EXHIBIT 3.1
SIXTH AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
REPLAY NETWORKS, INC.
The undersigned, Earl H. LeMasters III and Mark A. Medearis, hereby certify
that:
1. They are the duly elected and acting Chief Executive Officer and
Secretary, respectively, of Replay Networks, 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
The name of this corporation is ReplayTV, Inc. (the "Corporation").
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ARTICLE 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.
ARTICLE III
(A) Classes of Stock. The Corporation is authorized to issue two classes
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of stock to be designated, respectively, "Common Stock" and "Preferred Stock."
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The total number of shares which the Corporation is authorized to issue is
110,077,301 shares, each with a par value of $0.001 per share. 75,000,000 shares
shall be Common Stock and 35,077,301 shares shall be Preferred Stock.
(B) Rights, Preferences and Restrictions of Preferred Stock. The Preferred
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Stock authorized by these Sixth Amended and Restated Articles of Incorporation
may be issued from time to time in one or more series. The first series of
Preferred Stock shall be designated "Series A Preferred Stock" and shall consist
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of 2,494,070 shares. The second series of Preferred Stock shall be designated
"Series B Preferred Stock" and shall consist of 2,580,644 shares. The third
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series of Preferred Stock shall be designated "Series C Preferred Stock" and
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shall consist of 3,162,592 shares. The fourth series of Preferred Stock shall be
designated "Series D Preferred Stock" and shall consist of 10,200,000 shares.
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The fifth series of Preferred Stock shall be designated "Series E Preferred
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Stock" and shall consist of 7,639,995 shares. The sixth series of Preferred
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Stock shall be designated "Series F Preferred Stock" and shall consist of
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9,000,000 shares. The rights, preferences, privileges and restrictions granted
to and imposed on the Series A Preferred Stock, Series B Preferred Stock, Series
C Preferred Stock, Series D Preferred
Stock, Series E Preferred Stock and Series F Preferred Stock are as set forth
below in this Article III(B).
1. Dividend Provisions. Subject to the rights of series of
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Preferred Stock that may from time to time come into existence, the holders of
shares of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock, Series D Preferred Stock, Series E Preferred Stock and Series F Preferred
Stock shall be entitled to receive dividends, out of any assets legally
available therefor, prior and in preference to any declaration or payment of any
dividend (payable other than in Common Stock or other securities and rights
convertible into or entitling the holder thereof to receive, directly or
indirectly, additional shares of Common Stock of the Corporation) on the Common
Stock of the Corporation, on a pro rata basis at the rate of (i) $0.00884 per
share (as adjusted for any stock dividends, combinations, splits,
recapitalizations and the like with respect to such shares) per annum on each
outstanding share of Series A Preferred Stock, (ii) $0.0248 per share (as
adjusted for any stock dividends, combinations, splits, recapitalizations and
the like with respect to such shares) per annum on each outstanding share of
Series B Preferred Stock, (iii) $0.0505915 per share (as adjusted for any stock
dividends, combinations, splits, recapitalizations and the like with respect to
such shares) per annum on each outstanding share of Series C Preferred Stock,
(iv) $0.062 per share (as adjusted for any stock dividends, combinations,
splits, recapitalizations and the like with respect to such shares) per annum on
each outstanding share of Series D Preferred Stock, (v) $0.60 per share (as
adjusted for any stock dividends, combinations, splits, recapitalizations and
the like with respect to such shares) per annum on each outstanding share of
Series E Preferred Stock and (vi) $0.88 per share (as adjusted for any stock
dividends, combinations, splits, recapitalizations and the like with respect to
such shares) per annum on each outstanding share of Series F Preferred Stock,
payable quarterly when, as and if declared by the Board of Directors. No
dividends shall be paid in any calendar year on any share of Common Stock unless
a full dividend pursuant to the above provisions of this Section 1 is paid in
such year with respect to all outstanding shares of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock,
Series E Preferred Stock and Series F Preferred Stock in an amount for each such
share of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock, Series D Preferred Stock, Series E Preferred Stock and Series F Preferred
Stock together with an amount equal to or greater than the aggregate amount of
such dividends for all shares of Common Stock into which each such share of
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock, Series E Preferred Stock and Series F Preferred Stock
could then be converted. Such dividends shall not be cumulative.
2. Liquidation.
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(a) Preference. In the event of any liquidation, dissolution or
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winding up of the Corporation, either voluntary or involuntary, subject to the
rights of series of Preferred Stock that may from time to time come into
existence in accordance herewith, the holders of the Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock,
Series E Preferred Stock and Series F Preferred Stock shall be entitled to
receive, prior and in preference to any distribution of any of the assets of the
Corporation to the holders of Common Stock by reason of their ownership thereof,
an amount per share equal to (i) $0.1105 per share (as adjusted for any stock
dividends, combinations, splits, recapitalizations and the like
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with respect to such shares) for each share of Series A Preferred Stock then
held by them, (ii) $0.31 per share (as adjusted for any stock dividends,
combinations, splits, recapitalizations and the like with respect to such
shares) for each share of Series B Preferred Stock then held by them, (iii)
$0.6323925 per share (as adjusted for any stock dividends, combinations, splits,
recapitalizations and the like with respect to such shares) for each share of
Series C Preferred Stock then held by them, (iv) $0.775 per share (as adjusted
for any stock dividends, combinations, splits, recapitalizations and the like
with respect to such shares) for each share of Series D Preferred Stock then
held by them, (v) $7.50 per share (as adjusted for any stock dividends,
combinations, splits, recapitalizations and the like with respect to such
shares) for each share of Series E Preferred Stock held by them and (vi) $11.00
per share (as adjusted for any stock dividends, combinations, splits,
recapitalizations and the like with respect to such shares) for each share of
Series F Preferred Stock held by them, plus declared but unpaid dividends. If,
upon the occurrence of such event, the assets and funds thus distributed among
the holders of the Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock, Series E Preferred Stock and Series F
Preferred Stock shall be insufficient to permit the payment to such holders of
the full aforesaid preferential amounts, then, subject to the rights of series
of Preferred Stock that may from time to time come into existence in accordance
herewith, the entire assets and funds of the Corporation legally available for
distribution shall be distributed ratably among the holders of the Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock and Series F Preferred Stock in
proportion to the preferential amount each such holder is otherwise entitled to
receive.
(b) Remaining Assets. Upon the completion of the distribution
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required by Section 2(a) above and any other distribution that may be required
with respect to series of Preferred Stock that may from time to time come into
existence in accordance herewith, if assets remain in the Corporation, the
holders of the Common Stock of the Corporation shall receive all of the
remaining assets of the Corporation pro rata based on the number of shares of
Common Stock held by each.
(c) Certain Acquisitions.
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(i) Deemed Liquidation. For purposes of this Section 2, a
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liquidation, dissolution or winding up of the Corporation shall be deemed to be
occasioned by, or to include, (A) the acquisition of the Corporation by another
entity by means of any transaction or series of related transactions (including,
without limitation, any reorganization, merger or consolidation, but excluding
any merger effected exclusively for the purpose of changing the domicile of the
Corporation); or (B) a sale, lease, license or other conveyance of all or
substantially all of the assets of the Corporation, unless the Corporation's
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shareholders of record as constituted immediately prior to such acquisition or
sale will, immediately after such acquisition or sale (by virtue of securities
issued as consideration in the acquisition or sale or otherwise) hold at least
50% of the voting power of the surviving or acquiring entity in approximately
the same relative percentages after such acquisition or sale as before such
acquisition or sale.
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(ii) Valuation of Consideration. In the event of a deemed
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liquidation as described in Section 2(c)(i) above, if the consideration received
by the Corporation is other than cash, its value will be deemed its fair market
value. Any securities shall be valued as follows:
(A) Securities not subject to investment letter or other
similar restrictions on free marketability covered by (B) below:
(1) If traded on a securities exchange or the Nasdaq
National Market, the value shall be deemed to be the average of the closing
prices of the securities on such exchange over the thirty-day period ending
three days prior to the closing;
(2) If traded over-the-counter, the value shall be
deemed to be the average of the closing bid or sale prices (whichever is
applicable) over the thirty-day period in which sales actually occur ending
three days prior to the closing; and
(3) If there is no public market, the value shall be
the fair market value thereof, as mutually determined by the Corporation and the
holders of at least a majority of the voting power of all then outstanding
shares of Preferred Stock.
(B) The method of valuation of securities subject to
investment letter or other restrictions on free marketability (other than
restrictions arising solely by virtue of a shareholder's status as an affiliate
or former affiliate) shall be to make an appropriate discount from the market
value determined as above in Section 2(c)(ii)(A) to reflect the approximate fair
market value thereof, as mutually determined by the Corporation and the holders
of at least a majority of the voting power of all then outstanding shares of
Preferred Stock.
(iii) Notice of Transaction. The Corporation shall give each
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holder of record of Preferred Stock written notice of such impending transaction
not later than twenty (20) days prior to the shareholders' meeting called to
approve such transaction, or twenty (20) days prior to the closing of such
transaction, whichever is earlier, and shall also notify such holders in writing
of the final approval of such transaction. The first of such notices shall
describe the material terms and conditions of the impending transaction, the
record date for determining shareholders entitled to vote (if applicable) and
the provisions of this Section 2, and the Corporation shall thereafter give such
holders prompt notice of any material changes. The transaction shall in no event
take place sooner than twenty (20) days after the Corporation has given the
first notice provided for herein or sooner than ten (10) days after the
Corporation has given notice of any material changes provided for herein;
provided, however, that such periods may be shortened upon the written consent
of the holders of Preferred Stock that are entitled to such notice rights and
that represent at least a majority of the voting power of all then outstanding
shares of such Preferred Stock.
(iv) Effect of Noncompliance. In the event the requirements of
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this Section 2(c) are not complied with, the Corporation shall forthwith either
cause the closing of the transaction to be postponed until such requirements
have been complied with, or cancel
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such transaction, in which event the rights, preferences and privileges of the
holders of Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock, Series E Preferred Stock and Series F
Preferred Stock shall revert to and be the same as such rights, preferences and
privileges existing immediately prior to the date of the first notice referred
to in Section 2(c)(iii) hereof.
3. Redemption.
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(a) Date and Amount. On or at any time after (i) February 15,
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2004, or (ii) the receipt by the Corporation in writing from the holders of not
less than 66 2/3% of the Preferred Stock then outstanding of their consent to
redemption hereunder, the Corporation may at any time it may lawfully do so, at
the option of the Board of Directors, redeem in whole or in part the Preferred
Stock by paying in cash therefor (i) $0.1105 per share for each share of Series
A Preferred Stock then outstanding (as adjusted for any stock dividends,
combinations, splits, recapitalizations and the like with respect to such
shares), (ii) $0.31 per share for each share of Series B Preferred Stock then
outstanding (as adjusted for any stock dividends, combinations, splits,
recapitalizations and the like with respect to such shares), (iii) $0.6323925
per share for each share of Series C Preferred Stock then outstanding (as
adjusted for any stock dividends, combinations, splits, recapitalizations and
the like with respect to such shares), (iv) $0.775 per share for each share of
Series D Preferred Stock then outstanding (as adjusted for any stock dividends,
combinations, splits, recapitalizations and the like with respect to such
shares), (v) $7.50 per share for each share of Series E Preferred Stock then
outstanding (as adjusted for any stock dividends, combinations, splits,
recapitalizations and the like with respect to such shares) and (vi) $11.00 per
share for each share of Series F Preferred Stock then outstanding (as adjusted
for any stock dividends, combinations, splits, recapitalizations and the like
with respect to such shares), plus in each case an amount equal to all declared
but unpaid dividends on the outstanding shares of such Preferred Stock (such
total amount per share is hereinafter referred to as the "Redemption Price").
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(b) Partial Redemption. In the event of any redemption of only
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a part of the then outstanding shares of the Preferred Stock, the Corporation
shall effect such redemption pro rata among all the holders of Preferred Stock
(as to the number of shares, series by series, held on the date of notice of
redemption).
(c) Notice and Procedure. At least 45 days prior to the date
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fixed for any redemption of the Preferred Stock (hereinafter referred to as the
"Redemption Date"), written notice shall be mailed, postage prepaid, to each
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holder of record of the Preferred Stock, at the holder's post office address
last shown on the records of the Corporation (provided, however, that in the
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case of non-domestic investors, written notice shall instead be delivered by
confirmed fax at the holder's fax number last shown on the records of the
Corporation within the same time period), notifying such holder of the election
of the Corporation to redeem such shares, specifying the Redemption Date and the
date on which such holder's Conversion Rights (as hereinafter defined) as to
such shares terminate, which date shall be no earlier than five business days
prior to the Redemption Date, and calling upon such holder to surrender to the
Corporation, in the manner and at the place designated, the holder's certificate
or certificates representing the shares to be redeemed (such notice is
hereinafter referred to as the "Redemption Notice"). On or
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prior to the Redemption Date, each holder of the Preferred Stock to be redeemed
shall surrender his or her certificate or certificates representing such shares
to the Corporation, in the manner and at the place designated in the Redemption
Notice, and thereupon the aggregate Redemption Price (the Redemption Price per
share to be redeemed multiplied by the number of shares to be redeemed) for the
shares to be redeemed shall be payable to the order of the person whose name
appears on such certificate or certificates as the owner thereof and each
surrendered certificate shall be canceled. In calculating the aggregate
Redemption Price, the number of shares shall be reduced by the number of shares
which have been converted pursuant to Section 4 hereof between the date of
notice of redemption and the date on which Conversion Rights to such shares
terminate. 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 aggregate Redemption Price for shares to be
redeemed (whether because there is no source of funds legally available for such
redemption or because such funds shall not be paid or made available for
payment), all rights of the holders of the Preferred Stock designated for
redemption in the Redemption Notice as holders of such series of the Preferred
Stock of the Corporation (except the right to receive the aggregate Redemption
Price without interest upon surrender of their certificate or certificates)
shall cease with respect to such shares, and such shares shall not thereafter be
transferred on the books of the Corporation or be deemed to be outstanding for
any purpose whatsoever.
(d) Payment. On or prior to the Redemption Date, the
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Corporation shall deposit the aggregate Redemption Price of all shares of
Preferred 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 $100,000,000 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 that such holder has
surrendered his or her share certificate to the Corporation pursuant to Section
3(c) above. Such instructions shall also provide that any monies deposited by
the Corporation pursuant to this Section 3(d) for the redemption of shares
thereafter converted into shares of the Corporation's Common Stock pursuant to
Section 4 hereof no later than the fifth day preceding the Redemption Date shall
be returned to the Corporation forthwith upon such conversion. The balance of
any monies deposited by the Corporation pursuant to this Section 3(d) remaining
unclaimed at the expiration of two years following the Redemption Date shall
thereafter be returned to the Corporation upon its request expressed in a
resolution of its Board of Directors.
4. Conversion. The holders of the Series A Preferred Stock, Series
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B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock and Series F Preferred Stock shall have conversion rights as
follows (the "Conversion Rights"):
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(a) Right to Convert. Subject to Section 4(d), each share of
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Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock, Series E Preferred Stock and Series F Preferred Stock
shall be convertible, at the option of the holder thereof, at any time after the
date of issuance of such share, at the office of the Corporation or any transfer
agent for such stock, into such number of fully paid and nonassessable shares of
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Common Stock as is determined by dividing (i) $0.1105 in the case of the Series
A Preferred Stock, (ii) $0.31 in the case of the Series B Preferred Stock, (iii)
$0.6323925 in the case of the Series C Preferred Stock, (iv) $0.775 in the case
of the Series D Preferred Stock, (v) $7.50 in the case of the Series E Preferred
Stock and (vi) $11.00 in the case of the Series F Preferred Stock by the
Conversion Price applicable to such share, determined as hereinafter provided,
in effect on the date the certificate is surrendered for conversion. The
initial "Conversion Price" per share shall be $0.1105 for shares of Series A
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Preferred Stock, $0.31 for shares of Series B Preferred Stock, $0.6323925 for
shares of Series C Preferred Stock, $0.775 for shares of Series D Preferred
Stock, $7.50 for shares of Series E Preferred Stock and $11.00 for shares of
Series F Preferred Stock. Such initial Conversion Prices shall be subject to
adjustment as set forth in Section 4(d) below. In the event that all shares of
Preferred Stock are automatically converted pursuant to Section 4(b) in
connection with 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 "Securities Act"), in which the Offering
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Price (as defined below) is less than the Conversion Price of the Series E
Preferred Stock or Series F Preferred Stock then in effect (appropriately
adjusted for any stock split, dividend, combination or other recapitalization),
then the Conversion Price of the Series E Preferred Stock and/or Series F
Preferred Stock, as the case may be, shall be adjusted, effective immediately
prior to the closing of such offering, such that the Conversion Price after such
adjustment (and after appropriate adjustments for stock splits, combinations and
the like) shall be equal to the Offering Price. The "Offering Price" is defined
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as the price per share at which shares of the Corporation's Common Stock are
initially sold by the Corporation to the public in such offering.
(b) 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) except
as provided below in Section 4(c), the Corporation's sale of its Common Stock in
a firm commitment underwritten public offering pursuant to a registration
statement under the Securities Act, the public offering price of which is not
less than $7.50 per share (appropriately adjusted for any stock split, dividend,
combination or other recapitalization) or (ii) as to any particular series of
Preferred Stock, the date specified by written consent or agreement of the
holders of at least 66 2/3% of the then outstanding shares of such series of
Preferred Stock, voting together as a class.
(c) Mechanics of Conversion. Before any holder of Series A Preferred
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Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred
Stock, Series E Preferred Stock or Series F Preferred Stock shall be entitled
to convert the same into shares of Common Stock, he shall surrender the
certificate or certificates therefor, duly endorsed, at the office of the
Corporation or of any transfer agent for such series of Preferred Stock, and
shall give written notice to the Corporation at its principal corporate office,
of the election to convert the same and shall state therein the name or names in
which the certificate or certificates for shares of Common Stock are to be
issued. The Corporation shall, as soon as practicable thereafter, issue and
deliver at such office to such holder of Preferred Stock, or to the nominee or
nominees of such holder, a certificate or certificates for the number of shares
of Common Stock to which such holder shall be entitled as aforesaid. Such
conversion shall be deemed to have been made immediately prior to the close of
business on the date of such surrender of the shares of such series of Preferred
Stock to be converted, and the person or persons entitled to receive the
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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 as of
such date. If the conversion is in connection with an underwritten offering of
securities registered pursuant to the Securities Act the conversion may, at the
option of any holder tendering such Preferred Stock for conversion, be
conditioned upon the closing with the underwriters of the sale of securities
pursuant to such offering, in which event the person(s) entitled to receive
Common Stock upon conversion of such Preferred Stock shall not be deemed to have
converted such Preferred Stock until immediately prior to the closing of such
sale of securities.
(d) Conversion Price Adjustments of Preferred Stock for Certain
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Dilutive Issuances, Splits and Combinations. The Conversion Prices of the
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Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock, Series E Preferred Stock and Series F Preferred Stock
shall be subject to adjustment from time to time as follows:
(i) Issuance of Additional Stock below Purchase Price. If the
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Corporation shall issue, after the date upon which any shares of Series F
Preferred Stock were first issued (the "Purchase Date"), any Additional Stock
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(as defined below) without consideration or for a consideration per share less
than the Conversion Price for such series in effect immediately prior to the
issuance of such Additional Stock, the Conversion Price for such series in
effect immediately prior to each such issuance shall automatically be adjusted
as set forth in this Section 4(d)(i), unless otherwise provided in this Section
4(d)(i).
(A) Adjustment Formula. Whenever the Conversion Price is
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adjusted pursuant to this Section 4(d)(i), the new Conversion Price for any
series shall be a price equal to the quotient obtained by dividing the total
computed under clause (x) below by the total computed under clause (y) below as
follows:
(x) an amount equal to the sum of
(1) the aggregate purchase price of the shares of
such series sold pursuant to the agreement pursuant to which shares of such
series were first issued (the "Series Purchase Price" with respect to such
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series), plus
(2) the aggregate consideration, if any, received
by the Corporation for all Additional Stock issued on or after the Purchase
Date;
(y) an amount equal to the sum of :
(1) the Series Purchase Price for such series
divided by the initial Conversion Price for such series (or such higher or lower
Conversion Price as results from the application of Sections 4(d)(ii) and (iii)
hereof), plus
(2) the number of shares of Additional Stock issued
on or after the Purchase Date (as adjusted pursuant to Sections 4(d)(ii) and
(iii) hereof, if applicable).
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(B) Definition of "Additional Stock". For purposes of this
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Section 4(d)(i), "Additional Stock" shall mean any shares of Common Stock or
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capital stock, securities, options, warrants to purchase or other instruments of
similar effect convertible into or exchangeable for Common Stock issued (or
deemed to have been issued pursuant to Section 4(d)(i)(E)) by the Corporation
after the Purchase Date other than
(1) Common Stock issued pursuant to a transaction
described in Section 4(d)(ii) hereof,
(2) Shares of Common Stock issuable or issued to
employees, consultants or directors of the Corporation directly or pursuant to a
stock option plan or restricted stock plan or agreement approved by the Board of
Directors of the Corporation,
(3) Up to 100,000 shares of Common Stock issuable
or issued to vendors of the Corporation,
(4) 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, the terms of which are approved by the Board of Directors of the
Corporation,
(5) 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,
(6) Shares of Common Stock issued or issuable upon
conversion of the Preferred Stock authorized for issuance as of the date hereof,
and
(7) Shares of Common Stock issued or issuable in a
public offering prior to or in connection with which all outstanding shares of
Preferred Stock will be converted to Common Stock.
(C) No Fractional Adjustments. No adjustment of the
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Conversion Price for the Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock or
Series F Preferred Stock shall be made in an amount less than one cent per
share, provided that any adjustments which are not required to be made by reason
of this sentence shall be carried forward and shall be either taken into account
in any subsequent adjustment made prior to three years from the date of the
event giving rise to the adjustment being carried forward, or shall be made at
the end of three years from the date of the event giving rise to the adjustment
being carried forward.
(D) Determination of Consideration. In the case of the
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issuance of Common Stock for cash, the consideration shall be deemed to be the
amount of cash paid therefor before deducting any reasonable and actual
discounts, commissions, compensations or concessions allowed, paid or incurred
by the Corporation for any underwriting in connection with the issuance and sale
thereof but without deduction of any expenses paid by the Corporation. In the
case of the issuance of Common Stock for a consideration in whole or in
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part other than cash, the consideration other than cash shall be deemed to be
the fair value thereof as determined in good faith by the Board of Directors
irrespective of any accounting treatment.
(E) Deemed Issuances of Common Stock. In the case of
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the issuance (whether before, on or after the Purchase Date) of options to
purchase or rights to subscribe for Common Stock, securities by their terms
convertible into or exchangeable for Common Stock or options to purchase or
rights to subscribe for such convertible or exchangeable securities, the
following provisions shall apply for all purposes of this Section 4(d)(i):
(1) The aggregate maximum number of shares of
Common Stock deliverable upon exercise (assuming the satisfaction of any
conditions to exercisability, including without limitation, the passage of time,
but without taking into account potential antidilution adjustments) of such
options to purchase or rights to subscribe for Common Stock shall be deemed to
have been issued at the time such options or rights were issued and for a
consideration equal to the consideration (determined in the manner provided in
Section 4(d)(i)(D)), if any, received by the Corporation upon the issuance of
such options or rights plus the minimum exercise price provided in such options
or rights (without taking into account potential antidilution adjustments) for
the Common Stock covered thereby.
(2) The aggregate maximum number of shares of
Common Stock deliverable upon conversion of or in exchange (assuming the
satisfaction of any conditions to convertibility or exchangeability, including,
without limitation, the passage of time, but without taking into account
potential antidilution adjustments) for any such convertible or exchangeable
securities or upon the exercise of options to purchase or rights to subscribe
for such convertible or exchangeable securities and subsequent conversion or
exchange thereof shall be deemed to have been issued at the time such securities
were issued or such options or rights were issued and for a consideration equal
to the consideration, if any, received by the Corporation for any such
securities and related options or rights (excluding any cash received on account
of accrued interest or accrued dividends), plus the minimum additional
consideration, if any, to be received by the Corporation (without taking into
account potential antidilution adjustments) upon the conversion or exchange of
such securities or the exercise of any related options or rights (the
consideration in each case to be determined in the manner provided in Section
4(d)(i)(D)).
(3) In the event of any change in the number of
shares of Common Stock deliverable or in the consideration payable to the
Corporation upon exercise of such options or rights or upon conversion of or in
exchange for such convertible or exchangeable securities, including, but not
limited to, a change resulting from the antidilution provisions thereof, the
Conversion Price of each of the Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock, Series D Preferred Stock, Series E Preferred
Stock and Series F Preferred Stock, to the extent in any way affected by or
computed using such options, rights or securities, shall be recomputed to
reflect such change, but no further adjustment shall be made for the actual
issuance of Common Stock or any payment of such consideration upon the exercise
of any such options or rights or the conversion or exchange of such securities.
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(4) Upon the expiration of any such options or
rights, the termination of any such rights to convert or exchange or the
expiration of any options or rights related to such convertible or exchangeable
securities, the Conversion Price of each of the Series A Preferred Stock, Series
B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock and Series F Preferred Stock, to the extent in any way affected
by or computed using such options, rights or securities or options or rights
related to such securities, shall be recomputed to reflect the issuance of only
the number of shares of Common Stock (and convertible or exchangeable securities
which remain in effect) actually issued upon the exercise of such options or
rights, upon the conversion or exchange of such securities or upon the exercise
of the options or rights related to such securities.
(5) The number of shares of Common Stock deemed
issued and the consideration deemed paid therefor pursuant to Sections
4(d)(i)(E)(1) and 4(d)(i)(E)(2) shall be appropriately adjusted to reflect any
change, termination or expiration of the type described in either Section
4(d)(i)(E)(3) or 4(d)(i)(E)(4).
(F) No Increased Conversion Price. Notwithstanding
-----------------------------
any other provisions of this Section (4)(d)(i), except to the limited extent
provided for in Sections 4(d)(i)(E)(3) and 4(d)(i)(E)(4), no adjustment of the
Conversion Price pursuant to this Section 4(d)(i) shall have the effect of
increasing the Conversion Price above the Conversion Price in effect immediately
prior to such adjustment.
(ii) Stock Splits and Dividends. In the event the
--------------------------
Corporation should at any time or from time to time after the Purchase Date fix
a record date for the effectuation of a split or subdivision of the outstanding
shares of Common Stock or the determination of holders of Common Stock entitled
to receive a dividend or other distribution payable in additional shares of
Common Stock or other securities or rights convertible into, or entitling the
holder thereof to receive directly or indirectly, additional shares of Common
Stock (hereinafter referred to as "Common Stock Equivalents") without payment of
------------------------
any consideration by such holder for the additional shares of Common Stock or
the Common Stock Equivalents (including the additional shares of Common Stock
issuable upon conversion or exercise thereof), then, as of such record date (or
the date of such dividend distribution, split or subdivision if no record date
is fixed), the Conversion Price of each of the Series A Preferred Stock, Series
B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock and Series F Preferred Stock shall be appropriately decreased so
that the number of shares of Common Stock issuable on conversion of each share
of such series shall be increased in proportion to such increase of the
aggregate of shares of Common Stock outstanding and those issuable with respect
to such Common Stock Equivalents with the number of shares issuable with respect
to Common Stock Equivalents determined from time to time in the manner provided
for deemed issuances in Section 4(d)(i)(E).
(iii) Reverse Stock Splits. If the number of shares of
--------------------
Common Stock outstanding at any time after the Purchase Date is decreased by a
combination of the outstanding shares of Common Stock, then, following the
record date of such combination, the Conversion Price for each of the Series A
Preferred Stock, the Series B Preferred Stock, the Series C Preferred Stock, the
Series D Preferred Stock, the Series E Preferred Stock and the
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Series F Preferred Stock shall be appropriately increased so that the number of
shares of Common Stock issuable on conversion of each share of such series shall
be decreased in proportion to such decrease in outstanding shares.
(e) Other Distributions. In the event the Corporation shall
-------------------
declare a distribution payable in securities of other persons, evidences of
indebtedness issued by the Corporation or other persons, assets (excluding cash
dividends) or options or rights not referred to in Section 4(d)(ii), then, in
each such case for the purpose of this Section 4(e), the holders of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock and Series F Preferred Stock shall be
entitled to a proportionate share of any such distribution as though they were
the holders of the number of shares of Common Stock of the Corporation into
which their shares of Preferred Stock are convertible as of the record date
fixed for the determination of the holders of Common Stock of the Corporation
entitled to receive such distribution.
(f) Recapitalizations. If at any time or from time to time
-----------------
there shall be a recapitalization, reclassification, combination, subdivision,
merger, transfer, exchange, sale or other disposition of assets, stock split,
stock dividend, reverse stock split or other distribution in respect of the
Common Stock (other than a subdivision, combination or merger or sale of assets
transaction provided for elsewhere in this Section 4 or in Section 2) provision
shall be made so that the holders of the Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock and Series F Preferred Stock shall thereafter be entitled to
receive upon conversion of such Preferred Stock the number of shares of stock or
other securities or property of the Corporation or otherwise, to which a holder
of Common Stock deliverable upon conversion would have been entitled on such
recapitalization. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Section 4 with respect to the rights of
the holders of such Preferred Stock after the recapitalization to the end that
the provisions of this Section 4 (including adjustment of the Conversion Price
then in effect and the number of shares purchasable upon conversion of such
Preferred Stock) shall be applicable after that event and be as nearly
equivalent as practicable.
(g) No Impairment. The Corporation will not, by amendment of
-------------
its Articles of Incorporation or through any reorganization, recapitalization,
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 carrying out of
all the provisions of this Section 4 and in the taking of all such action as may
be necessary or appropriate in order to protect the Conversion Rights of the
holders of Preferred Stock against impairment and dilution consistent with the
terms hereof.
(h) No Fractional Shares and Certificate as to Adjustments.
------------------------------------------------------
(i) No fractional shares shall be issued upon the
conversion of any share or shares of the Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock or Series F Preferred Stock, and the number of shares of Common
Stock to be issued shall be rounded to the nearest whole share
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(with one-half being rounded upward). The number of shares issuable upon such
conversion shall be determined on the basis of the total number of shares of
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock, Series E Preferred Stock or Series F Preferred Stock
the holder is at the time converting into Common Stock and the number of shares
of Common Stock issuable upon such aggregate conversion.
(ii) Upon the occurrence of each adjustment or readjustment
of the Conversion Price of Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock or
Series F Preferred Stock pursuant to this Section 4, the Corporation, at its
expense, shall promptly compute such adjustment or readjustment in accordance
with the terms hereof and prepare and furnish to each holder of such Preferred
Stock a certificate setting forth such adjustment or readjustment and showing in
detail the facts upon which such adjustment or readjustment is based. The
Corporation shall, upon the written request at any time of any holder of Series
A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock or Series F Preferred Stock, furnish
or cause to be furnished to such holder a like certificate setting forth (A)
such adjustment and readjustment, (B) the Conversion Price for such series of
Preferred Stock at the time in effect, and (C) 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 a share of such series of Preferred Stock.
(i) 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) or other distribution, any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, the Corporation
shall mail to each holder of Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock or
Series F Preferred 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, distribution or right, and the amount and
character of such dividend, distribution or right.
(j) Reservation of Stock Issuable Upon Conversion. The
---------------------------------------------
Corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the shares of the Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock, Series D Preferred Stock, Series E Preferred
Stock and Series F Preferred Stock, such number of its shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all
outstanding shares of such series of Preferred Stock; and if at any time the
number of authorized but unissued shares of Common Stock shall not be sufficient
to effect the conversion of all then outstanding shares of such series of
Preferred Stock, in addition to such other remedies as shall be available to the
holder of such Preferred Stock, the Corporation will take such corporate action
as may, in the opinion of its counsel, be necessary to increase its authorized
but unissued shares of Common Stock to such number of shares as shall be
sufficient for such purposes, including, without limitation, engaging in best
efforts to obtain the requisite shareholder approval of any necessary amendment
to these articles.
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(k) Notices. Any notice required by the provisions of this
-------
Section 4 to be given to the holders of shares of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock,
Series E Preferred Stock or Series F Preferred Stock shall be in writing and
shall be deemed sufficient upon delivery, when delivered personally or by
overnight courier or sent by telegram or fax, or, in the case of domestic
recipients, five (5) business days after being deposited in the United States
mail as certified or registered mail, postage prepaid, and addressed to each
holder of record at his address appearing on the books of the Corporation.
(l) Taxes. The Corporation will pay all taxes (other than taxes
-----
based upon income) and other governmental charges that may be imposed with
respect to the issue or delivery of shares of Common Stock upon conversion of
the Preferred Stock, excluding any tax or other charge imposed in connection
with any transfer involved in the issue and delivery of shares of Common Stock
in a name other than that in which the shares of the converted Preferred Stock
were registered.
5. Voting Rights. The holders of the Preferred Stock shall have
-------------
voting rights as follows:
(a) In General. Subject to subsection (b) hereof, the holder of
----------
each share of Preferred Stock shall have the right to one vote for each share of
Common Stock into which such Preferred Stock could then be converted, and with
respect to such vote, such holder shall have full voting rights and powers equal
to the voting rights and powers of the holders of Common Stock, and shall be
entitled, notwithstanding any provision hereof, to notice of any stockholders'
meeting in accordance with the bylaws of the Corporation, and shall be entitled
to vote, together with holders of Common Stock, with respect to any question
upon which holders of Common Stock have the right to vote. Fractional votes
shall not, however, be permitted and any fractional voting rights available on
an as-converted basis (after aggregating all shares into which shares of
Preferred Stock held by each holder could be converted) shall be rounded to the
nearest whole number (with one-half being rounded upward).
(b) Voting for Board of Directors. The holders of shares of
-----------------------------
Series D Preferred Stock, voting together as a single class, shall elect one
member of the Board of Directors of the Corporation. Additional members of the
Board of Directors, if any, shall be elected by the holders of shares of Common
Stock and Preferred Stock, voting together as a single class and on an as-
converted basis.
6. Protective Provisions.
---------------------
(a) So long as any shares of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series E Preferred Stock or Series F
Preferred Stock are outstanding, the Corporation shall not without first
obtaining the approval (by vote or written consent, as provided by law) of the
holders of at least a majority of the then outstanding shares of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series E
Preferred Stock and Series F Preferred Stock, voting together as a class:
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(i) effect (A) the acquisition of the Corporation by
another entity by means of any transaction or series of related transactions
(including, without limitation, any reorganization, merger or consolidation, but
excluding any merger effected exclusively for the purpose of changing the
domicile of the Corporation); or (B) a sale, lease, license or other conveyance
of all or substantially all of the assets of the Corporation, unless the
------
Corporation's shareholders of record as constituted immediately prior to such
acquisition or sale will, immediately after such acquisition or sale (by virtue
of securities issued as consideration in the acquisition or sale or otherwise)
hold at least 50% of the voting power of the surviving or acquiring entity in
approximately the same relative percentages after such acquisition or sale as
before such acquisition or sale;
(ii) alter or change the rights, preferences or privileges
of the shares of Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series E Preferred Stock or Series F Preferred Stock so as to
affect adversely the shares of such series;
(iii) increase or decrease (other than by redemption or
conversion) the total number of authorized shares of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock,
Series E Preferred Stock or Series F Preferred Stock;
(iv) authorize, issue or reclassify, or obligate itself to
issue or reclassify, any other equity security, including any other security
convertible into or exercisable for any equity security having a preference
over, or being on a parity with, the Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock or Series F Preferred Stock with respect to voting, dividends,
conversion rights or upon liquidation;
(v) redeem, purchase or otherwise acquire (or pay into or
set funds aside for a sinking fund for such purpose) any share or shares of
Preferred Stock or Common Stock; provided, however, that this restriction shall
-------- -------
not apply to the redemption of shares of Preferred Stock pursuant to Section 3
hereof or to the repurchase of shares of Common Stock from employees, officers,
directors, consultants or other persons performing services for the Company or
any subsidiary pursuant to agreements under which the Company has the option to
repurchase such shares at cost or at fair market value upon the occurrence of
certain events, such as the termination of employment or a proposed transfer of
such shares; or
(vi) consummate a transaction subject to Section 305 of the
Internal Revenue Code of 1986, as amended.
(b) Subject to the rights of series of Preferred Stock which may
from time to time come into existence in accordance herewith, so long as any
shares of Series D Preferred Stock are outstanding, the Corporation shall not
without first obtaining the approval (by vote or written consent, as provided by
law) of the holders of at least a majority of the then outstanding shares of
Series D Preferred Stock, voting as a separate class:
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(i) effect (A) the acquisition of the Corporation by
another entity by means of any transaction or series of related transactions
(including, without limitation, any reorganization, merger or consolidation, but
excluding any merger effected exclusively for the purpose of changing the
domicile of the Corporation); or (B) a sale, lease, license or other conveyance
of all or substantially all of the assets of the Corporation, unless the
------
Corporation's shareholders of record as constituted immediately prior to such
acquisition or sale will, immediately after such acquisition or sale (by virtue
of securities issued as consideration in the acquisition or sale or otherwise)
hold at least 50% of the voting power of the surviving or acquiring entity in
approximately the same relative percentages after such acquisition or sale as
before such acquisition or sale;
(ii) alter or change the rights, preferences or privileges
of the shares of Series D Preferred so as to affect adversely the shares of such
series;
(iii) increase or decrease (other than by redemption or
conversion) the total number of authorized shares of Series D Preferred;
(iv) authorize, issue or reclassify, or obligate itself to
issue or reclassify, any other equity security, including any other security
convertible into or exercisable for any equity security having a preference
over, or being on a parity with, the Series D Preferred Stock with respect to
voting, dividends, conversion rights or upon liquidation;
(v) redeem, purchase or otherwise acquire (or pay into or
set funds aside for a sinking fund for such purpose) any share or shares of
Preferred Stock or Common Stock; provided, however, that this restriction shall
-------- -------
not apply to the redemption of shares of Preferred Stock pursuant to Section 3
hereof or to the repurchase of shares of Common Stock from employees, officers,
directors, consultants or other persons performing services for the Company or
any subsidiary pursuant to agreements under which the Company has the option to
repurchase such shares at cost or at fair market value upon the occurrence of
certain events, such as the termination of employment or a proposed transfer of
such shares;
(vi) amend or repeal any provision of, or add any provision
to, the Corporation's Articles of Incorporation or Bylaws if such action would
alter or change the rights, preferences, privileges or restrictions of the
shares of Series D Preferred Stock so as to affect adversely the shares of such
series; or
(vii) consummate a transaction subject to Section 305 of the
Internal Revenue Code of 1986, as amended.
(c) Notwithstanding the foregoing, with respect to any series of
Preferred Stock, the Corporation shall not, without first obtaining the approval
(by vote or written consent, as provided by law) of the holders of at least a
majority of the then outstanding shares of such series of Preferred Stock,
voting as a separate class, amend or repeal any provision of, or add any
provision to, the Corporation's Articles of Incorporation if such action
adversely
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affects such series in a different manner than other series of Preferred Stock.
7. Status of Converted Stock. In the event any shares of Preferred
-------------------------
Stock shall be converted pursuant to Section 4 hereof, the shares so converted
shall be canceled and shall not be issuable by the Corporation. The Articles of
Incorporation of the Corporation shall be appropriately amended to effect the
corresponding reduction in the Corporation's authorized capital stock.
8. Repurchase of Shares. In connection with repurchases by the
--------------------
Corporation of its Common Stock pursuant to its agreements with certain of the
holders thereof, Sections 502 and 503 of the California General Corporation Law
shall not apply in whole or in part with respect to such repurchases.
(C) Common Stock.
------------
1. Dividend Rights. Subject to the prior rights of holders of all
---------------
classes of stock at the time outstanding having prior rights as to dividends,
the holders of the Common Stock shall be entitled to receive, when and as
declared by the Board of Directors, out of any assets of the Corporation legally
available therefor, such dividends as may be declared from time to time by the
Board of Directors.
2. Liquidation Rights. Upon the liquidation, dissolution or winding
------------------
up of the Corporation, the assets of the Corporation shall be distributed as
provided in Section 2 of Division (B) of this Article III.
3. Redemption. The Common Stock is not redeemable.
----------
4. Voting Rights. The holder of each share of Common Stock shall
-------------
have the right to one vote, and shall be entitled to notice of any shareholders'
meeting in accordance with the bylaws of the Corporation, and shall be entitled
to vote upon such matters and in such manner as may be provided by law.
ARTICLE IV
(A) The liability of the directors of the Corporation for monetary damages
shall be eliminated to the fullest extent permissible under California law.
(B) The 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.
(C) Any amendment or repeal or modification of the foregoing provisions of
this Article IV by the shareholders of the Corporation shall not adversely
affect any right or protection of a director of the Corporation existing at the
time of such repeal or modification."
* * *
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3. The foregoing amendment has been approved by the Board of Directors of
this corporation.
4. The foregoing amendment 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 9,582,064 shares of
Common Stock, 2,494,070 shares of Series A Preferred Stock, 2,258,058 shares of
Series B Preferred Stock, 3,162,584 shares of Series C Preferred Stock,
10,193,544 shares of Series D Preferred Stock and 7,633,329 shares of Series E
Preferred Stock. The number of shares voting in favor of the foregoing amendment
equaled or exceeded the vote required. The percentage vote required was (i) a
majority of the outstanding shares of Common Stock, (ii) a majority of the
outstanding shares of Preferred Stock, (iii) a majority of the outstanding
shares of Series A, Series B, Series C and Series E, voting together as a single
class, (iv) a majority of the Series D Preferred Stock voting as a single class,
and (v) a majority of the outstanding shares of Common Stock and Preferred
Stock, voting together as a class.
-18-
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 our own knowledge.
Executed at Mountain View, California, on January 14, 2000.
/s/ Earl H. LeMasters III
---------------------------------
Earl H. LeMasters III,
Chief Executive Officer
/s/ Mark A. Medearis
---------------------------------
Mark A. Medearis, Secretary
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