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AS FILED WITH THE SECURITIES EXCHANGE COMMISSION ON MARCH 9, 2000
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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SDL, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 77-0331449
(State or jurisdiction of (I.R.S. Employer
incorporation or organization Identification Number)
80 ROSE ORCHARD WAY
SAN JOSE, CALIFORNIA 95134-1365
(408) 943-9411
(Address and telephone number of registrant's principal executive offices)
---------------
MICHAEL L. FOSTER
VICE PRESIDENT - FINANCE
SDL, INC.
80 ROSE ORCHARD WAY
SAN JOSE, CALIFORNIA 95134-1365
(408) 943-9411
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------
COPIES TO:
William D. Sherman, Esq.
Morrison & Foerster LLP
755 Page Mill Road
Palo Alto, California 94304
(650) 813-5600
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of this Registration
statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] ____________________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ____________________
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ] ____________________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED
MAXIMUM
AGGREGATE PROPOSED MAXIMUM AMOUNT
TITLE OF SHARES TO BE AMOUNT TO BE PRICE PER AGGREGATE OF REGISTRATION
REGISTERED REGISTERED(1) SHARE(2) OFFERING PRICE(2) FEE
- ----------------------------------- ---------------- --------------- ------------------ ------------------
<S> <C> <C> <C> <C>
Common Stock, $.001 par value..... 4,337,961 shares $218.14 $946,282,813 $249,819
</TABLE>
(1) Up to an aggregate maximum of 3,990,000 of the shares of Common Stock
being registered are issuable by the Registrant in connection with an
earn-out.
(2) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(c) based on the average of the high and low
reported sales prices of the Registrant's Common Stock on the Nasdaq
National Market on March 3, 2000 (as adjusted for the Registrant's 2-for-1
stock split payable on March 13, 2000).
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE AN AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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The information in this prospectus is not complete and may be changed. The
Selling Stockholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
Subject to Completion, dated March 9, 2000
PROSPECTUS
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SDL, INC.
4,337,961 SHARES OF COMMON STOCK
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4,337,961 shares of our common stock have been issued to former
stockholders of Queensgate Instruments Limited ("Queensgate") and an additional
aggregate maximum of up to 3,990,000 shares of our common stock may be issued in
the future, pursuant to an earn out, to former stockholders and former
optionholders of Queensgate as payment for the acquisition by us of all of the
outstanding equity interests of Queensgate in March, 2000. The shares of our
common stock which may be issued in the future will, if issued, be in payment of
the Company's obligations under an earn-out provision in connection with the
acquisition of all of the outstanding equity interests of Queensgate. Some of
these holders may wish to sell shares of our common stock in the future, and
this prospectus allows them to do so. We will not receive any of the proceeds
from any sale of shares by these holders, but we have agreed to bear the
expenses of registration of the shares by this prospectus. Share numbers in this
prospectus are included on a post-split basis to reflect our 2-for-1 stock split
being effected in the form of a 100% stock dividend payable on March 13, 2000 to
holders of record of our stock on February 29, 2000.
Our stock is listed on the Nasdaq National Market under the symbol SDLI.
The last sale price of the common stock on the Nasdaq National Market on
March 3, 2000 was $221 per share as adjusted for the Company's 2-for-1 stock
split payable on March 13, 2000.
-----------------------
INVESTING IN THE COMMON STOCK INVOLVES A HIGH LEVEL OF INVESTMENT RISK. SEE
"RISK FACTORS" INCORPORATED BY REFERENCE ON PAGE 5 OF THIS PROSPECTUS
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities, or determined if
this prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
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March ___, 2000
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information......................................................3
Incorporation of Certain Documents by Reference............................4
The Company................................................................6
Use of Proceeds............................................................6
Risk Factors...............................................................6
Selling Stockholders.......................................................8
Plan of Distribution.......................................................9
Experts...................................................................11
Legal Matters.............................................................11
</TABLE>
No person has been authorized to give any information or to make any
representations not contained or incorporated by reference in this prospectus in
connection with the offer described in this prospectus and, if given or made,
such information and representations must not be relied upon as having been
authorized by the Company or the selling stockholders. Neither the delivery of
this prospectus nor any sale made under this prospectus shall under any
circumstances create any implication that there has been no change in the
affairs of SDL, Inc. since the date hereof or since the date of any documents
incorporated herein by reference. This prospectus does not constitute an offer
to sell or a solicitation of an offer to buy any securities other than the
securities to which it relates, or an offer or solicitation in any state to any
person to whom it is unlawful to make such offer in such state.
AVAILABLE INFORMATION
We are subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance with
the Act we file reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). These reports, proxy
statements and other information filed can be inspected and copied at the
Commission's Public Reference Section, 450 Fifth Street, N.W., Washington, D.C.,
20549, and at the following regional offices of the Commission: Seven World
Trade Center, 13th Floor, New York, New York 10048 and 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511. Copies of such material can be
obtained from the Public Reference Section of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates. The Commission maintains a
web site (http://www.sec.gov) containing reports, proxy and information
statements and other information of registrants, including ours, that file
electronically with the Commission. In addition, the Common Stock is listed on
the Nasdaq National Market and similar information concerning us can be
inspected and copied at the offices of the National Association of Securities
Dealers, Inc., 9513 Key West Avenue, Rockville, Maryland 20850.
We have filed with the Commission a registration statement on Form S-3 (of which
this prospectus is a part) under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the shares being offered by this prospectus.
This prospectus does not contain all of the information set forth in this
registration statement, some portions of which have been omitted as permitted by
the rules and regulations of the Commission. Statements contained in this
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prospectus as to the contents of any contract or other documents are not
necessarily complete, and in each instance reference is made to the copy of such
contract or other document filed as an exhibit to the registration statement.
Each of these statements is qualified in all respects by this reference and the
exhibits and schedules thereto. For further information regarding us and the
shares being offered by this prospectus, reference is hereby made to the
registration statement and such exhibits and schedules which may be obtained
from the Commission at its principal office in Washington, D.C. upon payment of
the fees prescribed by the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The documents listed below have been filed by the Company under the
Exchange Act with the Commission and are incorporated herein by reference:
- SDL's Annual Reports on Form 10-K and Form 10-K/A for the year ended
January 1, 1999;
- SDL's Quarterly Reports on Form 10-Q for the quarters ended March 31,
1999, June 30, 1999 and September 30, 1999;
- SDL's Definitive Proxy Statement dated April 9, 1999, filed in
connection with SDL's 1999 Annual Meeting of Stockholders held on May
13, 1999;
- SDL's Definitive Proxy Statement dated January 21, 2000, filed in
connection with SDL's Special Meeting of Stockholders held on February
28, 2000;
- SDL's Current Reports on Form 8-K each dated as of May 18, 1999 and
filed with the SEC on June 2, 1999 and June 29, 1999;
- SDL's Current Report on Form 8-K dated as of September 21, 1999 and
filed with the SEC on September 23, 1999;
- the description of SDL's common stock contained in SDL's Registration
Statement on Form 8-A filed on March 31, 1995 under Section 12 of the
Exchange Act; and
- the description of SDL's preferred stock rights contained in SDL's
Registration Statement on Form 8-A filed on November 7, 1997 under
Section 12 of the Exchange Act, including SDL's Registration Statement
on Form 8-A/A filed on March 19, 1999 updating such description.
Each document we file pursuant to Sections 13(a), 13(c), 14 and 15(d) of
the Exchange Act subsequent to the date of this prospectus and prior to the
termination of the offering made hereby shall be deemed to be incorporated by
reference in this prospectus and to be part hereof from the date of filing such
documents. Any statement contained herein or in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this prospectus to the extent that a statement
contained herein (or in the applicable prospectus supplement) or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any
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such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this prospectus.
Copies of all documents which are incorporated herein by reference (not
including the exhibits to such information, unless such exhibits are
specifically incorporated by reference in such information) will be provided
without charge to each person, including any beneficial owner, to whom this
prospectus is delivered upon written or oral request. Requests should be
directed to Michael L. Foster, Vice President - Finance, SDL, Inc., 80 Rose
Orchard Way, San Jose, California 95134-1365, telephone number: (408) 943-4344.
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THE COMPANY
SDL designs, manufactures and markets semiconductor lasers, fiber optic
related products and optoelectronic systems. Since 1996, the Company strategy
has strongly focused on providing solutions for optical communications. The
Company's optical communications products power the transmission of data, voice
and Internet information over fiber optic networks to meet the needs of
telecommunications, dense wavelength division multiplexing (DWDM), cable
television and satellite communications applications. The demand for DWDM
solutions accelerated significantly in 1999 due to the technology's unique
ability to expand network bandwidth and provide much faster transmission of
data, voice and video signals. With the qualification of the Company's new wafer
fabrication facility in the first half of 1998 and expansion of yields and
assembly and test capacity in 1999, the Company was able to successfully ramp
capacity and achieve significant revenue growth. Revenue from fiber optic
communications products increased by 179 percent in 1999 compared to 1998.
Revenue from SDL products were also able to capture a strong position in the
undersea fiber optic communications market, where Company revenue increased
from less than 1 percent total revenue in 1998 to 30 percent of total revenue in
the fourth quarter of 1999. SDL's optical products also serve a wide variety of
non-communications applications, including materials processing, printing,
medical and scientific instrumentation.
We were incorporated in California on March 29,1983 and in Delaware on
November 16, 1992. We were known as Spectra Diode Laboratories, Inc. until we
changed our name to SDL, Inc. in April 1993. References to "SDL" or the
"Company" refer to SDL, Inc., our subsidiaries and predecessor entities acquired
in previous acquisitions. Our headquarters are located at 80 Rose Orchard Way,
San Jose, California, 95134-1365, and our telephone number is (408) 943-9411.
USE OF PROCEEDS
All of the shares being offered under this prospectus are offered by the
Selling Stockholders, and we will not receive any of the proceeds from the sale
of the shares. This registration statement is intended to satisfy certain of our
obligations under a Share Purchase Agreement and Registration Rights Agreement
with the holders of all of the equity interests in Queensgate. Under that
agreement, we have agreed to pay expenses of registration of these shares under
United States federal and state securities laws.
RISK FACTORS
You should carefully consider the risk factors set forth in our reports
filed with the SEC which are incorporated by reference herein, in evaluating an
investment in the common stock. This prospectus and our documents filed with the
SEC and incorporated by reference herein include "forward-looking statements"
within the meaning of Section 27A of the Securities Act and Section 21E of the
Exchange Act. All statements in or incorporated by reference in this prospectus,
other than statements of historical fact, are "forward-looking statements" for
purposes of these provisions, including any statements of the plans and
objectives for future operations and any statement of assumptions underlying any
of the foregoing. In some cases, forward-looking statements can be identified by
the use of terminology such as "may," "will," "expects," "plans," "anticipates,"
"estimates," "potential," or "continue," or the negative thereof or other
comparable terminology. Our actual results could differ materially from these
projected or assumed in these forward-looking statements because of
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risks and uncertainties, including risks and uncertainties described in the risk
factors incorporated by reference in this prospectus. We assume no obligation to
update any such forward-looking statement or reason why actual results might
differ.
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SELLING STOCKHOLDERS
The following table provides the names of and the numbers of shares of
common stock beneficially owned by each Selling Stockholder, the number of
shares of common stock which may be issued to each Selling Stockholder in
satisfaction of the Company's obligations under the earn-out provisions of the
Share Purchase Agreement between the Company and the Selling Stockholders and
the number of shares of common stock beneficially owned by each Selling
Stockholder upon completion of the offering or offerings pursuant to this
prospectus, assuming each Selling Stockholder offers and sells all of its or
his/her respective shares. Selling Stockholders may, however, offer and sell
all, or some or none of their shares. Under some circumstances, the respective
donees, pledgees and transferees or other successors in interest of the Selling
Stockholders may also sell the shares listed below as being held by the Selling
Stockholders. No Selling Stockholder beneficially owns one percent or greater of
the Company's outstanding common stock. All share numbers set forth in the table
are included on a post-split basis to reflect our 2-for-1 stock split being
effected in the form of a 100% stock dividend payable on March 13, 2000 to
stockholders of record on February 29, 2000.
<TABLE>
<CAPTION>
BENEFICIAL
BENEFICIAL OWNERSHIP PRIOR
OWNERSHIP TO OFFERING
PRIOR TO RESULTING FROM TOTAL
OFFERING ISSUANCE OF POTENTIAL
RESULTING MAXIMUM NUMBER BENEFICIAL BENEFICIAL
FROM ISSUANCE OF SHARES OWNERSHIP OWNERSHIP
OF SHARES ON PURSUANT TO THE PRIOR TO AFTER THE
MARCH 6, 2000 EARN-OUT OFFERING OFFERING
------------- --------------- ---------- ----------
<S> <C> <C> <C> <C>
STOCKHOLDERS:
3i Group plc (1).................... 126,470 857,414 983,884 0
Paul David Atherton................. 64,068 861,334 925,402 0
John Edward Herrin.................. 5,908 79,436 85,344 0
Thomas Rudolph Hicks................ 62,801 844,308 907,109 0
Newrick Kenneth Reay................ 64,068 861,334 925,402 0
James Ring.......................... 11,817 158,872 170,689 0
Phyllis Ring........................ 11,817 158,872 170,689 0
John Whiteley Ward.................. 1,012 13,604 14,616 0
------- --------- --------- ---
Total Stockholders Shares..... 347,961 3,835,174 4,183,135 0
OPTIONHOLDERS: 0
Christopher M. Shannon.............. -- 45,340 45,340 0
Ivor E. Thomas...................... -- 38,530 38,530 0
John H. Spensley.................... -- 9,028 9,028 0
Adrian G. Meldrum................... -- 4,514 4,514 0
David R. Jones...................... -- 6,748 6,748 0
Kent H. Wardley..................... -- 22,630 22,630 0
John E. Herrin...................... -- 3,388 3,388 0
John W. Ward........................ -- 3,388 3,388 0
Terrance C. Dines................... -- 3,388 3,388 0
Sean D. Staines..................... -- 2,234 2,234 0
Colin M. Chambers................... -- 2,234 2,234 0
Samuel Salloum...................... -- 2,234 2,234 0
Malachy McConnell................... -- 2,234 2,234 0
</TABLE>
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<TABLE>
<S> <C> <C> <C> <C>
Phil Rhead.......................... -- 2,234 2,234 0
Jayesh Patel........................ -- 2,234 2,234 0
Krzystof Pietraszewski.............. -- 2,234 2,234 0
Keith Gambles....................... -- 2,234 2,234 0
------- --------- --------- ---
Total Optionholders Shares...... -- 154,826 154,826 0
------- --------- --------- ---
Total of Stockholders
and Optionholders Shares.... 347,961 3,990,000 4,337,961 0
------- --------- --------- ---
</TABLE>
(1) The Selling Stockholder is a public company.
None of the Selling Stockholders has had any material relationship with
us or our affiliates within the past three years. All of the shares of common
stock set forth above were "restricted securities" under the Securities Act
prior to this registration.
We agreed with the Selling Stockholders to file the registration
statement to register the resale of the shares. We agreed to prepare and file
all necessary amendments and supplements to the registration statement to keep
it effective until such time as all of the securities covered by this
registration statement may be freely sold by the Selling Stockholders without
registration pursuant to Rule 144(k) of the Securities Act assuming none of the
Selling Stockholders is an affiliate of SDL.
PLAN OF DISTRIBUTION
This prospectus relates to the offer and sale from time to time by the
holders of up to an aggregate maximum of 4,337,961 shares (adjusted for the
2-for-1 stock split payable on March 13, 2000) of our common stock. These shares
have been issued or may be issued in the future pursuant to an earn-out in
connection with the Share Purchase Agreement between SDL and the holders of all
of the equity interests in Queensgate. This prospectus has been prepared in
connection with registering these shares to allow for sales of these shares by
the applicable Selling Stockholders to the public as required by the terms of
the Share Purchase Agreement and a related Registration Rights Agreement. We
have registered the shares for sale pursuant to the terms of the Share Purchase
Agreement and the Registration Rights Agreement, but registration of these
shares does not necessarily mean that any of these shares will be offered and
sold by the holders thereof pursuant to this prospectus.
We will not receive any proceeds from this offering. The shares may be
sold from time to time to purchasers directly by any of the Selling
Stockholders, or under some circumstances, donees, pledgees, transferees or
other successors in interest ("Transferees") thereof. Alternatively, the Selling
Stockholders, or Transferees thereof, may from time to time offer the shares
through dealers or agents, who may receive compensation in the form of
commissions from the Selling Stockholders, or Transferees thereof, and/or the
purchasers of the shares for whom they may act as agent. The Selling
Stockholders, or Transferees thereof, and any dealers or agents that participate
in the distribution of the shares may be deemed to be "underwriters" within the
meaning of the Securities Act and any profit on the sale of the shares by them
and any commissions received by any such dealers or agents might be deemed to be
underwriting commissions under the Securities Act of 1933.
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The Selling Stockholders are subject to the provisions of the Exchange
Act and the rules under it relating to stock manipulation, particularly
Regulation M. They are not to engage in any transaction in violation of these
provisions.
The Selling Stockholders may sell their shares directly to purchasers or
may use broker-dealers or agents to sell their shares. Broker-dealers or agents
who sell the shares may receive compensation in the form of commissions from the
Selling Stockholders or they may receive compensation from purchasers of the
shares for whom they acted as agents or to whom they sold the shares as
principal, or both. The compensation as to a particular broker-dealer or agent
will not be in excess of eight percent (8%) of the selling price of the shares
sold by the particular broker-dealer or agent. The Selling Stockholders and any
broker-dealers or agents that participate in the sale of their common stock may
be deemed to be "underwriters" within the meaning of the Securities Act. Any
commissions or profits received by these broker-dealers or agents on any resale
of the shares may be underwriting discounts and commissions under the Securities
Act of 1933, as amended. Selling Stockholders who are "underwriters" within the
meaning of the Securities Act, will be subject to the prospectus delivery
requirements of the Securities Act.
We will pay all fees and expenses incurred in connection with preparing
and filing this prospectus and any prospectus supplement and the registration
statement and any amendments thereto. The Selling Stockholders will pay any
brokerage commissions and similar selling expenses, if any, attributable in
connection with the sale of the shares of common stock.
We have agreed to keep the registration statement, of which this
prospectus and any subsequent prospectus supplements constitute a part,
effective until all of the securities covered by this registration statement may
be freely sold by the Selling Stockholders without registration pursuant to Rule
144(k) of the Securities Act, assuming none of the Selling Stockholders is an
affiliate of SDL. There can be no assurance that the Selling Stockholders will
sell all or any of the shares of common stock offered hereby.
Under the securities laws of certain states, the securities may be sold
in such states only through registered or licensed brokers or dealers.
Selling Stockholders may also resell all or a portion of their
securities in open market transactions in reliance upon Rule 144 under the
Securities Act. However, to do so, they must meet the criteria and conform to
the requirements of that Rule. In addition, any securities covered by this
prospectus which qualify for sale pursuant to Rule 144A of the Securities Act,
as amended, may be sold under Rule 144A rather than pursuant to this prospectus.
A Selling Stockholder may not sell any common stock covered by the registration
statement by means other than as described in this prospectus.
We have entered into a Registration Rights Agreement for the benefit of
the Selling Stockholders to register their common stock under applicable United
States federal and state securities laws under various circumstances and at
various times. Pursuant to this Registration Rights Agreement, we have agreed to
indemnify the Selling Stockholders, and the Selling Stockholders have agreed to
indemnify us, for certain liabilities under the Securities Act and the Exchange
Act.
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If required, at a time a particular offer of the shares is made, a
prospectus supplement, will be distributed that will set forth the name and
names of any dealers or agents and any commissions and other terms constituting
compensation from the Selling Stockholders, or transferees thereof, and any
other required information. The shares may be sold from time to time at varying
prices determined at the time of sale or at negotiated prices.
In order to comply with the securities laws of certain states, if
applicable, the shares may be sold only through registered or licensed brokers
or dealers. In addition, in certain states, the shares may not be sold unless
they have been registered or qualified for sale in such state or an exemption
from such registration or qualification requirement is available and is complied
with.
The shares may also be sold in one or more of the following
transactions: (a) block transactions (which may involve crosses) in which a
broker-dealer may sell all or a portion of such stock as agent but may position
and resell all or a portion of the block as principal to facilitate the
transaction; (b) purchases by any such broker-dealer as principal and resale by
such broker-dealer for its own account pursuant to a prospectus supplement; (c)
ordinary brokerage transactions and transactions in which any such broker-dealer
solicits purchasers; (d) sales "at the market" to or through a market maker or
into an existing trading market, on an exchange or otherwise, for such shares;
and (e) sales in other ways not involving market makers or established trading
markets, including direct sales to purchasers. In effecting sales,
broker-dealers engaged by the Selling Stockholders may arrange for other
broker-dealers to participate.
EXPERTS
The consolidated financial statements of SDL, Inc. incorporated by
reference in SDL, Inc.'s Annual Report (Form 10-K/A) for the year ended January
1, 1999, have been audited by Ernst & Young LLP, independent auditors, as set
forth in their report thereon incorporated by reference therein and incorporated
herein by reference. The supplemental consolidated financial statements of SDL,
Inc. appearing in SDL, Inc.'s Current Report on Form 8-K dated May 18, 1999 have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
report included therein and incorporated by reference elsewhere herein, which is
based in part on the report of Arthur Andersen, independent auditors. Such
consolidated financial statements and supplemental consolidated financial
statements referred to above are incorporated herein by reference in reliance
upon such reports given on the authority of such firms as experts in accounting
and auditing.
LEGAL MATTERS
The validity of the issuance of the shares of Common Stock offered
pursuant to this prospectus is being passed upon for the Company by Morrison &
Foerster LLP, Palo Alto, California.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated fees and expenses payable
by the Company in connection with the issuance and distribution of the Common
Stock registered hereby. All of such fees and expenses are estimates, except the
Securities Act registration fee.
<TABLE>
<S> <C>
Securities Act Registration Fee................. $ 249,819
Printing and duplicating fees................... 5,000
Legal fees and expenses......................... 50,000
Accounting fees and expenses.................... 15,000
Miscellaneous expenses.......................... 5,181
-----------
*Total.................................. $ 325,000
-----------
</TABLE>
*None of the expenses listed above will be borne by the selling stockholders.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Section 145 of the General Corporate Law of the State of Delaware,
the Registrant has broad powers to indemnify its directors and officers against
liabilities they may incur in such capacities, including liabilities under the
Securities Act of 1933, as amended (the "Securities Act"). The Registrant's
Amended and Restated Bylaws also provide for mandatory indemnification of its
directors and executive officers, and permissive indemnification of its
employees and agents, to the fullest extent permissible under Delaware law.
The Registrant's Amended and Restated Certificate of Incorporation
provides that the liability of its directors for monetary damages shall be
eliminated to the fullest extent permissible under Delaware law. Pursuant to
Delaware law, this includes elimination of liability for monetary damages for
breach of the directors' fiduciary duty of care to the Registrant and its
Stockholders. These provisions do not eliminate the directors' duty of care and,
in appropriate circumstances, equitable remedies such as injunctive or other
forms of non monetary relief will remain available under Delaware law. In
addition, each director will continue to be subject to liability for breach of
the director's duty of loyalty to the Registrant, for acts or omissions not in
good faith or involving intentional misconduct, for knowing violations of law,
for any transaction from which the director derived an improper personal
benefit, and for payment of dividends or approval of stock repurchases or
redemptions that are unlawful under Delaware law. The provision also does not
affect a director's responsibilities under any other laws, such as the
securities laws or state or federal environmental laws. The Registrant maintains
a policy of directors' and officers' liability insurance that insures the
Company's directors and officers against the cost of defense, settlement or
payment of a judgment under certain circumstances.
Pursuant to written agreement between the respective Selling stockholders and
the Company, the directors and officers of the Company are indemnified by such
Selling
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Stockholders against certain civil liabilities that they may incur under the
Securities Act in connection with this registration statement and the related
prospectus.
ITEM 16. EXHIBITS
3.1 - Restated Certificate of Incorporation of the Registrant including all
amendments thereto
3.2 - Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 to
Registrant's Registration Statement on Form S-1 (File No. 33-87752))
4.1 - Reference is made to Exhibits 3.1 and 3.2
4.3.1 - Rights Agreement, dated November 6, 1997, between SDL and Chase Mellon
Shareholder Services, L.L.C., together with; Exhibit A, Form of Rights
Certificate; Exhibit B, of Summary of Rights to Purchase Preferred Stock; and
Exhibit C Form of Certificate of Designation of the Series B Preferred Stock
(incorporated by reference to Exhibit 1 to Registrant's Registration Statement
on Form 8-A (File No. 000-25688) filed with the SEC on November 7, 1977)
4.3.2 - First Amended and Restated Rights Agreement, dated February 11, 1999,
between SDL and Chase Mellon Shareholders Services, L.L.C., a New Jersey limited
liability company (incorporated by reference to Exhibit 1 to Registrant's
Registration Statement on Form 8-A (File No. 000-25688) filed with the SEC on
March 19, 1999)
5.1 - Opinion of Morrison & Foerster LLP
23.1 - Consent of Ernst & Young LLP, Independent Auditors
23.2 - Consent of Arthur Andersen, Chartered Accountants
23.3 - Consent of Morrison & Foerster LLP (included in Exhibit 5.1)
24.1 - Power of Attorney (included on signature page hereto)
II-2
<PAGE> 14
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) any deviation from the low or high and of the
estimated maximum offering price may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate changes
in volume and price represent no more than a 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this registration statement or
any material change to such information in this registration statement;
provided, however, that subparagraphs (i) and (ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in the periodic reports filed by the Registrant pursuant
to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of these securities being registered which remain unsold at the termination
of the offering.
The undersigned Registrant hereby further undertakes that, for the
purposes of determining any liability under the Securities Act of 1933, each
filing of the Registrant's annual reports pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 (and, when applicable, each filing
of an employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference to this
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-3
<PAGE> 15
The undersigned Registrant hereby further undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance under Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4), or
497(h) under the Securities Act of 1933 shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof. Insofar as indemnification
for liabilities arising under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the Registrant pursuant to the
provisions described under Item 15 of this registration statement, or otherwise
(other than insurance), the Registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in such Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in such Act and
will be governed by the final adjudication of such issue.
II-4
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of San Jose, State of California on March 8, 2000.
SDL, INC.
By: /s/ Donald R. Scifres
---------------------------------
Chairman of the Board,
Chief Executive Officer and President
II-5
<PAGE> 17
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints Donald R. Scifres and
Michael L. Foster as his true and lawful attorneys-in-fact and agents, jointly
and severally, with full power of substitution and resubstitution, for and in
his/her stead, in any and all capacities, to sign on his/her behalf the
registration statement on Form S-3 in connection with the sale of shares, and to
execute any amendments thereto (including post-effective amendments or
supplemental registration statements pursuant to Rule 462(b)) or certificates
that may be required in connection with this registration statement, and to file
the same, with all exhibits thereto, and all other documents in connection
therewith, with the Securities and Exchange Commission and granting unto said
attorneys-in-fact and agents, jointly and severally, the full power and
authority to do and perform each and every act and thing necessary or advisable
to all intents and purposes as he might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents, jointly and
severally, or his substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement on Form S-3 has been signed by the following persons in
the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Donald R. Scifres Chairman of the Board, Chief Executive March 8, 2000
- ------------------------------ Officer and President (Principal Executive
Donald R. Scifres Officer)
/s/ Michael L. Foster Vice President, Finance and Chief March 8, 2000
- ------------------------------ Financial Officer (Principal Financial and
Michael L. Foster Accounting Officer)
/s/ Mark B. Myers Director March 8, 2000
- ------------------------------
Mark B. Myers
/s/ Keith B. Geeslin Director March 8, 2000
- ------------------------------
Keith B. Geeslin
/s/Frederic N. Schwettmann Director March 8, 2000
- ------------------------------
Frederic N. Schwettmann
/s/ Anthony B. Holbrook Director March 8, 2000
- ------------------------------
Anthony B. Holbrook
</TABLE>
II-6
<PAGE> 18
Exhibit Index
3.1 - Restated Certificate of Incorporation of the Registrant including all
amendments thereto
3.2 - Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 to
Registrant's Registration Statement on Form S-1 (File No. 33-87752))
4.1 - Reference is made to Exhibits 3.1 and 3.2
4.3.1 - Rights Agreement, dated November 6, 1997, between SDL and Chase Mellon
Shareholder Services, L.L.C., together with; Exhibit A, Form of Rights
Certificate; Exhibit B, of Summary of Rights to Purchase Preferred Stock; and
Exhibit C Form of Certificate of Designation of the Series B Preferred Stock
(incorporated by reference to Exhibit 1 to Registrant's Registration Statement
on Form 8-A (File No. 000-25688) filed with the SEC on November 7, 1977)
4.3.2 - First Amended and Restated Rights Agreement, dated February 11, 1999,
between SDL and Chase Mellon Shareholders Services, L.L.C., a New Jersey limited
liability company (incorporated by reference to Exhibit 1 to Registrant's
Registration Statement on Form 8-A (File No. 000-25688) filed with the SEC on
March 19, 1999)
5.1 - Opinion of Morrison & Foerster LLP
23.1 - Consent of Ernst & Young LLP, Independent Auditors
23.2 - Consent of Arthur Andersen, Chartered Accountants
23.3 - Consent of Morrison & Foerster LLP (included in Exhibit 5.1)
24.1 - Power of Attorney (included on signature page hereto)
<PAGE> 1
EXHIBIT 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
SDL, INC.,
A DELAWARE CORPORATION
------------------------------
SDL, Inc., a corporation organized and existing under the laws of the
State of Delaware, does hereby certify that:
FIRST: The name of the corporation is SDL, Inc., and the date of filing of
its original Certificate of Incorporation with the Secretary of State was
November 16, 1992.
SECOND: This Restated Certificate of Incorporation was duly adopted in
accordance with the provisions of Sections 242 and 245 of the Delaware General
Corporation Law by (i) the Board of Directors of the Corporation (the "Board")
in accordance with the Delaware General Corporation Law, and (ii) the
stockholders of the Corporation by written consent of such stockholders given in
accordance with Section 228 of the Delaware General Corporation Law.
THIRD: The text of the Restated Certificate of Incorporation is hereby
amended and further restated to read in full as follows:
"I. The name of the Corporation is SDL, Inc.
II. The address of its registered office in the State of Delaware is 32
Loockerman Square, Suite L-100, in the City of Dover, 19901, County of Kent. The
name of its registered agent at such address is The Prentice-Hall Corporation
System, Inc.
III. The nature of the business of the Corporation and the objects or
purposes to be transacted, promoted or carried on by it are as follows: To
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware.
IV. A. Classes of Stock. The total number of shares of all classes of
stock that the Corporation is authorized to issue is Twenty-Two Million
(22,000,000) shares, consisting of Twenty-One Million (21,000,000) shares of
Common Stock, with a par value of $.001 per share, and One Million (1,000,000)
shares of Preferred Stock, with a par value of $.001 per share, of which Two
Hundred Seventy-One Thousand Six Hundred Twenty-Eight (271,628) shares are
denominated as Series A Preferred Stock. The Preferred Stock may be
1
<PAGE> 2
issued in one or more series, and the Board of Directors of the Corporation is
expressly authorized (i) to fix the designations, powers, preferences, rights,
qualifications, limitations, and restrictions with respect to any series of
Preferred Stock and (ii) to specify the number of shares of any series of
Preferred Stock. Upon amendment of the Restated Certificate of Incorporation of
the Corporation as set forth herein, each share of Common Stock of the
Corporation outstanding prior to such amendment shall be split and subdivided
into three and four-tenths (3.4) shares of Common Stock of the Corporation.
B. Rights, Preferences and Restrictions of Preferred Stock. The
Preferred Stock authorized by this Certificate of Incorporation may be issued
from time to time in one or more series. The rights, preferences, privileges,
and restrictions granted to and imposed on the Series A Preferred Stock, which
series shall consist of 298,970 shares, are set forth below in this Section
IV(B). The Board of Directors is hereby authorized to fix or alter the rights,
preferences, privileges, and restrictions granted to or imposed upon any
additional series of Preferred Stock (including the dividend rights, conversion
rights, voting rights, terms of redemption, liquidation preferences and sinking
fund terms thereof), and the number of shares constituting any such series and
the designation thereof. Subject to compliance with applicable protective voting
rights which have been or may be granted to the Preferred Stock or series
thereof in Certificates of Designations or the Corporation's Certificate of
Incorporation ("Protective Provisions"), but notwithstanding any other rights of
the Preferred Stock or any series thereof, the rights, privileges, preferences,
and restrictions of or on any such additional series may be subordinated to,
pari passu with (including, without limitation, inclusion of provisions with
respect to liquidation and acquisition preferences, redemption, and/or approval
of matters by vote or written consent) or senior to any of those of any present
or future class or series of Preferred Stock or Common Stock. Subject to the
compliance with applicable Protective Provisions, the Board of Directors is also
authorized to increase or decrease the number of shares of any series prior or
subsequent to the issuance of that series, but not below the number of shares of
such series then outstanding. In case the number of shares of any series shall
be so decreased, the shares constituting such decrease shall resume the status
which they had prior to the adoption of the resolution originally fixing the
number of shares of such series.
1. Dividend Provisions. Subject to the rights of series of
Preferred Stock which may from time to time come into existence, the holders of
shares of Series A Preferred Stock shall be entitled to receive dividends, out
of any assets legally available therefor, prior and in preference to any
declaration or payment of any dividend (payable other than in Common Stock or
other securities and rights convertible into or entitling the holder thereof to
receive, directly or indirectly, additional shares of Common Stock of this
Corporation) on the Common Stock of this Corporation, at the rate of $2.00 per
share per annum or, if greater (as determined on a per annum basis and an
as-converted basis for the Series A Preferred Stock), an amount equal to that
paid on any other outstanding shares of this Corporation, payable quarterly
when, as, and if declared by the Board of Directors. Such dividends shall not be
cumulative.
2. Liquidation Preference.
2
<PAGE> 3
a. In the event of any liquidation, dissolution, or winding
up of this Corporation, either voluntary or involuntary, subject to the rights
of series of Preferred Stock which may from time to time come into existence,
the holders of Series A Preferred Stock shall be entitled to receive, prior and
in preference to any distribution of any of the assets of this Corporation to
the holders of Common Stock by reason of their ownership thereof, an amount per
share equal to the sum of (i) $32.35 for each outstanding share of Series A
Preferred Stock (the "Original Series A Issue Price") and (ii) an amount equal
to declared but unpaid dividends on such share (such amount equal to declared
but unpaid dividends being referred to herein as the "Premium"). If upon the
occurrence of such event, the assets and funds thus distributed among the
holders of the Series A Preferred Stock shall be insufficient to permit the
payment to such holders of the full aforesaid preferential amounts, then,
subject to the rights of series of Preferred Stock which may from time to time
come into existence, the entire assets and funds of the Corporation legally
available for distribution shall be distributed ratably among the holders of the
Series A Preferred Stock in proportion to the amount of such stock owned by each
such holder.
b. Upon the completion of the distribution required by
subparagraph (a) of this Section 2 and any other distribution which may be
required with respect to series of Preferred Stock which may from time to time
come into existence, if assets remain in this Corporation, the holders of the
Common Stock of this Corporation, shall receive an amount equal to $1.75 per
share (appropriately adjusted for any stock splits, stock dividends or other
recapitalizations). If upon the occurrence of such event, the assets and funds
thus distributed among the holders of the Common Stock shall be insufficient to
permit the payment to such holders of the full aforesaid amount, then the entire
remaining assets and funds of the Corporation legally available for distribution
shall be distributed ratably among the holders of the Common Stock in proportion
to the amount of such stock owned by each such holder.
c. After the distribution described in subsections (a) and
(b) above have been paid, subject to the rights of series of Preferred Stock
which may from time to time come into existence the remaining assets of the
Corporation available for distribution to shareholders shall be distributed
among the holders of Series A Preferred Stock and Common Stock pro rata based on
the number of shares of Common Stock held by each (assuming full conversion of
all such Series A Preferred Stock).
d. A consolidation or merger of this Corporation with or
into any other corporation or corporations, or a sale, conveyance or disposition
of all or substantially all of the assets of this Corporation or the
effectuation by the Corporation of a transaction or series of related
transactions in which more than 50% of the voting power of the Corporation is
disposed of, shall not be deemed to be a liquidation, dissolution, or winding up
with the meaning of this Section 2, but shall instead be treated pursuant to
Section 5 hereof.
3. Redemption.
a. Subject to the rights of series of Preferred Stock which
may
3
<PAGE> 4
from time to time come into existence, on or at any time after July 17, 1997,
within thirty (30) days after the receipt by this Corporation of a written
request from any holder of Series A Preferred Stock that all or some of such
holder's shares be redeemed, and concurrently with surrender by such holder of
the certificate representing such shares, this Corporation shall, to the extent
it may lawfully do so, redeem the shares specified in such request by paying in
cash therefor a sum per share equal to the Original Series A Issue Price and the
Premium (such total amount is hereinafter referred to as the "Series A
Redemption Price"); provided, however that the Corporation may elect to redeem
(subject to the provisions of 3(b) hereof) the shares of series A Preferred
Stock in three equal installments on an annual basis beginning thirty (30) days
after the date of the written request for redemption by paying in cash therefor
a sum per share equal to the Series A Redemption Price, which shall include
simple interest thereon from the date thirty (30) days after the date of the
written request for redemption at the rate of ten percent (10%) per annum; and
provided further that this Corporation may, at any time and from time to time,
prepay any amounts owing pursuant to this Section 3(a).
b. As used herein, the term "Redemption Date" shall refer
to each date of redemption of the Series A Preferred Stock, whether immediate or
deferred. At least fifteen (15) days prior to each Redemption Date written
notice shall be mailed, first class postage prepaid, to each holder of record
(at the close of business on the business day next preceding the day on which
notice is given) of the Series A Preferred Stock to be redeemed, at the address
last shown on the records of the Corporation for such holder, notifying such
holder of the redemption to be effected, specifying the number of shares to be
redeemed from such holder, the Redemption Date, the Redemption Price, the place
at which payment may be obtained and calling upon each holder to surrender to
the Corporation, in the manner and at the place designated, his certificate or
certificates representing the shares to be redeemed (the "Redemption Notice").
Except as provided in Section 3(c), on or after the Redemption Date, each holder
of Series A Preferred Stock to be redeemed shall surrender to this Corporation
the certificate or certificates representing such shares, in the manner and at
the place designated in the Redemption Notice, and thereupon the Redemption
Price of such shares shall be payable to the order of the person whose name
appears on such certificate or certificates as the owner thereof and each
surrendered certificate shall be cancelled. In the event less than all the
shares represented by any such certificate are redeemed, a new certificate shall
be issued representing the unredeemed shares.
c. From and after the applicable Redemption Date, unless
there shall have been a default in payment of the Redemption Price, all rights
of the holders of shares of Series A Preferred Stock designated for redemption
in the Redemption Notice as holders of Series A Preferred Stock (except the
right to receive the Redemption Price without interest upon surrender of their
certificate or certificates) shall cease with respect to such redeemed shares,
and such redeemed shares shall not thereafter be transferred on the books of
this Corporation or be deemed to be outstanding for any purpose whatsoever.
Subject to the rights of series of Preferred Stock which may from time to time
come into existence, if the funds of the Corporation legally available for
redemption of shares of Series A Preferred Stock on any Redemption Date are
insufficient to redeem the total number of shares of Series A Preferred Stock to
be redeemed on such date, those funds which are legally available will be used
to redeem the maximum possible
4
<PAGE> 5
number of such shares ratably among the holders of such shares to be redeemed
based upon their holdings of Series A Preferred Stock. The shares of Series A
Preferred Stock not redeemed shall remain outstanding and entitled to all the
rights and preferences provided herein. Subject to the rights of series of
Preferred Stock which may from time to time come into existence, at any time
thereafter when additional funds of the Corporation are legally available for
the redemption of shares of Series A Preferred Stock, such funds will
immediately be used to redeem the balance of the shares which the Corporation
has become obligated to redeem on any Redemption Date but which it has not
redeemed.
d. Subject to the rights of series of Preferred Stock which
may from time to time come into existence, three days prior to each Redemption
Date, this Corporation shall deposit the Redemption Price of all outstanding
shares of Series A Preferred Stock designated for redemption in the Redemption
Notice, and not yet redeemed or converted, with a bank or trust company having
aggregate capital and surplus in excess of $100,000,000 as a trust fund for the
benefit of the respective holders of the shares designated for redemption and
not yet redeemed. Simultaneously, this Corporation shall deposit irrevocable
instruction and authority to such bank or trust company to publish the notice of
redemption thereof (or to complete such publication if theretofore commenced)
and to pay, on and after the date fixed for redemption or prior thereto, the
Redemption Price of the Series A Preferred Stock to the holders thereof upon
surrender of their certificates. Any monies deposited by this Corporation
pursuant to this subsection 3(d) for the redemption of shares which are
thereafter converted into shares of Common Stock pursuant to Section 4 hereof no
later than the close of business on the Redemption Date shall be returned to
this Corporation forthwith upon such conversion. The balance of any monies
deposited by this Corporation pursuant to this subsection 3(d) remaining
unclaimed at the expiration of two years following the Redemption Date shall
thereafter be returned to this Corporation, provided that the shareholder to
which such monies would be payable hereunder shall be entitled, upon proof of
its ownership of the Series A Preferred Stock and payment of any bond requested
by the Corporation, to receive such monies but without interest from the
Redemption Date.
4. Conversion. The holders of Series A Preferred Stock shall have
conversion rights as follows (the "Conversion Rights"):
a. Right to Convert.
(i) Subject to subsection 4(c) hereof, each share of
Series A Preferred Stock shall be convertible, at the option of the holder
thereof, at any time between the date of issuance of such share and the close of
business on any Redemption Date as may have been fixed in any Redemption Notice
with respect to such share, at the office of this Corporation or any transfer
agent for the Series A Preferred Stock, into such number of fully paid and
nonassessable shares of Common Stock as is determined by dividing the Original
Series A Issue Price by the Conversion Price at the time in effect for such
share. The initial Conversion Price per share for shares of Series A Preferred
Stock shall be the Original Series A Issue Price; provided, however, that the
Conversion Price for the Series A Preferred Stock shall be subject to
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<PAGE> 6
adjustment as set forth in subsection 4(c).
(ii) Each share of Series A Preferred Stock shall
automatically be converted into shares of Common Stock at the Conversion Price
at the time in effect for such Series A Preferred Stock immediately upon the
earlier of (A) the closing of the Corporations's sale of its Common Stock in a
bona fide, firm commitment underwriting pursuant to a registration statement on
Form S-1 under the Securities Act of 1933, as amended, the public offering price
of which was not less than $40.00 per share (adjusted to reflect subsequent
stock dividends, stock splits or recapitalization) and $10,000,000 in the
aggregate or (B) the date upon which the Corporation obtains the consent of the
holders of at least sixty-six and two-thirds percent (66-2/3%) of the then
outstanding shares of Series A Preferred Stock.
b. Mechanics of Conversion. Before any holder of Series A
Preferred Stock shall be entitled to convert the same into shares of Common
Stock, he shall surrender the certificate or certificates therefor, duly
endorsed, at the office of this Corporation or of any transfer agent for the
Series A Preferred Stock, and shall give written notice by mail, postage
prepaid, to this Corporation at its principal corporate office, of the election
to convert the same and shall state therein the name or names in which the
certificate or certificates for shares of Common Stock are to be issued. This
Corporation shall, as soon as practicable thereafter, issue and deliver at such
office to such holder of Series A Preferred Stock, or to the nominee or nominees
of such holder, a certificate or certificates for the number of shares of Common
Stock to which such holder shall be entitled as aforesaid. Such conversion shall
be deemed to have been made immediately prior to the close of business on the
date of such surrender of the shares of Series A Preferred Stock to be
converted, and the person or persons entitled to receive the shares of Common
Stock issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such shares of Common Stock as of such date. If the
conversion is in connection with an underwritten offer of securities registered
pursuant to the Securities Act of 1933, the conversion may, at the option of any
holder tendering Series A Preferred Stock for conversion, be conditioned upon
the closing of the sale of securities pursuant to such offering, in which event
the person(s) entitled to receive the Common Stock issuable upon such conversion
of the Series A Preferred Stock shall not be deemed to have converted such
Series A Preferred Stock until immediately prior to the closing of such sale of
securities.
c. Conversion Price Adjustments of Series A Preferred
Stock. The Conversion Price of the Series A Preferred Stock shall be subject to
adjustment from time to time as follows:
(i) A. Upon each issuance by the Corporation of
any Additional Stock (as defined below), after the date upon which any shares of
the Series A Preferred Stock were first issued (the "Purchase Date" with respect
to such series), without consideration or for a consideration per share less
than the Conversion Price for such Series A Preferred Stock in effect
immediately prior to the issuance of such Additional Stock, the Conversion Price
for such series in effect immediately prior to each such issuance shall
forthwith (except as otherwise provided in this clause (i)) be adjusted to a
price determined by multiplying
6
<PAGE> 7
such Conversion Price by a fraction, the numerator of which shall be the number
of shares of Common Stock outstanding immediately prior to such issuance, plus
the number of shares of Common Stock which the aggregate consideration received
by the Corporation for such issuance would purchase at such Conversion Price;
and the denominator of which shall be the number of shares of Common Stock
outstanding immediately prior to such issuance plus the number of shares of such
Additional Stock. For purposes of the calculation called for by this clause (i),
shares of Common Stock issuable upon exercise or conversion of then-outstanding
securities exercisable or exchangeable for or convertible into, directly or
indirectly, Common Stock shall be deemed to be outstanding.
B. No adjustment of the Conversion Price for
the Series A Preferred Stock shall be made in an amount less than five cents
($0.05) per share, provided that any adjustments which are not required to be
made by reason of this sentence shall be carried forward and shall be either
taken into account in any subsequent adjustment made prior to 3 years from the
date of the event giving rise to the adjustment being carried forward, or shall
be made at the end of 3 years from the date of the event giving rise to the
adjustment being carried forward. Except to the limited extent provided for in
subsections (E)(3) and (E)(4) hereof, no adjustment of such Conversion Price
pursuant to this subsection 4(c)(i) shall have the effect of increasing the
Conversion Price above the Conversion Price in effect immediately prior to such
adjustment.
C. In the case of the issuance of Common Stock
for cash, the consideration shall be deemed to be the amount of cash paid
therefor before deducting any reasonable discounts, commissions or other
expenses allowed, paid or incurred by this Corporation for any underwriting or
otherwise in connection with the issuance and sale thereof.
D. In the case of the issuance of the Common
Stock for a consideration in whole or in part other than cash, the consideration
other than cash shall be deemed to be the fair value thereof as determined in
good faith by the Board of Directors irrespective of any accounting treatment.
E. In the case of the issuance (whether
before, on, or after the applicable Purchase Date) of options to purchase or
rights to subscribe for Common Stock, securities by their terms convertible into
or exchangeable for Common Stock, or options to purchase or rights to subscribe
for such convertible or exchangeable securities, the following provisions shall
apply for all purposes of this subsection 4(c)(i) and subsection 4(c)(ii):
1. The aggregate maximum number of
shares of Common Stock deliverable upon exercise (to the extent then
exercisable) of such options to purchase or rights to subscribe for Common
Stock shall be deemed to have been issued at the time such options or
rights were issued and for a consideration equal to the consideration
(determined in the manner provided in subsections 4(c)(i)(C) and (c)(i)(D)
hereof), if any, received by the Corporation upon the issuance of such
options or rights plus the exercise price provided in such options or
rights
7
<PAGE> 8
(without taking into account potential antidilution adjustments) for the
Common Stock covered thereby.
2. The aggregate maximum number of
shares of Common Stock deliverable upon conversion of or in exchange (to
the extent then convertible or exchangeable) for any such convertible or
exchangeable securities or upon the exercise of options to purchase or
rights to subscribe for such convertible or exchangeable securities and
subsequent conversion or exchange thereof shall be deemed to have been
issued at the time such securities were issued or such options or rights
were issued and for a consideration equal to the consideration, if any,
received by the Corporation for any such securities and related options or
rights, plus the additional consideration, if any, to be received by the
Corporation (without taking into account potential antidilution
adjustments) upon the conversion or exchange of such securities or the
exercise of any related options or rights (the consideration in each case
to be determined in the manner provided in subsections 4(c)(i)(C) and
(c)(i)(D) hereof).
3. In the event of any change in the
number of shares of Common Stock deliverable or in the consideration
payable to this Corporation upon exercise of such options or rights or
upon conversion of or in exchange for such convertible or exchangeable
securities, including, but not limited to, a change resulting from the
antidilution provisions thereof, the Conversion Price of the Series A
Preferred Stock, to the extent in any way affected by or computed using
such options, rights, or securities, shall be recomputed to reflect such
change.
4. Upon the expiration of any such
options or rights, the termination of any such rights to convert or
exchange or the expiration of any options or rights related to such
convertible or exchangeable securities, the Conversion Price of the Series
A Preferred Stock, to the extent in any way affected by or computed using
such options, rights, or securities or options or rights related to such
securities, shall be recomputed to reflect the issuance of only the number
of shares of Common Stock (and convertible or exchangeable securities
which remain in effect) actually issued upon the exercise of such options
or rights, upon the conversion or exchange of such securities or upon the
exercise of the options or rights related to such securities.
5. No further adjustment shall be made
for the actual issuance of Common Stock upon exercise of such options or
rights, conversion or exchange of such securities, or exercise of options
or rights for such securities.
(ii) "Additional Stock" shall mean any shares of
Common Stock issued (or deemed to have been issued pursuant to subsection
4(c)(i)(E)) by this Corporation after the Purchase Date other than:
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<PAGE> 9
A. Common Stock issued pursuant to a
transaction described in subsection 4(c)(iii) hereof,
B. shares of Common Stock issuable or
issued to employees, officers, consultants, or directors of this
Corporation directly or pursuant to a stock option plan or restricted
stock plan approved by the Board of Directors of this Corporation at any
time when the total number of shares of Common Stock so issuable or issued
(and not repurchased at their original cost from the holder thereof by the
Corporation in connection with the termination of such holder's employment
or service relationship with this Corporation) does not exceed 893,750,
and
C. 556,418 shares of Common Stock issued
pursuant to the Stock Purchase Agreement dated July 17, 1992.
D. Shares of Common Stock issued upon
conversion of the Series A Preferred Stock.
(iii) In the event the Corporation should at any
time or from time to time after the Purchase Date fix a record date for the
effectuation of a split or subdivision of the outstanding shares of Common Stock
or the determination of holders of Common Stock entitled to receive a dividend
or other distribution payable in additional shares of Common Stock or other
securities or rights convertible into, or entitling the holder thereof to
receive directly or indirectly, additional shares of Common Stock (hereinafter
referred to as "Common Stock Equivalents") without payment of any consideration
by such holder for the additional shares of Common Stock or the Common Stock
Equivalents (including the additional shares of Common Stock issuable upon
conversion or exercise thereof), then, as of such record date (or the date of
such dividend distribution, split, or subdivision if no record date is fixed),
the Conversion Price of the Series A Preferred Stock shall be appropriately
decreased so that the number of shares of Common Stock issuable on conversion of
each share of such series shall be increased in proportion to such increase of
the aggregate of shares of Common Stock outstanding and those issuable with
respect to such Common Stock Equivalents.
(iv) If the number of shares of Common Stock
outstanding at any time after the Purchase Date is decreased by a combination of
the outstanding shares of Common Stock, then, following the record date of such
combination, the Conversion Price for the Series A preferred Stock shall be
appropriately increased so that the number of shares of Common Stock issuable on
conversion of each share of such series shall be decreased in proportion to such
decrease in outstanding shares.
d. Other Distributions. In the event this
Corporation shall declare a distribution payable in securities of other persons,
evidences of indebtedness issued by this Corporation or other persons, assets
(excluding cash dividends) or options or rights not referred to in subsection
4(c)(iii) hereof, then, in each such case for the purpose of this
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<PAGE> 10
subsection 4(b) hereof, the holders of the Series A Preferred Stock shall be
entitled to a proportionate share of any such distribution as though they were
the holders of the number of shares of Common Stock of the Corporation into
which their shares of Series A Preferred Stock are convertible as of the record
date fixed for the determination of the holders of Common Stock of the
Corporation entitled to receive such distribution.
e. Recapitalizations. If at any time or from time
to time there shall be a recapitalization of the Common Stock (other than a
subdivision, combination, or merger or sale of assets transaction provided for
elsewhere in this Section 4 or Section 5) provision shall be made so that the
holders of the Series A Preferred Stock shall thereafter be entitled to receive
upon conversion of the Series A Preferred Stock the number of shares of stock or
other securities or property of the Corporation or otherwise, to which a holder
of the number of shares of Common Stock deliverable upon conversion of such
Series A Preferred Stock would have been entitled on such recapitalization. In
any such case, appropriate adjustment shall be made in the application of the
provisions of this Section 4 with respect to the rights of the holders of the
Series A Preferred Stock after the recapitalization to the end that the
provisions of this Section 4 (including adjustment of the Conversion Price then
in effect and the number of shares purchasable upon conversion of the Series A
Preferred Stock) shall be applicable after that event as nearly equivalent as
may be practicable.
f. No Impairment. This Corporation will not, by
amendment of its Certificate of Incorporation or through any reorganization,
recapitalization, transfer of assets, consolidation, merger, dissolution, issue,
or sale of securities, or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by this Corporation, but will at all times in good faith assist in the
carrying out of all the provisions of this Section 4 and in taking of all such
action as may be necessary or appropriate in order to protect the Conversion
Rights of the holders of the Series A Preferred Stock against impairment.
g. No Fractional Shares and Certificate as to
Adjustments.
(i) No fractional shares shall be issued upon
conversion of the Series A Preferred Stock, and the number of shares of Common
Stock to be issued shall be rounded to the nearest whole share. Whether or not
fractional shares are issuable upon such conversion shall be determined on the
basis of the total number of shares of Series A Preferred Stock the holder is at
the time converting into Common Stock and the number of shares of Common Stock
issuable upon such aggregate conversion.
(ii) Upon the occurrence of each adjustment or
readjustment of the Conversion Price of Series A Preferred Stock pursuant to
this Section 4, this Corporation, at its expense, shall promptly compute such
adjustment or readjustment in accordance with the terms hereof and prepare and
furnish to each holder of Series A Preferred Stock a certificate setting forth
such adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. This Corporation shall, upon the written
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<PAGE> 11
request at any time of any holder of Series A Preferred Stock, furnish or cause
to be furnished to such holder a like certificate setting forth (A) such
adjustment and readjustment, (B) the Conversion Price at the time in effect, and
(C) the number of shares of Common Stock and the amount, if any, of other
property which at the time would be received upon the conversion of a share of
Series A Preferred Stock.
h. Notices of Record Date. In the event of any
taking by this 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 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, this
Corporation shall mail to each holder of Series A Preferred Stock, at least
twenty (20) days prior to the date specified therein, a notice specifying the
date on which any such record is to be taken for the purpose of such dividend,
distribution, or right, and the amount and character of such dividend,
distribution, or right.
i. Reservation of Stock Issuable Upon Conversion.
This 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 Stock such
number of its shares of Common Stock as shall from time to time be sufficient to
effect the conversion of all outstanding shares of the Series A Preferred Stock;
and if at any time the number of authorized but unissued shares of Common Stock
shall not be sufficient to effect the conversion of all then outstanding shares
of the Series A Preferred Stock, in addition to such other remedies as shall be
available to the holder of such Series A Preferred Stock, this 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 purposes.
j. Notices. Any notice required by the provisions
of this Section 4 to be given to the holders of shares of Series A Preferred
Stock shall be deemed given if deposited in the United States mail, postage
prepaid, and addressed to each holder of record at his address appearing on the
books of this Corporation.
5. Merger, Consolidation.
a. At any time, in the event of:
(i) any transaction or series of related
transactions (including, without limitation, any reorganization, merger or
consolidation) which will result in the Corporation's shareholders immediately
prior to such transaction not holding (by virtue of such shares or securities
issued solely with respect thereto) at least 50% of the voting power of the
surviving or continuing entity (for purposes of this calculation, shares of
Common Stock issuable upon exercise or conversion of then-outstanding securities
exercisable or exchangeable for or convertible into, directly or indirectly,
Common Stock shall be deemed to be outstanding),
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<PAGE> 12
or
(ii) a sale of all or substantially all of the
assets of the Corporation, unless the Corporation's shareholders immediately
prior to such sale will, as a result of such sale, hold (by virtue of securities
issued as consideration for the Corporation's sale) at least 50% of the voting
power of the purchasing entity (for purposes of this calculation, shares of
Common Stock issuable upon exercise or conversion of then-outstanding securities
exercisable or exchangeable for or convertible into, directly or indirectly,
Common Stock shall be deemed to be outstanding);
then, subject to the rights of series of Preferred Stock which may from time to
time come into existence, holders of the Series A Preferred Stock shall receive
for each share of such stock in cash or in securities received from the
acquiring corporation, or in a combination thereof, at the closing of any such
transaction, an amount equal to the Original Series A Issue Price, plus an
amount equal to the Premium as of the date of closing of such transaction, and,
subject to the rights of series of Preferred Stock which may from time to time
come into existence, the remaining proceeds of such transaction shall be
distributed pro rata among the holders of the Common Stock. In the event the
proceeds of the transaction are not sufficient to make full payment of the
aforesaid preferential amounts to the holders of the Series A Preferred Stock in
accordance herewith, then, subject to the rights of series of Preferred Stock
which may from time to time come into existence, the entire amount payable in
respect of the proposed transaction shall be distributed among the holders of
Series A Preferred Stock in proportion to the amount of such stock owned by each
such holder. Notwithstanding the foregoing, if holders of the Series A Preferred
Stock would receive, for each share of such stock, an amount greater than that
provided above in this Section 5(a) by converting such stock into shares of
Common Stock in accordance with Section 4(a)(i), then, for purposes of this
Section 5(a), all shares of Series A Preferred Stock shall be deemed to have
been so converted into shares of Common Stock immediately prior to the closing
of the transaction.
b. In any of such events, if the consideration
received by this Corporation is other than cash or indebtedness, its value will
be deemed to be its fair market value. In the case of publicly-traded
securities, fair market value shall mean the closing market price for such
securities on the date such consolidation, merger, or sale is consummated. If
the consideration is in a form other than publicly-traded securities, its fair
market value shall be determined in good faith by the Board of Directors of this
Corporation.
c. In the event the requirements of subsection 5(a)
are not complied with, the Corporation shall forthwith either:
(i) cause such closing to be postponed until
such time as the requirements of this Section 5 have been complied with, or
(ii) cancel such transaction, in which event
the rights, preferences and privileges of the holders of Series A Preferred
Stock shall revert to and be the
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<PAGE> 13
same as such rights, preferences and privileges existing immediately prior to
the date of the first notice referred to in subsection 5(d) hereof.
d. The Corporation shall give each holder of
record of Series A Preferred Stock written notice of such impending transaction
not later than twenty (20) days prior to the shareholders' meeting called to
approve such transaction, or twenty (20) days prior to the closing of such
transaction, whichever is earlier, and shall also notify such holders in writing
of the final approval of such transaction. The first of such notices shall
describe the material terms and conditions of the impending transaction and the
provisions of this Section 5, and the Corporation shall thereafter give such
holders prompt notice of any material changes. The transaction shall in no event
take place sooner than twenty (20) days after the Corporation has given the
first notice provided for herein or sooner than ten (10) days after the
Corporation has given notice of any material changes provided for herein;
provided, however, that such periods may be shortened upon the written consent
of the holders of Series A Preferred Stock which is entitled to such notice
rights or similar notice rights and which represents at least sixty-six and
two-thirds percent (66-2/3%) of the voting power of all then outstanding shares
of such Series A Preferred Stock.
6. Voting Rights. The holder of each share of
Series A Preferred Stock shall have the right to one vote for each share of
Common Stock into which such Series A Preferred Stock could then be converted
(with any fractional share determined on an aggregate conversion basis being
rounded to the nearest whole share), and with respect to such vote, such holder
shall have full voting rights and powers equal to the voting rights and powers
of the holders of Common Stock, and shall be entitled, notwithstanding any
provision hereof, to notice of any shareholders' meeting in accordance with the
by-laws of this Corporation, and shall be entitled to vote, together with
holders of Common Stock, with respect to any question upon which holders of
Common Stock have the right to vote.
7. Status of Converted or Redeemed Stock. In the
event any shares of Series A Preferred Stock shall be redeemed or converted
pursuant to Section 3 or Section 4 hereof, the shares so converted or redeemed
shall be cancelled and shall not be issuable by the Corporation and shall resume
the status of authorized but unissued and non-denominated Preferred Stock. The
Certificate of Incorporation of this Corporation shall be appropriately amended
to effect the corresponding reduction in the Corporation's authorized capital
stock.
8. Repurchase of Shares. In connection with
repurchase by this Corporation of its Common Stock pursuant to its agreement
with certain of the holders thereof, Sections 502 and 503 of the California
Corporations Code shall not apply in whole or in part with respect to such
repurchases.
V. Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its 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 this Corporation or of any creditor or stockholder
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<PAGE> 14
thereof, or on the application of any receiver or receivers appointed for this
Corporation under the provisions of Section 291 of Title 8 of the Delaware Code
or on the application of trustees in dissolution or of any receiver or receivers
appointed for this Corporation under the provisions of Section 279 of Title 8 of
the Delaware Code, order a meeting of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of this Corporation, as the
case may be, to be summoned in such manner as the said court directs. If a
majority in number representing three-fourths in value of the creditors or class
of creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this 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 this Corporation, as the case may be,
and also on this Corporation.
VI. The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
VII. To the fullest extent permitted by Delaware statutory or decisional
law, as amended or interpreted, no director of this Corporation shall be
personally liable to the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director. This Section VII does not affect the
availability of equitable remedies for breach of fiduciary duties. Any repeal or
modification of the provisions of this Section VII by the stockholders of the
Corporation shall not adversely affect any right or protection of any director
existing at the time of such repeal or modification.
VIII. In all elections of directors each shareholder shall be entitled to
as many votes as shall equal the number of shares held by him multiplied by the
number of directors to be elected, and he may cast all of such votes for a
single director or may distribute them among the number to be voted for, or any
two or more of them, as he may see fit, which right, when exercised, shall be
termed "cumulative voting."
IX. For so long as the board of directors consists of greater than two
directors, the directors shall be divided into three classes, designated Class
I, Class II and Class III. Each class shall consist, as nearly as may be
possible, of one-third (1/3) of the total number of directors constituting the
entire Board of Directors. The initial classes shall be elected as follows:
Class I directors shall be elected for a one-year term, Class II directors for a
two-year term and Class III directors for a three-year term. At each succeeding
annual meeting of stockholders, successors to the class of directors whose term
expires at the annual meeting shall be elected for three-year terms. If the
number of directors is changed, any increase or decrease shall be elected for
three-year terms. If the number of directors is changed, any increase or
decrease shall be apportioned among the classes so as to maintain the number of
directors in each class as nearly equal as possible, and any additional director
of any class elected to fill a vacancy
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<PAGE> 15
resulting from an increase in such class shall hold office for a term that shall
coincide with the remaining term of that class, but in no case will a decrease
in the number of directors shorten the term of any incumbent director. A
director shall hold office until the annual meeting for the year in which his or
her term expires and until his or her successor shall be elected and shall
qualify, subject, however, to prior death, resignation, retirement,
disqualification or removal from office. Except as otherwise required by law,
any vacancy on the Board of Directors that results from an increase in the
number of directors and any other vacancy occurring in the Board of Directors
shall be filled by a majority of the directors then in office, even if less than
a quorum, or by a sole remaining director. Any director elected to fill a
vacancy not resulting from an increase in the number of directors shall have the
same remaining term as that of his or her predecessor.
X. In addition to any other considerations which the Board of Directors
may lawfully take into account, in determining whether to take or to refrain
from taking corporate action on any matter, including proposing any matter to
the stockholders of the Corporation, the Board of Directors may take into
account the long-term as well as the short-term interests of the Corporation and
its stockholders (including the possibility that these interests may be best
served by the continued independence of the Corporation), customers, employees
and other constituencies of the Corporation and its subsidiaries, including the
effect upon communities in which the Corporation and its subsidiaries do
business. In so evaluating any such determination, the Board of Directors shall
be deemed to be performing their duties and acting in good faith and in the best
interests of the Corporation within the meaning of Section 145 of the Delaware
General Corporation Law, or any successor provision.
XI. A. At any meeting of the stockholders, only such business shall be
conducted as shall have been properly brought before such meeting. To be
properly brought before an annual meeting, business to be brought before such
meeting must be (1) specified in the notice of meeting (or any supplement
thereto) given by or at the direction of the Board of Directors, (2) otherwise
properly brought before the meeting by or at the direction of the Board of
Directors or (3) otherwise properly brought before the meeting by a stockholder.
For business to be properly brought before an annual meeting by a stockholder,
the stockholder must have given timely notice thereof in writing to the
Secretary of the Corporation. To be timely, a stockholder's notice must be
received not less than sixty days nor more than ninety days prior to the first
anniversary of the preceding year's annual meeting; provided, however, that in
the event that the date of the annual meeting is advanced by more than thirty
days or delayed by more than sixty days from such anniversary, notice by the
stockholder to be timely must be so received not earlier than the ninetieth day
prior to such annual meeting and not later than the close of business on the
later of (1) the sixtieth day prior to such annual meeting or (2) the tenth day
following the date on which notice of the date of the annual meeting was mailed
or public disclosure thereof was made, whichever first occurs. For purposes of
calculating the first such notice period following adoption of this Certificate
of Incorporation, the first anniversary of the 1994 annual meeting shall be
deemed to be May 22, 1995. Each such notice shall set forth as to each matter
the stockholder proposed to bring before the annual meeting: (a) a brief
description of the business desired to be brought before the annual meeting and
the reasons for conducting such business at the meeting, (b) the name and
address, as they appear on the Corporation's books, of
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the stockholder proposing such business, (c) the class, series and number of
shares of the Corporation which are beneficially owned by the stockholder and
(d) any material interest of the stockholder in such business. To be properly
brought before a special meeting, business must be (i) specified in the notice
of meeting (or any supplement thereto) given by or at the direction of the Board
of Directors or (ii) otherwise properly brought before the meeting by or at the
direction of the Board of Directors.
B. No business shall be conducted at any meeting of the
stockholders except in accordance with the procedures set forth in this Article
XI. The presiding officer of the meeting shall, if the facts warrant, determine
and declare to the meeting that business was not properly brought before the
meeting in accordance with the provisions of this Article XI, and if he or she
should so determine, any such business not properly brought before the meeting
shall not be transacted. Nothing herein shall be deemed to affect any rights of
stockholders to request inclusion of proposals in the Corporations's proxy
statement pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as
amended, or any successor provision.
XII. A. Subject to the rights of holders of any class or series of
stock having a preference over the Common Stock as to dividends or upon
liquidation, dissolution or winding-up, nominations for the election of
directors may be made by the Board of Directors or a committee or person
appointed by the Board of Directors or by any stockholder entitled to vote in
the election of directors generally. However, any stockholder entitled to vote
in the election of directors generally may nominate one or more persons for
election as directors at an annual meeting only pursuant to the Corporation's
notice of such meeting or if written notice of such stockholder's intent to make
such nomination or nominations has been received by the Secretary of the
Corporation not less than sixty nor more than ninety days prior to the first
anniversary of the preceding year's annual meeting, then pursuant to such notice
by the stockholder; provided, however, that in the event that the date of the
annual meeting is advanced by more than thirty days or delayed by more than
sixty days from such anniversary, notice by the stockholder to be timely must be
so received not earlier than the ninetieth day prior to such annual meeting and
not later than the closing of business on the later of (1) the sixtieth day
prior to such annual meeting or (2) the tenth day following the day on which
notice of the date of the annual meeting was mailed or public disclosure thereof
was made by the Corporation, whichever first occurs. For purposes of calculating
the first such notice period following adoption of this Certificate of
Incorporation, the first anniversary of the 1994 annual meeting shall be deemed
to be May 22, 1995. Each such notice shall set forth: (a) the name and address
of the stockholder who intends to make the nomination and of the person or
persons to be nominated; (b) a representation that the stockholder is a holder
of record of stock of the Corporation entitled to vote at such meeting and
intends to appear in person or by proxy at the meeting to nominate the person or
persons specified in the notice; (c) a description of all arrangements or
understandings between the stockholder and each nominee and any other person or
persons (naming such person or persons) relating to the nomination or
nominations; (d) the class and number of shares of the Corporation which are
beneficially owned by such stockholder's notice and by any other stockholders
known by such stockholder to be supporting such nominees as of the date of such
stockholder's notice; (e) such other information regarding each nominee proposed
by such stockholder as would be
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<PAGE> 17
required to be included in a proxy statement filed pursuant to the proxy rules
of the Securities and Exchange Commission; and (f) the consent of each nominee
to serve as a director of the Corporation if so elected.
B. In addition, in the event the Corporation calls a special
meeting of stockholders for the purpose of electing one or more directors, any
stockholder entitled to vote in the election of directors generally may nominate
one or more persons for election as directors at a special meeting only pursuant
to the Corporation's notice of meeting or if written notice of such
stockholder's intent to make such nomination or nominations, setting forth the
information and complying with the form described in the immediately preceding
paragraph, has been received by the Secretary of the Corporation not earlier
than the ninetieth day prior to such special meeting and not later than the
close of business on the later of (i) the sixtieth day prior to such special
meeting or (ii) the tenth day following the day on which notice of the date of
the special meeting was mailed or public disclosure thereof was made by the
Corporation, whichever first occurs.
C. No person shall be eligible for election as a director of the
Corporation unless nominated in accordance with the procedures set forth in this
Article XII. The presiding officer of the meeting shall, if the facts warrant,
determine and declare to the meeting that a nomination was not made in
accordance with the procedures prescribed by this Article XII, and if he or she
should so determine, the defective nomination shall be disregarded.
D. Elections of directors need not be by written ballot unless
the Bylaws of the Corporation shall so provide."
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IN WITNESS WHEREOF, SDL, Inc. has caused this Certificate to be signed and
attested by its duly authorized officers this 14th day of March, 1995.
SDL, INC.,
a Delaware corporation
By: /s/ Donald R. Scifres
----------------------------------
Title: Chairman and Chief Executive
Officer
Attest:
By: /s/ John P. Melton
----------------------------------
Title: Secretary
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SDL, INC.
CERTIFICATE OF DESIGNATION
OF THE
SERIES B PREFERRED STOCK
-------------------------------------
Pursuant to Section 151 of the General Corporation Law of the State of Delaware
-------------------------------------
The undersigned officers of SDL, Inc., a corporation organized and
existing under the General Corporation Law of the State of Delaware (the
"Corporation"), in accordance with the provisions of Section 103 thereof, DO
HEREBY CERTIFY:
That, pursuant to the authority conferred upon the Board of Directors of
the Corporation by its Restated Certificate of Incorporation (the
"Certificate"), the said Board of Directors, at a duly called meeting held on
November 5, 1997, at which a quorum was present and acted throughout, adopted
the following resolution, which resolution remains in full force and effect on
the date hereof creating a series of 300,000 shares of Preferred Stock having a
par value of $.001 per share, designated as Series B Preferred Stock (the
"Series B Preferred Stock") out of the class of 1,000,000 shares of preferred
stock of the par value of $.001 per share (the "Preferred Stock"):
RESOLVED, that pursuant to the authority vested in the Board of Directors
in accordance with the provisions of its Certificate, the Board of Directors
does hereby create, authorize and provide for 300,000 shares of its authorized
Preferred Stock to be designated and issued as the Series B Preferred Stock,
having the voting powers, designation, relative, participating, optional and
other special rights, preferences and qualifications, limitations and
restrictions that are set forth as follows:
1. Dividends and Distributions. (A) Subject to the prior and superior
rights of the holders of any shares of any other series of Preferred Stock or
any other shares of stock of the Corporation ranking prior and superior to the
shares of Series B Preferred Stock with respect to dividends, each holder of one
one-hundredth (1/100) of a share (a "Unit") of Series B Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available for that purpose, (i) quarterly dividends payable in
cash on the last day of February, May, August and November in each year (each
such date being a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of such Unit of Series
B Preferred Stock, in an amount per Unit (rounded to the nearest cent) equal to
the greater of (a) $.01 or (b) subject to the provision for adjustment
hereinafter set forth, the aggregate per share amount of all cash dividends
declared on shares of the Common Stock since the immediately preceding Quarterly
Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of a Unit of Series B Preferred Stock, and (ii)
subject to the provision for adjustment hereinafter set forth, quarterly
distributions (payable in kind) on each Quarterly Dividend Payment Date in an
amount per Unit equal to the aggregate per share amount of all non-cash
dividends or other distributions (other than a dividend payable in shares of
Common Stock or a subdivision of the outstanding shares of Common Stock, by
reclassification or otherwise) declared on shares of Common Stock since the
<PAGE> 20
immediately preceding Quarterly Dividend Payment Date, or with respect to the
first Quarterly Dividend Payment Date, since the first issuance of a Unit of
Series B Preferred Stock. In the event that the Corporation shall at any time
after November 6, 1997 (the "Rights Declaration Date") (i) declare any dividend
on outstanding shares of Common Stock payable in shares of Common Stock, (ii)
subdivide outstanding shares of Common Stock or (iii) combine outstanding shares
of Common Stock into a smaller number of shares, then in each such case the
amount to which the holder of a Unit of Series B Preferred Stock was entitled
immediately prior to such event under clause (b) of the preceding sentence shall
be adjusted by multiplying such amount by a fraction the numerator of which
shall be the number of shares of Common Stock that are outstanding immediately
after such event and the denominator of which shall be the number of shares of
Common Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on Units of
Series B Preferred Stock as provided in paragraph (A) above immediately after it
declares a dividend or distribution on the shares of Common Stock (other than a
dividend payable in shares of Common Stock); provided, however, that, in the
event no dividend or distribution shall have been declared on the Common Stock
during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $.01 per Unit on the
Series B Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and shall be cumulative on each
outstanding Unit of Series B Preferred Stock from the Quarterly Dividend Payment
Date next preceding the date of issuance of such Unit of Series B Preferred
Stock, unless the date of issuance of such Unit is prior to the record date for
the first Quarterly Dividend Payment Date, in which case, dividends on such Unit
shall begin to accrue from the date of issuance of such Unit, or unless the date
of issuance is a Quarterly Dividend Payment Date or is a date after the record
date for the determination of holders of Units of Series B Preferred Stock
entitled to receive a quarterly dividend and before such Quarterly Dividend
Payment Date, in either of which events such dividends shall begin to accrue and
be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on Units of Series B Preferred
Stock in an amount less than the aggregate amount of all such dividends at the
time accrued and payable on such Units shall be allocated pro rata on a
unit-by-unit basis among all Units of Series B Preferred Stock at the time
outstanding. The Board of Directors may fix a record date for the determination
of holders of Units of Series B Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date shall be no more
than 30 days prior to the date fixed for the payment thereof.
2. Voting Rights. The holders of Units of Series B Preferred Stock
shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
Unit of Series B Preferred Stock shall entitle the holder thereof to one vote on
all matters submitted to a vote of the stockholders of the Corporation. In the
event the Corporation shall at any time after the Rights Declaration Date (i)
declare any dividend on outstanding shares of Common Stock payable in shares of
Common Stock, (ii) subdivide outstanding shares of Common Stock or (iii) combine
the outstanding shares of Common Stock into a smaller number of shares, then in
each
20
<PAGE> 21
such case the number of votes per Unit to which holders of Units of Series B
Preferred Stock were entitled immediately prior to such event shall be adjusted
by multiplying such number by a fraction the numerator of which shall be the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which shall be the number of shares of Common Stock that were
outstanding immediately prior to such event; and
(B) Except as otherwise provided herein, in the Certificate or the
Bylaws of the Corporation or as required by law, the holders of Units of Series
B Preferred Stock and the holders of shares of Common Stock shall vote together
as one class on all matters submitted to a vote of stockholders of the
Corporation, and such holders shall have no special voting rights and their
consents shall not be required for taking any corporate action.
3. Certain Restrictions. (A) Whenever quarterly dividends or other
dividends or distributions payable on Units of Series B Preferred Stock as
provided herein are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on outstanding Units of
Series B Preferred Stock shall have been paid in full, the Corporation shall not
(i) declare or pay dividends on, make any other distributions on, or redeem or
purchase or otherwise acquire for consideration any shares of junior stock; (ii)
declare or pay dividends on or make any other distributions on any shares of
parity stock, except dividends paid ratably on Units of Series B Preferred Stock
and shares of all such parity stock on which dividends are payable or in arrears
in proportion to the total amounts to which the holders of such Units and all
such shares are then entitled; (iii) redeem or purchase or otherwise acquire for
consideration shares of any parity stock, provided, however, that the
Corporation may at any time redeem, purchase or otherwise acquire shares of any
such parity stock in exchange for shares of any junior stock; (iv) purchase or
otherwise acquire for consideration any Units of Series B Preferred Stock,
except in accordance with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such Units.
(B) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section 3,
purchase or otherwise acquire such shares at such time and in such manner.
4. Reacquired Shares. Any Units of Series B Preferred Stock purchased
or otherwise acquired by the Corporation in any manner whatsoever shall be
retired and cancelled promptly after the acquisition thereof. All such Units
shall, upon their cancellation, become authorized but unissued shares (or
fractions of shares) of Preferred Stock and may be reissued as part of a new
series of Preferred Stock to be created by resolution or resolutions of the
Board of Directors, subject to the conditions and restrictions on issuance set
forth herein.
5. Liquidation, Dissolution or Winding Up. (A) Upon any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (i) to the holders of shares of junior stock unless
the holders of Units of Series B Preferred Stock shall have received, subject to
adjustment as hereinafter provided in paragraph (B), the greater of either (a)
$.01 per Unit plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not earned or declared, to the date of such
payment, or (b) the amount equal to the aggregate per share amount to be
distributed to holders of shares of Common Stock, or (ii)
21
<PAGE> 22
to the holders of shares of parity stock, unless simultaneously therewith
distributions are made ratably on Units of Series B Preferred Stock and all
other shares of such parity stock in proportion to the total amounts to which
the holders of Units of Series B Preferred Stock are entitled under clause
(i)(a) of this sentence and to which the holders of shares of such parity stock
are entitled, in each case upon such liquidation, dissolution or winding up.
(B) In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on outstanding shares of Common Stock
payable in shares of Common Stock, (ii) subdivide outstanding shares of Common
Stock, or (iii) combine outstanding shares of Common Stock into a smaller number
of shares, then in each such case the aggregate amount to which holders of Units
of Series B Preferred Stock were entitled immediately prior to such event
pursuant to clause (i)(b) of paragraph (A) of this Section 5 shall be adjusted
by multiplying such amount by a fraction the numerator of which shall be the
number of shares of Common Stock that are outstanding immediately after such
event and the denominator of which shall be the number of shares of Common Stock
that were outstanding immediately prior to such event.
6. Consolidation, Merger, etc. In case the Corporation shall enter into
any consolidation, merger, combination or other transaction in which the shares
of Common Stock are exchanged for or converted into other stock or securities,
cash and/or any other property, then in any such case Units of Series B
Preferred Stock shall at the same time be similarly exchanged for or converted
into an amount per Unit (subject to the provision for adjustment hereinafter set
forth) equal to the aggregate amount of stock, securities, cash and/or any other
property (payable in kind), as the case may be, into which or for which each
share of Common Stock is converted or exchanged. In the event the Corporation
shall at any time after the Rights Declaration Date (i) declare any dividend on
outstanding shares of Common Stock payable in shares of Common Stock, (ii)
subdivide outstanding shares of Common Stock, or (iii) combine outstanding
Common Stock into a smaller number of shares, then in each such case the amount
set forth in the immediately preceding sentence with respect to the exchange or
conversion of Units of Series B Preferred Stock shall be adjusted by multiplying
such amount by a fraction the numerator of which shall be the number of shares
of Common Stock that are outstanding immediately after such event and the
denominator of which shall be the number of shares of Common Stock that were
outstanding immediately prior to such event.
7. Redemption. The Units of Series B Preferred Stock and shares of
Series B Preferred Stock shall not be redeemable.
8. Ranking. The Units of Series B Preferred Stock and shares of Series
B Preferred Stock shall rank junior to all other series of the Preferred Stock
and to any other class of Preferred Stock that hereafter may be issued by the
Corporation as to the payment of dividends and the distribution of assets,
unless the terms of any such series or class shall provide otherwise.
9. Fractional Shares. The Series B Preferred Stock may be issued in
Units or other fractions of a share, which Units or fractions shall entitle the
holder, in proportion to such holder's units or fractional shares, to exercise
voting rights, receive dividends, participate in distributions and to have the
benefit of all other rights of holders of Series B Preferred Stock.
10. Certain Definitions. As used in this resolution with respect to the
Series B Preferred
22
<PAGE> 23
Stock, the following terms shall have the following meanings:
(A) The term "Common Stock" shall mean the class of stock designated as
the common stock, par value $.001 per share, of the Corporation at the date
hereof or any other class of stock resulting from successive changes or
reclassification of the common stock.
(B) The term "junior stock" (i) as used in Section 3 shall mean the
Common Stock and any other class or series of capital stock of the Corporation
hereafter authorized or issued over which the Series B Preferred Stock has
preference or priority as to the payment of dividends and (ii) as used in
Section 5, shall mean the Common Stock and any other class or series of capital
stock of the Corporation over which the Series B Preferred Stock has preference
or priority in the distribution of assets on any liquidation, dissolution or
winding up of the Corporation.
(C) The term "parity stock" (i) as used in Section 3 shall mean any
class or series of stock of the Corporation hereafter authorized or issued
ranking pari passu with the Series B Preferred Stock as to dividends and (ii) as
used in Section 5, shall mean any class or series of capital stock ranking pari
passu with the Series B Preferred Stock in the distribution of assets on any
liquidation, dissolution or winding up.
23
<PAGE> 24
IN WITNESS WHEREOF, SDL, Inc. has caused this Certificate to be signed by
its Chairman and Chief Executive Officer and its Secretary this 14 day of
November, 1997.
SDL, INC.
By: /s/ Donald R. Scifres
----------------------------------
Name: Donald R. Scifres
Title: Chairman and Chief Executive
Officer
By: /s/ John P. Melton
----------------------------------
Name: John P. Melton
Title: Secretary
24
<PAGE> 25
CERTIFICATE OF CORRECTION
OF
RESTATED CERTIFICATE OF INCORPORATION
OF SDL, INC.
SDL, Inc., a Delaware corporation (the "Corporation"), pursuant to Section
103(f) of the General Corporation Law of the State of Delaware, hereby certifies
that:
1. the Restated Certificate of Incorporation of the Corporation (the
"Restated Certificate of Incorporation") that was filed with the Secretary of
State of Delaware on March 17, 1995 was an inaccurate record of the corporate
action therein referred to;
2. the Restated Certificate of Incorporation was inaccurate in that
paragraph E of Article XII thereof, relating to the power of the Board of
Directors to make, alter or repeal the bylaws of the Corporation, was
inadvertently omitted in its entirety; and
3. Paragraph E of Article XII of the Restated Certificate of
Incorporation in its correct form as approved by the Board of Directors and by
the stockholders of the Corporation, is as follows:
"E. The board of directors is expressly
authorized to make, alter, or repeal the bylaws
of the Corporation."
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Correction to be signed by its duly authorized officer this 8th day of December,
1997.
By: /s/ Donald R. Scifres
----------------------------------
Donald R. Scifres
President
<PAGE> 26
AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION
OF
SDL, INC.
A DELAWARE CORPORATION
SDL, Inc. 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 SDL, Inc.
resolutions were duly adopted setting forth a proposed amendment to the
Certificate of Incorporation of said corporation, declaring said amendment to be
advisable and calling a meeting of stockholders of said corporation for
consideration thereof. The resolution setting forth the proposed amendment is as
follows:
RESOLVED, that paragraph A of Article 4 of the Company's Restated
Certificate of Incorporation shall be amended, subject to stockholder approval,
to read in its entirety as follows:
"A. Classes of Stock. The total number of shares of all classes of
stock that the Corporation is authorized to issue is seventy-one million
(71,000,000) shares, consisting of seventy million (70,000,000) shares of Common
Stock, with a par value of $0.001 per share, and one million (1,000,000) shares
of Preferred Stock, with a par value of $0.001 per share, of which two hundred
seventy-one thousand six hundred twenty-eight (271,628) shares are denominated
as Series A Preferred Stock, and three hundred thousand (300,000) shares are
denominated as Series B Preferred Stock."
SECOND:That thereafter, pursuant to resolution of its Board of
Directors, an annual meeting of the stockholders of said corporation was duly
called and held, upon notice in accordance with Section 222 of the General
Corporation Law of the State of Delaware at which meeting the necessary number
of shares as required by statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
<PAGE> 27
IN WITNESS WHEREOF, SDL, Inc. has caused this certificate to be signed by
Donald R. Scifres, its President, and attested by Michael L. Foster, its
Secretary, this 14th day of May, 1999.
SDL, INC.
By: /s/ Donald R. Scifres
----------------------------------
Donald R. Scifres
President
ATTEST:
/s/ Michael L. Foster
- ----------------------------------
Michael L. Foster, Secretary
<PAGE> 28
AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION
OF
SDL, INC.
A DELAWARE CORPORATION
SDL, Inc. 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 SDL, Inc.
resolutions were duly adopted setting forth a proposed amendment to the Restated
Certificate of Incorporation of said corporation, declaring said amendment to be
advisable and calling a meeting of stockholders of said corporation for
consideration thereof. The resolution setting forth the proposed amendment is as
follows:
RESOLVED, that paragraph A of Article 4 of the Company's Restated
Certificate of Incorporation shall be amended, subject to stockholder approval,
to read in its entirety as follows:
"A. Classes of Stock. The total number of shares of all classes of
stock that the Corporation is authorized to issue is one hundred forty-one
million (141,000,000) shares, consisting of one hundred forty million
(140,000,000) shares of Common Stock, with a par value of $0.001 per share, and
one million (1,000,000) shares of Preferred Stock, with a par value of $0.001
per share, of which two hundred seventy-one thousand six hundred twenty-eight
(271,628) shares are denominated as Series A Preferred Stock, and three hundred
thousand (300,000) shares are denominated as Series B Preferred Stock."
SECOND:That thereafter, pursuant to resolution of its Board of
Directors, a special meeting of the stockholders of said corporation was duly
called and held, upon notice in accordance with Section 222 of the General
Corporation Law of the State of Delaware at which meeting the necessary number
of shares as required by statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
<PAGE> 29
IN WITNESS WHEREOF, SDL, Inc. has caused this certificate to be signed by
Donald R. Scifres, its Chief Executive Officer, and attested by Michael L.
Foster, its Secretary, this 28th day of February, 2000.
SDL, INC.
By: /s/ Donald R. Scifres
----------------------------------
Donald R. Scifres
Chief Executive Officer
ATTEST:
/s/ Michael L. Foster
- ----------------------------------
Michael L. Foster, Secretary
<PAGE> 1
EXHIBIT 5.1
OPINION OF MORRISON & FOERSTER LLP
[MORRISON & FOERSTER LLP LETTERHEAD]
March 8, 2000
SDL, Inc.
80 Rose Orchard Way
San Jose, CA 95134-1365
Ladies and Gentlemen:
At your request, we have examined the registration statement on Form S-3
filed by SDL, Inc., a Delaware corporation (the "Company"), with the Securities
and Exchange Commission on March 9, 2000 (the "registration statement") relating
to the registration under the Securities Act of 1933, as amended, of up to
4,337,961 shares of the Company's common stock, $.001 par value (the "Stock"),
being offered by certain selling stockholders specified therein (the "Selling
Stockholders").
As counsel to the Company, we have examined the proceedings taken by the
Company and the Selling Stockholders in connection with the sale by the Selling
Stockholders of up to 4,337,961 shares of Stock.
It is our opinion that the 4,337,961 shares of Stock that may be sold
are, or will when and if issued to the Selling Stockholders be, legally and
validly issued, fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the registration
statement and further consent to all references to us in the registration
statement, the prospectus constituting a part thereof and any amendments
thereto.
/s/ Morrison & Foerster LLP
<PAGE> 1
Exhibit 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
the Registration Statement (Form S-3) and related Prospectus of SDL, Inc. for
the registration of shares of its common stock, issued or to be issued in
connection with its acquisition of Queensgate Instruments Limited, and to the
incorporation by reference therein of our report dated January 29, 1999, with
respect to the consolidated financial statements of SDL, Inc. incorporated by
reference in its Annual Report (Form 10-K/A) for the year ended January 1, 1999
and the related financial statement schedule included therein, and our report
dated January 29, 1999 (except Note 16, as to which the date is May 14, 1999 and
except for paragraph 4 of Note 1 and Note 17, as to which the date is May 18,
1999) with respect to the supplemental consolidated financial statements and
schedules of SDL, Inc. included in its Current Report on Form 8-K dated May 18,
1999, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
San Jose, California
March 8, 2000
<PAGE> 1
Exhibit 23.2
CONSENT OF ARTHUR ANDERSEN, INDEPENDENT AUDITORS
As independent auditors, we hereby consent to the reference to our firm
under the caption "Experts" in the Registration Statement (Form S-3) and related
Prospectus of SDL, Inc. for the registration of shares of its common stock, and
to the incorporation by reference therein of our report dated 15 December 1998,
with respect to the consolidated financial statements of IOC International plc
as at 30 September 1998 and 1997 and for the three years ended 30 September 1998
included in SDL, Inc.'s Current Report on Form 8-K dated May 18, 1999, filed
with the Securities and Exchange Commission. It should be noted that we have not
audited any financial statements of IOC International plc subsequent to 30
September 1998 or performed any audit procedures subsequent to the date of our
report.
/s/ Arthur Andersen, Chartered Accountants
Cambridge England
March 8, 2000
