time not exceeding six (6)
months as is determined by the Board) to exercise such Option after the
date he or she ceases to be a Director of the Company, but only to the
extent that he or she was entitled to exercise it at the date of such
termination.
(c) Disability of Optionee. Notwithstanding the provisions of Section
9(b) above, in the event a Director is unable to continue his or her
service as a Director with the Company as a result of his or her total and
permanent disability (as defined in Section 22(e)(3) of the Internal
Revenue Code) on or after May 23, 2003, he or she may, but only within four
(4) years (or such other period of time as is determined by the Board) from
the date of such termination, exercise his or her Option to the extent he
or she was entitled to exercise it at the date of such termination.
Notwithstanding the foregoing, in no event may the Option be exercised
after its term set forth in Section 7 has expired. To the extent that he or
she was not entitled to exercise the Option at the date of termination, or
if he or she does not exercise such Option (which he or she was entitled to
exercise) within the time specified herein, the Option shall terminate.
Notwithstanding the foregoing, with respect to an Option that was
outstanding before May 23, 2003, and has an exercise price less than 75% of
the fair market value of the Company's Common Stock on May 23, 2003, an
Outside Director shall have only six (6) months (or such other period of
time not exceeding twelve (12) months as is determined by the Board) to
exercise such Option after the date he or she ceases to be a Director of
the Company, but only to the extent that he or she was entitled to exercise
it at the date of such termination.
(d) Death of Optionee. In the event of the death of an Optionee:
(i) during the term of the Option who is, at the time of his or
her death, a Director of the Company and who shall have been in
Continuous Status as a Director since the date of grant of the Option,
the Option may be exercised in full, at any time within four (4) years
(or such lesser period of time as is determined by the Board)
following the date of death, by the Optionee's estate or by a person
who acquired the right to exercise the Option by bequest or
inheritance, whether or not the right to exercise that would have
accrued had the Optionee continued living. Notwithstanding the
foregoing, in no event may the Option be exercised after its term set
forth in Section 7 has expired. Notwithstanding the foregoing, with
respect to an Option that was outstanding before May 23, 2003, and has
an exercise price less than 75% of the fair market value of the
Company's Common Stock on May 23, 2003, such Option may be exercised
in full only for six (6) months (or such lesser time as is determined
by the Board) following the date of death.
(ii) within four (4) years (or such lesser period of time as is
determined by the Board) after the termination of Continuous Status as
a Director, the Option may be exercised by the Optionee's estate or by
a person who acquired the right to exercise the Option by bequest or
inheritance, but only to the extent of the right to exercise that had
accrued at the date of termination. Notwithstanding the foregoing, in
no event may the option be exercised after its term set forth in
Section 7 has expired. Notwithstanding the foregoing, with respect to
an Option that was outstanding before May 23, 2003, and has an
exercise price less than 75% of the fair market value of the Company's
Common Stock on May 23, 2003, such Option may be exercised in full
only for six (6) months following the date of death and only if death
occurs within three (3) months after termination of Continuous Status
as a Director.
10. Nontransferability of Options. The Option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution. The designation of a beneficiary
by an Optionee does not constitute a transfer. An Option may be exercised during
the lifetime of an Optionee only by the Optionee or a transferee permitted by
this Section.
11. Adjustments Upon Changes in Capitalization or Merger. Subject to any
required action by the shareholders of the Company, the number of shares of
Common Stock covered by each outstanding Option, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options have yet been granted or which have been returned to the Plan
upon cancellation or expiration of an Option, as well as the price per share of
Common Stock covered by each such outstanding Option, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option.
In the event of the proposed dissolution or liquidation of the Company, the
Option will terminate immediately prior to the consummation of such proposed
action, unless otherwise provided by the Board. The Board may, in the exercise
of its sole discretion in such instances, declare that any Option shall
terminate as of a date fixed by the Board and give each Optionee the right to
exercise his or her Option as to all or any part of the Optioned Stock,
including Shares as to which the Option would not otherwise be exercisable.
In the event of a proposed sale of all or substantially all of the assets
of the Company, or the merger of the Company with or into another corporation,
each outstanding Option shall be assumed or an equivalent option shall be
substituted by the successor corporation or a Parent or Subsidiary of the
successor corporation. In the event that such successor corporation refuses to
assume such Option or to substitute an equivalent option, such Options shall
become fully vested and exercisable as to all of the Optioned Stock, including
the Shares as to which the Options would not otherwise be vested and
exercisable. If Options become fully vested and exercisable in lieu of
assumption or substitution in the event of a merger or sale of assets, the Board
shall notify the Optionee that the Option shall be fully exercisable for a
period of thirty (30) days from the date of such notice, and the Option will
terminate upon the expiration of such period.
12. Time of Granting Options. The date of grant of an Option shall, for all
purposes, be the date determined in accordance with Section 4(b) hereof. Notice
of the determination shall be given to each Outside Director to whom an Option
is so granted within a reasonable time after the date of such grant.
13. Amendment and Termination of the Plan
(a) Amendment and Termination. The Board may amend or terminate the
Plan from time to time in such respects as the Board may deem advisable;
provided that, to the extent necessary and desirable to comply with Rule
16b-3 under the Exchange Act (or any other applicable law or regulation),
the Company shall obtain approval of the shareholders of the Company to
Plan amendments to the extent and in the manner required by such law or
regulation.
(b) Effect of Amendment or Termination. Any such amendment or
termination of the Plan that would impair the rights of any Optionee shall
not affect Options already granted to such Optionee and such Options shall
remain in full force and effect as if this Plan had not been amended or
terminated, unless mutually agreed otherwise between the Optionee and the
Board, which agreement must be in writing and signed by the Optionee and
the Company.
14. Conditions Upon Issuance of Shares. Shares shall not be issued pursuant
to the exercise of an Option unless the exercise of such Option and the issuance
and delivery of such Shares pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act of 1933, as
amended, the Exchange Act, the rules and regulations promulgated thereunder,
state securities laws, and the requirements of any stock exchange upon which the
Shares may then be listed, and shall be further subject to the approval of
counsel for the Company with respect to such compliance.
As a condition to the exercise of an Option, the Company may require the
person exercising such Option to represent and warrant at the time of any such
exercise that the Shares are being purchased only for investment and without any
present intention to sell or distribute such Shares, if, in the opinion of
counsel for the Company, such a representation is required by any of the
aforementioned relevant provisions of law.
Inability of the Company to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by the Company's counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall relieve
the Company of any liability in respect of the failure to issue or sell such
Shares as to which such requisite authority shall not have been obtained.
15. Reservation of Shares. The Company, during the term of this Plan, will
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
16. Option Agreement. Options shall be evidenced by written option
agreements in such form as the Board shall approve.
17. Shareholder Approval.
(a) Continuance of the Plan shall be subject to approval by the
shareholders of the Company at or prior to the first annual meeting of
shareholders held subsequent to the granting of an Option hereunder. If
such shareholder approval is obtained at a duly held shareholders' meeting,
it may be obtained by the affirmative vote of the holders of a majority of
the outstanding shares of the Company present or represented and entitled
to vote thereon. If such shareholder approval is obtained by written
consent, it may be obtained by the written consent of the holders of a
majority of the outstanding shares of the Company.
(b) Any required approval of the shareholders of the Company shall be
solicited substantially in accordance with Section 14(a) of the Exchange
Act and the rules and regulations promulgated thereunder.
18. Information to Optionees. The Company shall provide to each Optionee,
during the period for which such Optionee has one or more Options outstanding,
copies of all annual reports to shareholders, proxy statements and other
information provided to all shareholders of the Company.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>6
<FILENAME>exhibit104espp.txt
<DESCRIPTION>EXHIBIT 10.4 (1993 EMPLOYEE STOCK PURCHASE PLAN)
<TEXT>
ACTEL CORPORATION
1993 EMPLOYEE STOCK PURCHASE PLAN
Amended and Restated as of May23, 2003
[subject to shareholder approval]
The following constitute the provisions of the 1993 Employee Stock Purchase
Plan of Actel Corporation.
1. Purpose. The purpose of the Plan is to provide employees of the Company
and its Designated Subsidiaries with an opportunity to purchase Common Stock of
the Company through accumulated payroll deductions. It is the intention of the
Company to have the Plan qualify as an "Employee Stock Purchase Plan" under
Section 423 of the Code. The provisions of the Plan, accordingly, shall be
construed so as to extend and limit participation in a manner consistent with
the requirements of that section of the Code.
2. Definitions.
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "Common Stock" shall mean the Common Stock of the Company.
(d) "Company" shall mean Actel Corporation, a California corporation.
(e) "Compensation" shall mean all base straight time gross earnings
including commissions, overtime and shift premiums, and all incentive
compensation, incentive payments, bonuses and other compensation.
(f) "Designated Subsidiaries" shall mean the Subsidiaries which have
been designated by the Board from time to time in its sole discretion as
eligible to participate in the Plan.
(g) "Employee" shall mean any individual who is an employee of the
Company or any Designated Subsidiary for tax purposes whose employment with
the Company or any Designated Subsidiary averages at least twenty (20)
hours per week and more than five (5) months in any calendar year. For
purposes of the Plan, the employment relationship shall be treated as
continuing intact while the individual is on sick leave or other leave of
absence approved by the Company. Where the period of leave exceeds 90 days
and the individual's right to reemployment is not guaranteed either by
statute or by contract, the employment relationship will be deemed to have
terminated on the 91st day of such leave.
(h) "Enrollment Date" shall mean the first day of each Offering
Period.
(i) "Exercise Date" shall mean the last day of each Purchase Period.
(j) "Fair Market Value" shall mean, as of any date, the value of
Common Stock determined as follows:
(1) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the
National Market System of the National Association of Securities
Dealers, Inc. Automated Quotation ("NASDAQ") System, its Fair Market
Value shall be the closing sale price for the Common Stock (or the
mean of the closing bid and asked prices, if no sales were reported),
as quoted on such exchange (or the exchange with the greatest volume
of trading in Common Stock) or system on the date of such
determination, as reported in the Wall Street Journal or such other
source as the Board deems reliable, or;
(2) If the Common Stock is quoted on the NASDAQ system (but not
on the National Market System thereof) or is regularly quoted by a
recognized securities dealer but selling prices are not reported, its
Fair Market Value shall be the mean of the closing bid and asked
prices for the Common Stock on the date of such determination, as
reported in the Wall Street Journal or such other source as the Board
deems reliable, or;
(3) In the absence of an established market for the Common Stock,
the Fair Market Value thereof shall be determined in good faith by the
Board.
(4) For purposes of the Enrollment Date under the first Offering
Period under the Plan, the Fair Market Value of the Common Stock shall
be the Price to Public as set forth in the final prospectus filed with
the Securities and Exchange Commission pursuant to Rule 424 under the
Securities Act of 1933, as amended.
(k) "Offering Period" shall mean the period of approximately
twenty-four (24) months during which an option granted pursuant to the Plan
may be exercised. The first offering period shall commence with the date on
which the Company's registration statement on Form S-1 (or any successor
form thereof) is declared effective by the Securities and Exchange
Commission. This first offering period shall terminate on the last Trading
Day in the period ending August 1 or February 1 approximately 24 months
later. Subsequent offering periods shall commence on the first Trading Day
on or after August 1 and February 1 of each year and terminate on the last
Trading Day of the periods ending twenty-four months later. The duration
and timing of Offering Periods may be changed pursuant to Section 4 of this
Plan.
(l) "Plan" shall mean this Employee Stock Purchase Plan.
(m) "Purchase Price" shall mean an amount equal to 85% of the Fair
Market Value of a share of Common Stock on the Enrollment Date or on the
Exercise Date, whichever is lower.
(n) "Purchase Period" shall mean the approximately six month period
commencing after one Exercise Date and ending with the next Exercise Date,
except that the first Purchase Period of any Offering Period shall commence
on the Enrollment Date and end with the next Exercise Date. However, the
first Purchase Period of the first Offering Period under the Plan may be
more or less than six months in duration.
(o) "Reserves" shall mean the number of shares of Common Stock covered
by each option under the Plan which have not yet been exercised and the
number of shares of Common Stock which have been authorized for issuance
under the Plan but not yet placed under options.
(p) "Subsidiary" shall mean a corporation, domestic or foreign, of
which not less than 50% of the voting shares are held by the Company or a
Subsidiary, whether or not such corporation now exists or is hereafter
organized or acquired by the Company or a Subsidiary.
(q) "Trading Day" shall mean a day on which national stock exchanges
and the National Association of Securities Dealers Automated Quotation
(NASDAQ) System are open for trading.
3. Eligibility.
(a) Any Employee (as defined in Section 2(g)), who shall be employed
by the Company on a given Enrollment Date shall be eligible to participate
in the Plan.
(b) Any provisions of the Plan to the contrary notwithstanding, no
Employee shall be granted an option under the Plan (i) if immediately after
the grant, such Employee (or any other person whose stock would be
attributed to such Employee pursuant to Section 424(d) of the Code) would
own capital stock of the Company and/or hold outstanding options to
purchase such stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of the capital stock of the
Company or of any Subsidiary, or (ii) which permits his or her rights to
purchase stock under all employee stock purchase plans of the Company and
its subsidiaries to accrue at a rate which exceeds twenty-five thousand
dollars ($25,000) of Fair Market Value of such stock (determined at the
time such option is granted) for each calendar year in which such option is
outstanding at any time.
4. Offering Periods. The Plan shall be implemented by consecutive,
overlapping Offering Periods with the first Offering Period commencing with the
date on which the Company's registration statement on Form S-1 (or any successor
form thereof) is declared effective by the Securities and Exchange Commission.
The Board shall have the power to change the duration of Offering Periods
(including the commencement dates thereof) with respect to future offerings
without shareholder approval if such change is announced at least five (5) days
prior to the scheduled beginning of the first Offering Period to be affected.
Absent action by the Board, each Offering Period shall be for a period of
approximately twenty-four months (24) and new Offering Periods shall commence on
the first Trading Day of February and August of each year. The first Offering
Period under the Plan may be more or less than twenty-four (24) months in
duration.
5. Participation.
(a) An eligible Employee may become a participant in the Plan by
completing a subscription agreement authorizing payroll deductions (in the
form of Exhibit A to this Plan) and filing it with the Company's payroll
office prior to the applicable Enrollment Date.
(b) Payroll deductions for a participant shall commence on the first
payroll following the Enrollment Date and shall end on the last payroll in
the Offering Period to which such authorization is applicable, unless
sooner terminated by the participant as provided in Section 10 hereof.
6. Payroll Deductions.
(a) At the time a participant files his or her subscription agreement,
he or she shall elect to have payroll deductions made on each pay day
during the Offering Period in an amount not exceeding fifteen percent (15%)
of the Compensation which he or she receives on each pay day during the
Offering Period, and the aggregate of such payroll deductions during the
Offering Period shall not exceed fifteen percent (15%) of the participant's
Compensation during said Offering Period.
(b) All payroll deductions made for a participant shall be credited to
his or her account under the Plan and will be withheld in whole percentages
only. A participant may not make any additional payments into such account.
(c) A participant may discontinue his or her participation in the Plan
as provided in Section 10 hereof, or may increase or decrease the rate of
his or her payroll deductions during the Offering Period by filing with the
Company a new subscription agreement authorizing a change in payroll
deduction rate. The Board may, in its discretion, limit the number of
participation rate changes during any Offering Period. The change in rate
shall be effective with the first full payroll period following five (5)
business days after the Company's receipt of the new subscription agreement
unless the Company elects to process a given change in participation more
quickly. A participant's subscription agreement shall remain in effect for
successive Offering Periods unless terminated as provided in Section 10
hereof.
(d) Notwithstanding the foregoing, to the extent necessary to comply
with Section 423(b)(8) of the Code and Section 3(b) hereof, a participant's
payroll deductions may be decreased to 0% if the following should occur:
For the Purchase Periods that end during a single calendar year, the sum of
all payroll deductions that have been used to purchase stock under the Plan
plus all payroll deductions accumulated for the purchase of stock equals
$21,250. Payroll deductions shall recommence at the rate provided in such
participant's subscription agreement at the beginning of the first Purchase
Period which is scheduled to end in the subsequent calendar year, unless
terminated by the participant as provided in Section 10 hereof.
(e) At the time the option is exercised, in whole or in part, or at
the time some or all of the Company's Common Stock issued under the Plan is
disposed of, the participant must make adequate provision for the Company's
federal, state, or other tax withholding obligations, if any, which arise
upon the exercise of the option or the disposition of the Common Stock. At
any time, the Company may, but will not be obligated to, withhold from the
participant's compensation the amount necessary for the Company to meet
applicable withholding obligations, including any withholding required to
make available to the Company any tax deductions or benefits attributable
to sale or early disposition of Common Stock by the Employee.
7. Grant of Option. On the Enrollment Date of each Offering Period, each
eligible Employee participating in such Offering Period shall be granted an
option to purchase on the Exercise Date of such Offering Period (at the
applicable Purchase Price) up to a number of shares of the Company's Common
Stock determined by dividing such Employee's payroll deductions accumulated
prior to such Exercise Date and retained in the Participant's account as of the
Exercise Date by the applicable Purchase Price; provided that such purchase
shall be subject to the limitations set forth in Sections 3(b) and 12 hereof;
provided, further, that in no event shall any Employee purchase in excess of ten
thousand shares in any Offering Period. Exercise of the option shall occur as
provided in Section 8 hereof, unless the participant has withdrawn pursuant to
Section 10 hereof, and the option shall expire on the last day of the Offering
Period.
8. Exercise of Option. Unless a participant withdraws from the Plan as
provided in Section 10 hereof, his or her option for the purchase of shares will
be exercised automatically on the Exercise Date, and the maximum number of full
shares subject to the option shall be purchased for such participant at the
applicable Purchase Price with the accumulated payroll deductions in his or her
account. No fractional shares will be purchased; any payroll deductions
accumulated in a participant's account which are not sufficient to purchase a
full share shall be retained in the participant's account for the subsequent
Purchase Period, subject to earlier withdrawal by the participant as provided in
Section 10 hereof. Any other monies left over in a participant's account after
the Exercise Date shall be returned to the participant. During a participant's
lifetime, a participant's option to purchase shares hereunder is exercisable
only by him or her.
9. Delivery. As promptly as practicable after each Exercise Date on which a
purchase of shares occurs, the Company shall arrange the delivery to each
participant, as appropriate, of a certificate representing the shares purchased
upon exercise of his or her option.
10. Withdrawal; Termination of Employment.
(a) A participant may withdraw all but not less than all the payroll
deductions credited to his or her account and not yet used to exercise his
or her option under the Plan at any time by giving written notice to the
Company in the form of Exhibit B to this Plan. All of the participant's
payroll deductions credited to his or her account will be paid to such
participant promptly after receipt of notice of withdrawal and such
participant's option for the Offering Period will be automatically
terminated, and no further payroll deductions for the purchase of shares
will be made during the Offering Period. If a participant withdraws from an
Offering Period, payroll deductions will not resume at the beginning of the
succeeding Offering Period unless the participant delivers to the Company a
new subscription agreement.
(b) Upon a participant's ceasing to be an Employee (as defined in
Section 2(g) hereof), for any reason, he or she will be deemed to have
elected to withdraw from the Plan and the payroll deductions credited to
such participant's account during the Offering Period but not yet used to
exercise the option will be returned to such participant or, in the case of
his or her death, to the person or persons entitled thereto under Section
14 hereof, and such participant's option will be automatically terminated.
11. Interest. No interest shall accrue on the payroll deductions of a
participant in the Plan.
12. Stock.
(a) The maximum number of shares of the Company's Common Stock which
shall be made available for sale under the Plan shall be 3,519,680 shares,
subject to adjustment upon changes in capitalization of the Company as
provided in Section 18 hereof. If on a given Exercise Date the number of
shares with respect to which options are to be exercised exceeds the number
of shares then available under the Plan, the Company shall make a pro rata
allocation of the shares remaining available for purchase in as uniform a
manner as shall be practicable and as it shall determine to be equitable.
(b) The participant will have no interest or voting right in shares
covered by his option until such option has been exercised.
(c) Shares to be delivered to a participant under the Plan will be
registered in the name of the participant or in the name of the participant
and his or her spouse.
13. Administration.
(a) Administrative Body. The Plan shall be administered by the Board
or a committee of members of the Board appointed by the Board. The Board or
its committee shall have full and exclusive discretionary authority to
construe, interpret and apply the terms of the Plan, to determine
eligibility and to adjudicate all disputed claims filed under the Plan.
Every finding, decision and determination made by the Board or its
committee shall, to the full extent permitted by law, be final and binding
upon all parties. Members of the Board who are eligible Employees are
permitted to participate in the Plan, provided that:
(1) Members of the Board who are eligible to participate in the
Plan may not vote on any matter affecting the administration of the
Plan or the grant of any option pursuant to the Plan.
(2) If a Committee is established to administer the Plan, no
member of the Board who is eligible to participate in the Plan may be
a member of the Committee.
(b) Rule 16b-3 Limitations. Notwithstanding the provisions of
Subsection (a) of this Section 13, in the event that Rule 16b-3 promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
or any successor provision ("Rule 16b-3") provides specific requirements
for the administrators of plans of this type, the Plan shall be only
administered by such a body and in such a manner as shall comply with the
applicable requirements of Rule 16b-3. Unless permitted by Rule 16b-3, no
discretion concerning decisions regarding the Plan shall be afforded to any
committee or person that is not "disinterested" as that term is used in
Rule 16b-3.
14. Designation of Beneficiary.
(a) A participant may file a written designation of a beneficiary who
is to receive any shares and cash, if any, from the participant's account
under the Plan in the event of such participant's death subsequent to an
Exercise Date on which the option is exercised but prior to delivery to
such participant of such shares and cash. In addition, a participant may
file a written designation of a beneficiary who is to receive any cash from
the participant's account under the Plan in the event of such participant's
death prior to exercise of the option. If a participant is married and the
designated beneficiary is not the spouse, spousal consent shall be required
for such designation to be effective.
(b) Such designation of beneficiary may be changed by the participant
at any time by written notice. In the event of the death of a participant
and in the absence of a beneficiary validly designated under the Plan who
is living at the time of such participant's death, the Company shall
deliver such shares and/or cash to the executor or administrator of the
estate of the participant, or if no such executor or administrator has been
appointed (to the knowledge of the Company), the Company, in its
discretion, may deliver such shares and/or cash to the spouse or to any one
or more dependents or relatives of the participant, or if no spouse,
dependent or relative is known to the Company, then to such other person as
the Company may designate.
15. Transferability. Neither payroll deductions credited to a participant's
account nor any rights with regard to the exercise of an option or to receive
shares under the Plan may be assigned, transferred, pledged or otherwise
disposed of in any way (other than by will, the laws of descent and distribution
or as provided in Section 14 hereof) by the participant. Any such attempt at
assignment, transfer, pledge or other disposition shall be without effect,
except that the Company may treat such act as an election to withdraw funds from
an Offering Period in accordance with Section 10 hereof.
16. Use of Funds. All payroll deductions received or held by the Company
under the Plan may be used by the Company for any corporate purpose, and the
Company shall not be obligated to segregate such payroll deductions.
17. Reports. Individual accounts will be maintained for each participant in
the Plan. Statements of account will be given to participating Employees at
least annually, which statements will set forth the amounts of payroll
deductions, the Purchase Price, the number of shares purchased and the remaining
cash balance, if any.
18. Adjustments Upon Changes in Capitalization.
(a) Changes in Capitalization. Subject to any required action by the
shareholders of the Company, the Reserves as well as the price per share of
Common Stock covered by each option under the Plan which has not yet been
exercised shall be proportionately adjusted for any increase or decrease in
the number of issued shares of Common Stock resulting from a stock split,
reverse stock split, stock dividend, combination or reclassification of the
Common Stock, or any other increase or decrease in the number of shares of
Common Stock effected without receipt of consideration by the Company;
provided, however, that conversion of any convertible securities of the
Company shall not be deemed to have been "effected without receipt of
consideration". Such adjustment shall be made by the Board, whose
determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares
of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made
with respect to, the number or price of shares of Common Stock subject to
an option.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Offering Periods will
terminate immediately prior to the consummation of such proposed action,
unless otherwise provided by the Board.
(c) Merger or Asset Sale. In the event of a proposed sale of all or
substantially all of the assets of the Company, or the merger of the
Company with or into another corporation, each option under the Plan shall
be assumed or an equivalent option shall be substituted by such successor
corporation or a parent or subsidiary of such successor corporation, unless
the Board determines, in the exercise of its sole discretion and in lieu of
such assumption or substitution, to shorten the Offering Periods then in
progress by setting a new Exercise Date (the "New Exercise Date") or to
cancel each outstanding option to purchase and refund all sums collected
from participants during the Offering Period then in progress. If the Board
shortens the Offering Periods then in progress in lieu of assumption or
substitution in the event of a merger or sale of assets, the Board shall
notify each participant in writing, at least ten (10) business days prior
to the New Exercise Date, that the Exercise Date for his option has been
changed to the New Exercise Date and that his option will be exercised
automatically on the New Exercise Date, unless prior to such date he has
withdrawn from the Offering Period as provided in Section 10 hereof. For
purposes of this paragraph, an option granted under the Plan shall be
deemed to be assumed if, following the sale of assets or merger, the option
confers the right to purchase, for each share of stock subject to the
option immediately prior to the sale of assets or merger, the consideration
(whether stock, cash or other securities or property) received in the sale
of assets or merger by holders of Common Stock for each share of Common
Stock held on the effective date of the transaction (and if such holders
were offered a choice of consideration, the type of consideration chosen by
the holders of a majority of the outstanding shares of Common Stock);
provided, however, that if such consideration received in the sale of
assets or merger was not solely common stock of the successor corporation
or its parent (as defined in Section 424(e) of the Code), the Board may,
with the consent of the successor corporation and the participant, provide
for the consideration to be received upon exercise of the option to be
solely common stock of the successor corporation or its parent equal in
fair market value to the per share consideration received by holders of
Common Stock and the sale of assets or merger.
The Board may, if it so determines in the exercise of its sole
discretion, also make provision for adjusting the Reserves, as well as the
price per share of Common Stock covered by each outstanding option, in the
event the Company effects one or more reorganizations, recapitalizations,
rights offerings or other increases or reductions of shares of its
outstanding Common Stock, and in the event of the Company being
consolidated with or merged into any other corporation.
19. Amendment or Termination.
(a) The Board of Directors of the Company may at any time and for any
reason terminate or amend the Plan. Except as provided in Sections 18 and
19 hereof, no such termination can affect options previously granted,
provided that outstanding and/or future Offering Periods may be shortened
and/or terminated by the Board of Directors at any time. Except as provided
in Section 18 hereof and in the preceding sentence, no amendment may make
any change in any option theretofore granted which adversely affects the
rights of any participant. To the extent necessary to comply with Rule
16b-3 or under Section 423 of the Code (or any successor rule or provision
or any other applicable law or regulation), the Company shall obtain
shareholder approval in such a manner and to such a degree as required.
(b) Without shareholder consent and without regard to whether any
participant rights may be considered to have been "adversely affected," the
Board (or its committee) shall be entitled to change the Offering Periods,
limit the frequency and/or number of changes in the amount withheld during
an Offering Period, establish the exchange ratio applicable to amounts
withheld in a currency other than U.S. dollars, permit payroll withholding
in excess of the amount designated by a participant in order to adjust for
delays or mistakes in the Company's processing of properly completed
withholding elections, establish reasonable waiting and adjustment periods
and/or accounting and crediting procedures to ensure that amounts applied
toward the purchase of Common Stock for each participant properly
correspond with amounts withheld from the participant's Compensation, and
establish such other limitations or procedures as the Board (or its
committee) determines in its sole discretion advisable which are consistent
with the Plan.
20. Notices. All notices or other communications by a participant to the
Company under or in connection with the Plan shall be deemed to have been duly
given when received in the form specified by the Company at the location, or by
the person, designated by the Company for the receipt thereof.
21. Conditions Upon Issuance of Shares. Shares shall not be issued with
respect to an option unless the exercise of such option and the issuance and
delivery of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, the rules and regulations promulgated thereunder, and the requirements
of any stock exchange upon which the shares may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.
As a condition to the exercise of an option, the Company may require the
person exercising such option to represent and warrant at the time of any such
exercise that the shares are being purchased only for investment and without any
present intention to sell or distribute such shares if, in the opinion of
counsel for the Company, such a representation is required by any of the
aforementioned applicable provisions of law.
22. Term of Plan. The Plan shall become effective on the date on which the
Company's registration statement on Form S-1 (or any successor form thereof) is
declared effective by the Securities and Exchange Commission. It shall continue
in effect until August 2, 2013, unless sooner terminated under Section 19
hereof.
23. Additional Restrictions of Rule 16b-3. The terms and conditions of
options granted hereunder to, and the purchase of shares by, persons subject to
Section 16 of the Exchange Act shall comply with the applicable provisions of
Rule 16b-3. This Plan shall be deemed to contain, and such options shall
contain, and the shares issued upon exercise thereof shall be subject to, such
additional conditions and restrictions as may be required by Rule 16b-3 to
qualify for the maximum exemption from Section 16 of the Exchange Act with
respect to Plan transactions.
24. Automatic Transfer to Low Price Offering Period. To the extent
permitted by Rule 16b-3 of the Securities Exchange Act of 1934, as amended, if
the Fair Market Value of the Common Stock on any Exercise Date in an Offering
Period is lower than the Fair Market Value of the Common Stock on the Enrollment
Date of such Offering Period, then all participants in such Offering Period
shall be automatically withdrawn from such Offering Period immediately after the
exercise of their options on such Exercise Date and automatically re-enrolled in
the immediately following Offering Period as of the first day thereof.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>7
<FILENAME>exhibit1019ifxdevelopment.txt
<DESCRIPTION>EXHIBIT 10.19 (INFINEON DEVELOPMENT AGREEMENT)
<TEXT>
Development Agreement
- hereinafter referred to as "Agreement"
by and between
Infineon Technologies AG
a corporation duly incorporated under the laws of Germany,
having offices at St.-Martin-Str. 53, 81541 Munchen, Germany
- hereinafter referred to as "Infineon"
and
Actel Corporation
a corporation duly incorporated under the laws of California,
having offices at 955 East Arques Avenue, Sunnyvale, CA 94086-4533, USA
- hereinafter referred to as "Actel" -
- both hereinafter referred to as "Parties" or one as "Party" -
on
the Joint Development of C11FL Products
<PAGE>
Preamble
WHEREAS, Infineon is engaged in the development, production and
commercialization of semiconductor products, including flash technology for
semiconductor products.
WHEREAS, Actel is engaged in the development and commercialization of field
programmable semiconductor products including flash technology cells.
WHEREAS, both Parties learned from the previous contractual cooperation
regarding the C9FL technology, which will be the basis for a successful
cooperation regarding C11FL technology;
WHEREAS, both Parties concluded the Memorandum of Understanding of 12 April
2001;
NOW THEREFORE, the Parties agree as follows:
1. Definitions
1.1 The term "ACTEL FLASH FPGA" means any flash FPGA that was developed or is
developed by or on behalf of Actel on the basis of C11FL TECHNOLOGY for
production in C11FL TECHNOLOGY.
1.2 The term "ACTEL FLASH eFPGA CORE" means a reusable, pre-designed virtual
flash FPGA, whether synthesizable or otherwise, that was developed or is
developed by or on behalf of Actel or extracted by Infineon from the ACTEL
FLASH FPGA on the basis of C11FL TECHNOLOGY for use in the design of C11FL
PRODUCTS, including the programming switch, architecture, modules, test
software, and software design tools used for mapping customer applications
to and programming the embedded flash FPGA.
1.3 The term "ACTEL LEAD PRODUCT" means the first Actel C11FL PRODUCT that
Actel QUALIFIES and markets to its customers.
1.4 The term "BACKGROUND PATENTS" means patent applications, patents, utility
models and other statutory protection, which are embodied in INFORMATION
and under which one Party is the owner and/or has the right of
determination at any time during the term of this Agreement and which are
not resulting from performing the DEVELOPMENT WORK.
1.5 The term "CC" means Infineon's division Security & Chip Card ICs.
1.6 The term "C11FL TECHNOLOGY" means the technology (in particular process
technology, Infineon flash cells and circuits), which is described in ANNEX
1 to this Agreement and RATIO STEPS thereof.
1.7 The term "C11FL PRODUCTS" means any Infineon or Actel products based upon
C11FL TECHNOLOGY for production in C11FL TECHNOLOGY. The term "Actel C11FL
PRODUCTS" means C11FL PRODUCTS manufactured by or for Actel. The term
"Infineon C11FL PRODUCTS" means C11FL PRODUCTS manufactured by or for
Infineon
1.8 The term "DEVELOPMENT WORK" means any and all development work to be
performed by the Parties in accordance with Sections 2 and 3 below.
DEVELOPMENT WORK shall not include any C11FL TECHNOLOGY or development
thereof.
1.9 The term "DEVELOPMENT RESULTS" means any and all results, whether
patentable or not, in written or oral form, achieved by performing
DEVELOPMENT WORK, in particular data relating to flash cell reliability.
For the avoidance of doubt, DEVELOPMENT RESULTS shall not include any C11FL
TECHNOLOGY or any data and/or information relating to the specifications of
any C11FL PRODUCT.
1.10 The term "EFFECTIVE DATE" means the date that this Agreement is signed by
both Parties.
1.11 The term "EMBEDDED PRODUCT" means a C11FL PRODUCT that (i) contains an
ACTEL FLASH eFPGA CORE and (ii) the principal use of the device is
satisfied primarily by functions performed in those parts of the device
that are not comprised of the ACTEL FLASH eFPGA CORE.
1.12 The term "FLASH IPR" means any and all IPR of Actel relating to the ACTEL
FLASH eFPGA CORE.
1.13 The term "FPGA" means integrated circuits that implement field programmable
logic the operation of which is determined after the integrated circuit has
been manufactured.
1.14 The term "INFINEON FAB" means any foundry of Infineon or of any company,
which is affiliated with Infineon within the meaning of Section 15 of the
German Stock Corporation Act (Aktiengesetz) ("Affiliate").
1.15 The term "INFINEON LEAD PRODUCT" means the first Infineon C11FL PRODUCT
which Infineon QUALIFIES and markets to its customers.
1.16 The term "INFORMATION" means written and/or oral technical information with
regard to the C11FL TECHNOLOGY, such information being available to one
Party at any time during the term of this Agreement and not resulting from
performing the DEVELOPMENT WORK. However, INFORMATION shall not include any
data and/or information relating to the specifications of any Infineon or
Actel C11FL PRODUCT. INFORMATION of Infineon shall be limited to
information available at CC.
1.17 The term "INVENTION" means any and all (i) ideas and conceptions of
potentially patentable subject matter, including, without limitation, any
patent disclosures, whether or not reduced to practice, and whether or not
yet made the subject of a pending patent application or applications; (ii)
patent applications relating thereto, and (iii) United States, European,
international and foreign patents issuing there from; and all reissues,
divisions, renewals, extensions, provisionals, continuations and
continuations-in-part thereof.
1.18 The term "JOINT INVENTION" means any INVENTION that is first conceived or
reduced to practice by one or more of one Party's employees or third party
contractors with one or more of the other Party's employees or third party
contractors during the term and in the performance of this Agreement.
1.19 The term "IPR" means (by whatever name or term known or designated) any
intellectual property rights including, without limitation, patents,
registered designs, copyrights, trade secrets, moral rights and any other
intellectual property or proprietary rights (except trademarks, service
marks and related rights) eligible for protection under the laws of any
country, state or jurisdiction including registrations, applications,
renewals and extensions of such rights.
1.20 The term "KNOW-HOW" means any secret or overt knowledge or information,
which is proprietary to either Party.
1.21 The term "MILESTONE PLAN" means the contents and time schedule set forth in
ANNEX 2 to this Agreement.
1.22 The term "QUALIFIES" or "QUALIFIED" or "QUALIFICATION" shall mean that a
particular C11FL PRODUCT performs in accordance with the qualification
criteria and procedures for such products, as determined in the sole
discretion of the party who's product is at issue, and that, therefore, the
particular product is released for manufacturing and shipment to customers.
1.23 The term "RATIO STEPS" means any process that is substantially the same as
and built on the base 0.13 micron process with shrink design rules (e.g.
0.13 shrink 0.10), such as C11FL-R technology.
2. Carrying out of the DEVELOPMENT WORK
2.1 In General. Based on their different areas of expertise, the Parties agree
that each Party will perform the DEVELOPMENT WORK as set forth in Sections
2, 3 and ANNEX 2 hereof.
2.2 Development of Test Array. The Parties shall cooperate on the development
and testing of a test array as specified in ANNEX 3 ("Test Array")
according to Sections 2 and 3 hereof. Actel shall design the Test Array,
which shall contain at least the identical memory cells and shall be
operated under the same conditions as the type intended INFINEON LEAD
PRODUCT and ACTEL LEAD PRODUCT. Actel shall deliver the Test Array to
Infineon, at the INFINEON FAB in Dresden, Germany, in accordance with the
MILESTONE PLAN. Actel shall prepare the design data (GDS-file) for the Test
Array.
2.3 Test Array. Infineon shall use the Test Array for early learning regarding
reliability. Infineon and Actel shall jointly perform tests regarding the
reliability of the flash cells in the Test Array ("Flash Cell Reliability")
(collectively "Testing"). The parties will measure Flash Cell Reliability
by testing the Test Array for the reliability factors set forth on ANNEX 4
("Reliability Factors"). The Parties shall jointly define and agree upon
the acceptable measures for each such Reliability Factor ("Reliability
Objectives") and jointly determine whether the Test Array meets each of the
Reliability Objectives. If the Test Array meets each of the Reliability
Objectives, it shall be deemed to have met the threshold for Flash Cell
Reliability. The Parties agree that for the Reliability Factor regarding
moving bit failure rates a detection level of less than 1ppm/Mbit/year with
reasonable measurement for both erased and programmed states is the
Reliability Objective.
2.4 Testing Software and Board. Actel shall develop and deliver to Infineon the
software required for the Testing ("Test Programs") and shall also design
necessary circuits and layout for the respective tester probecard board to
be used for testing the Test Array. Actel shall deliver the Test Programs
to Infineon and install such programs at the INFINEON FAB in Dresden.
Infineon will provide a proven vendor for manufacture board that is
compatible with a Teradyne J750 tester and associated prober.
2.5 Running of Wafers. Infineon shall run a sufficient amount of wafers in
order to achieve the Reliability Objectives. Infineon shall make reasonable
endeavors to modify and/or improve wafers processed to be able to
demonstrate process reliability according to ANNEX 5. Infineon shall
provide Actel with access to data that is produced as a result of such
Testing.
2.6 Mask Design and Manufacture. Actel shall design and Infineon shall
manufacture the masks ("Masks"), which are necessary for the production of
the wafers to be processed with the Test Array.
2.7 Costs of Masks. In consideration for Infineon's manufacture of the Masks,
after completion of all the Masks and shipment of the Masks to the Dresden
fab, Actel shall pay to Infineon, within thirty (30) days of the date of
invoice, (i) a lump-sum payment in the amount of Euro
three-hundred-forty-thousand ((euro) 340,000) and (ii) fifty percent (50%)
of any actual cost for the mask set exceeding Euro
three-hundred-forty-thousand ((euro) 340,000). Infineon shall be the sole
owner of the masks, and Infineon alone shall be entitled to use the masks,
even after completion of the DEVELOPMENT WORK (Section 3 below) and after
Agreement termination.
2.8 MILESTONE PLAN. The DEVELOPMENT WORK shall comprise also the efforts and
activities set forth in Section 3 below and in the MILESTONE PLAN, and the
Parties shall use reasonable efforts in carrying out the DEVELOPMENT WORK
in accordance with the MILESTONE PLAN. The DEVELOPMENT WORK shall be
carried out in close cooperation between the Parties and in a joint effort
to keep cost and expenditures to a minimum.
2.9 Availability of DEVELOPMENT RESULTS. Each Party shall make available to the
other within a reasonable period of time following the EFFECTIVE DATE of
this Agreement, and from time to time during the carrying out of the
DEVELOPMENT WORK its DEVELOPMENT RESULTS.
2.10 Experts. Each Party shall, within one (1) month following the EFFECTIVE
DATE, appoint an expert who will act as a point of contact during the
DEVELOPMENT WORK. All INFORMATION and DEVELOPMENT RESULTS to be forwarded
to a Party hereunder, shall be addressed to such appointed expert.
2.11 Changes to the MILESTONE PLAN. In the event that one of the Parties
realizes that the DEVELOPMENT WORK cannot efficiently be performed
according to the MILESTONE PLAN, or development plans set forth for the
project, the other Party shall immediately be informed thereof. The Parties
shall then review the situation and mutually agree on relevant changes with
respect to the further conduct and performance of the DEVELOPMENT WORK.
2.12 Ownership. A Party forwarding, without charge, to the other Party parts,
components, software and other tangible articles for the purposes of the
DEVELOPMENT WORK shall remain the proprietor of such articles, except as
otherwise expressly provided in this Agreement. All items to be provided by
Actel under this Section 2 shall be delivered to Infineon at the INFINEON
FAB in Dresden, at the costs and risk of Actel.
2.13 Subcontractors. Infineon and Actel may, even without the other's consent,
have any of its obligations regarding the DEVELOPMENT WORK and/or any other
contractual obligations under this Agreement provided by a third party
(subcontractor), provided, however, that any such subcontractor shall be
required to agree in writing to confidentiality provisions at least as
protective as those set forth in Section 10 (Secrecy).
2.14 Technical Specifications and Other Deliverables. Infineon shall (i) provide
Actel with necessary technical specifications regarding the C11FL
TECHNOLOGY in order to support Actel in developing the Test Array; and (ii)
provide Actel with the runsets (software for Design Rule Checking - DRC),
design manuals, and simulation parameters required for Actel to develop the
Test Array and testing materials.
2.15 Engineering Support. Actel shall send to Infineon, INFINEON FAB in Dresden,
a sufficient number of engineers, but not more than four (4), until
Infineon determines in its reasonable judgment, that Infineon's staff at
the INFINEON FAB in Dresden is able to run the Test Programs with the Test
Array. Actel shall support the Test Programs and the Test Array at the
INFINEON FAB in Dresden, in particular provide Infineon with
on-site-support in order to safeguard proper functioning of the Test
Programs and of the Test Array, and enable Infineon by support via
telephone, email or any other means to solve specific problems using the
Test Programs, and use reasonable efforts to correct all bugs, errors and
problems with the Test Programs that are reported to Actel by Infineon.
3. Completion and Costs of the DEVELOPMENT WORK
3.1 Completion of Development. The DEVELOPMENT WORK shall be regarded as being
completed successfully once (i) the efforts and activities under Section 2
hereof have been carried out and (ii) Test Arrays have been designed and
(iii) the Test Programs run without any bugs and (iv) the reliability Tests
have been completed according to ANNEX 5.
3.2 Final Protocol. The Parties will record the DEVELOPMENT RESULTS in a final
protocol, including the date of the successful completion of the
DEVELOPMENT WORK. Each Party shall be entitled to a copy of such final
protocol.
3.3 Costs and Fees. Except as set forth in Section 2.7 above, each Party shall
bear the costs incurred by such Party for its efforts under or in
connection with the DEVELOPMENT WORK.
4. Design and QUALIFICATION of Actel Products
4.1 Actel C11FL Design. Actel shall have the right to use the Test Array,
INFORMATION and DEVELOPMENT RESULTS only to the extent necessary to design,
develop and have manufactured Actel C11FL PRODUCTS during and after the
term of this Agreement. Actel shall not use Test Array, INFORMATION and
DEVELOPMENT RESULTS in any other manner or for any other purpose. In any
event, Actel shall not be entitled to use the Masks provided by Infineon in
any manner.
4.2 Access to Wafer Corridor for QUALIFICATION. Actel shall have the right to
use a wafer corridor for C11FL PRODUCTS in an INFINEON FAB to be determined
by Infineon ("Wafer Corridor") to QUALIFY the ACTEL LEAD PRODUCT, provided
that either (i) Infineon has completed a minimum qualification of a
demonstration product according to testing criteria to be mutually agreed
upon ("Demo-QUALIFICATION"), or (ii) Infineon has successfully completed
the QUALIFICATION of the INFINEON LEAD PRODUCT. Actel's rights under this
Section 4.2 are subject to expiry as set forth in Section 5 below.
4.2.1Infineon shall give Actel written notice on the QUALIFICATION of the
INFINEON LEAD PRODUCT or the Demo-QUALIFICATION; the date of receipt of
Infineon's notice shall be deemed the date of the QUALIFICATION ("Infineon
QUALIFICATION Date").
4.2.2If Actel does not tape out an ACTEL LEAD PRODUCT within twelve (12) months
of the Infineon QUALIFICATION Date, Actel's rights under Section 4.2 shall
expire.
4.3 Order of Wafers. For the purpose QUALIFYING the ACTEL LEAD PRODUCT, Actel
shall order and Infineon shall fabricate and deliver to Actel wafers
according to the Project Plan in ANNEX 6 to this Agreement.
4.4 Actel QUALIFICATION First. With Infineon's consent, Actel may QUALIFY an
ACTEL LEAD PRODUCT prior to Infineon QUALIFYING the INFINEON LEAD PRODUCT.
However, in no event shall INFINEON be obligated to fabricate the ACTEL
LEAD PRODUCT for purposes of Actel's QUALIFICATION thereof at the same time
in the same INFINEON FAB as Infineon is fabricating the INFINEON LEAD
PRODUCT for purposes of QUALIFICATION thereof if, at Infineon's discretion,
such simultaneous loading of the same INFINEON FAB would cause additional
costs or time efforts of Infineon.
4.5 Notice of Tape Out/QUALIFICATION. Actel shall notify Infineon in writing on
the tape out and on the QUALIFICATION of each ACTEL LEAD PRODUCT.
4.6 Infineon Covenant Not To Sue. Infineon agrees that neither Infineon nor any
of its Affiliates will assert during the term of this Agreement and
thereafter (except as provided in Sections 14.3 and 14.4 below), directly
or indirectly, any claim or cause of action based, in whole or in part,
upon the purported infringement by Actel or its suppliers, licensees, or
customers, mediate or immediate, of any IPR as a result of the manufacture,
use, export, import, offer for sale, sale, lease, distribution, or other
transfer of products to the extent that such products use or incorporate
any technology or INFORMATION or KNOW-HOW that Actel contributes to the
Development Work during the term of this Agreement (and thereafter to the
extent that provisions herein survive termination or expiration).
5. Fabrication and Supply of Wafers to Actel
5.1 Wafer Corridor For Fabrication. Subject to Section 5.1.1 below, for a
period of three (3) years from the later of (i) the Infineon QUALIFICATION
Date and (ii) March 1, 2003 ("Access Period"), Actel shall have the right
to use the Infineon Wafer Corridor to QUALIFY and fabricate a reasonable
volume of Actel C11FL PRODUCTS ("Wafers"). During the Access Period Actel
shall be guaranteed a fabrication volume of at minimum
one-hundred-and-fifty (150) Wafer Starts Per Week ("WSPW").
5.1.1Termination of Right to Wafer Corridor. Actel's right to use the Wafer
Corridor shall terminate on the first to occur of the following: (i) one
(1) year after the Infineon QUALIFICATION Date if Actel has not by then
taped out an ACTEL LEAD PRODUCT; (ii) two (2) months after Infineon gives
written notice to Actel that Actel did not fabricate through the Wafer
Corridor an average minimum quantity of twenty-five (25) WSPW during any
single month more than eighteen (18) months after the beginning of the
Access Period; and (iii) the end of the Access Period.
5.1.2Exclusive Remedy. The provisions of Section 5.1.1 constitute Infineon's
exclusive remedy and Actel's sole liability for Actel's failure to
fabricate an average minimum quantity of twenty-five (25) WSPW during the
Access Period.
5.2 RATIO STEPS. Actel may transfer Actel C11FL PRODUCTS currently under
fabrication to RATIO STEPS of the C11FL TECHNOLOGY or to design Actel C11FL
PRODUCTS in RATIO STEPS in order to prolong manufacturability and to
achieve area savings. However, the Parties shall in advance mutually agree
on the timing of any such transfer to RATIO STEPS or design of Actel C11FL
PRODUCTS in RATIO STEPS.
5.3 Pricing. The provisions regarding pricing of Wafers are specified in the
ANNEX 7 to this AGREEMENT.
5.4 Third Party Manufacture. Provided that Infineon has enabled the manufacture
of Infineon C11FL PRODUCTS in a third party silicon foundry, Actel shall be
entitled to have ACTEL PRODUCTS manufactured in such third party silicon
foundry, and INFINEON hereby grants Actel a perpetual, irrevocable (except
as provided in Sections 12.1, 14.3 and 14.4 below), worldwide, royalty
free, non-exclusive, non-transferable (except as provided in Section 15.11
below) right, under all of its IPRs in and to the C11FL TECHNOLOGY and
Information to have manufactured Actel PRODUCTS by any third party location
at which the Infineon C11FL TECHNOLOGY and process has been or is
installed, however such license grant shall be limited to the extent that
Infineon has full power and title to make such grant without any third
party consent.
6. Limited Warranties
6.1 Development Warranties. Provided that a Party complies with its obligations
under Section 2, such PARTY shall not be liable towards the other Party in
the case that the DEVELOPMENT WORK cannot be successfully completed as per
Section 3 above.
6.2 The sole obligation of each Party with respect to errors in its INFORMATION
and DEVELOPMENT RESULTS and exclusive remedy of the other party shall be to
forward same to the other PARTY as provided in this Agreement, and to
correct errors that might have occurred in such INFORMATION and DEVELOPMENT
RESULTS without undue delay after such errors become known to the Party
which forwarded the relevant INFORMATION or DEVELOPMENT RESULTS.
THE WARRANTIES SET FORTH IN THIS SECTION 6 APPLY TO ALL INFORMATION AND
DEVELOPMENT RESULTS LICENSED OR KNOWINGLY DISCLOSED HEREUNDER AND ARE IN
LIEU OF ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION
THE WARRANTIES THAT INFORMATION AND DEVELOPMENT RESULTS CAN BE USED WITHOUT
INFRINGING STATUTORY AND OTHER RIGHTS OF THIRD PARTIES.
The disclaimer in this Section 6.2 shall in no way alter the Parties'
respective obligations to indemnify one another under Section 12 hereof.
6.3 Production Warranty. Infineon warrants that the wafers delivered to Actel
under Section 4 hereof meet the specification to be agreed expressly in
writing between the Parties. The warranty period shall be one (1) year from
delivery to Actel. If the wafers fail to meet these specifications,
Infineon shall correct the failure within thirty (30) days from receipt of
a written objection by Actel.
THE WARRANTIES PROVIDED IN SECTIONS 6.2 AND 6.3 ABOVE ARE THE ONLY
WARRANTIES MADE BY THE PARTIES TO EACH OTHER. NEITHER PARTY MAKES AND
NEITHER PARTY RECEIVES ANY OTHER WARRANTIES, EXPRESS OR IMPLIED, AND ALL
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR ANY PARTICULAR PURPOSE ARE
EXPRESSLY EXCLUDED.
7. License regarding ACTEL FLASH eFPGA CORE.
7.1 ACTEL FLASH eFPGA CORE. Subject to the restrictions and limitations set
forth in Sections 7.3, 7.4 and 7.5 below, Actel hereby grants to Infineon a
perpetual, worldwide, non-exclusive, non-transferable (except as provided
in Section 15.11 below), non-sublicenseable (except as provided in Section
7.1 (vi) below), irrevocable (except as provided in Sections 12.3 and 14.4
below) license:
(i) to use the ACTEL FLASH eFPGA CORE, or extract it from ACTEL FLASH
FPGA, including but not limited to switch, architecture, modules and
design tools, as defined in ANNEX 8, with any present or future
products of Infineon in an Infineon EMBEDDED PRODUCT, and to
manufacture, have manufactured solely for Infineon, sell or otherwise
distribute or have distributed such Infineon EMBEDDED PRODUCTS;
(ii) to use and exploit the FLASH IPR solely for the purposes set forth in
(i) above; and
(iii)to use, perform, display, program, modify, adapt and/or improve, or
have used, performed, displayed, programmed, modified, adapted and/or
improved software tools, in object code format, with which a Party can
program the ACTEL FLASH eFPGA CORE ("Design Tools") for applications
to manufacture, or have manufactured solely for Infineon, Infineon
EMBEDDED PRODUCTS; and
(iv) to use and exploit the Actel deliverables, such as the Test Programs
evaluation board, burner, which are defined in ANNEX 9, solely to the
extent required in order for Infineon to exercise its rights under the
licenses in (i)-(iii) above, and
(v) to program, modify, adapt and/or improve, or have programmed,
modified, adapted and/or improved the ACTEL FLASH eFPGA CORE, FLASH
IPR and/or any deliverables as under (iv) above and to use and exploit
the modified, adapted and/or improved items solely for the purposes
set forth in (i) above; and
(vi) sublicense the right to use, perform and display the Actel FLASH eFPGA
Design Tools under (iii) above to any present or future customers who
purchase Infineon EMBEDDED PRODUCTS.
7.2 Samples and Modifications. If Actel tapes out and/or QUALIFIES an Actel
PRODUCT, at any time, that Actel tapes out and/or QUALIFIES a new VERSION
of the Actel PRODUCT, Actel shall make available to Infineon:
(i) INFORMATION and samples of the Actel PRODUCT at the respective date of
QUALIFICATION, if applicable, as well as any modifications,
adaptations and/or improvements thereto at the QUALIFICATION of the
modified, adapted and/or improved Actel FLASH CORE; and
(ii) the Actel Deliverables set forth on ANNEX 9, but only to the extent
that such Deliverables exist; Actel shall have no obligation hereunder
to create such Deliverables other than for its own purposes.
7.3 Restrictions. The rights granted under the license in Section 7.1 shall be
restricted as follows:
(i) Infineon's use and exploitation of the ACTEL FLASH eFPGA CORE shall be
in connection with the C11FL TECHNOLOGY.
(ii) Infineon may only manufacture, have manufactured solely for Infineon,
distribute, have distributed, sell and otherwise make available the
ACTEL FLASH eFPGA CORE embedded in Infineon C11FL PRODUCTS that are
EMBEDDED PRODUCTS.
(iii)Infineon may only use the FLASH IPR and Actel INFORMATION in
connection with the development, manufacture and distribution of
Infineon C11FL PRODUCTS in which the ACTEL FLASH FPGA CORE is embedded
and may not use the Actel FLASH IPR or Actel INFORMATION in connection
with the development, manufacture and distribution of Infineon
products that do not contain the ACTEL FLASH eFPGA CORE.
7.4 All licenses granted to Infineon under this Section 7, shall be
free-of-charge for use by CC and one (1) further present or future division
of Infineon (collectively the "Entitled Divisions"). Infineon shall
designate such division by written notice to Actel prior to making use of
such additional license. If Infineon wishes to use the licensed rights
through a third division, Infineon shall inform Actel in advance. In this
case the Parties shall negotiate an adequate license fee in good faith.
7.5 If Infineon spins off an Entitled Division, the spin-off shall have the
same rights as attributed to the spun off Entitled Division. The Entitled
Divisions and the spin-off are collectively referred to as "Entitled
Entities". In no event shall any more than two (2) Entitled Entities, i.e.
CC and one (1) other Entitled Division or their spin-offs, have the right
to use the free licenses hereunder at any given time. In no event shall an
entity that is an Actel competitor be entitled to a license under this
Section 7. Infineon shall provide Actel or its successors and assigns with
written notice of and details concerning the spin-off of an Entitled
Division within a reasonable timeframe after such spin-off is effected.
7.6 The licenses in this Section 7 may not be sublicensed, except as expressly
provided in this Section 7.
7.7 Other Licenses. Under its INFORMATION, BACKGROUND PATENTS and DEVELOPMENT
RESULTS each Party hereby grants to the other Party and its Affiliates the
non-exclusive, non-transferable (except as set forth in Section 15.11),
non-sublicenseable, royalty free right to use the same during the term of
this Agreement for the purpose of carrying out the DEVELOPMENT WORK.
However, INFORMATION, which one Party receives from the other under this
Agreement, and BACKGROUND PATENTS of the other Party may be used by the one
Party solely to the extent strictly necessary to use the DEVELOPMENT
RESULTS, as set forth in the previous sentence of this Section 7.7. Section
4.1 above shall remain unaffected.
8. Additional Services relating to Actel FLASH eFPGA
8.1 Cost free Migration. If Infineon migrates an Infineon EMBEDDED PRODUCT to
another Infineon EMBEDDED PRODUCT, Infineon may undertake such migration
without paying Actel any fee provided that Infineon does not require Actel
to provide design and layout services to accomplish the migration (e.g. if
a "dumb" shrink migrating from C11FL to C11FL-R1 were used needing no Actel
design and layout services).
8.2 Migration for a Fee. If Infineon requires Actel design and layout services
for redesign and/or re-layout of the ACTEL FLASH eFPGA CORE for the purpose
of integration into Infineon EMBEDDED PRODUCTS, Actel shall provide such
services at a service fee to be negotiated between the Parties in good
faith. In performing such services Actel is not obligated to follow the
dumb shrink path or required to support an Infineon requested redesign and
re-layout.
8.3 Additional Free Services. To the extent that Actel typically provides
certain design and layout services free-of-charge to its ProASIC customers,
Actel agrees to also provide the same services to Infineon free-of-charge
to Infineon during the term of this Agreement.
8.4 Teaching Services. Actel shall render to Infineon training and teaching
services relating to ACTEL FLASH eFPGA CORE during this Agreement or after
Agreement termination, upon request of Infineon at a service fee to be
negotiated between the Parties in good faith. The service fee shall be
calculated at an hourly consulting fee rate.
9. DEVELOPMENT RESULTS, INFORMATION and Rights Thereunder
9.1 INVENTIONS. INVENTIONS made during the term and under the cooperation of
this Agreement by employees of one Party shall become neither the property
of the other Party nor the common property of both Parties, and the one
Party, therefore and insofar as it otherwise has the right to do so, shall
be free to use such Inventions as it sees fit and to file for statutory
protection and to use, maintain and permit to lapse such application for
statutory protection and any statutory rights issued thereon.
9.2 JOINT INVENTIONS. JOINT INVENTIONS shall, at the time they are made, become
the joint property of both Parties.
9.3 JOINT INVENTIONS including any and all statutory protection issuing thereon
(as per Section 9.3.1 below or otherwise), if any, may be used by each
Party, as such Party sees fit. Each Party therefore, for example and
without limitation, has the transferable right to grant non-exclusive,
further transferable licenses under such JOINT INVENTIONS. Neither Party
shall be obliged to pay to the other Party any royalties or other kind of
consideration with respect to grant of such licenses under JOINT INVENTIONS
to third parties.
9.3.1For JOINT INVENTIONS, which are eligible for statutory protection, the
Parties will agree upon the details for filing for such protection.
In case only one Party is interested in filing for statutory protection for
JOINT INVENTIONS, then the other Party shall execute and forward to the one
Party all documents requested by the one Party and reasonably believed to
be necessary and/or desirable for such procedure. Statutory rights filed
for JOINT INVENTIONS by one Party at its own expense shall, from the date
of filing, become the sole property of that one Party, and, therefore, for
example and without limitation, can be used, maintained and permitted to
lapse by this Party as it sees fit. The other Party's rights to use such
statutory rights are as laid down in Section 9.3 above.
9.3.2Each Party ensures that it will be in a position to immediately acquire
the share of inventions of its employees insofar as Joint Inventions are
concerned.
9.3.3Neither Party is obligated to take action against third parties infringing
upon statutory rights filed or issued for JOINT INVENTIONS or to defend
such rights against third parties. Notwithstanding the foregoing, each
Party shall promptly notify the other Party if such former Party becomes
aware of any possible infringement by a third Party of any of the JOINT
INVENTIONS. If either Party desires to take any action against such an
infringing third Party, such Party shall first notify the other Party
hereto and consult with such other Party regarding such action.
10. Secrecy
10.1 Non-Disclosure. Each Party agrees that all INFORMATION and DEVELOPMENT
RESULTS which it receives from the other Party and which are designated as
confidential by such Party will be deemed to be confidential and will be
maintained by the receiving Party in confidence, provided, however, that
such Party may disclose such information to its officers, and those of its
employees and others under its control for the purposes of this Agreement,
all of whom will be advised of this Agreement and such Party's obligations
thereunder. The provisions of this Section 10 shall apply mutatis mutandis
to any business secrets and KNOW-HOW of either Party.
10.2 Precautions. Such Party additionally agrees to take all reasonable
precautions to safeguard the confidential nature of the foregoing
information, provided, however, that such Party's normal procedures for
protecting its own confidential information shall be deemed reasonable
precautions, and provided that if such precautions are taken, such Party
will not be liable for any disclosure which is inadvertent or unauthorized
or is required by any judicial order or decree or by any governmental law
or regulation. Neither shall such Party be liable for disclosure and/or any
use of such information insofar as such information;
(i) is in, or becomes part of, the public domain other than through a
breach of this Agreement by such Party; or
(ii) is already known to such Party at or before the time it receives the
same from the other Party or is disclosed to such Party by a third
party as a matter of right; or
(iii)is independently developed by such Party without the benefit of such
information received from the other Party; or
(iv) is disclosed and/or used by such Party with the prior written consent
of the other Party.
10.3 Disclosure to Sublicensees. Notwithstanding the above provisions of this
Section 10, each Party has the right to disclose the other Party's
INFORMATION and DEVELOPMENT RESULTS, which it received under this Agreement
to its licensees insofar as it has the right to sublicense same as set
forth in this Agreement, provided, such Party requires such licensee to
undertake in writing secrecy obligations which are at least as stringent as
the ones set forth in this Section 10.
10.4 Subcontractors and Employees. Infineon shall safeguard by agreements in
writing with any subcontractor (Section 2.13) that the subcontractor shall
comply with obligations substantially similar to those set forth in
Sections 10.1 through 10.3 above. Actel shall safeguard by agreements in
writing with their employees and other staff members who may have access to
an INFINEON FAB that these persons shall comply with obligations
substantially similar to those set forth in Sections 10.1 through 10.3
above.
10.5 Authorized Disclosure. Notwithstanding the provisions of this Agreement,
each party may disclose the terms of this Agreement (i) in connection with
the requirements of an initial public offering, securities filing; (ii) in
confidence, to accountants, banks, and financing sources and their
advisors; (iii) in confidence, in connection with the enforcement of this
Agreement or rights under this Agreement.
10.6 Survival. The obligations under Sections 10.1 through 10.4 above shall
survive five (5) years after termination of this Agreement.
10.7 Actel Employee Access. Subject to the provisions in this Section 10,
Infineon shall provide Actel employees with access to Infineon facilities
including, without limitation, INFINEON FABs, as reasonably required for
Actel to fulfill its obligations and exercise its rights under this
Agreement. Any access for Actel employees to clean rooms and comparable
facilities in a fab of Infineon will be permitted only if escorted by
Infineon staff. Access to other rooms and facilities in a fab of Infineon
will be permitted without escort for Actel employees resident at such fab
for a period of at least four (4) weeks. Actel employees resident at such
fab of Infineon for a period of at less than four (4) weeks always require
an escort. Subject to room availability, a separate office for Actel staff
will be provided by Infineon.
11. Limitation of Liability
11.1 Willful Misconduct and Gross Negligence. With regard to any of either
Party's obligations hereunder, each Party shall be liable for damage
incurred by the other Party, to the extent that such damage is caused by
willful misconduct or gross negligence of the other Party, its legal
representatives, employees or subcontractors.
11.2 Death or Injury. Any liability of a Party with respect to death or injury
to any person is subject to and governed by the provisions of the
applicable law. Neither Party is, however, obliged to compensate for death
or personal injury or loss of or damage to property of the other Party to
the extent such death, injury, loss or damage is covered by and paid out by
the insurance(s) of the affected Party and such affected Party shall not be
entitled to recover same from the first Party.
11.3 EXCEPT WHERE SUCH LIABILITY IS MANDATORY BY APPLICABLE LAW, NEITHER PARTY
SHALL BE LIABLE FOR ANY INDIRECT OR CONSEQUENTIAL, EXEMPLARY OR PUNITIVE
DAMAGES OF THE OTHER PARTY, HOWEVER CAUSED AND UNDER ANY LEGAL CAUSE OR
THEORY WHATSOEVER AND ON ACCOUNT OF WHATSOEVER REASON, AND WHETHER OR NOT
SUCH PARTY WAS OR SHOULD HAVE BEEN AWARE OR ADVISED OF THE POSSIBILITY OF
SUCH DAMAGE AND NOTWITHSTANDING THE FAILURE OF ESSENTIAL PURPOSE OF ANY
LIMITED REMEDY STATED HEREIN
11.4 In no event shall either Party's liability arising out of this Agreement
exceed the maximum amount of three million US Dollars ($3,000,000) every
twelve (12) month period, up to a maximum of ten million US Dollars
($10,000,000). The Parties agree that this Section represents a reasonable
allocation of risk.
11.5 No Required Statutory Protection. Nothing in this Agreement shall obligate
either Party to apply for, take out, maintain or acquire any statutory
protection, in any country.
11.6 Third Party Rights. All rights granted in INFORMATION, DEVELOPMENT RESULTS
and under BACKGROUND PATENTS are granted insofar only as the Party granting
same has the right to grant without payment to third Parties.
12. Third Party Rights and Indemnity
12.1 Indemnity by Infineon. With respect to Infineon's proprietary contribution
to any C11FL PRODUCTS provided, manufactured, sold, or otherwise
transferred to Actel under this Agreement ("Infineon Item"), Infineon shall
defend Actel from any actions or claims brought against Actel to the extent
based upon a claim that such Infineon Item infringes a third party's IPR,
and shall hold Actel harmless from and against any such claim (including
all legal costs and attorney's fees), whether or not that claim is
successful, provided that Actel (i) gives Infineon notice of such claim,
(ii) cooperates with Infineon, at Infineon's expense, in the defense of
such claim, and (iii) gives Infineon the right to control the defense and
settlement of any such claim, except that (A) Infineon shall not enter into
any settlement that materially affects Actel's rights or interest without
Actel's prior written approval, and (B) Actel shall have the right, at its
own expense, to participate in the defense and settlement of such claim,
with counsel of Actel's own choosing. In addition, Infineon shall, at
Infineon's own cost and sole discretion, take one of the following
measures:
(i) procure for Actel the right to use the Infineon Item, or
(ii) for all infringing Infineon Items returned to Infineon by Actel and
for future provisions, modify the Infineon Items to become
non-infringing or deliver an equivalent non-infringing Item.
If Infineon determines in its sole discretion that neither of the foregoing
are available or commercially feasible, Infineon may terminate, by giving
one (1) month written notice to Actel, all rights and licenses granted to
Actel under this Agreement with respect to the Infineon Item and refund to
Actel all amounts paid by Actel under this Agreement. Notwithstanding,
Infineon shall remain obliged to hold harmless Actel from and against all
claims, which (i) at the date the notice termination becomes effective,
have yet been arisen and/or (ii) arise from Infineon's conduct or Actel's
conduct, such as manufacture or sale of Actel C11FL PRODUCTS, performed
prior to the date the notice termination becomes effective.
12.2 Exclusions to Indemnity by Infineon. Any liability of Infineon for
infringement of third party IPR by shall be excluded if the infringement is
not caused by the Infineon Item. Infineon shall also have no obligation to
indemnify if the infringement of the third party IPR arises as a result of
(i) the combination of a noninfringing Infineon Item with any item not
supplied by Infineon; (ii) modification of the Infineon Item by Actel or
its customers or by Infineon in compliance with Actel's designs,
specifications, or instructions; or (iii) continued allegedly infringing
activity by Actel after Actel has been notified of the possible
infringement.
12.3 Indemnity by Actel. With respect to Actel `s proprietary contribution to
any C11FL PRODUCTS provided, manufactured, sold, or otherwise transferred
to Infineon under this Agreement ("Actel Item"), Actel shall defend
Infineon from any actions or claims brought against Infineon to the extent
based upon a claim that such Actel Item infringes a third party's IPR, and
hold Infineon harmless from and against any such claim (including all legal
costs and attorney's fees), whether or not that claim is successful,
provided that Infineon (i) gives Actel notice of such claim, (ii)
cooperates with Actel, at Actel's expense, in the defense of such claim,
and (iii) gives Actel the right to control the defense and settlement of
any such claim, except that (A) Actel shall not enter into any settlement
that materially affects Infineon's rights or interest without Infineon's
prior written approval, and (B) Infineon shall have the right, at its own
expense, to participate in the defense and settlement of such claim, with
counsel of Infineon's own choosing. In addition, Actel shall, at Actel's
own cost and sole discretion, take one of the following measures:
(i) procure for Infineon the right to use the Actel Item, or
(ii) modify the Actel Item to become non-infringing or deliver an
equivalent non-infringing Item.
If Actel determines in its sole discretion that neither of the foregoing are
available or commercially feasible, Actel may terminate, by giving one (1) month
written notice to Infineon, all rights and licenses granted to Infineon under
this Agreement with respect to the Actel Item and refund all amounts paid by
Infineon under this Agreement. Notwithstanding, Actel shall remain obliged to
hold harmless Infineon from and against all claims, which (i) at the date the
notice termination becomes effective, have yet been arisen and/or (ii) arise
from Actel's conduct or Infineon's conduct, such as use of the Actel Item for
manufacture of Infineon C11FL PRODUCTS, performed prior to the date the notice
termination becomes effective.
12.4 Exclusions to Indemnity by Actel. Any liability of Actel for infringement
of third party IPR by shall be excluded if the infringement is not caused
by the Actel Item. Actel shall also have no obligation to indemnify if the
infringement of the third party IPR arises as a result of (i) the
combination of a noninfringing Actel Item with any item not supplied by
Actel; (ii) modification of the Actel Item by Infineon or its customers or
by Actel in compliance with Infineon's designs, specifications, or
instructions; or (iii) continued allegedly infringing activity by Infineon
after Infineon has been notified of the possible infringement.
12.5 Exclusive Remedy. This Section 12 sets forth sole liabilities and exclusive
remedies of the parties for infringement of any IPR by any Actel Item or
Infineon Item.
13. Non-Exclusivity
Nothing in this Agreement shall constitute any exclusivity between the
Parties regarding the subject matter of this Agreement. Subject to the
restrictions set forth in Sections 7 and 10, either Party shall be free to
carry out any development, which competes with the other Party's business
activities, alone or jointly with a third party and/or develop and have
developed, make and have made or otherwise acquire, sell or otherwise make
available same to third parties products that are similar and comparable to
any product referred to under this Agreement.
14. Term and Termination
14.1 Term. This Agreement shall become effective on the EFFECTIVE DATE and shall
continue indefinitely unless it expires or is terminated in accordance with
this Section 14.
14.2 Expiration. This Agreement shall expire upon of expiry of Actel's rights to
the Wafer Corridor under Sections 4.2.2 or 5.1.1 above, or by the latest
upon expiry of the three (3) year term of the Access Period (Section 5.1).
14.3 Other Termination. This Agreement may be terminated at any time by the one
Party by giving of not less than four (4) weeks' prior written notice to
the other Party
(i) if the other Party hereto is declared bankrupt or otherwise
permanently cannot fulfill its financial obligations; or
(ii) if the other Party hereto substantially defaults in the performance of
this Agreement and does not remedy the default within four (4) weeks
after receipt of a relevant request of the non-breaching Party.
In case that one Party terminates the Agreement pursuant to this Section 14.3,
such Party may revoke all rights and licenses granted to the other Party under
this Agreement immediately.
14.4 Competitors. Infineon may terminate this Agreement and/or revoke all rights
and licenses granted to Actel under this Agreement immediately upon notice
if Actel hereafter directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control
with an entity that competes with CC; and Actel may terminate this
Agreement and/or revoke all rights and licenses granted to Infineon under
this Agreement immediately upon notice if Infineon hereafter directly, or
indirectly through one or more intermediaries, controls, or is controlled
by, or is under common control with an entity that competes with Actel.
14.5 Survival. Sections 1, 6, 7, 8, 9, 10, 11, 12, 13, 14.4, 14.5, 14.6, and 15
hereof shall survive any termination of this Agreement.
14.6 Test Array. Infineon and its Affiliates may continue to use the Test Array
for the development and application of C11FL TECHNOLOGY, even if the
Agreement is terminated, including any termination by Actel.
14.7 Negotiation. Before termination of this Agreement, the Parties shall
negotiate on a joint development agreement regarding the generation of
products following the C11FL TECHNOLOGY. This shall not apply in case of
termination under Section 14.3 above.
15. Miscellaneous
15.1 Headings. The headings used in this Agreement are for reference purposes
only and are in no way intended to define or limit the scope or
interpretation of the Agreement or any provisions hereof.
15.2 Non-Solicitation. The Parties agree that during the term hereof and for a
period of one (1) year following the termination of this Agreement, neither
Party shall directly or indirectly solicit or in any manner attempt to hire
any employee of the other Party or its Subsidiaries or otherwise encourage
any such employee to pursue any other employment or career opportunities
except as may be otherwise agreed in writing by the Parties. The foregoing
shall not prohibit a Party from hiring any of the other Party's personnel
who respond to a public job advertisement or other solicitations such as a
job fair, without active solicitation from the hiring Party, or who
otherwise approach the hiring Party without active solicitation from such
Party.
15.3 No Agency. The Parties are independent contractors and nothing in this
Agreement is indented or shall be construed as to one Party being
considered or permitted to be an agent, partner, or joint venturer of the
other Party.
15.4 Force Majeure. Neither Party hereto shall be liable for default of any
obligation hereunder if such default results from the force majeure which
includes, without limitation, governmental acts or directives, strikes,
acts of God, war, insurrection, riot or civil commotion, fires, flooding or
water damage, explosions, embargoes, or delays in delivery, whether of the
kind herein enumerated or otherwise, which are not within the reasonable
control of the Party affected ("Force Majeure"). In such events, the
affected Party shall, without undue delay, inform the other Party of such
circumstances together with documents of proof; and the performance of
obligations hereunder shall be suspended during, but not longer than, the
period of existence of such cause and the period reasonably required to
perform the obligations in such cases.
15.5 Notices. Any notices permitted or required hereunder shall be made in the
English language by registered mail or by fax and confirmed by registered
mail to the following addresses or such other addresses as submitted by a
Party to the other from time to time in writing:
If to Actel: If to Infineon:
Actel Corporation Infineon Technologies AG
Att: Esmat Hamdy Att: Robert Allinger
955 East Arques Avenue 81699 Munchen
Sunnyvale, CA 94806 USA Germany
With a copy to: With a copy to:
Actel Corporation Infineon Technologies AG
Att: David L. Van De Hey Att: Legal Department
955 East Arques Avenue PO Box 80 09 49
Sunnyvale, CA 94806 USA St.-Martin-Str. 53
81609 Munchen
Germany
15.6 Export and Import Compliance. Export of controlled commodities, technical
data, or information about such commodities or data may be prohibited by
law. Both Parties agree to take all steps reasonably necessary to comply
with applicable export and import laws and regulations as they apply to use
and distribution of the subject matter of this Agreement.
15.7 Explicit Grants. Except as specifically provided for in this Agreement, no
rights or licenses of any kind (whether express or implied) are granted
hereunder.
15.8 Non-Waiver. No express or implied waiver by any of the Parties to this
Agreement of any breach of any term, condition or obligation of this
Agreement shall be construed as a waiver of any subsequent or continuing
breach of that term, condition or obligation or of any other term,
condition or obligation of this Agreement of the same or of a different
nature. Any waiver, consent, or approval of any kind regarding any breach,
violation, default, provision or condition of this Agreement must be in
writing and shall be effective only to the extent specifically set forth in
such writing.
15.9 Entire Agreement. This Agreement and all documents referred to herein,
constitutes the entire agreement between the Parties with respect to the
subject matter therein described, and supersedes any prior or simultaneous
communications, representations or agreements with respect hereto, whether
oral or written.
15.10Written Form. Additions and amendments to this Agreement shall only be
valid if made in writing and duly signed by the Parties. The requirement of
the written form can be waived itself only in writing.
15.11Assignment. This Agreement may not be assigned by either Party without the
prior written consent of the other Party. However, a Party may, even
without consent of the other Party, assign this Agreement to an entity (i)
to which the assigning Party transfers all or a substantial part of its
assets, or (ii) with which the assigning Party merges, reorganizes, or
consolidates, or (iii) which otherwise acquires control of the assigning
Party.
15.12Dispute Resolution. All disputes arising out of or in connection with this
Agreement, including any question regarding its existence, validity or
termination, shall be settled finally and binding by arbitration under the
Rules of Arbitration of the International Chamber of Commerce, Paris
("Rules") by three arbitrators in accordance with the said Rules.
Arbitration shall take place in London, United Kingdom, whereas its
procedural law shall apply where the Rules are silent. The language to be
used in the arbitration proceeding shall be English.
15.13Governing Law. This Agreement shall be subject to the substantive law in
force in Switzerland without reference to its conflicts of law provisions.
The application of the United Nations Convention on Contracts for the
International Sale of Goods of April 11, 1980 shall be excluded.
15.14Severability. If any provision of this Agreement is held to be invalid,
illegal or unenforceable under applicable law the remaining provisions
shall continue to be in full force and effect. The Parties undertake to
replace the invalid provision or parts thereof by a new provision, which
will approximate as closely as possible the economic result intended by the
Parties.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
by their respective duly authorized representatives:
Infineon Technologies AG Actel Corporation
Munchen
By: /s/ Jochen Hanebeck By: /s/ Esmat Hamdy
------------------- ---------------
Name: Jochen Hanebeck Name: Esmat Hamdy
Title:VP Operations CC Title:Sr. V.P. Technology
& Operations
By: /s/ Nicolaus Tolle By:
------------------
Name: Nikolaus Tolle Name:
Title:Sen. Director Coop Title:
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>8
<FILENAME>exhibit1020ifxsupply.txt
<DESCRIPTION>EXHIBIT 10.20 (INFINEON SUPPLY AGREEMENT)
<TEXT>
Development Agreement
- hereinafter referred to as "Agreement"
by and between
Infineon Technologies AG
a corporation duly incorporated under the laws of Germany,
having offices at St.-Martin-Str. 53, 81541 Munchen, Germany
- hereinafter referred to as "Infineon"
and
Actel Corporation
a corporation duly incorporated under the laws of California,
having offices at 955 East Arques Avenue, Sunnyvale, CA 94086-4533, USA
- hereinafter referred to as "Actel" -
- both hereinafter referred to as "Parties" or one as "Party" -
on
the Joint Development of C11FL Products
<PAGE>
Preamble
WHEREAS, Infineon is engaged in the development, production and
commercialization of semiconductor products, including flash technology for
semiconductor products.
WHEREAS, Actel is engaged in the development and commercialization of field
programmable semiconductor products including flash technology cells.
WHEREAS, both Parties learned from the previous contractual cooperation
regarding the C9FL technology, which will be the basis for a successful
cooperation regarding C11FL technology;
WHEREAS, both Parties concluded the Memorandum of Understanding of 12 April
2001;
NOW THEREFORE, the Parties agree as follows:
1. Definitions
1.1 The term "ACTEL FLASH FPGA" means any flash FPGA that was developed or is
developed by or on behalf of Actel on the basis of C11FL TECHNOLOGY for
production in C11FL TECHNOLOGY.
1.2 The term "ACTEL FLASH eFPGA CORE" means a reusable, pre-designed virtual
flash FPGA, whether synthesizable or otherwise, that was developed or is
developed by or on behalf of Actel or extracted by Infineon from the ACTEL
FLASH FPGA on the basis of C11FL TECHNOLOGY for use in the design of C11FL
PRODUCTS, including the programming switch, architecture, modules, test
software, and software design tools used for mapping customer applications
to and programming the embedded flash FPGA.
1.3 The term "ACTEL LEAD PRODUCT" means the first Actel C11FL PRODUCT that
Actel QUALIFIES and markets to its customers.
1.4 The term "BACKGROUND PATENTS" means patent applications, patents, utility
models and other statutory protection, which are embodied in INFORMATION
and under which one Party is the owner and/or has the right of
determination at any time during the term of this Agreement and which are
not resulting from performing the DEVELOPMENT WORK.
1.5 The term "CC" means Infineon's division Security & Chip Card ICs.
1.6 The term "C11FL TECHNOLOGY" means the technology (in particular process
technology, Infineon flash cells and circuits), which is described in ANNEX
1 to this Agreement and RATIO STEPS thereof.
1.7 The term "C11FL PRODUCTS" means any Infineon or Actel products based upon
C11FL TECHNOLOGY for production in C11FL TECHNOLOGY. The term "Actel C11FL
PRODUCTS" means C11FL PRODUCTS manufactured by or for Actel. The term
"Infineon C11FL PRODUCTS" means C11FL PRODUCTS manufactured by or for
Infineon
1.8 The term "DEVELOPMENT WORK" means any and all development work to be
performed by the Parties in accordance with Sections 2 and 3 below.
DEVELOPMENT WORK shall not include any C11FL TECHNOLOGY or development
thereof.
1.9 The term "DEVELOPMENT RESULTS" means any and all results, whether
patentable or not, in written or oral form, achieved by performing
DEVELOPMENT WORK, in particular data relating to flash cell reliability.
For the avoidance of doubt, DEVELOPMENT RESULTS shall not include any C11FL
TECHNOLOGY or any data and/or information relating to the specifications of
any C11FL PRODUCT.
1.10 The term "EFFECTIVE DATE" means the date that this Agreement is signed by
both Parties.
1.11 The term "EMBEDDED PRODUCT" means a C11FL PRODUCT that (i) contains an
ACTEL FLASH eFPGA CORE and (ii) the principal use of the device is
satisfied primarily by functions performed in those parts of the device
that are not comprised of the ACTEL FLASH eFPGA CORE.
1.12 The term "FLASH IPR" means any and all IPR of Actel relating to the ACTEL
FLASH eFPGA CORE.
1.13 The term "FPGA" means integrated circuits that implement field programmable
logic the operation of which is determined after the integrated circuit has
been manufactured.
1.14 The term "INFINEON FAB" means any foundry of Infineon or of any company,
which is affiliated with Infineon within the meaning of Section 15 of the
German Stock Corporation Act (Aktiengesetz) ("Affiliate").
1.15 The term "INFINEON LEAD PRODUCT" means the first Infineon C11FL PRODUCT
which Infineon QUALIFIES and markets to its customers.
1.16 The term "INFORMATION" means written and/or oral technical information with
regard to the C11FL TECHNOLOGY, such information being available to one
Party at any time during the term of this Agreement and not resulting from
performing the DEVELOPMENT WORK. However, INFORMATION shall not include any
data and/or information relating to the specifications of any Infineon or
Actel C11FL PRODUCT. INFORMATION of Infineon shall be limited to
information available at CC.
1.17 The term "INVENTION" means any and all (i) ideas and conceptions of
potentially patentable subject matter, including, without limitation, any
patent disclosures, whether or not reduced to practice, and whether or not
yet made the subject of a pending patent application or applications; (ii)
patent applications relating thereto, and (iii) United States, European,
international and foreign patents issuing there from; and all reissues,
divisions, renewals, extensions, provisionals, continuations and
continuations-in-part thereof.
1.18 The term "JOINT INVENTION" means any INVENTION that is first conceived or
reduced to practice by one or more of one Party's employees or third party
contractors with one or more of the other Party's employees or third party
contractors during the term and in the performance of this Agreement.
1.19 The term "IPR" means (by whatever name or term known or designated) any
intellectual property rights including, without limitation, patents,
registered designs, copyrights, trade secrets, moral rights and any other
intellectual property or proprietary rights (except trademarks, service
marks and related rights) eligible for protection under the laws of any
country, state or jurisdiction including registrations, applications,
renewals and extensions of such rights.
1.20 The term "KNOW-HOW" means any secret or overt knowledge or information,
which is proprietary to either Party.
1.21 The term "MILESTONE PLAN" means the contents and time schedule set forth in
ANNEX 2 to this Agreement.
1.22 The term "QUALIFIES" or "QUALIFIED" or "QUALIFICATION" shall mean that a
particular C11FL PRODUCT performs in accordance with the qualification
criteria and procedures for such products, as determined in the sole
discretion of the party who's product is at issue, and that, therefore, the
particular product is released for manufacturing and shipment to customers.
1.23 The term "RATIO STEPS" means any process that is substantially the same as
and built on the base 0.13 micron process with shrink design rules (e.g.
0.13 shrink 0.10), such as C11FL-R technology.
2. Carrying out of the DEVELOPMENT WORK
2.1 In General. Based on their different areas of expertise, the Parties agree
that each Party will perform the DEVELOPMENT WORK as set forth in Sections
2, 3 and ANNEX 2 hereof.
2.2 Development of Test Array. The Parties shall cooperate on the development
and testing of a test array as specified in ANNEX 3 ("Test Array")
according to Sections 2 and 3 hereof. Actel shall design the Test Array,
which shall contain at least the identical memory cells and shall be
operated under the same conditions as the type intended INFINEON LEAD
PRODUCT and ACTEL LEAD PRODUCT. Actel shall deliver the Test Array to
Infineon, at the INFINEON FAB in Dresden, Germany, in accordance with the
MILESTONE PLAN. Actel shall prepare the design data (GDS-file) for the Test
Array.
2.3 Test Array. Infineon shall use the Test Array for early learning regarding
reliability. Infineon and Actel shall jointly perform tests regarding the
reliability of the flash cells in the Test Array ("Flash Cell Reliability")
(collectively "Testing"). The parties will measure Flash Cell Reliability
by testing the Test Array for the reliability factors set forth on ANNEX 4
("Reliability Factors"). The Parties shall jointly define and agree upon
the acceptable measures for each such Reliability Factor ("Reliability
Objectives") and jointly determine whether the Test Array meets each of the
Reliability Objectives. If the Test Array meets each of the Reliability
Objectives, it shall be deemed to have met the threshold for Flash Cell
Reliability. The Parties agree that for the Reliability Factor regarding
moving bit failure rates a detection level of less than 1ppm/Mbit/year with
reasonable measurement for both erased and programmed states is the
Reliability Objective.
2.4 Testing Software and Board. Actel shall develop and deliver to Infineon the
software required for the Testing ("Test Programs") and shall also design
necessary circuits and layout for the respective tester probecard board to
be used for testing the Test Array. Actel shall deliver the Test Programs
to Infineon and install such programs at the INFINEON FAB in Dresden.
Infineon will provide a proven vendor for manufacture board that is
compatible with a Teradyne J750 tester and associated prober.
2.5 Running of Wafers. Infineon shall run a sufficient amount of wafers in
order to achieve the Reliability Objectives. Infineon shall make reasonable
endeavors to modify and/or improve wafers processed to be able to
demonstrate process reliability according to ANNEX 5. Infineon shall
provide Actel with access to data that is produced as a result of such
Testing.
2.6 Mask Design and Manufacture. Actel shall design and Infineon shall
manufacture the masks ("Masks"), which are necessary for the production of
the wafers to be processed with the Test Array.
2.7 Costs of Masks. In consideration for Infineon's manufacture of the Masks,
after completion of all the Masks and shipment of the Masks to the Dresden
fab, Actel shall pay to Infineon, within thirty (30) days of the date of
invoice, (i) a lump-sum payment in the amount of Euro
three-hundred-forty-thousand ((euro) 340,000) and (ii) fifty percent (50%)
of any actual cost for the mask set exceeding Euro
three-hundred-forty-thousand ((euro) 340,000). Infineon shall be the sole
owner of the masks, and Infineon alone shall be entitled to use the masks,
even after completion of the DEVELOPMENT WORK (Section 3 below) and after
Agreement termination.
2.8 MILESTONE PLAN. The DEVELOPMENT WORK shall comprise also the efforts and
activities set forth in Section 3 below and in the MILESTONE PLAN, and the
Parties shall use reasonable efforts in carrying out the DEVELOPMENT WORK
in accordance with the MILESTONE PLAN. The DEVELOPMENT WORK shall be
carried out in close cooperation between the Parties and in a joint effort
to keep cost and expenditures to a minimum.
2.9 Availability of DEVELOPMENT RESULTS. Each Party shall make available to the
other within a reasonable period of time following the EFFECTIVE DATE of
this Agreement, and from time to time during the carrying out of the
DEVELOPMENT WORK its DEVELOPMENT RESULTS.
2.10 Experts. Each Party shall, within one (1) month following the EFFECTIVE
DATE, appoint an expert who will act as a point of contact during the
DEVELOPMENT WORK. All INFORMATION and DEVELOPMENT RESULTS to be forwarded
to a Party hereunder, shall be addressed to such appointed expert.
2.11 Changes to the MILESTONE PLAN. In the event that one of the Parties
realizes that the DEVELOPMENT WORK cannot efficiently be performed
according to the MILESTONE PLAN, or development plans set forth for the
project, the other Party shall immediately be informed thereof. The Parties
shall then review the situation and mutually agree on relevant changes with
respect to the further conduct and performance of the DEVELOPMENT WORK.
2.12 Ownership. A Party forwarding, without charge, to the other Party parts,
components, software and other tangible articles for the purposes of the
DEVELOPMENT WORK shall remain the proprietor of such articles, except as
otherwise expressly provided in this Agreement. All items to be provided by
Actel under this Section 2 shall be delivered to Infineon at the INFINEON
FAB in Dresden, at the costs and risk of Actel.
2.13 Subcontractors. Infineon and Actel may, even without the other's consent,
have any of its obligations regarding the DEVELOPMENT WORK and/or any other
contractual obligations under this Agreement provided by a third party
(subcontractor), provided, however, that any such subcontractor shall be
required to agree in writing to confidentiality provisions at least as
protective as those set forth in Section 10 (Secrecy).
2.14 Technical Specifications and Other Deliverables. Infineon shall (i) provide
Actel with necessary technical specifications regarding the C11FL
TECHNOLOGY in order to support Actel in developing the Test Array; and (ii)
provide Actel with the runsets (software for Design Rule Checking - DRC),
design manuals, and simulation parameters required for Actel to develop the
Test Array and testing materials.
2.15 Engineering Support. Actel shall send to Infineon, INFINEON FAB in Dresden,
a sufficient number of engineers, but not more than four (4), until
Infineon determines in its reasonable judgment, that Infineon's staff at
the INFINEON FAB in Dresden is able to run the Test Programs with the Test
Array. Actel shall support the Test Programs and the Test Array at the
INFINEON FAB in Dresden, in particular provide Infineon with
on-site-support in order to safeguard proper functioning of the Test
Programs and of the Test Array, and enable Infineon by support via
telephone, email or any other means to solve specific problems using the
Test Programs, and use reasonable efforts to correct all bugs, errors and
problems with the Test Programs that are reported to Actel by Infineon.
3. Completion and Costs of the DEVELOPMENT WORK
3.1 Completion of Development. The DEVELOPMENT WORK shall be regarded as being
completed successfully once (i) the efforts and activities under Section 2
hereof have been carried out and (ii) Test Arrays have been designed and
(iii) the Test Programs run without any bugs and (iv) the reliability Tests
have been completed according to ANNEX 5.
3.2 Final Protocol. The Parties will record the DEVELOPMENT RESULTS in a final
protocol, including the date of the successful completion of the
DEVELOPMENT WORK. Each Party shall be entitled to a copy of such final
protocol.
3.3 Costs and Fees. Except as set forth in Section 2.7 above, each Party shall
bear the costs incurred by such Party for its efforts under or in
connection with the DEVELOPMENT WORK.
4. Design and QUALIFICATION of Actel Products
4.1 Actel C11FL Design. Actel shall have the right to use the Test Array,
INFORMATION and DEVELOPMENT RESULTS only to the extent necessary to design,
develop and have manufactured Actel C11FL PRODUCTS during and after the
term of this Agreement. Actel shall not use Test Array, INFORMATION and
DEVELOPMENT RESULTS in any other manner or for any other purpose. In any
event, Actel shall not be entitled to use the Masks provided by Infineon in
any manner.
4.2 Access to Wafer Corridor for QUALIFICATION. Actel shall have the right to
use a wafer corridor for C11FL PRODUCTS in an INFINEON FAB to be determined
by Infineon ("Wafer Corridor") to QUALIFY the ACTEL LEAD PRODUCT, provided
that either (i) Infineon has completed a minimum qualification of a
demonstration product according to testing criteria to be mutually agreed
upon ("Demo-QUALIFICATION"), or (ii) Infineon has successfully completed
the QUALIFICATION of the INFINEON LEAD PRODUCT. Actel's rights under this
Section 4.2 are subject to expiry as set forth in Section 5 below.
4.2.1Infineon shall give Actel written notice on the QUALIFICATION of the
INFINEON LEAD PRODUCT or the Demo-QUALIFICATION; the date of receipt of
Infineon's notice shall be deemed the date of the QUALIFICATION ("Infineon
QUALIFICATION Date").
4.2.2If Actel does not tape out an ACTEL LEAD PRODUCT within twelve (12) months
of the Infineon QUALIFICATION Date, Actel's rights under Section 4.2 shall
expire.
4.3 Order of Wafers. For the purpose QUALIFYING the ACTEL LEAD PRODUCT, Actel
shall order and Infineon shall fabricate and deliver to Actel wafers
according to the Project Plan in ANNEX 6 to this Agreement.
4.4 Actel QUALIFICATION First. With Infineon's consent, Actel may QUALIFY an
ACTEL LEAD PRODUCT prior to Infineon QUALIFYING the INFINEON LEAD PRODUCT.
However, in no event shall INFINEON be obligated to fabricate the ACTEL
LEAD PRODUCT for purposes of Actel's QUALIFICATION thereof at the same time
in the same INFINEON FAB as Infineon is fabricating the INFINEON LEAD
PRODUCT for purposes of QUALIFICATION thereof if, at Infineon's discretion,
such simultaneous loading of the same INFINEON FAB would cause additional
costs or time efforts of Infineon.
4.5 Notice of Tape Out/QUALIFICATION. Actel shall notify Infineon in writing on
the tape out and on the QUALIFICATION of each ACTEL LEAD PRODUCT.
4.6 Infineon Covenant Not To Sue. Infineon agrees that neither Infineon nor any
of its Affiliates will assert during the term of this Agreement and
thereafter (except as provided in Sections 14.3 and 14.4 below), directly
or indirectly, any claim or cause of action based, in whole or in part,
upon the purported infringement by Actel or its suppliers, licensees, or
customers, mediate or immediate, of any IPR as a result of the manufacture,
use, export, import, offer for sale, sale, lease, distribution, or other
transfer of products to the extent that such products use or incorporate
any technology or INFORMATION or KNOW-HOW that Actel contributes to the
Development Work during the term of this Agreement (and thereafter to the
extent that provisions herein survive termination or expiration).
5. Fabrication and Supply of Wafers to Actel
5.1 Wafer Corridor For Fabrication. Subject to Section 5.1.1 below, for a
period of three (3) years from the later of (i) the Infineon QUALIFICATION
Date and (ii) March 1, 2003 ("Access Period"), Actel shall have the right
to use the Infineon Wafer Corridor to QUALIFY and fabricate a reasonable
volume of Actel C11FL PRODUCTS ("Wafers"). During the Access Period Actel
shall be guaranteed a fabrication volume of at minimum
one-hundred-and-fifty (150) Wafer Starts Per Week ("WSPW").
5.1.1Termination of Right to Wafer Corridor. Actel's right to use the Wafer
Corridor shall terminate on the first to occur of the following: (i) one
(1) year after the Infineon QUALIFICATION Date if Actel has not by then
taped out an ACTEL LEAD PRODUCT; (ii) two (2) months after Infineon gives
written notice to Actel that Actel did not fabricate through the Wafer
Corridor an average minimum quantity of twenty-five (25) WSPW during any
single month more than eighteen (18) months after the beginning of the
Access Period; and (iii) the end of the Access Period.
5.1.2Exclusive Remedy. The provisions of Section 5.1.1 constitute Infineon's
exclusive remedy and Actel's sole liability for Actel's failure to
fabricate an average minimum quantity of twenty-five (25) WSPW during the
Access Period.
5.2 RATIO STEPS. Actel may transfer Actel C11FL PRODUCTS currently under
fabrication to RATIO STEPS of the C11FL TECHNOLOGY or to design Actel C11FL
PRODUCTS in RATIO STEPS in order to prolong manufacturability and to
achieve area savings. However, the Parties shall in advance mutually agree
on the timing of any such transfer to RATIO STEPS or design of Actel C11FL
PRODUCTS in RATIO STEPS.
5.3 Pricing. The provisions regarding pricing of Wafers are specified in the
ANNEX 7 to this AGREEMENT.
5.4 Third Party Manufacture. Provided that Infineon has enabled the manufacture
of Infineon C11FL PRODUCTS in a third party silicon foundry, Actel shall be
entitled to have ACTEL PRODUCTS manufactured in such third party silicon
foundry, and INFINEON hereby grants Actel a perpetual, irrevocable (except
as provided in Sections 12.1, 14.3 and 14.4 below), worldwide, royalty
free, non-exclusive, non-transferable (except as provided in Section 15.11
below) right, under all of its IPRs in and to the C11FL TECHNOLOGY and
Information to have manufactured Actel PRODUCTS by any third party location
at which the Infineon C11FL TECHNOLOGY and process has been or is
installed, however such license grant shall be limited to the extent that
Infineon has full power and title to make such grant without any third
party consent.
6. Limited Warranties
6.1 Development Warranties. Provided that a Party complies with its obligations
under Section 2, such PARTY shall not be liable towards the other Party in
the case that the DEVELOPMENT WORK cannot be successfully completed as per
Section 3 above.
6.2 The sole obligation of each Party with respect to errors in its INFORMATION
and DEVELOPMENT RESULTS and exclusive remedy of the other party shall be to
forward same to the other PARTY as provided in this Agreement, and to
correct errors that might have occurred in such INFORMATION and DEVELOPMENT
RESULTS without undue delay after such errors become known to the Party
which forwarded the relevant INFORMATION or DEVELOPMENT RESULTS.
THE WARRANTIES SET FORTH IN THIS SECTION 6 APPLY TO ALL INFORMATION AND
DEVELOPMENT RESULTS LICENSED OR KNOWINGLY DISCLOSED HEREUNDER AND ARE IN
LIEU OF ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION
THE WARRANTIES THAT INFORMATION AND DEVELOPMENT RESULTS CAN BE USED WITHOUT
INFRINGING STATUTORY AND OTHER RIGHTS OF THIRD PARTIES.
The disclaimer in this Section 6.2 shall in no way alter the Parties'
respective obligations to indemnify one another under Section 12 hereof.
6.3 Production Warranty. Infineon warrants that the wafers delivered to Actel
under Section 4 hereof meet the specification to be agreed expressly in
writing between the Parties. The warranty period shall be one (1) year from
delivery to Actel. If the wafers fail to meet these specifications,
Infineon shall correct the failure within thirty (30) days from receipt of
a written objection by Actel.
THE WARRANTIES PROVIDED IN SECTIONS 6.2 AND 6.3 ABOVE ARE THE ONLY
WARRANTIES MADE BY THE PARTIES TO EACH OTHER. NEITHER PARTY MAKES AND
NEITHER PARTY RECEIVES ANY OTHER WARRANTIES, EXPRESS OR IMPLIED, AND ALL
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR ANY PARTICULAR PURPOSE ARE
EXPRESSLY EXCLUDED.
7. License regarding ACTEL FLASH eFPGA CORE.
7.1 ACTEL FLASH eFPGA CORE. Subject to the restrictions and limitations set
forth in Sections 7.3, 7.4 and 7.5 below, Actel hereby grants to Infineon a
perpetual, worldwide, non-exclusive, non-transferable (except as provided
in Section 15.11 below), non-sublicenseable (except as provided in Section
7.1 (vi) below), irrevocable (except as provided in Sections 12.3 and 14.4
below) license:
(i) to use the ACTEL FLASH eFPGA CORE, or extract it from ACTEL FLASH
FPGA, including but not limited to switch, architecture, modules and
design tools, as defined in ANNEX 8, with any present or future
products of Infineon in an Infineon EMBEDDED PRODUCT, and to
manufacture, have manufactured solely for Infineon, sell or otherwise
distribute or have distributed such Infineon EMBEDDED PRODUCTS;
(ii) to use and exploit the FLASH IPR solely for the purposes set forth in
(i) above; and
(iii)to use, perform, display, program, modify, adapt and/or improve, or
have used, performed, displayed, programmed, modified, adapted and/or
improved software tools, in object code format, with which a Party can
program the ACTEL FLASH eFPGA CORE ("Design Tools") for applications
to manufacture, or have manufactured solely for Infineon, Infineon
EMBEDDED PRODUCTS; and
(iv) to use and exploit the Actel deliverables, such as the Test Programs
evaluation board, burner, which are defined in ANNEX 9, solely to the
extent required in order for Infineon to exercise its rights under the
licenses in (i)-(iii) above, and
(v) to program, modify, adapt and/or improve, or have programmed,
modified, adapted and/or improved the ACTEL FLASH eFPGA CORE, FLASH
IPR and/or any deliverables as under (iv) above and to use and exploit
the modified, adapted and/or improved items solely for the purposes
set forth in (i) above; and
(vi) sublicense the right to use, perform and display the Actel FLASH eFPGA
Design Tools under (iii) above to any present or future customers who
purchase Infineon EMBEDDED PRODUCTS.
7.2 Samples and Modifications. If Actel tapes out and/or QUALIFIES an Actel
PRODUCT, at any time, that Actel tapes out and/or QUALIFIES a new VERSION
of the Actel PRODUCT, Actel shall make available to Infineon:
(i) INFORMATION and samples of the Actel PRODUCT at the respective date of
QUALIFICATION, if applicable, as well as any modifications,
adaptations and/or improvements thereto at the QUALIFICATION of the
modified, adapted and/or improved Actel FLASH CORE; and
(ii) the Actel Deliverables set forth on ANNEX 9, but only to the extent
that such Deliverables exist; Actel shall have no obligation hereunder
to create such Deliverables other than for its own purposes.
7.3 Restrictions. The rights granted under the license in Section 7.1 shall be
restricted as follows:
(i) Infineon's use and exploitation of the ACTEL FLASH eFPGA CORE shall be
in connection with the C11FL TECHNOLOGY.
(ii) Infineon may only manufacture, have manufactured solely for Infineon,
distribute, have distributed, sell and otherwise make available the
ACTEL FLASH eFPGA CORE embedded in Infineon C11FL PRODUCTS that are
EMBEDDED PRODUCTS.
(iii)Infineon may only use the FLASH IPR and Actel INFORMATION in
connection with the development, manufacture and distribution of
Infineon C11FL PRODUCTS in which the ACTEL FLASH FPGA CORE is embedded
and may not use the Actel FLASH IPR or Actel INFORMATION in connection
with the development, manufacture and distribution of Infineon
products that do not contain the ACTEL FLASH eFPGA CORE.
7.4 All licenses granted to Infineon under this Section 7, shall be
free-of-charge for use by CC and one (1) further present or future division
of Infineon (collectively the "Entitled Divisions"). Infineon shall
designate such division by written notice to Actel prior to making use of
such additional license. If Infineon wishes to use the licensed rights
through a third division, Infineon shall inform Actel in advance. In this
case the Parties shall negotiate an adequate license fee in good faith.
7.5 If Infineon spins off an Entitled Division, the spin-off shall have the
same rights as attributed to the spun off Entitled Division. The Entitled
Divisions and the spin-off are collectively referred to as "Entitled
Entities". In no event shall any more than two (2) Entitled Entities, i.e.
CC and one (1) other Entitled Division or their spin-offs, have the right
to use the free licenses hereunder at any given time. In no event shall an
entity that is an Actel competitor be entitled to a license under this
Section 7. Infineon shall provide Actel or its successors and assigns with
written notice of and details concerning the spin-off of an Entitled
Division within a reasonable timeframe after such spin-off is effected.
7.6 The licenses in this Section 7 may not be sublicensed, except as expressly
provided in this Section 7.
7.7 Other Licenses. Under its INFORMATION, BACKGROUND PATENTS and DEVELOPMENT
RESULTS each Party hereby grants to the other Party and its Affiliates the
non-exclusive, non-transferable (except as set forth in Section 15.11),
non-sublicenseable, royalty free right to use the same during the term of
this Agreement for the purpose of carrying out the DEVELOPMENT WORK.
However, INFORMATION, which one Party receives from the other under this
Agreement, and BACKGROUND PATENTS of the other Party may be used by the one
Party solely to the extent strictly necessary to use the DEVELOPMENT
RESULTS, as set forth in the previous sentence of this Section 7.7. Section
4.1 above shall remain unaffected.
8. Additional Services relating to Actel FLASH eFPGA
8.1 Cost free Migration. If Infineon migrates an Infineon EMBEDDED PRODUCT to
another Infineon EMBEDDED PRODUCT, Infineon may undertake such migration
without paying Actel any fee provided that Infineon does not require Actel
to provide design and layout services to accomplish the migration (e.g. if
a "dumb" shrink migrating from C11FL to C11FL-R1 were used needing no Actel
design and layout services).
8.2 Migration for a Fee. If Infineon requires Actel design and layout services
for redesign and/or re-layout of the ACTEL FLASH eFPGA CORE for the purpose
of integration into Infineon EMBEDDED PRODUCTS, Actel shall provide such
services at a service fee to be negotiated between the Parties in good
faith. In performing such services Actel is not obligated to follow the
dumb shrink path or required to support an Infineon requested redesign and
re-layout.
8.3 Additional Free Services. To the extent that Actel typically provides
certain design and layout services free-of-charge to its ProASIC customers,
Actel agrees to also provide the same services to Infineon free-of-charge
to Infineon during the term of this Agreement.
8.4 Teaching Services. Actel shall render to Infineon training and teaching
services relating to ACTEL FLASH eFPGA CORE during this Agreement or after
Agreement termination, upon request of Infineon at a service fee to be
negotiated between the Parties in good faith. The service fee shall be
calculated at an hourly consulting fee rate.
9. DEVELOPMENT RESULTS, INFORMATION and Rights Thereunder
9.1 INVENTIONS. INVENTIONS made during the term and under the cooperation of
this Agreement by employees of one Party shall become neither the property
of the other Party nor the common property of both Parties, and the one
Party, therefore and insofar as it otherwise has the right to do so, shall
be free to use such Inventions as it sees fit and to file for statutory
protection and to use, maintain and permit to lapse such application for
statutory protection and any statutory rights issued thereon.
9.2 JOINT INVENTIONS. JOINT INVENTIONS shall, at the time they are made, become
the joint property of both Parties.
9.3 JOINT INVENTIONS including any and all statutory protection issuing thereon
(as per Section 9.3.1 below or otherwise), if any, may be used by each
Party, as such Party sees fit. Each Party therefore, for example and
without limitation, has the transferable right to grant non-exclusive,
further transferable licenses under such JOINT INVENTIONS. Neither Party
shall be obliged to pay to the other Party any royalties or other kind of
consideration with respect to grant of such licenses under JOINT INVENTIONS
to third parties.
9.3.1For JOINT INVENTIONS, which are eligible for statutory protection, the
Parties will agree upon the details for filing for such protection.
In case only one Party is interested in filing for statutory protection for
JOINT INVENTIONS, then the other Party shall execute and forward to the one
Party all documents requested by the one Party and reasonably believed to
be necessary and/or desirable for such procedure. Statutory rights filed
for JOINT INVENTIONS by one Party at its own expense shall, from the date
of filing, become the sole property of that one Party, and, therefore, for
example and without limitation, can be used, maintained and permitted to
lapse by this Party as it sees fit. The other Party's rights to use such
statutory rights are as laid down in Section 9.3 above.
9.3.2Each Party ensures that it will be in a position to immediately acquire
the share of inventions of its employees insofar as Joint Inventions are
concerned.
9.3.3Neither Party is obligated to take action against third parties infringing
upon statutory rights filed or issued for JOINT INVENTIONS or to defend
such rights against third parties. Notwithstanding the foregoing, each
Party shall promptly notify the other Party if such former Party becomes
aware of any possible infringement by a third Party of any of the JOINT
INVENTIONS. If either Party desires to take any action against such an
infringing third Party, such Party shall first notify the other Party
hereto and consult with such other Party regarding such action.
10. Secrecy
10.1 Non-Disclosure. Each Party agrees that all INFORMATION and DEVELOPMENT
RESULTS which it receives from the other Party and which are designated as
confidential by such Party will be deemed to be confidential and will be
maintained by the receiving Party in confidence, provided, however, that
such Party may disclose such information to its officers, and those of its
employees and others under its control for the purposes of this Agreement,
all of whom will be advised of this Agreement and such Party's obligations
thereunder. The provisions of this Section 10 shall apply mutatis mutandis
to any business secrets and KNOW-HOW of either Party.
10.2 Precautions. Such Party additionally agrees to take all reasonable
precautions to safeguard the confidential nature of the foregoing
information, provided, however, that such Party's normal procedures for
protecting its own confidential information shall be deemed reasonable
precautions, and provided that if such precautions are taken, such Party
will not be liable for any disclosure which is inadvertent or unauthorized
or is required by any judicial order or decree or by any governmental law
or regulation. Neither shall such Party be liable for disclosure and/or any
use of such information insofar as such information;
(i) is in, or becomes part of, the public domain other than through a
breach of this Agreement by such Party; or
(ii) is already known to such Party at or before the time it receives the
same from the other Party or is disclosed to such Party by a third
party as a matter of right; or
(iii)is independently developed by such Party without the benefit of such
information received from the other Party; or
(iv) is disclosed and/or used by such Party with the prior written consent
of the other Party.
10.3 Disclosure to Sublicensees. Notwithstanding the above provisions of this
Section 10, each Party has the right to disclose the other Party's
INFORMATION and DEVELOPMENT RESULTS, which it received under this Agreement
to its licensees insofar as it has the right to sublicense same as set
forth in this Agreement, provided, such Party requires such licensee to
undertake in writing secrecy obligations which are at least as stringent as
the ones set forth in this Section 10.
10.4 Subcontractors and Employees. Infineon shall safeguard by agreements in
writing with any subcontractor (Section 2.13) that the subcontractor shall
comply with obligations substantially similar to those set forth in
Sections 10.1 through 10.3 above. Actel shall safeguard by agreements in
writing with their employees and other staff members who may have access to
an INFINEON FAB that these persons shall comply with obligations
substantially similar to those set forth in Sections 10.1 through 10.3
above.
10.5 Authorized Disclosure. Notwithstanding the provisions of this Agreement,
each party may disclose the terms of this Agreement (i) in connection with
the requirements of an initial public offering, securities filing; (ii) in
confidence, to accountants, banks, and financing sources and their
advisors; (iii) in confidence, in connection with the enforcement of this
Agreement or rights under this Agreement.
10.6 Survival. The obligations under Sections 10.1 through 10.4 above shall
survive five (5) years after termination of this Agreement.
10.7 Actel Employee Access. Subject to the provisions in this Section 10,
Infineon shall provide Actel employees with access to Infineon facilities
including, without limitation, INFINEON FABs, as reasonably required for
Actel to fulfill its obligations and exercise its rights under this
Agreement. Any access for Actel employees to clean rooms and comparable
facilities in a fab of Infineon will be permitted only if escorted by
Infineon staff. Access to other rooms and facilities in a fab of Infineon
will be permitted without escort for Actel employees resident at such fab
for a period of at least four (4) weeks. Actel employees resident at such
fab of Infineon for a period of at less than four (4) weeks always require
an escort. Subject to room availability, a separate office for Actel staff
will be provided by Infineon.
11. Limitation of Liability
11.1 Willful Misconduct and Gross Negligence. With regard to any of either
Party's obligations hereunder, each Party shall be liable for damage
incurred by the other Party, to the extent that such damage is caused by
willful misconduct or gross negligence of the other Party, its legal
representatives, employees or subcontractors.
11.2 Death or Injury. Any liability of a Party with respect to death or injury
to any person is subject to and governed by the provisions of the
applicable law. Neither Party is, however, obliged to compensate for death
or personal injury or loss of or damage to property of the other Party to
the extent such death, injury, loss or damage is covered by and paid out by
the insurance(s) of the affected Party and such affected Party shall not be
entitled to recover same from the first Party.
11.3 EXCEPT WHERE SUCH LIABILITY IS MANDATORY BY APPLICABLE LAW, NEITHER PARTY
SHALL BE LIABLE FOR ANY INDIRECT OR CONSEQUENTIAL, EXEMPLARY OR PUNITIVE
DAMAGES OF THE OTHER PARTY, HOWEVER CAUSED AND UNDER ANY LEGAL CAUSE OR
THEORY WHATSOEVER AND ON ACCOUNT OF WHATSOEVER REASON, AND WHETHER OR NOT
SUCH PARTY WAS OR SHOULD HAVE BEEN AWARE OR ADVISED OF THE POSSIBILITY OF
SUCH DAMAGE AND NOTWITHSTANDING THE FAILURE OF ESSENTIAL PURPOSE OF ANY
LIMITED REMEDY STATED HEREIN
11.4 In no event shall either Party's liability arising out of this Agreement
exceed the maximum amount of three million US Dollars ($3,000,000) every
twelve (12) month period, up to a maximum of ten million US Dollars
($10,000,000). The Parties agree that this Section represents a reasonable
allocation of risk.
11.5 No Required Statutory Protection. Nothing in this Agreement shall obligate
either Party to apply for, take out, maintain or acquire any statutory
protection, in any country.
11.6 Third Party Rights. All rights granted in INFORMATION, DEVELOPMENT RESULTS
and under BACKGROUND PATENTS are granted insofar only as the Party granting
same has the right to grant without payment to third Parties.
12. Third Party Rights and Indemnity
12.1 Indemnity by Infineon. With respect to Infineon's proprietary contribution
to any C11FL PRODUCTS provided, manufactured, sold, or otherwise
transferred to Actel under this Agreement ("Infineon Item"), Infineon shall
defend Actel from any actions or claims brought against Actel to the extent
based upon a claim that such Infineon Item infringes a third party's IPR,
and shall hold Actel harmless from and against any such claim (including
all legal costs and attorney's fees), whether or not that claim is
successful, provided that Actel (i) gives Infineon notice of such claim,
(ii) cooperates with Infineon, at Infineon's expense, in the defense of
such claim, and (iii) gives Infineon the right to control the defense and
settlement of any such claim, except that (A) Infineon shall not enter into
any settlement that materially affects Actel's rights or interest without
Actel's prior written approval, and (B) Actel shall have the right, at its
own expense, to participate in the defense and settlement of such claim,
with counsel of Actel's own choosing. In addition, Infineon shall, at
Infineon's own cost and sole discretion, take one of the following
measures:
(i) procure for Actel the right to use the Infineon Item, or
(ii) for all infringing Infineon Items returned to Infineon by Actel and
for future provisions, modify the Infineon Items to become
non-infringing or deliver an equivalent non-infringing Item.
If Infineon determines in its sole discretion that neither of the foregoing
are available or commercially feasible, Infineon may terminate, by giving
one (1) month written notice to Actel, all rights and licenses granted to
Actel under this Agreement with respect to the Infineon Item and refund to
Actel all amounts paid by Actel under this Agreement. Notwithstanding,
Infineon shall remain obliged to hold harmless Actel from and against all
claims, which (i) at the date the notice termination becomes effective,
have yet been arisen and/or (ii) arise from Infineon's conduct or Actel's
conduct, such as manufacture or sale of Actel C11FL PRODUCTS, performed
prior to the date the notice termination becomes effective.
12.2 Exclusions to Indemnity by Infineon. Any liability of Infineon for
infringement of third party IPR by shall be excluded if the infringement is
not caused by the Infineon Item. Infineon shall also have no obligation to
indemnify if the infringement of the third party IPR arises as a result of
(i) the combination of a noninfringing Infineon Item with any item not
supplied by Infineon; (ii) modification of the Infineon Item by Actel or
its customers or by Infineon in compliance with Actel's designs,
specifications, or instructions; or (iii) continued allegedly infringing
activity by Actel after Actel has been notified of the possible
infringement.
12.3 Indemnity by Actel. With respect to Actel `s proprietary contribution to
any C11FL PRODUCTS provided, manufactured, sold, or otherwise transferred
to Infineon under this Agreement ("Actel Item"), Actel shall defend
Infineon from any actions or claims brought against Infineon to the extent
based upon a claim that such Actel Item infringes a third party's IPR, and
hold Infineon harmless from and against any such claim (including all legal
costs and attorney's fees), whether or not that claim is successful,
provided that Infineon (i) gives Actel notice of such claim, (ii)
cooperates with Actel, at Actel's expense, in the defense of such claim,
and (iii) gives Actel the right to control the defense and settlement of
any such claim, except that (A) Actel shall not enter into any settlement
that materially affects Infineon's rights or interest without Infineon's
prior written approval, and (B) Infineon shall have the right, at its own
expense, to participate in the defense and settlement of such claim, with
counsel of Infineon's own choosing. In addition, Actel shall, at Actel's
own cost and sole discretion, take one of the following measures:
(i) procure for Infineon the right to use the Actel Item, or
(ii) modify the Actel Item to become non-infringing or deliver an
equivalent non-infringing Item.
If Actel determines in its sole discretion that neither of the foregoing are
available or commercially feasible, Actel may terminate, by giving one (1) month
written notice to Infineon, all rights and licenses granted to Infineon under
this Agreement with respect to the Actel Item and refund all amounts paid by
Infineon under this Agreement. Notwithstanding, Actel shall remain obliged to
hold harmless Infineon from and against all claims, which (i) at the date the
notice termination becomes effective, have yet been arisen and/or (ii) arise
from Actel's conduct or Infineon's conduct, such as use of the Actel Item for
manufacture of Infineon C11FL PRODUCTS, performed prior to the date the notice
termination becomes effective.
12.4 Exclusions to Indemnity by Actel. Any liability of Actel for infringement
of third party IPR by shall be excluded if the infringement is not caused
by the Actel Item. Actel shall also have no obligation to indemnify if the
infringement of the third party IPR arises as a result of (i) the
combination of a noninfringing Actel Item with any item not supplied by
Actel; (ii) modification of the Actel Item by Infineon or its customers or
by Actel in compliance with Infineon's designs, specifications, or
instructions; or (iii) continued allegedly infringing activity by Infineon
after Infineon has been notified of the possible infringement.
12.5 Exclusive Remedy. This Section 12 sets forth sole liabilities and exclusive
remedies of the parties for infringement of any IPR by any Actel Item or
Infineon Item.
13. Non-Exclusivity
Nothing in this Agreement shall constitute any exclusivity between the
Parties regarding the subject matter of this Agreement. Subject to the
restrictions set forth in Sections 7 and 10, either Party shall be free to
carry out any development, which competes with the other Party's business
activities, alone or jointly with a third party and/or develop and have
developed, make and have made or otherwise acquire, sell or otherwise make
available same to third parties products that are similar and comparable to
any product referred to under this Agreement.
14. Term and Termination
14.1 Term. This Agreement shall become effective on the EFFECTIVE DATE and shall
continue indefinitely unless it expires or is terminated in accordance with
this Section 14.
14.2 Expiration. This Agreement shall expire upon of expiry of Actel's rights to
the Wafer Corridor under Sections 4.2.2 or 5.1.1 above, or by the latest
upon expiry of the three (3) year term of the Access Period (Section 5.1).
14.3 Other Termination. This Agreement may be terminated at any time by the one
Party by giving of not less than four (4) weeks' prior written notice to
the other Party
(i) if the other Party hereto is declared bankrupt or otherwise
permanently cannot fulfill its financial obligations; or
(ii) if the other Party hereto substantially defaults in the performance of
this Agreement and does not remedy the default within four (4) weeks
after receipt of a relevant request of the non-breaching Party.
In case that one Party terminates the Agreement pursuant to this Section 14.3,
such Party may revoke all rights and licenses granted to the other Party under
this Agreement immediately.
14.4 Competitors. Infineon may terminate this Agreement and/or revoke all rights
and licenses granted to Actel under this Agreement immediately upon notice
if Actel hereafter directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control
with an entity that competes with CC; and Actel may terminate this
Agreement and/or revoke all rights and licenses granted to Infineon under
this Agreement immediately upon notice if Infineon hereafter directly, or
indirectly through one or more intermediaries, controls, or is controlled
by, or is under common control with an entity that competes with Actel.
14.5 Survival. Sections 1, 6, 7, 8, 9, 10, 11, 12, 13, 14.4, 14.5, 14.6, and 15
hereof shall survive any termination of this Agreement.
14.6 Test Array. Infineon and its Affiliates may continue to use the Test Array
for the development and application of C11FL TECHNOLOGY, even if the
Agreement is terminated, including any termination by Actel.
14.7 Negotiation. Before termination of this Agreement, the Parties shall
negotiate on a joint development agreement regarding the generation of
products following the C11FL TECHNOLOGY. This shall not apply in case of
termination under Section 14.3 above.
15. Miscellaneous
15.1 Headings. The headings used in this Agreement are for reference purposes
only and are in no way intended to define or limit the scope or
interpretation of the Agreement or any provisions hereof.
15.2 Non-Solicitation. The Parties agree that during the term hereof and for a
period of one (1) year following the termination of this Agreement, neither
Party shall directly or indirectly solicit or in any manner attempt to hire
any employee of the other Party or its Subsidiaries or otherwise encourage
any such employee to pursue any other employment or career opportunities
except as may be otherwise agreed in writing by the Parties. The foregoing
shall not prohibit a Party from hiring any of the other Party's personnel
who respond to a public job advertisement or other solicitations such as a
job fair, without active solicitation from the hiring Party, or who
otherwise approach the hiring Party without active solicitation from such
Party.
15.3 No Agency. The Parties are independent contractors and nothing in this
Agreement is indented or shall be construed as to one Party being
considered or permitted to be an agent, partner, or joint venturer of the
other Party.
15.4 Force Majeure. Neither Party hereto shall be liable for default of any
obligation hereunder if such default results from the force majeure which
includes, without limitation, governmental acts or directives, strikes,
acts of God, war, insurrection, riot or civil commotion, fires, flooding or
water damage, explosions, embargoes, or delays in delivery, whether of the
kind herein enumerated or otherwise, which are not within the reasonable
control of the Party affected ("Force Majeure"). In such events, the
affected Party shall, without undue delay, inform the other Party of such
circumstances together with documents of proof; and the performance of
obligations hereunder shall be suspended during, but not longer than, the
period of existence of such cause and the period reasonably required to
perform the obligations in such cases.
15.5 Notices. Any notices permitted or required hereunder shall be made in the
English language by registered mail or by fax and confirmed by registered
mail to the following addresses or such other addresses as submitted by a
Party to the other from time to time in writing:
If to Actel: If to Infineon:
Actel Corporation Infineon Technologies AG
Att: Esmat Hamdy Att: Robert Allinger
955 East Arques Avenue 81699 Munchen
Sunnyvale, CA 94806 USA Germany
With a copy to: With a copy to:
Actel Corporation Infineon Technologies AG
Att: David L. Van De Hey Att: Legal Department
955 East Arques Avenue PO Box 80 09 49
Sunnyvale, CA 94806 USA St.-Martin-Str. 53
81609 Munchen
Germany
15.6 Export and Import Compliance. Export of controlled commodities, technical
data, or information about such commodities or data may be prohibited by
law. Both Parties agree to take all steps reasonably necessary to comply
with applicable export and import laws and regulations as they apply to use
and distribution of the subject matter of this Agreement.
15.7 Explicit Grants. Except as specifically provided for in this Agreement, no
rights or licenses of any kind (whether express or implied) are granted
hereunder.
15.8 Non-Waiver. No express or implied waiver by any of the Parties to this
Agreement of any breach of any term, condition or obligation of this
Agreement shall be construed as a waiver of any subsequent or continuing
breach of that term, condition or obligation or of any other term,
condition or obligation of this Agreement of the same or of a different
nature. Any waiver, consent, or approval of any kind regarding any breach,
violation, default, provision or condition of this Agreement must be in
writing and shall be effective only to the extent specifically set forth in
such writing.
15.9 Entire Agreement. This Agreement and all documents referred to herein,
constitutes the entire agreement between the Parties with respect to the
subject matter therein described, and supersedes any prior or simultaneous
communications, representations or agreements with respect hereto, whether
oral or written.
15.10Written Form. Additions and amendments to this Agreement shall only be
valid if made in writing and duly signed by the Parties. The requirement of
the written form can be waived itself only in writing.
15.11Assignment. This Agreement may not be assigned by either Party without the
prior written consent of the other Party. However, a Party may, even
without consent of the other Party, assign this Agreement to an entity (i)
to which the assigning Party transfers all or a substantial part of its
assets, or (ii) with which the assigning Party merges, reorganizes, or
consolidates, or (iii) which otherwise acquires control of the assigning
Party.
15.12Dispute Resolution. All disputes arising out of or in connection with this
Agreement, including any question regarding its existence, validity or
termination, shall be settled finally and binding by arbitration under the
Rules of Arbitration of the International Chamber of Commerce, Paris
("Rules") by three arbitrators in accordance with the said Rules.
Arbitration shall take place in London, United Kingdom, whereas its
procedural law shall apply where the Rules are silent. The language to be
used in the arbitration proceeding shall be English.
15.13Governing Law. This Agreement shall be subject to the substantive law in
force in Switzerland without reference to its conflicts of law provisions.
The application of the United Nations Convention on Contracts for the
International Sale of Goods of April 11, 1980 shall be excluded.
15.14Severability. If any provision of this Agreement is held to be invalid,
illegal or unenforceable under applicable law the remaining provisions
shall continue to be in full force and effect. The Parties undertake to
replace the invalid provision or parts thereof by a new provision, which
will approximate as closely as possible the economic result intended by the
Parties.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
by their respective duly authorized representatives:
Infineon Technologies AG Actel Corporation
Munchen
By: /s/ Jochen Hanebeck By: /s/ Esmat Hamdy
------------------- ---------------
Name: Jochen Hanebeck Name: Esmat Hamdy
Title:VP Operations CC Title:Sr. V.P. Technology
& Operations
By: /s/ Nicolaus Tolle By:
------------------
Name: Nikolaus Tolle Name:
Title:Sen. Director Coop Title:
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>9
<FILENAME>exhibit1021lease.txt
<DESCRIPTION>EXHIBIT 10.21 (OFFICE LEASE AGREEMENT)
<TEXT>
OFFICE LEASE AGREEMENT
THIS OFFICE LEASE AGREEMENT (the "Lease") is made and entered into as of
the 27th day of February, 2003, by and between CA-SHORELINE TECHNOLOGY PARK
LIMITED PARTNERSHIP, a Delaware limited partnership ("Landlord") and ACTEL
CORPORATION, a California corporation ("Tenant").
I. Basic Lease Information.
A. "Building 2051" shall mean the building located at 2051 Stierlin
Court, Mountain View, California and commonly known as Shoreline
Technology Park Building 8. "Building 2061" shall mean the building
located at 2061 Stierlin Court, Mountain View, California and commonly
known as Shoreline Technology Park Building 9. "Building" and
"Buildings" shall each mean, collectively, the 2051 Building and the
2061 Building.
B. "Rentable Square Footage of the Buildings" is deemed to be 158,352
square feet.
C. "Premises" shall mean the area shown on Exhibit A to this Lease. The
Premises are comprised of the Buildings. The "Rentable Square Footage
of the Premises" is deemed to be 158,352 square feet. All corridors
and restroom facilities located on any full floor of the Buildings
shall be considered part of the Premises. Landlord and Tenant
stipulate and agree that the Rentable Square Footage of the Building
and the Rentable Square Footage of the Premises are correct and shall
not be remeasured.
D. "Base Rent":
<TABLE>
<CAPTION>
----------------------------- -------------------------- --------------------- ---------------------
Annual Rate Annual Monthly
Period Per Square Foot Base Rent Base Rent
----------------------------- -------------------------- --------------------- ---------------------
<S> <C> <C> <C> <C>
Months 1 - 15 $14.76 $2,337,275.52 $194,772.96
----------------------------- -------------------------- --------------------- ---------------------
Months 16 - 27 $15.20 $2,406,950.40 $200,579.20
----------------------------- -------------------------- --------------------- ---------------------
Months 28 - 39 $15.66 $2,479,792.32 $206,649.36
----------------------------- -------------------------- --------------------- ---------------------
Months 40 - 51 $16.13 $2,554,217.76 $212,851.48
----------------------------- -------------------------- --------------------- ---------------------
Months 52 - 63 $16.61 $2,630,226.72 $219,185.56
----------------------------- -------------------------- --------------------- ---------------------
Months 64 - 75 $17.11 $2,709,402.72 $225,783.56
----------------------------- -------------------------- --------------------- ---------------------
Months 76 - 87 $17.62 $2,790,162.24 $232,513.52
----------------------------- -------------------------- --------------------- ---------------------
Months 88 - 99 $18.15 $2,874,088.80 $239,507.40
----------------------------- -------------------------- --------------------- ---------------------
Months 100 - 111 $18.69 $2,959,598.88 $246,633.24
----------------------------- -------------------------- --------------------- ---------------------
Months 112 - 123 $19.25 $3,048,276.00 $254,023.00
----------------------------- -------------------------- --------------------- ---------------------
</TABLE>
E. "Tenant's Pro Rata Share": that amount expressed by a percentage,
equal to the number of square feet included in the Premises divided by
the number of square feet in the Building (i.e., as of the date of
this Lease, 100.00%).
"Tenant's Monthly Expense and Tax Payment": $61,757.28, which is
Tenant's Pro Rata Share of the monthly estimated Expenses and monthly
estimated Taxes (as more fully described in, and subject to adjustment
as described in, Article IV below).
F. "Term": A period of 123 months. The Term shall commence on November 1,
2003 (the "Commencement Date") and, unless terminated early in
accordance with this Lease, end on January 31, 2014 (the "Termination
Date"). Notwithstanding the foregoing, the Commencement Date shall be
extended beyond November 1, 2003 only as a result of an event of Force
Majeure which results in an actual delay of Substantial Completion of
the Initial Alterations beyond September 1, 2003 and/or for any actual
delay in Substantial Completion of the Initial Alterations beyond
September 1, 2003 which delay results directly from an act or omission
by Landlord; provided, however, that Tenant shall provide to Landlord
prior written notice of such delay at the time it occurs (but in no
event later than 2 Business Days thereafter) and Landlord shall have
one Business Day after its receipt of Tenant's notice to cure such
delay prior to the extension of the Commencement Date beyond November
1, 2003. Promptly after the Commencement Date, Landlord and Tenant
shall enter into a commencement letter agreement in the form attached
as Exhibit C.
G. Tenant allowances: Up to $8,687,190.72 and $20,140.00, as each is more
fully described in the Work Letter attached hereto as Exhibit D.
H. "Security Deposit": The sum of $500,000.00, in the form of a letter of
credit, as more fully described in Article VI of this Lease.
I. Intentionally Omitted.
J. "Broker": Collectively, C.B. Richard Ellis Corporate Services (as
Tenant's broker) and Cornish & Carey (as Landlord's broker).
K. "Permitted Use": General office, semiconductor development, light
manufacturing, research and development and, subject to Landlord's
prior written approval, which approval shall not be unreasonably
withheld, all other legal uses.
L. "Notice Addresses":
Tenant:
On and after the Commencement Date, notices shall be sent to Tenant at
the Premises, Attention: Facilities Manager, with a copy to General
Counsel.
With a copy to:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304
Attention: Chair of Real Estate Group
If any additional person listed above fails to receive the copy of the
notice of Tenant default, the validity of the notice served on Tenant
shall not be affected thereby.
Prior to the Commencement Date, notices shall be sent to Tenant at the
following address:
Actel Corporation
955 East Arques Avenue
Sunnyvale, California 94086
Attention: Facilities Manager and General Counsel
Landlord: With a copy to:
CA-Shoreline Technology Park Limited Equity Office
Partnership Two North Riverside Plaza
c/o Equity Office Suite 2100
5104 Old Ironsides Drive, Suite 100 Chicago, Illinois 60606
Santa Clara, California 95054 Attention: Regional Counsel
Attention: Property Manager - San Jose Region
If any additional person listed above fails to receive the copy of the
notice of a Landlord breach of this Lease, the validity of the notice
served on Landlord shall not be affected thereby.
M. "Business Day(s)" are Monday through Friday of each week, exclusive of
New Year's Day, Presidents' Day, Martin Luther King, Jr. Day, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day
("Holidays").
N. "Landlord Work" means the work that Landlord is obligated to perform
in the Premises pursuant to a separate work letter agreement (the
"Work Letter") attached as Exhibit D.
O. "Law(s)" means all applicable statutes, codes, ordinances, orders,
rules and regulations of any municipal or governmental entity.
P. "Normal Business Hours" for the Building are 7:00 A.M. to 6:00 P.M. on
Business Days.
Q. "Property" means the Buildings and the parcel(s) of land on which they
are located and, at Landlord's discretion, the landscaping, the
parking facilities and all other improvements owned by Landlord and
serving the Buildings and the tenants thereof and the parcel(s) of
land on which they are located.
R. "Project" means that certain office project commonly known as
"Shoreline Technology Park", which currently includes the buildings
located at 2011 Stierlin Court ("Shoreline Technology Park Building
1"), 2021 Stierlin Court ("Shoreline Technology Park Building 2"),
2023 Stierlin Court ("Shoreline Technology Park Building 3"), 2025
Stierlin Court ("Shoreline Technology Park Building 5"), 2027 Stierlin
Court ("Shoreline Technology Park Building 6"), 2029 Stierlin Court
("Shoreline Technology Park Building 7"), 2051 Stierlin Court
("Shoreline Technology Park Building 8"), 2061 Stierlin Court
("Shoreline Technology Park Building 9"), 2071 Stierlin Court
("Shoreline Technology Park Building 10"), 2081 Stierlin Court
("Shoreline Technology Park Building 11"), 2081 Stierlin Court
("Shoreline Technology Park Building 11.5"), and 2091 Stierlin Court
("Shoreline Technology Park Building 12"), the Property and the
Exterior Common Areas (defined below), and, at Landlord's option, the
parking facilities serving the Project, all of which are located in
Mountain View, California. Notwithstanding the foregoing, Landlord and
Tenant agree that the definition of the Project may change from time
to time if Landlord elects to add or remove buildings or parcels of
land to or from the Project. In such event, the definition of
"Project" shall be deemed to be amended without any further action of
the parties herein to reflect such addition or deletion of building(s)
or parcels of land to or from the Project. In the event that Landlord
adds or removes buildings or parcels of land to or from the Project,
such modification of the Project shall not unreasonably and adversely
(i) interfere with Tenant's use of the Premises, or (ii) diminish
Tenant's parking rights as provided in the Parking Agreement attached
hereto as Exhibit F.
S. "Exterior Common Areas" mean those areas of the Project and/or the
Property which are not located within the Buildings or any other
building and which are provided and maintained for the use and benefit
of Landlord and tenants of the Building (if any) and/or the Project
generally and the employees, invitees and licensees of Landlord and
such tenants, including, without limitation, any parking garage,
artificial lakes, walkways, plaza, roads, driveways, sidewalks,
surface parking and landscapes, if any, and any recreation areas,
including, but not limited to, that certain recreation area (the
"Recreational Area") which is maintained by Landlord in the area
between Shoreline Technology Park Building 3 and Shoreline Technology
Park Building 5. As of the date of this Lease, the Recreational Areas
include the following: a tennis court, basketball court, softball
diamond, barbecue area and picnic tables. Notwithstanding the
foregoing to the contrary, the tenants' right to use the Recreational
Area shall be subject to the right of the City of Mountain View
("City") to require, pursuant to that certain Deferred Parking
Agreement by and between WRC Properties, Inc. a Delaware corporation
and the City of Mountain View dated as of June 1, 1989 (the "City
Parking Agreement"), that a portion of the Recreational Area be paved
and used for parking purposes at a time to be determined at the
discretion of the City.
T. "Initial Alterations" means the work that Tenant is obligated to
perform in the Premises pursuant to the Work Letter attached as
Exhibit D.
II. Lease Grant.
Landlord leases the Premises to Tenant and Tenant leases the Premises from
Landlord, together with the right in common with others to use any portions of
the Property that are designated by Landlord for the common use of tenants and
others, such as sidewalks, amenities, unreserved parking areas, common
corridors, elevator foyers, restrooms, vending areas, and lobby areas
(collectively, the "Common Areas").
III. Adjustment of Commencement Date; Possession.
A. The Landlord Work and the Initial Alterations shall each be
accomplished in a good and workmanlike manner and shall be deemed to
be "Substantially Complete" on the date that all Landlord Work or the
Initial Alterations, as the case may be, has been performed, other
than any details of construction, mechanical adjustment or any other
similar matter, the noncompletion of which does not materially
interfere with Tenant's use of the Premises. The Commencement Date and
Termination Date shall be determined by Section I.F.
B. Subject to the express terms of this Lease, the Premises are accepted
by Tenant in "as is" condition and configuration. The parties
acknowledge and agree that there are no representations or warranties
by Landlord regarding the condition of the Premises, the Building or
the Project, except to the extent expressly stated herein. Except to
the extent caused by Tenant, any Tenant Party or any Tenant Related
Party, as of the date of Substantial Completion of the Landlord Work
(but expressly excluding the Initial Alterations or any portions of
the Premises to the extent such portions are damaged, removed or
affected by the Initial Alterations), the base Building electrical,
heating, ventilation and air conditioning, mechanical and plumbing
systems of the Premises and all currently existing interior
improvements (excluding the UPS and the Cable Trays, as such terms are
defined in Sections V and VI, respectively, in Exhibit E to this
Lease) of the Premises and the landscaping, lighting, drainage,
sprinkler systems, water features of the Exterior Common Area and
located proximate to the Buildings (subject to the terms of this
Section III.B below), and, to Landlord's actual knowledge, the sewer
system of the Project, shall be in good order and satisfactory
condition. If the foregoing are not in good working order as provided
above, Landlord shall be responsible for repairing or restoring same
at its cost and expense. For purposes of this Section, "Landlord's
actual knowledge" shall be deemed to mean and limited to the current
actual knowledge of Jason Goff at the time of execution of the Lease
and not any implied, imputed, or constructive knowledge of said
individual or of Landlord or any Landlord Related Parties and without
any independent investigation or inquiry having been made or any
implied duty to investigate or make any inquiries; it being understood
and agreed that such individual shall have no personal liability in
any manner whatsoever hereunder or otherwise related to the
transactions contemplated hereby. Landlord's obligation with respect
to the condition of the water features of the Exterior Common Area
located proximate to the Buildings shall only apply to the extent that
the same continue to exist in the same order as of the date of this
Lease. Landlord's obligation as stated above with respect to such
water features shall in no event apply in the event that the water
features are removed and/or replaced. Notwithstanding anything
contained herein to the contrary, Tenant shall have 24 months from the
completion of Landlord Work in which to discover and notify Landlord
of any latent defects in the Landlord Work and the base Building
systems. Landlord shall be responsible for the correction (including
the costs thereof) of any latent defects with respect to which it
received timely notice from Tenant. Landlord shall be responsible for
correcting any violations of Laws in effect as of the date of this
Lease and as interpreted in Santa Clara County and, if applicable, by
the City of Mountain View, with respect to the Premises and the
Exterior Common Areas. Further, Landlord shall be responsible for
correcting any violations of Laws in effect as of the date of this
Lease and as interpreted in Santa Clara County and, if applicable, by
the City of Mountain View, with respect to the Premises and the
Exterior Common Areas which violations arise solely and directly as a
result of the construction of the Landlord Work and/or the Initial
Alterations but only to the extent any such compliance requirement
relates to normal and customary general office and manufacturing
improvements located in the Premises (as opposed to improvements which
are specialized for Tenant's specific use of the Premises).
Notwithstanding the foregoing, Landlord shall have the right to
contest any alleged violation in good faith, including, without
limitation, the right to apply for and obtain a waiver or deferment of
compliance, the right to assert any and all defenses allowed by Laws
and the right to appeal any decisions, judgments or rulings to the
fullest extent permitted by Laws; provided, however, that such contest
shall in no event adversely affect Tenant's ability to Substantially
Complete the Initial Alterations in a timely manner or Tenant's use of
the Premises. Landlord, after the exhaustion of any and all rights to
appeal or contest, will make all repairs, additions, alterations or
improvements necessary to comply with the terms of any final order or
judgment. Notwithstanding anything to the contrary contained herein,
Tenant, not Landlord, shall be responsible for the costs and expenses
of the correction of any violations that arise out of the specific
nature of Tenant's business in the Premises, the acts or omissions of
Tenant (excluding filing for permits related to the Initial
Alterations), its agents, employees, invitees or contractors, Tenant's
arrangement of any furniture, equipment or other property in the
Premises, any repairs, alterations, additions or improvements
performed by or on behalf of Tenant (other than the Landlord Work and
excluding filing for permits related to the Initial Alterations) and
any design or configuration of the Premises specifically requested by
Tenant after being informed that such design or configuration may not
be in strict compliance with any such Laws.
If Landlord has not delivered the Premises to Tenant before the
Required Delivery Date (defined below), Tenant, as its sole remedy
(unless Landlord willfully refused to deliver the Premises to Tenant
in bad faith and without cause), may terminate this Lease by giving
Landlord written notice of termination on or before the date which is
5 Business Days after the Required Delivery Date. In such event, this
Lease shall be deemed null and void and of no further force and effect
and Landlord shall promptly refund any prepaid Rent and Security
Deposit previously advanced by Tenant under this Lease and, at such
time, the parties hereto shall have no further responsibilities or
obligations to each other with respect to this Lease. The "Required
Delivery Date" shall mean 10 Business Days following the date upon
which this Lease is fully executed and delivered by the parties hereto
and all prepaid Rent and Security Deposits (including the Letter of
Credit as defined in Article VI) required of Tenant under this Lease
are delivered to Landlord.
C. If Tenant takes possession of the Premises before the Commencement
Date, such possession shall be subject to the terms and conditions of
this Lease except that Tenant shall not be required to pay Rent
(defined in Section IV.A.) or pay any charges or fees related to
utilities and Tenant's use of freight elevators to Landlord for such
period prior to the Commencement Date. Subject to the terms of this
Section III.C., Landlord grants Tenant the right to enter the
Premises, following full execution of this Lease and delivery of any
required prepaid Rent and Security Deposits to Landlord, at Tenant's
sole risk, for the purpose of performing the Initial Alterations (as
defined in Exhibit D to this Lease) and installing equipment,
furnishings and other personalty and, for no more than a total of 60
days, operate Tenant's business at the Premises.
If Tenant Substantially Completes the Initial Alterations prior to
September 1, 2003, Tenant shall be required to pay Rent commencing on
the 61st day thereafter at the initial rental rates described in
Section I.D but, notwithstanding the foregoing and subject to the
terms of Section I.F, in no event shall Tenant's obligation to pay
Rent hereunder commence after November 1, 2003.
IV. Rent.
A. Payments. As consideration for this Lease, Tenant shall pay Landlord,
without any setoff or deduction, Base Rent and Additional Rent in
accordance with the terms and conditions of this Lease. "Additional
Rent" means all sums (exclusive of Base Rent) that Tenant is required
to pay Landlord. Additional Rent and Base Rent are sometimes
collectively referred to as "Rent". Tenant shall pay and be liable for
all rental, sales and use taxes (but excluding income taxes), if any,
imposed upon or measured by Rent under applicable Law. Base Rent and
recurring monthly charges of Additional Rent shall be due and payable
in advance on the first day of each calendar month without notice or
demand, provided that the installment of Base Rent for the fourth full
calendar month of the Term (following the Base Rent and Expenses
Abatement Period) shall be payable upon the execution of this Lease by
Tenant. All other items of Rent shall be due and payable by Tenant on
or before 30 days after billing by Landlord. All payments of Rent
shall be by good and sufficient check or by other means (such as
automatic debit or electronic transfer) acceptable to Landlord. If
Tenant fails to pay any item or installment of Rent when due, Tenant
shall pay Landlord an administration fee equal to 5% of the past due
Rent, provided that Tenant shall be entitled to written notice and a
grace period of 5 days for the first late payment of Rent in a given
calendar year and a grace period of 5 days for the second late payment
of Rent in a given calendar year (without benefit of written notice
from Landlord). If the Term commences on a day other than the first
day of a calendar month or terminates on a day other than the last day
of a calendar month, the monthly Base Rent and Tenant's Pro Rata Share
of Expenses (defined in Section IV.C.) and Taxes (defined in Section
IV.D.) for the month shall be prorated based on the number of days in
such calendar month. Landlord's acceptance of less than the correct
amount of Rent shall be considered a payment on account of the
earliest Rent due. No endorsement or statement on a check or letter
accompanying a check or payment shall be considered an accord and
satisfaction, and either party may accept the check or payment without
prejudice to that party's right to recover the balance or pursue other
available remedies. Tenant's covenant to pay Rent is independent of
every other covenant in this Lease.
B. Payment of Tenant's Pro Rata Share of Expenses and Taxes. Tenant shall
pay Tenant's Pro Rata Share of the total amount of Expenses (defined
in Section IV.C.) and Taxes (defined in Section IV.D) for each
calendar year during the Term. Landlord shall provide Tenant with a
good faith estimate of the total amount of Expenses and Taxes for each
calendar year during the Term. On or before the first day of each
month, Tenant shall pay to Landlord a monthly installment equal to
one-twelfth of Tenant's Pro Rata Share of Landlord's estimate of the
total amount of Expenses and Taxes, which initial monthly sum is
defined in Section I.E. above as the "Tenant's Monthly Expense and Tax
Payment". If Landlord determines that its good faith estimate was
incorrect by a material amount, Landlord may provide Tenant with a
revised estimate. After its receipt of the revised estimate, Tenant's
Monthly Expense and Tax Payment shall be based upon the revised
estimate. If Landlord does not provide Tenant with an estimate of the
total amount of Expenses and Taxes by January 1 of a calendar year,
Tenant shall continue to pay monthly installments based on the
previous year's estimate until Landlord provides Tenant with the new
estimate. Upon delivery of the new estimate, an adjustment shall be
made for any month for which Tenant paid monthly installments based on
the previous year's estimate. Tenant shall pay Landlord the amount of
any underpayment within 30 days after receipt of the new estimate. Any
overpayment shall be refunded to Tenant within 30 days or credited
against the next due future installment(s) of Rent.
As soon as is practical following the end of each calendar year,
Landlord shall furnish Tenant with a reasonably detailed statement of
the actual amount of Expenses and Taxes for the prior calendar year
and Tenant's Pro Rata Share of the actual amount of Expenses and Taxes
for the prior calendar year. Landlord shall use reasonable efforts to
furnish the statement of actual Expenses on or before June 1 of the
calendar year immediately following the calendar year to which the
statement applies. If the estimated amount of Expenses and Taxes for
the prior calendar year is more than the actual amount of Expenses and
Taxes for the prior calendar year, Landlord shall apply any
overpayment by Tenant against Rent due or next becoming due, provided
if the Term expires before the determination of the overpayment,
Landlord shall refund any overpayment to Tenant after first deducting
the amount of Rent due. If the estimated amount of Expenses and Taxes
for the prior calendar year is less than the actual amount of Expenses
and Taxes for such prior year, Tenant shall pay Landlord, within 30
days after its receipt of the statement of Expenses and Taxes, any
underpayment for the prior calendar year.
C. Expenses Defined. "Expenses" means the sum of (i) all direct and
indirect costs and expenses incurred by Landlord in each calendar year
in connection with operating, maintaining, repairing, and managing the
Buildings and the Property (including any costs and expenses in
connection with operating, maintaining, repairing and managing the
Exterior Common Areas located on the Property to the extent such costs
and expenses are not deemed to be costs and expenses of the Project as
a whole), and (ii) the Buildings' and the Property's allocable
percentage of (a) all costs of operating, maintaining, repairing and
managing the Project (including any costs and expenses in connection
with operating, maintaining, repairing and managing the Exterior
Common Areas located on the Project to the extent such costs and
expenses are not specifically allocated to and payable by individual
buildings within the Project), (b) all costs, fees or other amounts
payable to any association established for the benefit of the Project
and/or other properties, and (c) all fees payable to the company or
association, if applicable, managing the parking areas within the
Project, including, but not limited to:
1. Labor costs, including, wages, salaries, social security and
employment taxes, medical and other types of insurance, uniforms,
training, and retirement and pension plans for personnel at or
below the level of general manager.
2. Management fees, and the Buildings' share of the cost of
equipping and maintaining a management office (at fair market
rent as reasonably determined by Landlord), accounting and
bookkeeping services, legal fees not attributable to leasing or
collection activity, and other administrative costs. Landlord, by
itself or through an affiliate, shall have the right to directly
perform or provide any services under this Lease (including
management services). However, in no event shall the aggregate
management fees for the Buildings exceed 1.5% of the Base Rent
for the Buildings.
3. The cost of services, including amounts paid to service providers
and the rental and purchase cost of parts, supplies, tools and
equipment.
4. Premiums and deductibles paid by Landlord for insurance,
including workers compensation, fire and extended coverage,
earthquake, general liability, rental loss, elevator, boiler and
other insurance customarily carried from time to time by owners
of comparable office buildings. Notwithstanding the foregoing,
Tenant's Pro Rata Share of insurance deductibles shall not exceed
$500,000.00 in the aggregate for any one event, which amount
shall be included in Tenant's Pro Rata Share of Expenses over up
to a five (5) year period with the amount paid by Tenant not to
exceed $100,000.00 in any 12 month period of the Term; provided,
however, that the foregoing limitation on Tenant's obligation to
pay its Pro Rata Share of insurance deductibles during the Term
shall not apply to any event which results from the active
negligence or willful misconduct of Tenant or any of its agents,
employees, invitees or contractors.
Further, notwithstanding the foregoing, Tenant's Pro Rata Share
of premiums for earthquake insurance only shall not increase by
more than 20% per calendar year on a compounding and cumulative
basis over the course of the Term. In other words, Tenant's Pro
Rata Share of premiums for earthquake insurance for the second
calendar year of the Term shall not exceed 120% of the
Controllable Expenses for the first calendar year of the Term.
Tenant's Pro Rata Share of premiums for earthquake insurance for
the third calendar year of the Term shall not exceed 120% of the
limit on Tenant's Pro Rata Share of premiums for earthquake
insurance for the second calendar year of the Term, etc. By way
of illustration, if Tenant's Pro Rata Share of premiums for
earthquake insurance was $10.00 per rentable square foot for the
first calendar year of the Term, then Tenant's Pro Rata Share of
premiums for earthquake insurance for the second calendar year of
the Term shall not exceed $12.00 per rentable square foot, and
Tenant's Pro Rata Share of premiums for earthquake insurance for
the third calendar year of the Term shall not exceed $14.40 per
rentable square foot. The foregoing cap on Tenant's Pro Rata
Share of premiums for earthquake insurance shall in no event
apply if Tenant, pursuant to Article XV, exercises its right to
require Landlord to carry earthquake insurance.
5. The Buildings' share of allocable Electrical Costs (defined
below) and charges for water, gas, steam and sewer, but excluding
those charges for which Landlord is reimbursed by tenants.
"Electrical Costs" means: (a) charges paid by Landlord for
electricity (and, during such time Tenant is the Sole Tenant of
the Building and contracts directly for such service, only
respecting the Exterior Common Areas and, during such time that
Tenant is not the Sole Tenant of the Building or Tenant does not
directly contract for such service, respecting the Exterior
Common Areas and the Common Areas of the Buildings); and (b)
costs incurred in connection with an energy management program
for the Buildings and the Project.
6. The amortized cost of capital improvements (as distinguished from
replacement parts or components installed in the ordinary course
of business) made to the Buildings or Project which are: (a)
performed primarily to reduce operating expense costs or
otherwise improve the operating efficiency of the Buildings or
Project; or (b) required to comply with any Laws that are
enacted, or first interpreted to apply to the Buildings or
Project, after the date of this Lease. The cost of capital
improvements shall be amortized by Landlord over the lesser of
the Payback Period (defined below) or the useful life of the
capital improvement as reasonably determined by Landlord.
"Payback Period" means the reasonably estimated period of time
that it takes for the operating cost savings in clause (a) above
resulting from a capital improvement to equal the total cost of
the capital improvement. The amortized cost of capital
improvements may, at Landlord's option, include actual or imputed
interest at the rate that Landlord would reasonably be required
to pay to finance the cost of the capital improvement.
7. The Buildings' allocable share of fees, costs and expenses
relating to operating, managing, owning, repairing and
maintaining the parking facilities servicing the Building or
Project, and the Recreational Area (defined in Section I.S.
above) or any other fitness facilities, conference center(s), or
other amenities (if any) in the Project.
If Landlord incurs Expenses for the Building, the Property or the
Project together with one or more other buildings or properties,
whether pursuant to a reciprocal easement agreement, common area
agreement or otherwise, the shared costs and expenses shall be
equitably prorated and apportioned between the Building, the
Property and the Project and the other buildings or properties.
Expenses shall not include: the cost of capital improvements
(except as set forth in Section IV.C.6 above); depreciation;
interest (except as provided above for the amortization of
capital improvements); amortization (except as set forth in
Section IV.C.6 above); principal payments of mortgage and other
non-operating debts of Landlord; the cost of repairs or other
work to the extent Landlord is reimbursed by insurance (or would
have been reimbursed by insurance had Landlord carried the
insurance required to be carried by Landlord under this Lease) or
condemnation proceeds; costs in connection with leasing space in
the Building, including brokerage commissions, brochures and
marketing supplies, legal fees in negotiating and preparing lease
documents, and construction, improvement and decorating costs in
preparing space for initial occupancy by a specific tenant; lease
concessions, including rental abatements and construction
allowances, granted to specific tenants; costs incurred in
connection with the sale, financing or refinancing of the
Building, including brokerage commissions, attorneys' and
accountants' fees, closing costs, title insurance premiums,
transfer taxes and interest charges; fines, interest and
penalties incurred due to the late payment of Taxes (defined in
Section IV.D), or Expenses or any other sums required to be paid
by Landlord; organizational expenses associated with the creation
and operation of the entity which constitutes Landlord; or any
penalties or damages that Landlord pays to Tenant under this
Lease or to other tenants in the Buildings or Project under their
respective leases.
The following items are also excluded from Expenses:
(a) Sums (other than management fees, it being agreed that the
management fees included in Expenses are as described in
Section IV.C.2 above) paid to subsidiaries or other
affiliates of Landlord for services on or to the Property,
Building and/or Premises, but only to the extent that the
costs of such services exceed the competitive cost for such
services rendered by persons or entities of similar skill,
competence and experience.
(b) Any fines, penalties or interest resulting from the
negligence or willful misconduct of the Landlord or its
agents, contractors, or employees or any other occupant of
the Building or the Project.
(c) Advertising and promotional expenditures.
(d) Landlord's charitable and political contributions.
(e) Ground lease rental.
(f) Attorney's fees and other expenses incurred in connection
with negotiations or disputes with prospective tenants or
tenants or other occupants of the Project (including
violations of Law by any other tenant of the Project).
(g) The cost or expense of any services or benefits provided
generally to other tenants in the Project and not provided
or available to Tenant.
(h) All costs of purchasing or leasing major sculptures,
paintings or other major works or objects of art (as opposed
to decorations purchased or leased by Landlord for display
in the Common Areas of the Building).
(i) Any expenses for which Landlord has received actual
reimbursement (other than through Expenses).
(j) Costs incurred by Landlord in connection with the correction
of defects in design and original construction of the
Buildings or Property and costs incurred by Landlord for the
repair of structural defects in the Buildings.
(k) Costs incurred (less costs of recovery) for any items to the
extent covered by a manufacturer's, materialman's, vendor's
or contractor's warranty (a "Warranty").
(l) Any costs, fines or penalties incurred due to violations by
Landlord of any Law which was in effect (and as interpreted)
as of the date of this Lease.
(m) The cost of complying with any Laws in effect (and as
enforced) on the Commencement Date, provided that if any
portion of the Building that was in compliance with all
applicable Laws on the Commencement Date becomes out of
compliance due to normal wear and tear, the cost of bringing
such portion of the Building into compliance shall be
included in Expenses unless otherwise excluded pursuant to
the terms hereof.
(n) Any cost or expense related to the removal, cleaning,
abatement or remediation of Hazardous Materials (as defined
in Exhibit E to this Lease) in or about the Building, Common
Area or Property, including, without limitation, hazardous
substances in the ground water or soil, except to the extent
such nonmaterial removal, cleaning, abatement or remediation
is incidental to the general repair and maintenance of the
Building, Common Area or Property.
(o) 50% of any increases in real estate taxes due to a one-time
sale or transfer of ownership of the Buildings in which the
Premises are located during the first thirty-six (36) months
of the original Term of this Lease.
(p) The cost of repairs and maintenance equitably allocated by
Landlord to other buildings in the Project.
(q) Intentionally omitted.
(r) Repairs, maintenance and replacement of the heating,
ventilating and air conditioning units servicing the 2051
Building in excess of normal repair and maintenance (as
defined below) until the day following substantial
completion of the HVAC Replacement Work (as defined in
Section IX.B of this Lease) with respect to the 2051
Building; and repairs, maintenance and replacement of the
heating, ventilating and air conditioning units servicing
the 2061 Building in excess of normal repair and maintenance
until the day following substantial completion of the HVAC
Replacement Work with respect to the 2061 Building; provided
that the foregoing carve out from Expenses shall in no event
apply to the extent that any such items are covered under
Tenant's Service Contract. For purposes of the foregoing,
"normal repair and maintenance" shall mean the repair and/or
replacement of filters, belts, fan shafts, bearings, damper
motors, damper linkage, condenser fan motors, contactors,
pressure switches, gas valves, hot surface ignition systems,
refrigerant, refrigeration oil and pump seals. "Normal
repair and maintenance" expressly excludes the repair or
replacement of compressors, evaporator and condenser coils,
variable frequency drives, evaporator and supply fan motors,
electronic control boards or heat exchangers or any single
repair to any one heating, ventilating and air conditioning
unit servicing the Premises costing in excess of $2,500.00.
(s) Any income, capital levy, capital stock, succession,
transfer, franchise, gift, estate or inheritance tax.
(t) Insurance deductibles in excess of the amounts provided in
Section IV.C.4 of this Lease (except to the extent such
limitation does not apply pursuant to the terms of this
Lease).
(u) Subject to the terms and conditions of Article XVII of this
Lease, the costs of repair or replacement of the Buildings
or the Project resulting from fire, earthquake and other
casualty except with respect to Tenant's Pro Rata Share of
insurance deductibles (subject to any limitations thereon as
expressly stated herein) and as otherwise stated in this
Lease.
(v) The costs of repair, maintenance and/or replacement of the
elevators in the Buildings in excess of $5,000.00 in any 12
month period of the Term.
(w) Costs respecting the structural and underground portions of
the Premises and the Property, including underground
utilities of the Project (including sewer lines and storm
drains).
(x) Taxes to the extent equitably allocated by Landlord to other
buildings in the Project.
(y) The cost of insurance to the extent equitably allocated by
Landlord to other buildings in the Project.
(z) The costs for repairs and replacements beyond normal wear
and tear to the Premises, the Buildings and the Project, as
reasonably determined by Landlord, which are not caused or
exacerbated directly or indirectly by Tenant or any Tenant
Party during the first 12 months of the initial Lease Term
only.
If Tenant is not the Sole Tenant of the Building (either the 2051
Building or the 2061 Building, as the case may be), in the event
that either the 2051 Building and/or the 2061 Building is not at
least 95% occupied during any calendar year or if Landlord is not
supplying services to at least 95% of the total rentable square
footage of either of the 2051 Building and/or the 2061 Building,
as the case may be, at any time during a calendar year, Expenses
shall, at Landlord's option, be determined as if the 2051
Building and/or the 2061 Building, as the case may be, had been
95% occupied and Landlord had been supplying services to 95% of
the total rentable square footage of either the 2051 Building
and/or the 2061 Building, as the case may be, during that
calendar year. In the event that Tenant is not occupying a
material portion of the Premises and, as a result, Landlord may
adjust Expenses for the Building in accordance with the concept
described in this Paragraph, Landlord shall equitably adjust
Tenant's Pro Rata Share of Expenses accordingly. In no event
shall Landlord be entitled to a reimbursement from tenants for
Expenses and Taxes in excess of 100% of the costs actually paid
or incurred by Landlord in any applicable calendar year. The
extrapolation of Expenses under this Section shall be performed
by appropriately adjusting the cost of those components of
Expenses that are impacted by changes in the occupancy of the
Building.
Landlord agrees to act in a commercially reasonable manner in
incurring Expenses, taking into consideration the class and the
quality of the Building.
D. Taxes Defined. "Taxes" shall mean: (1) all real estate taxes and other
assessments on the Buildings and/or Property, and the Buildings' and
Property's share of such taxes and assessments relating to the
Project, including, but not limited to, assessments for special
improvement districts and building improvement districts, taxes and
assessments levied in substitution or supplementation in whole or in
part of any such taxes and assessments and the Building's and
Property's share of any real estate taxes and assessments under any
reciprocal easement agreement, common area agreement or similar
agreement as to the Building, Property and/or Project; (2) the
Buildings' and Project's share of all personal property taxes for
property that is owned by Landlord and used in connection with the
operation, maintenance and repair of the Building, Property or the
Project to the extent such personal property is used to operate,
maintain and repair the Building, Property and Project; and (3) all
commercially reasonable costs and fees incurred in connection with
seeking reductions in any tax liabilities described in (1) and (2),
including, without limitation, any such costs incurred by Landlord for
compliance, review and appeal of tax liabilities. Without limitation,
Taxes shall not include any income, capital levy, franchise, capital
stock, gift, estate or inheritance tax. If an assessment is payable in
installments, Taxes for the year shall include the amount of the
installment and any interest due and payable during that year. For all
other real estate taxes, Taxes for that year shall, at Landlord's
election, include either the amount accrued, assessed or otherwise
imposed for the year or the amount due and payable for that year,
provided that Landlord's election shall be applied consistently
throughout the Term. In the event that during the Term Landlord
receives any credit or rebate on Taxes from any public authority with
respect to the Premises to the extent applicable to the Term and of
which Tenant has paid Tenant's Pro Rata Share, Tenant shall be
entitled to a Rent credit or, at Landlord's option, refund of Tenant's
Pro Rata Share of such credit or rebate after first deducting any of
Landlord's costs and expenses in obtaining such credit or rebate. Such
Rent credit or refund, at Landlord's option, shall be credited against
future installments of Rent or refunded to Tenant within 45 days of
Landlord's receipt of the credit or rebate.
E. Audit Rights. Tenant may, within 18 months after receiving Landlord's
reasonably detailed statement of Expenses, give Landlord written
notice ("Review Notice") that Tenant intends to review Landlord's
records of the Expenses for that calendar year. Within a reasonable
time after receipt of the Review Notice, Landlord shall make all
pertinent records available for inspection at one of Landlord's
management offices located in the San Jose, Santa Clara, Mountain
View, Campbell geographic area, which records are reasonably necessary
for Tenant to conduct its review. If any records are maintained at a
location other than the office of the Building, Tenant may either
inspect the records at such other location or pay for the reasonable
cost of copying and shipping the records. If Tenant retains an agent
to audit Landlord's records, the agent must be with a CPA firm
licensed to do business in California and not paid on a contingency
basis. Tenant shall be solely responsible for all costs, expenses and
fees incurred for the audit. However, notwithstanding the foregoing,
if the audit determines that in the aggregate Expenses for the
Building for the year in question were less than stated by more than
5%, Landlord, within 30 days after its receipt of paid invoices
therefor from Tenant, shall reimburse Tenant for the reasonable
amounts paid by Tenant to third parties in connection with such review
by Tenant. Likewise, if the audit determines that Expenses for the
calendar year are greater than reported, Tenant shall pay Landlord the
amount of any underpayment within 30 days. Within 90 days after the
records are made available to Tenant, Tenant shall have the right to
give Landlord written notice (an "Objection Notice") stating in
reasonable detail any objection to Landlord's statement of Expenses
for that year. If Tenant fails to give Landlord an Objection Notice
within the 90 day period or fails to provide Landlord with a Review
Notice within the 18 month period described above, Tenant shall be
deemed to have approved Landlord's statement of Expenses and shall be
barred from raising any claims regarding the Expenses for that year.
If Tenant provides Landlord with a timely Objection Notice, Landlord
and Tenant shall work together in good faith to resolve any issues
raised in Tenant's Objection Notice. If Landlord and Tenant determine
that Expenses for the calendar year are less than reported, Landlord
shall provide Tenant with a credit against the next installment of
Rent i