EXHIBIT 3.1
THIRD AMENDED AND RESTATED
ARTICLES OF INCORPORATION OF
BATTERY EXPRESS, INC.
The undersigned, Ken Hawk and Mick Delargy, hereby certify that:
1. They are the duly elected and acting President and Secretary,
respectively, of Battery Express, Inc., a California corporation.
2. The Articles of Incorporation of this corporation shall be amended and
restated to read in full as follows:
ARTICLE I
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The name of this Corporation is Battery Express, Inc.
ARTICLE II
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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
Corporation Code.
ARTICLE III
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A. Classes of Stock. This Corporation is authorized to issue two classes
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of stock, designated "Common Stock" and "Preferred Stock." The total number of
shares which this Corporation is authorized to issue is 10,000,000. The number
of shares of Common Stock which this Corporation is authorized to issue is
8,706,250 no par value. The number of shares of Preferred Stock which this
Corporation is authorized to issue is 1,293,750, no par value. Preferred Stock
may be issued from time to time in one or more Series.
B. Rights, Preferences and Restrictions of Preferred Stock. The Preferred
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Stock shall consist of 611,250 shares designated "Series A Preferred Stock" (the
"Series A"), 500,000 shares designated "Series B Preferred Stock" (the "Series
B"), and 182,500 shares designated "Series C Preferred Stock" (the "Series C"),
having the respective rights, preferences and privileges set forth herein. The
Series A, Series B and Series C are sometimes referred to herein collectively
the "Preferred Stock".
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The Corporation shall from time to time in accordance with the laws of the
State of California increase the authorized amount of its Common Stock if at any
time the number of shares of Common Stock remaining unissued and available for
issuance shall not be sufficient to permit conversion of the Preferred Stock.
The relative rights, preferences, privileges and restrictions granted to or
imposed upon the respective classes of Common Stock and Preferred Stock or the
holders thereof are as follows:
ARTICLE IIIA
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PREFERRED STOCK
Except as otherwise expressly provided herein, all shares of Preferred
Stock shall entitle the holders thereof to the same rights and privileges.
1A. Dividends. The holders of outstanding shares of Preferred Stock
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shall be entitled to receive, out of funds legally available for such purpose,
cash dividends at the rate of 8% per annum (computed on the basis of a 360-day
year and a 90 day quarter) of the Stated Value (as defined below) of each such
share then held by them, payable quarterly in arrears on June 13, September 13,
December 13 and March 13 (each such payment date, a "Dividend Payment Date") of
each year (beginning, with respect to the Series A, on September 13, 1996, with
respect to the Series B, on December 13, 1998, and with respect to the Series C,
on September 13, 1999), or when and as declared by the Board of Directors of the
Corporation. The Board of Directors of the Corporation may fix a record date for
the determination of holders of Preferred Stock entitled to receive payment of a
dividend declared thereon, which record date shall be no more than 60 days prior
to the date fixed for the payment thereof.
1B. Stated Value. Notwithstanding anything to the contrary provided
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herein, in the event that any portion of the quarterly dividend on the Series A,
Series B or Series C is not declared and paid in cash on any Dividend Payment
Date, the amount of such accrued dividend which is not so paid on any share of
Series A, Series B or Series C shall be accumulated and shall automatically be
added to the Stated Value of such share on such Dividend Payment Date.
Accumulated dividends on shares of Series A, Series B or Series C that have
previously been added to the Stated Value thereof pursuant to the terms of this
subparagraph 1B, may, in the discretion of the Board of Directors of the
Corporation, be paid in cash on any Dividend Payment Date. Accumulated
dividends on any share of Series A, Series B or Series C which are added to the
Stated Value of such share pursuant to this subparagraph 1B shall not be deemed
to be in arrears for any purpose whatsoever.
As used herein, the "Stated Value" per share shall mean the sum of (i) with
respect to the Series A, $2.67, with respect to the Series B, $12.00, or with
respect to the Series C, $40.91, plus (ii) all accumulated and unpaid dividends,
if any, added pursuant to this subparagraph 1B, less (iii) all amounts paid in
cash in respect of such previously accumulated and unpaid dividends, if any,
that were originally added to such Stated Value pursuant to this subparagraph
1B.
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2A. Mandatory Redemption. Beginning at any time on or after June 13,
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2003, upon receipt of a written redemption election executed by the holders of
not less than 66 2/3% of the Preferred Stock then outstanding, the Corporation
shall, to the extent legally permitted, redeem (in the manner and with the
effect provided in subparagraphs 2C through 2D below) all shares of Preferred
Stock then outstanding in four equal annual installments, the first of which
shall occur sixty (60) days following the Corporation's receipt of the written
redemption election. Each date on which the Corporation shall be required to
redeem shares of Preferred Stock as provided in this subparagraph 2A shall be
referred to as a "Redemption Date". No written redemption election shall be
required with respect to any Redemption Date other than the initial Redemption
Date.
2B. Redemption Price. The Preferred Stock to be redeemed on a Redemption
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Date shall be redeemed by paying for each share the sum of (i) the Stated Value
per share as of such Redemption Date, plus (ii) an amount equal to dividends
declared and unpaid thereon up to such Redemption Date, the sum, of (i) and (ii)
being herein sometimes referred to as the "Redemption Price". In the case of a
redemption pursuant to the first sentence of subparagraph 2A above, not less
than 30 days before such Redemption Date, written notice shall be given by mail,
postage prepaid to the holders of record of the Preferred Stock to be redeemed,
such notice to be addressed to each such shareholder at his post office address
as shown by the records of the Corporation, specifying the number of shares to
be redeemed, the Redemption Price and the place and date of such redemption,
which date shall not be a day on which banks in the City of New York are
required or authorized to close. If a notice of redemption shall have been duly
given under subparagraph 2A above or this subparagraph 2B and if on or before
such Redemption Date the funds necessary for redemption shall have been set
aside so as to be and continue to be available therefor, then, notwithstanding
that any certificate for shares of Preferred Stock to be redeemed shall not have
been surrendered for cancellation, after the close of business on such
Redemption Date, the shares so called for redemption shall no longer be deemed
outstanding, the dividends thereon shall cease to accrue, and all rights with
respect to such shares shall forthwith after the close of business on the
Redemption Date, cease, except only the right of the holders thereof to receive,
upon presentation of the certificate representing shares so called for
redemption, the Redemption Price therefor, without interest thereon.
2C. Redeemed or Otherwise Acquired Shares to Be Retired. Any shares of
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the Preferred Stock redeemed pursuant to this paragraph 2 or otherwise acquired
by the Corporation in any manner whatsoever shall be permanently retired and
shall not under any circumstances be reissued; and the Corporation may from time
to time take such appropriate corporate action as may be necessary to reduce the
number of authorized shares of Preferred Stock accordingly.
2D. Shares to be Redeemed. In case of the redemption under subparagraph
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2A, for any reason, of only a part of the outstanding shares of the Preferred
Stock otherwise subject to redemption on a Redemption Date, all shares of
Preferred Stock to be redeemed shall be selected pro rata such that there shall
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be so redeemed from each registered holder in whole shares, as nearly as
practicable to the nearest share, that proportion of all the shares to be
redeemed which the number of shares held of record by such holder bears to the
total number of shares of Preferred Stock at the time outstanding, calculated as
a single class. Shares not redeemed on the scheduled Redemption
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Date therefor shall remain outstanding and shall be redeemed, to the extent
legally permissible, on the next ensuing Redemption Date.
3. Liquidation. Upon any liquidation, dissolution or winding up of the
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Corporation, whether voluntary or involuntary, the holders of the shares of
Preferred Stock, before any distribution or payment is made upon Common Stock,
shall be entitled to be paid for each share the sum of (i) the Stated Value per
share as of such date of liquidation, dissolution or winding up (the
"Liquidation Date"), plus (ii) an amount equal to dividends accrued but unpaid
thereon up to the Liquidation Date (to the extent not accounted for in the
Stated Value of such share), the sum of (i) and (ii) being herein sometimes
referred to as the "Liquidation Payments". If, upon such liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
the assets to be distributed among the holders of Preferred Stock shall be
insufficient to permit payment to such holders of the preferential amounts to
which they are entitled, then the entire assets of the Corporation to be so
distributed shall be distributed ratably among the holders of Preferred Stock
based upon the Liquidation Payments to which each such holder would otherwise be
entitled. Upon any such liquidation, dissolution or winding up of the
Corporation, after the holders of Preferred Stock shall have been paid in full
the amounts to which they shall be entitled, the remaining net assets of the
Corporation available for distribution to its shareholders shall be distributed
to the holders of Common Stock. Written notice of such liquidation, dissolution
or winding up, stating a payment date, the amount of the Liquidation Payments,
the place where said Liquidation Payments shall be payable, shall be given by
mail, postage prepaid, not less than 30 days prior to the payment date stated
therein, to the holders of record of Preferred Stock, such notice to be
addressed to each such holder at his post office address as shown by the records
of the Corporation. The consolidation or merger of the Corporation into or with
any other corporation or corporations in which the shareholders of the
Corporation immediately prior to such consolidation, merger or reorganization
own less than 50% of the surviving entity's voting power immediately after such
consolidation, merger or reorganization, or any transaction or series of related
transactions to which the Corporation is a party in which greater than 50% of
the Corporation's voting power is transferred, or the sale or transfer by the
Corporation of all or substantially all of its assets, shall be deemed to be a
liquidation, dissolution or winding up of the Corporation within the meaning of
the provisions of this paragraph 3.
4A. Conversion. Subject to the terms and conditions of this paragraph 4,
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each share of Series A, Series B and Series C 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 such stock,
into such number of fully paid and nonassessable shares of Common Stock as is
determined by dividing (i) $2.67 in the case of the Series A, (ii) $12.00 in the
case of the Series B, or (iii) $40.91 in the case of the Series C, by the
Conversion Price applicable to such share, determined as hereafter provided, in
effect on the date the certificate is surrendered for conversion. The initial
Conversion Price per share shall be $2.67 for shares of Series A, $12.00 for
shares of Series B and $40.91 for shares of Series C. Such initial Conversion
Price shall be subject to adjustment as set forth in subparagraph 4D below. The
rights of conversion contained in this subparagraph 4A shall be exercised by the
holder of shares of Preferred Stock by giving written notice that such holder
elects to convert a stated number of shares of Preferred Stock into Common Stock
and by surrender of a certificate or certificates for the shares so to be
converted to the Corporation at its principal office
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(or such other office or agency of the Corporation as the Corporation may
designate by notice in writing to the holder or holders of the Preferred Stock)
at any time during its usual business hours on the date set forth in such
notice, together with a statement or the name or names (with address) in which
the certificate or certificates for shares of Common Stock shall be issued.
4B. Issuance of Certificates; Time Conversion Effected. Promptly after
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the receipt of the written notice referred to in subparagraph 4A and surrender
of the certificate or certificates for the share or shares of Preferred Stock to
be converted, the Corporation shall issue and deliver, or cause to be issued and
delivered, to the holder, registered in such name or names as such holder may
direct, a certificate or certificates for the number of whole shares of Common
Stock issuable upon the conversion of such share or shares of Preferred Stock.
To the extent permitted by law, such conversion shall be deemed to have been
effected, and the Conversion Price shall be determined, as of the close of
business on the date on which such written notice shall have been received by
the Corporation and the certificate or certificates for such share or shares
shall have been surrendered as aforesaid, and at such time the rights of the
holder of such share or shares of Preferred Stock shall cease, and the person or
persons in whose name or names any certificate or certificates for shares of
Common Stock shall be issuable upon such conversion shall be deemed to have
become the holder or holders of record of the shares represented thereby.
4C. Fractional Shares; Dividends; Partial Conversion. No fractional
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shares may be issued upon conversion of the Preferred Stock into Common Stock.
At the time of each conversion, the Corporation shall pay in cash an amount
equal to all dividends, if any, declared and unpaid on the shares surrendered
for conversion to the date upon which such conversion is deemed to take place as
provided in subparagraph 4B. In case the number of shares of Preferred Stock
represented by the certificate or certificates surrendered pursuant to
subparagraph 4A exceeds the number of shares converted, the Corporation shall,
upon such conversion, execute and deliver to the holder thereof, at the expense
of the Corporation, a new certificate or certificates for the number of shares
of Preferred Stock represented by the certificate or certificates surrendered
which are not to be converted. If any fractional interest in a share of Common
Stock would, except for the provisions of the first sentence of this
subparagraph 4C, be deliverable upon any such conversion, the Corporation, in
lieu of delivering the fractional share thereof, shall pay to the holder
surrendering the Preferred Stock for conversion an amount in cash equal to the
current market price of such fractional interest as determined in good faith by
the Board of Directors of the Corporation.
4D. Adjustment of Price Upon Issuance of Common Stock. Except as provided
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in subparagraph 4F hereof, if and whenever the Corporation shall issue or sell,
or is in accordance with subparagraphs 4D(1) through 4D(6) deemed to have issued
or sold, any shares of its Common Stock for a consideration per share less than
the Conversion Price for the Preferred Stock in effect immediately prior to the
time of such issue or sale, then, forthwith upon such issue or sale, the
Conversion Price for such series in effect immediately prior to each such
issuance shall automatically (except as otherwise provided herein) be adjusted
to a price determined by multiplying such Conversion Price by a fraction, the
numerator of which shall be equal to the sum of (i) Adjusted Outstanding Common
Stock (as defined below) multiplied by the then existing Conversion Price, plus
(ii) the consideration, if any, received by the Corporation upon such issue or
sale, and the
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denominator of which shall be an amount equal to the sum of Adjusted Outstanding
Common Stock plus the number of shares of Common Stock issued or sold.
For the purposes of this subparagraph 4D, "Adjusted Outstanding Common
Stock" shall mean the sum of (i) the number of shares of Common Stock
outstanding immediately prior to such issue or sale, plus (ii) the number of
shares of Common Stock issuable upon conversion of all outstanding shares of any
series of Preferred Stock of the Corporation convertible into Common Stock.
For purposes of this subparagraph 4D, the following subparagraphs 4D(l) to
4D(6) shall also be applicable:
4D(l) Issuance of Rights or Options. In case at any time the Corporation
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shall in any manner grant (whether directly or by assumption in a merger or
otherwise) any rights to subscribe for or to purchase, or any options for the
purchase of, Common Stock or any stock or securities convertible into or
exchangeable for Common Stock (such rights or options being herein called
"Options" and such convertible or exchangeable stock or securities being herein
called "Convertible Securities") whether or not such Options or the right to
convert or exchange any such Convertible Securities are immediately exercisable,
and the price per share for which Common Stock is issuable upon the exercise of
such Options or upon conversion or exchange of such Convertible Securities
(determined by dividing (i) the total amount, if any, received or receivable by
the Corporation as consideration for the granting of such Options, plus the
minimum aggregate amount of additional consideration payable to the Corporation
upon the exercise of all such Options, plus, in the case of such Options which
relate to Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable upon the issue or sale of such Convertible
Securities and upon the conversion or exchange thereof, by (ii) the total
maximum number of shares of Common Stock issuable upon the exercise of such
options or upon the conversion or exchange of all such Convertible Securities
issuable upon the exercise of such Options) shall be less than the applicable
Conversion Price in effect immediately prior to the time of the granting of such
Options, then the total maximum number of shares of Common Stock issuable upon
the exercise of such options or upon conversion or exchange of the total maximum
amount of such Convertible Securities issuable upon the exercise of such Options
shall be deemed to have been issued for such price per share as of the date of
granting of such Options and thereafter shall be deemed to be outstanding.
Except as otherwise provided in subparagraph 4D(3), no adjustment of a
Conversion Price shall be made upon the actual issue of such Common Stock or of
such Convertible Securities upon exercise of such options or upon the actual
issue of such Common Stock upon conversion or exchange of such Convertible
Securities.
4D(2) Issuance of Convertible Securities. In case the Corporation shall
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in any manner issue (whether directly or by assumption in a merger or otherwise)
or sell any Convertible Securities, whether or not the rights to exchange or
convert thereunder are immediately exercisable, and the price per share for
which Common Stock is issuable upon such conversion or exchange (determined by
dividing (i) the total amount received or receivable by the Corporation as
consideration for the issue or sale of such Convertible Securities, plus the
minimum aggregate amount of additional consideration, if any, payable to the
Corporation upon the conversion or exchange thereof, by (ii) the total maximum
number of shares of Common Stock issuable upon the conversion or exchange
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of all such Convertible Securities) shall be less than the Conversion Price in
effect immediately prior to the time of such issue or sale, then the total
maximum number of shares of Common Stock issuable upon conversion or exchange of
all such Convertible Securities shall be deemed to have been issued for such
price per share as of the date of the issue or sale of such Convertible
Securities and thereafter shall be deemed to be outstanding, provided that (a)
except as otherwise provided in subparagraph 4D(3) below, no adjustment of a
Conversion Price shall be made upon the actual issue of such Common Stock upon
conversion or exchange of such Convertible Securities, and (b) if any such issue
or sale of such Convertible Securities is made upon exercise of any option to
purchase any such Convertible Securities for which adjustments of the Conversion
Price have been or are to be made pursuant to other provisions of this
subparagraph 4D, no further adjustment of a Conversion Price shall be made by
reason of such issue or sale.
4D(3) Change in Option Price or Conversion Rate. If (i) the purchase
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price provided for in any Option referred to in subparagraph 4D(l), (ii) the
additional consideration, if any, payable upon the conversion or exchange of any
Convertible Securities referred to in subparagraph 4D(l) or 4D(2) or (iii) the
rate at which any Convertible Securities referred to in subparagraph 4D(l) or
4D(2) are convertible into or exchangeable for Common Stock shall change at any
time (in each case other than under or by reason of provisions designed to
protect against dilution), then the Conversion Price in effect at the time of
such event shall, as required, forthwith be readjusted to such Conversion Price
which would have been in effect at such time had such options or Convertible
Securities still outstanding provided for such changed purchase price,
additional consideration or conversion rate, as the case may be, at the time
initially granted, issued or sold; and on the expiration of any such option or
the termination of any such right to convert or exchange such Convertible
Securities, the Conversion Price then in effect hereunder shall, as required,
forthwith be increased to the Conversion Price which would have been in effect
at the time of such expiration or termination had such Option or Convertible
Securities, to the extent outstanding immediately prior to such expiration or
termination, never been issued, and the Common Stock issuable thereunder shall
no longer be deemed to be outstanding. If the purchase price provided for in any
such Option referred to in subparagraph 4D(l) or the rate at which any
Convertible Securities referred to in subparagraph 4D(l) or 4D(2) are
convertible into or exchangeable for Common Stock shall be reduced at any time
under or by reason of provisions with respect thereto assigned to protect
against dilution, then, in case of the delivery of Common Stock upon the
exercise of any such option or upon conversion or exchange of any such
Convertible Securities, the Conversion Price then in effect hereunder shall, as
required, forthwith be adjusted to such respective amount as would have been
obtained had such Option or Convertible Securities never been issued as to such
Common Stock and had adjustments been made upon the issuance of the shares of
Common Stock delivered as aforesaid, but only if as a result of such adjustment
the Conversion Price then in affect hereunder is thereby reduced.
4D(4) Stock Dividends. In case the Corporation shall declare a dividend
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or make any other distribution upon any stock of the Corporation payable in
Common Stock, Options or Convertible Securities in which dividend or
distribution the Preferred Stock does not ratably participate, any Common Stock,
Options or Convertible Securities, as the case may be, issuable in payment of
such dividend or distribution, shall be deemed to have been issued or sold
without consideration, and the applicable Conversion Price shall be reduced as
if the Corporation had subdivided its outstanding shares of Common Stock into a
greater number of shares, as provided in subparagraph 4E hereof.
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4D(5) Consideration. In case any shares of Common Stock, Options or
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Convertible Securities shall be issued or sold for cash, the consideration
received therefor shall be deemed to be the amount received by the Corporation
therefor, without deduction therefrom of any expenses incurred or any
underwriting commissions or concessions paid or allowed by the Corporation in
connection therewith. In case any shares of Common Stock, Options or Convertible
Securities shall be issued or sold for a consideration other than cash, the
amount of the consideration other than cash received by the Corporation shall be
deemed to be the fair value of such consideration as determined in good faith by
the Board of Directors of the Corporation, without deduction therefrom of any
expenses incurred or any underwriting commissions or concessions paid or allowed
by the Corporation in connection therewith. In case any options shall be issued
in connection with the issue and sale of other securities of the Corporation,
together comprising one integral transaction in which no specific consideration
is allocated to such Options by the Corporation, such Options shall be deemed to
have been issued without consideration, and the applicable Conversion Price
shall be reduced as if the Corporation had subdivided its outstanding shares of
Common Stock into a greater number of shares, as provided in subparagraph 4E
hereof.
4D(6) Record Date. In case the Corporation shall take a record of the
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holders of its Common Stock for the purpose of entitling them (i) to receive a
dividend or other distribution payable in Common Stock, options or Convertible
Securities, or (ii) to subscribe for or purchase Common Stock, Options or
Convertible Securities, then such record date shall be deemed to be the date of
the issue or sale of the shares of Common Stock deemed to have been issued or
sold upon the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of subscription or
purchase, as the case may be, provided that such shares of Common Stock shall in
fact have been issued or sold.
4E. Subdivision or Combination of Stock. In case the Corporation shall
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at any time subdivide its outstanding shares of Common Stock into a greater
number of shares, the Conversion Price in effect immediately prior to such
subdivision shall be proportionately reduced, and conversely, in case the
outstanding shares of Common Stock of the Corporation shall be combined into a
smaller number of shares, the Conversion Prices in effect immediately prior to
such combination shall be proportionately increased.
4F. Certain Issues of Common Stock Excepted. Anything herein to the
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contrary notwithstanding, the Corporation shall not be required to make any
adjustment of the Conversion Price for the Preferred Stock upon the occurrence
of any of the following events:
(i) the issuance of shares of Preferred Stock, the issuance of
Common Stock upon conversion of outstanding shares of Preferred Stock, or any
adjustment in the Conversion Price applicable to such conversion,
(ii) the issuance of shares of Common Stock, or options for the
purchase thereof, to employees, consultants or directors of the Corporation
pursuant to a stock option plan, restricted stock plan or other compensatory or
incentive arrangement approved by the Board of Directors of the Corporation,
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(iii) the issuance to Malcolm P. Appelbaum and Vrolyk / Power
Express L.P. of warrants to acquire up to an aggregate 13,500 shares of Common
Stock and the issuance of up to an aggregate 13,500 shares of Common Stock upon
the exercise of such warrants,
(iv) the issuance to Ken Hawk of 147,600 shares of Common Stock
pursuant to that certain Restricted Stock Purchase Agreement dated on or about
June 13, 1996 between the Corporation and Ken Hawk,
(v) the issuance of capital stock, or options or warrants to
purchase capital stock, issued to financial institutions or lessors in
connection with commercial credit arrangements, equipment financings or similar
transactions in which the equity component is incidental to the primary purpose
of such transaction,
(vi) the issuance of capital stock or warrants or options to purchase
capital stock issued in connection with bona fide acquisitions, mergers or
similar transactions, the terms of which are approved by the Board of Directors
of the Corporation, and
(vii) the issuance of shares of Common Stock in a public offering
prior to or in connection with which all outstanding shares of Preferred Stock
will be converted to Common Stock.
4G. Reorganization, Reclassification, Consolidation, Merger or Sale. If
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any capital reorganization or reclassification of the capital stock of the
Corporation or any consolidation or merger of the Corporation with another
corporation, or the sale of all or substantially all of its assets to another
corporation shall be effected in such a way (including, without limitation, by
way of consolidation or merger) that holders of Common Stock shall be entitled
to receive stock, securities or assets with respect to or in exchange for Common
Stock, then, as a condition of such reorganization, reclassification,
consolidation, merger or sale, lawful and adequate provisions (in form
reasonably satisfactory to the holders of at least 66-2/3% of the outstanding
shares of Preferred Stock) shall be made whereby each holder of a share or
shares of Preferred Stock shall thereafter have the right to receive, upon the
basis and upon the terms and conditions specified herein and in lieu of the
shares of Common Stock of the Corporation immediately theretofore receivable
upon the conversion of such shares or shares of the Preferred Stock, such shares
of stock, securities or assets as may be issued or payable with respect to or in
exchange for a number of outstanding shares of such Common Stock equal to the
number of shares of such stock immediately theretofore so receivable had such
reorganization, reclassification, consolidation, merger or sale not taken place,
and in any such case appropriate provision shall be made with respect to the
rights and interests of such holder to the end that the provisions hereof
(including, without limitation, provisions for adjustment of the applicable
Conversion Price) shall thereafter be applicable, as nearly practicable, in
relation to any shares of stock, securities or assets thereafter deliverable
upon the exercise of such conversion rights (including, if necessary to effect
the adjustments contemplated herein, an immediate adjustment, by reason of such
reorganization, reclassification, consolidation, merger or sale, of the
applicable Conversion Price to the value for the Common Stock reflected by the
terms of such reorganization, reclassification, consolidation, merger or sale if
the value so reflected is less
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than the applicable Conversion Price in effect immediately prior to such
reorganization, reclassification, consolidation, merger or sale). In the event
of a merger or consolidation of the Corporation as a result of which a greater
or lesser number of shares of Common Stock of the surviving corporation is
issuable to holders of Common Stock of the Corporation outstanding immediately
prior to such merger or consolidation, the Conversion Prices in effect
immediately prior to such merger or consolidation shall be adjusted in the same
manner as though there were a subdivision or combination of the outstanding
shares of Common Stock of the Corporation. The Corporation will not effect any
such consolidation or merger, or any sale of all or substantially all of its
assets and properties, unless prior to the consummation thereof the successor
corporation (if other than the Corporation) resulting from such consolidation or
merger or the corporation purchasing such assets shall assume by written
instrument (in form reasonably satisfactory to the holders of at least 66 2/3%
the shares of Preferred Stock at the time outstanding), executed and mailed or
delivered to each holder of shares of Preferred Stock at the last address of
such holder appearing on the books of the Corporation, the obligation to deliver
to such holder such shares of stock, securities or assets as, in accordance with
the foregoing provisions, such holder may be entitled to receive.
4H. Automatic Conversion. Each share of Preferred Stock shall
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automatically be converted into shares of Common Stock at the Conversion Price
at the time in effect for such share immediately upon the earlier of (i) the
Corporation's sale of its Common Stock in a firm commitment underwritten public
offering pursuant to a registration statement under the Securities Act of 1933,
as amended, the public offering price of which is not less than $7.50 per share
(adjusted to reflect subsequent stock dividends, stock splits or
recapitalization) and which results in aggregate cash proceeds to the
corporation of $15,000,000 (net of underwriting discounts and commissions) or
(ii) the date specified by written consent or agreement of the holders of at
least 66 2/3% of the then outstanding shares of Preferred Stock, voting together
as a class.
4I. Notice of Adjustment. Upon any adjustment of an applicable Conversion
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Price, then and in each such case the Corporation shall give written notice
thereof, by first class mail, postage prepaid, addressed to each holder of
shares of Preferred Stock, as applicable, at the address of such holder as shown
on the books of the Corporation, which notice shall state the Conversion Price
resulting from such adjustment, setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based.
4J. Other Notices. In case at any time:
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(1) the Corporation shall declare any dividend upon its Common Stock
payable in cash or stock or make any other distribution to the holders of
its Common Stock;
(2) the Corporation shall offer for subscription pro rata to the
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holders of its Common Stock any additional shares of stock of any class or
other rights;
(3) there shall be any capital reorganization or reclassification of
the capital stock of the Corporation, or a consolidation or merger of the
Corporation with, or a sale of a substantial portion of its assets to,
another corporation;
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(4) there shall be a voluntary or involuntary dissolution, liquidation
or winding up of the Corporation; or
(5) the Corporation shall take any action or there shall be any event
which would result in an automatic conversion of the Preferred Stock
pursuant to subparagraph 4H, then, in any one or more of said cases, the
Corporation shall give, by first class mail, postage prepaid, addressed to
each holder of any shares of Preferred Stock at the address of such holder
as shown on the books of the Corporation, (a) at least 30 days' prior
written notice of the date on which the books of the Corporation shall
close or a record shall be taken for such dividend distribution or
subscription rights or for determining rights to vote in respect of any
such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up, (b) in the case of any such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up, at least 30 days' prior written notice of the
date when the same shall take place, and (c) in the case of any event which
would result in an automatic conversion of the Preferred Stock pursuant to
subparagraph 4H, at least 30 days prior written notice of the date on which
the same is expected to be completed. such notice in accordance with the
foregoing clause (a) shall also specify, in the case of any such dividend,
distribution or subscription rights, the date on which the holders of
Common Stock shall be entitled thereto, and such notice in accordance with
the foregoing clause (b) shall also specify the date on which the holders
of Common Stock shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up, as the case may be.
4K. Stock to be Reserved. The Corporation will at all times reserve and
--------------------
keep available out of its authorized Common Stock or its treasury shares, solely
for the purpose of issue upon the conversion of the Preferred Stock as herein
provided, such number of shares of Common Stock as shall then be issuable upon
the conversion of all outstanding shares of Preferred Stock. The Corporation
covenants that all shares of Common Stock which shall be so issued shall be duly
and validly issued and fully paid and nonassessable and free from all taxes,
lions and charges with respect to the issue thereof and, without limiting the
generality of the foregoing, the Corporation covenants that it will from time to
time take all such action as may be requisite to assure that the par value per
share of the Common Stock is at all times equal to or less than the effective
Conversion Prices for the Preferred Stock. The Corporation will take all such
action as may be necessary to assure that all ouch shares of Common Stock may be
so issued without violation of any applicable law or regulation, or of any
requirements of any national securities exchange upon which the Common Stock of
the Corporation may be listed. The Corporation will not take any action which
results in any adjustment of the Conversion Price if the total number of shares
of Common Stock issued and issuable after such action upon conversion of the
Preferred Stock would exceed the total number of shares of Common Stock then
authorized by the Corporation's Articles of Incorporation.
4L. No Reissuance. Shares of Preferred Stock which are converted into
-------------
shares of Common Stock as provided herein shall not be reissued.
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4M. Issue Tax. The issuance of certificates for shares of Common Stock
---------
upon conversion of the Preferred Stock shall be made without charge to the
holders thereof for any issuance tax in respect thereof.
4N. Closing of Books. The Corporation will at no time close its transfer
----------------
books against the transfer of any Series A, Series B, Series C or of any shares
of Common Stock issued or issuable upon the conversion of any shares of
Preferred Stock in any manner which interferes with the timely conversion of
such Preferred Stock.
4O. Definition of Common Stock. As used in this paragraph 4, the term
--------------------------
"Common Stock" shall mean and include the Corporation's authorized Common Stock,
no par value, as constituted on the date of the filing of these Amended and
Restated Articles of Incorporation and shall also include any capital stock of
any class of the Corporation thereafter authorized which shall not be limited to
a fixed sum or percentage of par value in respect of the rights of the holders
thereof to participate in dividends or in the distribution of assets upon the
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, provided, however, that such term, when used to describe the
-----------------
securities receivable upon conversion of shares of the Preferred Stock of the
Corporation, shall include only shares designated as Common Stock of the
Corporation on the date of filing of these Amended and Restated Articles of
Incorporation, any shares resulting from any combination or subdivision thereof
referred to in subparagraph 4E, or in case of any reorganization or
reclassification of the outstanding shares thereof, the stock, securities or
assets provided for in subparagraph 4G.
5. Voting. Except as otherwise required by law or these Amended and
------
Restated Articles of Incorporation, (i) the holders of Preferred Stock shall
have one vote for each full share of Common Stock into which their respective
shares of Preferred Stock are convertible on the record date for the vote and
(ii) the holders of Common Stock shall have one vote per share of Common Stock.
6. Restrictions. At any time when shares of Preferred Stock are
------------
outstanding, without first obtaining the approval (by vote or written consent,
as provided by law) of the holders of at least 66 2/3% of the then outstanding
shares of Preferred Stock, voting together as a class (or such higher threshold
as may be required by law or by these Amended and Restated Articles of
Incorporation):
(A) the Corporation will not (i) create or authorize the creation of
any additional class or series of shares unless the same ranks junior to the
Preferred Stock as to the payment of dividends, redemption rights and the
distribution of assets upon the liquidation, dissolution or winding up of the
Corporation, (ii) increase the authorized amount of the Preferred Stock or the
authorized amount of any additional class or series of shares unless the same
ranks junior to the Preferred Stock as to the payment of dividends, redemption
rights and the distribution of assets upon the liquidation, dissolution or
winding up of the Corporation, or (iii) create or authorize any obligation or
security convertible into shares of Preferred Stock or into shares of any other
class or series unless the same ranks junior to the Preferred Stock as to the
payment of dividends, redemption rights and the distribution of assets upon the
liquidation; dissolution or winding up of the
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Corporation, whether any such creation or authorization or increase shall be by
means of amendment of these Amended and Restated Articles of Incorporation,
merger, consolidation or otherwise;
(B) the Corporation will not amend, alter or repeal the Corporation's
Articles of Incorporation or Bylaws in any manner, or file any directors'
resolutions pursuant to the General Corporation Law of California containing any
provision, in either case, which adversely affects the respective preferences,
qualifications, voting powers, special or relative rights or privileges of the
Preferred Stock or which in any manner adversely affects the Preferred Stock or
the holders thereof;
(C) the Corporation will not purchase or set aside any sums for the
purchase of any shares of stock of the Corporation or the purchase of any
options, warrants or other rights to acquire any shares of stock of the
Corporation, except for (i) the purchase of shares of Common Stock of the
Corporation from former employees of the Corporation who acquired such shares
directly from the Corporation, if each such purchase is made pursuant to
contractual rights held by the Corporation relating to the termination of
employment of such former employee and the purchase price does not exceed the
original issue price-paid by such former employee to the Corporation for such
shares, and (ii) redemptions of Preferred Stock pursuant to paragraph 2 hereof;
(D) the Corporation will not declare, or set aside funds for the
payment of, dividends on any class of stock of the Corporation, other than
dividends on Preferred Stock pursuant to paragraph 1 hereof;
(E) the Corporation will not (i) consolidate or merge with or into any
other corporation, (ii) sell or otherwise dispose of all or substantially all of
the assets of the Corporation as an entirety to any other person or persons, or
(iii) consent to any liquidation, dissolution or winding up of the Corporation;
(F) the Corporation will not acquire in any one transaction or series
of transactions the capital stock, assets or business of any person or entity,
in an amount exceeding $750,000; and
(G) from and after the date of these Amended and Restated Articles of
Incorporation the Corporation, the Corporation will not issue to employees,
consultants or directors of the Corporation pursuant to a stock option plan,
restricted stock plan or other compensatory or incentive arrangement options
(net of any such options canceled) to purchase more than an aggregate of 483,990
shares of Common Stock (which figure is inclusive of stock options outstanding
as of the date of these Amended and Restated Articles of Incorporation), nor
will it issue more than an aggregate of 483,990 shares of Common Stock upon the
exercise of such options.
ARTICLE IIIB
------------
COMMON STOCK
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1. Dividends. The holders of shares of Common Stock shall be entitled to
---------
receive such dividends as from time to time may be declared by the Board of
Directors of the Corporation, subject to the provisions of Article IIIA hereof
with respect to the rights of holders of Preferred Stock.
2. Liquidation. In the event of any liquidation, dissolution or winding
-----------
up of the Corporation, whether voluntary or involuntary, after payment shall
have been made to holders of Preferred Stock of the full amounts to which they
shall be entitled as stated and expressed herein or as may be stated and
expressed pursuant hereto the holders of Common Stock shall be entitled, to the
exclusion of the holders of Preferred Stock, to share ratably according to the
number of shares of Common Stock held by them in the remaining assets of the
Corporation available for distribution to its shareholders.
3. Voting. Except as otherwise provided by law, voting rights shall be
------
governed by paragraph 5 of Article IIIA hereof.
ARTICLE IV
----------
A. Limitation of Director's Liability. The liability of the director of
----------------------------------
this Corporation for monetary damages shall be eliminated to the fullest extent
permissible under California law. Unless applicable law otherwise provides, any
amendment, repeal or modification of this Section A shall not adversely affect
any right or protection of a director under this Section A that existed at or
prior to the time of such amendment, repeal or modification.
B. Indemnification of Agents. This Corporation is authorized to provide
-------------------------
indemnification of agents (as defined in Section 317 of the California
Corporations Code) to the fullest extent permissible under California law.
Unless applicable law otherwise provides, any amendment, repeal or modification
of this Section B shall not adversely affect any contract or other right to
indemnification of an agent the Corporation that existed at or prior to the time
of such amendment, repeal or modification.
C. Repeal or Modification. Any repeal or modification of the foregoing
----------------------
provisions of this Article IV shall not adversely affect any right of
indemnification or limitation of liability of a director or officer of this
Corporation relating to acts or omissions occurring prior to such repeal or
modification.
* * *
3. The foregoing amendment and restatement of this corporation's Articles
of Incorporation has been approved by the Board of Directors of this
Corporation.
4. The foregoing amendment and restatement of this corporation's Articles
of Incorporation was approved by the holders of the requisite number of shares
of this corporation in accordance with Sections 902 and 903 of the California
General Corporation Law. The total number of outstanding shares entitled to vote
with respect to the foregoing amendment was 1,106,941 shares of Common Stock,
611,250 shares of Series A Preferred Stock and 500,000 shares of Series B
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Preferred Stock. The number of shares voting in favor of the foregoing amendment
equaled or exceeded the vote required. The percentage vote required was a
majority of the outstanding shares of Common Stock and 66 2/3% of the
outstanding shares of Series A Preferred Stock and Series B Preferred Stock,
voting together as a single class.
[signature page follows]
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The undersigned certify 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 their own knowledge.
Executed at Reno, Nevada on July 27, 1999.
/s/ Ken Hawk
------------------------------
Ken Hawk, President
/s/ Mick Delargy
------------------------------
Mick Delargy, Secretary
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