UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
-------------------
FORM 10-K
/ X / ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the fiscal year ended December 31, 1999
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from ---------- to ---------
Commission File Number 0-17739
RAMTRON INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 84-0962308
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1850 Ramtron Drive, Colorado Springs, Colorado 80921
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (719) 481-7000
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock ($.01 par value)
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. Yes / X / No / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. / /
As of March 21, 2000, 16,007,329 shares of the Registrant's common stock were
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
NONE
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PART I
Item 1. BUSINESS
THE COMPANY
Ramtron International Corporation and its subsidiaries ("Ramtron" or the
"Company") are engaged primarily in the design, development, manufacture and
sale of specialty high-performance semiconductor memory devices. Ramtron has
two product lines, ferroelectric nonvolatile random access memory ("FRAM"
(registered trademark)) products and high-speed DRAM (dynamic random access
memory) products, called Enhanced-DRAM ("EDRAM" (registered trademark))
products.
The Company was incorporated in Delaware under the name of Amtec Securities
Corporation in January 1984. Its name was changed to Ramtron International
Corporation in January 1988. The Company's principal executive offices are
located at 1850 Ramtron Drive, Colorado Springs, Colorado 80921, and its
telephone number is (719) 481-7000.
The Company has two wholly owned subsidiaries, Enhanced Memory Systems, Inc.
("EMS"), which was established in May 1995, and Ramtron Kabushiki Kaisha
("Ramtron K.K."), which was established in July 1996. The Company formed
EMS to operate its EDRAM business. The Company formed Ramtron K.K. to perform
sales and marketing functions within Japan for the Company's products and to
act as a liaison between the Company and its Japan alliance partners.
Discussion of certain matters contained in this Annual Report on Form 10-K may
constitute forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995 (the "Reform Act"), and as such,
may involve risks and uncertainties. These forward-looking statements relate
to, among other things, expectations of the business environment in which
Ramtron operates, projections of future performance, perceived opportunities
in the market, statements regarding the Company's mission and vision and
statements regarding future potential changes in the Company's capital
structure. The Company's actual results, performance and achievements may
differ materially from the results, performance and achievements expressed or
implied in such forward-looking statements. For a discussion of some of the
factors that might cause such a difference, see "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Expected Future Results of Operations." From time to time, the Company details
other risks with respect to its business and financial results and conditions
in its filings with the Securities and Exchange Commission.
FRAM PRODUCTS
BACKGROUND
Ramtron's FRAM technology integrates ferroelectric materials with standard
semiconductor chip design and manufacturing technology to provide nonvolatile
memory products with unique performance characteristics and properties.
Ramtron's FRAM devices combine data non-volatility with the benefits of random
access memory (RAM) devices including a high number of read and write cycles,
high speed for both read and write functions and low power consumption.
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The Company believes that its proprietary FRAM technology is a significant
innovation in comparison with other major semiconductor memory solutions. FRAM
technology enables semiconductor memory products to be developed with
attributes that are not otherwise available in a single semiconductor product
and, in some cases, these attributes are not available even by combining
multiple technologies such as RAM (Random Access Memory), ROM (Read Only
Memory) and nonvolatile memories such as EEPROM (Electrically Erasable
Programmable Read Only Memory) and Flash.
CHARACTERISTICS OF FRAM PRODUCTS
Ramtron's FRAM products provide in a single component the high-speed
read/write characteristics and efficiencies of RAM with the nonvolatile memory
storage capability of ROM. By integrating the nonvolatile properties of its
ferroelectric materials with an industry standard CMOS semiconductor memory
manufacturing process, Ramtron has produced component-level nonvolatile RAM
products. The nonvolatile storage element in FRAM memories is a capacitor
that is integrated between the transistor and metalization layers of a typical
CMOS manufacturing process and is constructed from a thin film ferroelectric
between two metal electrodes. Ferroelectric materials inherently function in
a nonvolatile manner within a semiconductor memory device because they become
polarized when an electric field is applied and remain polarized after the
electric field is removed. Reversing the field causes spontaneous
polarization in the opposite direction. The positive or negative state of the
material can be sensed by the interaction of an applied electric field with
the material's polarization, thereby allowing for the storage of binary
digital information. Notwithstanding the theoretical simplicity of
nonvolatile ferroelectric memories, it took Ramtron over eight years to
be the first Company to produce such memories in commercial volumes. High-
density FRAM memories, if they can be developed and commercially produced in a
timely and cost-effective manner, have the potential to be important in the
development of future products in the semiconductor memory industry. The
advantages of Ramtron's FRAM products include:
Fast write time. Because a FRAM device works by polarization rather than
stored-charge, it has very fast write speeds measured in nanoseconds
(billionths of a second) rather than milliseconds that are required to write to
an EEPROM or Flash memory.
High write endurance. Current FRAM products deliver more than 10 billion
read/write cycles.
Nonvolatile retention. FRAM products can retain data without a power
source for a minimum of ten years under normal operating conditions.
Small form factor. Batteries, extra transistors, sockets or add-on
devices are unnecessary since non-volatility is inherent in the ferroelectric
material.
Minimal power. FRAM devices have extremely low power demands (2 to 20
times less active current than alternative nonvolatile solutions) and require
less standby current.
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FRAM PRODUCTS
Ramtron was the first company to introduce ferroelectric technology in
commercial memory products beginning with a 4 kilobit parallel interface
product in late 1992. This product established initial production and
demonstrated the benefits of FRAM in a commercial application. Based on this
demonstration, the Company was able to broaden its product line and establish a
merchant market presence. Today, the Company offers a line of serial and
parallel interface FRAM memories that have distinct advantages over EEPROM
equivalents. These products are manufactured by the Company's license partners
using the Company's proprietary FRAM technology. The Company sold $3.5 million
of FRAM products in 1999.
In order to accelerate market acceptance, the Company developed FRAM serial
products based on industry standard EEPROM circuits. These products are
offered in 4-kilobit,16-kilobit and 64-kilobit densities with selected industry
standard interfaces. The Company produces these products in industry-standard
package types. They compete with EEPROM serial memories with identical pin
configurations. By emulating standard EEPROM products with FRAM technology,
the Company is able to accelerate product evaluation and acceptance by new
customers. However, the products are distinguished from their EEPROM
counterparts by faster write times, higher write endurance (number of
permitted write cycles) and lower power requirements. As an example,
comparable EEPROM's perform a single-byte write in 2 to 10 milliseconds, where
as a FRAM-based product writes in 200 nanoseconds, or 10,000 to 50,000 times
faster. Comparable EEPROM's offer write endurance from 100,000 to 1,000,000
cycles, where as a FRAM product offers from 100,000,000 to 10,000,000,000
cycles, or 1,000 to 10,000 times greater. Deploying FRAM technology in
industry standard configurations offers substantial benefits in a variety of
industrial and commercial applications, which are write intensive and which
require collecting data or the frequent alteration of configuration settings.
As a consequence of these feature advantages, the Company's FRAM products are
currently able to command a price premium versus EEPROM products in these
selected applications.
In addition to low-density serial memories, the Company offers a line of medium
density parallel interface products. In order to accelerate market acceptance,
these product designs are based on industry standard SRAM circuits. The
primary market these products serve is replacement in multi-device battery-
backed SRAM applications. SRAM's are fundamentally a volatile device and do
not retain data in the absence of power. A backup battery is commonly used to
retain the stored data. FRAM parallel products offer a comparable feature set
and data retention without the requirement of a battery. Current products
include 64-kilobit and 256-kilobit products in industry standard package types.
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The Company anticipates increases in its available manufacturing capacity
from its foundry partners. The manufacturing and commercialization of FRAM
technology associated with each of the Company's foundry partners depend
primarily upon each individual foundry's process and product development
activities, the timing and results of which are uncertain. The Company intends
to continue developing new products as it is able to determine the available
manufacturing capacity of each of its foundry partners. In preparation for the
anticipated increase in foundry capacity, the Company is currently developing
several new products that are expected to provide future revenue growth. In
cooperation with one of its partners, the Company has developed a 64-kilobit
FRAM product and a 256-kilobit FRAM product. During 2000 the Company expects
to achieve volume manufacturing and commercialization for these two products.
The manufacturing costs of FRAM products are presently higher than competing
EEPROM and Flash products. The Company and its strategic alliance partners are
working to reduce such manufacturing costs and, because of FRAM compatibility
with CMOS semiconductor manufacturing and the mask design of FRAM chips, the
Company believes that FRAM products are capable of being mass produced on a
cost-effective basis.
DEVELOPMENT AND MANUFACTURING ALLIANCES
To gain access to advanced CMOS manufacturing processes and facilities,
Ramtron has entered into manufacturing alliances and licensing agreements for
FRAM products with certain well capitalized companies having or constructing
advanced memory product manufacturing capabilities, including Rohm Company,
Ltd. ("Rohm"), Hitachi Ltd. ("Hitachi"), Toshiba Corporation ("Toshiba") and
Fujitsu Limited ("Fujitsu"). Since the purchase or construction of an
advanced manufacturing facility capable of mass producing memory devices would
require a capital outlay well beyond the Company's current capital resources,
the Company believes that the most suitable alternative is this strategic-
alliance approach, which the Company believes will enable it to develop,
manufacture and sell FRAM products more rapidly and cost effectively than any
other available alternative. Ramtron's intention is to utilize current and
future alliance relationships as foundry sources for FRAM products.
STRATEGY FOR FRAM PRODUCTS
In 1999, Ramtron completed the shift to a fabless manufacturing strategy,
exclusively using foundry partners to produce its product. As a consequence of
this change, the Company has adopted a competitive strategy with three
elements. They are (1) strategic market selection, (2) strategic partner
selection, and (3) new product development.
STRATEGIC MARKET SELECTION. Ramtron is continuously identifying product
development opportunities while evaluating several considerations including
overall semiconductor memory product market conditions and access to our
strategic partners product development and manufacturing plans. Obtaining
information about the manufacturing capacity, product development plans and
target markets of our alliance partners has a particularly large impact on
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development and product strategy. Considering the size difference between
Ramtron and its alliance partners, we believe that it is critical to identify
appropriate development programs and target markets which minimize near-term
direct competition with our manufacturing partners. Based on its current
understanding of these conditions, the Company has grouped current product
plans into three market segments. They are standard memory, value added
memory, and niche products. The Company believes that products developed to
serve these segments provide attractive market opportunities while allowing
Ramtron to remain competitive.
STRATEGIC PARTNER SELECTION. The Company maintains a preference for
partners that serve a strategic interest to the Company by providing
complementary technology, production capacity, or market access. As the
Company's FRAM technology becomes widely accepted, the Company anticipates new
partnership opportunities. Ramtron expects to continue to license technology
and form partnerships with selected industry suppliers and customers.
NEW PRODUCT DEVELOPMENT. Ramtron believes that its product development
expertise, particularly in the application of FRAM technology is a unique
competence. It is the Company's intention to invest considerably to maintain
this advantage to the maximum extent we can do so within our capital and
financing constraints. Ramtron believes its current product development system
permits the Company to bring FRAM based products to market faster than the
competition and to minimize the cost of such product development. This
expertise is embodied in the Ramtron design methodology, which includes
ferroelectric circuit simulation, ferroelectric modeling for multiple foundry
processes, ferroelectric memory core libraries, and the institutional knowledge
of such memory design. The Company will continue investing to upgrade its
design automation and product development activities to further improve
productivity and shorten time to market.
COMPLEMENTARY FERROELECTRIC APPLICATIONS AND TECHNOLOGY
Ramtron's FRAM technology has product applications other than stand-alone
memory devices. For example, smart cards, microcontrollers, programmable logic
devices and radio frequency identification applications often include embedded
ROM and/or RAM memories in the device. FRAM memory performance compared to
alternative memory solutions offers distinct advantages in such applications.
To exploit these product opportunities without diverting the Company's focus
from the development of FRAM products, Ramtron has licensed its ferroelectric
technology to, and entered into joint ventures with, other companies. Ramtron
may elect to pursue selected business opportunities in these areas when
appropriate market conditions and suitable partners are identified. In
addition, the Company is continuing to research and develop ferroelectric
material compositions with the aim of further enhancing the performance
advantages of FRAM memories relative to alternative memory solutions (e.g.,
longer write endurance, lower operational voltage and lower power consumption).
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FRAM MARKETS
SALES CHANNELS. The Company markets standard FRAM memory products via
commercial semiconductor sales channels including manufacturers
representatives and industrial distributors. Such marketing activity is
conducted in major markets around the world. Customers are distributed
regionally, in size, and in end-use industry. The Company anticipates using
these existing channels for the future sales and distribution of its products.
The Company supports the sales channels with directly employed sales managers
that have regional responsibility. Sales of FRAM product are expected to
conform to the overall semiconductor industry in seasonal sales patterns.
CURRENT FRAM MARKETS. The market for existing FRAM products somewhat
resembles the market for EEPROM products. As examples, the Company
sells products into the industrial sector in applications such as electric
power meters and related datacom networks; the office equipment sector in
applications such as laser printers, copiers and hand held portable electronic
devices; and the communication sector in applications such as electronic
telephones and cable modems. If Ramtron is able to make a significant
improvement in reducing FRAM product manufacturing costs and expanding its
manufacturing capacity from its strategic partners, it should be able to
penetrate further into existing markets and to develop new markets.
COMPETITION
In order to accelerate the market acceptance of FRAM technology and Ramtron
products, the Company has followed a strategy of using FRAM technology to
create products that, when substituted for industry standard products such as
EEPROM, achieve certain performance benefits. This strategy serves to simplify
customer evaluation and design-in of FRAM products. It is a traditional
approach for introducing new technology that greatly accelerates the process
and improves the probability of a successful introduction. The disadvantages
of this strategy are (i) that the Company must compete directly with vendors of
alternate memory types and (ii) that not all the potential benefits of the
FRAM product may be completely exploited through such existing product
substitution.
Since the competition is based on industry standard products with multiple
sources, the basis for competition is price, availability, customer
relationships and customer service. Ramtron faces intense competition based on
these factors. The Company competes with major corporations having
substantially greater resources in technical, financial, production, marketing
and management categories such as ST-Microelectronics, Dallas Semiconductor,
Atmel Corp., and Xicor Inc. Using the Company's FRAM technology, Ramtron
introduces product performance as a new competitive factor, which has varying
importance depending on the customer and the application. During the past
several years many memory categories have experienced severe price erosion as a
result of excess capacity. Ramtron has been adversely impacted by such
erosion, which has lead to a substantial increase in the price premium of
certain FRAM products that compete directly with EEPROM products. The Company
is, therefore, seeking a strategy of targeting applications where the FRAM
technology advantages reduce competitive pressure. One result of this
strategy is a smaller market in which FRAM products can be sold. The Company
will continue to emphasize FRAM product benefits while the Company and its
manufacturing partners work to drive down the cost of production.
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In addition to competition with other technologies, the Company expects to be
competing with its licensees and foundry partners over the long term. To
successfully compete in such markets, Ramtron must therefore continue to
develop a low overhead structure, a value added product line, its own customer
relationships and a high level of customer service. In pursuing these goals,
Ramtron will develop proprietary products that more fully exploit the FRAM
benefits and produce expected higher margins than more standardized products.
The success of this strategy depends on the Company's ability to develop and
introduce new products into production, its competitors' plans for new
products, and customers' ability to deploy such products in commercial volumes.
Critical factors are the availability of manufacturing capacity that the
Company can use to build these products, the Company's ability to attract and
retain qualified personnel, and to execute rapid development of new products.
FRAM PRODUCT MANUFACTURING
Since April 1999, the Company has operated as a fabless semiconductor company
relying on third-party foundries for all of its wafer production. Ramtron
currently is engaged in foundry relationships with Rohm and Fujitsu. Rohm
provides the Company with 6" wafers using a CMOS/FRAM process with a 1.0-micron
minimum feature size. The Company anticipates a 0.6-micron CMOS/FRAM
production process will be available from Rohm in the future, however, process
upgrades at foundry partners is not under the direct control of the Company and
Ramtron cannot be assured when or if such process improvements will be
available. Fujitsu manufactures 6" wafers for the Company using a 0.5-micron
CMOS/FRAM process. Ramtron is currently collaborating with Fujitsu to develop
a 0.35-micron production process. Implementation of these new processes will
enable lower cost production and potentially larger memory arrays. The Company
will continue to have access to new production capabilities at foundry partner
locations based on contractual provisions in its technology license agreements
with such partners. In some cases, the details of these production
arrangements are to be determined when the partner's production capability is
established. A critical factor in the Company's product planning is the
availability and capability of these various fabrication plants. Each partner
has or will be installing processes and equipment consistent with their own
product plans. Neither the capacity nor the capability of these factories are
under the Company's direct control. In addition, each partner will provide a
different cost structure to the Company for its share of the production. It is
incumbent upon Ramtron to identify a product development and manufacturing
strategy that makes the best use of these diverse production resources. For
this reason, Ramtron's FRAM manufacturing strategy will evolve as it is able to
determine each partner's production capability. It is possible that the
Company will not be able or will not elect to use all of the production
capacity to which it has access.
In the case of proprietary products developed solely by Ramtron, the Company
must identify a source from among its partner foundries that is capable of
production with an attractive cost structure. In each case, the Company must
negotiate its ability to run such products at a partner foundry according to
the individual manufacturing agreement.
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The Company's business may be adversely affected by the unavailability of an
individual foundry partner's capacity from time to time. However, the Company
believes that as a consequence of multiple foundry relationships, it has more
flexibility in the long term in producing its products than other similarly
sized companies. The Company believes that the raw materials and services
required for the manufacture of its products at its manufacturing foundry
partners are readily available.
Once wafers are fabricated by one of our foundries, the Company assembles
and tests the products. These operations are primarily subcontracted to
companies that perform these operations on a relatively large scale. Current
production is subcontracted to two firms operating in Thailand and one firm
operating in China. Such off-shore subcontracted functions offer significant
economic benefits, however, they also introduce substantial risks. The Company
expects to receive lower priority from such subcontractors than larger firms as
a result of its initial limited volume of production. In addition, the Company
is exposed to all of the risks associated with using foreign subcontractors.
The Company maintains an active effort to manage these subcontracted operations
and to minimize any associated risks.
ENHANCED-DRAM PRODUCTS
In May 1995, Ramtron formed EMS as a wholly owned subsidiary through which the
Company operates its EDRAM and ESDRAM business, including designing, marketing
and selling such products manufactured by third-party manufacturing partners.
The creation of a separate organization serves to focus all of the Company's
non-ferroelectric activities in a single organization.
The Company has developed a family of proprietary Enhanced-DRAM ("EDRAM"
(registered trademark)) and Enhanced Synchronous DRAM ("ESDRAM") products
that capitalize on unique architectural and design features to provide what
the Company believes are the highest performance DRAM products available. The
Company currently produces EDRAM and ESDRAM products under foundry agreements
with IBM and Infineon Technologies ("Infineon"), formerly Siemens
Semiconductors.
BACKGROUND
Because of their low cost and unlimited random access read/write capability,
DRAM's are the most widely used memory device in computing applications.
Significant improvements in microprocessor ("MPU") speeds and increasing
architectural complexity in computing systems has created a performance
bottleneck at the memory system level due to slow memory access speed and
bandwidth. Because DRAM's operate at slow speeds relative to the MPU, high-
speed static random access memories ("SRAM's") have been used to improve
memory access and retrieval speed. However, the large memory cell size of the
SRAM makes it significantly more expensive than the DRAM. Alternate DRAM
architectures have been developed which use interleaving of several memory
banks such as synchronous DRAM ("SDRAM") and Rambus DRAM ("RDRAM"). Other
DRAM's, such as extended data output ("EDO") and burst EDO, use pipelining of
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data. These alternate DRAM's do not improve the basic access or retrieval
speed of the DRAM but instead only improve peak bandwidth. Most high-
performance systems require combinations of small amounts of SRAM to "cache"
data transfers and high bandwidth DRAM architectures to fill the cache
quickly. Even with these techniques, the larger size of today's software
operating systems and applications and the frequent context changes required
by multitasking create a bottleneck limited by the DRAM access and retrieval
speed.
CHARACTERISTICS OF EDRAM PRODUCTS
To address the access and retrieval speed limitations of DRAM's and the high
costs associated with high-speed SRAM's, the Company developed a group of
4-megabit EDRAM and 16-megabit ESDRAM products.
The Company's EDRAM and ESDRAM products combine what it believes is the
fastest 4-megabit (25-35 nanosecond) and 16-megabit (24-35 nanoseconds) DRAM
together with a 10-15 nanosecond SRAM and a 2,048 bit-wide integrated DRAM to
SRAM interconnecting bus for the EDRAM and a 4,096 bit-wide integrated DRAM to
SRAM interconnecting bus for the ESDRAM, all on the same chip. The Company's
EDRAM's and ESDRAM's can operate at the high speeds of today's MPU's enabling
systems to operate faster and at a reduced overall system cost when compared
with systems using SRAM cache plus standard DRAM or the alternate DRAM
architectures. Testing of EDRAM-based systems by Ramtron's customers has
shown system performance improvements from 1.3 times to 2.0 times over similar
systems with DRAM or DRAM plus SRAM cache. The system performance of EDRAM and
ESDRAM approaches the speed of a complete SRAM memory system but with
significant cost reductions and increased density.
The Company's 4-megabit EDRAM and 16-megabit ESDRAM components use the same
packaging as a standard DRAM, and the Company also has a family of EDRAM and
ESDRAM single in-line memory modules ("SIMM") and dual in-line memory modules
("DIMM") that use the same form factor and connectors as standard DRAM SIMM and
DIMM modules. This allows system developers to design higher performance
systems using the same packaging and control logic technique as slower DRAM's
and to design systems which can use either memory type to provide two
performance options. The Company began selling EDRAM's in commercial volumes
in the first quarter of 1993. The EDRAM product has been demonstrated to
provide a performance advantage and a cost effective memory solution for a
variety of the highest performance system applications including personal
computer motherboards, accelerator boards, multiprocessor systems, disk
controllers, embedded computer modules, communication bridge/routers, digital
signal processing systems and video graphic systems.
STRATEGY FOR EDRAM AND ESDRAM PRODUCTS
The Company's strategy is to provide SRAM performance with DRAM density in a
product with significantly lower pricing than SRAM's. A significant portion of
the Company's EDRAM and ESDRAM business is targeted at replacement of fast
(10-15 nanosecond) SRAM's in high-performance systems. In these applications,
the Company's EDRAM and ESDRAM products provide a significant density
improvement and a significantly lower cost per bit than equivalent SRAM
products. EDRAM and ESDRAM provide the customer cost and density advantages
while allowing the Company to command a price premium over slower DRAM's.
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A secondary strategy is to provide a significant performance upgrade option
for industry standard DRAM's in the same memory module socket. This strategy
targets the high-performance segments (communications, RAID disk control, DSP,
embedded processing, and PC systems) of the main memory marketplace. The
Company's strategy is to serve the highest performance segments of these
markets while maintaining higher margins than the commodity DRAM. This
strategy allows the business to achieve the production volumes necessary to
operate an efficient DRAM business while maximizing profit margins in served
markets.
The Company's plan is to produce EDRAM and ESDRAM products through strategic
alliances and foundry arrangements with major semiconductor companies and to
expand the market for these products by licensing production through multiple
sources. This approach avoids the high capital costs associated with DRAM
manufacturing that would have otherwise been incurred by the Company if it had
chosen to manufacture these products with Company-provided resources. In
order to increase the opportunity to expand licensing opportunities of the
Company's patented technology, the Company pursued and was granted a superset
standard for its ESDRAM product by JEDEC during 1998 and plans to continue to
pursue making the ESDRAM into an industry standard memory.
During 1999, the Company completed development of 16-megabit versions of its
EDRAM products. The new products, named the Enhanced Synchronous DRAM
(ESDRAM), are fully compatible with the industry standard SDRAM products that
are the standard main memory for PC systems. The new products use the original
EDRAM architecture internally to provide significantly faster access and
retrieval speeds than SDRAM. The ESDRAM can replace SDRAM directly on printed
circuit boards and on current DIMM modules and small outline dual inline memory
modules ("SO DIMM's") currently being used in PC desktop and notebook computer
systems. The new ESDRAM has the same speed as burst SRAM but with 4-8 times
higher density and much lower cost. This will allow the Company to continue to
provide a higher density and lower cost solution to SRAM products while
maintaining a higher average selling price over slower DRAM's.
IBM. In April 1995, the Company entered into a five-year agreement with IBM
under which the Company was required to design and qualify, and IBM would
manufacture, completed wafers for the Company's 4-megabit EDRAM products. The
Company granted to IBM an irrevocable, worldwide, non-exclusive license to use
the Company's EDRAM technology and know-how for the development, fabrication,
lease, sale or transfer of 4-megabit EDRAM products by or for IBM.
In December 1997, the Company entered into a five-year agreement with IBM
under which the Company will design and qualify, and IBM will manufacture,
completed wafers for the Company's 16-megabit ESDRAM products. The Company
granted to IBM a fully paid-up, irrevocable, perpetual, worldwide, non-
exclusive, non-sublicensable right and license under EMS's licensed technology
to use the Company's 16-megabit ESDRAM technology for the development,
fabrication, lease, sale or transfer of 16-megabit ESDRAM products by or for
IBM. IBM also received the unlimited right to manufacture 16-megabit ESDRAM's
for its internal consumption on a royalty-free basis, and the right to
manufacture and sell, measured on a quarterly basis, an amount up to two times
the Company's total sales of ESDRAM's or up to two times a predetermined
monthly wafer start amount, whichever is greater, for external sales on a
royalty-free basis. IBM may exceed such limit by paying to the Company a
royalty on such ESDRAM sales.
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The Company has the right to purchase the greater of a predetermined monthly
wafer amount or a quantity of wafers equal to 100% of IBM's previous quarterly
sales of ESDRAM product for external sales.
INFINEON TECHNOLOGIES. In February 1998, the Company entered into a
manufacturing foundry agreement with Infineon pursuant to which Infineon agreed
to manufacture and sell to the Company at specified prices for the Company's
resale to its customers ESDRAM products or other products using the Company's
EDRAM technology. The manufacturing foundry agreement has an unlimited term
and Infineon does not have any rights to the Company's EDRAM or ESDRAM
technology.
In January 2000, the Company expanded its relationship with Infineon
Technologies. Infineon acquired 20% ownership in EMS, the Company's formerly
wholly owned subsidiary which conducts the Company's EDRAM and ESDRAM business,
in consideration for up to $200 million per year of committed wafer
manufacturing capacity using Infineon's advanced DRAM and embedded DRAM process
capabilities and access to Infineon's design technology. The agreement has a
term of six years with optional two year renewal periods thereafter.
CYPRESS SEMICONDUCTOR. In November 1999, the Company entered into a technology
development agreement with Cypress Semiconductor Corporation ("Cypress") to
develop high performance, high density memory products. The agreement is
expected to result in a product to be sold by both Cypress and EMS.
COMPETITION
Numerous companies, including major corporations possessing worldwide wafer
manufacturing and integrated circuit production facilities, manufacture DRAM
products. While the Company's EDRAM and ESDRAM products have certain higher
performance characteristics than standard DRAM products, the Company
considers only high-speed "specialty" DRAM products such as cache DRAM
("CDRAM"), RDRAM, virtual channel RAM ("VCRAM"), fast cycle RAM ("FCRAM") and
multi-bank RAM ("MDRAM") products manufactured by companies such as Mitsubishi
Electric Corporation, Rambus (through licensees), NEC Corporation, Fujitsu and
MoSys, Inc. to be competitive with the Company's EDRAM and ESDRAM products.
The Company also considers its EDRAM and ESDRAM products to be competitive in
certain applications with SRAM products, which are manufactured by major
corporations, including Alliance Semiconductor Corporation, Cypress
Semiconductor Corporation, Integrated Device Technology, Inc., Motorola, Inc.,
Hitachi, ST-Microelectronics, Toshiba, Fujitsu, Samsung Electronics Co., Ltd.,
Hyundai Electronics Industries Co. Ltd. and Micron Technology Inc.
The Company currently sells eight 4-megabit EDRAM product configurations with
three speed grades and two temperature ranges. These products include
components with 4-megabit by 1, l-megabit by 4 and 5 SIMM modules with 4-
megabyte, 8-megabyte and 16-megabyte capacities. Each product is available
with 10, 12 or 15 nanosecond speed. The Company sold approximately $9.6
million of EDRAM and ESDRAM products in 1999.
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During 1999, the Company began shipments of its 16-megabit ESDRAM
products. These products included three product configurations with three
speed grades and two temperature ranges. The products include components with
4-megabit by 4, 2-megabit by 8, 1-megabit by 16 and 512-kilobit by 32
configurations and 3 DIMM modules with 8-megabyte, 16-megabyte, and 32-megabyte
capacities. Each product is available with 100, 133, and 166MHz maximum clock
rates. The Company began development of a higher density 64-megabit ESDRAM
product during 1999.
The Company expects the EDRAM and ESDRAM products to remain competitive with
fast SRAM and the alternate DRAM architectures (SDRAM, DDR SDRAM, RDRAM and
others) for the foreseeable future. Although many of the alternate DRAM
products are moving to 128-megabit densities and higher, many EDRAM and ESDRAM
market segments do not require higher density memories. The departure of
many of the competing memory suppliers to serve the volume PC main memory
market with 128-megabit products could enhance EDRAM and ESDRAM opportunities
in embedded control applications, which do not require higher density memory
capacities.
SALES CHANNELS
The Company markets EDRAM and ESDRAM memory products via commercial
semiconductor sales channels including manufacturers representatives and
industrial distributors. Such activity is conducted in major markets around
the world. Customers are distributed regionally, in size, and in end-use
industry. Using its contract manufacturing sources, the Company has produced
and sold a sufficient amount of product to enable the development of these
sales channels. The Company supports these sales channels with directly
employed sales managers that have regional responsibility. Sales of EDRAM and
ESDRAM products are expected to conform to the overall semiconductor industry
in seasonal sales patterns.
EDRAM AND ESDRAM PRODUCT MANUFACTURING
Because of the large capital costs required to build and operate competitive
DRAM manufacturing facilities, the Company's manufacturing strategy with
respect to EDRAM and ESDRAM products is to contract with conventional DRAM
manufacturers to produce such products on behalf of the Company. At this time,
IBM and Infineon are the Company's contract manufacturers of these products.
The development of additional manufacturing partners for the Company's products
continues to be a priority for the Company. The Company believes that the raw
materials associated with the manufacturing of the Company's EDRAM and ESDRAM
products are readily available from multiple sources.
The Company is currently working to develop ESDRAM products with 64-megabit and
higher densities to serve the needs of the high-performance main memory markets
and to reduce component counts in embedded control systems. The recent
agreement with Infineon gives the Company access to advanced technologies to
support development of 64-megabit, 256-megabit and higher density products.
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RESEARCH AND DEVELOPMENT
Development of additional FRAM and EDRAM products and the associated design
development and manufacturing processes will require the Company to make
significant additional investments in research and development. Continued
investment in both products and processes is critical to the Company's success
and, in the case of the Company's ferroelectric technology, to the ultimate
commercial realization of such ferroelectric technology. See "Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources." The Company's current research
and development activities are focused on expanding the Company's technology
to develop new low-density and high-density applications, materials and
processes, design concepts and architectures.
During 1999, the Company entered into a co-development agreement with Fujitsu
to pursue an advanced FRAM manufacturing process. The agreement calls for
Ramtron and Fujitsu to develop a 0.35-micron FRAM manufacturing process at
Ramtron's Colorado Springs facility. Fujitsu will provide development program
funding over a 2 year period and several pieces of wafer fabrication equipment
to be used in the development program.
As of December 31, 1999, approximately 68 of the Company's employees were
engaged in research and development. In addition, manufacturing personnel
were involved in research and development through efforts to increase the
manufacturing yields of the Company's products. The Company's research and
development expenditures for 1999, 1998 and 1997 were approximately
$7.2 million, $10.9 million and $10.7 million, respectively. Customer-
sponsored research and development expenditures during 1999, 1998 and 1997
were approximately $4.9 million, $0.8 million and $0.1 million, respectively.
MANUFACTURING
The Company's manufacturing strategy is to develop the design of new products
internally and through co-development alliances for production by third-party
manufacturers. Consistent with this strategy, Ramtron has entered into
arrangements with Rohm, Hitachi, Toshiba, Fujitsu and Asahi Chemical Industry
Co., Ltd. ("Asahi") for the development and/or manufacture of FRAM products and
with IBM and Infineon for the manufacture of EDRAM products. The Company has
also entered into a licensing arrangement with Samsung for the Company's
ferroelectric technology and a license arrangement with NEC Corporation
("NEC")for EDRAM technology. Such licenses do not include co-development or
manufacturing arrangements between the Company and the licensee.
Ramtron's agreements with its third-party manufacturers are intended to enable
the Company to avoid the large capital expenditures that otherwise would be
required to manufacture FRAM products and EDRAM products in commercial volumes.
As a result, however, the Company was dependent on IBM for its supply of
4-megabit EDRAM products during 1999 and IBM and Infineon for current and
future supply of 16-megabit ESDRAM products. The Company completed its
transition to a fabless manufacturing strategy for FRAM products in 1999.
Commercial production of FRAM products from its Colorado Springs facility
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ceased at the end of the first quarter in 1999. The Company began receiving
shipments of FRAM product memories manufactured by Rohm in February 1998 and in
late 1999 the Company began receiving shipments of FRAM product memories
manufactured by Fujitsu. The Company has not yet negotiated the
definitive terms of the foundry supply agreements with Hitachi or Toshiba, but
such companies are contractually bound to enter into such agreements upon
fulfillment of certain conditions. Under the fabless business strategy the
Company will continue to be dependent on other manufacturers for the
manufacture of FRAM and EDRAM products.
As is customary in the semiconductor industry, the Company and its third-party
manufacturers subcontract with foreign companies to assemble and test its
finished products. Manufacturing services performed by such third parties are
conducted in accordance with processes designed by the Company or its third-
party manufacturers and implemented under supervision of product engineers of
the Company or such third-party manufacturers.
Federal, state and local regulations impose various environmental controls on
the discharge of chemicals and gases used in the Company's manufacturing and
research and development processes. The Company believes that it has taken all
necessary steps to ensure that its activities comply with all applicable
environmental rules and regulations. While the Company's operations have not
been materially impacted by the cost of environmental compliance, there can be
no assurance that changes in such environmental rules and regulations will not
require additional investments in capital equipment and compliance programs in
the future. Any failure by the Company to comply with such environmental rules
and regulations regarding the discharge of hazardous substances could subject
it to substantial liabilities or could adversely affect its manufacturing
operations.
More than 50% of the Company's EDRAM product sales in 1999 were to the
Company's top three customers, Mylex Corporation, Lucent Technologies and
Motorola. As a result of the concentration of the Company's EDRAM customer
base, any substantial reduction or cancellation of business from any of those
customers or any significant decrease in the prices of EDRAM products sold to
them could have a material adverse effect on the Company's cash flow, operating
results and financial condition (see "Note 12 - Segment and Geographic Area
Information").
Export product sales as a percentage of total product sales were 20%, 26% and
38% for the years 1999, 1998 and 1997, respectively.
MARKETING
As is typical of other new products in the semiconductor industry,
Ramtron's products can require lengthy "design-in" cycles for customer
applications and extensive application engineering support. The Company
supports its customers' design-in activities and considers such support an
important element of its sales and marketing efforts.
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The Company markets its products worldwide through distribution networks using
internal sales resources and independent sales representatives and
distributors. The Company maintains 7 full-time sales and marketing
personnel at its headquarters in Colorado Springs and resident employee(s) in
California, Japan and Europe. The Company has distribution and/or
representation relationships with 22 companies in Europe, 4 in Japan, 3 in
Korea, 2 in each of Israel, Singapore and Malaysia and 1 in each of
Hong Kong, Thailand, Taiwan, China, Puerto Rico, Philippines, Russia, Mexico,
New Zealand and Australia. In the United States, the Company has
distribution/representation relationships with 28 companies and 2 in Canada.
BACKLOG
The rate of booking new orders varies from month to month and depends on
scheduling practices of individual customers. Cyclical industry conditions
make it difficult for many customers to enter into long-term, price-fixed
contracts. Orders are typically entered into under the condition that the
terms may be adjusted to reflect market conditions at the delivery date. For
the foregoing reasons and because of the possibility of customer changes in
delivery schedules or cancellations of orders without significant penalty, the
Company does not believe that its backlog as of any particular date is firm or
that it is a reliable indicator of actual sales for any succeeding period.
COMPETITION
The semiconductor memory industry is intensely competitive. The Company's FRAM
and EDRAM products experience intense competition from numerous domestic and
foreign companies. The Company may be at a disadvantage in competing with
many of these competitors having significantly greater financial, technical,
manufacturing and marketing resources, as well as more diverse product lines
that can provide cash flows counter cyclical to fluctuations in semiconductor
memory operations. The Company considers its FRAM products to be competitive
with existing nonvolatile memory products such as EEPROM, Battery Backed Static
RAM ("BBSRAM") and Nonvolatile RAM ("NVRAM") products in low-density
applications. Although nonvolatile Flash memory products are important in the
high-density memory product market, the Company's products do not currently
compete in that market. Both low-density and high-density nonvolatile memory
products are manufactured and marketed by major corporations possessing
worldwide wafer manufacturing and integrated circuit production facilities
(e.g., ST-Microelectronics, Motorola, Inc. and Hitachi) and by specialized
product companies (e.g., Dallas Semiconductor, Atmel Corp., Xicor Inc., and
Rohm).
Numerous companies, including major corporations possessing worldwide wafer
manufacturing and integrated circuit production facilities, manufacture DRAM
products. Because the Company's EDRAM products have certain higher
performance characteristics than standard DRAM products, the Company
considers only high-speed "specialty" DRAM products (such as SDRAM, CDRAM,
RDRAM, fast SRAM, VCRAM and MDRAM products manufactured by companies such as
Mitsubishi Electric Corporation, Rambus (through licensees), NEC Corporation,
Fujitsu, and MoSys, Inc.) to be competitive with the Company's EDRAM and ESDRAM
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products. The Company also considers its EDRAM and ESDRAM products to be
competitive in certain applications with SRAM products, which are manufactured
by major corporations, including Alliance Semiconductor Corporation, Cypress
Semiconductor Corporation, Integrated Device Technology, Inc., Motorola, Inc.,
Hitachi, ST-Microelectronics, Toshiba, Fujitsu, Samsung, Hyundai Electronics
Industries Co. Ltd., and Micron Technology, Inc.
The Company's licensees may market products, which compete with the Company's
FRAM and EDRAM products. Most of the Company's strategic alliance partners
have the right to manufacture and sell FRAM or EDRAM products for their own
account with or without the payment of royalties, depending upon the terms of
their agreements with the Company. For example, as part of its agreements
with Hitachi, Rohm, Toshiba and Fujitsu, the Company granted each of those
companies a royalty-bearing non-exclusive license to the Company's FRAM
technology and know-how, which license includes the right to manufacture and
sell products using FRAM technology. The Company has also granted IBM a
non-exclusive license to manufacture, produce and sell 4-megabit and 16-megabit
EDRAM products in unlimited quantities, which license is royalty-free for
internal consumption of EDRAM products and royalty-free for external sales up
to two times IBM's total sales of EDRAM products. Most of these license
agreements provide for the continuation of the licensed rights to Ramtron's
FRAM or EDRAM technology and know-how after expiration or termination of the
agreements on a royalty-bearing or royalty-free basis. To the extent that any
of the Company's products achieve market acceptance, there can be no assurance
that the Company's competitors will not be able to develop and offer
competitive products or implement pricing strategies for FRAM and EDRAM
products that could adversely affect the Company's business and operating
results. The Company's ability to compete successfully depends on its ability
to develop low-cost volume production of its products permitting its products
to be sold at a price that is both competitive and profitable to the Company
and on its ability to design products which successfully address customer
requirements. The Company's ability to compete successfully also depends on
factors beyond its control, including the rate at which customers incorporate
the Company's products into their own products, the success of such customers
in selling their products, the success of the Company's protection of its
intellectual property, the success of competitors' products and general market
and economic conditions. Many companies are researching and developing
semiconductor memory technologies and product configurations that could reduce
or eliminate any future competitive advantages of the Company's products.
There can be no assurance that the Company's ferroelectric technology will not
be supplanted in the future by competing technology or that the Company will
have the technical capability or financial resources to be competitive in the
semiconductor industry with respect to the design, development or manufacture
of either FRAM or EDRAM products.
PATENTS AND PROPRIETARY RIGHTS
The Company relies heavily on its patents and trade secrets as a defense
against competitors introducing infringing products that will compete with the
Company's FRAM and EDRAM products and the royalty-bearing products of the
Company's licensees. Although the Company intends to enforce its patents and
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trade secrets aggressively, there can be no assurance that such protection
will be available or be enforceable in any particular instance or that the
Company will have the financial resources necessary to adequately enforce its
patent and trade secret rights, and the unavailability or unenforceability of
such protection or the inability to enforce adequately such rights could
materially adversely affect the Company's business and operating results. The
Company's strategic alliance partners, have access to the Company's proprietary
FRAM technology and know-how and have the right, on a royalty-paying basis to
manufacture and sell ferroelectric products. The Company does not license
from others any material right covering its ferroelectric technology and does
not believe its technology infringes any known patents. The Company has,
however, entered into a cross-license agreement with Symetrix Corporation
("Symetrix") for the use by the Company of certain ferroelectric technology
that may have been developed by Symetrix, which is not used in the Company's
FRAM products. The Company is aware, because others have obtained patents
covering numerous semiconductor designs or processes, that the Company operates
in a competitive environment in which it would not be unlikely for a third
party to claim that certain of the Company's present or future products may
infringe the patents or rights of such third parties. If any such
infringements exist or arise in the future, the Company may be exposed to
liability for damages and may need to obtain licenses relating to third-party
technology incorporated into the Company's products. The Company's inability
to obtain such licenses on acceptable terms or the occurrence of related
litigation could have a material adverse affect on the Company. See "Item 3.
Legal Proceedings." The Company has been granted patents it believes are
fundamental in covering the basic architecture and method of operation of
its EDRAM products, and the Company has other patents and patent applications
involving its EDRAM technology pending.
As of December 31, 1999, the Company held 104 unexpired United States patents
covering certain aspects of its products and technology. Such patents will
expire at various times between November 2004 and June 2018. Three of
these patents involving FRAM technology are owned jointly by Ramtron and Seiko
Epson and 10 involving DRAM technology are owned jointly by Ramtron and Nippon
Steel. As of December 31, 1999, the Company had applied for 37 additional
United States patents covering certain aspects of its products and technology.
The Company has also taken steps to apply for foreign patents on its products
and technology. As of December 31, 1999, the Company held 77 unexpired
foreign patents and had 52 foreign patent applications pending. A number of
the pending foreign patents will, upon issuance, be jointly owned by the
Company and either Seiko Epson, Nippon Steel or Fujitsu.
In addition to prosecuting patents, the Company protects its proprietary
technology through a trade secret program that involves restricting access to
confidential documents and information and obtaining written confidentiality
agreements with all vendors, visitors and technical employees.
The Company believes its inventions are of fundamental importance to its
ferroelectric and EDRAM technology and that patents that have been issued, or
allowed but not yet issued, will provide protection against unauthorized use
of the Company's inventions. There is evidence that other companies are
seeking to develop and patent technology similar to the Company's technologies.
Furthermore, other companies may seek to reverse engineer the Company's
products.
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EMPLOYEES
As of December 31, 1999, the Company had 127 employees, including 16 in
management and administration, 68 in research and development, 28 in
manufacturing and 15 in marketing and sales. The Company's ability to attract
and retain qualified personnel is essential to its continued success. The
majority of the Company's employees have been granted options to purchase
common stock pursuant to either the Company's Amended and Restated 1986 Stock
Option Plan, the 1989 Nonstatutory Stock Option Plan, the 1995 Stock Option
Plan, as amended, or the 1999 Stock Option Plan. None of the Company's
employees are represented by a collective bargaining agreement, nor has the
Company ever experienced any work stoppage. None of the Company's employees
other than L. David Sikes, the Company's Chief Executive Officer; Greg B.
Jones, the Company's President and Chief Operating Officer; LuAnn D. Hanson,
the Company's Acting Chief Financial Officer and Vice President of Finance;
Craig W. Rhodine the Company's Vice President and General Manager; and
Donald G. Carrigan, the Company's Vice President of Sales and Marketing have an
employment agreement with the Company, and none of the Company's employees has
a post-employment noncompetition agreement with the Company. The Company
believes that its employee relations are good.
Item 1a. 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 58 Chairman of the Board and Chief Executive Officer
Greg B. Jones 52 Director, President and Chief Operating Officer
Richard L. Mohr 40 Executive Vice President, Chief Financial Officer
And Corporate Secretary (Mr. Mohr resigned from
all positions he held with the Company effective
January 31, 2000)
LuAnn D. Hanson 40 Acting Chief Financial Officer, Vice President of
Finance and Corporate Secretary (effective
February 1, 2000)
Donald G. Carrigan 52 Vice President of Sales and Marketing (FRAM
Products Business)
Craig W. Rhodine 36 Vice President and General Manager (EDRAM Products
Business)
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 its
Chairman, President and Chief Executive Officer from January 1995 until April
1995. Prior to joining Ramtron, Mr. Sikes was President and Chief Executive
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Officer of ASM America, Inc., 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.
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, Inc. Prior to his work with ASM America,
Inc., 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.
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 17 years of
professional finance experience including 13 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. Mohr resigned from all positions he held with the Company
effective January 31, 2000.
Ms. Hanson joined the Company in September 1993 as Assistant Controller. In
April 1995 she was named Controller and served in that capacity until January
1999 when she was named Vice President of Finance and Corporate Controller. In
February 2000 Ms. Hanson was named Acting Chief Financial Officer and Vice
President of Finance. Ms. Hanson is a certified public accountant and has over
18 years of professional finance experience including 14 years of semiconductor
industry experience. Before joining the Company, Ms. Hanson held various
positions at Carniero, Chumney & Co., certified public accountants, and various
positions in accounting with United Technologies Microelectronics Center.
Ms. Hanson attended the University of Northern Iowa earning a Bachelor of Arts
degree in Accounting and a Master of Business Administration degree in Finance
and Accounting from Regis University.
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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 officer of the Company and in January 1997, he was named
Vice President of Sales and Marketing. In February 1999 Mr. Carrigan was named
Vice President and General Manager of the Company's FRAM Product Business.
Mr. Carrigan is currently Ramtron's Vice President of Sales and Marketing for
the FRAM Product Business. Mr. Carrigan has over 27 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 Project 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 officer of the
Company in January 1998. Mr. Rhodine has over 14 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.
Item 2. PROPERTIES
The Company owns a 69,000-square foot building in Colorado Springs, which
serves as its principal executive offices and as a research, development
facility. The facility has a Class 10 semiconductor clean room that currently
is used in ferroelectric research and development activities related to
advanced FRAM manufacturing process development. The Company's land, building
and equipment are subject to a first deed of trust and security interest in
favor of the National Electrical Benefit Fund to secure a $7.2 million
(principal and accrued interest) credit facility extended to the Company in
September 1995 and amended in August 1999. The Company believes that its
existing facilities are adequate for its needs in the foreseeable future for
research and development activities.
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Item 3. LEGAL PROCEEDINGS
PATENT INTERFERENCE PROCEEDING. A patent interference proceeding, which was
declared in 1991 in the United States Patent and Trademark Office (the "Patent
Office") between the Company, National Semiconductor Corporation ("National")
and the Department of the Navy in regard to one of the Company's issued United
States patents, is continuing. The Patent involved covers a basic
ferroelectric memory cell design invention the Company believes is of
fundamental importance to its FRAM business in the United States. An
interference is declared in the Patent Office when two or more parties each
claim to have made the same invention. The interference proceeding is
therefore conducted to determine which party is entitled to the patent rights
covering the invention. In the present interference contest, the Company is
the "senior" party, which means that it is in possession of the issued
United States Patent and retains all rights associated with such patent. The
other two parties involved in the interference are the "junior" parties, and
each has the burden of proof of convincing the Patent Office by a
preponderance of the evidence that it was the first to invent the subject
matter of the invention and thus is entitled to the corresponding patent
rights. Only the Company and National filed briefs in this matter. Oral
arguments were presented before the Patent Office on March 1, 1996.
The Patent Office decided the interference on May 6, 1997, holding that all of
the claims were patentable to National, one of the "junior" parties. The
other "junior" party, the Department of the Navy, was not granted any patent
claims pursuant to the interference proceedings. On June 20, 1997, the
Company filed a Request for Reconsideration with the Patent Office concerning
the interference decision. Pursuant to the Request for Reconsideration, the
Company requested that five separate issues be reconsidered because, from the
Company's perspective, they were either ignored or misconstrued in the
original decision. A decision on the Request for Reconsideration was issued on
November 19, 1998, again holding that all of the claims were patentable to
National. On January 9, 1999, the Company appealed the decision of the Patent
Office on one of the interference counts directly to the Court of Appeals for
the Federal Circuit. On February 2, 2000 the Court of Appeals vacated and
remanded the decision of the Patent Office for further proceedings. The
Company also filed complaints in Federal District Court seeking a review of the
decision of the Patent Office on the remaining interference counts. The
Company remains in possession of the issued United States Patent and retains
all rights associated with such patent while it pursues its appeal options.
The "junior" party has received no rights associated with this patent decision
and will not receive any such rights as long as the appeal process continues.
If the Company's patent rights that are the subject of the interference
proceeding are ultimately lost or significantly compromised, the Company would
be precluded from producing FRAM products in the United States using the
Company's existing design architecture, absent being able to obtain a suitable
license to exploit such rights. If such patent rights are ultimately awarded
to National, and if a license to such rights is not subsequently entered into
by the Company with National, National could use the patent to prevent the
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manufacture, use or sale by the Company, and/or its licensees, within the
United States of any products that come within the scope of such patent rights,
which would include all FRAM products as currently designed, and which would
materially adversely affect the Company. The Company has vigorously defended
its patent rights in this interference contest and will continue such efforts.
The Company is uncertain as to the ultimate outcome of the interference
proceeding, as well as to the resulting effects upon the Company's financial
position or results of operations.
PATENT INFRINGEMENT PROCEEDING. In October 1998, the Company filed a claim for
patent infringement in the United States District Court, Northern District of
California against NEC Corporation, NEC Electronics, Inc. and NEC USA, Inc.
(collectively "NEC"). The complaint claimed that NEC infringed and continues
to infringe on certain patents of the Company by offering to sell and/or
selling NEC's Virtual Channel SDRAM products, and by actively inducing others
to infringe on such patents without authority or license from the Company. The
complaint sought relief from NEC to cease its infringement activities and
requested damages be awarded to the Company resulting from the infringement
activities. The relief also asked for reimbursement of attorney's fees and
certain other relief the Court deemed proper. NEC responded by denying the
infringement claims brought against them by the Company. NEC also filed
certain counterclaims against the Company, which were subsequently retracted or
stayed by the court.
On November 9, 1999 the Company and NEC entered into an agreement to settle its
patent infringement lawsuit. The parties agreed to terminate the pending
patent infringement cases and pursuant to the agreement, the Company granted
NEC a restricted license to use certain of the Company's Enhanced DRAM specific
intellectual property for certain consideration, terms of which are
confidential and under a court protective order.
LITIGATION
DEERE PARK. In November 1998, Deere Park Capital Management LLC ("Deere
Park"), a holder of the Company's Series A Convertible Preferred Stock
("Preferred Stock"), filed a lawsuit against the Company in the Court of
Chancery of the State of Delaware seeking a declaratory judgment and specific
performance of the Company's alleged obligation to convert a portion of Deere
Park's shares of Preferred Stock to common stock, as well as damages of $2.4
million plus costs and attorneys fees. On December 16, 1998, the Company filed
its answer denying the allegations of the complaint and asserting, among other
things, that the Company had fully performed its contractual obligations with
respect to the conversions alleged in the complaint. On January 20, 1999,
Deere Park moved for permission to file an amended complaint. Shortly
thereafter, in early February 1999, Deere Park filed a second action against
the Company in the Court of Chancery for the State of Delaware. Like the
proposed amended complaint in its original lawsuit, Deere Park alleged in the
second action that the Company breached certain obligations to convert Deere
Park's shares of Preferred Stock; however, Deere Park's new complaint added a
claim for relief and relied on different facts to support the claims asserted
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therein. On February 23, 1999, the Company answered Deere Park's second action
by denying the substance of Deere Park's new allegations and raised certain
affirmative defenses that the Company previously had not raised. Effective as
of August 6,1999, Deere Park dismissed all claims against the Company with
prejudice pursuant to the finalization of the Company's preferred stock
restructuring.
TALISMAN. On January 29, 1999, Talisman Capital Opportunity Fund, LLC
("Talisman"), a holder of Preferred Stock, filed a suit against the
Company in the United States District Court for the Southern District of New
York, also alleging that the Company failed to honor its obligations to
convert shares of its Preferred Stock and seeking damages of over $1.5 million
plus costs and attorney's fees. In its answer served on February 22, 1999,
the Company denied the substance of Talisman's allegations and asserted
several affirmative defenses. On April 7, 1999, the Company entered into an
agreement with Talisman to settle the pending litigation. Pursuant to the
terms of a confidential settlement agreement, the Company agreed to make a
cash payment to Talisman in consideration for the cancellation of all
Talisman's remaining shares of Series A Preferred Stock. Accordingly,
Talisman's suit over the Company was dismissed and Talisman ceased to be a
holder of the Company's Series A Preferred Stock.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On December 21, 1999, the Company held its 1999 Annual Meeting of Stockholders
(the "Annual Meeting") in Colorado Springs, Colorado. Proxies for the meeting
were solicited by the Board of Directors of the Company pursuant to Regulation
14A under the Securities and Exchange Act of 1934. There was no solicitation
in opposition to the management's nominees as listed in the proxy statement,
and all such nominees were elected.
At the Annual Meeting, the Company's stockholders elected the following persons
as directors of the Company. The number of votes cast for each director, as
well as the number of votes withheld, are listed opposite each director's name:
Name of Director Votes Cast for Director Votes Withheld
----------------------- ----------------------- --------------
L. David Sikes 9,053,709 210,870
Greg B. Jones 9,102,964 161,615
William G. Howard 9,105,704 158,875
Eric A. Balzer 9,107,526 157,053
Albert J. Hugo-Martinez 9,103,892 160,687
At the Annual Meeting, the stockholders approved with 3,099,035 votes cast in
favor, 524,872 votes cast against and 59,082 abstentions, the amendment to the
Company's 1995 Stock Option Plan to increase the number of shares available for
grant under such plan by 1,200,000 shares to a cumulative total of 1,800,000
shares and to increase the maximum number of shares that may be awarded as
options under the Plan during any calendar year to any optionee by 200,000
shares.
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PART II.
Item 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The Company's common stock trades on the Small Cap Market tier of The
Nasdaq Stock Market under the symbol "RMTR." The following table sets forth
the 1999 and 1998 ranges of the high and low closing sales prices for the
common stock as reported on The Nasdaq Stock Market.
High Low
------ ------
1999
- ----
First Quarter . . . . . . . . . . . . . . . . . . $4.30 $2.03
Second Quarter . . . . . . . . . . . . . . . . . . 4.22 2.50
Third Quarter . . . . . . . . . . . . . . . . . . 3.13 1.69
Fourth Quarter . . . . . . . . . . . . . . . . . . 9.00 1.88
1998
- ----
First Quarter . . . . . . . . . . . . . . . . . . $29.05 $21.90
Second Quarter . . . . . . . . . . . . . . . . . . 27.50 15.45
Third Quarter . . . . . . . . . . . . . . . . . . 20.15 3.30
Fourth Quarter . . . . . . . . . . . . . . . . . . 5.00 1.25
The prices set forth above reflect transactions in the over-the-counter market
at inter-dealer prices, without retail mark-up, mark-down or commission and
may not necessarily represent actual transactions. On March 21, 2000, the
last reported sale of the Company's common stock was $21.50 per share. As of
March 21, 2000, there were approximately 2,307 record holders of the Company's
common stock.
During December 1999, the Company issued approximately 953,000 common stock
units at an issue price of $5.66 per unit. Each unit consisted of one share of
common stock, one warrant to purchase common stock at $10.81 per share and one
warrant to purchase common stock at $16.22 per share. Such shares were
registered under the Securities Act of 1933, as amended (the "Securities Act").
The registration statement registering the resale of such securities under the
Securities Act, became effective on February 4, 2000.
REVERSE STOCK SPLIT
On July 20, 1999, the Company's stockholders approved a one-for-five reverse
stock split. Common stock information appearing in the accompanying financial
statements and notes have been retroactively adjusted to reflect the effects of
the reverse split.
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DIVIDEND POLICY
The Company has not paid any dividends since its inception and does not intend
to pay any cash dividends in the foreseeable future. The Company intends to
retain any earnings to finance its operations.
Item 6. SELECTED FINANCIAL DATA
The following selected financial data should be read in conjunction with, and
are qualified in their entirety by, the consolidated financial statements and
related notes thereto and "Item 7 - Management's Discussion and Analysis of
Financial Condition and Results of Operations" included herein.
Year Ended December 31,
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
(in thousands, except per share data)
Net revenues $24,871 $18,554 $20,495 $31,391 $28,886
Gross margin, product sales 5,170(1) 7,158(2) 3,863 3,910 852
Operating loss (5,825) (12,985) (9,128) (5,231) (1,833)
Net loss applicable to
common shares (2,035) (19,141) (8,857) (5,737) (2,482)
Net loss per share - basic
and diluted (.16) (2.23) (1.19) (0.80) (0.55)
Working capital 7,285 5,246 4,819 12,157 12,695
Total assets 29,380 33,347 31,054 31,762 36,558
Total long-term obligations 5,766 -- -- 3,721 3,954
Stockholders' equity 13,323 17,062 17,536 22,272 24,463
Cash dividends per
common share(3) -- -- -- -- --
- -----------------
(1) Excludes provision for inventory write-off of $1.2 million.
(2) Excludes loss on manufacturing contract of $1.2 million.
(3) The Company has not declared any cash dividends on its common stock and
does not expect to pay any such dividends in the foreseeable future.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
The following discussion and analysis is intended to provide greater details
of the results of operations and financial condition of the Company. The
following discussion should be read in conjunction with the information under
"Item 6. Selected Financial Data" and the Company's consolidated financial
statements and notes thereto and other financial data included elsewhere
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herein. Certain statements under this caption constitute "forward-looking
statements" under the Reform Act which are subject to certain risks and
uncertainties. The Company's actual results may differ significantly from the
results discussed in such forward-looking statements. Factors that might
cause such a difference include but are not limited to: (i) the timely
completion of the development and qualification for manufacturing of the
Company's new EDRAM and FRAM products; (ii) broader customer acceptance of its
EDRAM and ESDRAM products and low-density FRAM products; (iii) acceptance of
new high-density FRAM products, which may be developed; (iv) the Company's
ability to manufacture its products on a cost-effective and timely basis at its
alliance foundry operations; (v) the Company's ability to perform under
existing alliance and joint development agreements and to develop new alliance
and foundry relationships; (vi) the alliance partners' willingness to continue
development activities as they relate to their license agreements with the
Company; (vii) the availability and related cost of future financing;
(viii) the retention of key personnel; (ix) the outcome of the Company's
patent interference litigation proceedings, and (x) factors not directly
related to the Company, such as competitive pressures on pricing, marketing
conditions in general, competition, technological progression, product
obsolescence and the changing needs of potential customers and the
semiconductor industry in general. For additional information concerning these
and other factors, see "Expected Future Results of Operations" in this Item 7.
Since its inception, the Company has been primarily engaged in the research
and development of ferroelectric technology and the design, development and
commercialization of FRAM products and EDRAM products. Revenue has been derived
from the sale of the Company's FRAM and EDRAM products beginning in 1993. The
Company has also generated revenue under license and development agreements
entered into with a limited number of established semiconductor manufacturers
and involving the development of specific applications of the Company's
technologies. Accordingly, fluctuations in the Company's revenues have resulted
primarily from the timing of significant product orders, the timing of the
signing of license development agreements, and the achievement of related
performance milestones.
For 1999, 1998 and 1997, FRAM product sales represented approximately 27%, 15%
and 11% of total product sales revenue, respectively, while EDRAM product sales
accounted for 73%, 85% and 89%, respectively, for the same periods. During
these periods, product sales revenue accounted for approximately 53%, 95% and
71%, respectively, of total revenues, the remainder of which were generated
principally from license and development fees, royalties and customer-sponsored
research and development revenue. As a result of the Company's limited
revenues as compared to its substantial ongoing product research and
development costs and high manufacturing costs for certain of its products, the
Company has incurred losses on a consolidated basis in each fiscal year since
its inception and has required substantial capital infusions in the form of
debt and equity financing.
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The Company has entered into development and/or licensing arrangements with
several major semiconductor manufacturers, namely Hitachi, Rohm, Toshiba,
Fujitsu, IBM and Infineon to advance the development of both its FRAM products
and EDRAM products and to provide the Company with access to advanced
semiconductor manufacturing processes and capacity for such products. In
December 1996, the Company also entered into a license agreement with Samsung,
although such arrangement does not include any development activities between
the Company and Samsung or the availability of manufacturing capacity to the
Company from Samsung. In addition to these licensing and/or development
arrangements, in December 1997, the Company entered into a FRAM development
agreement with Asahi which does not currently include a license to the
Company's FRAM technology. In March 1999, the Company entered into a two year
joint development agreement with Fujitsu to pursue the development of advanced
FRAM manufacturing processes. This agreement provided the Company with
research and development funding and wafer fabrication processing equipment
supplied by Fujitsu.
RESULTS OF OPERATIONS
REVENUES. In 1999, product sales revenues totaled $13.1 million a decrease of
approximately 25% from 1998. Product revenues consisted of $3.5 million of
FRAM products and $9.6 million of EDRAM products. This is compared to product
sales revenues during 1998 of $17.6 million from the sale of $2.6 million of
FRAM products and $15.0 million of EDRAM products. The decrease in product
sales revenue in 1999 as compared with 1998 resulted primarily from a decrease
in the volume of EDRAM 4-megabit products ordered and shipped to new and
existing customers. The Company believes that the downward trend in 4-megabit
EDRAM product revenues is a result of fluctuations in demand from a limited
number of 4-megabit EDRAM customers. Although the trend in 4-megabit EDRAM
revenues has been down during 1999, the Company still has substantial demand
for the product and such demand is expected to continue for at least 2 more
years. FRAM product revenues increased 37% from the prior year primarily as a
result of increased availability of FRAM products from one of the Company's
FRAM foundry manufacturing sources and from renewed sales and marketing
activities resulting from the increased availability. The Company was able to
maintain average selling prices on its products during 1999 despite price
declines in competing products during the year. Product sales for 1999
consisted of 4-kilobit, 16-kilobit and RFID FRAM products and 4-megabit and the
recently introduced 16-megabit EDRAM products. In 1998, product sales revenues
increased by approximately 21% over product sales revenues in 1997 to a total
of $17.6 million, consisting of sales of $2.6 million of FRAM products and
$15.0 million of EDRAM products, compared to total product sales revenues
during 1997 of $14.6 million from the sale of $1.6 million of FRAM products and
$13.0 million of EDRAM products. The increase in product sales revenue in 1998
as compared with 1997 resulted primarily from an increase in the volume of
EDRAM products shipped to new and existing customers, primarily in the
communications sector. The increase in FRAM product revenues during 1998
resulted from the first availability of FRAM products manufactured by one of
the Company's foundry partners.
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The Company recognized $5.2 million in license and development fee revenue
during 1999. In 1998, the Company did not recognize any license and
development fee revenue. In 1997, the Company recognized license and
development fee revenue of $5.8 million. 1999 license and development fee
revenue is primarily attributable to the achievement of contractual milestones
for existing licensees and development partners. The Company also licensed
EDRAM technology to NEC during 1999 pursuant to the settlement of the Company's
patent infringement litigation with NEC. The Company believes that its lack of
license fee revenues during 1998 were driven primarily by the Asian financial
crisis and the overall semiconductor industry downturn experienced during the
year. Further, the Company and its alliance partners did not reach any
contractual milestones during the year to allow for the recognition of any
milestone licensing revenue pursuant to the terms of existing licensing
agreements. The Company's license fee revenues during 1997 resulted from the
achievement of milestones pursuant to an existing license arrangement with
Fujitsu and from the Company entering into a new FRAM development agreement
with Asahi.
During 1999, the Company recognized royalty revenues of $1.5 million compared
with no such royalty revenue recorded in 1998 and 1997. The $1.5 million
nonrefundable payment was received under a FRAM licensing agreement with an
existing licensee. The payment was consideration for a direct licensing right
to use Ramtron intellectual property in the design, manufacture and sale of
RF/ID products.
The Company enters into customer-sponsored research and development activities
primarily as a means to further the development of its technology with certain
strategic partners, customers or potential future technology licensees.
Revenues from such activities were $5,022,000, $944,000 and $132,000 in 1999,
1998 and 1997, respectively. Costs related to such activities were $4,880,000,
$826,000 and $118,000 in 1999, 1998 and 1997, respectively. Increases in
customer-sponsored research and development activities during 1999 are
primarily the result of entering into an advanced FRAM manufacturing process
development agreement with Fujitsu in March 1999.
COST OF SALES. In 1999, 1998 and 1997, cost of product sales as a
percentage of product revenues were 61%, 59% and 74%, respectively. During
1999 the cost of product sales as a percentage of product revenues
remained relatively flat as compared to 1998. The decrease in cost of product
sales as a percentage of product revenues in 1998 compared with 1997 resulted
primarily from lower costs of manufacturing for the Company's EDRAM products
and relatively stable average selling prices of the EDRAM products.
The cost of product sales as a percentage of product revenues for the Company's
FRAM products were approximately 74% in 1999, 94% in 1998 and 97% in 1997.
Cost of product sales as a percentage of product revenues for the Company's
FRAM products improved during 1999 resulting primarily from cost reductions
achieved through manufacturing the Company's FRAM products at an alliance
foundry partner in Japan. Additionally, the Company was able to reduce its
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costs of subcontract product assembly and testing on a per unit basis.
Historically, the low manufacturing volume of FRAM products has resulted in
higher costs associated with the Company's external packaging and testing
services and the CMOS underlayer supply used in internal FRAM manufacturing.
Improvements in the cost of product sales as a percentage of product revenues
for FRAM products are expected during 2000, resulting primarily from the
Company receiving product from the advanced semiconductor manufacturing
processes and facilities of the Company's foundry alliances, assuming further
successful completion of development and product qualification. As the
Company's FRAM product sales increase the Company will be better able to take
advantage of volume manufacturing efficiencies.
The cost of product sales as a percentage of product revenues for the Company's
EDRAM products were approximately 56% in 1999, 53% in 1998, and 71% in 1997.
The increase in 1999 is primarily due to lower average selling prices on
certain of the Company's 4-megabit EDRAM products. During the latter part of
1999 the Company decided to sell low demand "512K X 8" EDRAM products at
significantly discounted prices. The discounted sale of the "512K X 8" EDRAM
inventory helped a significant customer lower overall system costs in a price
sensitive application. Substantially all of the "512K X 8" EDRAM product was
sold during 1999. The Company expects EDRAM cost of product sales as a
percentage product revenues to increase during 2000 as the Company introduces
new products with initially higher manufacturing costs. As the volume of sales
and production increase into 2001 on these products, the Company expects to be
able to achieve increasingly lower manufacturing costs and commensurate
improvement in product gross margins.
PROVISION FOR INVENTORY WRITE-DOWN. During 1999, the Company increased its
provision for excess and obsolete inventory by $1.2 million. The Company
determined it had excess inventories of a specialty FRAM product built for a
selected market segment. Additionally, the Company has determined that certain
FRAM products which were manufactured in the Colorado Springs fabrication
facility, prior to receiving product from our foundry partners, should be
scrapped due to inferior performance attributes as compared to the same product
manufactured by our foundry partners.
LOSS ON MANUFACTURING CONTRACT. In August 1998, the Company entered into a
contract with Cubic Corporation to manufacture, in the Company's Colorado
Springs manufacturing facility, a limited number of RFID memory chips using the
Company's FRAM memory technology. As of December 31, 1998, the Company
determined that the total contract revenue compared with the estimated contract
costs of manufacturing this product indicated that a loss in fulfilling the
contract would be incurred. The loss resulted from low product
manufacturing yields, raw material quality issues and complications in product
testing due to the complexity of the chip design. Accordingly, the Company
recorded a charge to earnings reflecting the total estimated loss to be
incurred in the fulfillment of the contract in the amount of $1,163,000. The
manufacturing of this product was completed in March 1999. The loss on
manufacturing contract as a percentage of product revenues in 1998 was 7%.
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RESEARCH AND DEVELOPMENT. During 1999 research and development costs
(including customer-sponsored research and development) remained relatively
flat as compared to 1998 totaling $12.0 million as compared to $11.7 million in
1998. In March 1999, the Company entered into a two year joint development
agreement with Fujitsu to pursue development of advanced FRAM manufacturing
processes. This agreement provided the Company with research and development
funding and wafer fabrication processing equipment supplied by Fujitsu.
Funding to Ramtron in 1999 from this agreement totaled $4.0 million.
In 1998, research and development expenses (including customer-sponsored
research and development) increased to $11.7 from $10.8 million in 1997. The
Company incurred substantial increases in research and development expenses
during 1998 for product development of its 16-megabit ESDRAM products and for
additional future EDRAM products. EDRAM product engineering expenses
associated with the 16-megabit ESDRAM development increased significantly
during 1998 to $1.6 million from $.7 million in 1997. Such increases in
product engineering expenses included 16-megabit ESDRAM development costs for
photomasks, engineering wafers and test probe cards totaling approximately $1.0
million. Further, EDRAM engineering design expenses increased by 63% or
roughly $.5 million to $1.3 million during 1998 as compared to $.8 million
during 1997 to support the 16-megabit ESDRAM development and future EDRAM
product development. These increases in expenses for new EDRAM product
development were offset by decreases in FRAM research and development
activities that utilized the Company's Colorado Springs fabrication
facility. During the last five months of 1998, the Company's Colorado Springs
fabrication facility was used almost entirely for the fulfillment of an RFID
manufacturing contract entered into in August 1998, rather than for FRAM
technology development purposes. Certain of the resources that would typically
be used in FRAM research and development activities were, therefore, used in
fulfilling the RFID manufacturing contract and are included in cost of sales
amounts and a recorded $1.2 million loss on manufacturing contract recorded in
1998. The Company anticipates that overall research and development costs will
increase during 2000 and in future years as new FRAM and EDRAM products and
technologies are developed.
SALES, GENERAL AND ADMINISTRATIVE. 1999 sales, general and administrative
expense("SG&A") increased $1.3 million to $9.5 million as compared to $8.2
million in 1998. These increases are primarily attributable to legal and
financial advisory fees incurred in connection with the Company's preferred
stock restructuring efforts and from increased in foreign withholding taxes
related to license and development fee revenues recognized during 1999. In
1998, SG&A expenses increased by $168,000 (2%) to $8.2 million from $8.0
million in 1997. The primary increases in SG&A expenses during 1998 when
compared to 1997 were for commissions on increased product revenues and for
financial advisory and legal costs incurred associated with legal and
restructuring issues surrounding the Company's Convertible Preferred Stock.
These increases were partially offset by decreases in foreign withholding taxes
during 1998, as there were no licensing fee revenues recorded during 1998. The
Company recorded $375,000 in foreign withholding taxes from licensing
activities during 1997. The Company believes that SG&A expenses for 2000 will
remain relatively flat as compared to 1999. The Company expects that increases
in commissions as a result of increased product sales will be partially offset
by reduced legal and financial advisory fees in 2000.
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COMMON STOCK PRICE ADJUSTMENT. In December 1997, the Company issued and sold
in a private placement to certain investment funds ("Holders") 160,000 shares
of common stock at an issue price of $24.65 per share.
The purchase agreement for such common stock provided that, if during the
twelve-month period following the closing of the transaction, the Company sold
any shares of common stock for an issue price lower than the purchase price,
the purchase price per share of the common stock would be adjusted downward to
equal the lower issue price. Any adjustment would be effected by issuing
additional shares of common stock to the Holders. An issuance of common stock
for an issue price lower than the purchase price occurred during September and
October 1998 as a result of preferred stock conversions. The lowest issue
price from these conversions was $1.15 per share, which then triggered a price
adjustment pursuant to the terms of the Common Stock Purchase Agreement.
The Holders are not required to accept, by way of this adjustment, a number of
common shares such that the total number of common shares held by the Holders
would exceed 4.99% of the total outstanding common stock of the Company. The
Company would be required to effect the 4.99% adjustment by cash refund. As of
December 31, 1998, the additional shares and cash refund to effect the
limitation adjustment was 466,338 shares and $3,223,712, respectively.
Accordingly, the Company's obligation to deliver cash to the Holders was
recorded as a charge to earnings during 1998. On July 20, 1999 the Company's
shareholders approved a restructuring plan that created a one year unsecured
promissory notes for the cash refund amount of $3,223,712 at 8% interest
maturing July 31, 2000. In accordance with the provisions of the promissory
notes, on February 29, 2000 the Holders elected to convert the outstanding
principal and accrued and unpaid interest of approximately $3.4 million into
common stock of the Company at a conversion rate of $5.00 per share.
Accordingly, 675,547 common shares were issued to the Holders.
INTEREST EXPENSE. Related party interest expense in 1999 increased $245,000
totaling $914,000 primarily related to non-cash amortization of a note payable
discount recorded during 1999 for the valuation of stock warrants issued in
connection with the amendment of the Company's credit facility with the
National Electrical Benefit Fund. In 1998, related party interest expense
increased by approximately 73% or $283,000 over 1997 resulting from the
expensing of interest on $2.9 million of additional borrowings, which occurred
during the last four months of 1997 under the Company's credit facility with
the National Electrical Benefit Fund. There were no additional borrowings
under the credit facility during 1998 and 1999.
OTHER INCOME (EXPENSE). In 1999, the Company recorded interest income of
approximately $.3 million as compared to $.8 million in 1998. The Company also
recognized income of approximately $.2 million related to the reclaim of
precious metal targets during 1999. In 1997, the Company recognized income
associated with the collection of a $.5 million receivable written off in the
previous year.
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IMPUTED DIVIDENDS/ACCRETION OF DISCOUNT ON CONVERTIBLE PREFERRED STOCK. Imputed
dividend and accretion of discount results from certain provisions of the
Company's Preferred Stock, whereby a dividend is to be paid to the holders of
the Preferred stock in additional shares of Preferred Stock, and the conversion
price of the Preferred Stock is determined by applying a discount, which
increases over a fourteen month period from 7% to a maximum of 15% by May 1999.
The discount computed at issuance of $3,075,000 is recorded as a reduction of
preferred stock and an increase to additional paid-in-capital. The discount is
being recognized ratably as a non-cash deemed dividend over the applicable
fourteen month period. In 1999, the Company recorded preferred stock non-cash
imputed dividends and accretion of discount totaling $.9 million as compared to
$2.7 million for 1998. The decrease in 1999 is primarily attributable to fewer
preferred shares remaining outstanding during the year as a result of
conversions of preferred stock during September and October 1998, completion
the amortization period in May 1999 and restructuring of the Company's
preferred stock in August 1999. During the year ended December 31, 1999, the
Company recorded preferred stock non-cash imputed dividends and accretion of
discount totaling $.4 million and $.5 million, respectively, as compared to $.8
million and $1.9 million in 1998, respectively.
PREFERRED STOCK SETTLEMENT. On July 20, 1999, the Company's common stockholders
approved the restructuring of the terms of the Company's Preferred Stock and on
August 6, 1999, the Company entered into an agreement with the holders of a
majority of the outstanding Preferred Stock to restate the terms of the
Preferred Stock. In accordance with the restated terms of the Preferred Stock,
holders thereof had until the close of business on August 16, 1999, to elect
(i) to continue to own shares of Preferred Stock, (ii) to exchange shares of
Preferred Stock, including accrued dividends, for cash in the amount per
Preferred Stock share equal to 50% of the liquidation value thereof, or
(iii) to exchange the shares of Preferred Stock, including accrued dividends,
for shares of the Company's Common Stock at an exchange ratio of $3.75
liquidation value of Series A Preferred per share of Common Stock. Effective
as of August 16, 1999, of the 8,878 shares of Preferred Stock outstanding on
August 6, 1999, 4,204 shares plus accrued dividends were retired and canceled
in exchange for the payment in the aggregate of $2,290,431 to the former
holders thereof; 3,802 shares of Preferred Stock were exchanged for 1,104,746
shares of Common Stock; and 872 shares of Preferred Stock with restated terms
remained outstanding.
The restated terms of the remaining Preferred Stock include (i) a fixed
conversion at $5.00 per share; (ii) a three-year term expiring on July 31,
2002; (iii) an adjusted dividend rate of 11% per annum (subject to possible
future adjustments); and (iv) a mandatory redemption feature at the date of
maturity.
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For the year ended December 31, 1999, the Company recorded a gain on the
settlement of the Preferred Stock of $5.0 million. The $5.0 million gain on
the settlement of the Preferred Stock included a $676,000 gain recorded during
April 1999 from an earlier Preferred Stock settlement. The remaining balance
of the $5.0 million gain was determined on August 16, 1999 pursuant to the
decisions of holders of the Preferred Stock regarding their restructuring
options as described above. The gain was determined on that date by comparing
the fair value of the new instrument (i.e., cash, common stock and/or restated
Preferred Stock) with the recorded value of the exchanged Preferred Stock
(including dividends), less restructure costs, with the difference being the
recorded gain, which was recorded as an increase to additional paid-in capital.
EXPECTED FUTURE RESULTS OF OPERATIONS
The Company is continuing its efforts to improve and increase commercial
production and sales of its EDRAM products and low-density FRAM products,
decrease the cost of producing such products and develop and commercialize new
high-density and low-density FRAM products and enhancements to its existing
FRAM and EDRAM products. The Company expects revenues will continue to be
sporadic in the foreseeable future until the Company's products gain wider
market acceptance, new license arrangements are entered into and milestones
under the Company's existing and any new license and development agreements are
achieved.
The Company's ability to significantly increase product sales and achieve
profitability will depend on several factors, including: (i) the completion of
the development and qualification for manufacturing of the Company's high-
density FRAM products; (ii) the completion of the development and
qualification for manufacturing of the Company's new EDRAM products;
(iii) wider customer acceptance of its EDRAM products and low-density FRAM
products; (iv) market acceptance of new high and low-density FRAM products
which may be developed; (v) the Company's ability to manufacture its products
on a cost-effective and timely basis through alliance foundry operations and
third-party foundry sources; (vi) the availability and related cost of future
financing; and (vii) factors not directly related to the Company, including
market conditions, competition, technological progression, product obsolescence
and the changing needs of potential customers and the semiconductor industry in
general.
To gain access to advanced CMOS manufacturing processes and facilities,
Ramtron has entered into manufacturing alliances and licensing agreements for
FRAM products with companies having or constructing advanced memory products
manufacturing capability, including Rohm, Hitachi, Toshiba and Fujitsu. Since
the purchase or construction of an advanced manufacturing facility capable of
mass producing memory devices would require a capital outlay well beyond the
Company's current capital resources, the Company believes that the most
suitable alternative is this strategic-alliance approach, which the Company
believes will enable it to develop, manufacture and sell FRAM products more
rapidly and cost effectively than any other available alternative. Ramtron's
intention is to utilize current and future alliance relationships as foundry
sources for FRAM products in order to provide the Company with low-cost, high-
volume, high-quality FRAM products for resale to customers.
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<PAGE>
The Company intends to produce EDRAM's through strategic alliances and foundry
arrangements with major semiconductor companies and to expand the market for
EDRAM's by making EDRAM products available from multiple sources. This
approach avoids the high capital costs associated with DRAM manufacturing that
would have otherwise been incurred by the Company if it had chosen to
manufacture these products with Company-provided resources.
As a result of industry wide oversupply of semiconductor memory products,
significant price decreases within the industry have occurred during the past
several years. Historically, the semiconductor memory industry has experienced
declining average selling prices, and the Company believes these declines will
continue to affect the Company. Accordingly, the Company's ability to increase
revenues and margins on its products depends on the Company's ability to
increase unit sales volumes and to introduce new products with higher margins
or further reduce its manufacturing costs to offset the declines in average
selling prices. Absent these actions, declining average selling prices would
have an adverse effect on the Company's gross product margins and the overall
financial performance of the Company. There can be no assurance that the
Company will be able to increase unit sales volumes, introduce new, higher
margin products or reduce its manufacturing costs in the future.
YEAR 2000. The Company utilizes software and related technologies throughout
its business and relies on suppliers of services and materials that will be
affected by the date change in the year 2000 or prior. The Year 2000 issue
exists because many computer systems and applications currently use two-digit
fields to designate a year. As the century date change occurs, date sensitive
systems will recognize the year 2000 as 1900, or not at all. This inability to
recognize the year 2000 may cause systems to process critical financial and
operational information incorrectly. The Company has initiated a Year 2000
project to address the Year 2000 issues as they relate to the Company.
Throughout 1999 the Company maintained an active Year 2000 program to update
and replace software and hardware that it determined would be effected by the
date change in the year 2000 and to monitor the remediation progress of all
critical suppliers . All remediation efforts were completed prior to December
1999. The Company did not experience any material interruption of business as
a result of year 2000 date changes.
LIQUIDITY AND CAPITAL RESOURCES
Since its inception, because revenues generated from operations and licensing
have been insufficient to fund operations, the Company has depended for
funding principally on its stockholders, and in particular from 1989 until
February 1995 on Oren L. Benton ("Benton"), a former principal stockholder
and director and the former Chief Executive Officer of the Company, and from
1989 through 1997 on the National Electrical Benefit Fund (the "Fund"), a
principal stockholder of the Company. Benton and the Fund financed the
Company's cash flow requirements through equity investments and loans, most of
which were subsequently converted into equity.
Page-35
<PAGE>
The Company also raised funds through the private placement of convertible
preferred stock in 1993, all of which has been converted into common stock.
In 1995, the Company entered into a $12 million loan facility, bearing interest
at 12%, between the Company and the Fund. During 1999, the Company and the
Fund agreed to amend the terms of the credit facility extending the maturity
date to March 15, 2002, decreasing the interest rate to 8% and requiring the
Company maintain certain financial ratios, as defined in the loan document.
The Company's borrowings under the Fund's credit facility, including
outstanding principal and accrued interest, totaled approximately $7.2 million
as of December 31, 1999. No additional borrowings are available to the Company
under the Amended Credit Facility. In December 1997, the Company sold
approximately $4.0 million of common stock, and in February 1998, the Company
sold approximately $17.4 million of Series A Convertible Preferred Stock, to
certain institutional investors in separate private placements in order to
obtain funds for working capital and general corporate purposes. The Company
sold approximately $5.4 million of common stock and common stock warrants in a
private placement in December 1999.
Cash and cash equivalents decreased by $4.6 million in 1999 to $10.6 million.
The Company generated $5.2 million (net of expenses) from the sale of common
stock during 1999, which was offset by the use of $3.4 million in the preferred
stock restructuring and $2.7 million to fund operating activities. The Company
also used $3.2 million in 1999 for investing activities, primarily for costs
associated with the defense of the Company's proprietary EDRAM patent position.
Receivables increased by $1.0 million in 1999 (135%) from $.7 million at the
end of 1998 to $1.7 million at the end of 1999. The increase in the
receivables balance is primarily due to increased customer product deliveries
in December 1999 as compared to December 1998.
Inventories decreased by 21% in 1999 from $5.3 million at the end of 1998 to
$4.2 million at the end of 1999. Inventory levels decreased as of the end of
1999 as the Company decreased its production of 4-megabit EDRAM products to
correlate with 4-megabit EDRAM sales volumes. The Company also increased its
reserves for excess and obsolete inventories $1.2 million during 1999 when it
determined there were excess inventories of a specialty FRAM product built for
a selected market segment. Additionally, the Company determined that certain
FRAM products which were manufactured in the Colorado Springs fabrication
facility, prior to receiving product from our foundry partners, should be
scrapped due to inferior performance attributes as compared to the same product
manufactured by our foundry partners.
Accounts payable and accrued liabilities decreased slightly on a year-over-year
basis from $4.6 million at the end of 1998 to $4.1 million at the end of 1999.
This decrease resulted primarily from work in process decreases during the
fourth quarter of 1999 as compared to the same period in 1998. Such decreases
are the result of reduced manufacturing of 4-megabit EDRAM products to
correlate with 4-megabit EDRAM sales volumes.
Page-36
<PAGE>
During 1999, the Company invested $2.9 million in intellectual property
activities, due primarily to legal costs associated with the defense of the
Company's proprietary EDRAM patent position. Expenditures for intellectual
property purposes are expected to decrease during 2000 as a result of settling
the NEC patent infringement proceeding in November 1999.
Equipment and plant expenditures are expected to be minimal during 2000.
During 1999, the Company received approximately $5.2 million in cash relating
to FRAM and EDRAM licensing agreements for milestone achievements on existing
licensing agreements and for a new license agreement. Payments pursuant to
existing licensing agreements and new licensing agreements are expected to
create additional cash flows during 2000 and 2001, subject to the fulfillment
of certain milestone conditions with existing license agreements. An increase
in product sales activity and customer-sponsored research and development
revenues is anticipated in 2000. Additionally, the Company expects to
continue to receive cash inflows for research and development support provided
by Fujitsu throughout 2000.
Based on the Company's capital resources as of December 31, 1999 and the
expected operating costs and cash flows from product sales and licensing
revenues, the Company expects to be able to fund its operations through year-
end 2000.
The Company is currently involved in a patent interference proceeding (see
"Patent Interference Proceeding"). If the Company is ultimately unsuccessful
in these proceedings, there would be no retroactive cash payment requirements
from the Company to the junior party as a result of such an adverse decision.
While the Company cannot accurately estimate the financial effects of such a
result, the Company believes that it could, depending on when a final
non-appealable judgment is ultimately rendered, materially adversely affect
the Company's FRAM product business and operating results and, thus, have a
materially adverse effect on the Company's financial condition as a whole.
In view of the Company's expected future working capital requirements in
connection with the design, manufacturing and sale of its FRAM and EDRAM
products, the Company's projected continuing research and development
expenditures, other operating expenditures and the results of pending patent
litigation, the Company may be required to seek additional equity or debt
financing before or soon after year-end 2000. There is no assurance, however,
that the Company will be able to obtain such financing on terms acceptable to
the Company, or at all. Any issuance of common or preferred stock to obtain
additional funding would result in further dilution of existing stockholders'
interests in Ramtron. The inability to obtain additional financing when needed
would have a material adverse effect on our business, financial condition and
operating results and could adversely affect the Company's ability to continue
our business operations.
Page-37
<PAGE>
Item 7a. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk represents the risk of loss that may impact the financial
positions, results of operations or cash flows of the Company due to adverse
changes in financial and commodity market prices and rates. The Company is
exposed to market risk in the areas of changes in United States interest rates
and changes in foreign currency exchange rates as measured against the United
States dollar. These exposures are directly related to its normal operating
activities. The Company currently has no derivative financial instruments.
Interest payable on the Company's note payable to a related party is fixed,
and, therefore, will not effect future earnings or cash flows. The
Company manages interest rate risk by investing its excess cash in cash
equivalents bearing variable interest rates, which are tied to various market
indices. The Company does not believe that near-term changes in interest rates
will result in a material effect on future earnings, fair values or cash flows
of the Company. The net effect of a 10% change in interest rates on
outstanding cash and cash equivalents and debt at December 31, 1999 would have
less than an $100,000 effect on the fair value of the debt and earnings or cash
flows.
The Company has a wholly owned subsidiary located in Japan. The operating
costs of this subsidiary are denominated in Japanese Yen, thereby creating
exposures to exchange rate changes. To date, this subsidiary has had only
limited operations and is expected to continue to have limited operations in
the foreseeable future, and, therefore, the Company does not believe any
changes in exchange rates will have a material effect on future earnings, fair
values or cash flows of the Company. The Company also purchases certain of its
FRAM products from foundry suppliers in Japan with such costs denominated in
Japanese Yen, thereby creating exposures to changes in exchange rates. The
changes in the Japan/U.S. exchange rate may positively or negatively effect the
Company's sales, gross margins and retained earnings. The Company does not
believe that reasonably possible near-term changes in exchange rates will
result in a material effect on future earnings, fair values or cash flows of
the Company, and therefore, the Company has chosen not to enter into foreign
currency hedging instruments. There can be no assurance that such an approach
will be successful, especially in the event of a significant and sudden change
in Japanese currency valuation.
Average selling prices of the Company's products have not increased
significantly as a result of inflation during the past several years, primarily
due to intense competition within the semiconductor industry. The effect of
inflation on the Company's costs of production has been minimized through
improvements in production efficiencies. The Company anticipates that these
factors will continue to minimize the effects of any foreseeable inflation and
other price pressures within the industry and markets in which the Company
participates.
Page-38
<PAGE>
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial Statements: Page
Report of Independent Public Accountants F-1
Consolidated Balance Sheets as of December 31, 1999 and 1998 F-2
Consolidated Statements of Operations
for the years ended December 31, 1999, 1998 and 1997 F-3
Consolidated Statements of Cash Flows
for the years ended December 31, 1999, 1998 and 1997 F-4
Consolidated Statements of Stockholders' Equity
for the years ended December 31, 1999, 1998 and 1997 F-5
Notes to Consolidated Financial Statements F-6 to F-26
Financial Statement Schedules:
Schedule II: Valuation and Qualifying Accounts F-27
Page-39
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Ramtron International Corporation:
We have audited the accompanying consolidated balance sheets of Ramtron
International Corporation (a Delaware corporation) and subsidiaries as of
December 31, 1999 and 1998, and the related consolidated statements of
operations, stockholders' equity and cash flows for each of the three years in
the period ended December 31, 1999. These financial statements and the
schedule referred to below are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements and
schedule based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Ramtron International
Corporation and subsidiaries as of December 31, 1999 and 1998, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1999, in conformity with accounting principles
generally accepted in the United States.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index of
financial statements is presented for purposes of complying with the
Securities and Exchange Commission's rules and is not a required part of the
basic financial statements. This schedule has been subjected to the auditing
procedures applied in our audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
/S/ Arthur Andersen LLP
Denver, Colorado,
February 4, 2000.
Page F-1
<PAGE>
RAMTRON INTERNATIONAL CORPORATION
CONSOLIDATED BALANCE SHEETS
December 31, 1999 and 1998
(in thousands, except par value and per share amounts)
-------------
1999 1998
-------- --------
ASSETS
Current assets:
Cash and cash equivalents $10,601 $15,237
Accounts receivable, less allowances
of $347 and $134, respectively 1,703 726
Inventories 4,174 5,304
Prepaid expenses 84 170
Other current assets 100 94
--------- ---------
Total current assets 16,662 21,531
Property, plant and equipment, net 6,064 7,158
Intangible assets, net 6,654 4,658
--------- ---------
$29,380 $33,347
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $3,066 $ 2,535
Accrued liabilities 985 2,089
License rights -- 550
Deferred revenue 1,761 760
Common stock price adjustment -- 3,224
Promissory note and accrued interest, DFA 3,335 --
Promissory note and accrued interest, the Fund 230 7,127
--------- ---------
Total current liabilities 9,377 16,285
Promissory note, the Fund 5,766 --
--------- ---------
Total liabilities 15,143 16,285
--------- ---------
Commitments and contingencies (Notes 5 and 13)
Redeemable preferred stock, $.01 par value, 10,000
shares authorized: 1 and no shares issued and out-
standing, respectively, entitled to $1,000 per share
plus accrued and unpaid dividends in liquidation 914 --
--------- ---------
Stockholders' equity:
Convertible preferred stock, $.01 par value,
10,000 shares authorized: no and 10 shares
issued and outstanding, respectively; entitled
to $1,000 per share plus accrued and unpaid
dividends in liquidation -- 8,966
Common stock, $.01 par value, 50,000 and 75,000
shares authorized: 14,609 and 12,085 issued
and outstanding, respectively 146 121
Common stock warrants 1,409 --
Deferred compensation (2,423) --
Additional paid-in capital 179,204 165,916
Accumulated deficit (165,013) (157,941)
--------- ---------
Total stockholders' equity 13,323 17,062
--------- ---------
$29,380 $33,347
========= =========
See accompanying notes.
Page F-2
<PAGE>
RAMTRON INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended December 31, 1999, 1998 and 1997
(in thousands, except per share amounts)
-------------
1999 1998 1997
-------- -------- --------
Revenue:
Product sales $ 13,148 $ 17,610 $14,613
License and development fees 5,200 -- 5,750
Royalties 1,501 -- --
Customer-sponsored research
and development 5,022 944 132
--------- --------- ---------
24,871 18,554 20,495
--------- --------- ---------
Costs and expenses:
Cost of product sales 7,978 10,452 10,750
Provision for inventory write-off 1,178 -- --
Research and development 7,170 10,898 10,723
Customer-sponsored research
and development 4,880 826 118
Sales, general and administrative 9,490 8,200 8,032
Loss on manufacturing contract -- 1,163 --
--------- --------- ---------
30,696 31,539 29,623
--------- --------- ---------
Operating loss (5,825) (12,985) (9,128)
Interest expense, related party (914) (669) (386)
Other income 541 447 657
Common stock price adjustment -- (3,224) --
--------- --------- ---------
Net loss $(6,198) $(16,431) $(8,857)
========= ========= =========
Loss per common share:
Net loss $(6,198) $(16,431) $(8,857)
Imputed dividends on convertible
preferred stock (396) (779) --
Accretion of discount on convertible
preferred stock (488) (1,931) --
Gain on preferred stock settlement 5,047 -- --
--------- --------- ---------
Net loss applicable to common shares $(2,035) $(19,141) $(8,857)
========= ========= =========
Net loss per share - basic and diluted $(0.16) $(2.23) $(1.19)
========= ========= =========
Weighted average shares outstanding 12,815 8,572 7,412
========= ========= =========
See accompanying notes.
Page F-3
<PAGE>
RAMTRON INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 1999, 1998 and 1997
(in thousands)
--------------
1999 1998 1997
-------- --------- --------
Cash flows from operating activities:
Net loss $(6,198) $(16,431) $(8,857)
Adjustments used to reconcile net loss to
net cash used in operating activities:
Stock based compensation 155 146 --
Depreciation and amortization 2,290 2,473 2,597
Amortization of debt discount 176 -- --
Common stock price adjustment -- 3,224 --
Loss on manufacturing contract -- 1,163 --
Provision for inventory write-off 1,178 -- --
Other -- -- (485)
Changes in assets and liabilities:
Accounts receivable (977) 4,036 2,439
Inventories (48) 1,843 196
Prepaid expenses 86 (59) 392
Accounts payable and accrued liabilities (573) (1,505) 1,160
Accrued interest, related party 214 670 386
Deferred revenue 1,001 (235) 132
Other -- 30 65
-------- --------- --------
Net cash used in operating activities (2,696) (4,645) (1,975)
-------- --------- --------
Cash flows from investing activities:
Purchase of property, plant and equipment (316) (824) (1,160)
Intellectual property (2,951) (748) (346)
Proceeds from sale of assets 75 -- 5
-------- --------- --------
Net cash used in investing activities (3,192) (1,572) (1,501)
-------- --------- --------
Cash flows from financing activities:
Proceeds from notes payable, related party -- -- 2,900
Payments on license rights payable (550) (550) (550)
Issuance of capital stock, net of expenses 5,176 15,811 4,137
Preferred stock settlement (3,374) -- --
-------- --------- --------
Net cash provided by financing
activities 1,252 15,261 6,487
-------- --------- --------
Net increase (decrease) in cash and
cash equivalents (4,636) 9,044 3,011
Cash and cash equivalents, beginning of year 15,237 6,193 3,182
-------- --------- --------
Cash and cash equivalents, end of year $10,601 $15,237 $ 6,193
======== ========= ========
See accompanying notes.
Page F-4
<PAGE>
<TABLE>
<CAPTION>
RAMTRON INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the years ended December 31, 1999, 1998 and 1997
(in thousands, except par value amounts)
--------------
Convertible
Preferred Stock Common Stock
($.01) Par Value ($.01) Par Value Additional Total
------------------ ---------------- Paid-in Accumulated Stock Deferred Stockholders'
Shares Amount Shares Amount Capital Deficit Warrants Compensation Equity
------ ------ ------ ------ ---------- ----------- -------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balances, December 31, 1996 -- $ -- 7,399 $ 74 $152,126 $(129,928) $ -- $ -- $22,272
Issuance of stock:
Exercise of options -- -- 25 -- 583 -- -- -- 583
Sale of common stock -- -- 160 2 3,942 -- -- -- 3,944
Stock issuance costs -- -- -- -- (391) -- -- -- (391)
Other -- -- -- -- -- (15) -- -- (15)
Net loss for year
ended December 31, 1997 -- -- -- -- -- (8,857) -- -- (8,857)
-------------------------------------------------------------------------------------------------
Balances, December 31, 1997 -- -- 7,584 76 156,260 (138,800) -- -- 17,536
Issuance of stock:
Stock based compensation -- -- 6 -- 146 -- -- -- 146
Exercise of options -- -- -- -- 4 -- -- -- 4
Sale of preferred stock 17 17,425 -- -- -- -- -- -- 17,425
Preferred stock discount -- (3,075) -- -- 3,075 -- -- -- --
Preferred stock dividends -- 779 -- -- -- (779) -- -- --
Preferred stock discount
accretion -- 1,931 -- -- -- (1,931) -- -- --
Preferred stock conversions (7) (6,476) 4,495 45 6,431 -- -- -- --
Stock issuance costs -- (1,618) -- -- -- -- -- -- (1,618)
Net loss for year
ended December 31, 1998 -- -- -- -- -- (16,431) -- -- (16,431)
-------------------------------------------------------------------------------------------------
Balances, December 31, 1998 10 8,966 12,085 121 165,916 (157,941) -- -- 17,062
Issuance of stock:
Preferred stock discount
accretion -- 488 -- -- -- (488) -- -- --
Preferred stock dividend -- 360 -- -- -- (360) -- -- --
Settlement of preferred stock (9) (8,945) 1,571 16 5,555 -- -- -- (3,374)
Conversion of preferred stock
to redeemable preferred stock (1) (869) -- -- -- -- -- -- (869)
Redeemable preferred stock
discount accretion -- -- -- -- (12) -- -- -- (12)
Redeemable preferred stock
dividend -- -- -- -- -- (36) -- -- (36)
Sale of common stock -- -- 953 9 5,380 -- -- -- 5,389
Stock issuance costs -- -- -- -- (213) -- -- -- (213)
Stock based compensation -- -- -- -- 2,578 -- -- (2,578) --
Amortization of stock based
compensation -- -- -- -- -- -- -- 155 155
Price adjustment and issuance
of common stock warrants -- -- -- -- -- -- 1,409 -- 1,409
Other -- -- -- -- -- 10 -- -- 10
Net loss for year
ended December 31, 1999 -- -- -- -- -- (6,198) -- -- (6,198)
-----------------------------------------------------------------------------------------------
Balances, December 31, 1999 -- $ -- 14,609 $146 $179,204 $(165,013) $1,409 $(2,423) $13,323
===============================================================================================
See accompanying notes.
</TABLE>
Page F-5
<PAGE>
RAMTRON INTERNATIONAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999, 1998 and 1997
------------------------
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
DESCRIPTION OF BUSINESS. Ramtron International Corporation (the "Company")
designs, develops, manufactures and markets high-performance specialty
semiconductor memory devices. The Company has two product lines,
ferroelectric nonvolatile random access memory ("FRAM" (registered trademark))
products and high-speed DRAM (dynamic random access memory) products, called
Enhanced-DRAM ("EDRAM" (registered trademark)) products.
The Company's revenues are derived primarily from the sale of its FRAM and
EDRAM products and from license and development arrangements entered into with
a limited number of established semiconductor manufacturers and involving the
development of specific applications of the Company's technologies. Product
sales (primarily EDRAM) have been made to various customers for use in a
variety of applications including consumer electronics, telecommunications,
accelerator boards, disk controllers and industrial control devices. During
1999, 1998 and 1997, the Company's revenues have been derived from several
customers within these industries (Note 11).
USE OF ESTIMATES. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting periods. Actual results could differ from those
estimates.
PRINCIPLES OF CONSOLIDATION. The accompanying financial statements include
the consolidation of accounts for the Company's wholly owned subsidiaries,
Enhanced Memory Systems, Inc. ("EMS"), which was created in May 1995 and
Ramtron Kabushiki Kaisha ("Ramtron K.K."), which was created in July 1996.
The Company formed the wholly owned subsidiary, EMS, to operate its EDRAM
business. The Company formed Ramtron K.K., to act in a sales and marketing
role within Japan for the Company's products and to function as a liaison
between the Company and its Japan alliance partners. To date, Ramtron K.K.
has had limited operations. All material inter-company accounts and
transactions have been eliminated in consolidation.
REVENUE RECOGNITION. Revenue from product sales to direct customers is
recognized upon shipment. The Company defers recognition of sales to
distributors, that are given rights of return and price protection by the
Company until the distributors have resold the products. Revenue from
licensing and technology development programs, which are nonrefundable and for
which no significant future obligations exist is recognized when the license is
signed. Revenue from licensing and technology development programs, which are
refundable or for which future obligations exist is recognized when the Company
has completed its obligations under the terms of the agreements. Revenue from
royalties is recognized upon the shipment of product from the Company's
technology license partners to direct customers. Certain research and
development activities are conducted for third parties and such revenue is
recognized as the services are performed.
Page F-6
<PAGE>
INVENTORIES. Inventories are stated at the lower of cost or market value. The
first-in, first-out method of costing inventories is used.
PROPERTY, PLANT AND EQUIPMENT. Property, plant and equipment are stated at
cost and depreciation and amortization are provided using the straight-line
method over the estimated useful lives of the respective assets. Maintenance
and repairs are expensed as incurred and improvements are capitalized.
The cost of assets sold or retired and the related accumulated depreciation or
amortization are removed from the accounts and the resulting gain or loss is
reflected in the consolidated statements of operations in the period in which
such sale or disposition occurs.
INTANGIBLE ASSETS. Intangible assets are recorded at cost and are amortized
over their estimated useful lives using the straight-line method. The amounts
capitalized for patents include the cost of acquiring and defending the patent.
INCOME TAXES. The Company recognizes deferred income tax assets and
liabilities for the expected future income tax consequences, based on enacted
tax laws, of temporary differences between the financial reporting and tax
bases of assets, liabilities and carryovers. The Company recognizes deferred
tax assets for the expected future effects of all deductible temporary
differences, loss carryovers and tax credit carryovers. Deferred tax assets
are then reduced, if deemed necessary, by a valuation allowance for the amount
of any tax benefits which, more likely than not, based on current
circumstances, are not expected to be realized (Note 10).
CASH AND CASH EQUIVALENTS. For purposes of the consolidated statements of
cash flows, the Company considers all cash and highly liquid investments
purchased with an original maturity of three months or less to be cash
equivalents.
NET LOSS PER SHARE. The Company calculates its loss per share pursuant to
Statement of Financial Accounting Standards No. 128 ("SFAS No. 128"), Earnings
Per Share. Under SFAS No. 128, basic earnings per share is computed
by dividing reported earnings available to common stockholders by weighted
average shares outstanding. Diluted earnings per share reflects the potential
dilution assuming the issuance of common shares for all dilutive potential
common shares outstanding during the period. As a result of the Company's
net losses, all potentially dilutive securities including warrants and stock
options, would be anti-dilutive and thus, are excluded from diluted earnings
per share.
LONG-LIVED ASSETS. Long-lived assets and certain identifiable intangibles to
be held and used by the Company are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. Any long-lived assets and certain identifiable intangibles to
be disposed of are reported at the lower of carrying amount or fair value less
cost to sell.
FAIR VALUE OF FINANCIAL INSTRUMENTS. The Company's financial instruments
consist of cash and cash equivalents, short-term trade receivables and
payables and related party promissory notes. The carrying values of cash and
cash equivalents, and short-term trade receivables and payables approximate
fair value due to their short-term nature. The fair value of the related party
promissory notes is estimated on current rates available for similar debt with
similar maturities and collateral. The related party promissory notes have a
carrying value that is not significantly different than their estimated fair
value.
Page F-7
<PAGE>
NEW ACCOUNTING STANDARDS. In June 1998, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standards No. 133, "Accounting
for Derivative Instruments and Hedging Activities" ("SFAS No. 133"). SFAS No.
133, as amended, is effective for fiscal years beginning after June 15, 2000.
SFAS No. 133 establishes accounting and reporting standards requiring that
every derivative instrument (including certain derivative instruments embedded
in other contracts) be recorded in the balance sheet as either an asset or
liability measured at its fair value. It also requires that changes in the
derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. Special accounting for qualifying hedges
allows a derivative's gains and losses to offset related results on the hedged
item in the income statement, and requires that a company must formally
document, designate and assess the effectiveness of transactions that receive
hedge accounting. SFAS No. 133 may not be applied retroactively and must be
applied to (i) derivative instruments and (ii) certain derivative instruments
embedded in hybrid contracts. With respect to hybrid instruments, a company
may elect to apply SFAS No. 133, as amended, to (i) all hybrid contracts,
(ii) only those hybrid instruments that were issued, acquired, or substantively
modified after December 31, 1997, or (iii) only those hybrid instruments that
were issued, acquired or substantively modified after December 31, 1998.
Management is currently evaluating the effect SFAS No. 133 will have on the
Company's financial statements.
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101, "Revenue Recognition" ("SAB No. 101"), which
provides guidance on the recognition, presentation and disclosure of revenue in
financial statements. SAB No. 101 is effective for the second quarter of 2000.
SAB No. 101 is not expected to have a material effect on the Company's
financial position or results of operations.
RECLASSIFICATIONS. Certain reclassifications to prior years' financial
statements have been made to conform to the current year's presentation.
2. INVENTORIES:
Inventories consist of:
December 31,
------------------
1999 1998
------ ------
(in thousands)
Finished goods $2,544 $3,595
Work in process 1,630 1,660
Raw materials -- 49
------ ------
$4,174 $5,304
====== ======
Page F-8
<PAGE>
3. PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment consists of:
Estimated December 31,
Useful Lives -----------------
(In Years) 1999 1998
------------ ------- -------
(in thousands)
Land -- $ 668 $ 668
Buildings and improvements 18 and 10 8,942 8,942
Equipment 5 13,094 13,738
Office furniture and equipment 5 611 611
------- -------
23,315 23,959
Less accumulated depreciation and amortization (17,251) (16,801)
------- -------
$ 6,064 $ 7,158
======= =======
Depreciation and amortization expense for property, plant and equipment was
$1,335,000, $1,665,000 and $1,826,000 for 1999, 1998 and 1997, respectively.
Maintenance and repairs expense was $757,000, $842,000 and $823,000 for 1999,
1998 and 1997, respectively.
4. INTANGIBLE ASSETS:
Intangible assets consist of:
Estimated December 31,
Useful Lives ---------------
(In Years) 1999 1998
------------ ------ ------
(in thousands)
Patents and trademarks 17 $6,735 $3,784
License rights 5 2,150 2,150
Costs in excess of net assets purchased 17 4,529 4,529
------ ------
13,414 10,463
Less accumulated amortization (6,760) (5,805)
------ ------
$6,654 $4,658
====== ======
In August 1995, the Company entered into a cross license agreement with a
third party regarding the use of certain ferroelectric technology in the
development and production of ferroelectric integrated circuit memories. The
Company paid a technology license fee to the third party as consideration for
certain rights received under the cross license agreement. Such license fee is
included in intangible assets for the years ending December 31, 1999 and 1998
and is being amortized over the five-year term of the cross license agreement
ending in 2000.
Page F-9
<PAGE>
Amortization expense of intangible assets was $955,000, $783,000 and $771,000
for 1999, 1998 and 1997, respectively.
5. COMMITMENTS:
LEASE COMMITMENTS. The Company has commitments under non-cancelable operating
leases expiring through 2002 for various equipment. Minimum future annual
lease payments under these leases as of December 31, 1999 are as follows:
2000 $ 450,000
2001 407,000
2002 244,000
----------
$1,101,000
==========
Total rent expense on all operating leases was $535,000, $624,000 and $425,000
for 1999, 1998 and 1997, respectively.
EMPLOYMENT AGREEMENTS. The Company has employment agreements with certain
employees, which provide for certain payments and continuation of
benefits should their employment terminate as defined in the employment
agreements.
MANUFACTURING ALLIANCES. The Company has entered into third-party
manufacturing agreements for the supply of its FRAM and EDRAM products and
intends to enter into additional third-party manufacturing agreements for the
supply of such products in the future. The Company has relied and will
continue to rely on such manufacturing relationships as the primary source of
manufacturing for its products. The Company's third-party manufacturing
agreements provide only for a call on the manufacturing capacity of the
vendors. The product will be supplied to the Company at prices negotiated
between the Company and such third-party manufacturers based on current market
conditions. The Company does not engage in any take-or-pay agreements with
its manufacturing alliances.
6. STOCKHOLDERS' EQUITY:
REVERSE STOCK SPLIT. On July 20, 1999, the Company's stockholders approved a
one-for-five reverse stock split. Common stock information appearing in the
accompanying financial statements and notes have been retroactively adjusted to
reflect the effects of the reverse split.
PREFERRED STOCK PLACEMENT. In February 1998, the Company issued and sold in a
private placement 17,425 shares of Series A Convertible Preferred Stock
("Preferred Stock"), resulting in gross proceeds of approximately $17.4
million. Each share of Preferred Stock was entitled to receive cumulative
dividends at the rate of 6% per annum, payable in shares of Preferred Stock.
Except for certain exceptions, the holders of the Preferred Stock had no voting
Page F-10
<PAGE>
rights. The shares of Preferred Stock, including any accrued dividends
thereon, would automatically convert into common stock on the fifth anniversary
of the date of the original issuance to the extent any shares of Preferred
Stock remained outstanding at that time. Until September 1, 1998, the
Preferred Stock was convertible at a Conversion Price of $50.00. Thereafter,
subject to a maximum conversion price, as defined, the Conversion Price was
equal to the lowest trading price of the common stock for the 22-trading days
immediately preceding the conversion date, less a discount of 7% (beginning
September 1, 1998) and increasing by 1% per month to 15% (on or after May 1,
1999).
Each purchaser of the Preferred Stock agreed to trading limitations for the
offer or sale of common stock resulting from the conversion of the Preferred
Stock. In addition, the purchasers of the Preferred Stock and their affiliates
agreed not to engage in any short sales, swaps, purchasing of puts, or other
hedging activities that involved the direct or indirect use of the common stock
to hedge their investment in the Preferred Stock; however, the investor could
write call options if the call exercise price was greater than the effective
Conversion Price on the day that the call was written. These hedging
restrictions did not apply to certain short sales within three days of
conversion in amounts not greater than the number of shares issuable upon
conversion.
The conversion discount of the Preferred Stock was considered to be an
additional preferred stock dividend. The discount computed at issuance of
$3,075,000 was recorded as a reduction of preferred stock and an increase to
additional paid-in-capital. The discount was recognized ratably as a non-cash
deemed dividend over the applicable fourteen month period. If shares were
converted prior to the full accretion, no additional discount was taken during
the fourteen month period.
On October 21, 1998, the Company suspended conversions of the Preferred Stock
because the Company had issued, from its authorized shares, the maximum number
of common shares available for such conversions (4,494,768 shares). No further
conversions of the Preferred Stock could be effected until the Company's
shareholders approved an authorization of additional common stock. At the time
of suspension of the Preferred Stock conversions, approximately $8.9 million
face value of Preferred Stock, plus accrued dividends, remained outstanding.
On July 20, 1999, the Company's common stockholders approved the restructuring
of the terms of the Company's Preferred Stock and on August 6, 1999, the
Company entered into an agreement with the holders of a majority of the
outstanding Preferred Stock to restate the terms of the Preferred Stock. In
accordance with the restated terms of the Preferred Stock, holders thereof had
until the close of business on August 16, 1999, to elect (i) to continue to own
shares of Preferred Stock, (ii) to exchange shares of Preferred Stock,
including accrued dividends, for cash in the amount per Preferred Stock share
equal to 50% of the liquidation value thereof, or (iii) to exchange the shares
of Preferred Stock, including accrued dividends, for shares of the Company's
Common Stock at an exchange ratio of $3.75 liquidation value of Series A
Preferred per share of Common Stock. Effective as of August 16, 1999, of the
8,878 shares of Preferred Stock outstanding on August 6, 1999, 4,204 shares
Page F-11
<PAGE>
plus accrued dividends were retired and canceled in exchange for the payment in
the aggregate of $2,290,431 to the former holders thereof; 3,802 shares of
Preferred Stock were exchanged for 1,104,746 shares of Common Stock, with an
estimated fair value of $2,400,000; and 872 shares of Preferred Stock with
restated terms remained outstanding.
The restated terms of the remaining Preferred Stock include (i) a fixed
conversion at $5.00 per share; (ii) a three-year term expiring on July 31,
2002; (iii) an adjusted dividend rate of 11% per annum (subject to possible
future adjustments); and (iv) a mandatory redemption feature at the date of
maturity.
For the year ended December 31, 1999, the Company had recorded $395,000 of
dividends, $488,000 of accreted discount and a gain on the settlement of the
Preferred Stock of $5.0 million. The $5.0 million gain on the settlement of
the Preferred Stock included a $676,000 gain recorded during April 1999 from an
earlier Preferred Stock settlement. The remaining balance of the $5.0 million
gain was determined on August 16, 1999 pursuant to the decisions of holders of
the Preferred Stock regarding their restructuring options as described above.
The gain was determined on that date by comparing the fair value of the new
instrument (i.e., cash, common stock and/or restated Preferred Stock) with the
recorded value of the exchanged Preferred Stock (including dividends), less
restructure costs, with the difference being the recorded gain, which was
recorded as an increase to additional paid-in capital. Included in these
transactions were the reacquisition of $1.9 million of beneficial conversion
features which were recorded in additional paid-in capital and were created as
a part of the issuance of the preferred stock in 1998.
COMMON STOCK PLACEMENT AND PRICE ADJUSTMENT. In December 1997, the Company
issued and sold in a private placement to certain investment funds 160,000
shares of restricted common stock at an issue price of $24.65 per share. The
common stock purchase price was based on a 15% discount to the average closing
bid price for the Company's common stock as reported on The Nasdaq Stock Market
("NASDAQ")during the 5-trading day period immediately prior to the date of the
issuance resulting in aggregate gross proceeds to the Company of $3,944,000.
The Company also issued to the placement agents warrants to acquire an
aggregate of 16,000 shares of common stock for a purchase price of $24.65 per
share which expire in December 2002.
The agreement covering the sale of common stock provided, subject to certain
exceptions, that if during the twelve-month period following the closing of the
transaction, the Company sold any shares of common stock for an issue price
lower than the purchase price, the purchase price per share of such Common
Stock would be adjusted downward to equal such lower issue price. Any such
adjustment would be effected by issuing additional shares of common stock to
the holders who purchased in the private placement. A sale of shares pursuant
to the terms of the agreement included the sale or issuance of rights, options,
warrants or convertible securities under which the Company would become
obligated to issue shares of common stock, and the selling price of the
common stock converted thereby shall be the exercise or conversion price
thereof plus the consideration (if any) received by the Company upon such sale
or issuance.
Page F-12
<PAGE>
The holders were not required to accept, by way of any such adjustment, a
number of common shares such that the total number of common shares held by the
holders, which were held by them on the date of the agreement, or acquired by
them pursuant to the agreement, would exceed 4.99% of the total outstanding
common stock of the Company. The Company would be required to effect the 4.99%
adjustment by cash refund to the extent necessary to avoid the 4.99% limitation
being exceeded. As of December 31, 1998, the additional shares and cash refund
to effect the limitation adjustment was 466,338 shares and $3,223,712,
respectively. At December 31, 1998 the Company's obligation to deliver cash to
the holders, was recorded as a current liability with a corresponding charge to
earnings. On July 20, 1999 the Company's shareholders approved a restructuring
plan that created a one year promissory note for the cash refund amount of
$3,223,712 at 8% interest maturing July 31, 2000.
WARRANTS. Warrants to purchase shares of the Company's common stock,
including warrants issued to related parties (Note 8), are as follows:
Number of Shares
-----------------------------
(in thousands)
Exercise Principal
Price Per Share Stockholders Others Total
--------------- ------------ ------ -----
Outstanding and exercisable
at December 31, 1996 $20.75 1,399 -- 1,399
Granted $24.65(1) -- 16 16
----------------------------
Outstanding and exercisable
at December 31, 1997 $20.75-$24.65 1,399 16 1,415
Cancelled $24.65(1) -- (16) (16)
Granted $1.15(1) -- 16 16
----------------------------
Outstanding and exercisable
at December 31, 1998 $1.15-$20.75 1,399 16 1,415
Cancelled $5.00 (806) -- (806)
Granted $2.25-16.22(2)(3) 2,883 -- 2,883
----------------------------
Outstanding and exercisable
at December 31, 1999 $1.15-16.22 3,476 16 3,492
============================
All of the above warrants are currently exercisable. Of such warrants,
warrants to purchase 2,570,000 shares of common stock with various exercise
prices from $5.00 to $16.22 expire in August and December 2001, warrants to
purchase 906,000 shares of common stock with an exercise price of $2.25 expire
in 2008 and 2009. The remaining warrants to purchase 16,000 shares of common
stock with an exercise price of $1.15 expire in December 2002.
Page F-13
<PAGE>
(1) In December 1997, the Company issued and sold in a private placement to
certain investment funds, 160,000 shares of its common stock at an issue
price of $24.65 per share. The Company issued to the placement agents for
this transaction, warrants to purchase an aggregate of 16,000 shares of
common stock for a purchase price of $24.65 per share (the "Private
Placement Warrants"). If during the twelve month period following the
Private placement transaction, the Company sold any shares of common stock
for an issue price lower then $24.65 per share, the exercise price per
share of the issued warrants would be adjusted downward to equal such
lower issue price. In October 1998, the Company issued shares from the
conversion of Preferred Stock for a price of $1.15 per share. Pursuant to
the terms of the Private Placement Warrants, the exercise price of such
warrants were, therefore, adjusted from $24.65 to $1.15.
(2) In December 1999, the Company issued and sold in a private placement
953,000 common stock units at an issue price of $5.66 per unit. Each unit
consisted of 1 share of common stock, one warrant to purchase common stock
at $10.81 per share and one warrant to purchase common stock at $16.22 per
share. The Company issued to the placement agent for this transaction
approximately 36,000 warrants to purchase common stock at $10.81 per share
and approximately 36,000 warrants to purchase common stock at $16.22 per
share.
(3) Pursuant to the restructuring plan approved by the Company's shareholders
on July 20, 1999 and in consideration for the National Electrical Benefit
Fund (the "Fund") to amend the terms of Fund's credit facility, the
Company agreed to amend the exercise price of outstanding warrants held by
the Fund to purchase 805,697 shares of the Company's common stock and
extend the expiration date of such warrants to September 30, 2008. The
Company also issued new warrants to purchase 100,000 shares of the
Company's common stock with an expiration date of August 6, 2009. The
amended warrants and the new warrants have an exercise price of $2.25 per
share. The Company has determined that 906,000 warrants issued to the
Fund at $2.25 per share in conjunction with the amendment and restatement
of a note payable due to the Fund had a fair value of $1,409,000. The
Company recorded the fair value as a debt discount which is amortized over
the remaining life of the outstanding note payable. All other outstanding
warrants had a nominal value at the time of issuance.
DEFERRED COMPENSATION. Subject to shareholder approval to amend the Company's
1995 Stock Option Plan, options to purchase 500,000 shares of the Company's
common stock were approved by the Board of Directors for certain officers of
the Company on September 28, 1999, with an exercise price of $2.25 per share.
On December 22, 1999 shareholders approved the amendment of the 1995 Stock
Option Plan. The intrinsic value of stock based compensation related to the
options is $2,578,000. This amount is recorded as deferred compensation and
will be amortized over the vesting period of such options as a charge to
compensation expense. The unamortized compensation expense as of December 31,
1999 is approximately $2,423,000.
Page F-14
<PAGE>
STOCK OPTIONS. The Company has four stock option plans, the Amended and
Restated 1986 Stock Option Plan (the "1986 Plan"), the 1989 Nonstatutory Stock
Option Plan (the "1989 Plan"), the 1995 Stock Option Plan, as amended (the
"1995 Plan"), and the 1999 Stock Option Plan (the "1999 Plan")(collectively,
the "Plans"). The Plans reserve 3,035,714 shares of the Company's common stock
for issuance and permit the issuance of non-qualified stock options. The
exercise price of all non-qualified stock options must be equal to at least 85%
of the fair market value of the common stock on the date of grant in the 1986
and 1989 Plans and 95% in the 1995 and 1999 Plans, and the maximum term of each
grant is ten years. Options granted become exercisable in full or in
installments pursuant to the terms of each agreement evidencing options
granted. The 1986 and the 1995 Plans also permit the issuance of incentive
stock options. As of December 31, 1999, the Company has not granted any
incentive stock options.
The Company accounts for these plans under APB Opinion No. 25, under which no
compensation cost is recognized for grants with an exercise price equal to or
in excess of the value of the underlying stock on the measurement date.
Had compensation costs for these plans been determined consistent with SFAS
No. 123, "Accounting for Stock Based Compensation," the Company's net loss and
net loss per share would have been reported as follows:
Year Ended Year Ended Year Ended
Dec. 31, 1999 Dec. 31, 1998 Dec. 31, 1997
------------- ------------- -------------
(in thousands, except per share amounts)
Net Loss Applicable to
Common Shares
As reported $(2,035) $(19,141) $(8,857)
Pro forma (4,338) (22,079) (12,637)
Net Loss Per Share
As reported - basic and diluted $(0.16) $(2.23) $(1.19)
Pro forma - basic and diluted (0.34) (2.57) (1.70)
Because the SFAS No. 123 method of valuation has not been applied to options
granted prior to January 1, 1995, the resulting pro forma compensation costs
may not be representative of amounts to be expected in future years.
For disclosure purposes, the fair value of stock based compensation was
computed using the Black-Scholes option pricing model with the following
weighted average assumptions used for 1999, 1998 and 1997 grants:
1999 1998 1997
---------- ---------- ----------
Risk Free Interest Rate 6.63% 4.74% 5.54%
Expected Dividend Yield 0% 0% 0%
Expected Lives 3.5 years 3.5 years 3.5 years
Expected Volatility 103% 93% 50%
Page F-15
<PAGE>
Activity in the Plans is as follows:
Number of Shares
-------------------------------
(in thousands)
Weighted Average Directors
Exercise and
Price Per Share Officers Employees Total
---------------- --------- --------- ---------
Outstanding at
December 31, 1996 $30.50 306 435 741
Granted $31.00 31 49 80
Cancelled $32.75 (13) (67) (80)
Exercised $23.55 (15) (10) (25)
---------------------------
Outstanding at
December 31, 1997 $30.65 309 407 716
Granted $21.40 61 59 120
Cancelled $31.15 (4) (25) (29)
Reclassified $30.60 30 (30) --
---------------------------
Outstanding at
December 31, 1998 $29.25 396 411 807
Granted $ 2.31 545 481 1,026
Cancelled $22.47 (17) (36) (53)
---------------------------
Outstanding at
December 31, 1999 $13.92 924 856 1,780
===========================
Exercisable at
December 31, 1999 $28.57 318 272 590
===========================
The weighted average fair value of shares granted during the years ended
December 31, 1999, 1998 and 1997 are $2.68, $20.55 and $16.55, respectively.
The following table sets forth the exercise price range, number of shares,
weighted average exercise price and remaining contractual lives by groups of
similar price and grant date:
Weighted Average
Number of ---------------------------
Exercise Price Shares Exercise Contractual
Range Outstanding Price Life
-------------- ----------- -------- -----------
$ 1.88 - $ 3.60 1,000,430 $ 2.22 9.68
$ 7.03 - $ 8.75 22,481 7.49 8.86
$17.03 - $25.63 264,112 21.94 5.36
$28.44 - $32.50 181,144 32.21 6.14
$33.15 - $40.95 311,850 34.51 6.73
---------
1,780,017
=========
Page F-16
<PAGE>
Weighted
Number of Average
Exercise Price Shares Exercise
Range Exercisable Price
-------------- ----------- --------
$ 1.88 - $ 3.60 1,460 $ 2.11
$ 7.03 - $ 8.75 19,481 7.56
$17.03 - $25.63 199,237 21.30
$28.44 - $32.50 138,682 32.34
$33.15 - $40.95 230,672 34.53
---------
589,532
=========
7. LOSS ON MANUFACTURING CONTRACT. In August 1998, the Company entered into a
contract to manufacture, in the Company's Colorado Springs manufacturing
facility, a limited number of RFID memory chips using the Company's FRAM memory
technology. As Of December 31, 1998, the Company determined that the total
contract revenue compared with the estimated contract costs of manufacturing
this product indicated that a loss in fulfilling the contract would be
incurred. The loss resulted from low product manufacturing yields, raw
material quality issues and complications in product testing due to chip design
complexity. Accordingly, the Company recorded an accrued liability and a
charge to earnings reflecting the total estimated loss on the contract in
the amount of $1,163,000 in 1998. The manufacturing of this product was
completed in March 1999.
8. RELATED PARTY TRANSACTIONS:
The National Electrical Benefit Fund (the "Fund") is a principal stockholder
of the Company.
TRANSACTIONS WITH THE 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 1999, 1998 and 1997, the Company was
obligated to pay to the Fund approximately $60,000 per year in payment of such
fees and expenses. Payments made for these obligations were $390,000, $0 and
$0 during 1999, 1998 or 1997, respectively. $120,000 and $450,000 related to
this obligation is included in accrued expenses as of December 31, 1999 and
1998, respectively.
The Company granted to the Fund pursuant to a 1995 debt conversion agreement
(the "1995 Debt Conversion Agreement") certain rights to register under the
Securities Act for resale all of the warrants and shares of common stock
issued to the Fund pursuant to the 1995 Debt Conversion Agreement.
Page F-17
<PAGE>
In September 1995, the Company and the Fund entered into a Loan Agreement (the
"Fund Credit Facility") pursuant to which the Fund agreed to lend to the
Company up to $12 million bearing interest at 12% per annum. The borrowings
under the Fund Credit Facility totaled $5.5 million as of August 6, 1999. On
August 6, 1999, the Company and the Fund amended the terms of the Fund Credit
Facility. Pursuant to the terms of the amended credit facility (the "Amended
Credit Facility"), $1.5 million of accrued interest was reclassified to
principal, leaving an outstanding principal balance under the loan as of
August 6, 1999 of $7 million. The remaining accrued interest balance as of
August 6, 1999 of approximately $525,000 that was not reclassified to principal
was paid to the Fund at the time of the amendment. The Amended Credit Facility
bears interest at 8% per annum, payable quarterly, with the first interest
payment due January 31, 2000. The maturity date of the Amended Credit Facility
is March 15, 2002. No additional borrowings are available to the Company under
the Amended Credit Facility and the loan is secured by a first priority lien on
substantially all of the Company's assets. The Fund has the right to convert
all or any portion of the amounts outstanding under the Amended Credit Facility
into common stock at any time or times before maturity of the loan at a
conversion price equal to $5.00 for each share of common stock. The agreement
requires the Company maintain a minimum level of net worth of $7 million,
current assets to current liabilities ratio of not less than 1.5, as defined,
and long-term debt to net worth ratio not to exceed 1.0, as defined. The
Company was in compliance with these covenants at December 31, 1999.
Outstanding principal and accrued interest as of December 31, 1999 under the
Amended Credit Facility was $7.0 million and $230,000, respectively.
As consideration for the Fund to amend the terms of the credit facility, the
Company agreed to amend the exercise price of outstanding warrants held by the
Fund to purchase 805,697 shares of the Company's common stock to $5.00 and
extend the expiration date of such warrants to September 30, 2008. The
Company also issued new warrants to purchase 100,000 shares of the Company's
common stock with an exercise price of $2.35 with an expiration date of
August 6, 2009. The exercise price of such warrants is periodically amendable
to equal the lowest price of any warrant or stock option issued by the Company,
as defined. The current exercise price of the Fund's warrants is $2.25 per
share. The amended warrants and the new warrants were valued using the Black
Scholes option pricing method with a resulting value of approximately $1.4
million. The following assumptions were used to value these warrants: risk
free interest rate of 5%, expected yield of 0%, expected life of three years,
and expected volatility of 103%. This amount is accounted for as a discount to
the outstanding promissory note payable and will be amortized over the
remaining life of the note as a charge to interest expense in the Company's
consolidated statements of operations. The unamortized discount pertaining to
the note and warrants as of December 31, 1999 is approximately $1,235,000.
In July 1998, the Company granted to the Fund options to purchase 7,000 shares
of the Company's common stock at the fair market value at the date of such
grant. The grant of these options to the Fund was in lieu of Mr. Tull, the
Fund's board representative, receiving these options in recognition of the
services he has performed on the Company's behalf as a Director of the Company.
Mr. Tull resigned from the Company's Board of Directors effective September 8,
1999. The Fund currently has no representative on the Company's Board of
Directors.
Page F-18
<PAGE>
TRANSACTIONS INVOLVING DIMENSIONAL FUND ADVISORS, INC. Dimensional Fund
Advisors, Inc. is a principal shareholder of the Company.
In connection with the restructuring of the Company's Series A Preferred Stock
in August 1999, the Company entered into agreements with certain affiliates of
Dimensional Fund Advisors, Inc. (the "DFA Affiliates") to issue to each DFA
Affiliate an unsecured convertible promissory note (together, the "DFA
Promissory Notes") in consideration of the termination of certain Common Stock
purchase rights of the DFA Affiliates. Such purchase rights were recorded as a
common stock price adjustment liability in balance sheets prior to September
30, 1999. The DFA Promissory Notes bear interest at 8% per annum and mature on
July 31, 2000. All or part of the principal and accrued and unpaid interest of
the DFA Promissory Notes are convertible into common stock at the option of the
holder of the note at a conversion ratio of one share of common stock for each
$5.00 of principal and accrued interest converted. The outstanding principal
balance and accrued interest as of December 31, 1999 under the DFA Promissory
Notes were approximately $3,224,000 and $111,000, respectively.
The consolidated statements of operations include amounts attributable to
related party transactions, as follows:
1999 1998 1997
------ ------ ------
(in thousands)
Interest expense on convertible
promissory notes $914 $669 $386
====== ====== ======
INVESTMENT IN RACOM SYSTEMS, INC. Prior to September 1999 the Company had a
36% ownership interest in Racom Systems, Inc. ("Racom"). The investment was
carried at zero as the Company had no commitment to provide future funding to
Racom. In April 1999 Turbo International Limited ("Turbo") acquired a majority
ownership position in Racom. During September 1999 the Company sold its 36%
ownership interest in Racom to Turbo for $10,000.
9. SUPPLEMENTAL CASH FLOW INFORMATION:
CASH PAID FOR INTEREST AND INCOME TAXES:
1999 1998 1997
------ ------ ------
(in thousands)
Interest $557 $69 $49
Income taxes -- -- --
Page F-19
<PAGE>
10. INCOME TAXES:
As of December 31, 1999, the Company had approximately $148 million of net
operating loss carryovers for tax purposes. Further, the Company has
approximately $1.5 million of research and development tax credits available
to offset future federal tax. The net operating loss and credit carryovers
expire through 2014. The Internal Revenue Code contains provisions, which may
limit the net operating loss carryforwards available to be used in any given
year if certain events occur, including significant changes in ownership
interests.
The components of the net deferred income tax asset were as follows:
December 31,
--------------------
1999 1998
------- -------
(in thousands)
Deferred tax assets:
License fees and deferred revenue $ -- $ 2,700
Other 1,900 1,100
Net operating loss carryovers 59,300 56,900
------ -------
61,200 60,700
Valuation allowance (61,200) (60,700)
------ ------
$ -- $ --
====== ======
The provision for income taxes includes the following:
December 31,
----------------------------
1999 1998 1997
------ ------ ------
(in thousands)
Current:
Federal $ -- $ -- $ --
State -- -- --
------ ------ ------
Total current -- -- --
Deferred:
Federal (2,040) (4,550) (3,221)
State (290) (650) (379)
------ ------ ------
Total deferred benefit (2,330) (5,200) (3,600)
Increase in valuation allowance 2,330 5,200 3,600
------ ------ ------
Total provision $ -- $ -- $ --
====== ====== ======
Page F-20
<PAGE>
Income taxes computed using the federal statutory income tax rate differ from
the Company's effective tax rate primarily as a result of state taxes and the
increase in the valuation allowance. During 1999, net operating loss
carryovers of approximately $4.6 million expired.
Taxes other than payroll and income taxes were $586,000, $211,000 and $549,000
for 1999, 1998 and 1997, respectively.
11. SEGMENT AND GEOGRAPHIC AREA INFORMATION:
Ramtron is engaged primarily in the design, development, manufacture and
sale of specialty high-performance semiconductor memory devices. Ramtron has
two principal businesses, ferroelectric nonvolatile random access memory
("FRAM") technology and products, and high-speed DRAM products called Enhanced-
DRAM ("EDRAM") products.
The accounting policies for determining segment net income (loss) are the same
used in the consolidated financial statements. There are no internal sales
between segments or geographic regions.
1999 1998 1997
----------------- ----------------- -----------------
FRAM EDRAM FRAM EDRAM FRAM EDRAM
-------- -------- -------- -------- -------- --------
(in thousands)
Revenue:
Product sales $3,508 $9,640 $ 2,569 $15,041 $ 1,603 $13,010
License and development
fees 4,500 700 -- -- 5,750 --
Royalties 1,501 -- -- -- -- --
Customer-sponsored
research and
development revenue 4,562 460 944 -- 132 --
-------- -------- -------- -------- -------- --------
14,071 10,800 3,513 15,041 7,485 13,010
-------- -------- -------- -------- -------- --------
Operating costs (18,257) (12,439) (17,296) (14,243) (16,638) (12,985)
-------- -------- -------- -------- -------- --------
Operating profit(loss) $(4,186) $(1,639) (13,783) 798 (9,153) 25
Other 221 (17) (301) (19) 596 --
-------- -------- -------- -------- -------- --------
Net Profit (Loss) $(3,965) $(1,656) $(14,084) $779 $(8,557) $25
======== ======== ======== ======== ======== ========
Total assets $21,080 $8,300 $25,393 $7,954 $21,064 $9,990
Depreciation and
Amortization 1,900 390 2,187 286 2,349 248
Capital additions 249 67 726 98 766 394
Intangible additions 233 2,718 236 512 249 97
Page F-21
<PAGE>
Net profit (loss) excludes interest income, interest expense and special
charges of $577,000, $3,126,000 and $325,000 in 1999, 1998 and 1997,
respectively, not allocated to business segments.
Major customers representing more than 10% of total revenues are as follows:
1999 1998 1997
--------------------- --------------------- ---------------------
FRAM EDRAM FRAM EDRAM FRAM EDRAM
---------- ---------- ---------- ---------- ---------- ----------
(in thousands)
Customer A $8,000 32% $ -- -- $-- -- $ -- -- $3,750 18% $ -- --
Customer B -- -- 3,490 14% -- -- 4,301 23% -- -- -- --
Customer C -- -- -- -- -- -- 5,192 28% -- -- 3,488 17%
Customer D -- -- -- -- -- -- 2,128 11% -- -- 2,908 14%
Customer E -- -- -- -- -- -- -- -- 2,000 10% -- --
The following geographic area data include revenues based on product shipment
destination, license and development payor location and customer-sponsored
research and development payor location. The data presented for long-lived
assets is based on physical location.
Geographic Area Net Revenues:
1999 1998 1997
--------- --------- ---------
(in thousands)
United States $ 9,146 $13,475 $ 9,108
Japan 10,766 485 5,795
Canada 2,755 2,278 3,288
United Kingdom 923 935 1,014
Germany 643 414 495
Rest of world 638 967 795
--------- --------- ---------
Total $24,871 $18,554 $20,495
========= ========= =========
Geographic Area Long-lived Assets (Net):
1999 1998 1997
--------- --------- ---------
(in thousands)
United States $12,327 $11,165 $12,107
Thailand 229 310 95
Rest of world 162 341 515
--------- --------- ---------
$12,718 $11,816 $12,717
========= ========= =========
Page F-22
<PAGE>
12. DEFINED CONTRIBUTION PLAN:
The Company has a cash or deferred compensation plan (the "401(k) Plan")
intended to qualify under Section 401(k) of the Internal Revenue Code of 1986,
as amended (the "Code"), in which substantially all full-time employees are
participants. Participants in the 401(k) Plan may make maximum pretax
contributions, subject to limitations imposed by the Code, of 20% of their
compensation. The Company may make, at the Board of Directors' discretion, an
annual contribution on behalf of each participant. No amounts have been
contributed by the Company under the 401(k) Plan on behalf of participating
employees.
13. CONTINGENCIES:
PATENT INTERFERENCE PROCEEDING. A patent interference proceeding, which was
declared in 1991 in the United States Patent and Trademark Office (the "Patent
Office") between the Company, National Semiconductor Corporation ("National")
and the Department of the Navy in regard to one of the Company's issued United
States patents, is continuing. The Patent involved covers a basic
ferroelectric memory cell design invention the Company believes is of
fundamental importance to its FRAM business in the United States. An
interference is declared in the Patent Office when two or more parties each
claim to have made the same invention. The interference proceeding is
therefore conducted to determine which party is entitled to the patent rights
covering the invention. In the present interference contest, the Company is
the "senior" party, which means that it is in possession of the issued United
States Patent and retains all rights associated with such patent. The other
two parties involved in the interference are the "junior" parties, and each
has the burden of proof of convincing the Patent Office by a preponderance of
the evidence that it was the first to invent the subject matter of the
invention and thus is entitled to the corresponding patent rights. Only the
Company and National filed briefs in this matter. Oral arguments were
presented before the Patent Office on March 1, 1996.
The Patent Office decided the interference on May 6, 1997, holding that all of
the claims were patentable to National, one of the "junior" parties. The
other "junior" party, the Department of the Navy, was not granted any patent
claims pursuant to the interference proceedings. On June 20, 1997, the
Company filed a Request for Reconsideration with the Patent Office concerning
the interference decision. Pursuant to the Request for Reconsideration, the
Company requested that five separate issues be reconsidered because, from the
Company's perspective, they were either ignored or misconstrued in the
original decision. A decision on the Request for Reconsideration was issued
on November 19, 1998, again holding that all of the claims were patentable to
National. On January 9, 1999, the Company appealed the decision of the Patent
Office on one of the interference counts directly to the Court of Appeals for
the Federal Circuit. On February 2, 2000 the Court of Appeals vacated and
Page F-23
<PAGE>
remanded the decision of the Patent Office for further proceedings. The
Company also filed complaint's in Federal District Court in the District of
Columbia seeking a review of the decision of the Patent Office on the remaining
interference counts, which are still pending. The Company remains in
possession of the issued United States Patent and retains all rights associated
with such patent while it pursues its appeal options. The "junior" party has
received no rights associated with this patent decision and will not receive
any such rights as long as the appeal process continues.
If the Company's patent rights that are the subject of the interference
proceeding are ultimately lost or significantly compromised, the Company would
be precluded from producing FRAM products in the United States using the
Company's existing design architecture, absent being able to obtain a suitable
license to exploit such rights. If such patent rights are ultimately awarded
to National, and if a license to such rights is not subsequently entered into
by the Company with National, National could use the patent to prevent the
manufacture, use or sale by the Company, and/or its licensees, within the
United States of any products that come within the scope of such patent rights,
which would include all FRAM products as currently designed, and which would
materially adversely affect the Company. The Company has vigorously defended
its patent rights in this interference contest and will continue such efforts.
The Company is uncertain as to the ultimate outcome of the interference
proceeding, as well as to the resulting effects upon the Company's financial
position or results of operations.
PATENT INFRINGEMENT PROCEEDING. In October 1998, the Company filed a claim for
patent infringement in the United States District Court, Northern District of
California against NEC Corporation, NEC Electronics, Inc. and NEC USA, Inc.
(collectively "NEC"). The complaint claimed that NEC infringed and continues
to infringe on certain patents of the Company by offering to sell and/or
selling NEC's Virtual Channel SDRAM products, and by actively inducing others
to infringe on such patents without authority or license from the Company. The
complaint sought relief from NEC to cease its infringement activities and
requested damages be awarded to the Company resulting from the infringement
activities. The relief also asked for reimbursement of attorney's fees and
certain other relief the court deemed proper. NEC responded by denying the
infringement claims brought against them by the Company. NEC also filed
certain counterclaims against the Company, which were subsequently retracted or
stayed by the court.
On November 9, 1999 the Company and NEC entered into an agreement to settle its
patent infringement lawsuit. The parties agreed to terminate the pending
patent infringement cases and pursuant to the agreement, the Company granted
NEC a restricted license to use certain of the Company's Enhanced DRAM specific
intellectual property for certain consideration, the terms of which are
confidential and under a court protective order.
Page F-24
<PAGE>
LITIGATION
DEERE PARK. In November 1998, Deere Park Capital Management LLC ("Deere
Park"), a holder of the Company's Series A Convertible Preferred Stock
("Preferred Stock"), filed a lawsuit against the Company in the Court of
Chancery of the State of Delaware seeking a declaratory judgment and specific
performance of the Company's alleged obligation to convert a portion of Deere
Park's shares of Preferred Stock to common stock, as well as damages of $2.4
million plus costs and attorneys fees. On December 16, 1998, the Company
filed its answer denying the allegations of the complaint and asserting, among
other things, that the Company had fully performed its contractual obligations
with respect to the conversions alleged in the complaint. On January 20,
1999, Deere Park moved for permission to file an amended complaint. Shortly
thereafter, in early February 1999, Deere Park filed a second action against
the Company in the Court of Chancery for the State of Delaware. Like the
proposed amended complaint in its original lawsuit, Deere Park alleged in the
second action that the Company breached certain obligations to convert Deere
Park's shares of Preferred Stock; however, Deere Park's new complaint added a
claim for relief and relied on different facts to support the claims asserted
therein. On February 23, 1999, the Company answered Deere Park's second
action by denying the substance of Deere Park's new allegations and raised
certain affirmative defenses that the Company previously had not raised.
Effective as of August 6, 1999, Deere Park dismissed all claims against the
Company with prejudice pursuant to the finalization of the Company's preferred
stock restructuring.
TALISMAN. On January 29, 1999, Talisman Capital Opportunity Fund, LLC
("Talisman"), a holder of Preferred Stock, filed a suit against the
Company in the United States District Court for the Southern District of New
York, also alleging that the Company failed to honor its obligations to
convert shares of its Preferred Stock and seeking damages of over $1.5 million
plus costs and attorney's fees. In its answer served on February 22, 1999,
the Company denied the substance of Talisman's allegations and asserted
several affirmative defenses. On April 7, 1999, the Company entered into an
agreement with Talisman to settle the pending litigation. Pursuant to the
terms of a confidential settlement agreement, the Company agreed to make a
cash payment to Talisman in consideration for the cancellation of all
Talisman's remaining shares of Series A Preferred Stock. Accordingly,
Talisman's suit over the Company was dismissed and Talisman ceased to be a
holder of the Company's Series A Preferred Stock.
14. SUBSEQUENT EVENTS:
INFINEON. On January 26, 2000, the Company's wholly owned subsidiary, Enhanced
Memory Systems ("EMS"), Incorporated, entered into a non-exclusive, worldwide
technology licensing agreement with Infineon Technologies AG ("Infineon"). In
consideration for the grant of the license, Infineon received 20% of the
outstanding common stock of EMS. Additionally, the agreement calls for
Infineon to provide EMS with up to $200 million per year of committed wafer
manufacturing capacity using Infineon's advanced DRAM and embedded DRAM process
capabilities and access to Infineon's design technology. The agreement has a
term of six years with optional two-year renewal periods thereafter.
Page F-25
<PAGE>
PATENT INTERFERENCE PROCEEDING. The U.S. Court of Appeals for the Federal
Circuit on February 2, 2000 vacated and remanded a Patent Office decision
awarding rights to National Semiconductor in one of five patent interferences
appeals filed by the Company. Four other patent interference issues remain to
be heard in the Federal District Court in Washington, D.C.
Page F-26
<PAGE>
<TABLE>
<CAPTION>
RAMTRON INTERNATIONAL CORPORATION
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
(in thousands)
Column A Column B Column C Column D Column E
- --------- ---------- ---------- ---------- ----------
Additions
----------------------
Balance at Charged to Charged to Balance at
Beginning Costs and Other End
Description of Period Expenses Accounts Deductions of Period
- ------------ ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Year Ended 12/31/97:
Allowance for doubtful
accounts $585 $ -- $-- $485 $100
Allowance for returns
and discounts 136 371 -- 440 67
----------------------------------------------------------
$721 $371 $-- $925 $167
==========================================================
Year Ended 12/31/98:
Allowance for doubtful
accounts $100 $ -- $-- $ -- $100
Allowance for returns
and discounts 67 375 -- 408 34
----------------------------------------------------------
$167 $375 $-- $408 $134
==========================================================
Year Ended 12/31/99:
Allowance for doubtful
accounts $100 $ -- $-- $ -- $100
Allowance for returns
and discounts 34 330 -- 117 247
----------------------------------------------------------
$134 $330 $-- $117 $347
==========================================================
</TABLE>
Page F-27
<PAGE>
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
There have been no changes in or disagreements with accountants required to be
reported herein.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Directors of the Company, and certain information about them, are as
follows:
Name Age Position(s) with the Company
- ---- --- ----------------------------
L. David Sikes 58 Chairman of the Board and
Chief Executive Officer
Greg B. Jones 52 Director, President and
Chief Operating Officer
William G. Howard(1) 58 Director
Eric A. Balzer(1)(2) 51 Director
Albert J. Hugo-Martinez(1)(2) 54 Director
- -----------------
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
L. David Sikes. See Part I, Item 1a hereof entitled "Executive Officers of
the Registrant."
Greg B. Jones. See Part I, Item 1a hereof entitled "Executive Officers of the
Registrant."
Dr. Howard has served as a director of the Company since July 1994. Since
September 1990, Dr. Howard has been an independent engineering consultant to
various entities, including SEMATECH, the Semiconductor Industry Association
and Dow Corning. 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 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 the Chairman of
Credence Systems, Inc., a manufacturer of electronic test equipment.
Dr. Howard is also a director of BEI Electronics, Inc., a manufacturer of
electronic sensors; and Xilinx, Inc., a manufacturer of integrated circuits.
Page-40
<PAGE>
Mr. Balzer has served as a director of the Company since September 1998. From
January 1990 until his retirement in November 1999, Mr. Balzer served as
Senior Vice President of Operations for Advanced Energy Industries, Inc. a
company that develops, manufactures and markets power conversion devices for
the semiconductor equipment industry. Prior to his employment with Advanced
Energy Industries, Inc., Mr. Balzer served as Materials and Manufacturing
Manager for IBM's corporate systems technology division.
Mr. Hugo-Martinez has served as a director of the Company since March 1999.
From March 1996 to November 1998, he served as President and Chief Executive
Officer and a member of the Board of Directors of GTI Corporation, a
manufacturer of ISDN and local area network subcomponents. From 1987 to 1995,
he served as President and Chief Executive Officer of Applied Micro Circuits
Corporation, a manufacturer of high-performance bipolar and biCMOS gate arrays.
Mr. Hugo-Martinez is also a director of Microchip, Inc., a semiconductor
manufacturing company specializing in micro-controller devices and On
Semiconductor, Inc., a semiconductor manufacturer specializing in analog
integrated circuit products.
The information concerning the Company's executive officers required by this
Item is included in Part I, Item 1a hereof entitled "Executive Officers of the
Registrant."
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE: Under Section 16(a)
of the Securities and 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 on 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 1999, none of the Company's directors, officers and persons holding more
than 10% of the Company's Common Stock were delinquent in filing reports
pursuant to Section 16(a) of the Exchange Act.
Item 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information for the three years ended
December 31, 1999 concerning compensation paid or accrued by the Company to or
on behalf of the Company's Chief Executive Officer during 1999 and each of the
four other most highly compensated executive officers of the Company whose
compensation during 1999 exceeded $100,000:
Page-41
<PAGE>
Long-Term
Compensation Awards
-------------------------
Annual Compensation Securities Restricted
Name and -------------------- Underlying Stock
Principal Position Year Salary($) Bonus($) Options(#) Awards($)
- ------------------ ---- --------- -------- -------------------------
L. David Sikes 1999 $360,000 $ -- 200,000 $ --
Chairman of the 1998 360,000 65,000 20,000 64,806(1)
Board and Chief 1997 355,000 75,000 10,000 --
Executive Officer
Greg B. Jones 1999 200,000 -- 100,000 --
President and Chief 1998 202,100 -- 9,000 49,790(2)
Operating Officer 1997 179,900 -- -- --
Richard L. Mohr 1999 200,000 -- 100,000 --
Executive Vice 1998 200,000 -- -- 48,117(3)
President and Chief 1997 175,333 20,000 10,000 --
Financial Officer
Donald G. Carrigan 1999 152,092 333 50,000 --
Vice President of 1998 152,092 5,333 8,000 33,804(4)
Sales and Marketing, 1997 139,225 -- 10,000 --
FRAM Business
Craig W. Rhodine(5) 1999 145,000 -- 75,000 --
Vice President and 1998 137,500 -- -- 42,254(6)
General Manager, 1997 122,083 -- -- --
EDRAM Business
- ---------------
(1) The amount shown represents the dollar value of the award of restricted
stock, calculated by multiplying the closing market price of the Company's
Common Stock on the date of grant by the number of shares awarded plus
withholding tax on the calculated amount of the award. The number of
shares of fully vested restricted stock awarded was 1,600. The closing
market price on the date of the award, the market value of the stock on
the date of the award and the associated withholding taxes were $25.078,
$40,125 and $24,681, respectively. As of December 31, 1999, Mr. Sikes
held 1,600 shares of such restricted stock having a value of $10,700 based
upon the fair market value of the Common Stock on December 31, 1999. The
restricted shares are currently unregistered and are not tradable pursuant
to an active registration statement filed with the SEC.
Page-42
<PAGE>
(2) The amount shown represents the dollar value of the award of restricted
stock, calculated by multiplying the closing market price of the Company's
Common Stock on the date of grant by the number of shares awarded plus
withholding tax on the calculated amount of the award. The number of
shares of fully vested restricted stock awarded was 1,200. The closing
market price on the date of the award, the market value of the stock on
the date of the award and the associated withholding taxes were $25.078,
$30,094 and $19,696, respectively. As of December 31, 1999, Mr. Jones
held 1,200 shares of such restricted stock having a value of $8,025 based
upon the fair market value of the Common Stock on December 31, 1999. The
restricted shares are currently unregistered and are not tradable pursuant
to an active registration statement filed with the SEC.
(3) The amount shown represents the dollar value of the award of restricted
stock, calculated by multiplying the closing market price of the Company's
Common Stock on the date of grant by the number of shares awarded plus
withholding tax on the calculated amount of the award. The number of
shares of fully vested restricted stock awarded was 1,200. The closing
market price on the date of the award, the market value of the stock on
the date of the award and the associated withholding taxes were $25.078,
$30,094 and $18,023, respectively. As of December 31, 1999, Mr. Mohr held
1,200 shares of such restricted stock having a value of $8,025 based upon
the fair market value of the Common Stock on December 31, 1999. The
restricted shares are currently unregistered and are not tradable pursuant
to an active registration statement filed with the SEC.
(4) The amount shown represents the dollar value of the award of restricted
stock, calculated by multiplying the closing market price of the Company's
Common Stock on the date of grant by the number of shares awarded plus
withholding tax on the calculated amount of the award. The number of
shares of fully vested restricted stock awarded was 800. The closing
market price on the date of the award, the market value of the stock on
the date of the award and the associated withholding taxes were $25.078,
$20,062 and $13,742, respectively. As of December 31, 1999, Mr. Carrigan
held 800 shares of such restricted stock having a value of $5,350 based
upon the fair market value of the Common Stock on December 31, 1999. The
restricted shares are currently unregistered and are not tradable pursuant
to an active registration statement filed with the SEC.
(5) Mr. Rhodine became an executive officer of the Company in March 1997 and
was employed by the Company in various non-executive officer positions
from September 1992 until March 1997.
(6) The amount shown represents the dollar value of the award of restricted
stock, calculated by multiplying the closing market price of the Company's
Common Stock on the date of grant by the number of shares awarded plus
withholding tax on the calculated amount of the award. The number of
shares of fully vested restricted stock awarded was 1,000. The closing
market price on the date of the award, the market value of the stock on
the date of the award and the associated withholding taxes were $25.078,
$25,078 and $17,176, respectively. As of December 31, 1999, Mr. Rhodine
held 1,000 shares of such restricted stock having a value of $6,688 based
upon the fair market value of the Common Stock on December 31, 1999. The
restricted shares are currently unregistered and are not tradable pursuant
to an active registration statement filed with the SEC.
Page-43
<PAGE>
OPTION GRANTS IN 1999
The following table sets forth certain information concerning stock option
grants in 1999 to each of the executive officers named in the Summary
Compensation Table who received stock option grants in 1999.
Individual Grants
------------------------------------------
No. of Potential Realizable
Securities % of Total Value at Assumed
Underlying Options Annual Rates of Stock
Options Granted to Exercise Price Appreciation
Granted Employees Price Expiration for Option Term(2)
Name (#) in 1999(1) ($/Share) Date 5%($) 10%($)
- ---- ---------- ---------- --------- ---------- -------- ---------
L. David Sikes
200,000(3) 41.6% $2.25 09/28/09 $283,003 $717,184
Greg B. Jones
100,000(3) 20.8 2.25 09/28/09 141,501 358,592
Richard L. Mohr
100,000(3) 20.8 2.25 09/28/09 141,501 358,592
Donald G. Carrigan
50,000(3) 10.4 2.25 09/28/09 70,751 179,296
Craig W. Rhodine
75,000(3) 15.6 2.25 09/28/09 106,126 268,944
- ---------------
(1) The Company granted options to purchase an aggregate of 481,189 shares to
employees in 1999.
(2) Potential values are net of exercise price and before taxes payable in
connection with the exercise of such options or the subsequent sale of
shares acquired upon the exercise of such options. These values represent
certain assumed rates of appreciation (i.e., 5% and 10% compounded
annually over the term of such options) based on the Securities and
Exchange Commission's rules. The actual values, if any, will depend upon,
among other factors, the future performance of the Company's Common Stock,
overall market conditions and the named officer's continued employment
with the Company. Therefore, the potential values reflected in this table
may not necessarily be achieved.
(3) Such options were granted under the 1995 Stock Option Plan, as amended
(the "1995 Plan"), and vest and become exercisable in two equal annual
installments on March 31, 2000 and 2001. The exercise price per share of
such options is equal to the reported closing price of the Company's
Common Stock on The Nasdaq Stock Market on the date of grant.
Page-44
<PAGE>
AGGREGATED OPTIONS EXERCISED IN 1999 AND OPTION VALUES AT DECEMBER 31, 1999
The following table sets forth the aggregate number and the value of options
held as of the end of 1999 by the executive officers named in the Summary
Compensation Table. None of the executive officers named in the Summary
Compensation Table exercised options during 1999.
Number of Securities Value of Unexercised
Underlying Unexercised Options In-the-Money Options
at 12/31/99(#) at 12/31/99($)*
------------------------------ --------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
L. David Sikes 71,750 220,000 $-- $887,500
Greg B. Jones 36,500 109,500 -- 443,750
Richard L. Mohr 35,999 110,000 -- 443,750
Donald G. Carrigan 25,250 112,750 -- 221,875
Craig W. Rhodine 23,485 155,000 -- 332,813
- ---------------
* Represents the difference between the closing price of the Company's Common
Stock on December 31, 1999 as reported on The Nasdaq Stock Market
(i.e., $6.6875 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. The agreement provided for Mr. Sikes to 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. In August
1999, Mr. Sikes' employment agreement was extended until December 31, 2000.
In April 1997, the Company entered into a two-year employment agreement,
effective on April 1, 1997, with Mr. Mohr. The agreement provided for Mr. Mohr
to receive an initial monthly salary of $15,000. The agreement provided that
if the Company terminated Mr. Mohr's employment during the term of the
agreement for any reason other than for cause, the Company would be obligated
to pay him his then annual salary for the remainder of the two-year term. In
April 1999, the Board of Directors extended Mr. Mohr's employment agreement for
a period of two years beyond the original expiration date of April 1, 1999.
Page-45
<PAGE>
In January 1998, the Company entered into a two-year employment agreement,
effective on January 1, 1998, with Mr. Jones. The agreement provided for
Mr. Jones to receive an initial annual salary of $200,000. 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.
In September 1999, the Company entered into a 16 month employment agreement,
effective on September 1, 1999 with Mr. Carrigan. The agreement provided for
Mr. Carrigan to receive an initial annual salary of $152,092. The agreement
provides that if the Company terminates Mr. Carrigan'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 16 month
term.
In July 1998, the Company entered into a two-year employment agreement,
effective on July 22, 1998, with Mr. Rhodine. The agreement provided for
Mr. Rhodine to receive an initial annual salary of $137,500. The agreement
provides that if the Company terminates Mr. Rhodine'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.
COMPENSATION OF DIRECTORS. Directors 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. 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 1989
Nonstatutory Stock Option plan and the 1995 Plan.
In July 1998 and December 1999, the Company granted Dr. Howard options to
purchase 4,000 and 5,000 shares, respectively, of the Company's common stock at
the fair market value at the date of such grants. In September 1998 and
December 1999, the Company granted to Mr. Balzer options to purchase 4,000 and
5,000 shares, respectively, of the Company's common stock at the fair market
value at the date of such grants. In March and December 1999, the Company
granted to Mr. Hugo-Martinez options to purchase 4,000 and 5,000 shares,
respectively, of the Company's common stock at the fair market value at the
date of such grants. The grant of these options was in recognition of the
services the named individuals performed as Director's of the Company.
COMPENSATION COMMITTEE INTERLOCKS
The members of the Company's Compensation Committee during 1999 were
Dr. William G. Howard, Albert J. Hugo-Martinez and Eric A. Balzer. There were
no executive officers or employees of the Company that were members of the
Company's Compensation Committee during 1999.
Page-46
<PAGE>
Item 12. COMMON STOCK OWNERSHIP PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of March 21, 2000 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 Company's executive officers; and (iv) all current
directors and executive officers of the Company as a group. The number of
outstanding shares used in the calculation of beneficial ownership was
16,007,329.
Shares of Common Stock Percent
Name of Beneficial Owner(1) Beneficially Owned of Class(2)
- --------------------------- ---------------------- -----------
National Electrical Benefit Fund 2,554,377(3) 15.1%
1125 15th Street, N.W., Room 912
Washington, D.C. 20005
CC Investments, LDC 1,317,772(4) 7.9
77 West Wacker Drive, Suite 4040
Chicago, IL 60601
L. David Sikes 181,350(5) *
Greg B. Jones 89,100(6) *
Craig W. Rhodine 62,185(7) *
Donald G. Carrigan 54,418(8) *
William G. Howard 28,000(9) *
Albert J. Hugo-Martinez 23,600(10) *
Eric A. Balzer 21,000(11) *
LuAnn D. Hanson 17,098(12) *
All current directors and executive
officers as a group (8 persons) 476,751(13) 2.9
- ---------------
* 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, except as otherwise
indicated in the information contained in these footnotes.
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<PAGE>
(2) Pursuant to Rule 13d-3(d)(1)(B), shares of Common Stock issuable upon the
exercise of warrants or the conversion of convertible securities held by
each person set forth in the table which are currently exercisable or
convertible or become exercisable or convertible within 60 days are
included in the number of shares of Common Stock outstanding for purposes
of determining the percentage ownership of such person.
(3) Includes: (i) 1,638,680 shares of Common Stock owned by the Fund;
(ii) 905,697 shares of Common Stock issuable upon exercise of warrants
held by the Fund which are currently convertible or become exercisable
within 60 days; and(iii) 10,000 shares of Common Stock issuable to the
Fund pursuant to options which are currently exercisable or become
exercisable within 60 days. The trustees of the Fund share voting and
dispositive powers as to such shares. To the best knowledge of the
Company, the trustees of the Fund are Mr. John M. Grau and Mr. Edwin D.
Hill.
(4) In a Schedule 13D dated January 31, 2000, CC Investments, LDC, as nominee
reported ownership of: (i) 610,634 shares of Common Stock and 707,138
shares of Common Stock issuable upon the exercise of warrants.
(5) Includes: (i) 2,100 shares of Common Stock owned directly; and
(ii) 179,250 shares issuable to Mr. Sikes pursuant to options, which are
currently exercisable or become exercisable within 60 days after
March 21,2000.
(6) Includes: (i) 2,600 shares of Common Stock owned directly; and
(ii) 86,500 shares issuable to Mr. Jones pursuant to options, which are
currently exercisable or become exercisable within 60 days after
March 21, 2000.
(7) Includes: (i) 1,200 shares of Common Stock owned directly; and
(ii) 60,985 shares issuable to Mr. Rhodine pursuant to options, which are
currently exercisable or become exercisable within 60 days after
March 21, 2000.
(8) Includes: (i) 2,168 shares of Common Stock owned directly; and
(ii) 52,250 shares issuable to Mr. Carrigan pursuant to options, which
are currently exercisable or become exercisable within 60 days after
March 21, 2000.
(9) Includes: (i) 28,000 shares issuable to Mr. Howard pursuant to options,
which are currently exercisable.
(10) Includes: (i) 2,600 shares of Common Stock owned directly; and
(ii) 21,000 shares issuable to Mr. Hugo-Martinez pursuant to options,
which are currently exercisable.
(11) Includes: (i) 21,000 shares of Common Stock issuable to Mr. Balzer
pursuant to options, which are currently exercisable.
Page-48
<PAGE>
(12) Includes: (i) 100 shares of Common Stock owned directly; and
(ii) 16,998 shares issuable to Ms. Hanson pursuant to options, which
are currently exercisable or become exercisable within 60 days after
March 21, 2000.
(13) Includes 476,751 shares of Common Stock issuable to current officers
and directors pursuant to options, which are currently exercisable or
become exercisable within 60 days after March 21, 2000.
Item 13. 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, 1999.
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 1999,
the Company was obligated to pay to the Fund approximately $60,000 in payment
of such fees and expenses. Payments to the Fund during 1999 included $390,000
in outstanding consulting fees and $524,469.
TRANSACTIONS INVOLVING RICHARD L. MOHR
See "Employment Contracts and Termination of Employment and Change-In-Control
Agreements."
TRANSACTIONS INVOLVING DONALD G. CARRIGAN
See "Employment Contracts and Termination of Employment and Change-In-Control
Agreements."
Page-49
<PAGE>
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as a part of this report:
(1) Financial Statements. The following Consolidated Financial
Statements of the Company and the Report of Independent Accountants are
incorporated by reference from the indicated pages of the Company's 1998
Annual Report to Stockholders:
Report of Independent Public Accountants
Consolidated Balance Sheets as of December 31, 1999 and 1998
Consolidated Statements of Operations for the years ended
December 31, 1999, 1998 and 1997
Consolidated Statements of Changes in Stockholders' Equity (Deficit)
for the years ended December 31, 1999, 1998 and 1997
Consolidated Statements of Cash Flow for the years ended
December 31, 1999, 1998 and 1997
Notes to Consolidated Financial Statements
(2) Financial Statement Schedules
Schedule II: Valuation and Qualifying Accounts
All other schedules are omitted because they are not required, or not
applicable, or because the required information is included in the financial
statements or notes thereto.
3. Exhibits
Exhibit
Number
-------
3.1 Certificate of Incorporation of Registrant, as amended.
3.2 Bylaws of Registrant, as amended.(2)
4.1 Form of Preferred Stock Investment Agreement dated
February 25, 1998.(3)
4.2 Form of Preferred Stock Warrant dated February 25, 1998.(3)
4.3 Form of Common Stock Purchase Agreement dated December 23,
1997.(4)
4.4 Form of Common Stock Purchase Warrant dated December 23,
1997.(4)
4.5 Preferred Stock Recapitalization Agreement between the
majority of the Series A Preferred Stockholders and the
Registrant dated July 30, 1999.(17)
4.6 Supplemental Exchange Rights Agreement between the majority of
the Series A Preferred Stockholders and the Registrant dated
July 30, 1999.(17)
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<PAGE>
4.7 Form of Optional Election between the Series A Preferred
Stockholders and the Registrant.(17)
4.8 DFA Stockholders Recapitalization Agreement between the DFA
Affiliates: DFA Group Trust-6-10 Subtrust, DFA Group Trust -
Small Company Subtrust, and U.S. 9-10 Small Company Portfolio,
and the Registrant dated as of July 30, 1999.(17)
4.9 Promissory Note in the amount of $648,369 issued to DFA
Affiliate, DFA Group Trust - 6-10 Subtrust, by the Registrant
dated July 30, 1999.(17)
4.10 Promissory Note in the amount of $1,692,046 issued to DFA
Affiliate, DFA Group Trust - Small Company Subtrust, by the
Registrant dated July 30, 1999.(17)
4.11 Promissory Note in the amount of $883,297 issued to DFA
Affiliate, U.S. 9-10 Small Company Portfolio, by the
Registrant dated July 30, 1999.(17)
4.12 Amended Loan Agreement between the National Electrical Benefit
Fund and the Registrant dated August 6, 1999.(17)
4.13 Amended and Restated Warrant to purchase 805,697 shares of
common stock issued by the Registrant to the National
Electrical Fund dated August 6, 1999.(17)
4.14 Amended and Restated Warrant to purchase 100,000 shares of
common stock issued by the Registrant to the National
Electrical Fund dated August 6, 1999.(17)
4.15 Form of Common Stock and Warrant Purchase Agreement dated
December 13, 1999.(19)
4.16 Form of Warrant with an exercise price of $10.813 dated
December 13, 1999.(19)
4.17 Form of Warrant with an exercise price of $16.220 dated
December 13, 1999.(19)
4.18 Common Stock and Warrant Purchase Agreement dated December 13,
1999 between Castle Creek Technology Partners, LLC and the
Registrant.(19)
4.19 Warrant dated December 13, 1999 between Castle Creek
Technology Partners, LLC and the Registrant.(19)
4.20 Warrant dated December 13, 1999 between Castle Creek
Technology Partners, LLC and the Registrant.(19)
4.21 Warrant to purchase 372,243 shares of common stock issued by
the Registrant to NTC Liquidating Trust dated December 20,
1999.
4.22 Warrant to purchase 220,000 shares of common stock issued by
the Registrant to NTC Liquidating Trust dated December 20,
1999.
10.1 Registrant's Amended and Restated 1986 Stock Option Plan and
forms of Incentive Stock Option Agreement, Nonstatutory
Stock Option Agreement and Stock Purchase Agreement.(5)
10.2 Registrant's Amended 1989 Nonstatutory Stock Option Plan and
forms of Nonstatutory Stock Option Agreement and Stock
Purchase Agreement.(6)
10.3 Form of Invention and Non-Disclosure Agreement
between Registrant and employees.(7)
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<PAGE>
*10.4 High-Density FRAM Cooperation Agreement between Registrant
and Hitachi, Ltd. dated April 25, 1994.(6)
*10.5 Cooperative Agreement for License Manufacturing of FRAM
Product between Registration and Rohm Co., Ltd. dated
August 3, 1994.(6)
10.6 1995 Stock Option Plan and forms of Incentive Stock Option
Agreement and Nonstatutory Stock Option Agreement.(9)
10.7 Employment Agreement effective April 1, 1995 between the
Registrant and L. David Sikes.(9)
*10.8 Agreement for EDRAM Design and Purchase of Products dated
April 26, 1995 between the Registrant and IBM.(10)
*10.9 FRAM Technology License Agreement dated July 31, 1995 between
the Registrant and Toshiba.(10)
*10.10 Symetrix/Ramtron Ferroelectric Cross License Agreement dated
as of August 11, 1995 between the Registrant and
Symetrix.(11)
*10.11 First Amendment to Symetrix/Ramtron Ferroelectric Cross
License Agreement dated September 13, 1995 between the
Registrant and Symetrix.(10)
*10.12 Amendment dated September 21, 1995 to High-Density FRAM
Cooperation Agreement between the Registrant and Hitachi.(8)
*10.13 Supplement-1 dated September 28, 1995 to Cooperative
Agreement for License Manufacturing of FRAM Product between
the Registrant and Rohm.(10)
*10.14 FRAM Technology License Agreement dated December 19, 1995
between the Registrant and Fujitsu.(10)
*10.15 Amendment No. 2 to High-Density FRAM Cooperation Agreement
dated March 11, 1996 between the Registrant and
Hitachi, Ltd.(1)
*10.16 Amendment to Agreement dated August 30, 1996 between the
Registrant and Fujitsu.(11)
10.17 Amendment No. 1 to Registrant's 1989 Nonstatutory Stock
Option Plan dated October 24, 1996.(1)
10.18 Amendment No. 1 to Registrant's Amended and Restated 1986
Stock Option Plan dated October 24, 1996.(1)
10.19 Amendment No. 1 to Registrant's 1995 Stock Option Plan dated
October 24, 1996.(1)
*10.20 FRAM License Agreement dated December 20, 1996 between the
Registrant and Samsung Electronics Co., Ltd.(2)
10.21 Employment Agreement effective April 1, 1997 between the
Registrant and Richard L. Mohr.(13)
*10.22 Joint Development Agreement between the Registrant and
ULVAC Japan, Ltd., dated April 9, 1997.(12)
*10.23 Amendment No. 3 RF/ID Products to High-Density FRAM
Cooperation Agreement dated January 15, 1998 between the
Registrant, Racom Systems, Inc. and Hitachi, Ltd.(14)
10.24 Employment Agreement effective January 1, 1998 between the
Registrant and Greg B. Jones, dated January 12, 1998.(15)
10.25 Employment Agreement effective July 22, 1998 between the
Registrant and Craig W. Rhodine, dated July 22, 1998.(15)
Page-52
<PAGE>
*10.26 Joint Development Agreement between Fujitsu Limited and the
Registrant dated March 5, 1999.(16)
*10.27 Settlement and License Agreement dated November 9, 1999
between NEC and Enhanced Memory Systems, Inc., a subsidiary of
the Registrant.(18)
*10.28 Agreement between Infineon Technologies AG and Enhanced Memory
Systems, Inc., a subsidiary of the Registrant, as amended,
dated January 26, 2000.(20)
10.29 Employment Agreement effective September 1, 1999 between the
Registrant and Donald G. Carrigan, dated August 29, 1999.
*10.30 Second Amendment to FRAM Technology License Agreement between
Fujitsu Limited and the Registrant dated September 20, 1999.
10.31 Amendment No. 2 to Registrant's 1995 Stock Option Plan dated
December 22, 1999.
10.32 Registrant's 1999 Stock Option Plan.
23.1 Consent of Independent Public Accountants
27.1 Financial Data Schedule
* Confidential treatment has been granted or requested with respect to
portions of this exhibit, and such confidential portions have been deleted and
separately filed with the Securities and Exchange Commission pursuant to Rule
24b-2 or Rule 406.
- -----------
(1) Incorporated by reference to the Company's Annual Report on Form 10-K
(Commission File No. 0-17739) for the year ended December 31, 1996 filed
with the Securities and Exchange Commission on March 26, 1997.
(2) Incorporated by reference to the Company's Amendment No. 1 to the Annual
Report on Form 10-K (Commission File No. 0-17739) for the year ended
December 31, 1996 filed with the Securities and Exchange Commission on
August 29, 1997.
(3) Incorporated by reference to the Company's Form 8-K (Commission File No.
(0-17739) filed with the Securities and Exchange Commission on March 4,
1998.
(4) Incorporated by reference to the Company's Registration Statement Form
S-3 (Registration No. 333-47615) filed with the Securities and Exchange
Commission on March 10, 1998.
(5) Incorporated by reference to the Company's Annual Report on Form 10-K
(Commission File No. 0-17739) for the year ended June 30, 1991, filed with
the Securities and Exchange Commission on September 30, 1991.
(6) Incorporated by reference to the Company's Annual Report on Form 10-K
(Commission File No. 0-17739) for the year ended December 31, 1994 filed
with the Securities and Exchange Commission on April 17, 1995.
Page-53
<PAGE>
(7) Incorporated by reference to Amendment No. 1 to the Company's Annual
Report on Form 10-K under cover of Form 8 (Commission File No. 0-17739)
for the year ended June 30, 1991, filed with the Securities and Exchange
Commission on November 6, 1991.
(8) Incorporated by reference to the Company's Annual Report on Form 10-K
(Commission File No. 0-17739) for the year ended December 31, 1992 filed
with the Securities and Exchange Commission on March 31, 1993.
(9) Incorporated by reference to the Company's Form S-1 Registration
Statement (Registration No. 33-99898) filed with the Securities and
Exchange Commission on December 1, 1995.
(10) Incorporated by reference to the Company's Amendment No. 2 to the Form
S-1 Registration Statement (Registration No. 33-99898) filed with the
Securities and Exchange Commission on January 31, 1996.
(11) Incorporated by reference to the Company's Amendment No. 2 to the Form
10-Q (Commission File No. 0-17739) for the quarter ended September 30,
1996 and filed with the Securities and Exchange Commission on January 23,
1997.
(12) Incorporated by reference to the Company's Form 10-Q (Commission File
No. 0-17739) for the quarter ended March 31, 1997 filed with the
Securities and Exchange Commission on May 14, 1997.
(13) Incorporated by reference to the Company's Annual Report on Form 10-K
(Commission File No. 0-17739) for the year ended December 31, 1997 filed
with the Securities and Exchange Commission on March 30, 1998.
(14) Incorporated by reference to the Company's Form 10-Q (Commission File
No. 0-17739) for the quarter ended March 31, 1998 filed with the
Securities and Exchange Commission on May 15, 1998.
(15) Incorporated by reference to the Company's Annual Report on Form 10-K
(Commission File No. 0-17739) for the year ended December 31, 1998 filed
with the Securities and Exchange Commission on March 26, 1999.
(16) Incorporated by reference to the Company's Form 10-Q (Commission File
No. 0-17739) for the quarter ended March 31, 1999 filed with the
Securities and Exchange Commission on May 14, 1999.
(17) Incorporated by reference to the Company's Form 8-K (Commission File No.
0-17739) filed with the Securities and Exchange Commission on August 31,
1999.
(18) Incorporated by reference to the Company's Form 8-K (Commission File No.
0-17739) filed with the Securities and Exchange Commission on
November 16, 1999.
Page-54
<PAGE>
(19) Incorporated by reference to the Company's Form 8-K (Commission File No.
0-17739) filed with the Securities and Exchange Commission on
December 27, 1999.
(20) Incorporated by reference to the Company's Form 8-K (Commission File No.
0-17739) filed with the Securities and Exchange Commission on
February 18, 2000.
(b) Reports on Form 8-K:
On March 2, 1999, the Registrant filed a report on Form 8-K. The items
reported were Item 5 - "Other Events" and Item 7 - "Financial Statements
and Exhibits."
On May 4, 1999, the Registrant filed a report on Form 8-K. The item
reported were Item 5 - "Other Events" and Item 7 - "Financial Statements
and Exhibits."
On July 2, 1999, the Registrant filed a report on Form 8-K. The item
reported were Item 5 - "Other Events" and Item 7 - "Financial Statements
and Exhibits."
On July 21, 1999, the Registrant filed a report on Form 8-K. The item
reported were Item 5 - "Other Events" and Item 7 - "Financial Statements
and Exhibits."
On August 31, 1999, the Registrant filed a report on Form 8-K. The items
reported were Item 5 - "Other Events" and Item 7 - "Financial Statements
and Exhibits."
On November 16, 1999, the Registrant filed a report on Form 8-K. The item
reported were Item 5 - "Other Events" and Item 7 - "Financial Statements
and Exhibits."
On December 27, 1999, the Registrant filed a report on Form 8-K. The item
reported were Item 5 - "Other Events" and Item 7 - "Financial Statements
and Exhibits."
On February 18, 2000, the Registrant filed a report on Form 8-K. The item
reported were Item 5 - "Other Events" and Item 7 - "Financial Statements
and Exhibits."
On March 17, 2000, the Registrant filed a report on Form 8-K. The item
reported were Item 5 - "Other Events" and Item 7 - "Financial Statements
and Exhibits."
(c) Exhibits - See the list of Exhibits under Item 14(a)3 of this Form 10-K.
(d) Financial Statement Schedules - See the list of Schedules under Item
14(a)2 of this Form 10-K.
Page-55
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, in the County of
El Paso, State of Colorado, on March 29, 2000.
RAMTRON INTERNATIONAL CORPORATION
By: /S/ L. David Sikes
-----------------------
L. David Sikes
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant
and in the capacities and on the date indicated.
Signature Title Date
- -------------------------- ---------------------------- --------------
/S/ L. David Sikes
- -------------------------- Chairman and Chief Executive 3-29-00
L. David Sikes Officer
/S/ William G. Howard
- ------------------------- Director 3-29-00
William G. Howard
/S/ Eric A. Balzer
- ------------------------- Director 3-29-00
Eric A. Balzer
/S/ Albert J. Hugo-Martinez
- --------------------------- Director 3-29-00
Albert J. Hugo-Martinez
/S/ Greg B. Jones
- ------------------------- Director, President and 3-29-00
Greg B. Jones Chief Operating Officer
/S/ LuAnn D. Hanson
- ------------------------- Acting Chief Financial Officer 3-29-00
LuAnn D. Hanson and Vice President of Finance
Page-56
<PAGE>
STATE OF DELAWARE
OFFICE OF SECRETARY OF STATE
I, GLENN C. KENTON, SECRETARY OF STATE OF THE STATE OF DELAWARE DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF AMTEC SECURITIES CORPORATION FILED IN THIS OFFICE ON THE
SEVENTEENTH DAY OF JANUARY, A.D. 1984, AT 9 0'CLOCK A.M.
/S/ Glenn C. Kenton
--------------------
Glenn C. Kenton, Secretary of State
AUTHENTICATION: :0161434
DATE: 01/18/1984
Page-57
<PAGE>
CERTIFICATE OF INCORPORATION
OF
AMTEC SECURITIES CORPORATION
FIRST. The name of the Corporation is:
AMTEC SECURITIES CORPORATION
SECOND. The address of its registered office in the State of Delaware is No.
100 West Tenth Street, in the City of Wilmington, County of New Castle. The
name of its registered agent at such address is The Corporation Trust Company.
THIRD. The nature of the business or purposes to be conducted or promoted by
the Corporation is as follows:
To acquire, develop, license, sell and otherwise market technology of all
kinds, to manufacture, have manufactured, license, sell and otherwise market
products utilizing such technology, to make investments in and to enter into
joint ventures, partnerships and other business ventures with respect to the
foregoing.
To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
FOURTH. The total number of shares of stock which the Corporation shall have
authority to issue is 20,000,000 shares of Common Stock, $.01 par value per
share.
FIFTH. The name and mailing address of the sole incorporator are as follows:
NAME MAILING ADDRESS
- ------------------- -----------------
GENE T. BARTON, JR. C/O HALE AND DORR
60 State Street
Boston, MA 02109
SIXTH. In furtherance of and not in limitation of powers conferred by
statute, it is further provided:
1. Election of directors need not be by written ballot.
2. The Board of Directors is expressly authorized to adopt, amend or repeal
the By-Laws of the Corporation.
Page-58
<PAGE>
SEVENTH. Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the Corporation or of any creditor or stockholder thereof, or on the
application of any receiver or receivers appointed for the Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or any receiver or receivers appointed
for the Corporation under the provisions of section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or
of the stockholders or class of stockholders of the Corporation, as the case
may be, to be summoned in such manner as the said court directs. If a
majority in number representing three-fourths in value of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of the
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of the Corporation as a consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of the Corporation, as the case may be,
and also on the Corporation.
EIGHTH. The Corporation reserves the right to amend, alter, change or repeal
any provision continued in this Certificate of Incorporation, in the manner
now or hereafter prescribed by statue and the Certificate of Incorporation,
and all rights conferred upon stockholders herein are granted subject to this
reservation.
EXECUTED at Boston, on January 12, 1984.
Page-59
<PAGE>
STATE OF DELAWARE
OFFICE OF SECRETARY OF STATE
I, GLENN C. KENTON, SECRETARY OF STATE OF THE STATE OF DELAWARE DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF AMTEC SECURITIES CORPORATION FILED IN THIS OFFICE ON THE
SEVENTEENTH DAY OF AUGUST, A.D. 1984, AT 10 0'CLOCK A.M.
/S/ Glenn C. Kenton
--------------------
Glenn C. Kenton, Secretary of State
AUTHENTICATION: :0314628
DATE: 08/28/1984
Page-60
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
The undersigned, David R. Teplitzky and Ellen B. Corenswet, the President and
Secretary, respectively, of Amtec Securities Corporation, a corporation
organized and existing under and by virtue of the General Corporation Law of
the State of Delaware, DO HEREBY CERTIFY:
FIRST: That the Board of Directors of Amtec Securities Corporation, by a
written action in lieu of a meeting, adopted a resolution setting forth a
proposed amendment to the Certificate of Incorporation of said corporation.
The resolution setting forth the proposed amendment is as follows:
RESOLVED: That Article Fourth of the Certificate of Incorporation of the
corporation be amended to read as follows:
"FOURTH. The total number of shares of capital stock which the
corporation shall have authority to issue shall be thirty million (30,000,000)
shares of Common Stock, $.01 par value per share."
SECOND: That said amendment to the corporation's Certificate of Incorporation
was ratified by a majority of the stockholders of the corporation pursuant to
a written action in lieu of a meeting dated August 15, 1984.
THIRD: That the foregoing amendment to the Certificate of Incorporation has
been duly adopted in accordance with the provisions of Sections 242 and 228 of
the General Corporation Law of the State of Delaware.
FOURTH: That the capital of said corporation will not be reduced under or by
reason of said amendment.
IN WITNESS WHEREOF, Amtec Securities Corporation has caused this certificate
to be signed by David R. Teplitzky, its President, and attested by Ellen B.
Corenswet, its Secretary, this 15th day of August, 1984.
AMTEC SECURITIES CORPORATION
/S/ David R. Teplitzky
By: ----------------------
President
ATTEST:
/S/ Ellen B. Corenswet
By: -----------------------
Secretary
Page-61
<PAGE>
STATE OF DELAWARE
OFFICE OF SECRETARY OF STATE
I, MICHAEL HARKINS, SECRETARY OF STATE OF THE STATE OF DELAWARE DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF AMTEC SECURITIES CORPORATION FILED IN THIS OFFICE ON THE SIXTH
DAY OF JUNE, A.D. 1985, AT 10 0'CLOCK A.M.
/S/ Michael Harkins
--------------------
Michael Harkins, Secretary of State
AUTHENTICATION: :0522211
DATE: 06/07/1985
Page-62
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
The undersigned, David R. Teplitzky and Ellen B. Corenswet, the President and
Secretary, respectively, of Amtec Securities Corporation, a corporation
organized and existing under and by virtue of the General Corporation Law of
the State of Delaware, DO HEREBY CERTIFY:
FIRST: That the Board of Directors of Amtec Securities Corporation by a
written action in lieu of a meeting, adopted a resolution setting forth a
proposed amendment to the Certificate of Incorporation of said corporation.
The resolution setting forth the proposed amendment is as follows:
RESOLVED: That Article Fourth of the Certificate of Incorporation of the
corporation be amended to read as follows:
"FOURTH. The total number of shares of capital stock which the
corporation shall have authority to issue shall be forty million (40,000,000)
shares of Common Stock, $.01 par value per share."
SECOND: That said amendment to the corporation's Certificate of Incorporation
was ratified by a majority of the stockholders of the corporation pursuant to
a written action in lieu of a meeting dated April 23, 1985.
THIRD: That the foregoing amendment to the Certificate of Incorporation has
been duly adopted in accordance with the provisions of Sections 242 and 228 of
the General Corporation Law of the State of Delaware.
FOURTH: That the capital of said corporation will not be reduced under or by
reason of said amendment.
IN WITNESS WHEREOF, Amtec Securities Corporation has caused this certificate
to be signed by David R. Teplitzky, its President, and attested by Ellen B.
Corenswet, its Secretary, this 23 day of April, 1985.
AMTEC SECURITIES CORPORATION
/S/ David R. Teplitzky
By: ----------------------
President
ATTEST:
/S/ Ellen B. Corenswet
By: -----------------------
Secretary
Page-63
<PAGE>
STATE OF DELAWARE
OFFICE OF SECRETARY OF STATE
I, MICHAEL HARKINS, SECRETARY OF STATE OF THE STATE OF DELAWARE DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF AMTEC SECURITIES CORPORATION FILED IN THIS OFFICE ON THE TWENTY-
SEVENTH DAY OF JANUARY, A.D. 1988, AT 9 0'CLOCK A.M.
/S/ Michael Harkins
--------------------
Michael Harkins, Secretary of State
AUTHENTICATION: :1562788
DATE: 01/27/1988
Page-64
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
AMTEC SECURITIES CORPORATION,
a Delaware Corporation
The undersigned, Ross Lyndon-James and William G. Skolout, hereby certify that
they are the President and Secretary, respectively, of Amtec Securities
Corporation, a Delaware Corporation (the "Corporation"), and further certify
that:
FIRST: That the Board of Directors of the Corporation, adopted resolutions
setting forth proposed amendments to the Certificate of Incorporation of the
Corporation. The resolutions setting forth the proposed amendments state as
follows:
"NOW, THEREFORE, BE IT RESOLVED, that Article Fourth of the Certificate
of Incorporation of the Corporation be amended to read as follows:
'FOURTH: The total number of the shares of capital stock which the
Corporation shall have authority to issue shall be sixty million (60,000,000)
shares of common stock, $.01 par value per share.'"
NOW, THEREFORE, BE IT FURTHER RESOLVED, that the Corporation change its
name to Ramtron International Corporation and that Article First of the
Certificate of Incorporation be so amended".
SECOND: That said Amendments to the Corporation's Certificate of
Incorporation were ratified by the holder of a majority of the outstanding
shares of common stock of the corporation pursuant to a Board Resolution.
THIRD: That written notice of such Amendments to the Corporation's
Certificate of Incorporation have been given to shareholders who did not
consent in writing, as provided in Section 228 (c) of the Delaware General
Corporation Law.
FOURTH: That the foregoing amendments to the Corporation's Certificate of
Incorporation have been duly adopted in accordance with the provisions of
Sections 242 and 228 of the Delaware General Corporation Law.
FIFTH: That the capital of said Corporation will not be reduced under or by
reason of said amendments.
IN WITNESS WHEREOF, Amtec Securities Corporation has caused the Certificate to
be signed by Ross Lyndon-James, its President, and attested by William G.
Skolout, its Secretary, this 23 day of October, 1987.
AMTEC SECURITIES CORPORATION
/S/ Ross Lyndon-James
By: ----------------------
President
ATTEST:
/S/ William G. Skolout
By: -----------------------
Secretary
Page-65
<PAGE>
STATE OF DELAWARE
OFFICE OF SECRETARY OF STATE
I, MICHAEL HARKINS, SECRETARY OF STATE OF THE STATE OF DELAWARE DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF RAMTRON INTERNATIONAL CORPORATION FILED IN THIS OFFICE ON THE
THIRTEENTH DAY OF MARCH, A.D. 1989, AT 10 0'CLOCK A.M.
/S/ Michael Harkins
--------------------
Michael Harkins, Secretary of State
AUTHENTICATION: :2096663
DATE: 03/13/1989
Page-66
<PAGE>
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION OF
RAMTRON INTERNATIONAL CORPORATION
Ramtron International Corporation, a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware, does
hereby certify:
FIRST: That at a meeting of the Board of Directors of Ramtron International
Corporation, resolutions were duly adopted setting forth a proposed amendment
of the Certificate of Incorporation of said corporation, declaring said
amendment to be advisable and calling a meeting of the stockholders of said
corporation for consideration thereof. The resolution setting forth the
proposed amendment is as follows:
RESOLVED, that Article FOURTH of the Corporation's Certificate of
Incorporation be and, subject to the approval of a majority of the holders of
the Corporation's outstanding shares, is hereby amended to increase the
authorized number of shares of the existing Common Stock from 60,000,000
shares to 100,000,000 shares; and to create a new class of 25,000,000 shares
of Nonvoting Common Stock, denominated Class A Nonvoting Common Stock, with a
par value of $0.01 per share, and to state the rights of those shares, which
said Article FOURTH is amended to read in full as follows:
"FOURTH. The total number of shares of all classes of common stock which
the Corporation shall have authority to issue is 125,000,000 shares, all of
which shall be of the par value of one cent ($0.01) each. The common stocks
shall be divided into two classes, consisting of 100,000,000 shares designated
Common Stock and 25,000,000 shares designated Class A Nonvoting Common Stock.
The powers, preferences and rights of the Common Stock and the Class A
Nonvoting Common Stock shall be identical in all respects, share for share,
except that the shares of Common Stock shall entitle the holder thereof to one
(1) vote for each share on all matters on which stockholders are entitled or
required to vote, and the shares of Class A Nonvoting Common Stock shall not
entitle the holder thereof to any voting rights whatever. No dividends may be
declared or paid and no other distributions of cash, securities or property
may be made by the Corporation in respect of any shares of Common Stock unless
simultaneously therewith a dividend or distribution identical on a per-share
basis is declared, paid or made, as the case may be, in respect of all
outstanding shares of Class A Nonvoting Common Stock. The Corporation may not
enter into any agreement to effect any merger, consolidation or similar
transaction, or effect any merger, consolidation or similar transaction, that
provides or results in the conversion, exchange or repurchase of shares of its
Common Stock and Class A Nonvoting Common Stock unless the consideration to be
received by the holders thereof is identical on a per-share basis.
This amendment shall be effective at 4:15 P.M. on the date that such
amendment is filed with the Secretary of State of the State of Delaware."
Page-67
<PAGE>
SECOND: That thereafter, pursuant to resolution of its Board of Directors, a
majority of the stockholders of said corporation, in accordance with Section
228 of the General Corporation Law of the State of Delaware, consented in
writing to the amendment and gave prompt written notice of the taking of such
corporate action to those stockholders who did not consent thereto in writing.
The necessary number of shares as required by statute was voted in favor of
the amendment.
THIRD: That said amendment was duly adopted in accordance with the provisions
of Sections 242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, said Ramtron International Corporation has caused this
certificate to be signed by Richard Horton, its President, and Jerald A.
Bollinger, its Secretary, this 13 day of March, 1989.
RAMTRON INTERNATIONAL CORPORATION
/S/ Richard L. Horton
By: ----------------------
President
ATTEST:
/S/ Jerald A. Bollinger
By: ------------------------
Secretary
Page-68
<PAGE>
STATE OF DELAWARE
OFFICE OF SECRETARY OF STATE
I, MICHAEL HARKINS, SECRETARY OF STATE OF THE STATE OF DELAWARE DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF RAMTRON INTERNATIONAL CORPORATION FILED IN THIS OFFICE ON THE
NINETEENTH DAY OF APRIL, A.D. 1991, AT 9 0'CLOCK A.M.
/S/ Michael Harkins
--------------------
Michael Harkins, Secretary of State
AUTHENTICATION: *3826688
DATE: 04/23/1991
Page-69
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
Ramtron International Corporation, a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation, at a meeting duly
held, adopted a resolution proposing and declaring advisable the following
amendments to the Certificate of Incorporation of said corporation:
RESOLVED, that the Certificate of Incorporation of Ramtron International
Corporation be amended by changing the FOURTH Article thereof so that, as
amended, said Article shall be and read as follows:
"FOURTH. The total number of shares of capital stock which the
Corporation shall have authority to issue is 145,000,000 shares, consisting of
125,000,000 shares of Common Stock, $0.01 par value per share (the "Common"),
and 20,000,000 shares of Preferred Stock, $0.01 par value per share (the
"Preferred").
The Common Shall be divided into two classes, consisting of 100,000,000
shares designated Common Stock and 25,000,000 shares designated Class A
Nonvoting Common Stock. The powers, preferences and rights of the Common
Stock and the Class A Nonvoting Common Stock shall be identical in all
respects, share for share, except that the shares of Common Stock shall
entitle the holder thereof to one (1) vote for each share on all matters on
which stockholders are entitled or required to vote, and the shares of Class A
Nonvoting Common Stock shall not entitle the holder thereof to any voting
rights, with the exception that holders of Class A Nonvoting Common Stock may
vote, together with the holders of Common Stock as a single class, on the
proposed liquidation or dissolution of the Corporation, the sale of
substantially all of the assets of the Corporation in one transaction or a
series of related transactions and on the proposed merger or consolidation of
the Corporation with another corporation or entity. No dividends may be
declared or paid and no other distributions of cash, securities or property
may be made by the Corporation in respect of any shares of Common Stock unless
simultaneously therewith a dividend or distribution identical on a per-share
basis is declared, paid or made, as the case may be, in respect of all
outstanding shares of Class A Nonvoting Common Stock. The Corporation may not
enter into any agreement to effect any merger, consolidation or similar
transaction, or effect any merger, consolidation or similar transaction, that
provides or results in the conversion, exchange or repurchase of shares of its
Common Stock and Class A Nonvoting Common Stock unless the consideration to be
received by the holders thereof is identical on a per-share basis.
Page-70
<PAGE>
The board of directors is authorized, subject to any limitation
prescribed by Law, to provide for the issuance of the shares of Preferred in
one or more series, and by filing a certificate pursuant to the applicable law
of the State of Delaware, to establish from time to time the number of shares
to be included in each such series, and to fix the designations, powers,
preferences, and rights of the shares of each such series and any
qualifications, limitations or restrictions thereof. The number of authorized
shares of Preferred may be increased or decreased (but not below the number of
shares thereof then outstanding) by the affirmative vote of the holders of a
majority of the Common Stock, without a vote of the holders of Preferred, or
of any series thereof, unless a vote of such holders, is required pursuant to
the certificate or certificates establishing the series of Preferred."
FURTHER RESOLVED, that the Certificate of Incorporation of Ramtron
International Corporation be amended by adding a new NINTH Article thereof so
that said Article shall be and read as follows:
"NINTH. The personal liability of the directors of the Corporation is
hereby eliminated to the fullest extent permitted by paragraph (7) of
subsection (b) of Section 102 of the General Corporation Law of the State of
Delaware, as may be hereafter amended and supplemented."
SECOND: That at a meeting duly held, the majority of stockholders have given
consent to said amendments in accordance with the provisions of Section 216 of
the General Corporation Law of the State of Delaware.
THIRD: That the aforesaid amendments were duly adopted in accordance with the
applicable provisions of Section 216 and 242 of the General Corporation Law of
the State of Delaware.
IN WITNESS WHEREOF, said Ramtron International Corporation has caused this
certificate to be signed by Richard L. Horton, its President, and attested by
David M. Becker, its Secretary, this 18 day of April, 1991.
RAMTRON INTERNATIONAL CORPORATION
/S/ Richard L. Horton
By: ----------------------
President
ATTEST:
/S/ David M. Becker
By: --------------------
Secretary
Page-71
<PAGE>
STATE OF DELAWARE
OFFICE OF SECRETARY OF STATE
I, MICHAEL RATCHFORD, SECRETARY OF STATE OF THE STATE OF DELAWARE DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
OWNERSHIP OF RAMTRON INTERNATIONAL CORPORATION, A CORPORATION ORGANIZED AND
EXISTING UNDER THE LAWS OF THE STATE OF DELAWARE, MERGING RAMTRON CORPORATION
A CORPORATION ORGANIZED AND EXISTING UNDER THE LAWS OF THE STATE OF DELAWARE,
PURSUANT TO SECTION 253 OF THE GENERAL CORPORATION LAW OF THE STATE OF
DELAWARE, AS RECEIVED AND FILED IN THIS OFFICE THE TWENTY-THIRD DAY OF
DECEMBER, A.D. 1991, AT 9 0'CLOCK A.M.
AND I DO HEREBY FURTHER CERTIFY THAT THE AFORESAID CORPORATION SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF DELAWARE.
/S/ Michael Ratchford
---------------------
Michael Ratchford, Secretary of State
AUTHENTICATION: *3340594
DATE: 02/10/1992
Page-72
<PAGE>
CERTIFICATE OF OWNERSHIP AND MERGER
Pursuant to the provisions of Section 253 of the Delaware Corporation Code,
the undersigned, Ramtron International Corporation, a Delaware Corporation
("Corporation"), adopts the following Certificate of Ownership and Merger for
the purpose of merging Ramtron Corporation, a Delaware Corporation
("Subsidiary"), into the Corporation:
1. The name of the Corporation is Ramtron International Corporation.
2. The name of the Subsidiary is Ramtron Corporation.
3. The Corporation owns One Hundred Percent (100%) of the issued and
outstanding capital stock of the Subsidiary.
4. Pursuant to the Resolution of the Board of Directors of the Corporation
attached hereto as Exhibit "A," on June 18, 1991 the Board of Directors of the
Corporation authorized and approved in writing the merger of the Subsidiary
into the Corporation, such merger to be effective as of December 4, 1991.
5. All debts, obligations, and liabilities of the Subsidiary have been and
shall be assumed and discharged by the Corporation effective as of the date of
such merger.
6. All of the rights, property, and assets of the Subsidiary have been and
shall be transferred, conveyed, and assigned to the Corporation effective as
of the date of such merger.
Dated: December 4, 1991
RAMTRON INTERNATIONAL CORPORATION,
A Delaware Corporation
By: /S/George J. Stathakis
----------------------
George J. Stathakis, Chief Executive Officer
By: /S/David M. Becker
---------------------
David M. Becker, Secretary
Page-73
<PAGE>
EXHIBIT A
RESOLUTION OF THE
BOARD OF DIRECTORS OF RAMTRON INTERNATIONAL CORPORATION
RESOLVED, that the Board of Directors of Ramtron International Corporation, a
Delaware Corporation ("Corporation"), deems it desirable and in the best
interest of the Corporation and its shareholders that the Corporation cause
Ramtron Corporation, a Delaware Corporation ("Subsidiary"), to be merged into
the Corporation pursuant to Section 253 of the Delaware Corporation Code, with
the Corporation surviving such merger ("Merger"), and that, in connection
therewith, the Corporation assume all the obligations and liabilities of the
Subsidiary and succeed to all of the rights, properties and assets of the
Subsidiary.
FURTHER RESOLVED, that the Chief Executive Officer, President, any Vice
President, Chief Financial Officer and each other officer of the Corporation
be, and each of them hereby is, authorized, for and in the name and on behalf
of the Corporation to take or cause to be taken such action and to execute and
deliver or cause to be executed and delivered, all such instruments and
agreements as any such officer may deem to be necessary or advisable in order
to consummate the Merger, to effect the purposes and intentions of the
foregoing resolutions, and to be in the best interest of the Corporation (as
conclusively evidenced by the taking of such action or the execution and
delivery of such instruments or documents, as the case may be, by or under the
direction of any such officer), including, without limitation, the execution
and filing of any certificate of ownership and merger, together with a copy of
these resolutions, and all actions heretofore taken by each of such officers
of the Corporation in connection with the subjects of the foregoing
resolutions be, and they hereby are, approved, ratified and confirmed in all
respects as the acts and deeds of the Corporation.
FURTHER RESOLVED, that any specific resolutions required for the purposes of
carrying out the transactions contemplated by the foregoing resolutions,
including, without limitation, the Merger, are hereby deemed adopted and may
be certified as having been adopted by the Board of Directors of the
Corporation provided that a copy thereof is inserted in the minute book of the
Corporation following these resolutions.
Page-74
<PAGE>
STATE OF DELAWARE
OFFICE OF SECRETARY OF STATE
I, MICHAEL RATCHFORD, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF "RAMTRON INTERNATIONAL CORPORATION" FILED IN THIS OFFICE ON THE
TWENTY-NINTH DAY OF JUNE, A.D. 1992, AT 9 0'CLOCK A.M.
/S/ Michael Ratchford
---------------------
Michael Ratchford, Secretary of State
AUTHENTICATION: *3502661
DATE: 06/29/1992
Page-75
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
Ramtron International Corporation, a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware.
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation, at a meeting held,
adopted a resolution proposing and declaring advisable the following amendment
to the Certificate of Incorporation of said corporation.
"FOURTH. The total number of shares of capital stock which the
Corporation shall have authority to issue is 63,500,000, consisting of
53,500,000 shares of Common Stock, $0.01 par value per share (the "Common"),
and 10,000,000 shares of Preferred Stock, $0.01 par value per share (the
"Preferred").
The Common shall be divided into two classes, consisting of 50,000,000
shares designated Common Stock and 3,500,000 shares designated Class A
Nonvoting Common Stock. The powers, preferences and rights of the Common
Stock and the Class A Nonvoting Common Stock shall be identical in all
respects, share for share, except that the shares of Common Stock shall
entitle the holder thereof to one (1) vote for each share on all matters on
which stockholders are entitled or required to vote, and the shares of Class A
Nonvoting Common Stock shall not entitle the holder thereof to voting rights,
with the exception that holders of Class A Nonvoting Common Stock may vote,
together with the holders of Common Stock as a single class, on the proposed
liquidation or dissolution of the Corporation, the sale of substantially all
of the assets of the Corporation in one transaction or a series of related
transactions and on the proposed merger or consolidation of the Corporation
with another corporation or entity. No dividends may be declared or paid and
no other distributions of cash, securities or property may be made by the
Corporation in respect of any shares of Common Stock unless simultaneously
therewith a dividend or distribution identical on a per-share basis is
declared, paid or made, as the case may be, in respect of all outstanding
shares of Class A Nonvoting Common Stock. The Corporation may not enter into
any agreement to effect any merger, consolidation or similar transaction, or
effect any merger, consolidation or similar transaction, that provides or
results in the conversion, exchange or repurchase of shares of its Common
Stock and Class A Nonvoting Common Stock unless the consideration to be
received by the holders thereof is identical on a per-share basis.
Page-76
<PAGE>
At the effective time of this amendment, each outstanding share of Common
Stock and shares of Common Stock held as treasury shares shall be converted
into and be reconstituted as one-seventh share of Common Stock. No fractional
shares shall be issued upon such conversion and reconstitution, and the number
of shares of Common Stock to be issued shall be rounded down to the nearest
whole share. If a fractional interest in a share of Common Stock would,
except for the provisions of the preceding sentence, be deliverable upon such
conversion and reconstitution, the Corporation shall pay an amount in cash
equal to the fair market value of such fractional interest, as determined by
the Corporation's Board of Directors, to each holder of Common Stock to whom
such fractional interest would have been deliverable.
The Board of Directors is authorized, subject to any limitations
prescribed by law, to provide for the issuance of the shares of Preferred in
one or more series, and by filing a certificate pursuant to the applicable law
of the State of Delaware, to establish from time to time the number of shares
to be included in each such series, and to fix the designations, powers,
preferences, and rights of the shares of each such series and any
qualifications, limitations or restrictions thereof. The number of authorized
shares of Preferred may be increased or decreased (but not below the number of
shares thereof then outstanding) by the affirmative vote of the holders of a
majority of the Common Stock, without a vote of the holders of the Preferred,
or of any series thereof, unless a vote of such holders is required pursuant
to the certificate or certificates establishing the series of Preferred."
SECOND: That holders of a majority of the outstanding common stock of the
Company have approved said amendment by written consent in accordance with the
provisions of Section 228 of the General Corporation Law of the State of
Delaware.
THIRD: That the aforesaid amendments were duly adopted in accordance with the
applicable provisions of Section 228 of the General Corporation Law of the
State of Delaware.
IN WITNESS WHEREOF, said Ramtron International Corporation has caused this
certificate to be signed by Richard L. Horton, its President, and attested by
David M. Becker, its Secretary, this 5th day of June 1992.
Ramtron International Corporation
By: /S/ George J. Stathakis
-----------------------
George J. Stathakis, Chief Executive Officer
ATTEST:
By: /S/ David M. Becker
-------------------
David M. Becker, Secretary
Page-77
<PAGE>
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
I, MICHAEL RATCHFORD, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF STOCK
DESIGNATION OF "RAMTRON INTERNATIONAL CORPORATION" FILED IN THIS OFFICE ON THE
SIXTEENTH DAY OF NOVEMBER, A.D. 1992, AT 1:43 0'CLOCK P.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO NEW CASTLE COUNTY
RECORDER OF DEEDS ON THE SIXTEENTH DAY OF NOVEMBER, A.D. 1992 FOR RECORDING.
/S/ Michael Ratchford
---------------------
Michael Ratchford, Secretary of State
AUTHENTICATION: *3661985
DATE: 11/16/1992
Page-78
<PAGE>
CERTIFICATE OF DESIGNATION, PREFRENCES, RIGHTS, AND
LIMITATIONS OF
SERIES A CUMULATIVE CONVERTIBLE PREFERRED STOCK, $14 PAR
VALUE OF
RAMTRON INTERNATIONAL CORPORATION
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
RAMTRON INTERNATIONAL CORPORATION (hereinafter 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 of Section 151 of the Delaware Corporation Law, said Board of
Directors, at a meeting duly held on October 30, 1992, duly adopted a
resolution providing for the issuance of a series of 1,365,046 shares of
Series A Cumulative Convertible Preferred Stock, $0.01 Par Value, which
resolution is as follows:
RESOLVED, that pursuant to the authority expressly granted and vested in
the Board of Directors of this Corporation in accordance with the provisions
of its Certificate of Incorporation, as amended, a series of Preferred Stock
of the Corporation be and it hereby is given the distinctive designation of
Series A Cumulative Convertible Preferred Stock, $0.01 Par Value (hereinafter
referred to as the "Series A Preferred Stock"), said Series to consist of
1,365,046 shares of the par value of $0.01 per share, of which the preferences
and relative, participating, optional or other special rights, and the
qualifications, limitations or restrictions thereof, shall be as follows:
1. Dividends on Series A Preferred Stock. The holders of the Series A
Preferred Stock shall be entitled to receive, when and as declared by the
Board of Directors out of the funds of the Corporation legally available
therefor, cumulative dividends at the annual rate of eight percent (8%) per
annum calculated on a stated value of $14.00 per share of Series A Preferred
Stock; provided, however, that dividends on the Series A Preferred Stock shall
be payable only in Common Stock of the Corporation which, for purposes of such
dividends, shall have a deemed value of $14.00 per share of Common Stock. Any
fractional shares of the Corporation's Common Stock otherwise issuable
pursuant to this paragraph shall be rounded to the nearest whole share. If
the dividend on the Series A Preferred Stock for any dividend period shall not
have been paid or set apart in full for the Series A Preferred Stock, the
aggregate deficiency shall be cumulative and shall be fully paid or set apart
for payment before any dividends shall be paid upon or set apart for payment
for any class of Common Stock of the Corporation. Accumulations of dividends
on the Series A Preferred Stock shall not bear interest.
Page-79
<PAGE>
2. Conversion of Series A Preferred Stock into Common Stock.
(a) Subject to the provisions of this paragraph 2, the holder of record
of any share or shares of Series A Preferred Stock shall have the right, at
his option, at any time after the issuance of said shares and prior to
June 30, 1993, to convert each said share of Series A Preferred Stock into one
fully paid and non-assessable share of Common Stock of the Corporation.
(b) Any holder of a share of Series A Preferred Stock desiring to convert
such Series A Preferred Stock into Common Stock of the Corporation shall
surrender the certificate or certificates representing the share or shares of
Series A Preferred Stock so to be converted, duly indorsed to the Corporation
or in blank, at the principal office of the Corporation (or such other place
as may be designated by the Corporation), and shall given written notice to
the Corporation at said office that he elects to convert the same, and setting
forth the name or names (with the address or addresses) in which the shares of
Common Stock are to be issued.
If the last day for the exercise of the conversion right in the city where the
principal place of business of the Corporation (or in the city of the
principal office of such other entity as the Corporation shall have designated
as the place so to surrender Series A Preferred Stock for conversion, as
aforesaid) shall be a legal holiday or a day on which banking institutions are
authorized by law to close, then such conversion right may be exercised in
such city on the next succeeding day not in such city a legal holiday or a day
on which banking institutions are authorized by law to close.
(c) Conversion of the Series A Preferred Stock shall be subject to the
following additional terms and provisions:
(1) As promptly as practicable after the surrender for conversion of
any Series A Preferred Stock, the Corporation shall deliver or cause to be
delivered at the principal office of the Corporation (or such other place as
may be designated by the Corporation), to or upon the written order of the
holder of such Series A Preferred Stock, certificates representing the shares
of Common Stock issuable upon such conversion, issued in such name or names as
such holder may direct. Shares of the Series A Preferred Stock shall be
deemed to have been converted as of the close of business on the date of the
surrender of the Series A Preferred Stock for conversion, as provided above,
and the rights of the holders of such Series A Preferred Stock shall cease at
such time, and the person or persons in whose name or names the certificates
for such shares are to be issued shall be treated for all purposes as having
become the record holder or holders of such Common Stock at such time;
provided, however, that any such surrender on any date when the stock transfer
books of the Corporation shall be closed shall constitute the person or
persons in whose name or names the certificates for such shares are to be
issued as the record holder or holders thereof for all purposes at the close
of business on the next succeeding day on which such stock transfer books are
open.
Page-80
<PAGE>
(2) The Corporation shall at the time of such conversion pay to the
holder of record of any share or shares of Series A Preferred Stock any
accrued but unpaid dividends on said Series A Preferred Stock so surrendered
for conversion, in accordance with paragraph (1) above.
(3) In the event that the Corporation shall at any time subdivide or
combine into a greater or lesser number of shares the outstanding shares of
Common Stock, the number of shares of Common Stock issuable upon conversion of
the Series A Preferred Stock shall be proportionately increased in the case of
subdivision or decreased in the case of combination, effective in either case
at the close of business on the date when such subdivision or combination
shall become effective.
(4) No adjustment of the conversion ratio shall be made by reason of
the issuance, other than as provided in subparagraph (3) above, of any shares
of Common Stock of the Corporation, or of any securities convertible into
shares of Common Stock or other securities of the Corporation, or of any
rights, warrants or options to subscribe for or purchase shares of Common
Stock or other securities of the Corporation, or of any other securities of
the Corporation, provided that in the event the Corporation offers any of its
Common Stock pursuant to any rights that may be granted to such holders of
Common Stock by the Board of Directors of the Corporation, the Corporation
shall mail written notice of such offer to the holders of the Series A
Preferred Stock then of record at least twenty (20) days prior to the record
date for the determination of holders of the Common Stock entitled to receive
any such offer.
(5) The Corporation shall at all times reserve and keep available
solely for the purpose of issue upon conversion of Series A Preferred Stock,
as herein provided, such number of shares of Common Stock as shall be issuable
upon the conversion of all outstanding shares of Series A Preferred Stock.
3. Redemption of Series A Preferred Stock.
(a) The Series A Preferred Stock shall be redeemed mandatorily without
further action or resolution of the Corporation's Board of Directors,
on June 30, 1993, if the Series A Preferred Stock has not been converted into
Common Stock, as provided in paragraph 2 above, prior to such date. Each
share of Series A Preferred Stock shall be redeemed for one fully paid and
non-assessable share of Common Stock of the Corporation.
(b) Upon such redemption date, the holders of shares of Series A
Preferred Stock shall cease to be stockholders with respect to such shares and
shall have no interest in or claim against the Corporation by virtue thereof
and shall have no voting or other rights with respect to such shares, except
the right to receive the shares of Common Stock of the Corporation payable
upon such redemption from the Corporation upon surrender (and indorsement, if
required by the Corporation) of the certificates, and the shares represented
thereby shall no longer be deemed to be outstanding.
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(c) The Corporation shall, at the time of such redemption, pay to the
holder of record of any share or shares of Series A Preferred Stock any
accrued but unpaid dividends on said Series A Preferred Stock so surrendered
for redemption, in accordance with paragraph 1 above.
(d) The Corporation shall at all times reserve and keep available solely
for the purpose of issue upon redemption of Series A Preferred Stock, as
herein provided, such number of shares of Common Stock as shall be issuable
upon the redemption of all outstanding shares of Series A Preferred Stock.
4. Voting Rights. Except as may be otherwise provided in this Certificate of
Incorporation or by applicable law, the holder(s) of Series A Preferred Stock
shall not be entitled to any vote in respect of such Series A Preferred Stock
at any meeting of stockholders of the Corporation.
5. Redemption of Series A Preferred Stock in the Event of Dissolution. In
the event of any liquidation, dissolution or winding-up of the affairs of the
Corporation, whether voluntary or otherwise, the holders of the Series A
Preferred Stock shall be entitled to receive one fully paid and non-assessable
share of Common Stock of the Corporation for each share of Series A Preferred
Stock, plus an amount of Common Stock, calculated in accordance with paragraph
1 above, equal to all dividends accrued and unpaid on each such share up to
the date fixed for distribution. Thereafter, the holders of such Common Stock
shall be treated equally with the other holders of Common Stock of the
Corporation with respect to such liquidation, dissolution or winding-up of the
affairs of the Corporation.
6. Limitations on Corporation; Shareholder Consent. So long as any shares of
Series A Preferred Stock are outstanding, the Corporation shall not, without
the affirmative vote or the written consent, as provided by law, of the
holders of at least two-thirds (2/3) of the outstanding shares of Series A
Preferred Stock, voting as a class, change the preferences, rights or
limitations with respect to the Series A Preferred Stock in any material
respect prejudicial to the holders thereof, or increase the authorized number
of shares of Series A Preferred Stock; but nothing herein contained shall
require such a class vote or consent (a) in connection with any increase or
decrease in the total number of authorized shares of Common Stock, (b) in
connection with the authorization, designation, increase or issuance of any
class or series of stock ranking on a party with the Series A Preferred Stock,
(c) in connection with the creation of additional series of Preferred Stock,
having such powers and relative, participating, optional or other special
rights as shall be stated in the resolution or resolutions providing for the
issue of such series of Preferred Stock as may be adopted thereof, in
accordance with the laws of the State of Delaware, or (d) in connection with
the issuance of any presently authorized but unissued shares of Preferred
Stock.
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IN WITNESS WHEREOF, Ramtron International Corporation has caused this
Certificate to be executed by its President and by its Secretary, this 12th
day of November, 1992.
L. David Sikes
/S/ L. David Sikes
- ------------------
President
David M. Becker
/S/ David M. Becker
- -------------------
Secretary
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STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
I, WILLIAM T. QUILLEN, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF STOCK
DESIGNATION OF "RAMTRON INTERNATIONAL CORPORATION" FILED IN THIS OFFICE ON THE
TENTH DAY OF DECEMBER, A.D. 1993, AT 3 0'CLOCK P.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO NEW CASTLE COUNTY
RECORDER OF DEEDS ON THE THIRTEENTH DAY OF DECEMBER, A.D. 1993 FOR RECORDING.
/S/ William T. Quillen
----------------------
William T. Quillen, Secretary of State
AUTHENTICATION: *4187627
DATE: 12/13/1993
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<PAGE>
CERTIFICATE OF DESIGNATIONS,
PREFRENCES, RIGHTS, AND LIMITATIONS OF
SERIES B CONVERTIBLE PREFERRED STOCK
AND
SERIES C CONVERTIBLE PERFORMANCE RIGHT PREFERRED STOCK
OF
RAMTRON INTERNATIONAL CORPORATION
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
RAMTRON INTERNATIONAL CORPORATION (hereinafter called the "Corporation"), a
Delaware corporation, does hereby certify:
THAT, pursuant to the authority conferred upon the Board of Directors by the
Certificate of Incorporation, as amended, of the Corporation, and pursuant to
the provisions of Section 151 of the Delaware Corporation Law, said Board of
Directors, at a meeting held on December 1, 1993, duly adopted the following
resolutions; providing for the issuance of a series of 3,600,000 shares of
Series B Convertible Preferred Stock and a series of 3,600,000 shares of
Series C Convertible Performance Right Preferred Stock:
I. Series B Convertible Preferred Stock.
RESOLVED, that pursuant to the authority expressly granted and vested in
the Board of Directors of this Corporation in the Certificate of
Incorporation, as amended, a series of Preferred Stock of the Corporation be
and it hereby is authorized, and, as so authorized, is designated "Series B
Convertible Preferred Stock" (hereinafter called the "Series B Convertible
Preferred Stock"), said series to consist of 3,600,000 shares, of $0.01 par
value per share, of which the preferences and relative, participating,
optional or other special rights, and the qualifications, limitations or
restrictions thereof, shall be as follows:
(a) Dividends on Series B Convertible Preferred Stock. The holders of
outstanding Series B Convertible Preferred Stock shall not be entitled to
receive any dividends.
(b) Redemption. Except as provided in Section (c)(2) hereof, the Series
B Convertible Preferred Stock shall not be subject to redemption at any time.
(c) Preference on Liquidation.
(1) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation (any such instance hereinafter
called a "Liquidation"):
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(i) Subject to the rights of any class or series of stock of the
Corporation hereafter issued and ranking senior to the Series B Convertible
Preferred Stock, upon liquidation, dissolution or winding up of the
Corporation, the holders of shares of the Series B Convertible Preferred Stock
then outstanding shall be entitled to be paid, out of the assets of the
Corporation available for distribution to its stockholders, prior to and in
preference of any distribution of any of the assets or surplus funds of the
Corporation to the holders of the Common Stock (hereinafter called "Common
Stock") and Class A Nonvoting Common Stock (hereinafter called "Class A
Nonvoting Common Stock") of the Corporation or of any other shares of the
Corporation hereafter issued that upon liquidation are junior to the Series B
Convertible Preferred Stock (such Common Stock, Class A Nonvoting Common Stock
and such other shares being hereinafter collectively called "Junior Shares")
by reason of their ownership thereof, an amount equal to $9.00 per share of
the Series B Convertible Preferred Stock (hereinafter called the "Liquidation
Preference"). Upon receipt of such amount, holders of Series B Convertible
Preferred Stock will not share in any additional proceeds, whether of cash or
other property, that may result from such Liquidation. If, upon Liquidation
of the Corporation, the assets of the Corporation available for distribution
to its stockholders shall be insufficient to pay to the holders of the Series
B Convertible Preferred Stock the full amounts to which they otherwise would
be entitled, the holders of the Series B Convertible Preferred Stock and any
stock ranking on a parity thereto with respect to liquidation, dissolution or
winding up shall share ratably in any distribution of assets according to the
respective amounts which would have been payable in respect to the shares of
the Series B Convertible Preferred Stock and such parity stock held by them
upon such distribution if all amounts payable on or with respect to said
shares were paid in full.
(ii) All of the preferential amounts to be paid to the holders of
Series B Convertible Preferred Stock under this Section (c)(1) shall be paid
or set apart for payment prior to payment or setting apart for payment of any
amount for, or the distribution of any amounts to, the holders of any Junior
Shares in connection with any Liquidation. After setting apart or paying in
full the preferential amounts due the holders of the Series B Convertible
Preferred Stock, the remaining assets of the Corporation available for
distribution to stockholders, if any, shall be distributed to the holders of
Junior Shares pursuant to the respective priorities of such shares.
(2) Without first obtaining the approval by vote or written consent
in the manner provided by law of the holders of at least a majority of the
total number of shares of the Series B Convertible Preferred Stock then
outstanding, voting separately as a class, the Corporation shall not sell or
otherwise transfer for value all or substantially all of its assets or merge
or consolidate with another entity if such merger or consolidation would
result in the exchange of the outstanding shares of the Corporation for
securities or consideration issued, or caused to be issued, by the surviving
corporation, its subsidiary or parent (except for a merger or consolidation
after the consummation of which the stockholders of the Corporation own in
excess of fifty percent (50%) of the voting securities of the surviving
corporation or its parent corporation), unless immediately prior to such sale,
transfer for value, merger or consolidation each outstanding share of the
Series B Convertible Preferred Stock is redeemed out of funds legally
available therefor for an amount equal to the Liquidation Preference.
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<PAGE>
(i) At least thirty (30), but not more than sixty (60), days
prior to the date fixed for the redemption of shares of Series B Convertible
Preferred Stock in accordance with this Section (c)(2), a written notice shall
be mailed in a postage prepaid envelope to each holder of record of shares of
Series B Convertible Preferred Stock to be redeemed, addressed to such holder
at such holder's post office address as shown on the records of the
Corporation, notifying such holder of the redemption of such shares, stating
the date fixed for redemption thereof (the "Redemption Date"), and calling
upon such holder to surrender to the Corporation, on the Redemption Date at
the place designated in such notice, such holder's certificate or certificates
representing the number of shares specified in such notice of redemption. On
or after the Redemption Date, such holder of shares of Series B Convertible
Preferred Stock to be redeemed shall present and surrender such holder's
certificate or certificates for such shares to the Corporation at the place
designated in such notice and thereupon the redemption price of such shares
shall be paid to the order of the person whose name appears on such
certificate or certificates as the owner thereof and each surrendered
certificate shall be canceled.
(ii) At its election, the Corporation, prior to the Redemption
Date, may deposit the redemption price of the shares of Series B Convertible
Preferred Stock so called for redemption in trust for the holders thereof with
a bank or trust company in any city in which the Corporation at the time shall
maintain a transfer agency with respect to such shares, in which case the
aforesaid notice of holders of shares of Series B Convertible Preferred Stock
to be redeemed shall (a) state the date of such deposit, (b) specify the
office of such bank or trust company as the place of payment of the redemption
price and (c) call upon such holders to surrender the certificates
representing such shares at such place on or after the date fixed in such
redemption notice (which shall not be later than the Redemption Date) against
payment of the redemption price. Any interest accrued on such funds shall be
paid to the Corporation from time to time. Any monies so deposited which
shall remain unclaimed by the holders of such shares of Series B Convertible
Preferred Stock at the end of two years after the Redemption Date shall be
returned by such bank or trust company to the Corporation.
(iii) If a notice of redemption has been give pursuant to Section
(c)(2) and any holder of shares of Series B Convertible Preferred Stock shall,
prior to the close of business on the second business day preceding the
Redemption Date, give written notice to the Corporation pursuant to Section
(e)(2) below of the conversion of any or all of the shares to be redeemed held
by such holder (accompanied by a certificate or certificates for such shares,
duly endorsed or assigned to the Corporation, and any necessary transfer tax
payment, as required by Section (g) below), then such redemption shall not
become effective as to such shares to be converted, such conversion shall
become effective as provided in Section (e) below, and any monies set aside by
the Corporation for the redemption of such shares of converted Series B
Convertible Preferred Stock shall revert to the general funds of the
Corporation.
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(d) Voting. Except as otherwise required by law or by the Certificate of
Incorporation of the Corporation, each outstanding share of Series B
Convertible Preferred Stock shall have one vote on all matters which are the
subject of a vote of the holders of Common Stock, whether at any annual or
special meeting of stockholders of the Corporation, or by written consent,
voting as a class together with the Common Stock.
(e) Conversion Rights.
(1) Each share of the Series B Convertible Preferred Stock shall be
convertible, at the option of the holder thereof, at any time after the date
of issuance of such share and before December 15, 1995, into one "Unit,"
comprised of one share of Common Stock and one share of Series C Convertible
Performance Right Preferred Stock ("Performance Right Preferred Stock"). Such
optional conversion shall be deemed to have been effected on the date when
delivery of the certificate or certificates representing the shares to be
converted is made pursuant to Section (e)(2) hereof and such date is
hereinafter called the "Optional Conversion Date". If not previously
converted, each share of Series B Convertible Preferred Stock shall
automatically be converted into one Unit on the earlier to occur of
December 15, 1995, or the date on which a registration statement filed by the
Corporation with the Securities and Exchange Commission becomes effective with
respect to the Common Stock and Performance Right Preferred Stock issuable
upon conversion of the then outstanding Series B Convertible Preferred Stock.
Such automatic conversion date is hereinafter called the "Conversion Date."
(2) The holders of the Series B Convertible Preferred Stock may
exercise the conversion rights thereof until the Conversion Date as to all or
any part thereof by delivering to the Corporation during regular business
hours, at the office of any transfer agent of the Corporation for the Series B
Convertible Preferred stock, at the principal office of the Corporation, or at
such other place as may be designated by the Corporation, the certificate or
certificates representing the shares to be converted, duly endorsed for
transfer to the Corporation, accompanied by written notice stating that the
holder elects to convert such shares. As promptly as practicable after the
conversion of any shares of the Series B Convertible Preferred Stock, the
Corporation shall issue and deliver to, or upon the written order of such
holder, at such office or other place designated by the Corporation, a
certificate or certificates registered in the name of the holder for the
number of full shares of Common Stock and Performance Right Preferred Stock to
which such holder is entitled and a check made payable to such holder with
respect to any fractional interest in share of Common Stock or Performance
Right Preferred Stock as provided in Section (f) below. The holder shall be
deemed to have become a stockholder of record on the Optional Conversion Date
or the Conversion Date, as applicable, unless the transfer books of the
Corporation are closed on that date, in which event the holder shall be deemed
to have become a stockholder of record on the next succeeding date on which
the transfer books are open, but the "Closing Price," as defined below, shall
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be that in effect on the applicable Optional Conversion Date or Conversion
Date. Upon conversion of only a portion of the number of shares of the Series
B Convertible Preferred Stock represented by a certificate surrendered for
conversion, the Corporation shall issue and deliver to the holder of the
certificate so surrendered for conversion, at the expense of the Corporation,
a new certificate representing the unconverted portion of the Series B
Convertible Preferred Stock certificate so surrendered and a certificate or
certificates for the number of shares of Common Stock and Performance Right
Preferred Stock to which such holder is entitled.
(f) No Fractional Shares. No fractional shares of Common Stock,
Performance Right Preferred Stock or scrip shall be issued upon conversion of
shares of the Series B Convertible Preferred Stock. Instead of any fractional
shares of Common Stock or Performance Right Preferred Stock which would
otherwise be issuable upon conversion of any of the Series B Convertible
Preferred Stock, the Corporation shall pay a cash adjustment in respect of
such fractional interest, the fair value of which shall be determined in good
faith by the Board of Directors of the Corporation, which determination shall
be conclusive and binding.
(g) Taxes. The Corporation shall pay any and all issue and other taxes
that may be payable in respect of any issue or delivery of shares of Common
Stock and Performance Right Preferred Stock on conversion of the Series B
Convertible Preferred Stock pursuant hereto. The Corporation shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of shares of Common Stock in a
name other than in which the shares of Series B Convertible Preferred Stock so
converted were registered, and no such issue or delivery shall be made unless
and until the person requesting such issue has paid to the Corporation the
amount of any such tax, or has established, to the satisfaction of the
Corporation, that such tax has been or promptly will be paid.
(h) Shares Reserved. The Corporation shall at all times reserve and keep
available, out of its authorized but unissued Common Stock and Performance
Right Preferred Stock, solely for the purpose of effecting the conversion of
the Series B Convertible Preferred Stock, the full number of shares of Common
Stock and Performance Right Preferred Stock deliverable upon the conversion of
all Series B Convertible Preferred Stock from time to time outstanding. The
Corporation shall from time to time (subject to obtaining necessary director
and stockholder approval), in accordance with the laws of the State of
Delaware, increase the authorized amounts of its Common Stock and Performance
Right Preferred Stock if at any time the authorized number of shares of its
Common Stock and Performance Right Preferred Stock remaining unissued shall
not be sufficient to permit the conversion of all of the shares of Series B
Convertible Preferred Stock at the time outstanding.
(i) Status of Shares. All shares of Common Stock and Performance Right
Preferred Stock which may be issued upon conversion of the Series B
Convertible Preferred Stock will upon issuance by the Corporation be validly
issued, fully-paid and non-assessable and free from all taxes, liens and
charges with respect to the issuance thereof.
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(j) Adjustment of the Number of Shares to be Received upon Conversion of
Shares of Series B Convertible Preferred Stock.
(1) In case the Corporation shall at any time split or subdivide the
outstanding shares of Common Stock, or shall issue a stock dividend on its
outstanding Common Stock, or combine its outstanding shares of Common Stock
into a smaller number of shares of Common Stock, the number of shares into
which the shares of Series B Convertible Preferred Stock were convertible
immediately prior to such event shall be adjusted such that the holder of each
share of Series B Convertible Preferred Stock shall be entitled upon
conversion to receive the number of shares of Common Stock which such holder
would have been entitled to receive after the happening of any such event
described above, had such share of Series B Convertible Preferred Stock been
converted immediately prior to the happening of such event or any record date
with respect thereto. An adjustment made pursuant hereto shall become
effective immediately after the effective date of such event, retroactive to
the record date, if any, for such event.
(2) If the Corporation shall issue rights, options or warrants, or
convertible or exchangeable securities containing or providing for the right
to subscribe for or purchase shares of Common Stock, to all holders of its
outstanding Common Stock, without payment of additional consideration by such
holders, entitling them, at any time prior to the Conversion Date, to
subscribe for or purchase shares of Common Stock at a price per share that is
less than the market price per share of Common Stock as of the record date for
such transaction, the number of shares of Common Stock into which the then
outstanding shares of Series B Convertible Preferred Stock are convertible
shall be determined by multiplying the number of shares into which the Series
B Convertible Preferred Stock were convertible immediately prior to such
transaction by a fraction, of which the numerator shall be (i) the number of
shares of Common Stock outstanding on the date of issuance of such rights,
options or warrants, or such convertible or exchangeable securities, plus the
number of additional shares of Common Stock represented by such convertible
securities so offered for subscription or purchase, and of which the
denominator shall be (ii) the number of shares of Common Stock outstanding on
the date of issuance of such rights, options or warrants, or such convertible
or exchangeable securities, plus the number of shares which the aggregate
exercise price of the total number of shares represented by such convertible
securities so offered would purchase at the market price per share of Common
Stock at such record date. Such adjustment shall be made whenever such
rights, options or warrants, or such convertible or exchangeable securities,
are issued, and shall become effective immediately on the date of issuance
retroactive to the record date for the determination of stockholders entitled
to receive such rights, options or warrants, or such convertible or
exchangeable securities.
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(3) For the purpose of adjustments required by Section (j)(2), the
shares of Common Stock that the holder of any rights, options, warrants or
convertible or exchangeable securities shall be entitled to subscribe for or
purchase shall be deemed to be issued and outstanding as of the date of sale,
issuance or distribution of such securities and the consideration, if any,
received by the Corporation therefor shall be deemed to be the consideration
actually received by the Corporation for such securities, plus the
consideration or premiums stated in such securities to be paid for the shares
of Common Stock acquired upon such exercise and conversion.
(4) For the purpose of any computation under Section (j)(2), the
market price per share of Common Stock at any date shall be determined as of
the record date based upon the average of the last closing sale price as
reported by any national securities exchange or a consolidation transaction
reporting system on which such shares are listed for the forty (40) trading
days immediately preceding such date. If the Common Stock is not listed on a
national exchange or consolidated transaction reporting system, the market
price per share of Common Stock at any date shall mean the average of the
closing bid and ask prices as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System or a successor or similar
organization, for the forty (40)-day trading period immediately preceding such
date. If the Common Stock is not listed on a national exchange or
consolidated transaction reporting system or reported on the National
Association of Securities Dealers, Inc. Automated Quotation System or a
successor or similar organization, the market price per share of Common Stock
at any date shall be as determined in good faith by the Board of Directors of
the Corporation, which determination shall be conclusive.
(5) No adjustment in the number of shares into which the Series B
Convertible Preferred Stock are convertible shall be required unless such
adjustment would require an increase or decrease of at least one percent (1%)
in the number of shares of Common Stock into which the Series B Convertible
Preferred Stock are convertible; provided, however, that any adjustments which
by reason of this Section (j)(5) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
shall be made to the nearest cent and to the nearest one-hundredth of a share,
as the case may be.
(6) Irrespective of any adjustments in the number of shares into
which the Series B Convertible Preferred Stock are convertible, the
certificates representing the Series B Convertible Preferred Stock theretofore
and thereafter may continue to express the same number of shares as are
initially stated in the Series B Convertible Preferred Stock.
(7) If the shares of Common Stock shall be changed into the same or a
different number of shares of any other class or classes of stock, whether by
recapitalization, reclassification or otherwise (other than a subdivision or
combination of shares, stock dividend or reorganization, merger, consolidation
or sale of assets expressly provided for in Section (c)(2) hereof), then, and
in any such event, each holder of Series B Convertible Preferred Stock shall
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have the right to convert such stock into the kind and amount of stock and
other securities and property receivable upon such recapitalization,
reclassification or other change, which such holder would have been entitled
to receive after the happening of any such event described above, had such
shares of Series B Convertible Preferred Stock been converted immediately
prior to such recapitalization, reclassification or change or any record date
with respect thereto. An adjustment made pursuant hereto shall become
effective immediately after the effective date of such event, retroactive to
the record date, if any, for such event.
(k) Changes Affecting the Series B Convertible Preferred Stock. So long
as any shares of the Series B Convertible Preferred Stock are outstanding, the
Corporation shall not, without first obtaining the approval by vote or written
consent in the manner provided by law of the holders of at least a majority of
the total number of shares of the Series B Convertible Preferred Stock then
outstanding, voting separately as class, change the preferences, rights or
limitations with respect to the Series B Convertible Preferred Stock in any
material respect prejudicial to the holders thereof, increase the authorized
number of shares of Series B Convertible Preferred Stock, increase or decrease
the authorized number of shares of Preferred Stock of the Corporation, or
authorize, designate or increase or decrease the number of authorized shares
of any class or series of stock of the Corporation ranking on a parity with or
senior to the Series B Convertible Preferred Stock as to dividends or upon
dissolution, liquidation or winding up of the Corporation; but nothing
contained herein shall require such a class vote or consent (i) in connection
with any increase or decrease in the total number of authorized shares of the
Common Stock or Performance Right Preferred Stock, (ii) in connection with the
authorization, designation, increase or decrease of any class or series of
Junior Shares; or (iii) in connection with the issuance of any presently
authorized but unissued shares of Series B Convertible Preferred Stock.
(l) Status of Converted Series B Convertible Preferred Stock. No share
or shares of Series B Convertible Preferred Stock acquired by the Corporation
by reason of purchase, conversion, redemption or otherwise shall be re-issued
and such shares shall be canceled and retired and, upon compliance with
applicable law, returned to the status of authorized but unissued and
undesignated shares of Preferred Stock of the Corporation. All certificates
representing any of the Series B Convertible Preferred Stock surrendered for
conversion shall be appropriately canceled on the books of the Corporation.
(m) Authorized Number of Shares of Series B Convertible Preferred Stock.
The authorized number of shares of the Series B Convertible Preferred Stock
shall be 3,600,000.
II. Series C Performance Right Preferred Stock.
RESOLVED, that pursuant to the authority expressly granted and vested in
the Board of Directors of this Corporation in the Certificate of
Incorporation, as amended, a series of Preferred Stock of the Corporation be
and it hereby is authorized, and, as so authorized, is designated "Series C
Convertible Performance Right Preferred Stock" (hereinafter called the
"Performance Right Preferred Stock"), said series to consist of 3,600,000
shares, of $0.01 par value per share, of which the preferences and relative,
participating, optional or other special rights, and the qualifications,
limitations or restrictions thereof, shall be as follows:
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(a) Dividends on Performance Right Preferred Stock. The holders of
outstanding Performance Right Preferred Stock shall not be entitled to receive
any dividends.
(b) Redemption. The Performance Right Preferred Stock shall not be
subject to redemption at any time.
(c) Preference on Liquidation.
(1) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation (any such instance hereinafter
called a "Liquidation"):
(i) The holders of shares of the Performance Right Preferred
Stock then outstanding shall be entitled to be paid, out of the assets of the
Corporation available for distribution to its stockholders, prior to and in
preference of any distribution of any of the assets or surplus funds of the
Corporation to the holders of the Common Stock and Class A Nonvoting Common
Stock of the Corporation by reason of their ownership thereof, an amount per
share of Performance Right Preferred Stock (hereinafter called the
"Liquidation Preference") equal to the greater of: (y) one cent ($0.01) per
share of Performance Right Preferred Stock (the "Monetary Preference"), or (z)
one-half (50%) of the amount available for distribution per share of Common
Stock (without regard to the Monetary Preference). Upon receipt of such
amount, holders of Performance Right Preferred Stock will not share in any
additional proceeds, whether of cash or other property, that may result from
such Liquidation. If, upon Liquidation of the Corporation, the assets of the
Corporation available for distribution to its stockholders shall be
insufficient to pay to the holders of the Performance Right Preferred Stock
the full Liquidation Preference, the holders of the Performance Right
Preferred Stock and any stock ranking on a parity thereto with respect to
liquidation, dissolution or winding up shall share ratably in any distribution
of assets according to the respective amounts which would have been payable in
respect to the shares of the Performance Right Preferred Stock held by them
upon such distribution if all amounts payable on or with respect to said
shares were paid in full.
(ii) All of the preferential amounts to be paid to the holders of
Performance Right Preferred Stock under this Section (c) shall be paid or set
apart for payment prior to payment or setting apart for payment of any amount
for, or the distribution of any amounts to, the holders of Common Stock or
Class A Nonvoting Common Stock in connection with any Liquidation. After
setting apart or paying in full the preferential amounts due the holders of
the Performance Right Preferred Stock, the remaining assets of the Corporation
available for distribution to stockholders, if any, shall be distributed to
the holders of Common Stock and Class A Nonvoting Common Stock.
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(2) If the Corporation (i) sells or otherwise transfers for value all
or substantially all of its assets and properties (a "Disposition
Reorganization") or (ii) merges or consolidates with another entity if such
merger or consolidation would result in the exchange of the outstanding shares
of the Corporation for securities or consideration issued, or caused to be
issued, by the surviving corporation, its subsidiary or parent, excepting a
merger or consolidation after the consummation of which the stockholders of
the Corporation own in excess of fifty percent (50%) of the voting securities
of the surviving corporation or its parent corporation (a "Merger
Reorganization") (a Disposition Reorganization or a Merger Reorganization
being hereinafter called a "Reorganization Event"), the Performance Right
Preferred Stock shall be converted automatically as provided in Section (e)(1)
hereof.
(d) Voting. Except as otherwise required by law or by the Certificate of
Incorporation of the Corporation, the holders of Performance Right Preferred
Stock shall not be entitled to any vote in respect to such Performance Right
Preferred Stock, whether at any annual or special meeting of stockholders of
the Corporation, or by written consent.
(e) Conversion Rights.
(1) Each share of the Performance Right Preferred Stock shall
automatically convert, on the earlier to occur (i) of December 15, 1995
(hereinafter called the "Anniversary Date") or (ii) the date of the
Reorganization Event (hereinafter called the "Reorganization Date") (the
earlier to occur of the Anniversary Date or the Reorganization Date
hereinafter called the "Conversion Date"), into a fraction of a share, or one
or more full shares, of Common Stock determined by multiplication of each
share of Performance Right Preferred Stock by the "Conversion Formula" (as
hereinafter defined) based upon the average of the "Closing Prices" (as
hereinafter defined) of such Common Stock for the forty (40) trading days
immediately preceding the Conversion Date. The "Closing Price" shall mean the
last closing sale price as reported on a national securities exchange or by a
consolidation transaction reporting system, or in the instance of publicly
traded securities not listed on a national exchange or consolidated
transaction reporting system, the Closing Price shall mean the average of the
closing bid and ask prices as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System or a successor or similar
organization. In the instance of securities not listed on a national exchange
or consolidated transaction reporting system or reported on the national
Association of Securities Dealers, Inc. Automated Quotation System or a
successor or similar organization, the "Closing Price" shall mean the closing
price as determined in good faith by the Board of Directors of the Corporation
and a representative of the holders of a majority of the Performance Right
Preferred Stock, which determination shall be conclusive and binding. The
"Conversion Formula" upon which each share of the Performance Right Preferred
Stock will convert into Common Stock is the result calculated by dividing
sixty (60) (hereinafter the "Conversion Price") by the average of the Closing
Prices of the Common Stock for the forty (40) trading days immediately
preceding the Conversion Date, and then subtracting 4.5, provided, however,
that in no event shall the number of shares into which each share of the
Performance Right Preferred Stock shall be converted exceed three (3) shares
of Common Stock or be less than one-half (1/2) share of Common Stock
(hereinafter called the "Limits"), subject to adjustment as provided in
Section (j).
Page-94
<PAGE>
(2) Notwithstanding the provisions of Section (e)(1), the Performance
Right Preferred Stock shall automatically convert into one-half (1/2) share of
Common Stock, subject to adjustment as provided in Section (j), in the event
that the average of the Closing Prices of the Common Stock for any forty (40)
consecutive trading days prior to the Anniversary Date equals or exceeds
$15.00 (the last such consecutive trading day hereinafter called the "Price
Conversion Date").
(3) The conversion rights set forth in Sections (e)(1) and (e)(2) are
mandatory and automatic and shall apply to all Performance Right Preferred
Stock then outstanding. Upon such automatic conversion, the holders of such
Performance Right Preferred Stock shall surrender the certificate or
certificates representing the shares converted, duly endorsed for transfer to
the Corporation, to the principal office of the Corporation, or at such other
place as may be designed by the Corporation. As promptly as practicable
thereafter, the Corporation shall issue and deliver to such holder, at such
office or other place designated by the Corporation, a certificate or
certificates registered in the name of the holder for the number of full
shares of Common Stock to which such holder is entitled and a check made
payable to such holder with respect to any fractional interest in a share of
Common Stock as provided in Section (f) hereof. The holder shall be deemed to
have become a stockholder of record on the Conversion Date or the Price
Conversion Date, as applicable, unless the transfer books of the Corporation
are closed on that date, in which event the holder shall be deemed to have
become a stockholder of record on the next succeeding date on which the
transfer books are open.
(f) No Fractional Shares. No fractional shares of Common Stock or scrip
shall be issued upon conversion of shares of the Performance Right Preferred
Stock. Instead of any fractional shares of Common Stock which would otherwise
be issuable upon conversion of any of the Performance Right Preferred Stock,
the Corporation shall pay a cash adjustment in respect of such fractional
interest based on the average of the Closing Prices of Common Stock for the
forty (40) days immediately preceding the Conversion Date or the Price
Conversion Date, as applicable.
(g) Taxes. The Corporation shall pay any and all issue and other taxes
that may be payable in respect of any issue or delivery of shares of Common
Stock and Performance Right Preferred Stock on conversion of the Performance
Right Preferred Stock pursuant hereto. The Corporation shall not, however, be
required to pay any tax which may be payable in respect of any transfer
involved in the issue and delivery of shares of Common Stock in a name other
than that in which the shares of Performance Right Preferred Stock so
converted were registered, and no such issue or delivery shall be made unless
and until the person requesting such issue has paid to the Corporation the
amount of any such tax, or has established, to the satisfaction of the
Corporation, that such tax has been or promptly will be paid.
Page-95
<PAGE>
(h) Shares Reserved. The Corporation shall at all times reserve and keep
available, out of its authorized but unissued Common Stock, solely for the
purpose of effecting the conversion of the Performance Right Preferred Stock,
the full number of shares of Common Stock deliverable upon the conversion of
all Performance Right Preferred Stock from time to time outstanding. The
Corporation shall from time to time (subject to obtaining necessary director
and stockholder authorization), in accordance with the laws of the State of
Delaware, increase the authorized amounts of its Common Stock if at any time
the authorized number of shares of its Common Stock remaining unissued shall
not be sufficient to permit the conversion of all of the shares of Performance
Right Preferred Stock at the time outstanding.
(i) Status of Shares. All shares of Common Stock which may be issued
upon conversion of the Performance Right Preferred Stock will upon issuance by
the Corporation be validly issued, fully-paid and non-assessable and free from
all taxes, liens and charges with respect to the issuance thereof.
(j) Adjustment of the Number of Shares to be Received upon Conversion of
Shares of Performance Right Preferred Stock.
(1) In case the Corporation shall at any time split or subdivide the
outstanding shares of Common Stock, or shall issue a stock dividend on its
outstanding Common Stock, or combine its outstanding shares of Common Stock
into a smaller number of shares of Common Stock, the Conversion Price shall be
adjusted such that the holder of each share of Performance Right Preferred
Stock shall be entitled upon conversion to receive the number of shares of
Common Stock which such holder would have been entitled to receive after the
happening of any such event described above, had such shares of Performance
Right Preferred Stock been converted immediately prior to the happening of
such event or any record date with respect thereto, and the Limits shall be
proportionately adjusted. An adjustment made pursuant hereto shall become
effective immediately after the effective date of such event, retroactive to
the record date, if any, for such event.
(2) If the Corporation shall issue rights, options or warrants, or
convertible or exchangeable securities containing or providing for the right
to subscribe for or purchase shares of Common Stock, to all holders of its
outstanding Common Stock, without payment of additional consideration by such
holders, entitling them, at any time prior to the Conversion Date or the Price
Conversion Date, to subscribe for or purchase shares of Common Stock at a
price per share that is less than the market price per share of Common Stock
as of the record date for such transaction, the Conversion Price shall be
adjusted so that the number of shares of Common Stock into which the then
outstanding shares of Performance Right Preferred Stock is convertible shall
equal a number determined by multiplying the number of shares into which such
shares of the Performance Right Preferred Stock was convertible immediately
prior to such transaction by a fraction, of which the numerator shall be (i)
the number of shares of Common Stock outstanding on the date of issuance of
such rights, options or warrants, or such convertible or exchangeable
securities, plus the number of additional shares of Common Stock represented
Page-96
<PAGE>
by such convertible securities so offered for subscription or purchase, and of
which the denominator shall be (ii) the number of shares of Common Stock
outstanding on the date of issuance of such rights, options or warrants, or
convertible or exchangeable securities, plus the number of shares which the
aggregate exercise price of the total number of shares represented by such
convertible securities so offered would purchase at the market price per share
of Common Stock at such record date. In connection with any adjustment, the
Limits shall also be proportionately adjusted. Such adjustments shall be made
whenever such rights, options or warrants, or convertible or exchangeable
securities, are issued, and shall become effective immediately on the date of
issuance retroactive to the record date for the determination of stockholders
entitled to receive such rights, options or warrants, or convertible or
exchangeable securities.
(3) For the purpose of adjustments required by Section (j)(2), the
shares of Common Stock that the holder of any rights, options, warrants or
convertible or exchangeable securities shall be entitled to subscribe for or
purchase shall be deemed to be issued and outstanding as of the date of sale,
issuance or distribution of such securities and the consideration, if any,
received by the Corporation therefor shall be deemed to be the consideration
actually received by the Corporation for such securities, plus the
consideration or premiums stated in such securities to be paid for the shares
of Common Stock acquired upon such exercise and conversion.
(4) For the purpose of any computation under Section (j)(2), the
market price per share of Common Stock at any date shall be determined as of
the record date based upon the average of the Closing Prices for the
immediately preceding forty (40) trading days.
(5) No adjustment in the Conversion Price, the Limits or in the
number of shares into which the Performance Right Preferred Stock are
convertible shall be required unless such adjustment would require an increase
or decrease of at least one percent (1%) in the Conversion Price and in the
number of shares into which the Performance Right Preferred Stock are
convertible; provided, however, that any adjustments which by reasons of this
Section (j)(5) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations shall be made to
the nearest cent and to the nearest one-hundredth of a share, as the case may
be.
(6) Irrespective of any adjustments in the number of shares into
which the Performance Right Preferred Stock are convertible, the certificates
representing the Performance Right Preferred Stock theretofore and thereafter
may continue to express the same number of shares as are initially stated in
the Performance Right Preferred Stock.
Page-97
<PAGE>
(7) If the shares of Common Stock shall be changed into the same or a
different number of shares of any other class or classes of stock, whether by
recapitalization, reclassification or otherwise (other than a subdivision or
combination of shares, stock dividend or reorganization, merger, consolidation
or sale of assets expressly provided for in Section (c)(2) hereof), then, and
in any such event, each holder of Performance Right Preferred Stock shall have
the right to convert such stock into the kind and amount of stock and other
securities and property receivable upon such recapitalization,
reclassification or other change, which such holder would have been entitled
to receive after the happening of any such event described above, had such
shares of Performance Right Preferred Stock been converted immediately prior
to such recapitalization, reclassification or change or any record date with
respect thereto. An adjustment made pursuant hereto shall become effective
immediately after the effective date of such event, retroactive to the record
date, if any, for such event.
(k) Changes Affecting the Performance Right Preferred Stock. So long as
any shares of the Performance Right Preferred Stock are outstanding, the
Corporation shall not, without first obtaining the approval by vote or written
consent in the manner provided by law of the holders of at least a majority of
the total number of shares of the Performance Right Preferred Stock then
outstanding, voting separately as class, change the preferences, rights or
limitations with respect to the Performance Right Preferred Stock in any
material respect prejudicial to the holders thereof, or increase the
authorized number of shares of Performance Right Preferred Stock; but nothing
contained herein shall require such a class vote or consent (i) in connection
with any increase or decrease in the total number of authorized shares of the
Common Stock, (ii) in connection with the authorization, designation, increase
or decrease of any class or series of shares of the Corporation other than an
increase in the authorized number of shares of Performance Right Preferred
Stock; or (iii) in connection with the issuance of any presently authorized
but unissued shares of Performance Right Preferred Stock.
(l) Status of Converted Performance Right Preferred Stock. No share or
shares of Performance Right Preferred Stock acquired by the Corporation by
reason of purchase, conversion or otherwise shall be re-issued and such shares
shall be canceled and retired and, upon compliance with applicable law,
returned to the status of authorized but unissued and undesignated shares of
Preferred Stock of the Corporation. All certificates representing any of the
Performance Right Preferred Stock surrendered for conversion shall be
appropriately canceled on the books of the Corporation.
(m) Authorized Number of Shares of Performance Right Preferred Stock.
The authorized number of shares of the Performance Right Preferred Stock shall
be 3,600,000.
Page-98
<PAGE>
IN WITNESS WHEREOF, Ramtron International Corporation has caused this
Certificate of Designations, Preferences, Rights, and Limitations of Series B
Convertible Preferred Stock and Series C Convertible Performance Right
Preferred Stock to be duly executed by the undersigned this 9th day of the
December, 1993.
RAMTRON INTERNATIONAL CORPORATION
By: /S/ Jack R. Morgan
- -----------------------
Name: Jack R. Morgan
Title: Sr. Vice President
ATTEST
/S/ John C. Coe
- ---------------
John C. Coe, Secretary
Page-99
<PAGE>
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
DESIGNATION OF "RAMTRON INTERNATIONAL CORPORATION," FILED IN THIS OFFICE ON
THE SEVENTH DAY OF FEBRUARY, A.D. 1995, AT 11:38 0'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO NEW CASTLE COUNTY
RECORDER OF DEEDS FOR RECORDING.
/S/ Edward J. Freel
-------------------
Edward J. Freel, Secretary of State
AUTHENTICATION: 7401595
DATE: 02/08/1995
Page-100
<PAGE>
CERTIFICATE OF ELIMINATION
OF
SERIES A CUMULATIVE CONVERTIBLE PREFERRED STOCK
AND
SERIES B CONVERTIBLE PREFERRED STOCK
OF
RAMTRON INTERNATIONAL CORPORATION
Pursuant to Section 151 of the General Corporation Law of
the State of Delaware
RAMTRON INTERNATIONAL CORPORATION (hereinafter called the "Corporation"), a
Delaware corporation, does hereby certify:
THAT, pursuant to the authority conferred upon the Board of Directors by the
Certificate of Incorporation, as amended, of the Corporation, and pursuant to
the provisions of Section 151 of the Delaware Corporation Law, said Board of
Directors, at a meeting held on October 30, 1992, duly adopted resolutions
providing for the issuance of a series of 1,365,046 shares of Series A
Cumulative Convertible Preferred Stock and at a meeting held on December 1,
1993, duly adopted resolutions providing for the issuance of a series of
3,600,000 shares of Series B Convertible Preferred Stock and a series of
3,600,000 shares of Series C Convertible Performance Right Preferred Stock;
FURTHER THAT, pursuant to the authority conferred upon the Board of Directors
by the Certificate of Incorporation, as amended, and pursuant to the
provisions of Section 151 of the Delaware Corporation Law, said Board of
Directors, at a meeting held on July 29, 1994, duly adopted the following
resolutions cancelling the designation of the Series A Cumulative Convertible
Preferred Stock and Series B Convertible Preferred Stock and all such
previously designated preferred stock shall from this date forward be treated
as authorized but unissued preferred stock with no specific designation.
I. Series A Cumulative Convertible Preferred Stock and Series B Convertible
Preferred Stock.
RESOLVED that none of the authorized shares of Series A Cumulative
Convertible Preferred Stock of the Company is outstanding;
FURTHER RESOLVED that none of the authorized shares of Series A
Cumulative Convertible Preferred Stock of the Company will be issued subject
to the Certificate of Designations, Preferences, Rights and Limitations of
Series A Cumulative Preferred Stock filed with the Delaware Secretary to State
of November 16, 1992 with respect to the Series A Cumulative Convertible
Preferred Stock;
FURTHER RESOLVED that none of the authorized shares of Series B
Convertible Preferred Stock of the Company is outstanding;
Page-101
<PAGE>
FURTHER RESOLVED that none of the authorized shares of Series B
convertible Preferred Stock of the Company will be issued subject to the
Certificate of Designations, Preferences, Rights and Limitations of Series B
Convertible Preferred Stock filed with the Delaware Secretary to State of
December 10, 1993 with respect to the Series B Convertible Preferred Stock;
FURTHER RESOLVED that the Company's officers are hereby authorized and
directed to execute and file with the Delaware Secretary of State a
Certificate pursuant to the provisions of Section 151(g) of the General
Corporation Law of the State of Delaware for the purposes of eliminating from
the Certificate of Incorporation of the Company all references to both the
Series A Cumulative Convertible Preferred Stock and the Series B Convertible
Preferred Stock of the Company; and
FURTHER RESOLVED that the Company's officers are hereby authorized and
directed to perform any acts, including the payment of any and all expenses,
and to execute and deliver any and all documents that they deem necessary or
appropriate to carry out all of the foregoing resolutions.
IN WITNESS WHEREOF, Ramtron International Corporation has caused this
Certificate of Elimination of Series A Cumulative Convertible Preferred Stock
and Series B Convertible Preferred Stock to be duly executed by the
undersigned this 3rd day of February 1995.
RAMTRON INTERNATIONAL CORPORATION
By: /S/ Oren L. Benton
- ---------------------------
Name: Oren L. Benton
Title: Chief Executive Officer
ATTEST:
/S/ Kathy Bouard
- --------------------
Kathy Bouard
Page-102
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 11:45 AM 03/30/1995
950070966-2026110
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
Ramtron International Corporation, a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware.
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation, pursuant to written
unanimous written consent, adopted a resolution proposing and declaring
advisable the following amendment to the Certificate of Incorporation of said
corporation.
"FOURTH. The total number of shares of capital stock which the Company
shall have authority to issue is 60,000,000, consisting of 50,000,000 shares
of Common Stock, $0.01 par value per share, and 10,000,000 shares of Preferred
Stock, $0.01 par value per share.
The Board of Directors is authorized, subject to any limitations
prescribed by law, to provide for the issuance of the shares of Preferred
Stock in one or more series, and by filing a certificate pursuant to the
applicable law of the State of Delaware, to establish from time to time the
number of shares to be included in each such series, and to fix the
designations, powers, preferences, and rights of the shares of each such
series and any qualifications, limitations or restrictions thereof. The
number of authorized shares of Preferred Stock may be increased or decreased
(but not below the number of shares thereof then outstanding) by the
affirmative vote of the holders of a majority of the Common Stock, without a
vote of the holders of the Preferred Stock, or of any series thereof, unless a
vote of such holders is required pursuant to the certificate or certificates
establishing the series of Preferred Stock."
SECOND: That holders of a majority of the outstanding common stock of the
Company have approved said amendment by written consent in accordance with the
provisions of Section 228 of the General Corporation Law of the State of
Delaware.
THIRD: That the aforesaid amendments were duly adopted in accordance with the
applicable provisions of Section 228 of the General Corporation Law of the
State of Delaware.
Page-103
<PAGE>
IN WITNESS WHEREOF, said Ramtron International Corporation has caused this
certificate to be signed by Richard L. Mohr, its Executive Vice President and
attested by David N. Karpel, its Secretary, this 29th day of March 1995.
Ramtron International Corporation
By: /S/ Richard L. Mohr
- -----------------------
Richard L. Mohr, Executive Vice President
ATTEST:
By: /S/ David N. Karpel
- -----------------------
David N. Karpel, Secretary
Page-104
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 06/22/1995
950139642-2026110
CERTIFICATE OF CORRECTION
OF
CERTIFICATE OF AMENDMENT
OF
RAMTRON INTERNATIONAL CORPORATION
Ramtron International Corporation, a Delaware corporation (the "Corporation"),
pursuant to Section 103(f) of the General Corporation Law of the State of
Delaware, does hereby certify:
FIRST: That the Certificate of Amendment to Certificate of Incorporation
("Certificate of Amendment") of the Corporation which was filed with the
Secretary of State of Delaware on March 30, 1995, is an inaccurate record of
the corporation action referred to therein.
SECOND: That said Certificate of Amendment was inaccurate in that paragraphs
SECOND and THIRD thereof state that the amendment was approved by a majority
of the holders of the outstanding common stock by consent and that the
amendment was adopted in accordance with Section 228 of the General
Corporation Law of the State of Delaware. Said amendment was, in fact,
adopted in accordance with Section 242 of the General Corporation Law at a
duly called meeting of stockholders.
THIRD: Article SECOND in correct form is as follows:
SECOND: That holders of a majority of the outstanding common stock of the
Company have approved said amendment at a duly called meeting.
FOURTH: Article THIRD in correct form is as follows:
THIRD: The amendment was duly adopted in accordance with Section 242 of the
Delaware General Corporation Law.
IN WITNESS WHEREOF, Ramtron International Corporation has caused this
Certificate of Correction to be executed by its duly authorized officer this
21st day of June, 1995.
By: /S/ Richard L. Mohr
- -----------------------
Richard L. Mohr
Executive Vice President
Page-105
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 11/12/1996
960331885-2026110
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
Ramtron International Corporation, a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware.
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation, at a meeting held on
June 7, 1996, adopted a resolution proposed and declaring advisable the
following amendment to the Certificate of Incorporation of said corporation.
"FOURTH. The total number of shares of capital stock which the
Corporation shall have authority to issue is 85,000,000, consisting of
75,000,000 shares of Common Stock, $0.01 par value per share, and 10,000,000
shares of Preferred Stock, $0.01 par value per share.
The Board of Directors is authorized, subject to any limitations
prescribed by law, to provide for the issuance of the shares of Preferred
Stock in one or more series, and by filing a certificate pursuant to the
applicable law of the State of Delaware, to establish from time to time the
number of shares to be included in each such series, and to fix the
designations, powers, preferences, and rights of the shares of each such
series and any qualifications, limitations or restrictions thereof. The
number of authorized shares of Preferred Stock may be increased or decreased
(but not below the number of shares thereof then outstanding) by the
affirmative vote of the holders of a majority of the Common Stock, without a
vote of the holders of the Preferred Stock, or of any series thereof, unless a
vote of such holders is required pursuant to the certificate or certificates
establishing the series of Preferred Stock."
SECOND: That at a meeting duly held, the majority of holders of the
outstanding common stock of the Company have approved said amendment in
accordance with the provisions of Section 242 of the General Corporation Law
of the State of Delaware.
THIRD: That the aforesaid amendment was duly adopted in accordance with the
applicable provisions of Section 242 of the General Corporation Law of the
State of Delaware.
Page-106
<PAGE>
IN WITNESS WHEREOF, said Ramtron International Corporation has caused this
certificate to be signed by L. David Sikes, its Chief Executive Officer and
attested by Richard L. Mohr, its Secretary, this 1st day of November 1996.
RAMTRON INTERNATIONAL CORPORATION
BY: /S/ L. David Sikes
- ----------------------
L. David Sikes
Chief Executive Officer
ATTEST:
BY: /S/ Richard L. Mohr
- -----------------------
Richard L. Mohr
Secretary
Page-107
<PAGE>
State of Delaware
Office of the Secretary of State
I, Edward J. Freel, Secretary of State of the State of Delaware, do hereby
certify the attached is a true and correct copy of the Certificate of
Designation of "Ramtron International Corporation", filed in this office on the
twelfth day of February, A.D. 1998, at 1:20 O'clock P.M.
/S/ Edward J. Freel
- ---------------------------------------
Edward J. Freel, Secretary of State
Authentication: 8918338
Date: 02-12-98
Page-108
<PAGE>
State of Delaware
Secretary of State
Division of Corporations
Filed 01:20 PM 02/12/1998
981056214 - 2026110
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-109
<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:
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(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) (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
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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.
(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 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. Pacific 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.
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(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.
(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,
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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.,
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
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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
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.
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(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.
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(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.
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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
- -------------------------
L. David Sikes
Chairman of the Board
/S/ Richard L. Mohr
- -------------------------
Richard L. Mohr
Executive Vice President,
Chief Financial Officer and Secretary
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State of Delaware
Office of the Secretary of State
I, Edward J. Freel, Secretary of State of the State of Delaware, do hereby
certify the attached is a true and correct copy of the Certificate of
Amendment of "Ramtron International Corporation", filed in this office on the
sixth day of August, A.D. 1999, at 1 O'clock P.M.
A filed copy of this certificate has been forwarded to the New Castle County
Recorder of Deeds.
/S/ Edward J. Freel
- ---------------------------------------
Edward J. Freel, Secretary of State
Authentication: 9908472
Date: 08-06-99
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<PAGE>
State of Delaware
Secretary of State
Division of Corporations
Filed 01:00 PM 08/06/1999
991327093 - 2026110
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
RAMTRON INTERNATIONAL CORPORATION
RAMTRON INTERNATIONAL CORPORATION (hereafter called the "Corporation"), a
corporation organized and existing under the General Corporation Law of the
State of Delaware, hereby certifies:
FIRST, that the Corporation's Board of Directors has duly adopted the
following resolution:
RESOLVED, that the Corporation's Certificate of Designation, Preferences,
Rights and Limitations of Series A Convertible Preferred Stock, $0.01 Par
Value ("Certificate of Designation"), filed on February 12, 1998, with the
Secretary of State of the State of Delaware is hereby amended and restated in
its entirety to read as follows:
"1. Authorized Shares.
There shall be a series of shares of the Preferred Stock of the Corporation
designated "Series A Convertible Preferred Stock". The number of authorized
shares of such series shall be 29,000 and the rights and preferences of such
series (the "Series A Preferred") and the limitations or restrictions thereon,
shall be as set forth herein.
2. Dividends.
The holders of the Series A Preferred shall be entitled to receive cumulative
dividends at a rate equal to 11% per annum of the liquidation preference per
share per annum, payable semi-annually on December 31 and June 30, with the
first payment being payable on December 31, 1999, when and as declared by the
Board of Directors. Prior to the first anniversary of the date of filing of
this Certificate of Amendment (the "Closing Date"), all dividends shall be
paid in Series A Preferred. On and after the first anniversary of the Closing
Date, dividends may be paid, at the Corporation's option, on any dividend
payment date, either in cash or by the issuance of additional shares of Series
A Preferred (and payment of cash in lieu of fractional shares) having an
aggregate liquidation preference equal to the amount of such dividends. In
the event that on or after the first anniversary of the Closing Date,
dividends are paid in additional shares of Series A Preferred, the dividend
rate shall increase by 2% for such dividend payment period. In the event that
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a registration statement is not effective within 130 days after the Closing
Date with respect to the conversion rights set forth in Section 6 and the cash
exchange rights set forth in Section 7, the Series A Preferred shall accrue
dividends from and after the end of such 130 day period at a rate of 18% per
annum until such time as the registration statement is declared effective.
Dividends as provided by this Section 2 shall accrue on any given share from
the Closing Date, or from the date of original issuance of such share,
whichever is later, 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. Dividends accrued in
accordance with the terms of the Series A Preferred prior to the Closing Date
shall not be affected by this Section 2.
3. 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 (the "Liquidation Preference").
(b) Subject to the last sentence of this Section 3(b), 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 3 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 8 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 Stock 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.
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4. Mandatory Redemption.
All of the Series A Preferred outstanding on July 31, 2002 shall be redeemed
by the Corporation at a redemption price equal to 100% of the Liquidation
Preference thereof plus, without duplication, accumulated and unpaid dividends
to the date of redemption.
5. Optional Redemption.
The Series A Preferred shall be redeemable, at the option of the Corporation
and subject to the consent of its lenders, in whole or in part, at any time on
or after July 31, 2000 at an amount equal to its Liquidation Preference plus,
without duplication, accumulated and unpaid dividends to the date of
redemption.
6. Conversion.
The holders of the Series A Preferred shall have optional conversion rights as
follows:
(a) Conversion Rights.
(i) At any time prior to 10 days after the Closing Date (the "Post-
Closing Date"), the Series A Preferred shall be exchangeable at the option of
the holder for shares of Common Stock at an exchange ratio of $.75 face value
of Series A Preferred per share of Common Stock plus accrued and unpaid
dividends to the date of conversion.
(ii) Each holder of record of Series A Preferred shares shall be
entitled to convert Series A Preferred into shares of Common Stock on or after
the Post-Closing Date at the conversion rate of 1,000 shares of Common Stock
per share of Series A Preferred (i.e., $1.00 per share of Common Stock) (such
rate of exchange, and the rate of exchange set forth in paragraph (i), as
applicable, being hereinafter referred to as the "Conversion Rate").
(b) Restriction on Right to Convert. 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 preceding sentence will thereafter be convertible by
any holder if at the time such share is submitted for conversion the preceding
sentence is inapplicable.
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(c) 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.
(d) Determination of Conversion Rate. In the event that 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 Rate 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 elsewhere herein.
(e) 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.
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<PAGE>
(f) Certificates as to Adjustments. Upon the occurrence of any
adjustments or readjustment of the Conversion Rate pursuant to Section 6(d)
hereof, or any provision for distribution pursuant to Section 6(e) 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.
(g) 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.
(h) 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.
(i) 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.
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<PAGE>
(j) 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).
(k) 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 3, 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.
7. Cash Exchange Rights.
(a) Exchange Rights. At any time prior to June 25, 1999, the Series A
Preferred shall be exchangeable at the option of a holder for cash in amount
per share equal to 50% of the face value of the Series A Preferred Share plus
all accrued but unpaid dividends on the Series A Preferred Share, up to an
aggregate amount of $6.4 million face value and accrued and unpaid dividends
to the date of exchange. If, in the judgment of the Board of Directors of the
Corporation, the Corporation's financial condition and results of operations
permit the Corporation to permit the exchange for cash of more than $6.4
million face value (plus accrued dividends) of the Series A Preferred, the
terms of the Series A Preferred will permit the exchange for cash of up to
$8.0 million face value (plus accrued and unpaid dividends) of the Series A
Preferred. To the extent that holders of Series A Preferred desire to
exchange in the aggregate a greater face value (plus accrued and unpaid
dividends) of the Series A Preferred than is permitted under the terms of the
Series A Preferred, Series A Preferred will be accepted for exchange by the
Corporation for cash on a pro rata basis based upon the aggregate face value
(plus accrued and unpaid dividends) of the Series A Preferred validly tendered
for exchange.
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<PAGE>
(b) Mechanics of Exchange. To exercise the exchange right set forth in
Section 7(a), the holder shall give written notice to the Corporation (which
notice may be given by facsimile transmission) that such holder elects to
exercise such right and shall state therein the number of shares to be
converted and the name or names in which such holder wishes the payment to be
received. Promptly thereafter the holder shall surrender the certificate or
certificates representing the shares to be exchanged, 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 check for payment of the cash amount to which such
holder shall be entitled, and a certificate representing the shares of Series
A Preferred not so exchanged, if any. The Corporation shall effect such
payment immediately and shall transmit the check 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 the exercise of
exchange rights may be given by a holder at any time of day up to 5:00 p.m.
Los Angeles time, and such exercise shall be deemed to have been made
immediately prior to the close of business on the date such notice of
conversion is given (the "Exchange Date"). The person or persons entitled to
receive payment upon such exchange 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 Exchange Date.
8. 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.
9. Registration Rights.
The corporation shall use its best efforts to file and cause to become
effective as of no later than 130 days after June 15th a registration
statement for Common Stock of the Corporation issuable upon exchange or
conversion of the Series A Preferred, to the extent such shares of Common
Stock are not then freely tradable under the federal securities laws.
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<PAGE>
10. 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.
11. Voting Rights.
The Series A Preferred shall have no voting rights, except as otherwise
required by law and except in certain circumstances described herein,
including (i) amending certain rights of the holders of the Series A Preferred
and (ii) the issuance of any class of equity securities that ranks pari passu
with or senior to the Series A Preferred other than certain additional shares
of Series A Preferred.
12. 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."
SECOND, that the proposed amendment has been duly adopted in accordance with
the provisions of Section 242 of the General Corporation Law of the State of
Delaware and that notice of the taking of such action by written consent has
been given as provided in Section 228 of the General Corporation Law of the
State of Delaware.
IN WITNESS WHEREOF, Ramtron International Corporation has caused this
Certificate of Amendment to be executed by L. David Sikes, its Chairman of the
Board and Chief Executive Officer, this 6th day of August 1999.
Ramtron International Corporation
By: /S/ L. David Sikes
--------------------
L. David Sikes
Chairman of the Board and
Chief Executive Officer
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<PAGE>
State of Delaware
Office of the Secretary of State
I, Edward J. Freel, Secretary of State of the State of Delaware, do hereby
certify the attached is a true and correct copy of the Certificate of
Amendment of "Ramtron International Corporation", filed in this office on the
sixth day of August, A.D. 1999, at 1:05 O'clock P.M.
A filed copy of this certificate has been forwarded to the New Castle County
Recorder of Deeds.
/S/ Edward J. Freel
- -----------------------------------
Edward J. Freel, Secretary of State
Authentication: 9908479
Date: 08-06-99
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<PAGE>
State of Delaware
Secretary of State
Division of Corporations
Filed 01:05 PM 08/06/1999
991327102 - 2026110
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
RAMTRON INTERNATIONAL CORPORATION
Ramtron International Corporation, a corporation organized and existing under
the General Corporation Law of the State of Delaware (the "Corporation"), does
hereby certify:
FIRST, that the Corporation's Board of Directors has duly adopted the
following resolution:
RESOLVED, that the first numbered paragraph of Article FOURTH of the
Certificate of Incorporation, as amended, is hereby deleted and the following
is substituted in lieu thereof:
"FOURTH: The total number of shares of capital stock which the Corporation
shall have authority to issue is 60,000,000, consisting of 50,000,000 shares
of common stock, par value $0.01 per share (the "Common Stock"), and
10,000,000 shares of preferred stock, par value $0.01 per shares (the
"Preferred Stock").
Immediately upon the filing of this Amendment to the Certificate of
Incorporation (the "Effective Time"), each 5 shares of the Common Stock,
issued and outstanding immediately prior to the Effective Time (the "Old
Common Stock"), shall automatically, without further action on the part of the
Corporation or any holder of Old Common Stock, be combined, converted and
changed into one (1) fully paid and nonassessable share of Common Stock (the
"New Common Stock" and the "Reverse Stock Split"), subject to the treatment of
fractional share interests as described below. The conversion of the Old
Common Stock into New Common Stock will be deemed to occur at the Effective
Time regardless of when the certificates representing such Old Common Stock
are physically surrendered to the Corporation in exchange for certificates
representing New Common Stock. After the Effective Time, certificates
representing the Old Common Stock will, until surrendered to the Corporation
in exchange for New Common Stock, represent the number of shares of New Common
Stock into which such Old Common Stock shall have been converted pursuant to
this Amendment and the right to receive cash in lieu of any fractional share
interest. No certificates representing fractional shares of New Common Stock
shall be issued in connection with the Reverse Stock Split. Holders who
otherwise would be entitled to receive fractional share interests of New
Common Stock shall be entitled to receive in lieu of fractional shares and
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<PAGE>
upon surrender to the Corporation's transfer agent of their certificates
representing Old Common Stock, duly endorsed, a cash payment in an amount
equal to the product calculated by multiplying (i) the closing sales price of
the Corporation's Common Stock on the Effective Date as reported on The Nasdaq
Stock Market or, if no such sales price exists, the mid-range between the last
bid and asked price on the Effective Date by (ii) the number of shares of Old
Common Stock held by such holder that would otherwise have been converted into
a fractional share interest. Upon surrender by a holder of Old Common Stock
of a certificate or certificates for Old Common Stock, duly endorsed, to the
Corporation's transfer agent, the Corporation shall, as soon as practicable
thereafter, issue and deliver to such holder of Old Common Stock, or to the
nominee or nominees of such holder, a certificate or certificates for the
number of shares of New Common Stock to which such holder shall be entitled as
aforesaid together with cash in lieu of any fractional share interest."
SECOND, that said Amendment was duly adopted in accordance with the provisions
of Section 242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, Ramtron International Corporation has caused this
Certificate of Amendment to be executed by L. David Sikes, its Chairman of
the Board and Chief Executive Officer, this 6th day of August 1999.
Ramtron International Corporation
By: /S/ L. David Sikes
--------------------
L. David Sikes
Chairman of the Board and
Chief Executive Officer
Page-131
<PAGE>
RAMTRON INTERNATIONAL CORPORATION
Warrant to Purchase Shares
of Common Stock
RAMTRON INTERNATIONAL CORPORATION, a Delaware corporation (the "Company"),
hereby certifies that, for value received and the cancellation of that certain
warrant issued in the name of Oren Lee Benton, Debtor in Possession, dated
August 31, 1995 for 1,861,216 shares of Common Stock, NTC Liquidating Trust or
its assigns (the "Holder") is entitled to purchase from the Company, during the
period commencing on the date hereof and ending at 5:00 p.m. Eastern Time on
the Expiration Date (as hereinafter defined) (the "Warrant Exercise Period"),
subject to the terms and conditions hereinafter set forth, the number of shares
of the Common Stock, par value $0.01, of the Company determined in accordance
with Section 1.
Capitalized terms used herein and not otherwise defined shall have the meanings
ascribed to them in the Loan Agreement by and between the Holder and the
Company dated effective as of August 31, 1995 (the "Loan Agreement").
1. Number of Warrant Shares. Subject to adjustment as provided in Section 4,
the number of shares of Common Stock for which this Warrant may, at any given
time during the Warrant Exercise Period, be exercised (such total number of
underlying unissued shares as may, from time to time, be issuable upon the
exercise hereof being hereinafter referred to as the "Warrant Shares") shall be
372,243 (which number reflects the 1-for-5 reverse stock split for Ramtron
Common Stock which became effective August 6, 1999).
2. Exercise Price. This Warrant is exercisable for Warrant Shares at a price
per share (the "Warrant Price") equal to $5.00.
3. Expiration Date. Except as otherwise provided herein, this Warrant shall
expire on the earlier to occur of (a) the date on which this Warrant is fully
exercised and (b) 5:00 p.m. Eastern Time, on August 31, 2002, or, if such day
is not a Business Day, then at 5:00 p.m. Eastern Time on the next succeeding
Business Day (the "Expiration Date").
4. Procedure for Exercise. Subject to Section 5, the Holder may exercise this
Warrant by presenting and surrendering it to the Company at the office
specified in Section 12 between the hours of 9:00 a.m. and 5:00 p.m. on any
Business Day during the Warrant Exercise Period, accompanied by (a) payment in
cash of the aggregate Warrant Price of the Warrant Shares to be purchased and
(b) a subscription form duly executed by the Holder in substantially the form
attached hereto as Annex A. The number of Warrant Shares shall be reduced
immediately upon any partial exercise by the number of shares so purchased, and
a new Warrant, of like tenor and effect herewith, for the remaining Warrant
Shares shall be issued to the Holder.
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<PAGE>
5. Conditions to Exercise. It shall be a condition precedent to any exercise
of this Warrant to purchase shares of Common Stock that the Holder shall have
obtained, prior to such exercise, all regulatory approvals, if any, required to
lawfully acquire such shares.
6. Covenants. The Company covenants and agrees with the Holder as follows:
(a) All Warrant Shares shall, upon delivery to the Holder, be duly
authorized, validly issued, fully paid and non-assessable shares of
Common Stock.
(b) The Company shall pay when due and payable any and all federal and
state original issue stock taxes, if any, that may be payable in
respect of the issuance of Warrant Shares upon whole or partial
exercise of this Warrant.
(c) The Company shall at all times on or after the issuance of this
Warrant and prior to the expiration of the Warrant Exercise Period
reserve and keep available a number of authorized but unissued shares
of Common Stock sufficient to permit the full exercise of this
Warrant. If at any time the number of authorized but unissued shares
of Common Stock is not sufficient for this purpose, the Company shall
take such corporate action as may be necessary to increase the
authorized but unissued shares of Common Stock to a number that is
sufficient for this purpose.
(d) The Company shall cooperate fully with the Holder in obtaining any
regulatory approvals referred to in Section 5 hereof.
7. Loss, Theft, Destruction or Mutilation. Upon delivery by the Holder to the
Company of evidence reasonably satisfactory to the Company of the ownership and
loss, theft, destruction or mutilation of this Warrant, and (a) in the case of
loss, theft or destruction, of indemnity reasonably satisfactory to the
Company, and (b) in the case of mutilation, of this Warrant for cancellation,
the Company shall execute and deliver, in lieu thereof, a new Warrant of like
tenor and effect herewith; provided, however, that the Company may require as
an additional condition to issuance of any such substitute Warrant payment of a
sum sufficient to reimburse it for any stamp tax, other governmental charge or
out-of-pocket expense connected therewith.
8. Rights of Holder.
(a) The Holder of this Warrant or of any portion thereof shall not, solely
as such, be entitled to vote or receive dividends or be deemed the
holder of Common Stock for any purpose nor shall anything contained in
this Warrant be construed to confer upon the Holder, as such, any of
the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders
at any meeting thereof, or to give or withhold consent to any
corporate action (whether upon a merger, conveyance or otherwise) or
to receive notice of meetings, or to receive dividends or subscription
rights or otherwise until this Warrant shall have been exercised and
the Warrant Shares shall have become deliverable.
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<PAGE>
(b) Regardless of the date of issue and delivery of certificates
representing such shares, the Holder shall for all purposes be deemed
to have become the holder of record of all shares purchased upon
exercise of this Warrant as of the close of business on the date on
which the Company has received, with respect to such purchase, (a)
this Warrant, (b) the Warrant Price and (c) a duly executed
subscription form.
9. Transfer of Warrant. The Company shall, upon surrender to it of this
Warrant, accompanied by one or more duly executed certificates of transfer in
substantially the form attached hereto as Annex B, execute and deliver in lieu
hereof (a) to and in the name of each assignee or transferee, a new Warrant, of
like tenor and effect herewith, representing the right to purchase, on the same
terms and conditions as set forth herein, such number of the Warrant Shares as
shall have been so assigned or transferred; and (b) to the Holder, in case the
right to purchase some portion of the Warrant Shares shall have been retained
by the Holder, a new Warrant, of like tenor and effect herewith, representing
the right to purchase, on the same terms and conditions as set forth herein,
such number of Warrant Shares.
10. Disposition of Shares.
(a) Each Holder understands and agrees that this Warrant and the Warrant
Shares have not been registered under either the Securities Act of
1933, as amended (the "Act") or any applicable state securities laws
(the "State Acts") and may not lawfully be sold or otherwise disposed
of for value except upon registration of such transfer in accordance
with the securities registration requirements of the Act and any
applicable State Acts, or pursuant to an exemption from such
registration requirements.
(b) Any certificates evidencing shares purchased upon exercise hereof
shall be imprinted with a conspicuous legend in substantially the
following form:
The securities represented by this certificate have not been
registered under either the Securities Act of 1933, as amended (the
"Act") or applicable state securities laws (the "State Acts") and
shall not be sold or otherwise disposed of for value by the Holder
except upon registration of such sale or disposition in accordance
with the securities registration requirements of the Act and any
applicable State Acts, or pursuant to exemption from such registration
requirements.
(c) In connection with the exercise of this Warrant and the issuance of
the Warrant Shares, and upon the request of Holder, Borrower shall
register under the Securities Act of 1933, as amended, within a
reasonable period of time after the date of such exercise and
issuance, the resale of the Warrant Shares issued pursuant to such
exercise.
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<PAGE>
11. Adjustment of Purchase Price and Number of Shares. The number and kind of
securities purchasable upon the exercise of the Warrants and the Warrant Price
shall be subject to adjustment from time to time upon the happening of certain
events, as follows:
(a) Consolidation, Merger or Reclassification. If the Company at any time
while the Warrants remain outstanding and unexpired shall consolidate
with or merge into any other corporation, or sell all or substantially
all of its assets to another corporation, or reclassify or in any
manner change the securities then purchasable upon the exercise of the
Warrants (any of which shall constitute a "Reorganization"), then
lawful and adequate provision shall be made whereby this Warrant
certificate shall thereafter evidence the right to purchase such
number and kind of securities and other property as would have been
issuable or distributable on account of such Reorganization upon or
with respect to the securities which were purchasable or would have
become purchasable under the Warrants immediately prior to such
Reorganization. The Company shall not effect any such Reorganization
unless prior to or simultaneously with the consummation thereof the
successor corporation (if other than the Company) resulting from such
Reorganization shall assume by written instrument executed and mailed
or delivered to the Holder, at the last address of the Holder
appearing on the books of the Company, the obligation to deliver to
the Holder such shares of stock, securities or assets as, in
accordance with the foregoing provisions, the Holder may be entitled
to purchase. Notwithstanding anything in this Section 11(a) to the
contrary, the prior two sentences shall be inoperative and of no force
and effect if upon the completion of any such Reorganization the
stockholders of the Company immediately prior to such event do not own
at least fifty percent (50%) of the equity interest of the corporation
resulting from such Reorganization and those Warrants which are
unexercised shall expire on the completion of such Reorganization if
the notice required by Section 11(e) hereof has been given.
(b) Subdivision or Combination of Shares. If the Company at any time
while the Warrants remain outstanding and unexpired shall subdivide or
combine its Common Stock, the Warrant Price shall be adjusted to a
price determined by multiplying the Warrant Price in effect
immediately prior to such subdivision or combination by a fraction (i)
the numerator of which shall be the total number of shares of Common
Stock outstanding immediately prior to such subdivision or combination
and (ii) the denominator of which shall be the total number of shares
of Common Stock outstanding immediately after such subdivision or
combination.
(c) Certain Dividends and Distribution. If the Company at any time prior
to the expiration of the Warrant Exercise Period shall take a record
of the holders of its Common Stock for the purposes of:
Page-135
<PAGE>
(i) Stock Dividends. Entitling them to receive a dividend payable
in, or to receive any other distribution without consideration
of, Common Stock, then the Warrant Price shall be adjusted to the
price determined by multiplying the Warrant Price in effect
immediately prior to each dividend or distribution by a fraction
(A) the numerator of which shall be the total number of shares of
Common Stock outstanding immediately prior to such dividend or
distribution, and (B) the denominator of which shall be the total
number of shares of Common Stock outstanding immediately after
such dividend or distribution; or
(ii) Distribution of Assets, Securities, etc. Making any distribution
without consideration with respect to its Common Stock (other
than a cash dividend) payable otherwise than in its Common Stock,
then the Holder shall, upon the exercise hereof, be entitled to
receive, in addition to the number of Shares receivable
thereupon, and without payment of any additional consideration
therefor, such assets or securities as would have been payable to
the Holder as owner of that number of Shares on the record date
for such distribution; and an appropriate provision therefore
shall be made a part of any such distribution.
(d) Adjustment of Number of Shares. Upon each adjustment in the Warrant
Price pursuant to Subsections (b) or (c)(i) of this Section 11, the
number of shares purchasable under the Warrants represented by this
certificate shall be adjusted to that number determined by multiplying
the number of Shares purchasable upon the exercise of the Warrants
immediately prior to such adjustment by a fraction, the numerator of
which shall be the Warrant Price immediately prior to such adjustment
and the denominator of which shall be the Warrant Price immediately
following such adjustment.
(e) Notice. In case at any time:
(i) The Company shall pay any dividend payable in stock upon its
Common Stock or make any distribution, excluding a cash dividend,
to the holders of its Common Stock.
(ii) The Company shall offer for subscription pro rata to the holders
of its Common Stock any additional shares of stock of any class
or other rights;
(iii) There shall be any reclassification of the Common Stock of the
Company, or consolidation or merger of the Company with, or sale
of all or substantially all of its assets to, another
corporation; or
Page-136
<PAGE>
(iv) There shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in any one or more of such cases, the Company shall give to the
Holder at least ten (10) days prior written notice (or, in the event of
notice pursuant to Section 11(e)(iii), at least thirty (30) days prior
written notice) of the date on which the books of the Company shall close
or a record shall be taken for such dividend, distribution or subscription
rights or for determining rights to vote in respect to any such
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up. Such notice in accordance with the foregoing clause shall also
specify, in the case of any such dividend, distribution or subscription
rights, the date on which the holder of Common Stock shall be entitled
thereto, and such notice in accordance with the foregoing clause shall also
specify the date on which the holders of Common Stock shall be entitled to
exchange their Common Stock for securities or other property deliverable
upon such reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up, as the case may be. Each such written notice
shall be given by first-class mail, postage prepaid, addressed to the
Holder at the address of the Holder as shown on the books of the Company.
(f) No Change in Certificate. The form of this Warrant certificate need
not be changed because of any adjustment in the Warrant Price or in
the number of Warrant Shares purchasable on its exercise. The Warrant
Price or the number of Warrant Shares shall be considered to have been
so changed as of the close of business on the date of adjustment.
12. Notices. All notices and other communications pursuant hereto shall be in
writing and shall be deemed given if delivered in person or sent by United
States registered mail, postage prepaid:
If to the Company at:
Ramtron International Corporation
1850 Ramtron Drive
Colorado Springs, Colorado 80921
Attention: Chief Executive Officer
If to the Holder at:
NTC Liquidating Trust
c/o PriceWaterhouseCoopers
950 Seventeenth Street, Suite 2500
Denver, Colorado 80202
with copies to:
James Huemoeller
LeBoeuf, Lamb, Green & MacRae
633 17th Street, Suite 2000
Denver, Colorado 80202
Page-137
<PAGE>
or at such other address as either party may designate in writing by notice to
the other party as provided above.
13. Termination. This Warrant shall automatically and immediately terminate,
without any further action by the Company or the Holder, upon the occurrence of
any of the following:
(i) any voluntary or involuntary proceeding shall be commenced with
respect to the Holder in a court of competent jurisdiction seeking
relief under any applicable bankruptcy, insolvency or similar law;
(ii) a receiver, custodian, sequestrator or similar official for the
Holder or for any substantial part of its property shall be appointed
or elected;
(iii) the Holder shall commence any winding-up or liquidation, voluntary or
involuntary, of the Holder;
(iv) the Holder shall make a general assignment for the benefit of its
creditors or become unable generally, or admit in writing its
inability, to pay its debts as they become due; or
(v) the Holder shall take any corporate or similar action for the purpose
of effecting any of the foregoing.
14. Miscellaneous. This Warrant contains the entire agreement between the
parties with respect to the matters set forth herein and may not be modified,
supplemented or amended except in a writing signed by both parties. This
Warrant shall be governed by and construed in accordance with the laws of the
State of Delaware.
WITNESS the following signature effective as of the 20th day of December 1999.
RAMTRON INTERNATIONAL CORPORATION
By: /S/ L. David Sikes
---------------------------------
L. David Sikes, Chairman and CEO
Page-138
<PAGE>
ANNEX A
SUBSCRIPTION FORM
To Be Executed if Holder Desires
To Exercise Warrant
The undersigned hereby exercises, according to the terms and conditions hereof,
all or part (as indicated below) of this Warrant and herewith makes payment of
the applicable Warrant Price in full.
Name(s) ------------------------------------
Address ------------------------------------
No. of Shares ------------------------------
Dated --------------------------------------
Signature(s) -------------------------------
- ---------------------------------
Social Security Number or
Employer Identification Number
Page-139
<PAGE>
ANNEX B
CERTIFICATE OF TRANSFER
Ramtron International Corporation
1850 Ramtron Drive
Colorado Springs, Colorado 80921
Attention: Chief Executive Officer
Date: -----------------------
Gentlemen:
With reference to the Warrant to Purchase Shares of Common Stock dated
- -------------- (the "Warrant"), issued by Ramtron International Corporation
(the "Company") to -------------------------- (the "Holder"), representing as
of the date hereof the right to purchase, on the terms and subject to the
conditions herein set forth, --------------- shares of the Common Stock, par
value $0.01, of the Company (the "Warrant Shares"), the undersigned Holder
hereby transfers, conveys and assigns to ------------------------------,
subject to the terms and conditions of the Warrant, the right to purchase
- ---------------- of such Warrant Shares. By this transfer, all rights of the
undersigned Holder with respect to such number of the Warrant Shares are
transferred to the transferee.
Enclosed herewith is the original Warrant so that the Company may issue in lieu
thereof (a) to the transferee, a new Warrant, of like tenor and effect
therewith, for the number of Warrant Shares with respect to which the
undersigned Holder's rights under the Warrant are hereby transferred, conveyed
and assigned, and (b) if the undersigned Holder has retained its rights under
the Warrant with respect to some portion of the Warrant Shares, a new Warrant,
of like tenor and effect therewith, for such number of the Warrant Shares.
- ---------------------------------------
as Holder
By: -----------------------------------
Title: --------------------------------
Page-140
<PAGE>
RAMTRON INTERNATIONAL CORPORATION
Warrant to Purchase Shares
of Common Stock
RAMTRON INTERNATIONAL CORPORATION, a Delaware corporation (the "Company"),
hereby certifies that, for value received and the cancellation of that certain
warrant issued in the name of Oren Lee Benton, Debtor in Possession, dated
October 5, 1995 for 1,100,000 shares of Common Stock, NTC Liquidating Trust or
its assigns (the "Holder") is entitled to purchase from the Company, during the
period commencing on the date hereof and ending at 5:00 p.m. Eastern Time on
the Expiration Date (as hereinafter defined) (the "Warrant Exercise Period"),
subject to the terms and conditions hereinafter set forth, the number of shares
of the Common Stock, par value $0.01, of the Company determined in accordance
with Section 1.
Capitalized terms used herein and not otherwise defined shall have the meanings
ascribed to them in the Loan Agreement by and between the Holder and the
Company dated effective as of August 31, 1995 (the "Loan Agreement").
1. Number of Warrant Shares. Subject to adjustment as provided in Section 4,
the number of shares of Common Stock for which this Warrant may, at any given
time during the Warrant Exercise Period, be exercised (such total number of
underlying unissued shares as may, from time to time, be issuable upon the
exercise hereof being hereinafter referred to as the "Warrant Shares") shall be
220,000 (which number reflects the 1-for-5 reverse stock split for Ramtron
Common Stock which became effective August 6, 1999).
2. Exercise Price. This Warrant is exercisable for Warrant Shares at a price
per share (the "Warrant Price") equal to $5.00.
3. Expiration Date. Except as otherwise provided herein, this Warrant shall
expire on the earlier to occur of (a) the date on which this Warrant is fully
exercised and (b) 5:00 p.m. Eastern Time, on August 31, 2002, or, if such day
is not a Business Day, then at 5:00 p.m. Eastern Time on the next succeeding
Business Day (the "Expiration Date")."
4. Procedure for Exercise. Subject to Section 5, the Holder may exercise this
Warrant by presenting and surrendering it to the Company at the office
specified in Section 12 between the hours of 9:00 a.m. and 5:00 p.m. on any
Business Day during the Warrant Exercise Period, accompanied by (a) payment in
cash of the aggregate Warrant Price of the Warrant Shares to be purchased and
(b) a subscription form duly executed by the Holder in substantially the form
attached hereto as Annex A. The number of Warrant Shares shall be reduced
immediately upon any partial exercise by the number of shares so purchased, and
a new Warrant, of like tenor and effect herewith, for the remaining Warrant
Shares shall be issued to the Holder.
Page-141
<PAGE>
5. Conditions to Exercise. It shall be a condition precedent to any exercise
of this Warrant to purchase shares of Common Stock that the Holder shall have
obtained, prior to such exercise, all regulatory approvals, if any, required to
lawfully acquire such shares.
6. Covenants. The Company covenants and agrees with the Holder as follows:
(a) All Warrant Shares shall, upon delivery to the Holder, be duly
authorized, validly issued, fully paid and non-assessable shares of
Common Stock.
(b) The Company shall pay when due and payable any and all federal and
state original issue stock taxes, if any, that may be payable in
respect of the issuance of Warrant Shares upon whole or partial
exercise of this Warrant.
(c) The Company shall at all times on or after the issuance of this
Warrant and prior to the expiration of the Warrant Exercise Period
reserve and keep available a number of authorized but unissued shares
of Common Stock sufficient to permit the full exercise of this
Warrant. If at any time the number of authorized but unissued shares
of Common Stock is not sufficient for this purpose, the Company shall
take such corporate action as may be necessary to increase the
authorized but unissued shares of Common Stock to a number that is
sufficient for this purpose.
(d) The Company shall cooperate fully with the Holder in obtaining any
regulatory approvals referred to in Section 5 hereof.
7. Loss, Theft, Destruction or Mutilation. Upon delivery by the Holder to the
Company of evidence reasonably satisfactory to the Company of the ownership and
loss, theft, destruction or mutilation of this Warrant, and (a) in the case of
loss, theft or destruction, of indemnity reasonably satisfactory to the
Company, and (b) in the case of mutilation, of this Warrant for cancellation,
the Company shall execute and deliver, in lieu thereof, a new Warrant of like
tenor and effect herewith; provided, however, that the Company may require as
an additional condition to issuance of any such substitute Warrant payment of a
sum sufficient to reimburse it for any stamp tax, other governmental charge or
out-of-pocket expense connected therewith.
8. Rights of Holder.
(a) The Holder of this Warrant or of any portion thereof shall not, solely
as such, be entitled to vote or receive dividends or be deemed the
holder of Common Stock for any purpose nor shall anything contained in
this Warrant be construed to confer upon the Holder, as such, any of
the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders
at any meeting thereof, or to give or withhold consent to any
corporate action (whether upon a merger, conveyance or otherwise) or
to receive notice of meetings, or to receive dividends or subscription
rights or otherwise until this Warrant shall have been exercised and
the Warrant Shares shall have become deliverable.
Page-142
<PAGE>
(b) Regardless of the date of issue and delivery of certificates
representing such shares, the Holder shall for all purposes be deemed
to have become the holder of record of all shares purchased upon
exercise of this Warrant as of the close of business on the date on
which the Company has received, with respect to such purchase, (a)
this Warrant, (b) the Warrant Price and (c) a duly executed
subscription form.
9. Transfer of Warrant. The Company shall, upon surrender to it of this
Warrant, accompanied by one or more duly executed certificates of transfer in
substantially the form attached hereto as Annex B, execute and deliver in lieu
hereof (a) to and in the name of each assignee or transferee, a new Warrant, of
like tenor and effect herewith, representing the right to purchase, on the same
terms and conditions as set forth herein, such number of the Warrant Shares as
shall have been so assigned or transferred; and (b) to the Holder, in case the
right to purchase some portion of the Warrant Shares shall have been retained
by the Holder, a new Warrant, of like tenor and effect herewith, representing
the right to purchase, on the same terms and conditions as set forth herein,
such number of Warrant Shares.
10. Disposition of Shares.
(a) Each Holder understands and agrees that this Warrant and the Warrant
Shares have not been registered under either the Securities Act of
1933, as amended (the "Act") or any applicable state securities laws
(the "State Acts") and may not lawfully be sold or otherwise disposed
of for value except upon registration of such transfer in accordance
with the securities registration requirements of the Act and any
applicable State Acts, or pursuant to an exemption from such
registration requirements.
(b) Any certificates evidencing shares purchased upon exercise hereof
shall be imprinted with a conspicuous legend in substantially the
following form:
The securities represented by this certificate have not been
registered under either the Securities Act of 1933, as amended (the
"Act") or applicable state securities laws (the "State Acts") and
shall not be sold or otherwise disposed of for value by the Holder
except upon registration of such sale or disposition in accordance
with the securities registration requirements of the Act and any
applicable State Acts, or pursuant to exemption from such registration
requirements.
(c) In connection with the exercise of this Warrant and the issuance of
the Warrant Shares, and upon the request of Holder, Borrower shall
register under the Securities Act of 1933, as amended, within a
reasonable period of time after the date of such exercise and
issuance, the resale of the Warrant Shares issued pursuant to such
exercise.
Page-143
<PAGE>
11. Adjustment of Purchase Price and Number of Shares. The number and kind of
securities purchasable upon the exercise of the Warrants and the Warrant Price
shall be subject to adjustment from time to time upon the happening of certain
events, as follows:
(a) Consolidation, Merger or Reclassification. If the Company at any time
while the Warrants remain outstanding and unexpired shall consolidate
with or merge into any other corporation, or sell all or substantially
all of its assets to another corporation, or reclassify or in any
manner change the securities then purchasable upon the exercise of the
Warrants (any of which shall constitute a "Reorganization"), then
lawful and adequate provision shall be made whereby this Warrant
certificate shall thereafter evidence the right to purchase such
number and kind of securities and other property as would have been
issuable or distributable on account of such Reorganization upon or
with respect to the securities which were purchasable or would have
become purchasable under the Warrants immediately prior to such
Reorganization. The Company shall not effect any such Reorganization
unless prior to or simultaneously with the consummation thereof the
successor corporation (if other than the Company) resulting from such
Reorganization shall assume by written instrument executed and mailed
or delivered to the Holder, at the last address of the Holder
appearing on the books of the Company, the obligation to deliver to
the Holder such shares of stock, securities or assets as, in
accordance with the foregoing provisions, the Holder may be entitled
to purchase. Notwithstanding anything in this Section 11(a) to the
contrary, the prior two sentences shall be inoperative and of no force
and effect if upon the completion of any such Reorganization the
stockholders of the Company immediately prior to such event do not own
at least fifty percent (50%) of the equity interest of the corporation
resulting from such Reorganization and those Warrants which are
unexercised shall expire on the completion of such Reorganization if
the notice required by Section 11(e) hereof has been given.
(b) Subdivision or Combination of Shares. If the Company at any time
while the Warrants remain outstanding and unexpired shall subdivide or
combine its Common Stock, the Warrant Price shall be adjusted to a
price determined by multiplying the Warrant Price in effect
immediately prior to such subdivision or combination by a fraction (i)
the numerator of which shall be the total number of shares of Common
Stock outstanding immediately prior to such subdivision or combination
and (ii) the denominator of which shall be the total number of shares
of Common Stock outstanding immediately after such subdivision or
combination.
(c) Certain Dividends and Distribution. If the Company at any time prior
to the expiration of the Warrant Exercise Period shall take a record
of the holders of its Common Stock for the purposes of:
Page-144
<PAGE>
(i) Stock Dividends. Entitling them to receive a dividend payable
in, or to receive any other distribution without consideration
of, Common Stock, then the Warrant Price shall be adjusted to the
price determined by multiplying the Warrant Price in effect
immediately prior to each dividend or distribution by a fraction
(A) the numerator of which shall be the total number of shares of
Common Stock outstanding immediately prior to such dividend or
distribution, and (B) the denominator of which shall be the total
number of shares of Common Stock outstanding immediately after
such dividend or distribution; or
(ii) Distribution of Assets, Securities, etc. Making any distribution
without consideration with respect to its Common Stock (other
than a cash dividend) payable otherwise than in its Common Stock,
then the Holder shall, upon the exercise hereof, be entitled to
receive, in addition to the number of Shares receivable
thereupon, and without payment of any additional consideration
therefor, such assets or securities as would have been payable to
the Holder as owner of that number of Shares on the record date
for such distribution; and an appropriate provision therefore
shall be made a part of any such distribution.
(d) Adjustment of Number of Shares. Upon each adjustment in the Warrant
Price pursuant to Subsections (b) or (c)(i) of this Section 11, the
number of shares purchasable under the Warrants represented by this
certificate shall be adjusted to that number determined by multiplying
the number of Shares purchasable upon the exercise of the Warrants
immediately prior to such adjustment by a fraction, the numerator of
which shall be the Warrant Price immediately prior to such adjustment
and the denominator of which shall be the Warrant Price immediately
following such adjustment.
(e) Notice. In case at any time:
(i) The Company shall pay any dividend payable in stock upon its
Common Stock or make any distribution, excluding a cash dividend,
to the holders of its Common Stock.
(ii) The Company shall offer for subscription pro rata to the holders
of its Common Stock any additional shares of stock of any class
or other rights;
(iii) There shall be any reclassification of the Common Stock of the
Company, or consolidation or merger of the Company with, or sale
of all or substantially all of its assets to, another
corporation; or
(iv) There shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
Page-145
<PAGE>
then, in any one or more of such cases, the Company shall give to the
Holder at least ten (10) days prior written notice (or, in the event of
notice pursuant to Section 11(e)(iii), at least thirty (30) days prior
written notice) of the date on which the books of the Company shall close
or a record shall be taken for such dividend, distribution or subscription
rights or for determining rights to vote in respect to any such
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up. Such notice in accordance with the foregoing clause shall also
specify, in the case of any such dividend, distribution or subscription
rights, the date on which the holder of Common Stock shall be entitled
thereto, and such notice in accordance with the foregoing clause shall also
specify the date on which the holders of Common Stock shall be entitled to
exchange their Common Stock for securities or other property deliverable
upon such reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up, as the case may be. Each such written notice
shall be given by first-class mail, postage prepaid, addressed to the
Holder at the address of the Holder as shown on the books of the Company.
(f) No Change in Certificate. The form of this Warrant certificate need
not be changed because of any adjustment in the Warrant Price or in
the number of Warrant Shares purchasable on its exercise. The Warrant
Price or the number of Warrant Shares shall be considered to have been
so changed as of the close of business on the date of adjustment.
12. Notices. All notices and other communications pursuant hereto shall be in
writing and shall be deemed given if delivered in person or sent by United
States registered mail, postage prepaid:
If to the Company at:
Ramtron International Corporation
1850 Ramtron Drive
Colorado Springs, Colorado 80921
Attention: Chief Executive Officer
If to the Holder at:
NTC Liquidating Trust
c/o PriceWaterhouseCoopers
950 Seventeenth Street, Suite 2500
Denver, Colorado 80202
with copies to:
James Huemoeller
LeBoeuf, Lamb, Green & MacRae
633 17th Street, Suite 2000
Denver, Colorado 80202
Page-146
<PAGE>
or at such other address as either party may designate in writing by notice to
the other party as provided above.
13. Termination. This Warrant shall automatically and immediately terminate,
without any further action by the Company or the Holder, upon the occurrence of
any of the following:
(i) any voluntary or involuntary proceeding shall be commenced with
respect to the Holder in a court of competent jurisdiction seeking
relief under any applicable bankruptcy, insolvency or similar law;
(ii) a receiver, custodian, sequestrator or similar official for the
Holder or for any substantial part of its property shall be appointed
or elected;
(iii) the Holder shall commence any winding-up or liquidation, voluntary or
involuntary, of the Holder;
(iv) the Holder shall make a general assignment for the benefit of its
creditors or become unable generally, or admit in writing its
inability, to pay its debts as they become due; or
(v) the Holder shall take any corporate or similar action for the purpose
of effecting any of the foregoing.
14. Miscellaneous. This Warrant contains the entire agreement between the
parties with respect to the matters set forth herein and may not be modified,
supplemented or amended except in a writing signed by both parties. This
Warrant shall be governed by and construed in accordance with the laws of the
State of Delaware.
WITNESS the following signature effective as of the 20th day of December 1999.
RAMTRON INTERNATIONAL CORPORATION
By: /S/ L. David Sikes
---------------------------------
L. David Sikes, Chairman and CEO
Page-147
<PAGE>
ANNEX A
SUBSCRIPTION FORM
To Be Executed if Holder Desires
To Exercise Warrant
The undersigned hereby exercises, according to the terms and conditions hereof,
all or part (as indicated below) of this Warrant and herewith makes payment of
the applicable Warrant Price in full.
Name(s) ------------------------------------
Address ------------------------------------
No. of Shares ------------------------------
Dated --------------------------------------
Signature(s) -------------------------------
- ---------------------------------
Social Security Number or
Employer Identification Number
Page-148
<PAGE>
ANNEX B
CERTIFICATE OF TRANSFER
Ramtron International Corporation
1850 Ramtron Drive
Colorado Springs, Colorado 80921
Attention: Chief Executive Officer
Date: -----------------------
Gentlemen:
With reference to the Warrant to Purchase Shares of Common Stock dated
- -------------- (the "Warrant"), issued by Ramtron International Corporation
(the "Company") to -------------------------- (the "Holder"), representing as
of the date hereof the right to purchase, on the terms and subject to the
conditions herein set forth, --------------- shares of the Common Stock, par
value $0.01, of the Company (the "Warrant Shares"), the undersigned Holder
hereby transfers, conveys and assigns to ------------------------------,
subject to the terms and conditions of the Warrant, the right to purchase
- ---------------- of such Warrant Shares. By this transfer, all rights of the
undersigned Holder with respect to such number of the Warrant Shares are
transferred to the transferee.
Enclosed herewith is the original Warrant so that the Company may issue in lieu
thereof (a) to the transferee, a new Warrant, of like tenor and effect
therewith, for the number of Warrant Shares with respect to which the
undersigned Holder's rights under the Warrant are hereby transferred, conveyed
and assigned, and (b) if the undersigned Holder has retained its rights under
the Warrant with respect to some portion of the Warrant Shares, a new Warrant,
of like tenor and effect therewith, for such number of the Warrant Shares.
- ---------------------------------------
as Holder
By: -----------------------------------
Title: --------------------------------
Page-149
<PAGE>
August 25, 1999
Mr. Donald G. Carrigan
425 Scrub Oak Circle
Monument, Colorado 80132
Dear Mr. Carrigan:
This letter agreement ("Agreement") sets forth our agreement as it pertains to
your salary commitment from Ramtron International Corporation ("Ramtron").
1. Term. The term of this commitment shall begin on September 1, 1999 and
shall continue until December 31, 2000, unless sooner terminated as
provided in paragraph 2 below.
2. Termination. Should you voluntarily terminate your employment or should
your employment be terminated for cause, Ramtron shall be relieved of all
of its obligations provided herein including, but not limited to, its
obligation to pay you the salary provided in paragraph 3 below.
Termination for cause shall include chronic absenteeism (not due to
physical or mental illness, not constituting permanent disability, habitual
alcoholism, drug abuse or addiction); the commission of a felony or fraud
on Ramtron, its employees, customers, stockholders, or vendors;
misappropriation of any money or other assets or properties of Ramtron, its
employees, customers, stockholders or vendors; violation of reasonable,
specific and lawful directions received from Ramtron's Board of Directors
and/or CEO, in connection with and pertaining to your duties Vice President
and General Manager of FRAM Product Division; or the unauthorized
disclosure or use of any Ramtron trade secrets or financial information or
data which results, or is likely to result, in injury or damage to Ramtron.
Upon termination of this Agreement, you shall be paid your regular salary
up to the termination date less applicable income tax withholdings, or any
off set for lawful charges or indebtedness which may be owed by you to
Ramtron or both. If Ramtron terminates your employment for any reason
other than cause during the term of this Agreement, then Ramtron shall be
obligated to continue to pay you the salary provided in paragraph 3 below
until such term expires. IT IS EXPRESSLY ACKNOWLEDGED AND UNDERSTOOD THAT
YOUR EMPLOYMENT WITH RAMTRON IS AN EMPLOYMENT "AT WILL" SITUATION.
3. Salary. The salary to be paid by Ramtron to you shall be ONE HUNDRED
FIFTY-TWO THOUSAND NINETY-TWO DOLLARS ($152,092.00) per year, which amount
shall be paid in equal installments on or about the 15th and 30th of each
month. All such payments shall be subject to withholding and other
applicable taxes. For purposes of paragraph 2, salary is defined as
$12,674.33 per month.
Page-150
<PAGE>
4. Ownership of Documents, Patents and Copyrights. Any documents, inventions
or copyrightable material that you may prepare while employed by Ramtron
shall be subject to the non-disclosure and assignment requirements provided
in the Invention and Non-Disclosure Agreement between you and Ramtron dated
November 27, 1989. The termination or expiration of this Agreement shall
have no effect on your duties and obligations as provided in said Invention
and Non-Disclosure Agreement.
5. Arbitration. Should any dispute arise under this Agreement or out of its
termination or cancellation, the matter shall be submitted to and decided
by arbitration. The arbitration shall be held at a mutually agreeable
location within the State of Colorado and shall be held in accordance with
the terms and conditions outlined in the Colorado Uniform Arbitration Act,
C.R.S. Section 13-22-201.
6. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Colorado.
7. Severability. In case any one or more of the provisions of this Agreement
shall be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein
shall not in any way be affected thereby.
8. Assignability and Binding Effect. This Agreement shall inure to the
benefit of and shall be binding upon your successors, assigns and legal
representatives and the successors and assigns of Ramtron. Except as set
forth in paragraph 9 below, neither party may assign, transfer, pledge,
encumber or otherwise dispose of this Agreement or any rights or
obligations hereunder, and any such attempt at delegation or disposition
shall be null and void and without effect.
9. Complete Agreement; Modification; Waiver. This Agreement constitutes the
complete agreement and understanding between the parties with respect to
the subject matter hereof. This Agreement shall not be altered, modified
or amended except by written instruments signed by each of the parties
hereto. Waivers of any provision contained herein or any default hereunder
shall only be effective if in writing and signed by the party to be charged
therewith. Any written waiver shall not operate or be construed as a
waiver of any or other subsequent breach or default by any party.
Please indicate your agreement to the foregoing by signing below.
Sincerely,
/S/ L. David Sikes
L. David Sikes
Chairman and CEO
LDS/klb
This Agreement is hereby agreed to and accepted, effective as of September 1,
1999.
/S/ Donald G. Carrigan
- -----------------------
Donald G. Carrigan Date September 1, 1999
Page-151
<PAGE>
* Confidential treatment has been granted or requested with respect to
portions of this exhibit, and such confidential portions have been deleted and
separately filed with the Securities and Exchange Commission pursuant to Rule
24b-2 or Rule 406.
SECOND AMENDMENT TO
FRAM TECHNOLOGY LICENSE AGREEMENT
THIS SECOND AMENDMENT TO FRAM TECHNOLOGY LICENSE AGREEMENT (the "Amendment") is
entered into as of the 20th day of September, 1999, by and between RAMTRON
INTERNATIONAL CORPORATION ("Ramtron"), a Delaware corporation having its
principal office at 1850 Ramtron Drive, Colorado Springs, Colorado 80921, USA,
and FUJITSU LIMITED ("Fujitsu"), a Japanese corporation having its registered
office at 1-1, Kamikodanaka 4-chome, Nakahara-ku, Kawaski-shi, Kanagawa-ken
211-8588, Japan.
R E C I T A L S:
A. Ramtron and Fujitsu entered into that certain FRAM Technology License
Agreement executed by Ramtron on December 6, 1995 and by Fujitsu on
December 19, 1995, as amended by that certain Amendment to Agreement
entered into between the parties as of August 30, 1996 (as amended the
"Agreement"), pursuant to which Ramtron licensed to Fujitsu certain of its
proprietary ferroelectric technology for the design, development,
manufacture and sale of products based upon such ferroelectric technology.
B. Ramtron and Fujitsu wish to expand the scope of the Agreement to include
use of the Licensed Technology in applications involving radio frequency
identification devices, as more fully described herein.
NOW, THEREFORE, Ramtron and Fujitsu agree as follows:
1. Definitions. Defined terms herein shall have the meanings ascribed to such
terms in the Agreement, unless otherwise provided herein.
2. Amendments. The Agreement shall be, and is hereby, amended in the
following respects:
a) Section 1.6 (definition of "FRAM Products") is hereby amended and
restated in its entirety to read as follows:
"FRAM Products" means standard, non-volatile ferroelectric semi-
conductor memory devices, including, specifically, devices with only
memory array and associated memory array control logic.
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<PAGE>
b) Section 1.8 (definition of "Excluded FRAM Technology") is hereby
amended and restated in its entirety to read as follows:
"Excluded FRAM Technology" shall mean ** .
c) Section 4.1.1 (Grant of License) is hereby amended by deleting the
last sentence of the paragraph added to Section 4.1.1 by the Amendment
to Agreement dated August 30, 1996, and replacing it with the
following sentence:
Subject to the terms and conditions set forth herein, Ramtron hereby
grants to Fujitsu a royalty-bearing, non-exclusive, non-transferable,
worldwide, perpetual license to use the Ramtron Technology, Ramtron
Intellectual Property Rights and/or Ramtron's Improvements to design,
develop, manufacture, make, sell, use, lease, transfer and otherwise
dispose of Ferroelectric RF/ID Products, RF/ID IC cards and RF/ID IC
card systems and their components.
d) Section 5.1.1 (Lump Sum Payment) is hereby amended to include the
following new subparagraph (g):
(g) Prepaid RF/ID Royalties. On or before September 30, 1999,
Fujitsu shall pay Ramtron the amount of ** which
payment shall be a prepayment of certain of the royalties owed by
Fujitsu pursuant to Section 5.2.5 below. Accordingly, Fujitsu
shall be entitled to a credit against the first ** in
royalties otherwise due to Ramtron pursuant to Section 5.2.5
hereof. At such time as the royalties otherwise due to Ramtron
pursuant to Section 5.2.5 hereof equals ** Fujitsu
shall commence payment of such royalties to Ramtron in accordance
with this Agreement.
e) Section 5.2 (Royalty Payments) shall be amended to include the
following new subsection:
5.2.5 Fujitsu shall pay Ramtron a royalty on all Ferroelectric RF/ID
Products based upon and/or which use the FRAM Technology,
Ramtron IPR, and/or Ramtron's Improvements made thereto and
sold by Fujitsu for ** upon the first sale
by Fujitsu of Ferroelectric RF/ID Products in an amount equal
to ** . For purposes of the preceding sentence, the FRAM
memory area consists of the FRAM memory array and associated
control logic, and the die area excludes the bond pads.
Subject to Section 5.1.1(g) above, the obligation of Fujitsu to
pay royalties to Ramtron under this Section 5.2.5 shall
commence upon first sale by Fujitsu of Ferroelectric RF/ID
Products.
Section 5.2 (Royalty Payments) shall be further amended such
that the second to the last sentence thereof is amended and
restated in its entirety to read as follows: "All FRAM
Products, Embedded FRAM Products and/or Ferroelectric RF/ID
Products manufactured and/or sold by Fujitsu ** .
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f) Section 6.1 (OEM/Foundry Agreement) is hereby amended by modifying the
paragraph added to Section 6.1 by the Amendment to Agreement dated
August 30, 1996 such that each reference therein to "Embedded FRAM
Products" shall be amended to read "Embedded FRAM Products and/or
Ferroelectric RF/ID Products," and the reference therein to " **
Ramtron designs" shall be amended to read " ** Ramtron designs."
g) Section 6.2 (Sales Price to Ramtron) is hereby amended by modifying
the paragraph added to Section 6.2 by the Amendment to Agreement dated
August 30, 1996 such that each reference therein to "Embedded FRAM
Products" shall be amended to read "Embedded FRAM Products and/or
Ferroelectric RF/ID Products."
h) Sections 1.13 (definition of "Net Sales"), 4.1.2, 5.3 (Payment and
Certification of Royalties by Fujitsu) and 10.10 are hereby amended
such that each reference therein to "FRAM Products" shall be amended
to read "FRAM Products, Embedded FRAM Products and/or Ferroelectric
RF/ID Products."
i) Sections 10.7, 10.8 and 10.9, as amended by the Amendment to Agreement
dated August 30, 1996, are hereby amended such that each reference
therein to "FRAM Products and/or Embedded FRAM Products" shall be
amended to read "FRAM Products, Embedded FRAM Products and/or
Ferroelectric RF/ID Products."
3. No Other Changes. Except as expressly stated above, this Amendment does
not otherwise amend the Agreement, and the Agreement shall remain in full
force and effect, as amended hereby.
EXECUTED as of the day and year first written above.
FUJITSU LIMITED
By: /S/ Toshihiko Ono
-------------------
Toshihiko Ono
Group Senior Vice President
Semiconductor Group
RAMTRON INTERNATIONAL CORPORATION
By: /S/ Greg B. Jones
-------------------
Greg B. Jones
President and COO
Page-154
<PAGE>
AMENDMENT NO. 2 TO
RAMTRON INTERNATIONAL CORPORATION
1995 STOCK OPTION PLAN
Ramtron International Corporation's 1995 Stock Option Plan (the "Plan") shall
be amended as follows:
The text of Section 3 of the Plan, entitled "Shares Reserved," is hereby
amended to state the following:
"The maximum aggregate number of Shares reserved for issuance pursuant to
the Plan shall be 1,800,000 Shares or the number of shares of stock to
which such Shares shall be adjusted as provided in Section 10 of the Plan
. . . "
The text of Section 6(b) of the Plan, entitled "Terms and Conditions of
Options - Number of Shares," is hereby amended to state the following:
" . . . The maximum number of Shares, which may be awarded as Options under
the Plan during any calendar year to any Optionee is 300,000 Shares. . . ."
Dated: December 22, 1999
Page-155
<PAGE>
RAMTRON INTERNATIONAL CORPORATION
1999 STOCK OPTION PLAN
1. Establishment and Purpose of the Plan.
Ramtron International Corporation hereby establishes this 1999 Stock Option
Plan to promote the interests of the Company and its stockholders by (i)
helping to attract and retain the services of employees of the Company who
are in a position to make a material contribution to the successful operation
of the Company's business, (ii) motivating such persons, by means of
performance-related incentives, to achieve the Company's business goals and
(iii) enabling such persons to participate in the long-term growth and
financial success of the Company by providing them with an opportunity to
purchase stock of the Company.
2. Definitions.
The following definitions shall apply throughout the Plan:
a. "Affiliate" shall mean any entity that directly, or indirectly through
one or more intermediaries, controls or is controlled by, or is under
common control with, the Company.
b. "Board of Directors" shall mean the Board of Directors of the Company.
c. "Code" shall mean the Internal Revenue Code of 1986, as amended.
References in the Plan to any section of the Code shall be deemed to
include any amendment or successor provisions to such section and any
regulations issued under such section.
d. "Company" shall mean Ramtron International Corporation, a Delaware
corporation (or any successor corporation), any "subsidiary" corporation,
whether now or hereafter existing as defined in Section 424(f) and (g) of
the Code, and any "parent" corporation, whether now or hereafter
existing, as defined in Sections 424(e) and (g) of the Code.
e. "Continuous Employment" shall mean the absence of any interruption or
termination of employment by the Company. Continuous Employment shall
not be considered interrupted in the case of sick leave, military leave,
or any other leave of absence approved by the Board of Directors or in
the case of transfers between locations of the Company.
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<PAGE>
f. "Disability" shall mean the inability of the Optionee to engage in any
substantial gainful activity be reason of any medically determinable
physical or mental impairment which can be expected to result in death or
has lasted or can be expected to last for a continuous period of not less
than 12 months. In determining the Disability of the Optionee, the Board
of Directors may require the Optionee to furnish proof of the existence
of the Disability and may select a physician to examine the Optionee.
The final determination as to the Disability of the Optionee shall be
made by the Board of Directors.
g. "Employee" shall mean any employee of the Company who is not an officer
or director of the Company.
h. "Fair Market Value" shall mean, with respect to Shares, the fair market
value per Share on the date that an option is granted as determined by
the Board of Directors in its sole discretion, exercised in good faith;
provided, however, that where there is a public market for the Shares,
the fair market value per Share shall be the closing price of the Shares
on all securities exchanges on which the Shares may be listed, as of the
date of grant, as reported in the Wall Street Journal, or if the Shares
are not so listed on the date of grant, then the closing price quoted in
the National Association of Securities Dealers Automated Quotation
(Nasdaq) System as of 4:00 P.M., New York time, or, if the Shares are not
quoted on the Nasdaq System, then the closing price of the Shares on the
date of grant in the domestic over-the-counter market as reported by the
National Quotation Bureau Incorporated, or any similar successor
organization; provided that, if the grant date is not a trading day, such
determination will be made as of the immediately preceding trading day.
i. "Option" shall mean the grant of the right to an Employee pursuant to the
Plan to purchase a specified number of Shares at a specified exercise
price. All Options granted under the Plan shall be non-qualified stock
options that are not intended to meet the requirements of "incentive
stock options" within the meaning of Section 422 of the Code.
j. "Optioned Stock" shall mean the Shares subject to an Option.
k. "Optionee" shall mean an Employee who is granted an Option under the
Plan.
l. "Plan" shall mean this Ramtron International Corporation 1999 Stock
Option Plan as amended from time to time.
m. "Shares" shall mean shares of the common stock of the Company, par value
per share of $0.01, or any shares into which such Shares may be converted
in accordance with Section 9 of the Plan.
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<PAGE>
n. "Termination for Cause" shall mean termination of employment as a result
of (i) any act or acts by the Optionee constituting a felony under any
federal, state or local law; (ii) the Optinee's willful and continued
failure to perform the duties assigned to him or her as an Employee;
(iii) any material breach by the Optionee of any agreement with the
Company concerning his or her employment or other understanding
concerning the terms and conditions of employment by the Company;
(iv) dishonesty, gross negligence or malfeasance by the Optionee in the
performance of his or her duties as an Employee or any conduct by the
Optionee which involves a material conflict of interest with any business
of the Company; or (v) the Optinee's taking or knowingly omitting to take
any other action or actions in the performance of Optionee's duties as an
Employee without informing appropriate members of management to whom such
Optionee reports, which action or actions, in the detemination of the
Board of Directors , have caused or substantially contributed to the
material deterioration in the business of the Company.
3. Shares Reserved.
The maximum aggregate number of Shares reserved for issuance pursuant to the
Plan shall be 700,000 Shares or the number of shares of stock to which such
Shares shall be adjusted as provided in Section 9 of the Plan. Such number
of Shares may be set aside out of authorized but unissued Shares not reserved
for any other purpose, or out of issued Shares acquired for and held in the
treasury of the Company from time to time.
Shares subject to, but not sold or issued under, any Option terminating,
expiring or canceled for any reason prior to its exercise in full, shall
again be available for Options thereafter granted under the Plan, and the
same shall not be deemed an increase in the number of Shares reserved for
issuance under the Plan. Any Shares which may be tendered, actually or by
attestation, by an Optionee as full or partial payment in connection with the
exercise of any Option under the Plan shall again be available for Options
thereafter granted during the remainder of the Plan.
4. Administration of the Plan.
a. Unless otherwise determined by the Board of Directors, as evidenced by a
resolution duly adopted by the Board of Directors, the Plan shall be
administered by the Board of Directors.
b. Subject to the provisions of the Plan, the Board of Directors shall have
the authority, in its discretion: (i) to determine, upon review of
relevant information, the Fair Market Value per Share; (ii) to determine
the exercise price of the Options to be granted to Employees, in
accordance with Section 6(d) of the Plan; (iii) to determine the
Employees to whom, and the time or times at which, Options shall be
granted and the number of Shares subject to each Option; (iv) to
prescribe, amend and rescind rules and regulations relating to the Plan
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<PAGE>
subject to the limitations set forth in Section 10 of the Plan; (v) to
determine the terms and provisions of each Option granted under the Plan
(which need not be identical with the terms of other Options) and, with
the consent of the holder thereof, modify or amend an outstanding Option;
(vi) to accelerate the exercise date of any Option; (vii) to determine
whether any Optionee will be required to execute a stock purchase
agreement or other agreement as a condition to the exercise of an Option,
and to determine the terms and provisions of any such agreement (which
need not be identical with the terms of any other such agreement) and to
amend any such agreement; (viii) to interpret the Plan or any agreement
entered into with respect to the grant or exercise of Options and to
determine the eligibility of an Employee for benefits hereunder and the
amount thereof; (ix) to authorize any person to execute on behalf of the
Company any instrument required to effectuate the grant of an Option
previously granted or to take such other actions as may be necessary or
appropriate with respect to the Company's rights pursuant to Options or
agreements relating to the grant or exercise thereof; (x) to cancel any
outstanding Options and grant to an Optionee in replacement thereof such
number of Options on such terms and conditions as the Board of Directors
shall determine; and (xi) to make such other determinations and establish
such other procedures as it deems necessary or advisable for the
administration of the Plan.
c. All decisions, determinations and interpretations of the Board of
Directors shall be final and binding on all Optionees and any other
holders of any Options granted under the Plan.
d. The Board of Directors shall keep minutes of its meetings and of the
actions taken by it without a meeting. A majority of the Board of
Directors shall constitute a quorum, and the actions of a majority at a
meeting, including a telephone meeting, at which a quorum is present, or
acts approved in writing by a majority of the members of the Board of
Directors without a meeting, shall constitute acts of the Board of
Directors.
e. The Company shall pay all original issue and transfer taxes with respect
to the grant of Options and/or the issue and transfer of Shares pursuant
to the exercise thereof, and all other fees and expenses necessarily
incurred by the Company in connection therewith; provided, however, that
the person exercising an Option shall be responsible for all payroll,
withholding, income and other taxes incurred by such person on the date
of exercise of an Option or transfer of Shares.
5. Eligibility.
Options may be granted only to Employees, as defined under Section 2 of the
Plan; accordingly, officers and directors of the Company are specifically
excluded from participation in the Plan. An Employee who has been granted an
Option may be granted, if he or she is otherwise eligible, additional
Options. In the event that an employee to whom an Option is granted under
the Plan shall, subsequent to the date of the Option grant, become an officer
or director of the Company, such employee shall cease to be eligible to
participate in the Plan with respect to any further Option grants; provided,
however, that Options granted to such employee under the Plan prior to his or
her becoming an officer or director shall not be affected thereby.
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<PAGE>
6. Terms and Conditions of Option.
Options granted pursuant to the Plan by the Board of Directors shall be
evidenced by an Option Agreement providing, in addition to such other terms
as the Board of Directors may deem advisable, the following terms and
conditions:
a. Time of Granting Options. The date of grant of an Option shall be, for
all purposes, the date on which the Board of Directors makes the
determination granting such Option; provided, however, that if the Board
of Directors determines that such grant shall be effective as of some
future date, the date of grant shall be as of such future date. Notice
of the determination shall be given to each Optionee within a reasonable
time after the date of such grant.
b. Number of Shares. Each Option Agreement shall state the number of Shares
to which it pertains.
c. Vesting. Options granted under the Plan shall vest as determined by the
Board of Directors, in its sole and absolute discretion, from time to
time, which may include installment or performance vesting or other
contingent vesting provisions.
d. Exercise Price. The exercise price per Share for the Shares to be issued
pursuant to exercise of an Option shall be such price as is determined by
the Board of Directors as of the date of grant; provided, however, that
such price shall in no event be less than 95% of the Fair Market Value on
the date of grant.
e. Medium and Time of Payment. The consideration to be paid for the Shares
to be issued upon exercise of an Option, including the method of payment,
shall be determined by the Board of Directors on the date of grant and
may consist entirely of (1) cash, check or full recourse promissory notes
or (2) Shares having a Fair Market Value on the date of surrender (either
actually or by attestation) equal to the aggregate exercise price of the
Shares to which said Option shall be exercised, or any combination of
such methods of payment, or such other consideration and method of
payment for the issuance of Shares permitted under any laws to which the
Company is subject which is approved by the Board of Directors in its
discretion; provided, however that the Optionee shall be required to pay
in cash an amount necessary to satisfy the Company's tax withholding
obligations. Payment of the exercise price specified in the Option may
also be made in accordance with procedures for a "cashless exercise"
(including the delivery of an irrevocable notice of exercise) as the same
may be established from time to time by the Company to facilitate
exercises of Options and sales of Shares under this Plan.
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If the consideration for the exercise of an Option is a promissory note, it
shall be a full recourse promissory note executed by the Optionee, bearing
interest at a test rate which shall be sufficient to preclude the imputation
of interest under the applicable provisions of the Code. Until such time as
the promissory note has been paid in full, the Company may retain the Shares
purchased upon exercise of the Option in escrow as security as security for
payment of the promissory note.
If the consideration for the exercise of an Option is the actual surrender of
previously acquired and owned Shares, the Optionee will be required to make
representations and warranties satisfactory to the Company regarding his or
her title to the Shares used to effect the purchase, including without
limitation representations and warranties that the Optionee has good and
marketable title to such Shares free and clear of any and all liens,
encumbrances, charges, equities, claims, security interests, options or
restrictions, and has full power to deliver such Shares without obtaining the
consent or approval of any person or government authority other than those
which have already given consent or approval in a manner satisfactory to the
Company. The value of the Shares used to effect the purchase shall be the
Fair Market Value of such Shares on the date of exercise as determined by the
Board of Directors in its sole discretion exercised in good faith.
f. Term of Options. The term of an Option may be up to ten years plus one
day from the date of grant thereof. The term of any Option may be less than
the maximum term provided for herein as specified by the Board of Directors
upon grant of the Option and as set forth herein.
7. Exercise of Option.
a. In General. Any Option granted hereunder shall be exercisable at such
times and under such conditions as determined by the Board of Directors
and as shall be permissible under the Plan, including any performance or
other criteria with respect to the Company and/or the Optionee, as may be
determined by the Board of Directors.
An Option may be exercised in accordance with the provisions of the Plan
as to all or any portion of the Shares then exercisable under an Option
from time to time during the term of the Option. However, an Option may
not be exercised for a fraction of a Share.
b. Procedure. An Option shall be deemed to be exercised when written notice
of such exercise has been given to the Company at its principal business
office in accordance with the terms of the Option Agreement by the person
entitled to exercise the Option and full payment for the Shares with
respect to which the Option is exercised has been received by the
Company, accompanied by any other agreements required by the terms of the
Plan and/or Option Agreement or as required by the Board of Directors and
payment by the Optionee of all payroll, withholding or income taxes
incurred in connection with such Option exercise (or evidence that
arrangements for the collection or payment of such tax satisfactory to
the Committee have been made). Full payment may consist of such
consideration and method of payment allowable under Section 6(e) of the
Plan.
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c. Decrease in Available Shares. Exercise of an Option in any manner shall
result in a decrease in the number of Shares which thereafter may be
available, both for purposes of the Plan and for sale under the Option,
by the number of Shares as to which the Option is exercised, except if
the Option is exercised by tendering Shares, either actually or by
attestation.
d. Exercise of Stockholder Rights. Until the Option is properly exercised
in accordance with the terms of this Section 7, no right to vote or
receive dividends or any other rights as a stockholder shall exist with
respect to the Optioned Stock. No adjustment will be made for a dividend
or other right for which the record date is prior to the date the Option
is exercised, except as provided in Section 10 of the Plan.
e. Termination of Continuous Employment. If an Employee's Continuous
Employment with the Company terminates for any reason other than death,
Disability or Termination for Cause, he or she may exercise his or her
Option to the extent the Option was exercisable as of the date of such
termination, but only within 90 days following the date of such
termination (subject to any earlier termination of the Option as provided
by its terms).
The Board of Directors, at any time, may extend beyond 90 days the period
of time during which an Optionee may exercise his or her Option following
the date on which his or her Continuous Employment with the Company
terminates for any reason other than death, Disability or Termination for
Cause.
Notwithstanding the forgoing, an Option shall not be exercisable after
the expiration of the term of such Option, as set forth in the Option
Agreement, and, unless otherwise amended by the Board of Directors, an
Option may be exercised only to the extent the Optionee was entitled to
exercise it on the date his or her Continuous Employment with the Company
terminated. To the extent the Optionee does not exercise his or her
Option, to the extent exercisable, within the time specified herein, the
Option shall terminate.
f. Death or Disability of Optionee. If an Optionee's Continuous Employment
with the Company terminates due to death or Disability of the Optionee,
the Option may be exercised, in the case of death, by the Optionee's
estate or be a person who acquired the right to exercise the Option be
bequest or inheritance, or, in the case of Disability, by the Optionee,
within one year following the date of such termination (subject to any
earlier termination of the Option as provided by its terms).
Notwithstanding the forgoing, an Option shall not be exercisable after
the expiration of the term of such Option, as set forth in the Option
Agreement, and, unless otherwise amended by the Board of Directors, an
Option may be exercised only to the extent the Optionee was entitled to
exercise it on the date his or her Continuous Employment with the Company
terminated. To the extent the Optionee does not exercise his or her
Option, to the extent exercisable, within the time specified herein, the
Option shall terminate.
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g. Termination for Cause. If an Optionee's Continuous Employment with the
Company terminates due his or her Termination for Cause, he or she may
exercise his or her Option to the extent the Option was exercisable as of
the date of such termination, but only within 30 days following the date
of such Termination for Cause (subject to any earlier termination of the
Option as provided by its terms).
Notwithstanding the forgoing, an Option shall not be exercisable after
the expiration of the term of such Option, as set forth in the Option
Agreement, and, unless otherwise amended by the Board of Directors, an
Option may be exercised only to the extent the Optionee was entitled to
exercise it on the date his or her Continuous Employment with the Company
terminated. To the extent the Optionee does not exercise his or her
Option, to the extent exercisable, within the time specified herein, the
Option shall terminate.
h. Expiration of Option. Notwithstanding any provision in the Plan,
including but not limited to the provisions set forth in Section 7(e) and
7(f), an Option may not be exercised, under any circumstances, after the
expiration of its term.
i. Conditions on Exercise and Issuance. As soon as practicable after any
proper exercise of an Option in accordance with the provisions of the
Plan, the Company shall deliver to the Optionee at the principal
executive office of the Company or such other place as shall be mutually
agreed upon between the Company and the Optionee, a certificate or
certificates representing the Shares for which the Option shall have been
exercised. The time of issuance and delivery of the certificate or
certificates representing the Shares for which the Option shall have been
exercised may be postponed by the Company for such period as may be
required by the Company, with reasonable diligence, to comply with any
law or regulation applicable to the issuance or delivery of such Shares.
Options granted under the Plan are conditioned upon the Company obtaining
any required permit or order from appropriate governmental agencies,
authorizing the Company to issue such Options and Shares issuable upon
exercise thereof. Shares shall not be issued pursuant to the exercise of
an Option unless the exercise of such Option and the issuance and
delivery of such Shares pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Securities Exchange Act of 1934, as amended,
applicable state law, the rules and regulations promulgated thereunder,
and the requirements of any stock exchange upon which the Shares may then
be listed, and may be further subject to the approval of counsel for the
Company with respect to such compliance.
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<PAGE>
j. Withholding or Deduction for Taxes. If, at any time, the Company, any
Parent or Subsidiary is required, under applicable laws and regulations,
to withhold, or to make any deduction for, any taxes or take any other
action in connection with any Option exercise made hereunder or transfer
of Shares, the Company, such Parent or Subsidiary shall have the right to
deduct from all amounts paid in cash any taxes required by law to be
withheld there from, and, in the case of Shares, the Optionee or his or
her estate or beneficiary shall be required to pay to the Company, such
Parent or Subsidiary the amount of taxes required to be withheld, or, in
lieu thereof, the Company, such Parent or Subsidiary shall have the right
to retain, or sell without notice, a sufficient number of Shares to cover
the amount required to be withheld, or to make other arrangements with
respect to withholding as it shall deem appropriate. The Board of
Directors may, in its discretion, permit an Optionee to elect, subject to
such conditions as the Board of Directors shall impose to deliver to the
Company previously acquired Shares having a fair market value sufficient
to satisfy all or part of the Optionee's estimated total tax obligation
associated with the transaction.
8. Nontransferability of Options.
Options granted under the Plan may not be sold, pledged, assigned,
hypotheticated, gifted, transferred, or disposed of in any manner,
voluntarily or involuntarily by operation of law, other than by will or
by the laws of descent or distribution or transfers between spouses
incident to a divorce, and any such attempt may result, at the discretion
of the Board of Directors, in the termination of such Options. During
the lifetime of the Optionee, his or her Option may be exercised only by
the Optionee or his or her legal guardian.
9. Adjustments Upon Change in Corporate Structure.
a. Subject to any required action by the stockholders of the Company, the
number of Shares covered by each outstanding Option, and the number of
Shares which have been authorized for issuance under the Plan but as to
which no Options have yet been granted or which have been returned to the
Plan upon cancellation or expiration of an Option, as well as the
exercise or purchase price per Share covered by each such outstanding
Option, shall be proportionately adjusted for any increase or decrease in
the number of issued Shares resulting from a stock split or combination,
the payment of a stock dividend, recapitalization, merger, consolidation,
exchange, spin-off, or any other increase or decrease in the number of
issued Shares effected without receipt of consideration by the Company
(other than stock awards to Employees), as may be necessary to prevent
dilution or enlargement of rights; provided, however, that the conversion
of any convertible securities of the Company shall not be deemed to have
been "effected without receipt of consideration. Any such adjustment
shall be made by the Board of Directors, in its sole discretion, whose
determination in that respect shall be final, binding and conclusive.
The existence of the Plan and outstanding Options shall not limit or
affect in any way the right or power of the company to engage in any such
transactions.
Page-164
<PAGE>
b. In the event of the proposed dissolution or liquidation of the Company,
or in the event of a proposed sale of all or substantially all of the
assets or stock of the Company (other than in the ordinary course of
business), or the merger or consolidation of the company with or into
another corporation, as a result of which the Company is not the
surviving and controlling corporation or as a result of which the
outstanding Shares are exchanged or converted into cash or property or
securities not of the company, the Board of Directors shall (i) make
provision for the assumption of all outstanding Options by the successor
corporation or (ii) declare that any Option shall terminate as of a date
fixed by the Board of Directors which is at least 30 days after the
notice thereof to the Optionee, unless such 30-day period is waived by
the Optionee, and shall give each Optionee the right to exercise the
Option as to all or any part of the Optioned Stock, including Shares
covered by the Option as to which the Option would not otherwise be
exercisable, provided such exercise does not violate Section 7(e) of the
Plan. In the event the Company elects to comply with Section 9(b)(i) and
the Optionee's Continuous Employment is subsequently terminated (other
than by a voluntary termination by the Optionee of Termination for Cause)
prior to the time such Optionee's Options are fully vested, such
Optionee's Options shall be fully and immediately vested and such
Optionee shall have the right to exercise his or her Options as to all or
any part of the Optioned Stock including Shares as to which the Options
would not otherwise be exercisable, provided such exercise does not
violate Section 7(e) of the Plan.
c. No fractional Shares shall be issuable on account of any action
aforesaid, and the aggregate number of shares into which Shares then
covered by the Option, when changed as the result of such action, shall
be reduced to the largest number of whole shares resulting from such
action, unless the Board of Directors, in its sole discretion, shall
determine to issue scrip certificates in respect to any fractional
shares, which scrip certificates, in such event shall be in a form and
have such terms and conditions as the Board of Directors in its
discretion shall prescribe.
10. Amendment and Termination of the Plan.
a. Amendment and Termination. The Board of Directors may amend or terminate
the Plan from time to time in such respects as the Board of Directors may
deem advisable.
b. Effect of Amendment or Termination. Except as otherwise provided in
Section 9 of the Plan, any amendment or termination of the Plan shall not
affect Options already granted and such Options shall remain in full
force and effect as if this Plan had not been amended or terminated,
unless mutually agreed otherwise between the Optionee and the Company,
which agreement must be in writing and signed by the Optionee and the
Company.
Page-165
<PAGE>
11. Indemnification.
No member of the Board of Directors shall be liable for any act or action
taken, whether of commission or omission, except in circumstances involving
actual bad faith, or for any act or action taken, whether of commission or
omission, by any other member or by any officer, agent, or employee. In
addition to such other rights of indemnification, as they may have as members
of the Board of Directors, the Board of Directors shall be indemnified by the
Company against the reasonable expenses, including attorneys' fees actually
and necessarily incurred, in connection with the defense of any action, suit
or proceeding, or in connection with any appeal therein, to which they or any
of them may be a party by reason of any act or action taken, by commission or
omission, in connection with the Plan or any Option granted thereunder, and
against all amounts paid by them in settlement thereof (provided such
settlement is approved by independent legal counsel selected by the Company)
or paid by them in satisfaction of a judgment in any action, suit or
proceeding, except in relation to matters as to which it shall be adjudged in
such action, suit or proceeding that such Board of Directors member is liable
for actual bad faith in the performance of his or her duties; provided that
within 60 days after institution of any such action, suit or proceeding, a
Board of Directors member shall in writing offer the Company the opportunity,
at its own expense, to handle and defend the same.
12. Reservation of Shares.
The Company, during the term of this Plan, will at all times reserve and keep
available such number of Shares as shall be sufficient to satisfy the
requirements of the Plan.
13. General Provisions.
a. Other Plans. Nothing contained in the Plan shall prohibit the company
from establishing additional incentive compensation arrangements.
b. No Enlargement of Rights. Neither the Plan, nor the granting of Shares,
nor any other action taken pursuant tot he Plan shall constitute or be
evidence of any agreement or understanding, express or implied, that the
company will retain an Employee in employment for any period of time, or
at any particular rate of compensation. Nothing in the Plan shall be
deemed to limit or affect the right of the company to terminate the
employment of any Employee thereof at any time for any reason or no
reason.
c. Notice. Any notice given to the Company pursuant to the provisions of
the Plan shall be addressed to the company in care of its Secretary (or
such other person as the company may designate from time to time) at its
principal office, and any notice to be given to an Optionee to whom an
Option is granted hereunder shall be delivered personally or addressed to
him or her at the address given beneath his or her signature on his or
her Option Agreement, or at such other address as such Optionee or his or
her transferee (upon the transfer of the Optioned Stock) may hereinafter
Page-166
<PAGE>
designate to the Company in writing. Any such notice shall be deemed
duly given when enclosed in a properly sealed envelope or wrapper
addressed as aforesaid, registered or certified, and deposited, postage
and registry or certification fee prepaid, in a post office or branch
post office regularly maintained by the United States Postal Service. It
shall be the obligation of each Optionee holding Shares purchased upon
exercise of an Option to provide the Secretary of the Company, by letter
mailed as provided hereinabove, with written notice of his or her direct
mailing address.
d. Legends on Certificates. Unless an appropriate registration statement is
filed pursuant to the Securities Act of 1933, as amended, with respect to
the Options and Shares issuable under this Plan, each document or
certificate representing such Options or Shares shall be endorsed thereon
with a legend substantially as follows:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, and have been acquired for investment and not with a
view to, or in connection with, the sale or distribution thereof. No
sale, transfer or distribution may be effected without an effective
registration statement relating thereto or an opinion of counsel
satisfactory to the company that such REGISTRATION IS NOT REQUIRED."
Each document or certificate representing the Options or Shares issuable
under the Plan shall also contain legends as may be required under
applicable blue sky laws or by any agreement the execution of which is a
condition to the exercise of an Option under this Plan.
e. Applicable Law. To the extent that federal laws do not otherwise
control, the Plan shall be governed by and construed in accordance with
the law of the state of Delaware, without regard to the conflict of law
rules thereof.
f. Information to Optionees. The Company shall provide, upon request,
without charge to each Optionee copies of such annual and periodic
reports as are provided by the Company to its stockholders generally.
g. Availability of Plan. A copy of the plan shall be delivered to the
Secretary of the Company and shall be shown by him or her to any eligible
person inquiring about it.
h. Severability. In the event that any provision of the Plan is found to be
invalid or otherwise unenforceable under any applicable law, such
invalidity or unenforceability shall not be construed as rendering any
other provisions contained herein as invalid or unenforceable, and all
such other provisions shall be given full force and effect to the same
extent as though the invalid or unenforceable provision was not contained
herein.
14. Effective Date and Term of Plan.
The Plan shall become effective upon Board of Directors approval of the Plan
and shall continue in effect for a term of ten (10) years unless sooner
terminated under Section 10 of the Plan.
Page-167
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our report dated February 4, 2000, included in this Form 10-K, into Ramtron
International Corporation's previously filed Registration Statement File No.
333-12265 on Form S-8 and Registration Statement File Nos. 33-80411, 333-19119,
333-47615, 333-87107 and 333-95209 on Form S-3.
/S/ Arthur Andersen LLP
Denver, Colorado,
March 29, 2000
Page-168
<PAGE>
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