EXHIBIT (3)(I)(2)
AMENDMENT TO
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
SI DIAMOND TECHNOLOGY, INC.
Pursuant to the provisions of Article 4.04 of the Texas Business
Corporation Act (the "TBCA"), the undersigned Corporation adopts the following
Amendment (the "Amendment") to its Amended and Restated Articles of
Incorporation (the"AArticles of Incorporation").
ARTICLE I
The name of the corporation is SI Diamond Technology, Inc. (the
"Corporation").
ARTICLE II
The following Amendment to the Articles of Incorporation of the Corporation
was adopted by unanimous written consent of the holders of the outstanding
shares of the Corporation's Series F Preferred Stock dated July 14, 1997.
The description of the terms of the Corporation's Series F Preferred Stock,
as contained in Article Four, Division C-Series of Preferred Stock in the
Corporation's Articles of Incorporation is hereby deleted and replaced in its
entirety as follows:
"SERIES F PREFERRED STOCK
Section 1. Designation, Amount, Par Value, Stated Value, Accretion Rate,
Purchase Price and Certificates.
(a) The shares of such series shall be designated as "Series F
Preferred Stock" (the "Series F Preferred Stock") and the number of shares
constituting the Series F Preferred Stock shall be 2,500. Such number of
shares may be increased or decreased by resolution of the Board of Directors;
provided, that no decrease shall reduce the number of shares of Series F
Preferred Stock to a number less than the number of shares then outstanding plus
the number of shares reserved for issuance upon the exercise of outstanding
options, rights or warrants or upon the conversion of any outstanding securities
issued by the Corporation convertible into Series F Preferred Stock.
(b) Each share of Series F Preferred Stock shall have a par value of
$1.00, and a stated value (face amount) of One Thousand Dollars ($1,000) (the
"Stated Value"), with an accretion rate of four percent (4%) per annum on the
Stated Value as set forth herein.
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(c) The Series F Preferred Stock shall be offered at a purchase price
of One Thousand Dollars ($1,000) per share.
(d) Certificates representing the shares of Series F Preferred Stock
purchased shall be issued by the Corporation to the purchasers immediately upon
acceptance of the subscriptions to purchase such shares.
Section 2. Dividends.
The Series F Preferred Stock will bear no dividends, and the holders of the
Series F Preferred Stock shall not be entitled to receive dividends on the
Series F Preferred Stock.
Section 3. Liquidation Preference.
(a) In the event of any liquidation, dissolution or winding-up of the
Corporation, either voluntary or involuntary (a"Liquidation"), the holders of
shares of Series F Preferred Stock then issued and outstanding shall be entitled
to be paid out of the assets of the Corporation available for distribution to
its shareholders, whether from capital, surplus or earnings, before any payment
shall be made to the holders of shares of the Common Stock or upon any other
series of Preferred Stock of the Corporation with a liquidation preference
subordinate to the liquidation preference of the Series A or Series E Preferred
Stock, an amount per share equal to the sum of (i) $1,000 and (ii) an amount
equal to four percent (4%) of $1,000 multiplied by the fraction N/365, where N
equals the number of days elapsed since the issue date of the Series F Preferred
Stock. If, upon any Liquidation of the Corporation, the assets of the
Corporation available for distribution to its shareholders shall be insufficient
to pay the holders of shares of the Series F Preferred Stock and the holders of
any other series of Preferred Stock with a liquidation preference equal to the
liquidation preference of the Series F Preferred Stock the full amounts to which
they shall respectively be entitled, the holders of shares of Series F Preferred
Stock and the holders of any other series of Preferred Stock with a liquidation
preference equal to the liquidation preference of the Series F Preferred Stock
shall share ratably in any distribution in accordance with the amounts due such
shareholders. In the event of a Liquidation, the Series F Preferred Stock shall
be subordinate to Series A and Series E Preferred Stock.
(b) After payment shall have been made to the holders of the Series F
Preferred Stock of the full amount to which they shall be entitled, as
aforesaid, the holders of shares of the Series F Preferred Stock shall be
entitled to no further distributions thereon and the holders of shares of the
Common Stock and of shares of any other series of stock of the Corporation shall
be entitled to share, according to their respective rights and preferences, in
all remaining assets of the Corporation available for distribution to its
shareholders.
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(c) A merger or consolidation of the Corporation with or into any other
corporation, or a sale, lease, exchange or transfer of all or any part of the
assets of the Corporation which shall not in fact result in the Liquidation (in
whole or in part) of the Corporation and the distribution of its assets to its
shareholders shall not be deemed to be a Liquidation (in whole or in part) of
the Corporation.
Section 4. Conversion.
The record Holders of this Series F Preferred Stock shall have conversion
rights as follows (the "Conversion Rights").
(a) Right to Convert.
The record Holders of each share of Series F Preferred Stock shall be
entitled, as set forth below, and subject to the restrictions on conversion set
forth in Section 4(e) below, to convert the shares of Series F Preferred Stock
held by such Holder into that number of fully-paid and nonassessable shares of
the Corporation's Common Stock (the "Conversion Shares") at the Conversion Rate
as set forth below.
(b) Mechanics of Conversion.
Each holder of Series F Preferred Stock who desires to convert the same
into shares of Common Stock shall provide notice ("Conversion Notice") via
telecopy (facsimile) on a business day, during business hours in Austin, Texas,
to the Corporation, and a facsimile of the Conversion Notice shall be
transmitted to the Corporation's Transfer Agent at the same time as transmission
is made to the Corporation. On the same day, the original Conversion Notice
shall be delivered to the Corporation, but the certificate(s) representing the
Series F Preferred Stock for which conversion is elected, shall be delivered to
the Transfer Agent by international courier, duly endorsed. The later of the
date upon which the Corporation receives the original Conversion Notice or the
date the Transfer Agent receives the Certificates representing the Series F
Preferred Stock for which conversion is elected, shall be a "Notice Date."
Upon receipt by the Corporation of a Conversion Notice, as provided above,
the Corporation shall immediately send to the holder, via telecopy (facsimile),
a confirmation of receipt of the Conversion Notice which shall specify that the
Conversion Notice has been received and the name and telephone number of a
contact person at the Corporation whom the holder should contact regarding
information related to the conversion. The Corporation shall use all reasonable
efforts to issue and deliver within three (3) business days after the Notice
Date, to such holder of Series F Preferred Stock at the address of the holder on
the stock books of the Corporation, a certificate or certificates for the number
of shares of Common Stock to which the holder shall be entitled as aforesaid;
provided that the original shares of Series F Preferred Stock to be converted
are received by the transfer agent or the Corporation
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within three (3) business days after the receipt of the original Conversion
Notice and the person(s) entitled to receive the shares of Common Stock issuable
upon such conversion shall be treated for all purposes as the record holder(s)
of such shares of Common Stock on the Notice Date. If the original
certificate(s) representing the shares of Series F Preferred Stock to be
converted are not received by the transfer agent or the Corporation within three
(3) business days after the receipt of the original Conversion Notice, the
Conversion Notice shall become null and void.
(c) Conversion Dates.
Subject to the restrictions on conversion set forth in Section 4(e) below,
the shares of Series F Preferred Stock shall become convertible into shares of
Common Stock at any time commencing after the earlier of (i) the effective date
of a registration statement covering the Conversion Shares; or (ii) ninety (90)
days after the date of issuance of the shares of Preferred Stock. The date on
which a Conversion Notice is transmitted by facsimile to the Corporation shall
be referred to as a "Conversion Date."
(d) Conversion Formula/Conversion Price.
Each share of Series F Preferred Stock shall be convertible into the number
of shares of Common Stock in accordance with the following formula (the
"Conversion Formula"):
Number of shares of Common Stock issued upon conversion of one share of
Series F Preferred Stock
= [(.04) x (N/365) x (1,000)] + 1,000
-----------------------------------
Conversion Price
where
N = the number of days between (i) the issue date of the Series F
Preferred Stock being converted, and (ii) the Notice Date.
Conversion Price = the lesser of (x) $1.50 or (y) 80% of the ten (10)
day average Closing Bid Price prior to the
Conversion Date.
For purposes hereof, the term "Closing Bid Price" shall mean the closing
bid price on the Nasdaq SmallCap Stock Market, or if no longer traded thereon,
the closing bid price on the principal national securities exchange on which the
Common Stock is so traded.
Upon Conversion, if the Conversion Price is $.75 or less, the Company shall
have the right to redeem in cash by paying the Holder an amount equal to the
number of Common Shares it would have received had Conversion taken place
multiplied by the Conversion Price.
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Notwithstanding the foregoing definition of "Conversion Price," the
Conversion Price shall be as set forth in Section 4(e)(i) for the shares of
Series F Preferred Stock subject to such provisions.
(e) Restrictions on Conversion.
(i) The conversion of Series F Preferred Stock by each Holder of Series F
Preferred Stock pursuant to Section 4(a) above shall be limited as
follows:
(1) Each Holder shall be entitled to convert up to 12.5% of the
aggregate shares of Series F Preferred Stock held by such Holder as of
July 14, 1997 during the month of July 1997 and an additional 12.5% of
such amount during August 1997. These shares shall be converted at
the Conversion Price as calculated pursuant to Section 4(d) of this
Certificate of Designation, as amended to date.
(2) In addition to the shares of Series F Preferred Stock a Holder may
convert pursuant to Section 4(e)(i)(1) above, each Holder shall be
entitled to convert, at any time, any and all remaining shares of
Series F Preferred Stock held by such holder at a Conversion Price
equal to $1.50.
(ii) Consideration for Restrictions on Conversion Pursuant to Section
4(e)(i).
For each calendar month, commencing with July 1997, if the average
of the Closing Bid Prices of the Corporation's Common Stock for all the
trading days for such calendar month is less than $1.00, then the Holder
may have the Corporation redeem shares of the Series F Preferred Stock
held by such Holder in an amount equal to the lesser of (1) 7% of the
aggregate shares of Series F Preferred Stock held by such holder as of
July 14, 1997, or (2) all shares of Series F Preferred Stock then held by
such holder. For shares of Series F Preferred Stock submitted to the
Corporation under the terms of this provision, the Corporation shall have
the option of redeeming the shares submitted upon notice to the holders
within one (1) business day of the receipt of notice from the holder
exercising the rights of this provision. If the Corporation does exercise
its option to redeem, the redemption price shall be the equivalent of
115% of the sum of the original Series F Issue Price plus any accrued
interest under the terms of the Certificate of Designation, as amended.
If the Corporation does not exercise its right to redeem under this
provision, then the shares of Series F Preferred Stock shall be converted
into shares of the Corporation's Common Stock (valued at the average of
the Closing Bid Prices of the Corporation's Common Stock for all trading
days for such calendar month). The payment of such redemption price or
the shares of Common Stock to be received upon conversion pursuant to the
terms of this provision shall be delivered to the holder of Series F
Preferred Stock within ten (10) business days of the receipt by the
Corporation of notice from such holder exercising his rights
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under the terms of this provision. Any shares of Common Stock issued
pursuant to these provisions shall be included in the Registration
Statement which covers the shares of Common Stock into which the Series F
Preferred Stock are convertible.
(iii) If the Closing Bid Price of the Corporation's Common Stock does not
exceed $1.50 within ninety (90) days from July 14, 1997, the Corporation
hereby agrees to renegotiate the conversion terms of the Series F
Preferred Stock with its holders.
(f) Lost or Stolen Certificates.
Upon receipt by the Corporation of evidence reasonably satisfactory to it of
the loss, destruction, theft or mutilation of any Series F Preferred Stock
certificates (the "Certificates") and (in the case of loss, theft or
destruction) of indemnity or security reasonably satisfactory to the
Corporation, and upon surrender and cancellation of the Certificates, if
mutilated, the Corporation shall execute and deliver new Series F Preferred
Stock Certificates of like tenor and date. However, the Corporation shall not be
obligated to re-issue such lost or stolen Series F Preferred Stock Certificates
if the holder thereof contemporaneously requests the Corporation to convert such
Series F Preferred Stock into Common Stock, in which event the Corporation shall
be entitled to rely on an affidavit of loss, destruction or theft of the Series
F Preferred Stock Certificate (and the receipt of indemnity or security
reasonably satisfactory to the Corporation) or, in the case of mutilation,
tender of the mutilated certificate, and shall issue the Conversion Shares.
(g) Automatic Conversion.
Each share of Series F Preferred Stock outstanding on March 10, 1999 shall be
converted automatically into Common Stock on such date in accordance with the
Conversion Formula and the Conversion Price then in effect, and March 10, 1999
shall be deemed to be the Notice Date and Conversion Date with respect to such
conversion.
(h) No Fractional Shares.
If any conversion of the Series F Preferred Stock would create a fractional
share of Common Stock, no fractional shares shall be issued, and an equivalent
of the fractional share shall be paid in cash.
(i) Reservation of Stock Issuable Upon Conversion.
The Corporation shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock, solely for the purpose of
effecting the conversion of the shares of the Series F Preferred Stock, such
number of its shares of Common Stock as shall from time to time be sufficient to
effect the conversion of all then outstanding shares of the Series F Preferred
Stock; and if at any time the number of authorized but unissued shares of
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Common Stock shall not be sufficient to effect the conversion of all then
outstanding shares of the Series F Preferred Stock, the Corporation will take
such corporate action as may be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be sufficient
for such purpose.
(j) Adjustment to Conversion Price.
(1) If, prior to the conversion of all shares of Series F Preferred
Stock, the number of outstanding shares of Common Stock is increased by a
stock split, stock dividend, or other similar event, the Conversion Price
shall be proportionately reduced, or if the number of outstanding shares of
Common Stock is decreased by a combination or reclassification of shares,
or other similar event, the Conversion Price shall be proportionately
increased.
(2) If, prior to the conversion of all shares of Series F Preferred
Stock, there shall be any merger, consolidation, exchange of shares,
recapitalization, reorganization, or other similar event, as a result of
which shares of Common Stock of the Corporation shall be changed into the
same or a different number of shares of the same or another class or
classes of stock or securities of the Corporation or another entity, then
the holders of Series F Preferred Stock shall thereafter have the right to
purchase and receive upon conversion of shares of Series F Preferred Stock,
upon the basis and upon the terms and conditions specified herein and in
lieu of the shares of Common Stock immediately theretofore issuable upon
conversion, such shares of stock and/or securities as may be issued or
payable with respect to or in exchange for the number of shares of Common
Stock immediately theretofore purchasable and receivable upon the
conversion of shares of Series F Preferred Stock held by such holders had
such merger, consolidation, exchange of shares, recapitalization or
reorganization not taken place, and in any such case appropriate provisions
shall be made with respect to the rights and interests of the holders of
the Series F Preferred Stock to the end that the provisions hereof
(including, without limitation, provisions for adjustment of the Conversion
Price and of the number of shares issuable upon conversion of the Series F
Preferred Stock) shall thereafter be applicable, as nearly as may be
practicable in relation to any shares of stock or securities thereafter
deliverable upon the exercise hereof. The Corporation shall not effect any
transaction described in this subsection unless the resulting successor or
acquiring entity (if not the Corporation) assumes by written instrument the
obligation to deliver to the holders of the Series F Preferred Stock such
shares of stock and/or securities as, in accordance with the foregoing
provisions, the holders of the Series F Preferred Stock may be entitled to
purchase.
(3) If any adjustment under this subsection would create a fractional
share of Common Stock or a right to acquire a fractional share of Common
Stock, no fractional
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shares shall be issued upon conversion, and an equivalent of the fractional
share shall be paid in cash.
Section 5. Voting Rights.
Except as otherwise provided below or by the Texas Business Corporation
Act, the holders of the Series F Preferred Stock shall have no voting power
whatsoever, and no holder of Series F Preferred Stock shall vote or otherwise
participate in any proceeding in which actions shall be taken by the Corporation
or the shareholders thereof or be entitled to notification as to any meeting of
the Board of Directors or the shareholders.
Notwithstanding the above, the Corporation shall provide holders of the
Series F Preferred Stock ("Holders") with notification of any meeting of the
shareholders regarding any major corporate events affecting the Corporation. In
the event of any taking by the Corporation of a record of its shareholders for
the purpose of determining shareholders who are entitled to receive payment of
any dividend or other distribution, any right to subscribe for, purchase or
otherwise acquire any share of any class or any other securities or property
(including by way of merger, consolidation or reorganization), or to receive any
other right, or for the purpose of determining shareholders who are entitled to
vote in connection with any proposed sale, lease or conveyance of all or
substantially all of the assets of the Corporation, or any proposed liquidation,
dissolution or winding up of the Corporation, the Corporation shall mail a
notice to the Holders, at least ten (10) days prior to the record date specified
therein, of the date on which any such record is to be taken for the purpose of
such dividend, distribution, right or other event, and a brief statement
regarding the amount and character of such dividend, distribution, right or
other event to the extent known at such time.
To the extent that, under Texas law, the vote of the Holders, voting
separately as a class, is required to authorize a given action of the
Corporation, the affirmative vote or consent of the Holders of at least a
majority of the shares of the Series F Preferred Stock represented at a duly
held meeting at which a quorum is present or by written consent of the shares as
required by Texas law of Series F Preferred Stock (except as otherwise may be
required under Texas law) shall constitute the approval of such action by the
class. To the extent that under Texas law the Holders are entitled to vote on a
matter with the holders of Common Stock, voting together as one (1) class, each
share of Series F Preferred Stock shall be entitled to a number of votes equal
to the number of shares of Common Stock into which it is then convertible using
the record date for the taking of such vote of shareholders as the date as of
which the Conversion Price is calculated. The Holders shall also be entitled to
notice of all shareholder meetings or written consents with respect to which
they would be entitled to vote, which notice would be provided pursuant to the
Corporation's by-laws and applicable statutes.
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Section 6. Protective Provisions.
So long as shares of Series F Preferred Stock are outstanding, the
Corporation shall not, without first obtaining the approval (by vote or written
consent, as provided by law) of the Holders of at least seventy-five percent
(75%) of the then outstanding shares of Series F Preferred Stock:
(a) alter or change the rights, preferences or privileges of the Series F
Preferred Stock so as to affect adversely the Series F Preferred Stock;
(b) create any new class or series of stock or issue any capital stock
senior to or having a preference over or parity with the Series F Preferred
Stock with respect to payments upon Liquidation or increase the number of
authorized shares of Series F Preferred Stock or change the Stated Value
thereof; or
(c) do any act or thing not authorized or contemplated by this Resolution
which would result in taxation of the holders of shares of the Series F
Preferred Stock under Section 305 of the Internal Revenue Code of 1986, as
amended (or any comparable provision of the Internal Revenue Code as hereafter
from time to time amended).
Section 7. Status of Converted Stock.
In the event that any shares of Series F Preferred Stock shall be converted
pursuant to Section 4 hereof, the shares so converted shall be canceled, shall
return to the status of authorized but unissued Preferred Stock of no designated
class or series, and shall not be issuable by the Corporation as Series F
Preferred Stock.
Section 8. Taxes.
All shares of Common Stock issued upon conversion of Series F Preferred
Stock will be validly issued, fully paid and nonassessable. The Corporation
shall pay any and all documentary stamp or similar issue or transfer taxes that
may be payable in respect of any issue or delivery of shares of Common Stock on
conversion of Series F Preferred Stock pursuant hereto. The Corporation shall
not, however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of shares of Common Stock in a name
other than that in which the Series F Preferred Stock so converted were
registered, and no such issue or delivery shall be made unless and until the
person requesting such transfer has paid to the Corporation that such tax has
been paid or that no such tax is payable."
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ARTICLE III
Pursuant to Article 4.03(C) of the TBCA, 1500 shares of Series F Preferred
Stock of the Corporation were outstanding on the date referenced above and
entitled to vote on the amendment described in Article II.
ARTICLE IV
The number of shares voted for and against the Amendment described in
Article II above, by series, is as follows:
SERIES FOR AGAINST ABSTAIN
------ --- ------- -------
Series F Preferred Stock 1500 0 0
ARTICLE V
This Amendment does not involve any reclassification or cancellation of any
issued shares of the Corporation.
ARTICLE VI
This Amendment does not effect a change in the amount of stated capital of
the Corporation.
IN WITNESS WHEREOF, the undersigned has executed this Amendment to Amended
and Restated Articles of Incorporation of SI Diamond Technology, Inc. as of
August 1, 1997.
SI DIAMOND TECHNOLOGY, INC.
By: /s/ Trey Fecteau
-------------------------------------------
Trey Fecteau
Senior Vice President
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