EXHIBIT 3.1
ARTICLES OF INCORPORATION
OF
CREE RESEARCH, INC.
(as amended through August 14, 1995)
I, the undersigned, being a person of full age, do make and acknowledge
these Articles of Incorporation for the purpose of forming a business
corporation under and by virtue of the laws of the State of North Carolina.
ARTICLE I
The name of the corporation shall be Cree Research, Inc.
ARTICLE II
The period of duration of the corporation shall be perpetual.
ARTICLE III
The purpose for which the corporation is organized is to engage in any
lawful act or activity for which corporations may be organized under Chapter 55
of the General Statutes of North Carolina.
ARTICLE IV
The aggregate number of shares of capital stock which the Corporation shall
have authority to issue is 17,250,000 shares divided into three classes
consisting of 1,250,000 shares of Class A Voting Preferred Stock with a par
value of $0.01 per share, 1,500,000 shares of Class B Non-Voting Preferred Stock
with a par value of $0.01 per share, and 14,500,000 shares of Common Stock with
a par value of $0.005 per share. (The term "Preferred Stock," when used in this
Article IV without reference to a
particular class, means both the Class A Voting Preferred Stock and the Class B
Non-Voting Preferred Stock.) The Board of Directors is authorized from time to
time to establish one or more series of any class of Preferred Stock and to
determine the preferences, limitations and relative rights, insofar as the same
are not fixed by these Articles of Incorporation, of each such series and the
number of shares and designation thereof (the resolutions so establishing and
determining each such series being hereinafter referred to as a "Series
Resolution"). The Board of Directors from time to time may increase the number
of shares of any series of Preferred Stock by providing that any unissued shares
of Preferred Stock of that class shall constitute part of such series or
decrease the number of shares of any series of Preferred Stock (but not below
the number of shares of such series outstanding) by providing that any unissued
shares of Preferred Stock of that class previously assigned to such series shall
no longer constitute a part of such series, and may alter the terms of any
series of Preferred Stock prior to the issuance of shares of such series.
Subject to the foregoing powers of the Board of Directors, the preferences,
limitations and relative rights of the Preferred Stock and the Common Stock are
as follows:
A. Dividends
The holders of the Common Stock shall be entitled to receive dividends as,
when and if declared by the Board of Directors out of funds legally
available for the payment of dividends. The holders of the Preferred Stock
shall be entitled to receive dividends on a parity with the holders of the
Common Stock as, when and if declared by the Board of Directors out of
funds legally available for the payment of dividends. Such dividends on
shares of Preferred Stock shall be equal to the amount which would be paid
to the holder thereof on the number of shares of Common Stock into which
such shares of Preferred Stock are convertible on the record date for
determining eligibility to receive such dividends.
B. Voting Rights
(1) The holders of Common Stock shall have the right to vote upon all
matters submitted to the stockholders of the corporation and shall
be entitled to one vote for each share of Common Stock held by them
respectively.
(2) The holders of Class A Voting Preferred Stock shall be entitled to
vote upon all matters upon which holders of Common Stock have the
right to vote and, except as otherwise required by applicable law,
each holder of shares of Class A Voting Preferred Stock shall be
entitled to the number of votes equal to the number of whole shares
of Common Stock into which such shares of Class A Voting Preferred
Stock are convertible at the record date for determining the
stockholders entitled to vote on such matters, such votes to be
counted together with all other shares of capital stock having
general voting powers and not separately as a class.
(3) Except as otherwise required by applicable law, the holders of Class
B Nonvoting Preferred Stock shall have no voting power whatsoever
and shall not have the right to vote on any matter or otherwise
participate in any proceedings in which actions shall be taken by
the Corporation or the shareholders thereof or be entitled to
notification as to any meeting of the shareholders. In any case
where applicable law requires voting by holders of Class B Nonvoting
Preferred Stock, except as otherwise required by applicable law,
each such holder shall be entitled to the number of votes equal to
the number of whole shares of Common Stock into which such shares of
Class B Voting Preferred Stock are convertible at the record date
for determining the stockholders entitled to vote on such matters,
such votes to be counted together with all other shares of capital
stock having general voting powers and not separately as a group.
(4) In any case where applicable law requires a separate vote by the
holders of shares of a class of stock of the corporation or a series
thereof, in taking such separate vote each holder of such shares
shall be entitled to one vote for each such share held.
C. Liquidation Preference
In the event of any liquidation, dissolution or winding up of the
corporation, either voluntary or involuntary, the holders of shares of the
Preferred Stock shall be entitled to receive out of the assets of the
corporation available for distribution to its stockholders, before any
distribution or payment shall be made to the holders of the Common Stock,
an amount per share determined in accordance with the Series Resolution
applicable to such shares (which amount may be designated in the Series
Resolution as the "Liquidation Preference" of such series), or, if no such
amount is specified in the applicable Series Resolution, the par value of
such shares. Written notice of such liquidation, dissolution or winding up,
stating a payment date, the amount of such payment and the place where said
payment shall be payable, shall be given by first-class mail, postage
prepaid, not less than 30 days prior to the payment date stated therein to
the holders of the Preferred Stock, such notice to be addressed to each
such holder at his address as shown on the corporation's records. If upon
such liquidation, dissolution or winding up of the corporation, the assets
of the corporation available for distribution to its stockholders shall be
insufficient to permit the payment in full of such amounts to the holders
of the Preferred Stock, then the entire assets available for distribution
shall be distributed among the holders of the Preferred Stock ratably in
proportion to the full amount to which they would otherwise be respectively
entitled. If upon such liquidation, dissolution or winding up of the
corporation, the assets of the corporation available for distribution to
its stockholders exceed such amounts to be
paid to the holders of the Preferred Stock, the assets remaining after
payment of such amounts to the holders of the Preferred Stock shall be paid
as follows:
(1) the holders of the Common Stock shall first be paid an amount for
each share of Common Stock held by them respectively equal to the
quotient obtained by dividing the aggregate amounts paid to the
holders of the Preferred Stock pursuant to the preceding sentence by
the number of shares of Common Stock into which all of the
outstanding shares of Preferred Stock are convertible at the time of
such distribution to holders of the Preferred Stock;
(2) then the entire remaining balance of such assets shall be paid to
the holders of the Common Stock and the Preferred Stock in an amount
for each share of Common Stock or Preferred Stock held by them
respectively equal to the quotient obtained by dividing such balance
by the aggregate number of outstanding shares of Preferred Stock and
Common Stock, and for purposes of this distribution each share of
Preferred Stock shall be deemed to have been converted into the
number of shares of Common Stock into which such share of Preferred
Stock is convertible at the time of such distribution.
For purposes of this Paragraph C, no merger or consolidation of the
corporation into or with any other corporation or entity, nor any voluntary
sale, lease, exchange, transfer, mortgage, pledge or other disposition of
all or substantially all of the corporation's assets, whether for cash,
securities or otherwise, shall be deemed to be a liquidation, dissolution
or winding up of the corporation. For purposes of this Paragraph C, if any
assets distributed to stockholders upon liquidation of the corporation
consist of property other than cash, the amount of such distribution shall
be deemed to be the fair market value thereof at the time of such
distribution, as determined in good faith by the Board of Directors.
D. Conversion Rights [See Endnote (1)]
If so provided in the Series Resolutions applicable to such shares, shares
of Preferred Stock shall be convertible into Common Stock on the terms and
conditions stated in such Series Resolution. If no provision is made for
the conversion of shares of Preferred Stock into Common Stock by the Series
Resolution applicable to such shares of Preferred Stock, then, solely for
purposes of applying Paragraphs A, B and C hereof, such shares of Preferred
Stock shall be treated as convertible into one share of Common Stock at any
time and without adjustment.
ARTICLE V
The minimum amount of consideration to be received by the corporation for
its shares before it shall commence business is One Dollar ($1.00) in cash or
property of equivalent value.
ARTICLE VI
The address of the initial registered office of the corporation in North
Carolina is Suite 450, 2626 Glenwood Avenue, Raleigh, Wake County, North
Carolina 27608; and the name of the initial registered agent at such address is
Fred D. Hutchison.
ARTICLE VII
The number of Directors of the corporation may be fixed by the bylaws. The
number of the Directors constituting the initial Board of Directors shall be
three (3), and the names and addresses of the persons who are to serve as
Directors until the first meeting of the shareholders, or until their successors
be elected and qualify are:
Name Address
----- -------
Calvin H. Carter, Jr. 4400 Yates Pond Road
Raleigh, North Carolina 27606
F. Neal Hunter 621 Tinkerbell Road
Chapel Hill, North Carolina 27514
C. Eric Hunter 5639 Chapel Hill Road
Apt. 910
Durham, North Carolina 27707
ARTICLE VIII
The name and address of the incorporator is:
Name Address
---- --------
Fred D. Hutchison Suite 450, 2626 Glenwood Avenue
Raleigh, North Carolina 27608
ARTICLE IX
There shall be no preemptive rights with respect to the shares of the
capital stock of the corporation.
ARTICLE X
No director of the Corporation shall have personal liability arising out of
an action whether by or in the right of the Corporation or otherwise for
monetary damages for breach of his or her duty as a director; provided, however,
that the foregoing shall not limit or eliminate the personal liability of a
director with respect to (i) acts or omissions not made in good faith that such
director at the time of such breach knew or believed were in conflict with the
best interests of the corporation, (ii) any liability under Section 55-32 of the
North Carolina General Statutes or any successor provision, (iii) any
transaction from which such director derived an improper personal benefit, or
(iv) acts or omissions occurring prior to the date of the effectiveness of this
Article. As used in this Article, the term "improper personal benefit" does not
include a director's compensation or other incidental benefit for or on account
of his
or her service as a director, officer, employee, independent contractor,
attorney, or consultant of the corporation.
Furthermore, notwithstanding the foregoing provision, in the event that
Section 55-7 or any other provision of the North Carolina General Statutes is
amended or enacted to permit further limitation or elimination of the personal
liability of a director, the personal liability of the corporation's directors
shall be limited or eliminated to the fullest extent permitted by the applicable
law.
This Article shall not affect a charter or bylaw provision or contract or
resolution of the corporation indemnifying or agreeing to indemnify a director
against personal liability. Any repeal or modification of this Article shall not
adversely affect any limitation hereunder on the personal liability of a
director with respect to acts or omissions occurring prior to such repeal or
modification.
ENDNOTE (1)
- ----------------------------
The Corporation's Articles of Incorporation, all amendments thereto and all
outstanding Statements of Classification of Shares were amended by resolution
passed by the shareholders of the Corporation on January 5, 1993, as follows:
"The Conversion Price adjustments which are presently included in the
Corporation's Articles of Incorporation and Statements of Classification
of Shares which relate to the Corporation's outstanding Class A Voting and
Class B Non-voting Preferred Stock, which adjustments are to be made in
the event that outstanding shares of Common Stock of the Corporation shall
be subdivided or increased, by stock split or stock dividend, into a
greater number of shares of Common Stock, shall be deleted so that in the
event of a simultaneous stock split of the Corporation's Common and
Preferred Stock, the proportionate interests of the shareholders of
outstanding Common and Preferred Stock remains the same before and after
the effectiveness of such stock split."
CLASS A VOTING PREFERRED STOCK -- SERIES A
Preferences, Limitations and Relative Rights
1. Designation
65,474 shares of the Preferred Stock, $0.01 par value, of Cree Research, Inc.
(the "Corporation") shall constitute a series of such Preferred Stock designated
as "Class A Voting Preferred Stock -- Series A."
2. Liquidation Preference
The liquidation preference of each share of the Series A Preferred Stock shall
be the original issue price per share paid by the holder of such share.
3. Voluntary Conversion
Each share of Series A Preferred Stock may be converted at any time without the
payment of any consideration, at the rate (the "Conversion Rate") of one share
of Common Stock of the Corporation for each share of Series A Preferred Stock so
converted, subject to adjustment in accordance with the provisions hereof. All
such conversions shall be at the option of the holder of such Series A Preferred
Stock.
Such option to convert shares of Series A Preferred Stock into shares of Common
Stock may be exercised as to all or any portion of such shares of Series A
Preferred Stock by, and only by, surrendering for such purpose to the
Corporation at its principal executive office or at such other place as may be
designated by the Corporation the certificate or certificates representing such
shares of Series A Preferred Stock, duly endorsed or accompanied by proper
instruments of transfer together with a written notice from the holder thereof
stating that he elects to convert the same and the name or names and addresses
to which certificates for Common Stock will be issued. No fractional shares of
Common Stock shall be issued upon conversion of Series A Preferred Stock. In
lieu of any fractional shares to which the holder would otherwise be entitled,
the Corporation shall pay to the holder cash equal to such fraction multiplied
by the Liquidation Preference divided by the number of shares of Common Stock
(including any fractional interest for such purpose) into which each share of
Preferred Stock may then be converted. The Corporation shall, as soon as
practicable thereafter, issue and deliver to such holder of Series A Preferred
Stock, or to a third party such holder may designate in writing, a certificate
or certificates for the number of shares of Common Stock to which he shall be
entitled as aforesaid and, a check payable to the holder in the amount of any
cash amounts payable as the result of conversion into fractional shares of
Common Stock plus declared but unpaid dividends, and if less than all the shares
of the Series A Preferred Stock represented by such certificates are converted,
a certificate representing the shares of Series A Preferred Stock not converted.
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 on such date.
The number of shares of Common Stock into which each share of Series A Preferred
Stock may be converted shall be subject to the following adjustments:
(a) If the Corporation shall after the date of issuance of the Series
A Preferred Stock subdivide the outstanding shares of Common
Stock into a greater number of shares of Common Stock or combine
the outstanding shares of Common Stock into a lesser number of
shares, or issue by way of a stock dividend on its Common Stock
or reclassification of its shares of Common Stock any shares of
the Corporation, the number of shares of Common Stock into which
each share of Series A Preferred Stock may be converted
immediately prior thereto shall be adjusted so that the holder of
the Series A Preferred Stock thereafter surrendered for
conversion shall be entitled to receive for each share of Series
A Preferred Stock the number of shares of Common Stock which he
would have owned or been entitled to receive after the happening
of any of the events described above if his Series A Preferred
Stock had been converted immediately prior to the happening of
such event, such adjustment to become effective concurrently with
the time at which such subdivision or combination or
reclassification, as the case may be, became effective.
(b) In the event of any consolidation with or merger of the
Corporation with or into another corporation, or in case of any
sale, lease or conveyance to another corporation of the assets of
the Corporation as an entirety or substantially as an entirety,
each share of Series A Preferred Stock shall after the date of
such consolidation, merger, sale, lease or conveyance be
convertible into the number of shares of stock or other
securities or property (including cash) to which the Common Stock
issuable (at the time of such consolidation, merger, sale, lease
or conveyance) upon conversion of such share of Series A
Preferred Stock would have been entitled upon such consolidation,
merger, sale, lease or conveyance; and in any such case, if
necessary, the provisions set forth herein with respect to the
rights and interests thereafter of the holders of the shares of
Series A Preferred Stock shall be appropriately adjusted so as to
be applicable, as nearly as may reasonably be, to any shares of
stock or other securities or property thereafter deliverable on
the conversion of the shares of Series A Preferred Stock.
(c) Upon any adjustment of the number of shares into which Series A
Preferred Stock may be converted, then in each such case the
Corporation shall give written notice thereof within 30 days of
the occurrence of the adjustment, addressed to each registered
holder of Series A Preferred Stock at the address of such holder
as shown on the records of the Corporation, which notice shall
state the Conversion Rate resulting from such adjustment and the
increase or decrease, if any, in the number of shares issuable
upon the conversion of Series A Preferred Stock setting forth in
reasonable detail the method of calculation and the facts upon
which such calculation is based.
4. Mandatory Conversion
The Series A Preferred Stock shall automatically be converted into Common Stock
simultaneously with the closing of an underwritten public offering of the
Corporation's Common Stock pursuant to an effective registration statement filed
by the Corporation under the Securities Act of 1933, as amended. The provisions
of Section 3 regarding the number of shares of Common Stock which shall be
issuable upon the conversion of Series A Preferred Stock into Common Stock shall
be applicable to such mandatory conversion. The Corporation shall give written
notice of the date of such closing (the "Mandatory Conversion Date") to each
holder of record of Series A Preferred Stock, as promptly as practicable after
the Mandatory Conversion Date. Such notice shall be given by first-class mail,
postage prepaid, addressed to such holder at his address as shown on the records
of the Corporation, notifying such holder that the shares have been converted
and calling upon such holder to surrender to the Corporation the certificate
representing his shares of Series A Preferred Stock, duly endorsed or
accompanied by proper instruments of transfer.
Within 60 days after the Mandatory Conversion Date, each holder of shares of
Series A Preferred Stock shall present and surrender his certificate or
certificates for such shares to the Corporation at the principal executive
office of the Corporation or at such other place as may be designated by the
Corporation and shall be issued new certificates representing the shares of
Common Stock issuable upon such conversion. Upon the Mandatory Conversion Date,
each person who was a holder of Series A Preferred Stock on that date shall be
deemed to have become the holder of the Common Stock deemed to be issued on
conversion and not of the Series A Preferred Stock being converted. All rights
of the holders of such converted shares shall cease with respect to such shares
except for rights in connection with such shares which have become matured
obligations to such holders prior to such conversion and the right to receive
certificates of Common Stock representing the shares deemed to be issued upon
such conversion.
CLASS A VOTING PREFERRED STOCK -- SERIES B
Preferences, Limitations and Relative Rights
1. Designation
11,334 shares of the Preferred Stock, $0.01 par value, of the Corporation shall
constitute a series of such Preferred Stock designated as "Class A Voting
Preferred Stock -- Series B."
2. Liquidation Preference
The Liquidation Preference of the Series B Preferred Stock shall be the price
per share received by the Corporation upon the original issuance of such shares.
3. Voluntary Conversion
Each share of Series B Preferred Stock may be converted at any time, without the
payment of any consideration, at the rate (the "Conversion Rate") of one share
of Common Stock of the Corporation for each share of Series B Preferred Stock so
converted, subject to adjustment in accordance with the provisions hereof. All
such conversions shall be at the option of the holder of such Series B Preferred
Stock.
Such option to convert shares of Series B Preferred Stock into shares of Common
Stock may be exercised as to all or any portion of such shares of Series B
Preferred Stock by, and only by, surrendering for such purpose to the
Corporation at its principal executive office or at such other place as may be
designated by the Corporation the certificate or certificates representing such
shares of Series B Preferred Stock, duly endorsed or accompanied by proper
instruments of transfer together with a written notice from the holder thereof
stating that he elects to convert the same and the name or names and addresses
to which certificates for Common Stock will be issued. No fractional shares of
Common Stock shall be issued upon conversion of Series B Preferred Stock. In
lieu of any fractional shares to which the holder would otherwise be entitled,
the Corporation shall pay to the holder cash equal to such fraction multiplied
by the Liquidation Preference divided by the number of shares of Common Stock
(including any fractional interest for such purpose) into which each share of
Preferred Stock may then be converted. The Corporation shall, as soon as
practicable thereafter, issue and deliver to such holder of Series B Preferred
Stock, or to a third party such holder may designate in writing, a certificate
or certificates for the number of shares of Common Stock to which he shall be
entitled as aforesaid and, a check payable to the holder in the amount of any
cash amounts payable as the result of conversion into fractional shares of
Common Stock plus declared but unpaid dividends, and if less than all the shares
of the Series B Preferred Stock represented by such certificates are converted,
a certificate representing the shares of Series B Preferred Stock not converted.
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 B 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 on such date.
The number of shares of Common Stock into which each share of Series B Preferred
Stock may be converted shall be subject to the following adjustments:
(a) If the Corporation shall after the date of issuance of the Series
B Preferred Stock subdivide the outstanding shares of Common
Stock into a greater number of shares of Common Stock or combine
the outstanding shares of Common Stock into a lesser number of
shares, or issue by way of a stock dividend on its Common Stock
or reclassification of its shares of Common Stock any shares of
the Corporation, the number of shares of Common Stock into which
each share of Series B Preferred Stock may be converted
immediately prior thereto shall be adjusted so that the holder of
the Series B Preferred Stock thereafter surrendered for
conversion shall be entitled to receive for each share of Series
B Preferred Stock the number of shares of Common Stock which he
would have owned or been entitled to receive after the happening
of any of the events described above if his Series B Preferred
Stock had been converted immediately prior to the happening of
such event, such adjustment to become effective concurrently with
the time at which such subdivision or combination or
reclassification, as the case may be, became effective.
(b) In the event of any consolidation with or merger of the
Corporation with or into another corporation, or in case of any
sale, lease or conveyance to another corporation of the assets of
the Corporation as an entirety or substantially as an entirety,
each share of Series B Preferred Stock shall after the date of
such consolidation, merger, sale, lease or conveyance be
convertible into the number of shares of stock or other
securities or property (including cash) to which the Common Stock
issuable (at the time of such consolidation, merger, sale, lease
or conveyance) upon conversion of such share of Series B
Preferred Stock would have been entitled upon such consolidation,
merger, sale, lease or conveyance; and in any such case, if
necessary, the provisions set forth herein with respect to the
rights and interests thereafter of the holders of the shares of
Series B Preferred Stock shall be appropriately adjusted so as to
be applicable, as nearly as may reasonably be, to any shares of
stock or other securities or property thereafter deliverable on
the conversion of the shares of Series B Preferred Stock.
(c) Upon any adjustment of the number of shares into which
Series B Preferred Stock may be converted, then in each such
case the Corporation shall give written notice thereof
within 30 days of the occurrence of the adjustment,
addressed to each registered holder of Series B Preferred
Stock at the address of such holder as shown on the records
of the Corporation, which notice shall state the Conversion
Rate resulting from such adjustment and the increase or
decrease, if any, in the number of shares issuable upon the
conversion of Series B Preferred Stock setting forth in
reasonable detail the method of calculation and the facts
upon which such calculation is based.
4. Mandatory Conversion
The Series B Preferred Stock shall automatically be converted into Common Stock
simultaneously with the closing of an underwritten public offering of the
Corporation's Common Stock pursuant to an effective registration statement filed
by the Corporation under the Securities Act of 1933, as amended. The provisions
of Section 3 regarding the number of shares of Common Stock which shall be
issuable upon the conversion of Series B Preferred Stock into Common Stock shall
be applicable to such mandatory conversion. The Corporation shall give written
notice of the date of such closing (the "Mandatory Conversion Date") to each
holder of record of Series B Preferred Stock, as promptly as practicable after
the Mandatory Conversion Date. Such notice shall be given by first-class mail,
postage prepaid, addressed to such holder at his address as shown on the records
of the Corporation, notifying such holder that the shares have been converted
and calling upon such holder to surrender to the Corporation the certificate
representing his shares of Series B Preferred Stock, duly endorsed or
accompanied by proper instruments of transfer.
Within 60 days after the Mandatory Conversion Date, each holder of shares of
Series B Preferred Stock shall present and surrender his certificate or
certificates for such shares to the Corporation at the principal executive
office of the Corporation or at such other place as may be designated by the
Corporation and shall be issued new certificates representing the shares of
Common Stock issuable upon such conversion. Upon the Mandatory Conversion Date,
each person who was a holder of Series B Preferred Stock on that date shall be
deemed to have become the holder of the Common Stock deemed to be issued on
conversion and not of the Series B Preferred Stock being converted. All rights
of the holders of such converted shares shall cease with respect to such shares
except for rights in connection with such shares which have become matured
obligations to such holders prior to such conversion and the right to receive
certificates of Common Stock representing the shares deemed to be issued upon
such conversion.
CLASS B NONVOTING PREFERRED STOCK -- SERIES A
Preferences, Limitations and Relative Rights
1. Designation
48,000 shares of the Class B Nonvoting Preferred Stock, $0.01 par value, of the
Corporation shall constitute a series of such Preferred Stock designated as
"Class B Nonvoting Preferred Stock -- Series A." Such series is referred to
herein as the "Series A Preferred Stock."
2. Liquidation Preference
The Liquidation Preference of the Series A Preferred Stock shall be $100.00 per
share.
3. Voluntary Conversion
A. Right to Convert. Each share of Series A Preferred Stock may be
converted at any time, without the payment of any consideration,
into fully paid and nonassessable shares of Common Stock of the
Corporation at the Conversion Price (as hereinafter defined) in
effect at the time of conversion determined as provided herein,
and all such conversions shall be at the option of the holder of
such Series A Preferred Stock; provided, however, that if within
15 days after the certificate or certificates representing shares
to be converted are surrendered as provided in the next paragraph
(the "Objection Period"), the Board of Directors of the
Corporation, by action of a majority of the directors then
holding office, shall adopt a resolution objecting to the
conversion of such shares under this Section 3, then the exercise
of the option to convert such shares shall be null and void and
the certificate or certificates surrendered shall be returned as
soon as practicable thereafter to the holder of record of such
shares. Shares of Series A Preferred Stock attempted to be
converted but as to which conversion an objection is made as
provided herein shall again become eligible for conversion under
this Section 3 upon return of the certificate or certificates
representing such shares.
B. Mechanics of Conversion. Subject to the preceding paragraph,
such option to convert shares of Series A Preferred Stock into
shares of Common Stock may be exercised as to all or any portion
of such shares of Series A Preferred Stock by, and only by,
surrendering for such purpose to the Corporation at its principal
executive office or at such other place as may be designated by
the Corporation the certificate or certificates representing such
shares of Series A Preferred Stock, duly endorsed or accompanied
by proper instruments of transfer together with a written notice
from the holder thereof stating that he elects to
convert the same and the name or names and addresses to which
certificates for Common Stock will be issued. No fractional shares
of Common Stock shall be issued upon conversion of Series A
Preferred Stock. In lieu of any fractional shares to which the
holder would otherwise be entitled, the Corporation shall pay to the
holder cash equal to such fraction multiplied by the then effective
Conversion Price. The Corporation shall, within 20 days after
surrender of the certificate or certificates as provided in this
paragraph or as soon as practicable thereafter, unless a resolution
objecting to the conversion is adopted the Board of Directors within
the Objection Period as provided herein, issue and deliver to such
holder of Series A Preferred Stock, or to such third party as such
holder may designate in writing, a certificate or certificates for
the number of shares of Common Stock to which he shall be entitled
as aforesaid and, a check payable to the holder in the amount of any
cash amounts payable as the result of conversion into fractional
shares of Common Stock plus declared but unpaid dividends, and if
less than all the shares of the Series A Preferred Stock represented
by such certificates are converted, a certificate representing the
shares of Series A Preferred Stock not converted. Unless a
resolution objecting to the conversion is adopted by the Board of
Directors within the Objection Period as provided herein, such
conversion shall be deemed to have been made immediately prior to
the opening of business on the date immediately following the
expiration of the Objection Period, and the person or persons
entitled to receive the shares of Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or
holders of such shares of Common Stock on such date.
C. Conversion Price. For purposes of Sections 3, 4 and 5 hereof,
each share of Series A Preferred Stock shall be convertible into
the number of shares of Common Stock that results from dividing
$100.00 by the Conversion Price per share in effect at the time
of conversion. The Conversion Price per share of Series A
Preferred Stock shall initially be $100.00 and shall be subject
to adjustment from time to time as provided in Section 5 and as
follows:
(1) If the Corporation shall after the date of issuance of the
Series A Preferred Stock subdivide the outstanding shares of
Common Stock into a greater number of shares of Common Stock
or combine the outstanding shares of Common Stock into a
lesser number of shares, or increase the number of outstanding
shares of Common Stock by way of a stock dividend on its
Common Stock, the Conversion Price then in effect shall be
adjusted so that the holder of the Series A Preferred Stock
thereafter surrendered for conversion shall be
entitled to receive for each share of Series A Preferred Stock
the number of shares of Common Stock which he would have owned
or been entitled to receive after the happening of any of the
events described above if his Series A Preferred Stock had
been converted immediately prior to the happening of such
event, such adjustment to become effective concurrently with
the time at which such subdivision or combination or stock
dividend, as the case may be, became effective.
(2) If the Common Stock issuable upon conversion of the Series A
Preferred Stock shall be changed into the same or a different
number of shares of any other class or classes of stock,
whether by capital reorganization, reclassification or
otherwise (other than a subdivision or combination of shares
provided for above), the Conversion Price then in effect
shall, concurrently with the effectiveness of such
reorganization or reclassification, be proportionately
adjusted such that the Series A Preferred Stock shall be
convertible into, in lieu of the number of shares of Common
Stock which the holders would otherwise have been entitled to
receive, a number of shares of such other class or classes of
stock equivalent to the number of shares of Common Stock that
would have been subject to receipt by the holders upon
conversion of the Series A Preferred Stock immediately before
that change.
(3) In the event of any consolidation with or merger of the
Corporation with or into another corporation, or in case of
any sale, lease or conveyance to another corporation of the
assets of the Corporation as an entirety or substantially as
an entirety, each share of Series A Preferred Stock shall
after the date of such consolidation, merger, sale, lease or
conveyance be convertible into the number of shares of stock
or other securities or property (including cash) to which the
Common Stock issuable (at the time of such consolidation,
merger, sale, lease or conveyance) upon conversion of such
share of Series A Preferred Stock would have been entitled
upon such consolidation, merger, sale, lease or conveyance;
and in any such case, if necessary, the provisions set forth
herein with respect to the rights and interests thereafter of
the holders of the shares of Series A Preferred Stock shall be
appropriately adjusted so as to be applicable, as nearly as
may reasonably be, to any shares of stock or other securities
or property thereafter deliverable on the conversion of the
shares of Series A Preferred Stock.
(4) Upon any adjustment, under the provisions of this Section 3(C)
or the provisions of Section 5, of the number or character of
shares into which Series A Preferred Stock may be converted,
then in each such case the Corporation shall give written
notice thereof within 30 days of the occurrence of the
adjustment, addressed to each registered holder of Series A
Preferred Stock at the address of such holder as shown on the
records of the Corporation, which notice shall state the
Conversion Price resulting from such adjustment and the
increase or decrease, if any, in the number of shares issuable
upon the conversion of Series A Preferred Stock setting forth
in reasonable detail the method of calculation and the facts
upon which such calculation is based.
4. Mandatory Conversion
Each share of Series A Preferred Stock shall automatically be converted into
fully paid and nonassessable shares of Common Stock at the then effective
Conversion Price simultaneously with the closing of an underwritten public
offering (a "Registered Public Offering") of the Corporation's Common Stock
pursuant to an effective registration statement filed by the Corporation under
the Securities Act of 1933, as amended. The provisions of Section 3 regarding
the number of shares of Common Stock which shall be issuable upon the conversion
of Series A Preferred Stock into Common Stock, and the amount of payment for any
fractional shares in lieu of the issuance thereof, shall be applicable to such
mandatory conversion. Upon the closing of a Registered Public Offering, the
outstanding shares of Series A Preferred Stock shall be converted automatically
without any further action on the part of the holders of such shares and
regardless of whether the certificate or certificates representing the converted
shares are surrendered, and all rights of the holders of such converted shares
shall cease with respect to the converted shares upon such conversion except for
rights to any declared but unpaid dividends with respect to such converted
shares and the right to receive certificates representing the shares of Common
Stock deemed issued upon such conversion and any payment for fractional shares
in accordance herewith. The Corporation shall give written notice of the date of
such closing (the "Mandatory Conversion Date") to each holder of record of
Series A Preferred Stock, as promptly as practicable after the Mandatory
Conversion Date. Such notice shall be given by first-class mail, postage
prepaid, addressed to such holder at his address as shown on the records of the
Corporation, notifying such holder that the shares have been converted and
calling upon such holder to surrender to the Corporation the certificate or
certificates representing his shares of Series A Preferred Stock. Each holder of
shares of Series A Preferred Stock shall present and surrender his certificate
or certificates for such shares to the Corporation at the principal executive
office of the Corporation or at such other place as may be designated by the
Corporation, duly endorsed or accompanied by proper instruments of transfer
together with a written notice from the holder
thereof stating the name or names and addresses to which certificates for Common
Stock are to be issued, and the Corporation shall, as soon as practicable
thereafter, issue and deliver to such holder of Series A Preferred Stock, or to
such third party as such holder may designate in writing, a certificate or
certificates for the number of shares of Common Stock to which he shall be
entitled as aforesaid and a check payable to the holder in the amount of any
cash amounts payable as the result of conversion into fractional shares of
Common Stock plus declared but unpaid dividends.
5. Certain Adjustments to Conversion Price for Diluting Issues
A. Special Definitions. For purposes of this Section 5, the
following definitions shall apply:
(1) "Options" shall mean rights, options or warrants to subscribe
for, purchase or otherwise acquire either Common Stock or
Convertible Securities.
(2) "Convertible Securities" shall mean any evidences of
indebtedness, shares or other securities convertible into or
exchangeable for Common Stock and shall include, without
limitation, shares of the Class A Voting Preferred Stock and
the Class B Nonvoting Preferred Stock of the Corporation.
(3) "Original Issue Date" shall mean the date upon which the first
share of the Series A Preferred Stock was first issued by the
Corporation.
(4) "Additional Shares of Common" shall mean all shares of Common
Stock issued or, pursuant to Section 5(C), deemed to be
issued, by the Corporation after the Original Issue Date,
except shares of Common Stock issued or issuable at any time:
(a) upon conversion of shares of the Series A Preferred
Stock as provided herein;
(b) to employees, officers or directors of the Corporation
pursuant to a stock grant, stock option plan or stock purchase
plan or other stock agreement or arrangement approved by the
Board of Directors of the Corporation;
(c) as a dividend or distribution on all outstanding shares of
all classes of the capital stock of the Corporation or a
dividend or distribution on all outstanding shares of all
classes of the Preferred Stock of the Corporation;
(d) in the circumstances described in Section 3(C); or
(e) pursuant to the exercise of Options outstanding on or
prior to the Original Issue Date or the conversion or exchange
of Convertible Securities outstanding on or prior to the
Original Issue Date.
B. Adjustments for Issuance of Additional Shares of Common. No
adjustment in the Conversion Price for any shares of Series A
Preferred Stock shall be made in respect of the issuance of
Additional Shares of Common except as expressly provided in this
Section 5(B). In the event the Corporation, at any time or from
time to time within 120 days after the Original Issue Date, shall
issue Additional Shares of Common (including Additional Shares of
Common deemed issued pursuant to Section 5(C)) without
consideration or for a consideration per share (determined
pursuant to Section 5(D) hereof) less than the Conversion Price
for a share of Series A Preferred Stock in effect on the date of,
and immediately prior to such issue, then the Conversion Price
shall be reduced, concurrently with such issue, to a price
(calculated to the nearest one hundredth of a cent) equal to the
consideration per share received by the Corporation for the
Additional Shares of Common so issued.
C. Deemed Issue of Additional Shares of Common. In the event the
Corporation, at any time or from time to time within 120 days
after the Original Issue Date, shall issue any Options or
Convertible Securities, then the maximum number of shares of
Common Stock (as set forth in the instrument relating thereto
without regard to any provisions contained therein for a
subsequent adjustment of such number) issuable upon the exercise
of such Options or, in the case of Convertible Securities and
Options therefor, the conversion or exchange of such Convertible
Securities, shall (except as otherwise provided in Section
5(a)(4)) be deemed to be Additional Shares of Common issued as of
the time of such issue; provided, that Additional Shares of
Common shall not be deemed to have been issued unless the
consideration per share (determined pursuant to Section 5(D)
hereof) of such Additional Shares of Common would be less than
the Conversion Price in effect on the date of and immediately
prior to such issue, and, provided further, that in any such case
in which Additional Shares of Common are deemed to be issued:
(1) no further adjustment in the Conversion Price shall be made
upon the subsequent issue of shares of Common Stock or
Convertible Securities upon the exercise of such Options or
conversion or exchange of such Convertible Securities;
(2) if such Options or Convertible Securities by their terms
provide, with the passage of time or otherwise, for any change
in the amount of
consideration payable to the corporation, or change in the
number of shares of Common Stock issuable, upon the exercise,
conversion or exchange thereof, the Conversion Price computed
upon the original issue thereof, and any subsequent
adjustments based thereon, shall, upon any such change
becoming effective, be recomputed to reflect an appropriate
increase or decrease reflecting such change insofar as it
affects such Options or the rights of conversion or exchange
under such Convertible Securities;
(3) upon the expiration of any such Options or any rights of
conversion or exchange under such Convertible Securities which
shall not have been exercised, the Conversion Price computed
upon the original issue thereof, and any subsequent
adjustments based thereon, shall, upon such expiration, be
recomputed as if:
(a) in the case of Convertible Securities or Options for
Common Stock, the only Additional Shares of Common issued were
shares of Common Stock, if any, actually issued upon the
exercise of such Options or the conversion or exchange of such
Convertible Securities and the consideration received therefor
was the consideration actually received by the Corporation for
the issue of all such Options, whether or not exercised, plus
the consideration actually received by the Corporation upon
such exercise, or for the issue of all such Convertible
Securities which were actually converted or exchanged, plus
the additional consideration, if any, actually received by the
Corporation upon such conversion or exchange, and
(b) in the case of Options for Convertible Securities, only
the Convertible Securities, if any, actually issued upon the
exercise thereof were issued at the time of issue of such
Options, and the consideration received by the Corporation for
the Additional Shares of Common deemed to have been issued was
the consideration actually received by the Corporation for the
issue of all such Options, whether or not exercised, and the
consideration deemed to have been received by the Corporation
upon the issue of the Convertible Securities with respect to
such Options as were actually exercised.
(4) in the case of any Options which expire by their terms not
more than thirty (30) days after the date of issue thereof, no
adjustment of the Conversion Price shall be made until the
expiration or exercise of all such Options, whereupon such
adjustment shall be made in the same manner provided in clause
(3) above.
D. Determination of Consideration. For purposes of this Section 5, the
consideration received by the Corporation for the issue of any
Additional Shares of Common shall be computed as follows:
(1) Except as provided in Section D(2) below, such consideration
shall:
(a) insofar as it consists of cash, be computed at the
aggregate amount of cash received by the Corporation (before
commission or expenses) excluding amounts paid or payable for
accrued interest or accrued dividends;
(b) insofar as it consists of property other than cash, be
computed at the fair value thereof at the time of such issue,
as determined in good faith by the Board of Directors; and
(c) in the event Additional Shares of Common are issued
together with other shares or securities or other assets of
the Corporation for consideration which covers both, at the
proportion of such consideration so received, computed as
provided in clauses (a) and (b) above, as determined in good
faith by the Board of Directors.
(2) The consideration per share received by the Corporation for
Additional Shares of Common deemed to have been issued
pursuant to Section 5(C) shall be determined by dividing
(a) the total amount, if any, received or receivable by the
Corporation as consideration for the issue of such Options or
Convertible Securities, plus the minimum aggregate amount of
additional consideration (as set forth in the instruments
relating thereto, without regard to any provisions contained
thereof for a subsequent adjustment of such consideration)
payable to the Corporation upon the exercise of such Options
or the conversion or exchange of such Convertible Securities,
or in the case of Options for Convertible Securities, the
exercise of such Options for Convertible Securities and the
conversion or exchange of such Convertible Securities by
(b) the maximum number of shares of Common Stock (as set forth
in the instruments relating thereto, without regard to any
provision contained therein for a subsequent adjustment of
such number) issuable upon the exercise of such Options of the
conversion or exchange of such Convertible Securities.
6. Amendments to Articles of Incorporation
The Corporation shall not, without the affirmative vote or written consent in
lieu of a vote of the holders of such number of outstanding shares of Series A
Preferred Stock as may be required by applicable law (with such shares to be
counted either separately or as a group with other shares of the Corporation's
capital stock in the manner specified by applicable law), adopt any amendment to
its Articles of Incorporation which would: (a) adversely change the rights or
preferences of the Series A Preferred Stock; (b) create a new class of shares of
capital stock having rights or preferences with respect to distributions or to
dissolution that are prior or superior to the Series A Preferred Stock; or (c)
increase the rights or preferences of any class of capital stock that, after
giving effect to the amendment, have rights or preferences with respect to
distributions or to dissolution that are prior or superior to the Series A
Preferred Stock.
7. Other Rights and Privileges
Holders of Series A Preferred Stock shall have the same relative rights and
privileges as are granted to holders of Common Stock by the Articles of
Incorporation (as the same may be amended from time to time), except as
otherwise provided in the Articles of Incorporation (as the same may be amended
from time to time) and in Sections 1 through 6 above.
CREE RESEARCH, INC.
CLASS B NONVOTING PREFERRED STOCK -- SERIES B
Preferences, Limitations and Relative Rights
1. Designation
19,200 shares of the Class B Nonvoting Preferred Stock, $0.01 par value per
share, of the Corporation shall constitute a series of such Preferred Stock
designated as "Class B Nonvoting Preferred Stock -- Series B." Such series is
referred to herein as the "Series B Nonvoting Preferred Stock."
2. Liquidation Preference
The Liquidation Preference of the Series B Nonvoting Preferred Stock shall be
$100.00 per share.
3. Conversion
A. Mandatory Conversion. Each outstanding share of Series B
Nonvoting Preferred Stock shall be converted into fully paid and
nonassessable shares of Common Stock at the then effective
Conversion Price (as defined below) simultaneously with the
closing of an underwritten public offering (a "Registered Public
Offering") of the Corporation's Common Stock pursuant to an
effective registration statement filed by the Corporation under
the Securities Act of 1933, as amended. Upon the closing of a
Registered Public Offering, the out-standing shares of Series B
Nonvoting Preferred Stock shall be deemed automatically converted
without any further action on the part of the holders of such
shares and regardless of whether the certificate or certificates
representing the converted shares are surrendered, and all rights
of the holders of such converted shares shall cease with respect
to the converted shares except for rights to any declared but
unpaid dividends on such converted shares and the right to
receive certificates representing the shares of Common Stock
deemed issued upon such conversion and any payment for fractional
shares in accordance herewith. No fractional shares of Common
Stock shall be issued upon conversion of Series B Nonvoting
Preferred Stock. In lieu of fractional shares to which the
holder would otherwise be entitled, the Corporation shall pay to
the holder, without interest, cash equal to such fraction
multiplied by the Conversion Price in effect at the time of
conversion.
B. Mechanics of Conversion. The Corporation shall, as promptly as
practicable after the closing of a Regis-tered Public Offering, give
written notice of the closing to each holder of record of the Series
B Non-voting Preferred Stock thereby converted stating that the
shares have been converted and calling upon such
holder to surrender to the Corporation the certificate or
certificates representing his shares of Series B Nonvoting Preferred
Stock. Such notice shall be given by first-class mail, postage
prepaid, ad-dressed to such holder at his address as shown on the
records of the Corporation. Each holder of shares of Series B
Nonvoting Preferred Stock shall present and surrender his
certificate or certificates for such shares to the Corporation at
the principal executive office of the Corporation or at such other
place as may be designated by the Corporation in its notice to the
holder, duly endorsed or accompanied by proper instruments of
transfer together with a written notice from the holder thereof
stating the name or names and addresses to which certificates for
Common Stock are to be issued, and the Corporation shall, as soon as
practicable thereafter, issue and deliver to such holder of Series B
Nonvoting Preferred Stock, or to such third party as such holder may
designate in writing, a certificate or certificates for the number
of shares of Common Stock to which he shall be entitled as aforesaid
and a check payable to the holder for any cash amounts payable in
lieu of fractional shares of Common Stock plus any declared but
unpaid dividends on the converted shares.
C. Conversion Price. For purposes of this Section 3, each share of
Series B Nonvoting Preferred Stock shall be convertible into the
number of shares of Common Stock that results from dividing $100.00
by the Conversion Price per share in effect at the time of
conversion. The Conversion Price per share of Series B Nonvoting
Preferred Stock shall initially be $100.00 and shall be subject to
adjustment from time to time as follows:
(1) In the event the outstanding shares of Common Stock shall be
subdivided or increased, by stock split or stock dividend,
into a greater number of shares of Common Stock, the
Conversion Price then in effect shall, concurrently with the
effectiveness of such subdivision or payment of such stock
dividend, be proportionately decreased. In the event the
outstanding shares of Common Stock shall be combined or
consolidated, by reclassification or otherwise, into a lesser
number of shares of Common Stock, the Conversion Price then in
effect shall, concurrently with the effectiveness of such
combination or con-solidation, be proportionately increased.
(2) If the Common Stock issuable upon conversion of the Series B
Nonvoting Preferred Stock shall be changed into the same or a
different number of shares of any other class or classes of
stock of the Corporation, whether by capital reorganization,
reclassification or otherwise (other than a subdivision or
combination of shares provided for above), the Conversion
Price then in
effect shall, concurrently with the effectiveness of such
reorganization or reclassification, be proportionately
adjusted such that the Series B Nonvoting Preferred Stock
shall be convertible into, in lieu of the shares of Common
Stock which the holders would otherwise have been entitled to
receive, a number of shares of such other class or classes of
stock equivalent to the number of shares of Common Stock that
would have been subject to receipt by the holders upon
conversion of the Series B Nonvoting Preferred Stock
immediately before such event.
(3) Upon each adjustment of the Conversion Price provided for
hereunder and upon each change in the number of shares of
Common Stock issuable upon conversion of the Series B
Nonvoting Preferred Stock pursuant to the provisions hereof,
the Corporation shall promptly give written notice thereof to
each registered holder of Series B Nonvoting Preferred Stock,
first-class mail, postage prepaid, addressed to such holder at
his address as shown on the records of the Corporation, which
notice shall state the Conversion Price resulting from such
adjustment and the increase or decrease, if any, in the number
of shares issuable upon conversion of Series B Nonvoting
Preferred Stock or specifying the other shares of stock,
securities or assets and the amount thereof so issuable and
setting forth in reasonable detail the method of calculation
and the facts upon which such calculation is based.
D. Consolidations and Mergers. In the event of any con- solidation or
merger of the Corporation with or into another corporation (other
than a merger in which the Corporation is a continuing corporation
and which does not result in any reclassification of the Common
Stock of the Corporation), then as a condition of effecting such
merger or consolidation lawful and adequate pro-visions shall be
made whereby each holder of out-standing shares of Series B
Nonvoting Preferred Stock shall be entitled to receive, upon the
consummation of such consolidation or merger, such shares of stock,
securities or assets to which such holder would have been entitled
upon the consummation thereof if such shares of Series B Nonvoting
Preferred Stock had been converted into Common Stock immediately
prior thereto. In any such case, upon the consummation of such
consolidation or merger, all rights of holders of shares of Series B
Nonvoting Preferred Stock shall cease with respect to such shares
except for the right to receive shares of stock, securities or
assets in accordance with the provisions made pursuant to the
preceding sentence.
CLASS B NONVOTING PREFERRED STOCK - SERIES C
Preferences, Limitations and Relative Rights
1. Designation
53,500 shares of the Class B Non-voting Preferred Stock, $0.01 par value per
share, of the Corporation shall constitute a series of such Preferred Stock
designated as "Class B Non-voting Preferred Stock -- Series C.("Series C
Non-voting Preferred Stock").
2. Liquidation Preference
The Liquidation Preference of the Series C Non-voting Preferred Stock shall be
$100.00 per share.
3. Conversion
A. Mandatory Conversion. Each outstanding share of Series C
Non-voting Preferred Stock shall be converted into fully paid and
nonassessable shares of Common Stock at the then effective
Conversion Price (as defined below) simultaneously with the
closing of an underwritten public offering (a "Registered Public
Offering") of the Corporation's Common Stock pursuant to an
effective registration statement filed by the Corporation under
the Securities Act of 1933, as amended. Upon the closing of a
Registered Public Offering, the outstanding shares of Series C
Non-voting Preferred Stock shall be deemed automatically
converted without any further action on the part of the holders
of such shares and regardless of whether the certificate or
certificates representing the converted shares are surrendered,
and all rights of the holders of such converted shares shall
cease with respect to the converted shares except for rights to
any declared but unpaid dividends on such converted shares and
the right to receive certificates representing the shares of
Common Stock deemed issued upon such conversion of Series C
Non-voting Preferred Stock. In lieu of fractional shares to
which the holder would otherwise be entitled, the Corporation
shall pay to the holder, without interest, cash equal to such
fraction multiplied by the Conversion Price in effect at the time
of conversion.
B. Mechanics of Conversion. The Corporation shall, as promptly as
practicable after the closing of a Registered Public Offering,
give written notice of the closing to each holder of record of
the Series C Non-voting Preferred Stock thereby converted stating
that the shares have been converted and calling upon such holder
to surrender to the Corporation the certificate or certificates
representing his shares of Series C Non-voting Preferred Stock.
Such notice shall be given by first-class mail, postage prepaid,
addressed to such
holder at his address as shown on the records of the Corporation.
Each holder of shares of Series C Non-voting Preferred Stock shall
present and surrender his certificate or certificates for such
shares to the Corporation at the principal executive office of the
Corporation or at such other place as may be designated by the
Corporation in its notice to the holder, duly endorsed or
accompanied by proper instruments of transfer together with a
written notice from the holder thereof stating the name or names and
addresses to which certificates for Common Stock are to be issued,
and the Corporation shall, as soon as practicable thereafter, issue
and deliver to such holder of Series C Non-voting Preferred Stock,
or to such third party as such holder may designate in writing, a
certificate or certificates for the number of shares of Common Stock
to which he shall be entitled as aforesaid and a check payable to
the holder for any cash amounts payable in lieu of fractional shares
of Common Stock plus any declared but unpaid dividends on the
converted shares.
C. Conversion Price. For purposes of this Section 3, each share of
Series C Non-voting Preferred Stock shall be convertible into the
number of shares of Common Stock that results from dividing $100.00
by the Conversion Price per share in effect at the time of
conversion. The Conversion Price per share of Series C Non-voting
Preferred Stock shall initially be $100.00 and shall be subject to
adjustment from time to time as follows:
(1) In the event the outstanding shares of Common Stock shall be
subdivided or increase, by stock split or stock dividend, into
a greater number of shares of Common Stock, the Conversion
Price then in effect shall, concurrently with the
effectiveness of such subdivision or payment of such stock
dividend, be proportionately decreased. In the event the
outstanding shares of Common Stock shall be combined or
consolidated, by reclassification or otherwise, into a lesser
number of shares of Common Stock, the Conversion Price then in
effect shall, concurrently with the effectiveness of such
combination or consolidation, be proportionately increased.
(2) If the Common Stock issuable upon conversion of the Series C
Non-voting Preferred Stock shall be changed into the same or a
different number of shares of any other class or classes of
stock of the Corporation, whether by capital reorganization,
reclassification or otherwise (other than a subdivision or
combination of shares provided for above), the Conversion
Price then in effect shall, concurrently with the
effectiveness of such reorganization or reclassification, be
proportionately adjusted such that the Series C Non-voting
Preferred Stock shall be convertible
into, in lieu of the shares of Common Stock which the holders
would otherwise have been entitled to receive, a number of
shares of such other class or classes of stock equivalent to
the number of shares of Common Stock that would have been
subject to receipt by the holders upon conversion of the
Series C Non-voting Preferred Stock immediately before such
event.
(3) Upon each adjustment of the Conversion Price provided for
hereunder and upon each change in the number of shares of
Common Stock issuable upon conversion of the Series C
Non-voting Preferred Stock pursuant to the provisions hereof,
the Corporation shall promptly give written notice thereof to
each registered holder of Series C Non-voting Preferred Stock,
first-class mail, postage prepaid, addressed to such holder at
his address as shown on the records of the Corporation, which
notice shall state the Conversion Price resulting from such
adjustment and the increase or decrease, if any, in the number
of shares issuable upon conversion of Series C Non-voting
Preferred Stock or specifying the other shares of stock,
securities or assets and the amount thereof so issuable and
setting forth in reasonable detail the method of calculation
and the facts upon which such calculation is based.
D. Consolidations and Mergers. In the event of any consolidation or
merger of the Corporation with or into another corporation (other
than a merger in which the Corporation is a continuing
corporation and which does not result in any reclassification of
the Common Stock of the Corporation), then as a condition of
effecting such merger or consolidation lawful and adequate
provisions shall be made whereby each holder of outstanding
shares of Series C Non-voting Preferred Stock shall be entitled
to receive, upon the consummation of such consolidation or
merger, such shares of stock, securities or assets to which such
holder would have been entitled upon the consummation thereof if
such shares of Series C Non-voting Preferred Stock had been
converted into Common Stock immediately prior thereto. In any
such case, upon the consummation of such consolidation or merger,
all rights of holders of shares of Series C Non-voting Preferred
Stock shall cease with respect to such shares except for the
right to receive shares of stock, securities or assets in
accordance with the provisions made pursuant to the preceding
sentence.
CLASS B NONVOTING PREFERRED STOCK - SERIES C
(WITH ALTERNATIVE LIQUIDATION PRICE)
Preferences, Limitations and Relative Rights
1. Designation
In addition to the 53,500 shares of the Class B Non-voting Preferred Stock,
$0.01 par value per share, of the Corporation authorized by amendment to the
Articles of Incorporated dated June 24, 1991, and a second amendment dated May
12, 1992, an additional 40,910 shares shall constitute a part of the same series
of such Preferred Stock designated as "Class B Non-voting Preferred Stock --
Series C. (for a total authorized number of shares of 94,410)("Series C
Non-voting Preferred Stock").
2. Liquidation Preference
The Liquidation Preference of the additional shares of Series C Non-voting
Preferred Stock which is the subject of this amendment shall be $110.00 per
share. The liquidation preference of all previously issued Series C Non-voting
Preferred Stock shall not be altered or changed by this amendment.
3. Conversion
A. Mandatory Conversion. Each outstanding share of Series C
Non-voting Preferred Stock shall be converted into fully paid and
nonassessable shares of Common Stock at the then effective
Conversion Price (as defined below) simultaneously with the
closing of an underwritten public offering (a "Registered Public
Offering") of the Corporation's Common Stock pursuant to an
effective registration statement filed by the Corporation under
the Securities Act of 1933, as amended. Upon the closing of a
Registered Public Offering, the outstanding shares of Series C
Non-voting Preferred Stock shall be deemed automatically
converted without any further action on the part of the holders
of such shares and regardless of whether the certificate or
certificates representing the converted shares are surrendered,
and all rights of the holders of such converted shares shall
cease with respect to the converted shares except for rights to
any declared but unpaid dividends on such converted shares and
the right to receive certificates representing the shares of
Common Stock deemed issued upon such conversion of Series C
Non-voting Preferred Stock. In lieu of fractional shares to
which the holder would otherwise be entitled, the Corporation
shall pay to the holder, without interest, cash equal to such
fraction multiplied by the Conversion Price in effect at the time
of conversion.
B. Mechanics of Conversion. The Corporation shall, as promptly as
practicable after the closing of a Registered Public Offering,
give written notice of the closing to each holder of record of
the Series C Non-voting Preferred Stock thereby converted stating
that the shares have been converted and calling upon such holder
to surrender to the Corporation the certificate or certificates
representing his shares of Series C Non-voting Preferred Stock.
Such notice shall be given by first-class mail, postage prepaid,
addressed to such holder at his address as shown on the records
of the Corporation. Each holder of shares of Series C Non-voting
Preferred Stock shall present and surrender his certificate or
certificates for such shares to the Corporation at the principal
executive office of the Corporation or at such other place as may
be designated by the Corporation in its notice to the holder,
duly endorsed or accompanied by proper instruments of transfer
together with a written notice from the holder thereof stating
the name or names and addresses to which certificates for Common
Stock are to be issued, and the Corporation shall, as soon as
practicable thereafter, issue and deliver to such holder of
Series C Non-voting Preferred Stock, or to such third party as
such holder may designate in writing, a certificate or
certificates for the number of shares of Common Stock to which he
shall be entitled as aforesaid and a check payable to the holder
for any cash amounts payable in lieu of fractional shares of
Common Stock plus any declared but unpaid dividends on the
converted shares.
C. Conversion Price. For purposes of this Section 3, each share of
Series C Non-voting Preferred Stock which is the subject of this
amendment (40,910) shall be convertible into the number of shares
of Common Stock that results from dividing $110.00 by the
Conversion Price per share in effect at the time of conversion.
The Conversion Price per share of Series C Non-voting Preferred
Stock, which is the subject of this amendment, shall initially be
$110.00 and shall be subject to adjustment from time to time as
follows:
(1) In the event the outstanding shares of Common Stock shall be
subdivided or increase, by stock split or stock dividend, into
a greater number of shares of Common Stock, the Conversion
Price then in effect shall, concurrently with the
effectiveness of such subdivision or payment of such stock
dividend, be proportionately decreased. In the event the
outstanding shares of Common Stock shall be combined or
consolidated, by reclassification or otherwise, into a lesser
number of shares of Common Stock, the Conversion Price then in
effect shall, concurrently with the effectiveness of such
combination or consolidation, be proportionately increased.
(2) If the Common Stock issuable upon conversion of the Series C
Non-voting Preferred Stock shall be changed into the same or a
different number of shares of any other class or classes of
stock of the Corporation, whether by capital reorganization,
reclassification or otherwise (other than a subdivision or
combination of shares provided for above), the Conversion
Price then in effect shall, concurrently with the
effectiveness of such reorganization or reclassification, be
proportionately adjusted such that the Series C Non-voting
Preferred Stock shall be convertible into, in lieu of the
shares of Common Stock which the holders would otherwise have
been entitled to receive, a number of shares of such other
class or classes of stock equivalent to the number of shares
of Common Stock that would have been subject to receipt by the
holders upon conversion of the Series C Non-voting Preferred
Stock immediately before such event.
(3) Upon each adjustment of the Conversion Price provided for
hereunder and upon each change in the number of shares of
Common Stock issuable upon conversion of the Series C
Non-voting Preferred Stock pursuant to the provisions hereof,
the Corporation shall promptly give written notice thereof to
each registered holder of Series C Non-voting Preferred Stock,
first-class mail, postage prepaid, addressed to such holder at
his address as shown on the records of the Corporation, which
notice shall state the Conversion Price resulting from such
adjustment and the increase or decrease, if any, in the number
of shares issuable upon conversion of Series C Non-voting
Preferred Stock or specifying the other shares of stock,
securities or assets and the amount thereof so issuable and
setting forth in reasonable detail the method of calculation
and the facts upon which such calculation is based.
(4) Consolidations and Mergers. In the event of any consolidation
or merger of the Corporation with or into another corporation
(other than a merger in which the Corporation is a continuing
corporation and which does not result in any reclassification
of the Common Stock of the Corporation), then as a condition
of effecting such merger or consolidation lawful and adequate
provisions shall be made whereby each holder of outstanding
shares of Series C Non-voting Preferred Stock shall be
entitled to receive, upon the consummation of such
consolidation or merger, such shares of stock, securities or
assets to which such holder would have been entitled upon the
consummation thereof if such shares of Series C Non-voting
Preferred Stock had been converted into Common Stock
immediately prior thereto. In any such case, upon the
consummation of such consolidation or merger, all rights of
holders of shares of Series C Non-voting Preferred Stock shall
cease with respect to such shares except for the right to
receive shares of stock, securities or assets in accordance
with the provisions made pursuant to the preceding sentence.