<PAGE> 1
EXHIBIT 3.1
[As amended May 26, 2000]
RESTATED CERTIFICATE OF INCORPORATION
OF
CONEXANT SYSTEMS, INC.
FIRST: The name of the Corporation is
Conexant Systems, Inc.
SECOND: The Corporation's registered office in the State of Delaware is located
at 1209 Orange Street, in the City of Wilmington, County of New Castle. The name
and address of its registered agent is The Corporation Trust Company,
Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801.
THIRD: The nature of the business, or objects or purposes to be transacted,
promoted or carried on, are: To engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of Delaware.
FOURTH: The total number of shares of all classes of stock which the Corporation
shall have the authority to issue is 1,025,000,000, of which 25,000,000 shares
without par value are to be of a class designated Preferred Stock and
1,000,000,000 shares of the par value of $1 each are to be of a class designated
Common Stock.
In this Article Fourth, any reference to a section or paragraph, without further
attribution, within a provision relating to a particular class of stock is
intended to refer solely to the specified section or paragraph of the other
provisions relating to the same class of stock.
COMMON STOCK
The Common Stock shall have the following voting powers, designations,
preferences and relative, participating, optional and other special
rights, and qualifications, limitations or restrictions thereof:
<PAGE> 2
1. Dividends. Whenever the full dividends upon any outstanding
Preferred Stock for all past dividend periods shall have been paid and
the full dividends thereon for the then current respective dividend
periods shall have been paid, or declared and a sum sufficient for the
respective payments thereof set apart, the holders of shares of the
Common Stock shall be entitled to receive such dividends and
distributions in equal amounts per share, payable in cash or otherwise,
as may be declared thereon by the Board of Directors from time to time
out of assets or funds of the Corporation legally available therefor.
2. Rights on Liquidation. In the event of any liquidation, dissolution
or winding-up of the Corporation, whether voluntary or involuntary,
after the payment or setting apart for payment to the holders of any
outstanding Preferred Stock of the full preferential amounts to which
such holders are entitled as herein provided or referred to, all of the
remaining assets of the Corporation shall belong to and be
distributable in equal amounts per share to the holders of the Common
Stock. For purposes of this paragraph 2, a consolidation or merger of
the Corporation with any other corporation, or the sale, transfer or
lease of all or substantially all its assets shall not constitute or be
deemed a liquidation, dissolution or winding-up of the Corporation.
3. Voting. Except as otherwise provided by the laws of the State of
Delaware or by this Article Fourth, each share of Common Stock shall
entitle the holder thereof to one vote.
PREFERRED STOCK
The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is hereby authorized to provide for the
issuance of shares of Preferred Stock in series and, by filing a
certificate pursuant to the applicable law of the State of Delaware
(hereinafter referred to as a "Preferred Stock Designation"), to
establish from time to time the number of shares to be included in
2
<PAGE> 3
each such series, and to fix the designation, powers, preferences and
rights of the shares of each such series and the qualifications,
limitations and restrictions thereof. The authority of the Board of
Directors with respect to each series shall include, but not be limited
to, determination of the following:
(a) the designation of the series, which may be by
distinguishing number, letter or title;
(b) the number of shares of the series, which number the Board
of Directors may thereafter (except where otherwise provided in
the Preferred Stock Designation) increase or decrease (but not
below the number of shares thereof then outstanding);
(c) whether dividends, if any, shall be cumulative or
noncumulative and the dividend rate of the series;
(d) the dates at which dividends, if any, shall be payable;
(e) the redemption rights and price or prices, if any, for
shares of the series;
(f) the terms and amount of any sinking fund provided for the
purchase or redemption of shares of the series;
(g) the amounts payable on shares of the series in the event of
any voluntary or involuntary liquidation, dissolution or winding
up of the affairs of the Corporation;
(h) whether the shares of the series shall be convertible into
shares of any other class or series, or any other security, of
the Corporation or any other corporation, and, if so, the
specification of such other class or series or such other
security, the conversion price or prices or rate or rates, any
adjustments thereof, the date or dates as of which such shares
shall be convertible and all other terms and conditions upon
which such conversion may be made;
3
<PAGE> 4
(i) restrictions on the issuance of shares of the same series or
of any other class or series; and
(j) the voting rights, if any, of the holders of shares of the
series.
Except as may be provided in this Certificate of Incorporation or in a
Preferred Stock Designation, the Common Stock shall have the exclusive
right to vote for the election of directors and for all other purposes,
and holders of Preferred Stock shall not be entitled to receive notice
of any meeting of shareowners at which they are not entitled to vote.
The number of authorized shares of Preferred Stock may be increased or
decreased (but not below the number of shares thereof then outstanding)
by the affirmative vote of the holders of a majority of the outstanding
Common Stock, without a vote of the holders of the Preferred Stock, or
of any series thereof, unless a vote of any such holders is required
pursuant to any Preferred Stock Designation.
The Corporation shall be entitled to treat the person in whose name any
share of its stock is registered as the owner thereof for all purposes
and shall not be bound to recognize any equitable or other claim to, or
interest in, such share on the part of any other person, whether or not
the Corporation shall have notice thereof, except as expressly provided
by applicable law.
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
1. Designation and Amount. A series of Preferred Stock, without par
value, is hereby created and shall be designated as "Series A Junior
Participating Preferred Stock" (the "Series A Preferred Stock") and the
number of shares constituting the Series A Preferred Stock shall be
1,500,000. Such number of shares may be increased or decreased by
resolution of the Board of
4
<PAGE> 5
Directors; provided, that no decrease shall reduce the number of shares
of Series A Preferred Stock to a number less than the number of shares
then outstanding plus the number of shares reserved for issuance upon
the exercise of outstanding options, rights or warrants or upon the
conversion of any outstanding securities issued by the Corporation
convertible into Series A Preferred Stock.
2. Dividends and Distributions.
2.1. Subject to the rights of the holders of any shares of any series
of Preferred Stock (or any similar stock) ranking prior and superior to
the Series A Preferred Stock with respect to dividends, the holders of
shares of Series A Preferred Stock, in preference to the holders of
Common Stock and of any other junior stock of the Corporation, shall be
entitled to receive, when, as and if declared by the Board of Directors
out of funds legally available for the purpose, quarterly dividends
payable in cash on the second Monday of March, June, September and
December in each year (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of a share or fraction
of a share of Series A Preferred Stock, in an amount per share (rounded
to the nearest cent) equal to the greater of (a) $1 or (b) subject to
the provision for adjustment hereinafter set forth, 100 times the
aggregate per share amount of all cash dividends, and 100 times the
aggregate per share amount (payable in kind) of all non-cash dividends
or other distributions, other than a dividend payable in shares of
Common Stock or a subdivision of the outstanding shares of Common Stock
(by reclassification or otherwise), declared on the Common Stock since
the immediately preceding Quarterly Dividend Payment Date or, with
respect to the first Quarterly Dividend Payment Date, since the first
issuance of any share or fraction of a share of Series A Preferred
Stock. In the event the Corporation shall at any time declare or pay
any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination
5
<PAGE> 6
or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the amount to which holders of shares of
Series A Preferred Stock were entitled immediately prior to such event
under clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
2.2. The Corporation shall declare a dividend or distribution on the
Series A Preferred Stock as provided in paragraph 2.1 immediately after
it declares a dividend or distribution on the Common Stock (other than
a dividend payable in shares of Common Stock); provided that, in the
event no dividend or distribution shall have been declared on the
Common Stock during the period between any Quarterly Dividend Payment
Date and the next subsequent Quarterly Dividend Payment Date, a
dividend of $1 per share on the Series A Preferred Stock shall
nevertheless be payable on such subsequent Quarterly Dividend Payment
Date.
2.3. Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment
Date next preceding the date of issue of such shares, unless the date
of issue of such shares is prior to the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such shares
shall begin to accrue from the date of issue of such shares, or unless
the date of issue is a Quarterly Dividend Payment Date or is a date
after the record date for the determination of holders of shares of
Series A Preferred Stock entitled to receive a quarterly dividend and
before such Quarterly Dividend Payment Date, in either of which events
such dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment
6
<PAGE> 7
Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on the shares of Series A Preferred Stock in an amount less than
the total amount of such dividends at the time accrued and payable on
such shares shall be allocated pro rata on a share-by-share basis among
all such shares at the time outstanding. The Board of Directors may fix
a record date for the determination of holders of shares of Series A
Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not more than
60 days prior to the date fixed for the payment thereof.
3. Voting Rights. The holders of shares of Series A Preferred Stock
shall have the following voting rights:
3.1. Subject to the provision for adjustment hereinafter set forth,
each share of Series A Preferred Stock shall entitle the holder thereof
to 100 votes on all matters submitted to a vote of the shareowners of
the Corporation. In the event the Corporation shall at any time declare
or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise
than by payment of a dividend in shares of Common Stock) into a greater
or lesser number of shares of Common Stock, then in each such case the
number of votes per share to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event shall be
adjusted by multiplying such number by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of shares
of Common Stock that were outstanding immediately prior to such event.
3.2. Except as otherwise provided herein, in any other Preferred Stock
Designation creating a series of Preferred Stock or any similar stock,
or by law, the holders of shares of Series A Preferred Stock and the
holders of shares of Common Stock and any
7
<PAGE> 8
other capital stock of the Corporation having general voting rights
shall vote together as one class on all matters submitted to a vote of
shareowners of the Corporation.
3.3. Except as set forth herein, or as otherwise provided by law,
holders of Series A Preferred Stock shall have no special voting rights
and their consent shall not be required (except to the extent they are
entitled to vote with holders of Common Stock as set forth herein) for
taking any corporate action.
4. Certain Restrictions.
4.1. Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in paragraph 2 are
in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Preferred
Stock outstanding shall have been paid in full, the Corporation shall
not:
(a) declare or pay dividends, or make any other distributions,
on any shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A
Preferred Stock;
(b) declare or pay dividends, or make any other distributions,
on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with
the Series A Preferred Stock, except dividends paid ratably on
the Series A Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then
entitled;
(c) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A
Preferred Stock, provided that the
8
<PAGE> 9
Corporation may at any time redeem, purchase or otherwise
acquire shares of any such junior stock in exchange for shares
of any stock of the Corporation ranking junior (either as to
dividends or upon dissolution, liquidation or winding up) to the
Series A Preferred Stock; or
(d) redeem or purchase or otherwise acquire for consideration
any shares of Series A Preferred Stock, or any shares of stock
ranking on a parity with the Series A Preferred Stock, except in
accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend
rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith
will result in fair and equitable treatment among the respective
series or classes.
4.2. The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock
of the Corporation unless the Corporation could, under subparagraph (c)
of paragraph 4.1, purchase or otherwise acquire such shares at such
time and in such manner.
5. Reacquired Shares. Any shares of Series A Preferred Stock purchased
or otherwise acquired by the Corporation in any manner whatsoever shall
be retired and cancelled promptly after the acquisition thereof. All
such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock and may be reissued as part of a new
series of Preferred Stock subject to the conditions and restrictions on
issuance set forth herein or in any other Preferred Stock Designation
creating a series of Preferred Stock or any similar stock or as
otherwise required by law.
6. Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the
9
<PAGE> 10
Corporation, no distribution shall be made (i) to the holders of shares
of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock unless,
prior thereto, the holders of shares of Series A Preferred Stock shall
have received $100 per share, plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not declared, to
the date of such payment, provided that the holders of shares of Series
A Preferred Stock shall be entitled to receive an aggregate amount per
share, subject to the provision for adjustment hereinafter set forth,
equal to 100 times the aggregate amount to be distributed per share to
holders of shares of Common Stock, or (ii) to the holders of shares of
stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preferred Stock, except
distributions made ratably on the Series A Preferred Stock and all such
parity stock in proportion to the total amounts to which the holders of
all such shares are entitled upon such liquidation, dissolution or
winding up. In the event the Corporation shall at any time declare or
pay any dividend on the Common Stock payable in shares of Common Stock,
or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise
than by payment of a dividend in shares of Common Stock) into a greater
or lesser number of shares of Common Stock, then in each such case the
aggregate amount to which holders of shares of Series A Preferred Stock
were entitled immediately prior to such event under the proviso in
clause (i) of the preceding sentence shall be adjusted by multiplying
such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
7. Consolidation, Merger, etc. In case the Corporation shall enter into
any consolidation, merger, combination or other transaction in which
10
<PAGE> 11
the shares of Common Stock are exchanged for or changed into other
stock or securities, cash and/or any other property, then in any such
case each share of Series A Preferred Stock shall at the same time be
similarly exchanged or changed into an amount per share, subject to the
provision for adjustment hereinafter set forth, equal to 100 times the
aggregate amount of stock, securities, cash and/or any other property
(payable in kind), as the case may be, into which or for which each
share of Common Stock is changed or exchanged. In the event the
Corporation shall at any time declare or pay any dividend on the Common
Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock
(by reclassification or otherwise than by payment of a dividend in
shares of Common Stock) into a greater or lesser number of shares of
Common Stock, then in each such case the amount set forth in the
preceding sentence with respect to the exchange or change of shares of
Series A Preferred Stock shall be adjusted by multiplying such amount
by a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
8. No Redemption. The shares of Series A Preferred Stock shall not be
redeemable.
9. Rank. The Series A Preferred Stock shall rank, with respect to the
payment of dividends and the distribution of assets, junior to all
series of any other class of the Corporation's Preferred Stock.
10. Amendment. The Certificate of Incorporation of the Corporation
shall not be amended in any manner which would materially alter or
change the powers, preferences or special rights of the Series A
Preferred Stock so as to affect them adversely without the affirmative
vote of the holders of at least two-thirds of the outstanding shares of
Series A Preferred Stock, voting together as a single class.
11
<PAGE> 12
FIFTH: The Corporation is to have perpetual existence.
SIXTH: The private property of the shareowners of the Corporation shall not be
subject to the payment of corporate debts to any extent whatever.
SEVENTH: Subject to the rights of the holders of any series of Preferred Stock
to elect additional directors under specified circumstances, the number of
directors of the Corporation shall be fixed from time to time exclusively by the
Board of Directors pursuant to a resolution adopted by a majority of the whole
Board. A director need not be a shareowner. The election of directors of the
Corporation need not be by ballot unless the by-laws so require.
The directors, other than those who may be elected by the holders of any series
of Preferred Stock or any other series or class of stock, as provided herein or
in any Preferred Stock Designation, shall be divided into three classes, as
nearly equal in number as possible. One class of directors shall be initially
elected for a term expiring at the annual meeting of shareowners to be held in
2000, another class shall be initially elected for a term expiring at the annual
meeting of shareowners to be held in 2001, and another class shall be initially
elected for a term expiring at the annual meeting of shareowners to be held in
2002. Members of each class shall hold office until their successors are duly
elected and qualified. At each annual meeting of the shareowners of the
Corporation, commencing with the 2000 annual meeting, the successors of the
class of directors whose term expires at that meeting shall be elected by a
plurality vote of all votes cast for the election of directors at such meeting
to hold office for a term expiring at the annual meeting of shareowners held in
the third year following the year of their election.
Subject to the rights of the holders of any series of Preferred Stock, and
unless the Board of Directors otherwise determines, newly created directorships
resulting from any increase in the authorized number of directors or any
vacancies on the Board of Directors resulting from death, resignation,
retirement, disqualification, removal from office or other cause may be filled
only by a majority vote of the directors then
12
<PAGE> 13
in office, though less than a quorum, and directors so chosen shall hold office
for a term expiring at the annual meeting of shareowners at which the term of
office of the class to which they have been elected expires and until such
director's successor shall have been duly elected and qualified. No decrease in
the number of authorized directors constituting the whole Board of Directors
shall shorten the term of any incumbent director.
Subject to the rights of the holders of any series of Preferred Stock or any
other series or class of stock, as provided herein or in any Preferred Stock
Designation, to elect additional directors under specific circumstances, any
director may be removed from office at any time, but only for cause and only by
the affirmative vote of the holders of at least 80 percent of the voting power
of the then outstanding capital stock of the Corporation (the "Capital Stock")
entitled to vote generally in the election of directors (the "Voting Stock"),
voting together as a single class.
No director of the Corporation shall be liable to the Corporation or its
shareowners for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
Corporation or its shareowners, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation Law, or (iv) for any transaction
from which the director derived an improper personal benefit. This paragraph
shall not eliminate or limit the liability of a director for any act or omission
occurring prior to the effective date of its adoption. No repeal or modification
of this paragraph, directly or by adoption of an inconsistent provision of this
Certificate of Incorporation, by the shareowners of the Corporation shall be
effective with respect to any cause of action, suit, claim or other matter that,
but for this paragraph, would accrue or arise prior to such repeal or
modification.
EIGHTH: Unless otherwise determined by the Board of Directors, no holder of
stock of the Corporation shall,
13
<PAGE> 14
as such holder, have any right to purchase or subscribe for any stock of any
class which the Corporation may issue or sell, whether or not exchangeable for
any stock of the Corporation of any class or classes and whether out of unissued
shares authorized by the Certificate of Incorporation of the Corporation as
originally filed or by any amendment thereof or out of shares of stock of the
Corporation acquired by it after the issue thereof.
NINTH: Whenever a compromise or arrangement is proposed between this Corporation
and its creditors or any class of them and/or between this Corporation and its
shareowners or any class of them, any court of equitable jurisdiction within the
State of Delaware may, on the application in a summary way of this Corporation
or of any creditor or shareowner thereof, or on the application of any receiver
or receivers appointed for this Corporation under the provisions of section 291
of Title 8 of the Delaware Code or on the application of trustees in dissolution
or of any receiver or receivers appointed for this Corporation under the
provisions of section 279 of Title 8 of the Delaware Code order a meeting of the
creditors or class of creditors, and/or of the shareowners or class of
shareowners of this Corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority in number representing
three-fourths in value of the creditors or class of creditors, and/or of the
shareowners or class of shareowners of this Corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of this
Corporation as consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the shareowners or class of
shareowners, of this Corporation, as the case may be, and also on this
Corporation.
TENTH:
1. Amendment of Certificate of Incorporation. From time to time any of the
provisions of the Certificate of Incorporation may be amended, altered or
repealed, and other provisions authorized by the statutes of the State
14
<PAGE> 15
of Delaware at the time in force may be added or inserted in the manner at the
time prescribed by said statutes, and all rights at any time conferred upon the
shareowners of the Corporation by its Certificate of Incorporation are granted
subject to the provisions of this Article Tenth. Notwithstanding anything
contained in this Certificate of Incorporation to the contrary, the affirmative
vote of the holders of at least 80% of the voting power of the then outstanding
Voting Stock, voting together as a single class, shall be required to amend or
repeal Article Seventh, this Article Tenth or Article Twelfth or adopt any
provision inconsistent with any of the foregoing articles.
2. By-laws. The Board of Directors is expressly authorized to make, alter, amend
and repeal the by-laws of the Corporation, in any manner not inconsistent with
the laws of the State of Delaware or of the Certificate of Incorporation of the
Corporation, subject to the power of the holders of the Capital Stock to alter
or repeal the by-laws made by the Board of Directors; provided, that any such
amendment or repeal by shareowners shall require the affirmative vote of the
holders of at least 80% of the voting power of the then outstanding Voting
Stock, voting together as a single class.
ELEVENTH: The shareowner vote required to approve Business Combinations (as
hereinafter defined) shall be as set forth in this Article Eleventh.
1. Higher Vote for Business Combinations. In addition to any
affirmative vote required by law, this Certificate of Incorporation or
the by-laws of the Corporation, and except as otherwise expressly
provided in Section 2 of this Article Eleventh, a Business Combination
shall not be consummated without the affirmative vote of the holders of
at least 80% of the voting power of the then outstanding shares of the
Voting Stock, voting together as a single class. Such affirmative vote
shall be required notwithstanding the fact that no vote may be
required, or that a lesser percentage or separate class vote may be
specified, by law or in any agreement with any national securities
exchange or otherwise.
15
<PAGE> 16
2. When Higher Vote Is Not Required. The provisions of Section 1 of
this Article Eleventh shall not be applicable to a Business Combination
if the conditions specified in either of the following paragraphs A or
B are met.
A. Approval by Continuing Directors. The Business Combination
shall have been approved by at least two-thirds of the
Continuing Directors (as hereinafter defined), whether such
approval is made prior to or subsequent to the date on which the
Interested Shareowner (as hereinafter defined) became an
Interested Shareowner (the "Determination Date").
B. Price and Procedure Requirements. Each of the seven
conditions specified in the following subparagraphs (i) through
(vii) shall have been met:
(i) The aggregate amount of the cash and the Fair Market
Value (as hereinafter defined) as of the date of the
consummation of the Business Combination (the "Consummation
Date") of any consideration other than cash to be received
per share by holders of Common Stock in such Business
Combination shall be an amount at least equal to the higher
amount determined under clauses (a) and (b) below (the
requirements of this paragraph B(i) shall be applicable with
respect to all shares of Common Stock outstanding, whether
or not the Interested Shareowner has previously acquired any
shares of the Common Stock): (a) the highest per share price
(including any brokerage commissions, transfer taxes and
soliciting dealers' fees) paid by or on behalf of the
Interested Shareowner for any shares of Common Stock
acquired beneficially by it (1) within the two-year period
immediately prior to the first public announcement of the
proposal of the Business Combination (the "Announcement
16
<PAGE> 17
Date") or (2) in the transaction in which it became an
Interested Shareowner, whichever is higher, plus interest
compounded annually from the Determination Date through the
Consummation Date at the prime rate of interest of Morgan
Guaranty Trust Company of New York (or of such other major
bank headquartered in New York City selected by at least
two-thirds of the Continuing Directors) from time to time in
effect in New York City, less the aggregate amount of any
cash dividends paid, and the Fair Market Value of any
dividends paid in other than cash, per share of Common Stock
from the Determination Date through the Consummation Date in
an amount up to but not exceeding the amount of such
interest payable per share of Common Stock; and (b) the Fair
Market Value per share of Common Stock on the Announcement
Date or on the Determination Date, whichever is higher.
(ii) The aggregate amount of the cash and the Fair Market
Value as of the Consummation Date of any consideration other
than cash to be received per share by holders of shares of
any class or series of outstanding Capital Stock, other than
the Common Stock, in such Business Combination shall be an
amount at least equal to the highest amount determined under
clauses (a), (b) and (c) below (the requirements of this
paragraph B(ii) shall be applicable with respect to all
shares of every class or series of outstanding Capital
Stock, other than the Common Stock, whether or not the
Interested Shareowner has previously acquired any shares of
a particular class or series of Capital Stock):
(a) the highest per share price (including any
brokerage commissions, transfer taxes and soliciting
17
<PAGE> 18
dealers' fees) paid by or on behalf of the Interested
Shareowner for any shares of such class or series of
Capital Stock acquired beneficially by it (1) within
the two-year period immediately prior to the
Announcement Date or (2) in the transaction in which it
became an Interested Shareowner, whichever is higher,
plus interest compounded annually from the
Determination Date through the Consummation Date at the
prime rate of interest of Morgan Guaranty Trust Company
of New York (or of such other major bank headquartered
in New York City selected by at least two-thirds of the
Continuing Directors) from time to time in effect in
New York City, less the aggregate amount of any cash
dividends paid, and the Fair Market Value of any
dividends paid in other than cash, per share of such
class or series of Capital Stock from the Determination
Date through the Consummation Date in an amount up to
but not exceeding the amount of such interest payable
per share of such class or series of Capital Stock; and
(b) the Fair Market Value per share of such class or
series of Capital Stock on the Announcement Date or on
the Determination Date, whichever is higher; and
(c) the highest preferential amount per share to which
the holders of shares of such class or series of
Capital Stock would be entitled in the event of any
voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Corporation,
regardless of whether the Business Combination to be
consummated constitutes such an event.
18
<PAGE> 19
(iii) The consideration to be received by holders of
a particular class or series of outstanding Capital
Stock (including Common Stock) shall be in cash or in
the same form as previously has been paid by or on
behalf of the Interested Shareowner in its direct or
indirect acquisition of beneficial ownership of
shares of such class or series of Capital Stock. If
the consideration so paid for shares of any class or
series of Capital Stock varied as to form, the form
of consideration for such class or series of Capital
Stock shall be either cash or the form used to
acquire beneficial ownership of the largest number of
shares of such class or series of Capital Stock
previously acquired by the Interested Shareowner.
(iv) After such Interested Shareowner has become an
Interested Shareowner and prior to the consummation
of such Business Combination, such Interested
Shareowner shall not have become the beneficial owner
of any additional shares of Capital Stock except as
part of the transaction that results in such
Interested Shareowner becoming an Interested
Shareowner and except in a transaction that, after
giving effect thereto, would not result in any
increase in the Interested Shareowner's percentage
beneficial ownership of any class or series of
Capital Stock; and, except as approved by at least
two-thirds of the Continuing Directors: (a) there
shall have been no failure to declare and pay at the
regular date therefor any full quarterly dividends
(whether or not cumulative) payable in accordance
with the terms of any outstanding Capital Stock; (b)
there shall have been no reduction in the annual rate
of dividends paid on the
19
<PAGE> 20
Common Stock (except as necessary to reflect any
stock split, stock dividend or subdivision of the
Common Stock); and (c) there shall have been an
increase in the annual rate of dividends paid on the
Common Stock as necessary to reflect any
reclassification (including any reverse stock split),
recapitalization, reorganization or any similar
transaction which has the effect of reducing the
number of outstanding shares of Common Stock.
(v) After such Interested Shareowner has become an
Interested Shareowner, such Interested Shareowner
shall not have received the benefit, directly or
indirectly (except proportionately as a shareowner of
the Corporation), of any loans, advances, guarantees,
pledges or other financial assistance or any tax
credits or other tax advantages provided by the
Corporation, whether in anticipation of or in
connection with such Business Combination or
otherwise.
(vi) A proxy or information statement describing the
proposed Business Combination and complying with the
requirements of the Securities Exchange Act of 1934
and the rules and regulations thereunder (or any
subsequent provisions replacing such Act, rules or
regulations) shall be mailed to all shareowners of
the Corporation at least 30 days prior to the
consummation of such Business Combination (whether or
not such proxy or information statement is required
to be mailed pursuant to such Act or subsequent
provisions). The proxy or information statement shall
contain on the first page thereof, in a prominent
place, any statement as to the advisability of the
Business Combination that the Continuing Directors,
or any of them, may choose to
20
<PAGE> 21
make and, if deemed advisable by at least two-thirds of
the Continuing Directors, the opinion of an investment
banking firm selected for and on behalf of the
Corporation by at least two-thirds of the Continuing
Directors as to the fairness of the terms of the
Business Combination from a financial point of view to
the holders of the outstanding shares of Capital Stock
other than the Interested Shareowner and its Affiliates
or Associates (as hereinafter defined).
(vii) Such Interested Shareowner shall not have made
any material change in the Corporation's business or
equity capital structure without the approval of at
least two-thirds of the Continuing Directors.
Any Business Combination to which Section 1 of this Article
Eleventh shall not apply by reason of this Section 2 shall
require only such affirmative vote as is required by law,
any other provision of this Certificate of Incorporation,
the by-laws of the Corporation or any agreement with any
national securities exchange.
3. Certain Definitions. For the purposes of this Article Eleventh:
A. A "Business Combination" shall mean:
(i) any merger or consolidation of the Corporation or
any Subsidiary (as hereinafter defined) with (i) any
Interested Shareowner or (ii) any other corporation
(whether or not itself an Interested Shareowner) which
is, or after such merger or consolidation would be, an
Affiliate or Associate of an Interested Shareowner; or
(ii) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one transaction or a
series of
21
<PAGE> 22
transactions) to or with any Interested Shareowner or
any Affiliate or Associate of any Interested Shareowner
involving any assets or securities of the Corporation,
any Subsidiary or any Interested Shareowner or any
Affiliate or Associate of any Interested Shareowner
having an aggregate Fair Market Value of $25,000,000 or
more; or
(iii) the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation proposed
by or on behalf of any Interested Shareowner or any
Affiliate or Associate of any Interested Shareowner; or
(iv) any reclassification of securities (including any
reverse stock split), or recapitalization of the
Corporation, or any merger or consolidation of the
Corporation with any of its Subsidiaries or any other
transaction (whether or not with or into or otherwise
involving an Interested Shareowner) that has the
effect, directly or indirectly, of increasing the
proportionate share of any class or series of Capital
Stock, or any securities convertible into Capital Stock
or into equity securities of any Subsidiary, that is
beneficially owned by any Interested Shareowner or any
Affiliate or Associate of any Interested Shareowner; or
(v) any agreement, contract, arrangement or other
understanding providing for any one or more of the
actions specified in clauses (i) through (iv) above.
B. A "person" shall mean any individual, firm, corporation or other
entity and shall include any group composed of any person and any other
person with whom such person or any Affiliate or Associate of such
person has any agreement, arrangement or understanding, directly or
indirectly, for the purpose of acquiring, holding, voting or disposing
of Capital Stock.
22
<PAGE> 23
C. "Interested Shareowner" shall mean any person (other than the
Corporation or any Subsidiary and other than any profit-sharing,
employee stock ownership or other employee benefit plan of the
Corporation, any Subsidiary or Rockwell International Corporation or
any trustee of or fiduciary with respect to any such plan when acting
in such capacity) who or which:
(i) is the beneficial owner of Voting Stock having 10% or more
of the votes entitled to be cast by the holders of all then
outstanding shares of Voting Stock; or
(ii) is an Affiliate or Associate of the Corporation and at any
time within the two-year period immediately prior to the date in
question was the beneficial owner of Voting Stock having 10% or
more of the votes entitled to be cast by the holders of all then
outstanding shares of Voting Stock; or
(iii) is an assignee of or has otherwise succeeded to any shares
of Voting Stock which were at any time within the two-year
period immediately prior to the date in question beneficially
owned by any Interested Shareowner, if such assignment or
succession shall have occurred in the course of a transaction or
series of transactions not involving a public offering within
the meaning of the Securities Act of 1933;
provided, however, that Rockwell International Corporation shall not be
an Interested Shareowner as a result of its ownership of Capital Stock
of the Corporation prior to the distribution of the shares of Capital
Stock of the Corporation to the holders of capital stock of Rockwell
International Corporation (the "Distribution").
23
<PAGE> 24
D. A person shall be a "beneficial owner" of any Capital Stock:
(i) which such person or any Affiliate or Associate of such
person beneficially owns, directly or indirectly; or
(ii) which such person or any Affiliate or Associate of such
person has, directly or indirectly, (a) the right to acquire
(whether such right is exercisable immediately or only after the
passage of time), pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion rights,
exchange rights, warrants or options, or otherwise, or (b) the
right to vote pursuant to any agreement, arrangement or
understanding; or
(iii) which are beneficially owned, directly or indirectly, by
any other person with which such person or any Affiliate or
Associate of such person has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or
disposing of any shares of Capital Stock.
E. For the purposes of determining whether a person is an Interested
Shareowner pursuant to paragraph C of this Section 3, the number of
shares of Capital Stock deemed to be outstanding shall include shares
deemed owned by the Interested Shareowner through application of
paragraph D of this Section 3 but shall not include any other shares of
Capital Stock that may be issuable pursuant to any agreement,
arrangement or understanding, or upon exercise of conversion rights,
warrants or options, or otherwise.
F. "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as in effect on
November 19, 1998 (the term "registrant" in such Rule 12b-2 meaning in
this case the Corporation).
24
<PAGE> 25
G. "Subsidiary" means any corporation of which a majority of any class
of equity security is beneficially owned by the Corporation; provided,
however, that for the purposes of the definition of Interested
Shareowner set forth in paragraph C of this Section 3, the term
"Subsidiary" shall mean only a corporation of which a majority of each
class of equity security is beneficially owned by the Corporation.
H. "Continuing Director" means any member of the Board of Directors of
the Corporation (the "Board") who is not an Affiliate or Associate or
representative of the Interested Shareowner and was a member of the
Board prior to the time that the Interested Shareowner became an
Interested Shareowner, and any successor of a Continuing Director who
is not an Affiliate or Associate or representative of the Interested
Shareowner and is recommended or elected to succeed a Continuing
Director by at least two-thirds of the Continuing Directors then
members of the Board.
I. "Fair Market Value" means: (i) in the case of cash, the amount of
such cash; (ii) in the case of stock, the highest closing sale price
during the 30-day period immediately preceding the date in question of
a share of such stock on the Composite Tape for New York Stock
Exchange-Listed Stocks, or, if such stock is not quoted on the
Composite Tape, on the New York Stock Exchange, or, if such stock is
not listed on such Exchange, on the principal United States securities
exchange registered under the Securities Exchange Act of 1934 on which
such stock is listed, or, if such stock is not listed on any such
exchange, the highest closing bid quotation with respect to a share of
such stock during the 30-day period immediately preceding the date in
question on the National Association of Securities Dealers, Inc.
Automated Quotations System or any system then in use, or if no such
quotations are available, the fair market value on the date in
25
<PAGE> 26
question of a share of such stock as determined in good faith by at
least two-thirds of the Continuing Directors; and (iii) in the case of
property other than cash or stock, the fair market value of such
property on the date in question as determined in good faith by at
least two-thirds of the Continuing Directors.
J. In the event of any Business Combination in which the Corporation
survives, the phrase "consideration other than cash to be received" as
used in paragraphs B(i) and (ii) of Section 2 of this Article Eleventh
shall include the shares of Common Stock and/or the shares of any other
class or series of Capital Stock retained by the holders of such
shares.
4. Powers of Continuing Directors. Any determination as to compliance
with this Article Eleventh, including without limitation (A) whether a
person is an Interested Shareowner, (B) the number of shares of Capital
Stock or other securities beneficially owned by any person, (C) whether
a person is an Affiliate or Associate of another, (D) whether the
requirements of paragraph B of Section 2 have been met with respect to
any Business Combination, and (E) whether the assets that are the
subject of any Business Combination have, or the consideration to be
received for the issuance or transfer of securities by the Corporation
or any Subsidiary in any Business Combination has, an aggregate Fair
Market Value of $25,000,000 or more shall be made only upon action by
not less than two-thirds of the Continuing Directors of the
Corporation; and the good faith determination of at least two-thirds of
the Continuing Directors on such matters shall be conclusive and
binding for all the purposes of this Article Eleventh.
5. No Effect on Fiduciary Obligations. Nothing contained in this
Article Eleventh shall be construed to relieve the Board of Directors
or any Interested Shareowner from any fiduciary obligation imposed by
law.
26
<PAGE> 27
6. Amendment, Repeal, etc. Notwithstanding any other provisions of this
Certificate of Incorporation or the by-laws of the Corporation (and
notwithstanding the fact that a lesser percentage or separate class
vote may be specified by law, this Certificate of Incorporation or the
by-laws of the Corporation), the affirmative vote of the holders of at
least 80% of the voting power of the then outstanding shares of Voting
Stock, voting together as a single class, shall be required to amend or
repeal, or adopt any provisions inconsistent with, this Article
Eleventh; provided, however, that the preceding provisions of this
Section 6 shall not apply to any amendment to this Article Eleventh,
and such amendment shall require only such affirmative vote as is
required by law and any other provisions of this Certificate of
Incorporation or the by-laws of the Corporation, if such amendment
shall have been approved by at least two-thirds of the members of the
Board who are persons who would be eligible to serve as Continuing
Directors.
TWELFTH: From and after the time of the Distribution, any action required or
permitted to be taken by the shareowners shall be taken only at an annual or
special meeting of such shareowners and not by consent in writing. Special
meetings of the shareowners for any purpose or purposes shall be called only by
the Board of Directors pursuant to a resolution adopted by a majority of the
whole Board.
27
<PAGE> 28
CERTIFICATE OF DESIGNATION
OF
SERIES B VOTING PREFERRED STOCK
OF
CONEXANT SYSTEMS, INC.
(PURSUANT TO SECTION 151 OF THE
DELAWARE GENERAL CORPORATION LAW)
-------------
Conexant Systems, Inc., a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Corporation"), hereby
certifies that the following resolutions were adopted by the Board of Directors
of the Corporation pursuant to Section 151 of the Delaware General Corporation
Law:
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of this Corporation (the "Board of Directors" or the "Board")
in accordance with the provisions of its Certificate of Incorporation, the Board
of Directors hereby creates a series of the Corporation's previously authorized
Preferred Stock, without par value (the "Preferred Stock"), and hereby states
the designation and number of shares, and fixes the relative rights,
preferences, privileges, powers and restrictions thereof as follows:
SERIES B VOTING PREFERRED STOCK
1. Designation and Amount. The designation of this series, which
consists of 1 share of Preferred Stock, is "Series B Voting Preferred
Stock" (the "Series B Preferred Stock").
2. Dividends and Distributions. The holder of Series B Preferred Stock
shall be entitled to receive such dividends and distributions in equal
amounts per share,
<PAGE> 29
payable in cash or otherwise, as may be declared on one share of the
Corporation's common stock (the "Common Stock") by the Board of
Directors from time to time out of assets or funds of the Corporation
legally available therefor to the holder of record as it appears on the
stock books on such record dates as are fixed by the Board of
Directors, but only when, as and if declared by the Board of Directors
out of funds at the time legally available for the payment of
dividends. Such dividends shall not be cumulative.
3. Voting Rights.
3.1 The share of Series B Preferred Stock shall entitle the
holder thereof to an aggregate number of votes equal to the number of
Exchangeable Shares (the "Exchangeable Shares") of Philsar
Semiconductor Inc., an Ontario corporation ("Philsar") outstanding from
time to time which are not owned by the Corporation or any of its
direct or indirect subsidiaries. The holder of the Series B Preferred
Stock shall be entitled to notice of any stockholder's meeting in
accordance with the Bylaws of the Corporation.
3.2 Except as otherwise provided herein or by law, the holder of
the Series B Preferred Stock and the holders of Common Stock shall vote
together as one class on all matters submitted to a vote of
shareholders of the Corporation.
3.3 Except as set forth herein, the holder of the Series B
Preferred Stock shall have no special voting rights, and its consent
shall not be required (except to the extent it is entitled to vote with
holders of Common Stock as set forth herein) for taking any corporate
action.
4. Reacquired Shares. If the Series B Preferred Stock should be
purchased or otherwise acquired by the Corporation in any manner
whosoever, then the Series B Preferred Stock shall be retired and
canceled promptly after the acquisition thereof. Such share shall upon
2
<PAGE> 30
its cancellation, and upon the taking of any action required by
applicable law, become an authorized but unissued preferred share and
may be reissued as part of a new series of preferred shares to be
created by resolution or resolutions of the Board of Directors, subject
to the conditions and restrictions on issuance set forth in the
Certificate of Incorporation.
5. Liquidation Preference. In the event of a liquidation, dissolution
or winding up of the Corporation ("Liquidation"), whether voluntary or
involuntary, the holder of Series B Preferred Stock shall be entitled
to receive out of the assets of the Corporation, whether such assets
are capital or surplus of any nature, an amount equal to the sum of (i)
the dividends declared but not paid thereon to the date of the final
distribution to such holder, and (ii) $100 per share, and no more,
before any payment shall be made or any assets distributed to the
holders of shares of Common Stock or any other class or series of the
Corporation's capital stock ranking junior as to liquidation rights to
the Series B Preferred Stock (the "Junior Liquidation Stock"). The
entire assets of the Corporation available for distribution, after the
liquidation preferences of any class or series of capital stock ranking
prior to the Series B Preferred Stock as to liquidation rights (the
"Senior Liquidation Stock") are fully met, shall be distributed ratably
among the holders of shares of any class or series of the capital stock
of the Corporation hereafter issued having parity as to liquidation
rights with the Series B Preferred Stock in proportion to the
respective accrued and unpaid dividends and preferential amounts to
which each is entitled (but only to the extent of such accrued and
unpaid dividends and preferential amounts) when such assets are not
sufficient to pay in full the aggregate amounts payable thereon.
Neither a consolidation nor merger of the Corporation with another
corporation nor a sale or transfer of all or part of the Corporation's
assets for cash, securities or other property will be considered a
liquidation, dissolution or winding up of the Corporation.
3
<PAGE> 31
6. No Conversion. The Series B Preferred Stock shall not be convertible
into or exchangeable for any other class or series of capital stock, or
any other securities, of the Corporation or any other corporation.
7. Redemption. The Series B Preferred Stock shall not be subject to
redemption by the Corporation until such time as there are no
Exchangeable Shares outstanding which are not owned by the Corporation
or any of its direct or indirect subsidiaries, and thereafter may be
redeemed at any time by the Corporation, out of funds legally available
for a stock redemption, for cash, at a price per share equal to the sum
of $1.00 plus any declared and unpaid dividends, upon giving 30 days'
written notice to the holder of record of the Series B Preferred Stock
at the address of such holder set forth in the stock books of the
Corporation. No sinking fund shall be provided for the purchase or
redemption of Series B Preferred Stock.
8. Cancellation. At such time as (1) the Series B Preferred Stock
entitles its holder to a number of votes equal to zero because there
are no Exchangeable Shares of Philsar outstanding which are not owned
by the Corporation or any of its direct or indirect subsidiaries, and
(2) there is no share of stock, warrant, option or other agreement,
obligation or commitment of Philsar which by its terms could require
Philsar to issue any Exchangeable Shares to any person other than the
Corporation or any of its direct or indirect subsidiaries, then the
Series B Preferred Stock shall thereupon be retired and canceled
promptly thereafter. Such share shall upon its cancellation, and upon
the taking of any action required by applicable law, become an
authorized but unissued preferred share and may be reissued as part of
a new series of preferred shares to be created by resolution or
resolutions of the Board of Directors, subject to the conditions and
restrictions on issuance set forth in the Certificate of Incorporation.
4
<PAGE> 32
9. Rank The Series B Preferred Stock shall rank pari passu with the
Common Stock, as to payment of dividends and prior to the Common Stock
and the Corporation's Series A Preferred Stock as to distribution of
assets upon Liquidation to the extent provided in Section 5 hereof.
IN WITNESS WHEREOF, this Certificate of Designation is executed on
behalf of the Corporation by the undersigned this 26th day of May, 2000.
CONEXANT SYSTEMS, INC.
By: /s/ Dennis E. O'Reilly
-------------------------------
Name: Dennis E. O'Reilly
Title: Senior Vice President,
General Counsel and
Secretary
5
