AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 21, 2001
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
<Table>
DELAWARE 04-3363001
(State of Incorporation or organization) (I.R.S. employer identification number)
</Table>
82 RUNNING HILL ROAD
SOUTH PORTLAND, MAINE 04106
(207) 775-8100
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
FAIRCHILD SEMICONDUCTOR CORPORATION
(Exact name of registrant as specified in its charter)
<Table>
DELAWARE 77-0449095
(State of Incorporation or organization) (I.R.S. employer identification number)
</Table>
82 RUNNING HILL ROAD
SOUTH PORTLAND, MAINE 04106
(207) 775-8100
DANIEL E. BOXER
EXECUTIVE VICE PRESIDENT AND CHIEF ADMINISTRATIVE OFFICER, GENERAL COUNSEL AND
SECRETARY
FAIRCHILD SEMICONDUCTOR CORPORATION
(207) 775-8100
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
WITH A COPY TO:
STEVEN R. FINLEY, ESQ.
GIBSON, DUNN & CRUTCHER LLP
200 PARK AVENUE,
NEW YORK, NEW YORK 10166
(212) 351-4000
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
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, please 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. [ ]
(continued on next page)
---------------------
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, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
- --------------------------------------------------------------------------------
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(continued from previous page)
*OTHER REGISTRANTS
<Table>
<Caption>
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
STATE OR OTHER PRIMARY STANDARD
JURISDICTION OF INDUSTRIAL I.R.S. EMPLOYER
EXACT NAME OF REGISTRANT AS INCORPORATION OR CLASSIFICATION CODE IDENTIFICATION
SPECIFIED IN ITS CHARTER ORGANIZATION NUMBERS NUMBER
- -----------------------------------------------------------------------------------------------------------------
Fairchild Semiconductor Corporation of
California**.................................... Delaware 3674 04-3398512
QT Optoelectronics, Inc.**........................ Delaware 3674 77-0458987
QT Optoelectronics**.............................. California 3674 77-0263124
KOTA Microcircuits, Inc.**........................ Colorado 3674 84-1461973
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- -----------------------------------------------------------------------------------------------------------------
</Table>
** Address and telephone number of principal executive offices are the same as
those of Fairchild Semiconductor Corporation.
---------------------
CALCULATION OF REGISTRATION FEE
<Table>
<Caption>
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE PROPOSED MAXIMUM AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED OFFERING PRICE PER UNIT PRICE(1) REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------------------
5% Convertible Senior
Subordinated Notes due 2008 of
Fairchild Semiconductor
Corporation................... $200,000,000 111.875%(1) $223,750,000 $53,476.25
Class A Common Stock, $0.01 par
value of Fairchild
Semiconductor International,
Inc. ......................... 6,666,666 shares (2) -- -- --
Guaranties(3)................... -- -- -- --
Total........................... -- 111.875% $223,750,000 $53,476.25
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
</Table>
(1) Estimated solely for purposes of calculating the amount of the registration
fee, pursuant to Rule 457(c), based upon the average of the bid and the ask
price of the Notes on the PORTAL Market on December 14, 2001.
(2) Such number of shares of Class A common stock par value $0.01 per share, of
Fairchild Semiconductor International, Inc. as are initially issuable upon
conversion of Fairchild Semiconductor International, Inc.'s guaranty in
connection with the surrender of the notes registered hereunder. This
registration statement also covers such additional number of shares of Class
A common stock as may be issuable pursuant to anti-dilution adjustments.
Pursuant to Rule 457(i), no additional registration fee is required with
respect to the common stock because no additional consideration will be
received in connection with the conversion of the Notes.
(3) Includes the rights of holders of the notes under the guaranties. Pursuant
to Rule 457(n), no additional registration fee is required with respect to
the guaranties because no additional consideration will be received for the
guaranties.
The information in this prospectus is not complete and may be changed.
These securities may not be sold until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and is not soliciting an offer to buy these securities
in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED DECEMBER 21, 2001
PROSPECTUS
$200,000,000 AGGREGATE PRINCIPAL AMOUNT OF
5% CONVERTIBLE SENIOR
SUBORDINATED NOTES DUE 2008
ISSUED BY FAIRCHILD SEMICONDUCTOR CORPORATION
6,666,666 SHARES OF CLASS A COMMON STOCK
OF FAIRCHILD SEMICONDUCTOR INTERNATIONAL, INC.
By this prospectus, the selling holders may from time to time offer the 5%
convertible senior subordinated notes due 2008 of Fairchild Semiconductor
Corporation or shares of Class A common stock of Fairchild Semiconductor
International, Inc. You should read this prospectus and any supplement carefully
before you invest.
---------------------
SEE "RISK FACTORS" ON PAGE 5 OF THIS PROSPECTUS FOR INFORMATION YOU SHOULD
CONSIDER BEFORE BUYING THE SECURITIES.
---------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is ______________, 2002.
TABLE OF CONTENTS
<Table>
<Caption>
PAGE
----
ABOUT THIS PROSPECTUS....................................... i
NOTICE TO INVESTORS......................................... i
FORWARD-LOOKING STATEMENTS.................................. ii
WHERE YOU CAN FIND MORE INFORMATION......................... iii
INCORPORATION OF INFORMATION WE FILE WITH THE SEC........... iii
PROSPECTUS SUMMARY.......................................... 1
THE OFFERING................................................ 1
RISK FACTORS................................................ 4
USE OF PROCEEDS............................................. 14
RATIO OF EARNINGS TO FIXED CHARGES.......................... 14
DESCRIPTION OF NOTES........................................ 14
DESCRIPTION OF GUARANTIES................................... 29
DESCRIPTION OF FAIRCHILD INTERNATIONAL'S CAPITAL STOCK...... 30
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS.............. 33
SELLING HOLDERS............................................. 39
PLAN OF DISTRIBUTION........................................ 40
LEGAL MATTERS............................................... 41
EXPERTS..................................................... 41
</Table>
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement we filed with the SEC
using a "shelf" registration process. Under this shelf process, the selling
holders may sell any of the notes described in this prospectus in one or more
offerings. Holders of the notes also may surrender them to us and in connection
with that may convert the guaranty of our parent corporation, Fairchild
Semiconductor International, Inc., referred to herein as "Fairchild
International," into shares of Class A common stock of Fairchild International.
In this prospectus, we refer to this as surrendering and converting the notes
and guaranties into Class A common stock, or more simply, as converting the
notes into Class A common stock. This prospectus also covers sales of Class A
common stock by any of the selling holders.
This prospectus provides you with a general description of (i) the notes
that the selling holders may offer from time to time, (ii) the shares of common
stock that Fairchild International will issue upon the surrender of the notes
and conversion of the guaranty by Fairchild International and (iii) the
guaranties by our principal domestic subsidiaries. Each time additional selling
holders, if any, want to sell notes, 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 this prospectus and any applicable prospectus
supplement together with the additional information described under the heading
"Where You Can Find More Information."
The registration statement that contains this prospectus, including the
exhibits to the registration statement, contains additional information about us
and the securities that the holders may offer under this prospectus. You can
read that registration statement at the SEC's web site or at the SEC's offices
mentioned under the heading "Where You Can Find More Information."
NOTICE TO INVESTORS
The notes are available in book-entry form only. The notes were issued in
the form of global certificates, which are deposited with, or on behalf of, The
Depository Trust Company, or DTC, and registered in its name
i
or in the name of Cede & Co., its nominee. Beneficial interests in the global
certificates are shown on, and transfers of the global certificates will be
effected only through, records maintained by DTC and its participants. Notes in
certificated form will be issued in exchange for the global certificates only as
set forth in the indenture governing the notes. See "Description of the
Notes -- Book-Entry, Delivery and Form."
FORWARD-LOOKING STATEMENTS
This prospectus includes forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. These statements relate to
analyses and other information which are based on forecasts of future results
and estimates of amounts not yet determinable. These statements also relate to
our future prospects, developments and business strategies. The statements
contained in this prospectus that are not statements of historical fact may
include forward-looking statements that involve a number of risks and
uncertainties.
We have used the words "anticipate," "believe," "could," "estimate,"
"expect," "intend," "may," "plan," "predict," "project," "will" and similar
terms and phrases, including references to assumptions, in this prospectus to
identify forward-looking statements. These forward-looking statements are made
based on our management's expectations and beliefs concerning future events
affecting us and are subject to uncertainties and factors relating to our
operations and business environment, all of which are difficult to predict and
many of which are beyond our control, that could cause our actual results to
differ materially from those matters expressed in or implied by these
forward-looking statements. The following factors are among those that may cause
actual results to differ materially from the forward-looking statements:
- changes in demand for our products;
- changes in inventories at our customers and distributors;
- order cancellations or reduced bookings;
- acquisitions;
- disruption of manufacturing, marketing and distribution activities
because of the integration of acquired businesses;
- technological and product development risks; changes in general economic
and business conditions;
- changes in current pricing levels;
- changes in political, social and economic conditions and local
regulations;
- foreign currency fluctuations;
- reductions in sales to any significant customers;
- significant litigation;
- changes in sales mix;
- industry capacity;
- competition;
- loss of key customers;
- disruptions of established supply channels;
- manufacturing capacity constraints; and
- the availability, terms and deployment of capital.
All of our forward-looking statements should be considered in light of
these factors. We undertake no obligation to update our forward-looking
statements or risk factors to reflect new information, future events or
otherwise, except as required by law.
ii
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements and other information with the Securities
and Exchange Commission. Our SEC filings are also available over the Internet at
the SEC's web site at http://www.sec.gov. You may also read and copy any
document we file at the SEC's public reference rooms at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for more
information on the public reference room and their copy charges. You may also
inspect our SEC reports and other information at the New York Stock Exchange, 20
Broad Street, New York, New York 10005.
We have filed a registration statement on Form S-3 with the SEC covering
resales of the notes, Class A common stock and the guaranties. For further
information on Fairchild Semiconductor Corporation, Fairchild Semiconductor
International, Inc. and the securities that are described in this prospectus and
any prospectus supplement, you should refer to our registration statement, its
exhibits and the documents incorporated by reference therein. This prospectus
summarizes material provisions of contracts and other documents that we refer
you to. Since the prospectus may not contain all the information that you may
find important, you should review the full text of those documents.
You should rely only on the information contained or incorporated by
reference in this prospectus and any prospectus supplement. We have not
authorized any other person to provide you with different information. If anyone
provides you with different or inconsistent information, you should not rely on
it. We are not making an offer to sell these securities in any jurisdiction
where the offer or sale is not permitted. You should assume that the information
appearing in this prospectus and any prospectus supplement, as well as
information we previously filed with the SEC and incorporated by reference, is
accurate only as of the date such information was first filed with the SEC. Our
business, financial condition, results of operations and prospects may have
changed since those dates and we disclaim any obligation to update statements
regarding them except as required by law.
INCORPORATION OF INFORMATION WE FILE WITH THE SEC
The SEC allows us to "incorporate by reference" the information that
Fairchild International files with the SEC, which means:
- incorporated documents are considered part of the prospectus,
- we can disclose important information to you by referring you to those
documents and
- information that we file with the SEC will automatically update and
supersede this prospectus.
We incorporate by reference the documents listed below that Fairchild
International files with the SEC under the Securities Exchange Act of 1934 (the
"Exchange Act"):
- Fairchild International's annual report on Form 10-K for the fiscal year
ended December 31, 2000,
- Fairchild International's quarterly reports on Form 10-Q for the fiscal
quarters ended April 1, 2001, July 1, 2001 and September 30, 2001,
- Fairchild International's current reports on Form 8-K as filed with the
SEC on January 31, 2001, March 21, 2001, April 25, 2001, May 29, 2001,
July 26, 2001, September 6, 2001, October 25, 2001, October 26, 2001 and
November 28, 2001,
- The information set forth in Fairchild International's registration
statement on Form S-1 filed with the SEC on January 19, 2000 under the
caption "Description of Capital Stock," and
- The information set forth in Fairchild International's definitive proxy
statement for its 2001 annual meeting of stockholders under the captions
"Proposal 1 -- Election of Directors," "Executive Compensation," "Stock
Ownership by 5% Stockholders, Directors and Certain Executive Officers"
and "Certain Relationships and Related Transactions."
iii
We also incorporate by reference and are deemed to disclose to you as of
the date of their filing with the SEC each of the following documents that
Fairchild International files with the SEC (1) after the date of the filing of
the registration statement of which this prospectus forms a part and (2) until
all the securities offered by this prospectus have been sold:
- reports filed under Sections 13(a) and (c) of the Exchange Act, except
for Current Reports on Form 8-K containing only Regulation FD disclosure
furnished under Item 9 of Form 8-K and exhibits relating to such
disclosures, unless otherwise specifically stated in the Form 8-K.
- definitive proxy or information statements filed under Section 14 of the
Exchange Act in connection with any subsequent stockholders' meeting, and
- any reports filed under Section 15(d) of the Exchange Act.
Any statement contained in this prospectus, including in a document that we
incorporate by reference, shall be modified or superseded for purposes of this
prospectus to the extent that a statement contained herein or incorporated
herein from a subsequently filed document modifies or supersedes such statement.
Any statement that is so modified or superseded shall not be deemed to
constitute a part of this prospectus except as so modified or superseded.
You may request a copy of any filings referred to above (excluding
exhibits), at no cost, by contacting us at the following address:
Fairchild Semiconductor Corporation
82 Running Hill Road
South Portland, Maine 04106
Phone: (207) 775-8100
Attention: General Counsel
iv
PROSPECTUS SUMMARY
This summary contains basic information about us but may not contain all
the information that is important to you. We encourage you to read this entire
prospectus and the documents we refer you to, including the financial data and
related notes, before investing in the notes. As used in this prospectus, (1)
the terms "we," "our," "Fairchild," "Fairchild Semiconductor," "the company" and
"our company" refer to Fairchild Semiconductor Corporation and its subsidiaries,
(2) the term "Fairchild International" refers to Fairchild Semiconductor
International, Inc. and not to its subsidiaries, (3) the term "10 1/8% Senior
Subordinated Notes" refers to our 10 1/8% Senior Subordinated Notes Due March
15, 2007, (4) the term "10 3/8% Senior Subordinated Notes" refers to our 10 3/8%
Senior Subordinated Notes Due October 1, 2007, (5) the term "10 1/2% Senior
Subordinated Notes" refers to our 10 1/2% Senior Subordinated Notes Due February
1, 2009, (6) the term "Previous Notes" refers collectively to our 10 1/8% Senior
Subordinated Notes, our 10 3/8% Senior Subordinated Notes and our 10 1/2% Senior
Subordinated Notes and (7) the term "DPP" refers to our acquisition of the
discrete power products business of Intersil Corporation. The "Description of
the Notes" section uses terms that are specially defined in that section. You
should carefully consider the information set forth under "Risk Factors." In
addition, certain statements are forward-looking statements which involve risks
and uncertainties. See "Forward-Looking Statements."
We have changed our fiscal year-end from the last Sunday in May to the last
Sunday in December. Our last fiscal year under our old accounting calendar was
the year ended May 30, 1999. An intervening seven-month transition period began
May 31, 1999 and ended December 26, 1999. Our first full fiscal year following
this change was the year ended December 31, 2000. This prospectus incorporates
by reference financial information for the fiscal years ended May 1998 and 1999,
for the seven months ended December 26, 1999, for the twelve months ended
December 26, 1999, for the year ended December 31, 2000, and for the nine months
ended September 30, 2001. In this prospectus and in the information incorporated
by reference in this prospectus, we sometimes refer to the fiscal years of the
old accounting calendar as Fiscal 1999, Fiscal 1998, and so on. We sometimes
refer to the seven-month transition period as Stub Year 1999, and to the fiscal
year ended December 31, 2000 as Calendar 2000. We sometimes refer to the twelve
months ended December 26, 1999 as Calendar 1999.
FAIRCHILD SEMICONDUCTOR
We are one of the largest independent semiconductor companies focused
solely on multi-market products. Multi-market products are building block
components that can be used in a wide range of applications and are found in
virtually all electronic devices. We design, develop and market analog,
discrete, interface and logic, non-volatile memory and optoelectronic
semiconductors. We supply customers in a diverse range of end markets, including
the computer, industrial, communications, consumer electronics and automotive
industries. We are particularly strong in providing discrete and analog power
management products, which address the growing requirement for portability and
long battery life for computing and communication devices.
ADDITIONAL INFORMATION
Our executive offices are located at 82 Running Hill Road, South Portland,
Maine 04106. Our telephone number is (207) 775-8100. We were incorporated in
Delaware on February 10, 1997.
THE OFFERING
Securities offered............ $200,000,000 aggregate principal amount of 5%
Convertible Senior Subordinated Notes Due 2008
of Fairchild Semiconductor Corporation,
guaranteed on a senior subordinated basis by
Fairchild International and our principal
domestic subsidiaries, and 6,666,666 shares of
Class A common stock of Fairchild Interna-
1
tional that may be issued upon surrender and
conversion of the notes and the guaranties.
Interest...................... The notes will bear interest at an annual rate
of 5%. Interest is payable on May 1 and
November 1 of each year, beginning May 1, 2002.
Maturity date................. November 1, 2008.
Conversion rights............. Holders may surrender and convert all or some
of their notes and the guaranty by Fairchild
International into shares of Fairchild
International's Class A common stock at any
time prior to the close of business on the
business day immediately preceding the maturity
date at a conversion price of $30.00 per share.
The initial conversion price is equivalent to a
conversion rate of 33.33 shares per $1,000
principal amount of notes. The conversion price
is subject to adjustment. Upon conversion, you
will not receive any cash representing accrued
interest.
Optional redemption........... We may redeem the notes on or after November 5,
2004, at the redemption prices set forth in
this prospectus.
Change in control............. Upon a change in control, we may be required to
make an offer to purchase each holder's notes
at a price equal to 100% of the principal
amount thereof, plus accrued and unpaid
interest, if any, to the date of purchase.
Ranking....................... The notes are unsecured and subordinated to our
existing and future senior indebtedness.
Assuming we had consummated this offering as of
September 30, 2001, we would have had
approximately $3.8 million of Senior
Indebtedness and approximately $1.14 billion of
Senior Subordinated Indebtedness. The notes
rank pari passu in right of payment with our
Previous Notes and with any future Senior
Subordinated Indebtedness. The terms "Senior
Indebtedness" and "Senior Subordinated
Indebtedness" are defined in the section of
this prospectus entitled "Description of the
Notes -- Certain Definitions."
Guaranty...................... The payment of the principal, premium and
interest on the notes is fully and
unconditionally guaranteed on a senior
subordinated basis by Fairchild International
and our principal domestic subsidiaries. The
guaranties by Fairchild International and our
principal domestic subsidiaries are
subordinated to all existing and future senior
indebtedness of Fairchild International and our
principal domestic subsidiaries, respectively,
including their guaranty of our obligations
under the senior credit facility, and rank pari
passu with the existing guaranties of our
Previous Notes. Fairchild International
currently conducts no business and has no
significant assets other than our capital
stock, all of which is pledged to secure
Fairchild International's obligations under its
guaranty of the senior credit facility. See
"Description of the Guaranties."
Registration rights........... We, Fairchild International and the subsidiary
guarantors agreed to file a shelf registration
statement with the SEC with respect to the
notes and Fairchild International's Class A
common stock issuable upon conversion of the
notes. We have filed the registration
statement, and this prospectus is a part of the
registration state-
2
ment. We also agreed to use our commercially
reasonable efforts to cause the registration
statement to be declared effective by the SEC
by no later than April 29, 2002.
Use of Proceeds............... We will receive no proceeds from this offering.
The selling holders will receive the proceeds
from this offering.
Trading....................... We expect the notes to be eligible for trading
in PORTAL. However, we can provide no assurance
as to the liquidity of, or trading market for,
the notes.
Common stock.................. Fairchild International's Class A common stock
is listed on The New York Stock Exchange under
the symbol "FCS."
RISK FACTORS
Investment in the notes involves certain risks. You should carefully
consider the information under "Risk Factors" and all other information included
in this prospectus before investing in the notes.
3
RISK FACTORS
Our business is subject to a number of risks and uncertainties. Among other
things, these risks could cause actual results to differ materially from those
expressed in forward-looking statements. You should carefully consider the risks
described below before investing in the notes or the Class A common stock. The
risks described below are not the only ones facing our company. Additional risks
not currently known to us or that we currently believe are immaterial also may
impair our business operations.
RISKS RELATING TO THE NOTES
OUR SUBSTANTIAL INDEBTEDNESS COULD ADVERSELY AFFECT OUR FINANCIAL HEALTH, LIMIT
OUR ABILITY TO GROW AND COMPETE AND PREVENT US FROM FULFILLING OUR OBLIGATIONS
UNDER THE NOTES.
We are highly leveraged and this offering will further increase our
indebtedness. Our substantial indebtedness could have important consequences to
you. For example, it could:
- require us to dedicate a substantial portion of our cash flow from
operations to payments on our indebtedness, thereby reducing the
availability of our cash flow to fund working capital, capital
expenditures, research and development efforts and other general
corporate purposes;
- increase the amount of our interest expense, because some of our
borrowings are at variable rates of interest, which, if interest rates
increase, could result in higher interest expense;
- increase our vulnerability to general adverse economic and industry
conditions;
- limit our flexibility in planning for, or reacting to, changes in our
business and the industry in which we operate;
- restrict us from making strategic acquisitions, introducing new
technologies or exploiting business opportunities;
- make it more difficult for us to satisfy our obligations with respect to
the notes;
- place us at a competitive disadvantage compared to our competitors that
have less indebtedness; and
- limit, along with the financial and other restrictive covenants in our
indebtedness, among other things, our ability to borrow additional funds,
dispose of assets or pay cash dividends. Failing to comply with those
covenants could result in an event of default which, if not cured or
waived, could have a material adverse effect on our business, financial
condition and results of operations.
See "Description of the Notes."
DESPITE CURRENT INDEBTEDNESS LEVELS, WE AND OUR SUBSIDIARIES MAY STILL BE ABLE
TO INCUR SUBSTANTIALLY MORE INDEBTEDNESS. INCURRING MORE INDEBTEDNESS COULD
EXACERBATE THE RISKS DESCRIBED ABOVE.
The indenture governing the notes does not contain any limitation on the
amount of debt that we may incur. As a result, we and our subsidiaries may be
able to incur substantial additional indebtedness in the future. Although the
terms of each of the indentures governing the Previous Notes and the credit
agreement relating to the senior credit facility contain restrictions on the
incurrence of additional indebtedness, these restrictions are subject to a
number of qualifications and exceptions and, under certain circumstances,
indebtedness incurred in compliance with these restrictions could be
substantial. The senior credit facility permits borrowings of up to $300.0
million, and all of those borrowings would be senior to the notes. If new debt
is added to our subsidiaries' current debt levels, the substantial risks
described above would intensify.
4
WE MAY NOT BE ABLE TO GENERATE THE NECESSARY AMOUNT OF CASH TO SERVICE OUR
INDEBTEDNESS, WHICH MAY REQUIRE US TO REFINANCE OUR INDEBTEDNESS OR DEFAULT ON
OUR SCHEDULED DEBT PAYMENTS. OUR ABILITY TO GENERATE CASH DEPENDS ON MANY
FACTORS BEYOND OUR CONTROL.
Our historical financial results have been, and our future financial
results are anticipated to be, subject to substantial fluctuations. We cannot
assure you that our business will generate sufficient cash flow from operations,
that currently anticipated cost savings and operating improvements will be
realized on schedule or at all, or that future borrowings will be available to
us under our senior credit facility in an amount sufficient to enable us to pay
our indebtedness or to fund our other liquidity needs. In addition, because our
senior credit facility has variable interest rates, the cost of those borrowings
will increase if market interest rates increase. If we are unable to meet our
expenses and debt obligations, we may need to refinance all or a portion of our
indebtedness on or before maturity, sell assets or raise equity. We cannot
assure you that we would be able to refinance any of our indebtedness, sell
assets or raise equity on commercially reasonable terms or at all, which could
cause us to default on our obligations and impair our liquidity. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in Fairchild International's Annual Report on Form 10-K and in
Fairchild International's Quarterly Reports on Form 10-Q, each incorporated by
reference in this prospectus.
THE NOTES AND THE GUARANTIES ARE JUNIOR TO OUR AND OUR GUARANTORS' SENIOR
INDEBTEDNESS. FURTHERMORE, CLAIMS OF CREDITORS OF OUR NON-GUARANTOR SUBSIDIARIES
HAVE PRIORITY OVER YOUR CLAIMS WITH RESPECT TO SUCH SUBSIDIARIES' ASSETS AND
EARNINGS.
The notes, the guaranty by Fairchild International and the guaranties by
our principal domestic subsidiaries are subordinated to the prior payment in
full of our, Fairchild International's and the subsidiary guarantors', as the
case may be, current and future senior indebtedness. The notes, the guaranty by
Fairchild International and the guaranties by our principal domestic
subsidiaries rank pari passu with the Previous Notes and the related guaranties
from Fairchild International and our principal domestic subsidiaries guarantors.
The indenture relating to the notes does not restrict our ability to incur
additional indebtedness, which may be senior indebtedness.
We may not pay principal, premium, if any, interest or other amounts on the
notes in the event of a payment default in respect of certain senior
indebtedness, including indebtedness under the senior credit facility, unless
that indebtedness has been paid in full or the default has been cured or waived.
In addition, if certain other defaults regarding our senior indebtedness occur,
we may not be permitted to pay any amount regarding the notes, the Fairchild
International guaranty or any subsidiary guaranties for a designated period of
time. If we or any subsidiary guarantors are declared bankrupt or insolvent, or
if there is a payment default under, or an acceleration of, any senior
indebtedness, we are required to pay the lenders under the senior credit
facility and any other creditors who are holders of senior indebtedness in full
before we apply any of our assets to pay you. Accordingly, we may not have
enough assets to pay you after paying the holders of the senior indebtedness.
The senior credit facility does, and our future senior indebtedness may,
prohibit us from repurchasing any notes prior to maturity, even though the
indenture requires us to offer to repurchase notes in some circumstances. If a
change in control occurs when we are prohibited from repurchasing notes, we
could ask our lenders under the senior credit facility or other future senior
indebtedness for permission to repurchase the notes or we could attempt to
refinance the borrowings that contain these prohibitions. If we do not obtain a
consent to repurchase the notes or if we are unable to refinance the borrowings,
we would be unable to repurchase the notes. Our failure to repurchase tendered
notes at a time when repurchase is required by the indenture would constitute an
event of default under the indenture, which, in turn, would constitute a default
under the senior credit facility and the Previous Notes and may constitute an
event of default under our future indebtedness. In these circumstances, the
subordination provisions in the indenture would restrict payments to you. See
"Description of the Notes -- Ranking" and "Description of the Notes -- Purchase
of Notes at Your Option Upon a Change in Control."
5
We conduct a portion of our business through our subsidiaries. The notes
are not guaranteed by our foreign subsidiaries, including Fairchild Korea. Less
than two-thirds of the capital stock of Fairchild Korea has been pledged to
secure our obligations under the senior credit facility. Claims of creditors of
our non-guarantor subsidiaries, including trade creditors, secured creditors and
creditors holding indebtedness or guaranties issued by such subsidiaries, and
claims of holders of preferred stock of our non-guarantor subsidiaries, if any,
generally have priority with respect to the assets and earnings of such
subsidiaries over the claims of creditors of our company, including holders of
the notes, even if the obligations of such subsidiaries do not constitute senior
indebtedness.
FAIRCHILD INTERNATIONAL, OUR PARENT COMPANY, DOES NOT HAVE ANY RESOURCES TO
SUPPORT ITS GUARANTY OF THE NOTES.
Although Fairchild International has guaranteed the notes on a senior
subordinated basis, it currently conducts no business and has no significant
assets other than our capital stock. Since all of our capital stock owned by
Fairchild International is pledged to secure Fairchild International's guaranty
of the senior credit facility, there are currently no unencumbered assets
supporting Fairchild International's guaranty of the notes. Fairchild
International's guaranty of the notes is subordinated in right of payment to the
guaranty by Fairchild International of our obligations under the senior credit
facility. See "Description of the Guaranties."
RESTRICTIONS IMPOSED BY THE CREDIT AGREEMENT RELATING TO OUR SENIOR CREDIT
FACILITY AND EACH OF THE INDENTURES GOVERNING OUR PREVIOUS NOTES RESTRICT OR
PROHIBIT OUR ABILITY TO ENGAGE IN OR ENTER INTO SOME BUSINESS OPERATING AND
FINANCING ARRANGEMENTS, WHICH COULD ADVERSELY AFFECT OUR ABILITY TO TAKE
ADVANTAGE OF POTENTIALLY PROFITABLE BUSINESS OPPORTUNITIES.
The operating and financial restrictions and covenants in our debt
instruments, such as the credit agreement relating to our senior credit facility
and each of the indentures governing our Previous Notes may limit our ability to
finance our future operations or capital needs or engage in other business
activities that may be in our interests. Our debt instruments impose significant
operating and financial restrictions on us that affect our ability to incur
additional indebtedness or create liens on our assets, pay dividends, sell
assets, engage in mergers or acquisitions, make investments or engage in other
business activities. These restrictions could place us at a disadvantage
relative to competitors not subject to such limitations.
In addition, the senior credit facility contains other and more restrictive
covenants and prohibits us from prepaying our other indebtedness. The senior
credit facility, beginning March 31, 2003, or earlier if we make a borrowing
under the facility, also requires us to maintain specified financial ratios.
These financial ratios become more restrictive over the life of the senior
credit facility. Our ability to meet those financial ratios can be affected by
events beyond our control, and we cannot assure you that we will meet those
ratios. A breach of any of these covenants, ratios or restrictions could result
in an event of default under the senior credit facility. Upon the occurrence of
an event of default under the senior credit facility, the lenders could elect to
declare all amounts outstanding under the senior credit facility, together with
accrued interest, to be immediately due and payable. If we were unable to repay
those amounts, the lenders could proceed against the collateral granted to them
to secure the indebtedness. If the lenders under the senior credit facility
accelerate the payment of the indebtedness, we cannot assure you that our assets
would be sufficient to repay in full that indebtedness and our other
indebtedness, including the notes. See "Description of Certain Indebtedness."
FEDERAL AND STATE STATUTES ALLOW COURTS, UNDER SPECIFIC CIRCUMSTANCES, TO VOID
GUARANTIES AND REQUIRE NOTEHOLDERS TO RETURN PAYMENTS RECEIVED FROM SUBSIDIARY
GUARANTORS.
Under federal bankruptcy law and comparable provisions of state fraudulent
transfer laws, a guaranty could be voided, or claims in respect of a guaranty
could be subordinated to all other debts of that guarantor if, among other
things, the subsidiary guarantor, at the time it incurred the indebtedness
evidenced by its guaranty:
- received less than reasonably equivalent value or fair consideration for
its guaranty and was insolvent or was rendered insolvent by reason of
such incurrence;
6
- was engaged in a business or transaction for which the guarantor's
remaining assets constituted unreasonably small capital; or
- intended to incur, or believed that it would incur, debts beyond its
ability to pay such debts as they mature.
In addition, any payment by such subsidiary guarantor pursuant to its guaranty
could be voided and required to be returned to such guarantor, or to a fund for
the benefit of the creditors of the subsidiary guarantor. If the subsidiary
guaranties are not enforceable, the notes would be effectively junior in ranking
to all liabilities of the subsidiary guarantors.
The measures of insolvency for purposes of these fraudulent transfer laws
will vary depending upon the law applied in any proceeding to determine whether
a fraudulent transfer has occurred. Generally, however, a subsidiary guarantor
would be considered insolvent if:
- the sum of its debts, including contingent liabilities, were greater than
the fair saleable value of all of its assets;
- the present fair saleable value of its assets was less than the amount
that would be required to pay its probable liability on its existing
debts, including contingent liabilities, as they become absolute and
mature; or
- it could not pay its debts as they become due.
WE MAY NOT HAVE THE ABILITY TO RAISE THE FUNDS NECESSARY TO FINANCE A CHANGE IN
CONTROL OFFER.
Upon the occurrence of certain specific kinds of change in control events,
we are required to offer to repurchase the notes at 100% of their principal
amount, plus accrued and unpaid interest, if any, to the date of redemption. The
occurrence of certain kinds of change in control events and the payment of the
notes prior to their maturity will constitute a default under our senior credit
facility. Accordingly, we must offer to repay all borrowings under the senior
credit facility or obtain the consent of our lenders under the senior credit
facility to the purchase of the notes upon a change in control. In order to
repay our borrowings under the senior credit facility, we expect that we would
require third party financing and we cannot assure you that we would be able to
obtain this financing on commercially reasonable terms, or at all. If we do not
repay such borrowings or obtain the consent of our lenders under the senior
credit facility, we will remain prohibited from purchasing notes. In such case,
our failure to purchase tendered notes would constitute a default under the
indenture governing the notes, which, in turn, would constitute a default under
the senior credit facility. Upon certain change in control events, we will also
be required to offer to repurchase the Previous Notes at 101% of their principal
amount, plus accrued and unpaid interest, if any, to the date of redemption,
which will increase the risks described above. In sum, we cannot assure you that
we will have the financial ability to purchase the notes upon the occurrence of
a change in control. See "Description of the Notes -- Right to Require Purchase
of Notes Upon a Change in Control."
THE CONVERSION OF THE NOTES WILL BE A TAXABLE EVENT.
The conversion of notes into Fairchild International's common stock will be
a taxable event for U.S. federal income tax purposes. Accordingly, you will be
required to recognize gain or loss equal to the difference between the fair
market value of the common stock on the date of conversion (plus any cash
received in lieu of fractional shares) and your tax basis in the notes. See
"Certain U.S. Federal Income Tax Considerations" for a more detailed discussion
of the U.S. federal income tax consequences of owning and disposing of the notes
and Fairchild International's common stock.
YOU CANNOT BE SURE THAT AN ACTIVE TRADING MARKET WILL DEVELOP FOR THE NOTES.
There is currently no public market for the notes. We have been informed by
certain of the firms that initially purchased the notes that they intend to make
a market in the notes. However, the initial purchasers may cease their
market-making at any time. In addition, the liquidity of the trading market in
the notes, and
7
the market price quoted for the notes, may be adversely affected by changes in
the overall market for similar securities and by changes in our financial
performance or prospects or in the financial performance or prospects of
companies in our industry generally. As a result, we cannot assure you that an
active trading market will develop or be maintained for the notes. If an active
market does not develop or is not maintained, the market price and liquidity of
the notes may be adversely affected.
RISKS RELATING TO FAIRCHILD INTERNATIONAL'S CLASS A COMMON STOCK
A SUBSTANTIAL NUMBER OF SHARES OF FAIRCHILD INTERNATIONAL'S CLASS A COMMON STOCK
ARE OWNED BY A LIMITED NUMBER OF PERSONS, AND THEIR INTERESTS MAY CONFLICT WITH
YOUR INTERESTS.
Affiliates of Citigroup Inc., which are among Fairchild International's
principal stockholders, and Fairchild International's directors and executive
officers together own a substantial number of the outstanding shares of
Fairchild International's Class A common stock. By virtue of such stock
ownership, such persons have the power to significantly influence our and
Fairchild International's affairs and are able to influence the outcome of
matters required to be submitted to stockholders for approval, including the
election of Fairchild International's directors and amendment of Fairchild
International's charter and bylaws. Such persons may exercise their influence
over us or Fairchild International in a manner detrimental to the interests of
Fairchild International's stockholders or our bondholders. For more information
regarding Fairchild International's principal stockholders, see the portions of
Fairchild International's proxy statement on Schedule 14A, which are
incorporated herein by reference.
THE PRICE OF FAIRCHILD INTERNATIONAL'S CLASS A COMMON STOCK HAS FLUCTUATED
WIDELY IN THE LAST YEAR AND MAY FLUCTUATE WIDELY IN THE FUTURE.
Fairchild International's Class A common stock, which is traded on The New
York Stock Exchange, has experienced and may continue to experience significant
price and volume fluctuations that could adversely affect the market price of
Fairchild International's Class A common stock without regard to our or
Fairchild International's operating performance. In addition, we believe that
factors such as quarterly fluctuations in financial results, earnings below
analysts' estimates and financial performance and other activities of other
publicly traded companies in the semiconductor industry could cause the price of
Fairchild International's Class A common stock to fluctuate substantially. In
addition, in recent periods, Fairchild International's Class A common stock, the
stock market in general and the market for shares of semiconductor industry-
related stocks in particular have experienced extreme price fluctuations which
have often been unrelated to the operating performance of the affected
companies. Any similar fluctuations in the future could adversely affect the
market price of Fairchild International's Class A common stock.
RISKS RELATING TO OUR OPERATIONS
DOWNTURNS IN THE HIGHLY CYCLICAL SEMICONDUCTOR INDUSTRY OR CHANGES IN END USER
MARKET DEMANDS COULD REDUCE THE VALUE OF OUR BUSINESS.
The semiconductor industry is highly cyclical, and the value of our
business may decline during the "down" portion of these cycles. Beginning in the
fourth quarter of Calendar 2000 and throughout 2001, we and the rest of the
semiconductor industry have experienced backlog cancellations and lower
bookings, resulting in revenue declines, due in part to excess inventories at
computer and telecommunications equipment manufacturers and general economic
conditions, especially in the technology sector. During the latter half of
Fiscal 1998 and most of Fiscal 1999, we, as well as many others in our industry,
experienced significant declines in the pricing of our products as customers
reduced demand forecasts and manufacturers reduced prices to keep capacity
utilization high. We believe these trends were due primarily to the Asian
financial crisis during that period and excess personal computer inventories. We
may experience renewed, possibly more severe and prolonged, downturns in the
future as a result of such cyclical changes. Even as demand increases following
such downturns, our profitability may not increase because of price competition
that has historically
8
accompanied recoveries in demand. In addition, we may experience significant
changes in our profitability as a result of variations in sales, changes in
product mix, price competition for orders, changes in end user markets and the
costs associated with the introduction of new products. The markets for our
products depend on continued demand for personal computers, cellular telephones
and consumer electronics and automotive goods, and these end user markets may
experience changes in demand that will adversely affect our prospects.
WE MAY NOT BE ABLE TO DEVELOP NEW PRODUCTS TO SATISFY CHANGES IN CONSUMER
DEMANDS.
Our failure to develop new technologies, or react to changes in existing
technologies, could materially delay development of new products, which could
result in decreased revenues and a loss of market share to our competitors.
Rapidly changing technologies and industry standards, along with frequent new
product introductions, characterize the semiconductor industry. Our financial
performance depends on our ability to design, develop, manufacture, assemble,
test, market and support new products and enhancements on a timely and
cost-effective basis. We may not successfully identify new product opportunities
and develop and bring new products to market in a timely and cost-effective
manner. Products or technologies developed by other companies may render our
products or technologies obsolete or noncompetitive. A fundamental shift in
technologies in our product markets could have a material adverse effect on our
competitive position within our industry.
OUR FAILURE TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS COULD ADVERSELY AFFECT
OUR FUTURE PERFORMANCE AND GROWTH.
Failure to protect our existing intellectual property rights may result in
the loss of valuable technologies or having to pay other companies for
infringing on their intellectual property rights. We rely on patent, trade
secret, trademark and copyright law to protect such technologies. Some of our
technologies are not covered by any patent or patent application, and we cannot
assure that:
- any of the U.S. patents owned by us or numerous other patents which third
parties license to us will not be invalidated, circumvented, challenged
or licensed to other companies; or
- any of our pending or future patent applications will be issued within
the scope of the claims sought by us, if at all.
In addition, effective patent, trademark, copyright and trade secret
protection may be unavailable, limited or not applied for in some foreign
countries.
We also seek to protect our proprietary technologies, including
technologies that may not be patented or patentable, in part by confidentiality
agreements and, if applicable, inventors' rights agreements with our
collaborators, advisors, employees and consultants. We cannot assure you that
these agreements will not be breached, that we will have adequate remedies for
any breach or that such persons or institutions will not assert rights to
intellectual property arising out of such research. Some of our technologies
have been licensed on a non-exclusive basis from National Semiconductor, Samsung
Electronics, and other companies which may license such technologies to others,
including, in the case of National Semiconductor commencing on March 11, 2002,
our competitors. In addition, under a technology licensing and transfer
agreement, National Semiconductor has limited, royalty-free, worldwide license
rights (without right to sublicense) to some of our technologies. If necessary
or desirable, we may seek licenses under patents or intellectual property rights
claimed by others. However, we cannot assure you that we will obtain such
licenses or that the terms of any offered licenses will be acceptable to us. The
failure to obtain a license from a third party for technologies we use could
cause us to incur substantial liabilities and to suspend the manufacture or
shipment of products or our use of processes requiring the technologies.
OUR FAILURE TO OBTAIN OR MAINTAIN THE RIGHT TO USE CERTAIN TECHNOLOGIES MAY
NEGATIVELY AFFECT OUR FINANCIAL RESULTS.
Our future success and competitive position depend in part upon our ability
to obtain or maintain proprietary technologies used in our principal products,
which is achieved in part by defending claims by
9
competitors of intellectual property infringement. The semiconductor industry is
characterized by litigation regarding patent and other intellectual property
rights. We are involved in lawsuits, and we or our customers could become
subject to other lawsuits, in which it is alleged that we or they have infringed
upon the intellectual property rights of other companies. Our involvement in
existing and future intellectual property litigation could result in significant
expense to our company, adversely affecting sales of the challenged product or
technologies and diverting the efforts of our technical and management
personnel, whether or not such litigation is resolved in our favor. In the event
of an adverse outcome as a defendant in any such litigation, we may be required
to:
- pay substantial damages;
- indemnify customers for damages they might suffer if the products they
purchase from us violate the intellectual property rights of others;
- stop our manufacture, use, sale or importation of infringing products;
- expend significant resources to develop or acquire non-infringing
technologies;
- discontinue processes; or
- obtain licenses to the intellectual property we are found to have
infringed.
We cannot assure you that we would be successful in such development or
acquisition or that such licenses would be available under reasonable terms, or
at all. Any such development, acquisition or license could require the
expenditure of substantial time and other resources.
WE MAY NOT BE ABLE TO CONSUMMATE FUTURE ACQUISITIONS OR SUCCESSFULLY INTEGRATE
ACQUISITIONS INTO OUR BUSINESS.
We plan to pursue additional acquisitions of related businesses. We believe
the semiconductor industry is going through a period of consolidation, and we
expect to participate in this development. The expense incurred in consummating
the future acquisition of related businesses, or our failure to integrate such
businesses successfully into our existing businesses, could result in our
company incurring unanticipated expenses and losses. In addition, we may not be
able to identify or finance additional acquisitions or realize any anticipated
benefits from acquisitions we do complete.
We are constantly pursuing acquisition opportunities and consolidation
possibilities and are in various stages of due diligence or preliminary
discussions with respect to a number of potential transactions, some of which
would be significant. None of these potential transactions is subject to a
letter of intent or otherwise so far advanced as to make the transaction
reasonably certain.
Should we successfully acquire another business, the process of integrating
acquired operations into our existing operations may result in unforeseen
operating difficulties and may require significant financial resources that
would otherwise be available for the ongoing development or expansion of
existing operations. Some of the risks associated with acquisitions include:
- unexpected losses of key employees or customers of the acquired company;
- conforming the acquired company's standards, processes, procedures and
controls with our operations;
- coordinating new product and process development;
- hiring additional management and other critical personnel;
- negotiating with labor unions; and
- increased scope, geographic diversity and complexity of our operations.
Possible future acquisitions could result in the incurrence of additional
debt, contingent liabilities and amortization expenses related to goodwill and
other intangible assets, all of which could have a material adverse effect on
our financial condition and operating results.
10
PRODUCTION TIME AND THE OVERALL COST OF PRODUCTS COULD INCREASE IF WE WERE TO
LOSE ONE OF OUR PRIMARY SUPPLIERS OR IF A PRIMARY SUPPLIER INCREASED THE PRICES
OF RAW MATERIALS.
Our manufacturing operations depend upon obtaining adequate supplies of raw
materials on a timely basis. Our results of operations could be adversely
affected if we are unable to obtain adequate supplies of raw materials in a
timely manner or if the costs of raw materials increase significantly. We
purchase raw materials such as silicon wafers, lead frames, mold compound,
ceramic packages and chemicals and gases from a limited number of suppliers on a
just-in-time basis. From time to time, suppliers may extend lead times, limit
supplies or increase prices due to capacity constraints or other factors. In
addition, we subcontract a portion of our wafer fabrication and assembly and
test operations to other manufacturers, including Carsem, Amkor NS Electronics
(Bangkok) Ltd., Samsung Electronics, Korea Micro Industry and ChipPAC, Inc. Our
operations and ability to satisfy customer obligations could be adversely
affected if our relationships with these subcontractors are disrupted or
terminated.
DELAYS IN BEGINNING PRODUCTION AT NEW FACILITIES, EXPANDING CAPACITY AT EXISTING
FACILITIES, IMPLEMENTING NEW PRODUCTION TECHNIQUES, OR IN CURING PROBLEMS
ASSOCIATED WITH TECHNICAL EQUIPMENT MALFUNCTIONS, ALL COULD ADVERSELY AFFECT OUR
MANUFACTURING EFFICIENCIES.
Our manufacturing efficiency is an important factor in our profitability,
and we cannot assure you that we will be able to maintain our manufacturing
efficiency or increase manufacturing efficiency to the same extent as our
competitors. Our manufacturing processes are highly complex, require advanced
and costly equipment and are continuously being modified in an effort to improve
yields and product performance. Impurities or other difficulties in the
manufacturing process can lower yields or adversely affect product performance.
In addition, we are currently engaged in an effort to expand capacity at
our manufacturing facilities. As is common in the semiconductor industry, we
have from time to time experienced difficulty in beginning production at new
facilities or in effecting transitions to new manufacturing processes. As a
consequence, we have suffered delays in product deliveries or reduced yields. We
may experience delays or problems in bringing planned new manufacturing capacity
to full production. We may also experience problems in achieving acceptable
yields, or experience product delivery delays in the future with respect to
existing or planned new capacity as a result of, among other things, capacity
constraints, construction delays, upgrading or expanding existing facilities or
changing our process technologies, any of which could result in a loss of future
revenues. Our operating results could also be adversely affected by the increase
in fixed costs and operating expenses related to increases in production
capacity if revenues do not increase proportionately.
A SIGNIFICANT PORTION OF OUR SALES ARE MADE BY DISTRIBUTORS WHO CAN TERMINATE
THEIR RELATIONSHIPS WITH US WITH LITTLE OR NO NOTICE. THE TERMINATION OF A
DISTRIBUTOR COULD REDUCE SALES AND RESULT IN INVENTORY RETURNS.
As a general rule, we do not have long-term agreements with our
distributors and they may terminate their relationships with us with little or
no advance notice. Distributors generally offer competing products. The loss of
one or more of our distributors, or the decision by one or more of them to
reduce the number of our products they offer or to carry the product lines of
our competitors, could have a material adverse effect on our business, financial
condition and results of operations. The termination of a significant
distributor, whether at our or the distributor's initiative, or a disruption in
the operations of one or more of our distributors, could reduce our net sales in
a given quarter and could result in an increase in inventory returns.
THE SEMICONDUCTOR BUSINESS IS VERY COMPETITIVE AND INCREASED COMPETITION COULD
REDUCE THE VALUE OF AN INVESTMENT IN OUR COMPANY.
The semiconductor industry is, and the multi-market semiconductor product
markets in particular are, highly competitive. Competition is based on price,
product performance, quality, reliability and customer service. In addition,
even in strong markets, price pressures may emerge as competitors attempt to
gain a greater market share by lowering prices. Competition in the various
markets in which we participate comes from companies of various sizes, many of
which are larger and have greater financial and other resources than we have and
thus are better able to pursue acquisition candidates and can better withstand
adverse economic
11
or market conditions. In addition, companies not currently in direct competition
with us may introduce competing products in the future.
WE ENTERED INTO A NUMBER OF LONG-TERM SUPPLY AND SUPPORT CONTRACTS WITH SAMSUNG
ELECTRONICS IN CONNECTION WITH OUR ACQUISITION OF ITS POWER DEVICE BUSINESS IN
1999. ANY DECREASE IN THE PURCHASE REQUIREMENTS OF SAMSUNG ELECTRONICS OR THE
INABILITY OF SAMSUNG ELECTRONICS TO MEET ITS CONTRACTUAL OBLIGATIONS COULD
SUBSTANTIALLY REDUCE OUR FINANCIAL PERFORMANCE.
As a result of the acquisition of the power device business in 1999, we
have numerous arrangements with Samsung Electronics, including arrangements
relating to product sales, designation as a vendor to affiliated Samsung
companies and other services. Any material adverse change in the purchase
requirements of Samsung Electronics, in its ability to supply the agreed-upon
services or in its ability to fulfill its other obligations could have a
material adverse effect on our results of operations. Although historically the
power device business generated significant revenues from the sale of products
to affiliated Samsung companies, we cannot assure you that we will be able to
sell products to affiliated Samsung companies or that the designation of the
power device business as a vendor to those affiliated Samsung companies will
generate any revenues for our company. Furthermore, under the Korean Fair Trade
Law, the Fair Trade Commission may issue an order requiring a change in the
terms and conditions of the agreements between us and Samsung Electronics if it
concludes that Samsung Electronics has provided us with undue support or
discriminated against our competitors.
THE POWER DEVICE BUSINESS SUBJECTS OUR COMPANY TO RISKS INHERENT IN DOING
BUSINESS IN KOREA, INCLUDING LABOR RISK, POLITICAL RISK AND CURRENCY RISK.
As a result of the acquisition of the power device business in 1999, we
have significant operations in South Korea and are subject to risks associated
with doing business in that country.
In addition to other risks disclosed relating to international operations,
some businesses in South Korea are subject to labor unrest. Also, relations
between South Korea and North Korea have been tense over most of South Korea's
history. We cannot assure you as to whether or when this situation will be
resolved or change abruptly as a result of current or future events. An adverse
change in economic or political conditions in South Korea or in its relations
with North Korea could have a material adverse effect on our Korean subsidiary.
The power device business's sales are denominated primarily in U.S. dollars
while a significant portion of its costs of goods sold and its operating
expenses are denominated in South Korean won. Although we have taken steps to
fix the costs subject to currency fluctuations and to balance won revenues and
won costs, a significant change in this balance, coupled with a significant
change in the value of the won relative to the dollar, could have a material
adverse effect on our financial performance and results of operations. In
addition, an unfavorable change in the value of the won could require us to
write down our won-denominated assets.
A CHANGE IN FOREIGN TAX LAWS OR A DIFFERENCE IN THE CONSTRUCTION OF CURRENT
FOREIGN TAX LAWS BY RELEVANT FOREIGN AUTHORITIES COULD RESULT IN US NOT
RECOGNIZING THE BENEFITS WE ANTICIPATED IN CONNECTION WITH THE TRANSACTION
STRUCTURE USED TO CONSUMMATE THE ACQUISITION OF THE POWER DEVICE BUSINESS FROM
SAMSUNG ELECTRONICS.
The transaction structure we used for the acquisition of the power device
business from Samsung Electronics is based on assumptions about the various tax
laws, including withholding tax, and other relevant laws of foreign
jurisdictions. In addition, our Korean subsidiary was granted a ten-year tax
holiday under Korean law in 1999. The first seven years are tax-free, followed
by three years of income taxes at 50% of the statutory rate. In Calendar 2000,
the tax holiday was extended such that the exemption amounts were increased to
75% in the eighth year and a 25% exemption was added to the eleventh year. If
our assumptions about tax and other relevant laws are incorrect, or if foreign
taxing jurisdictions were to change or modify the relevant laws, or if our
Korean subsidiary were to lose its tax holiday, we could suffer adverse tax and
other financial consequences or lose the benefits anticipated from the
transaction structure we used to acquire that business.
12
OUR INTERNATIONAL OPERATIONS SUBJECT OUR COMPANY TO RISKS NOT FACED BY DOMESTIC
COMPETITORS.
Through our subsidiaries we maintain significant operations in the
Philippines, Malaysia and South Korea and also operate facilities in China and
Singapore. We also have sales offices and customers around the world. The
following are risks inherent in doing business on an international level:
- economic and political instability (including as a result of terrorist
attacks and military and other responses to them);
- foreign currency fluctuations;
- transportation delays;
- trade restrictions;
- changes in import duties;
- work stoppages; and
- the laws, including tax laws, and policies of the United States and of
the countries in which we manufacture our products.
WE ARE SUBJECT TO MANY ENVIRONMENTAL LAWS AND REGULATIONS THAT COULD AFFECT OUR
OPERATIONS OR RESULT IN SIGNIFICANT EXPENSES.
Increasingly stringent environmental regulations restrict the amount and
types of pollutants that can be released from our operations into the
environment. While historically the cost of compliance with environmental laws
has not had a material adverse effect on our results of operations, compliance
with these and any future regulations could require significant capital
investments in pollution control equipment or changes in the way we make our
products. In addition, because we use hazardous and other regulated materials in
our manufacturing processes, we are subject to risks of liabilities and claims,
regardless of fault, resulting from accidental releases, including personal
injury claims and civil and criminal fines, any of which could be material to
our cash flow or earnings. For example:
- we currently are remediating contamination at some of our operating plant
sites;
- we have been identified as a potentially responsible party at a number of
Superfund sites where we (or our predecessors) disposed of wastes in the
past; and
- significant regulatory and public attention to the impact of
semiconductor operations on the environment may result in more stringent
regulations, further increasing our costs.
Although most of our known environmental liabilities are covered by
indemnities from Raytheon Company or National Semiconductor, these indemnities
are limited to conditions that occurred prior to the consummation of those
transactions. Moreover, we cannot assure you that their indemnity obligations to
us for the covered liabilities will be adequate to protect us.
WE MAY NOT BE ABLE TO ATTRACT OR RETAIN THE TECHNICAL OR MANAGEMENT EMPLOYEES
NECESSARY TO REMAIN COMPETITIVE IN OUR INDUSTRY.
Our continued success depends on the retention and recruitment of skilled
personnel, including technical, marketing, management and staff personnel. In
the semiconductor industry, the competition for qualified personnel,
particularly experienced design engineers and other technical employees, is
intense. We cannot assure you that we will be able to retain our current
personnel or recruit the key personnel we require. In addition, we do not have
employment agreements with most members of our senior management team.
13
USE OF PROCEEDS
The selling holders will receive all of the proceeds from the sale of the
securities offered by this prospectus. Neither the company nor Fairchild
International will receive any of the proceeds from the sale of the securities
offered by this prospectus.
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges for each of the periods indicated is
as follows:
<Table>
<Caption>
SEVEN
MONTHS NINE
ENDED FISCAL YEAR MONTHS
FISCAL YEAR ENDED MAY, ------------ ENDED ENDED
-------------------------- DECEMBER 26, DECEMBER 31, SEPTEMBER 30,
1996 1997 1998 1999 1999 2000 2001
----- ---- ---- ---- ------------ ------------ -------------
Ratio of earnings to fixed charges...... 46.2x 2.5x 1.5x -- 1.4x 4.2x 0.5x
</Table>
We have computed these ratios by dividing earnings available for fixed
charges for each period by fixed charges for that period. For purposes of these
computations, we calculated "earnings" by adding our income (loss) before taxes
and our fixed charges. We calculated "fixed charges" by adding the interest we
pay on our indebtedness, the amount we amortize for debt financing costs and our
estimate of the amount of the interest within our rental expense. For Fiscal
1999, fixed charges exceeded earnings by $119.2 million. For the nine-month
period ended September 30, 2001, fixed charges exceeded earnings by
$39.2 million.
DESCRIPTION OF THE NOTES
On October 31, 2001, we issued and sold $200,000,000 of 5% convertible
senior subordinated notes due 2008 in private placement transactions to the
initial purchasers. The notes were issued under the indenture, dated as of
October 31, 2001, between the company, Fairchild International, the Subsidiary
Guarantors and the Bank of New York, as trustee. The following description is a
summary of certain of the material provisions of the indenture governing the
notes and the notes. This description does not restate the indenture or the
terms of the notes in their entirety. We urge you to read the indenture because
it, and not this description, defines your rights as a holder of the notes. The
indenture is filed as an exhibit to the registration statement of which this
prospectus is a part.
The terms of the notes include those stated in the indenture and those made
part of the indenture by reference to the Trust Indenture Act of 1939. In this
description, (1) the words "Company," "Fairchild Semiconductor," "we," "our,"
"Fairchild" and "our company" refer only to Fairchild Semiconductor Corporation
and not to any of our subsidiaries, (2) the words "Fairchild International"
refer to Fairchild Semiconductor International, Inc., the parent of the Company,
and not to any of its subsidiaries and (3) the words "common stock" refer to
Fairchild International's class A common stock, par value $.01 per share.
GENERAL
The notes are unsecured senior subordinated obligations of the Company and
rank in right of payment as described under "-- Ranking." The notes are
convertible into common stock of Fairchild International as described under
"-- Conversion of Notes." The notes have an aggregate principal amount of
$200,000,000. The notes were issued in denominations of $1,000 and integral
multiples of $1,000. The notes will mature on November 1, 2008, unless earlier
redeemed at our option or purchased by us at your option upon a change in
control.
Fairchild International and the Subsidiary Guarantors have unconditionally
guaranteed our obligations under the notes. The guaranties are senior
subordinated obligations of Fairchild International and the Subsidiary
Guarantors.
The indenture does not limit our, Fairchild International's or our
subsidiaries' ability to pay dividends, incur debt or issue or repurchase
securities. In addition, there are no financial covenants in the indenture. You
are not protected under the indenture in the event of a highly leveraged
transaction or a change in control of
14
the Company or Fairchild International, except to the extent described under
"-- Purchase of Notes at Your Option Upon a Change in Control."
The notes bear interest at the annual rate of 5% subject to increases
described in "-- Registration Rights" below. Interest will be payable on May 1
and November 1 of each year, beginning May 1, 2002, subject to exceptions if the
notes are converted, redeemed or purchased prior to the interest payment date.
The record dates for the payment of interest will be April 15 and October 15. We
may, at our option, pay interest on the notes by check mailed to the holders.
However, a holder with an aggregate principal amount of notes in excess of
$2,000,000 will be paid by wire transfer in immediately available funds at its
election. Interest will be computed on the basis of a 360-day year comprised of
twelve 30-day months. We will not be required to make any payment on the notes
due on any day which is not a business day until the next succeeding business
day. The payment made on the next succeeding business day will be treated as
though it were paid on the original due date and no interest will accrue on the
payment for the additional period of time.
We maintain an office in The City of New York where the notes may be
presented for registration, transfer, exchange or conversion. Initially, this
office is an office or agency of the trustee. Except under the circumstances
described below, the notes will be issued only in fully-registered bookentry
form, without coupons, and will be represented by one or more global notes.
There is no service charge for any registration of transfer or exchange of
notes. We may, however, require holders to pay a sum sufficient to cover any tax
or other governmental charge payable in connection with certain transfers or
exchanges.
SURRENDER AND CONVERSION OF NOTES AND GUARANTIES
You have the right, at your option, to surrender and convert your notes and
the guaranties into shares of Fairchild International's common stock at any time
prior to maturity, unless previously redeemed or purchased, at the conversion
price of $30.00 per share, subject to the adjustments described below.
Except as described below, neither we nor Fairchild International will make
any payment or other adjustment for accrued interest on the notes or dividends
on any common stock issued upon conversion of the notes. If you surrender your
notes for conversion between a record date and the opening of business on the
next interest payment date, you must pay funds equal to the interest payable on
the converted principal amount, except if the surrendered notes or portions of
notes are called for redemption or are subject to purchase following a change in
control on a date during the period from the close of business on a record date
and ending on the opening of business on the first business day after the next
interest payment date, or if this interest payment date is not a business day,
the second business day after the interest payment date. As a result of the
foregoing provisions, if the exception described in the preceding sentence does
not apply and you surrender notes for conversion on a date that is not an
interest payment date, you will not receive any interest for the period from the
interest payment date next preceding the date of conversion to the date of
conversion or for any later period. Fairchild International will not issue
fractional shares of common stock upon conversion of notes. Instead, Fairchild
International will pay a cash amount based upon the closing market price of the
common stock on the last trading day prior to the date of conversion. If the
notes are called for redemption or are subject to purchase following a change in
control, your conversion rights on the notes called for redemption or so subject
to purchase will expire at the close of business on the last business day before
the redemption date or purchase date, as the case may be, unless we default in
the payment of the redemption price or purchase price. If you have surrendered
your notes for purchase upon a change in control, you may only convert your
notes if you withdraw your election in accordance with the indenture.
The conversion price will be adjusted upon the occurrence of:
(1) the issuance of shares of Fairchild International's common stock
as a dividend or distribution on Fairchild International's common stock;
(2) the subdivision or combination of Fairchild International's
outstanding common stock;
(3) the issuance to all or substantially all holders of Fairchild
International's common stock of rights or warrants entitling them for a
period of not more than 60 days to subscribe for or purchase Fairchild
International's common stock, or securities convertible into Fairchild
International's common
15
stock, at a price per share or a conversion price per share less than the
then current market price per share, provided that the conversion price
will be readjusted to the extent that such rights or warrants are not
exercised prior to the expiration;
(4) the distribution to all or substantially all holders of Fairchild
International's common stock of shares of Fairchild International's capital
stock, evidences of indebtedness or other assets, or rights or warrants,
excluding:
- dividends, distributions and rights or warrants referred to in clause (1)
or (3) above;
- dividends or distributions exclusively in cash referred to in clause (5)
below; and,
- distribution of rights to all holders of common stock pursuant to an
adoption of a shareholder rights plan;
(5) the dividend or distribution to all or substantially all holders
of Fairchild International's common stock of all-cash distributions in an
aggregate amount that together with (A) any cash and the fair market value
of any other consideration payable in respect of any tender offer by
Fairchild International or any of its subsidiaries for Fairchild
International's common stock consummated within the preceding 12 months not
triggering a conversion price adjustment and (B) all other all-cash
distributions to all or substantially all holders of Fairchild
International's common stock made within the preceding 12 months not
triggering a conversion price adjustment, exceeds an amount equal to 10% of
Fairchild International's market capitalization on the business day
immediately preceding the day on which it declares such distribution; and
(6) the purchase of Fairchild International's common stock pursuant
to a tender offer (within the meaning of the U.S. federal securities laws)
made by it or any of its subsidiaries to the extent that the same involves
aggregate consideration that together with (A) any cash and the fair market
value of any other consideration payable in respect of any tender offer by
Fairchild International or any of its subsidiaries for its common stock
consummated within the preceding 12 months not triggering a conversion
price adjustment and (B) all-cash distributions to all or substantially all
holders of Fairchild International's common stock made within the preceding
12 months not triggering a conversion price adjustment, exceeds an amount
equal to 10% of Fairchild International's market capitalization on the
expiration date of such tender offer.
In the event of:
- any reclassification of Fairchild International's common stock; or
- a consolidation, merger or combination involving Fairchild International;
or
- a sale or conveyance to another person of the property and assets of
Fairchild International as an entirety or substantially as an entirety,
in which holders of Fairchild International's outstanding common stock would be
entitled to receive stock, other securities, other property, assets or cash for
their common stock, without the consent of any holders of notes, the notes will
become convertible only into the same type of consideration received by common
stockholders immediately prior to one of these types of events.
We and Fairchild International are permitted to reduce the conversion price
of the notes by any amount for a period of at least 20 days if Fairchild
International's board of directors determines that such reduction would be in
the best interest of Fairchild International. We are required to give at least
15 days prior notice of any reduction in the conversion price. We and Fairchild
International may also reduce the conversion price to avoid or diminish income
tax to holders of Fairchild International's common stock in connection with a
dividend or distribution of stock or similar event.
No adjustment in the conversion price will be required unless it would
result in a change in the conversion price of at least one percent. Any
adjustment not made will be taken into account in subsequent adjustments. Except
as stated above, the conversion price for the issuance of Fairchild
International's common stock or any
16
securities convertible into or exchangeable for Fairchild International's common
stock or the right to purchase Fairchild International's common stock or such
convertible or exchangeable securities will not be adjusted.
RANKING
NOTES AND GUARANTIES VERSUS SENIOR INDEBTEDNESS
The Indebtedness evidenced by the notes, the Fairchild International
Guaranty and the Subsidiary Guaranties are senior subordinated obligations of
the Company, Fairchild International and the Subsidiary Guarantors, as the case
may be. The payment of the principal of, premium, if any, and interest on the
notes and the payment of the Fairchild International Guaranty and any Subsidiary
Guaranty is subordinate in right of payment, as set forth in the indenture, to
the prior payment in full in cash when due of all of the Senior Indebtedness of
the Company, Fairchild International or the relevant Subsidiary Guarantor. The
indenture does not restrict the amount of Indebtedness that we, Fairchild
International or the Subsidiary Guarantors may incur; such Indebtedness may be
Senior Indebtedness.
GUARANTIES VERSUS OTHER LIABILITIES OF SUBSIDIARIES
A portion of our operations are conducted through our subsidiaries. The
notes are not guaranteed by any of our foreign subsidiaries. Claims of creditors
of our nonguarantor subsidiaries, including trade creditors, secured creditors
and creditors holding indebtedness and guaranties issued by such non-guarantor
subsidiaries, and claims of preferred stockholders, if any, of such
non-guarantor subsidiaries generally will have priority with respect to the
assets and earnings of such nonguarantor subsidiaries over the claims of our
creditors, including holders of the notes, even if such obligations do not
constitute Senior Indebtedness. The notes, the Fairchild International Guaranty
and each Subsidiary Guaranty, therefore, will be effectively subordinated to
creditors (including trade creditors) and preferred stockholders, if any, of
such non-guarantor subsidiaries of ours. Accordingly, claims of creditors of our
non-guarantor subsidiaries will have priority with respect to the assets and
earnings of such subsidiaries over your claims.
NOTES AND GUARANTIES VERSUS OTHER SENIOR SUBORDINATED INDEBTEDNESS
Only Indebtedness of ours, Fairchild International or a Subsidiary
Guarantor that is Senior Indebtedness will rank senior to the notes, the
Fairchild International Guaranty and the relevant Subsidiary Guaranty in
accordance with the provisions of the indenture. The notes, the Fairchild
International Guaranty and each Subsidiary Guaranty in all respects rank pari
passu with all other Senior Subordinated Indebtedness of ours, Fairchild
International and the relevant Subsidiary Guarantor, respectively.
We and each Subsidiary Guarantor have agreed in the indenture that we and
they will not incur, directly or indirectly, any Indebtedness that is
subordinate or junior in ranking in right of payment to our or their Senior
Indebtedness unless such indebtedness is Senior Subordinated Indebtedness or is
expressly subordinated in right of payment to Senior Subordinated Indebtedness.
Unsecured Indebtedness is not deemed to be subordinated or junior to secured
Indebtedness merely because it is unsecured.
PAYMENT OF NOTES
We are not permitted to pay principal of, premium, if any, or interest on,
the notes and may not repurchase, redeem or otherwise retire any notes
(collectively, "pay the notes") if either of the following (each, a "Payment
Default") occurs:
- any obligations with respect to Senior Indebtedness are not paid in full
when due; or
- any other default on Senior Indebtedness occurs and the maturity of such
Senior Indebtedness is accelerated in accordance with its terms;
unless, in either case, the Payment Default has been cured or waived and any
such acceleration has been rescinded in writing or such Senior Indebtedness has
been paid in full in cash. Regardless of the foregoing, we are permitted to pay
the notes without regard to the foregoing if we and the trustee receive written
notice
17
approving such payment from the representative of the Senior Indebtedness with
respect to which the Payment Default has occurred and is continuing.
During the continuance of any default (other than a Payment Default) with
respect to any Designated Senior Indebtedness pursuant to which the maturity
thereof may be accelerated immediately without further notice (except such
notice as may be required to effect such acceleration) or the expiration of any
applicable grace periods, we are not permitted to pay the notes for a period (a
"Payment Blockage Period") commencing upon the receipt by the trustee (with a
copy to us) of written notice (a "Blockage Notice") of such default from the
representative of the holders of such Designated Senior Indebtedness specifying
an election to effect a Payment Blockage Period and ending 179 days thereafter.
The Payment Blockage Period will end earlier if such Payment Blockage
Period is terminated:
- by written notice to the trustee and us from the person or persons who
gave such Blockage Notice;
- because no defaults continue in existence that would permit the
acceleration of the maturity of any Designated Senior Indebtedness at
such time; or
- because such Designated Senior Indebtedness has been repaid in full in
cash.
Notwithstanding the provisions described above, unless the holders of such
Designated Senior Indebtedness or the representative of such holders have
accelerated the maturity of such Designated Senior Indebtedness, or any Payment
Default otherwise exists, we are permitted to resume payments on the notes after
the end of such Payment Blockage Period. The notes shall not be subject to more
than one Payment Blockage Period in any consecutive 360-day period, irrespective
of the number of defaults with respect to Designated Senior Indebtedness during
such period, except that if any Blockage Notice is delivered to the trustee by
or on behalf of holders of Designated Senior Indebtedness (other than holders of
the Bank Indebtedness), a representative of holders of Bank Indebtedness may
give another Blockage Notice within such period. However, in no event may the
total number of days during which any Payment Blockage Period or Periods is in
effect exceed 179 days in the aggregate during any consecutive 360-day period,
and there must be 181 days during any consecutive 360-day period during which no
Payment Blockage Period is in effect.
Upon any payment or distribution by us upon any liquidation, dissolution,
winding up, assignment for the benefit of creditors or marshaling of our assets
or in a bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to us or our property:
- the holders of Senior Indebtedness will be entitled to receive payment in
full in cash of all obligations with respect to such Senior Indebtedness
before the holders of notes are entitled to receive any payment or
distribution; and
- until all obligations with respect to Senior Indebtedness are paid in
full in cash, any payment or distribution to which holders of notes would
be entitled but for the subordination provisions of the indenture will be
made to holders of such Senior Indebtedness as their interests may
appear.
If a distribution is made to holders of notes that, due to the
subordination provisions, should not have been made to them, such holders are
required to hold it in trust for the holders of Senior Indebtedness and pay it
over to them as their interests may appear.
If payment of the notes is accelerated because of an event of default, we
or the trustee shall promptly notify the holders of Senior Indebtedness or the
representative of such holders of the acceleration. If any Senior Indebtedness
is outstanding at the time of such acceleration, we may not pay the notes until
five business days after the representatives of all the issues of Designated
Senior Indebtedness receive notice of such acceleration and, thereafter, may pay
the notes only if the indenture otherwise permits payment at that time.
The obligations of Fairchild International under the Fairchild
International Guaranty and of each Subsidiary Guarantor under its Subsidiary
Guaranty are senior subordinated obligations. As such, the rights of noteholders
to receive payment by Fairchild International or by a Subsidiary Guarantor
pursuant to the Fairchild International Guaranty or a Subsidiary Guaranty will
be subordinated in right of payment to the
18
rights of holders of Senior Indebtedness of Fairchild International or such
Subsidiary Guarantor, as the case may be. The terms of the subordination
provisions described above with respect to our obligations under the notes apply
equally to the obligations of Fairchild International and each Subsidiary
Guarantor under the Fairchild International Guaranty or a Subsidiary Guaranty,
as the case may be.
By reason of the subordination provisions contained in the indenture, in
the event of insolvency, creditors of us, Fairchild International or a
Subsidiary Guarantor who are holders of Senior Indebtedness of us, Fairchild
International or a Subsidiary Guarantor, as the case may be, may recover more,
ratably, than the noteholders, and our creditors who are not holders of Senior
Indebtedness may recover less, ratably, than holders of Senior Indebtedness and
may recover more, ratably, than the noteholders.
CERTAIN DEFINITIONS
"Bank Indebtedness" means all Obligations (as defined in the indenture)
pursuant to the Credit Agreement.
"Credit Agreement" means the Credit Agreement dated as of June 6, 2000, by
and among the Company, Fairchild International, the lenders referred to therein,
Credit Suisse First Boston, as lead arranger and administrative agent, Fleet
National Bank, as syndication agent, and ABN AMRO Bank NV, as documentation
agent, together with the related documents thereto (including without limitation
the revolving loans thereunder, any guarantees and security documents), as
amended, extended, renewed, restated, supplemented or otherwise modified (in
whole or in part, and without limitation as to amount, terms, conditions,
covenants and other provisions) from time to time, and any agreement (and
related document) governing Indebtedness incurred to refund or refinance, in
whole or in part, the borrowings and commitments then outstanding or permitted
to be outstanding under such Credit Agreement or a successor Credit Agreement,
whether by the same or any other lender or group of lenders.
"Designated Senior Indebtedness" means (1) the Bank Indebtedness; provided,
however, that Bank Indebtedness outstanding under any Credit Agreement that is
Refinanced (as defined in the indenture) in part, but not in whole, the
previously outstanding Bank Indebtedness shall only constitute Designated Senior
Indebtedness if it meets the requirements of succeeding clause (2); and (2) any
other Senior Indebtedness of the Company that, at the date of determination, has
an aggregate principal amount outstanding of, or under which, at the date of
determination, the holders thereof are committed to lend up to, at least $10.0
million and is specifically designated by the Company in the instrument
evidencing or governing such Senior Indebtedness as "Designated Senior
Indebtedness" for purposes of the indenture.
"Fairchild International Guaranty" means the Guaranty (as defined in the
indenture) by Fairchild International of the Company's obligations with respect
to the notes.
"Indebtedness" means, with respect to any Person (as defined in the
indenture) on any date of determination (without duplication): (1) the principal
of and premium (if any) in respect of (A) indebtedness of such Person for money
borrowed and (B) indebtedness evidenced by notes, debentures, bonds or other
similar instruments for the payment of which such Person is responsible or
liable; (2) all Capital Lease Obligations (as defined in the indenture) of such
Person and all Attributable Debt (as defined in the indenture) in respect of
Sale/Leaseback Transactions (as defined in the indenture) entered into by such
Person; (3) all obligations of such Person issued or assumed as the deferred
purchase price of property, all conditional sale obligations of such Person and
all obligations of such Person under any title retention agreement (but
excluding trade accounts payable arising in the ordinary course of business);
(4) all obligations of such Person for the reimbursement of any obligor on any
letter of credit, banker's acceptance or similar credit transaction (other than
obligations with respect to letters of credit securing obligations (other than
obligations described in clauses (1) through (3) above) entered into in the
ordinary course of business of such Person to the extent such letters of credit
are not drawn upon or, if and to the extent drawn upon, such drawing is
reimbursed no later than the tenth Business Day (as defined in the indenture)
following payment on the letter of credit); (5) the amount of all obligations of
such Person with respect to the redemption, repayment or other repurchase of any
Disqualified Stock (as defined in the indenture) or, with respect to any
Subsidiary (as defined in the indenture) of such Person, the liquidation
preference with respect to, any
19
Preferred Stock (as defined in the indenture) (but excluding, in each case, any
accrued dividends); (6) all obligations of the type referred to in clauses (1)
through (5) of other Persons and all dividends of other Persons for the payment
of which, in either case, such Person is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise; (7) all obligations of the type
referred to in clauses (1) through (6) of other Persons secured by any Lien (as
defined in the indenture) on any property or asset of such Person (whether or
not such obligation is assumed by such Person), the amount of such obligation
being deemed to be the lesser of the value of such property or assets or the
amount of the obligation so secured; and (8) to the extent not otherwise
included in this definition, Hedging Obligations (as defined in the indenture)
of such Person. The amount of Indebtedness of any Person at any date shall be
the outstanding balance at such date of all unconditional obligations as
described above and the maximum liability, upon the occurrence of the
contingency giving rise to the obligation, of any contingent obligations at such
date; provided, however, that the amount outstanding at any time of any
Indebtedness issued with original issue discount shall be deemed to be the face
amount of such Indebtedness less the remaining unamortized portion of the
original issue discount of such indebtedness at such time as determined in
accordance with GAAP (as defined in the indenture).
"Senior Indebtedness" of any Person means all (1) Bank Indebtedness of or
guaranteed by such Person, whether outstanding on the Issue Date (as defined in
the indenture) or thereafter Incurred (as defined in the indenture), and (2)
Indebtedness of such Person, whether outstanding on the Issue Date or thereafter
Incurred, including interest thereon, in respect of (A) Indebtedness for money
borrowed, (B) Indebtedness evidenced by notes, debentures, bonds or other
similar instruments for the payment of which such Person is responsible or
liable and (C) Hedging Obligations, unless, in the case of (1) and (2), in the
instrument creating or evidencing the same or pursuant to which the same is
outstanding, it is provided that such obligations are subordinate in right of
payment to the obligations under the notes; provided, however, that Senior
Indebtedness shall not include (i) any obligation of such Person to any
subsidiary of such Person, (ii) any liability for federal, state, local or other
taxes owed or owing by such Person, (iii) any accounts payable or other
liability to trade creditors arising in the ordinary course of business
(including guaranties thereof or instruments evidencing such liabilities) and
(iv) any Indebtedness of such Person (and any accrued and unpaid interest in
respect thereof) which is subordinate or junior by its terms to any other
Indebtedness or other obligation of such Person (including, in the case of the
Company, the notes and the Previous Notes).
"Senior Subordinated Indebtedness" means (1) with respect to the Company,
the notes, the Previous Notes and any other Indebtedness of the Company that
specifically provides that such Indebtedness is to rank pari passu with the
notes in right of payment and is not subordinated by its terms in right of
payment to any Indebtedness or other obligation of the Company which is not
Senior Indebtedness of the Company and (2) with respect to Fairchild
International or a Subsidiary Guarantor, their respective guaranties of the
notes, the Previous Notes and any other Indebtedness of such Person that
specifically provides that such Indebtedness rank pari passu with such Guaranty
in respect of payment and is not subordinated by its terms in respect of payment
to any Indebtedness or other obligation of such Person which is not Senior
Indebtedness of such Person.
"Subsidiary Guarantor" means Fairchild Semiconductor Corporation of
California, QT Optoelectronics, Inc., QT Optoelectronics, KOTA Microcircuits,
Inc. and any other subsidiary of the Company that guaranties the Company's
obligations with respect to the notes. "Subsidiary Guaranty" means a guaranty by
a Subsidiary Guarantor of the Company's obligations with respect to the notes.
20
OPTIONAL REDEMPTION
We may redeem the notes on or after November 5, 2004, on at least 20 days
and no more than 60 days notice, in whole or in part, at the following
redemption prices expressed as percentages of the principal amount:
<Table>
<Caption>
PERIOD REDEMPTION PRICE
- ------ ----------------
Beginning on November 5, 2004 through October 31, 2005...... 102.250%
Beginning on November 1, 2005 through October 31, 2006...... 101.500%
Beginning on November 1, 2006 through October 31, 2007...... 100.750%
Beginning on November 1, 2007 and thereafter................ 100.000%
</Table>
In each case, we will pay accrued interest to, but excluding, the
redemption date. If the redemption date is an interest payment date, interest
will be paid to the record holder on the relevant record date.
If fewer than all of the notes are to be redeemed, the trustee will select
the notes to be redeemed by lot, or in its discretion, on a pro rata basis. If
any note is to be redeemed in part only, a new note in principal amount equal to
the unredeemed principal portion will be issued. If a portion of your notes is
selected for partial redemption and you convert a portion of your notes, the
converted portion will be deemed to be the portion selected for redemption.
NO MANDATORY REDEMPTION OR SINKING FUND; OPEN MARKET PURCHASES
We are not required to make any mandatory redemption sinking fund payments
with respect to the notes. However, under certain circumstances we may be
required to offer to purchase notes as described under the caption "--Purchase
of Notes at Your Option Upon a Change in Control." We may at any time and from
time to time purchase notes in the open market or otherwise.
PURCHASE OF NOTES AT YOUR OPTION UPON A CHANGE IN CONTROL
If a change in control occurs, you will have the right to require us to
purchase all or any part of your notes 30 business days after the occurrence of
a change in control at a purchase price equal to 100% of the principal amount of
the notes plus accrued and unpaid interest to, but excluding, the purchase date.
Notes surrendered for purchase must be in a principal amount of $1,000 or
integral multiples of $1,000.
We will mail to the trustee and to each holder of a note a written notice
of the change in control within 10 business days after the occurrence of a
change in control. This notice will state:
- the terms and conditions of the change in control;
- the procedures required for exercise of the change in control purchase
feature; and
- the holder's right to require us to purchase the notes.
You must deliver written notice of your exercise of this purchase right to
a paying agent at any time prior to the close of business on the business day
prior to the change in control purchase date. The written notice must specify
the notes for which the purchase right is being exercised. If you wish to
withdraw this election, you must provide a written notice of withdrawal to the
paying agent at any time prior to the close of business on the business day
prior to the change in control purchase date.
A change in control will be deemed to have occurred if any of the following
occurs:
- any "person" or "group" is or becomes the "beneficial owner," directly or
indirectly, of shares of voting stock of Fairchild International
representing 50% or more of the total voting power of all outstanding
classes of voting stock of Fairchild International or such person or
group has the power, directly or indirectly, to elect a majority of the
members of the board of directors of Fairchild International;
- Fairchild International consolidates with, or merges with or into,
another person or Fairchild International sells, assigns, conveys,
transfers, leases or otherwise disposes of all or substantially all of
21
its assets, or any person consolidates with, or merges with or into,
Fairchild International, in any such event other than pursuant to a
transaction in which the persons that "beneficially owned," directly or
indirectly, the shares of voting stock of Fairchild International
immediately prior to such transaction "beneficially own," directly or
indirectly, shares of voting stock of Fairchild International,
representing at least a majority of the total voting power of all
outstanding classes of voting stock of the surviving or transferee
person; or
- Fairchild International is dissolved or liquidated.
However, a change in control will not be deemed to have occurred if either:
- the last sale price of Fairchild International's common stock for any
five trading days during the ten trading days immediately preceding the
change in control is at least equal to 105% of the conversion price in
effect on such day; or
- in the case of a merger or consolidation, all of the consideration
excluding cash payments for fractional shares in the merger or
consolidation constituting the change in control consists of common stock
traded on a United States national securities exchange or quoted on The
Nasdaq National Market (or which will be so traded or quoted when issued
or exchanged in connection with such change in control) and as a result
of such transaction or transactions the notes become convertible solely
into such common stock.
For purposes of this change in control definition:
- "person" or "group" have the meanings given to them for purposes of
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 or any
successor provisions, and the term "group" includes any group acting for
the purpose of acquiring, holding or disposing of securities within the
meaning of Rule 13d-5(b)(1) under the Exchange Act, or any successor
provision;
- a "beneficial owner" will be determined in accordance with Rule 13d-3
under the Exchange Act, as in effect on the date of the indenture, except
that the number of shares of voting stock of Fairchild International will
be deemed to include, in addition to all outstanding shares of voting
stock of Fairchild International and unissued shares deemed to be held by
the "person" or "group" or other person with respect to which the change
in control determination is being made, all unissued shares deemed to be
held by all other persons;
- "beneficially owned" has a meaning correlative to that of beneficial
owner;
- "unissued shares" means shares of voting stock not outstanding that are
subject to options, warrants, rights to purchase or conversion privileges
exercisable within 60 days of the date of determination of a change in
control; and
- "voting stock" means any class or classes of capital stock pursuant to
which the holders of capital stock under ordinary circumstances have the
power to vote in the election of the board of directors, managers or
trustees of any person or other persons performing similar functions
irrespective of whether or not, at the time capital stock of any other
class or classes shall have, or might have, voting power by reason of the
happening of any contingency.
The term "all or substantially all" as used in the definition of change in
control will likely be interpreted under applicable state law and will be
dependent upon particular facts and circumstances. There may be a degree of
uncertainty in interpreting this phrase. As a result, we cannot assure you how a
court would interpret this phrase under applicable law if you elect to exercise
your rights following the occurrence of a transaction which you believe
constitutes a transfer of "all or substantially all" of Fairchild
International's assets.
We will:
- comply with the provisions of Rule 13e-4 and Rule 14e-1, if applicable,
under the Exchange Act;
- file a Schedule TO or any successor or similar schedule if required under
the Exchange Act; and
22
- otherwise comply with all federal and state securities laws in connection
with any offer by us to purchase the notes upon a change in control.
This change in control purchase feature may make more difficult or
discourage a takeover of Fairchild International and the removal of incumbent
management. However, we are not aware of any specific effort to accumulate
shares of Fairchild International's common stock or to obtain control of
Fairchild International by means of a merger, tender offer, solicitation or
otherwise. In addition, the change in control purchase feature is not part of a
plan by Fairchild International's management to adopt a series of anti-takeover
provisions. Instead, the change in control purchase feature is a result of
negotiations between us and the initial purchasers.
We could, in the future, enter into certain transactions, including
recapitalizations, that would not constitute a change in control but would
increase the amount of indebtedness, including Senior Indebtedness, outstanding
or otherwise adversely affect a holder. Neither we nor our subsidiaries are
prohibited from incurring indebtedness, including Senior Indebtedness, under the
indenture. The incurrence of significant amounts of additional indebtedness
could adversely affect our ability to service our debt, including the notes.
We may not repurchase any note at any time when the subordination
provisions of the indenture otherwise would prohibit us from making such
repurchase. If we fail to repurchase the notes when required, this failure will
constitute an event of default under the indenture whether or not repurchase is
permitted by the subordination provisions of the indenture.
If a change in control were to occur, we may not have sufficient funds to
pay the change in control purchase price for the notes tendered by holders. In
addition, our senior credit facility available pursuant to the Credit Agreement
and each of the indentures governing the existing 10?% Senior Subordinated
Notes, the 10?% Senior Subordinated Notes and the 10 1/2% Senior Subordinated
Notes contain (and future indebtedness that we may incur may contain) change in
control provisions that permit holders of that debt to accelerate or require us
to repurchase that indebtedness upon the occurrence of events similar to a
change in control. We cannot assure you that sufficient funds will be available
when necessary to make any required purchases. See "Risks Relating to the
Notes -- We may not have the ability to raise the funds necessary to finance a
change in control offer."
The provisions under the indenture relative to our obligation to offer to
purchase the notes as a result of a change in control may be waived or modified
with the written consent of the holders of a majority in principal amount of the
notes.
EVENTS OF DEFAULT
Each of the following will constitute an event of default under the
indenture:
(1) we fail to pay principal or premium, if any, on any note when
due, whether or not prohibited by the subordination provisions of the
indenture;
(2) we fail to pay any interest on any note when due if such failure
continues for 30 days, whether or not prohibited by the subordination
provisions of the indenture;
(3) the failure by the Company or Fairchild International to comply
with its obligations under "-- Consolidation; Merger and Sale of Assets"
below;
(4) we fail to perform any other covenant required of us in the
indenture if such failure continues for 60 days after notice is given in
accordance with the indenture;
(5) Fairchild International fails to perform any of its other
obligations under the indenture if such failure continues for 60 days after
notice is given in accordance with the indenture;
(6) we fail to pay the purchase price of any note when due, whether
or not prohibited by the subordination provisions of the indenture;
(7) we fail to provide timely notice of a change in control;
23
(8) certain events in bankruptcy, insolvency or reorganization of the
Company, Fairchild International or a Subsidiary Guarantor that is also
Significant Subsidiary (as such term is defined in the indenture); or
(9) (A) the Fairchild International Guaranty or a Subsidiary Guaranty
ceases to be in full force and effect (other than in accordance with its
terms) or (B) Fairchild International or a Subsidiary Guarantor denies or
disaffirms its obligations under the Fairchild International Guaranty or
the Subsidiary Guaranty, as the case may be.
If an event of default, other than an event of default described in clause
(8) with respect to the Company, occurs and is continuing, either the trustee or
the holders of at least 25% in aggregate principal amount of the outstanding
notes may declare the principal amount of the notes to be due and payable
immediately. If an event of default described in clause (8) with respect to the
Company occurs, the principal amount of the notes will automatically become
immediately due and payable. Any payment by us on the notes following any such
acceleration will be subject to the subordination provisions described above.
After any such acceleration, but before a judgment or decree based on
acceleration, the holders of a majority in aggregate principal amount of the
notes may, under certain circumstances, rescind and annul such acceleration.
Subject to the trustee's duties in the case of an event of default, the
trustee will not be obligated to exercise any of its rights or powers at the
request of the holders, unless the holders have offered to the trustee
reasonable indemnity. Subject to the trustee's indemnification, the holders of a
majority in aggregate principal amount of the outstanding notes will have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the trustee or exercising any trust or power conferred on
the trustee with respect to the notes.
No holder will have any right to institute any proceeding under the
indenture, or for the appointment of a receiver or a trustee, or for any other
remedy under the indenture unless:
- the holder has previously given to the trustee written notice of a
continuing event of default;
- the holders of at least 25% in aggregate principal amount of the
outstanding notes have made a written request and have offered reasonable
indemnity to the trustee to institute such proceeding as trustee;
- the trustee has not complied with the request within 60 days after
receipt of the request and the offer of security or indemnity; and
- the holders of a majority in principal amount of the outstanding notes
have not given the trustee a direction inconsistent with the request
within the 60-day period.
However, these limitations do not apply to a suit instituted by a holder
for the enforcement of payment of the principal of or any premium or interest on
any note on or after the applicable due date or the right to convert the note.
We are required to furnish to the trustee, on an annual basis, a statement
by our officers as to whether or not the Company or Fairchild International is,
to the officer's knowledge, in default in the performance or observance of any
of the terms, provisions and conditions of the indenture, specifying any known
defaults.
MODIFICATION AND WAIVER
We, Fairchild International, the Subsidiary Guarantors and the trustee may
make certain modifications and amendments to the indenture or the notes without
notice to or the consent of any holder, including modifications or amendments to
comply with the merger provisions described in the indenture, to provide for
uncertificated notes in addition to or in place of certificated notes, to comply
with the provisions of the Trust Indenture Act, to appoint a successor trustee,
to cure any ambiguity, defect or inconsistency, or to make any other change that
does not adversely affect the rights of the holders.
24
We, Fairchild International, the Subsidiary Guarantors and the trustee may
make other modifications and amendments to the indenture or the notes with the
consent of the holders of a majority in aggregate principal amount of the
outstanding notes.
However, neither we, Fairchild International and the Subsidiary Guarantors
nor the trustee may make any modification or amendment without the consent of
the holder of each outstanding note if such modification or amendment would:
- change the stated maturity of the principal of or interest on any note;
- reduce the principal amount of, or any premium or interest on, any note;
- reduce the amount of principal payable upon acceleration of the maturity
of any note;
- change the time at which any note may be redeemed;
- change the place or currency of payment of principal of, or any premium
or interest on, any note;
- impair the right to institute suit for the enforcement of any payment on,
or with respect to, any note;
- modify the subordination provisions in a manner adverse to the holders of
notes;
- adversely affect the right of holders to convert notes other than as
provided in or under the indenture;
- make any change in the Fairchild International Guaranty or any Subsidiary
Guaranty that would adversely affect the holders of notes;
- reduce the percentage in principal amount of outstanding notes required
for modification or amendment of the indenture;
- reduce the percentage in principal amount of outstanding notes necessary
for waiver of compliance with certain provisions of the indenture or for
waiver of certain defaults; or
- modify the foregoing requirements.
The holders of a majority in principal amount of the outstanding notes may,
on behalf of the holders of all notes:
- waive compliance by us with restrictive provisions of the indenture, as
detailed in the indenture.
- waive any past default under the indenture and its consequences, except a
default in the payment of the principal of or any premium or interest on
any note or in respect of a provision which under the indenture cannot be
modified or amended without the consent of the holder of each outstanding
note affected.
CONSOLIDATION, MERGER AND SALE OF ASSETS
None of the Company, Fairchild International or any of the Subsidiary
Guarantors may consolidate with or merge into any other person, in a transaction
in which it is not the surviving corporation, or convey, transfer or lease its
properties and assets substantially as an entirety to any successor person,
unless:
- the successor person, if any, is a corporation or limited liability
company organized and existing under the laws of the United States, or
any state of the United States, and assumes the obligations of the
Company, Fairchild International or a Subsidiary Guarantor, as
applicable, under the indenture;
- immediately after giving effect to the transaction, no default or event
of default shall have occurred and be continuing; and
- other conditions specified in the indenture are met.
Under any consolidation, merger or any conveyance, transfer or lease of the
properties and assets of the Company, Fairchild International or a Subsidiary
Guarantor as described in the preceding paragraph, the successor company will be
the successor of the Company, Fairchild International or the Subsidiary
Guarantor,
25
and will succeed to, and be substituted for, and may exercise every right and
power of, the Company, Fairchild International or the Subsidiary Guarantor, as
applicable, under the indenture. Except in the case of a lease, if the
predecessor is still in existence after the transaction, it will be released
from its obligations and covenants under the indenture and the notes. As
described under "Description of the Guaranties", upon the sale or other
disposition of a Subsidiary Guarantor or upon the sale or disposition of all or
substantially all the assets of a Subsidiary Guarantor, in each case other than
to us or any of our affiliates, the Subsidiary Guarantor will be released from
all of its obligations under the Subsidiary Guaranty.
REGISTRATION RIGHTS
We and the initial purchasers of the notes entered into a registration
rights agreement dated October 31, 2001. The following summary of the
registration rights provided in the registration rights agreement and the notes
is not complete. You should refer to the registration rights agreement, filed as
an exhibit to the registration statement of which this prospectus is a part, for
a full description of the registration rights that apply to the notes.
We, Fairchild International and the Subsidiary Guarantors agreed to file
the shelf registration statement under the Securities Act, of which this
prospectus is a part, within 90 days after the first date of original issuance
of the notes, to register resales of the notes and the shares of common stock
into which the notes are convertible, which we refer to as registrable
securities. We and they will use commercially reasonable efforts to have this
shelf registration statement declared effective within 180 days after the first
date of original issuance of the notes, and to keep it effective until the
earliest of:
(1) two years from the first date of original issuance of the notes;
(2) the date when all registrable securities shall have been
registered under the Securities Act and disposed of; and
(3) the date on which all registrable securities (other than those
held by our affiliates) are eligible to be sold to the public pursuant to
Rule 144(k) under the Securities Act or any successor rule thereof, without
limitations under clauses (c), (e), (f) and (h) of Rule 144 under the
Securities Act, or any successor provisions thereof.
We will be permitted to suspend the use of the prospectus which is a part
of the registration statement for a period not to exceed 90 consecutive days or
an aggregate of 120 days in any twelve-month period under certain circumstances
relating to pending corporate developments, public filings with the SEC and
similar events.
A holder of registrable securities that sells registrable securities
pursuant to the shelf registration statement generally will be required to
provide information about itself and the specifics of the sale, be named as a
selling security holder in the related prospectus and deliver a prospectus to
purchasers, be subject to relevant civil liability provisions under the
Securities Act in connection with such sales and be bound by the provisions of
the registration rights agreement which are applicable to such holder. If:
(1) on or prior to the 90th day after the first date of original
issuance of the notes, the shelf registration statement has not been filed
with the SEC;
(2) on or prior to the 180th day after the first date of original
issuance of the notes, the shelf registration statement has not been
declared effective by the SEC;
(3) we fail with respect to a noteholder that supplies the
questionnaire described below to amend or supplement the shelf registration
statement in a timely manner in order to name additional selling securities
holders; or
(4) after the shelf registration statement has been declared
effective, such shelf registration statement ceases to be effective or
fails to be usable in connection with resales of notes and the common stock
issuable upon the conversion of the notes in accordance with and during the
periods specified in the registration rights agreement and (A) we do not
cure the shelf registration statement within five business
26
days by a post-effective amendment or a report filed pursuant to the
Exchange Act or (B) if applicable, we do not terminate the suspension
period described above by the 90th or 120th day, as the case may be,
(each such event referred to in clauses (1) through (4), a registration
default), additional interest will accrue daily on registrable securities over
and above the rate set forth in the title of the notes, from and including the
date on which any such registration default shall occur to but excluding the
date on which all registration defaults have been cured, at the annual rate of
0.5% for the notes or, if applicable, on an equivalent basis per share (subject
to adjustment in the case of stock splits, stock recombinations, stock dividends
and the like) of common stock constituting registrable securities. We will have
no other liabilities for monetary damages with respect to our registration
obligations. With respect to each holder our obligations to pay additional
interest remain in effect only so long as the notes and the common stock
issuable upon the conversion of the notes held by the holder are "registrable
securities" within the meaning of the registration rights agreement.
SATISFACTION AND DISCHARGE
We may discharge our obligations under the indenture (except as to any
surviving rights of conversion, registration of transfer or exchange) while
notes remain outstanding if (1) all outstanding notes will become due and
payable at their scheduled maturity within 90 days or (2) all outstanding notes
have been called for redemption within 90 days, and in either case, we have
deposited with the trustee an amount sufficient to pay and discharge all
outstanding notes on the date of their scheduled maturity or the scheduled date
of redemption. Notwithstanding the satisfaction and discharge of the indenture,
certain other obligations of the Company and Fairchild International shall
survive until the notes have been paid in full.
TRANSFER AND EXCHANGE
We have initially appointed the trustee as security registrar, paying agent
and conversion agent acting through its corporate trust office. We reserve the
right to:
- vary or terminate the appointment of the security registrar, paying agent
or conversion agent;
- appoint additional paying agents or conversion agents; or
- approve any change in the office through which any security registrar or
any paying agent or conversion agent acts.
PURCHASE AND CANCELLATION
All notes surrendered for payment, redemption, registration of transfer or
exchange or conversion shall, if surrendered to any person other than the
trustee, be delivered to the trustee. All notes delivered to the trustee shall
be cancelled promptly by the trustee. No notes shall be authenticated in
exchange for any notes cancelled as provided in the indenture.
We may, to the extent permitted by law, purchase notes in the open market
or by tender offer at any price or by private agreement. Any notes purchased by
us may, to the extent permitted by law, be reissued or resold or may, at our
option, be surrendered to the trustee for cancellation. Any notes surrendered
for cancellation may not be reissued or resold and will be promptly cancelled.
REPLACEMENT OF NOTES
We will replace mutilated, destroyed, stolen or lost notes at your expense
upon delivery to the trustee of the mutilated notes, or evidence of the loss,
theft or destruction of the notes satisfactory to us and the trustee. In the
case of a lost, stolen or destroyed note, indemnity satisfactory to the trustee
and us may be required at the expense of the holder of such note before a
replacement note will be issued.
GOVERNING LAW
The indenture and the notes are governed by and will be construed in
accordance with the laws of the State of New York.
27
THE TRUSTEE
The Bank of New York has agreed to serve as the trustee under the
indenture. The trustee will be permitted to deal with us and any of our
affiliates with the same rights as if it were not trustee. However, under the
Trust Indenture Act, if the trustee acquires any conflicting interest and there
exists a default with respect to the notes, the trustee must eliminate such
conflicts or resign. The holders of a majority in principal amount of all
outstanding notes will have the right to direct the time, method and place of
conducting any proceeding for exercising any remedy or power available to the
trustee. However, any such direction may not conflict with any law or the
indenture, may not be unduly prejudicial to the rights of another holder or the
trustee and may not involve the trustee in personal liability.
BOOK-ENTRY, DELIVERY AND FORM
We initially issued the notes in the form of a global security. The global
security was deposited with the trustee as custodian for DTC and registered in
the name of a nominee of DTC. Except as set forth below, the global security may
be transferred, in whole and not in part, only to DTC or another nominee of DTC.
DTC has advised us that it is:
- a limited purpose trust company organized under the laws of the State of
New York;
- a member of the Federal Reserve System;
- a "clearing corporation" within the meaning of the New York Uniform
Commercial Code; and
- a "clearing agency" registered pursuant to the provisions of Section 17A
of the Exchange Act.
DTC was created to hold securities of institutions that have accounts with
DTC (called "participants") and to facilitate the clearance and settlement of
securities transactions among its participants in such securities through
electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. DTC's
participants include securities brokers and dealers, which may include the
initial purchasers, banks, trust companies, clearing corporations and certain
other organizations. Access to DTC's book-entry system is also available to
others such as banks, brokers, dealers and trust companies (called "indirect
participants") that clear through or maintain a custodial relationship with a
participant, whether directly or indirectly.
Upon the deposit of the global security with DTC, DTC credited on its
book-entry registration and transfer system the principal amount of notes
represented by such global security to the accounts of the participants
designated by the initial purchasers. Ownership of beneficial interests in the
global security is limited to participants or persons that may hold interests
through participants. Ownership of beneficial interests in the global security
is shown on, and the transfer of those ownership interests will be effected only
through, records maintained by DTC (with respect to participants' interests),
the participants and the indirect participants. The laws of some jurisdictions
may require that certain purchasers of securities take physical delivery of such
securities in definitive form. These limits and laws may impair the ability to
transfer or pledge beneficial interests in the global security.
Beneficial owners of interests in global securities who desire to convert
their interests into common stock should contact their brokers or other
participants or indirect participants through whom they hold such beneficial
interests to obtain information on procedures, including proper forms and
cut-off times, for surrendering requests for conversion.
So long as DTC, or its nominee, is the registered owner or holder of a
global security, DTC or its nominee, as the case may be, will be considered the
sole owner or holder of the notes represented by the global security for all
purposes under the indenture and the notes. In addition, no beneficial owner of
an interest in a global security will be able to transfer that interest except
in accordance with the applicable procedures of DTC. Except as set forth below,
as an owner of a beneficial interest in the global security you will not be
entitled to have the notes represented by the global security registered in your
name, will not receive or be entitled to receive physical delivery of
certificated securities and will not be considered to be the owner or holder of
any notes under the global security. We understand that under existing industry
practice if an owner
28
of a beneficial interest in the global security desires to take any action that
DTC, as the holder of the global security, is entitled to take, DTC would
authorize the participants to take such action and the participants would
authorize beneficial owners owning through such participants to take such action
or would otherwise act upon the instructions of beneficial owners owning through
them.
We will make payments of principal of, premium, if any, and interest
(including any additional interest) on the notes represented by the global
security registered in the name of and held by DTC or its nominee to DTC or its
nominee, as the case may be, as the registered owner and holder of the global
security. Neither we, the trustee nor any paying agent will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the global
security or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
We expect that DTC or its nominee, upon receipt of any payment of principal
of, premium, if any, or interest (including any additional interest) on the
global security, will credit participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the principal amount
of the global security as shown on the records of DTC or its nominee. We also
expect that payments by participants or indirect participants to owners of
beneficial interests in the global security held through such participants or
indirect participants will be governed by standing instructions and customary
practices and will be the responsibility of such participants or indirect
participants. We will not have any responsibility or liability for any aspect of
the records relating to, or payments made on account of, beneficial ownership
interests in the global security for any note or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests or for any
other aspect of the relationship between DTC and its participants or indirect
participants or the relationship between such participants or indirect
participants and the owners of beneficial interests in the global security
owning through such participants.
Transfers between participants in DTC will be effected in the ordinary way
in accordance with DTC rules and will be settled in same-day funds.
DTC has advised us that it will take any action permitted to be taken by a
holder of notes only at the direction of one or more participants to whose
account the DTC interests in the global security is credited and only in respect
of such portion of the aggregate principal amount of notes as to which such
participant or participants has or have given such direction. However, if DTC
notifies us that they are unwilling to be a depository for the global security
or ceases to be a clearing agency or there is an event of default under the
notes, DTC will exchange the global security for certificated securities which
it will distribute to its participants and which will be legended, if required,
as set forth under the heading "Transfer Restrictions."
Although DTC is expected to follow the foregoing procedures in order to
facilitate transfers of interests in the global security among participants of
DTC, they are under no obligation to perform or continue to perform such
procedures, and such procedures may be discontinued at any time. Neither we nor
the trustee will have any responsibility or liability for the performance by DTC
or the participants or indirect participants of their respective obligations
under the rules and procedures governing their respective operations.
DESCRIPTION OF THE GUARANTIES
Fairchild International and each of the Subsidiary Guarantors will jointly
and severally guaranty, on a senior subordinated basis, our obligations under
the notes. Each Subsidiary Guaranty will be limited as necessary to prevent such
Subsidiary Guaranty from being rendered voidable under applicable law relating
to fraudulent conveyance or fraudulent transfer or similar laws affecting the
rights of creditors generally. See "Risks Relating to the Notes -- Federal and
state statutes allow courts, under specific circumstances, to void guaranties
and require noteholders to return payments received from subsidiary guarantors."
Each Subsidiary Guarantor that makes a payment under its Subsidiary
Guaranty will be entitled to a contribution from each other Subsidiary Guarantor
in an amount equal to such other Subsidiary Guarantor's pro rata portion of such
payment based on the respective net assets of all the Subsidiary Guarantors at
the time of such payment determined in accordance with GAAP.
29
If a Subsidiary Guaranty were to be rendered voidable, it could be
subordinated by a court to all other indebtedness (including guaranties and
other contingent liabilities) of the applicable Subsidiary Guarantor and,
depending on the amount of such indebtedness, a Subsidiary Guarantor's liability
on its Subsidiary Guaranty could be reduced to zero.
Pursuant to the indenture, Fairchild International or a Subsidiary
Guarantor may consolidate with, merge with or into, or transfer all or
substantially all its assets to any other person to the extent described below
under "Description of the Notes -- Consolidation, Merger and Sale of Assets." A
Subsidiary Guarantor will be released and relieved from all its obligations
under its Subsidiary Guaranty:
(1) upon the sale or other disposition (including by way of
consolidation or merger) of such Subsidiary Guarantor; or
(2) upon the sale or disposition of all or substantially all the
assets of such Subsidiary Guarantor;
in each case other than to us or any of our affiliates.
The Fairchild International Guaranty and the Subsidiary Guaranties will be
senior subordinated obligations of the Company, Fairchild International and the
Subsidiary Guarantors, as the case may be. The payment of the principal of,
premium, if any, and interest on the notes and the payment of the Fairchild
International Guaranty and any Subsidiary Guaranty is subordinate in right of
payment, as set forth in the indenture, to the prior payment in full in cash
when due of all of the Senior Indebtedness of the Company, Fairchild
International or the relevant Subsidiary Guarantor. See "Description of the
Notes -- Ranking."
DESCRIPTION OF FAIRCHILD INTERNATIONAL'S CAPITAL STOCK
Fairchild International's capital stock consists of 340,000,000 authorized
shares of common stock, par value $.01 per share, divided into two classes
consisting of (a) 170,000,000 shares of Class A common stock, of which
99,741,117 shares were outstanding at September 30, 2001 and (b) 170,000,000
shares of Class B common stock, of which no shares were outstanding at September
30, 2001. Fairchild International's capital stock also consists of 100,000
authorized shares of preferred stock, par value $.01 per share, none of which is
issued or outstanding. On January 5, 1998, Fairchild International's board of
directors approved a four-for-one common stock split in the form of a stock
dividend. Stockholders received three additional shares for each share held.
Such distribution was made on April 29, 1998 to stockholders of record on that
date. All share amounts in the consolidated financial statements incorporated by
reference in this prospectus have been restated to retroactively reflect the
split.
CLASS A COMMON STOCK
The holders of Class A common stock are entitled to one vote for each share
held of record on all matters submitted to a vote of the stockholders other than
elections of directors. The Restated Certificate of Incorporation of Fairchild
International, as amended, provides for cumulative voting for directors. With
cumulative voting, at each election for directors, each holder of Class A common
stock is entitled to as many votes as would equal the number of shares he or she
holds multiplied by the number of directors to be elected. The holder may cast
all of his or her votes for a single candidate or may distribute them among any
number of candidates. Under cumulative voting, a minority holder has a greater
possibility of influencing the election of directors because, for example, the
minority holder can increase the number of votes such holder may cast for an
individual director. The holders of Class A common stock will be entitled to
such dividends as may be declared at the discretion of Fairchild International's
board of directors out of funds legally available for that purpose. The holders
of Class A common stock will be entitled to share ratably with holders of Class
B common stock in the net assets of Fairchild International upon liquidation
after payment or provision for all liabilities. A holder of Class A common stock
may convert any or all of his or her shares into an equal number of shares of
Class B common stock. Fairchild International has never paid and does not
anticipate declaring or paying any cash dividends on shares of its Class A
common stock in the foreseeable future. As of September 30, 2001, there were
approximately 300 holders of record of Fairchild International's Class A common
stock.
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CLASS B COMMON STOCK
Except as required by law, the holders of Class B common stock have no
voting rights. The holders of Class B common stock will be entitled to such
dividends as may be declared at the discretion of Fairchild International's
board of directors out of funds legally available for that purpose. The holders
of Class B common stock will be entitled to share ratably with holders of Class
A common stock in the net assets of Fairchild International upon liquidation
after payment or provision for all liabilities. A holder of Class B common stock
may convert any or all of his or her shares into an equal number of shares of
Class A common stock, provided that such conversion would be permitted only to
the extent that the holder of such shares to be converted certifies to Fairchild
International in writing that the holder would be permitted under applicable law
to hold the total number of shares of Class A common stock which would be held
after giving effect to the conversion. Fairchild International has never paid
and does not anticipate declaring or paying any cash dividends on shares of its
Class B common stock in the foreseeable future. As of September 30, 2001, no
shares of Fairchild International's Class B common stock were outstanding.
PREFERRED STOCK
Under the Restated Certificate of Incorporation of Fairchild International,
as amended, Fairchild International's board of directors has the authority to
issue up to 100,000 shares of preferred stock, but only in connection with the
adoption of a stockholder rights plan. A stockholder rights plan may only be
adopted by Fairchild International's board of directors with the approval of
holders of a majority of outstanding Class A common stock or with the unanimous
consent of Fairchild International's board of directors, unless affiliates of
Citigroup Inc. hold less than 15% of Fairchild International's outstanding
common stock, in which case a stockholder rights plan may be adopted with the
approval of a majority of Fairchild International's board of directors. See
"-- Other Provisions of Fairchild International's Restated Certificate of
Incorporation, as Amended." If Fairchild International's board of directors has
such requisite authority, it will be authorized to issue preferred stock in
connection with a stockholder rights plan in one or more series, and to fix the
voting powers, designations, preferences, and relative, participating, optional
or other special rights and qualifications, limitations and restrictions of each
series, including dividend rights, conversion rights, voting rights, terms of
redemption, liquidation preferences, and the number of shares constituting any
series. The ability of Fairchild International's board of directors to issue
preferred stock could have the effect of making it more difficult for a third
party to acquire, or discouraging a third party from acquiring, a majority of
its outstanding Class A common stock. Fairchild International's board of
director's ability to establish the preferences and rights of the shares of any
series of preferred stock may also afford holders of any preferred stock
preferences, powers and rights (including voting rights) senior to the rights of
holders of Fairchild International's Class A common stock. Fairchild
International has no present plans to issue any shares of preferred stock.
OTHER PROVISIONS OF FAIRCHILD INTERNATIONAL'S RESTATED CERTIFICATE OF
INCORPORATION, AS AMENDED
The Restated Certificate of Incorporation of Fairchild International, as
amended, contains provisions affecting the rights of its stockholders and the
powers of its board of directors, including the following:
- Fairchild International is not subject to the provisions of Section 203
of the General Corporation Law of Delaware regulating takeovers. Section
203 generally makes it more difficult for a third party to take control
of a company by prohibiting a third party owning more than 15% of the
company's stock from entering into transactions with the company unless
the board of directors or stockholders unaffiliated with the third party
approve either the third party or the transaction at issue, before the
third party becomes a 15% owner or the third party acquires at least 85%
of the company's stock.
- A stockholder rights plan can be adopted only with the consent of holders
of a majority of outstanding Class A common stock or with the unanimous
consent of Fairchild International's board of directors, except that if
Citigroup Inc.'s affiliates' ownership is less than 15% of Fairchild
International's outstanding common stock, then a stockholder rights plan
can be adopted with the consent of a majority of Fairchild
International's board of directors. A stockholder rights plan generally
makes it more difficult for a hostile bidder to take control of a company
by providing existing stockholders with
31
special rights which would make it uneconomical for the third party to
acquire additional interests. If Fairchild International's board of
directors is authorized to and decides to implement a stockholder rights
plan, the plan adopted by the board may deter acquisitions which you
might deem to be in your best interests.
- Fairchild International's board of directors must have no fewer than
seven and no more than nine members and may not be divided into classes.
The term of each member of the board of directors expires at each annual
stockholders' meeting. Having a minimum number of directors ensures that
cumulative voting will operate to protect the interests of minority
shareholders, since with a smaller board it would take a greater
percentage of votes to elect one director. Similarly, by prohibiting a
classified board, Fairchild International's Restated Certificate of
Incorporation, as amended, ensures that stockholders may replace the
entire board at each annual election.
- Stockholders may act by written consent, without a meeting and without
notice or a vote. This provision enables stockholders to act on matters
subject to a shareholder vote without waiting until the next annual or
special meeting of stockholders.
- Each of the provisions of Fairchild International's Restated Certificate
of Incorporation, as amended, described above, and the provision
described above under "Preferred Stock" that limits the board of
directors' ability to issue preferred stock other than in connection with
a stockholder rights plan, may be amended only with the approval of
holders of 75% of the outstanding Class A common stock. Amending other
provisions requires approval by holders of a majority of the outstanding
Class A common stock. The provision requiring a supermajority vote also
cannot be amended without the consent of holders of 75% of the Class A
common stock. If a third party -- that is, a person or entity other than
Fairchild International's principal stockholders or members of its
management -- acquires more than 40% of the Class A common stock, then
the holders of a majority of the Class A common stock could amend the
foregoing provisions. If, after any transfer by Citigroup Inc.'s
affiliates, such affiliates together own less than 15% of Fairchild
International's outstanding common stock, then holders of a majority of
the Class A common stock could amend the foregoing provisions and the
supermajority provisions itself. The effect of each supermajority
provision is that holders of 25% of the Class A common stock could block
amendments to our Restated Certificate of Incorporation, as amended,
affecting the provisions described above.
REGISTRATION RIGHTS AGREEMENTS
In connection with the entry by the then-existing stockholders of Fairchild
International into a Securities Purchase and Holders Agreement, which we refer
to as the Stockholders' Agreement, Fairchild International, Sterling Holding
Company, LLC, some key employees of Fairchild International and National
Semiconductor Corporation, our former parent, entered into a Registration Rights
Agreement. Pursuant to the Registration Rights Agreement, upon the written
request of Court Square Capital Limited or CCT Partners IV LP, as successors in
interest to Sterling Holding Company, LLC, Fairchild International will prepare
and file a registration statement with the Securities and Exchange Commission
concerning the distribution of all or part of the shares held by Court Square
Capital or CCT Partners and use its best efforts to cause such registration
statement to become effective. If at any time Fairchild International files a
registration statement for the common stock pursuant to a request by Court
Square Capital or CCT Partners or otherwise (other than a registration statement
on Form S-8, Form S-4 or any similar form, a registration statement filed in
connection with a share exchange or an offering solely to Fairchild
International's employees or existing stockholders, or a registration statement
registering a unit offering), Fairchild International will use its best efforts
to allow the other parties to the Registration Rights Agreement to have their
eligible shares of common stock (or a portion of their shares when an
underwriter determines that registering fewer than all their shares is
advisable) included in such offering of common stock. Fairchild International
will pay the registration expenses of the selling stockholders, other than
underwriting fees, brokerage fees and transfer taxes applicable to the shares
sold by such stockholders or the fees and expenses of any accountants or other
representatives retained by a selling stockholder.
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TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Class A common stock is EquiServe
Trust Co., N.A.
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
This section summarizes the material U.S. federal income tax considerations
relating to the purchase, ownership, and disposition of the notes and of
Fairchild International's common stock into which the notes may be converted.
This summary does not provide a complete analysis of all potential tax
considerations. The information provided below is based on existing authorities.
These authorities may change, or the Internal Revenue Service (the "IRS") might
interpret the existing authorities differently. In either case, the tax
consequences of purchasing, owning or disposing of the notes or Fairchild
International's common stock could differ from those described below. Except as
specifically stated below, the summary applies only to "U.S. Holders" that hold
the notes or Fairchild International's common stock as "capital assets" for U.S.
federal income tax purposes. For this purpose, U.S. Holders include individual
citizens or residents of the United States and corporations, partnerships or
other entities organized under the laws of the United States or any state or the
District of Columbia. Trusts are U.S. Holders if they (i) are subject to the
primary supervision of a U.S. court and the control of one or more U.S. persons
with respect to substantial trust decisions or (ii) have a valid election in
effect under applicable Treasury Regulations to be treated as a U.S. Holder. An
estate is a U.S. Holder if the income of the estate is subject to U.S. federal
income taxation regardless of the source of the income. The term "Non-U.S.
Holder" means a holder that is not a U.S. Holder. This summary describes some,
but not all, of the special rules applicable to Non-U.S. Holders.
The tax treatment of a holder of notes or Fairchild International's common
stock may vary depending on such holder's particular situation. This summary
does not address all of the tax consequences that may be relevant to you in
light of your particular circumstances, including but not limited to the
application of the alternative minimum tax or rules applicable to taxpayers in
special circumstances. Special rules may apply, for instance, to banks and
financial institutions, insurance companies, S corporations, broker-dealers,
tax-exempt organizations, persons who hold notes or Fairchild International's
common stock through partnerships or other pass-through entities, persons who
hold notes or Fairchild International's common stock as part of a hedge,
conversion or constructive sale transaction, straddle or other risk reduction
transaction, to persons that have a "functional currency" other than the U.S.
dollar, or to persons subject to taxation as expatriates of the United States.
This summary is based on the U.S. federal income tax law in effect as of the
date hereof, which is subject to change, possibly on a retroactive basis.
Finally, the summary does not describe the effect of the federal estate or gift
tax laws on U.S. Holders or the effects of any other federal or any applicable
foreign, state, or local tax laws.
PLEASE CONSULT YOUR OWN TAX ADVISOR REGARDING THE APPLICATION OF THE U.S.
FEDERAL INCOME TAX LAWS TO YOUR PARTICULAR SITUATION AND THE CONSEQUENCES OF
OTHER FEDERAL TAX LAWS, FOREIGN, STATE, OR LOCAL TAX LAWS AND TAX TREATIES.
U.S. HOLDERS
STATED INTEREST
Stated interest on a note will be includible in your gross income as
ordinary interest income in accordance with your regular method of accounting
for tax purposes.
MARKET DISCOUNT
If you acquire a note at a "market discount," some or all of any gain
realized upon a disposition of, or full or partial principal payment on such
note may be treated as ordinary income, as described below. "Market discount" is
the excess (if any) of the principal amount of a note over your initial tax
basis in the note. Such excess is not treated as market discount if it does not
exceed a certain de minimis amount. Unless you have elected to include the
market discount in income as it accrues, gain, if any, realized on a disposition
or a full or partial principal payment of a note with market discount will be
treated as ordinary income to the extent of the
33
market discount that is treated as having accrued during the period you held
such note. Gain may not be required to be recognized if you dispose of a note in
connection with certain nonrecognition transactions.
The amount of market discount treated as having accrued will be determined
on a ratable basis unless you elect to accrue such discount on a constant
interest basis. You may make that election with respect to any note but, once
made, such election may never be revoked. Under the ratable accrual method, the
accrued market discount on a note is an amount that bears the same ratio to the
total market discount on the note as (A) the number of days you held the note
bears to (B) the number of days after the date you acquired the note up to and
including the date of maturity. Under the constant interest method, the accrued
market discount is calculated using the purchased note's yield to maturity based
on the purchase price. The yield to maturity is the interest rate at which the
present value of all principal and interest payments to be made under the note
equals the purchase price of the note. It must be constant over the term of the
note.
You may elect to include market discount in income currently, on either a
ratable or constant interest basis. If you make this election, you will not be
required to recharacterize gain upon disposition as ordinary income as discussed
above. Once made, this election will apply to all debt instruments acquired by
you at a market discount during the taxable year for which the election is made,
and all subsequent taxable years. This election may be revoked only with the
consent of the IRS. If you make this election, your tax basis in the note will
be increased by the amount of the market discount that is included in income.
Unless you elect to include market discount in income currently, you may be
required to defer deductions for a portion of the interest paid on debt created
to acquire such note. The amount deferred will not exceed the deferred market
discount. The deferred amount will be deductible when the deferred market
discount is realized.
BOND PREMIUM
If you purchase a note and immediately after the purchase your tax basis of
the note exceeds the sum of all amounts payable on the note after the purchase
date (other than payments of stated interest), the note will be treated as
having been acquired with "bond premium." You may elect to amortize such bond
premium over the remaining term of such note using the constant yield method,
but only as you take stated interest into account under your regular method of
tax accounting (or, if it results in a smaller amount of amortizable bond
premium, until an earlier call date).
If bond premium is amortized, the amount of interest that must be included
in your income for each period ending on an interest payment date or at the
stated maturity of the note, as the case may be, will be reduced. The reduction
will be equal to the portion of premium allocable to such period based on your
yield to maturity with respect to the note as determined under the bond premium
rules. If you elect to amortize bond premium, you must reduce your tax basis in
the note as described below under "-- Sale, Exchange or Redemption of the
Notes." If you do not elect to amortize bond premium, you must include the full
amount of each interest payment as ordinary income in accordance with your
regular method of tax accounting. You may receive a tax benefit (in the form of
capital loss or reduced capital gain) from the premium only in computing your
gain or loss upon the sale or disposition or payment of the principal amount of
the note.
An election to amortize premium will apply to amortizable bond premium on
all notes and other bonds held at the beginning of your first taxable year to
which the election applies (if the interest on such notes or bonds is includible
in the your gross income) or that are thereafter acquired. This election may be
revoked only with the consent of the IRS.
SALE, EXCHANGE OR REDEMPTION OF THE NOTES
Upon the disposition of a note by sale, redemption or exchange (including a
conversion of the note into Fairchild International's common stock, discussed in
further detail below), you will generally recognize gain or loss in an amount
equal to the difference between (i) the amount realized on the disposition
(other than amounts attributable to accrued interest) and (ii) your adjusted tax
basis in the note. Your adjusted tax basis in a note generally will equal the
cost of the note (other than amounts attributable to accrued but unpaid
34
interest) decreased by payments received by you other than payments of stated
interest and any premium amortized by you.
Subject to the market discount rules discussed above, such gain or loss
generally will constitute capital gain or loss and will be long-term capital
gain or loss if you have held the note for more than one year. In the case of
individuals, long-term capital gains are generally taxed at a maximum rate of 20
percent, or 18 percent for assets acquired after the year 2000 and held for more
than five years. The deductibility of capital losses is subject to certain
limitations.
CONVERSION OF THE NOTES
The conversion of the notes into Fairchild International's common stock
will be a taxable event. You will recognize capital gain or loss as described
above under "-- Sale, Exchange or Redemption of the Notes" equal to the
difference between the fair market value of the common stock on the date of
conversion (plus any cash received in lieu of fractional shares) and your tax
basis in the notes. Your initial tax basis in the common stock will be equal to
its fair market value on the date of conversion, and your holding period in such
stock will begin on the day following such conversion date.
DIVIDENDS ON FAIRCHILD INTERNATIONAL'S COMMON STOCK
If, after you convert a note into Fairchild International's common stock,
Fairchild International makes a distribution in respect of that stock, the
distribution will be treated as a dividend, taxable as ordinary income, to the
extent it is paid from Fairchild International's current or accumulated earnings
and profits. If the distribution exceeds Fairchild International's current and
accumulated earnings and profits, the excess will be treated first as a tax-free
return of your investment, up to your tax basis in the common stock. Any
remaining excess will be treated as capital gain. If you are a U.S. corporation,
you may be able to claim a deduction for a portion of any dividends received.
ADJUSTMENT OF CONVERSION RATE
The terms of the notes allow for changes in the conversion price of the
notes in certain circumstances. A change in the conversion price that allows
noteholders to receive more shares of Fairchild International's common stock on
conversion may increase the noteholders' proportionate interests in Fairchild
International's earnings and profits or assets. In that case, the noteholders
may be treated as though they received a dividend in the form of Fairchild
International's stock. Such a constructive stock dividend could be taxable to
the noteholders, although they would not actually receive any cash or other
property. A taxable constructive stock dividend would result, for example, if
the conversion price is adjusted to compensate noteholders for distributions of
cash or property to Fairchild International's shareholders. Not all changes in
the conversion price that allow noteholders to receive more stock on conversion,
however, increase the noteholders' proportionate interests in Fairchild
International. For instance, a change in the conversion price could simply
prevent the dilution of the noteholders' interests upon a stock split or other
change in capital structure. Changes of this type, if made by a bona fide,
reasonable adjustment formula, are not treated as constructive stock dividends.
Conversely, if an event occurs that dilutes the noteholders' interests and the
conversion price is not adjusted, the resulting increase in the proportionate
interests of Fairchild International's shareholders could be treated as a
taxable stock dividend to them. Any taxable constructive stock dividends
resulting from a change to, or failure to change, the conversion price would be
treated like distributions paid in cash or other property. They would result in
ordinary income to the recipient, to the extent of Fairchild International's
current or accumulated earnings and profits, with any excess treated as a
tax-free return of capital up to the recipient's tax basis and then as capital
gain.
SALE OF FAIRCHILD INTERNATIONAL'S COMMON STOCK
You generally will recognize capital gain or loss on a sale or exchange of
Fairchild International's common stock. Your gain or loss will equal the
difference between the proceeds received by you and your adjusted tax basis in
the stock. The proceeds received by you will include the amount of any cash and
the fair
35
market value of any other property received for the stock. The gain or loss
recognized by you on a sale or exchange of stock will be long-term capital gain
or loss if you held the stock for more than one year. In the case of
individuals, long-term capital gains are generally taxed at a maximum rate of 20
percent, or 18 percent for assets acquired after the year 2000 and held for more
than five years. The deductibility of capital losses is subject to certain
limitations.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Under the Internal Revenue Code, you may be subject, under certain
circumstances, to information reporting and/or backup withholding at a rate of
30% in 2002 and 2003, 29% in 2004 and 2005, and 28% in 2006 with respect to cash
payments in respect of the notes. This backup withholding applies only if you:
(1) fail to furnish your social security or other taxpayer
identification number ("TIN") within a reasonable time after a request
therefor,
(2) furnish an incorrect TIN,
(3) fail to report interest or dividends properly, or
(4) fail, under certain circumstances, to provide a certified
statement, signed under penalty of perjury, that the TIN provided is your
correct number and that you are not subject to backup withholding.
Any amount withheld from a payment under the backup withholding rules is
allowable as a credit against your United States federal income tax liability
(and may entitle you to a refund), provided that the required information is
furnished to the IRS. Certain persons are exempt from backup withholding,
including corporations and certain financial institutions. You should consult
your tax advisor as to your qualification for exemption from backup withholding
and the procedure for obtaining such exemption.
SPECIAL TAX RULES APPLICABLE TO NON-U.S. HOLDERS
TAXATION OF INTEREST
Payments of interest to Non-U.S. Holders that are individuals or
corporations are generally subject to a 30% withholding tax. Payments of
interest on the notes to most Non-U.S. Holders, however, will qualify as
"portfolio interest," and thus will be exempt from the withholding tax, if the
holders certify their nonresident status as described below. The portfolio
interest exception will not apply to payments of interest to you under certain
circumstances including if: (i) you own, directly or indirectly, 10 percent or
more of the total combined voting power of all classes of our stock entitled to
vote, likely taking into account Fairchild International's common stock you
would acquire on conversion of notes; (ii) you are a "controlled foreign
corporation" that is related to us; or (iii) you are a bank investing in the
notes as an extension of credit made pursuant to a loan agreement entered into
in the ordinary course of your trade or business.
In general, a foreign corporation is a controlled foreign corporation if
more than 50 percent of its stock is owned, directly or indirectly, by one or
more U.S. persons that each owns, directly or indirectly, 10 percent or more of
the total combined voting power of all classes of stock entitled to vote. Even
if the portfolio interest exception does not apply, U.S. federal withholding tax
may be reduced or eliminated under an applicable treaty assuming you properly
certify your entitlement of the benefit under the treaty. The portfolio interest
exception and several of the special rules for Non-U.S. Holders described below
apply only if you certify your nonresident status. You can meet this
certification requirement by providing a Form W-8BEN or appropriate substitute
form to us, or our paying agent. If you hold the note through a financial
institution or other agent acting on your behalf, you will be required to
provide appropriate documentation to the agent. Your agent will then be required
to provide certification to us or our paying agent, either directly or through
other intermediaries. Special certification requirements also apply to
partnerships and other pass-through entities.
36
SALE, EXCHANGE OR REDEMPTION OF THE NOTES
You generally will not be subject to U.S. federal income tax on any gain
realized on the sale, exchange, or other disposition of notes. This general
rule, however, is subject to several exceptions. For example, if (i) the gain is
effectively connected with the conduct by you of a U.S. trade or business you
will be subject to U.S. federal income tax to the extent described below under
"-- Special Tax Rules Applicable to Non-U.S. Holders -- Income or Gains
Effectively Connected With a U.S. Trade or Business" or (ii) you are an
individual present in the United States for 183 days or more in the year of such
sale, exchange or disposition and certain other requirements are met, in which
case you would be subject to a flat tax of 30% on the amount of the gain (in
excess of any capital losses for such year).
CONVERSION OF THE NOTES
You generally will not be subject to U.S. federal income tax on any gain
realized upon converting a note into Fairchild International's common stock.
This general rule, however, is subject to the exceptions described above under
"-- Special Tax Rules Applicable to Non-U.S. Holders -- Sale, Exchange or
Redemption of Notes."
DIVIDENDS ON FAIRCHILD INTERNATIONAL'S COMMON STOCK
Dividends paid to you on Fairchild International's common stock received on
conversion of a note generally will be subject to U.S. withholding tax at a 30
percent rate if you are an individual or a corporation. The withholding tax
might not apply, however, or might apply at a reduced rate, under the terms of a
tax treaty between the United States and your country of residence. In order to
claim the benefits of a tax treaty, you must demonstrate your entitlement by
certifying your nonresident status and eligibility for treaty benefits. Some of
the common means of meeting this requirement are described above under
"-- Special Tax Rules Applicable to Non-U.S. Holders--Taxation of Interest."
Special certification rules also apply to holders that are partnerships or other
pass-through entities.
SALE OF FAIRCHILD INTERNATIONAL'S COMMON STOCK
You generally will not be subject to U.S. federal income tax on any gain
realized on the sale, exchange, or other disposition of Fairchild
International's common stock. This general rule, however, is subject to the
exceptions, described above under "-- Special Tax Rules Applicable to Non-U.S.
Holders -- Sale, Exchange or Redemption of the Notes."
INCOME OR GAINS EFFECTIVELY CONNECTED WITH A U.S. TRADE OR BUSINESS
The preceding discussion of the tax consequences of the purchase, ownership
and disposition of notes or Fairchild International's common stock by a Non-U.S.
Holder assumes that the holder is not engaged in a U.S. trade or business. If
any interest on the notes, dividends on Fairchild International's common stock,
or gain from the sale, exchange or other disposition of the notes or Fairchild
International's common stock is effectively connected with a U.S. trade or
business conducted by you and you are not a partnership or other pass-through
entity, then the income or gain will be subject to U.S. federal income tax at
the regular graduated rates. If you are eligible for the benefits of a tax
treaty between the United States and your country of residence, any "effectively
connected" income or gain generally will be subject to U.S. federal income tax
only if it is also attributable to a permanent establishment maintained by you
in the United States. Payments of interest or dividends that are effectively
connected with a U.S. trade or business, and therefore included in your gross
income, will not be subject to the 30 percent withholding tax. To claim this
exemption from withholding, you must certify your qualification, which can be
done by filing a Form W-8ECI. If you are a foreign corporation, your income
effectively connected with a U.S. trade or business generally would be subject
to an additional "branch profits tax." The branch profits tax rate is generally
30 percent, although an applicable tax treaty might provide for a lower rate.
Partnerships and other pass-through entities should consult their own tax
advisors regarding the taxation of their members on income that is effectively
connected with their U.S. trade or business.
37
UNITED STATES REAL PROPERTY HOLDING CORPORATION STATUS
Gain recognized on a sale, exchange or other disposition of notes or
Fairchild International's common stock may be subject to U.S. federal income tax
if we are, or were within the five years before the sale, exchange or other
disposition or, in the case of the disposition of common stock, Fairchild
International is, or was within such five year period, a "United States real
property holding corporation" ("USRPHC"). We do not believe that we are a USRPHC
or that we will become one in the future. We also do not believe that Fairchild
International is a USRPHC or that it will become one in the future.
U.S. FEDERAL ESTATE TAX
The estates of nonresident alien individuals are subject to U.S. federal
estate tax on property with a U.S. situs. The notes will not be U.S. situs
property as long as interest on the notes would have qualified as portfolio
interest (as described above under "-- Special Tax Rules Applicable to Non-U.S.
Holders -- Taxation of Interest") were it received by the decedent at the time
of death. Because Fairchild International is a U.S. corporation, Fairchild
International's common stock will be U.S. situs property, and therefore will be
included in the taxable estate of a nonresident alien decedent. The U.S. federal
estate tax liability of the estate of a nonresident alien may be affected by a
tax treaty between the United States and the decedent's country of residence.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Payments to Non-U.S. Holders of dividends on Fairchild International's
common stock, or interest on notes, generally will not be subject to backup
withholding. To avoid backup withholding on dividends, you will have to certify
your nonresident status. Some of the common means of doing so are described
under "-- Special Tax Rules Applicable to Non-U.S. Holders -- Taxation of
Interest." If you are a Non-U.S. Holder, payments made to you by a broker upon a
sale of notes or Fairchild International's common stock generally will not be
subject to backup withholding as long as you certify your foreign status.
Any amount withheld under the backup withholding rules will be allowed as a
credit against your U.S. federal income tax liability (and may entitle you to a
refund), provided that the required information is furnished to the IRS.
We must report annually to the IRS and to each Non-U.S. Holder on Form
1042-S the amount of interest paid on a note, regardless of whether withholding
was required, and any tax withheld with respect to the interest. Under the
provisions of an income tax treaty and any other applicable agreements, copies
of these information returns may be made available to the tax authorities of the
country in which the Non-U.S. Holder resides.
THE PRECEDING DISCUSSION OF CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
IS FOR GENERAL INFORMATION ONLY. IT IS NOT TAX ADVICE. YOU SHOULD CONSULT YOUR
OWN TAX ADVISOR REGARDING THE PARTICULAR U.S. FEDERAL, STATE, LOCAL, AND FOREIGN
TAX CONSEQUENCES OF PURCHASING, HOLDING, AND DISPOSING OF OUR NOTES OR FAIRCHILD
INTERNATIONAL'S COMMON STOCK, INCLUDING THE CONSEQUENCES OF ANY PROPOSED CHANGE
IN APPLICABLE LAW.
38
SELLING HOLDERS
The following table sets forth information with respect to the selling
holders of the notes and the respective principal amount of the notes
beneficially owned by each selling holder that may be offered pursuant to this
prospectus.
<Table>
<Caption>
PRINCIPLE
PRINCIPLE PRINCIPLE AMOUNT OF
AMOUNT OF AMOUNT OF NOTES HELD
NOTES NOTES OFFERED AFTER THIS
SELLING HOLDER CURRENTLY HELD HEREBY OFFERING
- -------------- -------------- ------------- ----------
Highbridge International LLC.......................... $ 16,000,000 $ 16,000,000 $0
First Union National Bank............................. $ 15,000,000 $ 15,000,000 $0
KBC Financial Products (Cayman Islands) Limited....... $ 15,000,000 $ 15,000,000 $0
First Union International Capital Markets Inc......... $ 11,000,000 $ 11,000,000 $0
Robertson Stephens.................................... $ 10,000,000 $ 10,000000 $0
Fidelity Convertible Securities Fund.................. $ 8,750,000 $ 8,750,000 $0
Pioneer High Yield Fund............................... $ 7,500,000 $ 7,500,000 $0
Chrysler Corporation Master Retirement Trust.......... $ 4,295,000 $ 4,295,000 $0
Vanguard Convertible Securities Fund, Inc............. $ 4,135,000 $ 4,135,000 $0
State of Connecticut Combined Investment Funds........ $ 3,615,000 $ 3,615,000 $0
OCM Convertible Trust................................. $ 2,645,000 $ 2,645,000 $0
Lipper Convertibles, L.P.............................. $ 2,000,000 $ 2,000,000 $0
Lipper Offshore Convertibles, L.P..................... $ 2,000,000 $ 2,000,000 $0
State Employees' Retirement Fund of the
State of Delaware................................... $ 1,705,000 $ 1,705,000 $0
TQA Master Fund, Ltd.................................. $ 1,500,000 $ 1,500,000 $0
TQA Master Plus Fund, Ltd............................. $ 1,500,000 $ 1,500,000 $0
The Class I C Company................................. $ 1,500,000 $ 1,500,000 $0
Delta Air Lines Master Trust
(c/o Oaktree Capital Management, LLC)............... $ 1,155,000 $ 1,155,000 $0
Partner Reinsurance Company Ltd....................... $ 690,000 $ 690,000 $0
Microsoft Corporation................................. $ 620,000 $ 620,000 $0
Delta Pilots D&S Trust
(c/o Oaktree Capital Management, LLC)............... $ 575,000 $ 575,000 $0
LDG Limited........................................... $ 500,000 $ 500,000 $0
Motion Picture Industry Health Plan --
Active Member Fund.................................. $ 395,000 $ 395,000 $0
KBC Financial Products USA Inc........................ $ 300,000 $ 300,000 $0
Motion Picture Industry Health Plan --
Retiree Member Fund................................. $ 170,000 $ 170,000 $0
Total....................................... $112,550,000 $112,550,000 $0
</Table>
None of the selling holders has, or within the past three years has had,
any position, office or other material relationship with the Company, Fairchild
International or any of their predecessors or affiliates. Because the selling
holders may, pursuant to this prospectus, offer all or some portion of the notes
or the common stock issuable upon conversion of the notes, no estimate can be
given as to the amount of the notes or the common stock issuable upon conversion
of the notes that will be held by the selling holders upon termination of any
such sales. In addition, the selling holders identified above may have sold,
transferred or otherwise disposed of all or a portion of their notes since the
date on which they provided the information regarding their notes pursuant to
transactions exempt from the registration requirements of the Securities Act.
39
PLAN OF DISTRIBUTION
The notes and shares of the Class A common stock issued upon surrender and
conversion of the notes may be sold from time to purchasers directly by the
selling holders. Alternatively, the selling holders may from time to time offer
the notes and shares to or through underwriters, broker/dealers or agents, who
may receive compensation in the form of underwriting discounts, concessions or
commissions from the selling holders or the purchasers of such notes for whom
they may act as agents. The selling holders and any underwriters, broker/dealers
or agents that participate in the distribution of notes or shares may be deemed
to be "underwriters" within the meaning of the Securities Act and any profit on
the sale of such securities by them and any underwriter, broker/dealer or agent
may be deemed to be underwriting discounts and commissions under the Securities
Act.
The notes and shares may be sold by the selling holders from time to time,
in one or more transactions at fixed prices, at prevailing market prices at the
time of sale, at varying prices determined at the time of sale or at negotiated
prices. Such prices will be determined by the selling holders. The sale of the
notes or shares may be effected in transactions (which may involve crosses or
block transactions) (i) on any national securities exchange or quotation service
on which the notes or shares may be listed or quoted at the time of sale, (ii)
in the over-the-counter market, (iii) otherwise than on such exchanges or in the
over-the-counter market or (iv) through the writing of options. At the time a
particular offering of the notes or shares is made, if required, a prospectus
supplement will be distributed which will set forth the names of the selling
holders, the aggregate amount and type of notes or shares being offered, and, to
the extent required, the terms of the offering, including the name or names of
any underwriters, broker/dealers or agents, any discounts, commissions and other
terms constituting compensation from the selling holders and any discounts,
commissions or concessions allowed or reallowed or paid to broker/dealers.
To comply with the securities laws of certain jurisdictions, if applicable,
the notes and shares will be offered or sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain jurisdictions
the notes and shares may not be offered or sold unless they have been registered
or qualified for sale in such jurisdictions or any exemption from registration
or qualification is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person
engaged in a distribution of the notes and shares may be limited in its ability
to engage in market activities with respect to such securities. In addition and
without limiting the foregoing, each Selling Holder will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder, which provisions may limit the timing of purchases and sales of any
of the notes or shares by the selling holders. All of the foregoing may affect
the marketability of the notes.
Pursuant to the registration rights agreement, all expenses of the
registration of the notes and shares will be paid by the Company, including,
without limitation, Commission filing fees and expenses of compliance with state
securities or "blue sky" laws; provided, however, that the selling holders will
pay all underwriting discounts and selling commissions, if any. The selling
holders will be indemnified by the Company and Fairchild International, jointly
and severally, against certain civil liabilities, including certain liabilities
under the securities Act, or will be entitled to contribution in connection
therewith. The Company and Fairchild International will be indemnified by the
selling holders severally against certain civil liabilities, including certain
liabilities under the Securities Act, or will be entitled to contribution in
connection therewith.
Pursuant to the registration rights agreement, the Company is required to
use its commercially reasonable efforts to keep the Registration Statement
continuously effective for a period of two years from its effective date or such
shorter period that will terminate upon the earlier of the date on which the
notes and shares shall have been sold pursuant to the Registration Statement or
the date on which the notes and shares are permitted to be freely sold or
distributed to the public pursuant to any exemption from the registration
requirements of the Securities Act (including in reliance on Rule 144(k) but
excluding in reliance on Rule 144A under the Securities Act). Notwithstanding
the foregoing obligations, the Company may, under certain circumstances,
postpone or suspend the filing or the effectiveness of the registration
statement (or any amendments or supplements thereto) or the sale of notes
pursuant thereto.
40
LEGAL MATTERS
Certain legal matters with respect to the validity of the offered
securities will be passed upon for us by Gibson, Dunn & Crutcher LLP, New York,
New York.
EXPERTS
The consolidated financial statements of Fairchild International and its
subsidiaries as of December 31, 2000 and December 26, 1999, and for the year
ended December 31, 2000, the seven months ended December 26, 1999, and for each
of the years in the two-year period ended May 30, 1999, have been incorporated
by reference herein and in the registration statement in reliance upon the
report of KPMG LLP, independent accountants, incorporated by reference herein,
and upon the authority of said firm as experts in accounting and auditing.
The report of KPMG LLP covering the aforementioned consolidated financial
statements refers to a change in the method of accounting for business process
reengineering costs as a result of the company adopting the provisions of the
Emerging Issues Task Force Issue 97-13, "Accounting for Business Process
Reengineering Costs."
This prospectus does not offer to sell or ask for offers to buy any
securities other than those to which this prospectus relates and it does not
constitute an offer to sell or ask for offers to buy any of the securities in
any jurisdiction where it is unlawful, where the person making the offer is not
qualified to do so, or to any person who cannot legally be offered the
securities. The information contained in this prospectus is current only as of
its date.
41
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth all expenses payable by us in connection
with the offering of the securities being registered, other than discounts and
commissions.
<Table>
Securities and Exchange Commission registration fee......... $ 53,476
Printing expenses........................................... $300,000
Legal fees and expenses..................................... $150,000
Accounting fees and expenses................................ $100,000
Rating Agency fees.......................................... $ 50,000
Trustee's and Depositary's fees and expenses................ $ 5,000
NYSE listing fee............................................ $ 1,500
Miscellaneous............................................... $ 25,000
Total............................................. $684,976
========
</Table>
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Section 145 of the Delaware General Corporation Law provides in relevant
part that a corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that such person is or was a director, officer, employee, or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding if
such person acted in good faith and in a manner such person reasonably believed
to be in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
such person's conduct was unlawful.
In addition, Section 145 provides that a corporation may indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer,
employee or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by such person in
connection with the defense or settlement of such action or suit if such person
acted in good faith and in a manner such person reasonably believed to be in or
not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Delaware Court of Chancery or the court
in which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Delaware Court of Chancery or such other court shall deem
proper.
Section 145 also provides that to the extent a director, officer, employee
or agent of a corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to above, or defense of any
claim issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
II-1
Furthermore, Section 145 provides that nothing in the above-described
provisions shall be deemed exclusive of any other rights to indemnification or
advancement of expenses to which any person may be entitled under any bylaw,
agreement, vote of stockholders or disinterested directors or otherwise.
Section 102(b)(7) of the Delaware General Corporation Law provides that a
corporation may in its certificate of incorporation eliminate or limit the
personal liability of a director to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director except for
liability: for any breach of the director's duty of loyalty to the corporation
or its stockholders; for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law; under Section 174 of the
Delaware General Corporation Law (pertaining to certain prohibited acts
including unlawful payment of dividends or unlawful purchase or redemption of
the corporation's capital stock); or for any transaction from which the director
derived an improper personal benefit. The Certificate of Incorporation of each
of Fairchild International, our company, Fairchild Semiconductor Corporation of
California and QT Optoelectronics, Inc. contains a provision so limiting the
personal liability of directors of such company.
Section 317 of the General Corporation Law of California provides that a
corporation shall have the power to indemnify any person who was or is a party
or is threatened to be made a party to any proceeding, other than in an action
by or in the right of the corporation to obtain a favorable judgment for itself,
by reason of the fact that such person is or was an agent of the corporation,
against expenses II-1 actually and reasonably incurred in connection with the
proceeding, if the person acted in good faith and in a manner the person
reasonably believed to be in the best interests of the corporation and, in the
case of criminal proceedings, had no reasonable cause to believe that the
conduct was unlawful. In the case of suits by or on behalf of a corporation to
obtain a judgment in its favor, a corporation has the power to indemnify any
person who was or is a party or is threatened to made a party to such proceeding
by reason of the fact that the person is or was the corporation's agent, against
expenses actually and reasonably incurred, if the person acted in good faith in
a manner the person believed to be in the best interests of the corporation and
its shareholders, except that no such indemnification may be made for claims as
to which the person shall have been adjudged to be liable to the corporation in
the performance of that person's duty to the corporation, unless and then only
to the extent a court determines otherwise. In addition, Section 204 of the
General Corporation Law of California provides that a corporation may in its
articles of incorporation provide for the indemnification by the corporation of
directors and officers while acting in their capacities as such but not
involving a breach of duty to the corporation and its shareholders. Such a
provision in the articles of incorporation is construed to be a provision for
indemnification under both Sections 204 and 317. The articles of incorporation
of QT Optoelectronics contain such a provision.
Section 7-108-402 of the Colorado Business Corporation Act provides that a
corporation may, in its articles of incorporation, eliminate or limit the
personal liability of a director to the corporation or its shareholders for
monetary damages for breach of fiduciary duty as a director, but any such
provision shall not eliminate or limit the liability of a director for (1) any
breach of a director's duty of loyalty to the corporation or its shareholders,
(2) acts or omissions not in good faith or that involve intentional misconduct
or a knowing violation of law, or (3) that involve unlawful distributions. The
articles of incorporation of KOTA Microcircuits, Inc. contain such a provision.
The Bylaws of our company and each of Fairchild International, Fairchild
Semiconductor Corporation of California, QT Optoelectronics, Inc., QT
Optoelectronics and KOTA Microcircuits, Inc. provide for the indemnification of
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (a "proceeding") by reason of the fact
that such person is or was a director or officer of such company or a
constituent corporation absorbed in a consolidation or merger, or is or was
serving at the request of such company or a constituent corporation absorbed in
a consolidation or merger, as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise, or is or was a director
or officer of such company serving at its request as an administrator, trustee
or other fiduciary of one or more of the employee benefit plans of such company
or other enterprise, against expenses (including attorneys' fees), liability and
loss actually and reasonably incurred or suffered by such person in connection
with such proceeding, whether or not the indemnified liability arises or arose
from any threatened, pending or completed proceeding by or in
II-2
the right of such company, except to the extent that such indemnification is
prohibited by applicable law. The Bylaws of each of the above companies also
provide that such indemnification shall not be deemed exclusive of any other
rights to which those indemnified may be entitled as a matter of law or under
any by-law, agreement, vote of stockholders or otherwise.
We also maintain liability insurance covering directors and officers of
each of the above companies.
ITEM 16. EXHIBITS
<Table>
<Caption>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
4.1 The relevant portions of the Restated Certificate of
Incorporation, as amended.(2)(3)
4.2 The relevant portions of the Restated Bylaws.(4)
4.3 Registration Rights Agreement, dated March 11, 1997, among
Fairchild Semiconductor International, Inc., Sterling
Holding Company, LLC, National Semiconductor Corporation and
certain management investors.(5)
4.4 Indenture, dated as of March 11, 1997, relating to
$300,000,000 aggregate principal amount of 10 1/8% Senior
Subordinated Notes due 2007, among Fairchild Semiconductor
Corporation, as Issuer, Fairchild Semiconductor
International, Inc., as Guarantor and United States Trust
Company of New York, as Trustee.(1)
4.5 Form of 10 1/8% Senior Subordinated Notes due 2007.
(included in Exhibit 4.4)
4.6 Indenture, dated as of April 7, 1999, relating to
$300,000,000 aggregate principal amount of 10 3/8% Senior
Subordinated Notes due 2007, among Fairchild Semiconductor
Corporation, as Issuer, Fairchild Semiconductor
International, Inc., Fairchild Semiconductor Corporation of
California, as Guarantors, and United States Trust Company
of New York, as Trustee.(5)
4.7 Form of 10 3/8% Senior Subordinated Notes due 2007.
(included in Exhibit 4.6)
4.8 Indenture, dated as of January 31, 2001, relating to
$350,000,000 aggregate principal amount of 10 1/2% Senior
Subordinated Notes due 2009, among Fairchild Semiconductor
Corporation, as Issuer, Fairchild Semiconductor
International, Inc., Fairchild Semiconductor Corporation of
California, QT Optoelectronics, Inc., QT Optoelectronics,
KOTA Microcircuits, Inc., as Guarantors, and United States
Trust Company of New York, as Trustee.(6)
4.9 Form of 10 1/2% Senior Subordinated Notes due 2009.
(included in Exhibit 4.8)
4.10 Indenture, dated as of October 31, 2001, relating to the
$200,000,000 aggregate principal amount of 5% Senior
Subordinated Notes due 2008, among Fairchild Semiconductor
Corporation, as Issuer, Fairchild Semiconductor
International, Inc., Fairchild Semiconductor Corporation of
California, QT Optoelectronics, Inc., QT Optoelectronics,
KOTA Microcircuits, Inc., as Guarantors, and The Bank of New
York, as Trustee.
4.11 Form of 5% Senior Subordinated Notes due 2008. (included in
Exhibit 4.10)
4.12 Registration Rights Agreement, dated January 26, 2001, among
Fairchild Semiconductor Corporation, Fairchild Semiconductor
International, Inc., Fairchild Semiconductor Corporation of
California, QT Optoelectronics, Inc., QT Optoelectronics,
KOTA Microcircuits, Inc., Credit Suisse First Boston
Corporation, Lehman Brothers Inc., Deutsche Bank Alex. Brown
Inc. and Fleet Securities Inc.(6)
4.13 Registration Rights Agreement, dated October 31, 2001, among
the Registrants, Credit Suisse First Boston Corporation,
Lehman Brothers Inc., Prudential Securities Incorporated and
Robertson Stephens, Inc.
5.1 Opinion of Gibson, Dunn & Crutcher LLP.*
12.1 Computation of Ratio of Earnings to Fixed Charges.
23.2 Consent of KPMG LLP.
24.1 Powers of Attorney. (included on signature pages)
25.1 Form T-1, Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of the Bank of New York, as
Trustee.*
</Table>
II-3
- ---------------
* To be filed by amendment.
(1) Incorporated by reference from Fairchild Semiconductor Corporation's
Registration Statement on Form S-4, filed May 12, 1997 (File No. 333-26897).
(2) Incorporated by reference from Fairchild Semiconductor International Inc.'s
Annual Report on Form 10-K for the fiscal year ended May 30, 1999, filed
August 27, 1999.
(3) Incorporated by reference from Fairchild Semiconductor International Inc.'s
Registration Statement on Form S-8, filed June 29, 2000 (File No.
333-40412).
(4) Incorporated by reference from Fairchild Semiconductor International, Inc.'s
Registration Statement on Form S-4, filed March 23, 2000 (File No.
333-33082).
(5) Incorporated by reference from Amendment No. 1 to Fairchild Semiconductor
International, Inc.'s Registration Statement on Form S-1, filed June 30,
1999 (File No. 333-78557).
(6) Incorporated by reference from Fairchild Semiconductor International Inc.'s
Annual Report on Form 10-K for the fiscal year ended December 31, 2000,
filed March 26, 2001.
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;
(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% 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;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-4
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrants pursuant to the provisions described in Item 20 above, or otherwise,
the registrants have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the 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 registrants will, unless in
the opinion of counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes to file an application for the
purpose of determining the eligibility of the trustee to act under subsection
(a) of 310 of the Trust Indenture Act in accordance with the rules and
regulations prescribed by the Commission under Section 305(b)(2) of the Trust
Indenture Act.
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act, Fairchild Semiconductor
Corporation has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of South
Portland, State of Maine, on the 21st day of December, 2001.
FAIRCHILD SEMICONDUCTOR
CORPORATION
By: /s/ DANIEL E. BOXER
------------------------------------
Daniel E. Boxer
Executive Vice President,
General Counsel and Secretary
POWER OF ATTORNEY
KNOWN TO ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below, except David A. Henry, constitutes and appoints Daniel E. Boxer
and David A. Henry, each and individually, his attorneys-in-fact, with full
power of substitution and resubstitution, for him in any and all capacities, to
sign any or all amendments or post-effective amendments to this registration
statement or any registration statement for the same offering that is effective
upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as
amended, and to file the same with exhibits thereto and other documents in
connection therewith or in connection with the registration of common stock
under the Securities Exchange Act of 1934, as amended, with the Securities and
Exchange Commission, granting unto each of such attorneys-in-fact and agents
full power and authority to do and perform each and every act and thing
requisite and necessary in connection with such matters and hereby ratifying and
confirming all that each such attorney-in-fact, or his agent or substitutes, may
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on the 21st day of December, 2001:
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
/s/ KIRK P. POND Chairman of the Board of Directors, President
- --------------------------------------------- and Chief Executive Officer (principal
Kirk P. Pond executive officer)
/s/ JOSEPH R. MARTIN Executive Vice President and Chief Financial
- --------------------------------------------- Officer, and Director (principal financial
Joseph R. Martin officer)
/s/ DAVID A. HENRY Vice President, Corporate Controller
- --------------------------------------------- (principal accounting officer)
David A. Henry
Director
- ---------------------------------------------
Richard M. Cashin, Jr.
/s/ CHARLES M. CLOUGH Director
- ---------------------------------------------
Charles M. Clough
</Table>
II-6
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
/s/ WILLIAM T. COMFORT III Director
- ---------------------------------------------
William T. Comfort III
/s/ PAUL C. SCHORR IV Director
- ---------------------------------------------
Paul C. Schorr IV
/s/ RONALD W. SHELLY Director
- ---------------------------------------------
Ronald W. Shelly
/s/ WILLIAM N. STOUT Director
- ---------------------------------------------
William N. Stout
</Table>
II-7
SIGNATURES
Pursuant to the requirements of the Securities Act, Fairchild Semiconductor
International, Inc. has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of South
Portland, State of Maine, on the 21st day of December, 2001.
FAIRCHILD SEMICONDUCTOR
INTERNATIONAL, INC.
BY: /s/ DANIEL E. BOXER
------------------------------------
DANIEL E. BOXER
Executive Vice President,
General Counsel and Secretary
POWER OF ATTORNEY
KNOWN TO ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below, except David A. Henry, constitutes and appoints Daniel E. Boxer
and David A. Henry, each and individually, his attorneys-in-fact, with full
power of substitution and resubstitution, for him in any and all capacities, to
sign any or all amendments or post-effective amendments to this registration
statement or any registration statement for the same offering that is effective
upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as
amended, and to file the same with exhibits thereto and other documents in
connection therewith or in connection with the registration of common stock
under the Securities Exchange Act of 1934, as amended, with the Securities and
Exchange Commission, granting unto each of such attorneys-in-fact and agents
full power and authority to do and perform each and every act and thing
requisite and necessary in connection with such matters and hereby ratifying and
confirming all that each such attorney-in-fact, or his agent or substitutes, may
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on the 21st day of December, 2001:
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
/s/ KIRK P. POND Chairman of the Board of Directors, President
- --------------------------------------------- and Chief Executive Officer (principal
Kirk P. Pond executive officer)
/s/ JOSEPH R. MARTIN Executive Vice President and Chief Financial
- --------------------------------------------- Officer, and Director (principal financial
Joseph R. Martin officer)
/s/ DAVID A. HENRY Vice President, Corporate Controller
- --------------------------------------------- (principal accounting officer)
David A. Henry
Director
- ---------------------------------------------
Richard M. Cashin, Jr.
/s/ CHARLES M. CLOUGH Director
- ---------------------------------------------
Charles M. Clough
</Table>
II-8
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
/s/ WILLIAM T. COMFORT III Director
- ---------------------------------------------
William T. Comfort III
/s/ PAUL C. SCHORR IV Director
- ---------------------------------------------
Paul C. Schorr IV
/s/ RONALD W. SHELLY Director
- ---------------------------------------------
Ronald W. Shelly
/s/ WILLIAM N. STOUT Director
- ---------------------------------------------
William N. Stout
</Table>
II-9
SIGNATURES
Pursuant to the requirements of the Securities Act, Fairchild Semiconductor
Corporation of California has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of South Portland, State of Maine, on the 21st day of December, 2001.
FAIRCHILD SEMICONDUCTOR
CORPORATION OF CALIFORNIA
By: /s/ DANIEL E. BOXER
------------------------------------
Daniel E. Boxer
Vice President
POWER OF ATTORNEY
KNOWN TO ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below, except David A. Henry, constitutes and appoints Daniel E. Boxer
and David A. Henry, each and individually, his attorneys-in-fact, with full
power of substitution and resubstitution, for him in any and all capacities, to
sign any or all amendments or post-effective amendments to this registration
statement or any registration statement for the same offering that is effective
upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as
amended, and to file the same with exhibits thereto and other documents in
connection therewith or in connection with the registration of common stock
under the Securities Exchange Act of 1934, as amended, with the Securities and
Exchange Commission, granting unto each of such attorneys-in-fact and agents
full power and authority to do and perform each and every act and thing
requisite and necessary in connection with such matters and hereby ratifying and
confirming all that each such attorney-in-fact, or his agent or substitutes, may
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on the 21st day of December, 2001:
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
/s/ KIRK P. POND President (principal executive officer)
- ---------------------------------------------
Kirk P. Pond
/s/ JOSEPH R. MARTIN Vice President and Director (principal
- --------------------------------------------- financial officer)
Joseph R. Martin
/s/ DAVID A. HENRY Vice President (principal accounting officer)
- ---------------------------------------------
David A. Henry
/s/ DANIEL E. BOXER Director
- ---------------------------------------------
Daniel E. Boxer
</Table>
II-10
SIGNATURES
Pursuant to the requirements of the Securities Act, QT Optoelectronics,
Inc. has duly caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of South Portland, State
of Maine, on the 21st day of December, 2001.
QT OPTOELECTRONICS, INC.
BY: /s/ DANIEL E. BOXER
------------------------------------
DANIEL E. BOXER
Vice President
POWER OF ATTORNEY
KNOWN TO ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below, except David A. Henry, constitutes and appoints Daniel E. Boxer
and David A. Henry, each and individually, his attorneys-in-fact, with full
power of substitution and resubstitution, for him in any and all capacities, to
sign any or all amendments or post-effective amendments to this registration
statement or any registration statement for the same offering that is effective
upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as
amended, and to file the same with exhibits thereto and other documents in
connection therewith or in connection with the registration of common stock
under the Securities Exchange Act of 1934, as amended, with the Securities and
Exchange Commission, granting unto each of such attorneys-in-fact and agents
full power and authority to do and perform each and every act and thing
requisite and necessary in connection with such matters and hereby ratifying and
confirming all that each such attorney-in-fact, or his agent or substitutes, may
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on the 21st day of December, 2001:
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
/s/ KIRK P. POND President and Director (principal executive
- --------------------------------------------- officer)
Kirk P. Pond
/s/ JOSEPH R. MARTIN Vice President and Director (principal
- --------------------------------------------- financial officer)
Joseph R. Martin
/s/ DAVID A. HENRY Vice President (principal accounting officer)
- ---------------------------------------------
David A. Henry
/s/ DANIEL E. BOXER Director
- ---------------------------------------------
Daniel E. Boxer
</Table>
II-11
SIGNATURES
Pursuant to the requirements of the Securities Act, QT Optoelectronics has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of South Portland, State of
Maine, on the 21st day of December, 2001.
QT OPTOELECTRONICS
BY: /s/ DANIEL E. BOXER
------------------------------------
DANIEL E. BOXER
Vice President
POWER OF ATTORNEY
KNOWN TO ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below, except David A. Henry, constitutes and appoints Daniel E. Boxer
and David A. Henry, each and individually, his attorneys-in-fact, with full
power of substitution and resubstitution, for him in any and all capacities, to
sign any or all amendments or post-effective amendments to this registration
statement or any registration statement for the same offering that is effective
upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as
amended, and to file the same with exhibits thereto and other documents in
connection therewith or in connection with the registration of common stock
under the Securities Exchange Act of 1934, as amended, with the Securities and
Exchange Commission, granting unto each of such attorneys-in-fact and agents
full power and authority to do and perform each and every act and thing
requisite and necessary in connection with such matters and hereby ratifying and
confirming all that each such attorney-in-fact, or his agent or substitutes, may
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on the 21st day of December, 2001:
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
/s/ KIRK P. POND President and Director (principal executive
- --------------------------------------------- officer)
Kirk P. Pond
/s/ JOSEPH R. MARTIN Vice President and Director (principal
- --------------------------------------------- financial officer)
Joseph R. Martin
/s/ DAVID A. HENRY Vice President (principal accounting officer)
- ---------------------------------------------
David A. Henry
/s/ DANIEL E. BOXER Director
- ---------------------------------------------
Daniel E. Boxer
</Table>
II-12
SIGNATURES
Pursuant to the requirements of the Securities Act, KOTA Microcircuits,
Inc. has duly caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of South Portland, State
of Maine, on the 21st day of December, 2001.
KOTA MICROCIRCUITS, INC.
BY: /s/ DANIEL E. BOXER
------------------------------------
DANIEL E. BOXER
Vice President
POWER OF ATTORNEY
KNOWN TO ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below, except David A. Henry, constitutes and appoints Daniel E. Boxer
and David A. Henry, each and individually, his attorneys-in-fact, with full
power of substitution and resubstitution, for him in any and all capacities, to
sign any or all amendments or post-effective amendments to this registration
statement or any registration statement for the same offering that is effective
upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as
amended, and to file the same with exhibits thereto and other documents in
connection therewith or in connection with the registration of common stock
under the Securities Exchange Act of 1934, as amended, with the Securities and
Exchange Commission, granting unto each of such attorneys-in-fact and agents
full power and authority to do and perform each and every act and thing
requisite and necessary in connection with such matters and hereby ratifying and
confirming all that each such attorney-in-fact, or his agent or substitutes, may
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on the 21st day of December, 2001:
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
/s/ KIRK P. POND President (principal executive officer)
- ---------------------------------------------
Kirk P. Pond
/s/ JOSEPH R. MARTIN Vice President and Director (principal
- --------------------------------------------- financial officer)
Joseph R. Martin
/s/ DAVID A. HENRY Vice President (principal accounting officer)
- ---------------------------------------------
David A. Henry
/s/ DANIEL E. BOXER Director
- ---------------------------------------------
Daniel E. Boxer
</Table>
II-13