1598846
ENDORSED
FILED
In the office of the Secretary of State
of the State of California
OCT 23 1987
MARCH FUNG EU, Secretary of State
ARTICLES OF INCORPORATION
OF
INTELLICHOICE, INC.
I.
The name of this corporation is INTELLICHOICE, INC.
II.
The purpose of this corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
California other than the banking business, the trust company business or the
practice of a profession permitted to be incorporated by the California
Corporations Code.
III.
The name and address in the State of California of this corporation's
initial agent for service of process is:
Peter Levy
4771 La Cresta Way
San Jose, California 95129
IV.
This corporation is authorized to issue only one class of shares of stock,
designated as Common Stock, and the total number of shares which this
corporation is authorized to issue is 10,000,000.
DATED: 10/23/87
----------
/s/ Peter Levy
------------------------
Peter Levy, Incorporator
I hereby declare that I am the person who executed the foregoing Articles
of Incorporation, which execution is my act and deed.
/s/ Peter Levy
------------------------
Peter Levy
A362153
ENDORSED
FILED
In the office of the Secretary of State
of the State of California
DEC 16 1988
MARCH FUNG EU, Secretary of State
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
INTELLICHOICE, INC.
Peter Levy and Steven Gross certify that:
1. They are the President and Secretary, respectively, of INTELLICHOICE,
INC., a California Corporation (the "Corporation")
2. Article IV of the Articles of Incorporation of this Corporation is
amended in its entirety as follows:
"IV
(a) (i) The Corporation is authorized to issue two classes of
shares, to be designated respectively Preferred Stock ("Preferred") and Common
Stock ("Common"). The total number of shares of Preferred the Corporation shall
have authority to issue is 550,000 and the total number of shares of Common the
Corporation shall have authority to issue is 10,000,000.
The Corporation from time to time in accordance with the laws of the
State of California shall increase the authorized amount of its Common if at any
time the number of shares of Common remaining unissued and available for
issuance shall not be sufficient to permit conversion of the Preferred.
(ii) The Preferred authorized by these Articles of InCorporation
shall be issued in series as set forth herein. The first series of Preferred
shall be designated Series A Preferred Stock ("Series A Preferred") and shall
consist of Five Hundred Fifty Thousand (550,000) shares. The shares of each
series of Preferred have the rights, preference, privileges and restrictions
granted or imposed in paragraph (b) below.
(b) The relative rights, preferences, privileges and restrictions
granted to or imposed upon the respective classes of the shares of capital stock
or the holders thereof are as follows:
Section 1. General Definitions. For purposes of this Article the
following definitions shall apply:
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A. 'Junior Shares' shall mean all Common and any other shares of the
Corporation other than the Preferred.
B. 'Subsidiary' shall mean any Corporation at least 50% of whose
outstanding voting shares shall at the time be owned by the Corporation or by
one or more of such subsidiaries.
C. 'Original Issue Date' shall mean the date on which the first shares of
Series A Preferred were issued.
Section 2. Dividend Rights of Preferred. The holders of the Series A
Preferred shall be entitled to receive, out of any funds legally available
therefor, cash dividends at the rate of Four Cents ($0.04) per annum, on each
outstanding share of Series A Preferred, and no more, payable in preference and
priority to any payment of any dividends on Junior Shares out of any funds
legally available therefor, when and as declared by the Board of Directors. The
right to such dividends on the Preferred shall not be cumulative, and no right
shall accrue to holders of Preferred by reason of the fact that dividends on
such shares are not declared or paid in any prior year. No dividend shall be
declared or paid with respect to the Common during any fiscal year unless and
until the dividends provided for in the first sentence of this Section 2 are
declared and paid, or set apart for payment, on each outstanding share of
Preferred. After dividends in the amount of Four Cents ($0.04) per share of
Series A Preferred have been so declared and paid or set apart in any one fiscal
year of the Corporation, if the Board thereafter elects to declare additional
dividends in the same fiscal year out of funds legally available therefor, such
additional dividends shall be declared solely on the Junior Shares. In the event
that the Corporation shall have declared and unpaid dividends outstanding
immediately prior to, and in the event of, a conversion of Preferred (as
provided in Section 5 hereof), the Corporation shall pay such dividends, in cash
to the holder(s) of Preferred.
Section 3. Liquidation Preference.
(a) Priority. In the event of any liquidation, dissolution or
winding up of the Corporation, either voluntary or involuntary, the holders of
the Series A Preferred shall be entitled to receive, out of the assets of the
Corporation available for distribution to its shareholders, prior and in
preference to any distribution of any of the assets or surplus funds of the
Corporation to the holders of the Junior Shares by reason of their ownership
thereof, the amount of $.55 per share for each share of Series A Preferred then
held by them (as appropriately adjusted for any stock dividends, stock splits,
recapitalization, consolidation, or the like, with respect to such shares), and,
in addition, an amount equal to all declared but unpaid dividends on such Series
A Preferred, and no more,
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such amount to be payable in cash, or securities delivered in the transaction,
or a combination of both. If, upon occurrence of such event, the assets and
funds thus distributed among the holders of the Series A Preferred shall be
insufficient to permit the payment to such holders of the full preferential
amount, then the entire assets and funds of the Corporation legally available
for distribution shall be distributed ratably among the holders of the Series A
Preferred in proportion to the respective preferential amount each such holder
is entitled to receive. For purposes of this Section 3, a liquidation,
dissolution or winding up of the Corporation shall be deemed to be occasioned
by, and shall include, the Corporation's sale of all or substantially all of its
assets or the acquisition of the Corporation by another entity by means of a
merger or consolidation resulting in the exchange of the outstanding shares of
the Corporation for securities or consideration issued, or caused to be issued,
by such other entity.
(b) Payment to Junior Shares. All of the preferential amounts to be
paid to the holders of Preferred under this Section 3 shall be paid or set apart
for payment prior to payment or setting apart for payment of any amount for, or
the distribution of any amounts to, the holders of any Junior Shares in
connection with such liquidation, dissolution or winding up. If the Corporation
has assets remaining after payment or setting apart for payment of the
preferential amounts so payable to the holders of the Preferred, the holders of
Junior Shares shall be entitled to receive all remaining assets of the
Corporation, pro rata, based upon the number of shares of Common (or the number
of shares of Common into which shares of any other class could be converted)
held by each holder at the record date for any distribution.
(c) Valuation. For purposes of this Section 3, if the distributions
or consideration received by the shareholders of the Corporation is other than
cash, its value will be deemed to be its fair market value as determined in good
faith by the Board of Directors of the Corporation. In the case of publicly
traded securities listed on an exchange, fair market value shall mean the
average last closing sale price as reported by such exchange or by a
consolidated transaction reporting system for the five-day period immediately
preceding the date such sale, merger, consolidation or other reorganization is
consummated. In the case of publicly traded securities not listed on an
exchange, fair market value shall mean the average last closing bid price as
reported by the National Association of Securities Dealers Automatic Quotation
System, Inc. or such successor or similar organization, for the five-day period
immediately preceding the date on which such sale, merger, consolidation or
other reorganization is consummated.
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Section 4. Mandatory Redemption.
(a) Mandatory Redemption; Price. The Corporation shall redeem one-third of
the Series A Preferred outstanding (the "Redeemed Shares") each on the fifth
(5th), sixth (6th) and seventh (7th) anniversaries of the Original Issue Date.
The Corporation shall pay cash for each share to be redeemed pursuant to this
section 4 in the amount of $.55 per, share (as appropriately adjusted for any
stock dividends, stock splits, recapitalization, consolidation, or the like,
with respect to the Series A Preferred), together with an amount equal to any
declared but unpaid dividends on Series A Preferred to the date fixed for
redemption, and delivery of a certificate representing the number of shares of
Common Stock which the holders would have received had they elected to convert
the Redeemed Shares into Common upon the Redemption Date (as that term is
defined below). Such amount and the number of shares of Common Stock is
hereinafter referred to as the "Redemption Price."
(b) Redemption Date; Notice. Not less than thirty (30) days nor more than
sixty (60) days prior to the date fixed for any redemption of Series A Preferred
(hereinafter referred to as the "Redemption Date"), written notice shall be
mailed, postage prepaid, to each holder of record of Series A Preferred to be
redeemed, at the post office address last shown on the records of the
Corporation, specifying the Redemption Date, the total number of Series A
Preferred being redeemed, the number of Series A Preferred held by the holder to
whom such notice is sent, the applicable Redemption Price, and calling upon such
holder to surrender to the Corporation, in the manner and at the place
designated, the certificate or certificates representing the shares to be
redeemed (such notice is hereinafter referred to as the "Redemption Notice"). On
or after the Redemption Date, each holder of Series A Preferred to be redeemed
shall surrender the certificate or certificates representing such shares to the
Corporation, in the manner and at the place designated in the Redemption Notice,
and thereupon the Redemption Price of such shares shall be payable to the order
of the person whose name appears on such certificate or certificates as the
owner of such shares and each surrendered certificate shall be cancelled. From
and after the Redemption Date, all rights of the holders of Series A Preferred
designated for redemption in the Redemption Notice (except the right to receive
the Redemption Price without interest upon surrender of their certificate or
certificates) shall cease and terminate with respect to such shares, and such
shares shall not subsequently be transferred on the books of the Corporation or
be deemed to be outstanding for any purpose whatsoever. In the event fewer than
all of the shares represented by such surrendered certificate are redeemed, a
new certificate representing the unredeemed shares shall be issued forthwith.
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(c) Deposit. On or prior to the Redemption Date, the Corporation shall
deposit the Redemption Price of all shares of Series A Preferred designated for
redemption in the Redemption Notice and not yet redeemed with a bank or trust
company having aggregate capital and surplus in excess of one hundred million
dollars ($100,000,000) as a trust fund for the benefit of the respective holders
of the shares designated for redemption and not yet redeemed, with irrevocable
instructions and authority to the bank or trust company to pay the Redemption
Price for such shares to their respective holders on or after the Redemption
Date upon receipt of notification to the Corporation pursuant to Section 4 (b).
The balance of any funds deposited by the Corporation pursuant to this
subparagraph 4 (c) remaining unclaimed at the expiration of one (1) year
following the Redemption Date shall be returned to the Corporation upon its
request expressed in a resolution of its Board of Directors.
Section 5. Conversion. The holders of the Series A Preferred shall have
conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each share of Series A Preferred shall be
convertible, at the option of the holder thereof, at the office of the
Corporation or any transfer agent for the Preferred, into such number of fully
paid and non-assessable shares of Common, as is determined by dividing $.55 for
each share of Series A Preferred by the Conversion Price (determined as
hereinafter provided) in effect at the time of conversion. The price at which
shares of Common shall be deliverable upon conversion (the "Conversion Price")
initially shall be $.55 for each share of Series A Preferred per share of
Common. Such Conversion Price shall be subject to adjustment as hereinafter
provided.
(b) Automatic Conversion. Each share of Preferred automatically
shall be converted into shares of Common at the then effective Conversion Price
on the effective date of a firm commitment underwritten public offering pursuant
to an effective registration statement under the Securities Act of 1933, as
amended, covering the offer and sale of Common for the account of the
Corporation to the public at a price per share (prior to underwriting
commissions and expenses) of not less than $2.00 per share (as adjusted for
stock splits, recapitalization, consolidation or the like) and an aggregate
offering price of not less than $2,000,000.
(c) Mechanics of Conversion. No fractional shares or scrip
representing fractional shares shall be issued upon the conversion of any share
of Preferred. If, upon conversion of any share of Preferred, except for the
provisions of this Section 5(c), the registered holder would be entitled to
receive a
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fractional share of Common, then an amount equal to such fractional share
multiplied by the then fair market value (as determined in good faith by the
Corporation's Board of Directors) of a share of the Corporation's Common shall
be paid by the Corporation in cash to such registered holder. Before any holder
of Preferred shall be entitled to convert the same into shares of Common, the
holder shall surrender the certificate or certificates therefor, duly endorsed,
at the office of the Corporation or of any transfer agent for the Preferred, and
shall give written notice to the Corporation at such office that the holder
elects to convert the same. The Corporation shall, as soon as practicable
thereafter, issue and deliver at such office to such holder of Preferred, a
certificate or certificates for the number of shares of Common to which the
holder 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. 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 to be converted, or in the case of automatic conversion on the
effective date of the offering as provided in Section 5(b), and the person or
persons entitled to receive the shares of Common issuable upon such conversion
shall be treated for all purposes as the record holder or holders of such shares
of Common on such date.
(d) Adjustments to Conversion Price for Diluting Issues.
(i) Special Definitions. For purposes of this Section 5(d),
the following definitions shall apply:
(1) 'Options' shall mean rights, options or warrants to
subscribe for, purchase or otherwise acquire either Common or Convertible
Securities.
(2) 'Convertible Securities' shall mean any evidences
of indebtedness, shares (other than Common) or other securities convertible into
or exchangeable for Common.
(3) 'Additional Shares of Common' shall mean all
shares of Common issued (or, pursuant to Section 5(d)(iii), deemed to be issued)
by the Corporation after the Original Issue Date, other than shares of Common
issued or issuable (or pursuant to Section 5(d)(iii), deemed to be issued):
(A) upon conversion of shares of Series A
Preferred; and
(B) to officers, directors or employees of, or
contractors or consultants to, the Corporation pursuant to
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a stock grant, option plan or purchase plan or other stock incentive program or
agreement approved by the Board of Directors not exceeding 535,000 shares of
Common and including an additional 2,125,000 shares which were held by officers,
directors, employees and consultants on October 21, 1988, which are repurchased
from officers, directors, employees or consultants upon termination of the
employment, consulting relationship or services to the Corporation of such
person.
(ii) No Adjustment of Conversion Price. No adjustment in the
Conversion Price of a particular share of Series A Preferred shall be made in
respect of the issuance of Additional Shares of Common unless the consideration
per share 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 share of Series A Preferred.
(iii) Deemed Issue of Additional Shares of Common.
(A) Options and Convertible Securities. In the event, at
any time or from time to time after the Original Issue Date, the Corporation
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 issuable
upon the exercise of such Options or, in the case of Convertible Securities and
Options therefor, the conversion or exchange of such Convertible Securities,
shall be deemed to be Additional Shares of Common 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 Additional Shares of Common shall
not be deemed to have been issued as to Series A Preferred unless the
consideration per share (determined pursuant to Section 5(d)(v) hereof) of such
Additional Shares of Common would be less than the Conversion Price applicable
to the Series A Preferred in effect on the date of, and immediately prior to
such issue, or such record date, as the case may be, and provided further that
in any such case in which Additional Shares of Common are deemed to be issued:
(1) no further adjustment in the Conversion Price
shall be made upon the subsequent issue of Convertible Securities or shares of
Common upon the exercise of such Options or conversion or exchange of such
Convertible Securities;
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(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 issuable (including a decrease resulting from the expiration of
such Options or the rights of conversion or exchange of such Convertible
Securities), upon the exercise, conversion or exchange thereof, the Conversion
Price computed upon the original issue thereof (or upon the occurrence of a
record date with respect thereto), and any subsequent adjustments based thereon,
shall, upon any such increase or decrease becoming effective, be recomputed to
reflect such increase or decrease insofar as it affects such Options or the
rights of conversion or exchange under such Convertible Securities as if such
Options or Convertible Securities had never been issued;
(3) no readjustment pursuant to clause (2) above
shall have the effect of increasing the Conversion Price to an amount which
exceeds the lower of (i) the Conversion Price on the original adjustment date,
or (ii) the Conversion Price that would have resulted from any issuance of
Additional Shares of Common between the original adjustment date and such
readjustment date; and
(4) no readjustment of the Conversion Price shall
occur upon the expiration of any such Options or any rights of conversion or
exchange under such Convertible Securities.
(B) Stock Dividends. In the event the Corporation at any
time or from time to time after the Original Issue Date shall declare or pay any
dividend on the Common payable in Common, the Additional Shares of Common shall
be deemed to have been issued on the record date for the determination of
holders of any class of securities entitled to receive such dividend.
(iv) Adjustment of Conversion Price Upon Issuance of
Additional Shares of Common. In the event the Corporation shall issue Additional
Shares of Common (including Additional Shares of Common deemed to be issued
pursuant to Section 5(d)(iii)) without consideration or for a consideration per
share less than the Conversion Price of the Series A Preferred in effect on the
date of, and immediately prior to such issue, then, and in such event, such
Conversion Price for Series A Preferred shall be reduced, concurrently with such
issue, to a price (calculated to the nearest cent) determined by the following
formula:
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CP(1) = CP(0) x CS + C/CP(0)/(CS + AS)
where:
(1) CP(0) = the Conversion Price in effect on the date of
and immediately prior to such issue;
(2) CP(1) = the Conversion Price as so adjusted;
(3) CS = the number of shares of Common outstanding
immediately prior to such issuance (including
shares of Common issuable upon conversion or
exercise of any Convertible Securities and
the Preferred, or upon exercise of Options);
(4) C = the aggregate consideration, if any,
received by the Corporation for the total
number of Additional Shares of Common so
issued, provided that if the Additional
Shares of Common are issued without
consideration then C shall be zero (0); and
(5) AS = the number of such Additional Shares of
Common so issued.
and provided further that, immediately after any Additional Shares of Common are
deemed issued pursuant to Section 5(d)(iii), such Additional Shares of Common
shall be deemed to be outstanding shares of Common for the purposes of the
foregoing formula.
(v) Determination of Consideration. For purposes of this
Section 5(d), the consideration received by the Corporation for the 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, and provided further that
no deduction shall be made for any commissions or expenses paid or incurred by
the Corporation for any underwriting of the issue or otherwise in connection
therewith;
(B) insofar as it consists of property other than
cash, be computed at the fair value thereof at the
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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 covers both, be the proportion of such
consideration so received in respect of the Additional Shares of Common,
computed as provided in clauses (A) and (B) above, as determined in good faith
by the Board of Directors.
(2) Options and Convertible Securities. The
consideration per share received by the Corporation for Additional Shares of
Common deemed to have been issued pursuant to Section 5(d)(iii), relating to
Options and Convertible Securities, 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 (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.
(3) Stock Dividends. Any additional shares of Common
deemed to have been issued relating to stock dividend shall be deemed to have
been issued for no consideration.
(e) Adjustment for Subdivisions and Combinations. If the
Corporation at any time or from time to time effects a subdivision of the
outstanding Common, the Conversion Price of the Series A Preferred then in
effect immediately before that subdivision shall be proportionately decreased,
and, conversely, if the Corporation at any time or from time to time combines
the outstanding shares of Common, the Conversion Price of the Series A Preferred
then in effect immediately before the combination shall be proportionately
increased. Any adjustment of the Conversion Price of the Series A Preferred
under this Section
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5(e) shall become effective at the close of business on the date the subdivision
or combination becomes effective.
(f) Adjustment for Certain Dividends and Distributions. In the
event the Corporation at any time or from time to time makes, or fixes a record
date for the determination of holders of Common entitled to receive, a dividend
or other distribution payable in additional shares of Common, then and in each
such event the Conversion Price then in effect shall be decreased as of the time
of such issuance or, in the event such a record date is fixed, as of the close
of business on such record date, by multiplying the Conversion Price then in
effect by a fraction (1) the numerator of which is the total number of shares of
Common issued and outstanding immediately prior to the time of such issuance on
the close of business on such record date, and (2) the denominator of which
shall be the total number of shares of Common issued and outstanding immediately
prior to the time of such issuance on the close of business on such record date
plus the number of shares of Common issuable in payment of such dividend or
distribution; provided, however, that if such record date is fixed and such
dividend is not fully paid or if such distribution is not fully made on the date
fixed therefor, the Conversion Price shall be recomputed accordingly as of the
close of business on such record date and thereafter the Conversion Price shall
be adjusted pursuant to this Section 5(e) as of the time of actual payment of
such dividends or distributions.
(g) Adjustments for Other Dividends or Distributions. In the
event the Corporation at any time or from time to time makes or fixes a record
date for the determination of holders of shares of Common entitled to receive a
dividend or other distribution payable in securities or other property of the
Corporation (other than shares of Common and other than as otherwise adjusted in
this Section 5), then, and in each such event, provision shall be made so that
the holders of shares of Preferred shall receive upon conversion thereof, in
addition to the number of shares of Common receivable thereupon, the amount of
securities and other property of the Corporation which they would have received
had their shares of Preferred been converted into shares of Common on the date
of such event and had they thereafter, during the period from the date of such
event to and including the date of conversion, retained such securities and
other property receivable by them as aforesaid during such period, subject to
all other adjustments called for during such period under this Section 5 with
respect to the rights of the holders of shares of Preferred.
(h) Adjustments for Reclassification. Exchange and
Substitution. If the shares of Common issuable upon conversion of the Preferred
shall be changed into the same or a different number of shares of any other
class or classes of stock, whether by capitalization, reclassification or
otherwise
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(other than a subdivision or combination of shares, stock dividend, or
reorganization, merger, consolidation or sale of assets, as provided for
herein), then and in any such event each holder of Series A Preferred thereafter
shall have the right to convert such stock into the kind and amount of stock and
other securities and property receivable upon such recapitalization,
reclassification or other change, by holders of the number of shares of Common
into which such shares of Preferred might have been converted immediately prior
to such recapitalization, reclassification or change, all subject to such
further adjustments applicable as specified herein.
(i) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to this Section 5,
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 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, 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 and the amount,
if any, of other property which at the time would be received upon the
conversion of Preferred.
(j) Notices of Record Date. In the event that the
Corporation shall propose at any time:
(i) to declare any dividend or distribution upon its
Common, whether in cash, property, stock or other securities, whether or not a
regular cash dividend and whether or not out of earnings or earned surplus;
(ii) to offer for subscription pro rata to the holders
of any class or series of its stock any additional shares of stock of any class
or series or other rights;
(iii) to effect any reclassification or recapitalization
of its Common outstanding involving a change in the Common; or
(iv) to merge or consolidate with or into any other
Corporation, or sell, lease or convey all or substantially all its property or
business, or to liquidate, dissolve or wind up;
then, in connection with each such event, the Corporation shall send to the
holders of the Preferred:
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(1) at least ten (10) days' prior written notice
of the date on which a record shall be taken for such dividend, distribution or
subscription rights (and specifying the date on which the holders of Common
shall be entitled thereto) or for determining rights to vote in respect of the
matters referred to in (iii) and (iv) above; and
(2) in the case of the matters referred to in
(iii) and (iv) above, at least ten (10) days' prior written notice of the date
when the same shall take place (and specifying the date on which the holders of
Common shall be entitled to exchange their Common for securities or other
property deliverable upon the occurrence of such event)
Each such written notice shall be given by certified or registered mail,
postage prepaid, addressed to the holders of Preferred at the address for each
such holder as shown on the books of this Corporation.
(k) No Impairment. The Corporation will not, by
amendment of its Articles of Incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Corporation by will at all times in good faith assist in the carrying out of all
the provisions of this Section 5 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 Preferred against impairment.
Section 6. Voting Rights. Except as otherwise expressly provided herein or
as required by law, the holder of each share of Common issued and outstanding
shall have one vote per share and the holder of each share of Preferred shall be
entitled to the number of votes equal to the number of shares of Common into
which such holder's shares of Preferred could be converted (as adjusted from
time to time pursuant to Section 5 hereof) at the record date for determination
of the stockholders entitled to vote on such matters, or, if no such record date
is established, at the date such vote is taken or any written consent of
stockholders is solicited, such votes to be counted together with all other
shares of stock of the Corporation having general voting power and not
separately as a class. Holders of shares of Common and Preferred shall be
entitled to notice of any stockholders' meeting in accordance with the Bylaws of
the Corporation. No fractional votes shall be permitted, and any fractional
voting rights resulting from the above formula (after aggregating all shares
into which shares of Preferred held by each holder could be converted) shall be
rounded to the nearest whole number.
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Section 7. Covenants. In addition to any other rights provided by law, so
long as any Series A Preferred shall be outstanding, the Corporation shall not,
without first obtaining the affirmative vote or written consent of the holders
of not less than a majority of such outstanding shares of Series A Preferred
(not less than seventy-five percent (75%) in the case of item (c) below) voting
as a class:
(a) Authorize or issue shares of any class or series having
any preference or priority as to dividends or assets superior to any such
preference or priority of Series A Preferred; or
(b) Increase the authorized number of shares of Preferred or
Series A Preferred.
(c) Materially and adversely alter or change the rights,
preferences, privileges or restrictions of the Series A Preferred.
Section 8. Consent for Certain Repurchases of Common Stock Deemed to be
Distributions. Each holder of an outstanding share of Preferred shall be deemed
to have consented, for purposes of Sections 502, 503 and 506 of the General
Corporation Law, to distributions made by the Corporation in connection with the
repurchase of shares of Common issued to or held by employees, officers,
directors, consultants or other persons performing services for the Corporation
or any Subsidiary upon termination of their employment or services pursuant to
agreements providing for the right of said repurchase between the Corporation
and such persons.
Section 9. Residual Rights. All rights accruing to the outstanding shares
of the Corporation not expressly provided for to the contrary herein shall be
vested in the Common.
Section 10. Status of Converted or Redeemed Stock. In the event any shares
of Preferred shall be redeemed or converted, the shares so converted or redeemed
shall be cancelled and shall not have the status of authorized but unissued
shares of Preferred and shall not be issuable by the Corporation and the
Articles of InCorporation of this Corporation shall be amended to effect the
corresponding reduction in the Corporation's capital stock."
3. The foregoing amendment of Articles of InCorporation has been duly
approved by the Board of Directors.
4. The foregoing amendment of Articles of InCorporation has been duly
approved by the required vote of shareholders in accordance with Section 902 and
903 of the Corporations Code. The total number of outstanding shares of the
Corporation is
-14-
2,125,000 shares of Common Stock. The number of shares voting in favor of the
amendment equalled or exceeded the vote required. The percentage vote required
was more than 50%. No other class of shares is outstanding.
/s/ Peter Levy 12-15-88
--------------------------
Peter Levy, President
/s/ Steven Gross 12/15/88
--------------------------
Steven Gross, Secretary
The undersigned declares under penalty of perjury that the matters set
forth in the foregoing certificate are true of their own knowledge.
Executed at San Jose, California on December __, 1988.
/s/ Peter Levy 12-15-88
-------------------------
Peter Levy, President
/s/ Steven Gross 12/15/88
--------------------------
Steven Gross, Secretary
-15-
A384508
ENDORSED
FILED
In the office of the Secretary of State
of the State of California
Mar 29 1990
MARCH FUNG EU, Secretary of State
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
INTELLICHOICE, INC.
Peter Levy and Steven Gross certify that:
1. They are the President and Secretary, respectively, of INTELLICHOICE,
INC., a California corporation.
2. The Articles of Incorporation of this corporation are amended to
include Articles V, VI, and VII as follows:
"V.
The liability of the directors of this corporation for monetary damages
shall be eliminated to the fullest extent permissible under California law.
VI.
This corporation is authorized to provide indemnification of agents (as
defined in Section 317 of the Corporations Code) for breach of duty to the
corporation and its stockholders through bylaw provisions or through agreements
with the agents, or both, in excess of the indemnification otherwise permitted
by Section 317 of the Corporations Code, subject to the limits on such excess
indemnification set forth in Section 204 of the Corporations Code.
VII.
Any repeal or modification of the foregoing provisions of Articles V and
VI by the shareholders of this corporation shall not adversely affect any right
or protection of a director of this corporation existing at the time of such
repeal or modification."
3. The foregoing amendment of Articles of Incorporation has been duly
approved by the Board of Directors.
4. The foregoing amendment of Articles of Incorporation has been duly
approved by the required vote of shareholders in accordance with Section 902 and
903 of the Corporations Code. The total number of outstanding shares of the
corporation is 2,125,000 shares of Common Stock and 290,000 shares of Series A
Preferred Stock. The number of shares voting in favor of the
-1-
amendment equalled or exceeded the vote required. The percentage vote required
was more than 50% of the classes voting together.
/s/ Peter Levy
-------------------------
Peter Levy, President
/s/ Steven Gross
-------------------------
Steven Gross, Secretary
The undersigned declare under penalty of perjury that the matters set
forth in the foregoing certificate are true of their own knowledge.
Executed at San Jose, California on March 2, 1989.
/s/ Peter Levy
-------------------------
Peter Levy, President
/s/ Steven Gross
-------------------------
Steven Gross, Secretary
-2-
A386003
ENDORSED
FILED
In the office of the Secretary of State
of the State of California
APR 27 1990
MARCH FUNG EU, Secretary of State
CERTIFICATE OF AMENDMENT
OF
ARTICLES OF INCORPORATION
OF
INTELLICHOICE, INC.
Peter Levy and Steven Gross certify that:
1. They are the President and Secretary, respectively, of INTELLICHOICE,
INC., a California Corporation (the "Corporation").
2. Article IV of the Articles of Incorporation of this Corporation is
amended in its entirety as follows:
"IV
(a) (i) The Corporation is authorized to issue two classes of
shares, to be designated respectively Preferred Stock ("Preferred") and Common
Stock ("Common"). The total number of shares of Preferred the Corporation shall
have authority to issue is 850,000 and the total number of shares of Common the
Corporation shall have authority to issue is 10,000,000.
The Corporation from time to time in accordance with the laws of the
State of California shall increase the authorized amount of its Common if at any
time the number of shares of Common remaining unissued and available for
issuance shall not be sufficient to permit conversion of the Preferred.
(ii) The Preferred authorized by these Articles of
Incorporation shall be issued in series as set forth herein. The first series of
Preferred shall be designated Series A Preferred Stock ("Series A Preferred")
and shall consist of Five Hundred Fifty Thousand (550,000) shares. The second
series of Preferred shall be designated Series B Preferred Stock ("Series B
Preferred") and shall consist of Three Hundred Thousand (300,000) shares. The
shares of each series of Preferred have the rights, preference, privileges and
restrictions granted or imposed in paragraph (b) below.
(b) The relative rights, preferences, privileges and restrictions
granted to or imposed upon the respective classes of
-1-
the shares of capital stock or the holders thereof are as follows:
Section 1. General Definitions. For purposes of this Article the following
definitions shall apply:
A. 'Junior Shares' shall mean all Common and any other shares of the
Corporation other than the Preferred.
B. 'Subsidiary' shall mean any Corporation at least 50% of whose
outstanding voting shares shall at the time be owned by the Corporation or by
one or more of such subsidiaries.
C. 'Original Issue Date' shall mean the date on which the first shares of
Series A Preferred and Series B Preferred, respectively, were issued.
Section 2. Dividend Rights of Preferred. The holders of the Series A
Preferred shall be entitled to receive, out of any funds legally available
therefor, cash dividends at the rate of (i) Four Cents ($0.04) per annum, on
each outstanding share of Series A Preferred, and (ii) Six Cents ($0.06) per
annum, on each outstanding share of Series B Preferred, and no more, payable in
preference and priority to any payment of any dividends on Junior Shares out of
any funds legally available therefor, when and as declared by the Board of
Directors. The right to such dividends on the Preferred shall not be cumulative,
and no right shall accrue to holders of Preferred by reason of the fact that
dividends on such shares are not declared or paid in any prior year. No dividend
shall be declared or paid with respect to the Common during any fiscal year
unless and until the dividends provided for in the first sentence of this
Section 2 are declared and paid, or set apart for payment, on each outstanding
share of Preferred. After dividends in the amount specified per share for each
series of Preferred have been so declared and paid or set apart in any one
fiscal year of the Corporation, if the Board thereafter elects to declare
additional dividends in the same fiscal year out of funds legally available
therefor, such additional dividends shall be declared solely on the Junior
Shares. In the event that the Corporation shall have declared and unpaid
dividends outstanding immediately prior to, and in the event of, a conversion of
Preferred (as provided in Section 5 hereof), the Corporation shall pay such
dividends, in cash to the holder(s) of Preferred.
Section 3. Liquidation Preference.
(a) Priority. In the event of any liquidation, dissolution or
winding up of the Corporation, either voluntary or involuntary, the holders of
the Preferred shall be entitled to receive, out of the assets of the Corporation
available for distribution to its shareholders, prior and in preference to any
-2-
distribution of any of the assets or surplus funds of the Corporation to the
holders of the Junior Shares by reason of their ownership thereof, the amount of
(i) $0.55 per share for each share of Series A Preferred and (ii) $0.85 per
share for each share of Series B Preferred, then held by them (as appropriately
adjusted for any stock dividends, stock splits, recapitalization, consolidation,
or the like, with respect to such shares), and, in addition, an amount equal to
all declared but unpaid dividends on each of the respective series of Preferred,
and no more, such amount to be payable in cash, or securities delivered in the
transaction, or a combination of both. If, upon occurrence of such event, the
assets and funds thus distributed among the holders of the Preferred shall be
insufficient to permit the payment to such holders of the full preferential
amount, then the entire assets and funds of the Corporation legally available
for distribution shall be distributed ratably among the holders of the Preferred
in proportion to the respective preferential amount each such holder is entitled
to receive. For purposes of this Section 3, a liquidation, dissolution or
winding up of the Corporation shall be deemed to be occasioned by, and shall
include, the Corporation's sale of all or substantially all of its assets or the
acquisition of the Corporation by another entity by means of a merger or
consolidation resulting in the exchange of the outstanding shares of the
Corporation for securities or consideration issued, or caused to be issued, by
such other entity.
(b) Payment to Junior Shares. All of the preferential amounts to be
paid to the holders of Preferred under this Section 3 shall be paid or set apart
for payment prior to payment or setting apart for payment of any amount for, or
the distribution of any amounts to, the holders of any Junior Shares in
connection with such liquidation, dissolution or winding up. If the Corporation
has assets remaining after payment or setting apart for payment of the
preferential amounts so payable to the holders of the Preferred, the holders of
Junior Shares shall be entitled to receive all remaining assets of the
Corporation, pro rata, based upon the number of shares of Common (or the number
of shares of Common into which Junior Shares could be converted) held by each
holder at the record date for any distribution.
(c) Valuation. For purposes of this section 3, if the distributions
or consideration received by the shareholders of the Corporation is other than
cash, its value will be deemed to be its fair market value as determined in good
faith by the Board of Directors of the Corporation. In the case of publicly
traded securities listed on an exchange, fair market value shall mean the
average last closing sale price as reported by such exchange or by a
consolidated transaction reporting system for the five-day period immediately
preceding the date such sale, merger, consolidation or other reorganization is
consummated. In the
-3-
case of publicly traded securities not listed on an exchange, fair market value
shall mean the average last closing bid price as reported by the National
Association of Securities Dealers Automatic Quotation System, Inc. or such
successor or similar organization, for the five-day period immediately
preceding the date on which such sale, merger, consolidation or other
reorganization is consummated.
Section 4. Mandatory Redemption.
(a) Mandatory Redemption; Price. The Corporation shall redeem one-third of
the Series A Preferred and Series B Preferred outstanding (the "Redeemed
Shares") each of January 6, 1994, January 6, 1995 and January 6, 1996. The
Corporation shall pay cash for each share to be redeemed pursuant to this
Section 4 in the amount of (i) $0.55 per share of Series A Preferred and (ii)
$0.85 per shares of Series B Preferred (the foregoing appropriately adjusted for
any stock dividends, stock splits, recapitalization, consolidation, or the like,
with respect to such series A Preferred), together with an amount equal to any
declared but unpaid [Illegible] dividends on such series of Preferred being
redeemed to the date fixed for redemption, and delivery of a certificate
representing the number of shares of Common Stock which the holders would have
received had they elected to convert the Redeemed Shares into Common upon the
Redemption Date (as that term is defined below). The amount to be paid for a
share of the series of Preferred to be redeemed is hereinafter referred to as
the "Redemption Price."
(b) Redemption Date; Notice. Not less than thirty (30) days nor more than
sixty (60) days prior to the date fixed for any redemption of a series of
Preferred (hereinafter referred to as the "Redemption Date"), written notice
shall be mailed, postage prepaid, to each holder of record of such series of
Preferred to be redeemed, at the post office address last shown on the records
of the Corporation, specifying the Redemption Date, the total number shares of
such series of Preferred being redeemed, the number of shares of such series of
Preferred held by the holder to whom such notice is sent, the applicable
Redemption Price, and calling upon such holder to surrender to the Corporation,
in the manner and at the place designated, the certificate or certificates
representing the shares to be redeemed (such notice is hereinafter referred to
as the "Redemption Notice"). On or after the Redemption Date, each holder of the
series of Preferred to be redeemed shall surrender the certificate or
certificates representing such shares to the Corporation, in the manner and at
the place designated in the Redemption Notice, and thereupon the Redemption
Price of such shares shall be payable to the order of the person whose name
appears on such certificate or certificates as the owner of such shares and each
surrendered certificate shall be cancelled. From and after the Redemption Date,
all rights of the holders of the
-4-
series of Preferred designated for redemption in the Redemption Notice (except
the right to receive the Redemption Price without interest upon surrender of
their certificate or certificates) shall cease and terminate with respect to
such shares, and such shares shall not subsequently be transferred on the books
of the Corporation or be deemed to be outstanding for any purpose whatsoever. In
the event fewer than all of the shares represented by such surrendered
certificate are redeemed, a new certificate representing the unredeemed shares
shall be issued forthwith.
(c) Deposit. On or prior to the Redemption Date, the Corporation shall
deposit the Redemption Price of all shares of the series of Preferred designated
for redemption in the Redemption Notice and not yet redeemed with a bank or
trust company having aggregate capital and surplus in excess of one hundred
million dollars ($100,000,000) as a trust fund for the benefit of the respective
holders of the shares designated for redemption and not yet redeemed, with
irrevocable instructions and authority to the bank or trust company to pay the
Redemption Price for such shares to their respective holders on or after the
Redemption Date upon receipt of notification to the Corporation pursuant to
Section 4(b). The balance of any funds deposited by the Corporation pursuant to
this Section 4(c) remaining unclaimed at the expiration of one (1) year
following the Redemption Date shall be returned to the Corporation upon its
request expressed in a resolution of its Board of Directors.
Section 5. Conversion. The holders of the Preferred shall have conversion
rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each share of Preferred shall be convertible,
at the option of the holder thereof, at the office of the Corporation or any
transfer agent for the Preferred, into such number of fully paid and
nonassessable shares of Common, as is determined by dividing (i) $0.55 for each
share of Series A Preferred and (ii) $. 85 for each share of Series B Preferred
by the Conversion Price (determined as hereinafter provided) in effect at the
time of conversion. The price at which shares of Common shall be deliverable
upon conversion (the "Conversion Price") initially shall be (ii) $0.55 for each
share of Series A Preferred and (ii) $0.85 for each share of Series B Preferred,
per share of Common. Such Conversion Price shall be subject to adjustment as
hereinafter provided.
(b) Automatic Conversion. Each share of Preferred automatically
shall be converted into shares of Common at the then effective Conversion Price
on the effective date of a firm commitment underwritten public offering pursuant
to an effective registration statement under the Securities Act of 1933, as
amended, covering the offer and sale of Common for the account of
-5-
the Corporation to the public at a price per share (prior to underwriting
commissions and expenses) of not less than $2.00 per share (as adjusted for
stock splits, recapitalization, consolidation or the like) and an aggregate
offering price of not less than $2,000,000.
(c) Mechanics of Conversion. No fractional shares or scrip
representing fractional shares shall be issued upon the conversion of any share
of Preferred. If, upon conversion of all of shares of Preferred held by a
registered holder which are being converted (after aggregating such shares),
except for the provisions of this Section 5(c), the registered holder would be
entitled to receive a fractional share of Common, then an amount equal to such
fractional share multiplied by the then fair market value (as determined in good
faith by the Corporation's Board of Directors) of a share of the Corporation's
Common shall be paid by the Corporation in cash to such registered holder.
Before any holder of Preferred shall be entitled to convert the same into shares
of Common, the holder shall surrender the certificate or certificates therefor,
duly endorsed, at the office of the Corporation or of any transfer agent for the
Preferred, and shall give written notice to the Corporation at such office that
the holder elects to convert the same. The Corporation shall, as soon as
practicable thereafter, issue and deliver at such office to such holder of
Preferred, a certificate or certificates for the number of shares of Common to
which the holder 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. 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 to be converted, or in the case of automatic conversion
on the effective date of the offering as provided in Section 5(b), and the
person or persons entitled to receive the shares of Common issuable upon such
conversion shall be treated for all purposes as the record holder or holders of
such shares of Common on such date.
(d) Adjustments to Conversion Price for Diluting Issues.
(i) Special Definitions. For purposes of this Section 5(d),
the following definitions shall apply:
(1) 'Options' shall mean rights, options or warrants to
subscribe for, purchase or otherwise acquire either Common or Convertible
Securities.
(2) 'Convertible Securities' shall mean any evidences
of indebtedness, shares (other than Common) or other securities convertible into
or exchangeable for Common.
-6-
(3) 'Additional Shares of Common' shall mean all
shares of Common issued (or, pursuant to Section 5(d) (iii), deemed to be
issued) by the Corporation after the Original Issue Date, other than shares of
Common issued or issuable (or pursuant to Section 5(d) (iii), deemed to be
issued):
(A) upon conversion of shares of Series A
Preferred or Series B Preferred; and
(B) to officers, directors or employees of, or
contractors or consultants to, the Corporation pursuant to a stock grant, option
plan or purchase plan or other stock incentive program or agreement approved by
the Board of Directors not exceeding 535,000 shares of Common and including an
additional 2,125,000 shares which were held by officers, directors, employees
and consultants on October 21, 1988, which are repurchased from officers,
directors, employees or consultants upon termination of the employment,
consulting relationship or services to the Corporation of such person.
(ii) No Adjustment of Conversion Price. No adjustment in the
Conversion Price of a particular share of a series of Preferred shall be made in
respect of the issuance of Additional Shares of Common unless the consideration
per share 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 share of a series of Preferred.
(iii) Deemed Issue of Additional Shares of Common.
(1) Options and Convertible Securities. In the event, at
any time or from time to time after the Original Issue Date, the Corporation
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 issuable
upon the exercise of such Options or, in the case of Convertible Securities and
Options therefor, the conversion or exchange of such Convertible Securities,
shall be deemed to be Additional Shares of Common 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 Additional Shares of Common shall
not be deemed to have been issued as to a series of Preferred unless the
consideration per share (determined pursuant to Section 5(d)(v) hereof) of such
Additional Shares of Common
-7-
would be less than the applicable Conversion Price in effect on the date of, and
immediately prior to such issue, or such record date, as the case may be, and
provided further that in any such case in which Additional Shares of Common are
deemed to be issued:
(A) no further adjustment in the Conversion Price
shall be made upon the subsequent issue of Convertible Securities or shares of
Common upon the exercise of such Options or conversion or exchange of such
Convertible Securities;
(B) 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 issuable (including a decrease resulting from the expiration of
such Options or the rights of conversion or exchange of such Convertible
Securities), upon the exercise, conversion or exchange thereof, the Conversion
Price computed upon the original issue thereof (or upon the occurrence of a
record date with respect thereto), and any subsequent adjustments based thereon,
shall, upon any such increase or decrease becoming effective, be recomputed to
reflect such increase or decrease insofar as it affects such Options or the
rights of conversion or exchange under such Convertible Securities as if such
Options or Convertible Securities had never been issued;
(C) no readjustment pursuant to clause (B) above
shall have the effect of increasing the Conversion Price to an amount which
exceeds the lower of (i) the Conversion Price on the original adjustment date,
or (ii) the Conversion Price that would have resulted from any issuance of
Additional Shares of Common between the original adjustment date and such
readjustment date; and
(D) no readjustment of the Conversion Price shall
occur upon the expiration of any such Options or any rights of conversion or
exchange under such Convertible Securities.
(2) Stock Dividends. In the event the Corporation at any
time or from time to time after the Original Issue Date shall declare or pay any
dividend on the Common payable in Common, the Additional Shares of Common shall
be deemed to have been issued on the record date for the determination of
holders of any class of securities entitled to receive such dividend.
(iv) Adjustment of Conversion Price Upon Issuance of
Additional Shares of Common. In the event the Corporation shall issue Additional
Shares of Common (including Additional Shares of Common deemed to be issued
pursuant to Section
-8-
5(d) (iii)) without consideration or for a consideration per share less than the
Conversion Price of the Series A Preferred or Series B Preferred in effect on
the date of, and immediately prior to such issue, then, and in such event, such
Conversion Price for such series of Preferred shall be reduced, concurrently
with such issue, to a price (calculated to the nearest cent) determined by the
following formula:
CP(1) = CP(0) x CS + C/CP(0)/(CS + AS)
where:
(1) CP(0) = the Conversion Price in effect on the date of
and immediately prior to such issue;
(2) CP(1) = the Conversion Price as so adjusted;
(3) CS = the number of shares of Common outstanding
immediately prior to such issuance (including
shares of Common issuable upon conversion or
exercise of any Convertible Securities and
the Preferred, or upon exercise of Options);
(4) C = the aggregate consideration, if any,
received by the Corporation for the total
number of Additional Shares of Common so
issued, provided that if the Additional
Shares of Common are issued without
consideration then C shall be zero (0); and
(5) AS = the number of such Additional Shares of
Common so issued.
and provided further that, immediately after any Additional Shares of Common are
deemed issued pursuant to Section 5(d) (iii), such Additional Shares of Common
shall be deemed to be outstanding shares of Common for the purposes of the
foregoing formula.
(v) Determination of Consideration. For purposes of this
Section 5(d), the consideration received by the Corporation for the issue of any
Additional Shares of Common shall be computed as follows:
(1) Cash and Property: Such consideration shall:
-9-
(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, and provided further that
no deduction shall be made for any commissions or expenses paid or incurred by
the Corporation for any underwriting of the issue or otherwise in connection
therewith;
(B) insofar as it consists of property other than
cash, be computed at the fair value thereof at the time of such issue, as
determined in good faith by the Board of Directors; and
(C) in the event Additional Shares of Common are
issued together with other shares or securities or other assets of the
Corporation for consideration which covers both, be the proportion of such
consideration so received in respect of the Additional Shares of Common,
computed as provided in clauses (A) and (B) above, as determined in good faith
by the Board of Directors.
(2) Options and Convertible Securities. The
consideration per share received by the Corporation for Additional Shares of
Common deemed to have been issued pursuant to Section 5(d)(iii), relating to
Options and Convertible Securities, 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 (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.
(3) Stock Dividends. Any additional shares of Common
deemed to have been issued relating to stock dividends shall be deemed to have
been issued for no consideration.
-10-
(e) Adjustment for Subdivisions and Combinations. If the
Corporation at any time or from time to time effects a subdivision of the
outstanding Common, the Conversion Price of such series of Preferred then in
effect immediately before that subdivision shall be proportionately decreased,
and, conversely, if the Corporation at any time or from time to time combines
the outstanding shares of Common, the Conversion Price of such series of
Preferred then in effect immediately before the combination shall be
proportionately increased. Any adjustment of the Conversion Price of a series of
Preferred under this Section 5(e) shall become effective at the close of
business on the date the subdivision or combination becomes effective.
(f) Adjustment for Certain Dividends and Distributions. In the
event the Corporation at any time or from time to time makes, or fixes a record
date for the determination of holders of Common entitled to receive, a dividend
or other distribution payable in additional shares of Common, then and in each
such event the Conversion Price of each series of Preferred then in effect shall
be decreased as of the time of such issuance or, in the event such a record date
is fixed, as of the close of business on such record date, by multiplying the
Conversion Price then in effect by a fraction (1) the numerator of which is the
total number of shares of Common issued and outstanding immediately prior to the
time of such issuance on the close of business on such record date, and (2) the
denominator of which shall be the total number of shares of Common issued and
outstanding immediately prior to the time of such issuance on the close of
business on such record date plus the number of shares of Common issuable in
payment of such dividend or distribution; provided, however, that if such record
date is fixed and such dividend is not fully paid or if such distribution is not
fully made on the date fixed therefor, the Conversion Price shall be recomputed
accordingly as of the close of business on such record date and thereafter the
Conversion Price shall be adjusted pursuant to this Section 5(e) as of the time
of actual payment of such dividends or distributions.
(g) Adjustments for Other Dividends or Distributions. In the
event the Corporation at any time or from time to time makes or fixes a record
date for the determination of holders of shares of Common entitled to receive a
dividend or other distribution payable in securities or other property of the
Corporation (other than shares of Common and other than as otherwise adjusted in
this Section 5), then, and in each such event, provision shall be made so that
the holders of shares of Preferred shall receive upon conversion thereof, in
addition to the number of shares of Common receivable thereupon, the amount of
securities and other property of the Corporation which they would have received
had their shares of Preferred been converted into shares of Common on the date
of such event and had they thereafter, during the period from the date of such
event to and
-11-
including the date of conversion, retained such securities and other property
receivable by them as aforesaid during such period, subject to all other
adjustments called for during such period under this Section 5 with respect to
the rights of the holders of shares of Preferred.
(h) Adjustments for Reclassification. Exchange and
Substitution. If the shares of Common issuable upon conversion of the Preferred
shall be changed into the same or a different number of shares of any other
class or classes of stock, whether by capitalization, reclassification or
otherwise (other than a subdivision or combination of shares, stock dividend, or
reorganization, merger, consolidation or sale of assets, as provided for
herein), then and in any such event each holder of Series A Preferred thereafter
shall have the right to convert such stock into the kind and amount of stock and
other securities and property receivable upon such recapitalization,
reclassification or other change, by holders of the number of shares of Common
into which such shares of Preferred might have been converted immediately prior
to such recapitalization, reclassification or change, all subject to such
further adjustments applicable as specified herein.
(i) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to this Section 5,
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 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, 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 and the amount,
if any, of other property which at the time would be received upon the
conversion of Preferred.
(j) Notices of Record Date. In the event that the
Corporation shall propose at any time:
(i) to declare any dividend or distribution upon its
Common, whether in cash, property, stock or other securities, whether or not a
regular cash dividend and whether or not out of earnings or earned surplus;
(ii) to offer for subscription pro rata to the holders
of any class or series of its stock any additional shares of stock of any class
or series or other rights;
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(iii) to effect any reclassification or recapitalization
of its Common outstanding involving a change in the Common; or
(iv) to merge or consolidate with or into any other
Corporation, or sell, lease or convey all or substantially all its property or
business, or to liquidate, dissolve or wind up;
then, in connection with each such event, the Corporation shall send to the
holders of the Preferred:
(1) at least ten (10) days' prior written notice
of the date on which a record shall be taken for such dividend, distribution or
subscription rights (and specifying the date on which the holders of Common
shall be entitled thereto) or for determining rights to vote in respect of the
matters referred to in (iii) and (iv) above; and
(2) in the case of the matters referred to in
(iii) and (iv) above, at least ten (10) days' prior written notice of the date
when the same shall take place (and specifying the date on which the holders of
Common shall be entitled to exchange their Common for securities or other
property deliverable upon the occurrence of such event).
Each such written notice shall be given by certified or registered mail,
postage prepaid, addressed to the holders of Preferred at the address for each
such holder as shown on the books of this Corporation.
(k) No Impairment. The Corporation will not, by
amendment of its Articles of Incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Corporation by will at all times in good faith assist in the carrying out of all
the provisions of this Section 5 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 Preferred against impairment.
Section 6. Voting Rights. Except as otherwise expressly provided herein or
as required by law, the holder of each share of Common issued and outstanding
shall have one vote per share and the holder of each share of Preferred shall be
entitled to the number of votes equal to the number of shares of Common into
which such holder's shares of Preferred could be converted (as adjusted from
time to time pursuant to Section 5 hereof) at the record date for determination
of the stockholders entitled to vote on such matters, or, if no such record date
is established,
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at the date such vote is taken or any written consent of stockholders is
solicited, such votes to be counted together with all other shares of stock of
the Corporation having general voting power and not separately as a class.
Holders of shares of Common and Preferred shall be entitled to notice of any
stockholders' meeting in accordance with the Bylaws of the Corporation. No
fractional votes shall be permitted, and any fractional voting rights resulting
from the above formula (after aggregating all shares into which shares of
Preferred held by each holder could be converted) shall be rounded to the
nearest whole number.
Section 7. Covenants. In addition to any other rights provided by law, so
long as any Preferred shall be outstanding, the Corporation shall not, without
first obtaining the affirmative vote or written consent of the holders of not
less than a majority of such outstanding shares of the series of Preferred
affected (not less than seventy-five percent (75%) in the case of item (c)
below) voting as a class:
(a) Authorize or issue shares of any class or series having
any preference or priority as to dividends or assets superior to any such
preference or priority of such series of Preferred; or
(b) Increase the authorized number of shares of Preferred or
such series of Preferred.
(c) Materially and adversely alter or change the rights,
preferences, privileges or restrictions of such series of Preferred.
Section 8. Consent for Certain Repurchases of Common Stock Deemed to be
Distributions. Each holder of an outstanding share of Preferred shall be deemed
to have consented, for purposes of Sections 502, 503 and 506 of the General
Corporation Law, to distributions made by the Corporation in connection with the
repurchase of shares of Common issued to or held by employees, officers,
directors, consultants or other persons performing services for the Corporation
or any Subsidiary upon termination of their employment or services pursuant to
agreements providing for the right of said repurchase between the Corporation
and such persons.
Section 9. Residual Rights. All rights accruing to the outstanding shares
of the Corporation not expressly provided for to the contrary herein shall be
vested in the Common.
Section 10. Status of Converted or Redeemed Stock. In the event any shares
of Preferred shall be redeemed or converted, the shares so converted or redeemed
shall be cancelled and shall not have the status of authorized but unissued
shares of
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Preferred and shall not be issuable by the Corporation and the Articles of
InCorporation of this Corporation shall be amended to effect the corresponding
reduction in the Corporation's capital stock."
3. The foregoing amendment of Articles of InCorporation has been duly
approved by the Board of Directors.
4. The foregoing amendment of Articles of InCorporation has been duly
approved by the required vote of shareholders in accordance with section 902 and
903 of the Corporations Code. The total number of outstanding shares of the
Corporation is 2,200,000 shares of Common Stock and 527,724 shares of Series A
Preferred Stock. The number of shares voting in favor of the amendment equalled
or exceeded the vote required. The percentage vote required was more than 50% of
the classes voting together and more than 50% of the Series Preferred voting
separately as a class. No other class of shares is outstanding.
/s/ Peter Levy
------------------------
Peter Levy, President
/s/ Steven Gross
------------------------
Steven Gross, Secretary
The undersigned declares under penalty of perjury that the matters set
forth in the foregoing certificate are true of their own knowledge.
Executed at San Jose, California on April 9, 1990.
/s/ Peter Levy
------------------------
Peter Levy, President
/s/ Steven Gross
------------------------
Steven Gross, Secretary
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