Articles of Incorporation - 3dfx Interactive Inc.
RESTATED ARTICLES OF INCORPORATION
OF
3DFX INTERACTIVE, INC.
a California Corporation
The undersigned, Gary Martin and John B. Montgomery, hereby certify
that:
1. They are the duly elected and acting Vice President and Assistant
Secretary, respectively, of 3Dfx Interactive, Inc., a California corporation
(the "Corporation").
2. The Articles of Incorporation of the Corporation are amended and
restated in their entirety as in Appendix I attached hereto.
3. The amendments and restatements herein set forth have been duly
approved by the Board of Directors of the Corporation.
4. The amendments herein set forth have been duly approved by the
required vote of the shareholders of the Corporation in accordance with Sections
902 and 903 of the California Corporations Code. The total number of shares of
Common Stock entitled to vote is 3,753,360, the total number of shares of Series
A Preferred Stock entitled to vote is 5,501,979 shares, the total number of
shares of Series B Preferred Stock entitled to vote is 5,300,000 shares and the
total number of shares of Series C Preferred Stock entitled to vote is
2,514,085. The number of shares voting in favor of the amendments equalled or
exceeded the vote required. The percentage vote required was more than 50% of
the outstanding shares of Common Stock, more than 50% of the outstanding shares
of Series A Preferred Stock, Series B Preferred Stock and Series C Preferred
Stock voting together as a single class, more than 50% of the Common Stock,
Series A Preferred Stock and Series B Preferred Stock voting together as a
single class, and more than 50% of the outstanding shares each of the Series A
Preferred Stock, Series B Preferred Stock and Series C Preferred Stock, each
voting as a separate class.
We further declare under penalty of perjury under the laws of the State
of California that the matters set forth in this certificate are true and
correct of our own knowledge.
Executed on November __ 1996.
________________________________
Gary Martin, Vice President
_______________________________________
John B. Montgomery, Assistant Secretary
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Appendix I
RESTATED ARTICLES OF INCORPORATION
OF
3DFX INTERACTIVE, INC.
a California Corporation
ARTICLE I
NAME
The name of this corporation is 3Dfx Interactive, Inc. (the
"Corporation").
ARTICLE II
PURPOSES
The purpose of this Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of California other than the banking business, the trust company business or
the practice of a profession permitted to be incorporated by the California
Corporations Code.
ARTICLE III
CAPITAL STOCK
The total number of shares of all classes of stock which the
Corporation is authorized to issue is 39,666,666, consisting of 25,033,333
shares of Common Stock, no par value, and 14,633,333 shares of Preferred Stock,
no par value. The Preferred Stock consists of three series, of which 5,600,000
shares have been designated as Series A Preferred Stock (the "Series A Preferred
Stock"), 5,700,000 shares have been designated as Series B Preferred Stock (the
"Series B Preferred Stock") and of which 3,333,333 have been designated as
Series C Preferred Stock (the "Series C Preferred Stock").
The relative rights, preferences, privileges and restrictions granted
to or imposed on the respective series or classes of capital stock or the
holders thereof are as follows:
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Section 1. Dividends.
1.1 Dividend Rights. The holders of the Preferred Stock shall
be entitled to receive, when and as declared by the Board of Directors, out of
funds legally available therefor, dividends at an annual rate of $0.10 per share
of Series A Preferred Stock (the "Series A Dividend Rate"), $0.22 per share of
Series B Preferred Stock (the "Series B Dividend Rate") and $0.375 per share of
Series C Preferred Stock (the "Series C Dividend Rate") payable in preference
and priority to any payment of any dividend on Common Stock of the Corporation.
Such dividends shall not be cumulative and no right to such dividends shall
accrue to holders of Series A Preferred Stock, Series B Preferred Stock and
Series C Preferred Stock unless declared by the Board of Directors.
Without limiting the foregoing, no distribution shall be made
in respect of the Common Stock unless the holders of the Series A Preferred
Stock, Series B Preferred Stock and Series C Preferred Stock shall receive a
proportionate share of any such distribution as though the holders of the Series
A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock were
the holders of the number of shares of Common Stock of the Corporation into
which such shares of Series A Preferred Stock, Series B Preferred Stock and
Series C Preferred Stock are then convertible.
1.2 Definition of Distribution. For purposes of this Section
1, unless the context otherwise requires, a "distribution" shall mean the
transfer of cash or other property without consideration whether by way of
dividend or otherwise or the purchase or redemption of shares of the Corporation
(other than repurchases of Common Stock issued to or held by employees,
officers, directors or consultants of the Corporation or its subsidiaries upon
termination of their employment or services pursuant to agreements providing for
the right of said repurchase) for cash or property.
1.3 Certain Repurchases not Distributions. As authorized by
Section 402.5(c) of the California Corporations Code, the provisions of Sections
502 and 503 of the California Corporations Code shall not apply with respect to
repurchases by the Corporation of shares of Common Stock issued to or held by
employees, officers, directors or consultants of the Corporation or its
subsidiaries upon termination of their employment or services pursuant to
agreements providing for the right of said repurchase.
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Section 2. Liquidation Preference.
(a) In the event of any liquidation, dissolution or
winding up of the Corporation, either voluntary or involuntary, distributions to
the shareholders of the Corporation shall be made in the following manner:
(i) Each series of Preferred Stock shall be
entitled to receive, prior and in preference to any distribution of any of the
assets of the Corporation to the holders of the Common Stock by reason of their
ownership thereof, an amount per share as may be fixed for such series (the
"Preferential Amount"). The Preferential Amount shall be $1.00 for each share of
Series A Preferred Stock, $2.20 for each share of Series B Preferred Stock and
$3.75 for each share of Series C Preferred Stock, adjusted for any stock split,
combination, consolidation, or stock distributions or stock dividends with
respect to such shares, plus an amount equal to all declared but unpaid
dividends on the Series A Preferred Stock, Series B Preferred Stock and Series C
Preferred Stock as provided in Section 1 above. If the assets and funds thus
distributed among the holders of the Series A Preferred Stock, Series B
Preferred Stock and Series C Preferred Stock shall be insufficient to permit the
payment to such holders of the full aforesaid Preferential Amount, then the
entire assets and funds of the Corporation legally available for distribution
shall be distributed among the holders of the Series A Preferred Stock, Series B
Preferred Stock and Series C Preferred Stock in proportion to the respective
Preferential Amounts which each such holder is entitled to receive pursuant to
this Section 2(a)(i).
(ii) After payment has been made to the
holders of the Series A Preferred Stock, Series B Preferred Stock and Series C
Preferred Stock of the full amounts to which they shall be entitled as set forth
in Section 2(a)(i) above, then the holders of the Common Stock shall be entitled
to receive an amount per share equal to (as such amount shall be adjusted to
reflect subdivisions and combinations of shares and stock dividends), $0.10 with
respect to each outstanding share of Common Stock, plus an amount equal to all
declared and unpaid dividends with respect to such share. If the assets and
funds legally available for distribution among the holders of Common Stock shall
be insufficient to permit the payment to such holders of the full preferential
amount, then such assets and funds shall be distributed ratably among the
holders of Common Stock in proportion to the total preferential amount which
each such holder is entitled to receive pursuant to this Section 2(a)(ii).
(iii) Any assets remaining after the
distributions pursuant to Sections 2(a)(i) and (ii) shall be distributed on a
pro rata basis to the holders of Common Stock and Preferred Stock based on the
number of shares (assuming conversion of each holder's shares of Preferred Stock
into the number of shares of Common Stock into which such holder's Preferred
Stock is then convertible, as
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adjusted from time to time pursuant to Section 4 hereof) then held by each
holder of Common Stock and Preferred Stock.
(b) (i) If the Corporation should sell all
or substantially all of its assets, or should consolidate or merge with or into
any other corporation or corporations (other than wholly-owned subsidiaries of
the Corporation), or should engage in a transaction or series of related
transactions after the Series A Original Issue Date, as hereinafter defined, in
which more than 50% of the voting power of the Corporation is disposed, then
such sale, merger or other transaction shall be treated as a liquidation subject
to this Section 2.
(ii) In any of such events, if the
consideration received by the Corporation is other than cash or indebtedness,
its value will be deemed to be its fair market value. In the case of securities,
fair market value shall be determined as follows:
(A) Securities not subject to
investment letter or other similar restrictions on free marketability:
(I) If traded on a
securities exchange, or over-the-counter as a NASDAQ National Market System
security, the value shall be deemed to be the average of the closing prices of
the securities on such exchange or NASDAQ National Market System over the 30-day
period ending three (3) days prior to the closing;
(II) If actively traded
over-the-counter (but not on the National Market System), the value shall be
deemed to be the average of the closing bid prices over the 30-day period ending
three (3) days prior to the closing; and
(III) If there is no active
public market, the value shall be the fair market value thereof, as determined
by the unanimous consent or vote of the Board of Directors and such
determination shall be binding upon the holders of the Preferred Stock; and
(B) The method of valuation of
securities subject to investment letter or other restrictions on free
marketability shall be to make an appropriate discount from the market value
determined as above in subparagraphs (A) (I), (II) or (III) to reflect the
approximate fair market value thereof, as determined by the unanimous consent or
vote of the Board of Directors and such determination shall be binding upon the
shareholders.
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(c) The liquidation preference of holders of
Preferred Stock provided herein shall not be deemed to be impaired by
distributions made by the Corporation in connection with the repurchase of
Reserved Shares, as hereinafter defined, from former employees or consultants
upon termination of their employment or services pursuant to stock restriction
agreements between the Corporation and such persons approved by the
Corporation's Board of Directors, and such holders shall be deemed to have
consented to such repurchases.
Section 3. Voting Rights.
(a) General. Except with respect to the election of
directors of the Corporation as set forth below, the holder of each share of
Common Stock issued and outstanding shall have one vote and each holder of
Preferred Stock issued and outstanding shall have the number of votes equal to
the number of shares of Common Stock into which such holder's shares of
Preferred Stock are then convertible, as adjusted from time to time pursuant to
Section 4 hereof, at the record date for determination of the shareholders
entitled to vote on such matters or, if no record date is established, at the
date such vote is taken or any written consent of shareholders is first
solicited. The holders of Preferred Stock shall be entitled to receive notice,
together with the holders of Common Stock, of all shareholder meetings even if
only the holders of Common Stock are entitled to vote on the issues addressed at
such meeting.
(b) Board of Directors. The authorized number of
directors shall be set forth in the Bylaws of the Corporation and may be
increased or decreased by an amendment to such Bylaws in accordance with their
provisions. As long as there are at least 2,000,000 shares of Preferred Stock
issued and outstanding, of the authorized number of members of the Corporation's
Board of Directors:
(i) the holders of Series A Preferred Stock
voting separately as a class shall be entitled to elect two (2) directors (and
to fill any vacancies with respect thereto), with each holder of Series A
Preferred Stock entitled to the number of votes determined as provided in
Section 3(a) above;
(ii) the holders of Series B Preferred Stock
voting separately as a class shall be entitled to elect one (1) director (and to
fill any vacancies with respect thereto), with each holder of Series B Preferred
Stock entitled to the number of votes determined as provided in Section 3(a)
above;
(iii) the holders of Series C Preferred
Stock voting separately as a class shall be entitled to elect one (1) director
(and to fill any vacancies with respect thereto), with each holder of Series C
Preferred Stock entitled to the number of votes determined as provided in
Section 3(a) above; and
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(iv) the holders of Common Stock voting
separately as a class shall be entitled to elect three (3) directors to be
elected (and to fill any vacancies with respect thereto).
Subject to Section 302 and Section 303 of the California Corporations Code, any
director who shall have been elected by a specified group of shareholders may be
removed during the aforesaid term of office, either for or without cause, by and
only by, the affirmative vote of the holders of a majority of the shares of such
specified group, given at a special meeting of such shareholders duly called or
by an action by written consent for that purpose.
Section 4. Conversion. The holders of Preferred Stock shall
have conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert.
(i) Optional Conversion. Each share of
Preferred Stock shall be convertible at the option of the holder thereof at any
time after the date of issuance of such share, at the office of the Corporation
or any transfer agent for Preferred Stock, into such number of fully paid and
nonassessable shares of Common Stock as is determined in the case of the Series
A Preferred Stock, by dividing $1.00 by the Series A Conversion Price at the
time in effect, as is determined in the case of the Series B Preferred Stock, by
dividing $2.20 by the Series B Conversion Price at the time in effect and as is
determined in the case of the Series C Preferred Stock, by dividing $3.75 by the
Series C Conversion Price at the time in effect. As of the effective date of
these Restated Articles of Incorporation, the Series A Conversion Price shall be
$1.00, the Series B Conversion Price shall be $2.20 and the Series C Conversion
Price shall be $3.75. Such initial Series A Conversion Price, Series B
Conversion Price and Series C Conversion Price shall be subject to adjustment as
set forth below.
(ii) Series A Preferred Stock. Each share of
Series A Preferred Stock shall automatically be converted into shares of Common
Stock at the Series A Conversion Price then in effect upon the earlier of (1)
the affirmative vote of holders of 66 2/3 percent of the Series A Preferred, (2)
the date on which fewer than 50,000 shares of Series A Preferred Stock
(appropriately adjusted for any stock splits, combinations, consolidations, or
stock distributions or dividends with respect to such shares) remain outstanding
or (3) the closing of an underwritten public offering pursuant to an effective
registration statement under the Securities Act of 1933, as amended, covering
the offer and sale of Common Stock for the account of the Corporation to the
public at a price per share (before deduction of underwriter discounts and
commissions and offering expenses) of not less than $6.60 per share (as adjusted
for any stock
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splits, combinations, consolidations, or stock distributions or dividends with
respect to such shares) and an aggregate offering price to the public of not
less than $15,000,000.
(iii) Series B Preferred Stock. Each share
of Series B Preferred Stock shall automatically be converted into shares of
Common Stock at the Series B Conversion Price then in effect upon the earlier of
(1) the affirmative vote of holders of 66 2/3 percent of the Series B Preferred
(2) the date on which fewer than 50,000 shares of Series B Preferred Stock
(appropriately adjusted for any stock splits, combinations, consolidations, or
stock distributions or dividends with respect to such shares) remain outstanding
or (3) the closing of an underwritten public offering pursuant to an effective
registration statement under the Securities Act of 1933, as amended, covering
the offer and sale of Common Stock for the account of the Corporation to the
public at a price per share (before deduction of underwriter discounts and
commissions and offering expenses) of not less than $6.60 per share
(appropriately adjusted for any stock splits, combinations, consolidations, or
stock distributions or dividends with respect to such shares) and an aggregate
offering price to the public of not less than $15,000,000.
(iv) Series C Preferred Stock. Each share of
Series C Preferred Stock shall automatically be converted into shares of Common
Stock at the Series C Conversion Price then in effect upon the earlier of (1)
the affirmative vote of holders of 66 2/3 percent of the Series C Preferred (2)
the date on which fewer than 50,000 shares of Series C Preferred Stock
(appropriately adjusted for any stock splits, combinations, consolidations, or
stock distributions or dividends with respect to such shares) remain outstanding
or (3) the closing of an underwritten public offering pursuant to an effective
registration statement under the Securities Act of 1933, as amended, covering
the offer and sale of Common Stock for the account of the Corporation to the
public at a price per share (before deduction of underwriter discounts and
commissions and offering expenses) of not less than $6.60 per share
(appropriately adjusted for any stock splits, combinations, consolidations, or
stock distributions or dividends with respect to such shares) and an aggregate
offering price to the public of not less than $15,000,000.
(v) In the event of the automatic conversion
of the Series A, Series B or Series C Preferred Stock as set forth in Sections 4
(a)(ii)(3), 4(a)(iii)(3) and 4(a)(iv)(3) above, the person(s) entitled to
receive the Common Stock issuable upon such conversion shall not be deemed to
have converted such shares until immediately prior to the closing of such sale
of securities causing the conversion, at which time the Preferred Stock shall be
converted automatically without any further action by the holders of such shares
and whether or not the certificates representing such shares are surrendered to
the Corporation or its transfer agent; provided, however, that the
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Corporation shall not be obligated to issue certificates evidencing the shares
of Common Stock issuable upon such conversion unless certificates evidencing
such shares of the Preferred Stock being converted are either delivered to the
Corporation or its transfer agent, as hereinafter provided, or the holder
notifies the Corporation or its transfer agent, as hereinafter provided, that
such certificates have been lost, stolen or destroyed and executes an agreement
satisfactory to the Corporation to indemnify the Corporation from any loss
incurred by it in connection therewith. Upon the automatic conversion of the
Preferred Stock, the holders of the Preferred Stock shall surrender the
certificates representing such shares at the office of the Corporation or of any
transfer agent for the Preferred Stock. Thereupon, there shall be issued and
delivered to such holder, promptly at such office and in his name as shown on
such surrendered certificate or certificates, a certificate or certificates for
the number of shares of Common Stock into which the shares of the Preferred
Stock surrendered were convertible on the date on which such automatic
conversion occurred.
(vi) Upon conversion of the Preferred Stock,
the Common Stock so issued shall be duly and validly issued, fully paid and
nonassessable shares of the Corporation.
(b) Mechanics of Conversion. No fractional shares of
Common Stock shall be issued upon conversion of Preferred Stock. In lieu of any
fractional shares to which the holder would otherwise be entitled, the
Corporation shall pay cash equal to such fraction multiplied by the
then-effective conversion price for a particular series of Preferred Stock (a
"Conversion Price"). Except as provided in Sections 4(a)(ii), 4 (a)(iii) and
4(a)(iv), before any holder of Preferred Stock shall be entitled to convert the
same into full shares of Common Stock, he shall surrender the certificate or
certificates therefor, duly endorsed, at the office of the Corporation or of any
transfer agent for the Preferred Stock, and shall give written notice by mail,
postage prepaid, to the Corporation at its principal corporate office, of the
election to convert the same. The Corporation shall, as soon as practicable
thereafter, issue and deliver at such office to such holder of Preferred Stock,
a certificate or certificates for the number of shares of Common Stock to which
he shall be entitled as aforesaid and a check payable to the holder in the
amount of any cash payable in lieu of fractional shares of Common Stock (after
aggregating all shares of Common Stock issuable to such holder of Preferred
Stock upon conversion of the number of shares of Preferred Stock at the time
being converted). In addition, if less than all of the shares represented by
such certificates are surrendered for conversion pursuant to Section 4(a)(i),
the Corporation shall issue and deliver to such holder a new certificate for the
balance of the shares of Preferred Stock not so converted. Except as provided in
Sections 4(a)(ii), 4(a)(iii) and 4(a)(iv), such conversion shall be deemed to
have been made immediately prior to the close of business on the date of the
surrender of the shares of such Preferred Stock to be converted, and the person
or persons entitled to receive the shares of Common
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Stock issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such shares of Common Stock as of such date. If the
conversion is in connection with an underwritten offer of securities registered
pursuant to the Securities Act of 1933, the conversion may, at the option of any
holder tendering such Preferred Stock for conversion, be conditioned upon the
closing with the underwriter of the sale of securities pursuant to such
offering, in which event the person(s) entitled to receive Common Stock issuable
upon such conversion of such Preferred Stock shall not be deemed to have
converted such Preferred Stock until immediately prior to the closing of such
sale of securities.
(c) Adjustment to Conversion Price for Diluting
Issues.
(i) Special Definitions. For purposes of
this Section 4(c), the following definitions shall apply:
(1) "Convertible Securities" shall
mean any evidences of indebtedness, shares (other than Common Stock, Series A
Preferred Stock, Series B Preferred Stock or Series C Preferred Stock) or other
securities convertible into or exchangeable for Common Stock.
(2) "Options" shall mean rights,
options or warrants to subscribe for, purchase or otherwise acquire either
Common Stock or Convertible Securities, except for those issued to officers or
employees of, or consultants to, the Corporation as provided in Section
4(c)(i)(6)(B).
(3) "Series A Original Issue Date"
shall mean March 13, 1995.
(4) "Dilutive Financing" means any
issuance or deemed issuance of Additional Shares of Common Stock after the
Series A Original Issue Date for a consideration per share less than the
applicable Conversion Price in effect on the date of and immediately prior to
such sale.
(5) "New Securities" means shares
of Common Stock, Preferred Stock or any other class of capital stock of the
Company, whether or not now authorized, securities of any type that are
convertible into shares of such capital stock, and options, warrants or rights
to acquire shares of such capital stock. Notwithstanding the foregoing, the term
"New Securities" will not include: (A) securities issued in connection with bona
fide equipment lease or working capital debt financings with lending
institutions; (B) securities offered to the public pursuant to a registration
statement filed under the Securities Act; (C) securities issued pursuant to the
acquisition of another corporation by the Company by merger, purchase of
substantially
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all of the assets, or other reorganization whereby the Company owns not less
than fifty-one percent (51%) of the voting power of such corporation; (D)
securities issued upon exercise or conversion of options, warrants and other
convertible securities outstanding on the date of filing of these Amended and
Restated Articles of Incorporation, excluding Reserved Shares; and (E) shares of
Common Stock or Preferred Stock issued in connection with any stock split, stock
dividend or recapitalization by the Company in which all classes and series of
capital stock are adjusted equally.
(6) "Additional Shares of Common
Stock" shall mean all shares of Common Stock issued (or, pursuant to Section
4(c)(iii), deemed to be issued) by the Corporation after the Series A Original
Issue Date including New Securities, other than shares of Common Stock issued or
issuable:
(A) upon conversion of
shares of Preferred Stock;
(B) to officers or
employees of, or consultants to, the Corporation pursuant to a stock grant,
stock option plan, stock purchase plan or other stock incentive agreement
(collectively, the "Plans"), (collectively, the "Reserved Shares") up to an
aggregate of 3,500,000 shares;
(C) as a dividend or
distribution on Preferred Stock;
(D) as securities excluded
from the definition of New Securities in Section 4(c)(i)(5);
(E) following a vote of the
holders of 66 2/3% of the Preferred Stock voting on the basis of the number of
shares of Common Stock into which each holder's shares of Preferred Stock are
then convertible, as adjusted from time to time pursuant to Section 4 hereof,
that designated shares of Common Stock issued or deemed to be issued shall not
constitute Additional Shares of Common Stock; and
(F) in connection with any
transaction for which adjustment is made pursuant to Section 4(d) hereof.
(ii) No Adjustment of Conversion Price. No
adjustment in the Conversion Price of a share of
Preferred Stock shall be made in respect of the
issuance of Additional Shares of Common Stock unless
the consideration per share for an Additional Share
of Common Stock issued or deemed to be issued by
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the Corporation is less than the Conversion Price in effect on the date of, and
immediately prior to, such issuance, for such share of Preferred Stock.
(iii) Deemed Issue of Additional Shares of
Common Stock.
(1) Options and Convertible
Securities. In the event the Corporation at any time or from time to time after
the Series A Original Issue Date shall issue any Options or Convertible
Securities or shall fix a record date for the determination of holders of any
class of securities entitled to receive any such Options or Convertible
Securities, then the maximum number of shares (as set forth in the instrument
relating thereto without regard to any provisions contained therein for a
subsequent adjustment of such number) of Common Stock issuable upon the exercise
of such Options or, in the case of Convertible Securities and Options therefor,
the conversion or exchange of such Convertible Securities, shall be deemed to be
Additional Shares of Common Stock issued as of the time of such issue or, in
case such a record date shall have been fixed, as of the close of business on
such record date; provided, however, that Additional Shares of Common Stock
shall not be deemed to have been issued unless the consideration per share
(determined pursuant to Section 4(c)(vi) hereof) of such Additional Shares of
Common Stock would be less than the applicable Conversion Price in effect on the
date of and immediately prior to such issue, or such record date, as the case
may be; and, provided, further, that in any such case in which Additional Shares
of Common Stock are deemed to be issued:
(A) no further adjustment
in the Conversion Price shall be made upon the subsequent issue of Convertible
Securities or shares of Common Stock upon the exercise of such Options or
conversion or exchange of such Convertible Securities;
(B) if such Options or
Convertible Securities by their terms provide, with the passage of time or
otherwise, for any increase or decrease in the consideration payable to the
Corporation, or increase or decrease in the number of shares of Common Stock
issuable, upon the exercise, conversion or exchange thereof, the Conversion
Price computed upon the original issue thereof (or upon the occurrence of a
record date with respect thereto), and any subsequent adjustments based thereon,
shall, upon any such increase or decrease becoming effective, be recomputed to
reflect such increase or decrease, insofar as it affects such Conversion Price,
but no further change in the Conversion Price shall be made upon the exercise,
conversion or exchange of such Options or Convertible Securities, and no such
adjustment of the Conversion Price shall affect Common Stock previously issued
upon conversion of the Preferred Stock;
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(C) if any such Options or
Convertible Securities shall expire or be cancelled without having been
exercised or converted, the Conversion Price as adjusted upon the original
issuance thereof (or upon the occurrence of a record date with respect thereto)
shall be readjusted as if
(I) in the case of
Convertible Securities or Options for Common Stock, the only Additional Shares
of Common Stock so issued were shares of Common Stock, if any, actually issued
or sold on the exercise of such Options or the conversion or exchange of such
Convertible Securities, and such Additional Shares of Common Stock, if any, were
issued or sold for the consideration actually received by the Corporation upon
such exercise, plus the consideration, if any, actually received by the
Corporation for the granting of all such Options, whether or not exercised, plus
the consideration received for issuing or selling the Convertible Securities
actually converted plus the consideration, if any, actually received by the
Corporation (other than by cancellation of liabilities or obligations evidenced
by such Convertible Securities) on the conversion or exchange of such
Convertible Securities; and
(II) in the case
of Options for Convertible Securities, only the Convertible Securities, if any,
actually issued upon the exercise thereof were issued at the time of issue of
such Options, and the consideration received by the Corporation for the
Additional Shares of Common Stock deemed to have been then issued was the
consideration actually received by the Corporation for the issue of all such
Options, whether or not exercised, plus the consideration deemed to have been
received by the Corporation upon the issue of the Convertible Securities with
respect to which such Options were actually exercised;
(D) no readjustment
pursuant to clauses (B) or (C) above shall have the effect of increasing the
Conversion Price to an amount which exceeds the lower of (i) the Conversion
Price on the original adjustment date (immediately prior to the adjustment), or
(ii) the Conversion Price that would have resulted from any actual issuance of
Additional Shares of Common Stock between the original adjustment date and such
readjustment date.
(iv) Adjustment of Conversion Price Upon
Issuance of Additional Shares of Common Stock. Subject to Section 4(c)(ii), the
Conversion Price of each series of Preferred Stock shall be subject to
adjustment under this Section 4(c)(iv) as follows:
(1) In the event the Corporation
shall at any time after the Series A Original Issue Date issue Additional Shares
of Common Stock (including Additional Shares of Common Stock deemed to be issued
pursuant Section
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4(c)(iii)), without consideration or for a consideration per share less than a
particular Conversion Price in effect on the date of and immediately prior to
such issue, then and in such event, any such Conversion Price shall be reduced,
concurrently with such issue, to the price (calculated to the nearest cent)
determined by multiplying such Conversion Price by a fraction (x) the numerator
of which shall be the number of shares of Common Stock outstanding immediately
prior to such issue plus the number of shares of Common Stock which the
aggregate consideration received by the Corporation for the total number of
Additional Shares of Common Stock so issued would purchase at such Conversion
Price, and (y) the denominator of which shall be the number of shares of Common
Stock outstanding immediately prior to such issue plus the number of such
Additional Shares of Common Stock so issued; provided, however, that, for the
purposes of this Section 4(c)(iv), all shares of Common Stock issuable upon
conversion of outstanding shares of Preferred Stock shall be deemed to be
outstanding; and, further provided, that any Additional Shares of Common Stock
deemed issued pursuant to Section 4(c)(iii) shall be deemed to be outstanding.
(v) Adjustment of Conversion Price of Series
C Preferred Stock Upon Certain Financings. The Conversion Price of the Series C
Preferred Stock shall be subject to adjustment under this Section 4(c)(v) as
follows:
(1) In the event the Corporation
shall issue shares of equity securities other than shares of Series C Preferred
Stock in an equity financing resulting in gross cash proceeds to the Company of
at least $1,000,000 (a "Financing"), for a consideration per share that is less
than 125% of the Series C Conversion Price in effect on the date of and
immediately prior to such issue, then and in such event, the Series C Conversion
Price shall be reduced, concurrently with such issue, to the price (calculated
to the nearest cent) determined by multiplying such Conversion Price by a
fraction (x) the numerator of which shall be 80% of the consideration per share
in the Financing and (y) the denominator of which shall be such Conversion
Price.
(vi) Determination of Consideration. For
purposes of this Section 4(c), the consideration received by the Corporation for
the issuance of any Additional Shares of Common Stock shall be computed as
follows:
(1) Cash and Property. Such
consideration shall:
(A) insofar as it consists
of cash, be computed at the aggregate amount of cash received by the Corporation
excluding amounts paid or payable for accrued interest or accrued dividends;
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(B) insofar as it consists
of property other than cash, be computed at the fair value thereof at the time
of such issue, as determined in good faith by the Board of Directors; and
(C) in the event Additional
Shares of Common Stock are issued together with other shares or securities or
other assets of the Corporation for consideration which covers both, by the
proportion of such consideration so received, computed as provided in clauses
(A) and (B) above, as determined in good faith by the Board of Directors.
(2) Options and Convertible
Securities. The consideration per share received by the Corporation for
Additional Shares of Common Stock deemed to have been issued pursuant to Section
4(c)(iii)(1), relating to Options and Convertible Securities, shall be
determined by dividing:
(A) the total amount, if
any, received or receivable by the Corporation as consideration for the issue of
such Options or Convertible Securities, plus the minimum aggregate amount of
additional consideration (as set forth in the instruments relating thereto,
without regard to any provisions contained therein for a subsequent adjustment
of such consideration) payable to the Corporation upon the exercise of such
Options or the conversion or exchange of such Convertible Securities, or in the
case of Options for Convertible Securities, the exercise of such Options for
Convertible Securities and the conversion or exchange of such Convertible
Securities, by
(B) the maximum number of
shares of Common Stock (as set forth in the instruments relating thereto,
without regard to any provisions contained therein for a subsequent adjustment
of such number) issuable upon the exercise of such Options or the conversion or
exchange of such Convertible Securities.
(d) Adjustments for Stock Dividends, Distributions,
Subdivisions, Combinations or Consolidations of Common Stock.
(i) Stock Dividends, Distributions or
Subdivisions. In the event the Corporation shall issue shares of Common Stock
pursuant to a stock dividend, stock distribution or subdivision, the Conversion
Price in effect immediately prior to such stock dividend, stock distribution or
subdivision shall concurrently with such stock dividend, stock distribution or
subdivision, be proportionately decreased.
(ii) Combinations or Consolidations. In the
event the outstanding shares of Common Stock shall be combined or consolidated,
by
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reclassification or otherwise, into a lesser number of shares of Common Stock,
the Conversion Price in effect immediately prior to such combination or
consolidation shall, concurrently with the effectiveness of such combination or
consolidation, be proportionately increased.
(iii) Adjustments for Other Distributions.
In the event the Corporation at any time or from time to time makes, or fixes a
record date for the determination of holders of Common Stock entitled to receive
any distribution payable in securities of the Corporation other than shares of
Common Stock and other than as otherwise adjusted in this Section 4(c) or (d) or
as otherwise provided in Section 1, then, and in each such event, provision
shall be made so that the holders of Preferred Stock shall receive upon
conversion thereof, in addition to the number of shares of Common Stock
receivable thereupon, the amount of securities of the Corporation which they
would have received had their Preferred Stock been converted into Common Stock
on the date of such event and had they thereafter, during the period from the
date of such event to and including the date of conversion, retained such
securities receivable by them as aforesaid during such period, subject to all
other adjustments called for during such period under this Section 4(c) or (d)
with respect to the rights of the holders of the Preferred Stock.
(iv) Adjustments for Reclassification,
Exchange, and Substitution. If the Common Stock issuable upon conversion of the
Preferred Stock shall be changed into the same or a different number of shares
of any other class or classes of stock, whether by capital reorganization,
reclassification or otherwise (other than a subdivision or combination of shares
provided for above), the applicable Conversion Price then in effect shall,
concurrently with the effectiveness of such reorganization or reclassification,
be proportionately adjusted such that the Preferred Stock shall be convertible
into, in lieu of the number of shares of Common Stock which the holders would
otherwise have been entitled to receive, a number of shares of such other class
or classes of stock equivalent to the number of shares of Common Stock that
would have been subject to receipt by the holders upon conversion of their
Prefer red Stock immediately before that change.
(e) No Impairment. The Corporation will not, by
amendment of its Articles of Incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any other 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 4 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 Preferred Stock against impairment.
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(f) Reservation of Stock Issuable Upon Conversion.
The Corporation shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock solely for the purpose of
effecting the conversion of the Preferred Stock, such number of shares of its
Common Stock as shall from time to time be sufficient to effect the conversion
of all outstanding shares of Preferred Stock; and if at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the conversion of all then-outstanding shares of Preferred Stock, in addition to
such other remedies as shall be available to the holders of Preferred Stock, the
Corporation will take such corporate actions as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purposes.
(g) Certificate as to Adjustments. Upon the
occurrence of each adjustment or readjustment of the Conversion Price pursuant
to this Section 4, the Corporation at its expense shall promptly compute such
adjustment or readjustment in accordance with the terms hereof and furnish to
each holder of Preferred Stock a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Corporation shall, upon the written request at any
time of any holder of Preferred Stock, furnish or cause to be furnished to such
holder a like certificate setting forth (i) all such adjustments and
readjustments, (ii) the Conversion Price at the time in effect, and (iii) the
number of shares of Common Stock and the amount, if any, of other property which
at the time would be received upon the conversion of such Preferred Stock.
(h) Notices of Record Date. In the event that the
Corporation shall propose at any time:
(i) to declare any dividend or distribution
upon the Common Stock, whether in cash, property, stock or other securities,
whether or not a regular cash dividend and whether or not out of earnings or
earned surplus, other than distributions to shareholders in connection with the
repurchase of Reserved Shares of former employees or consultants, to which the
holders of Preferred Stock have consented in Section 2(c) hereof; or
(ii) to offer for subscription to the
holders of any class or series of its capital stock any additional shares of
stock of any class or series or any other rights; or
(iii) to effect any reclassification or
recapitalization; or
(iv) to merge or consolidate with or into
any other corporation, or sell, lease or convey all or substantially all its
property or business, or to
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liquidate, dissolve or wind up, or to effect any other transaction subject to
the provisions of Section 2 of these Amended and Restated Articles of
Incorporation;
then, in connection with each such event, the Corporation shall send to the
holders of the Preferred Stock:
(1) at least 20 days' prior written
notice of the date on which a record shall be taken for such dividend,
distribution or subscription rights (and specifying the date on which the
holders of Common Stock shall be entitled thereto) or for determining the rights
to vote in respect of the matters referred to in (iii) and (iv) above; and
(2) in the case of the matters
referred to in (iii) and (iv) above, at least 20 days' prior written notice of
the date of a shareholders meeting at which a vote on such matters shall take
place or the effective date of any written consent (and specifying the material
terms and conditions of the proposed transaction or event and the date on which
the holders of Preferred Stock and Common Stock shall be entitled to exchange
their Preferred Stock and Common Stock for securities or other property
deliverable upon the occurrence of such event and the amount of securities or
other property deliverable upon such event).
Each such written notice shall be given
personally or by first class mail, postage prepaid, addressed to the holders of
Preferred Stock at the address for each such holder as shown on the books of the
Corporation.
Section 5. No Reissuance of Preferred Stock. No share or
shares of Preferred Stock acquired by the Corporation by reason of redemption,
purchase, conversion or otherwise shall be reissued, and all such shares shall
be cancelled, retired and eliminated from the shares which the Corporation shall
be authorized to issue.
Section 6. Protective Provisions.
(a) Series A Preferred Stock. In addition to any
other rights provided by law and without limiting Section 6(d) below, so long as
at least 50,000 shares of Series A Preferred Stock (as such number may be
adjusted for stock splits, combinations, consolidations and stock distributions
or dividends) shall be outstanding, the Corporation shall not, without first
obtaining the affirmative vote or written consent of the holders of a majority
of the outstanding shares of Series A Preferred Stock voting as a separate class
(based on the number of shares of Common Stock into which each holder's Series A
Preferred Stock is then convertible, as adjusted from time to time pursuant to
Section 4 hereof):
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(i) amend or repeal any provision of, or add
any provision to, this Corporation's Articles of Incorporation or bylaws 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 in
a material and adverse manner or alter or change the preferences, rights,
privileges or powers of, or the restrictions provided for the benefit of the
Series B or Series C Preferred Stock if such alteration or change would affect
the Series A Preferred Stock in a material and adverse manner;
(ii) increase the authorized number of
shares of Series A Preferred Stock; and
(iii) authorize or issue any new shares or
reclassify any Common Stock into shares of any class or series of stock senior
to or on parity with the Series A Preferred Stock as to dividends, redemption
rights, liquidation preferences, conversion rights, voting rights or otherwise.
(b) Series B Preferred Stock. In addition to any
other rights provided by law and without limiting Section 6(d) below, so long as
at least 50,000 shares of Series B Preferred Stock (as such number may be
adjusted for stock splits, combinations, consolidations and stock distributions
or dividends) shall be outstanding, the Corporation shall not, without first
obtaining the affirmative vote or written consent of the holders of a majority
of the outstanding shares of Series B Preferred Stock voting as a separate class
(based on the number of shares of Common Stock into which each holder's Series B
Preferred Stock is then convertible, as adjusted from time to time pursuant to
Section 4 hereof):
(i) amend or repeal any provision of, or add
any provision to, this Corporation's Articles of Incorporation or bylaws if such
action would alter or change the preferences, rights, privileges or powers of,
or the restrictions provided for the benefit of, the Series B Preferred Stock in
a material and adverse manner or alter or change the preferences, rights,
privileges or powers of, or the restrictions provided for the benefit of the
Series A or Series C Preferred Stock if such alteration or change would affect
the Series B Preferred Stock in a material and adverse manner;
(ii) increase the authorized number of
shares of Series B Preferred Stock; and
(iii) authorize or issue any new shares or
reclassify any Common Stock into shares of any class or series of stock senior
to or on parity with the Series B Preferred Stock as to dividends, redemption
rights, liquidation preferences, conversion rights, voting rights or otherwise.
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(c) Series C Preferred Stock. In addition to any
other rights provided by law and without limiting Section 6(d) below, so long as
at least 50,000 shares of Series C Preferred Stock (as such number may be
adjusted for stock splits, combinations, consolidations and stock distributions
or dividends) shall be outstanding, the Corporation shall not, without first
obtaining the affirmative vote or written consent of the holders of a majority
of the outstanding shares of Series C Preferred Stock voting as a separate class
(based on the number of shares of Common Stock into which each holder's Series C
Preferred Stock is then convertible, as adjusted from time to time pursuant to
Section 4 hereof):
(i) amend or repeal any provision of, or add
any provision to, this Corporation's Articles of Incorporation or bylaws if such
action would alter or change the preferences, rights, privileges or powers of,
or the restrictions provided for the benefit of, the Series C Preferred Stock in
a material and adverse manner or alter or change the preferences, rights,
privileges or powers of, or the restrictions provided for the benefit of the
Series A or Series B Preferred Stock if such alteration or change would affect
the Series C Preferred Stock in a material and adverse manner;
(ii) increase the authorized number of
shares of Series C Preferred Stock; and
(iii) authorize or issue any new shares or
reclassify any Common Stock into shares of any class or series of stock senior
to or on parity with the Series C Preferred Stock as to dividends, redemption
rights, liquidation preferences, conversion rights, voting rights or otherwise.
(d) In addition to any other rights provided by law
and without limiting the foregoing, so long as any shares of any series of
Preferred Stock shall be outstanding, the Corporation shall not, without first
obtaining the affirmative vote or written consent of the holders of a majority
of the outstanding shares of such series of Preferred Stock voting as a separate
class (based on the number of shares of Common Stock into which each holder's
Preferred Stock is then convertible, as adjusted from time to time pursuant to
Section 4 hereof), take any action to amend the Articles of Incorporation in
which the dividend, liquidation preference, conversion, voting, redemption or
other rights of such series of Preferred Stock will be adversely affected. In
addition to any other rights provided by law and without limiting the foregoing,
so long as any shares of any series of Preferred Stock shall be outstanding, the
Corporation shall not, without first obtaining the affirmative vote or written
consent of the holders of a majority of the outstanding shares of the Preferred
Stock voting as a separate class (based on the number of shares of Common Stock
into which each holder's Preferred Stock is then convertible, as adjusted from
time to time pursuant to Section 4 hereof), take any action to:
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(i) sell or otherwise dispose of all or
substantially all of the assets or business of the Corporation;
(ii) effect a consolidation, reorganization
or merger of the Corporation with or into any other corporation, or any other
transaction in which ownership of a majority of the Corporation's capital stock
is transferred;
(iii) authorize or issue any new shares or
reclassify any Common Stock into shares of any class or series of stock senior
to or on parity with the Series A, Series B and/or C Preferred Stock as to
dividends, redemption rights, liquidation preferences, conversion rights, voting
rights or otherwise;
(iv) increase the authorized number of
directors of this Corporation to more than seven (7), without the unanimous
approval (by vote or written consent) of all of the directors then in office
(including, without limitation, the directors elected by the holders of
Preferred Stock).
ARTICLE IV
LIMITATION OF LIABILITY
The liability of the directors of the Corporation for monetary damages
shall be eliminated to the fullest extent permissible under California law. Any
repeal or modification of this Article IV, or the adoption of any provision of
the Articles of Incorporation inconsistent with this Article IV, shall only be
prospective and shall not adversely affect the rights under this Article IV in
effect at the time of the alleged occurrence of any act or omission to act
giving rise to liability.
ARTICLE V
INDEMNIFICATION
The Corporation is authorized to provide indemnification of agents (as
defined in Section 317 of the California Corporations Code) through By-law
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 on indemnification set forth in Section 204 of the California
Corporations Code with respect to actions for breach of duty to the Corporation
or its shareholders. Any repeal or modification of this Article V, or the
adoption of any provision of the Articles of Incorporation inconsistent with
this Article V, shall only be prospective and shall not adversely affect the
rights under this Article V in effect at the time of the alleged occurrence of
any action or omission to act giving rise to indemnification.
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