APPENDIX B
RESTATED ARTICLES OF INCORPORATION OF ENCAD, INC.
Richard A. Plante and Thomas L. Green certify that: 1 . They are the President and the Secretary, respectively, of ENCAD, Inc., a California
corporation (the "corporation").
2. The articles of incorporation of the corporation are amended and restated to read as
follows: I.
The name of the corporation is "ENCAD, Inc." II.
The purpose of the corporation is to engage in any lawful act or activity for which a corpora tion may be
organized under the General Corporation Law of California other than the banking business, the t rust company
business or the practice of a profession permitted to be incorporated by the California Corporations Code.
III.
(A) Classes of Stock. The corporation is authorized to issue two classes of stock to be designated, respectively,
"Common Stock" and "Preferred Stock." The total number of shares which the corporation is authorize d to issue
is fifteen million (15,000,000) shares of Common Stock and five million (5,000,000) shares of Preferred Stock.
(B) Powers, Preferences and Rights and Qualifications, Limitations and Restrictions of Preferre d Stock. The
Preferred Stock may be issued from time to time in one or more series. The Board of Dire ctors is hereby
authorized to fix or alter from time to time the designation, powers. preferences and rights of the shares of each
such series and the qualifications, limitations or restrictions thereof, including without limitation the dividend
rights, dividend rate, conversion rights, voting rights, rights and terms of redemption (including sinki ng fund
provisions), redemption price or prices, and the liquidation preferences of an), wholly unissued series of
Preferred Stock, and to establish from time to time the number of shares constituting a ny such series and the
designation thereof, or any of them (a "Preferred Stock Designation"); and to increase or decrea se the number of
shares of any series subsequent to the issuance of shares of that series, but not below the number of shares of
such series then outstanding. In case the number of shares of any series shall be decreased i n accordance with
the foregoing sentence, the shares constituting such decrease shall resume the status t hat they had prior to the
adoption of the resolution originally fixing the number of shares of such series.
IV.
(A) Liability of Directors. The liability of the directors of the corporation for monetary damages shall be
eliminated to the fullest extent permissible under California law.
(B) Indemnity of Directors, Officers and Agents. The corporation is authorized to indemnify the directors and
officers of the corporation to the fullest extent permissible under California law. The corporation is authorized
to provide indemnification of agents (as defined in Section 317 of the California Corporations Code) through
bylaw provisions, agreements with agents, vote of shareholders or disinterested directors or otherwise, in excess
of the indemnification otherwise permitted by Section 317 of the California Corporations Code, subject only to
the applicable limits set forth in Section 204 of the California Corporations Code with respect to actions for
breach of duty to the corporation and its shareholders.
(C) Reveal or Modification. Any repeal or modification of the foregoing provisions of this Article IV shall be
prospective and shall not adversely affect any right of indemnification or liability of a director, officer or agent
of the corporation relating to acts or omissions occurring prior to such repeal or modification.
V.
(A) Classes, Election and Term of Office of Directors. At the 1996 Annual Meeting of the Shareholders, the
directors shall be classified into two classes, as nearly equal in number as possible, with the term of office of the
first class to expire at the 1997 Annual Meeting of Shareholders and the term of office of the second class to
expire at the 1998 Annual Meeting of Shareholders. At each Annual Meeting of Shareholders following such
initial classification and election, directors elected to succeed those directors "hose terms e xpire shall be elected
for a term of office to expire at the second succeeding Annual Meeting of Shareholders after their election.
(B) Newly Created Directorships. Newly created directorships resulting from an), increase in the authorized
number of directors shall, unless the Board of Directors determines by resolution that any such newly created
directorship shall be filled by the shareholders, be filled only by the affirmative vote of a majority of the
directors then in office, even though less than a quorum of the Board of Directors. Any director elected in -
accordance with the preceding sentence shall hold office until such director's successor shall have been elected
and qualified.
VI.
No action shall be taken by the shareholders of the corporation except at an annual or special meeting of
shareholders called in accordance with the bylaws, and no action shall be taken by the shareholders by written
consent.
VII.
Advance notice of shareholder nominations for the election of directors and of business to be brought by
shareholders before any meeting of the shareholders of the corporation shall be given in the manner provided in
the bylaws of the corporation.
VIII.
The election of directors by the shareholders shall not be by cumulative voting. At ea ch election of directors,
each shareholder entitled to vote may vote all the shares held by that shareholder for each of the several
nominees for director up to the number of directors to be elected. The shareholder may not cast more votes for
an), single nominee than the number of shares held by that shareholder. This Article VIII shall become effective
only when the Corporation becomes a "listed corporation" within the meaning of the California Corporations
Code Section 301.5(d).
Section 1. Shareholder Vote Required for Business Combinations.
(a) Shareholder Votes. In addition to any affirmative vote required by law or by the articles of incorporation or
by any Preferred Stock Designation, and except as otherwise expressly provided in Section 2 of this Article IX
(i) any merger or consolidation of the corporation or any Subsidiary (as hereinafter defined) with
(A) any Interested Shareholder (as hereinafter defined) or (B) any other corporation (whether or not
itself an Interested Shareholder) which is, or after such merger or consolidation would be, an Affiliate
(as hereinafter defined) of an Interested Shareholder; or
(ii) any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction
or a series of transactions) to or with any Interested Shareholder or any Affiliate of any Interested
Shareholder of any assets of the corporation or any subsidiary having an aggregate Fair Market Value
(as hereinafter defined) equal to or greater than 15% of the corporation's assets as set forth on the
corporation's most recent audit consolidated financial statements; or
(iii) the issuance or transfer by the corporation or any Subsidiary (in one transaction or a series of
transactions) of any securities of the corporation or any Subsidiary to any Interested Shareholder or any
Affiliate of any Interested Shareholder in exchange for cash, securities or other property (or a
combination thereof) having an aggregate Fair Market Value equal to or greater than 15% of the
corporation's assets as set forth on the corporation's most recent audited consolidated financial
statements; or
(iv) [Intentionally Omitted]
(v) any reclassification of securities (including any reverse stock split), or recapitalization of the
corporation, or any merger or consolidation of the corporation with an), of its subsidiaries or any other
transaction (whether or not with or into or otherwise involving any Interested Shareholder) which has
the effect, directly or indirectly, of increasing the proportionate share of the outstanding shares of any
class of equity or convertible securities of the corporation or any subsidiary ,which is Beneficially
Owned (as hereinafter defined) by any Interested Shareholder or any Affiliate of any Interested
Shareholder;
shall require the affirmative vote of the holders of at least 66-2/3% of the voting power of all of the then
outstanding shares of capital stock of the corporation entitled to vote generally in the election of
directors (the "Voting Stock"), voting together as a single class. Such affirmative vote shall be required
notwithstanding any other provisions of the articles of incorporation or any provision of law or of any
agreement with any national securities exchange or otherwise which might otherwise permit a lesser
vote or no vote.
(b) Definition of Business Combination. The term "Business Combination" as used in this Article IX shall mean
any transaction which is referred to in any one or more of subparagraphs (i) through (v) of paragraph (a) of this
Section 1.
Section 2. Exceptions to Shareholder Vote Requirement.
The provisions of Section I of this Article IX shall not be applicable to any particular Business Combination,
and such Business Combination shall require only such affirmative vote as is required by law and any other
provision of the articles of incorporation and any Preferred Stock Designation, if, in the case of a Business
Combination that does not involve any cash or other consideration being received by the shareholders of the
corporation, solely in their respective capacities as shareholders of the corporation, the condition specified in
the following paragraph (a) is met or, in the case of any other Business Combination, the conditions specified in
either of the following paragraph (a) or paragraph (b) are met:
(A) The Business Combination shall have been approved by a majority of the Continuing Direc tors (as
hereinafter defined); provided, however, that this condition shall not be capable of satisfac tion unless there are
at least two Continuing Directors.
(B) All of the following conditions shall have been met: (i) The consideration to be received by holders of shares of a particular class (or series) of outstanding
capital stock of the corporation (including Common Stock and other than Excluded Preferred St ock (as
hereinafter defined)) shall be in cash or in the same form as the Interested Shareholder or any of its
Affiliates has previously paid for shares of such class (or series) of capital stock. If the Interested
Shareholder or any of its Affiliates have paid for shares of any class (or series) of capital stock with
varying forms of consideration, the form of consideration to be received per share by holders of shares
of such class (or series) of capital stock shall be either cash or the form used to acqui re the largest
number of shares of such class (or series) of capital stock previously acquired by the Interested
Shareholder.
(ii) The aggregate amount of (x) the cash and (y) the Fair Market Value, as of the da te (the
"Consummation Date") of the consummation of the Business Combination, of the consideration othe r
than cash to be received per share by holders of Common Stock in such Business Combinati on shall be
at least equal to the higher of the following (in each case appropriately adjusted in the event of any
stock dividend, stock split, combination of shares of similar event):
(A) (if applicable) the highest per share price (including any brokerage commissions.
transfer taxes and soliciting dealers' fees) paid by the Interested Shareholder or any of i ts
Affiliates for an), shares of Common Stock acquired by them within the two-year period
immediately prior to the date of the first public announcement of the proposal of the
Business Combination (the "Announcement Date") or in any transaction in which the
Interested Shareholder became an Interested Shareholder, whichever is higher, plus
interest compounded annually from the first date on which the Interested Shareholder
became an Interested Shareholder (the "Determination Date") through the
Consummation Date at the publicly announced reference rate of interest of Bank of
America, N.T. & S.A. (or such other major bank headquartered in the State of California
as may be selected by the Continuing Directors) from time to time in effect i n the City
of San Francisco less the aggregate amount of any cash dividends paid, and the Fair
Market Value of an), dividends paid in other than cash, on each share of Common Stock
from the Determination Date through the Consummation Date in an amount up to but
not exceeding the amount of interest so payable per share of Common Stock; and
(B) the Fair Market Value per share of Common Stock on the Announcement Date or
the Determination Date, whichever is higher.
(iii) The aggregate amount of (x) the cash and (y) the Fair Market Value, as of the Consummation Date,
of the consideration other than cash to be received per share by holders of shares of any class (or
series), other than Common Stock or Excluded Preferred Stock. of outstanding Voting Stock shall be at
least equal to the highest of the following (in each case appropriately adjusted in the event of any stock
dividend, stock split, combination of shares or similar event), it being intended that the requirements of
this paragraph (b)(iii) shall be required to be met with respect to every such class (or se ries) of
outstanding Voting Stock whether or not the Interested Shareholder or any of its Affiliates has
previously acquired any shares of a particular class (or series) of Voting Stock):
(A) (if applicable) the highest per share price (including any brokerage commissions,
transfer taxes and soliciting dealers' fees) paid by the Interested Shareholder or any of it s
Affiliates for any shares of such class (or series) of Voting Stock acquired by them
within the two-year period immediately prior to the Announcement Date or in any
transaction in which it became an Interested Shareholder, whichever is higher, plus
interest compounded annually from the Determination Date through the Consummation
Date at the publicly announced reference rate of interest of Bank of America, N.T. &
S.A. (or such other major bank headquartered in the State of California as may be
selected by the Continuing Directors) from time to time in effect in the Ci ty of San
Francisco less the aggregate amount of any cash dividends paid, and the Fair Market
Value of any dividends paid in other than cash, on each share of such class (or series) of
Voting Stock from the Determination Date through the Consummation Date in an
amount up to but not exceeding the amount of interest so payable per share of such cla ss
(or series) of Voting Stock;
(B) the Fair Market value per share of such class (or series) of Voting Stock on the
Announcement Date or on the Determination Date, whichever is higher; and
(C) the highest preferential amount per share, if any, to which the holders of shares of
such class (or series) of Voting Stock would be entitled in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the corporation.
(iv) After such Interested Shareholder has become an. Interested Shareholder and prior to the
consummation of such Business Combination: (x) except as approved by a majority of the Conti nuing
Directors, there shall have been no failure to declare and pay at the regular dat e therefore any full
quarterly dividends (whether or not cumulative) on any outstanding Preferred Stock; (y) there shall have
been (A) no reduction in the annual rate of dividends paid on the Common Stock (except as necessary to
reflect any subdivision of the Common Stock), except as approved by a majority of the Continui ng
Directors, and (B) an increase in such annual rate of dividends as necessary to reflect any
reclassification (including any reverse stock split), recapitalization, reorganization or any similar
transaction which has the effect of reducing the number of outstanding shares of the Common Stoc k,
unless the failure so to increase such annual rate is approved by a majority of the Cont inuing Directors;
and (z) neither such Interested Shareholder nor any of its Affiliates shall have become the beneficial
owner of any additional shares of Voting Stock except as part of the transaction which results i n such
Interested Shareholder becoming an Interested Shareholder; provided, however, that no approval by
Continuing Directors shall satisfy the requirements of this subparagraph (iv) unless at the time of such
approval there are at least two Continuing Directors.
(v) After such Interested Shareholder has become an Interested Shareholder, such Interested
Shareholder and any of its Affiliates shall not have received the benefit, directly or indirectly (except
proportionately, solely in such Interested Shareholder's or Affiliate's capacity as a shareholder of the
corporation), of any loans, advances, guarantees, pledges or other financial assistance or any t ax credits
or other tax advantages provided by the corporation, whether in anticipation of or in connect ion with
such Business Combination or otherwise.
(vi) A proxy or information statement describing the proposed Business Combination and complyi ng
with the requirements of the Securities Exchange Act of 1934, as amended (The "1934 Act") a nd the
rules and regulations thereunder (or any subsequent provisions replacing such Act, rules or regulati ons)
shall be mailed to all shareholders of the corporation at least 30 days prior to the consummation of such
Business Combination (whether or not such proxy or information statement is required to be mail ed
pursuant to such Act or subsequent provisions).
(vi) Such Interested Shareholder shall have supplied the corporation with such information as sha ll
have been requested pursuant to Section 5 of this Article IX within the time period set forth therein.
Definitions.
For the purposes of this Article IX
(a) A "person" means any individual, limited partnership, general partnership, corporation or other firm or
entity.
(b) "Interested Shareholder" means any person (other than the corporation or any Subsidiary.)w ho or which: (i) is the Beneficial Owner (as hereinafter defined), directly or indirectly, of 15%
or more of the voting power of the then outstanding Voting Stock; or
(ii) is an Affiliate of the corporation and at any time within the two-year period
immediately prior to the date in question was the Beneficial Owner, directl y or indirectly, of 15% or
more of the voting pow er of the then outstanding Voting Stock, or
(iii) is an assignee of or has otherwise succeeded to any shares of Voting Stock
which were at any time within the two-year period immediately prior to the da te in question
Beneficially Owned by an Interested Shareholder. if such assignment or succession shall ha ve occurred
in the course of a transaction or series of transactions not involving a public offering wi thin the
meaning of the 1933 Act.
(c) A person shall be a "Beneficial Owner" of or shall "Beneficially Own” any, Voting Stock: (i) which such person or any of its Affiliates or Associates (as hereinafter defined) beneficially
owns, directly or indirectly, within the meaning of Rule 13d-3 under the 1934 Act as in effect on the
adoption date of the articles of incorporation; or
(ii) which such person or any of its Affiliates or Associates has (A) the right to acquire (whether
such right is exercisable immediately or only after the passage of time), pursuant to any agreement,
arrangement, or understanding or upon the exercise of conversion rights, exchange rights, warrants or
options. or otherwise, or (B) the right to vote pursuant to any agreement, arrangement or understanding
(but shall not be deemed to be the beneficial owner of an), shares of Voting Stock solely by reason of a
revocable proxy granted for a particular meeting of shareholders, pursuant to a public solicitation of
proxies for such meeting, and with respect to which shares neither such person nor any such Affiliate or
Associate is otherwise deemed the beneficial owner); or
(iii) which is beneficially owned, directly or indirectly, within the meaning of Rule 13d-3 under
the 1934 Act as in effect on the adoption date of the articles of incorporation, by any other person in
which such person or any, of its Affiliates or Associates has any agreement, arrangement or
understanding for [lie purpose of acquiring, holding. voting (other than solely by reason of irrevocable
proxy as described in subparagraph (ii) of this paragraph (c)) or disposing of any shares of Voting Stock:
provided, however, that in case of any employee stock ownership or similar plan of the corporation or of
any Subsidiary in which the beneficiaries thereof possess the right to vote an) shares of Voting Stock
held by such plan. no such plan nor any trustee with respect thereto (nor any Affiliate of such trustee),
solely by reason of such capacity of such trustee. shall be deemed, for any purposes hereof, to
Beneficially Own any shares of Voting Stock held under an), such plan.
(d) For the purposes of determining whether a person is an Interested Shareholder pursuant to paragraph (b) of
this Section 3. the number of shares of Voting Stock deemed to be outstanding shall include shares deemed
Beneficially Owned through application of paragraph (c) of this Section 3 but shall not include any, other
unissued shares of Voting Stock which may be issuable pursuant to any agreement. arrangement or
understanding, or upon exercise of conversion rights, warrants or options, or otherwise.
(e) "Affiliate" or "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 under the
1934 Act as in effect on the adoption date of the articles of incorporation.
(f) "Subsidiary" means any corporation of which a majority of the outstanding shares of any class of e quity
security is owned, directly or indirectly, by the corporation; provided, however that for the purposes of the
definition of Interested Shareholder set forth in paragraph (b) of this Section 3, the term "Subsidia ry" shall mean
only a corporation of which a majority of the outstanding shares of each class of equity sec urity is owned,
directly or indirectly, by the corporation.
(g) "Continuing Director" means a member of the Board of Directors of the corporation who is not an Interested
Shareholder or affiliated with an Interested Shareholder.
(h) "Fair Market Value" means: (i) in the case of stock, the highest closing sale pric e during the 30-day period
immediately preceding the date in question of a share of such stock on the Composite T ape for New York Stock
Exchange-Listed Stocks, or, if such stock is not quoted on the Composite Tape, on the New York Stock
Exchange, or, if such stock is not listed op such Exchange, on the principal United State s securities exchange
registered under the 1934 Act on which such stock is listed. or, if such stock is not liste d on any such exchange,
the highest closing sale price quotation with respect to a share of such stock during t he 30-day period preceding
the date in question on the National Association of Securities Dealers, Inc. Automated Quotations System or
any system then in use. or if no such quotations arc available, the fair market value on the date in question of a
share of such stock as determined by the Board of Directors in accordance with Section 4 of this Article IX; and
(ii) in the case of property other than cash or stock, the fair market value of such property on the date in
question as determined by the Board of Directors in accordance with Section 4 of this Article IX
(i) In the event of any Business Combination in which the corporation survives, the phrase "consideration other
than cash to be received" as used in paragraphs (b)(ii) and (b)(iii) of Section 2 of this Article IX shall include
the shares of Common Stock and/or the shares of any other class (or series) of outstanding Voting Stock
retained by the holders of such shares.
(j) "Whole Board" means the total number of directors which this corporation would have if there were no
vacancies.
(k) "Excluded Preferred Stock" means any series of Preferred Stock with respect to which the Prefe rred Stock
Designation creating such series expressly provides that the provisions of this Article IX shall not apply.
Section 4. Board Enforcement.
(a) Compliance. A majority of the Whole Board but only if a majority of the Whole Board shall then consist of
Continuing Directors or, if a majority of the Whole Board shall not then consist of Continui ng Directors, a
majority of the then Continuing Directors, shall have the power and duty, to determine , on the basis of
information known to them after reasonable inquiry, all facts necessary to determine c ompliance with this
Article IX including, without limitation. (i) whether a person is an Interested Shareholder, (i i) the number of
shares of Voting Stock beneficially owned by any person, (iii) whether a person is an Affiliate or Associate of
another, (iv) whether the applicable conditions set forth in paragraph (b) of Section 2 have be en met with
respect to any Business Combination, (v) the Fair Market Value of stock or other property in a ccordance with
paragraph (h) of Section 3, and (vi) whether the assets which are the subject of any Business Combination
referred to in paragraph (a)(ii) of Section I have or the consideration to be received for the issuance or transfer
of securities by the corporation or any Subsidiary in any Business Combination referred to in pa ragraph (a)(iii)
of Section I has, an aggregate Fair Market Value equal to or greater than 15% of the c orporation's assets as set
forth on the corporation's most recent audited consolidated financial statements.
(b) Demand as to Interested Shareholder. A majority of the Whole Board shall have the right to demand. but
only if a majority of the Whole Board shall then consist of Continuing Directors. or, if a majority of the Whole
Board shall not then consist of Continuing Directors, a majority of the then Continuing Direc tors shall have the
right to demand, that any person who it is reasonably believed is an Interested Shareholde r (or holds of record
shares of Voting Stock Beneficially Owned by any Interested Shareholder) supply this corporation with
complete information as to (i) the record owner(s) of all shares Beneficially Owned by suc h person who it is
reasonably believed is an Interested Shareholder. (ii) the number of, and class or series of, sha res Beneficially
Owned by such person who it is reasonably believed is an Interested Shareholder and held of rec ord by each
such record owner and the number(s) of the stock certificate(s) evidencing such shares, and (iii) a ny other
factual matter relating to the applicability or effect of this Article IX as may be reasonably requested of such
person, and such person shall furnish such information within 10 days after receipt of such demand.
(c) Fiduciary Obligation of Interested Shareholder. Nothing contained in this Article IX shall be construed to
relieve any Interested Shareholder from any fiduciary obligation imposed by law. X.
(A) The corporation reserves the right to repeal, alter, amend or rescind any provision contained in the articles
of incorporation, in the manner now or hereafter prescribed by statute, except as provided in para graph (B) of
this Article X and all rights conferred on shareholders herein are granted subject to this reservation.
(B) Notwithstanding any other provision of the articles of incorporation or any provision of law which might
otherwise permit a lesser vote or no vote, but in addition to any affirmative vote of the holders of any particular
class or series of the Voting Stock required by law, the articles of incorporation or any Preferred Stock
Designation, the affirmative vote of the holders of at least 66-2/3% of the voting power of a ll of the then -
outstanding shares of the Voting Stock, voting together as a single class, shall be required to alter, amend or
repeal Article V, Article VI, Article VII, Article VIII, Article IX or this Article X.
* * *
3. The foregoing amendment and restatement of articles of incorporation has been duly approved by the
Board of Directors.
4. The foregoing amendment and restatement of articles of incorporation has been duly approved by the
required vote of shareholders in accordance with Sections 710, 902, and 903 of the Corporations Code. As of
the time shareholder approval for these restated articles was obtained, the total num ber of outstanding Common
shares of the corporation was 5,_,_. No other shares were outstanding. The number of shares of Common voti ng
in favor of the amendment equaled or exceeded the vote required. The percentage vote re quired was sixty-six
and two-thirds percent (66 2/3%) of the Common shares.
5.On _____, 1995, the record date of the corporation's most recent annual meeting the corporation had at least
800 holders of its equity securities and the corporation's common shares are designated as qua lified for trading
as a national market security on the National Association of Securities Dealers Automatic Quotation System .
We further declare under penalty of perjury under the laws of the State of California tha t the matters set
forth in this certificate are true and correct of our own knowledge.
Date: June -, 1996 Richard A. Plante, President
Thomas L. Green, Secretary
Encad, Inc. 6/18196
