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Exhibit 3(i).1
AMENDED AND RESTATED ARTICLES OF INCORPORATION
of
LOGICVISION, INC.
a California Corporation
The undersigned, Vinod K. Agarwal, hereby certifies that:
1. He is the duly acting President and Secretary of LogicVision, Inc., a
California corporation (the "Corporation").
2. The Corporation's Articles of Incorporation are hereby amended and restated
in their entirety to read as follows:
I.
"The name of the Corporation is LogicVision, Inc.
II.
The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of California other than the banking business, the trust company business,
or the practice of a profession permitted to be incorporated by the California
Corporations Code.
III.
A. The Corporation is authorized to issue two classes of shares,
designated "Common Stock" and "Preferred Stock". The total number of shares of
Common Stock that the Corporation is authorized to issue is Fifty Million
(50,000,000), and each such share shall have no par value. The total number of
shares of Preferred Stock that the Corporation is authorized to issue is
Seventeen Million One Hundred Thirty-Seven Thousand Nine Hundred Seventy-Six
(17,137,976), and each such share shall have no par value. The Preferred Stock
may be issued from time to time in one or more series. The first series shall be
designated "Series A Preferred Stock" and shall consist of 1,000,000 shares (the
"Series A Stock"). The second series shall be designated "Series B Preferred
Stock" and shall consist of 844,754 shares (the "Series B Stock"). The third
series shall be designated "Series C-1 Convertible Preferred Stock" and shall
consist of 1,000,000 shares (the "Series C-1 Stock"). The fourth series shall be
designated "Series C-2 Convertible Preferred Stock" and shall consist of 666,667
shares (the "Series C-2 Stock"). The fifth series shall be designated "Series C-
3 Convertible Preferred Stock" and shall consist of 333,000 shares (the "Series
C-3 Stock") (collectively, the Series C-1 Stock, Series C-2 Stock and Series C-3
Stock are referred to as the "Series C Stock"). The sixth series shall be
designated "Series D Convertible Preferred Stock" and shall consist of 787,800
shares (the "Series D Stock"). The seventh series shall be designated "Series E
Convertible Preferred Stock" and shall
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consist of 793,332 shares (the "Series E Stock"). The eighth series shall be
designated "Series F Convertible Preferred Stock" and shall consist of 4,820,717
shares (the "Series F Stock"). The ninth series shall be designated "Series G
Convertible Preferred Stock" and shall consist of 1,211,765 shares (the "Series
G Stock"). The tenth series shall be designated "Series H-1 Convertible
Preferred Stock" and shall consist of 988,235 shares (the "Series H-1 Stock").
The eleventh series shall be designated "Series H-2 Convertible Preferred Stock"
and shall consist of 691,706 shares (the "Series H-2 Stock"). The Series H-1
Stock and Series H-2 Stock is collectively referred to herein as the "Series H
Stock." The twelfth series shall be designated "Series I Convertible Preferred
Stock" and shall consist of 4,000,000 shares (the "Series I Stock").
B. A statement of the rights, preferences, privileges and
restrictions granted to or imposed upon the Series A, B, C, D, E, F, G, H and I
Preferred Stock and the holders thereof is as follows:
1. Seniority. For purposes of these Articles of Incorporation,
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the series of preferred stock shall rank in seniority, from most senior to most
junior, as follows: Series I Stock, Series H Stock, Series G Stock, Series F
Stock, Series E Stock, Series D Stock, Series C Stock, Series B Stock and Series
A Stock.
2. Dividends. The holders of shares of Series A, B, C, D, E, F,
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G, H and I Preferred Stock shall be entitled to receive cash dividends, if, when
and as declared by the Board of Directors. Any dividends that may be declared
with respect to shares of Series A, B, C, D, E, F, G, H and I Preferred Stock
but are not so declared shall be non-cumulative. The holders of shares of Series
A, B, C, D, E, F, G, H and I Preferred Stock shall be entitled to no dividends
with respect to such Preferred Stock other than as stated in this Paragraph 2.
Declared but unpaid dividends shall be accrued but shall not bear interest. No
dividend or distribution whatsoever shall be declared or paid at any time on the
Common Stock or any junior series of Preferred Stock unless a dividend shall be
simultaneously paid on each outstanding share of each series of Preferred Stock
senior thereto in an amount which is equal to or greater than the dividend or
distribution proposed to be declared or paid on each share of Common Stock or
junior series of Preferred Stock (on an as converted to Common Stock basis)
multiplied by the number of shares of Common Stock into which each share of such
series of Preferred Stock is then convertible under Paragraph 5 hereof. For
purposes of the preceding sentence, any dividend or distribution declared or
paid on Series A or Series B Preferred Stock or any securities issued directly
or indirectly with respect to or in exchange for Common Stock shall be deemed to
be declared or paid on the Common Stock. No dividends shall be paid that would
reduce the Corporation's shareholders' equity to less than the aggregate
liquidation preference of all shares of Preferred Stock then outstanding.
After payment of the preferred dividends to the other series of
Preferred Stock, the holders of outstanding Series A and B Stock shall be
entitled to receive, in any fiscal year, when and as declared by the Board of
Directors, out of any assets at the time legally available therefor, dividends
at the rate of $.006 per share of Series A Stock and $.06 per share of Series B
Stock per annum, before any dividend is paid on Common Stock. Such dividend may
be payable quarterly or otherwise as the Board of Directors may from time to
time determine. Dividends may be declared and paid upon Common Stock in any
fiscal year of the Corporation only if
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dividends shall have been paid to or declared and set apart upon all shares of
Series A and B Stock at such annual rate for each quarter of such fiscal year of
the Corporation including the quarter in which such dividends upon Common Stock
are declared.
3. Preference on Liquidation, Etc.
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(a) In the event of any voluntary or involuntary liquidation,
distribution of assets (other than the payment of dividends), dissolution or
winding up of the Corporation (a "Liquidation"), before any payment or
distribution of the assets of the Corporation (whether capital or surplus) shall
be made to or set apart for the holders of shares of Common Stock or the holders
of shares of any junior series of preferred stock, the holders of shares of
Series I Stock shall be entitled to receive payment of an amount per share equal
to Four Dollars and Twenty-Five Cents ($4.25) (such per share amount to be
appropriately adjusted for any stock dividend, stock split, recapitalization or
combination of shares (hereinafter an "Adjustment Event")) for each share of
Series I Stock held by them plus an amount equal to any declared but unpaid
dividends thereon to the date of final distribution to such holders.
If, upon any liquidation, distribution of assets, dissolution or
winding up of the Corporation, the assets of the Corporation, or proceeds
thereof, distributable among the holders of shares of Series I Stock shall be
insufficient to pay in full the preferential amount on the shares of Series I
Stock, then such assets, or the proceeds thereof, shall be distributed among
holders of the Series I Stock ratably in accordance with the respective amounts
which would be payable on such shares if all amounts payable thereon were paid
in full.
(b) In the event of any Liquidation, after payment in full of
the liquidation preference on the Series I Stock as provided in paragraph (a)
above but before any payment or distribution of the assets of the Corporation
(whether capital or surplus) shall be made to or set apart for the holders of
shares of Common Stock or the holders of shares of any junior series of
preferred stock, the holders of shares of Series H-1 Stock and Series H-2 Stock,
as applicable, shall be entitled to receive payment of an amount per share equal
to Four Dollars and Twenty-Five Cents ($4.25) or Two Dollars and Forty-Three
Cents ($2.43), respectively (such per share amount to be appropriately adjusted
for any Adjustment Event) for each share of Series H-1 Stock or Series H-2 Stock
held by them plus an amount equal to any declared but unpaid dividends thereon
to the date of final distribution to such holders.
If, upon any liquidation, distribution of assets, dissolution or
winding up of the Corporation, the assets of the Corporation, or proceeds
thereof, distributable among the holders of shares of Series H Stock shall be
insufficient to pay in full the preferential amount on the shares of Series H
Stock, then such assets, or the proceeds thereof, shall be distributed among
holders of the Series H Stock ratably in accordance with the respective amounts
which would be payable on such shares if all amounts payable thereon were paid
in full.
(c) In the event of any Liquidation, after payment in full of
the liquidation preference on the Series H Stock as provided in paragraph (b)
above but before any payment or distribution of the assets of the Corporation
(whether capital or surplus) shall be made to or set apart for the holders of
shares of Common Stock or the holders of shares of any junior series of
preferred stock, the holders of shares of Series G Stock shall be entitled to
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receive payment of an amount per share equal to Four Dollars and Twenty-Five
Cents ($4.25) (such per share amount to be appropriately adjusted for any
Adjustment Event) for each share of Series G Stock held by them plus an amount
equal to any declared but unpaid dividends thereon to the date of final
distribution to such holders.
If, upon any liquidation, distribution of assets, dissolution or
winding up of the Corporation, the assets of the Corporation, or proceeds
thereof, distributable among the holders of shares of Series G Stock shall be
insufficient to pay in full the preferential amount on the shares of Series G
Stock, then such assets, or the proceeds thereof, shall be distributed among
holders of the Series G Stock ratably in accordance with the respective amounts
which would be payable on such shares if all amounts payable thereon were paid
in full.
(d) In the event of any Liquidation, after payment in full of
the liquidation preference on the Series G Stock as provided in paragraph (c)
above but before any payment or distribution of the assets of the Corporation
(whether capital or surplus) shall be made to or set apart for the holders of
shares of Common Stock or the holders of shares of any junior series of
preferred stock, the holders of shares of Series F Stock shall be entitled to
receive payment of an amount per share equal to Four Dollars and Twenty-Five
Cents ($4.25) (such per share amount to be appropriately adjusted for any
Adjustment Event) for each share of Series F Stock held by them plus an amount
equal to any declared but unpaid dividends thereon to the date of final
distribution to such holders.
If, upon any liquidation, distribution of assets, dissolution or
winding up of the Corporation, the assets of the Corporation, or proceeds
thereof, distributable among the holders of shares of Series F Stock shall be
insufficient to pay in full the preferential amount on the shares of Series F
Stock, then such assets, or the proceeds thereof, shall be distributed among
holders of the Series F Stock ratably in accordance with the respective amounts
which would be payable on such shares if all amounts payable thereon were paid
in full.
(e) In the event of any Liquidation, after payment in full of
the liquidation preference on the Series F Stock as provided in paragraph (d)
above but before any payment or distribution of the assets of the Corporation
(whether capital or surplus) shall be made to or set apart for the holders of
shares of Common Stock or the holders of shares of any junior series of
preferred stock, the holders of shares of Series E Stock shall be entitled to
receive payment of an amount per share equal to Three Dollars ($3.00) (such per
share amount to be appropriately adjusted for any Adjustment Event) for each
share of Series E Stock held by them plus an amount equal to any declared but
unpaid dividends thereon to the date of final distribution to such holders.
If, upon any liquidation, distribution of assets, dissolution or
winding up of the Corporation, the assets of the Corporation, or proceeds
thereof, distributable among the holders of shares of Series E Stock shall be
insufficient to pay in full the preferential amount on the shares of Series E
Stock, then such assets, or the proceeds thereof, shall be distributed among
holders of the Series E Stock ratably in accordance with the respective amounts
which would be payable on such shares if all amounts payable thereon were paid
in full.
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(f) In the event of any Liquidation, after payment in full of
the liquidation preference on the Series E Stock as provided in paragraph (e)
above but before any payment or distribution of the assets of the Corporation
(whether capital or surplus) shall be made to or set apart for the holders of
shares of Common Stock or the holders of shares of any junior series of
preferred stock, the holders of shares of Series D Stock shall be entitled to
receive payment of an amount per share equal to Two Dollars and Fifty Cents
($2.50) (such per share amount to be appropriately adjusted for any Adjustment
Event) for each share of Series D Stock held by them plus an amount equal to any
declared but unpaid dividends thereon to the date of final distribution to such
holders.
If, upon any liquidation, distribution of assets, dissolution or
winding up of the Corporation, the assets of the Corporation, or proceeds
thereof, distributable among the holders of shares of Series D Stock shall be
insufficient to pay in full the preferential amount on the shares of Series D
Stock, then such assets, or the proceeds thereof, shall be distributed among
holders of the Series D Stock ratably in accordance with the respective amounts
which would be payable on such shares if all amounts payable thereon were paid
in full.
(g) In the event of any Liquidation, after payment in full of
the liquidation preference on the Series D Stock as provided in paragraph (f)
above but before any payment or distribution of the assets of the Corporation
(whether capital or surplus) shall be made to or set apart for the holders of
shares of Common Stock or the holders of shares of any junior series of
preferred stock, the holders of shares of Series C Stock shall be entitled to
receive payment of an amount per share equal to One Dollar ($1.00) in the case
of Series C-1 Stock; One Dollar and Fifty Cents ($1.50) in the case of Series C-
2 Stock; and Three Dollars and Three Tenths of One Cent ($3.003) in the case of
Series C-3 Stock (such per share amounts to be appropriately adjusted for any
Adjustment Event) for each share of Series C-1 Stock, Series C-2 Stock or Series
C-3 Stock, as applicable, held by them plus an amount equal to any declared but
unpaid dividends thereon to the date of final distribution to such holders.
If, upon any liquidation, distribution of assets, dissolution or
winding up of the Corporation, the assets of the Corporation, or proceeds
thereof, distributable among the holders of shares of Series C Stock shall be
insufficient to pay in full the preferential amount on the shares of Series C
Stock, then such assets, or the proceeds thereof, shall be distributed among
holders of the Series C Stock ratably in accordance with the respective amounts
which would be payable on such shares if all amounts payable thereon were paid
in full.
(h) In the event of any Liquidation, after payment in full of
the liquidation preference on the Series C Stock as provided in paragraph (g)
above but before any payment or distribution of the assets of the Corporation
(whether capital or surplus) shall be made to or set apart for the holders of
shares of Common Stock, the holders of shares of Series A and B Stock shall be
entitled to receive payment of an amount per share equal to Ten Cents ($0.10) in
the case of Series A Stock and One Dollar ($1.00) in the case of Series B Stock
(such per share amounts to be appropriately adjusted for any Adjustment Event)
for each share of Series A or B Stock as applicable held by them plus an amount
equal to any declared but unpaid dividends thereon to the date of final
distribution to such holders.
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If, upon any liquidation, distribution of assets, dissolution or
winding up of the Corporation, the assets of the Corporation, or proceeds
thereof, distributable among the holders of shares of Series A and B Stock shall
be insufficient to pay in full the preferential amount on the shares of Series A
and B Stock, then such assets, or the proceeds thereof, shall be distributed
among holders of the Series A and B Stock ratably in accordance with the
respective amounts which would be payable on such shares if all amounts payable
thereon were paid in full.
(i) After the payment or setting apart of payment to holders
of Series A, B, C, D, E, F, G, H and I Preferred Stock of the respective
preferential amounts so payable to them, the holders of each share of Common
Stock shall thereafter receive pro rata the remaining assets of the Corporation,
or the proceeds thereof.
(j) A merger of this Corporation with or into any other
corporation or corporations (or other Person) (other than a transaction the sole
purpose of which is a change of domicile), a statutory share exchange with any
other corporation, or a sale, conveyance or disposition of all or substantially
all of the assets of this Corporation, an exclusive license of all or
substantially all of the Corporation's intellectual property used in generating
all or substantially all the Corporation's revenues, or reorganization of the
Corporation or the effectuation by this Corporation of a transaction or series
of related transactions in which more than 50% of the voting power of this
Corporation is disposed of (each, a "Sale of the Company"), shall not be deemed
to be a liquidation, distribution of assets, dissolution or winding up of the
Corporation within the meaning of Paragraphs 3(a)-(i), but shall instead be
treated as provided in this Paragraph (3)(j).
(i) In the event of any Sale of the Company, before any
payment or distribution of the consideration received shall be made to or set
apart for the holders of shares of Common Stock or the holders of shares of any
junior series of preferred stock, the holders of shares of Series I Preferred
Stock shall be entitled to receive payment of an amount per share equal to Four
Dollars and Twenty-Five Cents ($4.25) (such per share amount to be appropriately
adjusted for any Adjustment Event) for each share of Series I held by them plus
an amount equal to any declared but unpaid dividends thereon to the date of
final distribution to such holders.
If, upon any Sale of the Company, the consideration received shall be
insufficient to pay in full the preferential amount on the shares of Series I
Stock, then such consideration shall be distributed among holders of the Series
I Stock ratably in accordance with the respective amounts which would be payable
on such shares if all amounts payable thereon were paid in full.
(ii) In the event of any Sale of the Company, after
payment of the full preferential amount payable to the Series I Stock set forth
in paragraph (i) above but before any payment or distribution of the
consideration received shall be made to or set apart for the holders of shares
of Common Stock or the holders of shares of any junior series of preferred
stock, the holders of shares of Series H-1 Preferred Stock and Series H-2
Preferred Stock, as applicable, shall be entitled to receive payment of an
amount per share equal to Four Dollars and Twenty-Five Cents ($4.25) and Two
Dollars and Forty-Three Cents ($2.43), respectively, (such per share amount to
be appropriately adjusted for any Adjustment Event) for each share of Series H-1
Preferred Stock and Series H-2 Preferred Stock held by them plus an
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amount equal to any declared but unpaid dividends thereon to the date of final
distribution to such holders.
If, upon any Sale of the Company, the consideration received shall be
insufficient to pay in full the preferential amount on the shares of Series H
Stock, then such consideration shall be distributed among holders of the Series
H Stock ratably in accordance with the respective amounts which would be payable
on such shares if all amounts payable thereon were paid in full.
(iii) In the event of any Sale of the Company, after
payment of the full preferential amount payable to the Series H Stock set forth
in paragraph (ii) above but before any payment or distribution of the
consideration received shall be made to or set apart for the holders of shares
of Common Stock or the holders of shares of any junior series of preferred
stock, the holders of shares of Series G Preferred Stock shall be entitled to
receive payment of an amount per share equal to Four Dollars and Twenty-Five
Cents ($4.25) (such per share amount to be appropriately adjusted for any
Adjustment Event) for each share of Series G Preferred Stock held by them plus
an amount equal to any declared but unpaid dividends thereon to the date of
final distribution to such holders.
If, upon any Sale of the Company, the consideration received shall be
insufficient to pay in full the preferential amount on the shares of Series G
Stock, then such consideration shall be distributed among holders of the Series
G Stock ratably in accordance with the respective amounts which would be payable
on such shares if all amounts payable thereon were paid in full.
(iv) In the event of any Sale of the Company, after
payment of the full preferential amount payable to the Series G Stock set forth
in paragraph (iii) above but before any payment or distribution of the
consideration received shall be made to or set apart for the holders of shares
of Common Stock or the holders of shares of any junior series of preferred
stock, the holders of shares of Series F Preferred Stock shall be entitled to
receive payment of an amount per share equal to Four Dollars and Twenty-Five
Cents ($4.25) (such per share amount to be appropriately adjusted for any
Adjustment Event) for each share of Series F Preferred Stock held by them plus
an amount equal to any declared but unpaid dividends thereon to the date of
final distribution to such holders.
If, upon any Sale of the Company, the consideration received shall be
insufficient to pay in full the preferential amount on the shares of Series F
Stock, then such consideration shall be distributed among holders of the Series
F Stock ratably in accordance with the respective amounts which would be payable
on such shares if all amounts payable thereon were paid in full.
(v) In the event of any Sale of the Company, after
payment of the full preferential amount payable to the Series F Stock set forth
in paragraph (iv) above but before any payment or distribution of the
consideration received shall be made to or set apart for the holders of shares
of Common Stock or the holders of shares of any junior series of preferred
stock, the holders of shares of Series E Preferred Stock shall be entitled to
receive payment of an amount per share equal to Three Dollars ($3.00) (such per
share amount to be appropriately adjusted for any Adjustment Event) for each
share of Series E Preferred Stock held
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by them plus an amount equal to any declared but unpaid dividends thereon to the
date of final distribution to such holders.
If, upon any Sale of the Company, the consideration received shall be
insufficient to pay in full the preferential amount on the shares of Series E
Stock, then such consideration shall be distributed among holders of the Series
E Stock ratably in accordance with the respective amounts which would be payable
on such shares if all amounts payable thereon were paid in full.
(vi) In the event of any Sale of the Company, after
payment of the full preferential amount payable to the Series E Stock set forth
in paragraph (v) above but before any payment or distribution of the
consideration received shall be made to or set apart for the holders of shares
of Common Stock or the holders of shares of any junior series of preferred
stock, the holders of shares of Series D Preferred Stock shall be entitled to
receive payment of an amount per share equal to Two Dollars and Fifty Cents
($2.50) (such per share amount to be appropriately adjusted for any Adjustment
Event) for each share of Series D Preferred Stock held by them plus an amount
equal to any declared but unpaid dividends thereon to the date of final
distribution to such holders.
If, upon any Sale of the Company, the consideration received shall be
insufficient to pay in full the preferential amount on the shares of Series D
Stock, then such consideration shall be distributed among holders of the Series
D Stock ratably in accordance with the respective amounts which would be payable
on such shares if all amounts payable thereon were paid in full.
(vii) In the event of any Sale of the Company, after
payment of the full preferential amount payable to the Series D Stock set forth
in paragraph (vi) above but before any payment or distribution of the
consideration received shall be made to or set apart for the holders of shares
of Common Stock or the holders of shares of any junior series of preferred
stock, the holders of shares of Series C Preferred Stock shall be entitled to
receive payment of an amount per share equal to One Dollar ($1.00) in the case
of Series C-1 Stock; One Dollar and Fifty Cents ($1.50) in the case of Series C-
2 Stock; and Three Dollars and Three Tenths of One Cent ($3.003) in the case of
Series C-3 Stock (such per share amounts to be appropriately adjusted for any
Adjustment Event) for each share of Series C-1 Stock, Series C-2 Stock, or
Series C-3 Stock , as applicable, held by them plus an amount equal to any
declared but unpaid dividends thereon to the date of final distribution to such
holders.
If, upon any Sale of the Company, the consideration received shall be
insufficient to pay in full the preferential amount on the shares of Series C
Stock, then such consideration shall be distributed among holders of the Series
C Stock ratably in accordance with the respective amounts which would be payable
on such shares if all amounts payable thereon were paid in full.
(viii) In the event of any Sale of the Company, after
payment of the full preferential amount payable to the Series C Stock set forth
in paragraph (vii) above but before any payment or distribution of the
consideration received shall be made to or set apart for the holders of shares
of Common Stock, the holders of shares of Series A and B
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Preferred Stock shall be entitled to receive payment of an amount per share
equal to Ten Cents ($0.10) in the case of Series A Stock and One Dollar ($1.00)
in the case of Series B Stock (such per share amounts to be appropriately
adjusted for any Adjustment Event) for each share of Series A or B Preferred
Stock as applicable held by them plus an amount equal to any declared but unpaid
dividends thereon to the date of final distribution to such holders.
If, upon any Sale of the Company, the consideration received shall be
insufficient to pay in full the preferential amount on the shares of Series A
and B Stock, then such consideration shall be distributed among holders of the
Series A and B Stock ratably in accordance with the respective amounts which
would be payable on such shares if all amounts payable thereon were paid in
full.
(ix) After the payment or setting apart of payment to
holders of Series A, B, C, D, E, F, G, H and I Preferred Stock of the respective
preferential amounts so payable to them upon a Sale of the Company, the holders
of each share of Common Stock shall thereafter receive pro rata the remaining
assets of the Corporation.
(k) In the event of any payments or distributions pursuant to
subparagraph 3(j), if the consideration received by the Corporation or its
shareholders is other than cash, its value will be deemed its fair market value.
Any securities shall be valued as follows:
(i) Securities not subject to investment letter or
other similar restrictions on free marketability covered by (ii) below:
(A) If traded on a securities exchange or through
the Nasdaq National Market, the value shall be deemed to be the average of the
closing prices of the securities on such exchange or system over the twenty (20)
day period ending three (3) days prior to the closing;
(B) If actively traded over-the-counter, the value
shall be deemed to be the average of the closing bid or sale prices (whichever
is applicable) over the twenty (20) day period ending three (3) days prior to
the closing; and
(C) If there is no active public market, the value
shall be the fair market value thereof, as mutually determined by the
Corporation and the holders of at least a majority of the voting power of all
then outstanding shares of such series of Preferred Stock to receive such
securities.
(ii) The method of valuation of securities subject to
investment letter or other restrictions on free marketability (other than
restrictions arising solely by virtue of a shareholder's status as an affiliate
or former affiliate) shall be to make an appropriate discount from the market
value determined as above in subparagraphs (k)(i)(A), (B) or (C) to reflect the
approximate fair market value thereof, as mutually determined by the Corporation
and the holders of at least a majority of the voting power of all then
outstanding shares of such series of Preferred Stock to receive such securities.
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(l) In the event the requirements of subparagraphs 3(j), 3(k) and
3(m) are not complied with, the Corporation shall forthwith either:
(i) cause such closing to be postponed until such time as the
requirements of this Section 3 have been complied with; or
(ii) cancel such transaction, in which event the rights,
preferences and privileges of the holders of the Preferred Stock shall revert to
and be the same as such rights, preferences and privileges existing immediately
prior to the date of the first notice referred to in subparagraph 3(m) hereof.
(m) The Corporation shall give each holder of record of Preferred
Stock written notice of an impending transaction governed by paragraph 3(h) not
later than twenty (20) days prior to the shareholders' meeting called to approve
such transaction, or twenty (20) days prior to the closing of such transaction,
whichever is earlier, and shall also notify such holders in writing of the final
approval of such transaction. The first of such notices shall describe the
material terms and conditions of the impending transaction and the provisions of
this Section 3, and the Corporation shall thereafter give such holders prompt
notice of any material changes. The transaction shall in no event take place
sooner than twenty (20) days after the Corporation has given the first notice
provided for herein or sooner than ten (10) days after the Corporation has given
notice of any material changes provided for herein; provided, however, that
following notice to all holders of Preferred Stock that are entitled to notice,
such notice periods may be shortened upon the written consent of the holders of
Preferred Stock that are entitled to such notice rights or similar notice rights
and that represent at least a majority of the voting power of all then
outstanding shares of such Preferred Stock.
4. Voting.
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General. In addition to the special voting rights provided below
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and by applicable law, the holders of Series A, B, C, D, E, F, G, H and I Stock
shall be entitled to vote upon all matters upon which holders of the Common
Stock have the right to vote, and each holder of Series A, B, C, D, E, F, G, H
and I Stock shall be entitled to the number of votes equal to the largest number
of full shares of Common Stock into which such holder's shares of Series A, B,
C, D, E, F, G, H and I Stock could be converted pursuant to the applicable
provisions of Paragraph 5 hereof, at the record date for the determination of
the shareholders entitled to vote on such matter, or, if no such record date is
established, at the date such vote is taken or any written consent of
shareholders is solicited, such votes to be counted together with all other
shares of capital stock having general voting powers and not separately as a
class. In all cases in which holders of Common Stock have cumulative voting
rights, holders of Series A, B, C, D, E, F, G, H and I Stock shall have the same
cumulative voting rights. In all cases where the holders of shares of any class
or series of preferred stock have the right to vote separately as a class, such
holders shall be entitled to the number of votes equal to the largest number of
full shares of Common Stock into which such holder's shares of Preferred Stock
could be converted pursuant to the applicable provisions of Paragraph 5 hereof,
at the record date for the determination of the shareholders entitled to vote on
such matter, or, if no such record date is established, at the date such vote is
taken or any written consent of shareholders is solicited.
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(a) Special Class Vote. Without the consent of the holders of
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at least two-thirds (2/3) of the aggregate number of shares of the Series A, B,
C, D, E, F, G, H and I Stock then outstanding, voting together as a single class
for this purpose, given in writing or by vote at a meeting of shareholders
called for such purpose, the Corporation will not (i) merge with or into any
other corporation, or other Person (other than for the sole purpose of changing
the Corporation's domicile), or sell, lease or otherwise dispose of all or
substantially all of its properties or assets, or acquire, directly or
indirectly through a subsidiary, all or substantially all of the stock or assets
of another entity, or effect a statutory share exchange with any other
corporation, or engage in a transaction or a series of transactions in which
more than 50% of the voting power of the Corporation is issued or transferred,
or permit any subsidiary to take any of the foregoing actions; (ii) purchase,
lease or otherwise acquire the assets of any other person in any transaction
outside the ordinary course of business; (iii) voluntarily dissolve, liquidate
or wind up the affairs of the Corporation or any of its subsidiaries or carry
out any partial liquidation or distribution of the assets of the Corporation or
any such subsidiary or any transaction in the nature of a partial liquidation or
distribution; (iv) effect any amendment or change of the rights, preferences,
privileges or powers of, or the restrictions provided for the benefit of, the
Preferred Stock; (v) effect any amendment of the Corporation's Articles of
Incorporation that adversely affect the rights of the Preferred Stock; (vi)
exclusively license substantially all of the Corporation's intellectual property
used in generating all or substantially all revenue of the Corporation; or (vii)
declare or pay a dividend on the Common Stock (other than a dividend payable
solely in shares of Common Stock).
(b) Board of Directors. The holders of the Series H Stock,
------------------
voting separately as a single class for this purpose, shall be entitled to elect
one member of the Corporation's Board of Directors at or pursuant to each
meeting or consent of the Corporation's shareholders for the election of
directors, and to remove from office such director and to fill any vacancy
caused by the resignation, death or removal of such director. The holders of the
Series F Stock, voting separately as a single class for this purpose, shall be
entitled to elect one member of the Corporation's Board of Directors at or
pursuant to each meeting or consent of the Corporation's shareholders for the
election of directors, and to remove from office such director and to fill any
vacancy caused by the resignation, death or removal of such director. The
holders of the Series C, D and E Stock, voting together as a single class for
this purpose, shall be entitled to elect one member of the Corporation's Board
of Directors at or pursuant to each meeting or consent of the Corporation's
shareholders for the election of directors, and to remove from office such
director and to fill any vacancy caused by the resignation, death or removal of
such director. The holders of the Series A and B Stock and the Common Stock,
voting together as a single class for this purpose, shall be entitled to elect
one member of the Corporation's Board of Directors at or pursuant to each
meeting or consent of the Corporation's shareholders for the election of
directors, and to remove from office such director and to fill any vacancy
caused by the resignation, death or removal of such director. The holders of the
Common Stock, voting separately as a single class for this purpose, shall be
entitled to elect one member of the Corporation's Board of Directors at or
pursuant to each meeting or consent of the Corporation's shareholders for the
election of directors, and to remove from office such director and to fill any
vacancy caused by the resignation, death or removal of such director. The
remaining directors authorized for election at such election of directors shall
be elected by the holders of the Series A, B, C, D, E, F, G, H and I Stock and
Common Stock, voting together as a single class in accordance with paragraph 4
hereof.
11
<PAGE>
5. Conversion Rights. Shares of Preferred Stock shall be convertible
-----------------
into shares of Common Stock as follows:
(a) Optional Conversion. Subject to and upon compliance with the
-------------------
provisions of this Paragraph 5, any holder of Series A, B, C-1, C-2, C-3, D, E,
F, G, H and I Stock shall have the right, at such holder's option, at any time
or from time to time, to convert any of such shares of Series A, B, C-1, C-2, C-
3, D, E, F, G, H and I Stock into fully paid and nonassessable shares of Common
Stock at the Series A, B, C-1, C-2, C-3, D, E, F, G, H and I Conversion Prices
(as hereinafter defined), respectively, in effect on the Series A, B, C-1, C-2,
C-3, D, E, F, G, H and I Conversion Dates (as hereinafter defined),
respectively, upon the terms hereinafter set forth.
(b) Automatic Conversion of Series A, B, C, D, E, F, H and I
--------------------------------------------------------
Preferred Stock. Each outstanding share of Series A, B, C, D, E, F, H and I
---------------
Stock shall automatically be converted, without any further act of the
Corporation or its shareholders, into fully paid and nonassessable shares of
Common Stock pursuant to the formulae set forth in Subparagraph 5(d) hereof (i)
upon the closing of a firm commitment underwriting by an investment banking firm
of nationally recognized standing pursuant to an effective registration
statement under the Securities Act of 1933, as amended, covering the offering
and sale of Common Stock in which the aggregate gross offering proceeds equal or
exceed Fifteen Million Dollars ($15,000,000), and the public offering price per
share of which equals or exceeds $8.50 (such per share amount to be
appropriately adjusted for any Adjustment Event) (a "Public Offering") and (ii)
upon the affirmative vote of or written notice from at least sixty-six and two-
thirds percent (66-2/3%) of the outstanding Series A, B, C-1, C-2, C-3, D, E, F,
H-1, H-2 and I Preferred Stock, voting together as a single class.
(c) Automatic Conversion of Series G Preferred Stock. Each
------------------------------------------------
outstanding share of Series G Stock shall automatically be converted, without
any further act of the Corporation or its shareholders, into fully paid and
nonassessable shares of Common Stock pursuant to the formulae set forth in
Subparagraph 5(d) hereof (i) upon the closing of a firm commitment underwriting
by an investment banking firm of nationally recognized standing pursuant to an
effective registration statement under the Securities Act of 1933, as amended,
covering the offering and sale of Common Stock in which the aggregate gross
offering proceeds equal or exceed Fifteen Million Dollars ($15,000,000), and the
public offering price per share of which equals or exceeds $8.50 (such per share
amount to be appropriately adjusted for any Adjustment Event) (a "Public
Offering") and (ii) upon the affirmative vote of or written notice of at least
sixty-six and two thirds percent (66 2/3%) of the outstanding Series G Preferred
Stock, voting as a separate class.
(d) Series A, B, C-1, C-2, C-3, D, E, F, G, H and I Conversion
---------------------------------------------------------
Prices.
------
(i) Each share of Series I Stock shall be converted into the
number of shares of Common Stock as is determined by multiplying each such share
by a fraction, the numerator of which is Four Dollars and Twenty-Five Cents
($4.25) and the denominator of which is the Series I Conversion Price in effect
on the Series I Conversion Date as determined by reference to Subparagraph
5(d)(ii) below. Each share of Series H-1 Stock shall
12
<PAGE>
be converted into the number of shares of Common Stock as is determined by
multiplying each such share by a fraction, the numerator of which is Three
Dollars and Fifty Cents ($3.50) and the denominator of which is the Series H-1
Conversion Price in effect on the Series H-1 Conversion Date as determined by
reference to subparagraph 5(d)(ii) below. Each share of Series H-2 Stock shall
be converted into the number of shares of Common Stock as is determined by
multiplying each such share by a fraction, the numerator of which is Two Dollars
and Forty-Three Cents ($2.43) and the denominator of which is the Series H-2
Conversion Price in effect on the Series H-2 Conversion Date as determined by
reference to subparagraph 5(d)(ii) below. Each share of Series G Stock shall be
converted into the number of shares of Common Stock as is determined by
multiplying each such share by a fraction, the numerator of which is Three
Dollars and Fifty Cents ($3.50) and the denominator of which is the Series G
Conversion Price in effect on the Series G Conversion Date as determined by
reference to Subparagraph 5(d)(ii) below. Each share of Series F Stock shall be
converted into the number of shares of Common Stock as is determined by
multiplying each such share by a fraction, the numerator of which is Four
Dollars and Twenty-Five Cents ($4.25) and the denominator of which is the Series
F Conversion Price in effect on the Series F Conversion Date as determined by
reference to Subparagraph 5(d)(ii) below. Each share of Series E Stock shall be
converted into the number of shares of Common Stock as is determined by
multiplying each such share by a fraction, the numerator of which is Three
Dollars ($3.00) and the denominator of which is the Series E Conversion Price in
effect on the Series E Conversion Date as determined by reference to
Subparagraph 5(d)(ii) below. Each share of Series D Stock shall be converted
into the number of shares of Common Stock as is determined by multiplying each
such share by a fraction, the numerator of which is Two Dollars and Fifty Cents
($2.50) and the denominator of which is the Series D Conversion Price in effect
on the Series D Conversion Date as determined by reference to Subparagraph
5(d)(ii) below. Each share of Series C-3 Stock shall be converted into the
number of shares of Common Stock as is determined by multiplying each such share
by a fraction, the numerator of which is Three Dollars and Three Tenths of One
Cent ($3.003) and the denominator of which is the Series C-3 Conversion Price in
effect on the Series C-3 Conversion Date as determined by reference to
Subparagraph 5(d)(ii) below. Each share of Series C-2 Stock shall be converted
into the number of shares of Common Stock as is determined by multiplying each
such share by a fraction, the numerator of which is One Dollar and Fifty Cents
($1.50) and the denominator of which is the Series C-2 Conversion Price in
effect on the Series C-2 Conversion Date as determined by reference to
Subparagraph 5(d)(ii) below. Each share of Series C-1 Stock shall be converted
into the number of shares of Common Stock as is determined by multiplying each
such share by a fraction, the numerator of which is One Dollar ($1.00) and the
denominator of which is the Series C-1 Conversion Price in effect on the Series
C-1 Conversion Date as determined by reference to Subparagraph 5(d)(ii) below.
Each share of Series B Stock shall be converted into the number of shares of
Common Stock as is determined by multiplying each such share by a fraction, the
numerator of which is One Dollar ($1.00) and the denominator of which is the
Series B Conversion Price in effect on the Series B Conversion Date as
determined by reference to Subparagraph 5(d)(ii) below. Each share of Series A
Stock shall be converted into the number of shares of Common Stock as is
determined by multiplying each such share by a fraction, the numerator of which
is Ten Cents ($0.10) and the denominator of which is the Series A Conversion
Price in effect on the Series A Conversion Date as determined by reference to
Subparagraph 5(d)(ii) below.
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<PAGE>
(ii) The Series I Conversion Price for one (1) share of
Series I Stock shall be Four Dollars and Twenty-Five Cents ($4.25) (as such may
be adjusted pursuant to Subparagraphs 5(g)(i) through 5(g)(viii) hereof) (the
"Adjusted Series I Conversion Price"). The Series H-1 Conversion Price for one
(1) share of Series H-1 Stock shall be Three Dollars and Fifty Cents ($3.50) (as
such may be adjusted pursuant to subparagraphs 5(g)(i) through 5(g)(viii)
hereof) (the "Adjusted Series H-1 Conversion Price"). The Series H-2 Conversion
Price for one (1) share of Series H-2 Stock shall be Two Dollars and Forty-Three
Cents ($2.43) (as such may be adjusted pursuant to subparagraphs 5(g)(i) through
5(g)(viii) hereof) (the "Adjusted Series H-2 Conversion Price"). The Series G
Conversion Price for one (1) share of Series G Stock shall be Three Dollars and
Fifty Cents ($3.50) (as such may be adjusted pursuant to Subparagraphs 5(g)(i)
through 5(g)(viii) hereof) (the "Adjusted Series G Conversion Price"). The
Series F Conversion Price for one (1) share of Series F Stock shall be Four
Dollars and Twenty-Five Cents ($4.25) (as such may be adjusted pursuant to
Subparagraphs 5(g)(i) through 5(g)(viii) hereof) (the "Adjusted Series F
Conversion Price"). The Series E Conversion Price for one (1) share of Series E
Stock shall be Three Dollars ($3.00) (as such may be adjusted pursuant to
Subparagraphs 5(g)(i) through 5(g)(vii) hereof) (the "Adjusted Series E
Conversion Price"). The Series D Conversion Price for one (1) share of Series D
Stock shall be Two Dollars and Fifty Cents ($2.50) (as such may be adjusted
pursuant to Subparagraphs 5(g)(i) through 5(g)(vii) hereof) (the "Adjusted
Series D Conversion Price"). The Series C-3 Conversion Price for one (1) share
of Series C-3 Stock shall be Three Dollars and Three Tenths of One Cent ($3.003)
(as such may be adjusted pursuant to Subparagraphs 5(g)(i) through 5(g)(vii)
hereof) (the "Adjusted Series C-3 Conversion Price"). The Series C-2 Conversion
Price for one (1) share of Series C-2 Stock shall be One Dollar and Fifty Cents
($1.50) (as such may be adjusted pursuant to Subparagraphs 5(g)(i) through
5(g)(vii) hereof) (the "Adjusted Series C-2 Conversion Price"). The Series C-1
Conversion Price for one (1) share of Series C-1 Stock shall be One Dollar
($1.00) (as such may be adjusted pursuant to Subparagraphs 5(g)(i) through
5(g)(vii) hereof) (the "Adjusted Series C-1 Conversion Price"). The Series B
Conversion Price for one (1) share of Series B Stock shall be One Dollar ($1.00)
(as such may be adjusted pursuant to Subparagraphs 5(g)(i) through 5(g)(vii)
hereof) (the "Adjusted Series B Conversion Price"). The Series A Conversion
Price for one (1) share of Series A Stock shall be Ten Cents ($0.10) (as such
may be adjusted pursuant to Subparagraphs 5(g)(i) through 5(g)(vii) hereof) (the
"Adjusted Series A Conversion Price").
(iii) Each of the Series A, B, C-1, C-2, C-3, D, E, F, G, H-
1, H-2 and I Conversion Price shall be subject to adjustment as set forth in
Subparagraph 5(f) hereof.
(e) Mechanics of Conversion. Pursuant to Subparagraph 5(b) or
-----------------------
5(c) hereof, the outstanding shares of Series A, B, C, D, E, F, G, H and I
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, that
the Corporation shall not be obligated to issue to any such holder certificates
evidencing the shares of Common Stock issuable upon such conversion unless
certificates evidencing the shares of Series A, B, C, D, E, F, G, H and I
Preferred Stock or an appropriate indemnity bond are delivered to the
Corporation or any transfer agent of the Corporation. The holder of any shares
of Series A, B, C, D, E, F, G, H and I Preferred Stock may exercise the
conversion right specified in Subparagraph 5(a) hereof as to any part thereof by
14
<PAGE>
surrendering to the Corporation or any transfer agent of the Corporation the
certificate or certificates representing the shares to be converted, accompanied
by written notice stating that the holder elects to convert all or a specified
portion of the shares represented thereby. Conversion of such Preferred Stock
shall be deemed to have been effected on the date on which an event specified
with respect to such Preferred Stock in Subparagraph 5(b) or 5(c) hereof shall
have occurred or on the date when delivery of notice of an election to convert
and certificates representing such shares is made, as the case may be, and such
date is referred to herein with respect to such series of Preferred Stock as the
"Conversion Date" for such series. Subject to the provisions of Subparagraph
5(g)(v) hereof, as promptly as practicable after the Conversion Date (and after
surrender of the certificate or certificates representing shares of such
Preferred Stock to the Corporation or any transfer agent of the Corporation in
the case of conversions pursuant to Subparagraph 5(b) or 5(c) hereof) the
Corporation shall issue and deliver to such holder a certificate or certificates
for the number of full shares of Common Stock to which such holder is entitled
and a check or cash with respect to any fractional interest in a share of Common
Stock as provided in Subparagraph 5(e) hereof and any dividends on the such
Preferred Stock which such holder is entitled to receive, but has not yet
received. Subject to the provisions of Subparagraph 5(f)(v) hereof, the person
in whose name the certificate or certificates for Common Stock are to be issued
shall be deemed to have become a holder of record of such Common Stock on the
applicable Conversion Date. Upon conversion of only a portion of the number of
shares covered by a certificate representing shares of Preferred Stock
surrendered for conversion (in the case of conversion pursuant to Subparagraph
5(a) hereof), the Corporation shall issue and deliver to the holder of the
certificate so surrendered for conversion, at the expense of the Corporation, a
new certificate covering the number of shares of Preferred Stock representing
the unconverted portion of the certificate so surrendered.
(f) Fractional Shares. No fractional shares of Common Stock or
-----------------
scrip shall be issued upon conversion of shares of Preferred Stock. If more than
one share of Preferred Stock shall be surrendered for conversion at any one time
by the same holder, the number of full shares of Common Stock issuable upon
conversion thereof shall be computed on the basis of the aggregate number of
shares of Preferred Stock so surrendered. Instead of any fractional shares of
Common Stock which would otherwise be issuable upon conversion of any shares of
Preferred Stock, the Corporation shall pay a cash adjustment in respect of such
fractional interest in an amount equal to that fractional interest of the then
current market price, as determined reasonably and in good faith by the Board of
Directors of the Corporation, irrespective of any accounting treatment.
(g) Conversion Price Adjustments for the Preferred Stock. Each of
----------------------------------------------------
the Series A, B, C-1, C-2, C-3, D, E, F, G, H-1, H-2 and I Conversion Price, as
applicable, shall be subject to adjustment from time to time as follows:
(i) Stock Dividends; Stock Splits. If the number of
-----------------------------
shares of Common Stock outstanding at any time after the date of issuance of a
series of Preferred Stock is increased by a stock dividend payable in shares of
Common Stock or by a subdivision or split-up of shares of Common Stock, then,
immediately after the record date fixed for the determination of holders of
Common Stock entitled to receive such stock dividend or the effective date of
such subdivision or split-up, as the case may be, the Conversion Price for each
series of Preferred Stock shall be automatically reduced so that the holder of
any shares of such
15
<PAGE>
series of Preferred Stock thereafter converted shall be entitled to receive the
number of shares of Common Stock of the Corporation which he would have owned
immediately following such action had such shares of Preferred Stock been
converted immediately prior thereto.
(ii) Combination of Stock. If the number of shares of
--------------------
Common Stock outstanding at any time after the date of issuance of a series of
Preferred Stock is decreased by a combination of the outstanding shares of
Common Stock, then, immediately after the effective date of such combination,
the Conversion Price for each series of Preferred Stock shall be automatically
increased so that the holder of any shares of Preferred Stock thereafter
converted shall be entitled to receive the number of shares of Common Stock of
the Corporation which he would have owned immediately following such action had
such shares of Preferred Stock been converted immediately prior thereto.
(iii) Reorganizations, Etc. In case of any capital
---------------------
reorganization of the Corporation, or of any reclassification of the Common
Stock, or in case of the merger of the Corporation with or into any other
Person, the exchange of shares of Common Stock for securities of another Person,
or of the sale, lease or other transfer of all or substantially all of the
assets of the Corporation to any other Person (other than reorganizations,
reclassifications, mergers, exchanges, sales, leases or other transfers provided
for in Section 3 hereof), each share of Preferred Stock shall, after such
capital reorganization, reclassification, merger, exchange, sale, lease or other
transfer, be convertible into the number of shares of stock or other securities
or property to which the Common Stock issuable (at the time of such capital
reorganization, reclassification, merger, exchange, sale, lease or other
transfer) upon conversion of such share of Preferred Stock would have been
entitled upon such capital reorganization, reclassification, merger, exchange,
sale, lease or other transfer; and in any such case, if necessary, the
provisions set forth herein with respect to the rights and interests thereafter
of the holders of each series of Preferred Stock shall be automatically adjusted
so as to be applicable, as nearly as may reasonably be possible, to any shares
of stock or other securities or property thereafter deliverable on the
conversion of the shares of each series of Preferred Stock. The subdivision or
combination of shares of Common Stock issuable upon conversion of shares of
Preferred Stock at any time outstanding into a greater or lesser number of
shares of Common Stock (whether with or without par value) shall not be deemed
to be a reclassification of the Common Stock of the Corporation for the purposes
of this clause (iii).
(iv) Rounding of Calculations, Minimum Adjustment. All
--------------------------------------------
calculations under this Subparagraph 5(g) shall be made by rounding upward to
the nearest cent or rounding downward to the nearest one hundredth (1/100th) of
a share, as the case may be. Any provision of this Paragraph 5 to the contrary
notwithstanding and except for immediately prior to the time shares of Preferred
Stock convert into Common Stock (for which this sentence shall not apply), no
adjustment in the Conversion Price of any series of Preferred Stock shall be
made if the amount of such adjustment would be less than one percent (1%) of the
applicable Conversion Price of such series of Preferred Stock then in effect,
but any such amount shall be carried forward and an adjustment with respect
thereto shall be made at the time of and together with any subsequent adjustment
which, together with such amount and any other amount or amounts so carried
forward, shall aggregate one percent (1%) or more of the applicable Conversion
Price of such series of Preferred Stock then in effect.
16
<PAGE>
(v) Timing of Issuance of Additional Common Stock Upon
--------------------------------------------------
Certain Adjustments. In any case in which the provisions of this Subparagraph
-------------------
5(g) shall require that an adjustment shall become effective immediately after
the record date for an event, the Corporation may defer until the occurrence of
such event (A) issuing to the holder of any shares of Preferred Stock converted
after such record date and before the occurrence of such event the additional
shares of Common Stock issuable upon such conversion by reason of the adjustment
required by such event over and above the shares of Common Stock issuable upon
such conversion before giving effect to such adjustment and (B) paying to such
holder any amount of cash in lieu of a fractional share of Common Stock pursuant
to Subparagraph (f) of this Paragraph 5; provided, that the Corporation upon
request shall deliver to such holder an appropriate instrument evidencing such
holder's right to receive such additional shares, and such cash, upon the
occurrence of the event requiring such adjustment.
(vi) Stock Issued at a Price Less than the Applicable
------------------------------------------------
Series C-1, C-2, C-3, D, E, F, G, H-1, H-2 and I Conversion Price.
-----------------------------------------------------------------
(A) In the event that after the file date of these
Amended and Restated Articles of Incorporation this Corporation shall issue,
sell or enter into any contract to issue or sell any stock other than Series G
or H-1 Excluded Stock (as defined in Subparagraph 5(g)(vii)(A) hereof) ("Series
G Additional Stock" or "Series H-1 Additional Stock") for a consideration per
share less than the Adjusted Series G or H-1 Conversion Price, as the case may
be, (determined on a Common Stock equivalent basis if securities are other than
Common Stock) in effect on the date of and immediately prior to such issue, sale
or contract date then and in such event, the Adjusted Series G or H-1 Conversion
Price, as the case may be, shall be reduced, concurrently with such issue, sale
or contract, to a price (calculated to the nearest cent) determined by dividing
the aggregate consideration received by the Corporation for the total number of
Series G or H-1 Additional Stock, as the case may be (determined on a Common
Stock equivalent basis if securities are other than Common Stock) so issued,
sold or contracted for by the total number of Series G or H-1 Additional Stock,
as the case may be, (determined on a Common Stock equivalent basis if securities
are other than Common Stock) so issued, sold or contracted for.
(B) If the Corporation shall issue, sell or enter
into any contract to issue or sell any stock other than Excluded Stock (as
defined in subparagraph 5(g)(vii)(B) hereof) ("Additional Stock") without
consideration or for consideration per share (determined on a Common Stock
equivalent basis if the securities are other than Common Stock) for less than
the Adjusted Series C, D, E, F, H-2 or I Conversion Price in effect on the date
of and immediately prior to such issue, sale or contract date (taking into
account all prior adjustments thereto pursuant to Subparagraph 5(g) hereof),
then the Series C-1, C-2, C-3, D, E, F, H-2 or I Conversion Price, as
applicable, shall, concurrently with such issue, sale or contract, be reduced to
a price per share determined by multiplying the Series C-1, C-2, C-3, D, E, F,
H-2 or I Conversion Price, as applicable, by a fraction (i) the numerator of
whichshall be (A) the number of shares of Common Stock deemed outstanding (as
definedin the following sentence) immediately
17
<PAGE>
prior to such issuance, sale or contract date, plus (B) the number of shares of
Common Stock which the aggregate consideration received by the Corporation for
the aggregate Additional Stock would purchase at such Adjusted Series C-1, C-2,
C-3, D, E, F, H-2 or I Conversion Price in effect immediately prior to such
issuance of Additional Stock, as applicable, and (ii) the denominator of which
shall be (X) the number of shares of Common Stock deemed outstanding (as defined
in the following sentence) immediately prior to such issuance, sale or contract
date, plus (Y) the total number of shares of Additional Stock (determined on a
Common Stock equivalent basis if securities are other than Common Stock) so
issued, sold or contracted for. For the purposes of the preceding sentence
Common Stock shall mean, (i) all outstanding shares of Common Stock and, (ii)
all shares of Common Stock issuable upon conversion of outstanding shares of
Series A, B, C-1, C-2, C-3, D, E, F, G, H and I Preferred Stock.
(C) For purposes of any adjustment of the Series C-
1, C-2, C-3, D, E, F, G, H-1, H-2 or I Conversion Price pursuant to this
Subparagraph 5(g)(vi), (i) the grant, issue or sale of Additional Stock
consisting of the same class of security and warrants to purchase such security
issued or issuable at the same price at two or more closings held within a six-
month period shall be aggregated and shall be treated as one sale of Additional
Stock occurring on the earliest date on which such securities were granted,
issued or sold, and (ii) the grant, issue or sale of Additional Stock consisting
of one or more types of securities in connection with any one financing
transaction shall be aggregated and shall be treated as one sale of Additional
Stock occurring on the earliest date on which such securities were granted,
issued or sold with the purchase price for the sale of such Additional Stock
equal to the aggregate consideration paid or to be paid for such Additional
Stock and the per share security purchase price equal to the quotient of (x) the
aggregate consideration paid or to be paid for such Additional Stock divided by
(y) the aggregate number of shares of Additional Stock (determined on a Common
Stock equivalent basis for securities other than Common Stock) so issued,
granted or sold.
In addition, for the purposes of any adjustment of the Series C-1, C-
2, C-3, D, E, F, G, H-1, H-2 or I Conversion Price pursuant to this Subparagraph
5(g)(vi), the following provisions shall be applicable:
(D) Cash. In the case of the issuance of securities
----
of the Corporation for cash, the amount of the consideration received by the
Corporation shall be deemed to be the amount of the cash proceeds received by
the Corporation for such securities before deducting therefrom any reasonable
discounts, commissions, taxes or other expenses allowed, paid or incurred by the
Corporation for any underwriting or otherwise in connection with the issuance
and sale thereof.
(E) Consideration Other than Cash. In the case of
-----------------------------
the issuance of securities of the Corporation (other than the issuance of Common
Stock upon the conversion of shares or securities of the Corporation,
18
<PAGE>
capital stock or other securities of the Corporation pursuant to their original
terms) for a consideration in whole or in part other than cash, including
securities acquired in exchange therefor (other than securities by their terms
so exchangeable), the consideration other than cash shall be deemed to be the
fair market value thereof as determined reasonably and in good faith by the
Board of Directors of the Corporation, irrespective of any accounting treatment.
(F) Options and Convertible Securities. In the case
----------------------------------
of the issuance of (i) options, warrants or other rights to purchase or acquire
Common Stock (whether or not at the time exercisable), (ii) securities by their
terms convertible into or exchangeable for Common Stock (whether or not at the
time so convertible or exercisable) or (iii) options, warrants or rights to
purchase such convertible or exchangeable securities whether or not at the time
exercisable (collectively, "Convertible Securities"), the following provisions
shall apply for all purposes of this subsection 5(g)(vi) and 5(g)(vii):
(1) the aggregate maximum number of shares of
Common Stock deliverable upon exercise of such Convertible Securities shall be
deemed to have been issued at the time such Convertible Securities were issued
and for a consideration equal to the consideration (determined in the manner
provided in subclauses (D) and (E) above), if any, received by the Corporation
upon the issuance of such Convertible Securities plus the minimum purchase price
provided in such Convertible Securities for the Common Stock covered thereby;
(2) the aggregate maximum number of shares of
Common Stock deliverable upon conversion of or in exchange for any such
Convertible Securities, or upon the exercise of options, warrants or other
rights to purchase or acquire such Convertible Securities and the subsequent
conversion or exchange thereof, shall be deemed to have been issued at the time
such securities were issued or such options, warrants or rights were issued and
for a consideration equal to the consideration, if any, received by the
Corporation for any such Convertible Securities and related options, warrants or
rights (excluding any cash received on account of accrued interest or accrued
dividends), plus the minimum additional consideration, if any, to be received by
the Corporation upon the conversion or exchange of such Convertible Securities
and the exercise of any related options, warrants or rights (the consideration
in each case to be determined in the manner provided in subclauses (D) and (E)
above);
(3) on any change in the number of shares of
Common Stock deliverable upon exercise of any such Convertible Securities or
conversion of or exchange for such Convertible Securities or any change in the
consideration to be received by the Corporation upon such exercise, conversion
or exchange, including, but not limited to, a change resulting from the anti-
dilution provisions thereof,
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<PAGE>
the applicable Conversion Price as then in effect, to the extent in
any way affected by or computed using such Convertible Securities,
shall automatically be readjusted to such Conversion Price as would
have been obtained had an adjustment been made upon the issuance of
such Convertible Securities not exercised prior to such change, or
securities not converted or exchanged prior to such change, upon the
basis of such change;
(4) if the applicable Conversion Price shall
have been adjusted upon or after the issuance of any such Convertible
Securities, no further adjustment of such Conversion Price shall be
made for the actual issuance of Common Stock upon the exercise
thereof.
(vii) Excluded Stock. (A) "Series G Excluded Stock" and
---------------
"Series H-1 Excluded Stock" shall mean shares of Common Stock issued
or reserved for issuance by the Corporation (a) as a stock dividend
payable in shares of Common Stock, (b) upon any subdivision or split-
up of the outstanding shares of Common Stock, (c) for the sale or
issuance of Common Stock to employees, officers, directors or
consultants, pursuant to stock purchase, stock option or stock bonus
plans which have been authorized and approved by the Board of
Directors, at prices not less than the fair market value of the Common
Stock, as determined in good faith by the Board of Directors (or the
Compensation Committee thereof, if any) of the Corporation (including
options), (d) upon conversion of up to 603,578 shares Series F
Preferred Stock or other securities issuable upon exercise of Warrants
issued pursuant to a Series F Convertible Preferred Stock Purchase
Agreement dated May 7, 1997 between the Corporation and the Investors
as defined therein, (e) upon conversion of shares of Series A, B, C,
D, E, F, G, H or I Preferred Stock, (f) the issuance of warrants to
purchase up to 1,656,251 shares of common stock issued in connection
with the Corporation's Series G Preferred Stock financing and the
conversion or exercise of any such warrants, (g) upon conversion of up
to 691,706 shares of Series H-2 Preferred Stock issuable upon exercise
of warrants issued pursuant to a Securities Purchase Agreement between
the Corporation and the purchasers of Series H Preferred Stock, (h) to
financial institutions or lessors in connection with commercial credit
arrangements, equipment financings or similar transactions approved by
the Board of Directors.
(B) "Excluded Stock" shall mean shares of Common Stock issued or
reserved for issuance by the Corporation (a) as a stock dividend
payable in shares of Common Stock, (b) upon any subdivision or split-
up of the outstanding shares of Common Stock, (c) for the sale or
issuance of Common Stock to employees, officers, directors or
consultants, pursuant to stock purchase, stock option or stock bonus
plans which have been authorized and approved by the Board of
Directors, at prices not less than the fair market value of the Common
Stock, as determined in good faith by the Board of Directors (or the
Compensation Committee thereof, if any) of the Corporation (including
options), (d) Series F Preferred Stock or other securities issuable
upon exercise of Warrants issued pursuant to a Series F Convertible
Preferred Stock Purchase Agreement dated May 7, 1997 between the
Corporation and the Investors as defined therein (e) Series I
Preferred Stock issued pursuant to a Securities Purchase Agreement
between the Corporation and
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the purchasers of Series I Preferred Stock, (f) upon conversion of
shares of Series A, B, C, D, E, F, G, H or I Preferred Stock, (g) to
financial institutions or lessors in connection with commercial credit
arrangements, equipment financings or similar transactions approved by
the Board of Directors.
(viii) Special Adjustment of Series F, Series G, Series H and
------------------------------------------------------
Series I Conversion Prices Upon on Sale of the Corporation. If, the execution of
----------------------------------------------------------
either a definitive agreement or letter of intent relating to a Sale of the
Company occurs after May 7, 1998 and on or before August 7, 1999, whereby the
consideration received by the Corporation is less than Four Dollars and Twenty-
Five Cents ($4.25) per share (based on all outstanding shares (including vested
options and exercisable warrants) immediately prior to the closing of such Sale
of the Company and treating all shares of convertible Preferred Stock as
converted to Common Stock at the Conversion Price in effect immediately prior to
such closing), then effective and contingent upon the closing of such Sale of
the Company, the Adjusted Series F, Adjusted Series G and Adjusted Series H
Conversion Prices shall be adjusted to an amount equal to the Adjusted Series E
Conversion Price in effect immediately prior to such closing; provided, however,
to the extent that the Adjusted Series F Conversion Price, the Adjusted Series G
or the Adjusted Series H Conversion Price at such time were less than the
Adjusted Series E Conversion Price then in effect, then such Adjusted Series F
Conversion Price, Adjusted Series G or the Adjusted Series H Conversion Price,
as applicable, shall not be adjusted pursuant to this subparagraph.
(h) Statement Regarding Adjustments. Whenever a Conversion
-------------------------------
Price shall be adjusted as provided in Subparagraph 5(g) hereof, the Corporation
shall as soon as practicable file, at the office of any transfer agent for the
affected series of Preferred Stock and at the principal office of the
Corporation, a certificate showing in detail the facts requiring such adjustment
and the Conversion Price for such series that shall be in effect after such
adjustment, and the Corporation shall also cause a copy of such certificate to
be sent by mail, first class postage prepaid, to each holder of such series of
Preferred Stock at its address appearing on the Corporation's records. Where
appropriate such copy may be given in advance and may be included as part of a
notice required to be mailed under the provisions of Subparagraph 5(i) hereof.
(i) Notice to Holders. In the event the Corporation shall
-----------------
propose to take any action of the type described in Subparagraphs 5(g)(i)
through 5(g)(iii), the Corporation shall give notice to each holder of shares of
Series A, B, C, D, E, F, G, H and I Preferred Stock in the manner set forth in
Subparagraph 5(h) hereof, which notice shall specify the record date, if any,
with respect to any such action and the approximate date on which such action is
to take place. Such notice shall also set forth such facts with respect thereto
as shall be reasonably necessary to indicate the effect of such action (to the
extent such effect may be known at the date of such notice) on the Conversion
Price of each series of Preferred Stock and the number, kind or class of shares
or other securities or property which shall be deliverable or purchasable upon
the occurrence of such action or deliverable upon conversion of shares of each
series of Preferred Stock. In the case of any action which would require the
fixing of a record date, such notice shall be given at least fifteen (15) days
prior to the date so fixed, and in case of all other action, such notice shall
be given at least twenty (20) days prior to the taking of such proposed action.
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<PAGE>
(j) Costs. The Corporation shall pay all documentary, stamp,
-----
transfer or other transactional taxes attributable to the issuance or delivery
of shares of Common Stock of the Corporation upon conversion of any shares of
Preferred Stock; provided, that the Corporation shall not be required to pay any
taxes which may be payable in respect of any transfer involved in the issuance
or delivery of any certificate for such shares in a name other than that of the
holder of the Preferred Stock in respect of which such shares are being issued.
(k) Reservation of Shares. The Corporation shall reserve at
---------------------
all times, so long as any shares of Preferred Stock remain outstanding or
reserved for issuance upon exercise of outstanding options or warrants, free
from preemptive rights, out of its authorized but unissued shares of Common
Stock, solely for the purpose of effecting the conversion of the shares of
Preferred Stock, sufficient shares of Common Stock to provide for the conversion
of all outstanding shares of Preferred Stock.
(l) Approvals. If any shares of Common Stock to be reserved
---------
for the purpose of conversion of shares of Preferred Stock require registration
with or approval of any governmental authority under any Federal or state law
before such shares may be validly issued or delivered upon conversion, then the
Corporation will in good faith and as expeditiously as possible endeavor to
secure such registration or approval, as the case may be. If, and as long as,
any Common Stock into which the shares of Preferred Stock are then convertible
is listed on any national securities exchange, the Corporation will, if
permitted by the rules of such exchanger list and keep listed on such exchange,
upon official notice of issuance, all shares of such Common Stock issuable upon
conversion.
(m) Valid Issuance. All shares of Common Stock which may be
--------------
issued upon conversion of the shares of Preferred Stock will, upon issuance by
the Corporation, be duly and validly issued, fully paid and nonassessable and
free from all taxes, liens and charges with respect to the issuance thereof.
(n) Other Distributions. In the event the Corporation shall
-------------------
declare a distribution payable in securities of other persons, evidences of
indebtedness issued by the Corporation or other persons, assets (excluding cash
dividends) or options or rights not referred to in subparagraph 5(g)(i), then,
in each such case for the purpose of this subparagraph 5(n), the holders of the
Preferred Stock shall be entitled to a proportionate share of any such
distribution as though they were the holders of the number of shares of Common
Stock of the Corporation into which their shares of Preferred Stock are
convertible as of the record date fixed for the determination of the holders of
Common Stock of the Corporation entitled to receive such distribution.
(o) No Impairment. The Corporation will not, by amendment of
--------------
its Articles of Incorporation or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Corporation, but will at all times in good faith assist in the carrying out of
all the provisions of this Section 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 Preferred Stock against impairment.
22
<PAGE>
(p) Notices of Record Date. In the event of any taking by the
----------------------
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, the Corporation
shall mail to each holder of Preferred Stock, at least twenty (20) days prior to
the date specified therein, a notice specifying the date on which any such
record is to be taken for the purpose of such dividend, distribution or right,
and the amount and character of such dividend, distribution or right.
(q) If all of the outstanding shares of Series C, D, E, F, G,
H and I Preferred Stock shall be converted to Common Stock, then effective on
the Conversion Date of such conversion, all shares of all series of preferred
stock that are junior to the Series C, D, E, F, G, H and I shall automatically
and without further action on the part of any of the holders thereof convert to
Common Stock.
(r) Each holder of an outstanding share of Series A, B, C, D,
E, F, G, H or I Preferred Stock shall be deemed to have consented, for purposes
of Sections 502, 503 and 506 of the California Corporations Code to
distributions made by the Corporation in connection with the repurchase of
shares of Common Stock issued to or held by service providers upon termination
of their service relationship pursuant to agreements providing for the right of
such repurchase between the Corporation and such service providers.
6. Redemption.
----------
(a) Redemption Events.
-----------------
(i) The holder or holders of not less than a majority
in voting power of the outstanding Series G Preferred Stock may require the
Corporation to redeem the outstanding Series G Preferred Stock in three equal
installments with the first such installment for thirty-three and one-third
percent (33-1/3%) of the then outstanding shares of Series G Preferred Stock
being due and payable on December 31, 2003, the second such installment for
fifty percent (50%) of the then-outstanding shares of Series G Preferred Stock
being due and payable on December 31, 2004 and the third and final such
installment for all remaining outstanding shares of Series G Preferred Stock
being due and payable on December 31, 2005.
(ii) An election pursuant to subparagraph (i) of this
Section B6(a) shall be made by such holders giving the Corporation and each
other holder of Series G Preferred Stock not less than ninety (90) days prior
written notice, which notice shall set forth the date for such redemption.
(b) Redemption Date; Redemption Price. Upon the election of
---------------------------------
the holders of at least a majority of the voting power of the outstanding Series
G Preferred Stock to cause the Corporation to redeem the Series G Preferred
Stock pursuant to Article III Section B6(a)(i), all holders of Series G
Preferred Stock shall be deemed to have elected to cause all of the Series G
Preferred Stock to be so redeemed. Any date upon which a redemption shall
23
<PAGE>
occur in accordance with Section B6(a) shall be referred to as a "Series G
Preferred Redemption Date." The redemption price for each share of Series G
Preferred Stock redeemed pursuant to Section B6 shall be an amount in cash equal
to (i) Four Dollars and Twenty Five Cents ($4.25) (such per share amount to be
appropriately adjusted for any Adjustment Event) plus (ii) any accrued but
unpaid dividends on such share of Series G Preferred Stock pursuant to Sections
B2 and B6(d) hereof (collectively, the "Series G Preferred Redemption Price").
The aggregate Series G Preferred Redemption Price shall be payable in cash in
immediately available funds to the respective holders of the Series G Preferred
Stock on each Series G Preferred Redemption Date, subject to Sections B6(a) and
B6(c). After an election has been made under this Section B6(b) by the holders
of at least a majority of the voting power of the outstanding Series G Preferred
Stock, until the full Series G Preferred Redemption Price has been paid to such
holders for all shares of Series G Preferred Stock being redeemed: (A) no
dividend whatsoever shall be paid or declared, and no distribution shall be
made, on any capital stock of the Corporation (other than the Series G Preferred
Stock in accordance with Section B6(d)); and (B) no shares of capital stock of
the Corporation (other than the Series G Preferred Stock in accordance with this
Section B6) shall be purchased, redeemed or acquired by the Corporation and no
monies shall be paid into or made available for a sinking fund or set aside or
made available for the purchase, redemption or acquisition thereof.
Notwithstanding the election to cause the Corporation to redeem the Series G
Preferred Stock as provided above, until the full Series G Preferred Redemption
Price has been paid to the holders of the Series G Preferred Stock, the holders
of at least a majority of the voting power of the outstanding Series G Preferred
Stock may rescind such election by providing written notice thereof to the
Corporation.
(c) Redemption Prohibited. If, at a Series G Preferred
---------------------
Redemption Date, the Corporation is prohibited under the Corporations Code of
the State of California or other applicable law from redeeming all shares of
Series G Preferred Stock for which redemption is required hereunder, then it
shall redeem such shares on a pro-rata basis among the holders of Series G
Preferred Stock in proportion to the full respective redemption amounts to which
they are entitled hereunder to the extent possible and shall redeem the
remaining shares to be redeemed as soon as the Corporation is not prohibited
from redeeming some or all of such shares under the Corporations Code of the
State of California or other applicable law. The shares of Series G Preferred
Stock not redeemed shall remain outstanding and entitled to all of the rights
and preferences provided in these Articles. In the event that the Corporation
fails to redeem shares for which redemption is required pursuant to this Section
B.6, then during the period from the applicable Series G Preferred Redemption
Date through the date on which such shares are redeemed, the applicable Series G
Preferred Redemption Price of such shares shall bear interest at the per annum
rate of the greater of (i) 7% or (ii) the Citibank, N.A. prime rate published in
the Wall Street Journal on such Series G Preferred Redemption Date, compounded
annually; provided, however, that in no event shall such interest exceed the
-------- -------
maximum permitted rate of interest under applicable law (the "Maximum Permitted
Rate"). In the event that fulfillment of any provision hereof results in such
rate of interest being in excess of the Maximum Permitted Rate, the obligation
to be fulfilled shall automatically be reduced to the extent required to
eliminate such excess.
(d) Dividend After Series G Preferred Redemption Date. From
-------------------------------------------------
and after a Series G Preferred Redemption Date, no shares of Series G Preferred
Stock subject to redemption shall be entitled to dividends, if any, as
contemplated by Section A.2; provided,
--------
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<PAGE>
however, that in the event that shares of Series G Preferred Stock are unable to
-------
be redeemed and continue to be outstanding in accordance with Section B.6(c),
such shares shall continue to be entitled to dividends and interest thereon as
provided in Sections A.2 and B.6(c) until the date on which such shares are
actually redeemed by the Corporation.
(e) Surrender of Certificates. The Corporation shall give,
--------------------------
not less than 15 days prior to nor more than 30 days in advance of the Series G
Preferred Redemption Date, written notice (the "Redemption Notice") to all
holders of the Series G Preferred Stock, which shall require each holder
submitting shares for redemption to surrender to the Corporation on or before
the Series G Preferred Redemption Date, at the place designated in the
Redemption Notice, such holder's certificate or certificates representing the
shares of Series G Preferred Stock to be redeemed. On or prior to the Redemption
Date, each holder of shares of Series G Preferred Stock submitted for redemption
shall surrender the certificate or certificates evidencing such shares to the
Corporation, at the place designated in the Redemption Notice and shall
thereupon be entitled to receive payment of the appropriate Redemption Price by
certified check or wire transfer. In the event the certificate or certificates
are lost, stolen or missing, the holder of Series G Preferred Stock shall
deliver an affidavit or agreement satisfactory to the Corporation to indemnify
the Corporation from any loss incurred by it in connection therewith (an
"Affidavit of Loss") with respect to such certificates at the place set forth in
the Redemption Notice. Each surrendered certificate shall be cancelled and
retired; provided, however, that if the holder has exercised its redemption
-------- -------
right pursuant to Section B.6(a)(i) or the Corporation is prohibited from
redeeming all shares of Series G Preferred Stock as provided in Section B.6(c),
the holder shall not be required to surrender said certificate(s) to the
Corporation until said holder has received a new stock certificate for those
shares of Series G Preferred Stock not so redeemed.
7. Retirement of Shares. Shares of Series A, B, C, D, E, F, G, H
--------------------
or I Preferred Stock which have been issued and have been redeemed, repurchased
or reacquired in any manner by the Corporation shall be retired and shall not be
reissued.
8. General Provisions.
------------------
(a) For purposes of this Certificate, the term "Person" may
be an individual, a corporation, a partnership, an unincorporated organization,
an association, a joint stock company, a joint venture, a trust, an estate, a
government or any agency or political subdivision thereof, or other entity,
whether acting in an individual, fiduciary or other capacity.
(b) All accounting terms used herein and not expressly
defined herein shall have the meanings given to them in accordance with
generally accepted accounting principles.
(c) The headings of the paragraphs, subparagraphs, clauses
and subclauses hereof are for convenience of reference only and shall not
define, limit or affect any of the provisions hereof.
IV.
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<PAGE>
A. The liability of the directors of the Corporation for monetary
damages shall be eliminated to the fullest extent permissible under California
law.
B. The Corporation is authorized to provide indemnification of agents
(as defined in Section 317 of the California Corporations Code) through bylaw
provisions, agreements with the agents, vote of shareholders or disinterested
directors, or otherwise, in excess of the indemnification otherwise permitted by
Section 317 of the California Corporations Code, subject only to the limits set
forth in Section 204 of the California Corporations Code with respect to actions
for breach of duty to the Corporation or its shareholders. The Corporation is
further authorized to provide insurance for agents as set forth in Section 317
of the California Corporations Code, provided that, in cases where the
Corporation owns all or a portion of the shares of the company issuing the
insurance policy, the company and/or the policy must meet one of the two sets of
conditions set forth in Section 317, as amended.
C. Any repeal or modification of the foregoing provisions of this
Article IV by the shareholders of this Corporation shall not adversely affect
any right or protection of an agent of this Corporation existing at the time of
such repeal or modification."
3. The foregoing Amended and Restated Articles of Incorporation have been duly
approved by the Board of Directors.
4. The foregoing Amended and Restated Articles of Incorporation have been duly
approved by the required vote of shareholders in accordance with Sections 902
and 903 of the Corporations Code. The total number of outstanding shares of the
Corporation is 2,321,505 shares of Common Stock, 1,000,000 shares of Series A
Preferred Stock, 844,754 shares of Series B Preferred Stock, 1,000,000 shares of
Series C-1 Convertible Preferred Stock, 666,667 shares of Series C-2 Convertible
Preferred Stock, 333,000 shares of Series C-3 Convertible Preferred Stock,
787,800 shares of Series D Convertible Preferred Stock, 793,332 shares of Series
E Convertible Preferred Stock, 4,217,139 shares of Series F Convertible
Preferred Stock, 1,211,765 shares of Series G Convertible Preferred Stock and
775,236 shares of Series H-1 Preferred Stock. The number of shares voting in
favor of the amendment equaled or exceeded the vote required. The percentage
vote required was more than 50% of the Common Stock, voting as a separate class
for this purpose, and two-thirds of the outstanding shares of all series of
Preferred Stock, all voting together as a separate class."
[Signature page follows]
26
<PAGE>
The undersigned declares under penalty of perjury that the matters set
forth in the foregoing certificate are true of his own knowledge.
IN WITNESS WHEREOF, the undersigned has executed and subscribed this
Certificate in San Jose, California this 15th day of December, 1999.
/s/ Vinod K. Agarwal
---------------------------------
Vinod K. Agarwal
President and Secretary
27
