EXHIBIT 3.1L
RESTATED ARTICLES OF INCORPORATION
OF
Data Storage Systems, Inc.
I.
The name of the corporation is Data Storage Systems, Inc.
II.
The purpose of the 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.
III.
(A) This corporation is authorized to issue two classes of stock to be
designated, respectively, "Common Stock" and "Preferred Stock." The total number
of shares which the corporation is authorized to issue is nine million
(9,000,000) shares. Five million (5,000,000) shares shall be Common Stock. Four
million (4,000,000) shares shall be Preferred Stock.
(B) The Preferred Stock may be issued from time to time in one or more
series. Excepting the Series A Preferred Stock, Series B Preferred Stock, and
the Series C Preferred Stock, the Board of Directors is hereby authorized,
within the limitations and restrictions stated in these Articles, to fix or
alter the dividend rights, dividend rate, conversion rights, voting rights,
rights and terms of redemption (including sinking fund provisions), the
redemption price or prices, and the liquidation preferences of any wholly
unissued series of Preferred Stock, and the number of shares constituting any
such series and the designation thereof, or any of them; and to increase or
decrease the number of shares of any series subsequent to the issue of shares of
that series, but not below the number of shares of such
series then outstanding. In case the number of shares of any series shall be so
decreased, the shares constituting such decrease shall resume the status which
they had prior to the adoption of the resolution originally fixing the number of
shares of such series.
(C) The rights, preferences, restrictions and other matters relating to
the four million (4,000,000) shares of Preferred Stock are as follows:
1. Designation. One million (1,000,000) of the shares of Preferred Stock
are hereby designated "Series A Preferred Stock" (hereinafter referred to as the
"Series A Stock") and five hundred thousand (500,000) of the shares of Preferred
Stock are hereby designated "Series B Preferred Stock" (hereinafter referred to
as the "Series B Stock") and one million six hundred thousand (1,600,000) of the
shares of Preferred Stock are hereby designated "Series C Preferred Stock"
(hereinafter referred to as the "Series C Stock") with the rights, preferences
and privileges as specified herein.
2. Dividends. The holders of the Series C Stock shall be entitled to
receive, out of any funds legally available therefor, dividends, payable in
preference and priority to any payment of any dividend on Series A Stock, Series
B Stock or Common Stock and in an amount per share of up to $0.05 annually
before any such funds are applied to the payment of dividends on Series A Stock,
Series B Stock or Common Stock. The holders of the Series A Stock shall be
entitled to receive, out of any funds legally available therefor, dividends,
payable in preference and priority to any payment of any dividend on Series B
Stock or Common Stock and in an amount per share of up to $0.09 annually before
any such funds are applied to the payment of dividends on Series B Stock or
Common Stock. The holders of the Series B stock shall be entitled to receive,
out of any funds legally available therefor, dividends, payable in preference
and priority to any payment of any dividend on Common Stock and in an amount per
share of up to $0.12 annually before any such funds are applied to the payment
of dividends on Common Stock, and then after an equal amount per share has been
paid on all Common and Preferred Stock, in an amount per share equal to any such
further dividend on Common Stock, all such amounts to be payable only when and
as declared by the Board. Such dividends shall not be cumulative and no right
shall accrue to the holders of the Series A Stock, Series B Stock or Series C
Stock by reason of the Board's failure to pay or declare such dividends.
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3. Liquidation Preference. 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:
(a) The holders of the Series C Stock shall be entitled to receive,
prior and in preference to any distribution of any of the assets or surplus
funds of the corporation to the holders of the Series A Stock, Series B Stock or
Common Stock by reason of their ownership of such stock, the amount of $0.60 per
share for each share of Series C Stock then held by them, adjusted for any
combinations, consolidations, or stock distributions or dividends with respect
to such shares. If the assets and funds thus distributed among the holders of
the Series C 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 C Stock in proportion to the full preferential amount
each such holder is otherwise entitled to receive.
(b) After payment to the holders of the Series C Stock of the
amounts set forth in (a), the holders of the Series A Stock shall be entitled to
receive, prior and in preference to any distribution of any of the assets or
surplus funds of the corporation to the holders of the Series B Stock or Common
Stock by reason of their ownership of such stock, the amount of $1.00 per share
for each share of Series A Stock then held by them, adjusted for any
combinations, consolidations, or stock distributions or dividends with respect
to such shares. If the assets and funds thus distributed among the holders of
the Series A 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 Stock in proportion to the full preferential amount
each such holder is otherwise entitled to receive.
(c) After payment to the holders of the Series C Stock of the
amounts set forth in (a), and after payment of the holders of Series A stock of
the amounts set forth in (b), the holders of the Series B Stock shall be
entitled to receive, prior and in preference to any distribution of any of the
assets or surplus funds of the corporation to the holders of the Common Stock by
reason of their ownership of such stock, the amount of $1.37 per share for each
share of Series B Stock then held by them, adjusted for any combinations,
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consolidations, or stock distributions or dividends with respect to such shares.
If the assets and funds thus distributed among the holders of the Series B Stock
shall be insufficient to permit the payment to such holders of the full
aforesaid preferential amount, then the entire remaining assets and funds of the
corporation legally available for distribution shall be distributed among the
holders of the Series B Stock in proportion to the full preferential amount each
such holder is otherwise entitled to receive.
(d) After payment to the holders of Series C Stock of the amount set
forth in (a), and to the holders of Series A Stock of the amounts set forth in
(b), and to the holders of Series B Stock of the amounts set forth in (c), the
holders of Common Stock shall then be entitled to receive $0.40 per share for
each share of Common Stock held by them.
(e) After payment to the holders of Series C Stock of the amounts
set forth in (a), and payment to the holders of Series A Stock the amounts set
forth in (b), and payment to the holders of Series B Stock the amounts set forth
in (c), and payment to the holders of Common Stock of the amounts set forth in
(d), the entire assets and funds of the corporation legally available for
distribution, if any, shall be distributed ratably among the holders of the
Common Stock and the holders of Preferred Stock on the basis of the number of
shares of Common Stock (i) held by each of them and (ii) issuable at the time of
such liquidation upon the conversion of the Preferred Stock.
(f) A consolidation or merger of the corporation with or into any
other corporation or corporations, or a sale of all or substantially all of the
assets of the corporation, shall not be deemed to be a liquidation, dissolution,
or winding up within the meaning of this paragraph.
4. Redemption.
(a) On June 2, 1995, the corporation shall redeem the Series A Stock
and Series C Stock by paying in cash for each share of Series A Stock and Series
C Stock redeemed, the price of $1.00 per share and $0.60 per share,
respectively.
(b) The amount payable to the holders of Series A Stock and Series C
Stock upon redemption thereof pursuant to paragraph 4(a) of this Article is
hereinafter referred to as the "Redemption Price."
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(c) At least sixty (60) days prior to the date fixed for any
redemption of Series A Stock and Series C Stock (hereinafter referred to as the
"Redemption Date"), written notice shall be mailed, postage prepaid, to each
holder of record, at such holder's post office address last shown on the records
of the corporation, notifying such holder of the election of the corporation to
redeem such shares, specifying the Redemption Date, the applicable Redemption
Price, and the date on which such holder's Conversion Rights (as defined in
paragraph 6) as to such shares terminate and calling upon such holder to
surrender to the corporation, in the manner and at the place designated, his
certificate or certificates representing the shares to be redeemed (such notice
is hereinafter referred to as the "Redemption Notice"). On or after the
Redemption Date, each holder of stock to be redeemed shall surrender such
holder's certificate or certificates representing such shares to the
corporation, in the manner and at the place designated in the Redemption Notice,
and thereupon the Redemption Price of such shares shall be payable to the order
of the person whose name appears on such certificate or certificates as the
owner of such shares and each surrendered certificate shall be cancelled. In the
event less than all the shares represented by any such certificate are redeemed,
a new certificate shall be issued representing the unredeemed shares. From and
after the Redemption Date, unless there shall have been a default in payment of
the Redemption Price, all rights of the holders of the stock designated for
redemption in the Redemption Notice as shareholders of the corporation (except
the right to receive the Redemption Price without interest upon surrender of
their certificate or certificates) shall cease and determine with respect to
such shares, and such shares shall not subsequently be transferred on the books
of the corporation or be deemed to be outstanding for any purpose whatsoever.
(d) On or prior to the Redemption Date, the corporation shall
deposit the Redemption Price of all shares of stock designated for redemption in
the Redemption Notice and not yet redeemed with a bank or trust company having
aggregate capital and surplus in excess of $20,000,000 as a trust fund for the
benefit of the respective holders of the shares designated for redemption and
not yet redeemed, with irrevocable instructions and authority to the bank or
trust company to pay the Redemption Price for such shares to their respective
holders on or after the Redemption Date upon receipt of notification from the
corporation
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that such holder has surrendered his share certificate to the corporation
pursuant to paragraph 4(c) of this Article. Such instructions shall also provide
that any funds deposited by the corporation pursuant to this paragraph 4(d) for
the redemption of shares that are subsequently converted into shares of Common
Stock pursuant to paragraph 6 of this Article shall be returned to the
corporation forthwith upon such conversion. The balance of any funds deposited
by the corporation pursuant to this paragraph 4(d) remaining unclaimed at the
expiration of two (2) years following the Redemption Date shall be returned to
the corporation upon direction by Board of Directors.
(e) In the event of any redemption of only a part of the then
outstanding shares of any series of Preferred Stock, this corporation shall
effect such redemption pro rata according to the number of shares of such series
held by each holder thereof.
5. Voting Rights. The holder of each share of the Series A Stock, Series B
Stock and Series C Stock shall be entitled to the number of votes equal to the
number of shares of Common Stock into which such share of Series A Stock, Series
B Stock and Series C Stock could be converted, shall have voting rights and
powers equal to the voting rights and powers of the Common Stock, and shall be
entitled to notice of any shareholders' meeting in accordance with the Bylaws of
the corporation. Fractional votes shall not, however, be permitted and any
fractional voting rights resulting from the above formula (after aggregating all
shares into which shares of Series A Stock, Series B Stock and Series C Stock
held by each holder could be converted) shall be rounded to the nearest whole
number (with one-half being rounded upward).
6. Conversion. The holders of the Series A stock, Series B Stock and
Series C Stock shall have conversion rights as follows (the "Conversion
rights"):
(a) Right to Convert. Each share of Series A Stock, Series B Stock
and Series C Stock shall be convertible, at the option of the holder, 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 fully paid and nonassessable shares
of Common Stock at the Conversion Price (as hereafter defined) therefore in
effect at the time of conversion determined as provided herein.
(b) Automatic Conversion. Each share of Series A Stock, Series B
Stock and Series C Stock shall automatically convert into fully paid and
nonassessable shares of
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Common Stock at the then effective conversion Price immediately upon the closing
of a firmly underwritten registered public offering covering a primary sale of
Common Stock at a public offering price (prior to underwriting discounts and
expenses) of $4.00 per share or above with a total offering gross of $5,000,000
or more. Each share of Series B Stock shall automatically convert into fully
paid and nonassessable shares of Common Stock at the then effective Conversion
Price immediately upon any of the following events:
(i) the closing of any sale or sales by the corporation of
shares of its Preferred Stock at a price of not less than $1.00 per share of the
Company's Preferred Stock, as presently constituted, the aggregate gross
proceeds to the corporation of which equals or exceeds $1,000,000;
(ii) the last day of any fiscal year in which the corporation
realizes gross revenues of at least $1,000,000; and
(iii) the last day of any fiscal year in which the corporation
realizes after-tax operating income (assuming the same tax rate on operating
income as on the corporation's net income as a whole) of at least $200,000.
Upon such automatic conversion, the rights, preferences and privileges of
the Series A Stock, Series B Stock or Series C Stock, as applicable, shall
thereupon cease and determine, and the holders shall thereafter be treated in
all respects as holders of the number of shares of Common Stock issuable at the
Conversion Price in excess on the date of the automatic conversion, taking
account of any necessary adjustments of the Conversion Price in accordance with
this paragraph 6. The corporation shall notify each holder in writing of the
automatic conversion upon the occurrence of such event. Each holder shall within
ten (10) days of his receipt of such notice, surrender his certificate(s)
representing his Series A Stock, Series B Stock or Series C Stock at the place
specified in such notice, and shall thereupon be entitled to receive
certificates representing the Common Stock into which his Series A Stock, Series
B Stock or Series C Stock was converted.
(c) Conversion Price. Each share of Series A Stock, Series B Stock
and Series C Stock shall be convertible into that number of shares of Common
which results from dividing $1.00, in the case of the Series A Sock, and the
Series B Stock, and $.60 in the case of the Series C Stock, by the Conversion
Price per share applicable to such Series of
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Preferred at the time of conversion. The price at which shares of Common Stock
shall be deliverable upon conversion of the Series A Stock, Series B Stock and
Series C Stock (the "Conversion Price") shall initially be $1.00 per share,
$1.00 per share and $.60 per share, respectively. Such conversion shall be
subject to adjustment as provided herein.
(d) Mechanics of Elective Conversion. Before any holder of Series A
Stock, Series B Stock or Series C Stock shall be entitled to convert the same
into shares of Common Stock, he shall surrender the certificate or certificates
for such shares at the office of the corporation or of any transfer agent for
such stock, and shall have given written notice to the corporation at such
office that he elects to convert the same and shall state in the notice the name
or names in which he wishes the certificate or certificates for shares of Common
Stock to be issued. The Corporation shall then, as soon as is practicable, issue
and deliver at such office to such holder, or to his nominee or nominees, a
certificate or certificates for the number of shares of Common Stock to which he
shall be entitled. Such conversion shall be deemed to have been made immediately
prior to the close of business on the date of surrender of the shares to be
converted, and the person or persons entitled to receive the shares of Common
Stock issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such shares of Common Stock on such date.
(e) Adjustments to Conversion Price for Diluting Issues.
(i) Special Definitions. For purposes of this Section 6(e),
the following definitions shall apply:
(1) "Option" shall mean rights, options or warrants to
subscribe for, purchase or otherwise acquire either Common Stock or Convertible
Securities.
(2) "Original Issue Date" shall mean the date on which a
share of Series C Preferred Stock was first issued.
(3) "Convertible Securities" shall mean any evidences of
indebtedness, shares or other securities directly or indirectly convertible into
or exchangeable for Common Stock.
(4) "Additional Shares of Common Stock" shall mean all
shares of Common Stock issued (or, pursuant to Section 6(e)(iii), deemed to be
issued) by
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the corporation after the Original Issue Date, other than shares of Common Stock
issued or issuable:
(A) upon conversion of shares of Series A Stock or
Series C Stock;
(B) to officers or employees of, or consultants
to, the corporation pursuant to any stock purchase plan or arrangement, stock
option plan, or other stock incentive plan or agreement approved by the
corporation's Board of Directors;
(C) pursuant to any warrants issued to purchase
shares of the corporation's Series C Stock; or
(D) by way of dividend or other distribution on
shares excluded from the definition of Additional Shares of Common Stock by the
foregoing clauses (A), (B), (C) or this clause (D).
(ii) No Adjustment of Conversion Price. No adjustment in the
number of shares of Common Stock into which the Series A Stock or Series C Stock
is convertible shall be made, by adjustment in the Conversion Price in respect
to the issuance of Additional Shares of Common Stock or otherwise, unless the
consideration per share for an Additional Share of Common Stock issued or deemed
to be issued by the corporation is less than the Conversion Price in effect on
the date of, and immediately prior to, the issue of such Additional Share.
(iii) Issue of Securities 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 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
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a record date shall have been fixed, as of the close of business on such record
date, provided that Additional Shares of Common Stock shall not be deemed to
have been issued with respect to a series of Preferred Stock unless the
consideration per share (determined pursuant to Section 6(e)(v) hereof), of such
Additional Shares of Common Stock would be less than the respective Conversion
Price of such series 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
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 provided, with the passage of time or otherwise, for any increase in
the consideration payable to the corporation, or decreases 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 Options or the rights of conversion or exchange under such
Convertible Securities;
(C) upon the expiration of any such Options or any
rights of conversion or exchange under such Convertible Securities which shall
not have been exercised, the respective Conversion Prices 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 such
expiration, be recomputed as if:
(i) in the case of Convertible Securities or
Options for Common Stock the only Additional Shares of Common Stock issued were
the shares of Common Stock, if any, actually issued upon the exercise of such
Options or conversion or exchange of such Convertible Securities and the
consideration received therefor was the consideration actually received by the
corporation for the issue of all such Options, whether or not exercised, plus
the consideration actually received by the corporation upon
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such exercise, or for the issue of all such Convertible Securities which were
actually converted or exchanged, plus the Additional consideration, if any,
actually received by the corporation upon such conversion or exchange, and
(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
(determined pursuant to Section 6(e)(v)) upon the issue of the Convertible
Securities with respect to which such Options were actually exercised;
(D) no readjustment pursuant to clause (B) or (C)
above shall have the effect of increasing the Conversion Price to an amount
which exceeds the lower of (i) such Conversion Price on the original adjustment
date, or (ii) such Conversion Price that would have resulted from any issuance
of Additional Shares of Common Stock between the original adjustment date and
such readjustment date (nor shall any shares issued upon conversion prior to
such readjustment be affected by such readjustment);
(E) in the case of any Options that expire by
their terms not more than thirty (30) days after the date of issue thereof, no
adjustment of the Conversion Price shall be made until the expiration or
exercise of all such Options, whereupon such adjustment shall be made in the
same manner provided in class (C) above; and
(F) if such record date shall have been fixed and
such Options or Convertible Securities are not issued on the date fixed
therefor, the adjustment previously made in the Conversion Price which became
effective on such record date shall be cancelled as of the close of business on
such record date, and thereafter the Conversion Price shall be adjusted pursuant
to this subparagraph 6(e)(iii) as of the actual date of their issuance.
(2) Stock Dividends, Stock Distributions and
Subdivisions. In the event the corporation at any time or from time to time
after the Original Issue Date
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shall declare or pay dividend or make any other distribution on the Common Stock
payable in Common Stock, or effect a subdivision of the outstanding shares of
Common Stock (by reclassification or otherwise than by payment of a dividend in
Common Stock), then and in any such event, Additional Shares of Common Stock
shall be deemed to have been issued:
(A) in the case of such dividend or distribution,
immediately after the close of business on the record date for the determination
of holders of any class of securities entitled to receive such dividend or
distribution, or
(B) in the case of any such subdivision, at the
close of business on the date immediately prior to the date upon which such
corporate action becomes effective.
If such record date shall have been fixed and such dividend shall not have
been fully paid on the date fixed therefor, the adjustment previously made in
the Conversion Price which became effective on such record date shall be
cancelled as of the close of business on such record date, and thereafter the
Conversion Price shall be adjusted pursuant to this subparagraph 6(e)(iii) as of
the time of the actual payment of such dividend.
(iv) Adjustment of Conversion Price Upon Issuance of
Additional Shares of Common Stock. In the event the corporation shall issue
Additional Shares of Common Stock (including Additional Shares of Common Stock
deemed to be issued pursuant to Section 6(e)(iii) but excluding Additional
Shares of Common Stock issued pursuant to Section 6 (e)(iii)(2) which event is
dealt with in Section 6(3)(vi) hereof) without consideration or for a
consideration per share less than the Conversion Price in effect on the date of
and immediately prior to such issue, then in such event, the Conversion Price
shall be reduced, concurrently with such issue in order to increase the number
of shares of Common Stock into which the Series A Stock and Series C Stock is
convertible, to a price equal to the consideration per share received by the
corporation for such Additional Shares of Common Stock.
(v) Determination of Consideration. For purposes of this
Section 6(e), the consideration received by the corporation for the issue of any
Additional Shares of Common Stock shall be computed as follows:
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(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;
(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, be 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 6(e)(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 provision 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
provision 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.
(vi) Adjustment for Dividends, Distributions, Subdivisions,
Combinations or Consolidation of Common Stock.
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(1) Stock Dividends, Distribution or Subdivisions. In
the event the corporation shall issue Common Stock pursuant to Section
6(e)(iii)(2) in 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 the effectiveness of such
stock dividend, stock distribution or subdivision, be proportionately decreased.
(2) Combinations or Consolidations. In the event the
outstanding shares of Common Stock shall be combined or consolidated, by
reclassification or otherwise, into a lesser number of shares of Common Stock,
the Conversion Price in effect immediately prior to such combination or
consolidation shall, concurrently with the effectiveness of such combination or
consolidation, be proportionately increased.
(vii) Adjustment for Merger or Reorganization, etc. In case of
any consolidation or merger of the corporation with or into another corporation
or the conveyance of all or substantially all the assets of the corporation to
another corporation, each share of Series A Stock and Series C Stock shall
thereafter be convertible into the number of shares of stock or other securities
or property to which a holder of the number of shares of Common Stock of the
corporation deliverable upon conversion of such Series A Stock or Series C Stock
would have been entitled upon such consolidation, merger or conveyance; and, in
any such case, appropriate adjustment (as determined by the Board of Directors)
shall be made in the application of the provisions herein set forth with respect
to the rights and interest thereafter of the holders of the Series A Stock and
Series C Stock, to the end that the provisions set forth herein (including
provisions with respect to changes in and other adjustments of the Conversion
Price) shall thereafter be applicable, as nearly as reasonably may be, in
relation to any shares of stock or other property thereafter deliverable upon
the conversion of the Series C Stock.
(f) No Impairment. The corporation will not, by amendment of these
Restated 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 of the terms to be observed or performed hereunder by the corporation but
will at all times in good faith assist in the
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carrying out of all the provisions of this Section 6 and in the taking of all
such action as may be necessary or appropriate in order to protect the
Conversion Rights of the holders of the Series A Stock and Series C Stock
against impairment.
(g) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the respective Conversion Prices pursuant to this
Section 6, the corporation at its expense shall promptly compute such
adjustments or readjustments in accordance with the terms hereof and furnish to
each holder of Series A Stock and Series C 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 Series A Stock or Series C Stock, furnish
or cause to be furnished to such holder a like certificate setting forth (i)
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 holder's shares.
(h) Notices of Record Date. In the event of any taking by the
corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend which is the same as cash dividends paid in
previous quarters) or other distribution, the corporation shall mail to each
holder of Series A Stock and Series C Stock at least ten (10) days prior to the
date specified therein, a notice specifying the date on which any such record is
to be taken for the purpose of such dividend or distribution.
(i) Common Stock Reserved. The corporation shall reserve and keep
available out of its authorized but unissued Common Stock such number of shares
of Common Stock as shall from time to time be sufficient to effect conversion of
the Series A Stock, Series B Stock and Series C Stock.
7. Consent to Certain Distributions. Each holder of Series A Stock, Series
B Stock and Series C Stock shall be deemed to have consented, for purposes of
Sections 502, 503 and 506 of the General Corporations Law, to distributions made
by the corporation and approved by the Board of Directors of the corporation in
connection with the repurchase of shares of Common Stock issued to or held by
directors and employees of, or consultants to,
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the corporation upon termination of their employment or services pursuant to
agreements providing for the right of said repurchase between the corporation
and such persons.
8. Voting Rights. Except as otherwise required by law and the provisions
of this Section 8, the holders of Series A Stock, Series B Stock and Series C
Stock shall be entitled to notice of any shareholders' meeting and to vote
together with the holders of Common Stock as a single class of capital stock
upon any matter submitted to shareholders for a vote, on the following basis:
(a) Holders of Common Stock and Series B Stock shall have one (1)
vote per share; and
(b) Holders of Series A Stock and Series C Stock shall have that
number of votes per share as is equal to the number of shares of Common Stock
into which each such share of Series A Stock or Series C Stock held by such
holder is convertible at the record date for the determination of the
shareholders entitled to vote on such matters or, if no such record date is
established, at the date such vote is taken or any written consent of
shareholders is solicited.
(c) So long as at least one million (1,000,000) shares of Series A
Stock remain outstanding, the holders of the Series A Stock then outstanding
shall be entitled, voting together as a class, to elect two (2) directors of the
corporation at each election of directors. Any vacancy occurring because of the
death, resignation or removal of a director elected by the holders of Series A
Stock shall be filled by the vote or written consent of the holders of a
majority of the shares of Series A Stock, or in the absence of such action by
such holders, by action of the remaining directors then in office.
(d) The holders of Common Stock, Series B Preferred and Series C
Preferred shall be entitled, voting together as a separate class, to elect two
(2) directors of the corporation at each election of directors. Any vacancy
occurring because of the death, resignation or removal of a director elected by
the holders of Common Stock, Series B Preferred and Series C Preferred shall be
filled by the vote or written consent of the holders of a majority of the shares
of Common Stock, Series B Preferred and Series C Preferred or, in the absence of
such action by such holders, by action of the remaining directors then in
office.
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(e) All directors not elected by the holders of Series A Stock,
Series B Stock, Series C Stock or by the holders of Common Stock as set forth
above shall be elected by the holders of Common Stock and the holders of
Preferred Stock, voting together and not as separate classes, with each share
voting as provided in this Section 8. Any vacancy occurring because of the
death, resignation or removal of a director elected by the holders of Common
Stock and the holders of Preferred Stock voting together shall be filled by the
vote or written consent of a majority of the holders of Common Stock and the
holders of Preferred Stock voting together as provided above or, in the absence
of action by such holders of Common Stock and Preferred stock, by action of the
remaining directors then in office.
9. Covenants. In addition to any other rights provided by law, so long as
any shares of Preferred Stock shall be outstanding, the corporation shall not,
without first obtaining the affirmative vote or written consent of the holders
of not less than a majority of the outstanding shares of Preferred Stock voting
together as a class:
(a) amend or repeal any provision of, or add any provision to, the
corporation's Restated Articles of Incorporation or Bylaws if such action would
alter or change the preferences, rights or privileges of, or the restrictions
provided for the benefit of the Preferred Stock;
(b) create any new series or class of stock having any preference or
priority as to dividends or assets superior to or on a parity with any such
preference or priority of the Preferred stock;
(c) increase the total number of authorized shares of the Preferred
Stock;
(d) pay or declare any dividend or distribution on any shares of
Common Stock or apply any of its assets to the redemption, retirement, purchase
or other acquisition directly or indirectly, through subsidiaries or otherwise,
of any shares of Common Stock except from employees or consultants of the
corporation upon termination of employment;
(e) effect any sale, lease, assignment, transfer or other conveyance
of all or substantially all of the assets of the Corporation or any of its
subsidiaries, or any consolidation or merger involving the Corporation or any of
its subsidiaries, or any reclassification or other change of any stock, or any
recapitalization of the Corporation.
-17-
10. Residual Rights. All rights accruing to the outstanding shares of the
corporation not expressly provided for to the contrary herein shall be vested in
the Common Stock.
IV.
(A) 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 shall only be prospective and shall not
affect the rights under this Article in effect at the time of the alleged
occurrence of any action or omission to act giving rise to liability.
(B) The corporation is authorized to provide indemnification of agents (as
defined in Section 317 of the California Corporations Code) for breach of duty
to the corporation and its shareholders through bylaw provisions, through
agreements with the agents, and/or through shareholder resolutions, or
otherwise, in excess of the indemnification otherwise permitted by Section 317
of the California Corporations Code, subject to the limits on such excess
indemnification set forth in Section 204 of the California Corporations Code.
Any repeal or modification of this Article shall only be prospective and shall
not affect the rights under this Article in effect at the time of the alleged
occurrence of any action or omission to act giving rise to indemnification.
-18-
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
Whitney G. Newton certifies that:
1. He is the President and the Secretary of Data Storage Systems, Inc.,
a California corporation.
2. Article III, Paragraph (C) of the articles of incorporation of this
corporation is amended to read as follows:
"(C) The rights, preferences, restrictions and other matters
relating to the four million (4,000,000) shares of Preferred Stock
are as follows:
1. Designation. One million (1,000,000) of the shares of Preferred
Stock are hereby designated "Series A Preferred Stock" (hereinafter
referred to as the "Series A Stock") and five hundred thousand
(500,000) of the shares of Preferred Stock are hereby designated
"Series B Preferred Stock" (hereinafter referred to as the "Series B
Stock") and two million (2,000,000) of the shares of Preferred Stock
are hereby designated "Series C Preferred Stock" (hereinafter
referred to as the "Series C Stock") with the rights, preferences
and privileges as specified herein."
3. The foregoing amendment of articles of incorporation has been duly
approved by the board of directors.
4. The foregoing amendment of articles of incorporation has been duly
approved by the required vote of shareholders in accordance with
Section 902 of the Corporations Code. The total number of
outstanding shares of the corporation is 3,133, 334. The number of
shares voting in favor of the amendment equaled or exceeded the vote
required. The percentage vote required was more than 50%.
I 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 my own knowledge.
DATE: July 24, 1991
/s/ Whitney G. Newton
Whitney G. Newton, President
/s/ Whitney G. Newton
Whitney G. Newton, Secretary
CERTIFICATE OF RESTATEMENT
OF
ARTICLES OF INCORPORATION
OF
Data Storage Systems, Inc.
Whitney G. Newton certifies that:
1. He is the Chief Executive Officer and the Secretary of Data Storage
Systems, Inc., a California corporation.
2. The Articles of Incorporation of the Corporation, as amended to the
date of the filing of this certificate, including amendments set forth herein
but not separately filed (and with the omissions required by section 910 of the
Corporations Code) are restated as in Exhibit A attached hereto.
3. The Restated Articles of Incorporation 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 shareholders in accordance with section 903 of the Corporations Code.
The total number of outstanding shares of the Corporation is 788,334 shares of
Common Stock; 1,000,000 shares of Series A Preferred Stock; 266,666 shares of
Series B Preferred Stock, and 1,083,334 shares of Series C Preferred Stock. The
number of shares voting in favor of the amendment equaled or exceeded the
percentage vote required. The percentage vote required
-2-
was more than 50% of each class of shares voting separately.
March 12, 1991.
/s/ Whitney G. Newton
Whitney G. Newton
Chief Executive Officer
/s/ Whitney G. Newton
Whitney G. Newton
Secretary
Each of the undersigned declares under penalty of perjury that he has read
the foregoing certificate and knows the contents thereof and that the same is
true of his own knowledge.
Executed at San Francisco, California, on March 12, 1991.
/s/ Whitney G. Newton
Whitney G. Newton
CERTIFICATE OF APPROVAL
OF
AGREEMENT OF MERGER
OF
DATA STORAGE SYSTEMS, INC.
(surviving corporation)
Kathryn McGovern hereby certifies that:
1. She is the President and Secretary of Data Storage Systems, Inc. a
California corporation (the "Corporation").
2. The Agreement Merger in the form attached was duly approved by the
Board of Directors and shareholders of the Corporation.
3. The principal terms of the Agreement of Merger were approved by the
Corporation by a vote of a number of shares of Common Stock which
equaled or exceeded the vote required. The vote required was greater
than 50% of the outstanding shares of Common Stock.
4. The Corporation has one class of stock outstanding, designated
"Common Stock" of which 297,588,558 shares of Common Stock were
outstanding and entitled to vote on the merger. There are no shares
of Preferred Stock outstanding.
I 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 my own knowledge.
Dated: March 15, 1996 By: /s/ Kathryn McGovern
----------------------
Kathryn McGovern
President and Secretary
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
DATA STORAGE SYSTEMS, INC.
The undersigned, Kathryn McGovern hereby certifies that:
1. I am the duly elected Chief Executive Officer and Secretary of Data
Storage Systems, Inc., a California Corporation.
2. Article III, Section A of the articles of incorporation of this
corporation is amended and restated to read as follows:
"This corporation is authorized to issue two classes of stock to be
designated, respectively, "Common Stock" and "Preferred Stock." The total number
of shares which the corporation is authorized to issue is one hundred forty
million (140,000,000) shares. One hundred thirty-seven million (137,000,000)
shares shall be Common Stock. Three million (3,000,000) shares shall be
Preferred Stock."
3. The first sentence of Article III, Section C, paragraph 6(b) is hereby
amended and restated to read as follows:
"Each share of Series A Stock, Series B Stock and Series C stock shall
automatically convert into fully paid and nonassessable shares of Common Stock
at the then effective Conversion Price immediately upon the closing of a firmly
underwritten registered public offering covering a primary shall of Common Stock
at a public offering price (prior to underwriting discounts and expenses) of
$4.00 per share or above with a total offering gross of $5,000,000 or more or
upon the consent of a majority of each class of Series A Stock, Series B Stock
and Series C Stock."
-2-
4. The foregoing amendment of articles of incorporation has been duly
approved by the board of directors.
5. The foregoing amendment of articles of incorporation has been duly
approved by the required vote of shareholders in accordance with Section 902 of
the Corporations Code. The total number of outstanding shares of the corporation
is 1,000,000 shares of Series A Preferred Stock, 1,083,334 shares of Series C
Preferred Stock and 1,060,000 of Common Stock. The number of shares voting in
favor of the amendment equaled or exceeded the vote required. The percentage
vote required was more than 50% of the Preferred Stock voting as a single class
and more than 50% of the Common Stock voting as a single class.
I 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 my own knowledge.
DATE: November 3, 1995
/s/ Kathryn McGovern
Kathryn McGovern, Chief Executive Officer
and Secretary
CERTIFICATE OF APPROVAL
OF
AGREEMENT OF MERGER
OF TEMP DSSI, INC.
(disappearing corporation)
Eugene B. Doggett and Garry B. Watzke hereby certify that:
1. They are the Executive Vice President and Secretary, respectively,
of Temp DSSI, Inc., a California corporation (the "Corporation").
2. The Agreement Merger in the form attached was duly approved by the
Board of Directors and shareholders of the Corporation.
3. The shareholder approval was by the holders of 100% of the
outstanding shares of the Corporation.
4. There is only one class of shares and the number of outstanding
shares is 100.
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.
Dated: March 15, 1996 By: /s/ Eugene B. Doggett
-------------------------
Eugene B. Doggett
Executive Vice President
Dated: March 15, 1996 By: /s/ Garry B. Watzke
----------------------
Garry B. Watzke
Secretary
AGREEMENT OF MERGER
THIS AGREEMENT OF MERGER, dated as of March 15, 1996 (the "Agreement"), is
made and entered into by Temp DSSI, Inc., a California corporation ("Acquiror
Sub") and Data Storage Systems, Inc. a California corporation ("Target" or
"Surviving Corporation") (Target and Acquiror Sub being hereinafter collectively
referred to as the "Constituent Corporations").
Recitals
A. Iron Mountain Records Management, Inc., a Delaware corporation
("Acquiror"), Target and Acquiror Sub have entered into a Reorganization
Agreement dated November 17, 1995 (the "Reorganization Agreement"), providing,
among other things, for the execution and filing of this Merger Agreement and
the merger of Acquiror Sub with and into Target upon the terms set forth in the
Reorganization Agreement and this Merger Agreement (the "Merger").
B. The respective Boards of Directors of each of the Constituent
Corporations deem it advisable and in the best interests of each of such
corporations and their respective shareholders that Acquiror Sub be merged with
and into Target.
Agreement
NOW, THEREFORE, in consideration of the promises and mutual agreements
contained in this Merger Agreement, Acquiror and the Constituent Corporations
hereby agree that Acquiror Sub shall be merged with and into Target in
accordance with the provisions of the laws of the State of California, upon the
terms and subject to the conditions set forth as follows:
Article 1
The Merger
1.1 Filing. This Merger Agreement, together with the officers'
certificates of each of the Constituent Corporations required by the General
Corporation Law of the State of California (the "California Law"), shall be
filed with the Secretary of State of the State of California at the time
specified in the Reorganization Agreement.
1.2 Effectiveness. The Merger shall become effective upon the filing of
this Merger Agreement with the Secretary of State of the State of California
(the "Effective Time").
1.3 Merger. At the Effective Time, Acquiror Sub shall be merged into
Target and the separate corporate existence of Acquiror Sub shall thereupon
cease. Target shall be the Surviving Corporation in the Merger and the separate
corporate existence of Target, with all
-2-
of its purposes, objects, rights, privileges, powers, immunities and franchises,
shall continue unaffected and unimpaired by the Merger.
1.4 Further Action. If at any time after the Effective Time any further
action is necessary or desirable to carry out the purposes of this Merger
Agreement or to vest the Surviving Corporation with the full right, title and
possession to all assets, property, rights, privileges, immunities, powers and
franchises of either or both of the Constituent Corporations, the officers and
directors of the Surviving Corporation are fully authorized in the name of
either or both of the constituent Corporations or otherwise to take all such
action.
Article 2
Corporate Governance Matters
2.1 Articles. The Articles of Incorporation of Target in effect
immediately prior to the Effective Time shall be the Articles of Incorporation
of the Surviving Corporation unless and until amended as provided by law.
2.2 Bylaws. The Bylaws of the Target in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation unless and until
amended as provided by law.
2.3 Directors. From and after the Effective Time, the directors of
Acquiror Sub shall be the directors of the Surviving Corporation and they shall
hold office as provided in the Bylaws of the Surviving Corporation.
2.4 Officers. The officers of the Surviving Corporation shall be the
officers of Acquiror Sub on the Effective Time and they shall continue to hold
office from and after the Effective Time as provided in the Bylaws of the
Surviving Corporation.
Article 3
Manner of Converting Shares of the Constituent Corporations
3.1 Conversion of Target Shares.
(a) At and as of the Effective Time, (A) each Target Share (other
than any Dissenting Share) shall be converted into the right to receive an
amount (the "Merger Consideration") equal to (i) the difference between
$3,310,776 and the total liabilities of the Target as of the close of business
on February 29, 1996 (ii) divided by the aggregate number of Target Shares
outstanding as of the Effective Time (without interest), and (B) each Dissenting
Share shall be converted into the right to receive payment from the Surviving
Corporation with respect thereto in accordance with the provisions of the
California General Corporation Law; provided, however, that the Merger
Consideration shall be subject to equitable adjustment in the event of any stock
split, stock dividend, reverse stock split, or other change in the number of
Target Shares outstanding between the date hereof and the
-3-
Effective Time; and further provided that there shall be withheld from payment
to each holder of record a pro rata portion of the Merger Consideration which
would otherwise be paid to such person such amount which, when aggregated, is
equal to the Closing Escrow Deposit (as defined in Section 3.6). No target
Shares shall be deemed to be outstanding or to have any rights, other than those
set forth below in Section 3.2, after the Effective Time.
For purposes hereof, the following terms shall have the following
meanings:
(i) "Target Shares" shall mean each issued and outstanding
share of the Common Stock, no par value, of the Target issued and outstanding as
of the Effective Time.
(ii) "Dissenting Shares" shall mean any Target Share which any
stockholder who has exercised his or her appraisal rights under the California
General Corporation Law holds of record.
3.2 Acquiror Sub Common Stock. At the Effective Time, each then
outstanding share of common stock, $1.00 par value, of Acquiror Sub shall cease
to be an existing and issued share and shall become and be converted into, by
virtue of the Merger and without any action on the part of Acquiror, Acquiror
Sub or Target, one share of Common Stock of the Surviving Corporation and the
aggregate of such shares shall constitute the only outstanding shares of capital
stock of the Surviving Corporation.
3.3 Closing of Target Transfer Books. At and after the Effective Time,
holders of certificates representing Target Shares shall cease to have any
rights as shareholders of Target and the stock transfer books of Target shall be
closed with respect to Target Shares issued and outstanding immediately prior to
the Effective Time and no further transfer of such shares shall thereafter be
made on such stock transfer books. If, after the Effective Time, valid
certificates previously representing such shares are presented to Acquiror or
Target, they shall be exchanged as provided in Section 3.4.
3.4 Exchange of Certificates for Merger Consideration. Promptly following
the Effective Time, Acquiror or the Surviving Corporation shall transmit to the
former Target shareholders appropriate documents to be used by them to surrender
their Target Shares certificates in exchange for payment of the Merger
Consideration. Until so surrendered and exchanged, each certificate for Target
Shares shall represent solely the rights to receive payment of the Merger
Consideration that it is entitled to pursuant to Section 3.1 (or to perfect the
holder thereof's right to receive payment for such shares pursuant to Chapter 13
of the California Law and Section 3.5 hereof); provided, however, that customary
and appropriate certifications and indemnities allowing exchange against lost or
destroyed certificates shall be provided.
3.5 Dissenting Shares. Notwithstanding anything in this Agreement to the
contrary, Target Shares that are issued and outstanding immediately prior to the
Effective Time and that are held by shareholders who have not voted such shares
in favor of the Merger and who have delivered a written demand for purchase of
such shares in the manner provided in Chapter 13 of the California Law
("Dissenting Shares") shall not be canceled and
-4-
converted into rights to receive payment of the Merger Consideration in
accordance with Section 3.1 unless and until such holder shall have failed to
perfect, or shall have effectively withdrawn or lost, such holder's right to
demand purchase and payment under the California Law. If such holder shall have
so failed to perfect, or shall have effectively withdrawn or lost such right,
such holder's Target Shares shall thereupon be deemed to have been canceled and
converted as described in Section 3.1 at the Effective time, and each such share
shall represent solely the right to receive payment of the Merger Consideration
in accordance with such Section 3.1. From and after the Effective Time, no
holder of Target Shares who has demanded the purchase of shares as provided in
Chapter 13 of the California Law shall be entitled to vote such holder's shares
for any purpose or to receive payment of dividends or other distributions with
respect to such holder's shares (except dividends and other distributions
payable to shareholders of record at a date which is prior to the Effective
Time).
3.6 Post-Closing Escrow. A pro rata portion of the Merger Consideration
payable in respect of each Target Share equal in the aggregate to $500,000 (the
"Closing Escrow Deposit") shall be paid to Cooley Godward Castro Huddleston &
Tatum, as escrow agent (the "Post-Closing Escrow Agent") under that certain
Post-Closing Escrow Agreement in the form annexed to the Reorganization
Agreement as Exhibit 1.6 (the "Post-Closing Escrow Agreement"). The Post-Closing
Escrow Agent shall hold, invest and disburse the Post-Closing Escrow Deposit and
any interest or dividends therein (together with the Escrow Deposit, the "Escrow
Fund") as provided in the Post-Closing Escrow Agreement. The Post-Closing Escrow
Agreement shall provide for disbursement of funds to the former shareholders of
Target (other than funds required to cover claims) on December 15, 1996.
Article 4
Termination and Amendment
4.1 Termination. Notwithstanding the approval of this Merger Agreement by
the shareholders of Acquiror Sub and Target, this Merger Agreement shall
terminate forthwith in the event that the Reorganization Agreement shall be
terminated as therein provided.
4.2 Amendment. This Merger Agreement may be amended by the parties hereto
at any time before or after approval hereof by the shareholders of either
Acquiror Sub or Target, but, after any such approval, no amendment shall be made
which without the further approval of such shareholders would (i) have a
material adverse effect on the shareholders of either Acquiror Sub or Target,
(ii) change any of the principal terms of the Merger Agreement, or (iii) change
any term of the Articles of Incorporation of the Surviving Corporation. This
Merger Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
-5-
IN WITNESS WHEREOF, the parties have duly executed this Merger Agreement
as of the date first written above.
DATA STORAGE SYSTEMS, INC.
a California corporation
By: /s/ Kathryn McGovern By: /s/ Kathryn McGovern
------------------------- ------------------------
Its Secretary Its President
TEMP DSSI, INC.
a California corporation
By: /s/ Garry B. Watzke By: /s/ John F. Kenny
------------------------- ------------------------
Its Secretary
Title: Vice President
Iron Mountain Records Management, Inc.
a Delaware corporation
By: /s/ Garry B. Watzke By: /s/ John F. Kenny
------------------------- ------------------------
Its Secretary
Title: Vice President