EXHIBIT 4.2
ARTEST CORPORATION
SERIES A PREFERRED
STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into on the 28th day of March,
1997, by and among ARTEST CORPORATION, a California corporation (the "Company"),
with its principal office at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Mr. ▇▇▇ ▇▇▇, the founder of the Company (the "Founder") and the purchasers
listed on the Schedule of Purchasers attached hereto as Exhibit A (the
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"Purchasers" or individually a "Purchaser").
SECTION 1. THE INVESTMENT
1.1 Authorization. Prior to the Closing Date, the Company will
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authorize the sale and issuance of not less than 14,000,000 shares of Series A
Preferred Stock (the "Series A Preferred Stock"), having the rights, privileges
and preferences as set forth in the Company's Certificate of Amendment to its
Articles of Incorporation (the "Certificate of Amendment") in the form attached
to this agreement as Exhibit B.
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1.2 The Investment. Subject to the terms hereof, on the Closing Date
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(as defined below), the Purchasers shall purchase from the Company, and the
Company shall issue and sell to the Purchasers an aggregate of up to 14,000,000
shares of Series A Preferred Stock of the Company (the "Shares"), in the amounts
set forth opposite each Purchaser's name on the Schedule of Purchasers, at the
price of $1.00 per share.
SECTION 2. THE CLOSING
2.1 Closing Date. The closing (the "Closing") hereunder shall be held
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at the legal office of ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq. at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ at 10:00 a.m. on or before March 28, 1997 (the "Closing
Date"), or at such other time and place to which the Company and a majority in
interest of the Purchasers may agree. The Company's agreement with each
Purchaser constitutes a separate agreement, but the sale of Shares to all of the
Purchasers shall occur at one Closing.
2.2 Delivery. At the Closing (i) the Company shall deliver to each
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Purchaser a certificate representing the Shares purchased by such Purchaser
hereunder and (ii) each Purchaser will deliver to the Company a check, wire
transfer funds or
evidence of cancellation of the Company's indebtedness to such Purchaser in the
aggregate amount of the purchase price for the Shares so purchased and sold.
2.3 Conditions Precedent to the Company's Obligations at the Closing.
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The obligations of the Company to issue the Shares at the Closing under this
Section 2 are subject to fulfillment at or before the Closing of the following
conditions:
(a) The representations and warranties of the Purchasers in Section 4
shall be true at and as of the Closing with the same effect as though such
representations and warranties had been made at the Closing.
(b) The Certificate of Amendment shall have been duly filed with the
Secretary of State of the State of California.
(c) All material matters of a legal nature which pertain to this
Agreement and the transactions contemplated hereby shall have been approved by
counsel to the Company.
2.4 Conditions Precedent to Purchaser's Obligations at the Closing.
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The obligations of the Purchasers under this Section 2 are subject to
fulfillment at or before the Closing of the following conditions:
(a) The representations and warranties of the Company in Section 3
shall be true at and as of the Closing Date with the same effect as though such
representations and warranties had been made at the Closing Date and the
President of the Company shall have delivered to the Purchasers a certificate
attesting to such effect.
(b) The Certificate of Amendment shall have been duly filed with the
Secretary of State of the State of California.
(c) The Company's Board of Directors shall consist of ▇▇▇ ▇▇▇, ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇ and a representative of Mitsui Hi-tech.
(d) All covenants, agreements and conditions contained in this
Agreement to be performed by the Company on or prior to the Closing Date shall
have been performed or complied with in all material respects.
(e) All corporate proceedings necessary to authorize the execution of
this Agreement, the issuance of the Shares, and
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the completion of the transactions contemplated hereunder shall have been
complete and be fully effective.
(f) All material matters of a legal nature which pertain to this
Agreement and the transactions contemplated hereby shall have been approved by
counsel to the Purchasers, if any.
SECTION 3. REPRESENTATIONS AND WARRANTIES
Except as otherwise disclosed in Exhibit C to this Agreement, the
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Company hereby represents and warrants to the Purchasers that as of the Closing
Date the following representation and warranties shall be true and correct:
3.1 Organization and Standing. The Company has been duly organized
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and is validly existing as a corporation in good standing under the laws of the
State of California. The Articles of Incorporation of the Company are in full
force and effect and the Company has made a copy of the Company's Bylaws as in
effect on the Closing Date available to the Purchasers upon request. The Company
has all requisite corporate power to own and operate its properties and assets,
and to carry on its business as presently conducted and as contemplated. No
jurisdiction has requested that the Company qualify to do business as a foreign
corporation in any jurisdiction and no such qualification is required.
3.2 Corporation Power. The Company has all requisite corporate power
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to enter into this Agreement and to carry out and perform its obligations under
the terms of this Agreement. This Agreement is a legal, valid and binding
obligation of the Company enforceable in accordance with its terms.
3.3 Authorization. All corporate action on the part of the Company,
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its officers, directors and shareholders necessary for the execution, delivery
and performance of this Agreement, any agreement referenced herein and the
performance of the Company's obligations hereunder, including the issuance and
delivery of the Shares, has been taken. This agreement is a valid and binding
obligation of the Company enforceable in accordance with its terms, subject to
laws of general application relating to bankruptcy, insolvency and the relief of
debtors and rules of law governing specific performance, injunctive relief or
other equitable remedies. The Common Stock issuable upon conversion of the
Shares has been duly and validly reserved and, when issued upon conversion of
the Shares, will be validly issued, will be fully paid and nonassessable, will
have
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the rights, preferences and privileges described in the Articles, and will be
free of any liens or encumbrances; provided, however, that the Shares (and the
Common Stock issuable upon conversion thereof) may be subject to restrictions on
transfer under federal securities laws as set forth herein. The Shares and the
Common Stock issuable upon conversion thereof are not subject to any preemptive
rights or rights of first refusal.
3.4 Governmental Consents, etc. No consent, approval or authorization
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of or designation, declaration or filing with any governmental authority on the
part of the Company is required in connection with the execution and delivery of
this Agreement, any agreement referenced herein, and the performance of the
Company's obligations hereunder or the offer, sale or issuance of the Shares
hereunder except such as has already been obtained or as is not required to be
obtained prior to the Closing.
3.5 Compliance with Other Instruments. The Company is not in
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violation of any term of its Articles or Bylaws or in any material respect of
any material term or provision of any mortgage, indenture, lease agreement,
contract, agreement, instrument, judgment, decree, order, or any statute, rule
or regulation to which the Company is subject and a violation of which would
have a material adverse effect upon the operations of the Company, nor has any
event occurred which with the passage of time or giving of notice would result
in such a violation. The execution, delivery, performance of and compliance with
this Agreement, any agreement referenced herein, and the performance of the
Company's obligations hereunder and the issuance of the Shares pursuant hereto,
will not result in any such violation or be in conflict with or constitute a
default (or an event which with the passage of time or giving of notice would
result in a default) under any such term or result in the creation of any
mortgage, pledge, lien, encumbrance or charge upon any of the properties or
assets of the Company.
3.6 Subsidiaries. The Company has no subsidiaries or affiliated
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companies and does not otherwise own or control, directly or indirectly, any
other corporation, association or business entity and is not a participant in
any joint venture or partnership.
3.7 Capitalization. Upon the filing of the Certificate of Amendment,
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the authorized capital stock of the Company consists of 38,000,000 shares of
Common Stock of which 5,240,000 shares are issued and outstanding and 14,000,000
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shares of Series A Preferred Stock which are to be sold and issued to the
Purchasers in accordance with this Agreement. Included in Exhibit C is a
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complete and correct listing of all holders of outstanding shares of Common
Stock of the Company. All issued and outstanding shares of capital stock have
been duly authorized and validly issued, and are fully paid and nonassessable.
The Company has reserved 14,000,000 shares of Common Stock for issuance upon
conversion of the Series A Preferred Stock and 760,000 shares for issuance to
additional founders of the Company. The Company will reserve 4,000,000 shares of
Common Stock for issuance, either directly or through options or warrants, to
employees, consultants or others who render services to or otherwise assist the
Company as approved by the Company's Board of Directors. Except as set forth
above and in the Company's Bylaws, there are no other warrants, options,
convertible securities or other rights requiring the Company to issue any shares
of its capital stock. The Shares, when issued in accordance with the terms of
this Agreement, will be duly authorized and validly issued, fully paid and
nonassessable.
3.8 Properties and Assets; Liens, etc. The Company has just commenced
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operations and except for the amounts to be transferred to the Company under the
terms of the Founder's agreements and this Agreement has no assets or
properties.
3.9 Patents, Trademarks, etc.
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(a) The Company owns, has access to, possesses, has the right to use
or reasonably believes that it can develop or acquire on terms that will not
have a material adverse impact on the Company, free and clear of all liens,
charges, claims and restrictions, all patents, trademarks, service marks, trade
names, copyrights, licenses, circuit board designs, wiring designs and other
rights necessary to its business as proposed to be conducted and is not, to the
best of its knowledge, infringing upon or otherwise acting adversely to the
right or claimed right of any person under or with respect to any of the
foregoing. There are no outstanding options, licenses, or agreements of any kind
relating to the foregoing, nor is the Company bound by or a party to any
options, licenses or agreements of any kind with respect to the patents,
trademarks, service marks, trade names, copyrights, trade secrets, licenses,
information, proprietary rights and processes of any other person or entity. The
Company has not received any communications alleging that it has violated or, by
conducting its business as proposed would violate, any of the patents,
trademarks, service marks, trade names, copyrights or trade
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secrets or other proprietary rights of any other person or entity.
(b) The Company is not aware that any of its employees or consultants
is obligated under any contract (including licenses, covenants or commitments of
any nature) or other agreement, or subject to any judgment, decree or order of
any court or administrative agency, that would conflict with his obligation to
use his best efforts to promote the interests of the Company. Neither the
execution nor delivery of this Agreement, nor the carrying on of the Company's
business by the employees of the Company, nor the conduct of the Company's
business as proposed, will, to the Company's knowledge, conflict with or result
in a breach of the terms, conditions or provisions or constitute a default
under, any contract, covenant or instrument under which any such employee or
consultant is now obligated. The Company does not believe it is or will be
necessary to utilize any inventions of any of its employees or consultants (or
people it currently intends to hire or retain) made or owned prior to their
employment or retention by the Company or that it is or will be necessary to
utilize any other assets or rights of any of its employees or consultants (or
people it currently intends to hire or retain) made or owned prior to their
employment with the Company in violation of any limitation or restrictions to
which such person is a party or to which any of such assets or rights may be
subject.
3.10 Material Contracts and Commitments. The Company has no
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contracts, agreements or instruments to which the Company is a party or that are
proposed which involve a total consideration to or from the Company for each
such contract in excess of $25,000 other than those set forth in Exhibit C
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hereto, including, but not limited to, pension plans, retirement plans or
obligations, employment contracts, deferred bonus or compensation plans,
agreements with shareholders, collective bargaining agreements, liens, debts,
mortgages, promissory notes, or guarantees. All contracts in Exhibit C are in
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full force and effect in all material respects, and are valid, binding and
enforceable by the Company, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
relating to or affecting enforcement of creditor's rights and by general
equitable principles.
3.11 Litigation, etc. There are no actions suits, proceedings or
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investigations pending against the Company or its properties or to which the
Company, or any officer, director, or employee of the Company, is a party in his
capacity as such
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before any court or governmental agency (nor is there any threat thereof), that,
either in any case or in the aggregate, might result in any material adverse
change in the business or financial condition of the Company or any of its
properties or assets, or in any material impairment of the right or ability of
the Company to carry on its business as now conducted or as proposed to be
conducted, or in any material liability on the part of the Company, and none
that questions the validity of this Agreement or any action taken or to be taken
in connection herewith.
3.12 Registration Rights; Preemptive Rights. Except as set forth in
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this Agreement, the Company is not under any obligation to register any of its
presently outstanding securities or any of its securities which may hereafter be
issued under the Securities Act of 1933, as amended. The holders of capital
stock of the Company are not entitled to any preemptive rights with respect to
the Shares.
3.13 Taxes. The Company has filed all necessary or appropriate
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federal, state, local and foreign tax returns and reports and all taxes, fees,
assessments and governmental charges of any nature shown by such returns to be
due and payable have been paid. The Company has never had any material tax
deficiency proposed or assessed against it or executed any waiver of any statute
of limitations on the assessment or collection of any tax. None of the federal
or state income or franchise tax returns of the Company has ever been audited by
governmental authorities.
3.14 No Brokers or Finders. No person, firm or corporation has, or as
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a result of the transactions contemplated by this Agreement will have, by reason
of any commitment made by the Company, any right, interest or valid claim
against or upon the Purchasers or the Company for any commission, fee or other
compensation as a finder or broker, or in any similar capacity, with respect to
the transactions contemplated by this Agreement.
3.15 Disclosure. To the best of the Company's knowledge, neither this
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Agreement nor any Exhibit annexed hereto nor any certificate or other instrument
referred to herein or furnished to the Purchasers by the Company contains, when
considered as a whole with all such other material, any untrue statement of
material fact or omits to state a material fact necessary (in the context of all
such other written information furnished to the Purchasers) in order to make the
statements contained therein or herein, in light of the circumstances under
which they were made, not misleading.
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SECTION 4. PURCHASER'S REPRESENTATIONS AND WARRANTIES
Each Purchaser represents and warrants to the Company as follows:
4.1 Authority. The execution of this Agreement has been duly
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authorized by all necessary action by the Purchaser. Further, this Agreement is
a valid and binding agreement of the Purchaser which is enforceable in
accordance with its terms except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or other laws of general application
relating to or affecting enforcement of creditors' rights and by general
equitable principles.
4.2 Accreditation and Experience. The Purchaser is either an
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"accredited investor" as that term is defined in Regulation D promulgated under
the Securities Act of 1933, as amended (the "Act") or such Purchaser has such
knowledge and experience in business and financial matters that it is capable of
evaluating the merits and risks of its investment hereunder and protecting its
own interests in connection with this transaction.
4.3 Investment. The Purchaser is acquiring the Shares for investment
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for its own account, and not with the view to, or for resale in connection with,
any distribution thereof or with any present intention of distributing or
selling the Shares. The Purchaser understands that the Shares will not be
registered under the Act, by reason of a specific exemption from the
registration provisions of the Act which depends upon, among other things, the
bona fide nature of the Purchaser's investment intent as expressed herein.
4.4 Restrictive Legend. Each certificate representing (i) the Shares,
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(ii) shares of the Company's Common Stock issued upon conversion thereof or
(iii) any other securities issued in respect of the Shares or Common Stock
issued upon conversion thereof upon any stock split, stock dividend,
recapitalization, merger, consolidation or similar event, shall be stamped or
otherwise imprinted with a legend in the following form (in addition to any
legend required under applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT THEREFOR OR AN OPINION OF COUNSEL FOR THE COMPANY
THAT SUCH
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REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.
4.5 Rule 144. The Purchaser acknowledges that the Shares must be held
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indefinitely unless subsequently registered under the Act or an exemption from
such registration is available. The Purchaser is aware of the provisions of Rule
144 promulgated under the Act ("Rule 144") which permit limited resale of
securities purchased in a private placement (i) by non-affiliates of the Company
not less than three years after a party has purchased and paid for the security
to be sold or (ii) subject to the satisfaction of certain conditions, including,
among other things, the existence of a public market for the securities, the
availability of certain current public information about the Company, the resale
occurring not less than two years after a party has purchased and paid for the
security to be sold, the sale being effected through a "broker's transaction" or
in transactions directly with a "market maker" (as provided by Rule 144(f)) and
the number of securities being sold during any three-month period not exceeding
specified limitations.
4.6 No Public Market. The Purchaser understands that no public market
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now exists for any of the securities issued by the Company.
4.7 Access to Data. The Purchaser or its representatives have had an
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opportunity to discuss the terms and conditions of the offering and the
Company's business, management and financial affairs with the Company's
management, to review the Company's books, records and other documents, and to
obtain additional information (to the extent the Company possessed such
information or could acquire it without unreasonable effort or expense)
necessary to verify the accuracy of any information furnished to it or to which
it had access. Nothing contained in this paragraph 4.7 shall alter in any way
the effectiveness of the Company's representations and warranties contained in
Section 3 hereof.
SECTION 5. AFFIRMATIVE COVENANTS OF THE COMPANY
5.1 Use of Proceeds. The Company intends to apply the proceeds of the
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issuance of the Shares to the capital and operating needs of the Company.
5.2 Financial Information. The Company will furnish the following
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reports to Purchaser for so long as Purchaser is the holder of at least 250,000
Shares:
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(a) As soon as practicable after the end of each fiscal year, and in
any event within 90 days thereafter, consolidated balance sheets of the Company
and its subsidiaries, if any, as of the end of such fiscal year, and
consolidated statements of income and consolidated statements of changes in
financial position of the Company and its subsidiaries, if any, for such year,
prepared in accordance with generally accepted accounting principles and setting
forth in each case in comparative form the figures for the previous fiscal year,
all in reasonable detail and accompanied by the audit report thereof of an
independent certified public accountant selected by the Company.
(b) As soon as practicable after the end of the first, second and
third quarterly accounting periods in each fiscal year of the Company and in any
event within 45 days thereafter, an unaudited income statement for such fiscal
quarter and an unaudited balance sheet as of the end of such fiscal quarter.
(c) With reasonable promptness, such other information and data with
respect to the Company and its subsidiaries, if any, as a Purchaser or its
authorized representative may from time to time reasonably request and Purchaser
shall also have the right, at its expense, to visit and inspect any of the
properties of the Company or any of its subsidiaries, and to discuss their
affairs, finances and accounts with their officers, all at such reasonable times
and as often as may be reasonably requested.
Purchaser agrees that any information obtained by the Purchaser
pursuant to this Section 5.2 that may be proprietary to the Company or otherwise
confidential will not be disclosed without the prior written consent of the
Company. Purchaser further acknowledges and understands that any information so
obtained that may be considered "inside" non-public information will not be
utilized by Purchaser in connection with purchases and/or sales of the Company's
securities except in compliance with applicable state and federal securities
laws.
5.3 Conduct of Business: The Company, with respect to its assets and
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its business, shall use its best efforts to:
(a) Maintain and preserve its business organization intact and its
relationships with its customers and suppliers.
(b) Do all things necessary to preserve, renew and keep in full force
and effect and in good standing its corporate
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existence, franchises, licenses, technology and proprietary information;
(c) Avoid the commission of any crime involving moral turpitude or any
felony; and
(d) Pay and discharge before the same shall become in arrears, all
taxes, assessments, and other governmental charges or levies imposed upon it
and/or its properties, sales and activities, or upon the income or profits
therefrom, as well as all claims for wages, salaries, materials or supplies
which if unpaid might by law become a lien or charge upon any of its properties
unless the validity or amount thereof shall be then currently contested in good
faith by appropriate proceedings.
5.4 Termination of Covenants. The rights contained in this Section 5
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shall terminate on the day upon which the Company becomes registered under
Section 12(g) of the Securities and Exchange Act of 1934, as amended.
SECTION 6. REGISTRATION RIGHTS
6.1 Company's Registration. Whenever the Company proposes to register
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any of its Common Stock for its own account under the Act for a public offering
for cash (other than a registration relating to a Rule 145 transaction or
employee benefit plans or any other registration which is not appropriate for
the registration of Shares), the Company shall give the Purchaser written notice
of its intent to do so. Upon the written request of the Purchaser given within
15 days after receipt of such notice, the Company will use its best efforts to
cause to be included in such registration all of the Shares which the Purchaser
requests to be registered.
6.2 Expenses. All expenses incurred in connection with any
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registrations under Section 6.1 (excluding underwriting commissions and
discounts and fees of counsel for Purchaser) shall be borne by the Company.
6.3 Underwriting Requirements. In connection with any offering
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involving an underwriting of shares being issued by the Company, the Company
shall not be required under Section 6.1 to include any of the Shares unless the
Purchasers accept and agree to the terms of the underwriters selected by the
Company. If the total number of shares of the Company's stock which the
Purchaser and any other persons entitled to include shares of stock in a Company
registration (the "Other Participants") request to be included in any offering
involving an underwriting
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of shares being issued by the Company (the "Requested Shares") exceeds the
number which the underwriters reasonably believe is compatible with the success
of the offering, then the Company shall only be required to include in the
offering so many Requested Shares as the underwriters believe will not
jeopardize the success of the offering (the Requested Shares to be included
shall be apportioned among the Purchasers and the Other Participants pro rata
according to the number of shares owned by each Purchaser or Other Participant
indicating a desire to participate in such offering); provided, however, that
with respect any offering other than the Company's initial public offering, that
notwithstanding the underwriter's discretion set forth above, a minimum of
thirty percent (30%) of any such offering by the Company shall be reserved for
the inclusion of Shares held by the Purchasers. Purchaser agrees that it will
not, during any underwritten public offering under Section 6.1 offer, sell, or
dispose of shares, except as may be agreed upon with the managing underwriter,
for a period of 180 days from the effective date of the registration statement
for such public offering; provided that this provision shall not apply unless
all officers, directors and greater than 5% shareholders of the Company are
similarly restricted.
6.4 Information/Indemnification. The Purchaser shall furnish the
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Company with such information as the Company may request in writing and as shall
be required in connection with any registration under this Article 6 and shall
agree to indemnify the Company and the underwriters of such offering against any
claim or loss resulting from the inaccuracy of such information provided, and on
the condition, that the Company shall agree to provide Purchaser with
indemnification for all other information contained in the registration
statement relating to such registration on usual and customary terms for
offerings of such nature.
6.5 Definitions. For purposes of this Article 6 the following
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definitions shall apply:
(a) The term "Purchaser" shall be deemed to include any transferee of
a Purchaser to whom the Shares may be subsequently transferred; provided that
the transferor shall specifically transfer its rights under this Article 6 to
such transferee and that such transferee holds more than 250,000 Shares.
(b) "Shares" shall mean and include any shares of Common Stock issued
or issuable upon conversion of the Series A Preferred Stock sold in accordance
with this Agreement or any
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shares of Common Stock issued in respect of such Shares pursuant to any stock
split, dividend, recapitalization and the like.
SECTION 7. RIGHT OF FIRST REFUSAL
7.1 The Right. The Company will notify the Purchasers and the Founder
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of any intended offering of New Securities (as defined below) to be undertaken
by the Company after the date of this Agreement and prior to termination of the
right provided herein pursuant to Section 7.3 below. The Purchasers and the
Founder shall have the right of first refusal to participate pro rata in such
offering of New Securities based upon their then existing ownership percentage
in the Company.
7.2 Notice. The Company shall give to the Purchasers and the Founder
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written notice of the proposed offer to sell and issue any of the New
Securities, which written notice shall contain the terms of such proposed sale
in reasonable detail and shall be delivered to the Purchasers and the Founder at
least thirty (30) days prior to the date such securities are proposed to be sold
and issued to any third party. The Purchasers and the Founder shall have the
right to exercise the right of first refusal granted them pursuant to Section
7.1 above by giving written notice thereof to the Company within fifteen (15)
days after receipt of the Company's notice, specifying the amount of securities
which such person desires to purchase. Failure to so notify the Company within
such period shall be deemed an election not to participate.
7.3 Termination. The rights granted by this Section 7 shall terminate
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upon either of the following:
(a) as to each Purchaser or the Founder, the failure of such person to
exercise its rights under this Article 7 in full with respect to a prior
offering of New Securities; or
(b) the effectiveness of (and shall not apply to the shares subject
to) a registration statement under the Securities Act on Form ▇-▇, ▇-▇, ▇-▇, SB-
1 or SB-2 (or similar form containing substantially the same information)
covering a firm commitment underwriting of the Company's securities; or
(c) the closing of a transaction by which the Company is merged into
or acquired by another corporation and in which the shareholders of the Company
hold less than 50% of the voting power of the surviving corporation (and shall
not apply to such transaction).
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7.4 Definitions. For purposes of this Article 7, the following shall
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apply:
(a) The term "New Securities" means any shares of Common Stock or any
rights, options, warrants or other debt, equity or hybrid securities
exchangeable for or convertible into shares of Common Stock which the Company
intends to offer, sell or issue after the date of this Agreement except for such
securities which are (i) exchanged for the securities of another corporation as
a result of a statutory merger or consolidation; (ii) issued to another
corporation in exchange for all or substantially all of the assets of such other
corporation; or (iii) shares of Common Stock (or securities convertible into or
rights to acquire shares of Common Stock) issued to fulfill any obligation of
the Company under any existing or future stock option, bonus or other employee
or consultant incentive arrangement or plan for the benefit of the employees,
consultants or directors of the Company.
(b) For purposes of determining the Founder's "percentage interest" in
the Company, the Founder's holdings of shares of Series A Preferred Stock,
Common Stock and vested options to purchase Common Stock, if any, shall be
aggregated.
7.5 Transferability. A Purchaser's right to purchase New Securities
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under the terms of this Article 7 shall be nontransferable.
SECTION 8. MISCELLANEOUS
8.1 Governing Law. This Agreement shall be governed in all respects
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by the substantive laws of the State of California without giving effect to
principles of choice of law.
8.2 Survival. The representations, warranties, covenants and
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agreements made herein shall survive any investigation made by the Purchaser and
the closing of the transactions contemplated hereby.
8.3 Successors and Assigns. Except as otherwise expressly provided
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herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
8.4 Entire Agreement; Amendment. This Agreement, including the
---------------------------
Exhibits hereto, and the other documents delivered pursuant hereto constitute
the full and entire understanding and agreement between the parties with regard
to the subjects hereof
14
and thereof. Neither this Agreement nor any term hereof may be amended, waived,
discharged or terminated except by a written instrument signed by the Company
and the Purchasers.
8.5 Notices, etc. All notices and other communications required or
------------
permitted hereunder shall be in writing and shall be sent by facsimile, telex,
telegram or other form of rapid
15
communications, if possible, or if not, then such notice or communication shall
be mailed by first-class mail, postage prepaid, addressed to the addresses set
forth above or to such other address as a party hereto may specify in writing to
the other. Notice shall conclusively be deemed to have been given when
personally delivered or when deposited in the mail, telex, telegram or fax in
the manner set forth above and shall be deemed to have been received when
delivered.
8.6 Title and Subtitles. The titles of the paragraphs and
-------------------
subparagraphs of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
8.7 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
The foregoing agreement is hereby executed as of the date first above
written.
COMPANY:
ARTEST CORPORATION,
a California corporation
By: /s/ ▇▇▇ ▇▇▇
--------------------------------
▇▇▇ ▇▇▇, President
FOUNDER:
/s/ ▇▇▇ ▇▇▇
------------------------------------
▇▇▇ ▇▇▇ (for purposes of Article 7 only)
PURCHASER:
____________________________________
(Printed Name)
____________________________________
(Authorized Signatory)
____________________________________
(Address 1)
____________________________________
(Address 2)
____________________________________
(Address 3)
communications, if possible, or if not, then such notice or communication shall
be mailed by first-class mail, postage prepaid, addressed to the addresses set
forth above or to such other address as a party hereto may specify in writing to
the other. Notice shall conclusively be deemed to have been given when
personally delivered or when deposited in the mail, telex, telegram or fax in
the manner set forth above and shall be deemed to have been received when
delivered.
8.6 Title and Subtitles. The titles of the paragraphs and
-------------------
subparagraphs of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
8.7 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
The foregoing agreement is hereby executed as of the date first above
written.
COMPANY:
ARTEST CORPORATION,
a California corporation
By: ___________________________________
▇▇▇ ▇▇▇, President
FOUNDER:
_______________________________________
▇▇▇ ▇▇▇ (for purposes of Article 7 only)
PURCHASER:
SILICONWARE INVESTMENT
COMPANY LTD.
_______________________________________
(Printed Name)
/s/ ▇. ▇. ▇▇▇▇
---------------------------------------
(Authorized Signatory)
____________________________________
(Address 1)
____________________________________
(Address 2)
____________________________________
(Address 3)
communications, if possible, or if not, then such notice or communication shall
be mailed by first-class mail, postage prepaid, addressed to the addresses set
forth above or to such other address as a party hereto may specify in writing to
the other. Notice shall conclusively be deemed to have been given when
personally delivered or when deposited in the mail, telex, telegram or fax in
the manner set forth above and shall be deemed to have been received when
delivered.
8.6 Title and Subtitles. The titles of the paragraphs and
-------------------
subparagraphs of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
8.7 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
The foregoing agreement is hereby executed as of the date first above
written.
COMPANY:
ARTEST CORPORATION,
a California corporation
By: /s/ ▇▇▇ ▇▇▇
-------------------------------
▇▇▇ ▇▇▇, President
FOUNDER:
/s/ ▇▇▇ ▇▇▇
-----------------------------------
▇▇▇ ▇▇▇ (for purposes of Article 7 only)
PURCHASER:
Siliconware Foundries, Inc.
----------------------------------------
(Printed Name)
/s/ [?]
------------------------------
(Authorized Signatory)
▇▇, ▇▇. ▇▇ ▇▇▇▇▇ ▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇
----------------------------------
(Address 1)
Hsin-chu City, Taiwan
---------------------
(Address 2)
____________________________________
(Address 3)
communications, if possible, or if not, then such notice or communication shall
be mailed by first-class mail, postage prepaid, addressed to the addresses set
forth above or to such other address as a party hereto may specify in writing to
the other. Notice shall conclusively be deemed to have been given when
personally delivered or when deposited in the mail, telex, telegram or fax in
the manner set forth above and shall be deemed to have been received when
delivered.
8.6 Title and Subtitles. The titles of the paragraphs and
-------------------
subparagraphs of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
8.7 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
The foregoing agreement is hereby executed as of the date first above
written.
COMPANY:
ARTEST CORPORATION,
a California corporation
By: ________________________________
▇▇▇ ▇▇▇, President
FOUNDER:
____________________________________
▇▇▇ ▇▇▇ (for purposes of Article 7 only)
PURCHASER:
Creative Group Limited
____________________________________
(Printed Name)
/s/ ▇. ▇. ▇▇▇▇▇
------------------------------------
(Authorized Signatory)
▇.▇. ▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------
(Address 1)
Road Town, Tortola
---------------------------------
(Address 2)
British Virgin Islands
---------------------------------
(Address 3)
delivered or when deposited in the mail, telex, telegram or fax ill the manner
set forth above and shall be deemed to have been received when delivered.
8.6 Title and Subtitles. The titles of the paragraphs and
-------------------
subparagraphs of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
8.7 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
The foregoing agreement is hereby executed as of the date first above
written.
COMPANY:
ARTEST CORPORATION,
a California corporation
By: /s/ ▇▇▇ ▇▇▇
--------------------------------
▇▇▇ ▇▇▇, President
FOUNDER:
/s/ ▇▇▇ ▇▇▇
------------------------------------
▇▇▇ ▇▇▇ (for purposes of Article 7 only)
PURCHASER:
▇▇▇▇▇▇ ▇.▇. ▇▇▇
------------------------------------
(Printed Name)
/s/ ▇▇▇▇▇▇ ▇. ▇. ▇▇▇
------------------------------------
(Authorized Signatory)
4th Fl., 237 Fu-▇▇▇▇▇ ▇. Rd.
------------------------------------
(Address 1)
Sec. 1, Taipei
------------------------------------
(Address 2)
____________________________________
(Address 3)
delivered or when deposited in the mail, telex, telegram or fax ill the manner
set forth above and shall be deemed to have been received when delivered.
8.6 Title and Subtitles. The titles of the paragraphs and
-------------------
subparagraphs of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
8.7 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
The foregoing agreement is hereby executed as of the date first above
written.
COMPANY:
ARTEST CORPORATION,
a California corporation
By: /s/ ▇▇▇ ▇▇▇
-----------------------------
▇▇▇ ▇▇▇, President
FOUNDER:
/s/ ▇▇▇ ▇▇▇
---------------------------------
▇▇▇ ▇▇▇ (for purposes of Article 7 only)
PURCHASER:
SAMANTHA ▇.▇. ▇▇▇
------------------------------------
(Printed Name)
/s/ Samantha ▇.▇. ▇▇▇
------------------------------------
(Authorized Signatory)
____________________________________
(Address 1)
____________________________________
(Address 2)
____________________________________
(Address 3)
communications, if possible, or if not, then such notice or communication shall
be mailed by first-class mail, postage prepaid, addressed to the addresses set
forth above or to such other address as a party hereto may specify in writing to
the other. Notice shall conclusively be deemed to have been given when
personally delivered or when deposited in the mail, telex, telegram or fax in
the manner set forth above and shall be deemed to have been received when
delivered.
8.6 Title and Subtitles. The titles of the paragraphs and
-------------------
subparagraphs of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
8.7 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
The foregoing agreement is hereby executed as of the date first above
written.
COMPANY:
ARTEST CORPORATION,
a California corporation
By: _________________________________
▇▇▇ ▇▇▇, President
FOUNDER:
_____________________________________
▇▇▇ ▇▇▇ (for purposes of Article 7 only)
PURCHASER:
INTERNATIONAL LEADFRAME CORPORATION
-------------------------------------
(Printed Name)
/s/ K. Sanefuji
-------------------------------------
(Authorized Signatory)
BY: K. SANEFUJI
ITS: PRESIDENT
________________________________
(Address 1)
________________________________
(Address 2)
________________________________
(Address 3)
communications, if possible, or if not, then such notice or communication shall
be mailed by first-class mail, postage prepaid, addressed to the addresses set
forth above or to such other address as a party hereto may specify in writing to
the other. Notice shall conclusively be deemed to have been given when
personally delivered or when deposited in the mail, telex, telegram or fax in
the manner set forth above and shall be deemed to have been received when
delivered.
8.6 Title and Subtitles. The titles of the paragraphs and
-------------------
subparagraphs of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
8.7 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
The foregoing agreement is hereby executed as of the date first above
written.
COMPANY:
ARTEST CORPORATION,
a California corporation
By: /s/ ▇▇▇ ▇▇▇
--------------------------------
▇▇▇ ▇▇▇, President
FOUNDER:
/s/ ▇▇▇ ▇▇▇
------------------------------------
▇▇▇ ▇▇▇ (for purposes of Article 7 only)
PURCHASER:
HSIN SAN ▇▇▇
------------------------------------
(Printed Name)
/s/ Hsin San ▇▇▇
------------------------------------
(Authorized Signatory)
____________________________________
(Address 1)
____________________________________
(Address 2)
____________________________________
(Address 3)
communications, if possible, or if not, then such notice or communication shall
be mailed by first-class mail, postage prepaid, addressed to the addresses set
forth above or to such other address as a party hereto may specify in writing to
the other. Notice shall conclusively be deemed to have been given when
personally delivered or when deposited in the mail, telex, telegram or fax in
the manner set forth above and shall be deemed to have been received when
delivered.
8.6 Title and Subtitles. The titles of the paragraphs and
-------------------
subparagraphs of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
8.7 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
The foregoing agreement is hereby executed as of the date first above
written.
COMPANY:
ARTEST CORPORATION,
a California corporation
By: /s/ ▇▇▇ ▇▇▇
-------------------------------
▇▇▇ ▇▇▇, President
FOUNDER:
/s/ ▇▇▇ ▇▇▇
-----------------------------------
▇▇▇ ▇▇▇ (for purposes of Article 7 only)
PURCHASER:
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇
-----------------------------------
(Printed Name)
/s/ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇
-----------------------------------
(Authorized Signatory)
___________________________________
(Address 1)
___________________________________
(Address 2)
___________________________________
(Address 3)
EXHIBIT A
SCHEDULE OF PURCHASERS
Name Shares Amount
------------------------------------ ------------ ------------
Siliconware Investment Company, 6,000,000 $6,000,000
Ltd
▇▇. ▇▇, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇,
▇▇▇▇▇▇▇-▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇, Taiwan
Silicon Foundries 1,000,000 1,000,000
▇▇, ▇▇. ▇▇, ▇▇▇▇▇-▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇
Creative Group Limited 2,000,000 2,000,000
▇.▇. ▇▇▇ ▇▇
Craigmuir ▇▇▇▇▇▇▇▇
Road Town, Tortola
British Virgin Islands
copy all correspondence to:
Hon Hai Precision Industry Co., Ltd.
▇▇. ▇, ▇▇▇ ▇▇ ▇▇▇▇▇▇, ▇▇-▇▇▇▇▇
Taipei Hsien, Taiwan R.O.C.
▇▇. ▇▇▇▇▇▇ ▇. ▇. ▇▇▇ 1,000,000 1,000,000
▇▇▇ ▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇ ▇
▇▇-▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇-▇▇▇▇ ▇▇▇ 1,000,000 1,000,000
▇▇. ▇ ▇▇▇▇▇▇-▇▇▇▇ ▇▇., ▇▇▇▇ ▇
▇▇-▇▇▇▇, ▇▇▇-▇▇▇▇
▇▇▇▇▇▇
International Leadframe Corporation 2,000,000 2,000,000
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Mr. Hsin San ▇▇▇ 300,000 300,000
▇▇. ▇, ▇▇▇▇▇ ▇▇, ▇▇▇▇ ▇▇▇
Sec. ▇, ▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇ 200,000 200,000
▇▇. ▇-▇, ▇▇▇▇▇ ▇▇, ▇▇▇▇ ▇
▇▇▇. ▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇
▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇ 500,000 500,000
Lite-On Group
▇▇▇▇ ▇▇▇▇▇, #▇▇
▇▇▇.▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇
___________ __________
Total $14,000,000 14,000,000
EXHIBIT B
FORM OF CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
1
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION OF
ARTEST CORPORATION
▇▇▇ ▇▇▇ and Chia ▇▇▇ ▇▇▇ certify that:
1. They are the President and Secretary, respectively, of Artest
Corporation, a California corporation.
2. Article IV of the Articles of Incorporation of this corporation is
amended and restated to read in its entirety, as follows:
"Article IV
This corporation is authorized to issue two classes of shares
designated "Series A Preferred Stock" and "Common Stock," respectively. The
total number of shares which this corporation shall have the authority to issue
is Thirty Eight Million (38,000,000). The number of shares of Series A
Preferred Stock authorized to be issued is Fourteen Million (14,000,000), and
the number of shares of Common Stock authorized to be issued is Twenty Four
Million (24,000,000).
A statement of the rights, preferences, privileges and restrictions
granted to or imposed on the Series A Preferred Stock and the holders thereof is
as follows:
1. Dividends.
---------
(a) Preference. The holders of outstanding Series A Preferred Stock
----------
shall be entitled to receive, when and as declared by the Board of Directors,
out of any assets at the time legally available therefor, dividends in cash at
the rate of $0.08 per share per annum before any dividend is paid on Common
Stock. The right to such dividends on shares of Series A Preferred Stock shall
not be cumulative. Such dividend is payable when and as the Board of Directors
may from time to time determine. Dividends or distributions (other than
dividends payable solely in shares of Common Stock) may be declared and paid
upon shares of Common Stock only if dividends shall have been paid on or
declared and set apart upon all shares of Series A Preferred Stock.
1
(b) Non-Cash Dividends. In the event this corporation shall declare a
------------------
distribution payable in securities of other persons, evidences of indebtedness
issued by this corporation or other persons, assets (excluding cash dividends)
or options or rights to purchase any such securities or evidences of
indebtedness, then, in each such case the holders of the Series A Preferred
Stock shall be entitled to a proportionate share of any such distribution as
though the holders of the Series A Preferred Stock were the holders of the
number of shares of Common Stock of the corporation into which their respective
shares of Series A Preferred Stock are convertible as of the record date fixed
for the determination of the holders of Common Stock of the corporation entitled
to receive such distribution.
(c) Consent to Certain Repurchases. As authorized by Section 402.5(c)
------------------------------
of the California Corporations Code, Sections 502, 503 and 506 of the California
Corporations Code shall not apply with respect to distributions (as defined in
Section 166 of the California Corporations Code) made by the Company in
connection with the repurchase of shares of Common Stock issued to or held by
employees, consultants, officers and directors upon termination of their
employment or services pursuant to agreements providing for the right of said
repurchase.
2. Liquidation Distributions.
-------------------------
(a) Series A Preference. In the event of any liquidation, dissolution
-------------------
or winding up of the corporation, either voluntary or involuntary, the holders
of the Series A Preferred Stock shall be entitled to receive, prior and in
preference to any distribution of any of the assets or surplus funds of the
corporation to the holders of the Common Stock by reason of their ownership
thereof, the amount of One dollar ($ 1.00) per share. If upon the occurrence of
such event the assets and funds thus distributed among the holders of the Series
A Preferred Stock shall be insufficient to permit the payment to such holders of
the full preferential amount, then the entire assets and funds of the
corporation legally available for distribution shall be distributed ratably
among the holders of the Series A Preferred Stock.
(b) Distributions on Common. After payment has been made to the
-----------------------
holders of the Series A Preferred Stock of the full amounts to which they shall
be entitled as set forth in subsection (a) above, the remaining assets of the
corporation available for distribution to shareholders shall be distributed
among the holders of Common Stock pro rata based upon the number of shares of
Common Stock held by each such holder.
2
(c) Reorganization. For purposes of this Section 2, a liquidation,
--------------
dissolution or winding up of the Company shall be deemed to be occasioned by, or
to include, (A) the acquisition of the Company by another entity by means of any
transaction or series of related transactions (including, without limitation,
any reorganization, merger or consolidation but excluding any merger effected
exclusively for the purpose of changing the domicile of the Company) that
results in the transfer of fifty percent (50%) or more of the outstanding voting
power of the Company; or (B) a sale of all or substantially all of the assets of
the Company.
3. Conversion. The holders of the Series A Preferred Stock shall have
----------
conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert.
----------------
(i) Each share of Series A Preferred Stock shall be
convertible, at the option of the holder thereof, at the office of the
corporation or any transfer agent for the Series A Preferred Stock, into Common
Stock. The initial rate upon which the Series A Preferred Stock shall be
convertible into shares of Common Stock shall be one share of Common Stock for
each share of Series A Preferred Stock converted, subject to adjustment as
provided herein. (The number of shares of Common Stock into which each share of
Series A Preferred Stock may be converted is hereinafter referred to as the
"Conversion Rate".)
(ii) Each share of Series A Preferred Stock shall automatically
be converted into shares of Common Stock at the then effective Conversion Rate
immediately upon either (A) the consummation of the corporation's sale of Common
Stock pursuant to a registration statement under the Securities Act of 1933, as
amended, pursuant to an underwritten firm commitment public offering or (B) upon
the written consent to such conversion of holders of more than 50% of the
outstanding shares of Series A Preferred Stock, whichever first shall occur.
(iii) No fractional shares of Common Stock shall be issued upon
conversion of any Series A Preferred Stock and if any shares of Series A
Preferred Stock surrendered for conversion would otherwise result in a
fractional share of Common Stock, such fractional share shall be redeemed for
the then fair market value thereof as reasonably determined by the corporation's
Board of Directors, payable as promptly as possible whenever funds are legally
available therefor. If more than one share of Series A Preferred Stock is
surrendered for
3
conversion at any one time by the same holder, the number of full shares of
Common Stock to be issued upon conversion shall be computed on the basis of the
aggregate number of shares of Series A Preferred Stock so surrendered.
(b) Mechanics of Conversion. Before any holder of Series A Preferred
-----------------------
Stock shall be entitled to convert the same into shares of Common Stock, such
holder shall surrender the certificate or certificates therefor, duly endorsed,
at the office of the corporation or of any transfer agent for the Series A
Preferred Stock, and shall give written notice to the corporation at such office
that such holder elects to convert the same and shall state therein the name or
names in which such holder wishes the certificate or certificates for shares of
Common Stock to be issued. The corporation shall, as soon as practicable
thereafter, issue and deliver at such office to such holder of Series A
Preferred Stock, or to such holder's nominee or nominees, a certificate or
certificates for the number of shares of Common Stock to which such holder shall
be entitled as aforesaid. Such conversion shall be deemed to have been made
immediately prior to the close of business on the date of such surrender of the
shares of Series A Preferred Stock to be converted, and the person or persons
entitled to receive the shares of Common Stock issuable upon such conversion
shall be treated for all purposes as the record holder or holders of such shares
of Common Stock on such date.
(c) Adjustment of Conversion Rate for Combinations or Consolidations
----------------------------------------------------------------
of Common Stock. In the event the corporation at any time or from time to time
---------------
effects a subdivision or combination of its outstanding Common Stock into a
greater or lesser number of shares without a proportionate and corresponding
subdivision or combination of the Series A Preferred Stock, then and in each
such event the Conversion Rate for the Series A Preferred Stock shall be
increased or decreased proportionately.
(d) No Impairment. The corporation will not, by amendment of its
-------------
Articles of Incorporation or through any reorganization, re-capitalization,
transfer of assets, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed hereunder by the corporation, but
will at all times in good faith assist in the carrying out of all the provisions
of this section 3 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of the
Series A Preferred Stock against impairment.
4
4. Voting Rights.
-------------
(a) General. Each holder of shares of the Series A Preferred Stock
-------
shall be entitled to the number of votes equal to the number of shares of Common
Stock into which such shares of Series A Preferred Stock could be converted on
the record date for the vote or consent of shareholders and shall have voting
rights and powers equal to the voting rights and powers of the Common Stock. The
holder of each share of the Series A Preferred Stock shall be entitled to notice
of any shareholders' meeting in accordance with the Bylaws of the corporation
and shall vote with holders of the Common Stock upon the election of directors
and upon any other matter submitted to a vote of shareholders, except those
matters required by law to be submitted to a class vote. Fractional votes by the
holders of Series A Preferred Stock shall not, however, be permitted and any
fractional voting rights resulting from the above formula (after aggregating all
shares into which shares of Series A Preferred Stock held by each holder could
be converted) shall be rounded to the nearest whole number.
(b) Special Voting Rights. In addition to any other rights provided
---------------------
by law, so long as shares of Series A Preferred Stock are outstanding, the
corporation shall not without first obtaining the affirmative vote or written
consent of the holders of not less than a majority of the then outstanding
shares of the Series A Preferred Stock:
(i) sell, convey, or otherwise dispose of or encumber all or
substantially all of its property or business or merge into or consolidate with
any other corporation (other than a wholly owned subsidiary corporation) or
effect any transaction or series of transaction in which 50% of the voting power
of the corporation is disposed of;
(ii) amend or repeal any provision of, or add any provision to,
this Corporation's Articles of Incorporation if such action would alter or
change the preferences, rights, privileges or powers of, or the restrictions
provided for the benefit of, the Series A Preferred Stock;
(iii) amend or repeal any provision of, or add any provision to,
this Corporation's Articles of Incorporation if such action would increase the
number of authorized shares of Series A Preferred Stock or the number of
authorized shares of Common Stock;
(iv) authorize or issue shares of any class of stock not
authorized herein having any preference or priority as
5
to dividends or assets superior to or on a parity with any such preference or
priority of the Series A Preferred Stock or authorize or issue any bonds,
debentures, notes or other obligations convertible into or exchangeable for, or
having option rights to purchase, any shares of stock of this Corporation other
than Common Stock; or
(v) reclassify any shares of Common Stock and any other shares
of this Corporation other than the Series A Preferred Stock into shares having
any preference or priority as to dividends or assets superior to or on a parity
with any such preference or priority of the Series A Preferred Stock."
3. The foregoing Amendment of Articles of Incorporation has been
duly approved by the Board of Directors of this Corporation.
4. The foregoing Amendment of the Articles of Incorporation has been
approved by the required vote of shareholders in accordance with Sections 902
and 903 of the Corporations Code. The total number of outstanding shares of
Common Stock of the corporation is 5,240,000. The number of shares voting in
favor of the amendment equaled or exceeded the vote required. The percentage
vote required was more than 50% of the outstanding shares of Common Stock.
____________________________
▇▇▇ ▇▇▇, President
____________________________
Chia ▇▇▇ ▇▇▇, Secretary
The undersigned declares under penalty of perjury that the matters set
forth in the foregoing certificate are true of his/her own knowledge.
Executed at Saratoga, California, on March __, 1997.
____________________________
▇▇▇ ▇▇▇
____________________________
Chia ▇▇▇ ▇▇▇
6
EXHIBIT C
SCHEDULE OF EXCEPTIONS
Exceptions:
None
Material Contracts:
The Company has an Agreement dated December 18, 1996, with Shlumberger
Corporation regarding the supply to it of specified automated test equipment and
related technical co-operation.
The Company has entered into a Sublease Agreement with MicroComp
Industries to lease approximately 8,000 square feet at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇.
Shareholder List:
Common Stock
▇▇▇ ▇▇▇ - 5,000,000
▇▇▇▇ ▇▇▇▇ - 240,000