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EXHIBIT 3(i).1
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF ALLIANCE FIBER OPTICS PRODUCT, INC.
The undersigned, Peter C. Chang, hereby certifies that:
ONE: He is the duly appointed and acting President and Secretary of this
corporation.
TWO: The Articles of Incorporation of this corporation shall be amended
and restated to read in full as follows:
"ARTICLE I
The name of this corporation is Alliance Fiber Optics Product, Inc.
ARTICLE II
The purpose of this corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of California other than the banking business, the trust company business or
the practice of a profession permitted to be incorporated by the California
Corporations Code.
ARTICLE III
A. Authorized Stock. The corporation is authorized to issue two classes
of stock to be designated, respectively, "Common Stock" and "Preferred Stock".
The number of shares of Common Stock authorized to be issued is fifty million
(50,000,000) shares, having no par value. The number of shares of Preferred
Stock authorized to be issued is twenty-two million four hundred thousand
(22,400,000) shares, having no par value, 15,400,000 shares of which are
designated as Series A Preferred Stock (the "Series A Preferred"), 2,000,000
shares of which are designated Series B Preferred Stock (the "Series B
Preferred") and 5,000,000 shares of which are designated Series C Preferred
Stock (the "Series C Preferred").
B. Preferred Stock. The rights, preferences, privileges and restrictions
granted to and imposed on the Preferred Stock are as follows:
1. Dividend Provisions. The holders of shares of Preferred Stock
shall be entitled to receive dividends at a rate of $0.012 per share of Series A
Preferred per annum (adjusted to reflect stock splits, stock dividends,
recapitalizations and the like), $0.12 per share of Series B Preferred per annum
(adjusted to reflect stock splits, stock dividends, recapitalizations and the
like), and $0.33 per share of Series C Preferred per annum (adjusted to reflect
stock splits, stock dividends, recapitalizations and the like), payable out of
funds legally available therefor. Such dividends shall be payable only when, as
and if declared by the Board of Directors and shall be noncumulative. No
dividends (other than those payable solely in Common Stock or other securities
and rights
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convertible into or entitling the holder thereof to receive, directly or
indirectly, additional shares of Common Stock of the corporation) shall be
payable on any Common Stock of the corporation during any fiscal year of the
corporation until dividends in the amount specified above per share (adjusted to
reflect stock splits, stock dividends, recapitalizations and the like) on the
Preferred Stock shall have been paid or declared and set apart during that
fiscal year. No dividend shall be paid on or declared and set apart for the
shares of any series of Preferred Stock for any dividend period unless at the
same time a like proportionate dividend for the same dividend period, ratably in
proportion to the respective annual dividend rates fixed therefor, shall be paid
on or declared and set apart for the shares of all other such series of
Preferred Stock. After the holders of the Preferred Stock have received their
dividend preference as set forth above, any dividends declared by the Board of
Directors out of funds legally available therefor shall be shared equally among
all outstanding shares on an as-converted basis.
2. Liquidation Preference. In the event of any liquidation,
dissolution or winding up of the corporation, either voluntary or involuntary,
distributions to the shareholders of the corporation shall be made in the
following manner:
(a) The holders of Preferred Stock shall be entitled to
receive, prior and in preference to any distribution of the assets and surplus
funds of the corporation to the holders of Common Stock by reason of their
ownership thereof, the amount of $0.20 per share (adjusted to reflect stock
splits, stock dividends, recapitalizations and the like), plus all declared but
unpaid dividends on each share of Series A Preferred (the "Series A Liquidation
Preference") then held by them, $2.00 per share (adjusted to reflect stock
splits, stock dividends, recapitalizations and the like), plus all declared but
unpaid dividends on each share of Series B Preferred (the "Series B Liquidation
Preference") then held by them and $5.50 per share (adjusted to reflect stock
splits, stock dividends, recapitalizations and the like), plus all declared but
unpaid dividends on each share of Series C Preferred (the "Series C Liquidation
Preference") then held by them. If, upon the occurrence of such an event, the
assets and funds thus distributed among the holders of the Preferred Stock shall
be insufficient to permit the payment to such holders of the full Series A,
Series B and Series C Liquidation Preference, then the entire assets and funds
of the corporation legally available for distribution shall be distributed
ratably among the holders of the Preferred Stock in proportion to the
preferential amount each such holder is entitled to receive.
(b) After the distributions described in subsection (a)
above have been paid in full, the remaining assets of the corporation available
for distribution to shareholders shall be distributed among the holders of
Preferred Stock and Common Stock pro rata based on the number of shares of
Common Stock held by each (assuming conversion of all such Preferred Stock at
the then applicable Conversion Price (as defined below)), subject to the
limitation that any holder of Preferred Stock shall be entitled to participate
in the distribution described in this Section 2(b) only until such time as the
aggregate proceeds received by such holder (including amounts received pursuant
to Section 2(a) above) equals the Liquidation Preference for such series
multiplied by a factor of two (2). Any holder of Preferred Stock electing to
convert Preferred Stock into shares of Common Stock prior to the liquidation
event shall not be entitled to the liquidation preference described in Section
2(a) (with respect to such converted Preferred Stock), but shall have only the
rights under this Section 2(b) of a holder of the Common Stock issued upon such
conversion.
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(c) For purposes of this Section 2, any acquisition of the
corporation by means of merger or other form of corporate reorganization in
which the outstanding shares of the corporation are exchanged for securities or
other consideration issued, or caused to be issued, by the acquiring corporation
or its subsidiary (other than a reincorporation transaction not affecting the
percentage ownership interests in the corporation) or a sale of all or
substantially all of the assets of the corporation (each, an "Acquisition
Transaction") shall be treated as a liquidation, dissolution or winding up of
the corporation and shall entitle the holders of Preferred Stock and Common
Stock to receive at the closing in cash, securities or other property amounts as
specified in Sections 2(a) and 2(b) above.
(d) Any securities to be delivered to the holders of the
Preferred Stock and/or Common Stock pursuant to Section 2(c) above shall be
valued as follows:
(i) Securities not subject to investment letter or
other similar restrictions on free marketability:
(A) If traded on a securities exchange or the
NASDAQ National Market, the value shall be deemed to be the average of the
closing prices of the securities on such exchange over the 30-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 prices over the 30-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 determined in good faith by the Board
of Directors of the corporation.
(ii) The method of valuation of securities subject to
investment letter or other restrictions on free marketability shall be to make
an appropriate discount from the market value determined as above in (i) (A),
(B) or (C) to reflect the approximate fair market value thereof, as determined
in good faith by the Board of Directors of the corporation.
3. Conversion. The holders of the Preferred Stock shall have
conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert.
(i) The initial Conversion Price for shares of Series A
Preferred shall be $0.20 per share (the "Series A Conversion Price") and the
initial Conversion Price for shares of Series B Preferred shall be $2.00 per
share (the "Series B Conversion Price"). Each share of Series A Preferred shall
be automatically convertible in the manner and subject to the event described in
subsection 3(a)(ii) into such number of fully paid and nonassessable shares of
Common Stock as is determined by dividing $0.20 for each share of Series A
Preferred by the Series A Conversion Price at the time in effect for such share.
Each share of Series B Preferred
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shall be automatically convertible in the manner and subject to the event
described in subsection 3(a)(ii) into such number of fully paid and
nonassessable shares of Common Stock as is determined by dividing $2.00 for each
share of Series B Preferred by the Series B Conversion Price at the time in
effect for such share. The initial Conversion Price for shares of Series C
Preferred shall be $5.50 per share (the "Series C Conversion Price"). Each share
of Series C Preferred shall be convertible, (A) at the option of the holder
thereof, at any time after the date of issuance of such share, at the office of
the corporation or any transfer agent for such Series C Preferred, or (B)
automatically in the manner described in subsection 3(a)(ii), into such number
of fully paid and nonassessable shares of Common Stock as is determined by
dividing $5.50 for each share of Series C Preferred by the Conversion Price at
the time in effect for such share. The Series A Conversion Price, the Series B
Conversion Price and the Series C Conversion Price shall be subject to
adjustment as set forth in subsection 3(c).
(ii) Each share of Preferred Stock shall automatically
be converted into shares of Common Stock at the then effective Conversion Price
upon the consummation of the corporation's sale of its Common Stock in a bona
fide, firm commitment underwriting pursuant to a registration statement under
the Securities Act of 1933, as amended (the "Securities Act"), which results in
aggregate gross cash proceeds to the corporation in excess of $30,000,000 and
the public offering price of which is not less than $8.25 per share (adjusted to
reflect subsequent stock dividends, stock splits or recapitalizations) (a
"Qualified IPO").
(b) Mechanics of Conversion. Before any holder of Preferred
Stock shall be entitled to convert the same into shares of Common Stock, he
shall surrender the certificate or certificates therefor, duly endorsed, at the
office of the corporation or of any transfer agent for such stock, and shall
give written notice by mail, postage prepaid, to the corporation at its
principal corporate office, of the election to convert the same (in the event of
a voluntary conversion of Series C Preferred Stock) and shall state therein the
name or names in which the certificate or certificates for shares of Common
Stock are to be issued. The corporation shall, as soon as practicable after the
effectiveness of the conversion, issue and deliver at such office to such holder
of Preferred Stock, or to the nominee or nominees of such holder, a certificate
or certificates for the number of shares of Common Stock to which such holder
shall be entitled as aforesaid. A voluntary conversion of Series C Preferred
Stock shall be deemed to have been made immediately prior to the close of
business on the date of such surrender of the shares of Series C Preferred Stock
to be converted, and the person or persons entitled to receive the shares of
Common Stock issuable upon such conversion shall be treated for all purposes as
the record holder or holders of such shares of Common Stock as of such date. If
a conversion is in connection with an underwritten offer of securities
registered pursuant to the Securities Act, the conversion will be conditioned
upon the closing with the underwriter of the sale of securities pursuant to such
offering, unless otherwise designated in writing by the holders of such
Preferred Stock, in which event the person(s) entitled to receive the Common
Stock issuable upon such conversion of the Preferred Stock shall not be deemed
to have converted such Preferred Stock until immediately prior to the closing of
such sale of securities.
(c) Conversion Price Adjustments of Preferred. The
Conversion Price of the Preferred shall be subject to adjustment from time to
time as follows:
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(i) (A) If the corporation, at any time or from time
to time after the date of the first issuance of shares of Series C Preferred
(the "Purchase Date"), shall issue any Additional Stock (as defined below)
without consideration or for a consideration per share less than the Series A
Conversion Price with respect to the Series A Preferred, the Series B Conversion
Price with respect to the Series B Preferred or the Series C Conversion Price
with respect to the Series C Preferred in effect on the date of and immediately
prior to the issuance of such Additional Stock, then and in such event, the
Series A Conversion Price, the Series B Conversion Price or the Series C
Conversion Price, as applicable, shall be reduced concurrently with such
issuance, to a price determined by multiplying such Conversion Price by a
fraction, the numerator of which shall be the number of shares of Common Stock
outstanding and the number of shares of Common Stock issuable upon the
conversion of the shares of Preferred Stock outstanding immediately prior to
such issuance plus the number of shares of Common Stock which the aggregate
consideration received by the corporation for the total number of shares of
Additional Stock so issued would purchase at such Conversion Price, and the
denominator of which shall be the number of shares of Common Stock outstanding
and the number of shares of Common Stock issuable upon the conversion of the
shares of Preferred Stock outstanding immediately prior to such issuance plus
the number of such shares of Additional Stock so issued. For the purposes of
this subsection, the number of shares of Common Stock outstanding immediately
prior to such issue shall be calculated on a fully diluted basis, as if all
shares of Preferred Stock and all convertible securities had been fully
converted into shares of Common Stock immediately prior to such issuance and any
outstanding warrants, options or other rights for the purchase of shares of
stock or convertible securities had been fully exercised immediately prior to
such issuance (and the resulting securities fully converted into shares of
Common Stock, if so convertible) as of such date, but not including in such
calculation any additional shares of Common Stock issuable with respect to
shares of Preferred Stock, convertible securities, or outstanding options,
warrants or other rights for the purchase of shares of stock or convertible
securities, solely as a result of the adjustment of the Series A, Series B or
Series C Conversion Price, as the case may be, (or other conversion ratios)
resulting from the issuance of the Additional Stock causing the adjustment in
question. Immediately after any Additional Stock is deemed issued, such
Additional Stock shall be deemed to be outstanding.
(B) No adjustment of the Conversion Price shall be
made in an amount less than one cent per share, provided that any adjustments
which are not required to be made by reason of this sentence shall be carried
forward and shall be either taken into account in any subsequent adjustment made
prior to 3 years from the date of the event giving rise to the adjustment being
carried forward, or shall be made at the end of 3 years from the date of the
event giving rise to the adjustment being carried forward. Except to the limited
extent provided for in subsections (E)(3) and (E)(4), no adjustment of the
Conversion Price pursuant to this subsection 3(c)(i) shall have the effect of
increasing the Conversion Price above the Conversion Price in effect immediately
prior to such adjustment.
(C) In the case of the issuance of Common Stock
for cash, the consideration shall be deemed to be the amount of cash paid
therefor before deducting any reasonable discounts, commissions or other
expenses allowed, paid or incurred by the corporation for any underwriting or
otherwise in connection with the issuance and sale thereof.
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(D) In the case of the issuance of the Common
Stock for a consideration in whole or in part other than cash, the consideration
other than cash shall be deemed to be the fair value thereof as determined by
the Board of Directors irrespective of any accounting treatment.
(E) In the case of the issuance, whether before,
on or after the Purchase Date, of options to purchase or rights to subscribe for
Common Stock, securities by their terms convertible into or exchangeable for
Common Stock or options to purchase or rights to subscribe for such convertible
or exchangeable securities (which are not excluded from the definition of
Additional Stock), the following provisions shall apply:
1. The aggregate maximum number of shares of
Common Stock deliverable upon exercise of such options to purchase or rights to
subscribe for Common Stock shall be deemed to have been issued at the time such
options or rights were issued and for a consideration equal to the consideration
(determined in the manner provided in subsections 3(c)(i)(C) and 3(c)(i)(D)), if
any, received by the corporation upon the issuance of such options or rights
plus the minimum purchase price provided in such options or rights for the
Common Stock covered thereby.
2. The aggregate maximum number of shares of
Common Stock deliverable upon conversion of or in exchange for any such
convertible or exchangeable securities or upon the exercise of options to
purchase or rights to subscribe for such convertible or exchangeable securities
and subsequent conversion or exchange thereof shall be deemed to have been
issued at the time such securities were issued or such options or rights were
issued and for a consideration equal to the consideration, if any, received by
the corporation for any such securities and related options or rights (excluding
any cash received on account of accrued interest or accrued dividends), plus the
additional consideration, if any, to be received by the corporation upon the
conversion or exchange of such securities or the exercise of any related options
or rights (the consideration in each case to be determined in the manner
provided in subsections 3(c)(i)(C) and 3(c)(i)(D)).
3. In the event of any change in the number
of shares of Common Stock deliverable or any increase in the consideration
payable to the corporation upon exercise of such options or rights or upon
conversion of or in exchange for such convertible or exchangeable securities,
including, but not limited to, a change resulting from the antidilution
provisions thereof, the Conversion Price of the Preferred Stock obtained with
respect to the adjustment which was made upon the issuance of such options,
rights or securities, and any subsequent adjustments based thereon, shall be
recomputed to reflect such change, but no further adjustment shall be made for
the actual issuance of Common Stock or any payment of such consideration upon
the exercise of any such options or rights or the conversion or exchange of such
securities.
4. Upon the expiration of any such options or
rights, the termination of any such rights to convert or exchange or the
expiration of any options or rights related to such convertible or exchangeable
securities, the Conversion Price of the Preferred
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Stock obtained with respect to the adjustment which was made upon the issuance
of such options, rights or securities or options or rights related to such
securities, and any subsequent adjustments based thereon, shall be recomputed to
reflect the issuance of only the number of shares of Common Stock actually
issued upon the exercise of such options or rights, upon the conversion or
exchange of such securities or upon the exercise of the options or rights
related to such securities. Upon the expiration of any such options or rights,
the termination of any such rights to convert or exchange or the expiration of
any options or rights related to such convertible or exchangeable securities,
only the number of shares of Common Stock actually issued upon the exercise of
such options or rights, upon the conversion or exchange of such securities or
upon the exercise of the options or rights related to such securities shall
continue to be deemed to be issued.
5. All Common Stock deemed issued pursuant to
this subsection 3(c)(i)(E) shall be considered issued only at the time of its
deemed issuance and any actual issuance of such stock shall not be an actual
issuance or a deemed issuance of the corporation's Common Stock under the
provisions of this Section 3; provided however, that in the case of any options
to purchase or rights to subscribe for Common Stock which expire by their terms
not more than 30 days after the date of issue thereof, no adjustment of the
Conversion Price shall be made until the expiration or exercise of all such
options or rights, whereupon such adjustment shall be made in the same manner
provided in subsection (E)(4) above.
(ii) "Additional Stock" shall mean any shares of Common
Stock issued (or deemed to have been issued pursuant to subsection 3(c)(i)(E))
by the corporation on or after the Purchase Date other than:
(A) shares of Common Stock issued or issuable
pursuant to a transaction described in subsection 3(c)(iii) hereof,
(B) up to 7,000,000 shares of Common Stock issued
or issuable to employees, consultants or directors of this corporation pursuant
to a stock option plan or restricted stock plan approved by the Board of
Directors of this corporation or a stock purchase agreement approved by the
Board of Directors of this corporation,
(C) shares of Common Stock issued or issuable to
banks, equipment lessors or landlords, provided such issuances are for other
than equity financing purposes,
(D) shares of Common Stock issued or issuable for
which adjustment of the Conversion Price is made pursuant to this Section 3,
(E) shares of Common Stock issued or issuable upon
conversion of the Preferred Stock,
(F) shares of Common Stock issued or issuable (i)
in a bona fide, firmly underwritten public offering of shares of Common Stock
before or in connection with which all outstanding shares of Preferred Stock are
converted to Common Stock, or (ii) upon
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exercise of warrants or rights granted to underwriters in connection with such a
public offering, which warrants or rights are unanimously approved by the Board
of Directors, or
(G) shares of Common Stock issued in connection
with a bona fide business acquisition by the Company, whether by merger,
consolidation, sale of assets, sale or exchange of stock or otherwise approved
by (i) the Board of Directors, and (ii) if the purchase price thereof is less
than $5.50 per share (adjusted to reflect stock splits, stock dividends,
recapitalizations and the like), holders of at least a majority of the
outstanding shares of Series C Preferred Stock.
(iii) In the event the corporation should at any time
or from time to time after the Purchase Date fix a record date for the
effectuation of a split or subdivision of the outstanding shares of Common Stock
or the determination of holders of Common Stock entitled to receive a dividend
or other distribution payable in additional shares of Common Stock or other
securities or rights convertible into, or entitling the holder thereof to
receive directly or indirectly, additional shares of Common Stock (hereinafter
referred to as "Common Stock Equivalents") without payment of any consideration
by such holder for the additional shares of Common Stock or the Common Stock
Equivalents (including the additional shares of Common Stock issuable upon
conversion or exercise thereof), then, as of such record date (or the date of
such dividend distribution, split or subdivision if no record date is fixed),
the Conversion Price of the Preferred Stock shall be appropriately decreased so
that the number of shares of Common Stock issuable on conversion of each share
of such series shall be increased in proportion to such increase of the
aggregate shares of Common Stock outstanding and those issuable with respect to
such Common Stock Equivalents.
(iv) If the number of shares of Common Stock
outstanding at any time after the Purchase Date is decreased by a combination of
the outstanding shares of Common Stock, then, following the record date of such
combination, the Conversion Price for the Preferred Stock shall be appropriately
increased so that the number of shares of Common Stock issuable on conversion of
each share of such series shall be decreased in proportion to such decrease in
outstanding shares.
(d) 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 subsection 3(c)(iii), then,
in each such case for the purpose of this subsection 3(d), 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.
(e) Recapitalizations. If at any time or from time to time
there shall be a recapitalization of the Common Stock (other than a subdivision,
combination or merger or sale of assets transaction provided for elsewhere in
Sections 2 or 3) provision shall be made so that the holders of the Preferred
Stock shall thereafter be entitled to receive upon conversion of the Preferred
Stock the number of shares of stock or other securities or property of the
corporation or otherwise, to
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which a holder of Common Stock deliverable upon conversion would have been
entitled on such recapitalization. In any such case, appropriate adjustment
shall be made in the application of the provisions of this Section 3 with
respect to the rights of the holders of the Preferred Stock after the
recapitalization to the end that the provisions of this Section 3 (including
adjustment of the Conversion Price then in effect and the number of shares
purchasable upon conversion of the Preferred Stock) shall be applicable after
that event as nearly equivalent as may be practicable.
(f) 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 3 and in the taking of all such action as may
be necessary or appropriate in order to protect the Conversion Rights of the
holders of the Preferred Stock against impairment.
(g) No Fractional Shares and Certificate as to Adjustments.
(i) No fractional shares shall be issued upon
conversion of the Preferred Stock, and the number of shares of Common Stock to
be issued upon conversion shall be rounded to the nearest whole share. Whether
or not fractional shares are issuable upon such conversion shall be determined
on the basis of the total number of shares of Preferred Stock the holder is at
the time converting into Common Stock and the number of shares of Common Stock
issuable upon such aggregate conversion.
(ii) Upon the occurrence of each adjustment or
readjustment of any Conversion Price of Preferred Stock pursuant to this Section
3, the corporation, at its expense, shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and prepare and furnish to each
holder of Preferred Stock a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The corporation shall, upon the written request at any
time of any holder of Preferred Stock, furnish or cause to be furnished to such
holder a like certificate setting forth (A) such adjustment and readjustment,
(B) the Conversion Price at the time in effect, and (C) the number of shares of
Common Stock and the amount, if any, of other property which at the time would
be received upon the conversion of a share of Preferred Stock.
(h) 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 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.
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(i) Reservation of Stock Issuable Upon Conversion. The
corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock solely for the purpose of effecting the
conversion of the shares of the Preferred Stock such number of its shares of
Common Stock as shall from time to time be sufficient to effect the conversion
of all outstanding shares of the Preferred Stock; and if at any time the number
of authorized but unissued shares of Common Stock shall not be sufficient to
effect the conversion of all then outstanding shares of the Preferred Stock, in
addition to such other remedies as shall be available to the holder of such
Preferred Stock, the corporation will take such corporate action as may, in the
opinion of its counsel, be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purposes.
(j) Notices. Any notice required by the provisions of
this Section 3 to be given to the holders of shares of Preferred Stock shall be
sent by airmail, postage prepaid, and addressed to each holder of record at his
address appearing on the books of the corporation, and shall be deemed given ten
(10) days after deposit.
4. Voting Rights.
(a) Each holder of shares of Preferred Stock shall be
entitled to the number of votes equal to the number of shares of Common Stock
into which such Preferred Stock could then be converted (with any fractional
share determined on an aggregate conversion basis being rounded to the nearest
whole share), and with respect to such vote, such holder shall have full voting
rights and powers equal to the voting rights and powers of the holders of Common
Stock (except as otherwise expressly provided herein or as required by law,
voting together with holders of Common Stock, with respect to any question upon
which holders of Common Stock have the right to vote), and shall be entitled,
notwithstanding any provision hereof, to notice of any shareholders' meeting in
accordance with the bylaws of the corporation.
(b) The Board of Directors shall consist of six (6)
directors. The holders of Series A Preferred and Series B Preferred, voting
together as a single class, shall be entitled to elect two (2) directors. So
long as the aggregate number of shares of the Series C Preferred Stock of the
Company that have been voluntarily converted into shares of the Common Stock of
the Company pursuant to Section 3(a)(i) on or after the date of the amendment of
these articles to read as set forth herein (the "Voluntary Conversion Number")
is less than one million (1,000,000) (subject to adjustment for stock splits,
stock dividends, recapitalizations and the like), then the remaining four (4)
directors shall be elected as follows: (i) the holders of the Common Stock,
voting as a separate class, shall be entitled to elect three (3) directors; and
(ii) the holders of the Series C Preferred, voting as a separate series, shall
be entitled to elect one (1) director. If at any time the Voluntary Conversion
Number equals or exceeds one million (1,000,000), however, then, for all times
thereafter, the remaining four (4) directors shall instead be elected in the
following manner: (i) the holders of the Common Stock, voting as a separate
class, shall be entitled to elect three (3) directors (the "Common-Only
Directors"); and (ii) the holders of the Common Stock and the Series C
Preferred, voting together as a single class, shall be entitled to elect one (1)
director (the "Sixth Director"). Furthermore, notwithstanding the second, third
and fourth sentences of this Section 4(b),
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for all times after a Qualified IPO all six (6) directors shall be elected by
the holders of the Common Stock, voting as a separate class.
(c) In the case of any vacancy in the office of a director
occurring among the directors elected by the holders of any series or class or
combination thereof pursuant to Section 4(b) hereof, the remaining director or
directors so elected by such series, class or combination thereof, as the case
may be, may, by affirmative vote of a majority thereof (or the remaining
director so elected if there is but one, or if there is no such director
remaining, by the affirmative vote of the holders of a majority of the shares of
such series, class or combination thereof), elect a successor or successors to
hold the office for the unexpired term of the director or directors whose place
or places shall be vacant. Any director who shall have been elected by the
holders of any series, class or combination thereof in accordance with Section
4(b) or any director so elected as provided in this Section 4(c), may be removed
during the aforesaid term of office, whether with or without cause, only by the
affirmative vote of the holders of a majority of the shares of such series,
class or combination thereof.
5. Protective Provisions.
(a) So long as shares of Preferred Stock are outstanding,
the corporation shall not without first obtaining the approval (by vote or
written consent, as provided by law) of the holders of at least a majority of
the then outstanding shares of Preferred Stock, voting as a separate class:
(i) amend or repeal any provision of, or add any
provision to, the corporation's Articles of Incorporation if such action would
materially and adversely alter or change the rights, preferences or privileges
or powers of, or the restrictions provided for the benefit of, the Preferred
Stock;
(ii) authorize or issue any new class or series of
stock having any preference or priority as to dividends or assets superior to or
on a parity with any such preference or priority of the Preferred Stock;
(iii) reclassify any shares of Common Stock or any
other shares of the corporation into shares having any preference or priority as
to dividends or assets superior to or on a parity with any such preference or
priority of the Preferred Stock;
(iv) sell all or substantially all of its property or
business or merge into or consolidate with any other corporation (other than a
wholly-owned subsidiary corporation) or effect any other transaction or series
of related transactions in which more than fifty percent (50%) of the voting
power of the corporation is disposed of, provided that this Section 5(a)(iv)
shall not apply to a merger effected exclusively for the purpose of changing the
domicile of the corporation; or
(v) liquidate, dissolve or wind up the corporation.
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(b) So long as shares of Series C Preferred are outstanding,
the Company shall not without first obtaining the approval (by vote or written
consent, as provided by law) of the holders of at least a majority of the then
outstanding shares of Series C Preferred, voting as a single series:
(i) amend or repeal any provision of, or add any
provision to, the corporation's Articles of Incorporation if such action would
materially and adversely alter or change the rights, preferences or privileges
or powers of, or the restrictions provided for the benefit of, the Series C
Preferred;
(ii) authorize or issue any new class or series of
stock having any preference or priority as to dividends or assets superior to or
on a parity with any such preference or priority of the Series C Preferred;
(iii) reclassify any shares of Common Stock or any
other shares of the corporation into shares having any preference or priority as
to dividends or assets superior to or on a parity with any such preference or
priority of the Series C Preferred;
(iv) declare or pay any dividends on the Common Stock
(other than in Common Stock);
(v) sell all or substantially all of its property or
business or merge into or consolidate with any other corporation (other than a
wholly-owned subsidiary corporation) or effect any other transaction or series
of related transactions in which more than fifty percent (50%) of the voting
power of the corporation is disposed of if the value of the proceeds from such
transaction to the holders of Series C Preferred Stock is less than $8.25 per
share of Series C Preferred Stock, provided that this Section 5(b)(v) shall not
apply to a merger effected exclusively for the purpose of changing the domicile
(within the United States of America) of the corporation; or
(vi) redeem, purchase or otherwise acquire (or pay into
or set funds aside for a sinking fund for such purpose) any share or shares of
Common Stock; provided, however, that this restriction shall not apply to the
repurchase of shares of Common Stock from employees, officers, directors,
consultants or other persons performing services for the Company pursuant to
agreements under which the Company has the option to repurchase such shares at
cost upon the occurrence of certain events, such as the termination of
employment.
C. Common Stock.
1. Dividend Rights. Subject to the prior rights of holders of all
classes of stock at the time outstanding having prior rights as to dividends,
the holders of the Common Stock shall be entitled to receive, when and as
declared by the Board of Directors, out of any assets of the corporation legally
available therefor, such dividends as may be declared from time to time by the
Board of Directors.
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2. Liquidation Rights. Upon the liquidation, dissolution or winding
up of the corporation, the assets of the corporation shall be distributed as
provided in Section B.2. of this Article III.
3. Redemption. The Common Stock is not redeemable.
4. Voting Rights. The holder of each share of Common Stock shall
have the right to one vote, and shall be entitled to notice of any shareholders
meeting in accordance with the Bylaws of the corporation, and shall be entitled
to vote upon such matters and in such manner as may be provided by law.
ARTICLE IV
A. Limitation of Directors Liability. The liability of the directors of
the corporation for monetary damages shall be eliminated to the fullest extent
permissible under California law.
B. Indemnification of Corporate Agents. The corporation is authorized to
provide indemnification of agents (as defined in Section 317 of the California
Corporations Code) to the fullest extent permissible under California law.
C. Repeal or Modification. Any amendment, repeal or modification of any
provision of this Article IV shall not adversely affect any right or protection
of an agent of this corporation existing at the time of such amendment, repeal
or modification."
* * *
THREE: The foregoing amendment and restatement has been approved by the
Board of Directors of the corporation.
FOUR: The foregoing amendment and restatement was approved by the
holders of the requisite number of shares of the corporation in accordance with
Sections 902 and 903 of the California General Corporation Law. The total number
of outstanding shares entitled to vote with respect to the foregoing amendment
and restatement was 6,751,250 shares of Common Stock and 17,400,000 shares of
Preferred Stock (which number includes 15,400,000 shares of Series A Preferred
and 2,000,000 shares of Series B Preferred). The number of shares voting in
favor of the foregoing amendment and restatement equaled or exceed the vote
required, such required vote being a majority of the outstanding shares of
Common Stock, voting as a separate class; a majority of the outstanding shares
of Preferred Stock, voting as a separate class; a majority of the outstanding
shares of Series A Preferred Stock, voting as a separate series; and a majority
of the outstanding shares of Series B Preferred Stock, voting as a separate
series.
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The undersigned declares under penalty of perjury under the laws of the
State of California that he has read the foregoing Amended and Restated Articles
of Incorporation and that the matters set forth in the foregoing Amended and
Restated Articles of Incorporation are true and correct of his own knowledge.
Executed at Sunnyvale, California on July 7, 2000.
/s/ Peter C. Chang
------------------------------------
Peter C. Chang, President and Secretary
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