SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant / X /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ X / Preliminary Proxy Statement
/ / Confidential. For Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Ramtron International Corporation
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ x / No fee required.
/ / Fee computed on table below per Exchange Act Rule 14-6(i)(4) and 0-11
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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PRELIMINARY COPY
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RAMTRON INTERNATIONAL CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
May 28, 1998
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Stockholders (the
"Annual Meeting") of Ramtron International Corporation, a Delaware
corporation (the "Company"), will be held on May 28, 1998, at 10:30 a.m.,
Mountain Standard Time, at the Broadmoor Hotel, One Lake Circle, Colorado
Springs, Colorado 80906, for the following purposes, each as more fully
described in the attached Proxy Statement:
1. To elect seven directors. The names of the nominees intended to be
presented for election are: L. David Sikes, William G. Howard, Greg B. Jones,
George J. Stathakis, William G. Tull, L.T. Womack and Michael L. Rothschild.
2. To approve and reserve for issuance the shares of Common Stock issuable
(i) upon the conversion of shares of the Company's Series A Convertible
Preferred Stock ("Series A Preferred Stock") issued in a February 1998 private
placement, (ii) upon conversion of the Series A Preferred Stock to be issued
as dividends on the outstanding Series A Preferred Stock and (iii) in respect
of related placement agents' warrants to purchase shares of Series A Preferred
Stock.
3. To ratify the appointment of Arthur Andersen LLP as independent auditors
of the Company for the fiscal year ending December 31, 1998.
4. To transact other business as may properly come before the Annual Meeting
or any adjournment(s) thereof.
Only record holders of Common Stock at the close of business on April 6, 1998,
are entitled to notice of, and to vote at, the Annual Meeting and at any
adjournment(s) thereof.
All stockholders are cordially invited to attend the Annual Meeting in person.
Whether or not you expect to attend the Annual Meeting in person, in order to
ensure your representation at the Annual Meeting, please mark, sign, date and
return the enclosed proxy card as promptly as possible in the postage-prepaid
envelope enclosed for that purpose. Any stockholder attending the Annual
Meeting may vote in person even if such stockholder has returned a proxy.
By Order of the Board of Directors
/S/ Richard L. Mohr
-----------------------
Richard L. Mohr
Secretary
Colorado Springs, Colorado
April 20, 1998
<PAGE>
PRELIMINARY COPY
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RAMTRON INTERNATIONAL CORPORATION
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited by and on behalf of the Board of Directors of
Ramtron International Corporation, a Delaware corporation ("Ramtron" or the
"Company"), for use at the Annual Meeting of Stockholders (the "Annual
Meeting") to be held on Thursday, May 28, 1998, at 10:30 a.m., Mountain
Standard Time, or at any adjournment(s) thereof, for the purposes set forth
herein and in the accompanying Notice of Annual Meeting of Stockholders. The
Annual Meeting will be held at the Broadmoor Hotel, One Lake Circle, Colorado
Springs, Colorado 80906.
These proxy solicitation materials were first mailed on or about April 20,
1998 to all stockholders entitled to vote at the Annual Meeting.
Only stockholders of record at the close of business on April 6, 1998 (the
"Record Date") are entitled to notice of, and to vote at, the Annual
Meeting. At the Record Date, 37,953,772 shares of Common Stock were issued
and outstanding.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Secretary of the
Company a written notice of revocation or a duly executed proxy bearing a
later date or by attending the Annual Meeting and voting in person.
The Company's principal place of business is 1850 Ramtron Drive, Colorado
Springs, Colorado 80921.
VOTING AND SOLICITATION
On all matters, each share of Common Stock has one vote. The affirmative vote
of a majority of shares present, in person or by proxy, and entitled to vote
at the Annual Meeting is required for the approval of matters submitted to the
stockholders for a vote. Abstentions are counted as shares that are present
and entitled to vote for purposes of determining the presence of a quorum.
Abstentions, however, do not constitute a vote "for" or "against" any
matter and thus will be disregarded in the calculation of a plurality or of
"votes cast." Broker non-votes are counted as shares that are present and
entitled to vote for purposes of determining a quorum. If a broker indicates
on the proxy that it does not have discretionary authority to vote on a
particular matter as to certain shares, those shares will be counted for
purposes of determining the presence of a quorum but will not be treated as
present and entitled to vote with respect to that matter (even though such
shares are considered present and entitled to vote for quorum purposes and may
be entitled to vote on other matters).
<PAGE>
The costs of this solicitation will be borne by the Company. The Company has
retained the services of Corporate Investor Communications, Inc. to assist in
distributing proxy materials to brokerage houses, banks, custodians and other
nominee holders. The estimated cost of such services is $2,500 plus out-of-
pocket expenses. Although there are no formal agreements to do so, the
Company may reimburse brokerage houses and other persons representing
beneficial owners of shares for their expenses in forwarding proxy materials
to such beneficial owners. Proxies may be solicited personally or by
telephone or telegram by certain of the Company's directors, officers and
regular employees, without additional compensation.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Proposals of stockholders of the Company which are intended to be presented by
such stockholders at the next annual meeting of stockholders of the Company to
be held after the Annual Meeting must be received by the Company no later than
December 15, 1998 in order that they may be included in the proxy statement
and form of proxy relating to that annual meeting. It is recommended that
stockholders submitting proposals direct them to the Secretary of the Company
by certified mail, return receipt requested, in order to ensure timely
delivery. No such proposals were received with respect to the Annual Meeting
scheduled for May 28, 1998.
PROPOSAL 1 - ELECTION OF DIRECTORS
NOMINEES
A board of seven directors will be elected at the Annual Meeting. Unless
otherwise instructed, proxy holders will vote the proxies received by them for
the seven nominees named below, all of whom are currently directors of the
Company. It is not expected that any nominee will be unable or will decline
to serve as a director. If, however, any nominee of the Company is unable or
declines to serve as a director at the time of the Annual Meeting, the proxies
will be voted for any nominee who shall be designated by the present Board of
Directors to fill the vacancy. In the event that additional persons are
nominated for election as directors, the proxy holders intend to vote all
proxies received by them for the nominees listed below and not for a greater
number of persons than the number of nominees listed below. The term of
office of each person elected as a director at the Annual Meeting will
continue until the next annual meeting of stockholders and such time as his
successor is duly elected and qualified or until his earlier resignation,
removal or death.
<PAGE>
The names of the nominees, who constitute all of the current directors, and
certain information about them, are set forth below:
Name Age Position(s) with the Company
- ---- --- ----------------------------
L. David Sikes 56 Chairman of the Board and
Chief Executive Officer
Greg B. Jones 50 Director, President and
Chief Operating Officer
William G. Howard 56 Director
George J. Stathakis 67 Director
William G. Tull 69 Director
L. T. Womack 68 Director
Michael L. Rothschild 45 Director
In July 1995, the Company entered into a debt conversion agreement (the "1995
Debt Conversion Agreement") with the National Electrical Benefit Fund (the
"Fund"); Oren L. Benton and the bankruptcy estates of Oren L. Benton, Energy
Fuels Exploration Co. and Nuexco Trading Corporation; BEA Associates, Inc.
("BEA"); Nordostschweizerische Kraftwerke AG ("NOK"); Kernkraftwerk
Gosgen-Daniken AG ("KKG") and Kernkraftwerk Leibstadt AG ("KKL"). Pursuant
to the 1995 Debt Conversion Agreement, Mr. Benton, the Fund, BEA and the
Company have agreed that for as long as any of Mr. Benton, the Fund or BEA
beneficially owns 5% or more of the issued and outstanding shares of the
Company's Common Stock, the Company and the other two of such stockholders
will use their best efforts to cause a designee of each such 5% stockholder to
serve on the Company's Board of Directors. The Company has also agreed
pursuant to a March 1989 Stock and Warrant Purchase Agreement between the
Company and the Fund that for as long as the Fund owns 5% or more of the
issued and outstanding shares of the Company's Common Stock, the Company will
use its best efforts to cause one individual designated by the Fund to serve
on the Company's Board of Directors. William G. Tull and Michael L.
Rothschild are the Fund's and BEA's current designees, respectively, on the
Board of Directors.
Mr. Sikes became the Company's Chairman of the Board and Chief Executive
Officer in April 1995 and has been a director of the Company since September
1992. Prior to becoming Chairman of the Board and Chief Executive Officer,
Mr. Sikes was the Company's President and Chief Operating Officer from July
1992 until January 1995, at which time he left the Company and joined Micro
Component Technology Inc., a semiconductor equipment manufacturer, as
Chairman, President and Chief Executive Officer from January 1995 until April
1995. Prior to joining Ramtron, Mr. Sikes was President and Chief Executive
Officer of ASM America, Inc. ("ASM America"), a semiconductor equipment
company, from January 1991 until June 1992, and Executive Vice President and
General Manager of ASM Epitaxy, a semiconductor equipment manufacturer, from
February 1989 until December 1990. Prior to his tenure with ASM Epitaxy,
Mr. Sikes spent 18 years with Motorola, Inc. ("Motorola") in various
management and executive positions including Vice President and Director of
Semiconductor Research and Development Lab. His experience also includes
several management and engineering roles with Eastman Kodak and National
Semiconductor Corporation. Mr. Sikes received his Bachelor of Science degree
in Electrical Engineering from Massachusetts Institute of Technology.
<PAGE>
Mr. Jones became a director of the Company and the Company's President and
Chief Operating Officer in February 1995. Prior to becoming President and
Chief Operating Officer, Mr. Jones was Ramtron's Chief of Administration from
January 1995 until February 1995. Prior to joining Ramtron, Mr. Jones was
Marketing Director at Concord Services, Inc., from November 1993 until January
1995. From August 1990 until November 1993, Mr. Jones served as Director of
Vertical Reactors at ASM America. Prior to his work with ASM America,
Mr. Jones held a variety of management positions in sales, marketing,
corporate planning and project management. He holds a Bachelor of Science
degree in Engineering from the U.S. Naval Academy, Annapolis and a Master of
Science degree in Management Sciences from Stanford University.
Dr. Howard became a director of the Company in July 1994. Since September
1990, Dr. Howard has been an independent engineering consultant to various
entities, including SEMETECH, the Semiconductor Industry Association and VLSI
Technology. From October 1987 until December 1990, he served as a Senior
Fellow at the National Academy of Engineering while on leave from Motorola.
From 1969 to 1990, Dr. Howard was employed by Motorola in its integrated
circuits operations where he most recently served as Corporate Senior Vice
President and Director of Research and Development. Dr. Howard is a member of
the National Academy of Engineering and a fellow of the Institute of
Electrical Engineers and of the American Association for the Advancement of
Science. Dr. Howard is also a director of BEI Technologies, Inc., a
manufacturer of electronic sensors, Credence Systems, Inc., a manufacturer of
electronic test equipment, VLSI Technology, Inc., a manufacturer of integrated
circuits, and Xilinx, Inc., a manufacturer of integrated circuits.
Mr. Stathakis has been a director of the Company since March 1990.
Mr. Stathakis also served as Chairman of the Board and Chief Executive Officer
of the Company from March 1990 until June 1994 and, in an interim capacity,
from February 1995 until April 1995. From 1986 until 1989, Mr. Stathakis
served as Chairman of the Board and Chief Executive Officer of International
Capital Corporation, a subsidiary of American Express. Prior to his
involvement in international investment banking, Mr. Stathakis retired from
General Electric Corporation ("GE") after having spent 32 years in
management and executive positions. In 1971, he was appointed Vice President
of GE and General Manager of the Nuclear Energy Division. In 1977, he was
appointed General Manager of GE's International Trading Operations.
Mr. Stathakis founded the General Electric Trading Company in 1982 and was
appointed its first President and Chief Executive Officer. Mr. Stathakis is
also a director of Racom Systems, Inc., a smartcard development company of
which the Company is a principal stockholder, Calpine Corp., an electric power
producer and Oregon Steel Mills, Inc., a steel producer. Mr. Stathakis
graduated from the University of California at Berkeley with Bachelor of
Science and Master of Science degrees in engineering. In 1985, Mr. Stathakis
was appointed by President Reagan as a member of the President's Export
Council, and he served on such Council until 1987.
<PAGE>
Mr. Tull has been a director of the Company since January 1991 when the Fund
selected him to serve as its designee on the Company's Board of Directors.
Since January 1990, he has been an independent financial advisor and has
provided such services to the Fund since June 1990. From December 1988 to
December 1989, Mr. Tull was Chairman of the Board of Security Trust Company,
N.A., based in Washington D.C., and from April 1985 to January 1990, Mr. Tull
was President of American Security Bank, N.A., based in Washington D.C.
Mr. Womack has been a director of the Company since July 1994. From 1957
until his retirement in 1988, Mr. Womack was with the international accounting
firm of KPMG Peat Marwick where he most recently served as the managing
partner of the firm's Lincoln, Nebraska office. Mr. Womack has a number of
active investment interests, including banking, and serves on the board of
directors of several privately owned companies.
Mr. Rothschild has been a director of the Company since October 1996 when BEA
selected him as its designee on the Company's Board of Directors. Since
January 1996, Mr. Rothschild has been the President and Chief Executive
Officer of Maxager Technology, Inc., a developer of factory management
software systems. Since August 1991, Mr. Rothschild has also been the
President of The Bionomics Institute, an economic educational foundation.
Mr. Rothschild is the author of "Bionomics: Economy as Ecosystem" (Holt,
1990). Previously, he was a consultant with The Boston Consulting Group.
Mr. Rothschild earned law and MBA degrees from Harvard University. He is also
a founding director of CyberCash, Inc., a developer of secure payment systems
for internet commerce.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE ELECTION
OF EACH OF THE NOMINEES NAMED ABOVE.
INFORMATION REGARDING THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors held a total of five meetings during 1997 and acted by
unanimous written consent one time.
The Compensation Committee, which during 1997 was comprised of
Dr. Howard and Messrs. Stathakis and Tull, met four times during 1997. The
Compensation Committee makes recommendations to the Board of Directors
regarding salaries, bonuses, stock option grants and other compensation and
benefits for directors, officers and employees.
The Executive Committee, which during 1997 was comprised of L. David Sikes,
William G. Howard and George J. Stathakis, did not meet during 1997. The
Executive Committee is currently comprised of Messrs. Sikes and Stathakis and
Dr. Howard and acts as the liaison between the Company and legal counsel
retained by the Company in connection with the filing by Oren L. Benton, a
former principal stockholder and former director of the Company, for
protection under Chapter 11 of the United States Bankruptcy Code.
<PAGE>
The Audit Committee, which during 1997 was comprised of Mr. Tull and
Mr. Womack, met one time during 1997. The Audit Committee is currently
comprised of Messrs. Tull and Womack. The Audit Committee recommends the
engagement of independent auditors, reviews the scope of audits proposed by
the independent auditor, reviews results of audit engagements and generally
performs functions related to financial matters of the Company.
The Company does not have a nominating committee or any committee performing
the functions thereof.
COMPENSATION OF DIRECTORS. Directors other than Mr. Tull who are not officers
of the Company are paid monthly fees of $1,000, plus $1,500 for each Board of
Directors' meeting attended in person. Mr. Tull, as the Fund's designee on
the Board, is not paid such director fees by the Company. Pursuant to the
March 1989 Stock and Warrant Purchase Agreement between the Company and the
Fund, any compensation payable by the Company to Mr. Tull as a director of the
Company is required to be paid to the Fund rather than to Mr. Tull. Directors
are also reimbursed for reasonable expenses for attending Board of Directors'
meetings. Non-employee directors of the Company are eligible to be granted
nonstatutory stock options under the Company's Amended and Restated 1986 Stock
Option Plan, 1989 Nonstatutory Stock Option Plan and the 1995 Stock Option
Plan.
In July 1995, Mr. Stathakis entered into a consulting agreement with the
Company pursuant to which he agreed to perform consulting services for the
Company until December 31, 1996 in consideration of $7,000 per month, plus
travel expenses for travel at the Company's request. Pursuant to the terms of
such consulting agreement, the Company has options to extend the term of the
agreement for six additional periods of six months each. In December 1996,
the Company exercised a six month extension to such agreement for
Mr. Stathakis to perform consulting services for the Company through June 30,
1997. In July 1997, the Company exercised a second extension to such
agreement for Mr. Stathakis to perform consulting services for the Company
until December 1998 with a decrease in consideration for such services to
$5,800 per month.
During 1997, the Company paid to Mr. Stathakis $85,000 as payment for
consulting fees and reimbursement for expenses owed to Mr. Stathakis in
connection with consulting services performed by Mr. Stathakis for the benefit
of the Company during 1997.
EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Company, and certain information about them, are
as follows:
Name Age Position(s)
- ---- --- -----------
L. David Sikes 56 Chairman of the Board and Chief Executive Officer
Greg B. Jones 50 Director, President and Chief Operating Officer
Richard L. Mohr 38 Executive Vice President and Chief Financial
Officer
Donald G. Carrigan 50 Vice President of Sales and Marketing
Craig W. Rhodine 34 Vice President and General Manager
<PAGE>
Officers are appointed by and serve at the discretion of the Board of
Directors. Each officer was appointed for a term ending upon his death,
resignation, removal or appointment and qualification of a successor. For
information concerning Mr. Sikes and Mr. Jones, see "Nominees"above.
Mr. Mohr joined the Company in January 1991 as Controller. In April 1994, he
was named Vice President and Controller and served in that position until
February 1995 when he was named Executive Vice President and Chief Financial
Officer. Mr. Mohr is a certified public accountant and has over 15 years of
professional finance experience including 11 years employed with high
technology and manufacturing companies. From February 1987 until December
1990, Mr. Mohr was the Chief Financial Officer of Packaging Research
Corporation, an equipment manufacturing company. Mr. Mohr received his
Bachelor of Science degree in Accounting from Colorado State University and a
Master of Business Administration degree in Accounting and Finance from Regis
University.
Mr. Carrigan joined the Company in November 1989 as Sales Manager and in July
1990 was named Director of Marketing and Sales and held that position
until October 1992, when he became Vice President of Sales. In July 1996
Mr. Carrigan became an executive officer of the Company and in January 1997,
Mr. Carrigan was named Vice President of Sales and Marketing. Mr. Carrigan
has over 25 years of semiconductor industry experience in research and
development, design, operations, marketing and sales. Prior to joining the
Company, Mr. Carrigan held various managerial and technical positions,
including Vice President of Sales and Marketing for Information Storage
Incorporated, an optical storage system venture between Eastman Kodak Co. and
Kawasaki Steel. He also held positions as Product and Test Engineering
Manager and Director of Marketing for INMOS Corporation; Design Manager for
NCR Microelectronics; IC Design Engineer in the Corporate Research Labs of
Texas Instruments; and Design Manager for SRAM's with the Advanced MOS Memory
Division of Texas Instruments. Mr. Carrigan received his Bachelor of Science
degree in Electrical Engineering from the University of Tennessee and a Master
of Science degree in Electrical Engineering from Southern Methodist
University.
Mr. Rhodine joined the Company in August 1992 as Senior Product Engineer and
in February 1994 he was named Engineering Manager. In August 1995,
Mr. Rhodine was named General Manager of Enhanced Memory Systems, Inc.
("EMS"), a wholly owned subsidiary of Ramtron, and in March 1997,
Mr. Rhodine became Vice President and General Manager of EMS. Mr. Rhodine
became an executive officer of the Company in January 1998. Mr. Rhodine has
over 12 years of experience in the semiconductor industry in engineering,
development, and operations. Prior to joining the Company, Mr. Rhodine was a
Member of the Group Technical Staff at Texas Instruments where he was involved
with memory product development. Mr. Rhodine received his Bachelor of Science
degree in Electrical Engineering from the University of Wyoming.
<PAGE>
SECURITY OWNERSHIP OF
PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of March 15, 1998 by: (i) each
person who is known by the Company to own beneficially more than 5% of the
outstanding shares of the Company's Common Stock; (ii) each of the Company's
directors; (iii) each of the executive officers named in the Summary
Compensation Table on page 8; and (iv) all current directors and executive
officers of the Company as a group:
Shares of Common Stock Percent
Name of Beneficial Owner(1) Beneficially Owned of Class
- --------------------------- ---------------------- --------
National Electrical Benefit Fund 12,859,055(2) 30.2%
1125 15th Street, N.W., Room 912
Washington, D.C. 20005
NTC Liquidating Trust 7,589,390(3) 18.5
Price Waterhouse
200 E. Randolph Dr., STE 7600
Chicago, IL 60601
BEA Associates, Inc. 3,831,352(4) 10.1
One Citicorp Center
153 East 53rd Street
New York, New York 10022
Benton Liquidating Trust 2,069,130(5) 5.5
Price Waterhouse
200 E. Randolph Dr., STE 7600
Chicago, IL 60601
L. David Sikes 254,250(6) *
George J. Stathakis 225,500(7) *
Elliott M. Philofsky 92,714(8) *
Richard L. Mohr 91,165(9) *
Greg B. Jones 88,500(10) *
Donald G. Carrigan 66,341(11) *
L.T. Womack 15,000(12) *
William G. Howard 15,000(12) *
Michael L. Rothschild 15,000(13) *
William G. Tull 0 *
All current directors and executive
officers as a group (10 persons) 826,970(14) 2.1
- ---------------
<PAGE>
* Less than one percent
(1) Such persons have sole voting and investment power with respect to all
shares of Common Stock shown as being beneficially owned by them, subject to
community property laws where applicable, and the information contained in the
footnotes to this table.
(2) Includes: (i) 8,193,399 shares of Common Stock owned by the Fund; (ii)
4,028,485 shares of Common Stock issuable upon exercise of the warrants held
by the Fund; (iii) approximately 627,171 shares issuable as of March 15, 1997
upon conversion of a convertible promissory note dated August 31, 1995 made by
the Company in favor of the Fund; and (iv) 10,000 shares issuable to the Fund
pursuant to options which are exercisable or become exercisable within 60 days
after March 15, 1997. The trustees of the Fund share voting and dispositive
powers as to such shares.
(3) In an amended Schedule 13D dated December 2, 1997, the NTC Liquidating
Trust reported sole voting and sole dispositive power as to 7,589,390 shares
consisting of: (i) 4,628,174 shares of Common Stock owned directly; and
(ii) 2,961,216 shares of Common Stock issuable upon exercise of the warrants
held by the NTC Liquidating Trust.
(4) Such shares are held in discretionary accounts managed by BEA.
(5) In a Schedule 13D dated October 8, 1997, the Benton Liquidating Trust
reported sole voting and sole dispositive power as to 2,069,130 shares of
Common Stock owned directly.
(6) Includes: (i) 8,000 shares of Common Stock owned directly; and
(ii) 246,250 shares issuable to Mr. Sikes pursuant to options which are
exercisable or become exercisable within 60 days after March 15, 1998.
(7) Includes: ( i) 5,500 shares of Common Stock owned directly; and
(ii) 220,000 shares issuable to Mr. Stathakis pursuant to options which are
exercisable or become exercisable within 60 days after March 15, 1998.
(8) Includes: (i) 14,314 shares of Common Stock owned directly; and
(ii) 78,400 shares issuable to Dr. Philofsky pursuant to options which are
exercisable or become exercisable within 60 days after March 15, 1998. In
January 1998, Dr. Philofsky resigned from his position as Senior Vice
President and Chief Technical Officer and as a result of such resignation is
no longer an officer of the Company. Dr. Philofsky remains employed by the
Company and currently holds the position of Chief Scientist for ferroelectric
technology.
(9) Includes: (i) 9,890 shares of Common Stock owned directly; and
(ii) 81,275 shares issuable to Mr. Mohr pursuant to options which are
exercisable or become exercisable within 60 days after March 15, 1998.
<PAGE>
(10) Includes: (i) 11,000 shares of Common Stock owned directly; and
(ii) 77,500 shares issuable to Mr. Jones pursuant to options which are
exercisable or become exercisable within 60 days after March 15, 1998.
(11) Includes: (i) 9,841 shares of Common Stock owned directly; and
(ii) 56,500 shares issuable to Mr. Carrigan pursuant to options which are
exercisable or become exercisable within 60 days after March 15, 1998.
(12) Such shares of Common Stock are issuable pursuant to options which are
exercisable or become exercisable within 60 days after March 15, 1998.
(13) Includes: (i) 10,000 shares of Common Stock owned directly; and
(ii) 5,000 shares issuable to Mr. Rothschild pursuant to options which are
exercisable or become exercisable within 60 days after March 15, 1998.
(14) Includes 767,739 shares of Common Stock issuable to current officers and
directors pursuant to options which are exercisable or become exercisable
within 60 days after March 15, 1998.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), the Company's directors and officers and persons holding
more than ten percent of the Company's Common Stock are required to report
their ownership of the Company's Common Stock and any changes in that
ownership to the Securities and Exchange Commission (the "SEC"). The
specific due dates for these reports have been established by the SEC, and the
Company is required to report in this Proxy Statement any failure to file by
the established dates. To the knowledge of the Company and based solely on a
review of the Section 16(a) reports furnished to the Company during 1997,
L. T. Womack, a director of the Company, was delinquent in filing one Form 4
relating to one transaction.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information for the three years ended
December 31, 1997 concerning compensation paid or accrued by the Company to or
on behalf of the Company's Chief Executive Officer during 1997 and each of the
<PAGE>
four other most highly compensated executive officers of the Company whose
compensation during 1997 exceeded $100,000:
Long-Term
Compensation Awards
Annual Compensation ---------------------
Name and -------------------- Securities
Principal Position Year Salary($) Bonus($) Underlying Options(#)
- ------------------ ---- --------- -------- ---------------------
L. David Sikes 1997 $355,000 $75,000 50,000
Chairman of the Board and 1996 335,005 100,000 50,000
Chief Executive Officer 1995 273,643 50,000 258,750(1)
Greg B. Jones 1997 179,900 -- --
President and Chief 1996 167,500 105,044 145,000
Operating Officer 1995 141,831 60,000 80,000(1)
Richard L. Mohr 1997 175,333 20,000 50,000
Executive Vice President 1996 131,300 98,183 137,451
and Chief Financial 1995 111,975 50,000 72,549(1)
Officer
Elliott M. Philofsky(2) 1997 159,516 -- 5,600
Sr. Vice President 1996 152,900 101,987 46,001
and Chief Technical 1995 145,500 50,000 53,999(1)
Officer
Donald G. Carrigan(3) 1997 139,225 -- 50,000
Vice President of
Sales and Marketing
- ---------------
(1) Amounts shown for 1995 with respect to Messrs. Sikes, Jones, Mohr and
Dr. Philofsky include options to purchase 258,750, 40,000, 42,549 and 53,999
shares, respectively, which were originally granted under the Company's 1989
Nonstatutory Stock Option Plan (the "1989 Plan") at various times between
June 1992 and April 1995 and which were amended in July 1995 pursuant to the
1995 Debt Conversion Agreement solely to reduce the exercise prices thereof to
$4.15 per share.
(2) In January 1998, Dr. Philofsky resigned from his position as Senior Vice
President and Chief Technical Officer and as a result of such resignation is
no longer an officer of the Company. Dr. Philofsky remains employed by the
Company and currently holds the position of Chief Scientist for ferroelectric
technology.
(3) Mr. Carrigan became an executive officer of the Company in July 1996 and
was employed by the Company in various non-executive officer positions from
November 1989 until July 1996.
<PAGE>
OPTION GRANTS IN 1997
The following table sets forth certain information concerning stock option
grants in 1997 to each of the executive officers named in the Summary
Compensation Table who received stock option grants in 1997.
Individual Grants
------------------------------------------
No. of Potential Realizable
Securities % of Total Value at Assumed
Underlying Options Annual Rates of Stock
Options Granted to Exercise Price Appreciation
Granted Employees Price Expiration for Option Term(2)
Name (#) in 1997(1) ($/Share) Date 5%($) 10%($)
- ---- ---------- ---------- --------- ---------- -------- ---------
L. David Sikes
50,000(3) 12.4% $6.94 02/17/07 $218,226 $553,029
Richard L. Mohr
50,000(4) 12.4 5.13 05/28/07 161,154 408,397
Elliott M. Philofsky
5,600(5) 1.4 6.75 01/05/07 23,772 60,243
Donald G. Carrigan
50,000(4) 12.4 5.13 05/28/07 161,154 408,397
- ---------------
(1) The Company granted options to purchase an aggregate of 401,700 shares to
employees in 1997.
(2) Potential values are net of exercise price and before taxes payable in
connection with the exercise of such options or the subsequent sale of shares
acquired upon the exercise of such options. These values represent certain
assumed rates of appreciation (i.e., 5% and 10% compounded annually over the
term of such options) based on the Securities and Exchange Commission's rules.
The actual values, if any, will depend upon, among other factors, the future
performance of the Company's Common Stock, overall market conditions and the
named officer's continued employment with the Company. Therefore, the
potential values reflected in this table may not necessarily be achieved.
(3) Such options were granted under the 1995 Stock Option Plan
(the "1995 Plan") and vest and become exercisable in four equal annual
installments commencing one year following the grant date. The exercise price
per share of such options is equal to the reported closing price of the
Company's Common Stock on the Nasdaq Stock Market on the date of grant.
<PAGE>
(4) Such options were granted under the 1989 Nonstatutory Stock Option Plan
(the "1989 Plan") and vest and become exercisable in four equal annual
installments commencing one year following the grant date. The exercise price
per share of such options is equal to the reported closing price of the
Company's Common Stock on the Nasdaq Stock Market on the date of grant.
(5) Such options were granted under the Amended and Restated 1986 Stock
Option Plan (the "1986 Plan") and vest and become exercisable in four equal
annual installments commencing one year following the grant date. The
exercise price per share of such options is the reported closing price of the
Company's Common Stock on the Nasdaq Stock Market on the date of grant.
AGGREGATED OPTIONS EXERCISED IN 1997 AND OPTION VALUES AT DECEMBER 31, 1997
The following table sets forth the aggregate number of options held as of the
end of 1997 by the executive officers named in the Summary Compensation Table.
None of the executive officers named in the Summary Compensation Table
exercised options during 1997.
Number of Securities Value of Unexercised
Underlying Unexercised Options In-the-Money Options
at 12/31/97(#) at 12/31/97($)*
------------------------------ --------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
L. David Sikes 171,250 187,500 $224,314 $141,300
Greg B. Jones 56,250 128,750 28,260 28,260
Richard L. Mohr 66,912 163,088 45,992 36,030
Elliott M. Philofsky 65,500 40,100 76,301 0
Donald G. Carrigan 47,875 102,125 43,097 21,900
- ---------------
* Represents the difference between the closing price of the Company's Common
Stock on December 31, 1997 as reported on the Nasdaq Stock Market
(i.e., $5.563 per share) and the exercise price of such options.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
AGREEMENTS
EMPLOYMENT AGREEMENTS. In March 1995, the Company entered into a three-
year employment agreement, effective on April 1, 1995, with Mr. Sikes in
connection with his becoming the Company's Chief Executive Officer and
Chairman of the Board. Pursuant to the agreement, Mr. Sikes would receive an
initial annual salary of $320,000. The agreement provides that if the Company
terminates Mr. Sikes' employment during the term of the agreement for any
reason other than for cause, the Company will be obligated to pay him his
then annual salary for the remainder of the three-year term. In May 1997, the
Board of Directors extended Mr. Sikes' employment agreement for a period of
two years beyond the original expiration date of April 1, 1998.
<PAGE>
In April 1997, the Company entered into a two-year employment agreement,
effective on April 1, 1997, with Mr. Mohr. Mr. Mohr will receive an initial
monthly salary of $15,000 under such employment agreement. The agreement
provides that if the Company terminates Mr. Mohr's employment during the term
of the agreement for any reason other than for cause, the Company will be
obligated to pay him his then annual salary for the remainder of the two-year
term. At the time of the agreement, Mr. Mohr was also guaranteed a $20,000
bonus, to be paid during 1998, in recognition of his performance during 1996
and the first quarter of 1997.
In January 1998, the Company entered into a two-year employment agreement,
effective on January 1, 1998, with Mr. Jones. Mr. Jones will receive an
initial annual salary of $200,000 under such employment agreement. The
agreement provides that if the Company terminates Mr. Jones' employment during
the term of the agreement for any reason other than for cause, the Company
will be obligated to pay him his then annual salary for the remainder of the
two-year term.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Company's Compensation Committee during 1997 were George J.
Stathakis, William G. Tull and William G. Howard. There were no executive
officers or employees of the Company that were members of the Company's
Compensation Committee during 1997.
TRANSACTIONS INVOLVING GEORGE J. STATHAKIS. In July 1995, Mr. Stathakis
entered into a consulting agreement with the Company pursuant to which he
agreed to perform consulting services for the Company until December 31, 1996
in consideration of $7,000 per month. Pursuant to the terms of such
consulting agreement, the Company has the option to extend the term of the
agreement for six additional periods of six months each. In December 1996,
the Company exercised a six month extension to such agreement for
Mr. Stathakis to perform consulting services for the Company through June 30,
1997. In July 1997, the Company exercised a second extension to such
agreement for Mr. Stathakis to perform consulting services for the Company
until December 1998, with a decrease in consideration for such services to
$5,800 per month.
During 1997, the Company paid to Mr. Stathakis $85,000 as payment for
consulting fees and reimbursement for expenses owed to Mr. Stathakis in
connection with consulting services performed by Mr. Stathakis for the benefit
of the Company during 1997.
The following Board of Directors Report on Executive Compensation and the
Performance Graph on page 11 shall not be deemed incorporated by reference
by any general statement incorporating by reference this Proxy Statement into
any filing under the Securities Act of 1933 or under the Securities Exchange
Act of 1934, except to the extent that the Company specifically incorporates
such information by reference, and shall not otherwise be deemed filed under
such Acts.
<PAGE>
BOARD OF DIRECTORS
REPORT ON EXECUTIVE COMPENSATION
In 1997, the Board of Directors was responsible for determining and approving
the annual compensation to be paid and the benefits to be provided to the
Company's executive officers and for administering the Company's Amended and
Restated 1986 Stock Option Plan, the 1989 Nonstatutory Stock Option Plan and
the 1995 Stock Option Plan. The Company's compensation program is designed to
attract, retain and motivate qualified executive officers who the Company
believes will contribute to its long-term success. The Company's compensation
program is comprised primarily of annual base salaries and stock option
grants. In addition, executive officers receive group life insurance and
health benefits as part of their overall compensation. The Board considers
each component of compensation within the context of the entire officer
compensation program in making its determination.
The Compensation Committee of the Board of Directors makes recommendations to
the Board of Directors regarding salaries, bonuses, stock option grants and
other compensation and benefits for directors, officers and employees.
ANNUAL BASE SALARIES. The Board of Directors reviews and approves the annual
base salaries of all executive officers (including the Chief Executive
Officer). In determining annual base salaries, the Board collects and
analyzes base salary information from competitors in its industry and uses
that information as the basis for comparing the base salaries of the Company's
executive officers to the amounts paid to executive officers with comparable
qualifications, experience and responsibilities in businesses similar to the
Company's business. The Board also considers both subjective and objective
factors, including, among others, an officer's responsibilities, experience
and qualifications, job performance, contributions and length of service to
the Company, and the Company's financial results and condition. The Board
increased the annual base salary of Mr. Sikes, the Company's Chairman and
Chief Executive Officer, by approximately 5.9% in 1997 to $360,000.
The Board also increased the base salaries of its other executive officers in
1997 by an average of approximately 16.0% over 1996 base salary levels in
recognition of such officers' performance and contributions made in 1996 as
well as to remain competitive with similar types of positions in the industry
or comparable industries in which the Company competes and does business.
Such salary increases made to executive officers (and other key personnel)
were also pursuant to a salary survey conducted at the request of the
Company's Compensation Committee.
BONUSES. The Board approved a one-time cash bonus to Mr. Sikes, the
Company's Chairman and Chief Executive Officer, of $75,000 during 1997 in
recognition of Mr. Sikes' contributions to the Company during 1996 regarding
operational, financial and legal issues and requirements created subsequent to
and resulting from the filing for personal bankruptcy by Oren L. Benton, one
of the Company's principal stockholders and historically a primary source of
financing.
<PAGE>
STOCK OPTIONS. Options to purchase the Company's Common Stock have
historically been and continue to be a key component of the Company's
compensation program. The Board of Directors views the grant of stock options
as a valuable incentive that serves to attract, retain and motivate executive
officers and other key employees, as well as to align their interest more
closely with the Company's goal of enhancing stockholder value. The
Compensation Committee reviews and considers recommendations by the Company's
Chief Executive Officer (other than for himself) with regard to the grant of
stock options to executive officers and other key employees, and then makes
recommendations to the Board of Directors. In determining the size, frequency
and other terms of an option grant to an executive officer, the Compensation
Committee and the Board consider a number of factors, including, among others,
such officer's position, responsibilities, job performance, prior option
grants, contributions and length of service to the Company and the value of
his or her vested and unvested previously granted stock options, if any.
Options generally vest in annual installments over two to four years as long
as the optionee remains an employee of the Company and, therefore, encourages
an optionee to remain in the employ of the Company. In 1997, options to
purchase an aggregate of 155,600 shares of Common Stock were granted to all
executive officers as a group and represented approximately 39% of all options
granted to the Company's employees in 1997. Information concerning
options granted during 1997 to executive officers is provided in the table
entitled "Option Grants in 1997" above.
COMPENSATION OF CHIEF EXECUTIVE OFFICER. The Board of Directors generally
considers the same factors in determining the Chief Executive Officer's
compensation as it considers with respect to the Company's other executive
officers including both subjective and objective factors. Although L. David
Sikes, the Company's Chief Executive Officer, is a member of the Company's
Board of Directors, he did not participate in any discussions or decisions of
the Board regarding the setting of his compensation for 1997. During 1997,
Mr. Sikes' compensation consisted of an annual salary of approximately
$355,000, a cash bonus of $75,000, and the granting of new stock options to
purchase 50,000 shares of the Company's Common Stock.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION. Under Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code"), a publicly held corporation
such as the Company will not be allowed a federal income tax deduction for
compensation paid to the executive officers named in the Summary Compensation
Table to the extent that compensation (including stock-based compensation)
paid to a particular officer exceeds $1 million in any fiscal year unless such
compensation was based on performance goals or paid under a written contract
that was in effect on February 17, 1993. Qualifying performance-based
compensation (including compensation attributable to the exercise of stock
options) will not be subject to the deductibility limitation if certain
conditions are met. The Company expects that compensation attributable to the
exercise of stock options will qualify for the exception for qualifying
performance-based compensation and that such compensation will not, therefore,
count toward the $1 million limit. Based upon the Company's current
compensation plans and policies and the regulation under Section 162(m), it
appears that the compensation to be paid to the Company's executive officers
for 1998 will not exceed the $1 million limitation per officer.
<PAGE>
L. David Sikes
Greg B. Jones
William G. Howard
George J. Stathakis
William G. Tull
L. T. Womack
Michael L. Rothschild
PERFORMANCE GRAPH
The following graph compares the cumulative total return on the Company's
Common Stock with the cumulative total return of the S&P Electronics
(Semiconductors) Index and the S&P 500 Composite Index for the period
commencing January 1, 1993 and ending December 31, 1997. Because the
Company's Common Stock has been quoted on The Nasdaq Stock Market only since
February 1993, there is no independent market price for the Company's Common
Stock prior to that date. The Company has used the prices at which its Common
Stock was sold in private transactions, or the per share exercise price at
which stock options were granted, between January 1990 and February 1993 as
the "market price" for the Company's Common Stock during that time period.
There can be no assurance that the prices selected by the Company for that
period in the following graph represent the fair market value of the shares
during the period or would correspond to the market value of such shares if
such shares had been actively traded in any public market during the period.
In preparing the following graph, it was assumed that $100 was invested on
January 1, 1993 in each of the Company's Common Stock, the S&P Electronics
(Semiconductors) Index and the S&P 500 Composite Index with all dividends, if
any, reinvested.
The historic stock price performance presented in the following chart is not
necessarily indicative of future stock performance.
Comparison of Five-Year Cumulative Total Return Among
Ramtron International Corporation, the S&P Electronics (Semiconductors) Index
and the S&P 500 Composite Index
Jan. 1, Dec. 31, Dec. 31, Dec. 30, Dec. 29, Dec. 31,
1993 1993 1994 1995 1996 1997
-------- -------- -------- -------- -------- --------
Ramtron
International
Corporation $100 $ 80.41 $ 51.02 $ 66.33 $ 61.22 $ 56.73
S&P Electronics
(Semiconductors)
Index 100 154.04 180.06 244.55 440.35 473.85
S&P 500 Composite
Index 100 110.08 111.54 153.45 188.69 251.64
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following are certain transactions entered into between the Company and
its officers, directors and principal stockholders or their affiliates since
January 1, 1997.
TRANSACTIONS INVOLVING GEORGE J. STATHAKIS
See "Compensation Committee Interlocks and Insider Participation-Transactions
Involving George J. Stathakis."
TRANSACTIONS INVOLVING THE NATIONAL ELECTRICAL BENEFIT FUND
Pursuant to a Stock and Warrant Purchase Agreement dated March 13, 1989
between the Company and the Fund, as amended by Amendment No. 1 thereto dated
June 29, 1989 (the "1989 Fund Purchase Agreement"), the Company agreed to
pay to the Fund, for as long as the Fund owns at least 5% of the outstanding
shares of the Company's Common Stock, a reasonable monthly consulting fee of
not more than $5,000 and to reimburse the Fund for all out-of-pocket expenses
incurred in monitoring the Fund's investment in the Company. During 1997,
the Company was obligated to pay to the Fund approximately $60,000 in payment
of such fees and expenses, of which no payments were made during 1997.
TRANSACTIONS INVOLVING GREG B. JONES
See "Employment Contracts and Termination of Employment and Change-In-Control
Agreements."
TRANSACTIONS INVOLVING RICHARD L. MOHR
See "Employment Contracts and Termination of Employment and Change-In-Control
Agreements."
PROPOSAL 2 - APPROVAL OF ISSUANCE OF COMMON STOCK IN CONNECTION WITH PRIVATE
PLACEMENT
GENERAL
In February 1998, the Company issued in a private placement (the "Private
Placement") 17,425 shares of Series A Convertible Preferred Stock, $.01 par
value, (the "Series A Preferred Stock") at $1,000 per. The placement agents
for the Private Placement of the Series A Preferred Stock were Cappello
Capital Corp. and CEA Montgomery Media L.L.C. (the "Placement Agents"). As
partial consideration for placing such securities, the Placement Agents
received five-year warrants to acquire an aggregate of 1,742 shares of Series
A Preferred Stock (the "Series A Preferred Stock Warrants") for an exercise
price of $1,000 per share (subject to the same anti-dilution protections as
are applicable to the Series A Preferred Stock).
<PAGE>
All of the securities issued in the Private Placement were sold solely to
accredited investors pursuant to an exemption under the Securities Act of
1933, as amended. The net proceeds to the Company (after cash fees to the
Placement Agents and estimated transaction expenses) was approximately $16
million and is expected to be utilized for working capital purposes and in the
continued research and development, manufacturing, and marketing of its
ferroelectric random access memory ("FRAM") and enhanced dynamic random access
memory ("EDRAM") technologies.
Certain rights, preferences and privileges of the Series A Preferred Stock are
summarized below. This discussion is modified in its entirety by, and is
subject to, the Certificate of Designation, Preferences, Rights and
Limitations of Series A Convertible Preferred Stock filed with the Delaware
Secretary of State on February 12, 1998, a copy of which is attached hereto as
Exhibit A and incorporated by reference herein.
The Series A Preferred Stock has a liquidation preference of $1,000 per share,
plus accumulated and unpaid dividends. The Series A Preferred Stock ranks
prior to all other classes of equity securities of the Company, including the
Common Stock, as to distributions of assets upon liquidation, dissolution or
winding up of the Company, whether voluntary of involuntary. Each share of
Series A Preferred Stock is entitled to receive cumulative dividends of $60
per share per annum, payable in additional shares of Series A Preferred Stock
valued at $1,000 per share.
Following conversion of the Series A Preferred Stock into shares of Common
Stock of the Company, the holders of such shares of Common Stock have agreed
to limits on re-sales of such shares on any trading day to the greatest of:
(i) 10% of the average daily trading volume of the Common Stock for the five
trading days preceding any such sale; (ii) 20,000 shares; and (iii) 10% of the
trading volume for the Common Stock on the date of any such sale.
Holders of shares of Series A Preferred Stock have no voting rights, except
for the right to consent or not to actions by the Company to: (i) modify its
Certificate of Incorporation or Bylaws so as to amend or change any of the
rights, preferences or privileges of the Series A Preferred Stock;
(ii) authorize or issue any other equity security senior to or ranking on
parity with the Series A Preferred Stock; or (iii) pay any dividends in cash
or property on, or purchase or otherwise acquire for value, any Common Stock
or other equity security of the Company either junior to or on a parity with
the Series A Preferred Stock (except from current or retained earnings or from
the net proceeds of sales of equity securities and except for purchases of
Common Stock from terminating or retiring employees pursuant to the terms of
the employee benefit plans in an aggregate amount not greater than $1
million), and except as otherwise provided by applicable law.
<PAGE>
NASDAQ GOVERNANCE RULES
The Common Stock trades on the Nasdaq National Market tier of the Nasdaq Stock
Market. Under the applicable Nasdaq corporate governance standards, a listed
company is required to obtain stockholder approval of the sale or issuance of
common stock at a price less than the greater of book or market value, equal
to 20% or more of the number of shares or voting power then issued and
outstanding before the issuance (the "Nasdaq Share Limit"). Because the
conversion of the Series A Preferred Stock after August 31, 1998, could result
in the issuance of shares of Common Stock in excess of 20% of the number of
shares of Common Stock outstanding before such conversion for a price less
than the greater of book or market value of such Common Stock, the Company
seeks the approval of such issuance in order to comply with the Nasdaq
standards.
In the Company's agreements with the purchasers of the Series A Preferred
Stock, the Company agreed to submit to the Company's stockholders for approval
the issuance of Common Stock upon conversion of the Series A Preferred Stock
in accordance with the Nasdaq rules.
The Nasdaq standards also require stockholder approval for transactions deemed
to constitute a "change in control." Although the Company does not believe
that the issuance of the Series A Preferred Stock in the Private Placement or
the issuance of the Common Stock upon conversion of the Series A Preferred
Stock constitutes a "change in control" under Nasdaq's standards, if the
transactions were to be so construed, the approval sought hereby would also be
effective to satisfy the stockholder vote required thereby. The Company's
belief is based on, among other things, the facts that no investor is entitled
to convert any shares of Series A Preferred Stock into Common Stock if
following the conversion the investor and its affiliates would be the
beneficial owners of 10% or more of the Common Stock, that no voting rights
were granted to holders of the Series A Preferred Stock except in certain
limited instances and that, if this proposal is approved, such holders do not
have any contractual right to elect a director or otherwise influence
management of the Company.
The exact number of shares of Common Stock issuable upon conversion of the
Series A Preferred Stock cannot currently be determined because it is
dependent on the future trading prices of the Common Stock and the conversion
decisions made by holders of Series A Preferred Stock. Each share of Series A
Preferred Stock is convertible into the number of shares of Common Stock equal
to the quotient of (i) $1,000 divided by (ii) the Conversion Price. Up
until September 1, 1998, the Conversion Price will be $10.00 per share.
Thereafter, subject to the maximum conversion price specified below, the
Conversion Price will be equal to the lowest trading price of the Common Stock
for the 22 consecutive trading days immediately preceding the conversion date,
less a discount ranging from 7% (beginning September 1, 1998) and increasing
by 1% per month to 15% (on or after May 1, 1999). The maximum Conversion
Price is the lesser of (i) 85% of the average of the daily low trade prices of
the Common Stock for the fifteenth calendar month after the date of issuance,
(ii) 85% of the average of the daily low trade prices of the Common Stock for
the twenty-first calendar month after the date of issuance, or (iii) 85% of
the average of the daily low trade prices of the Common Stock for the twenty-
seventh calendar month after the date of issuance. Such provisions become
effective at the end of the fifteenth, twenty-first and twenty-seventh
calendar months, respectively, following the date of issuance. The shares of
Series A Preferred Stock will automatically convert into Common Stock on
February 25, 2003 to the extent any shares of Series A Preferred Stock remain
outstanding at that time.
<PAGE>
Pursuant to a Registration Statement on Form S-3, effective March 23, 1998,
the Company has registered for re-sale with the Securities and Exchange
Commission the shares of Common Stock issuable upon conversion of the Series A
Preferred Stock, including shares payable as dividends thereon, and shares
issuable upon exercise of the related Placement Agents Warrants, for re-sale
under the Securities Act.
EFFECT ON OUTSTANDING COMMON STOCK
The issuance of Common Stock upon the conversion of the Series A Preferred
Stock will have no effect on the rights or privileges of existing holders of
Common Stock except that the economic interests of each stockholder will be
diluted as a result of such issuance. Further, prior to conversion, holders
of the Series A Preferred Stock will be entitled to receive dividends and
distributions upon a liquidation of the Company in preference to claims of
holders of the Common Stock.
As noted above, the exact number of shares of Common Stock issuable upon
conversion of the Series A Preferred Stock cannot currently be determined, but
such issuance's will vary inversely with the market price of the Common Stock.
The current holders of Common Stock will be diluted by issuance's of Common
Stock upon conversion of the Series A Preferred Stock to an extent that
depends on the future market price of the Common Stock, the timing of
conversion of Series A Preferred Stock, and exercise of the related Placement
Agents Warrants, and the Company's payment of dividends in additional shares
of Series A Preferred Stock. The potential effects of any such dilution on
the existing stockholders of the Company include the significant dilution of
the current stockholders' economic and voting interests in the Company.
The terms of the Series A Preferred Stock provide that the Company will not be
obligated to issue shares of Common Stock in excess of the Nasdaq Share Limit
unless and until stockholder approval of the issuance of Common Stock issuable
upon conversion of the Series A Preferred Stock sought hereby is obtained.
CERTAIN ACCOUNTING EFFECTS
The conversion discount of the Series A Preferred Stock is considered to be an
additional preferred stock dividend. The maximum discount of 15% of
$3,075,007 will initially be recorded as a reduction of preferred stock and an
increase to additional paid-in capital. The guaranteed return reduction to
preferred stock will be accreted, as additional dividends, over 14 months by
recording a charge to income available to Common Stockholders and an increase
to preferred stock. The Company will also record cumulative dividends of $60
per outstanding Series A Preferred share per annum ($1,045,500 annually
assuming 17,425 Series A Preferred shares outstanding) as a reduction of
income available to Common Stockholders. The earnings per share calculation
will show the effect of the guaranteed return (recorded as additional
dividends) and annual cumulative dividends recorded to net income available
for Common Stockholders.
<PAGE>
CONSEQUENCES IF STOCKHOLDER APPROVAL NOT OBTAINED
Because the terms governing the conversion of the Series A Preferred Stock
after August 31, 1998 provide for issuance at less than the then market value
of such Common Stock, if the stockholder approval sought hereby is not
obtained, the Nasdaq rules will prohibit the Company from issuing 20% or more
of the Company's shares of Common Stock outstanding before conversion of the
Series A Preferred Stock. If the approval sought hereby is not granted by
stockholders, the Company will be obligated to immediately redeem, at the
Special Redemption Price (as defined below), a sufficient number of shares of
Series A Preferred Stock which, in its reasonable judgment, will permit
conversion of the remaining shares of Series A Preferred Stock without
violating the Share Limit. The "Special Redemption Price" means a cash
payment equal to 110% of the liquidation preference of $1,000 per share
(subject to adjustments under certain circumstances).
The amount of cash which the Company would be required to pay in the event
stockholder approval is not obtained will depend on the per share market price
of the Common Stock. For illustration, if the lowest trading price of the
Common Stock for the 22 trading days immediately preceding the conversion date
is $2.00, $2.50 or $2.75 per share, and the fifteen percent discount to that
price applies, the Company would be required to pay approximately $5.3
million, $1.8 million or $120,000, respectively, to redeem shares of Series A
Preferred Stock if the stockholder approval of the issuance of Common Stock
upon conversion of the Series A Preferred Stock sought hereby is not obtained.
Since the number of shares of Common Stock issuable upon conversion of the
Series A Preferred Stock will increase if the market price of the Common Stock
decreases, the number of shares of Series A Preferred Stock which could not be
converted into Common Stock would increase and the amount of cash that the
Company would be required to pay to holders of the Series A Preferred Stock
would increase.
IF THE STOCKHOLDER APPROVAL SOUGHT HEREBY IS NOT OBTAINED AND THE COMPANY IS
REQUIRED TO EFFECT SUCH REDEMPTION OF A PORTION OF THE OUTSTANDING SHARES OF
SERIES A PREFERRED STOCK, THERE CAN BE NO ASSURANCE THAT THE COMPANY WILL HAVE
AVAILABLE THE CASH RESOURCES TO SATISFY ITS REDEMPTION OBLIGATIONS OR THAT IT
WOULD BE ABLE TO EFFECTUATE THE REDEMPTION IN COMPLIANCE WITH APPLICABLE LAW.
IN THE EVENT THE STOCKHOLDER APPROVAL SOUGHT HEREBY IS NOT OBTAINED,
COMPLIANCE WITH THE REDEMPTION OBLIGATION COULD HAVE A MATERIAL ADVERSE
EFFECT ON THE COMPANY'S FINANCIAL CONDITION AND ABILITY TO IMPLEMENT ITS
BUSINESS STRATEGY. IN ADDITION, ANY DELAY IN PAYMENT OF THE REDEMPTION AMOUNT
WILL CAUSE SUCH REDEMPTION AMOUNT TO ACCRUE INTEREST AT THE RATE OF ONE-
TWENTIETH OF ONE PERCENT PER DAY UNTIL PAID.
INTERESTS OF CERTAIN PERSONS
To the Company's knowledge, none of the purchasers of Series A Preferred Stock
in the Private Placement was a director, executive officer or 5% stockholder
of the Company or an affiliate of any such person or entity.
<PAGE>
CERTAIN VOTING UNDERTAKINGS
Each member of the Board of Directors and each executive officer of the
Company and the National Electrical Benefit Fund, a principal stockholder of
the Company, has under taken to vote all shares of Common Stock over which
they exercise voting authority in favor of this proposal. As of March 15,
1998, the Company estimates that such undertakings cover approximately 22% of
the shares of Common Stock outstanding on the record date for the Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR APPROVAL OF
THE ISSUANCE OF COMMON STOCK UPON CONVERSION OF THE SERIES A PREFERRED STOCK
ISSUED IN CONNECTION WITH THE PRIVATE PLACEMENT, AS SET FORTH IN THIS
PROPOSAL 2.
PROPOSAL 3 - RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed Arthur Andersen LLP, independent
auditors, to audit the Company's consolidated financial statements for the
year ending December 31, 1998. In the event of a negative vote on such
ratification, the Board of Directors will reconsider its selection. A
representative of Arthur Andersen LLP is expected to be present at the Annual
Meeting, will have an opportunity to make a statement if he or she desires to
do so and is expected to be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
RATIFICATION OF APPOINTMENT OF THE INDEPENDENT AUDITORS NAMED ABOVE.
OTHER MATTERS
The Company currently knows of no matters to be submitted at the Annual
Meeting other than those described herein. If any other matters properly come
before the Annual Meeting, it is the intention of the persons named on the
enclosed proxy card to vote the shares they represent as the Board of
Directors may recommend.
The financial statements, supplementary financial information, and
management's discussion and analysis of financial condition and results of
operations included in the Company's Annual Report to Stockholders enclosed
with this Proxy Statement and in the Company's Annual Report on Form 10-K for
the year ended December 31, 1997, as filed with the Securities and Exchange
Commission and as may be subsequently amended, are hereby incorporated by
reference herein.
COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1997 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION WILL
BE PROVIDED TO STOCKHOLDERS WITHOUT CHARGE UPON WRITTEN REQUEST TO THE
CORPORATE SECRETARY, RAMTRON INTERNATIONAL CORPORATION, 1850 RAMTRON
DRIVE, COLORADO SPRINGS, COLORADO 80921.
<PAGE>
PROXY PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
RAMTRON INTERNATIONAL CORPORATION
1998 Annual Meeting of Stockholders
The undersigned stockholder(s) of Ramtron International Corporation, a
Delaware corporation (the "Company"), hereby acknowledges receipt of the
Notice of Annual Meeting of Stockholders and Proxy Statement, each dated
April 20, 1998, and hereby appoints L. David Sikes and Greg B. Jones, and each
of them, proxies and attorneys-in-fact, with full power to each of
substitution, on behalf and in the name of the undersigned, to represent the
undersigned at the Annual Meeting of Stockholders of the Company to be held
May 28, 1998, at 10:30 a.m., Mountain Standard Time, at the Broadmoor Hotel,
One Lake Circle, Colorado Springs, Colorado 80906, and at any adjournment(s)
thereof, and to vote all shares of Common Stock to which the undersigned would
be entitled, if then and there personally present, on the matters set forth on
reverse side.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED FOR PROPOSALS 1, 2 AND 3 AND AS SAID PROXIES DEEM
ADVISABLE ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
DO NOT FOLD, STAPLE OR MUTILATE.
(To be Signed on Reverse Side)
SEE REVERSE SIDE
<PAGE>
RAMTRON INTERNATIONAL CORPORATION
PLEASE MARK VOTES AS IN THIS EXAMPLE USING DARK INK ONLY.
( X )
1. ELECTION OF DIRECTORS:
Nominees: L. David Sikes; Greg B. Jones; William G. Howard; George J.
Stathakis; William G. Tull; L. T. Womack; Michael L. Rothschild
FOR WITHHELD
ALL FROM ALL
NOMINEES NOMINEES
( ) ( )
FOR, except vote withheld from the following nominee(s):
( )------------------------------------------------------------------
List Nominees(s)
2. APPROVAL OF ISSUANCE OF COMMON STOCK IN CONNECTION WITH PRIVATE PLACEMENT
To approve and reserve for issuance the shares of Common Stock issuable
(i) upon the conversion of shares of the Company's Series A Convertible
Preferred Stock ("Series A Preferred Stock") issued in a February 1998 private
placement, (ii) upon conversion of the Series A Preferred Stock to be issued
as dividends on the outstanding Series A Preferred Stock and (iii) in respect
of related placement agents' warrants to purchase shares of Series A Preferred
Stock.
FOR AGAINST ABSTAIN
( ) ( ) ( )
3. APPOINTMENT OF INDEPENDENT AUDITORS:
To ratify the appointment of Arthur Andersen LLP as independent auditors of
the Company for the fiscal year ending December 31, 1997, as described in the
Proxy Statement.
FOR AGAINST ABSTAIN
( ) ( ) ( )
4. OTHER BUSINESS: In their discretion, the Proxies are authorized to vote
upon such other business as may properly come before the meeting or any
adjournment(s) thereof.
Any one of such attorneys-in-fact or substitutes as shall be present and shall
act at said meeting or any adjournment(s) thereof shall have and may exercise
all powers of said attorney-in-fact hereunder.
Dated 1998
---------------------
Signature(s)
------------------------------------------------------------------
(This Proxy should be marked, dated and signed by the stockholder(s) exactly
as his or her name appears hereon and returned promptly in the enclosed
envelope. Persons signing in a fiduciary capacity should so indicate. If
shares are held by joint tenants or as community property, both should sign.)
<PAGE>
==============================================================================
BY ORDER OF THE BOARD OF DIRECTORS
/S/ Richard L. Mohr
------------------------
Richard L. Mohr
Secretary
Colorado Springs, Colorado
April 20, 1998
EXHIBIT 4.1
CERTIFICATE OF DESIGNATION, PREFERENCES, RIGHTS AND LIMITATIONS
OF
SERIES A CONVERTIBLE PREFERRED STOCK, $0.01 PAR VALUE
OF
RAMTRON INTERNATIONAL CORPORATION
Pursuant to Section 151 of the General Corporation Law of the State of
Delaware
RAMTRON INTERNATIONAL CORPORATION (hereafter called the "Corporation"), a
corporation organized and existing under the General Corporation Law of the
State of Delaware, does hereby certify:
THAT, pursuant to authority conferred upon the Board of Directors by the
Certificate of Incorporation, as amended, of the Corporation, and pursuant to
the providing Section 151 of the Delaware Corporation Law, said Board of
Directors, by unanimous written consent dated February 10, 1998, duly adopted
a resolution providing for the issuance of a series of 29,000 shares of the
Series A Convertible Preferred Stock, $0.01 Par Value, which resolution is a
follows:
RESOLVED that there shall be a series of shares of the Preferred Stock of the
Corporation designated "Series A Convertible Preferred Stock"; that the
number of authorized shares of such series shall be 29,000 and that the rights
and preferences of such series (the "Series A Preferred") and the
limitations or restrictions thereon, shall be as follows:
1. Dividends.
(a) The holders of the Series A Preferred shall be entitled to receive
cumulative dividends at the rate of $60.00 per share per annum, payable in
shares of Series A Preferred Stock valued at $1,000 per share, when and as
declared by the Board of Directors. Such dividends shall accrue on any given
share from the day of original issuance of such share and shall accrue from
day to day whether or not declared. Dividends not theretofore paid shall be
paid upon conversion of any shares of the Series A Preferred and shares of
Series A Preferred issued in payment of such dividends shall be simultaneously
converted into Common Stock together with the shares on which such dividends
have accrued.
<PAGE>
2. Liquidation Preference.
(a) In the event of any liquidation, dissolution or winding up of the
Corporation, either voluntary or involuntary, the holders of the Series A
Preferred shall be entitled to receive, prior and in preference to any
distribution of any assets of the Corporation to the holders of the Common
Stock or any other class or series of shares except any class or series which
is entitled to priority over the Series A Preferred, the amount of $1,000 per
share plus any accrued but unpaid dividends plus any amounts accrued but
unpaid under Section 1.4(b)(iv) of the Preferred Stock Investment Agreement
under which shares of the Series A Preferred were originally issued (the
"Liquidation Preference").
(b) Subject to the last sentence of this Section, a consolidation or
merger of the Corporation with or into any other corporation or corporations,
or a sale of all or substantially all of the assets of the Corporation, shall,
at the option of the holders of the Series A Preferred, be deemed a
liquidation, dissolution or winding up within the meaning of this Section 2 if
the shares of stock of the Corporation (along with all derivative securities)
outstanding immediately prior to such transaction represent immediately after
such transaction less than a majority of the voting power of the surviving
corporation (or of the acquirer of the Corporation's assets in the case of a
sale of assets). Such option may be exercised by the vote or written consent
of holders of a majority of the Series A Preferred at any time within thirty
calendar days after written notice of the essential terms of such transaction
shall have been given to the holders of the Series A Preferred as provided in
Section 5 hereof. Such notice shall be given by the Corporation immediately
following determination of such essential terms. If such option is exercised,
the holders of the Series A Preferred shall be entitled to receive, in cash,
immediately upon the occurrence of such transaction, an amount per share equal
to the Liquidation Preference. This Section shall not apply to a business
combination in which substantially all the Common Stock of the Corporation is
converted into or exchanged for voting common stock of the corporation
surviving such business combination, if (i) such common stock of the surviving
corporation is listed and traded on the NASDAQ National Market or the New York
Stock Exchange, and (ii) the Board of Directors of the Corporation determines
in good faith that the conversion rights and other rights and preferences of
the Series A Preferred are preserved and not rendered of less value by the
terms of such business combination.
3. Mandatory Conversion.
On the fifth anniversary of the date of issuance, all then outstanding shares
of Series A Preferred including any accrued dividends thereon shall be
automatically converted into Common Stock at the Conversion Price on such
anniversary date and otherwise pursuant to the applicable provisions set forth
in Section 4 hereof.
4. Conversion. The holders of the Series A Preferred shall have optional
conversion rights as follows:
<PAGE>
(a) Accrual of Conversion Rights. The Conversion Period shall commence 3
calendar months after the date of issuance, or (if earlier) the date that a
Registration Statement covering resale of the underlying shares of Common
Stock has been declared effective by the Securities and Exchange Commission,
and shall continue thereafter for the life of the issue. Each holder of
record of Series A Preferred shares on the date of commencement of the
Conversion Period (an "Original Holder") shall be entitled to convert in any
calendar month the following percentage of the Series A Preferred shares held
by such holder on the date of commencement of the Conversion Period, on a
cumulative basis following commencement of the Conversion Period. The
percentage for each calendar month will be determined based on the highest of
the daily low trading prices of the Common Stock during such month, as
follows:
Highest of daily low trading Percentage convertible
prices during month during such month
---------------------------- ----------------------
$7.00 to less 20.0%
$7.01 to $7.50 25.0%
$7.51 to $8.00 30.0%
$8.01 to $8.50 35.0%
$8.51 to $9.00 40.0%
$9.01 to $9.50 45.0%
$9.51 or more 50.0%
The number of shares which may be converted in any calendar month shall be
the number determined as above provided plus the number which might have been
but were not converted during earlier calendar months. In the case of
transfers of shares by an Original Holder the Corporation shall make such
notations on its stock ownership records and on the certificates for shares
issued upon transfer so as to reflect the portion (if any) of the transferred
shares which have become convertible pursuant to this provision, or the
Corporation may at its election issue certificates representing the Series A
Preferred shares in such form, or with such annotations, as to reflect the
time or times at which the shares represented by such certificates will become
convertible.
(b) Removal of Limitations. The limitations set forth in Section 4(a)
hereof, with respect to the percentage of Series A Preferred shares which may
be converted during certain time periods, shall terminate and all the Series A
Preferred shares shall thereafter be fully convertible if any of the following
events or conditions shall occur or exist: (i) an event described in Section
2(b) hereof (subject to the exclusion in the last sentence of such Section)
shall occur, whether or not the holders of Series A Preferred deem such event
to be a liquidation; (ii) proceedings for relief under any bankruptcy or
similar law for the relief of debtors are instituted by or against the
Corporation or any of its significant subsidiaries and, if instituted against
the Corporation or such subsidiary, are consented to or not dismissed within
30 days; (iii) the independent auditors of the Corporation shall fail or be
unwilling to express within 90 days after the end of the Corporation's fiscal
year a customary opinion on the financial statements of the Corporation, or
shall express such opinion subject to a "going concern" qualification; (iv)
the Common Stock of the Corporation shall cease to be listed on either the
NASDAQ National Market or the New York Stock Exchange; or (v) there shall be a
material breach by the Corporation of any of its obligations hereunder or
under the Preferred Stock Investment Agreements pursuant to which the Series A
Preferred was originally issued, which breach has a material adverse effect on
the holders of Series A Preferred.
<PAGE>
(c) Right to Convert. At and after the time it has become convertible,
each share of Series A Preferred shall be convertible, at the option of the
holder thereof, into such number of fully paid and nonassessable shares of
Common Stock as is determined by dividing (i) the liquidation preference of
the Series A Preferred share determined pursuant to Section 2(a) hereof on
the date the notice of conversion is given, by (ii) the Conversion Price
determined as hereinafter provided in effect on said date, provided however,
that a share of Series A Preferred shall not be converted into Common Stock if
following such conversion the holder thereof together with affiliates of such
holder would be the beneficial owners (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934) of 10% or more of the Common Stock of the
Corporation. A share which may not be converted because of the foregoing
"provided however" clause will thereafter be convertible by any holder
(including the original holder) if at the time such share is submitted for
conversion the "provided however" clause is inapplicable.
(d) Mechanics of Conversion. To convert shares of Series A Preferred into
shares of Common Stock, the holder shall give written notice to the
Corporation (which notice may be given by facsimile transmission) that such
holder elects to convert the same and shall state therein the number of shares
to be converted and the name or names in which such holder wishes the
certificate or certificates for shares of Common Stock to be issued. Promptly
thereafter the holder shall surrender the certificate or certificates
representing the shares to be converted, duly endorsed, at the office of the
Corporation or of any transfer agent for such shares, or at such other place
designated by the Corporation. The Corporation shall, immediately upon
receipt of such notice, issue and deliver to or upon the order of such holder,
against delivery of the certificates representing the shares which have been
converted, a certificate or certificates for the number of shares of Common
Stock to which such holder shall be entitled, and a certificate representing
the shares of Series A Preferred not so converted, if any. The Corporation
shall effect such issuance immediately and shall transmit the certificates by
messenger or overnight delivery service to reach the address designated by
such holder within three trading days after the receipt of such notice.
Notice of conversion may be given by a holder at any time of day up to 5:00
p.m. Los Angeles time, and such conversion shall be deemed to have been made
immediately prior to the close of business on the date such notice of
conversion is given (the "Conversion Date"). 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 at the close of business on the Conversion Date.
(e) Determination of Conversion Price.
(i) Until the last day of the sixth full calendar month after the
Closing, the Conversion Price shall be $10.00. Thereafter, subject to the
provisions of subsection (e)(iii) of this Section, on any Conversion Date, the
Conversion Price shall be the lowest trading price of the Common Stock for the
22 consecutive trading days ending with the trading day prior to the
Conversion Date, reduced by the Applicable Percentage (as defined below) in
effect on the Conversion Date.
<PAGE>
(ii) The Applicable Percentage shall be as follows:
7.0% starting on the first day of the
seventh (7th) calendar month after Closing.
8.0% starting on the first day of the
eighth (8th) calendar month after Closing.
9.0% starting on the first day of the
ninth (9th) calendar month after Closing.
10.0% starting on the first day of the
tenth (10th) calendar month after Closing.
11.0% starting on the first day of the
eleventh (11th) calendar month after Closing.
12.0% starting on the first day of the
twelfth (12th) calendar month after Closing.
13.0% starting on the first day of the
thirteenth (13th) calendar month after Closing.
14.0% starting on the first day of the
fourteenth (14th) calendar month after Closing.
15.0% starting on the first day of the
fifteenth (15th) calendar month after Closing, and
thereafter
(iii) The Maximum Conversion Price ("Conversion Cap") shall be the
lesser of (i) 85% of the average of the daily low trade prices of the Common
Stock for the fifteenth calendar month after the Closing, (ii) 85% of the
average of the daily low trade prices of the Common Stock for the twenty-first
calendar month after the Closing, or (iii) 85% of the average of the daily
low trade prices of the Common Stock for the twenty-seventh calendar month
after the Closing. The provisions of clauses (i), (ii) and (iii) of the
foregoing sentence shall become effective at the end of the fifteenth,
twenty-first and twenty-seventh calendar months following the Closing,
respectively.
(iv) The terms "low trading price" and "last sale price" of the
Common Stock on any day shall mean, respectively, (A) the lowest reported sale
price and the last reported sale price of the Common Stock on the principal
stock exchange on which the Common Stock is listed, or (B) if the Common Stock
is not listed on a stock exchange, the lowest reported sale price and the last
reported sale price of the Common Stock on the principal automated securities
price quotation system on which sale prices of the Common Stock are reported,
or (C) if the Common Stock is not listed on a stock exchange and sale prices
of the Common Stock are not reported on an automated quotation system, the
lowest bid price and the last bid price for the Common Stock as reported by
National Quotation Bureau Incorporated. If none of the foregoing provisions
are applicable, the "low trading price" and "last sale price" of the
Common Stock on a day will be the fair market value of the Common Stock on
that day as determined by a member firm of the New York Stock Exchange, Inc.,
<PAGE>
selected by the Board of Directors of the Corporation. The term "trading
day" means (x) if the Common Stock is listed on at least one stock exchange,
a day on which there is trading on the principal stock exchange on which the
Common Stock is listed, (y) if the Common Stock is not listed on a stock
exchange but sale prices of the Common Stock are reported on an automated
quotation system, a day on which trading is reported on the principal
automated quotation system on which sales of the Common Stock are reported, or
(z) if the foregoing provisions are inapplicable, a day on which quotations
are reported by National Quotation Bureau Incorporated. The term "trading
day" shall not include any day that the New York Stock Exchange closes for at
least one hour because of the "Circuit Breakers" pursuant to Rule 80A or
80B. The "closing price" of the Common Stock on any day means the "last
sale price" as defined above. The term "lowest trading price" of the
Common Stock for a period of several trading days means the lowest of the low
trading prices for each of such trading days.
(v) In the event that during any period of consecutive trading days
provided for herein, the Corporation shall declare or pay any dividend on the
Common Stock payable in Common Stock or in rights to acquire Common Stock, or
shall effect a stock split or reverse stock split, or a combination,
consolidation or reclassification of the Common Stock, then the Conversion
Price and the Conversion Cap shall be proportionately decreased or increased,
as appropriate, to give effect to such event, and like adjustment shall be
made in any price per share specified in dollars in Section 4(a) or elsewhere
herein.
(f) Green Floor. If at any time the Conversion Price falls below a price
designated by the Corporation upon 30 calendar days prior notice given to the
holders of the Series A Preferred (the "Green Floor Price") the Corporation
may at its option, exercised by written notice ("Cash Conversion Notice")
given to the holders of the Series A Preferred twenty calendar days prior to
the effective date specified in such Notice (the "Effective Date") honor any
conversion request otherwise properly made, if at a Conversion Price lower
than the Green Floor Price then in effect, by a cash payment in lieu of the
issuance of Common Stock in an amount equal to the proceeds which would
otherwise have been received by the holder if conversion were in fact made
into Common Stock and such Common Stock were sold at the high trading price on
the Conversion Date (the "Cash Conversion Amount"). A Cash Conversion
Notice shall constitute a representation and warranty by the Corporation that
it has funds available in cash or cash equivalents to pay the Cash Conversion
Amount (computed on the basis of the Green Floor Price then in effect) upon
conversion of all the Series A Preferred shares eligible for conversion at
that time, and that such funds will be set aside and maintained for the
exclusive purpose of satisfying the Corporation's Cash Conversion obligations.
The Cash Conversion Notice shall expressly confirm such representation and
warranty. If thereafter there is a change in the availability of such funds,
the Cash Conversion Notice shall automatically and immediately be cancelled
and the Corporation shall immediately give notice thereof to the holders of
the Series A Preferred. The Cash Conversion Notice may specify an expiration
<PAGE>
date of such Notice, or may specify that the Corporation may terminate the
Cash Conversion Notice by further twenty day notice to the holders of Series A
Preferred that the Cash Conversion Notice will not be in effect after a
specified date. The Corporation may re-establish the Green Floor Price, at
its option, not more frequently than once each month, by giving 30 days prior
notice to the holders of the Series A Preferred. If notice of conversion
shall be given by a holder of Series A Preferred shares on a date that a Cash
Conversion Notice is in effect, the Corporation shall within 48 hours
following surrender of the share certificate as provided in Section 4(d)
hereof make payment of the Cash Conversion Amount to such holder by wire
transfer of immediately available funds in U.S. dollars pursuant to such wire
transfer instructions as may have been given by such holder, or otherwise by
mailing by certified mail a bank cashier's or certified check for the Cash
Conversion Amount to the record address of such holder. If the Corporation
fails to make payment of the Cash Conversion Amount to any holder entitled
thereto in the manner and within the time specified above, time being of the
essence, such holder shall be entitled to receive from the Corporation in cash
an amount equal to 3% of the Cash Conversion Amount as compensation to such
holder for such failure on the part of the Corporation, and such holder shall
be entitled to the immediate return of the stock certificate or certificates
representing the Series A Preferred shares submitted by such holder for Cash
Conversion. Then and thereafter (whether or not such certificate or
certificates have been returned) such holder shall have the right to convert
his Series A Preferred shares into Common Stock of the Corporation without
regard to the provisions of this subsection (f). A Cash Conversion Notice
shall cease to be effective if the Corporation fails to make payment of the
Cash Conversion Amount to any holder entitled thereto in the manner and within
the time specified above, time being of the essence, and the Corporation may
not thereafter give a Cash Conversion Notice. The number of shares that a
holder is entitled to convert, determined pursuant to subsections (a) and (b)
of this Section 4, shall not be affected by the giving or effectiveness of a
Cash Conversion Notice. Any Cash Conversion Notice shall be given as provided
in Section 5 hereof.
(g) Distributions. In the event the Corporation shall at any time or from
time to time make or issue, or fix a record date for the determination of
holders of Common Stock entitled to receive, a dividend or other distribution
payable in securities of the Corporation or any of its subsidiaries or other
property, other than cash dividends from earnings, then in each such event
provision shall be made so that the holders of Series A Preferred shall
receive, upon the conversion thereof, the securities or other property which
they would have received had they been the owners on the date of such event of
the number of shares of Common Stock issuable to them upon conversion.
<PAGE>
(h) Certificates as to Adjustments. Upon the occurrence of any
adjustments or readjustment of the Conversion Price pursuant to Section
4(e)(v) or Section 4(m) hereof, or any provision for distribution pursuant to
Section 4(g) hereof, or any adjustment of the cash per-share prices specified
herein, the Corporation at its expense shall promptly compute such adjustment,
readjustment or provision in accordance with the terms hereof and prepare and
furnish to each holder of Series A Preferred a certificate setting forth such
adjustment, readjustment or provision and showing in detail the facts upon
which such adjustment, readjustment or provision is based. The Corporation
shall, upon the written request at any time of any holder of Series A
Preferred, furnish or cause to be furnished to such holder a like certificate
prepared by the Corporation setting forth (i) such adjustments and
readjustments, and (ii) the number of other securities and the amount, if any,
of other property which at the time would be received upon the conversion of
Series A Preferred with respect to each share of Common Stock received upon
such conversion. If any holder disputes the computation of such adjustment or
provision the Corporation shall cause independent public accountants selected
by the Corporation to verify and, if necessary, correct such computation.
(i) Notice of Record Date. In the event of any taking by the Corporation
of a 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, any security or right
convertible into or entitling the holder thereof to receive additional shares
of Common Stock, or any right to subscribe for, purchase or otherwise acquire
any shares of stock of any class or any other securities or property, or to
receive any other right, the Corporation shall give notice to each holder of
Series A Preferred at least 10 days prior to such date specifying the date on
which any such record is to be taken for the purpose of such dividend,
distribution, security or right and the amount and character of such dividend,
distribution, security or right.
(j) Issue Taxes. The Corporation shall pay any and all issue and other
taxes, excluding any income, franchise or similar taxes, that may be payable
in respect of any issue or delivery of shares of Common Stock on conversion of
shares of Series A Preferred pursuant hereto; provided, however, that the
Corporation shall not be obligated to pay any transfer taxes resulting from
any transfer requested by any holder in connection with any such conversion.
(k) Reservation of Stock Issuable Upon Conversion. The Corporation shall
at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, 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 the 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 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, including, without limitation, engaging in best efforts to
obtain the requisite shareholder approval as promptly as practicable.
<PAGE>
(l) Fractional Shares. No fractional shares shall be issued upon the
conversion of any share or shares of Series A Preferred. All shares of Common
Stock (including fractions thereof) issuable upon conversion of more than one
share of Series A Preferred by a holder thereof shall be aggregated for
purposes of determining whether the conversion would result in the issuance of
any fractional share. If, after the aforementioned aggregation, the
conversion would result in the issuance of a fraction of a share of Common
Stock, the Corporation shall, in lieu of issuing any fractional share, pay the
holder otherwise entitled to such fraction a sum in cash equal to the fair
market value of such fraction on the date of conversion (as determined in good
faith by the Board of Directors of the Corporation).
(m) Reorganization or Merger. In case of any reorganization or any
reclassification of the capital stock of the Corporation or any consolidation
or merger of the Corporation with or into any other corporation or
corporations or a sale of all or substantially all of the assets of the
Corporation to any other person, and the holders of Series A Preferred do not
elect to treat such transaction as a liquidation, dissolution or winding up as
provided in Section 2, then, as part of such reorganization, consolidation,
merger or sale, provision shall be made so that each share of Series A
Preferred shall thereafter be convertible into the number of shares of stock
or other securities or property (including cash) to which a holder of the
number of shares of Common Stock deliverable upon conversion of such share of
Series A Preferred would have been entitled upon the record date of (or date
of, if no record date is fixed) such event and, in any case, appropriate
adjustment (as determined by the Board of Directors) shall be made in the
application of the provisions herein set forth with respect to the rights and
interests thereafter of the holders of the Series A Preferred, to the end that
the provisions set forth herein shall thereafter be applicable, as nearly as
equivalent as is practicable, in relation to any shares of stock or the
securities or property (including cash) thereafter deliverable upon the
conversion of the shares of Series A Preferred. The Corporation shall have no
obligation to obtain the prior consent of the holders of the Series A
Preferred, individually or as a class, except as expressly provided herein or
as provided by applicable law.
5. Notices. Any notice to be given to the holders of the Series A Preferred
shall be (i) mailed by first class mail postage prepaid to each holder of
Series A Preferred at the address shown on the records of the Corporation for
such holder, (ii) transmitted by telecopy or facsimile transmission to any
holder which has supplied a telecopy or facsimile address to the Corporation,
and (iii) unless receipted for by telecopy or facsimile on the date such
notice is given, shall be transmitted by an overnight delivery service or
courier service for delivery at the address shown on the records of the
Corporation for such holder on the first business day following the date such
notice is given, or if delivery in one business day to such address cannot be
effected by such delivery service, then on the earliest day on which such
delivery can be made.
<PAGE>
6. Other Provisions. For all purposes of this Resolution, the term "date of
issuance" or "closing" shall mean the day on which shares of the Series A
Preferred are first issued by the Corporation, and the terms "trading
price," "low trading price," "closing price," "last trade price," and
"trading days" shall have the meanings given them in Section 4(e) hereof.
Any provision herein which conflicts with or violates any applicable usury
law shall be deemed modified to the extent necessary to avoid such conflict or
violation.
7. Restrictions and Limitations. The Corporation shall not undertake the
following actions without the consent of the holders of a majority of the
Series A Preferred: (i) modify its Certificate of Incorporation or Bylaws so
as to amend or change any of the rights, preferences, or privileges of the
Series A Preferred, (ii) authorize or issue any other equity security senior
to or ranking on parity with the Series A Preferred, or (iii) pay any
dividends in cash or property on, or purchase or otherwise acquire for value,
any Common Stock purchase or other equity security of the Corporation either
junior to or on a parity with the Series A Preferred except from current or
retained earnings or from the net proceeds of sale of equity securities,
except for purchases of Common Stock from terminating or retiring employees
pursuant to the terms of employee benefit plans in an aggregate amount not
greater than $1 million.
8. Voting Rights. Except as provided herein or as provided for by law, the
Series A Preferred shall have no voting rights.
9. Attorneys' Fees. Any holder of Series A Preferred shall be entitled to
recover from the Corporation reasonable attorneys' fees and expenses incurred
by such holder in connection with enforcement by such holder of any obligation
of the Corporation hereunder, if such holder is the prevailing party in an
action or proceeding to compel such enforcement.
10. Limitation on Number of Conversion Shares. The Corporation shall not be
obligated to issue, in the aggregate, more than 7,420,000 shares of Common
Stock as presently constituted (the "NASD Cap") upon conversion of the
Series A Preferred, if issuance of a larger number of shares would constitute
a breach of the Rules of NASD. Subject to the obligation to effect certain
redemptions pursuant to the last four sentences of this Section, if further
issuances of shares of Common Stock upon conversion of the Series A Preferred
would constitute a breach of the NASD Rules (i.e., all of the shares permitted
to be issued under the NASD Cap shall have been so issued), then so long
thereafter as such limitation shall continue to be applicable and any shares
of Series A Preferred are submitted for conversion such shares shall receive
in cash an amount equal to the Cash Conversion Amount determined as provided
in Section 4(f) hereof, in lieu of the Common Stock which such shares would
otherwise be entitled to receive upon conversion. Payment of the Cash
Conversion Amount shall be made no later than as specified in Section 4(f) and
shall bear daily interest thereafter at the rate of one-tenth of one percent
per day until paid. The NASD Cap shall be proportionately and equitably
adjusted in the event of stock splits, stock dividends, reverse stock splits,
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reclassifications or other such events, in such manner as the Board of
Directors of the Corporation shall reasonably determine. If (A) the
Corporation is unable to obtain shareholder approval concerning
the issuance of shares of Common Stock upon conversion of the Series A
Preferred at a meeting of shareholders of the Corporation held not later than
June 30, 1998, then (B) the Corporation shall immediately redeem, at a
"Special Redemption Price" equal to 110% of the liquidation preference of
such shares, the smallest number of Shares which is sufficient, in the
Corporation's reasonable judgment, such that following such redemption,
conversion of the remaining shares of Series A Preferred would not constitute
a breach of the Corporation's obligations under the NASD Rules. Any
redemption effected pursuant to the preceding sentence shall require 15 days
notice and the Redemption Date shall be not more than 15 days after the date
specified in Clause A of the preceding sentence. Such redemption shall be
made pro-rata. If there shall be a default in payment of the Special
Redemption Price, the amount so payable shall bear daily interest from and
after the Redemption Date at the rate of one-twentieth of one percent per day
until paid.
IN WITNESS WHEREOF, Ramtron International Corporation has caused this
Certificate to be executed by its Chairman of the Board and by its Executive
Vice President, Chief Financial Officer and Secretary, this 12th day of
February 1998.
/S/ L. David Sikes
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L. David Sikes
Chairman of the Board
/S/ Richard L. Mohr
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Richard L. Mohr
Executive Vice President,
Chief Financial Officer and Secretary
