SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________________
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 2, 1994
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission file number: 0-12695
INTEGRATED DEVICE TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
Delaware 94-2669985
________________________________________________________________________
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2975 Stender Way, Santa Clara, California 95054
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (408) 727-6116
NONE
_________________________________________________________________________
(Former name, former address and former fiscal year, if changed since
last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports); and (2) has been subject
to such filing requirements for the past 90 days.
Yes X No
____ ____
The number of outstanding shares of the registrant's Common Stock, $.001
par value, as of October 30, 1994 was 33,753,377.
PART I. FINANCIAL INFORMATION
--------------------------------
Item 1. Financial Statements
INTEGRATED DEVICE TECHNOLOGY, INC.
-----------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
-----------------------------------------------
( In thousands, except per share data)
(Unaudited)
Quarter Ended Quarter Ended
October 2, 1994 Sept. 26, 1993
--------------- --------------
Revenues $95,585 $80,295
Cost of revenues 40,011 40,328
Gross profit 55,574 39,967
Operating expenses:
Research and development 17,956 15,715
Selling, general and administrative 15,538 13,529
Total operating expenses 33,494 29,244
Operating income 22,080 10,723
Interest expense (895) (1,340)
Interest income and other, net 1,480 276
Income before provision for income taxes 22,665 9,659
Provision for income taxes 5,659 1,926
Net income $17,006 $7,733
Net income per share $.47 $.24
Shares used in computing net income per share 35,952 32,186
The accompanying notes are an integral part of these financial statements.
INTEGRATED DEVICE TECHNOLOGY, INC.
------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
-----------------------------------------------
( In thousands, except per share data)
(Unaudited)
Six Months Ended Six Months Ended
October 2, 1994 Sept. 26, 1993
Revenues $190,628 $153,061
Cost of revenues 80,422 79,146
Gross profit 110,206 73,915
Operating expenses:
Research and development 35,536 31,182
Selling, general and administrative 30,368 25,306
Total operating expenses 65,904 56,488
Operating income 44,302 17,427
Interest expense (1,854) (2,778)
Interest income and other, net 2,721 795
Income before provision for income taxes 45,169 15,444
Provision for income taxes 11,285 3,083
Net income $33,884 $12,361
Net income per share $.94 $.39
Shares used in computing net income per share 36,040 31,953
The accompanying notes are an integral part of these financial statements.
INTEGRATED DEVICE TECHNOLOGY, INC.
------------------------------------
CONDENSED CONSOLIDATED BALANCE SHEETS
--------------------------------------
( In thousands, except share data)
(Unaudited)
October 2, 1994 April 3, 1994
--------------- -------------
ASSETS
Current assets:
Cash and cash equivalents $87,774 $88,490
Short-term investments 38,120 33,351
Accounts receivable, net 59,872 40,643
Inventory (Note 2) 32,755 29,855
Deferred tax assets 24,068 26,276
Prepayments and other current assets 4,382 3,858
Total current assets 246,971 222,473
Property, plant and equipment, net 143,170 120,838
Other assets 7,425 6,260
TOTAL ASSETS $397,566 $349,571
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $25,954 $15,925
Accrued compensation and related expense 15,851 16,528
Deferred income on shipments to distributors 25,829 17,592
Income taxes payable 8,052 1,964
Other accrued liabilities 10,066 13,032
Current portion of long term obligations 8,608 14,184
Total current liabilities 94,360 79,225
Long term obligations 34,316 37,462
Deferred tax liabilities 8,517 8,517
Commitments and contingencies
Shareholders' equity :
Preferred stock; $.001 par value:
5,000,000 shares authorized; no shares issued
Common stock; $.001 par value: 65,000,000
shares authorized; 33,652,361 and
33,405,552 shares issued and outstanding 34 33
Additional paid-in capital 162,109 160,221
Retained earnings 98,401 64,517
Cumulative translation adjustment (171) (404)
Total shareholders' equity 260,373 224,367
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $397,566 $349,571
The accompanying notes are an integral part of these financial statements.
INTEGRATED DEVICE TECHNOLOGY, INC.
------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------------
( In thousands)
(Unaudited)
Six months Ended Six months Ended
October 2, 1994 Sept. 26, 1993
----------------- ----------------
Increase (decrease) in cash
- ---------------------------
Operating activities:
Net income $33,884 $12,361
Adjustments:
Depreciation and amortization 19,089 18,809
Provision for losses on accounts receivable 290 392
Changes in assets and liabilities:
Accounts receivable (19,519) (668)
Inventory (2,900) (1,882)
Other assets (2,874) (1,417)
Accounts payable 10,029 385
Accrued compensation and related expense (677) 2,559
Deferred income to distributors 8,237 1,695
Income taxes including deferred 8,296 2,940
Other accrued liabilities (2,348) 143
Net cash provided by operating activities 51,507 35,317
Investing activities:
Additions to property, plant
and equipment, net (40,636) (16,061)
Proceeds from sale of equipment 400 591
Purchases of short-term investments (24,456) (2,007)
Proceeds from sales of short-term
investments 19,687 460
Net cash used for investing activities (45,005) (17,017)
Financing activities:
Issuance of common stock, net 1,889 3,946
Proceeds from borrowings 2,731
Payment on capital leases and other debt (9,107) (12,744)
Net cash used for financing activities (7,218) (6,067)
Net increase (decrease) in cash and
cash equivalents (716) 12,233
Cash and cash equivalents at beginning
of period 88,490 22,529
Cash and cash equivalents at end of period $87,774 $34,762
Supplemental disclosure of cash flow information:
Interest paid 1,526 2,711
Income taxes paid 2,841 151
The accompanying notes are an integral part of these financial statements.
INTEGRATED DEVICE TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. The accompanying condensed consolidated balance sheets and the
condensed consolidated statements of operations and cash flows and the
accompanying notes are unaudited. In the opinion of management, these
financial statements have been prepared on the same basis as the audited
consolidated financial statements and reflect all adjustments, consisting
of normal recurring adjustments, necessary to present fairly the financial
data of Integrated Device Technology, Inc. and its subsidiaries for such
periods. The results of operations for the three and six months period
ending October 2, 1994 are not necessarily indicative of the results to be
expected for the year ending April 2, 1995.
This report on Form 10-Q for the quarter ended October 2, 1994
should be read in conjunction with the Company's Annual Report to
Stockholders and Annual Report on Form 10-K for the year ended April 3, 1994.
2. Inventory consists of the following (in thousands):
October 2, 1994 April 3, 1994
Raw materials $ 3,076 $ 2,834
Work-in-process 15,058 10,201
Finished goods 14,621 16,820
$ 32,755 $ 29,855
3. The provision for income taxes reflects the estimated annualized
effective tax rate applied to earnings for the interim period. The
effective rate differs from the U.S. statutory rate primarily due
to earnings of foreign subsidiaries being taxed at lower rates, utilization
of research and development credits and realization of certain deferred tax
benefits for which a valuation allowance was previously required.
4. Net income per share is based on the weighted average number of
shares of common stock and common stock equivalents outstanding, if
dilutive.
5. The Company adopted Statement of Financial Accounting Standards
(FAS) 115, "Accounting for Certain Investments in Debt and Equity Securities"
effective April 4, 1994 as required by that pronouncement. The Statement
requires reporting of investments as either held to maturity, trading or
available for sale. The Company's investments have been classified as
available for sale. The effect of adoption was not material.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
All references are to the company's fiscal periods ended October 2,
1994, and September 26, 1993, unless otherwise indicated.
RESULTS OF OPERATIONS
Revenues for the quarter and six months of fiscal 1995 increased to
$95.6 million and $190.6 million respectively, representing increases of
19.0% for the quarter and 24.5% for the six-month period, respectively.
The increases in the quarter and six-month period were attributable
to higher unit volumes across most product families, geographic regions and
sales channels. Significant unit volume growth was experienced in
SRAM memories, particularly 3.3 volt devices, RISC based microprocessors,
logic circuits and specialty memory products. The higher unit volumes were
offset in part by lower average unit selling prices on certain products due
to competitive pricing and the maturation of certain products.
Gross profit for the quarter increased by $15.6 million to $55.6
million, or to 58.1% as a percentage of revenue (gross margin) from 49.8% in
the same quarter of the prior year. For the six-month period gross profit
increased to $110.2 million, or to 57.8% of revenues as compared to $73.9
million or 48.3%, respectively, for the comparable period of the prior year.
The improvements in gross profit and gross margin were primarily attributable
to higher capacity utilization and increased unit volumes. In addition, the
Company continued a shift to more advanced designs and wafer fabrication
processes which resulted in increased die per wafer yields and therefore
lower unit costs. More efficient test and burn-in procedures also
contributed to improved yields and reduced manufacturing costs. In addition,
selective acceptance of new orders as a result of continued strong demand
allowed the Company to shift manufacturing capacity to higher-margin
products. Due primarily to the Company reaching a cap on certain royalty
obligations, gross profit also benefited in the first six months of fiscal
1995 compared to the first six months of fiscal 1994 from a $1 million
reduction in patent and royalty expenses relating to cross-license
agreements. However, the Company's industry is characterized by patent
claims and license agreements, and there can be no assurance royalty
expenses will not increase in the future.
Research and development (R&D) expenses increased in absolute dollars
but declined as a percentage of revenues for the quarter and the first six
months of fiscal 1995 as compared to the same periods of fiscal 1994. R&D
grew $2.2 million in the quarter but declined as a percentage of revenues to
18.8% from 19.6% in the same quarter a year ago. For the six-month period
R&D expenses increased 14.0% to $35.5 million, but decreased to 18.6% of
revenues from 20.4% in the corresponding period of the prior year. The
Company continues to invest in the development of new products and process
technologies. In the first six months of fiscal 1995, the Company introduced
11 new products and continued to develop its 0.5 micron CMOS processes. The
Company expects that it will continue to increase R&D spending in the future,
although such expenses may vary as a percentage of revenues.
Selling, general and administrative (S,G&A) expenses increased by $2.0
million in the quarter, decreasing to 16.3% of revenues from 16.9% in the
same quarter of the prior year. SG&A expenses increased 20.0% to $30.4
million for the first six months of fiscal 1995, but declined as a percentage
of revenues to 15.9% from 16.5% in the comparable period of the prior year.
The increase in SG&A expenses was attributable to higher costs associated
with the higher level of sales, including higher sales commissions, employee
profit sharing and management bonuses, although SG&A expenses did not
increase as rapidly as sales. The Company anticipates that SG&A expenses
will continue to increase, but may vary as a percentage of revenues.
Interest expense in the quarter decreased by 33.2% to $.9 million
compared with $1.3 million in the prior year. For the six-month period
interest expense decreased 33.3% to $1.9 million. The decrease was the
result of lower debt balances coupled with lower interest rates.
Interest income and other, net, increased to $1.5 million in the quarter
and $2.7 million for the six-month period as contrasted with $.3 million and
$.8 million, respectively, for the same period of the prior year. The
increase in interest income was attributable to significantly higher average
cash balances, partially offset by lower interest rates.
Income taxes for the quarter are provided at an effective rate of 25%.
This compares to an effective rate of 20% provided in the same quarter a year
ago. The increase in the effective tax rate in fiscal 1995 as compared to
fiscal 1994 is primarily due to higher utilization in fiscal 1994 of certain
deferred tax benefits. The Company believes that its effective tax rate will
increase in the future as the tax holiday associated with the Company's
Malaysia facility expires and the Company will have exhausted its deferred
tax benefits.
LIQUIDITY AND CAPITAL RESOURCES
The Company had cash and liquid investments of $125.9 million at October
2, 1994, an increase of $4.1 million during the first six months of fiscal
1995. Working capital increased from $143.2 million at April 3, 1994 to
$152.6 million at October 2, 1994. As of October 2, 1994, the Company had
$4.4 million available under unsecured lines of credit, all of which are
overseas. The Company generated $51.5 million of cash flows from operations
during the first six months of fiscal 1995. The Company's net cash used in
investing activities was $45.0 million, of which $40.6 million was used for
capital equipment and property and plant improvements. For the six months
ended October 2, 1994 the Company used $7.2 million in net cash for financing
activities, including net repayments of $9.1 million relating to capital
equipment financing.
In view of current and anticipated capacity requirements, the Company
anticipates total fiscal 1995 capital expenditures of $100 million to $110
million. For the last six months of fiscal 1995 capital expenditures of
$60 to $70 million are anticipated. For fiscal 1996, capital expenditures
of approximately $200 million are anticipated. Principal requirements are
for incremental production equipment at the Company's San Jose' wafer
fabrication facility and completion of the conversion of the Salinas wafer
fabrication facility from five-inch to six-inch wafer manufacturing. The
Company has begun construction of a new building, planned at $3.1 million,
adjacent to it's existing Penang, Malaysia facility. The new building will
allow further expansion of the assembly and test capabilities and capacities
of the Penang facility. Incremental production test equipment at the
Company's San Jose' and Salinas facilities is also included in the planned
capital expenditures.
In addition, the Company has begun construction of a new eight-inch
wafer fabrication facility in Hillsboro, Oregon. Construction is progressing
more rapidly than previously anticipated. The incremental impact of the
improved construction schedule is included in the planned capital
expenditures. The new facility is planned to be operational late in fiscal
1996.
On November 15, 1994, the Company filed with the Securities and Exchange
Commission a Registration Statement on Form S-3 relating to the issuance and
sale by the Company of 3,300,000 shares of Common Stock to the public. There
can be no assurance that such offering will actually occur or that it will
not be reduced in size. The Company may consider additional forms of
financing to help meet its anticipated capital needs for the construction and
equipping of its new Oregon facility, including a possible bond financing
through the State of Oregon and/or a leasing transaction, which could yield
aggregate proceeds of up to $70 million or more.
The Company believes that the proceeds from such offering, together
with existing cash and cash equivalents, cash flow from operations, existing
credit facilities and possible other financing arrangements for the Oregon
facility, will be adequate to fund anticipated capital expenditures and
working capital needs through fiscal 1996. There can be no assurance,
however, that the Company will not be required to seek other financing
sooner or that such financing, if required, will be available on terms
satisfactory to the Company.
FACTORS AFFECTING FUTURE RESULTS
The Company has experienced improvements in revenues, bookings and
profitability during the first six months of fiscal 1995. However, the
Company's future operating results are subject to a variety of uncertainties.
The Company's quarterly operating results may be subject to fluctuations
due to a number of factors, including the semiconductor industry's
volatility, the timing of new product and process technology announcements
by the Company or competitors, competitive pricing pressures, fluctuations
in manufacturing yields, changes in the mix of products sold, availability
and costs of raw materials, industry-wide wafer processing capacity, various
geographic area economic conditions, or the costs of other events, such as
the expansion of existing production capacities, delays in new facility
construction or litigation. While the Company's business conditions appear
to be improved, intense semiconductor industry competition and the world
economy, as well as the rapid pace of technological change, make
profitability trends difficult to predict.
New products and process technology continue to require significant R&D
investments by the Company but there can be no assurance that those efforts
will result in market acceptance. A significant number of the Company's
growth opportunities are targeted at the emerging market demand in computer
and communications industries and depend on customer preference for IDT
products and capabilities in lieu of competitive alternatives. There is no
assurance that market acceptance and demand will continue or that customer
preference will be realized.
The Company is operating its wafer fabrication facilities in Salinas
and San Jose and its assembly operations in Malaysia near installed
equipment capacity. As a result, the Company has not been able to take
advantage of all market opportunities. Due to long production lead times
and current capacity constraints, any failure by the Company to adequately
forecast the mix of product demand could adversely affect the Company's
sales and operating results. To address its capacity requirements, the
Company is converting its Salinas wafer fabrication facility from the
existing five-inch wafer capability to six-inch wafers. Should the
Company encounter production difficulties during the conversion, quality
problems and delivery delays could result. The Company has also begun
construction of a new eight-inch wafer fabrication facility. Construction
or equipment delivery delays could result in longer term delays in the
Company realizing the revenue production capacity of the new facility. The
Company's capacity additions will result in a significant increase in fixed
and operating expenses. If revenue levels do not increase sufficiently to
offset these additional expense levels, the Company's operating results
could be adversely impacted in future periods.
PART II OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
(a) On Thursday, August 25, 1994 the Company held its 1994 Annual Meeting
of Shareholders. At the meeting, 29,548,099 shares of Common Stock
were represented in person or by proxy, representing 88.07% of the
total outstanding shares.
(b) The meeting involved the election of Class I Director - Leonard
C. Perham.
Votes For: 29,318,116
Votes Withheld: 229,983
The term of office of the following directors continued after the
meeting:
Federico Faggin
John C. Bolger
D. John Carey
Carl E. Berg
(c) Three additional matters (other than procedural matters) were voted
upon at the meeting, the results of which were as follows:
(i) Adoption of the 1994 Stock Option Plan
Votes For: 22,402,240
Votes Against: 5,953,532
Votes Withheld: 58,813
Broker Non Vote: 1,133,514
(ii) Adoption of the 1994 Directors Stock Option Plan
Votes For: 20,037,149
Votes Against: 8,451,232
Votes Withheld: 69,652
Broker Non Vote: 990,066
(iii) Ratification of appointment of Price Waterhouse as independent
auditors
Votes For: 29,451,828
Votes Against: 61,992
Votes Withheld: 34,279
Broker Non Vote 0
Item 6 Exhibits and Reports on Form 8-K
(a) The following exhibits are filed herewith or incorporated by
reference herein:
Exhibit
No. Description Page
4.1* Restated Certificate of Incorporation (previously filed as
Exhibit 3A to Registration Statement on Form 8-B [File No.
0-12695] dated September 23, 1987).
4.2* Certificate of Amendment of Restated Certificate of
Incorporation (previously filed as Exhibit 3.2 to Annual
Report on Form 10-K [File No. 0-12695] for the Fiscal Year
Ended April 2, 1989).
4.3* Certificate of Designation, Preferences and Rights of Series
A Junior Participating Preferred Stock (previously filed as
Exhibit 3.3 to Annual Report on Form 10-K [File No. 0-12695]
for the Fiscal Year Ended April 2, 1989).
4.4* Bylaws dated January 25, 1993 (previously filed as Exhibit 3.4
to Annual Report on Form 10-K [File No. 0-12695] for the Fiscal
Year Ended March 28, 1993).
4.5* Amended and Restated Rights Agreement dated as of February 27,
1992, between the Company and The First National Bank of Boston
(previously filed as Exhibit 4.1 to Current Report on Form 8-K
[File No. 0-12695] dated February 27, 1992).
10.1* Lease for 1566 Moffet Street, Salinas, California, dated June 28,
1985 between the Company and Carl E. Berg and Clyde J. Berg, dba
Berg & Berg Developers (previously filed as Exhibit 10.7 to Form
S-1 Registration Statement No. 33-3189).
10.2* Assignment of Lease dated October 30, 1985 between the Company
and Synertek Inc. relating to 2975 Stender Way, Santa Clara,
California (previously filed as Exhibit 10.4 to Annual Report
on Form 10-K [File No. 0-12695] for the Fiscal Year Ended April
1, 1990).
10.3* Assignment of Lease dated October 30, 1985 between the Company
and Synertek Inc. relating to 3001 Stender Way, Santa Clara,
California (previously filed as Exhibit 10.5 to Annual Report on
Form 10-K [File No. 0-12695] for the Fiscal Year Ended April 1,
1990).
10.4* Lease dated October 23, 1989 between Integrated Device Technology
International Inc. and RREEF USA FUND-III relating to 2972 Stender
Way, Santa Clara, California (previously filed as Exhibit 10.6 to
Annual Report on Form 10-K [File No. 0-12695] for the Fiscal Year
Ended April 1, 1990).
10.5* First Deed of Trust and Assignment of Rents, Security Agreement
and Fixture Filing dated March 28, 1990 between the Company and
Santa Clara land Title Company for the benefit of The Variable
Annuity Life Insurance Company relating to 2670 Seely Avenue,
San Jose, California (previously filed as Exhibit 10.7 to Annual
Report on Form 10-K [File No. 0-12695] for the Fiscal Year Ended
April 1, 1990).
10.6* Amended and Restated 1984 Employee Stock Purchase Plan.
10.7* Form of Indemnification Agreement between the Company and its
directors and officers (previously filed as Exhibit 10.68 to
Annual Report on Form 10-K [File No. 0-12695] for the Fiscal
Year Ended April 2, 1989).
10.8* Manufacturing, Marketing and Purchase Agreement between the
Company and MIPS Computer Systems, Inc. dated January 16, 1988
(previously filed as Exhibit 10.12 to Annual Report on Form
10-K [File No. 0-12695] for the Fiscal Year Ended March 29,
1992) (Confidential Treatment).
10.9* Preferred Stock Purchase Agreement dated January 14, 1992
among the Company, Berg & Berg Enterprises, Inc. and Quantum
Effect Design, Inc. (previously filed as Exhibit 10.13 to
Annual Report on Form 10-K [File No. 0-12695] for the Fiscal
Year Ended March 29, 1992).
10.10* Patent License Agreement between the Company and American
Telephone and Telegraph Company dated May 1, 1992 (previously
filed as Exhibit 19.1 to Quarterly Report on Form 10-Q [File
No. 0-12695] for the Quarter Ended June 28, 1992) (Confidential
Treatment).
10.11* Agreement Between the Company and Texas Instruments Incorporated
effective December 10, 1992, including all related exhibits,
among others, the Patent Cross-License Agreement and the OEM
Purchase Agreement (previously filed as Exhibit 19.1 to Quarterly
Report on Form 10-Q [File No. 0-12695] for the Quarter Ended
December 27, 1992) (Confidential Treatment).
10.12 Series A Preferred Stock Purchase Agreement dated July 16, 1992
among Monolithic System Technology, Inc. and certain purchasers.
10.13 Series B Preferred Stock Purchase Agreement dated March 1994
among Monolithic System Technology, Inc. and certain purchasers.
10.14 Series C Preferred Stock Purchase Agreement dated June 13, 1994
among Monolithic System Technology, Inc. and certain purchasers.
10.15 Domestic Distributor Agreement between the Company and Wyle
Laboratories, Inc. Electronic Marketing Group dated as of April
15, 1994.
10.16 Lease Extension and Modification Agreement between the Company
and Baccarat Silicon, Inc. dated as of September 1, 1994,
relating to 1566 Moffet Street, Salinas, California.
10.17 1994 Stock Option Plan and related documents.
10.18 1994 Directors Stock Option Plan and related documents.
10.19 Letter dated June 29, 1994 to the Company regarding construction of
Oregon facility.
* These exhibits were previously filed with the Commission as
indicated and are incorporated herein by reference.
(b) Reports on Form 8-K
No reports have been filed on Form 8-K during this quarter.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INTEGRATED DEVICE TECHNOLOGY, INC.
Date: November 15, 1994 /s/ Leonard C. Perham
____________________________________
Leonard C. Perham
Chief Executive Officer
Date: November 15, 1994 /s/ William D. Snyder
____________________________________
William D. Snyder
Vice President Finance (principal
financial and accounting officer)
MONOLITHIC SYSTEM TECHNOLOGY, INC.
SERIES A
PREFERRED STOCK PURCHASE AGREEMENT
July 16, 1992
TABLE OF CONTENTS
Page
SECTION 1 - Authorization and Sale of Preferred Stock 1
1.1 Authorization 1
1.2 Sale of Series A Preferred 1
SECTION 2 - Closing and Delivery 1
2.1 Closing and Delivery 1
SECTION 3 - Representations and Warranties of the Company 2
3.1 Organization and Standing 2
3.2 Corporate Power 2
3.3 Capitalization 2
3.4 Authorization 2
3.5 Compliance with Other Instruments 3
3.6 Litigation 3
3.7 Governmental Consents 3
3.8 Brokers or Finders 3
SECTION 4 - Representations and Warranties of the Purchasers 3
4.1 Experience 4
4.2 Investment 4
4.3 Rule 144 4
4.4 No Public Market 4
4.5 Access to Data 4
4.6 Authorization 5
4.7 Brokers or Finders 5
SECTION 5 - Miscellaneous 5
5.1 Governing Law 5
5.2 Successors and Assigns 5
5.3 Entire Agreement; Amendment 5
5.4 Notices, etc 5
5.5 Delays or Omissions 6
5.6 California Corporate Securities Law 6
5.7 Expenses 6
5.8 Indemnification For Finders Fees 6
5.9 Severability 6
5.10 Counterparts 6
EXHIBITS
A. Schedule of Purchasers
B. Amended and Restated Articles of Incorporation
C. Not Used
D. Registration Rights Agreement
MONOLITHIC SYSTEM TECHNOLOGY, INC.
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
This Agreement is made as of July 16, 1992, among Monolithic
System Technology, Inc., a California corporation (the "Company"),
and the persons and entities listed on the Schedule of Purchasers
attached hereto as Exhibit A (the "Purchasers").
SECTION 1
Authorization and Sale of Preferred Stock
1.1 Authorization. The Company has authorized the sale and issuance of
up to 500,000 shares of its Series A Preferred Stock ("Series A Preferred"),
having the rights, restrictions, privileges and preferences as set forth in
the Company's Amended and Restated Articles of Incorporation in the
form attached to this Agreement as Exhibit B (the "Restated Articles").
1.2 Sale of Series A Preferred. Subject to the terms and conditions
hereof, the Company hereby issues and sells to the Purchasers, and the
Purchasers hereby buy from the Company, the number of shares (the "Shares")
of Series A Preferred specified opposite each Purchaser's name on the
Schedule of Purchasers, at a purchase price of $1.00 per share payable in
cash or through cancellation of indebtedness of the Company to the
Purchasers. The Company's agreements with each of the Purchasers
are separate agreements, and the sales of the Series A Preferred to
each of the Purchasers are separate sales.
SECTION 2
Closing and Delivery
2.1 Closing and Delivery. The closing of the purchase and sale of
the Series A Preferred hereunder (the "Closing") took place and is
effective as of the date hereof. Each of the Purchasers hereby acknowledges
receipt from the Company of a certificate or certificates representing the
number of Shares designated in column 2 of the Schedule of
Purchasers and the Company hereby acknowledges receipt of payment
of the purchase price therefor, by check or wire transfer payable
to the Company or through cancellation of indebtedness of the
Company to the Purchasers, in the amount specified in column 3 of
the Schedule of Purchasers.
SECTION 3
Representations and Warranties of the Company
The Company hereby represents and warrants to the Purchasers
as follows:
3.1 Organization and Standing. The Company is a corporation duly
organized and existing under, and by virtue of, the laws of the State of
California and is in good standing under such laws. The Company has requisite
corporate power to own and operate its properties and assets, and to carry
on its business as presently conducted and as proposed to be conducted.
The Company is not qualified to do business as a foreign
corporation in any jurisdiction and such qualification is not
presently required.
3.2 Corporate Power. The Company has all requisite legal and corporate
power to execute and deliver this Agreement and the Registration and
Information Rights Agreement attached hereto as Exhibit C
(the "Registration Rights Agreement"), to sell and issue the Shares hereunder,
to issue the Common Stock issuable upon conversion of the Series A Preferred
and to carry out and perform its obligations under the terms of this
Agreement and the Shareholder Rights Agreement.
3.3 Capitalization. The authorized capital stock of the Company
consists of 4,000,000 shares of Common Stock, of which 2,600,000 shares
are issued and outstanding, and 1,000,000 shares of Preferred Stock, of which
500,000 shares have been designated as Series A Preferred Stock and none
of which is issued or outstanding prior to the Closing. All such issued and
outstanding shares have been duly authorized and validly issued,
and are fully paid and nonassessable. The Company has reserved (or
will reserve prior to the Closing) (i) 500,000 shares of Series A
Preferred for issuance hereunder, (ii) 500,000 shares of Common
Stock for issuance upon conversion of the Shares and (iii) 900,000
shares of Common Stock for issuance to employees and consultants.
The Series A Preferred shall have the rights, preferences,
privileges and restrictions set forth in the Restated Articles.
3.4 Authorization. All corporate action on the part of the Company,
its directors and shareholders necessary for the authorization, execution,
delivery and performance of this Agreement and the Registration Rights
Agreement by the Company, the authorization, sale, issuance and delivery of
the Shares (and the Common Stock issuable upon conversion of the
Shares) and the performance of the Company's obligations hereunder
has been taken. This Agreement and the Registration Rights
Agreement, when executed and delivered by the Company, shall
constitute valid and binding obligations of the Company enforceable
in accordance with their respective terms. The Shares, when issued
in compliance with the provisions of this Agreement, will be
validly issued and fully paid and nonassessable, and the Common
Stock issuable upon conversion of the Shares will be duly and
validly reserved and, when issued in compliance with the provisions
of this Agreement, will be validly issued, fully paid and non
assessable, and free of any liens or encumbrances.
3.5 Compliance with Other Instruments. The Company is not in violation
of any term of its Articles or Bylaws nor, to the best of its knowledge, any
material term of any agreement, judgment, statute, rule or
regulation to which the Company is subject and a violation of which
would have a material adverse effect on the condition, financial or
otherwise, or operations of the Company.
3.6 Litigation. There are no actions, suits, proceedings or
investigations pending against the Company or its properties before any
court or governmental agency.
3.7 Governmental Consents. No consent, approval or authorization of,
or designation, declaration or filing with, any governmental authority on
the part of the Company is required in connection with the valid execution
and delivery of this Agreement and the Rights Agreement, or the offer,
sale or issuance of the Series A Preferred (and the Common Stock
issuable upon conversion of the Series A Preferred), or the
consummation of any other transaction contemplated hereby, except
(a) filing of the Restated Articles with the office of the
Secretary of State of the State of California and (b) qualification
(or taking such action as may be necessary to secure an exemption
from qualification, if available) of the offer and sale of the
Series A Preferred (and the Common Stock issuable upon conversion
of the Series A Preferred) under the California Corporate
Securities Law and other applicable Blue Sky laws, which filing and
qualification, if required, will be accomplished in a timely manner
prior to or promptly upon completion of the Closing.
3.8 Brokers or Finders. The Company has not incurred, and will not
incur, directly or indirectly, any liability for brokerage or finders' fees
or agents' commissions or any similar charges in connection with this
Agreement or any transaction contemplated hereby.
SECTION 4
Representions and Warranties of the Purchasers
Each Purchaser hereby represents and warrants to the Company
with respect to its purchase of the Shares as follows:
4.1 Experience. Each Purchaser has substantial experience in
evaluating and investing in private placement transactions of securities in
companies similar to the Company so that it is capable of evaluating the
merits and risks of its investment in the Company and has the capacity to
protect its own interests.
4.2 Investment. Each Purchaser is acquiring the Shares and the
underlying Common Stock for investment for its own account, not as a nominee
or agent, and not with the view to, or for resale in connection with,
any distribution thereof. Each Purchaser understands that the Shares to be
purchased and the underlying Common Stock have not been, and will not be,
registered under the Securities Act of 1933, as amended (the "Securities
Act") by reason of a specific exemption from the registration provisions
of the Securities Act, the availability of which depends upon,
among other things, the bona fide nature of the investment intent
and the accuracy of such Purchaser's representations as expressed
herein.
4.3 Rule 144. Each Purchaser acknowledges that the Shares and the
underlying Common Stock must be held indefinitely unless subsequently
registered under the Securities Act or unless an exemption from such
registration is available. Each Purchaser is aware of the provisions of
Rule 144 promulgated under the Securities Act which permit limited resale
of shares purchased in a private placement subject to the satisfaction of
certain conditions, including, among other things, the existence of
a public market for the shares, the availability of certain current
public information about the Company, the resale occurring not less
than two years after a party has purchased and paid for the
security to be sold, the sale being effected through a "broker's
transaction" or in transactions directly with a "market maker" and
the number of shares being sold during any three-month period not
exceeding specified limitations.
4.4 No Public Market. Each Purchaser understands that no public market
now exists for any of the securities issued by the Company and that the
Company has made no assurances that a public market will ever exist for
the Company's securities.
4.5 Access to Data. Each Purchaser has had an opportunity to discuss
the Company's business, management and financial affairs with the Company's
management and has had the opportunity to review the Company's facilities.
Each Purchaser has also had an opportunity to ask questions of officers of
the Company concerning the terms of this offering, which questions were
answered to its satisfaction. It understands that such
discussions, as well as any written information issued by the
Company, were intended to describe certain aspects of the Company's
business and prospects but were not a thorough or exhaustive
description.
4.6 Authorization. This Agreement and the Rights Agreement when
executed and delivered by such Purchaser will constitute a valid and
legally binding obligation of the Purchaser, enforceable in accordance
with its terms.
4.7 Brokers or Finders. The Company has not incurred, and will not
incur, directly or indirectly, as a result of any action taken by such
Purchaser, any liability for brokerage or finders' fees or agents'
commissions or any similar charges in connection with this Agreement or
any transaction contemplated hereby.
SECTION 5
Miscellaneous
5.1 Governing Law. This Agreement shall be governed in all respects
by the laws of the State of California.
5.2 Successors and Assigns. Except as otherwise provided herein,
the provisions hereof shall inure to the benefit of, and be binding upon,
the successors, assigns, heirs, executors, and administrators of the parties
hereto.
5.3 Entire Agreement; Amendment. This Agreement and the other
documents delivered pursuant hereto constitute the full and entire
understanding and agreement between the parties with regard to the
subjects hereof and thereof. Neither this Agreement nor any term
hereof may be amended, waived, discharged, or terminated other than
by a written instrument signed by the party against whom
enforcement of any such amendment, waiver, discharge, or termina
tion is sought.
5.4 Notices, etc. All notices and other
communications required or permitted hereunder shall be in writing
and shall be deemed effectively given upon delivery to the party to
be notified in person or by courier service or five (5) days after
deposit with the United States mail, by registered or certified
mail, postage prepaid, addressed (a) if to a Purchaser, at such
Purchaser's address set forth in Exhibit A, or at such other
address as such Purchaser shall have furnished to the Company in
writing, or (b) if to any other holder of any Shares, at such
address as such holder shall have furnished the Company in writing,
or, until any such holder so furnishes an address to the Company,
then to and at the address of the last holder of such Shares who
has so furnished an address to the Company, or (c) if to the
Company, one copy should be sent to its address set forth on the
last page of this Agreement and addressed to the attention of the
President, or at such other address as the Company shall have
furnished to the Purchasers.
5.5 Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to any holder of any Shares, upon any breach or
default of the Company under this Agreement, shall impair any such right,
power or remedy of such holder nor shall it be construed to be a waiver of
any such breach or default, or an acquiescence therein, or of or in any
similar breach or default thereafter occurring; nor shall any
waiver of any single breach or default be deemed a waiver of any
other breach or default theretofore or thereafter occurring. Any
waiver, permit, consent or approval of any kind or character on the
part of any holder of any breach or default under this Agreement,
or any waiver on the part of any holder of any provisions or
conditions of this Agreement, must be in writing and shall be
effective only to the extent specifically set forth in such
writing. All remedies, either under this Agreement or by law or
otherwise afforded to any holder, shall be cumulative and not
alternative.
5.6 California Corporate Securities Law. THE SALE OF THE SECURITIES
WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH
THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE
ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART
OF THE CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION IS
UNLAWFUL UNLESS AN EXEMPTION FROM SUCH QUALIFICATION IS AVAILABLE.
THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY
CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, OR SUCH
EXEMPTION BEING AVAILABLE.
5.7 Expenses. The Company and the Purchasers
shall each bear their own expenses and legal fees with respect to
this Agreement and the transactions contemplated hereby.
5.8 Indemnification For Finders Fees. Each Purchaser agrees to
indemnify and to hold harmless the Company from any liability for any
commission or compensation in the nature of a finder's fee (and the costs
and expenses of defending against such liability or asserted liability)
for which such Purchaser or any of its officers, partners,
employees, or representatives is responsible. The Company agrees
to indemnify and hold harmless each Purchaser from any liability
for any commission or compensation in the nature of a finders' fee
(and the costs and expenses of defending against such liability or
asserted liability) for which the Company or any of its officers,
employees or representatives is responsible.
5.9 Severability. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision.
5.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which may be executed by less than all of the
Purchasers, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument.
The foregoing agreement is hereby executed as of the date
first above written.
"COMPANY" MONOLITHIC SYSTEM TECHNOLOGY,
INC., a California corporation
21775 Congress Hall Lane
Saratoga, California 95070
By: ____________________________
Fu-Chieh Hsu, President
"PURCHASERS"
BACCARAT DEVELOPMENT PARTNERSHIP
By: Baccarat Development
Corporation, General
Partner
By: _______________________
Carl E. Berg, President
_______________________________
Keno Misawa
KAN ELECTRONICS CO., LTD.
By: ____________________________
Title: _________________________
INTEGRATED DEVICE TECHNOLOGY, INC.
By: ____________________________
Title: _________________________
EXHIBIT A
SCHEDULE OF PURCHASERS
Name and Address Number Aggregate
of Purchaser of Shares Purchase Price
Baccarat Development Partnership 266,000 $266,000
Keno Misawa 50,000 50,000
Kan Electronics Co., Ltd. 50,000 50,000
Integrated Device 134,000 134,000
Technology, Inc.
Total 500,000 $500,000
RESTATED ARTICLES OF INCORPORATION
OF
MONOLITHIC SYSTEM TECHNOLOGY, INC.
The undersigned, Fu-Chieh Hsu and Wing Yu Leung, hereby
certify that:
1. They are the duly elected and acting President and
Secretary, respectively, of Monolithic System Technology, Inc., a
California corporation.
2. The Articles of Incorporation of this corporation are
amended and restated to read in full as follows:
I.
The name of this corporation is Monolithic System Technology,
Inc.
II.
The purpose of this 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.
III.
This corporation is authorized to issue two classes of stock,
designated "Common Stock" and "Preferred Stock." The total number
of shares which this corporation is authorized to issue is
5,000,000 shares. The number of shares of Common Stock which this
corporation is authorized to issue is 4,000,000 shares. The number
of shares of Preferred Stock which this Corporation is authorized
to issue is 1,000,000 shares. The Preferred Stock may be issued
from time to time in one or more series. Of the Preferred Stock,
500,000 shares shall be designated Series A Preferred Stock. The
Board of Directors of this corporation is authorized to determine
or alter the rights, preferences, privileges and restrictions
granted to or imposed upon any wholly unissued series of Preferred
Stock, and within the limitations or restrictions stated in any
resolution or resolutions of the Board of Directors originally
fixing the number of shares constituting any series, to increase or
decrease (but not below the number of shares of any such series
then outstanding) the number of shares of any such series subsequent
to the issue of shares of that series, to determine the
designation of any series, and to fix the number of shares of any
series.
The Series A Preferred Stock (the "Series A Preferred") shall
have the rights, preferences, privileges and restrictions set forth
below.
Section 1. Dividend Rights of Series A Preferred. Subject to
the rights of additional series of Preferred Stock which may be
designated by the Board of Directors (the "Board") from time to
time, the holder of each share of Series A Preferred shall be
entitled to receive, prior and in preference to any declaration and
payment of any dividend (payable other than in stock of the corporation)
on the Common Stock, non-cumulative dividends at an annual
rate equal to $0.10 per share, when and as declared by the Board of
Directors.
Section 2. Liquidation Preference.
(a) Subject to the rights of additional series of Preferred
Stock which may be designated by the Board from time to time, in
the event of any liquidation, dissolution or winding up of the
corporation, either voluntarily or involuntarily, the holders of
the Series A Preferred shall be entitled to receive, prior and in
preference to any distribution of any of the assets of the corporation
to the holders of the Common Stock, an amount per share equal
to $1.00 plus any declared but unpaid dividends for each share of
Series A Preferred then held by them. After payment to the holders
of the Series A Preferred of the amounts set forth in this
Section 2, the entire remaining assets and funds of the corporation
legally available for distribution, if any, shall be distributed
among the holders of the Common Stock in proportion to the shares
of Common Stock then held by them. If, upon the occurrence of such
event, the assets thus distributed among the holders of the
Series A Preferred shall be insufficient to permit the payment to
such holders of the full aforesaid preferential amount, then the
entire assets and funds of the corporation legally available for
distribution shall be distributed among the holders of the Series A
Preferred in proportion to the number of shares of Series A
Preferred then held by them.
(b) (i) For purposes of this Section 2, a liquidation,
dissolution or winding up of the corporation shall be deemed to be
occasioned by and to include (A) the corporation's sale of all or
substantially all of its assets or (B) any transaction or series of
related transactions (including, without limitation, any reorganization,
merger or consolidation) which will result in the holders
of the outstanding voting equity securities of the corporation
immediately prior to such transaction or series of related transactions
holding securities representing less than 50% of the voting
power of the surviving entity immediately following such
transaction or series of related transactions.
(ii) In any such events, if the consideration received
by the corporation is other than cash or indebtedness, its value
will be deemed to be its fair market value. In the case of publicly
traded securities, fair market value shall mean the closing
market price of such securities on the date such consolidation,
merger or sale is consummated. If a consideration is in a form
other than publicly traded securities, its value shall be
determined by the Board.
Section 3. Conversion.
The holders of the Series A Preferred shall have conversion
rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each share of Series A Preferred
shall be convertible, at the option of the holder thereof,
at any time after the date of issuance of such share, at the office
of the Corporation or any transfer agent for the Series A Preferred,
into such number of fully paid and nonassessable shares of
Common Stock as is determined by dividing One Dollar ($1.00) by the
Conversion Price, determined as hereinafter provided, in effect at
the time of conversion. The price at which shares of Common Stock
shall be deliverable upon conversion of shares of Series A Preferred
(the "Conversion Price") shall initially be One Dollar
($1.00) per share of Common Stock. Such initial Conversion Price
shall be subject to adjustment as hereinafter provided.
Upon conversion, all declared and unpaid dividends on the
Series A Preferred shall be paid either in cash or in shares of
Common Stock of the Corporation, at the election of the Company,
wherein the shares of Common Stock shall be valued at the fair
market value at the time of such conversion, as determined by the
Board of Directors of the Corporation.
(b) Automatic Conversion. Each share of Series A
Preferred shall automatically be converted into shares of Common
Stock at the then effective Conversion Price upon the closing of an
underwritten public offering pursuant to an effective registration
statement under the Securities Act of 1933, as amended, covering
the offer and sale of Common Stock for the account of the
Corporation to the public at a price per share (prior to
underwriter commissions and offering expenses) of not less than
$5.00 per share (appropriately adjusted for any recapitalization)
and an aggregate offering price to the public of not less than
$7,500,000. In the event of the automatic conversion of the
Series A Preferred, the person(s) entitled to receive the Common
Stock issuable upon such conversion of Series A Preferred shall not
be deemed to have converted such Series A Preferred until
immediately prior to the closing of such sale of securities.
(c) Mechanics of Conversion. No fractional shares of
Common Stock shall be issued upon conversion of Preferred Stock. In
lieu of any fractional shares to which the holder would otherwise
be entitled, the Corporation shall pay cash equal to such fraction
multiplied by the then effective Conversion Price. Before any
holder of Preferred Stock shall be entitled to convert the same
into full shares of Common Stock and to receive certificates there
for, he shall surrender the certificate or certificates therefor,
duly endorsed, at the office of the Corporation or of any transfer
agent for the Preferred Stock, and shall give written notice to the
Corporation at such office that he elects to convert the same; provided,
however, that in the event of an automatic conversion pursuant
to Section 3(b), the outstanding shares of Preferred Stock
shall be converted automatically without any further action by the
holders of such shares and whether or not the certificates representing
such shares are surrendered to the Corporation or its transfer
agent, and provided further that the Corporation shall not be
obligated to issue certificates evidencing the shares of Common
Stock issuable upon such automatic conversion unless the certificates
evidencing such shares of Preferred Stock are either delivered
to the Corporation or its transfer agent as provided above,
or the holder notifies the Corporation or its transfer agent that
such certificates have been lost, stolen or destroyed and executes
an agreement satisfactory to the Corporation to indemnify the
Corporation from any loss incurred by it in connection with such
certificates. The Corporation shall, as soon as practicable after
such delivery, or such agreement and indemnification in the case of
a lost certificate, issue and deliver at such office to such holder
of Preferred Stock, a certificate or certificates for the number of
shares of Common Stock to which he shall be entitled as aforesaid
and a check payable to the holder in the amount of any cash amounts
payable as the result of a conversion into fractional shares of
Common Stock. Such conversion shall be deemed to have been made
immediately prior to the close of business on the date of such
surrender of the shares of Preferred Stock to be converted, or in
the case of automatic conversion on the date of closing of the
offering or the effective date of such written consent, and the
person or persons entitled to receive the shares of Common Stock
issuable upon such conversion shall be treated for all purposes as
the record holder or holders of such shares of Common Stock on such
date.
(d) Adjustments to Conversion Price for Diluting Issues.
(i) Special Definitions. For purposes of this
Section 3(d), the following definitions shall apply:
(A) 'Options' shall mean rights, options
or warrants to subscribe for, purchase or otherwise acquire either
Common Stock or Convertible Securities.
(B) 'Original Issue Date' shall mean the
date on which a share of Series A Preferred Stock was first issued.
(C) 'Convertible Securities' shall mean
any evidences of indebtedness, Preferred Stock, or other securities
convertible into or exchangeable for Common Stock.
(D) 'Additional Shares of Common' shall
mean all shares of Common Stock issued (or, pursuant to Sec
tion 3(d)(iii), deemed to be issued) by the Corporation after the
Original Issue Date, other than shares of Common Stock issued,
issuable or, pursuant to Section 3(d)(iii), deemed to be issued:
(a) upon conversion of shares of
Preferred Stock;
(b) to officers, directors or
employees of, or consultants to, the Corporation pursuant to a
stock grant, option plan or purchase plan or other employee stock
incentive program or arrangement approved by the Board of
Directors;
(c) as a dividend or distribution on
Preferred Stock; and
(d) in connection with any trans
action for which adjustment is made pursuant to Section 3(d)(vi)
hereof.
(ii) No Adjustment of Conversion Price. No
adjustment in the Conversion Price shall be made in respect of the
issuance of Additional Shares of Common unless the consideration
per share for an Additional Share of Common issued or deemed to be
issued by the Corporation is less than the Conversion Price in
effect on the date of, and immediately prior to such issue.
(iii) Options and Convertible Securities. In
the event the Corporation at any time or from time to time after
the Original Issue Date shall issue any Options or Convertible
Securities or shall fix a record date for the determination of
holders of any class of securities entitled to receive any such
Options or Convertible Securities, then the maximum number of
shares of Common issuable upon the exercise of such Options or, in
the case of Convertible Securities and Options therefor, the
conversion or exchange of such Convertible Securities, shall be
deemed to be Additional Shares of Common issued as of the time of
such issue or, in case such a record date shall have been fixed, as
of the close of business on such record date, provided that Additional
Shares of Common shall not be deemed to have been issued
unless the consideration per share (determined pursuant to Section
3(d)(v) hereof) of such Additional Shares of Common would be
less than the Conversion Price in effect on the date of and immediately
prior to such issue, or such record date, as the case may
be, and provided further that in any such case in which Additional
Shares of Common are deemed to be issued:
(A) no further adjustment in the Conversion
Price shall be made upon the subsequent issue of Convertible
Securities or shares of Common Stock upon the exercise of such
Options or conversion or exchange of such Convertible Securities,
in each case, pursuant to their respective terms;
(B) if such Options or Convertible
Securities by their terms provide, with the passage of time or
otherwise, for any increase in the consideration payable to the
Corporation, or decrease in the number of shares of Common Stock
issuable, upon the exercise, conversion or exchange thereof, the
Conversion Price computed upon the original issue thereof (or upon
the occurrence of a record date with respect thereto), and any
subsequent adjustments based thereon, shall, upon any such increase
or decrease becoming effective, be recomputed to reflect such
increase or decrease insofar as it affects such Options or the
rights of conversion or exchange under such Convertible Securities;
(C) upon the expiration of any such
Options or any rights of conversion or exchange under such Convert
ible Securities which shall not have been exercised, the Conversion
Price computed upon the original issue thereof (or upon the occurrence
of a record date with respect thereto), and any subsequent
adjustments based thereon, shall, upon such expiration, be recomputed
as if:
(a) in the case of Convertible
Securities or Options for Common Stock, the only Additional Shares
of Common issued were shares of Common Stock, if any, actually
issued upon the exercise of such Options or the conversion or
exchange of such Convertible Securities and the consideration
received therefor was the consideration actually received by the
Corporation for the issue of all such Options, whether or not exercised,
plus the consideration actually received by the Corporation
upon such exercise, or for the issue of all such Convertible Securities
which were actually converted or exchanged, plus the additional
consideration, if any, actually received by the Corporation
upon such conversion or exchange, and
(b) in the case of Options for
Convertible Securities, only the Convertible Securities, if any,
actually issued upon the exercise thereof were issued at the time
of issue of such Options, and the consideration received by the
Corporation for the Additional Shares of Common deemed to have been
then issued was the consideration actually received by the Corporation
for the issue of all such Options, whether or not exercised,
plus the consideration deemed to have been received by the Corporation
upon the issue of the Convertible Securities with respect to
which such Options were actually exercised;
(D) no readjustment pursuant to clauses
(B) or (C) above shall have the effect of increasing the Conversion
Price to an amount which exceeds the lower of (i) the Conversion
Price on the original adjustment date, or (ii) the Conversion Price
that would have resulted from any issuance of Additional Shares of
Common between the original adjustment date and such readjustment
date; and
(E) in the case of an Option which
expires by its terms not more than 30 days after the date of issue
thereof, no adjustment of the Conversion Price shall be made until
the expiration or exercise of such Option, whereupon such
adjustment shall be made in the same manner provided in clause (C)
above.
(iv) Adjustment of Conversion Price Upon Issuance
of Additional Shares of Common. In the event this Corporation
shall issue Additional Shares of Common (including Additional
Shares of Common deemed to be issued pursuant to Section 3(d)(iii))
without consideration or for a consideration per share less than
the Conversion Price in effect on the date of and immediately prior
to such issue, then and in such event, such Conversion Price shall
be reduced, concurrently with such issue, to a price (calculated to
the nearest cent) determined by multiplying such Conversion Price
theretofore in effect by a fraction, the numerator of which shall
be the number of shares of Common Stock outstanding immediately
prior to such issue plus the number of shares of Common Stock which
the aggregate consideration received by the Corporation for the
total number of Additional Shares of Common so issued would purchase
at such Conversion Price; and the denominator of which shall
be the number of shares of Common Stock outstanding immediately
prior to such issue plus the number of such Additional Shares of
Common so issued;
provided further that, for the purposes of this Section 3(d)(iv),
all shares of Common Stock issuable upon exercise, conversion or
exchange of outstanding Options or Convertible Securities, as the
case may be, shall be deemed to be outstanding, and immediately
after any Additional Shares of Common are deemed issued pursuant to
Section 3(d)(iii), such Additional Shares of Common shall be deemed
to be outstanding.
(v) Determination of Consideration. For
purposes of this Section 3(d), the consideration received by the
Corporation for the issue of any Additional Shares of Common shall
be computed as follows:
(A) Cash and Property. Such consideration shall:
(a) insofar as it consists of cash,
be computed at the aggregate amount of cash received by the
Corporation excluding amounts paid or payable for accrued interest or
accrued dividends;
(b) insofar as it consists of property
other than cash, be computed at the fair value thereof at the
time of such issue, as determined in good faith by the Board; and
(c) in the event Additional Shares
of Common are issued together with other shares or securities or
other assets of the Corporation for consideration which covers
both, be the proportion of such consideration so received, computed
as provided in clauses (a) and (b) above, as determined in good
faith by the Board.
(2) Options and Convertible Securities.
The consideration per share received by the Corporation for
Additional Shares of Common deemed to have been issued pursuant
to Section 3(d)(iii)(1), relating to Options and Convertible
Securities, shall be determined by dividing
(x) the total amount, if any,
received or receivable by the Corporation as consideration for the
issue of such Options or Convertible Securities, plus the minimum
aggregate amount of additional consideration payable to the Corporation upon
the exercise of such Options or the conversion or
exchange of such Convertible Securities, or in the case of Options
for Convertible Securities, the exercise of such Options for
Convertible Securities and the conversion or exchange of such
Convertible Securities by
(y) the maximum number of shares of
Common Stock issuable upon the exercise of such Options or the
conversion or exchange of such Convertible Securities, as determined
in Section 3(d)(iii) hereof.
(vi) Adjustments for Subdivisions, Stock Dividends,
Combinations or Consolidations of Common Stock. In the event the
Corporation effects a subdivision or combination of its outstanding
shares of Common Stock into a greater or smaller number of shares
without a proportionate and corresponding subdivision or combination
of its outstanding shares of Preferred Stock, then and in each
such event the Conversion Price shall be increased or decreased
proportionally.
(vii) Adjustments for Other Dividends and
Distributions. In the event the Corporation at any time or from
time to time makes, or fixes a record date for the determination of
holders of Common Stock entitled to receive, any distribution
payable in securities of the Corporation other than shares of
Common Stock and other than as otherwise adjusted in this Section 3,
then and in each such event provision shall be made so that
the holders of Preferred Stock shall receive upon conversion
thereof, in addition to the number of shares of Common Stock
receivable thereupon, the amount of securities of the Corporation
which they would have received had their shares of Preferred Stock
been converted into Common 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, subject to all
other adjustments called for during such period under this Section 3
with respect to the rights of the holders of the Preferred Stock.
(viii) Adjustments for Reclassification, Exchange
and Substitution. If the Common Stock issuable upon conversion of
the Preferred Stock shall be changed into the same or a different
number of shares of any other class or classes of stock, whether by
capital reorganization, reclassification or otherwise (other than
in an event provided for in Section 3(d)(i) above), the Conversion
Price then in effect shall, concurrently with the effectiveness of
such reorganization or reclassification, be proportionately
adjusted such that the Preferred Stock shall be convertible into,
in lieu of the number of shares of Common Stock which the holders
would otherwise have been entitled to receive, a number of shares
of such other class or classes of stock equivalent to the number of
shares of Common Stock that would have been subject to receipt by
the holders upon conversion of the Preferred Stock immediately
before that change.
(e) No Impairment. The Corporation will not, by amendment
of its Articles of Incorporation or through any 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 but will at
all times in good faith assist in the carrying out of all the provisions
of this Section 3 and in the taking of all such action as
may be necessary or appropriate in order to protect the Conversion
Rights of the holders of the Preferred Stock against impairment.
(f) Certificate as to Adjustments. Upon the occurrence
of each adjustment or readjustment of the Conversion Price pursuant
to this Section 3, the Corporation at its expense shall promptly
compute such adjustment or readjustment in accordance with the
terms hereof and furnish to each holder of Preferred 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 the written request at any time
of any holder of Preferred Stock, furnish or cause to be furnished
to such holder a like certificate setting forth (i) such adjustments
and readjustments, (ii) the Conversion Price at the time in
effect, and (iii) the number of shares of Common Stock and the
amount, if any, of other property which at the time would be
received upon the conversion of Preferred Stock.
(g) Notices of Record Date. In the event of any taking by
the corporation of the record of the holders of any class of securities
for the purpose of determining the holders thereof who are
entitled to receive any dividend (other than a cash dividend) or
other distribution, the corporation shall mail to each holder of
Series A Preferred, at least twenty (20) days prior to the date
specified herein, a notice specifying the date on which any such
record is to be taken for the purpose of such dividend or
distribution.
(h) Reservation of Stock. The corporation shall at all times
reserve and keep available out of its authorized but unissued
shares of Common Stock solely for the purpose of effecting the conversion
of the shares of the Series A Preferred such number of its
shares of Common Stock as shall from time to time be sufficient to
effect the conversion of all outstanding shares of Series A Preferred;
and if at any time the number of authorized but unissued
shares of Common Stock shall not be sufficient to effect the conversion
of all the then outstanding shares of the Series A Preferred,
the corporation will take such corporate action as may, in the
opinion of its counsel, be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall
be sufficient for such purpose.
(i) Notices. Any notice required by the provisions of this
Section 3 to be given to the holders of shares of Series A Preferred
shall be deemed given if deposited in the United States
mail, postage prepaid, and addressed to each holder of record at
his or her address appearing on the books of the corporation.
Section 4. Voting Matters. Except as otherwise required by
law, each share of Common Stock issued and outstanding shall have
one vote. Each share of Series A Preferred issued and outstanding
shall have the number of votes equal to the number of shares of
Common Stock into which the Series A Preferred is convertible as
adjusted from time to time pursuant to Section 3 hereof. The
holder of each share of Series A Preferred shall be entitled to
notice of any shareholders' meeting in accordance with the by-laws
of the corporation and shall vote with the holders of the Common
Stock and upon any matter submitted to a vote of shareholders,
except those matters required by law to be submitted to a class
vote.
Section 5. Residual Rights. All rights accruing to the
outstanding shares of this corporation not expressly provided for
to the contrary herein shall be vested in the Common Stock.
Section 6. Consent for Certain Repurchases of Common Stock
Deemed to be Distributions. Each holder of Series A Preferred
shall be deemed to have consented, for purposes of Section 502, 503
and 506 of the California Corporations Code, to distributions made
by the corporation in connection with the repurchase of shares of
Common Stock issued to or held by employees or consultants upon
termination of their employment or services or pursuant to agreements
providing for the right of said repurchase between the
corporation and such persons.
IV
Section 1. Limitation of Directors' Liability. The liability
of the directors of this corporation for monetary damages shall be
eliminated to the fullest extent permissible under California law.
Section 2. Indemnification of Corporate Agents. This corporation
is authorized to provide for, through bylaw provisions or
through agreements with the agents, or both, the indemnification of
agents (as defined in Section 317 of the California General Corporation
Law) of the corporation in excess of that expressly permitted
by said Section 317 for said agents to the fullest extent
permissible under California law, subject to the limitations set
forth in Section 204 of the California General Corporation Law with
respect to actions for breach of duty to this corporation or its
shareholders.
Section 3. Repeal or Modification. Any repeal or modification
of the foregoing provisions of this Article IV shall not
adversely affect any right of indemnification or limitation of
liability of an agent of this corporation relating to acts or
omissions occurring prior to such repeal or modification."
3. The foregoing amendment and restatement has been duly
approved by the Board of Directors of the corporation.
4. The foregoing amendment has been duly approved by the
holders of the requisite number of shares of the corporation in
accordance with Sections 902 and 903 of the California Corporations
Code. The total number of outstanding shares of each class
entitled to vote with respect to the foregoing amendment and
restatement was 2,600,000 shares of Common Stock. The number of
shares voting in favor of the foregoing amendment equaled or
exceeded the vote required. The required vote was a majority of
the outstanding shares of Common Stock.
I 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 my knowledge.
Executed at Saratoga, California this _____ day of
June, 1992.
Fu-Chieh Hsu, President
Wing Yu Leung, Secretary
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made
as of this 16th day of July, 1992 by and among Monolithic System
Technology, Inc., a California corporation (the "Company"), and the
Purchasers listed on Exhibit A to that certain Series A Preferred
Stock Purchase Agreement dated the date hereof (the "Purchase
Agreement") by and among the Company and the Purchasers pursuant to
which the Company sold to the Purchasers 500,000 shares of its
Series A Preferred Stock ("Series A Preferred").
AGREEMENT
I. REGISTRATION RIGHTS
1. Certain Definitions. As used in this Agreement, the
following terms shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange
Commission or any successor agency.
"Holder" shall mean each Purchaser and any transferee of
Registrable Securities who, pursuant to Section 15 below, is
entitled to registration rights hereunder.
"Restricted Securities" shall mean the securities of the
Company required to bear the legend set forth in Section 3 hereof
(or any similar legend).
"Registrable Securities" shall mean (i) shares of the
Company's Common Stock issued or issuable upon the conversion of
the Series A Preferred; (ii) any Common Stock of the Company or
other securities issued or issuable in respect of shares of the
Series A Preferred; and (iii) shares of the Company's Common Stock
or other securities issued or issuable upon any conversion of the
Series A Preferred upon any stock split, stock dividend, recapitalization,
or similar event; provided, however, that any shares
described in clauses (i)-(iii) above which have been resold to the
public shall cease to be Registrable Securities upon such resale.
The terms "register," "registered," and "registration"
refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act, and the
declaration or ordering of the effectiveness of such registration
statement.
"Registration Expenses" shall mean all expenses incurred
by the Company in complying with Sections 5, 6 and 7 hereof,
including, without limitation, all registration, qualification and
filing fees, printing expenses, escrow fees, fees and disbursements
of counsel for the Company, blue sky fees and expenses, and the
expense of any special audits incident to or required by any such
registration but excluding all Selling Expenses.
"Securities Act" shall mean the Securities Act of 1933,
as amended.
"Selling Expenses" shall mean all underwriting discounts,
selling commissions and stock transfer taxes applicable to the
securities registered by the Holders and any fees of counsel to any
Holder.
2. Restrictions on Transferability. The Restricted Securi
ties shall not be transferable except upon the conditions specified
in this Agreement, which conditions are intended to ensure compliance
with the provisions of the Securities Act. Each holder of
Restricted Securities will cause any proposed transferee of the
Restricted Securities held by such holder to agree to take and hold
such Restricted Securities subject to the provisions and upon the
conditions specified in this Agreement.
3. Restrictive Legend. Each certificate representing
(i) the Series A Preferred, (ii) shares of the Company's Common
Stock issued upon conversion of the Series A Preferred, and
(iii) any other securities issued in respect of the Series A
Preferred or Common Stock issued upon conversion of the Series A
Preferred upon any stock split, stock dividend, recapitalization,
merger, consolidation or similar event, shall (unless otherwise
permitted by the provisions of Section 4 below) be stamped or
otherwise imprinted with a legend in the following form (in addition
to any legend required under applicable state securities
laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933. THESE SHARES MAY NOT
BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION
OR AN EXEMPTION THEREFROM UNDER SAID ACT. COPIES OF
THE AGREEMENT COVERING THE PURCHASE OF THESE SHARES AND
RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT NO COST BY
WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS
CERTIFICATE TO THE SECRETARY OF THE CORPORATION AT THE
PRINCIPAL EXECUTIVE OFFICES OF THE CORPORATION.
4. Notice of Proposed Transfers. The holder of each certificate
representing Restricted Securities by acceptance thereof
agrees to comply in all respects with the provisions of this
Section 4. Prior to any proposed transfer of any Restricted Securities,
unless there is in effect a registration statement under the
Securities Act covering the proposed transfer, the holder thereof
shall give written notice to the Company of such Holder's intention
to effect such transfer. Each such notice shall describe the
manner and circumstances of the proposed transfer in sufficient
detail, and shall, if the Company so requests, be accompanied by
either (i) an unqualified written opinion of legal counsel who
shall be reasonably satisfactory to the Company, addressed to the
Company and reasonably satisfactory in form and substance to the
Company's counsel, to the effect that the proposed transfer of the
Restricted Securities may be effected without registration under
the Securities Act, or (ii) a "No Action" letter from the Commission
to the effect that the transfer of such securities without
registration will not result in a recommendation by the staff of
the Commission that action be taken with respect thereto, whereupon
the holder of such Restricted Securities shall be entitled to
transfer such Restricted Securities in accordance with the terms of
the notice delivered by the holder to the Company; provided,
however, that no opinion or No Action letter need be obtained with
respect to a transfer to (A) a partner, active or retired, of a
holder of Restricted Securities, (B) the estate of any such
partner, or (C) the spouse, children, grandchildren or spouse of
such children or grandchildren of any holder or to trusts for the
benefit of any holder or such persons, provided that in such cases
the transferee agrees in writing to be subject to the terms hereof.
Each certificate evidencing the Restricted Securities transferred
as above provided shall bear the appropriate restrictive legend set
forth in Section 3 above, except that such certificate shall not
bear such restrictive legend if in the opinion of counsel for the
Company such legend is not required in order to establish
compliance with any provisions of the Securities Act.
5. Requested Registration.
(a) Request for Registration. If at any time after
three months following the Company's initial registered public
offering, the Company shall receive from any Holder or group of
Holders of Registrable Securities a written request that the
Company effect any registration, qualification or compliance with
respect to all or a part of the Registrable Securities, the
anticipated gross offering price of which would exceed $2,000,000,
the Company will:
(x) promptly give written notice of the proposed
registration, qualification or compliance to all other Holders; and
(y) as soon as practicable, use its best efforts to
effect such registration, qualification or compliance (including,
without limitation, the execution of an undertaking to file post-
effective amendments, appropriate qualification under applicable
blue sky or other state securities laws and appropriate compliance
with applicable regulations issued under the Securities Act and any
other governmental requirements or regulations) as may be so
requested and as would permit or facilitate the sale and distribution
of all or such portion of such Registrable Securities as are
specified in such request, together with all or such portion of the
Registrable Securities of any Holder or Holders joining in such
request as are specified in a written request received by the
Company within 15 days after receipt of such written notice from
the Company;
Provided, however, that the Company shall not be obligated to
take any action to effect any such registration, qualification or
compliance pursuant to this Section 5:
(A) In any particular jurisdiction in which
the Company would be required to execute a general consent to
service of process in effecting such registration, qualification or
compliance unless the Company is already subject to service in such
jurisdiction and except as may be required by the Securities Act;
(B) After the Company has effected one (1)
such registration pursuant to this Section 5(a), such registration
has been declared or ordered effective and the securities offered
pursuant to such registration have been sold.
Subject to the foregoing clauses (A) and (B), the Company
shall file a registration statement covering the Registrable
Securities so requested to be registered as soon as practicable
after receipt of the request or requests of any Holder or Holders.
If, however, the Company shall furnish to the Holder or Holders
requesting a registration statement pursuant to this Section 5 a
certificate signed by the President of the Company stating that, in
the good faith judgment of the Board of Directors of the Company,
it would be seriously detrimental to the Company and its share
holders for such registration statement to be filed and it is
therefore essential to defer the filing of such registration
statement, the Company shall have the right to defer such filing
for a period of not more than 120 days after receipt of the request
of the Holder or Holders requesting such registration; provided,
however, that the Company may not utilize this right more than once
in any twelve-month period.
(b) Underwriting. If the Holders intend to distribute
the Registrable Securities covered by their request by means of an
underwriting, they shall so advise the Company as a part of their
request made pursuant to Section 5(a) and the Company shall include
such information in the written notice referred to in Sec
tion 5(a)(x). The right of any Holder to registration pursuant to
Section 5 shall be conditioned upon such Holder's participation in
such underwriting and the inclusion of such Holder's Registrable
Securities in the underwriting to the extent provided herein.
The Company shall (together with all Holders proposing to
distribute their securities through such underwriting) enter into
an underwriting agreement in customary form with the managing
underwriter selected for such underwriting by a majority in
interest of the Holders. Notwithstanding any other provision of
this Section 5, if the managing underwriter advises the Holders in
writing that marketing factors require a limitation of the number
of shares to be underwritten, then, subject to the provisions of
Section 5(a), the Company shall so advise all Holders and the
number of shares of Registrable Securities that may be included in
the registration and underwriting shall be allocated among all
Holders requesting inclusion in the registration in proportion, as
nearly as practicable, to the respective amounts of Registrable
Securities originally requested by such Holders to be included in
the registration statement. No Registrable Securities excluded
from the underwriting by reason of the managing underwriter's
marketing limitation shall be included in such registration.
If any Holder of Registrable Securities disapproves of the
terms of the underwriting, such person may elect to withdraw
therefrom by written notice to the Company, the managing under
writer and the other Holders. The Registrable Securities and/or
other securities so withdrawn shall also be withdrawn from registration;
provided, however, that if by the withdrawal of such
Registrable Securities a greater number of Registrable Securities
held by other Holders may be included in such registration (up to
the maximum of any limitation imposed by the underwriters), then
the Company shall offer to all Holders who have included Registrable
Securities in the registration the right to include additional
Registrable Securities in the same proportion used in
determining the underwriter limitation in this Section 5(b). If
the registration does not become effective due to the withdrawal of
Registrable Securities, then either (1) the Demand Holders
requesting registration shall reimburse the Company for expenses
incurred in complying with the request or (2) the aborted registration
shall be treated as effected for purposes of Section 5(a)(B).
6.Company Registration.
(a) Notice of Registration. If the Company shall
determine to register any of its securities, either for its own
account or the account of a security holder or holders exercising
their respective demand registration rights, other than (i) the
Company's initial public offering, (ii) a registration relating
solely to employee benefit plans or (iii) a registration relating
solely to a Commission Rule 145 transaction, the Company will:
(i) promptly give to each Holder written notice
thereof; and
(ii) include in such registration (and any related
qualification under blue sky laws or other compliance), and in any
underwriting involved therein, all the Registrable Securities
specified in a written request or requests, made within 15 days
after receipt of such written notice from the Company, by any
Holder or Holders, provided that the Company may limit, to the
extent so advised by the underwriters, the amount of Registrable
Securities to be included in the registration by the Holders.
(b) Allocation. In all registered public offerings,
whether underwritten or not, the amount of Registrable Securities
of Holders which are included in such registration, in accordance
with the limitation set forth in Section 6(a)(ii) above, shall be
allocated among all Holders requesting inclusion in the
registration in proportion, as nearly as practicable, to the
respective amounts of Registrable Securities originally requested
by such Holders to be included in the registration statement.
7.Registration on Form S-3. The Company shall use its best
efforts to qualify for registration on Form S-3, and to that end,
the Company shall comply with the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
After the Company has qualified for the use of Form S-3, each
holder of Registrable Securities shall have the right to request an
unlimited number of registrations on Form S-3 (such requests shall
be in writing and shall state the number of shares of Registrable
Securities to be disposed of and the intended method of disposition
of such shares by each such holder), subject only to the following
limitations:
(i) The Company shall not be obligated to cause a
registration on Form S-3 to become effective prior to one hundred
eighty (180) days following the effective date of a Company-
initiated registration (other than a registration effected solely
to qualify an employee benefit plan or to effect a business
combination pursuant to Rule 145);
(ii) The Company shall not be obligated to cause a
registration on Form S-3 to become effective prior to expiration of
one hundred eighty (180) days following the effective date of the
most recent registration pursuant to a request by a holder of
Registrable Securities under Section 5 of this Agreement or
pursuant to a request by a holder of registration rights under any
other agreement of the Company granting Form S-3 demand registration
rights;
(iii) The Company shall not be required to effect a
registration pursuant to this Section 7, unless the Holder or
Holders requesting registration propose to dispose of shares of
Registrable Securities having an aggregate disposition price
(before deduction of underwriting discounts and expenses of sale)
of at least $1,000,000; and
(iv) The Company shall not be required to maintain and
keep any such registration on Form S-3 effective for a period
exceeding ten (10) days from the effective date thereof. The
Company shall give notice to all Holders and all holders of registration
rights under any other agreement of the Company granting
Form S-3 or similar demand registration rights of the receipt of a
request for registration pursuant to this Section 7 and shall
provide a reasonable opportunity for all such other Holders,
including holders of registration rights under any other agreement
of the Company granting Form S-3 or similar demand registration
rights, to participate in the registration. Subject to the fore
going, the Company will use its best efforts to effect promptly the
registration of all shares of Registrable Securities on Form S-3 to
the extent requested by the Holder or Holders thereof for purposes
of disposition. In the event the Underwriter determines that
market factors require a limitation on the number of shares to be
underwritten, then shares shall be excluded from such registration
and underwriting pursuant to the method described in Section 5(b).
8.Expenses of Registration. All Registration Expenses
incurred in connection with any registration, qualification or
compliance pursuant to Section 5, Section 6 or Section 7 shall be
borne by the Company. All Selling Expenses relating to securities
registered by the Holders shall be borne by the Holders of such
securities pro rata on the basis of the number of shares so
registered.
9.Registration Procedures. In the case of each registration,
qualification or compliance effected by the Company pursuant to
this Agreement the Company will keep each Holder advised in writing
as to the initiation of each registration, qualification and
compliance and as to the completion thereof. At its expense the
Company will furnish such number of prospectuses and other
documents incident thereto as a Holder from time to time may
reasonably request.
10.Termination of Registration Rights. The registration
rights granted pursuant to this Agreement shall terminate as to any
Holder, at such time after the Company's initial public offering as
the Registrable Securities held by such Holder may be sold within
any three (3) month period pursuant to Rule 144.
11.Lockup Agreement. In consideration for the Company
agreeing to its obligations under this Agreement each Holder of
Registrable Securities and each transferee pursuant to Section 15
hereof agrees (but only if each officer and director of the Company
also agrees), in connection with the first registration of the
Company's securities, upon request of the Company or the under
writers managing any underwritten offering of the Company's securities,
not to sell, make any short sale of, loan, grant any option
for the purchase of, or otherwise dispose of any Registrable
Securities (other than those included in the registration) without
the prior written consent of the Company or such underwriters, as
the case may be, for such period of time (not to exceed 180 days)
from the effective date of such registration as the Company or the
underwriters may specify. Each Holder agrees that the Company may
instruct its transfer agent to place stop-transfer notations in its
records to enforce the provisions of this Section 11.
12.Indemnification.
(a) The Company will indemnify each Holder, each of its
officers, directors and partners and such Holder's legal counsel
and independent accountants, and each person controlling such
Holder within the meaning of Section 15 of the Securities Act, with
respect to which registration, qualification or compliance has been
effected pursuant to this Agreement, and each underwriter, if any,
and each person who controls any underwriter within the meaning of
Section 15 of the Securities Act, against all expenses, claims,
losses, damages and liabilities (or actions in respect thereof),
including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact
contained in any registration statement, prospectus, offering
circular or other document, or any amendment or supplement thereto,
incident to any such registration, qualification or compliance, or
based on any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they
were made, not misleading, or any violation by the Company of any
rule or regulation promulgated under the Securities Act applicable
to the Company and relating to action or inaction required of the
Company in connection with any such registration, qualification or
compliance, and will reimburse each such Holder, each of its
officers, directors and partners and such Holder's legal counsel
and independent accountants, and each person controlling such
Holder, each such underwriter and each person who controls any such
underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating, preparing or defending
any such claim, loss, damage, liability or action, provided that
the Company will not be liable in any such case to the extent that
any such claim, loss, damage, liability or expense arises out of or
is based on any untrue statement or omission or alleged untrue
statement or omission, made in reliance upon and in conformity with
written information furnished to the Company by an instrument duly
executed by such Holder or underwriter and stated to be specific
ally for use therein.
(b) Each Holder will, if Registrable Securities held by
such Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify
the Company, each of its directors and officers and its legal
counsel and independent accountants, each underwriter, if any, of
the Company's securities covered by such a registration statement,
each person who controls the Company or such underwriter within the
meaning of Section 15 of the Securities Act, and each other such
Holder, each of its officers and directors and each person
controlling such Holder within the meaning of Section 15 of the
Securities Act, against all claims, losses, damages and liabilities
(or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact
contained in any such registration statement, prospectus, offering
circular or other document, or any omission (or alleged omission)
to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will
reimburse the Company, such Holders, such directors, officers,
legal counsel, independent accountants, underwriters or control
persons for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss,
damage, liability or action, in each case to the extent, but only
to the extent, that such untrue statement (or alleged untrue
statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other
document in reliance upon and in conformity with written information
furnished to the Company by an instrument duly executed by
such Holder and stated to be specifically for use therein;
provided, however, that the obligations of such Holders hereunder
shall be limited to an amount equal to the gross proceeds before
expenses and commissions to each such Holder of Registrable Securities
sold as contemplated herein.
(c) Each party entitled to indemnification under this
Section 12 (the "Indemnified Party") shall give notice to the party
required to provide indemnification (the "Indemnifying Party")
promptly after such Indemnified Party has actual knowledge of any
claim as to which indemnity may be sought, and shall permit the
Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or
litigation, shall be approved by the Indemnified Party (whose
approval shall not be unreasonably withheld), and the Indemnified
Party may participate in such defense at such party's expense, and
provided further that the failure of any Indemnified Party to give
notice as provided herein shall not relieve the Indemnifying Party
of its obligations under this Agreement, except to the extent, but
only to the extent, that the Indemnifying Party's ability to defend
against such claim or litigation is impaired as a result of such
failure to give notice. No Indemnifying Party, in the defense of
any such claim or litigation, shall, except with the consent of
each Indemnified Party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnified
Party of a release from all liability in respect to such claim or
litigation.
13.Information by Holder. The Holder or Holders of Registrable
Securities included in any registration shall furnish to the
Company such information regarding such Holder or Holders and the
distribution proposed by such Holder or Holders as the Company may
request in writing and as shall be required in connection with any
registration, qualification or compliance referred to in this
Agreement.
14.Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the Commission which
may at any time permit the sale of the Restricted Securities to the
public without registration, after such time as a public market
exists for the Common Stock of the Company, the Company agrees to:
(a) Make and keep public information available, as those
terms are understood and defined in Rule 144 under the Securities
Act, at all times after the effective date of the first registration
under the Securities Act filed by the Company for an offering
of its securities to the general public;
(b) Use its best efforts to then file with the Commission
in a timely manner all reports and other documents required of
the Company under the Securities Act and the Exchange Act (at any
time after it has become subject to such reporting requirements);
(c) Furnish to Holders of Registrable Securities forth
with upon request, a written statement by the Company as to its
compliance with the reporting requirements of Rule 144 (at any time
after 90 days after the effective date of the first registration
statement filed by the Company for an offering of its securities to
the general public), and of the Securities Act and the Exchange Act
(at any time after it has become subject to such reporting require
ments), a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents of the Company as a
Holder of Registrable Securities may reasonably request in availing
itself of any rule or regulation of the Commission allowing such
Holder to sell any such securities without registration.
15.Transfer of Registration Rights. The right to cause the
Company to register securities granted the Purchasers hereunder may
be assigned to a transferee or assignee who acquires at least
10,000 shares of Series A Preferred (or Common Stock issued upon
conversion thereof) (appropriately adjusted for stock splits,
recapitalizations and the like) provided that the Company is given
prior written notice of such assignment. In addition, rights to
cause the Company to register securities may be freely assigned
(a) to any constituent partner of a Holder of Registrable Securities,
where such Holder is a partnership, or (b) to the spouse,
children, grandchildren or spouse of such children or grandchildren
of any Holder or to trusts for the benefit of any Holder or such
persons.
II. INFORMATION RIGHTS
16.Information Rights. The Company hereby covenants and
agrees to furnish to each Purchaser for so long as such Purchaser
is a holder of any shares of Series A Preferred purchased by such
person pursuant to this Agreement (or Common Stock issued upon
conversion of the Series A Preferred), as soon as practicable after
the end of each fiscal year, and in any event within 90 days
thereafter, consolidated balance sheets of the Company and its
subsidiaries, if any, as of the end of such fiscal year, and
consolidated statements of income and consolidated statements of
changes in financial position of the Company and its subsidiaries,
if any, for such year, prepared in accordance with generally
accepted accounting principles, provided that this Section 16 shall
terminate and be of no further force or effect immediately upon an
initial public offering. Each Purchaser who receives from the
Company or its agents, directly or indirectly, any information
which the Company has not made generally available to the public,
pursuant to the preparation and execution of this Agreement or
disclosure in connection therewith or pursuant to the provisions of
this Section 16, acknowledges and agrees that such information is
confidential and for its use only in connection with evaluating its
investment in the Company, and further agrees that it will not
disseminate such information to any person other than its
accountant, investment advisor or attorney and that such
dissemination shall be only for purposes of evaluating its
investment.
III. RIGHT OF FIRST REFUSAL
17.Transfers of Securities. Before any Purchaser may transfer
any of their shares of Series A Preferred (including Common Stock
issued upon conversion of the Series A Preferred) (either referred
to as "Shares"), such Shares shall first be offered to the Company
(or the Company's assignee, as the case may be) as follows:
(a) The Purchaser desiring to transfer the Shares (the
"Seller") shall deliver a notice ("Notice") to the Company (or the
Company's assignee, as the case may be) stating (i) its bona fide
intention to sell or transfer such shares, (ii) the number of
shares to be sold or transferred, (iii) the price for which the
Seller proposes to sell or transfer such shares and (iv) the name
of the proposed purchaser or transferee.
(b) Within thirty (30) days after delivery of the
Notice, the Company (or the Company's assignee, as the case may be)
may elect to purchase all or part of the shares referenced in the
Notice, by delivery to the Seller of a written notice stating the
number of shares it elects to purchase.
(c) In the event that the Company (or the Company's
assignee, as the case may be) fails to exercise in full the right
of first refusal within the period specified above, the Seller
shall have one hundred twenty (120) days thereafter to sell the
shares referenced in the Notice at a price and upon terms no more
favorable to the purchaser thereof than specified in the Notice. In
the event that the Seller has not sold such shares within such one
hundred twenty (120) day period, the Seller shall not thereafter
sell any of such shares without first offering such shares to the
Company (or the Company's assignee, as the case may be) in the
manner provided above.
(d) The provisions of this Section 17 shall not apply
(and no Notice shall be required) to a transfer of any shares
(i) by a Purchaser to any constituent partner of a Purchaser, where
such Purchaser is a partnership; provided, however, that any such
transferee shall receive and hold such shares subject to the
provisions of this Section 17 and there shall be no further
transfer of such shares except in accordance herewith, and (ii) by
a Purchaser as to shares sold as part of an initial public
offering.
(e) The right of first refusal granted pursuant to this
Section 17 shall expire immediately prior to an initial public
offering.
(f) So long as this Section 17 is in effect, each
certificate representing shares of the Company's Series A Preferred
(or the Common Stock issued upon conversion of the Series A
Preferred) upon any stock split, recapitalization or similar event,
held by a Purchaser shall be stamped or otherwise imprinted with a
legend in the following form (in addition to any other legends
required under applicable federal or state securities laws):
THE SALE OR TRANSFER OF THE SECURITIES REPRESENTED BY
THIS CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS
OF A RIGHT OF FIRST REFUSAL WHEREBY THE COMPANY HAS THE
RIGHT TO PURCHASE THE SHARES REPRESENTED BY THIS
CERTIFICATE PRIOR TO THE CONSUMMATION OF A SALE TO ANY
OTHER PERSON. A COPY OF SUCH AGREEMENT MAY BE OBTAINED
UPON A WRITTEN REQUEST TO THE SECRETARY OF THE COMPANY.
(g) The Company may assign its rights to purchase Shares
pursuant to this Section 17 provided that any assignee must
exercise such rights within the time periods designated herein with
respect to action to be taken by the Company.
IV. GENERAL PROVISIONS
18.Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of California.
The parties hereto agree to submit to the jurisdiction of the
federal and state courts of the State of California with respect to
the breach or interpretation of this Agreement or the enforcement
of any and all rights, duties, liabilities, obligations, powers,
and other relations between the parties arising under this
Agreement.
19.Entire Agreement. This Agreement constitutes the full and
entire understanding among the parties regarding the subject matter
herein. Except as otherwise expressly provided herein, the
provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators
of the parties hereto.
20.Notices, etc. All notices and other communications
required or permitted hereunder shall be in writing and shall be
deemed effectively given upon delivery to the party to be notified
in person or by courier service or five (5) days after deposit with
the United States mail, by registered or certified mail, postage
prepaid, addressed (a) if to a Purchaser, to such Purchaser's
address set forth on the signature pages hereto, or at such other
address as such Purchaser shall have furnished to the Company in
writing, or (b) if to any other holder of any Registrable Securities,
to such address as such holder shall have furnished the
Company in writing, or, until any such holder so furnishes an
address to the Company, then to and at the address of the last
holder of such Securities who has so furnished an address to the
Company, or (c) if to the Company, to its address set forth on the
signature page of this Agreement the attention of the Corporate
Secretary, or at such other address as the Company shall have
furnished to the Holders.
21.Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be an original, but all of
which together shall constitute one instrument.
22.Amendment. Any provision of this Agreement may be amended,
waived or modified upon the written consent of the (i) Company and
(ii) holders of a majority of the outstanding shares of Series A
Preferred and Common Stock issued upon conversion thereof
(excluding for all purposes in such computation any Common Stock
resold to the public). Any Purchaser may waive any of his or her
rights or the Company's obligations hereunder without obtaining the
consent of any other person.
IN WITNESS WHEREOF, the undersigned have executed this Regis
tration and Information Rights Agreement as of the date set forth
above.
COMPANY
MONOLITHIC SYSTEM TECHNOLOGY, INC.
a California corporation
21775 Congress Hall Lane
Saratoga, California 95070
By: ____________________________
Fu-Chieh Hsu, President
PURCHASERS
_________________________
Carl E. Berg
_________________________
Keno Misawa
KAN ELECTRONICS, INC.
By: ____________________________
Title: _________________________
INTEGRATED DEVICE TECHNOLOGY, INC.
By: ____________________________
Title: _________________________
MONOLITHIC SYSTEM TECHNOLOGY, INC.
SERIES B
PREFERRED STOCK PURCHASE AGREEMENT
March ____, 1994
TABLE OF CONTENTS
Page
SECTION 1 - Authorization and Sale of Preferred Stock 1
1.1 Authorization 1
1.2 Sale of Series B Preferred at the Closing 1
SECTION 2 - Closing and Delivery 1
SECTION 3 - Representations and Warranties of the Company 2
3.1 Organization and Standing 2
3.2 Corporate Power 2
3.3 Capitalization 2
3.4 Authorization 2
3.5 Compliance with Other Instruments 3
3.6 Litigation 3
3.7 Governmental Consents 3
3.8 Brokers or Finders 3
SECTION 4 - Representations and Warranties of the Purchasers 4
4.1 Experience 4
4.2 Investment 4
4.5 Access to Data 4
4.6 Authorization 5
4.7 Brokers or Finders 5
SECTION 5 - Agreement to Future Financings 5
5.1 Future Sales of Preferred Stock 5
SECTION 6 - Miscellaneous 5
6.1 Governing Law 5
6.2 Successors and Assigns 5
6.3 Entire Agreement; Amendment 5
6.4 Notices, etc 6
6.5 Delays or Omissions 6
6.6 California Corporate Securities Law 6
6.7 Expenses 7
6.8 Indemnification For Finders Fees 7
6.9 Severability 7
6.10 Counterparts 7
EXHIBITS
A. Schedule of Purchasers
B. Amended and Restated Articles of Incorporation
C. Registration Rights Agreement
MONOLITHIC SYSTEM TECHNOLOGY, INC.
SERIES B PREFERRED STOCK PURCHASE AGREEMENT
This Agreement is made as of March ____, 1994 among Monolithic
System Technology, Inc., a California corporation (the "Company"),
and the persons and entities listed on the Schedule of Purchasers
attached hereto as Exhibit A (the "Purchasers").
SECTION 1
Authorization and Sale of Preferred Stock
1.1 Authorization. The Company has
authorized the sale and issuance of up to 1,000,000 shares of its
Series B Preferred Stock ("Series B Preferred"), having the rights,
restrictions, privileges and preferences as set forth in the
Company's Amended and Restated Articles of Incorporation in the
form attached to this Agreement as Exhibit B (the "Restated
Articles"). The Company's agreements with each of the Purchasers
are separate agreements, and the sales of the Series B Preferred to
each of the Purchasers are separate sales.
1.2 Sale of Series B Preferred.
Subject to the terms and conditions hereof, the Company hereby
issues and sells to the Purchasers, and the Purchasers hereby buy
from the Company, a total of 1,000,000 shares (the "Shares") of
Series B Preferred, the specific number of which is set forth
opposite each Purchaser's name on the Schedule of Purchasers, at a
purchase price of $2.00 per share payable in cash or through
cancellation of indebtedness of the Company to the Purchasers.
SECTION 2
Closing and Delivery
2.1 Closing. The closing of the purchase and
sale of the Series B Preferred hereunder (the "Closing") has taken
place concurrent with the execution of this Agreement and is
effective as of the date hereof. Each of the Purchasers hereby
acknowledges receipt from the Company of a certificate or certificates
representing the number of Shares designated in column 2 of
the Schedule of Purchasers and the Company hereby acknowledges
receipt of payment of the purchase price therefor, by check or wire
transfer payable to the Company or through cancellation of indebtedness
of the Company to the Purchasers, in the amount specified in
column 3 of the Schedule of Purchasers.
SECTION 3
Representations and Warranties of the Company
The Company hereby represents and warrants to the Purchasers
as follows:
3.1 Organization and Standing.
The Company is a corporation duly organized and existing under, and
by virtue of, the laws of the State of California and is in good
standing under such laws. The Company has requisite corporate power
to own and operate its properties and assets, and to carry on its
business as presently conducted and as proposed to be conducted.
The Company is not qualified to do business as a foreign
corporation in any jurisdiction and such qualification is not
presently required.
3.2 Corporate Power. The Company has all
requisite legal and corporate power to execute and deliver this
Agreement and the Amended and Restated Registration and Information
Rights Agreement attached hereto as Exhibit C (the "Registration
Rights Agreement"), to sell and issue the Shares hereunder, to
issue the Common Stock issuable upon conversion of the Series B
Preferred and to carry out and perform its obligations under the
terms of this Agreement and the Registration Rights Agreement.
3.3 Capitalization. The authorized capital stock of the Company
at Closing will consist of 5,000,000 shares of Common Stock, of which
2,600,000 shares are issued and outstanding, and 1,500,000 shares of
Preferred Stock, of which 500,000 shares have been designated as Series A
Preferred Stock and are issued and outstanding and of which 1,000,000 shares
will at the Closing be designated as Series B Preferred Stock and
none of which is issued or outstanding prior to the Closing. All
such issued and outstanding shares have been duly authorized and
validly issued, and are fully paid and nonassessable. The Company
has reserved (or will reserve prior to the Closing) (i) 1,000,000
shares of Series B Preferred for issuance hereunder, (ii) 1,500,000
shares of Common Stock for issuance upon conversion of the Series A
and Series B Preferred and (iii) 900,000 shares of Common Stock for
issuance to employees and consultants. The Series B Preferred
shall have the rights, preferences, privileges and restrictions set
forth in the Restated Articles.
3.4 Authorization. All corporate action
on the part of the Company, its directors and shareholders
necessary for the authorization, execution, delivery and
performance of this Agreement and the Registration Rights Agreement
by the Company, the authorization, sale, issuance and delivery of
the Shares (and the Common Stock issuable upon conversion of the
Shares) and the performance of the Company's obligations hereunder
has been taken. This Agreement and the Registration Rights
Agreement, when executed and delivered by the Company, shall
constitute valid and binding obligations of the Company enforceable
in accordance with their respective terms. The Shares, when issued
in compliance with the provisions of this Agreement, will be
validly issued and fully paid and nonassessable, and the Common
Stock issuable upon conversion of the Shares will be duly and
validly reserved and, when issued in compliance with the provisions
of this Agreement, will be validly issued, fully paid and nonassessable,
and free of any liens or encumbrances.
3.5 Compliance with Other Instruments. The Company is not in
violation of any term of its Articles or Bylaws nor, to the best of its
knowledge, any material term of any agreement, judgment, statute, rule or
regulation to which the Company is subject and a violation of which
would have a material adverse effect on the condition, financial or
otherwise, or operations of the Company.
3.6 Litigation. There are no actions, suits,
proceedings or investigations pending against the Company or its
properties before any court or governmental agency.
3.7 Governmental Consents.
No consent, approval or authorization of, or designation, declaration
or filing with, any governmental authority on the part of the
Company is required in connection with the valid execution and
delivery of this Agreement and the Registration Rights Agreement,
or the offer, sale or issuance of the Series B Preferred (and the
Common Stock issuable upon conversion of the Series B Preferred),
or the consummation of any other transaction contemplated hereby,
except (a) filing of the Restated Articles with the office of the
Secretary of State of the State of California and (b) qualification
(or taking such action as may be necessary to secure an exemption
from qualification, if available) of the offer and sale of the
Series B Preferred (and the Common Stock issuable upon conversion
of the Series B Preferred) under the California Corporate
Securities Law and other applicable Blue Sky laws, which filing and
qualification, if required, will be accomplished in a timely manner
prior to or promptly upon completion of the Closing.
3.8 Brokers or Finders. The Company
has not incurred, and will not incur, directly or indirectly, any
liability for brokerage or finders' fees or agents' commissions or
any similar charges in connection with this Agreement or any
transaction contemplated hereby.
SECTION 4
Representations and Warranties of the Purchasers
Each Purchaser hereby represents and warrants to the Company
with respect to its purchase of the Shares as follows:
4.1 Experience. Each Purchaser has
substantial experience in evaluating and investing in private
placement transactions of securities in companies similar to the
Company so that it is capable of evaluating the merits and risks of
its investment in the Company and has the capacity to protect its
own interests.
4.2 Investment. Each Purchaser is acquiring
the Shares and the underlying Common Stock for investment for its
own account, not as a nominee or agent, and not with the view to,
or for resale in connection with, any distribution thereof. Each
Purchaser understands that the Shares to be purchased and the
underlying Common Stock have not been, and will not be, registered
under the Securities Act of 1933, as amended (the "Securities Act")
by reason of a specific exemption from the registration provisions
of the Securities Act, the availability of which depends upon,
among other things, the bona fide nature of the investment intent
and the accuracy of such Purchaser's representations as expressed
herein.
4.3 Rule 144. Each Purchaser acknowledges
that the Shares and the underlying Common Stock must be held
indefinitely unless subsequently registered under the Securities
Act or unless an exemption from such registration is available.
Each Purchaser is aware of the provisions of Rule 144 promulgated
under the Securities Act which permit limited resale of shares
purchased in a private placement subject to the satisfaction of
certain conditions, including, among other things, the existence of
a public market for the shares, the availability of certain current
public information about the Company, the resale occurring not less
than two years after a party has purchased and paid for the
security to be sold, the sale being effected through a "broker's
transaction" or in transactions directly with a "market maker" and
the number of shares being sold during any three-month period not
exceeding specified limitations.
4.4 No Public Market. Each Purchaser
understands that no public market now exists for any of the
securities issued by the Company and that the Company has made no
assurances that a public market will ever exist for the Company's
securities.
4.5 Access to Data. Each Purchaser has
had an opportunity to discuss the Company's business, management
and financial affairs with the Company's management and has had the
opportunity to review the Company's facilities. Each Purchaser has
also had an opportunity to ask questions of officers of the Company
concerning the terms of this offering, which questions were
answered to its satisfaction. It understands that such
discussions, as well as any written information issued by the
Company, were intended to describe certain aspects of the Company's
business and prospects but were not a thorough or exhaustive
description.
4.6 Authorization. This Agreement and
the Registration Rights Agreement when executed and delivered by
such Purchaser will constitute a valid and legally binding
obligation of the Purchaser, enforceable in accordance with its
terms.
4.7 Brokers or Finders. The Company
has not incurred, and will not incur, directly or indirectly, as a
result of any action taken by such Purchaser, any liability for
brokerage or finders' fees or agents' commissions or any similar
charges in connection with this Agreement or any transaction
contemplated hereby.
SECTION 5
Agreement to Future Financings
5.1 Future Sales of Preferred Stock. In the event the Company
should engage in a subsequent round or rounds of financing involving the
sale of any future series of Preferred Stock at a price per share not less
than $2.00 and otherwise on terms and conditions on parity, on a share-
for-share basis with those rights conferred upon the Purchasers
herein, then each Purchaser agrees that it will take such action as
the Company may reasonably request, including consent to any
amendment of this Agreement, the Company's Articles of
Incorporation or any other instrument related to the issue and sale
of such future series of Preferred Stock, to enable the Company to
conclude such financing.
SECTION 6
Miscellaneous
6.1 Governing Law. This Agreement shall
be governed in all respects by the laws of the State of California.
6.2 Successors and Assigns.
Except as otherwise provided herein, the provisions hereof shall
inure to the benefit of, and be binding upon, the successors,
assigns, heirs, executors, and administrators of the parties
hereto.
6.3 Entire Agreement; Amendment. This Agreement and the other
documents delivered pursuant hereto constitute the full and entire
understanding and agreement between the parties with regard to the
subjects hereof and thereof. Neither this Agreement nor any term
hereof may be amended, waived, discharged, or terminated other than
by a written instrument signed by the party against whom
enforcement of any such amendment, waiver, discharge, or
termination is sought.
6.4 Notices, etc. All notices and other
communications required or permitted hereunder shall be in writing
and shall be deemed effectively given upon delivery to the party to
be notified in person or by courier service or five (5) days after
deposit with the United States mail, by registered or certified
mail, postage prepaid, addressed (a) if to a Purchaser, at such
Purchaser's address set forth in Exhibit A, or at such other
address as such Purchaser shall have furnished to the Company in
writing, or (b) if to any other holder of any Shares, at such
address as such holder shall have furnished the Company in writing,
or, until any such holder so furnishes an address to the Company,
then to and at the address of the last holder of such Shares who
has so furnished an address to the Company, or (c) if to the
Company, one copy should be sent to its address set forth on the
last page of this Agreement and addressed to the attention of the
President, or at such other address as the Company shall have
furnished to the Purchasers.
6.5 Delays or Omissions. No delay
or omission to exercise any right, power or remedy accruing to any
holder of any Shares, upon any breach or default of the Company
under this Agreement, shall impair any such right, power or remedy
of such holder nor shall it be construed to be a waiver of any such
breach or default, or an acquiescence therein, or of or in any
similar breach or default thereafter occurring; nor shall any
waiver of any single breach or default be deemed a waiver of any
other breach or default theretofore or thereafter occurring. Any
waiver, permit, consent or approval of any kind or character on the
part of any holder of any breach or default under this Agreement,
or any waiver on the part of any holder of any provisions or
conditions of this Agreement, must be in writing and shall be
effective only to the extent specifically set forth in such
writing. All remedies, either under this Agreement or by law or
otherwise afforded to any holder, shall be cumulative and not
alternative.
6.6 California Corporate Securities Law.
THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT
BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF
CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF
ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION IS
UNLAWFUL UNLESS AN EXEMPTION FROM SUCH QUALIFICATION IS AVAILABLE.
THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY
CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, OR SUCH
EXEMPTION BEING AVAILABLE.
6.7 Expenses. The Company and the Purchasers
shall each bear their own expenses and legal fees with respect to
this Agreement and the transactions contemplated hereby.
6.8 Indemnification For Finders Fees. Each Purchaser agrees to
indemnify and to hold harmless the Company from any liability for any
commission or compensation in the nature of a finder's fee (and the costs
and expenses of defending against such liability or asserted liability)
for which such Purchaser or any of its officers, partners,
employees, or representatives is responsible. The Company agrees
to indemnify and hold harmless each Purchaser from any liability
for any commission or compensation in the nature of a finders' fee
(and the costs and expenses of defending against such liability or
asserted liability) for which the Company or any of its officers,
employees or representatives is responsible.
6.9 Severability. In the event that any
provision of this Agreement becomes or is declared by a court of
competent jurisdiction to be illegal, unenforceable or void, this
Agreement shall continue in full force and effect without said
provision.
6.10 Counterparts. This Agreement may be executed in any
number of counterparts, each of which may be executed by less than
all of the Purchasers, each of which shall be enforceable against
the parties actually executing such counterparts, and all of which
together shall constitute one instrument.
The foregoing agreement is hereby executed as of the date
first above written.
COMPANY MONOLITHIC SYSTEM TECHNOLOGY,
INC., a California corporation
2670 Seeley Road
San Jose, California 95134
By: ________________________
Fu-Chieh Hsu, President
PURCHASERS
BACCARAT DEVELOPMENT PARTNERSHIP
By: Baccarat Development
Corporation, General
Partner
By: ________________________
Carl E. Berg, President
INTEGRATED DEVICE TECHNOLOGY, INC.
By: ____________________________
Title: _________________________
EXHIBIT A
SCHEDULE OF PURCHASERS
Aggregate
Name and Address Number Purchase
of Purchaser of Shares Price
Baccarat Development Partnership 666,500 $1,333,000
[address]
Integrated Device 333,500 $ 667,000
Technology, Inc.
[address]
Total 1,000,000 $2,000,000
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
MONOLITHIC SYSTEM TECHNOLOGY, INC.
The undersigned, Fu-Chieh Hsu and Wing Yu Leung, hereby
certify that:
1. They are the duly elected and acting President and
Secretary, respectively, of Monolithic System Technology, Inc., a
California corporation.
2. The Articles of Incorporation of this corporation are
amended and restated to read in full as follows:
I.
The name of this corporation is Monolithic System Technology,
Inc.
II.
The purpose of this 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.
III.
This corporation is authorized to issue two classes of stock,
designated "Common Stock" and "Preferred Stock." The total number
of shares which this corporation is authorized to issue is
6,500,000 shares. The number of shares of Common Stock which this
corporation is authorized to issue is 5,000,000 shares. The number
of shares of Preferred Stock which this Corporation is authorized
to issue is 1,500,000 shares. The Preferred Stock may be issued
from time to time in one or more series. Of the Preferred Stock,
500,000 shares shall be designated Series A Preferred Stock and
1,000,000 shares shall be designated Series B Preferred Stock. The
Board of Directors of this corporation is authorized to determine
or alter the rights, preferences, privileges and restrictions
granted to or imposed upon any wholly unissued series of Preferred
Stock, and within the limitations or restrictions stated in any
resolution or resolutions of the Board of Directors originally
fixing the number of shares constituting any series, to increase or
decrease (but not below the number of shares of any such series
then outstanding) the number of shares of any such series subsequent
to the issue of shares of that series, to determine the
designation of any series, and to fix the number of shares of any
series.
The Series A Preferred Stock (the "Series A Preferred") and
the Series B Preferred Stock (the "Series B Preferred") shall have
the rights, preferences, privileges and restrictions set forth
below.
Section 1. Dividend Rights of Series A Preferred. Subject to
the rights of additional series of Preferred Stock which may be
designated by the Board of Directors (the "Board") from time to
time, the holder of each share of Series A Preferred and Series B
Preferred shall be entitled to receive, prior and in preference to
any declaration and payment of any dividend (payable other than in
stock of the corporation) on the Common Stock, non-cumulative
dividends at an annual rate equal to $0.10 and $0.20 per share,
respectively, when and as declared by the Board of Directors.
Dividends, if paid, or if declared and set apart for payment, must
be paid on, or declared and set apart for payment on, all series of
Preferred Stock contemporaneously, and if less than full dividends
are paid or declared and set apart for payment, the same percentage
of the dividend rate will be paid on or declared and set apart for
payment on each series of Preferred Stock.
Section 2. Liquidation Preference.
(a) Subject to the rights of additional series of Preferred
Stock which may be designated by the Board from time to time, in
the event of any liquidation, dissolution or winding up of the
corporation, either voluntarily or involuntarily, the holders of
the Preferred Stock shall be entitled to receive, prior and in
preference to any distribution of any of the assets of the corporation
to the holders of the Common Stock, an amount per share equal
to $1.00 plus any declared but unpaid dividends for each share of
Series A Preferred then held by them and an amount per share equal
to $2.00 plus any declared but unpaid dividends for each share of
Series B Preferred then held by them. After payment to the holders
of the Series A Preferred of the amounts set forth in this
Section 2, the entire remaining assets and funds of the corporation
legally available for distribution, if any, shall be distributed
among the holders of the Common Stock in proportion to the shares
of Common Stock then held by them. If, upon the occurrence of such
event, the assets thus distributed among the holders of the
Series A Preferred and Series B Preferred shall be insufficient to
permit the payment to such holders of the full aforesaid preferential
amount, then the entire assets and funds of the corporation
legally available for distribution shall be distributed among the
holders of the Preferred Stock in proportion to the aggregate
preferential amounts owed the holders of the then outstanding
shares of each series of Preferred Stock upon a liquidation,
dissolution or winding up of the corporation; and no amount shall
be paid or set apart for payment on any series of the Preferred
Stock unless, at the same time, amounts in like proportion to the
respective preferential amounts to which the other outstanding
series of the Preferred Stock are entitled shall be paid or set
apart for payment on the outstanding other series.
(b) Upon the completion of the distribution required by
subparagraph (a) of this Section 2, if assets remain in this
corporation, the holders of Common Stock of this corporation,
including Common Stock issued upon conversion of the Preferred
Stock, shall share ratably in the distribution of all remaining
assets of the corporation available for distribution.
(c) (i) For purposes of this Section 2, a liquidation,
dissolution or winding up of the corporation shall be deemed to be
occasioned by and to include (A) the corporation's sale of all or
substantially all of its assets or (B) any transaction or series of
related transactions (including, without limitation, any reorganization,
merger or consolidation) which will result in the holders
of the outstanding voting equity securities of the corporation
immediately prior to such transaction or series of related transactions
holding securities representing less than 50% of the voting
power of the surviving entity immediately following such
transaction or series of related transactions.
(ii) In any such events, if the consideration received
by the corporation is other than cash or indebtedness, its value
will be deemed to be its fair market value. In the case of publicly
traded securities, fair market value shall mean the closing
market price of such securities on the date such consolidation,
merger or sale is consummated. If a consideration is in a form
other than publicly traded securities, its value shall be
determined by the Board.
Section 3. Conversion.
The holders of the Series A Preferred and Series B Preferred
shall have conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each share of Series A Preferred
and each share of Series B Preferred shall be convertible,
at the option of the holder thereof, at any time after the date of
issuance of such share, at the office of the corporation or any
transfer agent for the Preferred Stock, into such number of fully
paid and nonassessable shares of Common Stock as is determined, in
the case of the Series A Preferred, by dividing One Dollar ($1.00)
by the Series A Conversion Price, and, in the case of the Series B
Preferred, by dividing Two Dollars ($2.00) by the Series B Conversion
Price, determined as hereinafter provided, in effect at the
time of conversion. The price at which shares of Common Stock
shall be deliverable upon conversion of shares of Series A Preferred
(the "Series A Conversion Price") shall initially be One
Dollar ($1.00) per share of Common Stock, and the price at which
shares of Common Stock shall be deliverable upon conversion of
shares of Series B Preferred (the "Series B Conversion Price")
shall initially be Two Dollars ($2.00) per share of Common Stock.
The term "Conversion Price" as used herein shall refer to the
respective Conversion Price for each series of Preferred Stock as
the context so requires. The initial Conversion Price shall be
subject to adjustment as hereinafter provided.
Upon conversion, all declared and unpaid dividends on the
Preferred Stock shall be paid either in cash or in shares of Common
Stock of the Corporation, at the election of the Company, wherein
the shares of Common Stock shall be valued at the fair market value
at the time of such conversion, as determined by the Board of
Directors of the Corporation.
(b) Automatic Conversion. Each share of Preferred Stock
shall automatically be converted into shares of Common Stock at the
then effective Conversion Price upon the closing of an underwritten
public offering pursuant to an effective registration statement
under the Securities Act of 1933, as amended, covering the offer
and sale of Common Stock for the account of the Corporation to the
public at a price per share (prior to underwriter commissions and
offering expenses) of not less than $5.00 per share (appropriately
adjusted for any recapitalization) and an aggregate offering price
to the public of not less than $7,500,000. In the event of the
automatic conversion of the Preferred Stock, the person(s) entitled
to receive the Common Stock issuable upon such conversion of the
Preferred Stock shall not be deemed to have converted such Preferred
Stock until immediately prior to the closing of such sale of
securities.
(c) Mechanics of Conversion. No fractional shares of
Common Stock shall be issued upon conversion of Preferred Stock. In
lieu of any fractional shares to which the holder would otherwise
be entitled, the Corporation shall pay cash equal to such fraction
multiplied by the then effective Conversion Price. Before any
holder of Preferred Stock shall be entitled to convert the same
into full shares of Common Stock and to receive certificates there
for, he shall surrender the certificate or certificates therefor,
duly endorsed, at the office of the Corporation or of any transfer
agent for the Preferred Stock, and shall give written notice to the
Corporation at such office that he elects to convert the same; provided,
however, that in the event of an automatic conversion pursuant
to Section 3(b), the outstanding shares of Preferred Stock
shall be converted automatically without any further action by the
holders of such shares and whether or not the certificates representing
such shares are surrendered to the Corporation or its transfer
agent, and provided further that the Corporation shall not be
obligated to issue certificates evidencing the shares of Common
Stock issuable upon such automatic conversion unless the certificates
evidencing such shares of Preferred Stock are either delivered
to the Corporation or its transfer agent as provided above,
or the holder notifies the Corporation or its transfer agent that
such certificates have been lost, stolen or destroyed and executes
an agreement satisfactory to the Corporation to indemnify the
Corporation from any loss incurred by it in connection with such
certificates. The Corporation shall, as soon as practicable after
such delivery, or such agreement and indemnification in the case of
a lost certificate, issue and deliver at such office to such holder
of Preferred Stock, a certificate or certificates for the number of
shares of Common Stock to which he shall be entitled as aforesaid
and a check payable to the holder in the amount of any cash amounts
payable as the result of a conversion into fractional shares of
Common Stock. Such conversion shall be deemed to have been made
immediately prior to the close of business on the date of such
surrender of the shares of Preferred Stock to be converted, or in
the case of automatic conversion on the date of closing of the
offering or the effective date of such written consent, and the
person or persons entitled to receive the shares of Common Stock
issuable upon such conversion shall be treated for all purposes as
the record holder or holders of such shares of Common Stock on such
date.
(d) Adjustments to Conversion Price for Diluting Issues.
(i) Special Definitions. For purposes of this
Section 3(d), the following definitions shall apply:
(A) 'Options' shall mean rights, options
or warrants to subscribe for, purchase or otherwise acquire either
Common Stock or Convertible Securities.
(B) 'Original Issue Date' shall mean the
date on which a share of either series of the Preferred Stock was
first issued.
(C) 'Convertible Securities' shall mean
any evidences of indebtedness, Preferred Stock, or other securities
convertible into or exchangeable for Common Stock.
(D) 'Additional Shares of Common' shall
mean all shares of Common Stock issued (or, pursuant to Section
3(d)(iii), deemed to be issued) by the Corporation after the
Original Issue Date, other than shares of Common Stock issued,
issuable or, pursuant to Section 3(d)(iii), deemed to be issued:
(a) upon conversion of shares of
Preferred Stock;
(b) to officers, directors or
employees of, or consultants to, the Corporation pursuant to a
stock grant, option plan or purchase plan or other employee stock
incentive program or arrangement approved by the Board of
Directors;
(c) as a dividend or distribution on
Preferred Stock; and
(d) in connection with any transaction
for which adjustment is made pursuant to Section 3(d)(vi) hereof.
(ii) No Adjustment of Conversion Price. No
adjustment in the Conversion Price of a particular share of Preferred
Stock shall be made in respect of the issuance of Additional
Shares of Common unless the consideration per share for an Additional
Share of Common issued or deemed to be issued by the Corporation
is less than the Conversion Price in effect on the date of,
and immediately prior to such issue, for such share of Preferred
Stock.
(iii) Options and Convertible Securities. In
the event the Corporation at any time or from time to time after
the Original Issue Date shall issue any Options or Convertible
Securities or shall fix a record date for the determination of
holders of any class of securities entitled to receive any such
Options or Convertible Securities, then the maximum number of
shares of Common issuable upon the exercise of such Options or, in
the case of Convertible Securities and Options therefor, the
conversion or exchange of such Convertible Securities, shall be
deemed to be Additional Shares of Common issued as of the time of
such issue or, in case such a record date shall have been fixed, as
of the close of business on such record date, provided that Additional
Shares of Common shall not be deemed to have been issued
unless the consideration per share (determined pursuant to Section
3(d)(v) hereof) of such Additional Shares of Common would be
less than the Conversion Price in effect on the date of and immediately
prior to such issue, or such record date, as the case may
be, and provided further that in any such case in which Additional
Shares of Common are deemed to be issued:
(A) no further adjustment in the Conversion
Price shall be made upon the subsequent issue of Convertible
Securities or shares of Common Stock upon the exercise of such
Options or conversion or exchange of such Convertible Securities,
in each case, pursuant to their respective terms;
(B) if such Options or Convertible
Securities by their terms provide, with the passage of time or
otherwise, for any increase in the consideration payable to the
Corporation, or decrease in the number of shares of Common Stock
issuable, upon the exercise, conversion or exchange thereof, the
Conversion Price computed upon the original issue thereof (or upon
the occurrence of a record date with respect thereto), and any
subsequent adjustments based thereon, shall, upon any such increase
or decrease becoming effective, be recomputed to reflect such
increase or decrease insofar as it affects such Options or the
rights of conversion or exchange under such Convertible Securities;
(C) upon the expiration of any such
Options or any rights of conversion or exchange under such Convert
ible Securities which shall not have been exercised, the Conversion
Price computed upon the original issue thereof (or upon the occur
rence of a record date with respect thereto), and any subsequent
adjustments based thereon, shall, upon such expiration, be recomputed
as if:
(a) in the case of Convertible
Securities or Options for Common Stock, the only Additional Shares
of Common issued were shares of Common Stock, if any, actually
issued upon the exercise of such Options or the conversion or
exchange of such Convertible Securities and the consideration
received therefor was the consideration actually received by the
Corporation for the issue of all such Options, whether or not exercised,
plus the consideration actually received by the Corporation
upon such exercise, or for the issue of all such Convertible Securities
which were actually converted or exchanged, plus the additional
consideration, if any, actually received by the Corporation
upon such conversion or exchange, and
(b) in the case of Options for
Convertible Securities, only the Convertible Securities, if any,
actually issued upon the exercise thereof were issued at the time
of issue of such Options, and the consideration received by the
Corporation for the Additional Shares of Common deemed to have been
then issued was the consideration actually received by the Corporation
for the issue of all such Options, whether or not exercised,
plus the consideration deemed to have been received by the Corporation
upon the issue of the Convertible Securities with respect to
which such Options were actually exercised;
(D) no readjustment pursuant to clauses
(B) or (C) above shall have the effect of increasing the Conversion
Price to an amount which exceeds the lower of (i) the Conversion
Price on the original adjustment date, or (ii) the Conversion Price
that would have resulted from any issuance of Additional Shares of
Common between the original adjustment date and such readjustment
date; and
(E) in the case of an Option which
expires by its terms not more than 30 days after the date of issue
thereof, no adjustment of the Conversion Price shall be made until
the expiration or exercise of such Option, whereupon such adjust
ment shall be made in the same manner provided in clause (C) above.
(iv) Adjustment of Conversion Price Upon Issuance
of Additional Shares of Common. In the event this Corporation
shall issue Additional Shares of Common (including Additional
Shares of Common deemed to be issued pursuant to Section 3(d)(iii))
without consideration or for a consideration per share less than
the Conversion Price in effect on the date of and immediately prior
to such issue, then and in such event, such Conversion Price shall
be reduced, concurrently with such issue, to a price (calculated to
the nearest cent) determined by multiplying such Conversion Price
theretofore in effect by a fraction, the numerator of which shall
be the number of shares of Common Stock outstanding immediately
prior to such issue plus the number of shares of Common Stock which
the aggregate consideration received by the Corporation for the
total number of Additional Shares of Common so issued would purchase
at such Conversion Price; and the denominator of which shall
be the number of shares of Common Stock outstanding immediately
prior to such issue plus the number of such Additional Shares of
Common so issued;
provided further that, for the purposes of this Section 3(d)(iv),
all shares of Common Stock issuable upon exercise, conversion or
exchange of outstanding Options or Convertible Securities, as the
case may be, shall be deemed to be outstanding, and immediately
after any Additional Shares of Common are deemed issued pursuant to
Section 3(d)(iii), such Additional Shares of Common shall be deemed
to be outstanding.
(v) Determination of Consideration. For
purposes of this Section 3(d), the consideration received by the
Corporation for the issue of any Additional Shares of Common shall
be computed as follows:
(A) Cash and Property. Such consideration shall:
(a) insofar as it consists of cash,
be computed at the aggregate amount of cash received by the Corporation
excluding amounts paid or payable for accrued interest or
accrued dividends;
(b) insofar as it consists of property
other than cash, be computed at the fair value thereof at the
time of such issue, as determined in good faith by the Board; and
(c) in the event Additional Shares
of Common are issued together with other shares or securities or
other assets of the Corporation for consideration which covers
both, be the proportion of such consideration so received, computed
as provided in clauses (a) and (b) above, as determined in good
faith by the Board.
(2) Options and Convertible Securities.
The consideration per share received by the Corporation for
Additional Shares of Common deemed to have been issued pursuant
to Section 3(d)(iii)(1), relating to Options and Convertible
Securities, shall be determined by dividing
(x) the total amount, if any,
received or receivable by the Corporation as consideration for the
issue of such Options or Convertible Securities, plus the minimum
aggregate amount of additional consideration payable to the Corporation
upon the exercise of such Options or the conversion or
exchange of such Convertible Securities, or in the case of Options
for Convertible Securities, the exercise of such Options for
Convertible Securities and the conversion or exchange of such
Convertible Securities by
(y) the maximum number of shares of
Common Stock issuable upon the exercise of such Options or the
conversion or exchange of such Convertible Securities, as determined
in Section 3(d)(iii) hereof.
(vi) Adjustments for Subdivisions, Stock Dividends,
Combinations or Consolidations of Common Stock. In the event the
Corporation effects a subdivision or combination of its outstanding
shares of Common Stock into a greater or smaller number of shares
without a proportionate and corresponding subdivision or combina
tion of its outstanding shares of Preferred Stock, then and in each
such event the Conversion Price shall be increased or decreased
proportionally.
(vii) Adjustments for Other Dividends and
Distributions. In the event the Corporation at any time or from
time to time makes, or fixes a record date for the determination of
holders of Common Stock entitled to receive, any distribution
payable in securities of the Corporation other than shares of
Common Stock and other than as otherwise adjusted in this Section 3,
then and in each such event provision shall be made so that
the holders of Preferred Stock shall receive upon conversion
thereof, in addition to the number of shares of Common Stock
receivable thereupon, the amount of securities of the Corporation
which they would have received had their shares of Preferred Stock
been converted into Common 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, subject to all
other adjustments called for during such period under this Section 3
with respect to the rights of the holders of the Preferred Stock.
(viii) Adjustments for Reclassification, Exchange
and Substitution. If the Common Stock issuable upon conversion of
the Preferred Stock shall be changed into the same or a different
number of shares of any other class or classes of stock, whether by
capital reorganization, reclassification or otherwise (other than
in an event provided for in Section 3(d)(i) above), the Conversion
Price then in effect shall, concurrently with the effectiveness of
such reorganization or reclassification, be proportionately
adjusted such that the Preferred Stock shall be convertible into,
in lieu of the number of shares of Common Stock which the holders
would otherwise have been entitled to receive, a number of shares
of such other class or classes of stock equivalent to the number of
shares of Common Stock that would have been subject to receipt by
the holders upon conversion of the Preferred Stock immediately
before that change.
(e) No Impairment. The Corporation will not, by amend
ment of its Articles of Incorporation or through any reorgani
zation, 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 but will at
all times in good faith assist in the carrying out of all the provisions
of this Section 3 and in the taking of all such action as
may be necessary or appropriate in order to protect the Conversion
Rights of the holders of the Preferred Stock against impairment.
(f) Certificate as to Adjustments. Upon the occurrence
of each adjustment or readjustment of the Conversion Price pursuant
to this Section 3, the Corporation at its expense shall promptly
compute such adjustment or readjustment in accordance with the
terms hereof and furnish to each holder of Preferred 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 the written request at any time
of any holder of Preferred Stock, furnish or cause to be furnished
to such holder a like certificate setting forth (i) such adjust
ments and readjustments, (ii) the Conversion Price at the time in
effect, and (iii) the number of shares of Common Stock and the
amount, if any, of other property which at the time would be
received upon the conversion of Preferred Stock.
(g) Notices of Record Date. In the event of any taking
by the corporation of the record of the holders of any class of
securities for the purpose of determining the holders thereof who
are entitled to receive any dividend (other than a cash dividend)
or other distribution, the corporation shall mail to each holder of
Preferred Stock, at least twenty (20) days prior to the date
specified herein, a notice specifying the date on which any such
record is to be taken for the purpose of such dividend or
distribution.
(h) Reservation of Stock. The corporation shall at all
times reserve and keep available out of its authorized but unissued
shares of Common Stock solely for the purpose of effecting the conversion
of the shares of the Preferred Stock such number of its
shares of Common Stock as shall from time to time be sufficient to
effect the conversion of all outstanding shares of Preferred Stock;
and if at any time the number of authorized but unissued shares of
Common Stock shall not be sufficient to effect the conversion of
all the then outstanding shares of the Preferred Stock, the corporation
will take such corporate action as may, in the opinion of
its counsel, be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient
for such purpose. Any reserve of its authorized but unissued
shares of Common Stock established by the corporation in accordance
with this paragraph may not be diminished without the consent of
the holders of a majority of the outstanding Preferred Stock.
(i) No Reissuance of Series A or B Preferred. No share
or shares of Series A Preferred or B Preferred acquired by the
corporation by reason of purchase, conversion or otherwise shall be
reissued, and all such shares shall be cancelled, retired and
eliminated from the shares which the corporation shall be authorized to issue.
(j) Notices. Any notice required by the provisions of
this Section 3 to be given to the holders of shares of Preferred
Stock shall be deemed given if deposited in the United States mail,
postage prepaid, and addressed to each holder of record at his or
her address appearing on the books of the corporation.
Section 4. Voting Matters. Except as otherwise required by
law, each share of Common Stock issued and outstanding shall have
one vote. Each share of Preferred Stock issued and outstanding
shall have the number of votes equal to the number of shares of
Common Stock into which the Preferred Stock is convertible as
adjusted from time to time pursuant to Section 3 hereof. The
holder of each share of Preferred Stock shall be entitled to notice
of any shareholders' meeting in accordance with the by-laws of the
corporation and shall vote with the holders of the Common Stock and
upon any matter submitted to a vote of shareholders, except those
matters required by law to be submitted to a class vote.
Section 5. Residual Rights. All rights accruing to the
outstanding shares of this corporation not expressly provided for
to the contrary herein shall be vested in the Common Stock.
Section 6. Consent for Certain Repurchases of Common Stock
Deemed to be Distributions. Each holder of Preferred Stock shall
be deemed to have consented, for purposes of Section 502, 503 and
506 of the California Corporations Code, to distributions made by
the corporation in connection with the repurchase of shares of
Common Stock issued to or held by employees or consultants upon
termination of their employment or services or pursuant to agree
ments providing for the right of said repurchase between the
corporation and such persons.
IV
Section 1. Limitation of Directors' Liability. The liability
of the directors of this corporation for monetary damages shall be
eliminated to the fullest extent permissible under California law.
Section 2. Indemnification of Corporate Agents. This corporation
is authorized to provide for, through bylaw provisions or
through agreements with the agents, or both, the indemnification of
agents (as defined in Section 317 of the California General Corporation
Law) of the corporation in excess of that expressly permitted
by said Section 317 for said agents to the fullest extent
permissible under California law, subject to the limitations set
forth in Section 204 of the California General Corporation Law with
respect to actions for breach of duty to this corporation or its
shareholders.
Section 3. Repeal or Modification. Any repeal or modification
of the foregoing provisions of this Article IV shall not
adversely affect any right of indemnification or limitation of
liability of an agent of this corporation relating to acts or
omissions occurring prior to such repeal or modification."
3. The foregoing amendment and restatement has been duly
approved by the Board of Directors of the corporation.
4. The foregoing amendment has been duly approved by the
holders of the requisite number of shares of the corporation in
accordance with Sections 902 and 903 of the California Corporations
Code. The total number of outstanding shares of each class
entitled to vote with respect to the foregoing amendment and
restatement was 2,600,000 shares of Common Stock and 500,000 shares
of the Series A Preferred Stock. The number of shares voting in
favor of the foregoing amendment equaled or exceeded the vote
required. The required vote was a majority of the outstanding
shares of Common Stock and a majority of the outstanding shares of
Series A Preferred Stock.
The undersigned 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 Saratoga, California this _____ day of October,
1992.
------------------------
Fu-Chieh Hsu, President
-------------------------
Wing Yu Leung, Secretary
MONOLITHIC SYSTEM TECHNOLOGY, INC.
SERIES C
PREFERRED STOCK PURCHASE AGREEMENT
June 13, 1994
TABLE OF CONTENTS
Page
SECTION 1 - Authorization and Sale of Preferred Stock 1
1.1 Authorization 1
1.2 Sale of Series C Preferred at the Closing 1
SECTION 2 - Closing and Delivery 1
SECTION 3 - Representations and Warranties of the Company 2
3.1 Organization and Standing 2
3.2 Corporate Power 2
3.3 Capitalization 2
3.4 Authorization 2
3.5 Compliance with Other Instruments 3
3.6 Litigation 3
3.7 Governmental Consents 3
3.8 Brokers or Finders 3
SECTION 4 - Representations and Warranties of the Purchasers 4
4.1 Experience 4
4.2 Investment 4
4.3 Rule 144 4
4.4 No Public Market 4
4.5 Access to Data 4
4.6 Authorization 5
4.7 Brokers or Finders 5
SECTION 5 - Agreement to Future Financings 5
5.1 Future Sales of Preferred Stock 5
SECTION 6 - Miscellaneous 5
6.1 Governing Law 5
6.2 Successors and Assigns 5
6.3 Entire Agreement; Amendment 5
6.4 Notices, etc 6
6.5 Delays or Omissions 6
6.6 California Corporate Securities Law 6
6.7 Expenses 7
6.8 Indemnification For Finders Fees 7
6.9 Severability 7
6.10 Counterparts 7
EXHIBITS
A. Schedule of Purchasers
B. Amended and Restated Articles of Incorporation
C. Addendum to Amended and Restated Registration Rights
Agreement
MONOLITHIC SYSTEM TECHNOLOGY, INC.
SERIES C PREFERRED STOCK PURCHASE AGREEMENT
This Agreement is made as of June 13, 1994 among Monolithic
System Technology, Inc., a California corporation (the "Company"),
and the persons and entities listed on the Schedule of Purchasers
attached hereto as Exhibit A (the "Purchasers").
SECTION 1
Authorization and Sale of Preferred Stock
1.1 Authorization. The Company has
authorized the sale and issuance of up to 1,100,000 shares of its
Series C Preferred Stock ("Series C Preferred"), having the rights,
restrictions, privileges and preferences as set forth in the
Company's Amended and Restated Articles of Incorporation in the
form attached to this Agreement as Exhibit B (the "Restated
Articles"). The Company's agreements with each of the Purchasers
are separate agreements, and the sales of the Series C Preferred to
each of the Purchasers are separate sales.
1.2 Sale of Series C Preferred.
Subject to the terms and conditions hereof, the Company hereby
issues and sells to the Purchasers, and the Purchasers hereby buy
from the Company, the total number of shares of Series A Preferred
specified opposite such Purchaser's name in column 2 of the
Schedule of Purchasers (the "Shares"), at a purchase price of $5.00
per share payable in cash or through cancellation of indebtedness
of the Company to the Purchasers.
SECTION 2
Closing and Delivery
2.1 Closing. The closing of the purchase and
sale of the Series C Preferred hereunder (the "Closing") has taken
place concurrent with the execution of this Agreement and is
effective as of the date hereof. Each of the Purchasers hereby
acknowledges receipt from the Company of a certificate or certificates
representing the number of Shares designated in column 2 of
the Schedule of Purchasers and the Company hereby acknowledges
receipt of payment of the purchase price therefor, by check or wire
transfer payable to the Company or through cancellation of indebtedness
of the Company to the Purchasers, in the amount specified in
column 3 of the Schedule of Purchasers.
2.2 Additional Closings. If the full amount of the Shares
authorized for sale in Section 1.1 above is not sold at the
Closing, the Company shall have the right for up to six (6) months
following the Closing to sell the remaining Shares to one or more
additional purchasers (the "Additional Shares") at the price and on
the terms set forth herein. The closing of any purchase and sale
of Shares to Additional Purchasers shall be referred to as an
"Additional Closing." By execution of this Agreement, (i) the
Purchasers hereby consent to the sale of the Shares to the
Additional Purchasers and to the Additional Purchasers becoming a
party to the Agreement, and (ii) each Additional Purchaser shall be
added to the Schedule of Purchasers and shall be entitled to all
rights and subject to all obligations of the Purchasers under this
Agreement. The term "Purchasers" as used in this Agreement shall
include the Additional Purchasers, unless the context specifically
indicates otherwise.
SECTION 3
Representations and Warranties of the Company
SECTION 3
Representations and Warranties of the Company
The Company hereby represents and warrants to the Purchasers
as follows:
3.1 Organization and Standing.
The Company is a corporation duly organized and existing under, and
by virtue of, the laws of the State of California and is in good
standing under such laws. The Company has requisite corporate power
to own and operate its properties and assets, and to carry on its
business as presently conducted and as proposed to be conducted.
The Company is not qualified to do business as a foreign
corporation in any jurisdiction and such qualification is not
presently required.
3.2 Corporate Power. The Company has all
requisite legal and corporate power to execute and deliver this
Agreement and the Addendum to Amended and Restated Registration
Rights Agreement attached hereto as Exhibit C (the "Addendum"), to
sell and issue the Shares hereunder, to issue the Common Stock
issuable upon conversion of the Series C Preferred and to carry out
and perform its obligations under the terms of this Agreement and
the Addendum.
3.3 Capitalization. The authorized
capital stock of the Company at Closing will consist of 6,100,000
shares of Common Stock, of which 2,656,250 shares are issued and
outstanding, and 2,600,000 shares of Preferred Stock, of which
500,000 shares have been designated as Series A Preferred Stock and
are issued and outstanding, of which 1,000,000 shares have been
designated as Series B Preferred Stock and are issued and
outstanding, and of which 1,100,000 shares will at the Closing be
designated as Series C Preferred Stock and none of which is issued
or outstanding prior to the Closing. All such issued and outstand
ing shares have been duly authorized and validly issued, and are
fully paid and nonassessable. The Company has reserved (or will
reserve prior to the Closing) (i) 1,100,000 shares of Series C
Preferred for issuance hereunder, (ii) 2,600,000 shares of Common
Stock for issuance upon conversion of the Series A, Series B and
Series C Preferred and (iii) 900,000 shares of Common Stock for
issuance to employees and consultants. The Series C Preferred
shall have the rights, preferences, privileges and restrictions set
forth in the Restated Articles.
3.4 Authorization. All corporate action
on the part of the Company, its directors and shareholders
necessary for the authorization, execution, delivery and
performance of this Agreement and the Addendum by the Company, the
authorization, sale, issuance and delivery of the Shares (and the
Common Stock issuable upon conversion of the Shares) and the
performance of the Company's obligations hereunder has been taken.
This Agreement and the Addendum, when executed and delivered by the
Company, shall constitute valid and binding obligations of the
Company enforceable in accordance with their respective terms. The
Shares, when issued in compliance with the provisions of this
Agreement, will be validly issued and fully paid and nonassessable,
and the Common Stock issuable upon conversion of the Shares will be
duly and validly reserved and, when issued in compliance with the
provisions of this Agreement, will be validly issued, fully paid
and nonassessable, and free of any liens or encumbrances.
3.5 Compliance with Other Instruments. The Company is not in
violation of any term of its Articles or Bylaws nor, to the best of its
knowledge, any material term of any agreement, judgment, statute, rule or
regulation to which the Company is subject and a violation of which
would have a material adverse effect on the condition, financial or
otherwise, or operations of the Company.
3.6 Litigation. There are no actions, suits,
proceedings or investigations pending against the Company or its
properties before any court or governmental agency.
3.7 Governmental Consents.
No consent, approval or authorization of, or designation, declaration
or filing with, any governmental authority on the part of the
Company is required in connection with the valid execution and
delivery of this Agreement and the Addendum, or the offer, sale or
issuance of the Series C Preferred (and the Common Stock issuable
upon conversion of the Series C Preferred), or the consummation of
any other transaction contemplated hereby, except (a) filing of the
Restated Articles with the office of the Secretary of State of the
State of California and (b) qualification (or taking such action as
may be necessary to secure an exemption from qualification, if
available) of the offer and sale of the Series C Preferred (and the
Common Stock issuable upon conversion of the Series C Preferred)
under the California Corporate Securities Law and other applicable
Blue Sky laws, which filing and qualification, if required, will be
accomplished in a timely manner prior to or promptly upon
completion of the Closing.
3.8 Brokers or Finders. The Company
has not incurred, and will not incur, directly or indirectly, any
liability for brokerage or finders' fees or agents' commissions or
any similar charges in connection with this Agreement or any
transaction contemplated hereby.
SECTION 4
Representations and Warranties of the Purchasers
Each Purchaser hereby represents and warrants to the Company
with respect to its purchase of the Shares as follows:
4.1 Experience. Each Purchaser has
substantial experience in evaluating and investing in private
placement transactions of securities in companies similar to the
Company so that it is capable of evaluating the merits and risks of
its investment in the Company and has the capacity to protect its
own interests.
4.2 Investment. Each Purchaser is acquiring
the Shares and the underlying Common Stock for investment for its
own account, not as a nominee or agent, and not with the view to,
or for resale in connection with, any distribution thereof. Each
Purchaser understands that the Shares to be purchased and the
underlying Common Stock have not been, and will not be, registered
under the Securities Act of 1933, as amended (the "Securities Act")
by reason of a specific exemption from the registration provisions
of the Securities Act, the availability of which depends upon,
among other things, the bona fide nature of the investment intent
and the accuracy of such Purchaser's representations as expressed
herein.
4.3 Rule 144. Each Purchaser acknowledges
that the Shares and the underlying Common Stock must be held
indefinitely unless subsequently registered under the Securities
Act or unless an exemption from such registration is available.
Each Purchaser is aware of the provisions of Rule 144 promulgated
under the Securities Act which permit limited resale of shares
purchased in a private placement subject to the satisfaction of
certain conditions, including, among other things, the existence of
a public market for the shares, the availability of certain current
public information about the Company, the resale occurring not less
than two years after a party has purchased and paid for the
security to be sold, the sale being effected through a "broker's
transaction" or in transactions directly with a "market maker" and
the number of shares being sold during any three-month period not
exceeding specified limitations.
4.4 No Public Market. Each Purchaser
understands that no public market now exists for any of the
securities issued by the Company and that the Company has made no
assurances that a public market will ever exist for the Company's
securities.
4.5 Access to Data. Each Purchaser has
had an opportunity to discuss the Company's business, management
and financial affairs with the Company's management and has had the
opportunity to review the Company's facilities. Each Purchaser has
also had an opportunity to ask questions of officers of the Company
concerning the terms of this offering, which questions were
answered to its satisfaction. It understands that such
discussions, as well as any written information issued by the
Company, were intended to describe certain aspects of the Company's
business and prospects but were not a thorough or exhaustive
description.
4.6 Authorization. This Agreement and
the Addendum when executed and delivered by such Purchaser will
constitute a valid and legally binding obligation of the Purchaser,
enforceable in accordance with its terms.
4.7 Brokers or Finders. The Company
has not incurred, and will not incur, directly or indirectly, as a
result of any action taken by such Purchaser, any liability for
brokerage or finders' fees or agents' commissions or any similar
charges in connection with this Agreement or any transaction
contemplated hereby.
SECTION 5
Agreement to Future Financings
5.1 Future Sales of Preferred Stock. In the event the Company should
engage in a subsequent round or rounds of financing involving the sale of
any future series of Preferred Stock at a price per share not less than
$5.00 and otherwise on terms and conditions on parity, on a share-
for-share basis with those rights conferred upon the Purchasers
herein, then each Purchaser agrees that it will take such action as
the Company may reasonably request, including consent to any
amendment of this Agreement, the Company's Articles of
Incorporation or any other instrument related to the issue and sale
of such future series of Preferred Stock, to enable the Company to
conclude such financing.
SECTION 6
Miscellaneous
6.1 Governing Law. This Agreement shall
be governed in all respects by the laws of the State of California.
6.2 Successors and Assigns.
Except as otherwise provided herein, the provisions hereof shall
inure to the benefit of, and be binding upon, the successors,
assigns, heirs, executors, and administrators of the parties
hereto.
6.3 Entire Agreement; Amendment. This Agreement and the other
documents delivered pursuant hereto constitute the full and entire
understanding and agreement between the parties with regard to the
subjects hereof and thereof. Neither this Agreement nor any term
hereof may be amended, waived, discharged, or terminated other than
by a written instrument signed by the party against whom
enforcement of any such amendment, waiver, discharge, or
termination is sought.
6.4 Notices, etc. All notices and other
communications required or permitted hereunder shall be in writing
and shall be deemed effectively given upon delivery to the party to
be notified in person or by courier service or five (5) days after
deposit with the United States mail, by registered or certified
mail, postage prepaid, addressed (a) if to a Purchaser, at such
Purchaser's address set forth in Exhibit A, or at such other
address as such Purchaser shall have furnished to the Company in
writing, or (b) if to any other holder of any Shares, at such
address as such holder shall have furnished the Company in writing,
or, until any such holder so furnishes an address to the Company,
then to and at the address of the last holder of such Shares who
has so furnished an address to the Company, or (c) if to the
Company, one copy should be sent to its address set forth on the
last page of this Agreement and addressed to the attention of the
President, or at such other address as the Company shall have
furnished to the Purchasers.
6.5 Delays or Omissions. No delay
or omission to exercise any right, power or remedy accruing to any
holder of any Shares, upon any breach or default of the Company
under this Agreement, shall impair any such right, power or remedy
of such holder nor shall it be construed to be a waiver of any such
breach or default, or an acquiescence therein, or of or in any
similar breach or default thereafter occurring; nor shall any
waiver of any single breach or default be deemed a waiver of any
other breach or default theretofore or thereafter occurring. Any
waiver, permit, consent or approval of any kind or character on the
part of any holder of any breach or default under this Agreement,
or any waiver on the part of any holder of any provisions or
conditions of this Agreement, must be in writing and shall be
effective only to the extent specifically set forth in such
writing. All remedies, either under this Agreement or by law or
otherwise afforded to any holder, shall be cumulative and not
alternative.
6.6 California Corporate Securities Law.
THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT
BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF
CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT
OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION IS
UNLAWFUL UNLESS AN EXEMPTION FROM SUCH QUALIFICATION IS AVAILABLE.
THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY
CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, OR SUCH
EXEMPTION BEING AVAILABLE.
6.7 Expenses. The Company and the Purchasers
shall each bear their own expenses and legal fees with respect to
this Agreement and the transactions contemplated hereby.
6.8 Indemnification For Finders Fees. Each Purchaser agrees to
indemnify and to hold harmless the Company from any liability for any
commission or compensation in the nature of a finder's fee (and the costs
and expenses of defending against such liability or asserted liability)
for which such Purchaser or any of its officers, partners,
employees, or representatives is responsible. The Company agrees
to indemnify and hold harmless each Purchaser from any liability
for any commission or compensation in the nature of a finders' fee
(and the costs and expenses of defending against such liability or
asserted liability) for which the Company or any of its officers,
employees or representatives is responsible.
6.9 Severability. In the event that any
provision of this Agreement becomes or is declared by a court of
competent jurisdiction to be illegal, unenforceable or void, this
Agreement shall continue in full force and effect without said
provision.
6.10 Counterparts. This Agreement may be executed in any
number of counterparts, each of which may be executed by less than
all of the Purchasers, each of which shall be enforceable against
the parties actually executing such counterparts, and all of which
together shall constitute one instrument.
The foregoing agreement is hereby executed as of the date
first above written.
COMPANY MONOLITHIC SYSTEM TECHNOLOGY,
INC., a California corporation
2670 Seeley Road
San Jose, California 95134
By: ________________________
Fu-Chieh Hsu, President
PURCHASERS
DYNAMICS TECHNOLOGY
By: ____________________________
Title: _________________________
INTEGRATED DEVICE TECHNOLOGY, INC.
By: ____________________________
Title: _________________________
________________________________
Phillip Pare
EXHIBIT A
SCHEDULE OF PURCHASERS
Aggregate
Name and Address Number Purchase
of Purchaser of Shares Price
Dynamics Technology 600,000 $3,000,000
21311 Hawthorne Boulevard
Torrance, California 90503
Attention: Dana Ulrich
Integrated Device Technology, Inc. 400,000 $2,000,000
2975 Stender Way
Santa Clara, California 95054-3214
Phillip Pare 10,000 $50,000
233 Brown Road
San Juan Bautista, California 95045
Total 1,010,000 $5,050,000
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
MONOLITHIC SYSTEM TECHNOLOGY, INC.
The undersigned, Fu-Chieh Hsu and Wing Yu Leung, hereby
certify that:
1. They are the duly elected and acting President and
Secretary, respectively, of Monolithic System Technology, Inc., a
California corporation.
2. The Articles of Incorporation of this corporation are
amended and restated to read in full as follows:
I.
The name of this corporation is Monolithic System Technology,Inc.
II.
The purpose of this 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.
III.
This corporation is authorized to issue two classes of stock,
designated "Common Stock" and "Preferred Stock." The total number
of shares which this corporation is authorized to issue is
8,700,000 shares. The number of shares of Common Stock which this
corporation is authorized to issue is 6,100,000 shares. The number
of shares of Preferred Stock which this Corporation is authorized
to issue is 2,600,000 shares. The Preferred Stock may be issued
from time to time in one or more series. Of the Preferred Stock,
500,000 shares shall be designated Series A Preferred Stock,
1,000,000 shares shall be designated Series B Preferred Stock and
1,100,000 shares shall be designated Series C Preferred Stock. The
Board of Directors of this corporation is authorized to determine
or alter the rights, preferences, privileges and restrictions
granted to or imposed upon any wholly unissued series of Preferred
Stock, and within the limitations or restrictions stated in any
resolution or resolutions of the Board of Directors originally
fixing the number of shares constituting any series, to increase or
decrease (but not below the number of shares of any such series
then outstanding) the number of shares of any such series subsequent
to the issue of shares of that series, to determine the
designation of any series, and to fix the number of shares of any
series.
The Series A Preferred Stock (the "Series A Preferred"), the
Series B Preferred Stock (the "Series B Preferred") and the Series
C Preferred Stock (the "Series C Preferred") shall have the rights,
preferences, privileges and restrictions set forth below.
Section 1. Dividend Rights of Preferred Stock. Subject to
the rights of additional series of Preferred Stock which may be
designated by the Board of Directors (the "Board") from time to
time, the holder of each share of Series A Preferred, Series B
Preferred and Series C Preferred shall be entitled to receive,
prior and in preference to any declaration and payment of any
dividend (payable other than in stock of the corporation) on the
Common Stock, non-cumulative dividends at an annual rate equal to
$0.10, $0.20 and $0.50 per share, respectively, when and as
declared by the Board of Directors. Dividends, if paid, or if
declared and set apart for payment, must be paid on, or declared
and set apart for payment on, all series of Preferred Stock
contemporaneously, and if less than full dividends are paid or
declared and set apart for payment, the same percentage of the
dividend rate will be paid on or declared and set apart for payment
on each series of Preferred Stock.
Section 2. Liquidation Preference.
(a) Subject to the rights of additional series of Preferred
Stock which may be designated by the Board from time to time, in
the event of any liquidation, dissolution or winding up of the
corporation, either voluntarily or involuntarily, the holders of
the Preferred Stock shall be entitled to receive, prior and in
preference to any distribution of any of the assets of the corporation
to the holders of the Common Stock, an amount per share equal
to $1.00 plus any declared but unpaid dividends for each share of
Series A Preferred then held by them, an amount per share equal to
$2.00 plus any declared but unpaid dividends for each share of
Series B Preferred then held by them and an amount per share equal
to $5.00 plus any declared but unpaid dividends for each share of
Series C Preferred then held by them. After payment to the holders
of the Preferred Stock of the amounts set forth in this Section 2,
the entire remaining assets and funds of the corporation legally
available for distribution, if any, shall be distributed among the
holders of the Common Stock in proportion to the shares of Common
Stock then held by them. If, upon the occurrence of such event,
the assets thus distributed among the holders of the Series A
Preferred, Series B Preferred and Series C Preferred then held by
them shall be insufficient to permit the payment to such holders of
the full aforesaid preferential amount, then the entire assets and
funds of the corporation legally available for distribution shall
be distributed among the holders of the Preferred Stock in
proportion to the aggregate preferential amounts owed the holders
of the then outstanding shares of each series of Preferred Stock
upon a liquidation, dissolution or winding up of the corporation;
and no amount shall be paid or set apart for payment on any series
of the Preferred Stock unless, at the same time, amounts in like
proportion to the respective preferential amounts to which the
other outstanding series of the Preferred Stock are entitled shall
be paid or set apart for payment on the outstanding other series.
(b) Upon the completion of the distribution required by
subparagraph (a) of this Section 2, if assets remain in this
corporation, the holders of Common Stock of this corporation,
including Common Stock issued upon conversion of the Preferred
Stock, shall share ratably in the distribution of all remaining
assets of the corporation available for distribution.
(c) (i) For purposes of this Section 2, a liquidation,
dissolution or winding up of the corporation shall be deemed to be
occasioned by and to include (A) the corporation's sale of all or
substantially all of its assets or (B) any transaction or series of
related transactions (including, without limitation, any reorganization,
merger or consolidation) which will result in the holders
of the outstanding voting equity securities of the corporation
immediately prior to such transaction or series of related transactions
holding securities representing less than 50% of the voting
power of the surviving entity immediately following such
transaction or series of related transactions.
(ii) In any such events, if the consideration received
by the corporation is other than cash or indebtedness, its value
will be deemed to be its fair market value. In the case of publicly
traded securities, fair market value shall mean the closing
market price of such securities on the date such consolidation,
merger or sale is consummated. If a consideration is in a form
other than publicly traded securities, its value shall be
determined by the Board.
Section 3. Conversion.
The holders of the Series A Preferred, Series B Preferred and
Series C Preferred shall have conversion rights as follows (the
"Conversion Rights"):
(a) Right to Convert. Each share of Series A Preferred,
each share of Series B Preferred and each shares of Series
C Preferred shall be convertible, at the option of the holder
thereof, at any time after the date of issuance of such share, at
the office of the corporation or any transfer agent for the Preferred
Stock, into such number of fully paid and nonassessable
shares of Common Stock as is determined, in the case of the
Series A Preferred, by dividing One Dollar ($1.00) by the Series A
Conversion Price, in the case of the Series B Preferred, by
dividing Two Dollars ($2.00) by the Series B Conversion Price, and,
in the case of the Series C Preferred, by dividing Five Dollars
($5.00) by the Series C Conversion Price, determined as hereinafter
provided, in effect at the time of conversion. The price at which
shares of Common Stock shall be deliverable upon conversion of
shares of Series A Preferred (the "Series A Conversion Price")
shall initially be One Dollar ($1.00) per share of Common Stock,
the price at which shares of Common Stock shall be deliverable upon
conversion of shares of Series B Preferred (the "Series B
Conversion Price") shall initially be Two Dollars ($2.00) per share
of Common Stock and the price at which shares of Common Stock shall
be deliverable upon conversion of shares of Series C Preferred (the
"Series C Conversion Price") shall initially be Five Dollars
($5.00) per share of Common Stock. The term "Conversion Price" as
used herein shall refer to the respective Conversion Price for each
series of Preferred Stock as the context so requires. The initial
Conversion Price shall be subject to adjustment as hereinafter
provided.
Upon conversion, all declared and unpaid dividends on the
Preferred Stock shall be paid either in cash or in shares of Common
Stock of the Corporation, at the election of the Company, wherein
the shares of Common Stock shall be valued at the fair market value
at the time of such conversion, as determined by the Board of
Directors of the Corporation.
(b) Automatic Conversion. Each share of Preferred Stock
shall automatically be converted into shares of Common Stock at the
then effective Conversion Price upon the closing of an underwritten
public offering pursuant to an effective registration statement
under the Securities Act of 1933, as amended, covering the offer
and sale of Common Stock for the account of the Corporation to the
public at a price per share (prior to underwriter commissions and
offering expenses) of not less than $5.00 per share (appropriately
adjusted for any recapitalization) and an aggregate offering price
to the public of not less than $7,500,000. In the event of the
automatic conversion of the Preferred Stock, the person(s) entitled
to receive the Common Stock issuable upon such conversion of the
Preferred Stock shall not be deemed to have converted such Preferred
Stock until immediately prior to the closing of such sale of
securities.
(c) Mechanics of Conversion. No fractional shares of
Common Stock shall be issued upon conversion of Preferred Stock. In
lieu of any fractional shares to which the holder would otherwise
be entitled, the Corporation shall pay cash equal to such fraction
multiplied by the then effective Conversion Price. Before any
holder of Preferred Stock shall be entitled to convert the same
into full shares of Common Stock and to receive certificates there
for, he shall surrender the certificate or certificates therefor,
duly endorsed, at the office of the Corporation or of any transfer
agent for the Preferred Stock, and shall give written notice to the
Corporation at such office that he elects to convert the same; provided,
however, that in the event of an automatic conversion pursuant to
Section 3(b), the outstanding shares of Preferred Stock
shall be converted automatically without any further action by the
holders of such shares and whether or not the certificates representing
such shares are surrendered to the Corporation or its transfer agent,
and provided further that the Corporation shall not be
obligated to issue certificates evidencing the shares of Common
Stock issuable upon such automatic conversion unless the certificates
evidencing such shares of Preferred Stock are either delivered to
the Corporation or its transfer agent as provided above,
or the holder notifies the Corporation or its transfer agent that
such certificates have been lost, stolen or destroyed and executes
an agreement satisfactory to the Corporation to indemnify the
Corporation from any loss incurred by it in connection with such
certificates. The Corporation shall, as soon as practicable after
such delivery, or such agreement and indemnification in the case of
a lost certificate, issue and deliver at such office to such holder
of Preferred Stock, a certificate or certificates for the number of
shares of Common Stock to which he shall be entitled as aforesaid
and a check payable to the holder in the amount of any cash amounts
payable as the result of a conversion into fractional shares of
Common Stock. Such conversion shall be deemed to have been made
immediately prior to the close of business on the date of such
surrender of the shares of Preferred Stock to be converted, or in
the case of automatic conversion on the date of closing of the
offering, and the person or persons entitled to receive the shares
of Common Stock issuable upon such conversion shall be treated for
all purposes as the record holder or holders of such shares of
Common Stock on such date.
(d) Adjustments to Conversion Price for Diluting Issues.
(i) Special Definitions. For purposes of this
Section 3(d), the following definitions shall apply:
(A) 'Options' shall mean rights, options
or warrants to subscribe for, purchase or otherwise acquire either
Common Stock or Convertible Securities.
(B) 'Original Issue Date' shall mean, for
each series, the date on which a share of that series of the
Preferred Stock was first issued.
(C) 'Convertible Securities' shall mean
any evidences of indebtedness, Preferred Stock, or other securities
convertible into or exchangeable for Common Stock.
(D) 'Additional Shares of Common' shall
mean all shares of Common Stock issued (or, pursuant to Section
3(d)(iii), deemed to be issued) by the Corporation after the
Original Issue Date, other than shares of Common Stock issued,
issuable or, pursuant to Section 3(d)(iii), deemed to be issued:
(a) upon conversion of shares of
Preferred Stock;
(b) to officers, directors or
employees of, or consultants to, the Corporation pursuant to a
stock grant, option plan or purchase plan or other employee stock
incentive program or arrangement approved by the Board of
Directors;
(c) as a dividend or distribution on
Preferred Stock; and
(d) in connection with any transaction
for which adjustment is made pursuant to Section 3(d)(vi) hereof.
(ii) No Adjustment of Conversion Price. No
adjustment in the Conversion Price of a particular share of Preferred
Stock shall be made in respect of the issuance of Additional
Shares of Common unless the consideration per share for an Additional
Share of Common issued or deemed to be issued by the Corporation
is less than the Conversion Price in effect on the date of,
and immediately prior to such issue, for such share of Preferred
Stock.
(iii) Options and Convertible Securities. In
the event the Corporation at any time or from time to time after
the Original Issue Date shall issue any Options or Convertible
Securities or shall fix a record date for the determination of
holders of any class of securities entitled to receive any such
Options or Convertible Securities, then the maximum number of
shares of Common issuable upon the exercise of such Options or, in
the case of Convertible Securities and Options therefor, the
conversion or exchange of such Convertible Securities, shall be
deemed to be Additional Shares of Common issued as of the time of
such issue or, in case such a record date shall have been fixed, as
of the close of business on such record date, provided that Additional
Shares of Common shall not be deemed to have been issued
unless the consideration per share (determined pursuant to Section
3(d)(v) hereof) of such Additional Shares of Common would be
less than the Conversion Price in effect on the date of and immediately
prior to such issue, or such record date, as the case may
be, and provided further that in any such case in which Additional
Shares of Common are deemed to be issued:
(A) no further adjustment in the Conversion
Price shall be made upon the subsequent issue of Convertible
Securities or shares of Common Stock upon the exercise of such
Options or conversion or exchange of such Convertible Securities,
in each case, pursuant to their respective terms;
(B) if such Options or Convertible
Securities by their terms provide, with the passage of time or
otherwise, for any increase in the consideration payable to the
Corporation, or decrease in the number of shares of Common Stock
issuable, upon the exercise, conversion or exchange thereof, the
Conversion Price computed upon the original issue thereof (or upon
the occurrence of a record date with respect thereto), and any
subsequent adjustments based thereon, shall, upon any such increase
or decrease becoming effective, be recomputed to reflect such
increase or decrease insofar as it affects such Options or the
rights of conversion or exchange under such Convertible Securities;
(C) upon the expiration of any such
Options or any rights of conversion or exchange under such Convert
ible Securities which shall not have been exercised, the Conversion
Price computed upon the original issue thereof (or upon the occur
rence of a record date with respect thereto), and any subsequent
adjustments based thereon, shall, upon such expiration, be recomputed as if:
(a) in the case of Convertible
Securities or Options for Common Stock, the only Additional Shares
of Common issued were shares of Common Stock, if any, actually
issued upon the exercise of such Options or the conversion or
exchange of such Convertible Securities and the consideration
received therefor was the consideration actually received by the
Corporation for the issue of all such Options, whether or not exercised,
plus the consideration actually received by the Corporation
upon such exercise, or for the issue of all such Convertible Securities
which were actually converted or exchanged, plus the additional
consideration, if any, actually received by the Corporation
upon such conversion or exchange, and
(b) in the case of Options for
Convertible Securities, only the Convertible Securities, if any,
actually issued upon the exercise thereof were issued at the time
of issue of such Options, and the consideration received by the
Corporation for the Additional Shares of Common deemed to have been
then issued was the consideration actually received by the Corporation
for the issue of all such Options, whether or not exercised,
plus the consideration deemed to have been received by the Corporation
upon the issue of the Convertible Securities with respect to
which such Options were actually exercised;
(D) no readjustment pursuant to clauses
(B) or (C) above shall have the effect of increasing the Conversion
Price to an amount which exceeds the lower of (i) the Conversion
Price on the original adjustment date, or (ii) the Conversion Price
that would have resulted from any issuance of Additional Shares of
Common between the original adjustment date and such readjustment
date; and
(E) in the case of an Option which
expires by its terms not more than 30 days after the date of issue
thereof, no adjustment of the Conversion Price shall be made until
the expiration or exercise of such Option, whereupon such adjust
ment shall be made in the same manner provided in clause (C) above.
(iv) Adjustment of Conversion Price Upon Issuance
of Additional Shares of Common. In the event this Corporation
shall issue Additional Shares of Common (including Additional
Shares of Common deemed to be issued pursuant to Section 3(d)(iii))
without consideration or for a consideration per share less than
the Conversion Price in effect on the date of and immediately prior
to such issue, then and in such event, such Conversion Price shall
be reduced, concurrently with such issue, to a price (calculated to
the nearest cent) determined by multiplying such Conversion Price
theretofore in effect by a fraction, the numerator of which shall
be the number of shares of Common Stock outstanding immediately
prior to such issue plus the number of shares of Common Stock which
the aggregate consideration received by the Corporation for the
total number of Additional Shares of Common so issued would purchase
at such Conversion Price; and the denominator of which shall
be the number of shares of Common Stock outstanding immediately
prior to such issue plus the number of such Additional Shares of
Common so issued; provided further that, for the purposes of this
Section 3(d)(iv), all shares of Common Stock issuable upon
exercise, conversion or exchange of outstanding Options or
Convertible Securities, as the case may be, shall be deemed to be
outstanding, and immediately after any Additional Shares of Common
are deemed issued pursuant to Section 3(d)(iii), such Additional
Shares of Common shall be deemed to be outstanding.
(v) Determination of Consideration. For
purposes of this Section 3(d), the consideration received by the
Corporation for the issue of any Additional Shares of Common shall
be computed as follows:
(A) Cash and Property. Such consideration shall:
(a) insofar as it consists of cash,
be computed at the aggregate amount of cash received by the Corporation
excluding amounts paid or payable for accrued interest or
accrued dividends;
(b) insofar as it consists of property
other than cash, be computed at the fair value thereof at the
time of such issue, as determined in good faith by the Board; and
(c) in the event Additional Shares
of Common are issued together with other shares or securities or
other assets of the Corporation for consideration which covers
both, be the proportion of such consideration so received, computed
as provided in clauses (a) and (b) above, as determined in good
faith by the Board.
(2) Options and Convertible Securities.
The consideration per share received by the Corporation for
Additional Shares of Common deemed to have been issued pursuant
to Section 3(d)(iii), relating to Options and Convertible
Securities, shall be determined by dividing
(x) the total amount, if any,
received or receivable by the Corporation as consideration for the
issue of such Options or Convertible Securities, plus the minimum
aggregate amount of additional consideration payable to the Corporation
upon the exercise of such Options or the conversion or
exchange of such Convertible Securities, or in the case of Options
for Convertible Securities, the exercise of such Options for
Convertible Securities and the conversion or exchange of such
Convertible Securities by
(y) the maximum number of shares of
Common Stock issuable upon the exercise of such Options or the
conversion or exchange of such Convertible Securities, as determined
in Section 3(d)(iii) hereof.
(vi) Adjustments for Subdivisions, Stock Dividends,
Combinations or Consolidations of Common Stock. In the event the
Corporation effects a subdivision or combination of its outstanding
shares of Common Stock into a greater or smaller number of shares
without a proportionate and corresponding subdivision or combination
of its outstanding shares of Preferred Stock, then and in each
such event the Conversion Price shall be increased or decreased
proportionally.
(vii) Adjustments for Other Dividends and
Distributions. In the event the Corporation at any time or from
time to time makes, or fixes a record date for the determination of
holders of Common Stock entitled to receive, any distribution
payable in securities of the Corporation other than shares of
Common Stock and other than as otherwise adjusted in this Section 3,
then and in each such event provision shall be made so that
the holders of Preferred Stock shall receive upon conversion
thereof, in addition to the number of shares of Common Stock
receivable thereupon, the amount of securities of the Corporation
which they would have received had their shares of Preferred Stock
been converted into Common 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, subject to all
other adjustments called for during such period under this Sec
tion 3 with respect to the rights of the holders of the Preferred
Stock.
(viii) Adjustments for Reclassification, Exchange
and Substitution. If the Common Stock issuable upon conversion of
the Preferred Stock shall be changed into the same or a different
number of shares of any other class or classes of stock, whether by
capital reorganization, reclassification or otherwise (other than
in an event provided for in Section 3(d) above), the Conversion
Price then in effect shall, concurrently with the effectiveness of
such reorganization or reclassification, be proportionately
adjusted such that the Preferred Stock shall be convertible into,
in lieu of the number of shares of Common Stock which the holders
would otherwise have been entitled to receive, a number of shares
of such other class or classes of stock equivalent to the number of
shares of Common Stock that would have been subject to receipt by
the holders upon conversion of the Preferred Stock immediately
before that change.
(e) No Impairment. The Corporation will not, by amend
ment of its Articles of Incorporation or through any 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 but will at
all times in good faith assist in the carrying out of all the provisions
of this Section 3 and in the taking of all such action as
may be necessary or appropriate in order to protect the Conversion
Rights of the holders of the Preferred Stock against impairment.
(f) Certificate as to Adjustments. Upon the occurrence
of each adjustment or readjustment of the Conversion Price pursuant
to this Section 3, the Corporation at its expense shall promptly
compute such adjustment or readjustment in accordance with the
terms hereof and furnish to each holder of Preferred 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 the written request at any time
of any holder of Preferred Stock, furnish or cause to be furnished
to such holder a like certificate setting forth (i) such adjust
ments and readjustments, (ii) the Conversion Price at the time in
effect, and (iii) the number of shares of Common Stock and the
amount, if any, of other property which at the time would be
received upon the conversion of Preferred Stock.
(g) Notices of Record Date. In the event of any taking
by the corporation of the record of the holders of any class of
securities for the purpose of determining the holders thereof who
are entitled to receive any dividend (other than a cash dividend)
or other distribution, the corporation shall mail to each holder of
Preferred Stock, at least twenty (20) days prior to the date
specified herein, a notice specifying the date on which any such
record is to be taken for the purpose of such dividend or
distribution.
(h) Reservation of Stock. The corporation shall at all
times reserve and keep available out of its authorized but unissued
shares of Common Stock solely for the purpose of effecting the conversion
of the shares of the Preferred Stock such number of its
shares of Common Stock as shall from time to time be sufficient to
effect the conversion of all outstanding shares of Preferred Stock;
and if at any time the number of authorized but unissued shares of
Common Stock shall not be sufficient to effect the conversion of
all the then outstanding shares of the Preferred Stock, the corporation
will take such corporate action as may, in the opinion of
its counsel, be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient
for such purpose. Any reserve of its authorized but unissued
shares of Common Stock established by the corporation in accordance
with this paragraph may not be diminished without the consent of
the holders of a majority of the outstanding Preferred Stock.
(i) No Reissuance of Series A, B or C Preferred. No
share or shares of Series A Preferred, Series B Preferred or Series
C Preferred acquired by the corporation by reason of purchase,
conversion or otherwise shall be reissued, and all such shares
shall be cancelled, retired and eliminated from the shares which
the corporation shall be authorized to issue.
(j) Notices. Any notice required by the provisions of
this Section 3 to be given to the holders of shares of Preferred
Stock shall be deemed given if deposited in the United States mail,
postage prepaid, and addressed to each holder of record at his or
her address appearing on the books of the corporation.
Section 4. Voting Matters. Except as otherwise required by
law, each share of Common Stock issued and outstanding shall have
one vote. Each share of Preferred Stock issued and outstanding
shall have the number of votes equal to the number of shares of
Common Stock into which the Preferred Stock is convertible as
adjusted from time to time pursuant to Section 3 hereof. The
holder of each share of Preferred Stock shall be entitled to notice
of any shareholders' meeting in accordance with the by-laws of the
corporation and shall vote with the holders of the Common Stock and
upon any matter submitted to a vote of shareholders, except those
matters required by law to be submitted to a class vote (in which
case, except as otherwise required by law, the Series A Preferred,
Series B Preferred and Series C Preferred shall vote together as a
class).
Section 5. Residual Rights. All rights accruing to the
outstanding shares of this corporation not expressly provided for
to the contrary herein shall be vested in the Common Stock.
Section 6. Consent for Certain Repurchases of Common Stock
Deemed to be Distributions. Each holder of Preferred Stock shall
be deemed to have consented, for purposes of Section 502, 503 and
506 of the California Corporations Code, to distributions made by
the corporation in connection with the repurchase of shares of
Common Stock issued to or held by employees or consultants upon
termination of their employment or services or pursuant to agreements
providing for the right of said repurchase between the
corporation and such persons.
IV
Section 1. Limitation of Directors' Liability. The liability
of the directors of this corporation for monetary damages shall be
eliminated to the fullest extent permissible under California law.
Section 2. Indemnification of Corporate Agents. This corporation
is authorized to provide for, through bylaw provisions or
through agreements with the agents, or both, the indemnification of
agents (as defined in Section 317 of the California General Corporation Law)
of the corporation in excess of that expressly permitted by said
Section 317 for said agents to the fullest extent
permissible under California law, subject to the limitations set
forth in Section 204 of the California General Corporation Law with
respect to actions for breach of duty to this corporation or its
shareholders.
Section 3. Repeal or Modification. Any repeal or modification
of the foregoing provisions of this Article IV shall not
adversely affect any right of indemnification or limitation of
liability of an agent of this corporation relating to acts or
omissions occurring prior to such repeal or modification."
3. The foregoing amendment and restatement has been duly
approved by the Board of Directors of the corporation.
4. The foregoing amendment has been duly approved by the
holders of the requisite number of shares of the corporation in
accordance with Sections 902 and 903 of the California Corporations
Code. The total number of outstanding shares of each class
entitled to vote with respect to the foregoing amendment and
restatement was 2,656,250 shares of Common Stock, 500,000 shares of
the Series A Preferred Stock and 1,000,000 shares of the Series B
Preferred Stock. The number of shares voting in favor of the
foregoing amendment equaled or exceeded the vote required. The
required vote was a majority of the outstanding shares of Common
Stock and a majority of the outstanding shares of Series A and
Series B Preferred Stock, voting together as a class.
The undersigned 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 Saratoga, California this _____ day of May, 1994.
-----------------------
Fu-Chieh Hsu, President
-----------------------
Wing Yu Leung, Secretary
ADDENDUM
TO
REGISTRATION RIGHTS AGREEMENT, AS AMENDED
THIS ADDENDUM (the "Addendum") to the Amended and Restated
Registration Rights Agreement dated September 30, 1992, as amended
(the "Registration Rights Agreement"), is entered into as of this
13th day of June, 1994, by and among Monolithic Systems Technology,
Inc., a California corporation (the "Company") and the purchasers
of Series C Preferred Stock of the Company (the "Purchasers"). All
capitalized terms used in the Addendum shall have the same meanings
set forth for them in the Registration Rights Agreement, unless
otherwise defined in the Addendum.
RECITALS
WHEREAS, the Company has entered into a Series C Preferred
Stock Purchase Agreement (the "Purchase Agreement") with the
Purchasers, as set forth on the Schedule of Purchasers attached as
Exhibit A to the Purchase Agreement, pursuant to which the Company
shall sell and issue up to 1,100,000 shares of Series C Preferred
Stock (the "Shares") to the Purchasers,
WHEREAS, the Purchase Agreement provides for the grant of
registration rights to the Purchasers on the same terms as the
registration rights granted to the purchasers of Series A and
Series B Preferred Stock of the Company (the "Preferred Holders")
pursuant to the Registration Rights Agreement,
WHEREAS, pursuant to Section 16 of the Registration Rights
Agreement, the Company may grant registration rights to a
prospective holder of securities of the Company on a pari passu
basis with the rights of the Original Purchasers, and
WHEREAS, the Company desires to amend the Agreement to include
the Shares within the definition of "Registrable Securities" and to
make the Purchasers a party to the Agreement by including each
Series C Purchaser in the definition of "Holder",
NOW, THEREFORE, in consideration of the foregoing, the parties
hereto agree as follows:
1. Amendment.
(a) The definition of "Holder" as set forth in Section 1
of the Registration Rights Agreement is hereby amended to include
the Purchasers.
(b) The definition of "Registrable Securities" as set
forth in Section 1 of the Registration Rights Agreement is hereby
amended to include the Shares.
2. Effectiveness. This Addendum in its entirety shall be
effective upon its execution by the Company and the Purchasers.
3. Miscellaneous.
(a) Governing Law. This Addendum shall be governed in
all respects by the internal laws of the State of California.
(b) Counterparts. This Addendum may be executed in one
or more counterparts, each of which shall be deemed an original but
all of which, together, shall constitute one and the same
instrument.
(c) Successors and Assigns. Except as otherwise pro
vided herein, the provisions hereof shall inure to the benefit of,
and be binding upon, the successors, assigns, heirs, executors and
administrators of the parties hereto.
(d) Titles and Subtitles. The titles and subtitles used
in this Addendum are for convenience only and are not to be
considered in construing or interpreting this Addendum.
The foregoing Addendum is hereby executed as of the date first
above written.
COMPANY MONOLITHIC SYSTEMS TECHNOLOGY, INC.
a California Corporation
By: ___________________________
Fu-Chieh Hsu, President
PURCHASERS _______________________________
Print Name of Holder
By: ___________________________
Title: ________________________
DOMESTIC DISTRIBUTOR AGREEMENT
between
INTEGRATED DEVICE TECHNOLOGY, INC.
and
WYLE LABORATORIES, INC., ELECTRONIC MARKETING GROUP
Made as of April 15, 1994, by and between INTEGRATED DEVICE TECHNOLOGY, INC.,
a Delaware Corporation having its principal place of business at 2975 Stender
Way, Santa Clara, California 95054 ("IDT") and WYLE LABORATORIES, INC.,
ELECTRONIC MARKETING GROUP, a California corporation having its principal
place of business at 15370 Barranca Parkway, Irvine, California 92173
("Distributor").
The parties agree as follows:
1. DEFINITIONS.
1.1 Confidential Information:
Information clearly marked as "Confidential" and identifying the
owner on the face thereof.
1.2 Book Distributor Cost:
Distributor's cost as published in the then current IDT distribution
price list.
1.3 Cost:
Unless otherwise defined, the price paid for the Product excluding
taxes, duties, freight, insurance, handling or other fee charge.
1.4 Product:
All items manufactured by IDT and included on IDT's price list in
effect from time to time. "Product" and "IDT Product" have the same
meaning.
1.5 Custom Product:
Items manufactured by IDT which are not listed in the current IDT
price list or are manufactured or altered to comply with a
customer's specifications.
1.6 Territory:
The geographic area and/or specific accounts described on Exhibit A,
attached hereto, as modified from time to time by IDT by written
notice to Distributor.
2. APPOINTMENT.
2.1 IDT appoints Distributor as a nonexclusive distributor of the
Products in the Territory.
3. STAFF, EDI COMMUNICATIONS AND RECORDS.
3.1 Sales Organization:
Distributor shall use its best efforts to promote the sale of IDT
Products in the Territory during the term of this Agreement.
Distributor shall maintain an active and well trained sales
organization and shall participate from time to time in sales
incentive programs sponsored by IDT.
3.2 EDI COMMUNICATIONS:
Distributor and IDT shall establish a program for the exchange of
purchase orders and acknowledgements electronically, and have
executed an Electronic Data Interchange Trading Partner Agreement
("EDI Agreement") for this purpose. A copy of the EDI Agreement
is attached hereto as Exhibit C and incorporated by this reference.
To the extent that there are any inconsistencies between the terms
and conditions of the EDI Agreement and this Agreement, this
Agreement will control.
3.3 Records:
Distributor shall keep current and accurate books and records,
including inventory records, in accordance with generally accepted
accounting principles in effect in the Territory. Such books
and records shall include, with respect to inventories, the date
of purchase and cost (net of freight, taxes, insurance, duties
and credits) of each IDT Product in inventory.
3.4 Inspection:
IDT may, at any time during the term hereof, on not less than 24
hours prior notice, inspect Distributors sales, finance, other
records, physical inventories and count thereof at Distributor's
facilities or in such other places as such records and inventories
may be located.
4. ADVERTISING.
4.1 Promotion:
Distributor shall advertise and promote the sale of IDT Products
through all appropriate means, including tradeshow exhibits,
catalogues and direct mailings, space advertising, educational
meetings and sales aids.
4.2 Authority:
Distributor shall submit to IDT all advertisements and promotions
of IDT Products which utilize any IDT trademark, tradename or
service mark for approval prior to publication. Distributor
and IDT shall cooperate with each other to expedite the review of
each such advertisement or promotion.
4.3 Consent:
IDT consents to Distributor's use of IDT's trademarks, tradename,
and service marks in connection with the authorized promotion of
IDT Products. Distributor shall assign to IDT, upon request, any
and all rights acquired by Distributor by reason of the use,
registration, or association with any trademark, tradename or
service mark of IDT. Distributor shall cooperate with IDT and
shall execute such documents as may be reasonably required to
perfect IDT's interest in such marks in the Territory.
4.4 Literature:
Distributor shall maintain an adequate supply of IDT's Product
literature.
4.5 Cooperative Advertising:
IDT shall pay up to fifty percent (50%) of the cost of Distributor's
advertising or other promotional programs provided:
a. such advertisement or program has been approved by IDT in
writing prior to publication or implementation; and
b. the aggregate amount of all such payments made by IDT to
Distributor does not exceed five-tenths of one percent (0.5%) of
Distributor's net purchases of IDT Products during the prior 12
months.
5. ORDERS.
5.1 Distributor may submit offers to purchase Products from IDT for
resale by submission of a written or electronic purchase order
to IDT setting forth a description of the Product, the unit
price, model code, total price and such other information as IDT
may reasonably require. Distributor shall promptly confirm in
writing all verbal offers submitted to IDT. IDT shall promptly
accept or reject each offer. IDT may accept any offer by delivery
of the Products or by a written acknowledgment setting forth the
essential terms of the sale.
5.2 IDT shall have no obligation to accept any offer by Distributor
to purchase Products from IDT which is consistent with the terms
of this Agreement. In addition, IDT shall have no obligation to
accept offers to purchase Products for resale via EDI which do not
conform to the requirements set forth in Exhibit C.
6. TERMS AND CONDITIONS.
6.1 Except as modified by this Agreement, all sales of Products shall be
subject to IDT's standard terms and conditions of sale in effect
at the time of acceptance of Distributor's offer. A copy of IDT's
current terms and conditions is attached hereto as Exhibit B and
incorporated by this reference.
6.2 In addition to the terms and conditions of this Agreement, IDT
may from time to time publish Distributor Policies and Procedures.
IDT will provide Distributor with thirty days written notice before
the implementation or modification of any Distributor Policies
and Procedures. IDT will not be obligated to undertake any action
or make any sale that is inconsistent with previously published
Distributor Policies and Procedures. To the extent that there are
any inconsistencies between the Distributor Policies and Procedure
and this Agreement, this Agreement will control.
6.3 The relationship between the parties is that of independent
contractors. In no event shall either party undertake any
obligation on behalf of the other party nor act as an Agent of
the other party without obtaining prior written consent.
7. CUSTOM PRODUCTS.
7.1 In additions to the other terms and conditions set forth in this
Agreement, all sales of Custom Products to Distributor shall be
subject to the following additional restrictions:
a. Distributor shall be liable for 100% of the order within ninety
(90) days prior to the scheduled shipping date.
b. There shall be no returns for these products other than warranty
returns as defined in Exhibit B, item 4.
8. SINGLE SOURCE.
Distributor shall not, without IDT's prior written consent, purchase
Products from any other person, including without limitation,
another authorized IDT distributor.
9. PRICE.
9.1 The purchase price of Products shall be IDT's price in effect at
the time of shipment by IDT of Distributor's order, or such other
price as may be agreed to in writing.
9.2 The purchase price of Products is FOB origin. Distributor shall
pay all costs of delivery, taxes, duties, freight, insurance and
handling.
9.3 In the event IDT shall reduce the published purchase price for
any Product in Distributor's inventory, for which Distributor paid
Book Distributor Cost, Distributor may apply to IDT for credit in
an amount equal to the quantity of such Product in Distributor's
inventory on the effective date of the price reduction, multiplied
by the amount of the price reduction. IDT shall calculate the
amount of the price reduction by comparing the new Book Distributor
Cost with the immediately preceding Book Distributor Cost.
Any such credit may only be applied to purchase Products from IDT
hereunder.
10. PAYMENT TERMS.
10.1 Terms of payment include a two percent (2%) discount if the balance
due is paid in full within ten (10) days of issuance of the invoice,
and the net balance is due thirty (30) days after issuance of the
invoice. Invoices shall be dated the date of shipment (delivery
FOB origin). Distributor shall make all payments to IDT in U.S.
Dollars.
10.2 Notwithstanding the foregoing, IDT may at any time amend or revoke
the amount or duration of credit allowed to Distributor,including
requiring full or partial payment in advance of,or after, shipment.
11. INVENTORY.
11.1 Adjustments:
Distributor may, by written notice to IDT and compliance with such
reasonable procedures as IDT may from time to time establish,
exchange a portion of Distributor's slow moving Products,purchased
at Distributor's Book Cost, in Distributor's inventory for other
Products of Distributor's choice, provided, however, that the
purchase price of such slow moving Products shall not exceed an
amount equal to five percent (5%) of IDT's current Book Distributor
Cost for all Products purchased from IDT at Book Distributor
Cost during the prior six (6) months. Distributor shall not
exercise this right more frequently than twice in any calendar year.
In no event shall Distributor have any right to return Products for
cash or credit. IDT shall have no obligation to accept the
return of any Products hereunder unless the returned Products are
new and unused, in original packing, free of damage, and pass
inspection upon receipt by IDT.
11.2 Discontinued Products:
IDT shall notify Distributor thirty (30) days in advance in the
event IDT shall elect to discontinue the sale of any Product.
Distributor may return to IDT, in unopened shipping tubes and
in multiples of the Factory Order Increments, all or any portion
of such discontinued Product in Distributor's inventory provided
Distributor complies, within thirty (30) days of the date of receipt
of such notice, with the procedures set forth therein.
Distributor may only return, and IDT shall only be obligated to
accept, Discontinued Product which was purchased at Book Distributor
Cost, was properly accounted for in Distributor's reports to IDT
and is new, unused and free of damage or defect may be returned
hereunder. IDT shall value the Discontinued Product at the lesser
of either the Book Distributor Cost or original purchase price.
New Product shall be valued at the purchase price in effect at the
time of receipt of the Discontinued Product.
11.3 Recall:
IDT may purchase any Product in Distributor's inventory at
Distributor's cost.
11.4 On Termination:
Upon termination of this Agreement, Distributor may apply to IDT for
the purchase by IDT of such portion of Distributor's inventory of
Products as was purchased at Book Distributor Cost and which meets
the following additional requirements:
a. such Product was properly accounted for during the term of the
Agreement,
b. such Product is new, unused and free of damage or defect in
unopened tubes and in multiples of the Factory Order Increment,
and
c. such Product is current Product listed on IDT's most current
price list for which no notice of discontinuation has been issued.
IDT shall have no obligation hereunder unless and until such
application is accepted in writing by IDT. All Product returned
hereunder shall be subject to inspection and test by IDT. In
the event IDT elects to purchase any portion of Distributor's
inventory, such inventory must be delivered to IDT not more than
thirty (30) days from the effective date of termination of this
Agreement.
11.5 If this Agreement is terminated for convenience by IDT and IDT
elects to purchase Distributor's Inventory, then the purchase
price for the Product returned shall be the lesser of either
the current Book Distributor Cost or the actual price paid.
If this Agreement is terminated by IDT for cause or by Distributor,
and IDT elects to purchase Distributor's Inventory, then the
purchase price of Product returned shall be Distributor's cost
less fifteen percent (15%).
12. TERM AND TERMINATION.
12.1 Term:
The term of this Agreement shall commence on the date of this
Agreement and terminate on March 31, 1995. Upon thirty (30) days
written notice, either party may request renewal of the Agreement
for an additional year. Paragraphs 11, 13, 14, 18, and 22 shall
survive the termination of this Agreement.
12.2 Termination for Convenience:
Either party may terminate this Agreement on thirty days prior
written notice. In the event IDT shall elect to terminate this
Agreement for convenience, Distributor shall promptly, and in no
event more than thirty (30) days, notify IDT whether and to what
extent it desires to cancel or otherwise amend any orders for
Product then outstanding. IDT shall have no obligation to deliver
any Product to Distributor after the termination date if the
termination of Distributor was either at Distributor's election
or due to the insolvency of Distributor, provided, however, that
IDT will deliver such Product to Distributor as Distributor is
obligated by contract to deliver to third persons within 90 days
of the termination date. IDT may condition the delivery of any
Product on adequate assurances of payment, including, without
limitation, cash in advance or the posting of an irrevocable
letter of credit in the full amount of the purchase price and any
indebtedness then outstanding.
12.3 Termination for Cause:
Either party may terminate this Agreement on written notice in
the event of the insolvency or a material breach by the other.
In the case of material breach, the defaulting party shall have
thirty (30) days to cure the breach. If the defaulting party
provides the other party with written confirmation that the material
breach has been cured within the thirty days period, then the
Agreement shall continue to be in effect and to govern the
relationship of the parties.
13. CONFIDENTIALITY.
13.1 Neither party shall disclose Confidential Information to any third
party without the prior written consent of the disclosing party.
13.2 A party receiving Confidential Information shall use such
information solely for purposes consistent with the distribution
of the Products hereunder and for no other purpose.
13.3 Neither party shall be under any obligation with respect to
Confidential Information which is available to the general
public through no fault of such party, was known by such party
prior to disclosure, was disclosed to a third party without breach
of this Agreement, or was independently developed without use of
the Confidential Information.
All information of a business or technical nature imparted to
or learned by Distributor during the term of this Agreement with
respect to the business of IDT, including customer names and
information, shall be deemed to be confidential and shall be used
by Distributor only in connection with the distribution and sale
of the Products and shall not be disclosed by Distributor to anyone
outside the employ of distributor without IDT's written
authorization.
14. ASSIGNMENT.
14.1 Distributor shall not, by operation of law or otherwise assign this
Agreement or any right accruing to it hereunder without the prior
written consent of IDT. Except for the assignment of accounts
receivable for collection, IDT shall not, by operation of law or
otherwise assign this Agreement or any right accruing to it
hereunder without the prior written consent of Distributor.
14.2 Either party may assign this Agreement to any company a majority of
whose shares outstanding entitled to vote for directors is
held by the assigning company or by a wholly owned subsidiary of
the assigning company.
15. NOTICES.
Any notice given hereunder shall be in writing, in the English
language, and shall be effective upon delivery to a party at the
address set forth herein or at such other address as may be
designated in writing from time to time by a party hereto.
16. COMMERCIAL PAYMENTS
Both parties agree that they will not, in connection with this
Agreement, directly or indirectly offer, pay, or authorize
payment of any monies or things of value to any government official
for the purpose of influencing any act or decision of such
official in order to assist IDT or Distributor in obtaining business.
17. GOVERNING LAW, JURISDICTION.
17.1 This Agreement is made in and shall be construed in accordance
with the laws of the State of California, U.S.A.
17.2 The parties hereto consent to the jurisdiction of all federal
and state courts in California, U.S.A. Any action concerning
this Agreement shall be brought in the United States District Court
for the Northern District of California in San Jose, California or
the Santa Clara County Superior or Municipal Court.
18. WAIVER, AMENDMENT.
No waiver, amendment, or modification of any provision of this
Agreement shall be effective unless in writing and signed by
the party against whom such waiver, amendment, or modification is
sought to be enforced. No failure or delay by either party in
exercising any right, power, or remedy, except as expressly
provided herein, shall operate as a waiver of any such right,
power, or remedy.
19. SEVERABILITY.
If any provision of this Agreement shall be held invalid, the
remaining provisions of this Agreement shall remain in full
force and effect.
20. ENTIRE AGREEMENT
This Agreement and the Exhibits hereto constitute the entire
Agreement between the parties concerning the subject matter hereof.
21. LIMITATION OF LIABILITY.
21.1 IN NO EVENT SHALL IDT BE LIABLE TO DISTRIBUTOR FOR INCIDENTAL,
CONSEQUENTIAL, SPECIAL, OR INDIRECT DAMAGES, INCLUDING WITHOUT
LIMITATION, LOST PROFITS, EVEN IF IDT HAS HAD NOTICE OF THE
POSSIBILITY OF SUCH DAMAGES.
21.2 IDT agrees to provide Distributor with a certificate of insurance
on any and all product liability insurance policies it may have
in effect from time to time with respect to the Products.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
Integrated Device Technology, Inc. Wyle Laboratories, Inc.
Electronic Marketing Group
By: _______________________ By: _______________________
Title: ______________________ Title: ______________________
EXHIBIT A
To Distributor Agreement between IDT and Wyle Laboratories, Inc.,
Electronic Marketing Group. The date of this Exhibit A is April 15, 1994.
1. TERRITORY:
The Territory shall be California, Oregon, Washington, Idaho,
Nevada, Arizona, New Mexico, Utah, Colorado, Wyoming, Montana.
Exhibit B
INTEGRATED DEVICE TECHNOLOGY, INC.
TERMS AND CONDITIONS OF SALE
1. Offer and Acceptance. These terms and conditions shall apply to all
contracts between Buyer and Integrated Device Technology, Inc. ("Seller").
Any purchase order or other document which purportedly modifies,
supersedes or otherwise alters these terms and conditions shall be of
no force or effect whatsoever.
2. Price and Payment. Prices are in U.S. dollars. Transportation and all
sales, property, excise, duties, and other federal, state and local taxes
(other than those based on IDT's net income) shall be paid by Buyer.
All invoices are payable within thirty (30) days of date of invoice,
provided, however, IDT may require full or partial payment in advance
of delivery. There is no discount for payment within such period.
3. Delivery. Delivery shall be FOB origin. Neither party shall not be
liable for any loss, expense, or damage caused by delays or failures in
performance resulting from acts of God, or other cause beyond its reasonable
control.
4. Limited Warranty. IDT warrants that all products, when delivered,
shall conform to IDT's specifications and be free of defects in manufacture
and workmanship. Buyer is authorized to pass this warranty through to
Buyer's customers and to end users. The warranty period as stated in
Exhibit B shall begin to run with respect to any end user upon delivery of
the product to the end user. Provided Buyer or its customer notifies IDT
in writing within 90 days of the date of delivery of printed circuit modules
or boards, or within one year of the date of delivery of integrated circuits
or ceramic modules, to a common carrier at the point of origin of such
defective or nonconforming product, and promptly returns such product to
IDT in accordance with IDT's instructions, freight prepaid, IDT shall,
at IDT's option and expense, either repair, replace, or refund the purchase
price of any nonconforming or defective product. IDT shall have no
obligation with respect to any damage arising from misuse, neglect,
tampering, unauthorized or improper use or installation, disassembly,
repair, alteration, or accident. Notwithstanding the foregoing, if any
product is designated developmental or experimental, such product
shall be purchased "as is, with all faults" and the remedy granted above
shall be of no force or effect whatsoever.
IDT DISCLAIMS THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS
FOR A PARTICULAR PURPOSE. EXCEPT FOR THE STATUTORY WARRANTY OF
TITLE, THERE ARE NO OTHER EXPRESS OR IMPLIED WARRANTIES.
5. Patent Indemnity. IDT shall defend, at its expense, any action brought
against Buyer or its customers which alleges that an IDT product
infringes a Unites States patent, United States mask work right, or United
States copyright, provided that Buyer promptly notifies IDT in writing of
any claim, gives IDT sole control of the defense and settlement thereof,
and provides all reasonable assistance in connection therewith. If any
product is finally adjudged to so infringe, IDT shall, at its option,
(a) procure for Buyer the right to continue using the product; (b) modify
or replace the product so there is no infringement; or (c) refund the
purchase price paid upon return of the product. IDT shall have no liability
regarding any claim arising out of the use of the product in combination
with other goods if the infringement would not occur but for such combination.
Buyer shall defend, indemnify, and hold IDT harmless from any and all
expense, damage, cost or losses resulting from any suit or proceeding
brought for infringement of patents, maskworks, copyrights, or trademarks
arising from compliance with Buyer's design, specifications or instructions.
6. Limitation of Liability. THE REMEDIES SET FORTH ABOVE CONSTITUTE THE
EXCLUSIVE REMEDY OF BUYER WHETHER ARISING IN CONTRACT, TORT, OR
OTHER LEGAL THEORY. IN NO EVENT SHALL IDT BE LIABLE TO BUYER FOR
INJURY OR DAMAGE TO ANY PERSON OR PROPERTY NOR FOR LOSS OF PROFITS,
EXCESS COSTS, OR INCIDENTAL, CONSEQUENTIAL, SPECIAL OR INDIRECT
DAMAGES EVEN IF IDT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES. IDT'S LIABILITY HEREUNDER SHALL NOT EXCEED THE PURCHASE
PRICE PAID BY BUYER FOR THE PRODUCT. THIS LIMITATION OF DAMAGES SHALL
NOT BE AFFECTED BY ANY FAILURE OF BUYER'S REMEDIES UNDER THE EXPRESS
WARRANTY SET FORTH ABOVE.
7. Rights in Data. Technical information and software, if any, are subject
to the U.S. Government's Restricted Rights Legend, and use, duplication,
or disclosure by the Government is subject to restrictions set forth in
subparagraph (c)(1) (ii) of the Rights in Technical Data and Computer
Software clause at 52.227-7013 of the Department of Defense Federal
Acquisition Regulations.
All software is copyrighted. All maskwork is registered. Buyer shall not
copy, reverse engineer or decompile or disassemble any product or software
without IDT's express written consent.
8. Export Controls. Buyer shall not, without the prior written approval,
if required, of the Office of Export Administration of the U.S. Department
of Commerce, Washington D.C. 20230, transmit, or directly or indirectly,
any product to Afghanistan, Namibia, The Republic of South Africa, the
People's Republic of China or to any Group Q, S, W, Y or Z country specified
in Supplement No. 1 to section 370 of the Department of Commerce Export
Administration Regulations.
9. Choice of Law. This Agreement is made in and shall be construed in
accordance with the laws of the state of California.
10. Entire Agreement. This Agreement sets forth the entire agreement of
the parties with respect to the subject matter hereof. This Agreement may
only be modified by a written instrument signed by each party hereto.
11. Waiver. No waiver of any right or default hereunder shall constitute a
waiver of the right or default in any subsequent exercise thereof.
12. Severability. If any provision of these terms and conditions shall be
ruled unenforceable, then the remainder shall be enforced to the extent
permissible.
Exhibit C
INTEGRATED DEVICE TECHNOLOGY INC.
EDI TRADING PARTNER AGREEMENT
(Rev. 3/94 -- No Software)
This Agreement is made by and between Integrated Device Technology, Inc.
("IDT") with a principle place of business at 2975 Stender Way, Santa
Clara, California 95054 and the EDI Participant listed and signing this
Agreement on the attached page. In consideration of the mutual
covenants of the Electronic Data Interchange (EDI) relationship,
the parties agree as follows:
1. PURPOSE. IDT and EDI Participant agree, under terms and conditions set
forth herein, to establish a system whereby communication and/or
transactions between IDT and EDI Participant can be accomplished through
electronics means, rather than writing on a paper.
2. EDI OPERATIONS. Technical and operational details necessary to implement
the EDI relationship contemplated herein, such as defining transaction
standards and sets, the time frame for implementation of EDI
communications and the selection of third party networks, shall be
mutually agreed upon and followed by the parties in good faith using
reasonable efforts. Appendix A sets forth the specific categories of
transaction to be communicated electronically ("Transaction Sets") and
the control parameters for those Transaction Sets. The communication of
any transaction set other than those provided for in Exhibit A shall
have no force or effect between parties.
3. GENERAL TERMS AND CONDITIONS FOR PURCHASES AND SALES. This Agreement
does not express or imply any commitment to purchase or sell goods or
services. The terms and conditions of the Domestic Distributor
Agreement between the parties will control in all EDI transactions
between the parties.
4. EDI TRANSACTIONS ENFORCEABILITY. EDI Participants agree that all rights,
duties, and obligations which would accrue upon receipt to data in the
form of paper documentation shall be accrue upon receipt of the data
in electronic form via EDI. Further, they agree: (1) that neither
party shall contest the admissibility of paper documentation copies of
electronically transmitted data under the business records exception to
the hearsay rule, or the best evidence rule, or the Statute of Frauds,
on the basis that the data were not originated or maintained in
documentary form, or that the data do not constitute a signed writing by
a party intending to be bound thereby; (2) that company identifiers
such as DUNS numbers in data transmission fields of network access
identification codes shall constitute prima facie evidence of which EDI
participant sent a transmission; and (3) that copies of the transmitted
and received data, mechanically or electronically stored by either party
shall constitute evidence of the intended contents of the orders,
acknowledgement, transactions, and other information covered by this
Agreement, if they are machine readable and capable of reproduction
into printed human readable form of paper. Each party is obligated
to retain records as prescribed by law or common business practice.
5. THIRD PARTY PUBLIC DATA NETWORK (PDN) USE. Unless otherwise agreed,
each party is responsible for establishing its own agreements with
third party networks. Unless otherwise agreed, connect time and any
other charges of the third party network shall be paid for by the party
initiating each communication.
Either party may change their third party network at any time for
convenience without liability therefor, upon thirty (30) days prior
written notice to the other party at the address on the attached page
hereof. However, such termination shall not relieve either party of
any contractual obligations incurred prior to termination.
The third party providers of the parties are:
IDT's Third Party Provider EDI Participant's Third Party Provider
Harbinger EDI Service
1800 Century Plaza, Ste. 340 --------------------------------------
Atlanta, GA 30345 --------------------------------------
6. TRANSMISSION REQUIREMENT. Each party shall have in place reasonable
controls to ensure timely handling of EDI transmissions and to promptly
contact the sending agent for corrective action in the event of a
transmission error, such as an unintelligible or garbled transmission.
Exhibit A contains specific Transmission Requirements to be followed by both
parties. In addition, the following general criteria shall apply:
a. PROPER RECEIPT. Transmissions shall not be deemed to have been
properly received, and no transmission shall give rise to any obligation,
until accessible to the receiving party at such party's receipt computer.
b. VERIFICATION. Upon proper receipt of any transmission, the receiving
party shall promptly and properly transmit a functional acknowledgement
in return for all transmissions. A functional acknowledgement shall
constitute conclusive evidence a transmission has been properly received.
If a document is in error or partial received, the functional
acknowledgement is to notify of rejection of transmission of the select
document.
c. ACCEPTANCE. Acceptance of an EDI transmission which has been
properly received shall not give rise to any obligation unless and until
the party initially transmitting such document has properly received in
return an acceptance document without change (as specified in Appendix A).
Any acceptance transmission with changes will be considered a counter offer
by IDT and IDT will require another issue of offer until the offer from IDT
is accepted without changes by supplier.
7. SECURITY DUTIES. Each party is solely responsible for the selection,
implementation, and maintenance of appropriate security products, tools,
tests and procedures sufficient to meet its requirements for protecting
its programs and data from improper access, loss, alteration, or
destruction.
Each party agrees to treat as proprietary and not to provide or otherwise
make available the whole or any portion of the other party's network
procedures, passwords, or computer telephone numbers to any person
other than to EDI Participant's employees who need to know, without written
consent from the other party. Each party agrees that its access to the
other party's network, if any, will be limited and agrees not to try and
exceed the scope of authorized access. If the scope is exceeded by a party,
it will promptly notify the other party. Each party agrees that it will
take appropriate actions by instructions, agreement, or otherwise with its
employees who are permitted access to the aforementioned items to notify
them of that party's and their individual obligations under this Agreement.
Each party agrees that any other network procedure information and data
transmitted to the other party shall not be considered as proprietary
information unless a separate nondisclosure agreement or clause covering
said information in the then-current general terms and conditions is in
place between the parties.
8. TERM AND TERMINATION. The term of this Agreement shall begin on the date
of acceptance by IDT and continue for the duration of the Domestic
Distributor Agreement between the parties. Either party may terminate this
EDI Agreement at any time for conveniences without liability therefore,
upon ten (10) days prior written notice to the other party at the address
on the attached page hereof. However, such termination shall not relieve
either party of any contractual obligations incurred prior to termination.
9. WARRANTY. IDT GRANTS NO CONDITIONS OR WARRANTIES, EITHER
EXPRESS OR IMPLIED, FOR THE EDI SERVICES PROVIDED, INCLUDING ALL
IMPLIED CONDITIONS OR WARRANTIES OF MERCHANTABILITY OR FITNESS FOR
A PARTICULAR PURPOSE.
10. REMEDIES AND DAMAGE LIMITATION. NEITHER PARTY SHALL BE
LIABLE FOR ANY LOSS OF PROFITS, LOSS OF USE, LOSS OF INFORMATION,
INTERRUPTION OF BUSINESS, OR INDIRECT, SPECIAL, INCIDENTAL, OR
CONSEQUENTIAL DAMAGES OF ANY KIND IN CONNECTION WITH OR ARISING
OUT OF THIS AGREEMENT WHETHER ALLEGED AS A BREACH OF CONTRACT OR
TORTUOUS CONDUCT, EVEN IF THE PARTIES ARE ADVISED OF THE POSSIBILITY
OF SUCH DAMAGES.
11. LIMITATION OF ACTIONS. All legal actions, however asserted, shall be
commenced within one year from the date the cause of action arises.
12. FORCE MAJEURE. Neither party shall be liable for any failure to perform
its obligations hereunder where such failure results from any act of God
or other cause beyond such party's reasonable control, including without
limitation, any mechanical, electronic or communications failure which
prevents electronic transmission or receipt of data.
13. APPLICABLE LAW. The validity, performance and construction of this
Agreement will be governed by the laws of the State of California, U.S.A.
13. ASSIGNMENTS. This Agreement shall not be assigned or transferred by
either party without securing the prior written consent of the other party.
15. RELEASE OF INFORMATION. Neither party shall, without securing the prior
written consent of the other party, publicly announce the existence of
this Agreement, any EDI transactions or IDT network access, of advertise
or release any publicity in regard thereto. This provision shall survive
expiration of termination of this Agreement.
16. TECHNICAL CONTACTS. Each party shall designate a primary technical
contact to coordinate the establishment and operation of EDI communication.
Those individuals are:
Company EDI Contact Name, Address and Phone
IDT EDI Contact Name, Address and Phone
Peggy Connors, 2975 Stender Way, Santa Clara, CA 95054 (408) 492-8640
EDI Participant: IDT:
Name: Name:
Signature: Signature:
Title: Title:
Date: Date:
IDT EDI TRADING PARTNER AGREEMENT - EXHIBIT A
1.0 Transaction Sets.
All Transactions Sets contemplated by this Agreement shall be transmitted
and formatted in accordance with the American National Standard Institute
Business Data Interchange (ANSI X12 ) Standard, as reflected in the
number, version and date column set forth below beside each Transaction
Set. This also includes the data dictionary, segment dictionary,
and transmission controls published as X12 standards.
1.1 Transaction Sets to be transmitted by IDT to Provider.
Communication Number X12 Version
Purchase Order Acknowledgement 855 002002
Change Order Acknowledgement 865 002002
Functional Acknowledgement 997 002002
1.2 Transaction Sets to be transmitted from Provider to IDT
Communication Number X12 Version
Purchase Order 850 002002
Change Order 860 002002
Functional Acknowledgement 997 002002
2.0 Transmission Requirements.
For each Transaction Set, the Header Control Number Data Element must
have an identical corresponding value in the Trailer Control Number
Data Element for all control Segments as follows:
2.1 The value for the Interchange Control Number contained in Data
Element ISA13 for a transmission must equal the value for Data Element
IEAO2 that is contained in the transmission.
2.2 The value for the Data Interchange Control Number contained in Data
Element GS06 must equal the value for Data Element GE02 that is contained
in that Functional Group.
2.3 The value for the Transaction Set Control Number contained in Data
Element ST02 for a Transaction Set must equal the value for Data Element
SE02 contained in that Transaction Set.
3.0 Additional Requirements
In addition, all Transactions Sets contemplated by this Agreement shall
meet the following requirements:
3.1. The actual quantity of Functional Groups received within the
transmission must equal the quantity the trading partner has identified
as being included, as contained in the IEA01 Data Element;
3.2. The actual quantity of Transaction Sets received with the
transmission must equal the quantity the trading partner has identified
as being included, as contained in the GE01 Data Element;
3.3. The actual quantity of Segments included within each Transaction Set
must equal the quantity the trading partner has identified as being
included, as contained in the SE01 field;
3.4 The actual quantity of Line Items included within each Transaction
Set must equal the quantity the trading partner has identified as being
included, as contained in the CTT01 field; and
3.5 The Hash Totals contained in the CTT02 field must equal the sum of
values as defined in each Transaction Set.
LEASE EXTENSION AND MODIFICATION AGREEMENT
This Lease Extension and Modification Agreement is made and entered into
as of September 1, 1994, by and between Baccarat Silicon, Inc., ("Baccarat"),
a California corporation,and Integrated Device Technology, Inc. ("IDT"),
a Delaware corporation.
RECITALS
A. By lease dated June 28, 1985 (the "Lease"), Carl E. Berg & Clyde J. Berg
, dba Berg & Berg Developers, dba Berg & Berg Industrial Developers,
("Berg") leased to IDT the property at 1566 Moffett Street, Salinas,
California (the "Premises").
B. Berg and IDT entered into an Addendum to Lease dated September, 1985.
C. Berg assigned all of its right, title, and interest in and to the
Premises and the Lease to Baccarat Silicon, Inc. ("Baccarat").
D. IDT and Baccarat desire to modify the terms of the Lease and to extend
the term of the Lease to June 30, 2005.
The parties agree as follows:
1. Term. The term of the Lease is extended until June 30, 2005.
2. Rent. IDT shall pay to Baccarat as rent for the Premises during the
extended Lease term, a monthly rent payable in advance on the first
day of each calendar month as follows:
July 1, 1995 - December 31, 1997 $73,900
January 1, 1998 - June 30, 2000 $76,500
July 1, 2000 - December 31, 2002 $78,000
January 1, 2003 - June 30, 2005 $80,500
3. First Right of Offer. The first paragraph of Paragraph 33 of the
Addendum to Lease is deleted and replaced as follows:
"Prior to Baccarat making any offer to sell the Premises or any part
thereof, Baccarat shall give IDT written notice of such offer which
shall include the price and terms of sale and a statement that Baccarat
is willing to sell at that price and on those terms of sale. IDT shall
have the option, which must be exercised by written notice within thirty
(30) days from the date of Baccarat's notice, to agree to purchase
the Premises at the price and on the terms specified in the notice
from Baccarat to IDT. If IDT fails to exercise its option within the
30 day period, Baccarat shall have 180 days from the date of Baccarat's
notice to sell at the price and upon the terms of sale specified
in the notice to IDT.
"If, within 180 days of Baccarat's notice to IDT, Baccarat wants to
sell the Premises to a third party on terms more favorable to the
third party than the terms set forth in Baccarat's notice to IDT, then
Baccarat must first re-offer the Premises to IDT on the same terms
and conditions offered to the third party ("Baccarat's Second Notice").
IDT shall have five (5) business days from IDT's receipt of Baccarat's
Second Notice to elect to buy the Premises. If IDT does not accept all
terms and conditions in writing within said five days, then Baccarat may
sell the Premises to the third party on terms and conditions not more
favorable than those set forth on Baccarat's Second Notice."
4. Options to Extend. Paragraph 34 of the Addendum to Lease is deleted
in its entirety and replaced as follows:
"IDT shall have two options to extend the term of this Lease for
consecutive terms of five (5) years each, commencing on July 1, 2005,
and July 1, 2010, respectively. Each option shall be exercisable by
written notice to Baccarat at least 180 days prior to the expiration
of this Lease or applicable extension hereof.
5. Option Term Rental. The last sentence of the first paragraph of
Paragraph 35 of the Lease shall read, "In no event shall the fair
market rent be less than $73,900 for the option periods specified
herein."
6. Purchase Option. Baccarat grants to IDT an option to purchase the
Premises. Such option shall be exercisable by delivery not earlier
than July 1, 2000 nor later than January 1, 2001 to Baccarat of a
written notice of purchase. The purchase price shall be $8,509,090.
The purchase of the Premises shall be consummated as a tax free
exchange of IDT stock and Baccarat stock according to terms and
conditions acceptable to Baccarat and IDT.
7. Ratification of Lease. Except as modified herein, the Lease as
modified by the Addendum to Lease, is hereby ratified, approved and
confirmed.
IN WITNESS WHEREOF, the parties have signed this Lease Extension and
Modification Agreement.
BACCARAT SILICON, INC., INTEGRATED DEVICE TECHNOLOGY, INC.
By: _____________________ By:________________________
Carl E. Berg Leonard C. Perham
Title: President Title: Chief Executive Officer
Date:_______________________ Date:______________________
INTEGRATED DEVICE TECHNOLOGY, INC.
1994 STOCK OPTION PLAN
As Adopted May 3, 1994
1. PURPOSE. The purpose of the Plan is to provide incentives
to attract, retain and motivate eligible persons whose present and potential
contributions are important to the success of the Company, its Parent,
Subsidiaries and Affiliates, by offering them an opportunity to participate
in the Company's future performance through awards of stock options.
Capitalized terms not defined in the text are defined in Section 19.
2. SHARES SUBJECT TO THE PLAN.
2.1 Number of Shares Available. Subject to Sections 2.2
and 14, the total number of Shares reserved and available for grant and
issuance pursuant to Awards under the Plan shall be One Million Six Hundred
Twenty-Five Thousand (1,625,000) Shares. Shares issuable upon exercise of
stock options granted pursuant to the Company's 1985 Incentive and
Nonqualified Stock Option Plan (the "Prior Plan") that expire or become
unexercisable for any reason without having been exercised in full, shall no
longer be available for exercise under the Prior Plan, but shall be available
for distribution under this Plan (not to exceed Five Million (5,000,000)
Shares). Subject to Sections 2.2 and 14, Shares shall again be available
for grant and issuance in connection with future Awards under the Plan if
such Shares cease to be subject to an Award.
2.2 Adjustment of Shares. In the event that the number
of outstanding Shares is changed by a stock dividend, recapitalization, stock
split, reverse stock split, subdivision, combination, reclassification or
similar change in the capital structure of the Company without consideration,
or by a Corporate Transaction (as defined in Section 14.1) then, unless such
change results in the termination of all outstanding Awards as a result of
the Corporate Transaction, (a) the number of Shares reserved for issuance
under the Plan and (b) the Exercise Prices of and number of Shares subject
to outstanding Awards shall be proportionately adjusted, subject to any
required action by the Board or the stockholders of the Company and
compliance with applicable securities laws; provided, however, that fractions
of a Share shall not be issued but shall either be paid in cash at Fair
Market Value or shall be rounded up to the nearest Share, as determined by
the Committee; and provided, further, that the Exercise Price of any Award
may not be decreased to below the par value of the Shares.
3. ELIGIBILITY. ISOs (as defined in Section 5 below) may be
granted only to employees (including officers and directors who are also
employees) of the Company or of a Parent or Subsidiary of the Company.
NQSOs (as defined in Section 5 below) may be granted to employees, officers,
directors, consultants, independent contractors and advisors of the Company
or any Parent, Subsidiary or Affiliate of the Company; provided such
consultants, contractors and advisors render bona fide services not in
connection with the offer and sale of securities in a capital-raising
transaction. A person may be granted more than one Award under the Plan.
Each person is eligible to receive up to an aggregate maximum of One Million
(1,000,000) Shares per fiscal year.
4. ADMINISTRATION.
4.1 Committee Authority. The Plan shall be administered
by the Committee. Subject to the general purposes, terms and conditions of
the Plan, the Committee shall have full power to implement and carry out the
Plan. The Committee shall have the authority to:
(a) construe and interpret the Plan, any Stock Option Agreement
and any other agreement or document executed pursuant to the Plan;
(b) prescribe, amend and rescind rules and regulations relating
to the Plan;
(c) select persons to receive Awards;
(d) determine the form and terms of Awards;
(e) determine the number of Shares subject to Awards;
(f) determine whether Awards will be granted in replacement of,
or as alternatives to, other Awards under the Plan or any other incentive or
compensation plan of the Company or any Parent, Subsidiary or Affiliate of
the Company;
(g) grant waivers of Plan or Award conditions;
(h) determine the vesting and exercisability of Awards;
(i) correct any defect, supply any omission, or reconcile any
inconsistency in the Plan, any Award or any Stock Option Agreement;
(j) determine the disposition of Awards in the event of a
Participant's divorce or dissolution of marriage; and
(k) make all other determinations necessary or advisable for the
administration of the Plan.
4.2 Committee Discretion. Any determination made by the
Committee with respect to any Award shall be made in its sole discretion at
the time of grant of the Award or, unless in contravention of any express
term of the Plan or Award, at any later time, and such determination shall
be final and binding on the Company and all persons having an interest in
any Award under the Plan. The Committee may delegate to one or more officers
of the Company the authority to grant an Award under the Plan to Participants
who are not Insiders of the Company.
4.3 Exchange Act Requirements. If two or more members
of the Board are Outside Directors, the Committee shall be comprised of at
least two members of the Board, all of whom are Outside Directors and
Disinterested Persons. The Company will take appropriate steps to comply
with the disinterested director requirements of Section 16(b) of the Exchange
Act, including but not limited to, the appointment by the Board of a
Committee consisting of not less than two persons (who are members of the
Board), each of whom is a Disinterested Person. It is the intent of the
Company that the Plan and Awards hereunder satisfy and be interpreted in a
manner, that, in the case of Participants who are or may be Insiders,
satisfies the applicable requirements of Rule 16b-3 (or its successor) of
the Exchange Act. If any provision of the Plan or of any Award would
otherwise conflict with the intent expressed in this Section 4.3, that
provision to the extent possible shall be interpreted and deemed amended so
as to avoid such conflict.
5. STOCK OPTIONS. The Committee may grant Awards to eligible
persons and shall determine whether such Awards shall be Incentive Stock
Options within the meaning of the Code ("ISOs") or Nonqualified Stock Options
("NQSOs"), the number of Shares subject to the Award, the Exercise Price of
the Award, the period during which the Award may be exercised, and all other
terms and conditions of the Award, subject to the following:
5.1 Form of Option Grant. Each Award granted under the
Plan shall be evidenced by an Stock Option Agreement which shall expressly
identify the Award as an ISO or NQSO, and be in such form and contain such
provisions (which need not be the same for each Participant) as the Committee
shall from time to time approve, and which shall comply with and be subject
to the terms and conditions of the Plan.
5.2 Date of Grant. The date of grant of an Award shall
be the date on which the Committee makes the determination to grant such
Award, unless otherwise specified by the Committee. The Stock Option
Agreement and a copy of the Plan will be delivered to the Participant within
a reasonable time after the granting of the Award.
5.3 Exercise Period. Awards shall be exercisable within
the times or upon the events determined by the Committee as set forth in the
Stock Option Agreement; provided, however, that no Award shall be exercisable
after the expiration of ten (10) years from the date the Award is granted;
and provided further that no ISO granted to a person who directly or by
attribution owns more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or any Parent or Subsidiary of
the Company ("Ten Percent Stockholder") shall be exercisable after the
expiration of five (5) years from the date the Award is granted. The
Committee also may provide for the exercise of Awards to become exercisable
at one time or from time to time, periodically or otherwise, in such number
or percentage as the Committee determines.
5.4 Exercise Price. The Exercise Price shall be
determined by the Committee when the Award is granted and shall be not less
than 100% of the Fair Market Value of the Shares on the date of grant;
provided, that the Exercise Price of any ISO granted to a Ten Percent
Stockholder shall not be less than 110% of the Fair Market Value of the
Shares on the date of grant. Payment for the Shares purchased may be made
in accordance with Section 6 of the Plan.
5.5 Method of Exercise. Awards may be exercised only by
delivery to the Company of a written exercise agreement (the "Exercise
Agreement") in a form approved by the Committee (which need not be the same
for each Participant), stating the number of Shares being purchased, the
restrictions imposed on the Shares, if any, and such representations and
agreements regarding Participant's investment intent and access to
information and other matters, if any, as may be required or desirable by
the Company to comply with applicable securities laws, together with payment
in full of the Exercise Price for the number of Shares being purchased.
5.6 Termination. Notwithstanding the exercise periods
set forth in the Stock Option Agreement, exercise of an Award shall always
be subject to the following:
(a) If the Participant is Terminated for any reason except death
or Disability, then Participant may exercise such Participant's Awards only
to the extent that such Awards would have been exercisable upon the
Termination Date no later than three (3) months after the Termination Date
(or such longer time period not exceeding five years as may be determined by
the Committee), but in any event, no later than the expiration date of the
Awards.
(b) If the Participant is terminated because of death or
Disability (or the Participant dies within three months of such termination),
then Participant's Awards would have been exercisable by Participant on the
Termination Date and must be exercised by Participant (or Participant's legal
representative or authorized assignee) no later than (i) twelve (12) months
after the Termination Date in the case of disability or (ii) eighteen (18)
months after the Termination Date in the case of death (or such longer time
period not exceeding five years as may be determined by the Committee), but
in any event no later than the expiration date of the Awards.
5.7 Limitations on Exercise. The Committee may specify
a reasonable minimum number of Shares that may be purchased on any exercise
of an Award; provided that such minimum number will not prevent Participant
from exercising the Award for the full number of Shares for which it is then
exercisable.
5.8 Limitations on ISOs. The aggregate Fair Market Value
(determined as of the date of grant) of Shares with respect to which ISOs are
exercisable for the first time by a Participant during any calendar year
(under the Plan or under any other incentive stock option plan of the Company
or any Affiliate, Parent or Subsidiary of the Company) shall not exceed
$100,000. If the Fair Market Value of Shares on the date of grant with
respect to which ISOs are exercisable for the first time by a Participant
during any calendar year exceeds $100,000, the Awards for the first $100,000
worth of Shares to become exercisable in such calendar year shall be ISOs and
the Awards for the amount in excess of $100,000 that become exercisable in
that calendar year shall be NQSOs. In the event that the Code or the
regulations promulgated thereunder are amended after the Effective Date of
the Plan to provide for a different limit on the Fair Market Value of Shares
permitted to be subject to ISOs, such different limit shall be automatically
incorporated herein and shall apply to any Awards granted after the effective
date of such amendment.
5.9 Modification, Extension or Renewal. The Committee
may modify, extend or renew outstanding Awards and authorize the grant of new
Awards in substitution therefor; provided that any such action may not,
without the written consent of Participant, impair any of Participant's
rights under any Award previously granted. Any outstanding ISO that is
modified, extended, renewed or otherwise altered shall be treated in
accordance with Section 424(h) of the Code. The Committee may reduce the
Exercise Price of outstanding Awards without the consent of Participants
affected by a written notice to them; provided, however, that the Exercise
Price may not be reduced below the minimum Exercise Price that would be
permitted under Section 5.4 of the Plan for Awards granted on the date the
action is taken to reduce the Exercise Price; and provided, further, that
the Exercise Price shall not be reduced below the par value of the Shares,
if any.
5.10 No Disqualification. Notwithstanding any other
provision in the Plan, no term of the Plan relating to ISOs shall be
interpreted, amended or altered, nor shall any discretion or authority
granted under the Plan be exercised, so as to disqualify the Plan under
Section 422 of the Code or, without the consent of the Participant affected,
to disqualify any ISO under Section 422 of the Code.
6. PAYMENT FOR SHARE PURCHASES. Payment for Shares purchased
pursuant to the Plan may be made in cash (by check) or, where expressly
approved for the Participant by the Committee and where permitted by law:
(a) by surrender of Shares that either: (1) have been owned by
Participant for more than six (6) months and have been paid for within the
meaning of SEC Rule 144 (and, if such shares were purchased from the Company
by use of a promissory note, such note has been fully paid with respect to
such Shares); or (2) were obtained by Participant in the public market;
(b) by waiver of compensation due or accrued to Participant for
services rendered;
(c) provided that a public market for the Company's stock exists:
(1) through a "same day sale" commitment from Participant
and a broker-dealer that is a member of the National Association of
Securities Dealers (a "NASD Dealer") whereby the Participant irrevocably
elects to exercise the Award and to sell a portion of the Shares so purchased
in order to pay for the Exercise Price, and whereby the NASD Dealer
irrevocably commits upon receipt of such Shares to forward the Exercise Price
directly to the Company; or
(2) through a "margin" commitment from Participant and
a NASD Dealer whereby Participant irrevocably elects to exercise the Award
and to pledge the Shares so purchased to the NASD Dealer in a margin account
as security for a loan from the NASD Dealer in the amount of the Exercise
Price, and whereby the NASD Dealer irrevocably commits upon receipt of such
Shares to forward the exercise price directly to the Company; or
(d) by any combination of the foregoing.
7. WITHHOLDING TAXES.
7.1 Withholding Generally. Whenever Shares are to be
issued in satisfaction of Awards granted under the Plan, the Company may
require the Participant to remit to the Company an amount sufficient to
satisfy federal, state and local withholding tax requirements prior to the
delivery of any certificate or certificates for such Shares. Whenever, under
the Plan, payments in satisfaction of Awards are to be made in cash, such
payment shall be net of an amount sufficient to satisfy federal, state, and
local withholding tax requirements.
7.2 Stock Withholding. When, under applicable tax laws,
a Participant incurs tax liability in connection with the exercise of any
Award that is subject to tax withholding and the Participant is obligated to
pay the Company the amount required to be withheld, the Committee may allow
the Participant to satisfy the minimum withholding tax obligation by electing
to have the Company withhold from the Shares to be issued that number of
Shares having a Fair Market Value equal to the minimum amount required to be
withheld, determined on the date that the amount of tax to be withheld is to
be determined (the "Tax Date"). All elections by a Participant to have
Shares withheld for this purpose shall be made in writing in a form
acceptable to the Committee and shall be subject to the following
restrictions:
(a) the election must be made on or prior to the applicable Tax
Date;
(b) once made, then except as provided below, the election shall
be irrevocable as to the particular Shares as to which the election is made;
(c) all elections shall be subject to the consent or disapproval
of the Committee;
(d) if the Participant is an Insider and if the Company is
subject to Section 16(b) of the Exchange Act: (1) the election may not be
made within six (6) months of the date of grant of the Award, except as
otherwise permitted by SEC Rule 16b-3(e) under the Exchange Act, and
(2) either (A) the election to use stock withholding must be irrevocably made
at least six (6) months prior to the Tax Date (although such election may be
revoked at any time at least six (6) months prior to the Tax Date) or (B) the
exercise of the Award or election to use stock withholding must be made in
the ten (10) day period beginning on the third day following the release of
the Company's quarterly or annual summary statement of sales or earnings; and
(e) in the event that the Tax Date is deferred until six (6)
months after the delivery of Shares under Section 83(b) of the Code, the
Participant shall receive the full number of Shares with respect to which
the exercise occurs, but such Participant shall be unconditionally obligated
to tender back to the Company the proper number of Shares on the Tax Date.
8. PRIVILEGES OF STOCK OWNERSHIP.
8.1 Voting and Dividends. No Participant shall have any
of the rights of a stockholder with respect to any Shares until the Shares
are issued to the Participant. After Shares are issued to the Participant,
the Participant shall be a stockholder and have all the rights of a
stockholder with respect to such Shares, including the right to vote and
receive all dividends or other distributions made or paid with respect to
such Shares.
8.2 Financial Statements. The Company shall provide
financial statements to each Participant prior to such Participant's purchase
of Shares under the Plan, and to each Participant annually during the period
such Participant has Awards outstanding; provided, however, the Company shall
not be required to provide such financial statements to Participants whose
services in connection with the Company assure them access to equivalent
information.
9. TRANSFERABILITY. Subject to Section 4.1(j), Awards granted
under the Plan, and any interest therein, shall not: (a) be transferable or
assignable by the Participant, (b) be made subject to execution, attachment
or similar process, otherwise than by will or by the laws of descent and
distribution or as consistent with the specific Plan and Stock Option
Agreement provisions relating thereto or (c) during the lifetime of the
Participant, be exercisable by anyone other than the Participant, and any
elections with respect to an Award, may be made only by the Participant.
10. CERTIFICATES. All certificates for Shares or other
securities delivered under the Plan shall be subject to such stock transfer
orders, legends and other restrictions as the Committee may deem necessary or
advisable, including restrictions under any applicable federal, state or
foreign securities law, or any rules, regulations and other requirements of
the SEC or any stock exchange or automated quotation system upon which the
Shares may be listed.
11. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Award
shall not be effective unless such Award is in compliance with all applicable
federal and state securities laws, rules and regulations of any governmental
body, and the requirements of any stock exchange or automated quotation
system upon which the Shares may then be listed, as they are in effect on the
date of grant of the Award and also on the date of exercise or other
issuance. Notwithstanding any other provision in the Plan, the Company shall
have no obligation to issue or deliver certificates for Shares under the Plan
prior to (a) obtaining any approvals from governmental agencies that the
Company determines are necessary or advisable, and/or (b) completion of any
registration or other qualification of such shares under any state or federal
law or ruling of any governmental body that the Company determines to be
necessary or advisable. The Company shall be under no obligation to register
the Shares with the SEC or to effect compliance with the registration,
qualification or listing requirements of any state securities laws, stock
exchange or automated quotation system, and the Company shall have no
liability for any inability or failure to do so.
12. NO OBLIGATION TO EMPLOY. Nothing in the Plan or any Award
granted under the Plan shall confer or be deemed to confer on any Participant
any right to continue in the employ of, or to continue any other relationship
with, the Company or any Parent, Subsidiary or Affiliate of the Company or
limit in any way the right of the Company or any Parent, Subsidiary or
Affiliate of the Company to terminate Participant's employment or other
relationship at any time, with or without cause.
13. EXCHANGE AND BUYOUT OF AWARDS. The Committee may, at any
time or from time to time, authorize the Company, with the consent of the
respective Participants, to issue new Awards in exchange for the surrender
and cancellation of any or all outstanding Awards. The Committee may at any
time buy from a Participant an Award previously granted with payment in cash,
Shares or other consideration, based on such terms and conditions as the
Committee and the Participant shall agree.
14. CORPORATE TRANSACTIONS.
14.1 Corporate Transactions. In the event of a Corporate
Transaction (as defined in this Section 14.1), the exercisability of each
Award shall be automatically accelerated so that each Award shall,
immediately before the specified effective date for the Corporate
Transaction, become fully exercisable with respect to the total number of
Shares and may be exercised for all or any portion of such Shares; provided,
that an Award shall not be accelerated if and to the extent that such Award
is, in connection with the Corporate Transaction, either to be assumed by the
successor corporation or parent thereof or to be replaced with a comparable
option to purchase shares of the capital stock of the successor corporation
or parent thereof. The determination of comparability shall be made by the
Committee, and the Committee's determination shall be final, binding and
conclusive. Upon the consummation of a Corporate Transaction, all
outstanding Awards shall, to the extent not previously exercised or assumed
by the successor corporation or its parent, terminate and cease to be
exercisable.
"Corporate Transaction" means (a) a merger or
acquisition in which the Company is not the surviving entity (except for a
transaction the principal purpose of which is to change the State in which
the Company is incorporated), (b) the sale, transfer or other disposition of
all or substantially all of the assets of the Company or (c) any other
corporate reorganization or business combination that is not approved by the
Board and in which the beneficial ownership of 50% or more of the Company's
outstanding voting stock is transferred.
14.2 Change in Control. Notwithstanding any provision in
Section 14.1 to the contrary, in the event of a Change in Control (as defined
in this Section 14.2), each Award shall automatically accelerate effective
fifteen (15) days following the effective date of the Change in Control, so
that each Award shall become fully exercisable with respect to the total
number of Shares and may be exercised for all or any portion of such Shares.
Upon a Change in Control, all outstanding Awards accelerated shall remain
fully exercisable until the expiration or sooner termination of the Award
term specified in the Stock Option Agreement.
A "Change in Control" shall be deemed to occur:
(a) should a person or related group of persons, other than the Company or a
person that directly or indirectly controls, is controlled by or is under
common control with the Company, becomes the beneficial owner (within the
meaning of Rule 13d-3 of the General Rules and Regulations under the Exchange
Act) of 25% or more of the Company's outstanding voting stock pursuant to a
tender or exchange offer that the Board does not recommend and that the
stockholders of the Company accept; or (b) on the first date within any
period of twenty-four (24) consecutive months or less on which there is
effected a change in the composition of the Board by reason of a contested
election such that a majority of the Board members cease to be comprised of
individuals who either (i) have been members of the Board continuously since
the beginning of such period or (ii) have been elected or nominated for
election as Board members during such period by at least a majority of the
Board members described in clause (i) who were still in office at the time
such election or nomination was approved by the Board.
14.3 Dissolution. In the event of the proposed
dissolution or liquidation of the Company, the Board shall notify the
Participant at least fifteen (15) days prior to such proposed action. To
the extent that Awards have not been previously exercised, such Awards will
terminate immediately prior to the consummation of such proposed action.
14.4 Assumption of Awards by the Company. The Company,
from time to time, also may substitute or assume outstanding awards granted
by another company, whether in connection with an acquisition of such other
company or otherwise, by either (a) granting an Award under the Plan in
substitution of such other company's award, or (b) assuming such award as if
it had been granted under the Plan if the terms of such assumed award could
be applied to an Award granted under the Plan. Such substitution or
assumption shall be permissible if the holder of the substituted or assumed
award would have been eligible to be granted an Award under the Plan if the
other company had applied the rules of the Plan to such grant. In the event
the Company assumes an award granted by another company, the terms and
conditions of such award shall remain unchanged (except that the exercise
price and the number and nature of Shares issuable upon exercise of any such
option will be adjusted appropriately pursuant to Section 424(a) of the
Code). In the event the Company elects to grant a new Award rather than
assuming an existing option, such new Award may be granted with a similarly
adjusted Exercise Price.
15. ADOPTION AND STOCKHOLDER APPROVAL. The Plan shall become
effective on the date that it is adopted by the Board (the "Effective Date").
The Plan shall be approved by the stockholders of the Company (excluding
Shares issued pursuant to this Plan), consistent with applicable laws, within
twelve months before or after the Effective Date. Upon the Effective Date,
the Board may grant Awards pursuant to the Plan; provided, however, that:
(a) no Award may be exercised prior to initial stockholder approval of the
Plan and (b) no Award granted pursuant to an increase in the number of Shares
approved by the Board shall be exercised prior to the time such increase has
been approved by the stockholders of the Company. For so long as and
whenever the Company is subject to Section 16(b) of the Exchange Act, the
Company will comply with the requirements of Rule 16b-3 (or its successor),
as amended, with respect to stockholder approval.
16. TERM OF PLAN. The Plan will terminate ten (10) years from
the Effective Date or, if earlier, the date of stockholder approval.
17. AMENDMENT OR TERMINATION OF PLAN. The Board may at any time
terminate or amend the Plan in any respect, including without limitation
amendment of any form of Stock Option Agreement or instrument to be executed
pursuant to the Plan; provided, however, that the Board shall not, without
the approval of the stockholders of the Company, amend the Plan in any manner
that requires such stockholder approval pursuant to the Code or the
regulations promulgated thereunder as such provisions apply to ISO plans or
pursuant to the Exchange Act or Rule 16b-3 (or its successor), as amended,
thereunder; provided, further, that no amendment may be made to outstanding
Awards without the consent of the Participant.
18. NONEXCLUSIVITY OF THE PLAN. Neither the adoption of the Plan
by the Board, the submission of the Plan to the stockholders of the Company
for approval, nor any provision of the Plan shall be construed as creating
any limitations on the power of the Board to adopt such additional
compensation arrangements as it may deem desirable, including, without
limitation, the granting of stock options otherwise than under the Plan, and
such arrangements may be either generally applicable or applicable only in
specific cases.
19. DEFINITIONS. As used in the Plan, the following terms shall
have the following meanings:
"Affiliate" means any corporation that directly, or
indirectly through one or more intermediaries, controls or is controlled by,
or is under common control with the Company where "control" (including the
terms "controlled by" and "under common control with") means the possession,
direct or indirect, of the power to cause the direction of the management
and policies of the corporation, whether through the ownership of voting
securities, by contract or otherwise.
"Award" means an award of an option to purchase Shares.
"Stock Option Agreement" means, with respect to each Award,
the signed written agreement between the Company and the Participant setting
forth the terms and conditions of the Award.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means the committee appointed by the Board to
administer the Plan, or if no committee is appointed, the Board.
"Company" means Integrated Device Technology, Inc., a
corporation organized under the laws of the State of Delaware, or any
successor corporation.
"Disability" means a disability, whether temporary or
permanent, partial or total, within the meaning of Section 22(e)(3) of the
Code, as determined by the Committee.
"Disinterested Person" means a director who has not, during
the period that person is a member of the Committee and for one year prior
to service as a member of the Committee, been granted or awarded equity
securities pursuant to the Plan or any other plan of the Company or any
Parent, Subsidiary or Affiliate of the Company, except in accordance with
the requirements set forth in Rules as promulgated by the SEC under Section
16(b) of the Exchange Act, as such Rules are amended from time to time and
as interpreted by the SEC.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exercise Price" means the price at which a holder of an
Award may purchase the Shares issuable upon exercise of the Award.
"Fair Market Value" means the value of a share of the
Company's Common Stock determined as follows:
(a) if such Common Stock is then quoted on the Nasdaq National
Market the closing price on the Nasdaq National Market System on the trading
day immediately preceeding the date on which Fair Market Value is determined,
or, if no such reported sale takes place on such date, the closing price on
the next preceding trading date on which a reported sale occurred;
(b) if such Common Stock is publicly traded and is then listed
on a national securities exchange, the closing price or, if no reported sale
takes place on such date, the closing price on the next preceding trading day
on which a reported sale occurred;
(c) if such Common Stock is publicly traded but is not quoted on
the Nasdaq National Market nor listed or admitted to trading on a national
securities exchange, the average of the closing bid and asked prices on such
date, as reported by The Wall Street Journal, for the over-the-counter
market; or
(d) if none of the foregoing is applicable, by the Board in good
faith.
"Insider" means an officer or director of the Company or any
other person whose transactions in the Company's Common Stock are subject to
Section 16 of the Exchange Act.
"Outside Director" means any outside director as defined in
Section 162(m) of the Code and the regulations issued thereunder.
"Parent" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company, if at the time of the
granting of an Award under the Plan, each of such corporations other than the
Company owns stock possessing 50% or more of the total combined voting power
of all classes of stock in one of the other corporations in such chain.
"Participant" means a person who receives an Award under the
Plan.
"Plan" means this Integrated Device Technology, Inc. 1994
Stock Option Plan, as amended from time-to-time.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as
amended.
"Shares" means shares of the Company's Common Stock $0.001
par value, reserved for issuance under the Plan, as adjusted pursuant to
Sections 2 and 14, and any successor security.
"Subsidiary" means any corporation (other than the Company)
in an unbroken chain of corporations beginning with the Company if, at the
time of granting of the Award, each of the corporations other than the last
corporation in the unbroken chain owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
"Termination" or "Terminated" means, for purposes of the Plan
with respect to a Participant, that the Participant has ceased to provide
services as an employee, director, consultant, independent contractor or
adviser, to the Company or a Parent, Subsidiary or Affiliate of the Company,
except in the case of sick leave, military leave, or any other leave of
absence approved by the Committee; provided, that such leave is for a period
of not more than ninety (90) days, or reinstatement upon the expiration of
such leave is guaranteed by contract or statute. The Committee shall have
sole discretion to determine whether a Participant has ceased to provide
services and the effective date on which the Participant ceased to provide
services (the "Termination Date").
Integrated Device Technology, Inc.
1994 Stock Option Plan
INTEGRATED DEVICE TECHNOLOGY, INC.
1994 STOCK OPTION PLAN
STOCK OPTION AGREEMENT
Participant: _________________________________ ID: _____________________
Social Security No.: _________________________
Address: _____________________________________
______________________________________________
You have been granted a stock option (this "Option") to purchase Common Stock
of Integrated Device Technology, Inc. as follows:
Stock Option Agreement No.: _______________________________
Date of Grant: ____________________________________________
Exercise Price Per Share: _________________________________
Total Number of Shares Granted: ___________________________
Total Exercise Price of Shares Granted: ___________________
Expiration Date: __________________________________________
Type of Option: Incentive ______ Nonqualified ______
Capitalized terms not defined below shall have the meaning ascribed to them
in the Integrated Device Technology, Inc. 1994 Stock Option Plan (the "Plan").
If the Participant set forth above is Terminated for any reason, except death
or Disability, this Option to the extent (and only to the extent) that it
would have been exercisable by Participant on the Termination Date, may be
exercised by Participant no later than three (3) months after the
Termination Date, but in any event no later than the Expiration Date set
forth above. If Participant is Terminated because of death or Disability of
Participant (or the Participant dies within three months of such
Termination), this Option, to the extent that it is exercisable by
Participant on the Termination Date, may be exercised by Participant (or
Participant's legal representative) no later than (i) twelve (12) months
after the Termination Date in the case of Disability or (ii) eighteen (18)
months after the Termination Date in the case of death, but in any event no
later than the Expiration Date.
This Option may not be transferred in any manner other than by will or by the
laws of descent and distribution and may be exercised during the lifetime of
Participant only by Participant. The terms of this Option shall be binding
upon the executors, administrators, successors and assigns of Participant.
By our signatures we agree that this Option is granted under and governed by
the terms of the Plan, specifically including Section 6 of the Plan. The
term of this Option is ten (10) years from the Date of Grant set forth above.
This Option shall be exercisable in accordance with the schedule on the Grant
Summary attached hereto as Exhibit A.
______________________________________ ______________________
For INTEGRATED DEVICE TECHNOLOGY, INC. Date
______________________________________ ______________________
Participant Date
EXHIBIT A
GRANT SUMMARY
EXHIBIT B
INTEGRATED DEVICE TECHNOLOGY, INC.
Stock Option Exercise Agreement
_______________________________
I hereby elect to purchase the number of shares of Common Stock as set forth
below, pursuant to the Integrated Device Technology, Inc. 1994 Stock Option
Plan (the "Plan"):
Participant _______________________ Number of Shares Purchased: ___________
Social Security Number: ___________ Purchase Price per Share: _____________
Address: __________________________ Aggregate Purchase Price: _____________
___________________________________ Date of Stock Option Agreement: _______
Type of Stock Option Exact Name of Title to Shares:
[ ] Incentive Stock Option _______________________________________
[ ] Nonqualified Stock Option _______________________________________
Participant hereby delivers to the Company the Aggregate Purchase Price as
set forth above, as follows (check as applicable and complete):
[ ] in cash (by check) in the amount of $__________________, receipt of
which is acknowledged by the Company;
[ ] through a "same-day-sale" commitment, delivered herewith, from
Participant and the NASD Dealer named therein, in the amount of
$___________________; or
[ ] through a "margin" commitment, delivered herewith from Participant
and the NASD Dealer named therein, in the amount of $_____________________.
Tax Consequences. PARTICIPANT UNDERSTANDS THAT PARTICIPANT MAY
SUFFER ADVERSE TAX CONSEQUENCES AS A RESULT OF PARTICIPANT'S PURCHASE OR
DISPOSITION OF THE SHARES. PARTICIPANT REPRESENTS THAT PARTICIPANT HAS
CONSULTED WITH ANY TAX CONSULTANT(S) PARTICIPANT DEEMS ADVISABLE IN
CONNECTION WITH THE PURCHASE OR DISPOSITION OF THE SHARES AND THAT
PARTICIPANT IS NOT RELYING ON THE COMPANY FOR ANY TAX ADVICE.
Entire Agreement. The Plan, Stock Option Agreement and Grant Summary
are incorporated herein by reference. This Exercise Agreement, the Plan,
the Stock Option Agreement and the Grant Summary constitute the entire
agreement of the parties and supersede in their entirety all prior
undertakings and agreements of the Company and Participant with respect to
the subject matter hereof, and are governed by California law except for that
body of law pertaining to conflict of laws.
Date: _______________________________ __________________________________
Signature of Participant
INTEGRATED DEVICE TECHNOLOGY, INC.
1994 DIRECTORS STOCK OPTION PLAN
As Adopted May 3, 1994
1. Purpose. This 1994 Directors Stock Option Plan (this "Plan")
is established to provide equity incentives for nonemployee members of the
Board of Directors of Integrated Device Technology, Inc. (the "Company") who
are described in Section 6.1 below, by granting such persons options to
purchase shares of stock of the Company.
2. Adoption and Stockholder Approval. This Plan shall become
effective on the date that it is adopted by the Board of Directors (the
"Board") of the Company. This Plan shall be approved by the stockholders of
the Company, consistent with applicable laws, within twelve (12) months after
the date that it is adopted by the Board. After adoption of this Plan by
the Board, options ("Options") may be granted under this Plan provided that,
in the event that stockholder approval is not obtained within the time period
provided herein, this Plan, and all Options granted hereunder, shall
terminate. No Option that is issued as a result of any increase in the
number of shares authorized to be issued under this Plan shall be exercised
prior to the time such increase has been approved by the stockholders of the
Company and all such Options granted pursuant to such increase shall
similarly terminate if such stockholder approval is not obtained. So long
as the Company is subject to Section 16(b) of the Securities Exchange Act of
1934, as amended, (the "Exchange Act") the Company will comply with the
requirements of Rule 16b-3 with respect to stockholder approval.
3. Types of Options and Shares. Options granted under this Plan
shall be non qualified stock options ("NQSOs"). The shares of stock that may
be purchased upon exercise of Options granted under this Plan (the "Shares")
are shares of the Common Stock of the Company.
4. Number of Shares. The number of Shares reserved and made
available for grant and issuance hereunder is Fifty Thousand (50,000) Shares.
Effective upon stockholder approval of this Plan, there shall also be
reserved for issuance under this Plan an additional Four Thousand (4,000)
Shares currently available for grant under the Company's 1989 Nonemployee
Director Stock Option Plan (the "Predecessor Plan"), which will thereupon
be terminated. The maximum number of Shares that may be issued pursuant to
Options granted under this Plan is Fifty Four Thousand (54,000) Shares,
subject to adjustment as provided in this Plan. If any Option is terminated
for any reason without being exercised in whole or in part, the Shares
thereby released from such Option shall be available for purchase under
other Options subsequently granted under this Plan. At all times during
the term of this Plan, the Company shall reserve and keep available such
number of Shares as shall be required to satisfy the requirements of
outstanding Options under this Plan.
5. Administration. This Plan shall be administered by the Board
or by a committee of not less than two members of the Board appointed to
administer this Plan (the "Committee"). As used in this Plan, references to
the Committee shall mean either such Committee or the Board if no Committee
has been established. The interpretation by the Committee of any of the
provisions of this Plan or any Option granted under this Plan shall be final
and binding upon the Company and all persons having an interest in any Option
or any Shares purchased pursuant to an Option.
6. Eligibility and Award Formula.
6.1 Eligibility. Options may be granted only to
directors of the Company who are not common-law employees of the Company or
any Parent, Subsidiary or Affiliate of the Company, as those terms are
defined in Section 17 below (each an "Optionee").
6.2 Standard Grant. Each Optionee who becomes a member
of the Board will automatically be granted an Option for 16,000 Shares upon
his election or appointment to the Board. An Optionee who becomes the Chair
of the Audit Committee of the Board will automatically be granted an
additional Option for 4,000 Shares on the date of the Optionee's election or
appointment to the office of Chair of the Audit Committee. Each such Option
grant to a member of the Board or to the Chair of the Audit Committee shall
be referred to as a "Standard Grant". An Optionee who received a Standard
Nonqualified Option (as defined in Section 4.1 of the Predecessor Plan) for
such Optionee's initial election or appointment to the Board or to the office
of Chair of the Audit Committee shall not be eligible to receive a Standard
Grant hereunder. Notwithstanding the preceding sentence, if an Optionee
resigns and is later reelected or reappointed to the Board or the office of
Chair of the Audit Committee, such Optionee shall again be eligible to
receive a Standard Grant pursuant to the terms of the Plan.
6.3 Fourever Grants. Each Optionee who remains a member
of the Board or the Chair of the Audit Committee as provided below, will
automatically be granted an Option for 4,000 Shares if the Optionee remains
a member of the Board and an additional Option for 1,000 Shares, if the
Optionee remains the Chair of the Audit Committee, on each anniversary of
the grant of such Optionee's Standard Grant (each a "Fourever Grant"). To
remain eligible for a Fourever Grant under the Plan, the Optionee must, on
each such anniversary date, (a) not have given notice to the Company that he
will not stand for re-election as a member of the Board at the annual meeting
of the Company's stockholders following expiration of his term; (b) not have
received notice from the Board that he will not be nominated for election as
a member of the Board at such meeting; and (c) in the case of the Chair of
the Audit Committee, (i) not have given notice to the Company that he intends
to resign as Chair of the Audit Committee and (ii) not have received notice
from the Board that he will be replaced as Chair of the Audit Committee.
6.4 Maximum Shares. The maximum number of Shares that
may be issued to any one Optionee under this Plan in any one fiscal year
shall be Twenty Thousand (20,000) shares. No grant will be made if such
grant will cause the number of Shares issued or subject to outstanding
Options under this Plan to exceed the number specified in Section 4 above.
7. Terms and Conditions of Options. Subject to the following
and to Section 6 above:
7.1 Form of Option Grant. Each Option granted under
this Plan shall be evidenced by a written Stock Option Grant ("Grant") in
such form (which need not be the same for each Optionee) as the Committee
shall from time to time approve, which Grant shall comply with and be subject
to the terms and conditions of this Plan.
7.2 Vesting. Options granted under this Plan shall be
exercisable as they vest. Standard Grants shall vest in cumulative
increments of 25% per year, commencing on the first anniversary of the date
of grant. Fourever Grants shall not vest until the fourth anniversary of the
date of grant, on which date Fourever Grants shall vest in full. No portion
of an Option that is unvested at the Optionee's Termination Date (as defined
in Section 7.4) shall thereafter become vested.
7.3 Exercise Price. The exercise price of an Option
shall be the Fair Market Value (as defined in Section 17.4) of the Shares,
at the time that the Option is granted.
7.4 Termination of Option. Except as provided below in
this Section 7.4, each Option shall expire ten (10) years after the date of
grant (the "Expiration Date"). The Option shall cease to vest if Optionee
ceases to be a member of the Board. The date on which Optionee ceases to be
a member of the Board shall be referred to as the "Termination Date." An
Option may be exercised after the Termination Date only as set forth below:
(a) Termination Generally. If Optionee ceases to
be a member of the Board for any reason except death or disability, each
Option, to the extent (and only to the extent) that it would have been
exercisable by Optionee on the Termination Date, may be exercised by
Optionee within three (3) months after the Termination Date, but in no event
later than the Expiration Date.
(b) Death or Disability. If Optionee ceases to be
a member of the Board because of the death of Optionee or the disability of
Optionee within the meaning of Section 22(e)(3) of the Internal Revenue Code
of 1986, as amended (the "Code"), each Option, to the extent (and only to the
extent) that it would have been exercisable by Optionee on the Termination
Date, may be exercised by Optionee (or Optionee's legal representative)
within twelve (12) months after the Termination Date, but in no event later
than the Expiration Date.
8. Exercise of Options.
8.1 Notice. Options may be exercised only by delivery
to the Company of an exercise agreement in a form approved by the Committee,
stating the number of Shares being purchased, the restrictions imposed on the
Shares and such representations and agreements regarding the Optionee's
investment intent and access to information as may be required by the Company
to comply with applicable securities laws, together with payment in full of
the exercise price for the number of Shares being purchased.
8.2 Payment. Payment for the Shares may be made (a) in
cash (by check); (b) by surrender of shares of Common Stock of the Company
that have been owned by Optionee for more than six (6) months (and which have
been paid for within the meaning of SEC Rule 144 and, if such shares were
purchased from the Company by use of a promissory note, such note has been
fully paid with respect to such shares) or were obtained by the Optionee in
the open public market, having a Fair Market Value equal to the exercise
price of the Option; (c) provided that a public market for the Company's
stock exists, through a "same day sale" commitment from the Optionee and a
broker-dealer that is a member of the National Association of Securities
Dealers (a "NASD Dealer") whereby the Optionee irrevocably elects to exercise
the Option and to sell a portion of the Shares so purchased to pay for the
exercise price and whereby the NASD Dealer irrevocably commits upon receipt
of such Shares to forward the exercise price directly to the Company;
(d) provided that a public market for the Company's stock exists, through a
"margin" commitment from the Optionee and a NASD Dealer whereby the Optionee
irrevocably elects to exercise the Option and to pledge the Shares so
purchased to the NASD Dealer in a margin account as security for a loan from
the NASD Dealer in the amount of the exercise price, and whereby the NASD
Dealer irrevocably commits upon receipt of such Shares to forward the
exercise price directly to the Company; or (e) by any combination of the
foregoing.
8.3 Withholding Taxes. Prior to issuance of the Shares
upon exercise of an Option, the Optionee shall pay or make adequate provision
for any federal or state withholding obligations of the Company, if
applicable.
8.4 Limitations on Exercise. Notwithstanding the
exercise periods set forth in the Grant, exercise of an Option shall always
be subject to the following limitations:
(a) An Option shall not be exercisable until
such time as the Plan or, in the case of Options granted pursuant to an
amendment to the number of shares that may be issued pursuant to the Plan
the amendment, has been approved by the stockholders of the Company in
accordance with Section 15 hereof.
(b) An Option shall not be exercisable unless
such exercise is in compliance with the Securities Act of 1933, as amended
(the "Securities Act"), and all applicable state securities laws, as they
are in effect on the date of exercise.
(c) The Committee may specify a reasonable
minimum number of Shares that may be purchased on any exercise of an Option,
provided that such minimum number will not prevent the Optionee from
exercising the full number of Shares as to which the Option is then
exercisable.
9. Nontransferability of Options. During the lifetime of the
Optionee, an Option shall be exercisable only by the Optionee or by the
Optionee's guardian or legal representative, unless otherwise permitted by
the Committee. No Option may be sold, pledged, assigned, hypothecated,
transferred or disposed of in any manner other than by will or by the laws
of descent and distribution.
10. Privileges of Stock Ownership. No Optionee shall have any
of the rights of a stockholder with respect to any Shares subject to an
Option until the Option has been validly exercised. No adjustment shall be
made for dividends or distributions or other rights for which the record date
is prior to the date of exercise, except as provided in this Plan. The
Company shall provide to each Optionee a copy of the annual financial
statements of the Company, at such time after the close of each fiscal year
of the Company as they are released by the Company to its stockholders.
11. Adjustment of Option Shares. In the event that the number
of outstanding shares of Common Stock of the Company is changed by a stock
dividend, stock split, reverse stock split, combination, reclassification or
similar change in the capital structure of the Company without consideration,
the number of Shares available under this Plan and the number of Shares
subject to outstanding Options and the exercise price per share of such
Options shall be proportionately adjusted, subject to any required action
by the Board or stockholders of the Company and compliance with applicable
securities laws; provided, however, that no certificate or scrip representing
fractional shares shall be issued upon exercise of any Option and any
resulting fractions of a Share shall be ignored.
12. No Obligation to Employ. Nothing in this Plan or any Option
granted under this Plan shall confer on any Optionee any right to continue
as a director of the Company.
13. Compliance With Laws. The grant of Options and the issuance
of Shares upon exercise of any Options shall be subject to and conditioned
upon compliance with all applicable requirements of law, including without
limitation compliance with the Securities Act, compliance with all other
applicable state securities laws and compliance with the requirements of any
stock exchange or national market system on which the Shares may be listed.
The Company shall be under no obligation to register the Shares with the
Securities and Exchange Commission or to effect compliance with the
registration or qualification requirement of any state securities laws,
stock exchange or national market system.
l4. Acceleration of Options. In the event of (i) a dissolution
or liquidation of the Company, (ii) a merger in which the Company is not the
surviving corporation, the sale of substantially all of the assets of the
Company, (iii) any other transaction which qualifies as a "corporate
transaction" under Section 424 of the Code wherein the stockholders of the
Company give up all of their equity interest in the Company or (iv) a change
in the composition of the Board by reason of a contested election such that
a majority of the Board members cease to be comprised of individuals who have
been members of the Board immediately prior to such change, the vesting of
all Options granted pursuant to the Plan will accelerate and the Options will
become exercisable in full prior to the consummation of such event at such
times and on such conditions as the Committee determines.
15. Amendment or Termination of Plan. The Committee may at any
time terminate or amend this Plan but not the terms of any outstanding
Option; provided, however, that the Committee shall not, without the approval
of the stockholders of the Company, increase the total number of Shares
available under this Plan (except by operation of the provisions of Sections
4 and 11 above) or change the class of persons eligible to receive Options.
Further, the provisions in Sections 6 and 7 of this Plan shall not be amended
more than once every six (6) months, other than to comport with changes in
the Code, the Employee Retirement Income Security Act or the rules
thereunder. In any case, no amendment of this Plan may adversely affect
any then outstanding Options or any unexercised portions thereof without
the written consent of the Optionee.
16. Term of Plan. Options may be granted pursuant to this Plan
from time to time within a period of ten (10) years from the date this Plan
is adopted by the Board of Directors.
17. Certain Definitions. As used in this Plan, the following
terms shall have the following meanings:
17.1 "Parent" means any corporation (other than the
Company) in an unbroken chain of corporations ending with the Company if, at
the time of the granting of the Option, each of such corporations other than
the Company owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain.
17.2 "Subsidiary" means any corporation (other than the
Company) in an unbroken chain of corporations beginning with the Company if,
at the time of granting of the Option, each of the corporations other than
the last corporation in the unbroken chain owns stock possessing 50% or more
of the total combined voting power of all classes of stock in one of the
other corporations in such chain.
17.3 "Affiliate" means any corporation that directly, or
indirectly through one or more intermediaries, controls or is controlled by,
or is under common control with the Company where "control" (including the
terms "controlled by" and "under common control with") means the possession,
direct or indirect, of the power to cause the direction of the management and
policies of the corporation, whether through the ownership of voting
securities, by contract or otherwise.
17.4 "Fair Market Value" shall mean, as of any date, the
value of a share of the Company's Common Stock determined as follows:
(a) the closing price of a share on the principal exchange on which shares
are then trading, if any, on the last business day before such date, or, if
shares were not traded on such date, then on the next preceding trading day
during which a sale occurred; (b) if the shares are not traded on an exchange
but quoted on the Nasdaq Stock Market or a successor quotation system,
(i) the closing price (if the shares are then listed as a National Market
Issue on the Nasdaq National Market) or (ii) the mean between the closing
representative bid and asked prices (in all other cases) for the shares on
the last business day before such date as reported by the Nasdaq Stock Market
or such successor quotation system; or (c) if the shares are not publicly
traded on an exchange and not quoted on the Nasdaq Stock Market or a
successor quotation system, the mean between the closing bid and asked
prices for the shares on the last business day before such date.
Integrated Device Technology, Inc.
1994 Directors Stock Option Plan
INTEGRATED DEVICE TECHNOLOGY, INC.
1994 DIRECTORS STOCK OPTION PLAN
DIRECTORS NONQUALIFIED STOCK OPTION AGREEMENT
Participant: __________________ ID: __________________
Social Security No.: __________________
Address: __________________
You have been granted a nonqualified stock option (this "Option") to purchase
Common Stock of Integrated Device Technology, Inc. as follows:
Nonqualified Stock Option Agreement No.: __________________
Date of Grant: __________________
Exercise Price Per Share: __________________
Total Number of Shares Granted: __________________
Total Exercise Price of Shares Granted: __________________
Expiration Date: __________________
Capitalized terms not defined below shall have the meaning ascribed to them
in the Integrated Device Technology, Inc. 1994 Directors Stock Option Plan
(the "Plan").
If the Participant set forth above ceases to be a member of the Board for any
reason, except death or disability, this Option to the extent (and only to
the extent) that it would have been exercisable by Participant on the
Termination Date, may be exercised by Participant no later than three (3)
months after the Termination Date, but in any event no later than the
Expiration Date set forth above. If Participant ceases to be a member of
the Board because of death or disability of Participant, this Option, to the
extent (and only to the extent) that it is exercisable by Participant on the
Termination Date, may be exercised by Participant (or Participant's legal
representative) no later than twelve (12) months after the Termination Date,
but in any event no later than the Expiration Date.
This Option may not be transferred in any manner other than by will or by
the laws of descent and distribution and may be exercised during the lifetime
of Participant only by Participant. The terms of this Option shall be
binding upon the executors, administrators, successors and assigns of
Participant.
By our signatures we agree that this Option is granted under and governed by
the terms of the Plan. The term of this Option is ten (10) years from the
Date of Grant set forth above. This Option shall be exercisable in
accordance with the schedule on the Grant Summary attached hereto as Exhibit
A.
_____________________________________ ___________________
For INTEGRATED DEVICE TECHNOLOGY, INC. Date
_____________________________________ ___________________
Participant Date
EXHIBIT A
GRANT SUMMARY
EXHIBIT B
INTEGRATED DEVICE TECHNOLOGY, INC.
Stock Option Exercise Agreement
I hereby elect to purchase the number of shares of Common Stock as set forth
below, pursuant to the Integrated Device Technology, Inc. 1994 Directors
Stock Option Plan (the "Plan"):
Participant ______________________ Number of Shares Purchased: _____________
Social Security Number:___________ Purchase Price per Share: _____________
Address: _________________________ Aggregate Purchase Price: _____________
__________________________________ Date of Stock Option Agreement: _________
Type of Stock Option Exact Name of Title to Shares:
[ ] Incentive Stock Option _________________________________________
[ ] Nonqualified Stock Option
Participant hereby delivers to the Company the Aggregate Purchase Price as
set forth above, as follows (check as applicable and complete):
[ ] in cash (by check) in the amount of $__________________, receipt of
which is acknowledged by the Company;
[ ] through a "same-day-sale" commitment, delivered herewith, from
Participant and the NASD Dealer named therein, in the amount of
$___________________; or
[ ] through a "margin" commitment, delivered herewith from Participant
and the NASD Dealer named therein, in the amount of $_______________.
Tax Consequences. PARTICIPANT UNDERSTANDS THAT PARTICIPANT MAY
SUFFER ADVERSE TAX CONSEQUENCES AS A RESULT OF PARTICIPANT'S PURCHASE OR
DISPOSITION OF THE SHARES. PARTICIPANT REPRESENTS THAT PARTICIPANT HAS
CONSULTED WITH ANY TAX CONSULTANT(S) PARTICIPANT DEEMS ADVISABLE IN
CONNECTION WITH THE PURCHASE OR DISPOSITION OF THE SHARES AND THAT
PARTICIPANT IS NOT RELYING ON THE COMPANY FOR ANY TAX ADVICE.
Entire Agreement. The Plan, Stock Option Agreement and Grant Summary
are incorporated herein by reference. This Exercise Agreement, the Plan,
the Stock Option Agreement and the Grant Summary constitute the entire
agreement of the parties and supersede in their entirety all prior
undertakings and agreements of the Company and Participant with respect to
the subject matter hereof, and are governed by California law except for that
body of law pertaining to conflict of laws.
Date: __________________
__________________________
Signature of Participant
June 29, 1994
Mr. Phillip Pare'
Vice President, General Manager - Special Projects
Integrated Device Technology, Inc.
1566 Moffett Street
Salinas, CA 93905
SUBJECT: INTEGRATED DEVICE TECHNOLOGY, INC.
FAB FOUR - OREGON
Dear Phillip:
McCarthy is pleased to present our preliminary budget proposal for the above
referenced project. Our preliminary budget includes site development, building
shell and core and the two story office build-out.
We propose a preliminary budget of TEN MILLION,SIX HUNDRED TWENTY ONE
THOUSAND,SIX HUNDRED THIRTY TWO DOLLARS, (10,621,632) excluding a Payment and
Performance Bond.
We propose a 16 week construction schedule to complete a weather-tight
building shell,including the basement sub-fab after completion of the site
development. We propose a 4 week site development schedule including
mobilization, excavation and utilities, prior to starting the
slab-on-grade and basement sub-fab.
Phillip, we recognize the importance of the schedule and have based our
preliminary budget on building systems and methods that allow accelerated
construction.
Thank you for the opportunity to assist you in the development of the IDT
Fab Four project. Should you have any qestions,please do not hesitate to
call me. We look forward to talking with you soon.
Sincerely,
Arne J. Hall
Director
CC: Del Bishop - McCarthy
Ed Weinmann - McCarthy
John Bailey - McCarthy
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THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
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AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-02-1995
<PERIOD-END> OCT-02-1994
<CASH> 87,774
<SECURITIES> 38,120
<RECEIVABLES> 63,600
<ALLOWANCES> 3,728
<INVENTORY> 32,755
<CURRENT-ASSETS> 246,971
<PP&E> 331,684
<DEPRECIATION> 188,514
<TOTAL-ASSETS> 397,566
<CURRENT-LIABILITIES> 94,360
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<COMMON> 34
0
0
<OTHER-SE> 260,339
<TOTAL-LIABILITY-AND-EQUITY> 397,566
<SALES> 190,628
<TOTAL-REVENUES> 190,628
<CGS> 80,422
<TOTAL-COSTS> 80,422
<OTHER-EXPENSES> 65,904
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,854
<INCOME-PRETAX> 45,169
<INCOME-TAX> 11,285
<INCOME-CONTINUING> 33,884
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