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Exhibit 3.1
[STATE OF CALIFORNIA LOGO]
SECRETARY OF STATE
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RESTATED ARTICLES OF INCORPORATION OF
INTERNATIONAL MICROCIRCUITS, INC.
Frank T. Deverse and Patsy J. Deverse hereby certify that:
ONE: They are the duly elected and acting President and Secretary,
respectively, of International Microcircuits, Inc., a California corporation
(the "Corporation" or the "Company").
TWO: The Articles of Incorporation of this corporation are hereby
amended and restated to read as follows:
Article I
The name of the Corporation is International Microcircuits, Inc. (the
"Corporation" or the "Company").
Article II
The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of California other than the banking business, the trust company business or
the practice of a profession permitted to be incorporated by the California
Corporations Code.
Article III
The total number of shares of capital stock which the corporation (the
"Corporation") shall have authority to issue is 11,760,000, of which (a)
6,660,000 shares shall be preferred stock, without par value per share
("Preferred Stock"), and (b) 5,100,000 shares shall be common stock, without par
value per share.
Except as otherwise restricted by these Amended and Restated Articles
of Incorporation (these "Articles of Incorporation"), the Corporation is
authorized to issue, from time to time, all or any portion of the capital stock
of the Corporation which may have been authorized but not issued, to such person
or persons and for such lawful consideration as it may deem appropriate, and
generally in its absolute discretion to determine the terms and manner of any
disposition of such authorized but unissued capital stock.
Any and all such shares issued for which the full consideration has
been paid or delivered shall be deemed fully paid shares of capital stock, and
the holder of such shares shall not be liable for any further call or assessment
or any other payment thereon.
The voting powers, designations, preferences, privileges and relative,
participating, optional or other special rights, and the qualifications,
limitations or restrictions of each class of capital stock of the Corporation,
shall be as provided in this Article III.
The Corporation shall not, by amendment of this these Articles of
Incorporation or through any Extraordinary Transaction (as defined in
Section A.5(a)(ii) or other reorganization,
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transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, knowingly or purposefully avoid or
seek to avoid the observance or performance of any of the terms to be observed
or performed hereunder by the Corporation but shall at all times in good faith
assist in the carrying out of all the provisions hereof and in the taking of all
such action as may be necessary or appropriate in order to protect the
conversion rights, if any, and other rights of the holders of the Preferred
Stock against impairment.
A. CONVERTIBLE PREFERRED STOCK
1. DESIGNATION. A total of 3,330,000 shares of the Corporation's
Preferred Stock shall be designated as a series known as a series known as
Convertible Preferred Stock, without par value per share (the "Convertible
Stock").
2. ELECTION OF DIRECTORS; VOTING.
(a) ELECTION OF DIRECTORS. The holders of outstanding shares of
Convertible Stock shall, voting together as a separate class, be entitled to
elect four (4) Directors of the Corporation. Such Directors shall be the
candidates receiving the greatest number of affirmative votes of the outstanding
shares of Convertible Stock (the "Convertible Stock Director Designees"). Each
holder of Convertible Stock entitled to vote at an election for directors may
cumulate the votes to which such holder is entitled, I.E., such holder may cast
a total number of votes equal to the number of directors to be elected
multiplied by the number of votes to which such holder's shares are entitled,
and may cast said total number of votes for one or more candidates in such
proportions as such holder thinks fit; PROVIDED, HOWEVER, no holder shall be
entitled to so cumulate such holder's votes unless the candidates for which such
holder is voting have been placed in nomination prior to the voting and a holder
has given notice at the meeting, prior to the vote, of an intention to cumulate
votes. The candidates receiving the highest number of votes, up to the number of
directors to be elected, are elected. Except as may otherwise be provided by
law, each holder shall be entitled to one vote for each share held. The election
of the Convertible Stock Director Designees by the holders of the Convertible
Stock shall occur (i) at the annual meeting of holders of capital stock, (ii) at
any special meeting of holders of capital stock, (iii) at any special meeting of
holders of Convertible Stock called by holders of a majority of the outstanding
shares of Convertible Stock or (iv) by the unanimous written consent of holders
of the outstanding shares of Convertible Stock. If at any time when any share of
Convertible Stock is outstanding any Convertible Stock Director Designee should
cease to be a Director for any reason, the vacancy shall only be filled by the
vote or written consent of the holders of the outstanding shares of Convertible
Stock, voting together as a separate class, in the manner and on the basis
specified above. The holders of outstanding shares of Convertible Stock shall
also be entitled to vote for all other Directors of the Corporation together
with holders of all other shares of the Corporation's outstanding capital stock
entitled to vote thereon, voting as a single class, with each outstanding share
entitled to the same number of votes specified in Section A.2(b). The holders of
outstanding shares of Convertible Stock, may, in their sole discretion,
determine to elect fewer than four (4) Convertible Stock Director Designees from
time to time, and during any such period the Board of Directors nonetheless
shall be deemed duly constituted.
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(b) VOTING GENERALLY. The holder of each share of Convertible
Stock shall be entitled to the number of votes equal to the largest number of
full shares of Common Stock (as defined in Section C of this Article III) into
which each share of Convertible Stock could be converted pursuant to Section A.6
hereof (other than by means of Section A.6(b)) on the record date for the vote
or for written consent of shareholders, if applicable, multiplied by the number
of shares of Convertible Stock held of record by such holder on such date. The
holder of each share of Convertible Stock shall be entitled to notice of any
shareholders' meeting in accordance with the by-laws of the Corporation and
shall vote with holders of the Common Stock, voting together as single class,
upon all matters submitted to a vote of shareholders, excluding those matters
required to be submitted to a class or series vote pursuant to the terms hereof
(including without limitation Section A.8) or by law. Fractional votes shall
not, however, be permitted and any fractional voting rights resulting from the
above formula (after aggregating all shares of Common Stock into which shares of
Convertible Stock held by each holder could be converted) shall be rounded to
the nearest whole number (with any fraction equal or greater than one-half
rounded upward to one and any fraction less than one-half rounded down to zero).
3. DIVIDENDS. The holders of Convertible Stock shall be entitled to
receive dividends out of funds legally available therefor at such times and in
such amounts as the Board of Directors may determine in its sole discretion;
PROVIDED, HOWEVER, that no such dividend may be declared or paid on any shares
of Convertible Stock unless at the same time a dividend is declared or paid on
all outstanding shares of Common Stock and vice versa, with holders of
Convertible Stock and Common Stock sharing in any such dividends as if they
constituted a single class of stock and with each holder of a share of
Convertible Stock entitled to receive such dividends based on the number of
shares of Common Stock into which such share of Convertible Stock is then
convertible hereunder. The right to dividends on shares of Convertible Stock
shall not be cumulative, and no right shall accrue to holders of Convertible
Stock by reason of the fact that dividends on said shares are not declared in
any prior period.
4. LIQUIDATION.
(a) LIQUIDATION PREFERENCE. Upon any liquidation, dissolution or
winding up of the Corporation and its subsidiaries, whether voluntary or
involuntary (a "Liquidation Event"), each holder of outstanding shares of
Convertible Stock shall be entitled to be paid out of the assets of the
Corporation available for distribution to shareholders, whether such assets are
capital, surplus or earnings, and before any amount shall be paid or distributed
to the holders of Common Stock or of any other stock ranking on liquidation
junior to the Convertible Stock, an amount in cash equal to (i) $4.44 per share
of Convertible Stock held by such holder (adjusted appropriately for stock
splits, stock dividends, recapitalizations and the like with respect to the
Convertible Stock), plus (ii) any accumulated but unpaid dividends to which such
holder of outstanding shares of Convertible Stock is then entitled pursuant to
Sections A.3 and A.5(f) hereof (the sum of clauses (i) and (ii) being referred
to herein as the "Convertible Base Liquidation Amount"), plus (iii) any interest
accrued pursuant to Section A.5(e) hereof to which such holder of Convertible
Stock is entitled, if any (the sum of clauses (i), (ii) and (iii) being referred
to herein as the "Convertible Liquidation Preference Amount"); PROVIDED,
HOWEVER, that if, upon any Liquidation Event, the amounts payable with respect
to the Convertible Liquidation Preference Amount are not paid in full, the
holders of the Convertible Stock shall share ratably in any distribution of
assets in proportion tot the full respective preferential amounts to which they
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are entitled; and PROVIDED FURTHER, HOWEVER, that if upon any Liquidation Event
the holders of the outstanding shares of Convertible Stock would receive more
than the aggregate Convertible Liquidation Preference Amount with respect to
such shares in the event all of their shares were converted into Series A
Redeemable Preferred Stock (as defined in Section B.1 of this Article III) and
Common Stock immediately prior to the record date for distributions in
connection with such liquidation event, then each holder of an outstanding share
of Convertible Stock shall receive, in lieu of the Convertible Liquidation
Preference Amount, an amount equal to such holder's Series A Redeemable
Liquidation Preference Amount (as defined in Section B.4) under Section B.4 plus
any dividends pursuant to Section A.3 or A.5(f) which are accumulated but unpaid
in respect of such share as of the date of such Liquidation Event before any
amount shall be paid or distributed to the holders of Common Stock or of any
other stock ranking on liquidation junior to the Convertible Stock, and
thereafter shall share ratably with the holders of Common Stock and any other
stock ranking on liquidation junior to the Convertible Stock in the assets
available for distribution, with such distributions to be made as if each share
of Convertible Stock had been converted into the number of shares of Series A
Redeemable Preferred Stock and Common Stock issuable upon the conversion of such
holder's shares of Convertible Stock immediately prior to any such Liquidation
Event. The provisions of this Section A.4 shall not in any way limit the right
of the holders of Convertible Stock to elect to convert their shares of
Convertible Stock into Series A Redeemable Preferred Stock and Common Stock
pursuant to Section A.6 prior to or in connection with any Liquidation Event.
(b) NOTICE. Prior to the occurrence of any Liquidation Event, the
Corporation will furnish each holder of Convertible Stock notice in accordance
with Section A.9 hereof, together with a certificate prepared by the chief
financial officer of the Corporation describing in detail the facts of such
Liquidation Event, stating in detail the amount(s) per share of Convertible
Stock each holder of Convertible Stock would receive pursuant to the provisions
of Section A.4(a) hereof (both with respect to the amount a holder would receive
pursuant to clauses (i) and (ii) of Section A.4(a) and the amount a holder would
receive pursuant to the second proviso of Section A.4(a)) and stating in detail
the facts upon which such amounts were determined.
5. REDEMPTION.
(a) REDEMPTION EVENTS.
(i) ON OR AFTER DECEMBER 5, 2003.
(A) At any time after December 5, 2003, on any one
occasion any holder of Convertible Stock may require the Corporation to redeem
up to 50% of the outstanding shares of Convertible Stock held by such holder at
such time.
(B) At any time after December 5, 2004, on any one
occasion any holder of Convertible Stock may require the Corporation to redeem
up to all of the outstanding shares of Convertible Stock held by such holder at
such time.
(ii) EXTRAORDINARY TRANSACTIONS. Upon the election of the
holder or holders of not less than sixty-six and two-thirds percent in voting
power of the outstanding
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Convertible Stock in connection with (A) a merger or consolidation of the
Corporation with or into another corporation (with respect to which less than a
majority of the outstanding voting power of the surviving or consolidated
corporation is held by shareholders of the Corporation immediately prior to such
event), (B) the sale or transfer of all or substantially all of the properties
and assets of the Corporation and its subsidiaries, (C) any purchase by any
party (or group of affiliated parties) other than the Investors (as defined in
that certain Stock Purchase Agreement by and among the Corporation and the
Investors (as defined therein) dated November 19, 1997), of shares of capital
stock of the Corporation (either through a negotiated stock purchase or a tender
for such shares), the effect of which is that such party (or group of affiliated
parties) that did not beneficially own a majority of the voting power of the
outstanding shares of capital stock of the Corporation immediately prior to such
purchase beneficially owns at least a majority of such voting power immediately
after such purchase, (D) the redemption or repurchase of shares representing a
majority of the voting power of the outstanding shares of capital stock of the
Corporation or (E) a public offering not constituting a "QPO" (as defined in
Section A.6(b) below) (each an "Extraordinary Transaction"), then, as a part of
and as a condition to the effectiveness of such Extraordinary Transaction,
UNLESS the holders of the Convertible Stock shall have elected to convert their
shares of Convertible Stock into Series A Redeemable Preferred Stock and Common
Stock in accordance with the voluntary conversion provisions of Section A.6
prior to the effective date of such Extraordinary Transaction, redeem all (but
not less than all) of the outstanding shares of Convertible Stocks for an amount
equal to the Convertible Liquidation Preference Amount, such amount to be
payable in cash or, at the election of holders of not less than sixty-six and
two-thirds percent in voting power of the outstanding Convertible Stock, in the
same form of consideration as is paid to the holders of Common Stock in such
Extraordinary Transaction; PROVIDED, HOWEVER, that if upon any Extraordinary
Transaction the holders of the outstanding shares of Convertible Stock would
receive more than the aggregate Convertible Liquidation Preference Amount in the
event their shares were converted into Series A Redeemable Preferred Stock and
Common Stock immediately prior to such Extraordinary Transaction, then each
holder of Convertible Stock shall receive with respect to each outstanding share
of Convertible Stock held by such holder an amount equal to the per share Series
A Redeemable Liquidation Preference Amount under Section B.4 plus any dividends
pursuant to Section A.3 or A.5(f) which are accumulated but unpaid in respect of
such share as of the date of such Extraordinary Transaction before any amount
shall be paid or distributed to the holders of Common Stock or of any other
stock ranking on liquidation junior to the Convertible Stock, payable in cash,
and thereafter shall share ratably with the holders of the Common Stock and any
other stock ranking on liquidation junior to the Convertible Stock in the
proceeds of such Extraordinary Transaction or, as applicable, shall receive from
the Corporation an amount equal to the amount per share that would be paid if
the shares of Common Stock receivable upon conversation of the Convertible Stock
were being acquired in the Extraordinary Transaction at the same price per share
as is paid for Common Stock, which excess amount shall be paid in the same form
of consideration as is paid to holders of Common Stock, as if each share of
Convertible Stock had been converted into the number of shares of Series A
Redeemable Preferred Stock and Common Stock issuable upon the conversion of such
share of Convertible Stock immediately prior to such Extraordinary Transaction.
The foregoing election shall be made by such holders giving the Corporation and
each other holder of Convertible Stock not less than five (5) business days
prior written notice, which shall set forth the date for such redemption. The
provisions of this Section A.5 shall not in any way limit the
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right of the holders of Convertible Stock to elect to convert their shares into
shares of Series A Redeemable Preferred Stock and Common Stock pursuant to
Section A.6 prior to or in connection with any Extraordinary Transaction.
(b) VALUATION OF DISTRIBUTION SECURITIES. Any securities or other
considerable to be delivered to the holders of the Convertible Stock upon any
Extraordinary Transaction in accordance with the terms hereof shall be valued as
follows:
(i) If traded on a nationally recognized securities exchange
or inter-dealer quotation system, the value shall be deemed to be the average of
the closing prices of the securities on such exchange or system over the 30-day
period ending three (3) business days prior to the closing:
(ii) If traded over-the-counter, the value shall be deemed to
be the average of the closing bid prices over the 30-day period ending three (3)
business days prior to the closing; and
(iii) If there is no active public market, the value shall be
the fair market value thereof, as mutually determined by the Corporation and the
holders of not less than sixty-six and two-thirds percent in voting power of the
outstanding shares of Convertible Stock, provided that if the Corporation and
the holders of sixty-six and two-thirds percent in voting power of the
outstanding shares of Convertible Stock are unable to reach agreement, then by
independent appraisal by a mutually agreed to investment banker, the fees of
which shall be paid by the Corporation.
(c) NOTICE BY CORPORATION. Prior to the occurrence of any
Extraordinary Transaction, the Corporation will furnish each holder of
Convertible Stock notice in accordance with Section A.9 hereof, together with a
certificate prepared by the chief financial officer of the Corporation
describing in detail all material terms of such Extraordinary Transaction,
including without limitation the consideration to be delivered in connection
with such Extraordinary Transaction the valuation of the corporation at the time
of such extraordinary transaction and the identities of the parties to the
Extraordinary Transaction.
(d) REDEMPTION DATE: REDEMPTION PRICE. Any holder of Convertible
Stock may exercise such holder's right of redemption pursuant to Section
A.5(a)(i) by such holder giving the Corporation not less than five (5) business
days prior written notice, which notice shall set forth the date of such
redemption. Upon the election of the holders of not less than sixty-six and
two-thirds percent of the voting power of the outstanding Convertible Stock to
cause the Corporation to redeem the Convertible Stock pursuant to Section
A.5(a)(ii), all holders of Convertible Stock shall be deemed to have elected to
cause the Convertible Stock to be so redeemed. Any date upon which a redemption
shall actually occur in accordance with Section A.5(a) shall be referred to as a
"Convertible Redemption Date." The redemption price for each share of
Convertible Stock redeemed pursuant to this Section A.5 shall be the per share
Convertible Liquidation Preference Amount or such greater per share amount as
may be payable pursuant to the proviso to Section A.5(a)(ii), if applicable (the
"Convertible Redemption Price"). The aggregate Convertible Redemption Price
shall be payable in cash in immediately available funds to the respective
holders of the Convertible Stock on the Convertible Redemption Date
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(subject to Section A.5(e)) except to the extent contemplated by the proviso
to Section A.5(a)(ii). Until the aggregate Convertible Redemption Price has
been paid for all shares of Convertible Stock being redeemed: (A) no dividend
whatsoever shall be paid or declared, and no distribution shall be made, on
any capital stock of the Corporation; and (B) except as permitted by Section
A.8(h), no shares of capital stock of the corporation (other than the
Convertible Stock in accordance with this Section A.5) shall be purchased,
redeemed or acquired by the Corporation and no monies shall be paid into or
set aside or made available for a sinking fund for the purchase, redemption
or acquisition thereof.
(e) REDEMPTION PROHIBITED. If, at a Convertible Redemption Date,
the Corporation is prohibited under the General Corporation Law of the State
California (the "Corporation Law") from redeeming all shares of Convertible
Stock for which redemption is required hereunder, then it shall redeem such
shares on a pro-rata basis among the holders of Convertible Stock in proportion
to the full respective redemption amounts to which they are entitled hereunder
to the extent possible and shall redeem the remaining shares to be redeemed as
soon as the Corporation is not prohibited from redeeming some or all of such
shares under the Corporation Law, subject to the last paragraph of Section A.8.
The shares of Convertible Stock not redeemed shall remain outstanding and
entitled to all of the rights and preferences provided in this Article III. The
Corporation shall take such action as shall be necessary or appropriate to
review and promptly remove any impediment to its ability to redeem Convertible
Stock, Series A Redeemable Preferred Stock or Common Stock under the
circumstances contemplated by this Section A.5(e) or Sections B.5(c) or C.5(c).
In the event that the Corporation fails for any reason to redeem shares for
which redemption is required pursuant to this Section A.5, including without
limitation due to a prohibition of such redemption under the Corporation Law,
then during the period from the applicable Convertible Redemption Date through
the date on which such shares are redeemed, the applicable convertible Base
Liquidation Amount of such shares shall bear interest at the rate of ten percent
(10%) per annum, with such interest to accrue daily in arrears and to be
compounded annually; PROVIDED, HOWEVER, that in no event shall such interest
exceed the maximum permitted rate of interest under applicable law (the "Maximum
Permitted Rate"). In the event that fulfillment of any provision hereof results
in such rate of interest being in excess of the Maximum Permitted Rate, the
obligation to be fulfilled shall automatically be reduced to eliminate such
excess; PROVIDED, HOWEVER, that any subsequent increase in the Maximum Permitted
Rate shall be retroactively effective to the applicable Redemption Date if
permitted by applicable law.
(f) DIVIDEND AFTER CONVERTIBLE REDEMPTION DATE. From and after a
Convertible Redemption Date, no shares of Convertible Stock subject to
redemption shall be entitled to dividends, if any, as contemplated by Section
A.3; PROVIDED, HOWEVER, that in the event that shares of Convertible Stock are
unable to be redeemed and continue to be outstanding in accordance with Section
A.5(e), such shares shall continue to be entitled to dividends and interest
thereon as provided in Section A.3 and A.5(e) until the date on which such
shares are actually redeemed by the Corporation.
(g) SURRENDER OF CERTIFICATES. Upon receipt of the applicable
Convertible Preferred Redemption Price by certified check or wire transfer, each
holder of shares of Convertible Stock to be redeemed shall surrender the
certificate or certificates representing such shares to the Corporation, duly
assigned or endorsed for transfer (or accompanied by duly
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executed stock powers relating thereto), or, in the event the certificate or
certificates are lost, stolen or missing, shall deliver an affidavit or
agreement satisfactory to the Corporation to indemnify the Corporation from any
loss incurred by it in connection therewith (an "Affidavit of Loss") with
respect to such certificates at the principal executive office of the
Corporation or the office of the transfer agent for the Convertible Stock or
such office or offices in the continental United States of an agent for
redemption as may from time to time be designated by notice to the holders of
Convertible Stock, and each surrendered certificate shall be canceled and
retired; PROVIDED, HOWEVER, that if the holder has exercised its redemption
right pursuant to Section A.5(a)(i)(A) or the Corporation is prohibited from
redeeming all shares of Convertible Stock as provided in Section A.5(e), the
holder shall not be required to surrender said certificate(s) to the Corporation
until said holder has received a new stock certificate for those shares of
Convertible Stock not so redeemed.
6. CONVERSION. The holders of the Convertible Stock shall have the
following conversion rights:
(a) AUTOMATIC CONVERSION UPON ELECTION OF HOLDERS. The holders of
shares of Convertible Stock shall be entitled, upon the written election of the
holder or holders of not less than sixty-six and two-thirds percent in voting
power of the outstanding shares of Convertible Stock, without the payment of any
additional consideration, (i) immediately prior to and subject to the closing or
happening of a Liquidation Event or an Extraordinary Transaction and (ii) at any
time after December 5, 1999, to cause all (but not less than all) of the
outstanding shares of Convertible Stock to be automatically converted into (i)
the number of fully paid and nonassessable shares of Common Stock which results
from dividing the Conversion Price (as defined in this Section A.6(a)) per share
in effect for the Convertible Stock at the time of conversion into the per share
Conversion Value (as defined in this Section A.6(a)) of the Convertible Stock
(the "Conversion Shares") and (ii) one (1) fully paid and nonassessable share of
Series A Redeemable Preferred Stock. Upon the election to so convert in the
manner and on the basis specified in the preceding sentence, all holders of the
Convertible Stock shall be deemed to have elected to voluntarily convert all
outstanding shares of Convertible Stock pursuant to this Section A.6. Upon the
filing and effectiveness of these Articles of Incorporation with the California
Secretary of State's office, the "Conversion Price" per share of Convertible
Stock shall be $4.44, and the per share "Conversion Value" of Convertible Stock
shall be $4.44. The Conversion Price per share of Convertible Stock and the
Common Stock Conversion Rate (as defined in this Section A.6(a)) shall be
subject to adjustment from time to time as provided in Section A.7 hereof. The
number of shares of Common Stock into which a share of Convertible Stock is
convertible is hereinafter referred to as the "Common Stock Conversion Rate."
The number of shares of Series A Redeemable Preferred Stock into which a share
of Convertible Stock is convertible is hereinafter referred to as the "Series A
Redeemable Conversion Rate." If the holders of shares of Convertible Stock elect
to convert the outstanding shares of Convertible Stock at a time when there are
any accumulated but unpaid dividends or other amounts due on or in respect of
such shares, such dividends and other amounts shall be paid in full in cash by
the Corporation in connection with such conversion. Upon the election to so
convert in the manner and on the basis specified in this Section A.6(a) all
holders of the Convertible Preferred Stock shall be deemed to have elected to
voluntarily convert all outstanding shares of Convertible Preferred Stock
pursuant to this Section A.6(a).
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(b) AUTOMATIC CONVERSION UPON QPO. Each share of Convertible
Stock shall automatically be converted, without the payment of any additional
consideration, into shares of Common Stock and Series A Redeemable Preferred
Stock as of, and in all cases subject to, the closing of the Corporation's first
underwritten offering to the public pursuant to an effective registration
statement under the Securities Act of 1933, as amended, provided that (i) such
registration statement covers the offer and sale of Common Stock of which the
aggregate net proceeds attributable to sales for the account of the Corporation
exceed $20,000,000, at a price per share not less than $13.32 (as appropriately
adjusted for any stock split, combination, reorganization, recapitalization,
stock dividend, or similar event), (ii) such Common Stock is listed for trading
on either the New York Stock Exchange or the Nasdaq National Market System and
(iii) if a redemption election is made pursuant to Section B.5(a)(i) or (a)(ii),
either (A) all outstanding shares of Series A Redeemable Preferred Stock which
are outstanding or issuable upon such automatic conversion are redeemed
immediately upon and as of the closing of such offering, (B) contemporaneously
with such offering cash in an amount sufficient to redeem all outstanding shares
of Series A Redeemable Preferred Stock is segregated and irrevocably held by the
Corporation for payment to holders of Series A Redeemable Preferred Stock or (C)
all outstanding shares of Series A Redeemable Preferred Stock are exchanged for
Series A Notes (as defined in Section B.5(a)(i)) (a "QPO" or a "Qualified Public
Offering"); PROVIDED that if a closing of a QPO occurs, all outstanding shares
of Convertible Stock shall be deemed to have been converted into shares of
Common Stock and Series A Redeemable Preferred Stock immediately prior to such
closing. Any such conversion shall be at the Common Stock Conversion Rate and
Series A Redeemable Conversion Rate in effect upon the closing of a QPO, as
applicable.
If the holders of shares of Convertible Stock are required to convert the
outstanding shares of Convertible Stock pursuant to this Section A.6(b) at a
time when there are any declared but unpaid dividends or any amounts due on or
in respect of such shares, such dividends and other amounts shall be paid in
full in cash by the Corporation in connection with such conversion.
(c) PROCEDURE FOR VOLUNTARY CONVERSION. Upon election to convert
pursuant to Section A.6(a), each holder of Convertible Stock shall surrender the
certificate or certificates representing its Convertible Stock, duly assigned or
endorsed for transfer to the Corporation (or accompanied by duly executed stock
powers relating thereto), at the principal executive office of the Corporation
or the offices of the transfer agent for the Convertible Stock or such office or
offices in the continental United States of any agent for conversion as may from
time to time be designated by notice to the holders of the Convertible Stock by
the Corporation, or shall deliver an Affidavit of Loss with respect to such
certificates. Upon surrender of a certificate representing Convertible Stock for
conversion, or delivery of an Affidavit of Loss, the Corporation shall issue and
send by hand delivery, by courier or by first class mail (postage prepaid) to
the holder thereof or to such holder's designee, at the address designated by
such holder, certificates for the number of shares of Common Stock and Series A
Redeemable Preferred Stock to which such holder shall be entitled upon
conversion. The issuance of certificates for Common Stock and Series A
Redeemable Preferred Stock upon conversion of Convertible Stock will be made
without charge to the holders of such shares for any issuance tax in respect
thereof or other costs incurred by the Corporation in connection with such
conversion and the related issuance of such stock. If a Liquidation Event or
conversion of Convertible Stock upon an Extraordinary Transaction or public
offering not constituting a QPO occurs, all
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outstanding shares of Convertible Stock shall be deemed to have been converted
into shares of Common Stock and Series A Redeemable Preferred Stock immediately
prior thereto, provided that the Corporation shall make appropriate provisions
(x) for the Common Stock issued upon such conversion to be treated on the same
basis as all other Common Stock in such Liquidation Event, Extraordinary
Transaction or public offering not constituting a QPO and (y) for the payment of
the Series A Redeemable Liquidation Preference Amount in connection with any
Liquidation Event or the redemption of the Series A Redeemable Preferred Stock
(issued upon such conversion) upon election of such redemption in connection
with any Extraordinary Transaction or public offering not constituting a QPO, if
applicable, as provided herein. In the event of any public offering constituting
a QPO, the provisions of Section A.5(d) shall apply.
(d) PROCEDURE FOR AUTOMATIC CONVERSION. As of, and in all cases
subject to, the closing of a QPO (the "Automatic Conversion Date"), all
outstanding shares of Convertible Stock shall be converted automatically into
shares of Common Stock and Series A Redeemable Preferred Stock at the applicable
conversion rates specified in Section A.6(a) and without any further action by
the holders of such shares and whether or not the certificates representing such
shares of Convertible Stock are surrendered to the Corporation or its transfer
agent; PROVIDED, HOWEVER, that all holders of Convertible Stock shall be given
prior written notice of the occurrence of a QPO in accordance with Section A.9
hereof. On the Automatic Conversion Date, all rights with respect to the
Convertible Stock so converted shall terminate, except any of the rights of the
holders thereof upon surrender of their certificate or certificates therefor or
delivery of an Affidavit or Loss thereof to receive certificates for the number
of shares of Common Stock and Series A Redeemable Preferred Stock into which
such Convertible Stock has been converted. If so required by the Corporation,
certificates surrendered for conversion shall be endorsed or accompanied by
written instrument or instruments of transfer, in form satisfactory to the
Corporation, duly executed by the registered holder or by his, her or its
attorney duly authorized in writing. Upon surrender of such certificates or
Affidavit of Loss the Corporation shall issue and deliver to such holder,
promptly (and in any event in such time as is sufficient to enable such holder
to participate in such QPO) at such office and in its name as shown on such
surrendered certificate or certificates, a certificate or certificates for the
number of shares of Common Stock and number of shares of Series A Redeemable
Preferred Stock or the Series A Notes into which the shares of the Convertible
Stock surrendered were convertible on the Automatic Conversion Date.
(e) RESERVATIONS OF STOCK ISSUABLE UPON CONVERSION. The
Corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock and Series A Redeemable Preferred Stock
solely for the purpose of effecting the conversion of the shares of Convertible
Stock such number of its shares of Common Stock and Series A Redeemable
Preferred Stock as shall from time to time be sufficient to effect the
conversion of all outstanding shares of Convertible Stock; and if at any time
the number of authorized but unissued shares of Common Stock and Series A
Redeemable Preferred Stock shall not be sufficient to effect the conversion of
all then outstanding shares of Convertible Stock, the Corporation will take such
corporate action as may be necessary to increase its authorized but unissued
shares of Common Stock and Series A Redeemable Preferred Stock to such number of
shares as shall be sufficient for such purpose.
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(f) NO CLOSING OF TRANSFER BOOKS. The Corporation shall not close
its books against the transfer of shares of Convertible Stock in any manner
which would interfere with the timely conversion of any shares of Convertible
Stock.
7. ADJUSTMENTS. The Conversion Price in effect from time to time shall
be subject to adjustment from and after December 5, 1997 and regardless of
whether any shares of Convertible Stock are then issued and outstanding as
follows:
(a) STOCK DIVIDENDS, SUBDIVIDENDS AND COMBINATIONS. Upon the
issuance of additional shares of Common Stock as a dividend or other
distribution on outstanding Common Stock, the subdivision of outstanding shares
of Common Stock into a greater number of shares of Common Stock, or the
combination of outstanding shares of Common Stock into a smaller number of
shares of Common Stock, the Conversion Price shall, simultaneously with the
happening of such dividend, subdivision or split be adjusted by multiplying the
then effective Conversion Price by a fraction, the numerator of which shall be
the number of shares of Common Stock outstanding immediately prior to such event
and the denominator of which shall be the number of shares of Common Stock
outstanding immediately after such event. An adjustment made pursuant to this
Section A.7(a) shall be given effect, upon payment of such a dividend or
distribution, as of the record date for the determination of shareholders
entitled to receive such dividend or distribution (on a retroactive basis) and
in the case of subdivision or combination shall become effective immediately as
of the effective date thereof.
(b) SALE OF COMMON STOCK. In the event the Corporation shall at
any time, or from time to time, issue, sell or exchange any shares of Common
Stock (including shares held in the Corporation's treasury but excluding up to
994,407 shares of Common Stock (as appropriately adjusted for stock splits,
stock dividends and the like) issued to officers, directors or employees of the
Corporation or upon the exercise of options or other rights issued to such
officers, director or employees pursuant to the stock option plans (the
"Excluded Shares"), for a consideration per share less than the Conversion Price
in effect immediately prior to the issuance, sale or exchange of such shares,
then, and thereafter successively upon each such issuance, sale or exchange, the
Conversion Price in effect immediately prior to the issuance, sale or exchange
of such shares shall forthwith be reduced to an amount determined by multiplying
such Conversion Price by a fraction:
(i) the numerator of which shall be (X) the number of shares
of Common Stock of all classes outstanding immediately prior to the issuance of
such additional shares of Common Stock (excluding treasury shares but including
all shares of Common Stock issuable upon conversion or exercise of any
outstanding Convertible Stock, options, warrants, rights or convertible
securities), plus (Y) the number of shares of Common Stock which the net
aggregate consideration received by the Corporation for the total number of such
additional shares of Common Stock so issued would purchase at the Conversion
Price (prior to adjustment), and
(ii) the denominator of which shall be (X) the number of
shares of Common Stock of all classes outstanding immediately prior to the
issuance of such additional shares of Common Stock (excluding treasury shares
but including all shares of Common Stock issuable upon conversion or exercise of
any outstanding Convertible Stock, options, warrants,
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rights or convertible securities), plus (Y) the number of such additional shares
of Common Stock so issued.
(c) SALE OF OPTIONS, RIGHTS OR CONVERTIBLE SECURITIES. In the
event the Corporation shall at any time or from time to time, issue options,
warrants or rights to subscribe for shares of Common Stock, or issue any
securities convertible into or exchangeable for shares of Common Stock, or issue
any securities convertible into or exchangeable for shares of (other than any
options or warrants for Excluded Shares), for a consideration per share
(determined by dividing the Net Aggregate Consideration (as determined below) by
the aggregate number of shares of Common Stock that would be issued if all such
options, warrants, rights or convertible securities were exercised or converted
to the fullest extent permitted by their terms) less than the Conversion Price
in effect immediately prior to the issuance of such options or rights or
convertible or exchangeable securities, the Conversion Price in effect
immediately prior to the issuance of such options, warrants or rights or
securities shall be reduced to an amount determined by multiplying such
Conversion Price by a fraction:
(i) the numerator of which shall be (X) the number of shares
of Common Stock of all classes outstanding immediately prior to the issuance of
such options, rights or convertible securities (excluding treasury shares but
including all shares of Common Stock issuable upon conversion or exercise of any
outstanding Convertible Stock, options, warrants, rights or convertible
securities), plus (Y) the number of shares of Common Stock which the total
amount of consideration received by the Corporation for the issuance of such
options, warrants, rights or convertible securities plus the minimum amount set
forth in the terms of such security as payable to the Corporation upon the
exercise or conversion thereof (the "Net Aggregate Consideration") would
purchase at the Conversion Price prior to adjustment, and
(ii) the denominator of which shall be (X) the number of
shares of Common Stock of all classes outstanding immediately prior to the
issuance of such options, warrants, rights or convertible securities (excluding
treasury shares but including all shares of Common Stock issuable upon
conversion or exercise of any outstanding Convertible Stock, options, warrants,
rights or convertible securities), plus (Y) the aggregate number of shares of
Common Stock that would be issued if all such options, warrants, rights or
convertible securities were exercised or converted.
(d) EXPIRATION OR CHANGE IN PRICE. If the consideration per share
provided for in any options or rights to subscribe for shares of Common Stock or
any securities exchangeable for or convertible into shares of Common Stock,
changes at any time, the Conversion Price in effect at the time of such change
shall be readjusted to the Conversion Price which would have been in effect at
such time had such options or convertible securities provided for such changed
consideration per share (determined as provided in Section A.7(c) hereof), at
the time initially granted, issued or sold; PROVIDED, that such adjustment of
the Conversion Price will be made only as and to the extent that the Conversion
Price effective upon such adjustment remains less than or equal to the
Conversion Price that would be in effect if such options, rights or securities
had not been issued. No adjustment of the Conversion Price shall be made under
this Section A.7 upon the issuance of any additional shares of Common Stock
which are issued pursuant to the exercise of any warrants, options or other
subscription or purchase rights or pursuant to the exercise of any conversion or
exchange rights in any convertible securities if an adjustment shall
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previously have been made upon the issuance of such warrants, options or other
rights. Any adjustment of the Conversion Price shall be disregarded if, as, and
when the rights to acquire shares of Common Stock upon exercise or conversion of
the warrants, options, rights or convertible securities which gave rise to such
adjustment expire or are canceled without having been exercised, so that the
Conversion Price effective immediately upon such cancellation or expiration
shall be equal to the Conversion Price in effect at the time of the issuance of
the expired or canceled warrants, options, rights or convertible securities,
with such additional adjustments as would have been made to that Conversion
Price had the expired or canceled warrants, options, rights or convertible
securities not been issued.
(e) OTHER ADJUSTMENTS. In the event the Corporation shall make or
issue, or fix a record date for the determination of holders of Common Stock
entitled to receive, a dividend or other distribution payable in securities of
the Corporation other than shares of Common Stock, then and in each such event
lawful and adequate provision shall be made so that the holders of Convertible
Stock shall receive upon conversion thereof in addition to the number of shares
of Common Stock receivable thereupon, the number of securities of the
Corporation which they would have received had their Convertible Stock been
converted into Common Stock and Series A Redeemable Preferred Stock on the date
of such event and had they thereafter, during the period from the date of such
event to and including the date of conversion, retained such securities
receivable by them as aforesaid during such period, giving application to all
adjustments called for during such period under this Section A.7 as applied to
such distributed securities.
If the Common Stock issuable upon the conversion of the Convertible
Stock shall be changed into the same or different number of shares of any class
or classes of stock, whether by reclassification or otherwise (other than a
subdivision or combination of shares or stock dividend provided for above, or a
reorganization, merger, consolidation or sale of assets provided for elsewhere
in this Section A.7), then and in each such event the holder of each share of
Convertible Stock shall have the right thereafter to convert such share into the
kind and amount of shares of stock and other securities and property receivable
upon such reorganization, reclassification or other change, by holders of the
number of shares of Common Stock into which such shares of Convertible Stock
might have been converted immediately prior to such reorganization,
reclassification or change, all subject to further adjustment as provided
herein.
(f) MERGERS AND OTHER REORGANIZATIONS. If at any time or from
time to time there shall be a capital reorganization of the Common Stock (other
than a subdivision, combination, reclassification or exchange of shares provided
for elsewhere in this Section A.7) or a merger or consolidation of the
Corporation with or into another Corporation or the sale of all or substantially
all of the Corporation's properties and assets to any other person, then, as a
part of and as a condition to the effectiveness of such reorganization, merger,
consolidation or sale, lawful and adequate provision shall be made so that the
holders of the Convertible Stock shall thereafter be entitled to receive upon
conversion of the Convertible Stock the number of shares of stock or other
securities or property of the Corporation or of the successor Corporation
resulting from such merger or consolidation or sale, to which a holder of Common
Stock deliverable upon conversion would have been entitled on such capital
reorganization, merger, consolidation, or sale. In any such case, appropriate
provisions shall be made with respect to the rights of the holders of the
Convertible Stock after the reorganization, merger, consolidation or
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sale to the end that the provisions of this Section A.7 (including without
limitation provisions for adjustment of the Conversion Price and the number of
shares purchasable upon conversion of the Convertible Stock) shall thereafter be
applicable, as nearly as may be, with respect to any shares of stock, securities
or assets to be deliverable thereafter upon the conversion of the Convertible
Stock.
(g) All calculations under this Section A.7 shall be made to the
nearest cent or to the nearest one hundredth (1/100) of a share, as the case may
be.
(h) Upon the occurrence of each adjustment or readjustment
pursuant to this Section A.7, the Corporation at its expense shall promptly
compute such adjustment or readjustment in accordance with the terms hereof and
prepare and furnish to each holder of Convertible Stock a certificate setting
forth such adjustment or readjustment and showing in detail the facts upon which
such adjustment or readjustment is based. The Corporation shall, upon written
request at any time of any holder of Convertible Stock, furnish or cause to be
furnished to such holder a like certificate setting forth (i) such adjustments
and readjustments, (ii) the Conversion Prices before and after such adjustment
or readjustment and (iii) the number of shares of Common Stock and Series A
Redeemable Preferred Stock and the amount, if any, of other property which at
the time would be received upon the conversion of such holder's shares of
Convertible Stock.
8. COVENANTS. So long as any shares of Convertible Preferred Stock (or
Series A Redeemable Preferred Stock, as applicable) shall be outstanding, the
Corporation shall not, without first having provided written notice of such
proposed action to each holder of outstanding shares of Convertible Preferred
Stock (or Series A Redeemable Preferred Stock, as applicable) and having
obtained the affirmative vote or written consent of the holders of not less than
sixty-six and two-thirds percent in voting power of the outstanding shares of
Convertible Preferred Stock (or Series A Redeemable Preferred Stock, as
applicable), voting as a single class, with each share of Convertible Preferred
Stock (or Series A Redeemable Preferred Stock, as applicable) entitling the
holder thereof to one vote per share of Convertible Preferred Stock (or Series A
Redeemable Preferred Stock, as applicable) held by such holder:
(a) sell, lease or otherwise dispose of (whether in one
transaction or a series of related transactions) all or substantially all of its
assets;
(b) merge with or into or consolidate with another entity (except
into or with a wholly-owned subsidiary of the Corporation with the requisite
shareholder approval);
(c) acquire any other corporation or business concern, whether by
acquisition of assets, capital stock or otherwise, and whether in consideration
of the payment of cash, the issuance of capital stock or otherwise, or make any
material investment in another business entity;
(d) voluntarily dissolve, liquidate or wind up its operations;
(e) authorize the issuance of, issue or reserve for issuance, any
equity securities (including without limitations options, warrants, convertible
or exchangeable securities or rights giving the holder thereof the right to
acquire equity securities or any of the foregoing)
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or otherwise engage in any equity financing, including without limitation in
connection with a stock acquisition, but excluding the issuance of stock options
and/or restricted stock as contemplated by Section 5.11 of that certain
Preferred Stock Purchase Agreement, dated as of November 19, 1997 (the "Purchase
Agreement"), by and between the Corporation and certain Investors (as defined
therein);
(f) declare or make dividend payments on any shares of its Common
Stock (as defined in Section C.1) or any other class of its capital stock;
(g) create, or obligate itself to create, any class or series of
shares having preference over or being on a parity with the Convertible
Preferred Stock or the Series A Redeemable Preferred Stock;
(h) except as otherwise expressly provided in the Purchase
Agreement, that certain Stock Redemption Agreement, dated as of November 19,
1997 (the "Redemption Agreement"), by and between the Corporation and certain
other parties named therein, the Option Cancellation Agreement (as defined the
Purchase Agreement) or herein, the Corporation will not declare or pay any
dividends or make any distributions of cash, property or securities of the
Corporation with respect to any shares of its Common Stock or any other class of
its capital stock, or directly or indirectly redeem, purchase, or otherwise
acquire for consideration any shares of its Common Stock or any other class of
its capital stock; provided. however, that this restriction shall not apply to
the repurchase of (x) up to 390,000 shares of Common Stock held by Golden Legacy
Limited Partnership, a Nevada limited partnership and (y) shares of Common Stock
pursuant to agreements under which the Corporation has the option or obligation
to repurchase such shares upon the occurrence of certain events, including the
termination of employment, and a right of refusal to acquire shares in the event
of certain proposed transfers;
(i) enter into any agreement or arrangement or take any other
action that eliminates, amends, restricts or otherwise adversely affects the
rights of the holders of the Convertible Preferred Stock or the Series A
Redeemable Preferred Stock or the Corporation's ability to perform its
obligations hereunder;
(j) increase the size of the Board of Directors to more than
seven (7) members;
(k) enter into or be a party to any transaction or agreement,
including without limitation any lease or other rental or purchase agreement
providing for loans or extensions of credit by or to the Corporation with or for
the benefit of any person or entity which is a shareholder, officer or director
of the Corporation, a relative by blood or marriage of, a trust or estate for
the benefit of, or a person or entity which directly or indirectly controls, is
controlled by, or is under common control with, any such person or entity,
except (i) for normal compensation paid to employees of the Corporation in the
ordinary course of business and (ii) transactions expressly disclosed in or
contemplated by the Purchase Agreement and the exhibits thereto; or
(l) make any amendment to Article III of its Articles of
Incorporation or make any other amendment to its Articles of Incorporation or
any amendment to its By-laws that
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eliminates, amends or restricts the rights and preferences of or otherwise
adversely affects the holders of the Convertible Preferred Stock or the Series A
Redeemable Preferred Stock.
Further, the Corporation shall not, by amendment of these Articles of
Incorporation or through any Extraordinary Transaction or other reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Corporation and each subsidiary of the Corporation but shall at all times in
good faith assist in the carrying out of all the provisions of this Article III
and in the taking of all such action as may be necessary or appropriate in order
to protect the rights of the holders of the Convertible Preferred Stock and the
Series A Redeemable Preferred Stock set forth in this Certificate against
impairment. Any successor to the Corporation or any subsidiary of the
Corporation shall agree, as a condition to such succession, to carry out and
observe the obligations of the Corporation hereunder with respect to the
Convertible Preferred Stock and the Series A Redeemable Preferred Stock.
9. NOTICE
(a) LIQUIDATION EVENTS, EXTRAORDINARY TRANSACTIONS. ETC. In the
event (i) the Corporation establishes a record date to determine the holders of
any class of securities who are entitled to receive any dividend or other
distribution or who are entitled to vote at a meeting (or by written consent) in
connection with any of the transactions identified in clause (ii) hereof, or
(ii) any Liquidation Event (as defined in Section A.4), any Extraordinary
Transaction (as defined in Section A.5), any QPO (as defined in Section A.6) or
any other public offering becomes reasonably likely to occur, the Corporation
shall mail or cause to be mailed by first class mail (postage prepaid) to each
holder of Convertible Stock (or each holder of Series A Redeemable Preferred
Stock, as applicable) at least forty-five (45) days prior to such record date
specified therein or the expected effective date of any such transaction,
whichever is earlier, a notice specifying (A) the date of such record date for
the purpose of such dividend or distribution or meeting or consent and a
description of such dividend or distribution or the action to be taken at such
meeting or by such consent, (B) the date on which any such Liquidation Event,
Extraordinary Transaction, QPO or other public offering is expected to become
effective, and (C) the date on which the books of the Corporation shall close or
a record shall be taken with respect to any such event.
(b) WAIVER OF NOTICE. The holder or holders of not less than
sixty-six and two-thirds percent in voting power of the outstanding shares of
Convertible Stock (or Series A Redeemable Preferred Stock, as applicable) may,
at any time upon written notice to the Corporation, waive any notice provisions
specified herein for the benefit of such holders, and any such waiver shall be
binding upon all holders of such securities.
(c) GENERAL. In the event that the Corporation provides any
notice, report or statement to any holder of Common Stock, the Corporation shall
at the same time provide a copy of any such notice, report or statement to each
holder of outstanding shares of Convertible Stock (or Series A Redeemable
Preferred Stock, as applicable).
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10. NO REISSUANCE OF CONVERTIBLE STOCK. No share or shares of
Convertible Stock acquired by the Corporation by reason of redemption, purchase,
conversion or otherwise shall be reissued, and all such shares shall be
canceled, retired and eliminated from the shares which the Corporation shall be
authorized to issue.
11. CONTRACTUAL RIGHTS OF HOLDERS. The various provisions set forth
herein for the benefit of the holders of the Convertible Stock and Series A
Redeemable Preferred Stock shall be deemed contract rights enforceable by them,
including without limitation, one or more actions for specific performance.
B. SERIES A REDEEMABLE PREFERRED STOCK
1. DESIGNATION. A total of 3,330,000 shares of the Corporation's
Preferred Stock shall be designated as a series known as Series A Redeemable
Preferred Stock, without par value per share (the "Series A Redeemable Preferred
Stock").
2. ELECTION OF DIRECTORS: VOTING.
(a) ELECTION OF DIRECTORS. The holders of outstanding shares of
Series A Redeemable Preferred Stock shall, voting together as a separate class,
be entitled to elect one (1) Director. Such Director shall be the candidate
receiving the greatest number of affirmative votes (with each holder of Series A
Redeemable Preferred Stock entitled to cast one vote for or against each
candidate with respect to each share of Series A Redeemable Preferred Stock held
by such holder) of the outstanding shares or Series A Redeemable Preferred Stock
(the "Series A Redeemable Preferred Stock Director Designee"). The election of
the Series A Redeemable Preferred Stock Director Designee by the holders of the
Series A Redeemable Preferred Stock shall occur (i) at the annual meeting of
holders of capital stock, (ii) at any special meeting of holders of capital
stock, (iii) at any special meeting of holders of Series A Redeemable Preferred
Stock called by holders of a majority of the outstanding shares of Series A
Redeemable Preferred Stock or (iv) by the unanimous written consent of holders
of the outstanding shares of Series A Redeemable Preferred Stock. If at any time
when any share of Series A Redeemable Preferred Stock is outstanding the Series
A Redeemable Preferred Stock Director Designee should cease to be a Director for
any reason, the vacancy shall only be filled by the vote or written consent of
holders of the outstanding shares of Series A Redeemable Preferred Stock, voting
together as a separate class, in the manner and on the basis specified above.
(b) VOTING GENERALLY. Except as set forth above with respect to
the election of the Series A Redeemable Preferred Stock Director Designee, the
holders of Series A Redeemable Preferred Stock shall not be entitled to vote on
any matters except to the extent otherwise required under the Corporation Law.
3. DIVIDENDS. The holders of outstanding shares of Series A Redeemable
Preferred Stock shall be entitled to receive, out of any funds legally available
therefor, cumulative (non-compounding) dividends on the Series A Redeemable
Preferred Stock in cash, at the per share rate per annum of six percent (6%) of
$3.996 (adjusted appropriately for stock splits, stock dividends,
recapitalizations and the like with respect to the Series A Redeemable Preferred
Stock) (a "Series A Redeemable Cumulative Dividend"). Such dividends will accrue
quarterly
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in arrears commencing as of the date of issuance of the Series A Redeemable
Preferred Stock and be cumulative, to the extent unpaid, whether or not they
have been declared and whether or not there are profits, surplus or other funds
of the Corporation legally available for the payment of dividends. Series A
Redeemable Cumulative Dividends shall become due and payable with respect to any
share of Series A Redeemable Preferred Stock as provided in Section B.4 and
Section B.5. So long as any shares of Series A Redeemable Preferred Stock are
outstanding and the Series A Redeemable Cumulative Dividends have not been paid
in full in cash: (A) no dividend whatsoever shall be paid or declared, and no
distribution shall be made, on any Common Stock or other capital stock of the
Corporation ranking junior to the Series A Redeemable Preferred Stock; and (B)
except as provided in Section A.8(h), no shares of capital stock of the
Corporation ranking junior to the Series A Redeemable Preferred Stock shall be
purchased, redeemed or acquired by the Corporation and no monies shall be paid
into or set aside or made available for a sinking fund for the purchase,
redemption or acquisition thereof. All numbers relating to the calculation of
dividends pursuant to this Section B.3 shall be subject to equitable adjustment
in the event of any stock split, combination, reorganization, recapitalization,
reclassification or other similar event involving a change in the Series A
Redeemable Preferred Stock.
4. LIQUIDATION. Upon any Liquidation Event, each holder of outstanding
shares of Series A Redeemable Preferred Stock shall be entitled to be paid out
of the assets of the Corporation available for distribution to shareholders,
whether such assets are capital, surplus, or earnings, and before any amount
shall be paid or distributed to the holders of Common Stock or of any other
stock ranking on liquidation junior to the Series A Redeemable Preferred Stock,
an amount in cash equal to the sum of (a) $3.996 per share of Series A
Redeemable Preferred Stock held by such holder (adjusted appropriately for stock
splits, stock dividends, recapitalizations and the like with respect to the
Series A Redeemable Preferred Stock), plus (b) any accumulated but unpaid
dividends to which such holder of outstanding shares of Series A Redeemable
Preferred Stock is entitled pursuant to Sections B.3 and B.5(d) hereof (the sum
of clauses (a) and (b) being referred to herein as the "Series A Redeemable Base
Liquidation Amount"), plus (c) any interest accrued pursuant to Section B.5(c)
to which such holder of outstanding shares of Series A Redeemable Preferred
Stock is entitled, if any (the sum of clauses (a), (b) and (c) being referred to
herein as the "Series A Redeemable Liquidation Preference Amount"); PROVIDED,
HOWEVER, that if, upon any Liquidation Event, the amounts payable with respect
to the Series A Redeemable Liquidation Preference Amount are not paid in full,
the holders of the Series A Redeemable Preferred Stock shall ratably in any
distribution of assets in proportion to the full respective preferential amounts
to which they are entitled.
5. REDEMPTION.
(a) REDEMPTION EVENTS.
(i) UPON ELECTION OF HOLDERS UPON A QPO. Upon the election of
holder or holders of not less than sixty-six and two-thirds percent of the
outstanding Series A Redeemable Preferred Stock, the Corporation shall redeem
all (and not less than all, except as set forth in the third sentence of this
Section B.5(a)) of the outstanding shares of Series A Redeemable Preferred Stock
upon the closing of a QPO. The foregoing election shall be made by such holders
giving the Corporation and each other holder of Series A Redeemable Preferred
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Stock written notice not less than five (5) days prior to the closing of a QPO.
In the event that the principal underwriter for a QPO shall reasonably and in
good faith request in writing, or cause the Corporation to so request in
writing, that the holders of Series A Redeemable Preferred Stock waive the
holders' right to elect to have such holder's shares of Series A Redeemable
Preferred Stock redeemed pursuant to this Section B.5(a)(i) and the holders of
sixty-six and two-thirds percent in voting power of the outstanding shares of
the Series A Redeemable Preferred Stock agree to so waive such redemption
election, then all outstanding shares of Series A Redeemable Preferred Stock
shall be exchanged, without the payment of additional consideration, for notes
of the Corporation ("Series A Notes") in an aggregate principal amount equal to
the aggregate Series A Redemption Price (as defined in Section B.5(b) below),
which Series A Notes shall (i) (i) mature on the second anniversary of the
effective date of such QPO and (ii) bear interest on the outstanding principal
balance thereof at the rate of ten percent (10%) per annum, which interest shall
accrue daily in arrears and be paid on the last day of each month, commencing on
the last day of the first month following the effective date of such QPO;
provided, however, that in no event shall such interest rate exceed the Maximum
Permitted Rate.
(ii) UPON ELECTION OF CORPORATION UPON A QPO. The Corporation
may elect to redeem all (but not less than all, other than pursuant to Section
B.5(c) below) of the outstanding shares of Series A Redeemable Preferred Stock
at any time upon the closing of a QPO. The foregoing election shall be made by
the Corporation giving each holder of Series A Redeemable Preferred Stock
written notice not less than five (5) days prior to the closing of a QPO.
(iii) LAPSE OF TIME.
(A) At any time after the later of the first anniversary
of the date of the conversion of the Convertible Preferred Stock as set forth in
Section A.6 (other than in connection with an Extraordinary Transaction) and
December 5, 2003, on any one occasion any holder of Series A Redeemable
Preferred Stock may require the Corporation to redeem up to 50% of the
outstanding shares of Series A Redeemable Preferred Stock held by such holder at
such time.
(B) At any time after the later of the second anniversary
of the date of the conversion of the Convertible Preferred Stock as set forth in
Section A.6 (other than in connection with an Extraordinary Transaction) and
December 5, 2004, on any one occasion any holder of Series A Redeemable
Preferred Stock may require the Corporation to redeem up to all of the
outstanding shares of Series A Redeemable Preferred Stock held by such holder at
such time.
(iv) UPON EXTRAORDINARY TRANSACTIONS. Upon the election of
the holder or holders of not less than sixty-six and two-thirds percent in
voting power of the outstanding Series A Redeemable Preferred Stock, the
Corporation shall redeem all (and not less than all, other than pursuant to
Section B.5(c) below) of the outstanding shares of Series A Redeemable Preferred
Stock upon the occurrence of an Extraordinary Transaction (as defined in Section
A.5) or public offering not constituting a QPO. The foregoing election shall be
made by such holders giving the Corporation and each other holder of Series A
Redeemable Preferred Stock (or
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<PAGE>
Convertible Stock, as applicable) not less than five (5) days prior written
notice, which notice shall set forth the date for such redemption.
(v) UPON ELECTION OF CORPORATION.
(A) At any time after the later of the first anniversary
of the date of the conversion of the Convertible Preferred Stock as set forth in
Section A.6 and December 5, 2003, the Corporation may redeem 50% (but not less
than 50%) of the outstanding shares of Series A Redeemable Preferred Stock. The
foregoing election shall be made by the Corporation giving each holder of Series
A Redeemable Preferred Stock written notice not less than five (5) days prior to
the date for such redemption.
(B) At any time after the later of the second anniversary
of the date of the conversion of the Convertible Preferred Stock as set forth in
Section A.6 and December 5, 2004, the Corporation may redeem all (but not less
than all) of the outstanding shares of Series A Redeemable Preferred Stock. The
foregoing election shall be made by the Corporation giving each holder of Series
A Redeemable Preferred Stock written notice not less than five (5) days prior to
such redemption.
(b) REDEMPTION DATE; REDEMPTION PRICE. Any holder of Series A
Redeemable Preferred Stock may exercise such holder's right of redemption
pursuant to Section B.5(a)(iii) by such holder giving the Corporation not less
than ten (10) days prior written notice, which notice shall set forth the date
for such redemption. Upon the election of the holders of not less than sixty-six
and two-thirds percent in voting power of the outstanding Series A Redeemable
Preferred Stock to cause the Corporation to redeem the Series A Redeemable
Preferred Stock pursuant to Section B. 5(a)(i) or (a)(iv), all holders of Series
A Redeemable Preferred Stock shall be deemed to have elected to cause the Series
A Redeemable Preferred Stock subject to such election to be so redeemed. Any
date upon which a redemption shall actually occur in accordance with Section
B.5(a) shall be referred to as a "Series A Redemption Date." The redemption
price for each share of Series A Redeemable Preferred Stock redeemed pursuant to
this Section B.5 shall be the per share Series A Redeemable Liquidation
Preference Amount (the "Series A Redemption Price"). The aggregate Series A
Redemption Price shall be payable in cash in immediately available funds on the
Series A Redemption Date. Until the aggregate Series A Redemption Price,
including any interest thereon, has been paid in cash for all shares of Series A
Redeemable Preferred Stock redeemed as of the applicable Series A Redemption
Date or Series A Notes have been issued pursuant to Section B.5(a)(i): (A) no
dividend whatsoever shall be paid or declared, and no distribution shall be
made, on any capital stock of the Corporation; and (B) except as provided in
Section A.8(h), no shares of capital stock of the Corporation (other than the
Series A Redeemable Preferred Stock in accordance with this Section B.5) shall
be purchased, redeemed or acquired by the Corporation and no monies shall be
paid into or set aside or made available for a sinking fund for the purchase,
redemption or acquisition thereof.
(c) REDEMPTION PROHIBITED. If, at a Series A Redemption Date, the
Corporation is prohibited under the Corporation Law from redeeming all shares of
Series A Redeemable Preferred Stock for which redemption is required hereunder,
then it shall redeem such shares on a pro-rata basis among the holders of Series
A Redeemable Preferred Stock in
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<PAGE>
proportion to the full respective redemption amounts to which they are entitled
hereunder to the extent possible and shall redeem the remaining shares to be
redeemed as soon as the Corporation is not prohibited from redeeming some or all
of such shares under the Corporation Law, subject to the last paragraph of
Section A.8. The shares of Series A Redeemable Preferred Stock not redeemed
shall remain outstanding and entitled to all of the rights and preferences
provided in this Article III. In the event that the Corporation fails for any
reason to redeem shares for which redemption is triggered pursuant to Section
B.5 (other than pursuant to the third sentence of Section B. 5(a)(i)), including
without limitation due to a prohibition of such redemption under the Corporation
Law, then during the period from the applicable Series A Redemption Date through
the date on which such shares are redeemed, the applicable Series A Redeemable
Base Liquidation Amount of such shares shall bear interest at the rate of ten
percent (10%) per annum, with such interest to accrue daily in arrears and to be
compounded annually; provided, however, that in no event shall such interest
rate exceed the Maximum Permitted Rate.
(d) DIVIDEND AFTER REDEMPTION DATE. From and after the closing of
a QPO or an Extraordinary Transaction or a public offering not constituting a
QPO (in the case of a redemption pursuant to Section B.5(a)(i) or (iv)) or the
date specified for redemption in the election notice as set forth in Section
B.5(a)(ii) or (v) or Section B.5(b), no shares of Series A Redeemable Preferred
Stock subject to redemption shall be entitled to any further dividends pursuant
to Section B.3 hereof; PROVIDED, HOWEVER, that in the event that shares of
Series A Redeemable Preferred Stock are unable to be redeemed and continue to be
outstanding in accordance with Section B.5(c), such shares shall continue to be
entitled to dividends and interest thereon as provided in Sections B.3 and
B.5(c) until the date on which such shares are actually redeemed by the
Corporation.
(e) SURRENDER OF CERTIFICATE. Upon receipt of the applicable
Series A Redemption Price by certified check or wire transfer or receipt of the
Series A Notes pursuant to the third sentence of Section B.5(a)(i), each holder
of shares of Series A Redeemable Preferred Stock to be redeemed shall surrender
the certificate or certificates representing such shares to the Corporation,
duly assigned or endorsed for transfer (or accompanied by duly executed stock
powers relating thereto), or shall deliver an Affidavit of Loss with respect to
such certificates at the principal executive office of the Corporation or the
office of the transfer agent for the Series A Redeemable Preferred Stock or such
office or offices in the continental United States of an agent for redemption as
may from time to time be designated by notice to the holders of Series A
Redeemable Preferred Stock (or the holders of Convertible Stock, as applicable),
and each surrendered certificate shall be canceled and retired; PROVIDED,
HOWEVER, that if the holder has exercised its redemption right pursuant to
Section B.5(a)(iii)(A) or the Corporation has exercised its right pursuant to
Section B.5(a)(v)(A), the holder shall not be required to surrender said
certificate(s) to the Corporation until said holder has received a new stock
certificate for those shares of Series A Redeemable Preferred Stock not so
redeemed.
6. NOTICE. In the event that the Corporation provides or is required to
provide notice to any holder of Convertible Stock or Common Stock in accordance
with the provisions of these Articles of Incorporation (including the provisions
of Sections A.5(c) and A.9) and/or the Corporation's by-laws, the Corporation
shall at the same time provide a copy of any such notice to each holder of
outstanding shares of Series A Redeemable Preferred Stock.
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<PAGE>
7. NO REISSUANCE OF SERIES A REDEEMABLE PREFERRED STOCK. No share or
shares of Series A Redeemable Preferred Stock acquired by the Corporation by
reason of redemption, purchase, conversion, exchange or otherwise shall be
reissued, and all such shares shall be canceled, retired and eliminated from the
shares which the Corporation shall be authorized to issue.
8. COVENANTS. So long as any shares of Series A Redeemable Preferred
Stock shall be outstanding the provisions of Section A.8 shall apply to all
shares of Series A Redeemable Preferred Stock as if such shares were shares of
Convertible Preferred Stock.
C. COMMON STOCK
1. DESIGNATION. A total of 5,100,000 shares of the Corporation's common
stock shall be designated as Common Stock, without par value per share (the
"Common Stock").
2. VOTING.
(a) ELECTION OF DIRECTION. The holders of Common Stock voting
together with the holders of outstanding Convertible Stock as a single class
shall be entitled to elect all of the Directors of the Corporation (other than
the Directors who are subject to election by the holders of Convertible Stock or
Series A Redeemable Preferred Stock as a separate class) for so long as any
shares of Convertible Stock or Series A Redeemable Preferred Stock remain
outstanding and thereafter shall be entitled to elect all of the Directors of
the Corporation. Such Directors shall be the candidates receiving the greatest
number of affirmative votes entitled to be cast with votes cast against such
candidates and votes withheld having no legal effect. Each holder of Common
Stock entitled to vote at an election for directors may cumulate the votes to
which such holder is entitled, I.E., such holder may cast a total number of
votes equal to the number of directors to be elected multiplied by the number of
votes to which such holder's shares are entitled, and may cast said total number
of votes for one or more candidates in such proportions as such holder thinks
fit; PROVIDED, HOWEVER, no holder shall be entitled to so cumulate such holder's
votes unless the candidates for which such holder is voting have been placed in
nomination prior to the voting and a holder has given notice at the meeting,
prior to the vote, of an intention to cumulate votes. The candidates receiving
the highest number of votes, up to the number of directors to be elected, are
elected. Except as may otherwise be provided by law, each holder shall be
entitled to one vote for each share held. The election of such Directors shall
occur at the annual meeting of holders of capital stock or at any special
meeting called and held in accordance with the by-laws of the Corporation. If a
person elected in accordance with the foregoing provisions should cease to be a
Director for any reason, the vacancy shall only be filled by the vote of the
outstanding shares entitled to vote for such Directors, in the manner and on the
basis specified above.
(b) OTHER VOTING. The holder of each share of Common Stock shall
be entitled to one vote for each such share as determined on the record date for
the vote or consent of shareholders and shall vote together with the holders of
the Convertible Stock as a single class upon any items submitted to a vote of
shareholders, except as otherwise provided herein.
3. DIVIDENDS. Subject to the payment in full of all preferential
dividends to which the holders of the Redeemable Preferred Stock are entitled
hereunder, the holders of Common Stock
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<PAGE>
shall be entitled to receive dividends out of funds legally available therefor
at such times and in such amounts as the Board of Directors may determine in its
sole discretion, with holders of Convertible Stock and Common Stock sharing PARI
PASSU in such dividends as contemplated by Section A.3.
4. LIQUIDATION. Upon any Liquidation Event, after the payment or
provision for payment of all debts and liabilities of the Corporation and all
preferential amounts to which the holders of Convertible Stock or Series A
Redeemable Preferred Stock, as applicable, are entitled with respect to the
distribution of assets in liquidation, the holders of Common Stock (and to the
extent applicable under Section A.4(a) Convertible Stock) shall be entitled to
share ratably in the remaining assets of the Corporation available for
distribution.
5. FRACTIONAL SHARES; UNCERTIFIED SHARES. The Corporation may issue
fractional shares (up to five decimal places) of Common Stock and Preferred
Stock. Fractional shares shall be entitled to dividends (on a pro rata basis),
and the holders of fractional shares shall be entitled to all rights as
shareholders of the Corporation to the extent provided herein and under
applicable law in respect of such fractional shares. Shares of Common Stock and
Preferred Stock, or fractions thereof, may, but need not be. represented by
share certificates. Such shares, or fractions thereof, not represented by share
certificates (`Uncertified Shares") shall be registered in the stock records
book of the Corporation. The Corporation at any time at its sole option may
deliver to any registered holder of such shares share certificates to represent
Uncertified Shares previously issued (or deemed issued) to such holder.
ARTICLE IV
(a) The liability of the directors of the Corporation for
monetary damages shall be eliminated to the fullest extent permissible under
California law.
(b) The Company is authorized to provide indemnification of
agents (as defined in Section 317 of the California Corporations Code) for
breach of duty to the Company and its shareholders through bylaw provisions or
through agreements with agents, or both, in excess of the indemnification
otherwise permitted by Section 317 of the General Corporation Law of California,
subject to the limits on such excess indemnification set forth in Section 204 of
the General Corporation Law of California. If, after the effective date of this
Article, California law is amended in a manner which permits a corporation to
limit the monetary or other liability of its directors or to authorize
indemnification of, or advancement of such defense expenses to, its directors or
to authorize indemnification of, or advancement of such defense expenses to, its
directors or other persons, in any such case to a greater extent than is
permitted on such effective date, the references in this Article to "California
Law" shall to that extent be deemed to refer to California law as so amended.
(c) Any repeal or modification of this Article shall only be
prospective and shall not effect the rights under this Article in effect at the
time of the alleged occurrence of any action or omission to act giving rise to
liability.
THREE: The foregoing amendment and restatement of the articles of
incorporation has been duly approved by the Board of Directors of this
Corporation.
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<PAGE>
FOUR: The foregoing amendment and restatement of the articles of
incorporation has been duly approved by the required vote of shareholders in
accordance with Section 902 of the California Corporations Code. The Corporation
has one class of stock outstanding and such class of stock is entitled to vote
with respect to the amendment herein set forth. The total number of outstanding
shares of common stock of the Corporation is 5,100,000. The number of shares
voting in favor of the amendment equaled or exceeded the vote required. The
percentage vote required was more than fifty percent (50%) of the outstanding
Common Stock voting as a class.
The undersigned, Frank Deverse and Patsy Deverse the Chairman and Chief
Executive Officer and Secretary, respectively, of International Microcircuits,
Inc., declare under penalty of perjury that the matters set out in the foregoing
Articles are true of their own knowledge.
Executed at Milpitas, California, on November 12, 1997.
/S
---------------------------------------------------
Frank Deverse, Chairman and Chief Executive Officer
/S
---------------------------------------------------
Patsy Deverse, Secretary
24
<PAGE>
[STATE OF CALIFORNIA LOGO]
SECRETARY OF STATE
<PAGE>
CERTIFICATE OF CORRECTION
OF
RESTATED ARTICLES OF INCORPORATION
OF
INTERNATIONAL MICROCIRCUITS, INC
Frank T. Deverse and Patsy J. Deverse certify that:
1. They are the Chief Executive Officer and Secretary, respectively, of
International Microcircuits, Inc., a California corporation.
2. The name of the corporation filing this certificate is International
Microcircuits, Inc. and it is a California corporation.
3. The instrument being corrected is entitled "RESTATED ARTICLES OF
INCORPORATION OF INCORPORATION OF INTERNATIONAL MICROCIRCUITS, INC." and said
instrument was filed in the office of the Secretary of State of the State of
California on December 9, 1997.
4. Paragraph ONE of said Restated Articles of Incorporation, as
corrected, should read in its entirety as follows:
"ONE: They are the duly elected and acting Chief Executive Officer and
Secretary, respectively, of International Microcircuits, Inc., a California
corporation (the "Corporation" or the "Company")."
5. Article III, paragraph one of said Restated Articles of
Incorporation, as corrected, should read in its entirety as follows:
"The total number of shares of capital stock which the Corporation
shall have authority to issue is 14,160,000 of which (a) 6,660,000 shares shall
be preferred stock, without par value per share ("Preferred Stock"), and (b)
7,500,000 shares shall be common stock, without par value per share."
6. Article III, Section A(4)(a) of said Restated Articles of
Incorporation, as corrected, should read in its entirety as follows:
"4. LIQUIDATION.
(a) LIQUIDATION PREFERENCE. Upon any liquidation, dissolution or
winding up of the Corporation and its subsidiaries, whether voluntary or
involuntary (a "Liquidation Event"), each holder of outstanding shares of
Convertible Stock shall be entitled to be paid out of the assets of the
Corporation available for distribution to shareholders, whether such assets are
capital, surplus or earnings, and before any amount shall be paid or distributed
to the holders of Common Stock or of any other stock ranking on liquidation
junior to the Convertible Stock, an amount in cash equal to (i) $4.376 per share
of Convertible Stock held by such holder (adjusted appropriately for stock
splits, stock dividends, recapitalizations and the like with respect to the
Convertible Stock), plus (ii) any accumulated but unpaid dividends to which such
holder of
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<PAGE>
outstanding shares of Convertible Stock is then entitled pursuant to Sections
A.3 and A.5(f) hereof (the sum of clauses (i) and (ii) being referred to herein
as the "Convertible Base Liquidation Amount"), plus (iii) any interest accrued
pursuant to Section A.5(e) hereof to which such holder of Convertible Stock is
entitled, if any (the sum of clauses (i), (ii) and (iii) being referred to
herein as the "Convertible Base Liquidation Amount"); plus (iii) any interest
accrued pursuant to Section A.5(e) hereof to which such holder of Convertible
Stock is entitled, if any (the sum of clauses (i), (ii) and (iii) being referred
to herein as the "Convertible Liquidation Preference Amount"); PROVIDED,
HOWEVER, that if, upon any Liquidation Event, the amounts payable with respect
to the Convertible Liquidation Preference Amount are not paid in full, the
holders of the Convertible Stock shall share ratably in any distribution of
assets in proportion to the full respective preferential amounts to which they
are entitled; and PROVIDED FURTHER, HOWEVER, that if upon any Liquidation Event
the holders of the outstanding shares of Convertible Stock would receive more
than the aggregate Convertible Liquidation Preference Amount with respect to
such shares in the event all of their shares were converted into Series A
Redeemable Preferred Stock (as defined in Section B. I of this Article III) and
Common Stock immediately prior to the record date for distributions in
connection with such Liquidation Event, then each holder of an outstanding share
of Convertible Stock shall receive, in lieu of the Convertible Liquidation
Preference Amount, an amount equal to such holder's Series A Redeemable
Liquidation Preference Amount (as defined in Section B.4) under Section B.4 plus
any dividends pursuant to Section A.3 or A.5(f) which are accumulated but unpaid
in respect of such share as of the date of such Liquidation Event before any
amount shall be paid or distributed to the holders of Common Stock or of any
other stock ranking on liquidation junior to the Convertible Stock, and
thereafter shall share ratably with the holders of Common Stock and any other
stock ranking on liquidation junior to the Convertible Stock in the assets
available for distribution, with such distributions to be made as if each share
of Convertible Stock had been converted into the number of shares of Series A
Redeemable Preferred Stock and Common Stock issuable upon the conversion of such
holder's shares of Convertible Stock immediately prior to any such Liquidation
Event. The provisions of this Section A.4 shall not in any way limit the right
of the holders of Convertible Stock to elect to convert their shares of
Convertible Stock into Series A Redeemable Preferred Stock and Common Stock
pursuant to Section A.6 prior to or in connection with any Liquidation Event."
7. Article III, Section A(6)(a) of said Restated Articles of
Incorporation, as corrected, should read in its entirety as follows:
"(a) AUTOMATIC CONVERSION UPON ELECTION OF HOLDERS. The holders
of shares of Convertible Stock shall be entitled, upon the written election of
the holder or holders of not less than sixty-six and two-thirds percent in
voting power of the outstanding shares of Convertible Stock, without the payment
of any additional consideration. (i) immediately prior to and subject to the
closing or happening of a Liquidation Event or an Extraordinary Transaction and
(ii) at any time after December 5, 1999, to cause all (but not less than all) of
the outstanding shares of Convertible Stock to be automatically converted into
(i) the number of fully paid and nonassessable shares of Common Stock which
results from dividing the Conversion Price (as defined in this Section A.6(a))
per share in effect for the Convertible Stock at the time of conversion into the
per share Conversion Value (as defined in this Section A.6(a)) of the
Convertible Stock (the "Conversion Shares") and (ii) one (1) fully paid and
nonassessable share of Series A Redeemable Preferred Stock. Upon the election to
so convert in the manner and on
2
<PAGE>
the basis specified in the preceding sentence, all holders of the Convertible
Stock shall be deemed to have elected to voluntarily convert all outstanding
shares of Convertible Stock pursuant to this Section A.6. Upon the filing and
effectiveness of these Articles of' Incorporation with the California Secretary
of State's office, the "Conversion Price" per share of Convertible Stock shall
be $4.376, and the per share "Conversion Value" of Convertible Stock shall be
$4.376. The Conversion Price per share of Convertible Stock and the Common Stock
Conversion Rate (as defined in this Section A.6(a)) shall be subject to
adjustment from time to -time as provided in Section A.7 hereof. The number of
shares of Common Stock into which a share of a Convertible Stock is convertible
is hereinafter referred to as the "Common Stock Conversion Rate." The number of
shares of Series A Redeemable Preferred Stock into which a share of Convertible
Stock is convertible is hereinafter referred to as the "Series A Redeemable
Conversion Rate." If the holders of shares of Convertible Stock elect to convert
the outstanding shares of Convertible Stock at a time when there are any
accumulated but unpaid dividends or other amount ` s due on or in respect of'
such shares, such dividends and other amounts shall be paid in full in cash by
the Corporation in connection with such conversion. Upon the election to so
convert in the manner and on the basis specified in this Section A.6(a) all
holders of the Convertible Preferred Stock shall be' deemed to have elected to
voluntarily convert all outstanding shares of Convertible Preferred Stock
pursuant to this Section A.6(a)."
8. Article III, Section A(6)(b) of said Restated Articles of
Incorporation, as corrected, should read in its entirety as follows:
"(b) AUTOMATIC CONVERSION UPON QPO. Each share of Convertible
Stock shall automatically be converted, without the payment of any additional
consideration, into shares of Common Stock and Series A Redeemable Preferred
Stock as of, and in all cases subject to, the closing of the Corporation's first
underwritten offering to the public pursuant to an effective registration
statement under the Securities Act of 1933, as amended, provided that (i) such
registration statement covers the offer and sale of Common Stock of which the
aggregate net proceeds attributable to sales for the account of the Corporation
exceed $20,000,000, at a price per share not less than $13.128 (as appropriately
adjusted for any stock split, combination, reorganization, recapitalization,
stock dividend, or similar event), (ii) such Common Stock is listed for trading
on either the New York Stock Exchange or the Nasdaq National Market System and
(iii) if a redemption election is made pursuant to Section B.5(a)(i) or (a)(ii),
either (A) all outstanding shares of Series A Redeemable Preferred Stock which
are outstanding or issuable upon such automatic conversion are redeemed
immediately upon and as of the closing of such offering, (B) contemporaneously
with such offering cash in an amount sufficient to redeem all outstanding shares
of Series A Redeemable Preferred Stock is segregated and irrevocably held by the
Corporation for payment to holders of Series A Redeemable Preferred Stock or (C)
all outstanding shares of Series A Redeemable Preferred Stock are exchanged for
Series A Notes (as defined in Section B.5(a)(i)) (a "QPO" or a "Qualified Public
Offering"); PROVIDED that if a closing of a QPO occurs, all outstanding shares
of Convertible Stock shall be deemed to have been converted into shares of
Common Stock and Series A Redeemable Preferred Stock immediately prior to such
closing. Any such conversion shall be at the Common Stock Conversion Rate and
Series A Redeemable Conversion Rate in effect upon the closing of a QPO, as
applicable.
3
<PAGE>
If. the holders of shares of Convertible Stock are required to convert
the outstanding shares of Convertible Stock pursuant to this Section A.6(b) at a
time when there are any declared but unpaid dividends or any amounts due on or
in respect of such shares, such dividends and other amounts shall be paid in
full in cash by the Corporation in connection with such conversion."
9. Article III, Section B(3) of said Restated Articles of
Incorporation, as corrected, should read in its entirety as follows:
"3. DIVIDENDS. The holders of outstanding shares of Series A
Redeemable Preferred Stock shall be entitled to receive, out of any funds
legally available therefor, cumulative (non-compounding) dividends on the Series
A Redeemable Preferred Stock in cash, at the per share rate per annum of six
percent (6%) of $3.9384 (adjusted appropriately for stock splits, stock
dividends, recapitalizations and the like with respect to the Series A
Redeemable Preferred Stock) (a "Series A Redeemable Cumulative Dividend"). Such
dividends will accrue quarterly in arrears commencing as of the date of issuance
of the Series A Redeemable Preferred Stock and be cumulative, to the extent
unpaid, whether or not they have been declared and whether or not there are
profits, surplus or other funds of the Corporation legally available for the
payment of dividends. Series A Redeemable Cumulative Dividends shall become due
and payable with respect to any share of Series A Redeemable Preferred Stock as
provided in Section B.4 and Section B.5. So long as any shares of Series A
Redeemable Preferred Stock are outstanding and the Series A Redeemable
Cumulative Dividends have not been paid in full in cash: (A) no dividend
whatsoever shall be paid or declared, and no distribution shall be made, on any
Common Stock or other capital stock of the Corporation ranking junior to the
Series A Redeemable Preferred Stock; and (B) except as provided in Section
A.8(h), no shares of capital stock of the Corporation ranking junior to the
Series A Redeemable Preferred Stock shall be purchased, redeemed or acquired by
the Corporation and no monies shall be paid into or set aside or made available
for a sinking fund for the purchase, redemption or acquisition thereof. All
numbers relating to the calculation of dividends pursuant to this Section B.3
shall be subject to equitable adjustment in the event of any stock split,
combination, reorganization, recapitalization, reclassification or other similar
event involving a change in the Series A Redeemable Preferred Stock.
10. Article III, Section B(4) of said Restated Articles of
Incorporation, as corrected, should read in its entirety as follows:
"4. LIQUIDATION. Upon any Liquidation Event, each holder of
outstanding shares of Series A Redeemable Preferred Stock shall be entitled to
be paid out of the assets of the Corporation available for distribution to
shareholders, whether such assets are capital, surplus, or earnings, and before
any amount shall be paid or distributed to the holders of Common Stock or of any
other stock ranking on liquidation junior to the Series A Redeemable Preferred
Stock, an amount in cash equal to the sum of (a) $3.9384 per share of Series A
Redeemable Preferred Stock held by such holder (adjusted appropriately for stock
splits, stock dividends, recapitalizations and the like with respect to the
Series A Redeemable Preferred Stock), plus (b) any accumulated but unpaid
dividends to which such holder of outstanding shares of Series A Redeemable
Preferred Stock is entitled pursuant to Sections B.3 and B.5(d) hereof (the sum
of clauses (a) and (b) being referred to herein as the "Series A Redeemable Base
Liquidation
4
<PAGE>
Amount"), plus (c) any interest accrued pursuant to Section B.5(c) to which
such holder of outstanding shares of Series A Redeemable Preferred Stock is
entitled, if any (the sum of clauses (a), (b) and (c) being referred to
herein as the "Series A Redeemable Liquidation Preference Amount"); PROVIDED,
HOWEVER, that if, upon any Liquidation Event, the amounts payable with
respect to the Series A Redeemable Liquidation Preference Amount are not paid
in full, the holders of the Series A Redeemable Preferred Stock shall share
ratably in any distribution of assets in proportion to the full respective
preferential amounts to which they are entitled.
11. THE RESTATED ARTICLES OF INCORPORATION when corrected as herein
specified, will conform in wording to the wording of the RESTATED ARTICLES OF
INCORPORATION in the resolutions adopted by the Board of Directors and
Shareholders approving the RESTATED ARTICLES OF INCORPORATION.
Each of the undersigned declares under penalty of perjury under the
laws of the State of California that the matters set forth in this certificate
are true and correct of his own knowledge and that this declaration was executed
on December 15, 1997.
/S
--------------------------------------------------
Frank T. Deverse
Title: Chief Executive Officer
/S
--------------------------------------------------
Patsy J. Deverse
Title: Secretary
5
<PAGE>
CERTIFICATE OF AMENDMENT OF
RESTATED ARTICLES OF INCORPORATION OF
INTERNATIONAL MICROCIRCUITS, INC.
The undersigned certify that:
1. They are the President and the Secretary, respectively, of
INTERNATIONAL MICROCIRCUITS, INC. a California corporation.
2. Article III, paragraph 1 of the Restated Articles of Incorporation
of this corporation is amended to read in full as follows:
"The total number of shares of capital stock which the Company shall
have authority to issue is 15,100,000 of which (a) 6,600,000 shares shall be
preferred stock, without par value per share ("Preferred Stock"), and (b)
8,500,000 shares shall be common stock, without par value per share ("Common
Stock").
Upon the amendment of this Article III to read as set forth above, each
outstanding share of Common Stock is split into 1.5 shares of Common Stock."
3. The foregoing amendment of Restated Articles of Incorporation has
been duly approved by the Board of Directors.
4. The foregoing amendment of Restated Articles of Incorporation has
been duly approved by the required vote of shareholders in accordance with
Section 902 of the California Corporations Code. The total number of outstanding
shares of the corporation is 728,200 shares of Common Stock and 3,159,128 shares
of Convertible Preferred Stock. The number of shares voting in favor of the
amendment equaled or exceeded the vote required. The percentage vote required
was more than 50% of the outstanding shares of Common Stock and more than 50% of
the outstanding shares of Convertible Preferred Sock.
The undersigned, Ilhan Refioglu and Patrick Pohlen, the President and
Secretary, respectively, of International Microcircuits, Inc., further declare
under penalty of perjury under the laws of the State of California that the
matters set forth in this certificate are true and correct of our own knowledge.
Executed at Milpitas, California on February 24, 1998.
/S
----------------------------------------
Ilhan Refioglu
President
/S
----------------------------------------
Patrick A. Pohlen
Secretary
1
<PAGE>
CERTIFICATE OF AMENDMENT OF
AMENDED AND RESTATED ARTICLES OF INCORPORATION OF
INTERNATIONAL MICROCIRCUITS, INC.
The undersigned certify that:
1. They are the President, Vice President, Finance and Assistant
Secretary, respectively, of INTERNATIONAL MICROCIRCUITS, INC., a California
Corporation.
2. Article III, paragraph 1 of the Amended and Restated Articles of
Incorporation of this corporation is amended to read in full as follows:
"The total number of shares of capital stock which the Company
shall have authority to issue is 19,350,000 of which (a) 6,600,000
shares shall be preferred stock, without par value per share
("Preferred Stock"), and (b) 12,750,000 shares shall be common stock,
without par value per share ("Common Stock").
Upon the amendment of this Article III to read as set forth
above, each outstanding share of Common Stock is split into 1.5 shares
of Common Stock."
3. The foregoing amendment of the Amended and Restated Articles of
Incorporation has been duly approved by the Board of Directors.
4. The foregoing amendment of the Amended and Restated Articles of
Incorporation has been duly approved by the required vote of shareholders in
accordance with Section 902 of the California Corporations Code. The total
number of outstanding shares of the corporation is 1,985,000 shares of Common
Stock and 3,159,128 shares of Convertible Preferred Stock. The number of shares
voting in favor of the amendment equaled or exceeded the vote required. The
percentage vote required was more than a majority of the outstanding shares of
Common Stock and Preferred Stock, voting together as a single class.
The undersigned, Ilhan Refioglu and Judith Signorino, the President and
Vice President, Finance, respectively, of International Microcircuits, Inc.,
further declare under penalty of perjury under the laws of the State of
California that the matters set forth in this certificate are true and correct
of their own knowledge.
Executed at Milpitas, California on April 3, 2000.
/S
--------------------------------------------------
ILHAN REFIOGLU
President
/S
--------------------------------------------------
JUDITH SIGNORINO
Vice President, Finance and Assistant Secretary
1
