Exhibit 3(i).4
ARTICLE IV. RIGHTS, PREFERENCES, AND RESTRICTIONS ON SHARES
The terms and provisions of the Common Stock and Preferred Stock are as
follows:
Section 4.1. DEFINITIONS
For purposes of this Article IV, the following definitions shall apply:
(a) "Conversion Price" shall mean one dollar ($1.00) per share
for the Series A Preferred Stock (subject to adjustment from time to
time for Recapitalizations and as otherwise set forth elsewhere
herein).
(b) "Convertible Securities" shall mean any evidences of
indebtedness, shares or other securities (other than shares of Series A
Preferred Stock) convertible into or exchangeable for Common Stock.
(c) "Distribution" shall mean the transfer of cash or other
property without consideration whether by way of dividend or otherwise,
payable other than in Common Stock, or the purchase or redemption of
shares of the Corporation for cash or property other than: (i)
repurchases of Common Stock issued to or held by employees, officers,
directors, or consultants of the Company or its subsidiaries upon
termination of their employment or services pursuant to agreements
providing for the right of said repurchase; (ii) repurchases of Common
Stock issued to or held by employees, officers, directors, or
consultants of the Company or its subsidiaries pursuant to rights of
first refusal contained in agreements providing for such right; (iii)
repurchase of capital stock of the Company in connection with the
settlement of disputes with any shareholder; and (iv) any other
repurchase or redemption of capital stock of the Company approved by
the holders of the Common and Preferred Stock of the Company voting as
separate classes.
(d) "Liquidation Preference" shall mean one dollar ($1.00) per
share for the Series A Preferred Stock (subject to adjustment from time
to time for Recapitalizations as set forth elsewhere herein).
(e) "Options" shall mean rights, options, or warrants to
subscribe for, purchase, or otherwise acquire Common Stock or
Convertible Securities.
(f) "Original Issue Price" shall mean one dollar ($1.00) per
share for the Series A Preferred Stock (subject to adjustment from time
to time for Recapitalizations as set forth elsewhere herein).
(g) "Preferred Stock" shall mean the Series .A Preferred
Stock. (h) "Recapitalization" shall mean any stock dividend, stock
split, combination of shares, reorganization, recapitalization,
reclassification, or other similar event.
Section 4.2. DIVIDENDS
(a) Preferred Stock. The holders of outstanding shares of
Preferred Stock shall be entitled to receive cash dividends, when and
as declared by the Board of Directors, out of any assets at the time
legally available therefor, payable in preference and priority to any
declaration or payment of any Distribution on Common Stock of the
Corporation, other than a stock dividend declared and paid on the
Common Stock that is payable in shares of Common Stock ("Common Stock
Dividend"). No Distributions shall be made with respect to the Common
Stock, other than a Common Stock Dividend, until all declared dividends
on the Preferred Stock have been paid or set aside for payment to the
Preferred Stock holders. No Distributions shall be made with respect to
the Common Stock, other than a Common Stock Dividend, unless an equal
or greater Dividend has been paid or set aside for payment to the
Preferred Stock holders. Payment of any dividends to the holders of the
Preferred Stock shall be on a pro-rata, pari pasu basis, The right to
receive dividends on shares of Preferred Stock shall not be cumulative,
and no right to such dividends shall accrue to holders of Preferred
Stock by reason of the fact that dividends on said shares are not
declared or paid in any year.
(b) Common Stock. Dividends may be paid on the Common Stock as
and when declared by the Board of Directors, subject to the prior
dividend rights of the Preferred Stock and to Section 4.6 below.
(c) Non-Cash Distributions. Whenever a Distribution provided
for in this Section 4.2 shall be payable in property other than cash,
the value of such Distribution shall be deemed to be the fair market
value of such property as determined in good faith by the Board of
Directors.
Section 4.3. LIQUIDATION RIGHTS
(a) Liquidation Preference. In the event of any liquidation,
dissolution or winding up of the Corporation, either voluntary or
involuntary, the holders of the Preferred Stock shall be entitled to
receive, prior and in preference to any Distribution of any of the
assets of the Corporation to the holders of the Common Stock by reason
of their ownership of such stock, an amount per share for each share of
Preferred Stock held by them equal to the sum of (i) the Liquidation
Preference specified for such share of Preferred Stock and (ii) all
declared but unpaid dividends (if any) on such share of Preferred
Stock. If upon the liquidation, dissolution or winding up of the
Corporation, the assets of the Corporation legally available for
distribution to the holders of the Preferred Stock are insufficient to
permit the payment to such holders of the full amounts specified in
this Section 4.3(a), then the entire assets of the Corporation legally
available for distribution shall be distributed with equal priority and
m rata among the holders of the Preferred Stock in proportion to the
full amounts they would otherwise be entitled to receive pursuant to
this Section 4.3(a).
(b) Remaining Assets. After the payment or setting aside for
payment to the holders of Preferred Stock of the full amounts specified
in Section 4.3(a) above, the entire remaining assets of the Corporation
legally available for distribution shall be distributed pro rata to
holders of the Common Stock of the Corporation in proportion to the
number of shares of Common Stock held by them.
(c) Shares not Treated as Both Preferred Stock and Common
Stock in anv Distribution. Shares of Preferred Stock shall not be
entitled to be converted into shares of Common Stock in order to
participate in any Distribution, or series of Distributions, as shares
of Common Stock, without first foregoing participation in the
Distribution, or series of Distributions, as shares of Preferred Stock.
(d) Reorganization. For purposes of this Section 4.3, a
liquidation, dissolution, or winding up of the Corporation shall be
deemed to be occasioned by, or to include, (a) the acquisition of the
Corporation by another entity by means of any transaction or series of
related transactions (including, without limitation, any stock
acquisition, reorganization, merger, or consolidation but excluding any
sale of stock for capital raising purposes) other than a transaction or
series of transactions in which the holders of the voting securities of
the Corporation outstanding immediately prior to such transaction
continue to retain (either by such voting securities remaining
outstanding or by such voting securities being converted into voting
securities of the surviving entity), as a result of shares in the
Corporation held by such holders prior to such transaction, at least
fifty percent (50%) of the total voting power represented by the voting
securities of the Corporation or such surviving entity outstanding
immediately after such transaction or series of transactions; (b) a
sale, lease, or other conveyance of all or substantially all of the
assets of the Corporation; or (c) any liquidation, dissolution, or
winding up of the Corporation, whether voluntary or involuntary.
(e) Valuation of Non-Cash Consideration. If any assets of the
Corporation distributed to shareholders in connection with any
liquidation, dissolution, or winding up of the Corporation are other
than cash, then the value of such assets shall be their fair market
value as determined in good faith by the Board of Directors, except
that any publicly-traded securities to be distributed to shareholders
in a liquidation, dissolution, or winding up of the Corporation shall
be valued as follows:
(i) If the securities are then traded on a national
securities exchange or the Nasdaq Stock Market (or a similar
national quotation system), then the value of the securities
shall be deemed to be to the average of the closing prices of
the securities on such exchange or system over the ten (10)
trading day period ending five (5) trading days prior to the
Distribution;
(ii) If the securities are actively traded
over-the-counter, then the value of the securities shall be
deemed to be the average of the closing bid prices of the
securities over the ten (10) trading day period ending five
(5) trading days prior to the Distribution.
In the event of a merger or other acquisition of the Corporation by
another entity, the Distribution date shall be deemed to be the date such
transaction closes. For the purposes of this subsection 3(e), "trading day"
shall mean any day which the exchange or system on which the securities to be
distributed are traded is open and "closing prices" or "closing bid prices"
shall be deemed to be: (i) for securities traded primarily on the New York Stock
Exchange, the American Stock Exchange, or Nasdaq, the last reported trade price
or salt price, as the case may be, at 4:00 p.m., New York time, on that day and
(ii) for securities listed or traded on other exchanges, markets, and systems,
the market price as of the end of the "regular hours" trading period that is
generally accepted as such for such exchange, market, or system. If, after the
date hereof, the benchmark times generally accepted in the securities industry
for determining the market price of a stock as of a given trading day shall
change from those set forth above, the fair market value shall be determined as
of such other generally accepted benchmark times.
Section 4.4. CONVERSION
The holders of the Preferred Stock shall have conversion rights as
follows (the "Conversion Rights"):
(a) Right to Convert. Each share of Preferred Stock shall be
convertible, at the option of the holder thereof, at any time after the
date of issuance of such share at the office of the Corporation or any
transfer agent for the Preferred Stock, into that number of fully-paid,
nonassessable shares of Common Stock determined by dividing the
Original Issue Price for the relevant series by the Conversion Price
for such series. (The number of shares of Common Stock into which each
share of Preferred Stock of a series may be converted is hereinafter
referred to as the "Conversion Rate" for each such series.) Upon any
decrease or increase in the Conversion Price for any series of
Preferred Stock, as described in this Section 4.4, the Conversion Rate
for such series shall be appropriately increased or decreased.
(b) Automatic Conversion. Each share of Preferred Stock shall
automatically be converted into fully-paid, non-assessable shares of
Common Stock at the then effective Conversion Rate for such share (i)
immediately prior to the closing of a firm commitment underwritten
initial public offering filed under the Securities Act of 1933, as
amended (the "Securities Act"), covering the offer and sale of the
Corporation's Common Stock, provided that the aggregate gross proceeds
to the Corporation are not less than ten million dollars ($10,000,000)
(a "Qualified IPO"), or (ii) upon the receipt by the Corporation of a
written request for such conversion from the holders of a majority of
the Preferred Stock then outstanding, or, if later, the effective date
for conversion specified in such requests (each of the events referred
to in (i) and (ii) are referred to herein as an "Automatic Conversion
Event").
(c) Mechanics of Conversion. No fractional shares of Common
Stock shall be issued upon conversion of Preferred Stock. In lieu of
any fractional shares to which the holder would otherwise be entitled,
the Corporation shall pay cash equal to such fraction multiplied by the
then fair market value of a share of Common Stock as determined by the
Board of Directors in good faith. For such purpose, all shares of
Preferred Stock held by each holder of Preferred Stock shall be
aggregated, and any resulting fractional share of Common Stock shall be
paid in cash. Before any holder of Preferred Stock shall be entitled to
convert the same into full shares of Common Stock, and to receive
certificates therefor, he shall surrender the certificate or
certificates therefor, duly endorsed, at the office of the Corporation
or of any transfer agent for the Preferred Stock, and shall give
written notice to the Corporation at such office that he elects to
convert the same; provided, however, that on the date of an Automatic
Conversion Event, the outstanding shares of Preferred Stock shall be
converted automatically without any further action by the holders of
such shares and whether or not the certificates representing such
shares are surrendered to the Corporation or its transfer agent;
provided further, however, that the Corporation shall not be obligated
to issue certificates evidencing the shares of Common Stock issuable
upon such Automatic Conversion Event unless either the certificates
evidencing such shares of Preferred Stock are delivered to the
Corporation or its transfer agent as provided above, or the holder
notifies the Corporation or its 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 with such certificates. On the date
of the occurrence of an Automatic Conversion Event, each holder of
record of shares of Preferred Stock shall be deemed to be the holder of
record of the Common Stock issuable upon such conversion,
notwithstanding that the certificates representing such shares of
Preferred Stock shall not have been surrendered at the office of the
Corporation, that notice from the Corporation shall not have been
received by any holder of record of shares of Preferred Stock, or that
the certificates evidencing such shares of Common Stock shall not then
be actually delivered to such holder.
The Corporation shall, as soon as practicable after such delivery, or
after such agreement and indemnification, issue and deliver at such office to
such holder of Preferred Stock, a certificate or certificates for the number of
shares of Common Stock to which he shall be entitled as aforesaid and a check
payable to the holder in the amount of any cash amounts payable as the result of
a conversion into fractional shares of Common Stock, plus any declared and
unpaid dividends on the convened Preferred Stock. 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 Preferred Stock to be convened, and the
person or persons entitled to receive the shares of Common Stock issuable upon
such conversion shall be treated for all purposes as the record holder or
holders of such shares of Common Stock on-such date; provided, however, that if
the conversion is in connection with an underwritten offer of securities
registered pursuant to the Securities Act the conversion may, at the option of
any holder tendering Preferred Stock for conversion, be conditioned upon the
closing of the sale of securities pursuant to such offering, in which event the
person, or persons, entitled to receive the Common Stock issuable upon such
conversion of the Preferred Stock shall not be deemed to have converted such
Preferred Stock until immediately prior to the closing of the sale of such
securities.
(d) Adjustments to Conversion Price for Diluting Issues.
(i) Special Definition. For purposes of this Section
4.4(d), "Additional Shares of Common" shall mean all shares of
Common Stock issued (or, pursuant to Section 4.4(d)(iii),
deemed to be issued) by the Corporation after the filing of
these Articles of Incorporation, other than:
(1) shares of Common Stock issued or
issuable upon conversion of shares of Preferred
Stock;
(2) shares of Common Stock issued or
issuable to officers, directors, and employees of, or
consultants to, the Corporation pursuant to stock
grants, option plans, purchase plans, or other
employee stock incentive programs or arrangements
approved by the Board of Directors, or upon exercise
of options or warrants granted to such parties
pursuant to any such plan or arrangement;
(3) shares of Common Stock issued upon the
exercise, exchange, adjustment, or conversion of
Options or Convertible Securities outstanding as of
the date of the filing of these Articles of
Incorporation;
(4) shares of Common Stock issued or
issuable as a dividend or distribution on Preferred
Stock or pursuant to any event for which adjustment
is made pursuant to Section 4.4(e). Section 4.4(f),
or Section 4.4(g) hereof;
(5) shares of Common Stock issued in a
registered public offering under the Securities Act
pursuant to which all outstanding shares of Preferred
Stock are automatically converted into Common Stock
pursuant to an Automatic Conversion Event;
(6) shares of Common Stock issued or
issuable pursuant to the acquisition of another
corporation by the Corporation by merger, purchase of
substantially all of the assets, or other
reorganization or to a joint venture agreement,
provided, that such issuances are approved by the
Board of Directors;
(7) shares of Common Stock issued or
issuable to banks, equipment lessors, or other
financial institutions pursuant to a commercial
leasing or debt financing transaction approved by the
Board of Directors;
(8) shares of Conunon Stock issued or
issuable in connection with sponsored research,
collaboration, technology license, development, OEM,
marketing, or other similar agreements or strategic
partnerships approved by the Board of Directors; and
(9) shares of Common Stock issued to
suppliers or third party service providers in
connection with the provision of goods or services
pursuant to transactions approved by the Board of
Directors,
(ii) No Adjustment of Conversion Price. No adjustment
in the Conversion Price of a particular series of Preferred
Stock shall be made in respect of the issuance of Additional
Shares of Common unless the consideration per share (as
determined pursuant to Section 4.4(d)(v)) for an Additional
Share of Common issued or deemed to be issued by the
Corporation is less than the Conversion Price in effect on the
date of, and immediately prior to such issue, for such series
of Preferred Stock.
(iii) Deemed Issue of Additional Shares of Common. In
the event the Corporation at any time or from time to time
after the date of the filing of these Articles of
Incorporation shall issue any Options or Convertible
Securities or shall fix a record date for the determination of
holders of any class of securities entitled to receive any
such Options or Convertible Securities, then the maximum
number of shares (as set forth in the instrument relating
thereto without regard to any provisions contained therein for
a subsequent adjustment of such number) of Common Stock
issuable upon the exercise of such Options or, in the case of
Convertible Securities, the conversion or exchange of such
Convertible Securities or, in the case of Options for
Convertible Securities, the exercise of such Options and the
conversion or exchange of the underlying securities, shall be
deemed to have been issued as of the time of such issue or, in
case such a record date shall have been fixed, as of the close
of business on such record date, provided that in any such
case in which shares are deemed to be issued:
(1) no further adjustment in the Conversion
Price of the Preferred Stock shall be made upon the
subsequent issue of Convertible Securities or shares
of Common Stock in connection with the exercise of
such Options or conversion or exchange of such
Convertible Securities;
(2) if such Options or Convertible
Securities by their terms provide, with the passage
of time or otherwise, for any increase in the
consideration payable to the Corporation, or decrease
in the number of shares of Common Stock issuable,
upon the exercise, conversion, or exchange thereof,
the Conversion Price of the Preferred Stock computed
upon the original issue thereof (or upon the
occurrence of a record date with respect thereto),
and any subsequent adjustments based thereon, shall,
upon any such increase or decrease becoming
effective, be recomputed to reflect such increase or
decrease insofar as it affects such Options or the
rights of conversion or exchange under such
Convertible Securities;
(3) no readjustment pursuant to clause (2)
above shall have the effect of increasing the
Conversion Price of the Preferred Stock to an amount
which exceeds the lower of (i) the Conversion Price
of the Preferred Stock on the original adjustment
date, or (ii) the Conversion Price of the Preferred
Stock that would have resulted from any issuance of
Additional Shares of Common between the original
adjustment date and such readjustment date;
(4) upon the expiration of any such Options
or any rights of conversion or exchange under such
Convertible Securities which shall not have been
exercised, the Conversion Price computed upon the
original issue thereof (or upon the occurrence of a
record date with respect thereto) and any subsequent
adjustments based thereon shall, upon such
expiration, be recomputed as if:
(a) in the case of Convertible Securities or Options for
Common Stock, the only Additional Shares of Common issued were the
shares of Common Stock, if any, actually issued upon the exercise of
such Options or the conversion or exchange of such Convertible
Securities and the consideration received therefor was the
consideration actually received by the Corporation for the issue of
such exercised Options plus the consideration actually received by the
Corporation upon such exercise or for the issue of all such Convertible
Securities which were actually convened or exchanged, plus the
additional consideration, if any, actually received by the Corporation
upon such conversion or exchange, and
(b) in the case of Options for Convertible Securities, only
the Convertible Securities, if any, actually issued upon the exercise
thereof were issued at the time of issue of such Options, and the
consideration received by the Corporation for the Additional Shares of
Common deemed to have been then issued was the consideration actually
received by the Corporation for the issue of such exercised Options,
plus the consideration deemed to have been received by the Corporation
(determined pursuant to Section 4.4(d)(v)) upon the issue of the
Convertible Securities with respect to which such Options were actually
exercised; and
(c) if such record date shall have been fixed and such Options
or Convertible Securities are not issued on the date fixed therefor,
the adjustment previously made in the Conversion Price which became
effective On such record date shall be canceled as of the close of
business on such record date, and thereafter the Conversion Price shall
be adjusted pursuant to this Section 4.4(d)(iii) as of the actual date
of their issuance.
(iv) Adjustment of Conversion Price Upon Issuance of
Additional Shares of Common. In the event this Corporation
shall issue Additional Shares of Common (including Additional
Shares of Common deemed to be issued pursuant to Section
4.4(d)(iii)) without consideration or for a consideration per
share less than the applicable Conversion Price of a series of
Preferred Stock in effect on the date of and immediately prior
to such issue, then, the Conversion Price of the affected
series of Preferred Stock shall be reduced, concurrently with
such issue, to a price (calculated to the nearest cent)
determined by multiplying such Conversion Price by a fraction,
the numerator of which shall be the number of shares of Common
Stock outstanding immediately prior to such issue plus the
number of shares which the aggregate consideration received by
the Corporation for the total number of Additional Shares of
Common so issued would purchase at such Conversion Price, and
the denominator of which shall be the number of shares of
Common Stock outstanding immediately prior to such issue plus
the number of such Additional Shams of Common so issued.
Notwithstanding the foregoing, the Conversion Price shall not
be reduced at such time if the amount of such reduction would
be less than $0.01, but any such amount shall be carried
forward, and a reduction will be made with respect to such
amount at the time of, and together with, any subsequent
reduction which, together with such amount and any other
amounts so carried forward, equal $0.01 or more in the
aggregate. For the purposes of this Section 4.4(d)(iv), all
shares of Common Stock issuable upon exercise of outstanding
Options or the conversion of outstanding Convertible
Securities and shares of Preferred Stock, and all Additional
Shares of Common deemed issued pursuant to Section 4.4(d)(iii)
hereof, shall be deemed to be outstanding.
(v) Determination of Consideration. For purposes of
this subsection 4(d), the consideration received by the
Corporation for the issue (or deemed issue) of any Additional
Shares of Common shall be computed as follows:
(1)Cash and Property. Such consideration
shall:
(a) insofar as it consists of cash, be computed at the
aggregate amount of cash received by the Corporation excluding amounts
paid or payable for accrued interest or accrued dividends;
(b) insofar as it consists of property other than cash, be
computed at the fair market value thereof at the time of such issue, as
determined in good faith by the Board of Directors; and
(c) in the event Additional Shares of Common are issued
together with other shares or securities or other assets of the
Corporation for consideration which conversion both, be the proportion
of such consideration so received, computed as provided in clauses (a)
and (b) above, as reasonably determined in good faith by the Board of
Directors.
(2) Options and Convertible Securities. The
consideration per share received by the Corporation
for Additional Shares of Common deemed to have been
issued pursuant to Section 4.4(d)(iii) shall be
determined by dividing (x) the total amount, if any,
received or receivable by the Corporation as
consideration for the issue of such Options or
Convertible Securities, plus the minimum aggregate
amount of additional consideration (as set forth in
the instruments relating thereto, without regard to
any provision contained therein for a subsequent
adjustment of such consideration) payable to the
Corporation upon the exercise of such Options or the
conversion or exchange of such Convertible
Securities, or in the case of Options for Convertible
Securities, the exercise of such Options for
Convertible Securities and the conversion or exchange
of such Convertible Securities by
(y) the maximum number of shares of Common Stock (as set forth
in the instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such number) issuable
upon the exercise of such Options or the conversion or exchange of such
Convertible Securities.
(e) Adjustments for Subdivisions or Combinations of Common
Stock. In the event the outstanding shares of Common Stock shall be
subdivided (by stock split, by payment of a stock dividend, or
otherwise), into a greater number of shares of Common Stock, the
Conversion Price of each series-of Preferred Stock in effect
immediately prior to such subdivision shall, concurrently with the
effectiveness of such subdivision, be proportionately decreased. In the
event the outstanding shares of Common Stock shall be combined (by
reclassification or otherwise) into a lesser number of shares of Common
Stock, the Conversion Price in effect immediately prior to such
combination shall, concurrently with the effectiveness of such
combination, be proportionately increased.
(f) Adjustments for Subdivisions or Combinations of Preferred
Stock. In the event the outstanding shares of Preferred Stock or a
series of Preferred Stock shall be subdivided (by stock split, by
payment of a stock dividend, or otherwise), into a greater number of
shares of Preferred Stock, the Original Issuer Price, and Liquidation
Preference of the affected series of Preferred Stock in effect
immediately prior to such subdivision shall, concurrently with the
effectiveness of such subdivision, be proportionately decreased. In the
event the outstanding shares of Preferred Stock or a series of
Preferred Stock shall be combined (by reclassification or otherwise)
into a lesser number of shares of 'referred Stock, the Original Issue
Price, and Liquidation Preference of the affected series of Preferred
Stock in effect immediately prior to such combination shall,
concurrently with the effectiveness of such combination, be
proportionately increased.
(g) Adjustments for Reclassification, Exchange and
Substitution. Subject to Section 4.3 above ("Liquidation Rights"), if
the Common Stock issuable upon conversion of the Preferred Stock shall
be changed into the same or a different number of shares of any other
class or classes of stock, whether by capital reorganization,
reclassification, or otherwise (other than a subdivision or combination
of shares provided for above), then, in any such event, in lieu of the
number of shares of Common Stock which the holders would otherwise have
been entitled to receive each holder of such Preferred Stock shall have
the right thereafter to convert such shares of Preferred Stock into a
number of shares of such other class or classes of stock which a holder
of the number of shares of Common Stock deliverable upon conversion of
such series of Preferred Stock immediately before that change would
have been entitled to receive in such reorganization or
reclassification, all subject to further adjustment as provided herein
with respect to such other shares.
(h) No Impairment. The Corporation will not through any
reorganization, transfer of assets, merger, dissolution, issue or sale
of securities, or any other voluntary action, avoid or seek to avoid
the observance or performance of any of the terms to be observed or
performed hereunder by the Corporation but will at all times in good
faith assist in the carrying out of all the provisions of this Section
4.4 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of
Preferred Stock against impairment. Notwithstanding the foregoing,
nothing in this Section 4.4(h) shall prohibit the Corporation from
amending its Articles of Incorporation with the requisite consent of
its shareholders and the Board of Directors.
(i) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to this
Section 4.4, the Corporation at its expense shall promptly compute such
adjustment or readjustment in accordance with the terms hereof and
furnish to each holder of Preferred Stock a certificate setting forth
such adjustment or readjustment and showing in detail the facts upon
which such adjustment or readjustment is based. The Corporation shall,
upon the written request at any time of any holder of Preferred Stock,
furnish or cause to be furnished to such holder a like certificate
setting forth (i) such adjustments and readjustments, (ii) the
Conversion Price at the time in effect, and (iii) the number of shares
of Common Stock and the amount, if any, of other property which at the
time would be received upon the conversion of Preferred Stock.
(j) Waiver of Adjustment of Conversion Price. Notwithstanding
anything herein to the contrary, any downward adjustment of the
Conversion Price of any series of Preferred Stock may be waived, either
prospectively or retroactively and either generally or in a particular
instance, by the consent or vote of the holders of the majority of the
outstanding shares of such series, Any such waiver shall bind all
future holders of shares of such series of Preferred Stock.
(k) 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 Preferred Stock, such
number of its shares of Common Stock as shall from time to time be
sufficient to effect the conversion of all then outstanding shares of
the 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 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.
Section 4.5, VOTING
(a) Restricted Class Voting. Except as otherwise expressly provided
herein or as required by law, the holders of Preferred Stock and the holders of
Common Stock shall vote together and not as separate classes.
(b) No Series Voting. Other than as provided herein or required by law,
there shall be no series voting.
(c) Preferred Stock. Each holder of Preferred Stock shall be entitled
to the number of votes equal to the number of shares of Common Stock into which
the shares of Preferred Stock held by such holder could be converted as of the
record date. The holders of shares of the Preferred Stock shall be entitled to
vote on all matters on which the Common Stock shall be entitled to vote. Holders
of Preferred Stock shall be entitled to notice of any shareholders' meeting in
accordance with the Bylaws of the Corporation. Fractional votes shall not,
however, be permitted and any fractional voting rights resulting from the above
formula (after aggregating all shares into which shares of Preferred Stock held
by each holder could be converted), shall be disregarded.
(d) Election of Directors. The Board of Directors shall consist of
seven (7) members. As long as at least two hundred thousand (200,000) shares (as
adjusted for Recapitalizations) of Preferred Stock remain outstanding, or until
the closing of a Qualified IPO, the holders of Preferred Stock, voting as a
separate class, shall be entitled to elect three (3) members of the
Corporation's Board of Directors at each annual or special election of directors
or pursuant to each consent of the Corporation's shareholders for the election
of directors; provide4, however, that, for a period of one hundred twenty (120)
days after the filing of these Articles of incorporation, the holders of
Preferred Stock shall be entitled to elect three (3) directors as long as at
least fifty thousand (50,000) shares of Preferred Stock remain outstanding. The
holders of Common Stock, voting as a separate class, shall be entitled to elect
four (4) members of the Corporation's Board of Directors at each meeting or
pursuant to each consent of the Corporation's shareholders for the election of
directors or pursuant to each consent of the Corporation's shareholders for the
election of directors. Any additional members of the Corporation's Board of
Directors shall be elected by the holders of Common Stock and Preferred Stock,
voting together as a single class. If a vacancy on the Board of Directors is to
be filled by the Board of Directors, only directors elected by the same class or
classes of shareholders as those who would be entitled to vote to fill such
vacancy shall vote to fill such vacancy.
(e) Two-Thirds Majority Vote of Directors Required. As long as at least
two hundred thousand (200,000) shares (as adjusted for Recapitalizations) of
Preferred Stock remain outstanding, or until the closing of a Qualified IPO,
Major Actions shall require approval by a two-thirds majority of the members of
the Board of Directors. "Major Actions" consist of:
(i) the issuance by the Corporation of Additional Shares of
Common:
(ii) the merger of the Corporation into another corporation or
the merger of one or more other corporations into the Corporation;
(iii) the acquisition by another corporation of all of the
outstanding shares of capital stock of the Corporation;
(iv) the sale, lease, exchange, or other disposition by the
Corporation of all, or substantially all, of its property other than in
the usual and regular course of business;
(v) an acquisition by the Corporation of an interest in any
other business for a consideration (including assumption of
liabilities) in excess of $100,000, or of any other material
expenditures in excess of $100,000 per annum not included in the annual
operating budget or outside the ordinary course of business;
(vi) the dissolution of the Corporation;
(vii) changes in accounting methods or policies and any change
in the Corporation's outside auditors;
(viii) the incurrence of indebtedness, or grant of any
mortgages, security interests, or other liens by the Corporation
pursuant to agreements not in effect as of the date hereof (other than
such of the foregoing as is included in the annual operating budget for
the Company and up to $100,000 per annum of indebtedness, mortgages,
security interests, or liens not included in the annual operating
budget);
(ix) any material transactions by the Corporation with an
affiliate of the Corporation; and
(x) material changes to this definition of "Major Actions."
(f) Common Stock. Each holder of shares of Common Stock shall be
entitled to one vote for each share thereof held.
Section 4.6. AMENDMENTS AND CHANGES
As long as fifty thousand (50,000) shares (as adjusted for
Recapitalization) of the Preferred Stock shall be issued and outstanding, the
Corporation shall not, without first obtaining the approval (by vote or written
consent as provided by law) of the holders of more than fifty percent (50%) of
the outstanding shares of the Preferred Stock:
(a) amend, alter, or repeal any provision of these Articles of
Incorporation if such action would adversely alter the rights, preferences,
privileges, or powers of, or restrictions provided for, the benefit of the
Preferred Stock;
(b) increase or decrease (other than for decreases resulting from
conversion of the Preferred Stock) the authorized number of shares of the
Preferred Stock or any series thereof;
(c) amend this Section 4.6.
Section 4.7. NOTICES
Any notice required by the provisions of this Article IV to be given to
the holders of Preferred Stock shall be deemed given if deposited in the United
States mail, postage prepaid, or transmitted by private carrier, personal
delivery, telegraph, teletype, or communications equipment that transmits a
facsimile of the notice, and addressed to each holder of record at such holder's
address or number appearing on the books of the Corporation. The right to
cumulate votes in the election of directors shall not exist with respect to
shares
ARTICLE V. PREEMPTIVE RIGHTS
Except as otherwise provided in these Articles of Incorporation, or by
agreement in which the Corporation so provides, no preemptive rights to acquire
additional securities issued by the Corporation shall exist with respect to
shares of stock, or securities convertible into shares of stock.
ARTICLE VI. CUMULATIVE VOTING
The right to cumulate votes in the election of directors shall not
exist with respect to shares of capital stock of the Corporation.
ARTICLE VII. DIRECTORS
Except as otherwise provided in these Articles of Incorporation, the
number of directors of the Corporation shall be determined in the manner
provided by the Bylaws and may be increased or decreased from time to time in
the manner provided therein.
ARTICLE VIII. AMENDMENTS TO ARTICLES OF INCORPORATION
The Corporation reserves the right to amend or repeal any of the
provisions contained in these Articles of Incorporation in any manner now or
hereafter permitted by the Washington Act and these Articles of Incorporation,
and the rights of shareholders of the Corporation are granted subject to this
reservation:
ARTICLE IX. SHAREHOLDER ACTION WITHOUT A MEETING BY LESS THAN
UNANIMOUS CONSENT
Any action required or permitted to be taken at a shareholders' meeting
may be taken without a meeting or a vote if either (i) the action is taken by
written consent of all shareholders entitled to vote on the action; or (ii) for
so long as the Corporation is not a public company, the action is taken by
written consent of shareholders holding of record, or otherwise entitled to
vote, in the aggregate not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote on the action were present and voted.
To the extent that the Washington Act requires prior notice of any such
action to be given to nonconsenting or nonvoting shareholders, such notice shall
be given prior to the date on which the action becomes effective, as required by
the Washington Act. The form of notice shall be sufficient to apprise the
nonconsenting or nonvoting shareholder of the nature of the action to be
effected in a To the extent that the Washington Act requires prior notice of any
such action to be given to nonconsenting or nonvoting shareholders, such notice
shall be given prior to the date on which the action becomes effective, as
required by the Washington Act. The form of notice shall be sufficient to
apprise the nonconsenting or nonvoting shareholder of the nature of the action
to be effected in a manner approved by the Board of Directors or by the
committee or officers to whom the Board of Directors has delegated that
responsibility.
ARTICLE XI. LIMITATION ON LIABILITY OF DIRECTORS
To the full extent that the Washington Act, as it exists on the date
hereof or may hereafter be amended, permits the limitation or elimination of the
liability of directors, a director of the Corporation shall not be liable to the
Corporation or its shareholders for monetary damages for conduct as a director.
Any amendments to or repeal of this Article XI shall not adversely affect any
right or protection of a director of this Corporation for or with respect to any
acts or omissions of such director occurring prior to such amendment or repeal.
ARTICLE XII. SHAREHOLDER APPROVAL
Unless these Articles of Incorporation provide for a greater voting
requirement for any voting group of shareholders, the affirmative vote or
written consent of a majority of all of the votes entitled to be cast by a
voting group shall be sufficient, valid, and effective to approve and authorize
any acts of the Corporation that, under the Washington Act, would otherwise
require the approval of two thirds of all of the votes entitled to he cast,
including, without limitation: (i) an amendment to these Articles of
Incorporation; (ii) the merger of the Corporation into another corporation or
the merger of one or more other corporations into the Corporation; (iii) the
acquisition by another corporation of all of the outstanding shares of one or
more classes or series of capital stock of the Corporation; (iv) the sale,
lease, exchange, or other disposition by the Corporation of all or substantially
all of its property otherwise than in the usual and regular course of business;
or (v) the dissolution of the Corporation.
DATED: March 22, 2001.
VIDEO INTERNET BROADCASTING
CORPORATION
a Washington corporation
By: /s/ Kelly J. Pointer
---------------------------------
Kelly J. Pointer, Incorporator
AMENDMENT TO ARTICLES OF INCORPORATION
NAME OF CORPORATION (As currently recorded with the Office of the
Secretary of State) VIDEO INTERNET BROADCASTING CORPORATION
AMENDMENTS TO ARTICLES OF
UBI NUMBER CORPORATION NUMBER (if known) INCORPORATION WERE ADOPTED ON
602 107 653 Date: August 23, 2004
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EFFECTIVE DATE (Specified effective dale may be up to 30 days AFTER receipt
OF ARTICLES OF of the document by the Secretary of State)
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AMENDMENT o Specific Date: [x] Upon filing by the Secretary of
State
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ARTICLES OF AMENDMENT WERE ADOPTED BY (Please check ONE of the following)
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Incorporators. Shareholders action was not required
Board of Directors. Shareholders action was not required
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Duly approved shareholder action in accordance with Chapter 238.10 RCW
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INFORMATION AND ASSISTANCE - 360t753-7115 (TDD - 3601753-1485)
IMPORTANT+ Person to contact about this filing
Lawrence M. Hecker, Esq.
Daytime Phone Number (with area code)(520) 798-3803
AMENDMENTS TO THE ARTICLES OF INCORPORATION ARE AS FOLLOWS
If amendment provides. for an exchange. reclassification, or
cancellation of issued shares, provisions forimplementing the amendment must be
included. if necessary, attach additional amendments or information.
ARTICLE I
NAME; REGISTERED OFFICE AND AGENT
The Articles of Incorporation are hereby amended to delete Article IV,
Section 4.5(d) in its entirety.
The Articles of Incorporation shall remain in full force and effect and
shall remain unaltered, except for the amendment and the deletion of Article IV,
Section 4.5(d) as described above.
SIGNATURE OF OFFICER
This document is here by executed under penalties of perjury, and is,
to the best of my knowledge, true and correct