EXHIBIT "B"
CERTIFICATE OF AMENDMENT
OF
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
MICROELECTRONIC PACKAGING, INC.
a California corporation
Andrew Wrobel and Denis Trafecanty certify that:
1. They are the President and the Secretary, respectively, of
MICROELECTRONIC PACKAGING, INC., a California corporation.
2. Article III of the Restated Articles of Incorporation of this
corporation is amended to read as follows:
ARTICLE III
-----------
This corporation is authorized to issue two classes of shares to be
designated respectively "Common Stock" and "Preferred Stock." The number of
shares of Common Stock this corporation is authorized to issue is Fifty Million
(50,000,000), without par value. The number of shares of Preferred Stock this
corporation is authorized to issue is Nine Million Three Hundred Sixty Two
Thousand Seven Hundred Seventy Eight (9,362,778), without par value, all of
which are designated as "Series A Preferred Stock."
1. Rights, Preferences, Privileges and Restrictions of Common Stock. The
----------------------------------------------------------------
rights, preferences, privileges and restrictions granted to and imposed on this
corporation's Common Stock are as follows:
A. Dividend Rights. Subject to any rights, preferences and
---------------
privileges that have been granted to the Series A Preferred Stock, 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.
B. Liquidation Rights. Subject to any rights, preferences and
------------------
privileges that have been granted to the Series A Preferred Stock, in the event
of any voluntary or involuntary liquidation, dissolution or winding up of the
corporation, the holders of shares of the Common Stock shall be entitled to
receive all of the assets of the corporation available for distribution to its
shareholders, ratable in proportion to the number of shares of the Common Stock
held by them.
C. Redemption. The Common Stock is not redeemable.
----------
D. Voting Rights. Subject to any rights, preferences and privileges
-------------
that have been granted to the Series A Preferred Stock, the holders of shares of
Common Stock shall be entitled to vote on all matters at all meetings of the
shareholders of the corporation and shall be entitled to one vote for each share
of Common Stock entitled to vote at such meeting.
2. Rights, Preferences, Privileges and Restrictions of Series A Preferred
----------------------------------------------------------------------
Stock. The rights, preferences, privileges and restrictions granted to and
- -----
imposed on this corporation's Series A Preferred Stock are as follows:
A. Dividends.
---------
1. Fixed Amount. Out of any assets legally available
------------
therefor, the Board shall have discretion (but shall not be required) to declare
a dividend on the outstanding Series A Preferred Stock at the fixed rate of
Three Point Five Seven Cents ($0.0357) per share per annum (subject to
adjustment to equitably account for any stock splits, stock dividends,
combinations, recapitalizations or the like, and not compounded from one year to
the next) ("Fixed Amount Dividends"). Fixed Amount Dividends shall be payable
only when, as, and if declared by the Board. Fixed Amount Dividends payable to
the holders of Series A Preferred Stock pursuant hereto, whether or not declared
by the Board, shall at all times be cumulative until paid in full, and shall be
paid in preference and priority to any Common Equivalent Dividends (as that term
is defined in Section A(2) below), and any dividend or other distribution being
paid or distributed to the holders of Common Stock.
2. Common Equivalent. Subject to the priority of the Fixed
-----------------
Amount Dividends, in the event the Board declares a dividend on or other
distribution with respect to the corporation's outstanding common stock ("Common
Stock"), which is payable other than in Common Stock and/or other securities or
rights convertible into or entitling the holder thereof to receive, directly or
indirectly, additional shares of Common Stock, then out of any assets legally
available therefor, the holders of Series A Preferred Stock shall concurrently
receive dividends or other distributions in an amount equal to (a) the amount of
the dividend or other distribution payable on one share of Common Stock;
multiplied by (b) the number of shares of Common Stock, rounded to the nearest
whole number (with one half being rounded upward), into which the total number
of shares of Series A Preferred Stock held by such holder could be converted on
the record date for determining which holders of Common Stock are entitled to
receive the dividend or other distribution in question ("Common Equivalent
Dividends"). Common Equivalent Dividends payable to the holders of Series A
Preferred Stock pursuant hereto shall at all times be cumulative until paid in
full, and shall be paid in preference and priority to any dividend or other
distribution being paid or distributed to the holders of Common Stock.
3. Treatment Upon Conversion. Upon any conversion of the
-------------------------
Series A Preferred Stock pursuant to the provisions of Section D hereof entitled
Conversion ("Triggering Conversion"), any Fixed Amount Dividends and/or Common
- ----------
Equivalent Dividends payable with respect to the shares of Series A Preferred
Stock being converted (collectively "Conversion Dividends"), shall concurrently
be converted into that number of shares of this corporation's fully paid and
nonassessable Common Stock determined by dividing the dollar amount of the
Conversion Dividends by the Conversion Price applicable to the Triggering
Conversion ("Dividend Conversion Shares"). Otherwise, the provisions of Section
D hereof entitled Conversion shall be applicable to the Dividend Conversion
----------
Shares in the same manner as
2
such provisions are applicable to any other shares of Common Stock to be issued
pursuant to the Triggering Conversion.
4. Waiver. Pursuant to the affirmative vote, written
------
consent or agreement of the holders of a majority of the then outstanding Series
A Preferred Stock ("Approving Preferred Majority"), the Approving Preferred
Majority shall be entitled on behalf of all holders of Series A Preferred Stock,
to waive any dividend such holders would otherwise be entitled to receive,
including without limitation, any Fixed Amount Dividends and/or Common
Equivalent Dividends (collectively the "Preferred Dividends").
B. Liquidation Preference. In the event of any liquidation,
----------------------
dissolution or winding up of this corporation, either voluntary or involuntary:
1. Priority Distribution. The holders of Series A Preferred
---------------------
Stock shall be entitled to receive, prior and in preference to any distribution
of any of the assets or funds of this corporation to the holders of Common Stock
by reason of their ownership thereof, an amount per share equal to the sum of
(a) One Dollar and Two Cents ($1.02) for each outstanding share of Series A
Preferred Stock (subject to adjustment to equitably account for any stock
splits, stock dividends, combinations, recapitalizations or the like) ("Original
Series A Issue Price"), plus (b) an amount equal to any declared but unpaid
dividends on such share, including without limitation, any accumulated balance
of Preferred Dividends ("Priority Distribution"). If the assets and funds thus
distributed among the holders of the Series A Preferred Stock shall be
insufficient to permit payment to such holders of the full amount of the
Priority Distribution, then the entire assets and funds of this corporation
legally available for distribution shall be distributed ratably among the
holders of the Series A Preferred Stock in proportion to the amount of such
stock owned by each such holder.
2. Acquisition or Sale. For purposes of this Section B
-------------------
entitled Liquidation Preference, a liquidation, dissolution or winding up of
----------------------
this corporation shall be deemed to be occasioned by, or to include (unless an
Approving Preferred Majority shall determine otherwise), (a) the acquisition of
this corporation by another entity by means of any transaction or series of
related transactions (including, without limitation, any reorganization, merger
or consolidation) that results in the transfer of fifty percent (50%) or more of
the outstanding voting power of this corporation; or (b) a sale of all or
substantially all of the assets of this corporation (collectively "Acquisition
or Sale"). In the event of any Acquisition or Sale, if the consideration
received by this corporation or its shareholders is other than cash, the value
of the non-cash consideration will be deemed to be equal to its fair market
value, except that the value of any securities received in any Acquisition or
Sale shall be determined as follows:
(a) For securities not subject to an investment letter
or other similar restriction on free marketability covered by Section B(2)(b)
below:
(i) If traded on a securities exchange or
through the Nasdaq National Market, the value shall be deemed to be the average
of the closing prices of the securities on such exchange or system over the
thirty (30) day period ending three (3) days prior to the closing of the
Acquisition or Sale;
(ii) If actively traded over-the-counter, the
value shall be deemed to be the average of the closing bid or sale prices
(whichever is applicable) over
3
the thirty (30) day period ending three (3) days prior to the closing of the
Acquisition or Sale; or
(iii) If there is no active public market, the
value shall be the fair market value thereof, as mutually determined by the
Board and an Approving Preferred Majority.
(b) The method of valuation of securities subject to
an investment letter or other restriction 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 above in Section B(2)(a), to reflect the approximate fair
market value thereof, as mutually determined by the Board and an Approving
Preferred Majority.
(c) In the event the requirements of this Section
B(2)(c) are not complied with, this corporation shall forthwith either: (i)
cause the closing of the Acquisition or Sale to be postponed until the time such
requirements have been complied with; or (ii) cancel the Acquisition or Sale, in
which event the rights, preferences, privileges and restrictions of the holders
of Series A Preferred Stock shall revert to and be the same as such rights,
preferences, privileges and restrictions existing immediately prior to the date
the first Transaction Notice (as hereafter defined) is given. This corporation
shall give each holder of record of Series A Preferred Stock written notice of
any impending Acquisition or Sale not later than (i) twenty (20) days prior to
the shareholders' meeting called to approve such Acquisition or Sale, or (ii)
twenty (20) days prior to the closing of such Acquisition or Sale, whichever is
earlier, and shall also notify such holders in writing of the final approval of
such Acquisition or Sale (any of the foregoing a "Transaction Notice"). The
first Transaction Notice to be given shall describe the material terms and
conditions of the impending Acquisition or Sale, and this corporation shall
thereafter give holders of record of the Series A Preferred Stock prompt notice
of any material changes in such material terms and conditions ("Material Change
Notice"). The Acquisition or Sale shall in no event take place sooner than
twenty (20) days after this corporation has given the first Transaction Notice,
or sooner than ten (10) days after this corporation has given any Material
Change Notice; provided, however, that such periods may be shortened by an
Approving Preferred Majority.
C. Redemption. To the extent it may otherwise lawfully do so, this
----------
corporation shall be entitled, in the sole discretion of the Board, to redeem
all or any part of the outstanding shares of Series A Preferred Stock, in
accordance and compliance with the following provisions:
1. Notice. Not less than twenty (20) and not more than thirty
------
(30) days prior to the date as of which the Board intends to give effect to a
redemption of some or all of the shares of Series A Preferred Stock ("Redemption
Date"), a written notice shall be mailed, first class postage prepaid, to each
holder of record (at the close of business on the business day next preceding
the day on which notice is mailed) of the Series A Preferred Stock to be
redeemed, at the address last shown on the records of this corporation for such
holder, notifying such holder of the redemption to be effected on the applicable
Redemption Date, specifying each of the following: (a) the number of shares to
be redeemed from such holder ("Redemption Shares"); (b) the Redemption Date; (c)
the Series A Redemption Price (as that term is hereafter defined); (d) the then
applicable Conversion Price (as that term is hereafter defined); (e) the date of
termination of the right to convert the Redemption Shares into shares of Common
Stock,
4
which date shall not be earlier than five (5) days prior to the Redemption Date
("Conversion Termination Date"); and (e) the place at which payment may be
obtained; and shall call upon such holder to surrender to this corporation, in
the manner and at the place designated, his, her or its certificate or
certificates representing the shares to be redeemed ("Redemption Notice").
2. Partial Redemptions to be Pro-Rata. In the event a
----------------------------------
Redemption Notice specifies that less than all of the outstanding shares of
Series A Preferred Stock are to be redeemed, then the number of shares of Series
A Preferred Stock to be redeemed shall be allocated pro-rata among all of the
holders thereof, based on the proportionate number of shares of Series A
Preferred Stock held by each such holder.
3. Conversion Prior to Redemption. Upon receiving a
------------------------------
Redemption Notice, at any time prior the to Conversion Termination Date stated
therein, each holder of Series A Preferred Stock shall be entitled to convert
some or all of the Redemption Shares into shares of Common Stock pursuant to the
provisions of Section D(1) below. Any such conversion shall be deemed to take
place on the Redemption Date. Any shares of Series A Preferred Stock not
converted to shares of Common Stock pursuant hereto shall remain subject to
redemption pursuant to the provisions of this Section C entitled Redemption, and
----------
as set forth in the Redemption Notice. If this corporation fails to carry out
the redemption of any Redemption Shares that are not converted to shares of
Common Stock pursuant to this Section C(3), then in such event, the redemption
described in the Redemption Notice shall be deemed null and void, and any
conversion of shares of Series A Preferred Stock into shares of Common Stock
pursuant hereto, shall also be deemed null and void.
4. Redemption Price. The price per share required to be paid
----------------
by the corporation upon the redemption of any share of Series A Preferred Stock
pursuant hereto shall be equal to the sum of (a) the Original Series A Issue
Price (subject to adjustment to equitably account for any stock splits, stock
dividends, combinations, recapitalizations or the like), plus (b) an amount
equal to any declared but unpaid dividends on such share, including without
limitation, any accumulated balance of Preferred Dividends ("Series A Redemption
Price").
5. Certificates. On or after the Redemption Date, each
------------
of Redemption Shares that have not been converted into shares of Common Stock
pursuant to Section C(3) hereof, shall surrender to this corporation the
certificate or certificates representing such Redemption Shares ("Redemption
Certificates"), in the manner and at the place designated in the Redemption
Notice, and thereupon the applicable Series A Redemption Price 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 the event less than all the shares represented by any such
certificate are redeemed, a new certificate shall be issued representing the
unredeemed shares. If on the Redemption Date the funds necessary for the
redemption of the Redemption Shares shall be available therefor, then any
Redemption Shares so called for redemption for which Redemption Certificates are
not surrendered, shall nevertheless be considered redeemed, and all rights of
the holders thereof shall be terminated, except for only the right to receive
the Redemption Price without interest upon the surrender of the Redemption
Certificates.
6. Payment. Concurrently with receiving the Redemption
-------
Certificates, this corporation shall pay the Series A Redemption Price to the
person whose name
5
appears on the Redemption Certificates, in cash in one lump sum.
7. No Previous Redemption of Common Stock. At all times while
--------------------------------------
any shares of Series A Preferred Stock are outstanding, this corporation shall
not redeem any shares of Common Stock, unless such redemption has been
authorized by an Approving Preferred Majority.
8. Good Faith Modification. Regardless of any of the
-----------------------
provisions of this Section C entitled Redemption, the holders of the outstanding
----------
shares of Series A Preferred Stock shall consider in good faith any request of
the Board to modify the rights, preferences and privileges of such holders
pursuant to this Section C entitled Redemption, if the Board deems such
----------
modification reasonably necessary to permit this corporation to obtain financing
or credit from a financial institution.
D. Conversion. The holders of the Series A Preferred Stock shall
----------
have conversion rights as follows ("Conversion Rights"):
1. Voluntary Conversion. Each share of Series A Preferred
--------------------
Stock shall be convertible, at the option of the holder thereof, (i) at any time
after the date of issuance of such share, and (ii) on or prior to the fifth
(5th) day prior to the Redemption Date, if any, as may have been fixed in any
Redemption Notice with respect to such share of the Series A Preferred Stock, at
the office of this corporation or any transfer agent for such stock ("Voluntary
Conversion"), into such number of fully paid and nonassessable shares of Common
Stock as is determined by dividing the Original Series A Issue Price by the
Conversion Price applicable to such share, determined as hereafter provided, in
effect on the date the certificate is surrendered for conversion. The initial
Conversion Price per share for shares of Series A Preferred Stock shall be Fifty
One Cents ($0.51); provided, however, that the Conversion Price for the Series A
Preferred Stock shall be subject to adjustment as set forth in Section D(4)
below.
2. Automatic Conversion. Each share of Series A Preferred
--------------------
Stock shall automatically be converted into shares of Common Stock at the
Conversion Price in effect at that time for the Series A Preferred Stock,
immediately upon this corporation's receipt of the written consent of the
Approving Preferred Majority to the conversion of all then outstanding Series A
Preferred Stock under this Section D.
3. Mechanics of Conversion. Before any holder of Series A
-----------------------
Preferred Stock shall be entitled to convert the same into shares of Common
Stock, he or she shall surrender the certificate or certificates therefor, duly
endorsed, at the office of this corporation or of any transfer agent for the
Series A Preferred Stock, and shall give written notice to this 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. This corporation shall, as soon as
practicable thereafter, issue and deliver at such office to such holder of
Series A 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 Series A Preferred Stock to be converted, and the
person or persons entitled to receive the shares of Common Stock issuable upon
such conversion shall be treated for all purposes as the record
6
holder or holders of such shares of Common Stock as of such date.
Regardless of any of the foregoing provisions, this corporation
shall not be obligated to issue certificates evidencing the shares of Common
Stock issuable upon such conversion unless certificates evidencing the shares of
Series A Preferred Stock being converted are either delivered to the corporation
or any transfer agent as provided herein, or the holder notifies the corporation
or any transfer agent that such certificates have been lost, stolen, or
destroyed and executes an agreement satisfactory to the corporation to indemnify
the corporation from any loss incurred by it in connection therewith.
4. Conversion Price Adjustments of Preferred Stock for
-----------------------------------------------
Certain Dilutive Issuances, Splits and Combinations. The Conversion Price of the
- ---------------------------------------------------
Series A Preferred Stock shall be subject to adjustment from time to time as
follows:
(a) If this corporation shall issue, after the date
upon which any shares of Series A Preferred Stock were first issued ("Purchase
Date"), any Additional Stock (as hereafter defined) without consideration or for
a consideration per share less than the Conversion Price for the Series A
Preferred Stock in effect immediately prior to the issuance of such Additional
Stock, the Conversion Price for the Series A Preferred Stock in effect
immediately prior to each such issuance shall forthwith (except as otherwise
provided in this Section D(4)) be adjusted to a price determined by multiplying
such Conversion Price by a fraction, (i) the numerator of which shall be the
number of shares of Common Stock outstanding immediately prior to the issuance
of the Additional Stock in question (including shares of Common Stock deemed to
be issued pursuant to Section D(4)(f)(i) or (ii) hereof, but not including
shares excluded from the definition of Additional Stock by Section D(4)(g)(ii)
hereof), plus the number of shares of Common Stock that the aggregate
consideration received by this corporation for such issuance would purchase at
such Conversion Price; and (ii) the denominator of which shall be the number of
shares of Common Stock outstanding immediately prior to such issuance (including
shares of Common Stock deemed to be issued pursuant to Section D(4)(f)(i) or
(ii) hereof, but not including shares excluded from the definition of Additional
Stock by Section D(4)(g)(ii) hereof), plus the number of shares of Additional
Stock in question.
(b) No adjustment of the Conversion Price for the
Series A Preferred Stock shall be made in an amount less than one cent per
share, provided that any adjustments that 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 (3) years from the date of the
event giving rise to the adjustment being carried forward, or shall be made at
the end of three (3) years from the date of the event giving rise to the
adjustment being carried forward.
(c) Except to the extent provided for in Section
D(4)(f)(iii) and (iv) hereof, and Section D(4)(i) hereof, no adjustment of the
Conversion Price pursuant to this Section D(4) shall have the effect of
increasing the Conversion Price above the Conversion Price in effect immediately
prior to such adjustment.
(d) In the case of the issuance of Common Stock for
cash, the consideration shall be deemed to be the amount of cash paid therefor
before deducting any reasonable discounts, commissions or other expenses
allowed, paid or incurred by this corporation for any underwriting or otherwise
in connection with the issuance and sale thereof.
7
(e) In the case of the issuance of the Common Stock
for a consideration in whole or in part other than cash, the consideration shall
be deemed to be the fair market value thereof as determined in good faith by the
Board irrespective of any accounting treatment.
(f) In the case of the issuance (whether before, on
or after the applicable Purchase Date) of options to purchase or rights to
subscribe for Common Stock, securities by their terms ultimately 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 Sections D(4)(a) through (g) hereof:
(i) 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), to the
extent then exercisable, 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 D(4)(d) and (e) hereof), if any,
received by this corporation upon the issuance of such options or rights plus
the minimum exercise price provided for in such options or rights (without
taking into account potential antidilution adjustments) for the Common Stock
covered thereby.
(ii) The aggregate maximum number of shares
of Common Stock deliverable upon conversion of, or in exchange for (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), to the extent then convertible or
exchangeable, 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 the 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 (1) the
consideration, if any, received by this corporation for any such securities and
related options or rights (excluding any cash received on account of accrued
interest or accrued dividends); plus (2) the minimum additional consideration,
if any, to be received by this 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 Sections D(4)(d) and (e)
hereof).
(iii) In the event of any change in the number
of shares of Common Stock deliverable or in the consideration payable to this
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, then
the Conversion Price of the Series A 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.
8
(iv) 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 the Series A 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 that 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.
(v) The number of shares of Common Stock
deemed issued and the consideration deemed paid therefor pursuant to Sections
D(4)(f)(i) and (ii) hereof, shall be appropriately adjusted to reflect any
change, termination or expiration of the type described in either Section
D(4)(f)(iii) and (iv) hereof.
(g) For purposes of this Section D(4), the term
"Additional Stock" shall mean any shares of Common Stock issued (or deemed to
have been issued pursuant to Section D(4)(f)) by this corporation after the
Purchase Date, except for any of the following:
(i) Common Stock issued pursuant to a
transaction described in Section D(4)(h) below; or
(ii) Common Stock issuable or issued to (1)
employees, consultants or directors of this corporation directly or pursuant to
a stock option plan or restricted stock plan, and such issuance has been
approved by the Board, or (2) vendors or joint venture partners of this
corporation, but only if such issuance is in a transaction with primarily a non-
financing purpose, and has been approved by the Board.
(h) In the event this 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 (collectively
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 the Series A 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 D(4)(f) hereof).
(i) 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 the Series A Preferred Stock shall be
appropriately increased so that the number of shares of
9
Common Stock issuable on conversion of each share of such series shall be
decreased in proportion to such decrease in outstanding shares.
5. Other Distributions. In the event this corporation shall
-------------------
declare a distribution payable in securities of other persons, evidences of
indebtedness issued by this corporation or other persons, assets (excluding cash
dividends) or options or rights not referred to in Section D(4)(h) hereof, then,
in each such case for the purpose of this Section D(5), the holders of the
Series A 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 this corporation into which their shares of Series A Preferred Stock
are convertible as of the record date fixed for the determination of the holders
of Common Stock of this corporation entitled to receive such distribution.
6. Recapitalizations. If at any time or from time to time
-----------------
there shall be a recapitalization or reclassification of the Common Stock (other
than a subdivision, combination or merger or sale of assets transaction provided
for elsewhere in this Section D entitled Conversion, or in Section B hereof
----------
entitled Liquidation Preference, provision shall be made so that the holders of
----------------------
the Series A Preferred Stock shall thereafter be entitled to receive upon
conversion of the Series A Preferred Stock the number of shares of stock or
other securities or property of this corporation or otherwise, to which a holder
of Common Stock deliverable upon conversion would have been entitled on such
recapitalization or reclassification. In any such case, appropriate adjustment
shall be made in the application of the provisions of this Section D entitled
Conversion, with respect to the rights of the holders of the Series A Preferred
- ----------
Stock after the recapitalization or reclassification, to the end that the
provisions of this Section D entitled Conversion (including adjustment of the
----------
Conversion Price then in effect and the number of shares purchasable upon
conversion of the Series A Preferred Stock) shall be applicable after that event
as nearly equivalent as may be practicable.
7. No Impairment. This corporation will not, by amendment or
-------------
restatement of its Articles of Incorporation or through any reorganization,
recapitalization, transfer of assets, consolidation, merger, dissolution,
issuance 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 this corporation, but will at all times in good faith
assist in the carrying out of all the provisions of this Section D entitled
Conversion, and in the taking of all such action as may be necessary or
- ----------
appropriate in order to protect the Conversion Rights of the holders of the
Series A Preferred Stock against impairment.
8. No Fractional Shares. No fractional shares shall be issued
--------------------
upon the conversion of any share or shares of the Series A Preferred Stock, and
the number of shares of Common Stock to be issued shall be rounded to the
nearest whole share (with one half being rounded upward). Whether or not
fractional shares are issuable upon such conversion shall be determined on the
basis of the total number of shares of Series A 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.
9. Certificate of Adjustment. Upon the occurrence of each
-------------------------
adjustment or readjustment of the Conversion Price of Series A Preferred Stock
pursuant to this Section D entitled Conversion, this corporation, at its
----------
expense, shall promptly compute such adjustment or readjustment in accordance
with the terms hereof and prepare and furnish to each
10
holder of Series A Preferred Stock a certificate setting forth such adjustment
or readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. This corporation shall, upon the written request at any
time of any holder of Series A 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 that at the time would be received upon the conversion of
a share of Series A Preferred Stock.
10. Notices of Record Date. In the event of any taking by this
----------------------
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, this
corporation shall mail to each holder of Series A Preferred Stock, at least
twenty (20) 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.
11. Reservation of Stock Issuable Upon Conversion. This
---------------------------------------------
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, 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; 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 the
Series A Preferred Stock, in addition to such other remedies as shall be
available to the holder of such Series A Preferred Stock, this 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 the corporation's articles of incorporation.
12. Notices. Any notice required by the provisions of this
-------
Section D entitled Conversion, to be given to the holders of shares of Series A
----------
Preferred Stock shall be deemed given if deposited in the United States mail,
postage prepaid, and addressed to each holder of record at his address appearing
on the books of this corporation.
E. Voting Rights.
-------------
1. Generally. The holder of each share of Series A Preferred
---------
Stock shall have the right to one vote for each share of Common Stock into which
such Series A 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 shareholders' meeting in
accordance with the bylaws of this 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 Series A
Preferred Stock held by each holder could be converted) shall be rounded to the
nearest
11
whole number (with one-half being rounded upward).
2. Board of Directors Election and Removal.
---------------------------------------
(a) Election. So long as any shares of Series A Preferred
--------
Stock are outstanding: (i) the holders of the Series A Preferred Stock, voting
as a separate series (with cumulative voting rights as among themselves in
accordance with Section 708 of the California Corporations Code), shall be
entitled to elect one (1) director of this corporation; and (ii) the holder of
the Series A Preferred Stock and the Common Stock, voting together as a single
class (with cumulative voting rights as among themselves in accordance with
Section 708 of the California Corporations Code), shall be entitled to elect the
remaining directors of this corporation.
(b) Quorum; Required Vote.
---------------------
(i) Quorum. At any meeting held for the purpose of
------
electing directors, the presence in person or by proxy: (A) of the holders of a
majority of the shares of the Series A Preferred Stock shall constitute a quorum
of the Series A Preferred Stock for the election of directors to be elected
solely by the holders of the Series A Preferred Stock; and (B) of holders of
Series A Preferred Stock and Common Stock representing a majority of the voting
power of all the then-outstanding shares of the directors to be elected jointly
by the holders of the Series A Preferred Stock and the Common Stock.
(ii) Required Vote. With respect to the election of
-------------
any director or directors by the holders of the outstanding shares of a
specified series, series', class or classes of stock given the right to elect
such director or directors pursuant to Section E(2)(a) above (the "Specified
Stock"), that candidate or those candidates (as applicable), shall be elected
who either: (i) in the case of any such vote conducted at a meeting of the
holders of such Specified Stock, receive the highest number of affirmative votes
of the outstanding shares of such Specified Stock, up to the number of directors
to be elected by such Specified Stock; or (ii) in the case of any such vote
taken by written consent without a meeting, are elected by the unanimous written
consent of the holders of the shares of such Specified Stock, except that, if
such vote is to fill a vacancy on the Board other than a vacancy created by
removal of a director, such vacancy may be filled election by the written
consent of the holders of a majority of the outstanding shares of such Specified
Stock.
(c) Vacancy. If there shall be any vacancy in the office
-------
of a director elected by the holders of any Specified Stock pursuant to Section
E(2)(a), then a successor to hold office for the unexpired term of such director
may be elected by either: (i) the remaining director or directors (if any) in
the office that were so elected by the holders of such Specified Stock, by the
affirmative vote of a majority of such directors (or by the sole remaining
director elected by the holders of such Specified Stock if there be but one); or
(ii) the required vote of holders of the shares of such Specified Stock
specified in Section E(2)(b)(ii) above that are entitled to elect such director
under Section E(2)(a).
(d) Removal. Subject to Section 303 of the California
-------
Corporations Code, any director who shall have been elected to the Board by the
holders of any Specified Stock pursuant to Section E(2)(a) or by any director or
directors elected by holder of any Specified Stock as provided in Subsection
E(2)(c), may be removed during his or her term of
12
office, either with or without cause, by, and only by, the affirmative vote of
shares representing a majority of the voting power of all the outstanding shares
of such Specified Stock entitled to vote given either at a meeting of such
shareholders duly called for that purpose or pursuant to a written consent of
shareholders without a meeting, and any vacancy created by such removal may be
filled only in the manner provided in Section E(2)(c).
(e) Procedures. Any meeting of the holders of any
----------
Specified Stock, and any action taken by the holders of any Specified Stock
written consent without a meeting, in order to elect or remove a director under
this Section E(2), shall be held in accordance with the procedures and
provisions of this corporation's bylaws, the California Corporations Code and
applicable law regarding shareholder meetings and shareholder actions by written
consent, as such are then in effect (including, but not limited to, procedures
for determining the record date for shares entitled to vote).
F. Protective Provisions. So long as any shares of Series A
---------------------
Preferred Stock are outstanding, this corporation shall not without first
obtaining the approval (by vote or written consent, as provided by law) of the
holders of at least two thirds (2/3) of the then outstanding shares of Series A
Preferred Stock:
1. Sell, convey, or otherwise dispose of all or
substantially all of its property or business or merge into or consolidate with
any other corporation (other than a wholly-owned subsidiary corporation) or
effect any transaction or series of related transactions in which more than
fifty percent (50%) of the voting power of this corporation is disposed of;
2. Alter or change the rights, preferences or privileges of
the shares of Series A Preferred Stock.
3. Increase or decrease (other than by redemption or
conversion) the total number of authorized shares of Series A Preferred Stock;
4. Authorize or issue, or obligate itself to issue, any
other equity security, including any other security convertible into or
exercisable for any equity security senior to or on a parity with the Series A
Preferred Stock with respect to dividends, liquidation, redemption or voting;
5. Redeem, purchase or otherwise acquire (or pay into or
set aside for a sinking fund for such purpose) any share or shares of the
capital stock of this corporation; provided, however, that this restriction
shall not apply to (i) the repurchase of shares of Common Stock from employees,
officers, directors, consultants or other persons performing services for this
corporation or any subsidiary pursuant to agreements under which this
corporation has the option to repurchase such shares at cost, or at cost upon
the occurrence of certain events, such as the termination of employment, or (ii)
the redemption of any share or shares of Preferred Stock in accordance with the
provisions of Section C hereof entitled Redemption;
----------
6. Amend or otherwise modify this corporation's articles of
incorporation in such a manner as to alter or change the rights, preferences or
privileges of the shares of Series A Preferred Stock so as to adversely affect
such shares;
7. Declare or pay any dividends or other distributions of
any kind
13
on or with respect to shares of Common Stock (other than such a dividend payable
solely in the form of shares of Common Stock);
8. Declare or pay any dividends or other distributions of
any kind on or with respect to shares of Series A Preferred Stock, except for
Fixed Amount Dividends.
9. Take any other action with respect to which the holders
of Series A Preferred Stock are entitled to vote and/or grant approval as a
separate class or series under the applicable laws of the State of California.
10. Reclassify any outstanding shares of securities of this
corporation into shares having rights, preferences or privileges senior to or on
a parity with the Series A Preferred Stock.
G. Status of Redeemed or Converted Stock. In the event any shares of
-------------------------------------
Series A Preferred Stock shall be redeemed or converted pursuant to Section C
hereof entitled Redemption, or Section D hereof entitled Conversion, the shares
---------- ----------
so redeemed or converted shall be canceled.
3. The foregoing amendment of Amended and Restated Articles of
Incorporation has been duly approved by the Board of Directors.
4. The foregoing amendment of Amended and Restated Articles of
Incorporation has been duly approved by the required vote of shareholders in
accordance with Section 902 and Section 903 of the California Corporations Code.
The total number of outstanding shares of this corporation's Common Stock is not
more than Eleven Million (11,000,000). There are no outstanding shares of this
corporation's Preferred Stock. The number of shares of this corporation's
Common Stock
[The remainder of this page has been intentionally left blank.]
14
voting in favor of the Amendment equaled or exceeded the vote required. The
percentage vote required was more than fifty percent (50%).
The undersigned further declare under penalty of perjury under the
laws of the State of California that the matters set forth in this certificate
are true and correct of their own knowledge.
Date: _____________, 1999
___________________________________ ____________________________________
Andrew K. Wrobel Denis J. Trafecanty
Chairman, President and Senior Vice President
Chief Executive Officer Chief Financial Officer
15