EXHIBIT 3.3
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
FOGDOG, INC.
Timothy P. Harrington and Warren T. Lazarow certify that:
A. They are the Chief Executive Officer and Assistant Secretary,
respectively, of Fogdog, Inc., a California corporation (the "corporation").
B. The Articles of Incorporation (the "Articles") of this corporation are
amended and restated to read in full as follows:
ARTICLE 1
NAME: The name of this corporation is Fogdog, Inc.
ARTICLE 2
PURPOSE. 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 3
This corporation is authorized to issue two classes of shares to be
designated respectively common stock, no par value, and preferred stock, no par
value. The total number of shares of common stock this corporation shall have
authority to issue is Seventy-Two Million (72,000,000) and the total number of
shares of preferred stock this corporation shall have authority to issue is
Forty-One Million Seven Hundred Ninety-Six Thousand Two Hundred Eighty-Two
(41,796,282).
Of the total number of shares of Preferred Stock authorized, two
million eight hundred thirteen thousand forty-six (2,813,046) shares shall be
designated Series A Convertible Preferred Stock ("Series A Preferred Stock"),
nine million six hundred seventy-eight thousand seven hundred (9,678,700) shares
shall be designated Series B Convertible Preferred Stock ("Series B Preferred
Stock"), Twenty-Three Million Eight Hundred Four Thousand Five Hundred Thirty-
Six (23,804,536) shares shall be designated Series C Convertible Preferred Stock
("Series C Preferred Stock") and Five Million Five Hundred Thousand (5,500,000)
shares shall be designated Series D Convertible Preferred Stock ("Series D
Preferred Stock").
ARTICLE 4
The rights, preferences, privileges and restrictions granted to or
imposed upon the Series A Preferred Stock, the Series B Preferred Stock, the
Series C Preferred Stock and the Series D Preferred Stock shall be as set forth
in this Article 4.
Certain Definitions. Unless the context otherwise requires, the terms
defined in this Article 4 shall have, for all purposes of the amended and
restated articles of incorporation, the meanings herein specified.
Board of Directors. The term "Board of Directors" shall mean the
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Board of Directors of this corporation and, to the extent permitted by law, any
committee of such Board of Directors authorized to exercise the powers of such
Board of Directors.
Closing Price. The term "Closing Price" for any day shall mean the
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last reported sale price of the Common Stock, or, in case no such reported sale
takes place on such day, the average of the closing bid and asked prices for
such day, in either case on the principal national securities exchange on which
the Common Stock is listed or admitted to trading, or if it is not listed or
admitted to trading on any national securities exchange, but is traded in the
over-the-counter market, the closing sale price of the Common Stock or, in case
no sale is publicly reported, the average of the closing bid and asked
quotations for the Common Stock on the National Association of Securities
Dealer's Automated Quotation System ("NASDAQ"), or any comparable system or, if
the Common Stock is not listed on NASDAQ or a comparable system, the closing
sale price of the Common Stock or, in case no sale is publicly reported, the
fair market value per share of Common Stock as determined on a reasonable basis
and in good faith by the Board of Directors.
Common Stock. The term "Common Stock" shall mean all shares now or
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hereafter authorized of any class of common stock of this corporation and any
other shares of this corporation, however designated, which have the right
(subject always to prior rights of any class or series of preferred stock) to
participate in the distribution of the assets and earnings of this corporation
without limit as to per share amount.
Series A Conversion Rate. The term "Series A Conversion Rate" shall
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mean the rate used to determine the number of shares of Common Stock deliverable
upon conversion of a share of Series A Preferred Stock and shall equal the
Series A Stated Value, plus all declared and unpaid dividends thereon (if any)
divided by the Series A Conversion Price. The initial Series A Conversion Price
shall be $.5625 per share (as adjusted for any stock split, dividend,
combination, reclassification and the like), subject to adjustment in accordance
with the provisions of paragraph 4 ("Conversion Rights") below. Whenever the
Series A Conversion Price is adjusted pursuant to the Conversion Rights, the
Series A Conversion Rate shall be recalculated.
Series B Conversion Rate. The term "Series B Conversion Rate" shall
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mean the rate used to determine the number of shares of Common Stock deliverable
upon conversion of a share of Series B Preferred Stock and shall equal the
Series B Stated Value, plus declared and unpaid dividends thereon (if any)
divided by the Series B Conversion Price. The initial Series B
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Conversion Price shall be $.4985 per share (as adjusted for any stock split,
dividend, combination, reclassification and the like), subject to adjustment in
accordance with the provisions of paragraph 4 below. Whenever the Series B
Conversion Price is adjusted pursuant to the Conversion Rights, the Series B
Conversion Rate shall be recalculated.
Series C Conversion Rate. The term "Series C Conversion Rate" shall
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mean the rate used to determine the number of shares of Common Stock deliverable
upon conversion of a share of Series C Preferred Stock and shall equal the
Series C Stated Value, plus declared and unpaid dividends thereon (if any)
divided by the Series C Conversion Price. The initial Series C Conversion Price
shall be $1.0294 per share (as adjusted for any stock split, dividend,
combination, reclassification and the like), subject to adjustment in accordance
with the provisions of paragraph 4 below. Whenever the Series C Conversion
Price is adjusted pursuant to the Conversion Rights, the Series C Conversion
Rate shall be recalculated.
Series D Conversion Rate. The term "Series D Conversion Rate" shall
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mean the rate used to determine the number of shares of Common Stock deliverable
upon conversion of a share of Series D Preferred Stock and shall equal the
Series D Stated Value, plus declared and unpaid dividends thereon (if any)
divided by the Series D Conversion Price. The initial Series D Conversion Price
shall be $2.8865 per share (as adjusted for any stock split, dividend,
combination, reclassification and the like), subject to adjustment in accordance
with the provisions of paragraph 4 below. Whenever the Series D Conversion
Price is adjusted pursuant to the Conversion Rights, the Series D Conversion
Rate shall be recalculated.
Series A Issue Date. The term "Series A Issue Date" shall mean the
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date after any shares of the Series C Preferred Stock are first issued by this
corporation.
Series B Issue Date. The term "Series B Issue Date" shall mean the
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date after any shares of the Series C Preferred Stock are first issued by this
corporation.
Series C Issue Date. The term "Series C Issue Date" shall mean the
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date after any shares of the Series C Preferred Stock are first issued by this
corporation.
Series D Issue Date. The term "Series D Issue Date" shall mean the
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date after any shares of the Series D Preferred Stock are first issued by this
corporation.
Series A Stated Value. The term "Series A Stated Value" shall mean
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$.5625 per share (as adjusted for any stock split, dividend, combination,
reclassification and the like) of Series A Preferred Stock.
Series B Stated Value. The term "Series B Stated Value" shall mean
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$.4985 per share (as adjusted for any stock split, dividend, combination,
reclassification and the like) of Series B Preferred Stock.
Series C Stated Value. The term "Series C Stated Value" shall mean
---------------------
$1.0294 per share (as adjusted for any stock split, dividend, combination,
reclassification and the like) of Series C Preferred Stock.
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Series D Stated Value. The term "Series D Stated Value" shall mean
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$2.8865 per share (as adjusted for any stock split, dividend, combination,
reclassification and the like) of Series D Preferred Stock.
1. Ranking.
(a) The Series A Preferred Stock shall, with respect to rights
on liquidation, winding up, and dissolution, whether voluntary or involuntary,
rank senior to all series and classes of the Common Stock of the corporation.
All securities of the corporation to which the Series A Preferred Stock ranks
senior, including the Common Stock, are collectively referred to herein as the
"Series A Junior Securities"; all securities of the corporation with which the
Series A Preferred Stock ranks on a parity are collectively referred to herein
as the "Series A Parity Securities"; and all securities of the corporation to
which the Series A Preferred Stock ranks junior, including the Series B
Preferred Stock, the Series C Preferred Stock and Series D Preferred Stock, are
collectively referred to herein as the "Series A Senior Securities". Subject to
the voting rights set forth herein, the Series A Preferred Stock shall be
subject to the creation of Series A Junior Securities, Series A Parity
Securities and Series A Senior Securities.
(b) The Series B Preferred Stock shall, with respect to rights
on liquidation, winding up, and dissolution, whether voluntary or involuntary,
rank senior to the Series A Preferred Stock and all series and classes of the
Common Stock of the corporation. All securities of the corporation to which the
Series B Preferred Stock ranks senior, including the Series A Preferred Stock
and the Common Stock, are collectively referred to herein as the "Series B
Junior Securities"; all securities of the corporation with which the Series B
Preferred Stock ranks on a parity are collectively referred to herein as the
"Series B Parity Securities"; and all securities of the corporation to which the
Series B Preferred Stock ranks junior, including the Series C Preferred Stock
and Series D Preferred Stock, are collectively referred to herein as the "Series
B Senior Securities". Subject to the voting rights set forth herein, the Series
B Preferred Stock shall be subject to the creation of Series B Junior
Securities, Series B Parity Securities and Series B Senior Securities.
(c) The Series C Preferred Stock shall, with respect to rights
on liquidation, winding up, and dissolution, whether voluntary or involuntary,
rank senior to the Series A Preferred Stock, Series B Preferred Stock and all
series and classes of the Common Stock of the corporation. All securities of the
corporation to which the Series C Preferred Stock ranks senior, including the
Series A Preferred Stock, Series B Preferred Stock and the Common Stock, are
collectively referred to herein as the "Series C Junior Securities"; all
securities of the corporation with which the Series C Preferred Stock ranks on a
parity are collectively referred to herein as the "Series C Parity Securities";
and all securities of the corporation to which the Series C Preferred Stock
ranks junior, including the Series D Preferred Stock, are collectively referred
to herein as the "Series C Senior Securities". Subject to the voting rights set
forth herein, the Series C Preferred Stock shall be subject to the creation of
Series C Junior Securities, Series C Parity Securities and Series C Senior
Securities.
(d) The Series D Preferred Stock shall, with respect to rights
on liquidation, winding up, and dissolution, whether voluntary or involuntary,
rank senior to the Series A Preferred Stock, the Series B Preferred Stock, the
Series C Preferred Stock and to all
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series and classes of the Common Stock of the corporation. Unless specifically
designated as senior to, or junior to, the Series D Preferred Stock with respect
to rights on liquidation, winding up or dissolution, all other series of
preferred shares hereinafter authorized or outstanding shall be on a parity with
the Series D Preferred Stock with respect to such rights. All securities of the
corporation to which the Series D Preferred Stock ranks senior, including the
Series A Preferred Stock, the Series B Preferred Stock, the Series C Preferred
Stock and Common Stock, are collectively referred to herein as the "Series D
Junior Securities"; all securities of the corporation with which the Series D
Preferred Stock ranks on a parity are collectively referred to herein as the
"Series D Parity Securities"; and all securities of the corporation to which the
Series D Preferred Stock ranks junior are collectively referred to herein as the
"Series D Senior Securities". Subject to the voting rights set forth herein, the
Series D Preferred Stock shall be subject to the creation of Series D Junior
Securities, Series D Parity Securities and Series D Senior Securities.
2. Dividends.
(a)
(i) The holders of shares of Series D Preferred Stock
shall be entitled to receive, dividends, out of any assets legally available
therefore, when, as and if declared by the Board of Directors of the
corporation, prior and in preferences to any declaration or payment of any
dividend (payable other than in Common Stock or other securities convertible
into or entitling the holder thereof to receive, directly or indirectly,
additional shares of Common Stock of the corporation) on the Series A Preferred
Stock, the Series B Preferred Stock, Series C Preferred Stock and the Common
Stock, at the rate of 8% per annum (from and after the dates of issuances) of
the Series D Stated Value (as adjusted for any stock split, dividend,
combination, reclassification and the like), after the Series D Issue Date.
(ii) The holders of shares of Series C Preferred Stock
shall be entitled to receive dividends, out of any assets legally available
therefore, when, as and if declared by the Board of Directors of the
corporation, prior and in preferences to any declaration or payment of any
dividend (payable other than in Common Stock or other securities convertible
into or entitling the holder thereof to receive, directly or indirectly,
additional shares of Common Stock of the corporation) on the Series A Preferred
Stock, Series B Preferred Stock and the Common Stock, at the rate of 8% per
annum (from and after the dates of issuances) of the Series C Stated Value (as
adjusted for any stock split, dividend, combination, reclassification and the
like), after the Series D Issue Date.
(iii) The holders of shares of Series B Preferred Stock
shall be entitled to receive dividends, out of any assets legally available
therefore, when, as and if declared by the Board of Directors of the
corporation, prior and in preferences to any declaration or payment of any
dividend (payable other than in Common Stock or other securities convertible
into or entitling the holder thereof to receive, directly or indirectly,
additional shares of Common Stock of the corporation) on the Series A Preferred
Stock and the Common Stock, at the rate of 8% per annum (from and after the
dates of issuances) of the Series B Stated Value (as adjusted for any stock
split, dividend, combination, reclassification and the like), after the Series D
Issue Date.
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(iv) The holders of shares of Series A Preferred Stock
shall be entitled to receive dividends, out of any assets legally available
therefore, when, as and if declared by the Board of Directors of the
corporation, prior and in preferences to any declaration or payment of any
dividend (payable other than in Common Stock or other securities convertible
into or entitling the holder thereof to receive, directly or indirectly,
additional shares of Common Stock of the corporation) on the Common Stock, at
the rate of 8% per annum (from and after the dates of issuances) of the Series A
Stated Value (as adjusted for any stock split, dividend, combination,
reclassification and the like), after the Series D Issue Date.
(v) Such dividends on the Series A Preferred Stock, the
Series B Preferred Stock, the Series C Preferred Stock and Series D Preferred
Stock shall not be cumulative. If the amount available for distribution shall be
insufficient to fulfill the provisions of this Section 4(2) of these Amended and
Restated Articles of Incorporation, each holder of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock
shall be entitled to participate pro rata in such available amount for
distribution based on the number of shares of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock or Series D Preferred Stock then held
by each holder, subject to the preferences set forth herein.
(b) So long as any shares of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock or Series D Preferred Stock shall be
outstanding, no dividend, whether in cash or property, shall be paid or
declared, nor shall any other distribution be made, on any Series A Junior
Security, Series B Junior Security, Series C Junior Security or Series D Junior
Security, nor shall any shares of any Series A Junior Security, Series B Junior
Security, Series C Junior Security or Series D Junior Security be purchased,
redeemed, or otherwise acquired for value by the corporation (except for
acquisition of Common Stock by the corporation pursuant to agreements which
permit the corporation to repurchase such shares upon termination of services to
the corporation or in exercise of the corporation's right of first refusal upon
a proposed transfer) until all dividends on the Series A Preferred Stock, Series
B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock (if
any) shall have been paid or declared or set apart. In the event dividends
(payable other than in Common Stock or other securities convertible into or
entitling the holder thereof to receive, directly or indirectly, additional
shares of Common Stock of the corporation) are paid on any share of Common
Stock, an additional dividend (payable other than in Common Stock or other
securities convertible into or entitling the holder thereof to receive, directly
or indirectly, additional shares of Common Stock of the corporation) shall be
paid with respect to all outstanding shares of Series A Preferred Stock, Series
B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock in an
amount equal per share (on an as-if converted to Common Stock basis) to the
amount paid or set aside for each share of Common Stock. The provisions of this
paragraph 2(b) shall not, however, apply to (i) the acquisition of shares of any
Series A Junior Security, Series B Junior Security, Series C Junior Security or
Series D Junior Security in exchange for shares of any other Series A Junior
Security, Series B Junior Security, Series C Junior Security or Series D Junior
Security, (ii) any repurchase or redemption of any outstanding securities of the
corporation that is approved by the corporation's Board of Directors or (iii) a
redemption pursuant to paragraph 6 hereof.
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3. Distributions Upon Liquidation, Dissolution or Winding Up.
(a) In the event of any "Liquidation" (as defined below) of the
affairs of the corporation, the holders of shares of Series D Preferred Stock
then outstanding shall be entitled to be paid out of the assets of the
corporation available for distribution to its shareholders, whether such assets
are capital or surplus, and whether or not any dividends are declared, an amount
equal to the Series D Stated Value, plus any and all accrued but unpaid
dividends, if any (collectively, the "Series D Liquidation Preference"), for
each share of Series D Preferred Stock outstanding, before any payment shall be
made or any assets distributed to any holder of Series D Junior Securities. If
the assets are insufficient to make all of the payments referred to in this
paragraph, the holders of the Series D Preferred Stock shall be entitled to
distribute the amount available for distribution to the holders of the Series D
Preferred Stock based on the number of shares of Series D Preferred Stock held
by each such holder.
(b) After payment or distribution of the Series D Liquidation
Preference and amounts to holders of Series D Senior Securities, the holders of
shares of Series C Preferred Stock then outstanding shall be entitled to be paid
out of the assets of the corporation then available for distribution to its
shareholders, whether such assets are capital or surplus, and whether or not any
dividends are declared, an amount equal to the Series C Stated Value, plus any
and all accrued but unpaid dividends, if any (collectively, the "Series C
Liquidation Preference"), for each share of Series C Preferred Stock
outstanding, before any payment shall be made or any assets distributed to any
holder of Series C Junior Securities. If the assets are insufficient to make all
of the payments referred to in this paragraph, the holders of the Series C
Preferred Stock shall be entitled to distribute the amount available for
distribution to the holders of the Series C Preferred Stock based on the number
of shares of Series C Preferred Stock held by each such holder.
(c) After payment or distribution of the Series D Liquidation
Preference and amounts to holders of Series D Senior Securities and the payment
or distribution of the Series C Liquidation Preference and amounts to the
holders of Series C Senior Securities, the holders of shares of Series B
Preferred Stock then outstanding shall be entitled to be paid out of the assets
of the corporation then available for distribution to its shareholders, whether
such assets are capital or surplus, and whether or not any dividends are
declared, an amount equal to the Series B Stated Value, plus any and all accrued
but unpaid dividends, if any (collectively, the "Series B Liquidation
Preference"), for each share of Series B Preferred Stock outstanding, before any
payment shall be made or any assets distributed to any holder of Series B Junior
Securities. If the assets are insufficient to make all of the payments referred
to in this paragraph, the holders of the Series B Preferred Stock shall be
entitled to distribute the amount available for distribution to the holders of
the Series B Preferred Stock based on the number of shares of Series B Preferred
Stock held by each such holder.
(d) After payment or distribution of the Series D Liquidation
Preference and amounts to holders of Series D Senior Securities, payment or
distribution of the Series C Liquidation Preference and amounts to holders of
Series C Senior Securities and the payment or distribution of the Series B
Liquidation Preference and amounts to holders of Series B Senior Securities, the
holders of shares of Series A Preferred Stock then outstanding shall be entitled
to be paid out of the assets of the corporation available for distribution to
its
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shareholders, whether such assets are capital or surplus, and whether or not any
dividends are declared, an amount equal to the Series A Stated Value, plus any
and all accrued but unpaid dividends, if any (collectively, the "Series A
Liquidation Preference") for each share of Series A Preferred Stock outstanding,
before any payment shall be made or any assets distributed to any holder of
Series A Junior Securities but after payment or distribution of all amounts to
holders of Series A Senior Securities. If the assets are insufficient to make
all of the payments referred to in this paragraph, the holders of the Series A
Preferred Stock shall be entitled to distribute the amount available for
distribution to the holders of the Series A Preferred Stock based on the number
of shares of Series A Preferred Stock held by each such holder.
(e) After the payment of the full Series D Liquidation
Preference, Series C Liquidation Preference, Series B Liquidation Preference,
the Series A Liquidation Preference, and any amounts to holders of Series D
Senior Securities, Series C Senior Securities, Series B Senior Securities and
Series A Senior Securities, as set forth in the preceding paragraphs, the assets
of the Company legally available for distribution, if any, shall be distributed
ratably and on a parity basis to the holders of the Common Stock and to the
holders of the Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock and Series D Preferred on an as-if-converted to Common Stock
basis until such time as the holders of Series D Preferred Stock have received
an aggregate amount per share of Series D Preferred Stock equal to $5.773 (as
adjusted for any stock split, dividend, combination, reclassification and the
like), the holders of Series C Preferred Stock have received an aggregate amount
per share of Series C Preferred Stock equal to $2.0588 (as adjusted for any
stock split, dividend, combination, reclassification and the like), the holders
of Series B Preferred Stock have received an aggregate amount per share of
Series B Preferred Stock equal to $.997 (as adjusted for any stock split,
dividend, combination, reclassification and the like) and the holders of Series
A Preferred Stock have received an aggregate amount per share of Series A
Preferred Stock equal to $1.125 (as adjusted for any stock split, dividend,
combination, reclassification and the like) in the aggregate pursuant to
paragraphs 3(a), 3(b), 3(c), 3(d) and 3(e). After such aggregate total payments
have been made to the Series A Preferred Stock, the Series B Preferred Stock,
the Series C Preferred Stock and Series D Preferred Stock, the Common Stock
shall participate in all of the remaining assets of the corporation.
(f) For purposes of this Article 4, a "Liquidation" shall be
defined to be any liquidation, dissolution or winding up of the affairs of the
corporation, including the sale, lease, conveyance, exchange or transfer (for
cash, shares of stock, securities or other consideration) of all or
substantially all the property or assets of the corporation or the consolidation
or merger of the corporation with one or more other corporations or other entity
or person, or any corporate reorganization, in which shareholders of the
corporation immediately prior to such consolidation, merger or reorganization,
own less than 50% of the corporation's voting power immediately after such
consolidation, merger or reorganization.
(g) Any securities or other non-cash consideration to be
delivered to the holders of the Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock or Series D Preferred Stock upon any Liquidation
in accordance with the terms hereof shall be valued as follows:
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(i) If traded on a nationally recognized securities exchange
or inter-dealer quotation system, the value shall be deemed to be the average of
the closing prices of the securities on such exchange or system over the 30-day
period ending three (3) business days prior to the closing;
(ii) If traded over-the-counter, the value shall be deemed to
be the average of the closing bid prices over the 30-day period ending three (3)
business days prior to the closing; and
(iii) If there is no active public market, the value shall be
the fair market value thereof, as determined in good faith by the Board of
Directors of the corporation, including the vote of a majority of the directors
elected by the holders of the Series A Preferred Stock and Series B Preferred
Stock.
4. Conversion Rights.
(a) A holder of shares of Series A Preferred Stock may
convert such shares into shares of Common Stock at the Series A Conversion Rate,
a holder of shares of Series B Preferred Stock may convert such shares into
shares of Common Stock at the Series B Conversion Rate, a holder of shares of
Series C Preferred Stock may convert such shares into shares of Common Stock at
the Series C Conversion Rate and a holder of shares of Series D Preferred Stock
may convert such shares into shares of Common Stock at the Series D Conversion
Rate, as the Series A Conversion Rate, Series B Conversion Rate, Series C
Conversion Rate and Series D Conversion Rate may have been adjusted, at any
time. No fractional shares of Common Stock shall be issued upon any conversion,
but in lieu thereof, this corporation shall, at its option, either (i) pay
therefor in cash an amount equal to the applicable fraction of the Closing Price
on the last trading date prior to the Conversion Date (as defined in paragraph
4(b) below) or (ii) make such arrangements as the Board of Directors may approve
to enable the holder of the fractional share of Common Stock to sell such
fractional share of Common Stock or to buy an additional fractional share of
Common Stock sufficient to make a full share of Common Stock.
(b) In order to convert shares of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock or Series D Preferred Stock
into shares of Common Stock, a holder shall surrender the certificate or
certificates evidencing the shares of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock or Series D Preferred Stock to be
converted, duly endorsed, at the office of the corporation, shall notify the
corporation at such office of his election to convert shares of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock or Series D
Preferred Stock and of the number of such shares which he wishes to convert,
shall state in writing the name or names in which he wishes the certificate or
certificates for shares of Common Stock to be issued, and shall pay any transfer
or similar tax if required. In the event that a holder fails to notify this
corporation of the number of shares of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock or Series D Preferred Stock which he
wishes to convert, he shall be deemed to have elected to convert all shares
represented by the certificate or certificates surrendered for conversion. The
date on which the holder satisfies the last of such requirements is herein
referred to as the "Conversion Date". Promptly after the Conversion Date, this
corporation shall issue and deliver a certificate
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for the number of full shares of Common Stock issuable upon the conversion,
either cash for any remaining fractional share of Common Stock or order forms
entitling the holder thereof to sell such fractional share of Common Stock or to
purchase an additional fractional share of Common Stock necessary to make a full
share of Common Stock, as provided in paragraph 4(a), a new certificate
representing the unconverted portion, if any, of the shares of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock or Series D
Preferred Stock represented by the certificate or certificates surrendered for
conversion and shall promptly pay in cash or, to the extent sufficient funds are
not then legally available therefor, in Common Stock (at the Common Stock's fair
market value determined by the Board of Directors as of the Conversion Date)
declared and unpaid dividends (if any) on the shares of Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock or Series D Preferred
Stock being converted. The person in whose name the certificate is registered
shall be treated as a shareholder of record of Common Stock as of the Conversion
Date.
(c) In case this corporation shall at any time after the Series
D Issue Date (i) pay a dividend in shares of Common Stock, (ii) subdivide the
outstanding shares of Common Stock, (iii) combine the outstanding shares of
Common Stock into a smaller number of shares of Common Stock, or (iv) issue any
shares of its capital stock or other securities by reclassification of the
Common Stock, the Series A Conversion Price and Series A Conversion Rate, the
Series B Conversion Price and the Series B Conversion Rate, the Series C
Conversion Price and the Series C Conversion Rate and the Series D Conversion
Price and the Series D Conversion Rate in effect at the time of the record date
for such dividend or distribution or of the effective date of such subdivision,
combination or reclassification shall be proportionately adjusted so that each
holder of shares of Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock or Series D Preferred Stock converted after such time shall be
entitled to receive the aggregate number and kind of shares of Common Stock or
other securities of this corporation which, if such shares of Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock or Series D Preferred
Stock had been converted immediately prior to such time, he would have owned
upon such conversion and distribution, subdivision, combination or
reclassification. Such adjustment shall be made successfully whenever any event
listed above shall occur.
(d) In case this corporation shall fix a record date for the
making of a distribution to all holders of shares of Common Stock of assets or
evidences of its indebtedness or securities (other than cash dividends or cash
distributions payable out of funds legally available therefor or dividends
payable in shares of Common Stock or distributions referred to in paragraph
4(c)), the Series A Conversion Price, Series B Conversion Price, Series C
Conversion Price and Series D Conversion Price, to be in effect after such
record date shall be determined by multiplying the Series A Conversion Price,
Series B Conversion Price, Series C Conversion Price and Series D Conversion
Price, respectively, in effect immediately prior to such record date by a
fraction, of which the numerator shall be the current market price (as defined
in paragraph 4(f) below) per share of Common Stock five business days prior to
such record date, less the fair market value (as determined by the Board of
Directors, whose determination shall be conclusive) of the portion of the assets
or evidences of indebtedness or securities so to be distributed applicable to
one share of Common Stock and of which the denominator shall be such current
market price per share of Common Stock. Such adjustments shall be made
successively
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whenever such a record date is fixed. In the event that such distribution is not
so made, the Series A Conversion Price, Series B Conversion Price, Series C
Conversion Price and Series D Conversion Price shall be that which would then be
in effect if such record date had not been fixed.
(e) If the corporation issues or sells, or in accordance with
this paragraph 4(e) is deemed to have issued or sold, any Common Stock or
securities exercisable for or convertible into Common Stock, other than Excluded
Stock (as defined herein), without consideration or for a consideration per
share, after the Series D Issue Date (i) with respect to the Series A Conversion
Price, less than the Series A Conversion Price in effect immediately prior to
the issuance of such Common Stock or securities exercisable for or convertible
into Common Stock; (ii) with respect to the Series B Conversion Price, less than
the Series B Conversion Price in effect prior to the issuance of such Common
Stock or securities exercisable for or convertible into Common Stock; (iii) with
respect to the Series C Conversion Price, less than the Series C Conversion
Price in effect prior to the issuance of such Common Stock or securities
exercisable for or convertible into Common Stock (a "Series C Dilutive
Issuance"); or (iv) with respect to the Series D Conversion Price, less than the
Series D Conversion Price in effect prior to the issuance of such Common Stock
or securities exercisable for or convertible into Common Stock, the Series A
Conversion Price, the Series B Conversion Price, the Series C Conversion Price
and/or the Series D Conversion Price, as applicable, in effect immediately prior
to each such issue or sale shall be adjusted (but not increased except as
provided in the last sentence of subparagraphs 4(d) or 4(e)(3)(D)) to equal the
price computed (to the nearest whole cent) by dividing (1) the sum of (i) the
result obtained by multiplying (x) the number of shares of Common Stock of the
corporation outstanding or issuable upon the exercise, exchange or conversion of
options to purchase or rights to subscribe for Common Stock, securities
convertible into or exchangeable for Common Stock, or options to purchase or
rights to subscribe for such convertible or exchangeable securities, in each
case, outstanding immediately prior to such issue or sale by (y) the Series A
Conversion Price, Series B Conversion Price, Series C Conversion Price or Series
D Conversion Price, as applicable, in effect immediately prior to such issue or
sale and (ii) the consideration, if any, received by the corporation upon such
issue or sale by (2) the sum of the number of shares of Common Stock of the
corporation outstanding or issuable upon the exercise, exchange or conversion of
options to purchase or rights to subscribe for Common Stock, securities
convertible into or exchangeable for Common Stock, or options to purchase or
rights to subscribe for such convertible or exchangeable securities, in each
case, outstanding, immediately prior to such issue or sale plus the number of
shares of Common Stock so issued or sold (or the number of shares of Common
Stock issuable upon exercise or conversion of the other securities so issued or
sold); provided, however, that if the corporation makes a Series C Dilutive
Issuance at any time, or from time to time, after the Series C Issue Date in an
institutional or equivalent round of equity financing for consideration per
share of $.70 (as adjusted for any stock split, dividend, combination,
reclassification and the like) or greater, the Series C Conversion Price shall
be immediately adjusted to equal the per share consideration received by the
corporation in such Series C Dilutive Issuance (in lieu of such amount, the
method of determination set forth earlier in this sentence). As used herein,
"Excluded Stock" shall mean (i) direct or indirect shares issued or issuable
upon the exercise of any options, warrants or other securities issued by the
corporation which are outstanding as of the Series D Issue Date, (ii) up to
6,235,856 shares of Series C Preferred Stock issuable upon the
11
exercise of a warrant or warrants, and the Common Stock issuable upon the
conversion of such Series C Preferred Stock, (iii) shares issued or issuable as
a dividend or distribution on the Series A Preferred Stock, the Series B
Preferred Stock, Series C Preferred Stock or Series D Preferred Stock, (iv)
shares issued or issuable for which adjustment of the Series A Conversion Price,
Series B Conversion Price, Series C Conversion Price or Series D Conversion
Price has been made pursuant to paragraph 4(c), (v) shares of Common Stock
issued or issuable upon conversion of the Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock or Series D Preferred Stock at any
time outstanding, (vi) shares of Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock or Series D Preferred Stock or (vii) shares of
Common Stock issuable upon the exercise of options or as stock issuances which
are granted or issued to management, service providers, employees or consultants
of the corporation or any subsidiary, or warrants issued or issuable to lenders
or lessors after the Series D Issue Date, provided that the issuance of such
options, stock issuances or warrants shall require the approval of at least a
majority of the Board of Directors of the corporation.
For the purposes of any adjustment of the Series A Conversion Price, Series B
Conversion Price, Series C Conversion Price or Series D Conversion Price
pursuant to this paragraph 4(e), the following provisions shall be applicable:
(1) In the case of the issuance of Common Stock for cash,
the consideration shall be deemed to be the amount of
cash paid therefor after deducting therefrom any
discounts, commissions or other expenses allowed, paid
or incurred by the corporation for any underwriting or
otherwise in connection with the issuance and sale
thereof.
(2) In the case of the issuance of Common Stock for
consideration in whole or in part other than cash, the
consideration other than cash shall be deemed to be the
fair market value thereof as determined by the Board of
Directors in good faith, irrespective of any accounting
treatment.
(3) In the case of the issuance, at any time after the
Series D Issue Date, of (i) options to purchase or
rights to subscribe for Common Stock, (ii) securities
by their terms convertible into or exercisable or
exchangeable for Common Stock or (iii) options to
purchase or rights to subscribe for such convertible or
exchangeable securities:
(A) the aggregate maximum number of shares of Common
Stock deliverable upon exercise 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 subdivisions
12
(1) and (2) above), if any, received by the
corporation upon the issuance of such options or
rights plus the minimum purchase price provided in
such options or rights for the Common Stock
covered thereby;
(B) the aggregate maximum number of shares of Common
Stock deliverable upon conversion of or in
exchange 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 received by the corporation for any
such securities and related options or rights (the
consideration in each case to be determined in the
manner provided in subdivisions (1) and (2) above)
plus a maximum purchase price provided in such
options or rights for such convertible or
exchangeable securities covered thereby;
(C) upon any change in the number of shares of Common
Stock deliverable upon exercise of any such
options or rights or conversion of or exchange for
such convertible or exchangeable securities, other
than a change resulting from the antidilution
provisions thereof, the Series A Conversion Price,
the Series B Conversion Price, the Series C
Conversion Price and/or Series D Conversion Price,
as applicable, shall forthwith be readjusted to
such Series A Conversion Price, Series B
Conversion Price, Series C Conversion Price or
Series D Conversion Price, as would have been
obtained had the adjustment made upon the issuance
of such options, rights or securities not
converted prior to such change or options or
rights related to such securities not converted
prior to such change been made upon the basis of
such change; and
(D) on 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 Series A Conversion Price, the
Series
13
B Conversion Price, the Series C Conversion Price
and/or the Series D Conversion Price, as
applicable, shall forthwith be readjusted to such
Series A Conversion Price, Series B Conversion
Price, Series C Conversion Price or Series D
Conversion Price, as would have obtained had the
adjustment made upon the issuance of such options,
rights, securities or options or rights related to
such securities been made upon the basis of the
issuance of only the number of shares of Common
Stock 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 and
subsequent conversion or exchange thereof.
(f) For the purpose of any computation pursuant to paragraph
4(d), the current market price per share of Common Stock on any date shall be
deemed to be the average of the Closing Prices for thirty (30) consecutive
trading days commencing five (5) trading days before the date in question if the
corporation's Common Stock is publicly traded, and if not publicly traded, in
good faith by the Board of Directors of the corporation.
(g) No adjustment in the Series A Conversion Rate or Series A
Conversion Price, Series B Conversion Rate or Series B Conversion Price or
Series C Conversion Rate, Series C Conversion Price or the Series D Conversion
Rate or Series D Conversion Price need be made unless the adjustment would
require an increase or decrease of at least 1% in the Series A Conversion Rate,
Series B Conversion Rate, Series C Conversion Rate or Series D Conversion Rate,
as applicable. Any adjustments which are not made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
paragraph 4 shall be made to the nearest cent or to the nearest 1/100th of a
share, as the case may be. The Series A Conversion Rate, Series B Conversion
Rate, Series C Conversion Rate and Series D Conversion Rate shall not be
adjusted downward except in the event of a combination of the outstanding shares
of Common Stock into a smaller number of shares of Common Stock or in the event
of a readjustment of the Series A Conversion Rate, Series B Conversion Rate,
Series C Conversion Rate or Series D Conversion Rate pursuant to the last
sentence of paragraph 4(d) or 4(e)(3)(D).
(h) Except as provided in this paragraph 4, no adjustment in the
Series A Conversion Rate, Series B Conversion Rate, Series C Conversion Rate or
Series D Conversion Rate shall be made because this corporation issues, in
exchange for cash, property or services, Common Stock or any securities
convertible into or exchangeable for Common Stock, or securities carrying the
right to purchase Common Stock or such convertible or exchangeable securities.
(i) Whenever the Conversion Rate is adjusted after the
Series D Issue Date, this corporation shall promptly mail to holders of the
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and
Series D Preferred Stock a notice of the
14
adjustment which briefly states the facts requiring the adjustment and the
manner of computing it. The notice shall be conclusive evidence that such
adjustment is required.
(j) If this corporation proposes to (i) take any action
which would require an adjustment in the Series A Conversion Price, Series B
Conversion Price, Series C Conversion Price or Series D Conversion Price
pursuant to paragraph 4(d), or clause (iv) of paragraph 4(c); (ii) consolidate
or merge with or into or transfer all or substantially all of its assets to,
another corporation; or (iii) take any action which would result in the
dissolution, liquidation or winding up of this corporation, a holder of shares
of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock
or Series D Preferred Stock may desire to convert such shares into shares of
Common Stock prior to the record date for or the effective date of the
transaction so that it may receive the rights, warrants, securities or assets
which a holder of shares of Common Stock on that date may receive. Therefore,
this corporation shall mail to the holders of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock and Series D Preferred Stock a notice
stating the proposed record or effective date, as the case may be, for any such
proposed action.
The corporation shall mail the notice not later than the time such
record date is required to be announced pursuant to the applicable rule of the
principal securities exchange upon which the corporation's securities are
listed, or if the corporation's securities are not listed on any such exchange
no later than ten (10) days prior to such proposed record date or effective
date, as the case may be. Failure to mail the notice or any defect therein
shall not affect the validity of any transaction referred to in clause (i), (ii)
or (iii) of this paragraph 4(j).
(k) In case of a merger or consolidation which reclassifies or
changes the shares of Common Stock of this corporation or in case of the
consolidation or merger of this corporation with or into another corporation or
corporations or the transfer of all or substantially all of the assets of this
corporation to another corporation or corporations, each share of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock or Series D
Preferred Stock which shall thereafter remain outstanding 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 deliverable upon
conversion of such shares of Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock or Series D Preferred Stock would have been entitled
upon such reclassification, consolidation, merger or transfer, and appropriate
adjustment (as determined in good faith by the Board of Directors) shall be made
in the application of the provisions herein set forth with respect to the rights
and interests thereafter of the holders of the Series A Preferred Stock, Series
B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock, to the
end that the provisions set forth herein (including provisions with respect to
changes in and other adjustments of the Series A Conversion Rate, Series B
Conversion Rate, Series C Conversion Rate or Series D Conversion Rate) shall
thereafter be applicable, as nearly as reasonably may be, in relation to any
shares of stock or other securities or property thereafter deliverable upon the
conversion of shares of Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock or Series D Preferred Stock. In case of any such merger
or consolidation, the resulting or surviving corporation (if not this
corporation) shall expressly assume the obligation to deliver, upon the exercise
of the conversion privilege, such stock or other securities or property as the
holders of the Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock or Series D Preferred Stock received by the holders in place
15
thereof, shall be entitled to receive pursuant to the provision hereof, and to
make provisions for the protection of the conversion right as provided above. If
this paragraph (k) applies, paragraph 4(c) shall not apply. If the Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock or Series D
Preferred Stock becomes convertible solely into cash, no adjustment need be made
thereafter, and interest shall not accrue on such cash.
(l) In any case in which this paragraph 4 shall require that an
adjustment as a result of any event becomes effective from and after a record
date, this corporation may elect to defer until the occurrence of such event (i)
the issuance to the holder of any shares of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock or Series D Preferred Stock converted
after such record date and before the occurrence of such event of the additional
shares of Common Stock issued upon such conversion over and above the shares
issuable on the basis of adjustment and (ii) the payment, if any, to such holder
of an amount of cash in lieu of a fractional share of Common Stock; provided,
however, that this corporation shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
share of Common Stock or such payment, if any, in lieu of such fractional share.
(m) Any determination which the Board of Directors must make
pursuant to paragraph 4 is conclusive. The Board of Directors shall have the
exclusive power and authority (acting in good faith) to resolve any ambiguity in
this paragraph 4.
(n) 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 and Series D 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 the Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock and Series D Preferred Stock. 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 the
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and
Series D 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 purpose.
(o) Payment of 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 shares of Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock and Series D 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 Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series D
Preferred Stock so converted were registered.
(p) No Dilution or Impairment. This corporation shall not amend
-------------------------
this paragraph 4 or participate in any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or take any
other voluntary action, for the purpose of
16
avoiding or seeking to avoid the observance or performance of any of the terms
to be observed or performed hereunder by the corporation, but shall at all times
in good faith assist in carrying out all such action as may be reasonably
necessary or appropriate in order to protect the conversion rights of the
holders of the Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock and Series D Preferred Stock against dilution or other
impairment.
(q) Notices. Any notice required by the provisions of this
-------
paragraph 4 shall be in writing and shall be deemed effectively given: (i) upon
personal delivery to the party to be notified, (ii) when sent by confirmed telex
or facsimile if sent during normal business hours of the recipient; if not, then
on the next business day, (iii) five (5) days after having been sent by
registered or certified mail, return receipt requested, postage prepaid, or (iv)
one (1) day after deposit with a nationally recognized overnight courier,
specifying next day delivery, with written verification of receipt. All notices
shall be addressed to each holder of record at the address of such holder
appearing on the books of the corporation.
5. Mandatory Conversion.
(a) All shares of Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock and Series D Preferred Stock shall be
automatically converted into shares of Common Stock at the Series A Conversion
Rate, Series B Conversion Rate, Series C Conversion Rate or Series D Conversion
Rate, as applicable, on the date (the "Mandatory Conversion Date") upon the
earlier to occur of the following: (i) with respect to the mandatory conversion
of the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock and Series D Preferred Stock, concurrent with the closing of a public
offering of Common Stock made pursuant to an effective registration statement
under the Securities Act of 1933, as amended, which offering has aggregate gross
proceeds of at least $10,000,000 to the corporation and at a price per share of
Common Stock at least equal to $5.773 (as adjusted for any stock split,
dividend, combination, reclassification and the like), (ii) with respect to the
mandatory conversion of all of the Series A Preferred Stock, holders of at least
a majority of the then outstanding shares of Series A Preferred Stock shall have
provided written notice to the corporation of its intent to convert into shares
of Common Stock, (iii) with respect to the mandatory conversion of all of the
Series B Preferred Stock, holders of a majority of the then outstanding shares
of Series B Preferred Stock shall have provided written notice to the
Corporation of its intent to convert into shares of Common Stock, (iv) with
respect to the mandatory conversion of all of the Series C Preferred Stock,
holders of a majority of the then outstanding shares of Series C Preferred Stock
shall have provided written notice to the Corporation of its intent to convert
into shares of Common Stock, or (v) with respect to the mandatory conversion of
all of the Series D Preferred Stock, holders of a majority of the then
outstanding shares of Series D Preferred Stock shall have provided written
notice to the Corporation of its intent to convert into shares of Common Stock.
No fractional shares of Common Stock shall be issued upon any conversion, but in
lieu thereof, the corporation shall, at its option, either (x) pay therefor in
cash an amount equal to the applicable fraction of the Closing Price on the last
trading date prior to the Mandatory Conversion Date or (y) make such
arrangements as the Board of Directors may approve to enable the holder of the
fractional share of Common Stock to sell such fractional share of Common Stock
or to buy an additional fractional share of Common Stock sufficient to make a
full share of Common Stock.
17
(b) As of the Mandatory Conversion Date applicable to the Series
A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock or Series
D Preferred Stock, each outstanding share of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock or Series D Preferred Stock, as
applicable, shall no longer be deemed outstanding and, without any action on the
part of the holder thereof or the corporation, shall be converted into and shall
constitute such number of shares of Common Stock as shall be determined by the
Series A Conversion Rate, Series B Conversion Rate, Series C Conversion Rate or
Series D Conversion Rate, as applicable, in effect on such date.
(c) Notice of any mandatory conversion shall be mailed not more
than 30 days following the Mandatory Conversion Date to the holders of record of
the shares of Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock and Series D Preferred Stock that shall have been converted into
shares of Common Stock, at their respective addressees as the same appear upon
the books of this corporation or supplied by them to this corporation for the
purpose of such notice; but no failure to mail such notice to particular
shareholders or any defect therein or in the mailing thereof shall affect the
validity of the mandatory conversion of shares of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock or Series D Preferred Stock.
The corporation shall include with such notice either cash for any remaining
fractional share of Common Stock or order forms entitling the holder thereof to
sell such fractional share of Common Stock or to purchase an additional
fractional Common Stock necessary to make a full share of Common Stock and cash
or, to the extent sufficient funds are not then legally available therefor, in
Common Stock (at the Common Stock's fair market value determined by the Board of
Directors at the Mandatory Conversion Date), all declared any unpaid dividends
(if any) on the shares of Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock and Series D Preferred Stock being converted. In order
to receive a certificate evidencing the shares of Common Stock issued upon
mandatory conversion, a holder shall surrender the certificate or certificates
evidencing the shares of Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock or Series D Preferred Stock that shall have been
converted, duly endorsed, at the office of the corporation, shall state in
writing the name or names in which he wishes the certificate or certificates for
shares of Common Stock to be issued, and shall pay any transfer or similar tax
if required. Promptly after the surrender of such certificate, this corporation
shall issue and deliver a certificate for the number of full shares of Common
Stock issuable upon such mandatory conversion. The person in whose name the
certificate is registered shall be treated as a shareholder of record of Common
Stock as of the Mandatory Conversion Date.
(d) Any determination which the Board of Directors must make
pursuant to paragraph 5 is conclusive. The Board of Directors shall have the
sole power and authority (acting in good faith) to resolve any ambiguity in this
paragraph 5.
6. Redemption Rights.
(a) Except in connection with a public offering of the
corporation's securities, upon a Liquidation, the Company shall redeem on the
date of the Liquidation event, all (but not less than all) of the shares of
Series A Preferred Stock, Series B Preferred Stock Series C Preferred Stock and
Series D Preferred Stock at their respective Series A Liquidation Preference,
Series B Liquidation Preference, Series C Liquidation Preference and Series D
18
Liquidation Preference, plus all other amounts as set forth in and qualified by,
paragraph 3(e) herein. Such redemption amounts shall be payable in cash or in
the same form of consideration as is paid to the holders of Common Stock in such
Liquidation. The provisions of this paragraph 6(a) shall not in any way limit
the right of the holders of Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock or Series D Preferred Stock to elect to convert their
shares into shares of Common Stock pursuant to paragraph 4 prior to or in
connection with any Liquidation.
(b) On or after such redemption date, each holder of shares of
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock or
Series D Preferred Stock to be redeemed shall surrender such holder's
certificates representing such shares to the corporation in the manner and at
the place designated by the corporation, 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 thereof and each surrendered
certificate shall be cancelled. In the event fewer than all of the shares
represented by such certificates are redeemed, a new certificate shall be issued
representing the unredeemed shares. From and after such redemption date, unless
there shall have been a default in payment of the redemption price or the
corporation is unable to pay the redemption price due to not having sufficient
legally available funds, all rights of the holders of such shares as holders of
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock or
Series D Preferred Stock (except the right to receive the redemption price
without interest upon surrender of their certificates), shall cease and
terminate with respect to such shares, provided that in the event that shares of
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock or
Series D Preferred Stock are not redeemed due to a default in payment by the
corporation or because the corporation does not have sufficient legally
available funds, such shares of Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock or Series D Preferred Stock shall remain
outstanding and shall be entitled to all of the rights and preferences provided
herein.
7. Voting Rights.
(a) Except as otherwise provided by law or these Amended and
Restated Articles of Incorporation of the corporation, the holders of Series A
Preferred Stock shall have the following voting rights:
(i) Without the consent of the holders of at least 66-2/3% of
the number of shares of Series A Preferred Stock at the time then outstanding,
either in writing or by vote at a meeting called for that purpose at which the
holders of such Series A Preferred Stock shall vote as a class, these Amended
and Restated Articles of Incorporation or Bylaws of the corporation, shall not
be changed so as to alter in an adverse manner the designations, preferences and
relative, participating, optional or other special rights, or the
qualifications, limitations or restrictions relating to, the Series A Preferred
Stock; and
(ii) Without the consent of the holders of at least 66-2/3% of
the number of shares of Series A Preferred Stock at the time then outstanding
either in writing or by vote at a meeting called for that purpose at which the
holders of such Series A Preferred Stock shall vote as a class, these Amended
and Restated Articles of Incorporation or Bylaws of the corporation shall not be
changed: (i) to establish any class of capital stock ranking senior to the
19
Series A Preferred Stock; or (ii) to increase the authorized number of shares of
Series A Preferred Stock.
(b) Except as otherwise provided by law or these Amended and
Restated Articles of Incorporation of the corporation, the holders of Series B
Preferred Stock shall have the following voting rights:
(i) Without the consent of the holders of at least 66-2/3% of
the number of shares of Series B Preferred Stock at the time then outstanding,
either in writing or by vote at a meeting called for that purpose at which the
holders of such Series B Preferred Stock shall vote as a class, these Amended
and Restated Articles of Incorporation or Bylaws of the corporation shall not be
changed so as to alter in an adverse manner the designations, preferences and
relative, participating, optional or other special rights, or the
qualifications, limitations or restrictions relating to, the Series B Preferred
Stock; and
(ii) Without the consent of the holders of at least a 66-2/3%
of the number of shares of Series B Preferred Stock at the time then
outstanding, either in writing or by vote at a meeting called for that purpose
at which the holders of such Series B Preferred Stock shall vote as a class,
these Amended and Restated Articles of Incorporation or Bylaws shall not be
changed: (i) to establish any class of capital stock ranking senior to the
Series B Preferred Stock; or (ii) to increase the authorized number of shares of
Series B Preferred Stock.
(c) Except as otherwise provided by law or these Amended and
Restated Articles of Incorporation of the corporation, the holders of Series C
Preferred Stock shall have the following voting rights:
(i) Without the consent of the holders of at least 66-2/3% of
the number of shares of Series C Preferred Stock at the time then outstanding,
either in writing or by vote at a meeting called for that purpose at which the
holders of such Series C Preferred Stock shall vote as a class, these Amended
and Restated Articles of Incorporation or Bylaws of the corporation shall not be
changed so as to alter in an adverse manner the designations, preferences and
relative, participating, optional or other special rights, or the
qualifications, limitations or restrictions relating to, the Series C Preferred
Stock; and
(ii) Without the consent of the holders of at least a 66-2/3%
of the number of shares of Series C Preferred Stock at the time then
outstanding, either in writing or by vote at a meeting called for that purpose
at which the holders of such Series C Preferred Stock shall vote as a class,
these Amended and Restated Articles of Incorporation or Bylaws shall not be
changed: (i) to establish any class of capital stock ranking senior to the
Series C Preferred Stock; or (ii) to increase the authorized number of shares of
Series C Preferred Stock.
(d) Except as otherwise provided by law or these Amended and
Restated Articles of Incorporation of the corporation, the holders of Series D
Preferred Stock shall have the following voting rights:
(i) Without the consent of the holders of at least 66-2/3% of
the number of shares of Series D Preferred Stock at the time then outstanding,
either in writing or
20
by vote at a meeting called for that purpose at which the holders of such Series
D Preferred Stock shall vote as a class, these Amended and Restated Articles of
Incorporation or Bylaws of the corporation shall not be changed so as to alter
in an adverse manner the designations, preferences and relative, participating,
optional or other special rights, or the qualifications, limitations or
restrictions relating to, the Series D Preferred Stock; and
(ii) Without the consent of the holders of at least a 66-2/3%
of the number of shares of Series D Preferred Stock at the time then
outstanding, either in writing or by vote at a meeting called for that purpose
at which the holders of such Series D Preferred Stock shall vote as a class,
these Amended and Restated Articles of Incorporation or Bylaws shall not be
changed: (i) to establish any class of capital stock ranking senior to the
Series D Preferred Stock; or (ii) to increase the authorized number of shares of
Series D Preferred Stock;
For the purposes of paragraphs 7(a), (b), (c) and (d), "ranking senior" shall
mean having a prior right to dividends, redemption or the distribution of assets
in liquidation.
(e) Without the consent of the holders of at least a majority of
the number of shares of Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock and Series D Preferred Stock, voting together as a
single class and not as a separate series, either in writing or by vote as a
class, the corporation shall not effect any Liquidation.
(f) Except as provided in paragraph 7(a), 7(b), 7(c), 7(d) or
7(e) above or by written agreement, or except as provided by law, the Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock and the Common Stock shall vote together as a single class on
any matter with respect to which the Common Stock is entitled to vote pursuant
to applicable California law or these Amended and Restated Articles of
Incorporation. Each share of Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock and Series D Preferred Stock shall be entitled to the
number of votes per share equal to the number of shares of Common Stock issuable
upon conversion of the Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock or Series D Preferred Stock, as applicable.
8. Preemptive Rights. The holders of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock
shall not have any preemptive rights except as set forth in any written
agreement.
ARTICLE 5
VOTING RIGHTS. Each share of common stock shall have one vote on all
matters on which shareholders are entitled to vote under the California
Corporations Code and these Articles, and, except as otherwise provided by law
or by these Articles, shares of any other class shall have no voting rights.
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ARTICLE 6
1. DIRECTORS' LIMITED LIABILITY. The liability of the directors of
the corporation for monetary damages shall be eliminated to the fullest extent
permissible under California law.
2. INDEMNIFICATION OF AGENTS. The corporation is authorized to
provide indemnification of its agents (as such term is defined in Section 317 of
the California Corporations Code), whether by bylaw, agreement, vote of
shareholders or disinterested directors, or otherwise, in excess of the
indemnification expressly permitted by Section 317 of the California
Corporations Code for breach of duty to the corporation and its shareholders,
subject only to the applicable limits upon such indemnification set forth in
Section 204(a)(11) of the California Corporations Code. If, after the effective
date of these Amended and Restated Articles of Incorporation, California law is
amended in a manner which permits a corporation to limit the monetary or other
liability of its directors or to authorize indemnification of, or advancement of
such defense expenses to, its directors or to authorize indemnification of, or
advancement of such defense expenses to, its directors or other persons, in any
such case to a greater extent than is permitted on such effective date, the
references in these Amended and Restated Articles of Incorporation, to
"California law" shall to that extent be deemed to refer to California law as so
amended.
3. Any repeal or modification of this Article 6 shall only be
prospective and shall not affect the rights under this Article 6 in effect at
the time of the alleged occurrence of any action or omission to give rise to
liability.
ARTICLE 7
BOARD OF DIRECTORS. The Board of Directors shall be elected as
follows: (i) holders of the outstanding shares of Series A Preferred Stock,
voting as a separate class, shall be entitled to elect one (1) director of the
corporation at each meeting or pursuant to consent of the corporation's
shareholders for the election of directors, and to remove from office such
director and fill any vacancy caused by the resignation, death or removal of
such director, so long as at least fifty percent (50%) of the authorized Series
A Preferred Stock shall be outstanding, (ii) holders of the outstanding Series B
Preferred Stock shall be entitled to elect up to two (2) directors of the
corporation at each meeting or pursuant to consent of the corporation's
shareholders for the election of directors, and to remove from office such
directors (or either of them) and fill any vacancy caused by the resignation,
death or removal of such directors (or either of them), in each case so long as
at least fifty percent (50%) of the authorized Series B Preferred Stock shall be
outstanding, (iii) holders of the outstanding shares of Series C Preferred
Stock, voting as a separate class, shall be entitled to elect one (1) director
of the corporation at each meeting or pursuant to consent of the corporation's
shareholders for the election of directors, and to remove from office such
director and fill any vacancy caused by the resignation, death or removal of
such director, so long as at least fifty percent (50%) of the authorized Series
C Preferred Stock shall be outstanding, (iv) holders of the outstanding shares
of Common Stock, voting as a separate class, shall be entitled to elect up to
two (2) directors of the corporation at each meeting or pursuant to consent of
the corporation's shareholders for the election of directors, and to remove from
office such directors (or either of them) and fill any vacancy
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caused by the resignation, death or removal of such directors (or either of
them), and (v) holders of the Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock and Common Stock, voting together as a single
class, shall be entitled to vote together with respect to the election of up to
four (4) additional directors of the corporation, at each meeting or pursuant to
each consent of the corporation's shareholders for the election of directors,
and to remove from office such directors (or either of them) and fill any
vacancy called by the resignation, death or removal of such directors (or either
of them).
ARTICLE 8
BYLAWS. The board of directors of this corporation shall have the
power to adopt, amend or repeal the Bylaws of this corporation, subject to the
powers of the shareholders to amend or repeal such bylaws."
C. The foregoing amendment and restatement of the Restated Articles
of Incorporation has been duly approved by the board of directors.
D. The foregoing amendment and restatement of the Restated Articles
of Incorporation has been duly approved by the required vote of shareholders in
accordance with Section 902 and 903 of the California Corporations Code. The
total number of outstanding shares of Common Stock of the corporation is
8,741,956, the total number of outstanding shares of Series A Preferred Stock is
2,679,268, the total number of outstanding shares of Series B Preferred Stock is
9,678,700 and the total number of outstanding shares of Series C Preferred Stock
is 17,568,680. The number of shares of Common Stock, Series A Preferred Stock,
Series B Preferred Stock and Series C Preferred Stock voting in favor of the
amendment equaled or exceeded the vote required. The percentage vote required
was more than a majority of the outstanding shares of Common Stock, more than
two-thirds of the outstanding shares of Series A Preferred Stock, more than two-
thirds of the outstanding shares of Series B Preferred Stock and more than two-
thirds of the outstanding shares of Series C Preferred Stock, each voting
separately as a class.
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We further declare under penalty of perjury that the matters set forth
in the foregoing are true and correct of our own knowledge.
Executed at Redwood City, California, this 16th day of September,
1999.
/s/ Timothy P. Harrington
-------------------------
Timothy P. Harrington,
Chief Executive Officer
/s/ Warren T. Lazarow
-------------------------
Warren T. Lazarow,
Assistant Secretary
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