As filed with the Securities and Exchange Commission on October 25, 2001
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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VERISIGN, INC.
(Exact name of Registrant as specified in its charter)
Delaware 94-3221585
(State or other (I.R.S.
jurisdiction employeridentification
ofincorporation or no.)
organization)
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487 East Middlefield Road
Mountain View, California 94043
(650) 961-7500
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
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Stratton D. Sclavos
President and Chief Executive Officer
VeriSign, Inc.
487 East Middlefield Road
Mountain View, California 94043
(650) 961-7500
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copies to:
Jeffrey R. Vetter, Esq.
R. Gregory Roussel, Esq.
Melanie P. Grace, Esq.
Fenwick & West LLP
Two Palo Alto Square
Palo Alto, California 94306
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Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
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CALCULATION OF REGISTRATION FEE
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ProposedMaximum Amount of
Title of Each Class of Securities to be Registered Offering Price (1) Registration Fee
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Common stock, $0.001 par value per share..... $750,000,000 $187,500
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(1) The Registrant is registering an indeterminate number of shares of
common stock as may be issued at various times and at indeterminate prices,
with a total public offering price not to exceed $750,000,000. This figure is
an estimate made solely for the purpose of calculating the registration fee
pursuant to Rule 457(o).
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION
(October 25, 2001)
$750,000,000
[LOGO] VERISIGN
VERISIGN, INC.
Common Stock
This prospectus will allow us to issue our common stock, from time to time
in one or more offerings. We may sell these securities from time to time in one
or more offerings up to a total public offering price of $750,000,000. We will
provide specific terms of these offerings in supplements to this prospectus.
You should read this prospectus and the supplement carefully before you invest.
This prospectus may not be used to offer and sell securities unless accompanied
by a prospectus supplement.
The common stock is listed on the Nasdaq National Market under the symbol
"VRSN."
On October 24, 2001 the closing price per share of the common stock on the
Nasdaq National Market was $49.45.
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The common stock offered involves a high degree of risk. See "RISK FACTORS" on
page 4, and in supplements to this prospectus.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of the disclosures in this prospectus. Any representation
to the contrary is a criminal offense.
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The date of this prospectus is , 2001.
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission using a shelf registration process. Under
this shelf process, we may offer common stock from time to time in one or more
offerings up to a total public offering price of $750,000,000. This prospectus
provides you with a general description of the securities we may offer. Each
time that we offer any common stock under this prospectus, we will provide a
prospectus supplement that will contain specific information about the terms of
that offering. The prospectus supplement may also add, update or change
information contained in this prospectus. You should read both this prospectus
and any prospectus supplement together with additional information described
below under the heading "Where You Can Find More Information" and
"Incorporation of Documents by Reference."
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements and other information with the Securities
and Exchange Commission. Copies of our reports, proxy statements and other
information may be inspected and copied at the Commission's Public Reference
Room at 450 Fifth Street, N.W., Washington, D.C. 20549.
Information on the operation of the Public Reference Room may be obtained by
calling the Commission at 1-800-SEC-0330. The Commission maintains a website
that contains reports, proxy statements and other information about us. The
address of the Commission's website is http://www.sec.gov.
Our common stock is quoted for trading on the Nasdaq National Market. You
can inspect reports, proxy statements and other information about us at the
offices of the Nasdaq Stock Market at 1735 K Street, N.W., Washington, D.C.
20006.
This prospectus is part of a registration statement on Form S-3 that we
filed with the Commission. Some of the information in the registration
statement has been omitted from this prospectus under the rules of the
Commission. There is additional information about us in the registration
statement and the exhibits and schedules filed with the registration statement.
Statements in this prospectus about any contract or any other document are not
necessarily complete, and in each instance we refer you to the copy of the
contract or other document filed as an exhibit to the registration statement,
each such statement being qualified in all respects by such reference. You can
inspect a copy of the registration statement without charge at the offices of
the Commission in Washington, D.C. You may obtain a copy of all or any part of
the registration statement for a fee from the public reference section of the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549.
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INCORPORATION OF DOCUMENTS BY REFERENCE
This prospectus incorporates by reference important business and financial
information that is not presented in or delivered with this document. You
should rely only on the information contained in this document or to which we
have referred you. We have not authorized anyone to provide you with
information that is different.
The following documents filed with the Commission are incorporated by
reference into this prospectus:
. our annual report on Form 10-K for the fiscal year ended December 31,
2000;
. our quarterly reports on Form 10-Q for the quarterly periods ended March
31 and June 30, 2001;
. our current reports on Form 8-K dated June 1 and September 27, 2001; and
. the description of our common stock in our registration statement on Form
8-A, SEC file number 000-23593, dated January 6, 1998, and any amendment
or report filed for the purpose of updating that description.
All documents filed by us under sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act after the date of this prospectus are incorporated by
reference into and deemed to be a part of this prospectus from the date of
filing of those documents.
Any statement contained in a document incorporated or deemed to be
incorporated in this document by reference will be deemed to be modified or
superseded for purposes of this prospectus to the extent that a statement
contained in this document or any other subsequently filed document that is
deemed to be incorporated in this document by reference modifies or supersedes
the statement. Any statement so modified or superseded will not be deemed,
except as so modified or superseded, to constitute a part of this prospectus.
The documents incorporated by reference into this prospectus are available
from us upon request. We will provide a copy of any and all of the information
that is incorporated by reference in this prospectus not including exhibits to
the information unless those exhibits are specifically incorporated by
reference into this prospectus to you, without charge, upon written or oral
request. You should direct any requests for copies to Investor Relations,
VeriSign, Inc., 487 East Middlefield Road, Mountain View, California 94043,
telephone: (650) 961-7500.
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VERISIGN
VeriSign is a leading provider of trusted infrastructure services to website
owners, enterprises, electronic commerce service providers and individuals. Our
domain name registration, digital certificate, global registry and payment
services provide the critical web identity, authentication and transaction
infrastructure that online businesses need to establish their web identities
and to conduct secure e-commerce and communications. Our services support
businesses and consumers from the moment they first establish an Internet
presence through the entire lifecycle of e-commerce activities.
Our core authentication service offerings were established as the
cornerstone of the business in 1995 with the introduction of website digital
certificates. Through our secure online infrastructure we sell our website
digital certificates to online businesses, large enterprises, government
agencies and other organizations. We also offer VeriSign OnSite, a managed
service that allows an organization to leverage our trusted data processing
infrastructure to develop and deploy customized digital certificate services
for use by employees, customers and business partners.
We market our payment services worldwide through multiple distribution
channels, including the Internet, direct sales, telesales, value added
resellers, and systems integrators. A significant portion of our payment
services revenues to date has been generated through sales from our website,
but we intend to continue to expand our direct sales force, both in the United
States and abroad, and to continue to expand our other distribution channels.
Our registry business, now VeriSign Global Registry Service, is the
exclusive registry for second level domain names within the .com, .net and .org
top-level domains under agreements with the Internet Corporation for Assigned
Names and Numbers, or ICANN, and the Department of Commerce, or DOC. Internet
domain names are unique identities that enable businesses, other organizations
and individuals to communicate and conduct commerce on the Internet. As a
registry, VeriSign Global Registry Service maintains the master directory of
all second level domain names in the .com, .net and .org top-level domains.
VeriSign Global Registry Service owns and maintains the shared registration
system that allows all registrars, including our own, to enter new second level
domain names into the master directory and to submit modifications, transfers,
re-registrations and deletions for existing second level domain names. As of
June 30, 2001, the VeriSign Global Registry Service had approximately 32.4
million domain names under management in its authoritative database of domain
names ending in .com, .net and .org.
Our web presence services business markets second level domain name
registration services, through our registrar, and other value- added services
that enable our customers to establish their identities on the web. As of June
30, 2001, our registrar had approximately 16.0 million domain names under
management in the .com, .net and .org top-level domains.
We were incorporated in Delaware in April 1995. Our principal executive
offices are located at 487 East Middlefield Road, Mountain View, California
94043. Our telephone number is (650) 961-7500. VeriSign and the VeriSign logo
are registered trademarks of VeriSign, Inc. This prospectus or any prospectus
supplement also contains trademarks of other companies and organizations. Our
website is located at verisign.com. Information contained in our website is not
part of this prospectus or any prospectus supplement.
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RISK FACTORS
This offering involves a high degree of risk. You should carefully consider
the risks described below and the other information in this prospectus and any
prospectus supplement, including the information incorporated by reference,
before deciding to invest in our common stock. If any of the risks described
below materializes, our operating results and financial condition could be
adversely affected and the trading price of our common stock could decline.
We have a limited operating history under our current business structure.
We were incorporated in April 1995, and began introducing our trusted
infrastructure services in June 1995. In addition, we completed several
acquisitions in 2000 and 2001. Therefore, we have only a limited operating
history on which to base an evaluation of our consolidated business and
prospects. Our success will depend on many factors, including, but not limited
to, the following:
. the successful integration of the acquired companies;
. the rate and timing of the growth and use of Internet protocol, or IP,
networks for electronic commerce and communications;
. the extent to which digital certificates and domain names are used for
these communications or electronic commerce;
. the continued growth in the number of web sites;
. the growth in demand for our payment services;
. the continued evolution of electronic commerce as a viable means of
conducting business;
. the demand for our Internet infrastructure services, digital certificates
and web presence services;
. the competition for any of our services;
. the perceived security of electronic commerce and communications over IP
networks;
. the perceived security of our services, technology, infrastructure and
practices; and
. our continued ability to maintain our current, and enter into additional,
strategic relationships.
To address these risks we must, among other things:
. successfully market our Internet infrastructure services, digital
certificates and our web presence services to new and existing customers;
. attract, integrate, train, retain and motivate qualified personnel;
. respond to competitive developments;
. successfully introduce new Internet infrastructure services and web
presence services; and
. successfully introduce enhancements to our existing Internet
infrastructure services, digital certificates and web presence services to
address new technologies and standards and changing market conditions.
We cannot be certain that we will successfully address these risks.
Our business depends on the future growth of the Internet and adoption and
continued use of IP networks.
Our future success substantially depends on the continued growth in the use
of the Internet and IP networks. If the use of and interest in the Internet and
IP networks does not continue to grow, our business would be
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harmed. To date, many businesses and consumers have been deterred from
utilizing the Internet and IP networks for a number of reasons, including, but
not limited to:
. potentially inadequate development of network infrastructure;
. security concerns, particularly for online payments, including the
potential for merchant or user impersonation and fraud or theft of stored
data and information communicated over IP networks;
. privacy concerns, including the potential for third parties obtaining
personally identifiable information about users to disclose or sell data
without notice to or the consent of such users;
. other security concerns such as attacks on popular websites by "hackers;"
. inconsistent quality of service;
. lack of availability of cost-effective, high-speed systems and service;
. limited number of local access points for corporate users;
. inability to integrate business applications on IP networks;
. the need to operate with multiple and frequently incompatible products;
. government regulation; and
. a lack of tools to simplify access to and use of IP networks.
The widespread acceptance of the Internet and IP networks will require a
broad acceptance of new methods of conducting business and exchanging
information. Organizations that already have invested substantial resources in
other methods of conducting business may be reluctant to adopt new methods.
Also, individuals with established patterns of purchasing goods and services
and effecting payments may be reluctant to change.
We may not be able to sustain our revenue growth and our near-term success
depends, in part, on the growth of the web presence services business.
We may not be able to sustain the revenue growth we have experienced in
recent periods. In addition, past revenue growth may not be indicative of
future operating results. If we do not successfully maintain our current
position as a leading provider of domain name registration services or develop
or market additional value-added web presence services and products, our
business could be harmed.
Our web presence services will account for a significant portion of our
revenue in at least the near term. Our future success will depend largely on:
. continued new domain name registrations;
. re-registration rates of our customers;
. our ability to maintain our current position as a leading registrar of
domain names;
. the successful development, introduction and market acceptance of new web
presence services that address the demands of Internet users;
. our ability to provide robust domain name registration systems; and
. our ability to provide a superior customer service infrastructure for our
web presence services.
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Issues arising from implementing agreements with ICANN and the Department of
Commerce could harm our registration business.
The Department of Commerce, or DOC, has adopted a plan for a phased
transition of the DOC's responsibilities for the domain name system to the
Internet Corporation for Assigned Names and Numbers, or ICANN. We face risks
from this transition, including the following:
. ICANN could adopt or promote policies, procedures or programs that are
unfavorable to our role in the registration of domain names or that are
inconsistent with our current or future plans;
. the DOC or ICANN could terminate our agreements to be the registry or a
registrar in the .com, .net and .org top-level domains if they find that
we are in violation of our agreements with them;
. if our agreements to be the registry for the .com, .org or .net top-level
domains, or a registrar for existing and new top-level domains are
terminated, we may not be able to sustain the revenue growth we
experienced in recent periods;
. the terms of the registrar accreditation contract could change, as a
result of an ICANN-adopted policy, in a manner that is unfavorable to us;
. the DOC's or ICANN's interpretation of provisions of our agreements with
either of them could differ from ours;
. the DOC could revoke its recognition of ICANN, as a result of which the
DOC would take the place of ICANN for purposes of the various agreements
described above, and could take actions that are harmful to us;
. ICANN has approved new top-level domains and we may not be permitted to
act as a registrar with respect to some of those top-level domains;
. the U.S. Government could refuse to transfer certain responsibilities for
domain name system administration to ICANN due to security, stability or
other reasons, resulting in fragmentation or other instability in domain
name system administration; and
. our registry business could face legal or other challenges resulting from
the activities of registrars.
Challenges to ongoing privatization of Internet administration could harm our
web presence services business.
Risks we face from challenges by third parties, including other domestic and
foreign governmental authorities, to our role in the ongoing privatization of
the Internet include:
. legal, regulatory or other challenges could be brought, including
challenges to the agreements governing our relationship with the DOC or
ICANN, or to the legal authority underlying the roles and actions of the
DOC, ICANN or us;
. Congress has held several hearings in which various issues about the
domain name system and ICANN's practices have been raised and Congress
could take action that is unfavorable to us;
. Congress has issued a Conference Report directing the General Accounting
Office to review the relationship between the DOC and ICANN and the
adequacy of security arrangements under existing DOC cooperative
agreements. An adverse report could cause Congress to take action that is
unfavorable to us or the stability of the domain name system;
. ICANN could fail to maintain its role, potentially resulting in
instability in domain name system administration; and
. some foreign governments and governmental authorities have in the past
disagreed with, and may in the future disagree with, the actions, policies
or programs of ICANN, the U.S. Government and us relating to
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the domain name system. These foreign governments or governmental
authorities may take actions or adopt policies or programs that are
harmful to our business.
Our quarterly operating results may fluctuate and our future revenues and
profitability are uncertain.
Our quarterly operating results have varied and may fluctuate significantly
in the future as a result of a variety of factors, many of which are outside
our control. These factors include the following:
. continued market acceptance of our trusted infrastructure services;
. the long sales and implementation cycles for, and potentially large order
sizes of, some of our Internet trust services and the timing and execution
of individual contracts;
. volume of domain name registrations through our web presence services
business and our Global Registry Service business;
. customer renewal rates for our Internet infrastructure services and web
presence services;
. competition in the web presence services business from competing
registrars and registries;
. the introduction of additional alternative Internet naming systems;
. the timing of releases of new versions of Internet browsers or other
third-party software products and networking equipment that include our
digital certificate service interface technology;
. the mix of all our offered services sold during a quarter;
. our success in marketing other Internet infrastructure services and web
presence value-added services to our existing customers and to new
customers;
. continued development of our direct and indirect distribution channels,
both in the U.S. and abroad;
. market acceptance of our Internet infrastructure services and new service
offerings or our competitors' products and services;
. a decrease in the level of spending for IT related products and services
by enterprise customers;
. our ability to expand operations;
. our success in assimilating the operations and personnel of any acquired
businesses;
. the amount and timing of expenditures related to expansion of our
operations;
. the impact of price changes in our Internet infrastructure services and
web presence services or our competitors' products and services; and
. general economic and market conditions as well as economic and market
conditions specific to IP network and Internet industries.
In addition, we expect a significant increase in our operating expenses as
we:
. increase our sales and marketing operations and activities; and
. continue to update our systems and infrastructure.
If the increase in our expenses is not accompanied by a corresponding
increase in our revenues, our operating results will suffer, particularly as
revenues from many of our services are recognized ratably over the term of the
service, rather than immediately when the customer pays for them, unlike our
sales and marketing expenditures, which are expensed in full when incurred.
Due to all of the above factors, our quarterly revenues and operating
results are difficult to forecast. Therefore, we believe that period-to-period
comparisons of our operating results will not necessarily be
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meaningful, and you should not rely upon them as an indication of future
performance. Also, operating results may fall below our expectations and the
expectations of securities analysts or investors in one or more future
quarters. If this were to occur, the market price of our common stock would
likely decline.
In addition, the terrorist acts of September 11, 2001 have created an
uncertain economic environment and we cannot predict the impact of these
events, any subsequent terrorist acts or of any related military action, on our
customers or business. We believe that, in light of these events, some
businesses may curtail spending on information technology, which could also
affect our quarterly results in the future.
We face significant competition.
We anticipate that the market for services that enable trusted and secure
electronic commerce and communications over IP networks will remain intensely
competitive. We compete with larger and smaller companies that provide products
and services that are similar to some aspects of our Internet infrastructure
services. Our competitors may develop new technologies in the future that are
perceived as being more secure, effective or cost efficient than the technology
underlying our trust services. We expect that competition will increase in the
near term, and that our primary long-term competitors may not yet have entered
the market.
Increased competition could result in pricing pressures, reduced margins or
the failure of our Internet trust services to achieve or maintain market
acceptance, any of which could harm our business. Several of our current and
potential competitors have longer operating histories and significantly greater
financial, technical, marketing and other resources. As a result, we may not be
able to compete effectively.
In connection with our first round of financing, RSA contributed certain
technology to us and entered into a non-competition agreement with us under
which RSA agreed that it would not compete with our certificate authority
business for a period of five years. This non-competition agreement expired in
April 2000. We believe that, because RSA, which is now a wholly owned
subsidiary of RSA Security, has already developed expertise in the area of
cryptography, its barriers to entry would be lower than those that would be
encountered by our other potential competitors should RSA choose to enter the
digital certificate market. If RSA were to enter into the digital certificate
market, our business could be materially harmed.
Seven new top-level domain registries, .aero, .biz, .coop, .info, .museum,
.name and .pro, are expected to begin accepting domain name registrations in
the near future. Since we will not serve as a registry for these new top-level
domains, we will not receive the annual registry fee for domain name
registrations under these top-level domains. The commencement of registrations
in these new top-level domains could have the effect of reduced demand for .com
and .net domain name registrations. If the new top-level domains do reduce the
demand for domain name registrations in .com and .net, our business could be
materially harmed.
The agreements among ICANN, the DOC, us and other registrars permit
flexibility in pricing for and term of registrations. Our revenues, therefore,
could be reduced due to pricing pressures, bundled service offerings and
variable terms from our competitors. Some registrars and resellers in the .com,
.net and .org top-level domains are already charging lower prices for web
presence services in those domains. In addition, other entities are bundling,
and may in the future bundle, domain name registrations with other products or
services at reduced rates or for free.
Acquisitions could harm our business.
We made several acquisitions in 2000 and 2001. In addition, we have recently
announced our proposed acquisition of Illuminet Holdings, Inc., which recently
completed several acquisitions of its own. We could experience difficulty in
integrating the personnel, products, technologies or operations of these
companies and these difficulties could be compounded by the fact that Illuminet
is facing similar integration issues. Assimilating acquired businesses involves
a number of other risks, including, but not limited to:
. the potential disruption of our business;
. the potential impairment of relationships with our employees, customers
and strategic partners;
. unanticipated costs or the incurrence of unknown liabilities;
. the need to manage more geographically-dispersed operations, such as our
offices in Virginia, North Carolina, South Africa and Europe;
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. diversion of management's resources from other business concerns;
. the inability to retain the employees of the acquired businesses;
. adverse effects on existing customer relationships of acquired companies;
. the difficulty of assimilating the operations and personnel of the
acquired businesses;
. the potential incompatibility of business cultures;
. any perceived adverse changes in business focus;
. our inability to incorporate acquired technologies successfully into our
Internet infrastructure services; and
. the inability to maintain uniform standards, controls, procedures and
policies.
If we are unable to successfully address any of these risks for future
acquisitions, our business could be harmed.
Additionally, we are required under generally accepted accounting principles
to review our intangible assets for impairment when events or changes in
circumstances indicate the carrying value may not be recoverable. For example,
there is risk that we may incur additional expenses associated with a write-off
of a portion of goodwill and other intangible assets due to changes in market
condition, as was the case when we recorded a non-cash charge of $9.9 billion
related to write downs of goodwill for stock-based acquisitions in the second
quarter of 2001.
Our Internet infrastructure services market is new and evolving.
We target our Internet infrastructure services at the market for trusted and
secure electronic commerce and communications over IP networks. This is a new
and rapidly evolving market that may not continue to grow.
Accordingly, the demand for our Internet infrastructure services is very
uncertain. Even if the market for electronic commerce and communications over
IP networks grows, our Internet infrastructure services may not be widely
accepted. The factors that may affect the level of market acceptance of digital
certificates and, consequently, our Internet infrastructure services include
the following:
. market acceptance of products and services based upon authentication
technologies other than those we use;
. public perception of the security of digital certificates and IP networks;
. the ability of the Internet infrastructure to accommodate increased levels
of usage; and
. government regulations affecting electronic commerce and communications
over IP networks.
Even if digital certificates achieve market acceptance, our Internet
infrastructure services may fail to address the market's requirements
adequately. If digital certificates do not sustain or increase their
acceptance, or if our Internet infrastructure services in particular do not
achieve or sustain market acceptance, our business would be materially harmed.
System interruptions and security breaches could harm our business.
We depend on the uninterrupted operation of our various domain name
registration systems, secure data centers and other computer and communications
systems. We must protect these systems from loss, damage or interruption caused
by fire, earthquake, power loss, telecommunications failure or other events
beyond our
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control. Most of our systems are located at, and most of our customer
information is stored in, our facilities in Mountain View, California and
Kawasaki, Japan, both of which are susceptible to earthquakes, and Dulles and
Herndon, Virginia. Though we have back-up power resources, our California
locations are susceptible to recent electric power shortages. All of our web
presence services systems, including those used in our domain name registry and
registrar business are located at our Dulles and Herndon, Virginia facilities.
Any damage or failure that causes interruptions in any of these facilities or
our other computer and communications systems could materially harm our
business.
In addition, our ability to issue digital certificates and register domain
names depends on the efficient operation of the Internet connections from
customers to our secure data centers and our various registration systems as
well as from customers to our registrar and from our registrar and other
registrars to the shared registration system. These connections depend upon
efficient operation of web browsers, Internet service providers and Internet
backbone service providers, all of which have had periodic operational problems
or experienced outages in the past. Any of these problems or outages could
decrease customer satisfaction.
A failure in the operation of our various registration systems, our domain
name zone servers, the domain name root servers or other events could result in
deletion of one or more domain names from the Internet for a period of time. A
failure in the operation of our shared registration system could result in the
inability of one or more other registrars to register and maintain domain names
for a period of time. A failure in the operation or update of the master
database that we maintain could result in deletion of one or more top-level
domains from the Internet and the discontinuation of second-level domain names
in those top-level domains for a period of time. The inability of our registrar
systems, including our back office billing and collections infrastructure, and
telecommunications systems to meet the demands of a large number of domain name
registration requests and corresponding customer e-mails and telephone calls,
including speculative, otherwise abusive and repetitive e-mail domain name
registration and modification requests, could result in substantial degradation
in our customer support service and our ability to process, bill and collect
registration requests in a timely manner.
We retain certain confidential customer information in our secure data
centers and various registration systems. It is critical to our business
strategy that our facilities and infrastructure remain secure and are perceived
by the marketplace to be secure. Our domain name registration operations also
depend on our ability to maintain our computer and telecommunications equipment
in effective working order and to reasonably protect our systems against
interruption and potentially depends on protection by other registrars in the
shared registration system. The root zone servers and top-level domain name
zone servers that we operate are critical hardware to our web presence
operations. Therefore, we may have to expend significant time and money to
maintain or increase the security of our facilities and infrastructure.
Despite our security measures, our infrastructure may be vulnerable to
physical break-ins, computer viruses, and attacks by hackers or similar
disruptive problems. It is possible that we may have to expend additional
financial and other resources to address such problems. Any physical or
electronic break-ins or other security breaches or compromises of the
information stored at our secure data centers and domain name registration
systems may jeopardize the security of information stored on our premises or in
the computer systems and networks of our customers. In such an event, we could
face significant liability and customers could be reluctant to use our Internet
infrastructure services and web presence services. Such an occurrence could
also result in adverse publicity and therefore adversely affect the market's
perception of the security of electronic commerce and communications over IP
networks as well as of the security or reliability of our services.
We rely on a continuous power supply to conduct our operations, and
California's current energy crisis could disrupt our operations and increase
our expenses.
California is in the midst of an energy crisis that could disrupt our
operations and increase our expenses. In the event of an acute power shortage,
that is, when power reserves for the State of California fall below 1.5%,
10
California has on some occasions implemented, and may in the future continue to
implement, rolling blackouts throughout the state. If blackouts interrupt our
power supply, we may be temporarily unable to operate. Any such interruption in
our ability to continue operations could delay the development of our products.
Future interruptions could damage our reputation, harm our ability to retain
existing customers and to obtain new customers, and could result in lost
revenue, any of which could substantially harm our business and results of
operations.
Furthermore, the deregulation of the energy industry instituted in 1996 by
the California government and shortages in wholesale electricity supplies have
caused power prices to increase. If wholesale prices continue to increase, our
operating expenses will likely increase, as our headquarters and many of our
employees are based in California.
Some of our investments in other companies resulted in losses and may result in
losses in the future.
We have equity and debt investments in a number of companies. In most
instances, these investments are in the form of equity and debt securities of
private companies for which there is no public market. These companies are
typically in the early stage of development and may be expected to incur
substantial losses. Therefore, these companies may never become publicly traded
companies. Even if they do, an active trading market for their securities may
never develop and we may never realize any return on these investments.
Further, if these companies are not successful, we could incur charges related
to write-downs or write-offs of these types of assets. Due to the recent
volatility in the stock market in general, and the market prices of securities
of technology companies in particular, in the first quarter of 2001, we
determined that the decline in value of some of our public and private equity
security investments was other than temporary and recognized a loss of $74.7
million related to the decline in value of these investments. Due to the
inherent risk associated with some of our investments, and in light of current
stock market conditions, we may incur future losses on the sales, write-downs
or write-offs of our investments.
Technological changes will affect our business.
The emerging nature of the Internet, digital certificate business, the
domain name registration business and payment services business, and their
rapid evolution, require us continually to improve the performance, features
and reliability of our Internet infrastructure services and web presence
services, particularly in response to competitive offerings. We must also
introduce any new Internet infrastructure services and web presence services,
as quickly as possible. The success of new Internet infrastructure services and
web presence services depends on several factors, including proper new service
definition and timely completion, introduction and market acceptance. We may
not succeed in developing and marketing new Internet infrastructure services
and web presence services that respond to competitive and technological
developments and changing customer needs. This could harm our business.
We must manage our growth and expansion.
Our historical growth has placed, and any further growth is likely to
continue to place, a significant strain on our resources. We have grown from 26
employees at December 31, 1995 to over 2,500 employees at September 30, 2001,
not including those from our non-wholly owned subsidiaries. In addition to
internal growth, our employee base grew through acquisitions. We have also
opened additional sales offices and have significantly expanded our operations,
both in the U.S. and abroad, during this time period. To be successful, we will
need to implement additional management information systems, continue the
development of our operating, administrative, financial and accounting systems
and controls and maintain close coordination among our executive, engineering,
accounting, finance, marketing, sales and operations organizations. Any failure
to manage growth effectively could harm our business.
11
We depend on key personnel.
We depend on the performance of our senior management team and other key
employees. Our success will also depend on our ability to attract, integrate,
train, retain and motivate these individuals and additional highly skilled
technical and sales and marketing personnel, both in the U.S. and abroad. There
is intense competition for these personnel. In addition, our stringent hiring
practices for some of our key personnel, which consist of background checks
into prospective employees' criminal and financial histories, further limit the
number of qualified persons for these positions.
We have no employment agreements with any of our key executives that prevent
them from leaving VeriSign at any time. In addition, we do not maintain key
person life insurance for any of our officers or key employees other than our
president and chief executive officer. The loss of the services of any of our
senior management team or other key employees or failure to attract, integrate,
train, retain and motivate additional key employees could harm our business.
We rely on third parties who maintain and control root zone servers and route
Internet communications.
We currently administer and operate only two of the 13 root zone servers.
The others are administered and operated by independent operators on a
volunteer basis. Because of the importance to the functioning of the Internet
of these root zone servers, our global registry services business could be
harmed if these volunteer operators fail to maintain these servers properly or
abandon these servers, which would place additional capacity demands on the two
root zone servers we operate.
Further, our global registry services business could be harmed if any of
these volunteer operators fails to include or provide accessibility to the data
that it maintains in the root zone servers that it controls. In the event and
to the extent that ICANN is authorized to set policy with regard to an
authoritative root server system, as provided in our registry agreement with
ICANN, it is required to ensure that the authoritative root will point to the
top-level domain zone servers designated by it. If ICANN does not do this, our
business could be harmed.
Our web presence services and registry services businesses also could be
harmed if a significant number of Internet service providers decided not to
route Internet communications to or from domain names registered by us or if a
significant number of Internet service providers decided to provide routing to
a set of domain name servers that did not point to our domain name zone
servers.
We must establish and maintain strategic and other relationships.
One of our significant business strategies has been to enter into strategic
or other similar collaborative relationships in order to reach a larger
customer base than we could reach through our direct sales and marketing
efforts. We may need to enter into additional relationships to execute our
business plan. We may not be able to enter into additional, or maintain our
existing, strategic relationships on commercially reasonable terms. If we fail
to enter into additional relationships, we would have to devote substantially
more resources to the distribution, sale and marketing of our Internet
infrastructure services and web presence services than we would otherwise.
Our success in obtaining results from these relationships will depend both
on the ultimate success of the other parties to these relationships,
particularly in the use and promotion of IP networks for trusted and secure
electronic commerce and communications, and on the ability of these parties to
market our Internet infrastructure services successfully.
Furthermore, our ability to achieve future growth will also depend on our
ability to continue to establish direct seller channels and to develop multiple
distribution channels, particularly with respect to our web presence services
business. To do this we must maintain relationships with Internet access
providers and other third parties. Failure of one or more of our strategic
relationships to result in the development and maintenance of a market for our
Internet infrastructure services or web presence services could harm our
business. Many of our existing relationships do not, and any future
relationships may not, afford us any exclusive marketing or
12
distribution rights. In addition, the other parties may not view their
relationships with us as significant for their own businesses. Therefore, they
could reduce their commitment to us at any time in the future. These parties
could also pursue alternative technologies or develop alternative products and
services either on their own or in collaboration with others, including our
competitors. If we are unable to maintain our relationships or to enter into
additional relationships, this could harm our business.
Some of our Internet trust services have lengthy sales and implementation
cycles.
We market many of our Internet infrastructure services directly to large
companies and government agencies. The sale and implementation of our services
to these entities typically involves a lengthy education process and a
significant technical evaluation and commitment of capital and other resources.
This process is also subject to the risk of delays associated with customers'
internal budgeting and other procedures for approving large capital
expenditures, deploying new technologies within their networks and testing and
accepting new technologies that affect key operations. As a result, the sales
and implementation cycles associated with certain of our Internet trust
services can be lengthy, potentially lasting from three to six months. Our
quarterly and annual operating results could be materially harmed if orders
forecasted for a specific customer for a particular quarter are not realized.
Our services could have unknown defects.
Services as complex as those we offer or develop frequently contain
undetected defects or errors. Despite testing, defects or errors may occur in
our existing or new services, which could result in loss of or delay in
revenues, loss of market share, failure to achieve market acceptance, diversion
of development resources, injury to our reputation, tort or warranty claims,
increased insurance costs or increased service and warranty costs, any of which
could harm our business. Furthermore, we often provide implementation,
customization, consulting and other technical services in connection with the
implementation and ongoing maintenance of our services, which typically
involves working with sophisticated software, computing and communications
systems. Our failure or inability to meet customer expectations in a timely
manner could also result in loss of or delay in revenues, loss of market share,
failure to achieve market acceptance, injury to our reputation and increased
costs.
Public key cryptography technology is subject to risks.
Our Internet infrastructure services depend on public key cryptography
technology. With public key cryptography technology, a user is given a public
key and a private key, both of which are required to perform encryption and
decryption operations. The security afforded by this technology depends on the
integrity of a user's private key and that it is not lost, stolen or otherwise
compromised. The integrity of private keys also depends in part on the
application of specific mathematical principles known as "factoring." This
integrity is predicated on the assumption that the factoring of large numbers
into their prime number components is difficult. Should an easy factoring
method be developed, the security of encryption products utilizing public key
cryptography technology would be reduced or eliminated. Furthermore, any
significant advance in techniques for attacking cryptographic systems could
also render some or all of our existing Internet trust services obsolete or
unmarketable. If improved techniques for attacking cryptographic systems were
ever developed, we would likely have to reissue digital certificates to some or
all of our customers, which could damage our reputation and brand or otherwise
harm our business. In the past there have been public announcements of the
successful attack upon cryptographic keys of certain kinds and lengths and of
the potential misappropriation of private keys and other activation data. This
type of publicity could also hurt the public perception as to the safety of the
public key cryptography technology included in our digital certificates. This
negative public perception could harm our business.
13
Our international operations are subject to certain risks.
Revenues from international subsidiaries and affiliates accounted for
approximately 13% of our revenues in the second quarter of 2001 and
approximately 12% of our revenues in the first six months of 2001. We intend to
expand our international operations and international sales and marketing
activities. For example, with our acquisition of THAWTE we have additional
operations in South Africa and with our acquisition of Network Solutions, we
have additional operations in Asia and Europe. Expansion into these markets has
required and will continue to require significant management attention and
resources. We may also need to tailor our Internet infrastructure trust
services and web presence services for a particular market and to enter into
international distribution and operating relationships. We have limited
experience in localizing our services and in developing international
distribution or operating relationships. We may not succeed in expanding our
services into international markets. Failure to do so could harm our business.
In addition, there are risks inherent in doing business on an international
basis, including, among others:
. competition with foreign companies or other domestic companies entering
the foreign markets in which we operate;
. regulatory requirements;
. legal uncertainty regarding liability and compliance with foreign laws;
. export and import restrictions on cryptographic technology and products
incorporating that technology;
. tariffs and other trade barriers and restrictions;
. difficulties in staffing and managing foreign operations;
. longer sales and payment cycles;
. problems in collecting accounts receivable;
. currency fluctuations, as all of our international revenues from VeriSign
Japan, K.K. and THAWTE (South Africa) are not denominated in U.S. dollars;
. difficulty of authenticating customer information;
. political instability;
. failure of foreign laws to protect our U.S. proprietary rights adequately;
. more stringent privacy policies in foreign countries;
. additional vulnerability from terrorist groups targeting American
interests abroad;
. seasonal reductions in business activity; and
. potentially adverse tax consequences.
We have licensed to our affiliates the VeriSign Processing Center platform,
which is designed to replicate our own secure data centers and allows the
affiliate to offer back-end processing of Internet infrastructure services. The
VeriSign Processing Center platform provides an affiliate with the knowledge
and technology to offer Internet infrastructure services similar to those
offered by us. It is critical to our business strategy that the facilities and
infrastructure used in issuing and marketing digital certificates remain secure
and we are perceived by the marketplace to be secure. Although we provide the
affiliate with training in security and trust practices, network management and
customer service and support, these practices are performed by the affiliate
and are outside of our control.
Any failure of an affiliate to maintain the privacy of confidential customer
information could result in negative publicity and therefore adversely affect
the market's perception of the security of our services as well as the security
of electronic commerce and communication over IP networks generally.
14
Our Internet infrastructure services could be affected by government
regulation.
Exports of software products utilizing encryption technology are generally
restricted by the United States and various non-United States governments.
Although we have obtained approval to export our Global Server digital
certificate service, and none of our other Internet infrastructure services are
currently subject to export controls under United States law, the list of
products and countries for which export approval is required could be revised
in the future to include more digital certificate products and related
services. It is possible that the terrorist acts of September 11, 2001 will
increase the scrutiny of, and further government restrictions on, exportation
of software products utilizing encryption technology. If we do not obtain
required approvals, we may not be able to sell specific Internet infrastructure
services in international markets. There are currently no federal laws or
regulations that specifically control certificate authorities, but a limited
number of states have enacted legislation or regulations with respect to
certificate authorities. If our market for digital certificates grows, the
United States federal or state or non-United States governments may choose to
enact further regulations governing certificate authorities or other providers
of digital certificate products and related services. These regulations or the
costs of complying with these regulations could harm our business.
We face risks related to intellectual property rights.
Our success depends on our internally developed technologies and other
intellectual property. Despite our precautions, it may be possible for a third
party to copy or otherwise obtain and use our trade secrets or other forms of
our intellectual property without authorization. In addition, it is possible
that others may independently develop substantially equivalent intellectual
property. If we do not effectively protect our intellectual property, our
business could suffer. In the future, we may have to resort to litigation to
enforce our intellectual property rights, to protect our trade secrets or to
determine the validity and scope of the proprietary rights of others. This type
of litigation, regardless of its outcome, could result in substantial costs and
diversion of management and technical resources.
We also license third-party technology, such as public key cryptography
technology licensed from RSA and other technology that is used in our products,
to perform key functions. These third-party technology licenses may not
continue to be available to us on commercially reasonable terms or at all. Our
business could suffer if we lost the rights to use these technologies. A third
party could claim that the licensed software infringes a patent or other
proprietary right. Litigation between the licensor and a third party or between
us and a third party could lead to royalty obligations for which we are not
indemnified or for which indemnification is insufficient, or we may not be able
to obtain any additional license on commercially reasonable terms or at all.
The loss of, or our inability to obtain or maintain, any of these technology
licenses could delay the introduction of our Internet infrastructure services
until equivalent technology, if available, is identified, licensed and
integrated. This could harm our business.
From time to time, we have received, and may receive in the future, notice of
claims of infringement of other parties' proprietary rights.
Infringement or other claims could be made against us in the future. Any
claims, with or without merit, could be time-consuming, result in costly
litigation and diversion of technical and management personnel, cause delays or
require us to develop non-infringing technology or enter into royalty or
licensing agreements. Royalty or licensing agreements, if required, may not be
available on acceptable terms or at all. If a successful claim of infringement
were made against us and it could not develop non-infringing technology or
license the infringed or similar technology on a timely and cost-effective
basis, our business could be harmed.
In addition, legal standards relating to the validity, enforceability, and
scope of protection of intellectual property rights in Internet-related
businesses are uncertain and still evolving. Because of the growth of the
Internet and Internet-related businesses, patent applications are continuously
and simultaneously being filed in
15
connection with Internet-related technology. There are a significant number of
U.S. and foreign patents and patent applications in our areas of interest, and
we believe that there has been, and is likely to continue to be, significant
litigation in the industry regarding patent and other intellectual property
rights. For example, we recently had a complaint filed against us alleging
patent infringement.
We have implemented anti-takeover provisions.
Our amended and restated certificate of incorporation and bylaws, contain
provisions that could make it more difficult for a third party to acquire us
without the consent of our board of directors. These provisions include:
. our stockholders may take action only at a meeting and not by written
consent;
. our board must be given advance notice regarding stockholder-sponsored
proposals for consideration at annual meetings and for stockholder
nominations for the election of directors;
. we have a classified board of directors, with the board being divided into
three classes that serve staggered three-year terms;
. vacancies on our board may be filled until the next annual meeting of
stockholders only by majority vote of the directors then in office; and
. special meetings of our stockholders may be called only by the chairman of
the board, the president or the board, not by our stockholders.
While we believe these provisions provide for an opportunity to receive a
higher bid by requiring potential acquirors to negotiate with our board of
directors, these provisions may apply even if the offer may be considered
beneficial by some stockholders.
16
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This prospectus, including the documents that are and will be incorporated
by reference into this prospectus, contains forward-looking statements within
the "safe harbor" provisions of the Private Securities Litigation Reform Act of
1995 with respect to our plans, expectations, estimates and beliefs. Words such
as "anticipates," "expects," "intends," "plans," "believes," "seeks,"
"estimates" and similar expressions identify forward-looking statements. These
forward-looking statements are not guarantees of future performance and are
subject to risks and uncertainties that could cause actual results to differ
materially from the results contemplated by the forward-looking statements. The
important factors that could cause our results to differ include those
discussed under the section entitled "Risk Factors" in any prospectus
supplement, as well as the section entitled "Factors That May Affect Future
Results of Operations" in item 2 of our Form 10-Q for the quarterly period
ended June 30, 2001 and similar sections in the other documents incorporated
into this prospectus by reference. We encourage you to read these sections
carefully. We may not update information in this prospectus or incorporated by
reference into this prospectus if any forward-looking statement later turns out
to be inaccurate.
17
USE OF PROCEEDS
We will use the net proceeds from the sale of common stock that we may offer
under this prospectus and any accompanying prospectus supplement for general
corporate purposes. General corporate purposes may include possible
acquisitions, investments, capital expenditures, working capital and any other
purposes that we may specify in any prospectus supplement. We may invest the
net proceeds temporarily until we use them for their stated purpose.
DIVIDEND POLICY
We have never declared or paid any cash dividends on our common stock or
other securities and we do not anticipate paying cash dividends in the
foreseeable future. We currently intend to retain our earnings, if any, for
future growth.
18
PLAN OF DISTRIBUTION
We may sell the common stock from time to time in underwritten public
offerings, negotiated transactions, block trades or a combination of these
methods. We may sell the securities (1) through underwriters or dealers, (2)
through agents, and/or (3) directly to one or more purchasers. We may
distribute the securities from time to time in one or more transactions at:
. a fixed price or prices, which may be changed;
. market prices prevailing at the time of sale;
. prices related to the prevailing market prices; or
. negotiated prices.
We may solicit directly offers to purchase the common stock being offered by
this prospectus. We may also designate agents to solicit offers to purchase the
common stock from time to time. We will name in a prospectus supplement any
agent involved in the offer or sale of our securities.
If we utilize a dealer in the sale of the securities being offered by this
prospectus, we will sell the securities to the dealer, as principal. The dealer
may then resell the securities to the public at varying prices to be determined
by the dealer at the time of resale.
If we utilize an underwriter in the sale of the securities being offered by
this prospectus, we will execute an underwriting agreement with the underwriter
at the time of sale and we will provide the name of any underwriter in the
prospectus supplement which the underwriter will use to make resales of the
securities to the public. In connection with the sale of the securities, we, or
the purchasers of securities for whom the underwriter may act as agent, may
compensate the underwriter in the form of underwriting discounts or
commissions. The underwriter may sell the securities to or through dealers, and
the underwriter may compensate those dealers in the form of discounts,
concessions or commissions.
With respect to underwritten public offerings, negotiated transactions and
block trades, we will provide in the applicable prospectus supplement any
compensation we pay to underwriters, dealers or agents in connection with the
offering of the securities, and any discounts, concessions or commissions
allowed by underwriters to participating dealers. Underwriters, dealers and
agents participating in the distribution of the securities may be deemed to be
underwriters within the meaning of the Securities Act of 1933 and any discounts
and commissions received by them and any profit realized by them on resale of
the securities may be deemed to be underwriting discounts and commissions. We
may enter into agreements to indemnify underwriters, dealers and agents against
civil liabilities, including liabilities under the Securities Act, or to
contribute to payments they may be required to make in respect thereof.
Shares of common stock sold pursuant to the registration statement of which
this prospectus is a part will be authorized for quotation and trading on the
Nasdaq National Market. To facilitate the offering of securities, certain
persons participating in the offering may engage in transactions that
stabilize, maintain or otherwise affect the price of the securities. This may
include over-allotments or short sales of the securities, which involve the
sale by persons participating in the offering of more securities than we sold
to them. In these circumstances, these persons would cover such over-allotments
or short positions by making purchases in the open market or by exercising
their over-allotment option. In addition, these persons may stabilize or
maintain the price of the securities by bidding for or purchasing securities in
the open market or by imposing penalty bids, whereby selling concessions
allowed to dealers participating in the offering may be reclaimed if securities
sold by them are repurchased in connection with stabilization transactions. The
effect of these transactions may be to stabilize or maintain the market price
of the securities at a level above that which might otherwise prevail in the
open market. These transactions may be discontinued at any time.
The underwriters, dealers and agents may engage in other transactions with
us, or perform other services for us, in the ordinary course of their business.
19
LEGAL MATTERS
The validity of the issuance of the common stock offered by this prospectus
will be passed upon for us by Fenwick & West LLP, Palo Alto, California. Legal
matters relating to our common stock offered by this prospectus may be passed
upon for any agents or underwriters by the counsel for the agents or
underwriters named in the applicable prospectus supplement.
EXPERTS
The consolidated financial statements of VeriSign, Inc. and subsidiaries as
of December 31, 2000 and 1999, and for each of the years in the three-year
period ended December 31, 2000, have been incorporated by reference herein in
reliance upon the report of KPMG LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as
experts in accounting and auditing.
20
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No dealer, salesperson or other person is authorized to give any information
or to represent anything not contained or incorporated by reference in this
prospectus or any prospectus supplement. You must not rely on any unauthorized
information or representations. This prospectus is an offer to sell only the
shares offered hereby, and only under circumstances and in jurisdictions where
it is lawful to do so. The information contained in this prospectus or any
prospectus supplement is current only as of its date.
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TABLE OF CONTENTS
Page
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About this Prospectus............................ 1
Where You Can Find More Information.............. 1
Incorporation of Documents by Reference.......... 2
VeriSign......................................... 3
Risk Factors..................................... 4
Caution Regarding Forward-Looking Statements..... 17
Use of Proceeds.................................. 18
Dividend Policy.................................. 18
Plan of Distribution............................. 19
Legal Matters.................................... 20
Experts.......................................... 20
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Shares
VeriSign, Inc.
Common Stock
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[LOGO] VERISIGN
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PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. Other Expenses Of Issuance And Distribution.
The estimated expenses to be paid by the Registrant in connection with this
offering are as follows:
Securities and Exchange Commission registration fee............. $187,500
NASD filing fee................................................. 30,500
Accounting fees and expenses.................................... 50,000
Legal fees and expenses......................................... 150,000
Printing and engraving.......................................... 50,000
Blue sky fees and expenses...................................... 5,000
Transfer agent fees and expenses................................ 10,000
Miscellaneous................................................... 17,000
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Total........................................................ $500,000
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Item 15. Indemnification Of Directors And Officers.
Section 145 of the Delaware General Corporation Law authorizes a court to
award, or a corporation's board of directors to grant, indemnity to directors
and officers in terms sufficiently broad to permit such indemnification under
certain circumstances for liabilities (including reimbursement for expenses
incurred) arising under the Securities Act of 1933.
As permitted by the Delaware General Corporation Law, the Registrant's Third
Amended and Restated Certificate of Incorporation includes a provision that
eliminates the personal liability of its directors for monetary damages for
breach of fiduciary duty as a director, except for liability: (i) for any
breach of the director's duty of loyalty to the Registrant or its stockholders;
(ii) for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law; (iii) under section 174 of the
Delaware General Corporation Law (regarding unlawful dividends and stock
purchases); or (iv) for any transaction from which the director derived an
improper personal benefit.
As permitted by the Delaware General Corporation Law, the Registrant's
Amended and Restated Bylaws provide that: (i) the Registrant is required to
indemnify its directors and officers to the fullest extent permitted by the
Delaware General Corporation Law, subject to certain very limited exceptions;
(ii) the Registrant may indemnify its other employees and agents to the extent
that it indemnifies its officers and directors, unless otherwise required by
law, its Certificate of Incorporation, its Amended and Restated Bylaws, or
agreement; (iii) the Registrant is required to advance expenses, as incurred,
to its directors and executive officers in connection with a legal proceeding
to the fullest extent permitted by the Delaware General Corporation Law,
subject to certain very limited exceptions; and (iv) the rights conferred in
the Amended and Restated Bylaws are not exclusive.
The Registrant has entered into Indemnification Agreements with each of its
current directors and certain of its executive officers and intends to enter
into such Indemnification Agreements with each of its other executive officers
to give such directors and executive officers additional contractual assurances
regarding the scope of the indemnification set forth in the Registrant's
Certificate of Incorporation and to provide additional procedural protections.
At present, there is no pending litigation or proceeding involving a director,
officer or employee of the Registrant regarding which indemnification is
sought, nor is the Registrant aware of any threatened litigation that may
result in claims for indemnification.
The Registrant has obtained directors' and officers' liability insurance
with a per claim and annual aggregate coverage limit of $25 million.
The form(s) of any Underwriting Agreement(s) to be incorporated by reference
herein may include provisions regarding the indemnification of officers and
directors of the registrant by the underwriters.
II-1
Item 16. Exhibits.
The following exhibits are filed herewith or incorporated by reference
herein:
Exhibit
Number Exhibit Description
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1.01 Form(s) of Underwriting Agreement(s).*
5.01 Opinion of Fenwick & West LLP.
23.01 Consent of KPMG LLP.
23.03 Consent of Fenwick & West LLP (included in Exhibit 5.01).
24.01 Power of Attorney (see Page II-4).
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* To be filed by amendment or by a report on Form 8-K pursuant to Item 601 of
Regulation S-K.
Item 17. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933 (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change
in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;
Provided, however, that clauses (i) and (ii) do not apply if the information
required to be included in a post-effective amendment by such clauses is
contained in periodic reports filed with or furnished to the Securities and
Exchange Commission by the Registrant pursuant to Section 13 or Section 15(d)
of the Securities Exchange Act of 1934 (the "Exchange Act") that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
II-2
(4) That, for purposes of determining any liability under the Securities
Act, each filing of the Registrant's annual report pursuant to Section 13(a)
or Section 15(d) of the Exchange Act that is incorporated by reference in
this Registration Statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 15 above, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant certifies
that it has reasonable grounds to believe that it meets all of the requirements
for filing on Form S-3 and has duly caused this Registration Statement on Form
S-3 to be signed on its behalf by the undersigned, thereunto duly authorized,
in the City of Mountain View, State of California, on this 24th day of October,
2001.
VERISIGN, INC.
By: /s/ STRATTON D. SCLAVOS
-----------------------------------
Stratton D. Sclavos,
President and Chief Executive Officer
KNOW ALL BY THESE PRESENTS that each individual whose signature appears
below constitutes and appoints Stratton D. Sclavos, Dana L. Evan and James M.
Ulam, and each of them, his or her attorneys-in-fact and agents, each with the
power of substitution, for him or her and in his or her name, place and stead,
in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement on Form S-3, and to
sign any registration statement for the same offering covered by this
Registration Statement that is to be effective upon filing pursuant to Rule
462(b) promulgated under the Securities Act of 1933, and all post-effective
amendments thereto, and to file the same, with all exhibits thereto and all
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or his or
their substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
In accordance with the requirements of the Securities Exchange Act of 1933,
this registration statement has been signed by the following persons on behalf
of the registrant and in the capacities indicated on the 24th day of October
2001.
Signature Title
--------- -----
Principal Executive Officer:
/s/ STRATTON D. SCLAVOS President, Chief Executive Officer and Director
-------------------------------
Stratton D. Sclavos
Principal Financial Officer and
Principal Accounting Officer:
/s/ DANA L. EVAN Executive Vice President of Finance and
------------------------------- Administration and Chief Financial Officer
Dana L. Evan
Additional Directors:
/s/ D. JAMES BIDZOS Chairman of the Board
-------------------------------
D. James Bidzos
/s/ WILLIAM CHENEVICH Director
-------------------------------
William Chenevich
/s/ KEVIN R. COMPTON Director
-------------------------------
Kevin R. Compton
/s/ DAVID J. COWAN Director
-------------------------------
David J. Cowan
/s/ SCOTT G. KRIENS Director
-------------------------------
Scott G. Kriens
/s/ GREG REYES Director
-------------------------------
Greg Reyes
------------------------------- Director
Timothy Tomlinson
II-4
EXHIBIT INDEX
Exhibit
Number Exhibit Description
1.01 Form(s) of Underwriting Agreement(s).*
5.01 Opinion of Fenwick & West LLP.
23.01 Consent of KPMG LLP.
23.03 Consent of Fenwick & West LLP (included in Exhibit 5.01).
24.01 Power of Attorney (see Page II-4).
--------
* To be filed by amendment or by a report on Form 8-K pursuant to Item 601 of
Regulation S-K.