EXHIBIT 3.1
CERTIFICATE OF AMENDMENT OF AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION OF
NETFLIX.COM, INC.
NetFlix.com, Inc., a corporation organized and existing under the laws of
the State of Delaware (the "Corporation"), pursuant to the provisions of the
General Corporation Law of the state of Delaware (the "GCL"), DOES HEREBY
CERTIFY as follows:
FIRST: The Amended and Restated Certificate of Incorporation of the
Corporation (the "Certificate") is hereby amended by deleting ARTICLE ONE of the
Certificate in its present form and substituting therefore a new ARTICLE ONE in
the following form:
"The name of this corporation is Netflix, Inc."
SECOND: The amendment to the Certificate set forth in this Certificate of
Amendment has been duly adopted in accordance with the provisions of Sections
242 and 228 of the GCL by (a) the Board of Directors of the Corporation having
duly adopted a resolution setting forth such amendment and declaring its
advisability and submitting it to the stockholders of the Corporation for their
approval, and (b) the stockholders of the Corporation having duly adopted such
amendment by an action by written consent of the holders of a majority of the
outstanding stock entitled to vote thereon.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed and attested by its duly authorized officers this 4th day of March, 2002.
NETFLIX.COM, INC.
By: /s/ Reed Hastings
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Reed Hastings, President and
Chief Executive Officer
ATTEST:
By: /s/ Barry McCarthy
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Barry McCarthy, Secretary
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
NETFLIX.COM, INC.
a Delaware corporation
NetFlix.com, Inc., a corporation organized and existing under the General
Corporation Law of the State of Delaware (the "General Corporation Law") hereby
certifies as follows:
1. That this corporation was originally incorporated on August 29, 1997
under the name Kibble, Inc., pursuant to the General Corporation Law.
2. Pursuant to Sections 242 and 245 of the General Corporation Law, this
Amended and Restated Certificate of Incorporation (this "Certificate") restates
and integrates and further amends the provisions of the Certificate of
Incorporation of this corporation.
3. The text of the Certificate of Incorporation is hereby amended and
restated in its entirety as follows:
ARTICLE I
The name of this corporation is NetFlix.com, Inc.
ARTICLE II
The address of the registered office of this corporation in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, City of Wilmington,
County of New Castle, Delaware 19081. The name of its registered agent at such
address is The Corporation Trust Company.
ARTICLE III
The nature of the business or purposes to be conducted or promoted by this
corporation is to engage in any lawful act or activity for which corporations
may be organized under the General Corporation Law of Delaware.
ARTICLE IV
This corporation is authorized to issue two classes of stock, to be
designated, respectively, "Common Stock" and "Preferred Stock." The total number
of shares that this corporation is authorized to issue is one hundred
thirty-five million four hundred twenty-five thousand fourteen (135,425,014),
each with a par value of $0.001 per share. The number of shares of Preferred
Stock
authorized to be issued is thirty-five million four hundred twenty-five thousand
fourteen (35,425,014), of which five million (5,000,000) are designated "Series
A Preferred Stock," five million seven hundred and seventy six thousand six
hundred and sixteen (5,776,616) are designated "Series B Preferred Stock," four
million seven hundred and fifty thousand (4,750,000) are designated "Series C
Preferred Stock," four million six hundred and fifty thousand (4,650,000) are
designated "Series D Preferred Stock," five million eight hundred seventy four
thousand one hundred ninety nine (5,874,199) are designated "Series E Preferred
Stock," five million eight hundred seventy four thousand one hundred ninety nine
(5,874,199) are designated "Series E-1 Preferred Stock," and three million five
hundred thousand (3,500,000) are designated "Series F Non-Voting Preferred
Stock." The number of shares of Common Stock authorized to be issued is one
hundred million (100,000,000).
Upon the filing of this Certificate, each outstanding share of Series E
Non-Voting Preferred Stock shall be automatically converted into one share of
Series E Preferred Stock which shall have the rights and preferences described
herein without any action on the part of the holder thereof.
No share of Preferred Stock issued by the corporation, if reacquired by the
corporation (whether by redemption, repurchase, conversion to Common Stock or
other means), shall upon such reacquisition resume the status of authorized and
unissued shares of Preferred Stock. No such share shall again be reissued, nor
shall such share be a part of the authorized shares of this corporation.
The corporation shall, from time to time, in accordance with the laws of
the State of Delaware, increase the authorized amount of its Common Stock, and
reserve all shares needed, if at any time the number of shares of Common Stock
remaining unissued and available for issuance shall not be sufficient to permit
conversion of the Preferred Stock.
The relative rights, preferences, privileges and restrictions granted to or
imposed upon the Common Stock, the Series A Preferred Stock, the Series B
Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock, the
Series E Preferred Stock, the Series E-1 Preferred Stock, and the Series F
Non-Voting Preferred Stock are as set forth below.
A. Dividends.
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1. The holders of Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock, Series E Preferred
Stock, and Series E-1 Preferred Stock shall be entitled to receive, when,
as and if declared by the Board of Directors, dividends out of assets of
this corporation legally available therefor at the annual rate as follows:
(a) holders of Series A Preferred Stock shall be entitled to receive
dividends at an annual rate of $0.05 per share (subject to any adjustments
for splits, dividends, combinations and the like applicable to such
shares); (b) holders of Series B Preferred Stock shall be entitled to
receive dividends at an annual rate of $0.0864 per share (subject to any
adjustments for splits, dividends, combinations and the like applicable to
such shares); (c) holders of Series C Preferred Stock shall be entitled to
receive dividends at an annual rate of $0.2616 per share (subject to any
adjustments for splits, dividends, combinations and the like applicable to
such shares); (d) holders of Series D Preferred Stock shall be entitled to
receive dividends at an annual rate of $0.5216 per share (subject to any
adjustments for
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splits, dividends, combinations and the like applicable to such shares);
(e) holders of Series E Preferred Stock shall be entitled to receive
dividends at an annual rate of $0.75 per share (subject to any adjustments
for splits, dividends, combinations and the like applicable to such
shares); and (f) holders of Series E-1 Preferred Stock shall be entitled to
receive dividends at an annual rate of $0.75 per share (subject to any
adjustments for splits, dividends, combinations and the like applicable to
such shares). Dividends pursuant to this paragraph shall be payable in
preference and prior to any payment of any dividend (other than a dividend
on the Common Stock payable solely in the form of additional shares of
Common Stock) on the Common Stock or Series F Non-Voting Preferred Stock.
If, upon the declaration of such dividends, the assets legally available
therefor shall be insufficient to permit the payment to such holders of the
aforesaid preferential amounts, then the entire assets legally available
therefor shall be distributed ratably among the holders of the Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series
D Preferred Stock, Series E Preferred Stock, and Series E-1 Preferred Stock
in proportion to the preferential amount each such holder is otherwise
entitled to receive.
2. Thereafter, the holders of the Common Stock and the Preferred Stock
shall be entitled to receive on a pro-rata basis (treating the Preferred
Stock on an as-if converted basis (subject to any adjustments for splits,
dividends, combinations and the like applicable to such shares)), when, as
and if declared by the Board of Directors, dividends out of assets of this
corporation legally available therefor.
3. The right to dividends on shares of the Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred
Stock, Series E Preferred Stock, and Series E-1 Preferred Stock shall not
be cumulative, and no right shall accrue to holders of Common Stock, Series
A Preferred Stock, the Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock, Series E Preferred Stock, Series E-1 Preferred
Stock, or Series F Non-Voting Preferred Stock by reason of the fact that
dividends on said shares are not declared in any prior period.
B. Liquidation Preference.
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1. Preference. In the event of any liquidation, dissolution or winding
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up of this corporation, either voluntarily or involuntarily, the holders of
the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock, Series D Preferred Stock, Series E Preferred Stock, and Series E-1
Preferred Stock by reason of their ownership thereof shall be entitled to
receive, prior and in preference to any distribution of any of the assets
or surplus funds of this corporation to the holders of the Common Stock,
(a) the amount of $0.50, $1.08, $3.27, $6.52, $9.38 and $9.38 per share
(subject to any adjustments for splits, dividends, combinations and the
like applicable to such shares), respectively, plus (b) an amount equal to
any dividends declared but unpaid on such shares. If upon such liquidation,
dissolution or winding up of this corporation, the assets of this
corporation distributable pursuant to the preceding sentence are
insufficient to provide for the cash payment described above in full to the
holders of the Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, and
Series E-1 Preferred Stock, such assets as are available shall be paid to
the holders of the Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock, Series E
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Preferred Stock, and Series E-1 Preferred Stock in proportion to the full
preferential amount each such holder is otherwise entitled to receive.
Holders of Series F Non-Voting Preferred Stock shall not be entitled to
receive any distribution of any of the assets or surplus funds of this
corporation in preference to the holders of the Common Stock.
After the payment or setting apart of payment to the holders of the
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock, Series D Preferred Stock, Series E Preferred Stock, and Series E-1
Preferred Stock of the preferential amounts so payable to each of them
pursuant to this Article IV(B)(1), each share of Common Stock, Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series
D Preferred Stock, Series E Preferred Stock, Series E-1 Preferred Stock,
and Series F Non-Voting Preferred Stock shall be entitled to receive pro
rata (treating the Preferred Stock on an as-if converted basis (subject to
any adjustments for splits, dividends, combinations and the like applicable
to such shares)) any remaining assets of this corporation; provided,
however, (i) the holders of Series A Preferred Stock shall cease to be
entitled to any distributions under this paragraph upon such time as such
holders have received an aggregate amount per share of Series A Preferred
Stock equal to $1.50 (including any such amounts as are received pursuant
to the first paragraph of this Article IV(B)(1)); (ii) the holders of
Series B Preferred Stock shall cease to be entitled to any distributions
under this paragraph upon such time as such holders have received an
aggregate amount per share of Series B Preferred Stock equal to $3.24
(including any such amounts as are received pursuant to the first paragraph
of this Article IV(B)(1)); (iii) the holders of Series C Preferred Stock
shall cease to be entitled to any distributions under this paragraph upon
such time as such holders have received an aggregate amount per share of
Series C Preferred Stock equal to $9.81 (including any such amounts as are
received pursuant to the first paragraph of this Article IV(B)(1)); (iv)
the holders of Series D Preferred Stock shall cease to be entitled to any
distributions under this paragraph upon such time as such holders have
received an aggregate amount per share of Series D Preferred Stock equal to
$19.56 (including any such amounts as are received pursuant to the first
paragraph of this Article IV(B)(1); (v) the holders of Series E Preferred
Stock shall cease to be entitled to any distributions under this paragraph
upon such time as such holders have received an aggregate amount per share
of Series E Preferred Stock equal to $28.14 (including any such amounts as
are received pursuant to the first paragraph of this Article IV(B)(1)); and
(vi) the holders of Series E-1 Preferred Stock shall cease to be entitled
to any distributions under this paragraph upon such time as such holders
have received an aggregate amount per share of Series E-1 Preferred Stock
equal to $28.14 (including any such amounts as are received pursuant to the
first paragraph of this Article IV(B)(1)). Thereafter, all remaining
proceeds shall be allocated to the holders of Common Stock and Series F
Non-Voting Preferred Stock pro-rata.
2. Consolidation or Merger. When the corporation shall sell, convey,
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or otherwise dispose of or encumber 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
(a "Change in Control"), such transaction or series of transactions shall
be deemed to be a liquidation, dissolution or winding up within the meaning
of this Article IV(B).
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3. Noncash Distributions. If any of the assets of this corporation are
---------------------
to be distributed under this Article IV(B), or for any purpose, in a form
other than cash, then the Board of Directors shall promptly determine in
good faith the value of the assets to be distributed to the holders of
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock, Series D Preferred Stock, Series E Preferred Stock, Series E-1
Preferred Stock, Series F Non-Voting Preferred Stock, and Common Stock.
This corporation shall, upon receipt of such determination, give prompt
written notice of the determination to each holder of shares of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series
D Preferred Stock, Series E Preferred Stock, Series E-1 Preferred Stock,
Series F Non-Voting Preferred Stock, and Common Stock.
C. Conversion. The holders of the Series A Preferred Stock, Series B
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Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock, Series E-1 Preferred Stock, and Series F Non-Voting Preferred
Stock shall have conversion rights as follows (the "Conversion Rights"):
1. Right to Convert. Shares of Preferred Stock shall be convertible,
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without the payment of any additional consideration by the holder thereof,
at the option of the holder thereof, at any time after the date of issuance
of such shares at the office of this corporation or any transfer agent for
the Preferred Stock into a certain number of fully paid and nonassessable
shares of Common Stock as follows: (i) each share of Series A Preferred
Stock shall be convertible into the number of fully paid and nonassessable
shares of Common Stock which results from dividing the Series A Conversion
Price (as hereinafter defined) in effect at the time of conversion into the
Series A Conversion Value (as hereinafter defined); (ii) each share of
Series B Preferred Stock shall be converted into the number of fully paid
and nonassessable shares of Common Stock which results from dividing the
Series B Conversion Price (as hereinafter defined) in effect at the time of
conversion into the Series B Conversion Value (as hereinafter defined);
(iii) each share of Series C Preferred Stock shall be convertible into the
number of fully paid and nonassessable shares of Common Stock which results
from dividing the Series C Conversion Price (as hereinafter defined) in
effect at the time of conversion into the Series C Conversion Value (as
hereinafter defined); (iv) each share of Series D Preferred Stock shall be
convertible into the number of fully paid and nonassessable shares of
Common Stock which results from dividing the Series D Conversion Price (as
hereinafter defined) in effect at the time of conversion into the Series D
Conversion Value (as hereinafter defined); (v) each share of Series E
Preferred Stock shall be convertible into the number of fully paid and
nonassessable shares of Common Stock which results from dividing the Series
E Conversion Price (as hereinafter defined) in effect at the time of
conversion into the Series E Conversion Value (as hereinafter defined);
(vi) each share of Series E-1 Preferred Stock shall be convertible into the
number of fully paid and nonassessable shares of Common Stock which results
from dividing the Series E-1 Conversion Price (as hereinafter defined) in
effect at the time of conversion into the Series E-1 Conversion Value (as
hereinafter defined); and (vii) each share of Series F Non-Voting Preferred
Stock shall be convertible into the number of fully paid and nonassessable
shares of Common Stock which results from dividing the Series F Conversion
Price (as hereinafter defined) in effect at the time of conversion into the
Series F Conversion Value (as hereinafter defined); provided, however, that
the shares of Series F Non-Voting Preferred Stock may not be converted to
shares of Common Stock pursuant to this Article IV(C)(1) until the earlier
of: (A) immediately prior to a Change in Control of the corporation, or (B)
such time as such shares of
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Series F Non-Voting Preferred Stock shall have been sold or transferred to
a third party not affiliated with the initial holder(s) of such shares of
Series F Non-Voting Preferred Stock. Upon the filing of this Certificate
with the Delaware Secretary of State (i) the Series A Conversion Price
shall be $0.50, and the Series A Conversion Value shall be $0.50; (ii) the
Series B Conversion Price shall be $1.08 and the Series B Conversion Value
shall be $1.08; (iii) the Series C Conversion Price shall be $3.27 and the
Series C Conversion Value shall be $3.27; (iv) the Series D Conversion
Price shall be $6.52 and the Series D Conversion Value shall be $6.52; (v)
the Series E Conversion Price shall be $6.52 and the Series E Conversion
Value shall be $9.38; (vi) the Series E-1 Conversion Price shall be $9.38
and the Series E-1 Conversion Value shall be $9.38; and (vii) the Series F
Conversion Price shall be $0.01 and the Series F Conversion Value shall be
$0.01. The Series A Conversion Price, the Series B Conversion Price, the
Series C Conversion Price, the Series D Conversion Price, the Series E
Conversion Price, the Series E-1 Conversion Price, and the Series F
Conversion Price shall be subject to adjustment from time to time as
provided below. The number of shares of Common Stock into which each share
of the Series A Preferred Stock is convertible is hereinafter referred to
as the "Series A Conversion Rate." The number of shares of Common Stock
into which each share of Series B Preferred Stock is convertible is
hereinafter referred to as the "Series B Conversion Rate." The number of
shares of Common Stock into which each share of Series C Preferred Stock is
convertible is hereinafter referred to as the "Series C Conversion Rate."
The number of shares of Common Stock into which each share of Series D
Preferred Stock is convertible is hereinafter referred to as the "Series D
Conversion Rate." The number of shares of Common Stock into which each
share of Series E Preferred Stock is convertible is hereinafter referred to
as the "Series E Conversion Rate." The number of shares of Common Stock
into which each share of Series E-1 Preferred Stock is convertible is
hereinafter referred to as the "Series E-1 Conversion Rate." The number of
shares of Common Stock into which each share of Series F Non-Voting
Preferred Stock is convertible is hereinafter referred to as the "Series F
Conversion Rate."
2. Automatic Conversion.
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(a) Any and all outstanding shares of the Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, and, notwithstanding the provisions of Article
IV(C)(1) above, the Series F Non-Voting Preferred Stock shall
automatically be converted into shares of Common Stock at the then
effective Series A Conversion Rate, Series B Conversion Rate, Series C
Conversion Rate and Series D Conversion Rate, and Series F Conversion
Rate, respectively, immediately upon the closing of a firm commitment
underwritten public offering which is pursuant to an effective
registration statement under the Securities Act of 1933, as amended,
covering the offer and sale of Common Stock and which results in
aggregate gross proceeds to this corporation equal to or in excess of
$20,000,000, prior to deduction of underwriting commissions and
offering expenses (such offering, a "Qualified Initial Public
Offering"). In addition, any and all outstanding shares of the Series
E Preferred Stock and Series E-1 Preferred Stock shall automatically
be converted into shares of Common Stock at the then effective Series
E Conversion Rate and Series E-1 Conversion Rate, respectively,
immediately upon the closing of a firm commitment underwritten public
offering which is pursuant to an effective registration statement
under the Securities Act of 1933, as amended, covering the offer and
sale of Common Stock and which results in aggregate gross proceeds to
this corporation equal to or in excess of $40,000,000,
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prior to deduction of underwriting commissions and offering expenses,
at a per share offering price of at least $5.00 (as adjusted for
recapitalizations, stock combinations, stock dividends, stock splits
and the like) (such offering, a "Series E Qualified Initial Public
Offering"). In addition, all outstanding shares of Series A Preferred
Stock shall be converted into shares of Common Stock at the then
effective Series A Conversion Rate immediately upon the affirmative
consent of the holders of greater than fifty percent (50%) of the then
outstanding shares of Series A Preferred Stock to such conversion.
Furthermore, all outstanding shares of Series B Preferred Stock shall
be converted into shares of Common Stock at the then effective Series
B Conversion Rate immediately upon the affirmative consent of the
holders of seventy-five percent (75%) of the then outstanding shares
of Series B Preferred Stock to such conversion. Furthermore, all
outstanding shares of Series C Preferred Stock shall be converted into
shares of Common Stock at the then effective Series C Conversion Rate
immediately upon the affirmative consent of the holders of
seventy-five percent (75%) of the then outstanding shares of Series C
Preferred Stock to such conversion. Furthermore, all outstanding
shares of Series D Preferred Stock shall be converted into shares of
Common Stock at the then effective Series D Conversion Rate
immediately upon the affirmative consent of the holders of
seventy-five percent (75%) of the then outstanding shares of Series D
Preferred Stock to such conversion. Furthermore, all outstanding
shares of Series E Preferred Stock and Series E-1 Preferred Stock
shall be converted into shares of Common Stock at the then effective
Series E Conversion Rate and Series E-1 Conversion Rate, respectively,
immediately upon the affirmative consent of the holders of
seventy-five percent (75%) of the then outstanding shares of Series E
Preferred Stock and Series E-1 Preferred Stock (voting together as a
single class on an as-converted basis) to such conversion.
(b) If the corporation proposes to consummate any debt or equity
financing closing after the date of the filing of this Certificate (a
"Financing") and, in connection with such Financing, the corporation
requests that the holders of Series E Preferred Stock purchase shares
of such securities to be issued in the Financing (the "Financing
Securities"), the corporation shall deliver a written notice (the
"Financing Notice") to each holder of Series E Preferred Stock
specifying (i) such holder's Pro Rata Amount (as defined below) of the
Financing Securities to be issued and (ii) the amount of such
Financing Securities the corporation requests the holder of Series E
Preferred Stock to purchase in such Financing (such amount the "Series
E Participation Amount"), which Series E Participation Amount shall
not be greater than such holder's Pro Rata Amount. In the event,
within 10 calendar days (or earlier, if such period is waived by such
holder) after the delivery of the Financing Notice, any holder of
shares of Series E Preferred Stock does not purchase its full Series E
Participation Amount, then Article IV(C)(6)(a) below shall not apply
to any shares of Series E Preferred Stock held by such holder with
respect to such Financing and each share of Series E Preferred Stock
held by such holder shall, upon the later of the expiration of such
10-day period or the date this corporation thereafter proceeds to
consummate the Financing, automatically be converted into one share of
Series E-1 Preferred Stock.
Each holder of shares of Series E Preferred Stock that have been
converted into shares of Series E-1 Preferred Stock pursuant to this
Article IV(C)(2)(b) shall, immediately upon written notice from the
corporation, surrender to the corporation at its principal office all
certificates for such Series E Preferred Stock, and the corporation
shall thereupon deliver to such holder a new Series E-1
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Preferred Stock certificate. For the purposes of this Article
IV(C)(2)(b), a holder's "Pro Rata Amount" of a Financing shall be
equal to (X) a fraction, the numerator of which shall be the number of
shares of Preferred Stock of the corporation (calculated on an
as-converted to Common Stock basis) held by such holder, and the
denominator of which shall be the number of shares Common Stock of the
corporation (calculated on an as-converted basis) then outstanding and
held by all stockholders of the corporation multiplied by (Y) the
total number of Financing Securities.
3. Mechanics of Conversion.
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(a) Before any holder of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock,
Series E Preferred Stock, Series E-1 Preferred Stock, or Series F
Non-Voting Preferred Stock shall be entitled to convert the same into
shares of Common Stock, such holder shall surrender the certificate or
certificates therefor, duly endorsed, at the office of this
corporation or of any transfer agent for the Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred
Stock, Series E Preferred Stock, Series E-1 Preferred Stock, or Series
F Non-Voting Preferred Stock, as the case may be, and shall give
written notice to this corporation at such office that such holder
elects to convert the same (except that no such written notice of
election to convert shall be necessary in the event of an automatic
conversion pursuant to Article IV(C)(2) hereof). This corporation
shall, as soon as practicable, after a conversion of any Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock, Series E Preferred Stock, Series E-1
Preferred Stock, or Series F Non-Voting Preferred Stock, as the case
may be, issue and deliver to the holder of such Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock, Series E-1 Preferred Stock
or Series F Non-Voting Preferred Stock, as the case may be, a
certificate or certificates for the number of shares of Common Stock
to which such holder shall be entitled as aforesaid.
(b) In the case of a conversion of Preferred Stock pursuant to
Article IV(C)(1), such conversion shall be deemed to have occurred
immediately prior to the close of business on the date of delivery of
the notice pursuant to Article IV(C)(3)(a). In the case of an
automatic conversion of Preferred Stock pursuant to Article IV(C)(2),
such conversion shall be deemed to have occurred immediately prior to
the closing of the Qualified Initial Public Offering or Series E
Qualified Initial Public Offering, as the case may be, or as set forth
in the consent, as the case may be, and the person or persons entitled
to receive the shares of Common Stock issuable upon such conversion
shall be treated for all purposes as the record holder or holders of
such shares of Common Stock on such date.
4. Fractional Shares. In lieu of any fractional shares to which the
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holder of the Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Series
E-1 Preferred Stock, or Series F Non-Voting Preferred Stock, as the case
may be, would otherwise be entitled, this corporation shall pay cash equal
to such fraction multiplied by the fair market value of one share of Series
A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock, Series E Preferred Stock, Series E-1 Preferred
Stock, or Series F Non-Voting Preferred Stock, as the case may be, as
determined in good faith by the Board of Directors. Whether or not
fractional shares are issuable upon such conversion
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shall be determined on the basis of the total number of shares of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series
D Preferred Stock, Series E Preferred Stock, Series E-1 Preferred Stock, or
Series F Non-Voting Preferred Stock, as the case may be, of each holder at
the time converting into Common Stock and the number of shares of Common
Stock issuable upon such aggregate conversion.
5. Adjustment of Series A, Series B, Series C, Series D, Series E,
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Series E-1, and Series F Conversion Price. The Series A Conversion Price,
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Series B Conversion Price, Series C Conversion Price, Series D Conversion
Price, Series E Conversion Price, Series E-1 Conversion Price, and Series F
Conversion Price shall be subject to adjustment from time to time as
follows:
(a) If the number of shares of Common Stock outstanding at any
time after the date hereof 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, on the date such payment is made or such change is
effective, the Series A Conversion Price, Series B Conversion Price,
Series C Conversion Price, Series D Conversion Price, Series E
Conversion Price, Series E-1 Conversion Price, and Series F Conversion
Price shall each be appropriately decreased so that the number of
shares of Common Stock issuable on conversion of any shares of the
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock, Series D Preferred Stock, Series E Preferred Stock, Series E-1
Preferred Stock, or Series F Non-Voting Preferred Stock, respectively,
shall be increased in proportion to such increase of outstanding
shares.
(b) If the number of shares of Common Stock outstanding at any
time after the date hereof is decreased by a combination of the
outstanding shares of Common Stock, then, on the effective date of
such combination, the Series A Conversion Price, Series B Conversion
Price, Series C Conversion Price, Series D Conversion Price, Series E
Conversion Price, Series E-1 Conversion Price, and Series F Conversion
Price shall each be appropriately increased so that the number of
shares of Common Stock issuable on conversion of any shares of the
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock, Series D Preferred Stock, Series E Preferred Stock, Series E-1
Preferred Stock, or Series F Non-Voting Preferred Stock, respectively,
shall be decreased in proportion to such decrease in outstanding
shares.
(c) In case this corporation shall declare a cash dividend upon
its Common Stock payable otherwise than out of retained earnings or
shall distribute to holders of its Common Stock shares of its capital
stock (other than Common Stock), or securities of other persons,
evidences of indebtedness issued by this corporation or other persons,
assets (excluding cash dividends) or options or rights (excluding
options to purchase and rights to subscribe for Common Stock or other
securities of this corporation convertible into or exchangeable for
Common Stock), then, in each such case, the holders of the shares of
the Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock, Series E Preferred Stock,
Series E-1 Preferred Stock, and Series F Non-Voting Preferred Stock
shall, concurrent with the distribution to holders of Common Stock,
receive a like distribution based upon the number of shares of Common
Stock into which the Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock, Series E-1 Preferred Stock, or Series F Non-Voting
Preferred Stock, respectively, is convertible.
- 9 -
(d) Subject to the provisions of Article IV(B), in the case, at
any time after the date hereof, of any capital reorganization, or any
reclassification of the stock of this corporation (other than as a
result of a stock dividend or subdivision, split-up or combination of
shares), or the consolidation or merger of this corporation with or
into another entity or entities (other than a consolidation or merger
in which this corporation is the continuing entity and which does not
result in any change in the Common Stock), or of the sale or other
disposition of all or substantially all the properties and assets of
this corporation, the shares of the Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock,
Series E Preferred Stock, Series E-1 Preferred Stock, and Series F
Non-Voting Preferred Stock shall, after such reorganization,
reclassification, consolidation, merger, sale or other disposition,
each be convertible into the (x) kind and (y) number, of shares of
stock or other securities or property of this corporation to which
such holder would have been entitled if immediately prior to such
reorganization, reclassification, consolidation, merger, sale or other
disposition it had converted its shares of the Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock, Series E-1 Preferred Stock,
or Series F Non-Voting Preferred Stock, as the case may be, into
Common Stock. The provisions of this paragraph shall similarly apply
to successive reorganizations, reclassifications, consolidations,
mergers, sales or other dispositions.
(e) All calculations under this Article IV(C) shall be made to
the nearest cent or to the nearest one one-hundredth (1/100) of a
share, as the case may be.
(f) For the purpose of any computation pursuant to this Article
IV(C)(5) or pursuant to Article IV(C)(6) below, the "Current Market
Price" at any date of one share of Common Stock, shall be deemed to be
the average of the highest reported bid and the lowest reported offer
prices on the preceding business day as furnished by the National
Quotation Bureau, Incorporated (or equivalent recognized source of
quotations); provided, however, that if the Common Stock is not traded
in such manner that the quotations referred to in this paragraph (f)
are available for the period required hereunder, Current Market Price
shall be determined in good faith by the Board of Directors.
6. Special Adjustment of Series C, Series D and Series E Conversion
----------------------------------------------------------------
Price. In addition to those adjustments set forth in Article IV(C)(5)
-----
above, the Conversion Price of the Series C Preferred Stock, Series D
Preferred Stock and Series E Preferred Stock shall be subject to adjustment
from time to time as follows:
(a) If this corporation shall issue any Common Stock other than
"Excluded Stock" (as defined below) for a consideration per share less
than the Series C Conversion Price, Series D Conversion Price or
Series E Conversion Price in effect immediately prior to the issuance
of such Common Stock (excluding stock dividends, subdivisions,
split-ups, combinations, dividends or recapitalizations which are
addressed in Articles IV(C)(5)(a), (b), (c) and (d)), then and in such
event (except as otherwise provided in this Article IV(C)(6)), such
Series C Conversion Price, Series D Conversion Price or Series E
Conversion Price, as the case may be, shall be reduced, concurrently
with such issue, to a price determined by multiplying such Series C
Conversion Price, Series D Conversion Price or Series E Conversion
Price, as the case may be, by a fraction, (x) the numerator of which
shall be the number of shares of Common Stock outstanding (including
any
- 10 -
shares of Common Stock issuable upon conversion of any Preferred Stock
or other security or upon exercise of rights, options or warrants to
acquire Common Stock (including shares deemed to have been issued
pursuant to subdivision (C) of this clause (a))) immediately prior to
such issue plus the number of shares of Common Stock which the
aggregate consideration received by the corporation for the total
number of shares of Common Stock so issued would purchase at such
Series C Conversion Price, Series D Conversion Price or Series E
Conversion Price, as the case may be, and (y) the denominator of which
shall be the number of shares of Common Stock outstanding (including
any shares of Common Stock issuable upon conversion of any Preferred
Stock or other security or upon exercise of rights, options or
warrants to acquire Common Stock (including shares deemed to have been
issued pursuant to subdivision (C) of this clause (a))) prior to such
issue plus the number of such shares of Common Stock so issued (or
deemed issued).
For purposes of any adjustment of the Series C Conversion Price,
Series D Conversion Price or Series E Conversion Price pursuant to
this clause (a), the following provisions shall be applicable:
(A) 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 discounts or commissions paid or
incurred by this corporation in connection with the issuance and
sale thereof.
(B) In the case of the issuance of 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
market value thereof as determined by the Board of Directors, in
accordance with generally accepted accounting principles;
provided, however, that if, at the time of such determination,
this corporation's Common Stock is traded in the over-the-counter
market or on a national or regional securities exchange, such
fair market value as determined by the Board of Directors shall
not exceed the aggregate Current Market Price of the shares of
Common Stock being issued.
(C) In the case of the issuance of (1) options to purchase
or rights to subscribe for Common Stock (other than Excluded
Stock), (2) securities by their terms convertible into or
exchangeable for Common Stock (other than Excluded Stock), or (3)
options to purchase or rights to subscribe for such convertible
or exchangeable securities:
(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 subdivisions (A) and
(B) above), if any, received by this 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
- 11 -
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 received by this corporation for any
such securities and related options or rights (excluding any
cash received on account of accrued interest or accrued
dividends), plus the minimum additional consideration, if
any, to be received by this 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 subdivisions (A) and
(B) above);
(3) on any change in the number of shares of Common
Stock deliverable upon exercise of any such options or
rights or conversion of or exchange for such convertible or
exchangeable securities, or on any change in the minimum
purchase price of such options, rights or securities, other
than a change resulting from the antidilution provisions of
such options, rights or securities, the Series C Conversion
Price, Series D Conversion Price and Series E Conversion
Price shall forthwith be readjusted to such Series C
Conversion Price, Series D Conversion Price and Series E
Conversion Price, respectively, as would have been obtained
had the adjustment made upon (x) the issuance of such
options, rights or securities not exercised, converted or
exchanged prior to such change, as the case may be, been
made upon the basis of such change or (y) the options or
rights related to such securities not converted or exchanged
prior to such change, as the case may be, been made upon the
basis of such change; and
(4) on 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 Series C
Conversion Price, Series D Conversion Price and Series E
Conversion Price shall forthwith be readjusted to such
Series C Conversion Price, Series D Conversion Price and
Series E Conversion Price, respectively, as would have been
obtained had the adjustment made upon the issuance of such
options, rights, convertible or exchangeable securities or
options or rights related to such convertible or
exchangeable securities, as the case may be, been made upon
the basis of 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
convertible or exchangeable securities or upon the exercise
of the options or rights related to such convertible or
exchangeable securities, as the case may be.
(b) "Excluded Stock" shall mean:
(i) all shares of Common Stock issued and outstanding on the date
this Certificate is filed with the Delaware Secretary of State and all
shares of Common Stock issuable upon exercise of options, warrants or
other convertible securities outstanding on such date;
(ii) all shares of Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock, Series E-1 Preferred Stock, Series F Non-Voting
Preferred Stock and the Common Stock into which the shares of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock, Series E Preferred Stock, Series E-1
Preferred Stock and Series F Non-Voting Preferred Stock are
convertible and any shares of Common Stock issued or issuable as a
dividend or distribution on
- 12 -
the Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock, Series E Preferred Stock,
Series E-1 Preferred Stock or Series F Non-Voting Preferred Stock;
(iii) all shares of Common Stock or options to purchase Common
Stock or other securities issued or issuable to employees, consultants
or directors of this corporation pursuant to any plan or other
arrangement approved by the Board of Directors;
(iv) all shares of Common Stock, options or warrants to purchase
Common Stock or other securities issued to banks, building developers,
equipment lessors or similar institutions provided such issuances are
for other than primarily equity financing purposes and are approved by
the Board of Directors; and
(v) all shares of capital stock, options or warrants to purchase
capital stock or other securities issued to movie studios or other
movie or DVD distributors, provided such issuances are for other than
primarily equity financing purposes and are approved by the Board of
Directors.
All outstanding shares of Excluded Stock (including any shares
issuable upon conversion of the Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock,
Series E Preferred Stock, Series E-1 Preferred Stock or Series F
Non-Voting Preferred Stock) shall be deemed to be outstanding for all
purposes of the computations of Article IV(C)(6)(a) above.
7. Minimal Adjustments. No adjustment in either the Series A
-------------------
Conversion Price, Series B Conversion Price, Series C Conversion Price,
Series D Conversion Price, Series E Conversion Price, Series E-1 Conversion
Price, or Series F Conversion Price need be made if such adjustment would
result in a change in such conversion price of less than $0.01. Any
adjustment of less than $0.01 which is not made shall be carried forward
and shall be made at the time of and together with any subsequent
adjustment which, on a cumulative basis, amounts to an adjustment of $0.01
or more in the Series A Conversion Price, Series B Conversion Price, Series
C Conversion Price, Series D Conversion Price, Series E Conversion Price,
Series E-1 Conversion Price, or Series F Conversion Price, as the case may
be.
8. No Impairment. This corporation will not, 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 this corporation, but will
at all times in good faith assist in the carrying out of all the provisions
of this Article IV(C) and in the taking of all such action as may be
necessary or appropriate in order to protect the Conversion Rights of the
holders of the Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Series
E-1 Preferred Stock, and Series F Non-Voting Preferred Stock against
impairment. This provision shall not restrict this corporation's right to
amend this Certificate with the requisite stockholder consent whether such
stockholder consent is required by law or the terms of this Certificate.
- 13 -
9. Certificate as to Adjustments. Upon the occurrence of each
-----------------------------
adjustment or readjustment of the Series A Conversion Rate, Series B
Conversion Rate, Series C Conversion Rate, Series D Conversion Rate, Series
E Conversion Rate, Series E-1 Conversion Rate, or Series F Conversion Rate
pursuant to this Article IV(C), this 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 Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock, Series E-1 Preferred Stock, or
Series F Non-Voting Preferred Stock, as the case may be, a certificate
setting forth such adjustment or readjustment and describing the facts upon
which such adjustment or readjustment is based. This corporation shall,
upon written request at any time of any holder of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred
Stock, Series E Preferred Stock, Series E-1 Preferred Stock, or Series F
Non-Voting Preferred Stock furnish or cause to be furnished to such holder
a like certificate setting forth (i) such adjustments and readjustments,
(ii) the applicable Conversion Rate at the time in effect, and (iii) the
number of shares of Common Stock and the amount, if any, of other property
which at the time would be received upon the conversion of the Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series
D Preferred Stock, Series E Preferred Stock, Series E-1 Preferred Stock, or
Series F Non-Voting Preferred Stock.
10. Notices of Record Date. In the event of any taking by this
----------------------
corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any right to
subscribe for, purchase or otherwise acquire any shares of stock of any
class or any other securities or property or to receive any other right,
this corporation shall mail to each holder of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred
Stock, Series E Preferred Stock, Series E-1 Preferred Stock, and Series F
Non-Voting Preferred Stock at least twenty (20) days prior to such record
date, a notice specifying the date on which any such record is to be taken
for the purpose of such dividend or distribution or right, and the amount
and character of such dividend, distribution or right.
11. Reservation of Stock Issuable Upon Conversion. This corporation
---------------------------------------------
shall at all times reserve and keep available out of its authorized but
unissued shares of Common Stock solely for the purpose of effecting the
conversion of the shares of the Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series
E Preferred Stock, Series E-1 Preferred Stock, and Series F Non-Voting
Preferred Stock such number of its shares of Common Stock as shall from
time to time be sufficient to effect the conversion of all outstanding
shares of the Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Series
E-1 Preferred Stock, and Series F Non-Voting Preferred Stock; and if at any
time the number of authorized but unissued shares of Common Stock shall not
be sufficient to effect the conversion of all then outstanding shares of
the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock, Series D Preferred Stock, Series E Preferred Stock, Series E-1
Preferred Stock, and Series F Non-Voting Preferred Stock this corporation
will take such corporate action as may, in the opinion of its counsel, be
necessary to increase its authorized but unissued shares of Common Stock to
such number of shares as shall be sufficient for such purpose.
- 14 -
12. Notices. Any notice required by the provisions of this Section C
-------
to be given to the holder of shares of the Series A Preferred Stock, Series
B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock,
Series E Preferred Stock, Series E-1 Preferred Stock, or Series F
Non-Voting Preferred Stock, as the case may be, shall be deemed given by
courier service or five days after being deposited in the United States
mail, postage prepaid, and addressed to each holder of record at his
address appearing on the books of this corporation; or if by facsimile,
upon proper confirmation of receipt.
D. Redemption.
----------
1. In the event that any holder (a "Redeeming Holder") of outstanding
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred
Stock, Series E Preferred Stock, or Series E-1 Preferred Stock, as the case
may be, gives written notice (the "Notice") to this corporation of a demand
for redemption of its Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock, Series E Preferred Stock, or Series E-1 Preferred
Stock during the period commencing June 12, 2004 and ending sixty (60) days
thereafter, this corporation shall, to the extent it may lawfully do so,
redeem in four (4) annual installments beginning one hundred twenty (120)
days following receipt by this corporation of proper demand for redemption,
25% of the Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock, or Series E-1 Preferred Stock as
the case may be, per year at a redemption price per share (the "Redemption
Price") equal to the sum of (i) $1.08, in the case of the Series B
Preferred Stock, $3.27, in the case of the Series C Preferred Stock, $6.52,
in the case of Series D Preferred Stock, or $9.38, in the case of Series E
Preferred Stock and Series E-1 Preferred Stock (subject to adjustments for
any split, combination or the like), plus (ii) an amount equal to any
dividends declared but unpaid on the shares of Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock, Series E Preferred
Stock, or Series E-1 Preferred Stock so redeemed. A redemption of only a
part of the number of shares required to be redeemed in any one installment
pursuant to this Article IV(D) shall be pro rata among all Redeeming
Holders according to the aggregate Redemption Price payable to such
Redeeming Holders. Within ten (10) days of receipt of the Notice, the
corporation shall send written notice to all holders of Series B Preferred
Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock and Series E-1 Preferred Stock of the pending redemption
and such holders shall have ten (10) days from receipt of such notice to
send written notice of intention to join in such redemption.
2. At least thirty (30) days but no more than sixty (60) days prior to
the date fixed for any redemption of the Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, or
Series E-1 Preferred Stock (hereinafter referred to as the "Redemption
Date"), written notice shall be mailed, postage prepaid, to each holder of
record (determined at the close of business on the business day preceding
the day on which notice is given) of Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, or
Series E-1 Preferred Stock to be redeemed, at his or her address last shown
on the records of this corporation, notifying such holder of the redemption
of such shares, specifying the Redemption Date, the Redemption Price and
the date on which such holder's rights to conversion as to such shares
terminate and calling upon such holder to surrender to this corporation, in
the manner and at the place designated, his or her certificate or
certificates representing the shares to be redeemed (such
- 15 -
notice is hereinafter referred to as the "Redemption Notice"). In the event
fewer than all the shares represented by any such certificate are redeemed,
a new certificate shall be issued representing the unredeemed shares.
3. Three (3) days prior to the Redemption Date, this corporation shall
deposit the Redemption Price of all outstanding shares of the Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series
E Preferred Stock, and Series E-1 Preferred Stock designated for redemption
in the Redemption Notice, and not yet redeemed or converted, with a bank or
trust company chosen by this corporation as a trust fund for the benefit of
the respective holders of the shares designated for redemption and not yet
redeemed. Simultaneously, this corporation shall deposit irrevocable
instruction and authority to such bank or trust company to publish the
notice of redemption thereof (or to complete such publication if
theretofore commenced) and to pay, on and after the date fixed for
redemption or prior thereto, the Redemption Price of the Series B Preferred
Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock, or Series E-1 Preferred Stock to the holders thereof upon
surrender of their certificates. Any monies deposited by this corporation
pursuant to this Article IV(D)(3) for the redemption of shares which are
thereafter converted into shares of Common Stock pursuant to Article IV(C)
hereof no later than the close of business on the Redemption Date shall be
returned to this corporation forthwith upon such conversion. The balance of
any monies deposited by this corporation pursuant to this Article IV(D)(3)
remaining unclaimed at the expiration of one year following the Redemption
Date shall thereafter be returned to this corporation, provided that the
holder to which such money would be payable hereunder shall be entitled,
upon proof of his, her or its ownership of the Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock, Series E Preferred
Stock, or Series E-1 Preferred Stock and payment of any bond requested by
this corporation, to receive such monies but without interest from the
Redemption Date.
4. If, on or prior to the Redemption Date, the funds necessary for
such redemption shall have been set aside by this corporation and deposited
with a bank or trust company for the benefit of the holders of Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series
E Preferred Stock, and/or Series E-1 Preferred Stock whose shares are being
redeemed, then, from and after the Redemption Date, unless there shall have
been a default in payment of the Redemption Price, all dividends on the
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred
Stock, Series E Preferred Stock, and Series E-1 Preferred Stock designated
for redemption in the Redemption Notice shall cease to accrue, all rights
of the holders of such shares as holders of Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock, Series E Preferred
Stock, or Series E-1 Preferred Stock (except the right to receive the
Redemption Price without interest upon surrender of their certificate or
certificates and the right to receive any declared but unpaid dividends)
shall cease with respect to such shares, and such shares shall not
thereafter be transferred on the books of this corporation or be deemed to
be outstanding for any purpose whatsoever. If the funds of this corporation
legally available for redemption of shares of Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock, Series E Preferred
Stock, and/or Series E-1 Preferred Stock on any Redemption Date are
insufficient to redeem the total number of shares of Series B Preferred
Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock, and/or Series E-1 Preferred Stock to be redeemed on such
date, those funds which are legally available will be used to redeem the
maximum possible number of such shares in
- 16 -
accordance with the provisions of paragraph D(1) above. The shares of
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred
Stock, Series E Preferred Stock and Series E-1 Preferred Stock not redeemed
shall remain outstanding and entitled to all the rights and preferences
provided herein. At any time thereafter when additional funds of this
corporation are legally available for the redemption of shares of Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series
E Preferred Stock, and/or Series E-1 Preferred Stock such funds will
immediately be used to redeem the balance of the shares that this
corporation has become obligated to redeem on any Redemption Date but which
it has not redeemed.
E. Voting Rights; Protective Provisions.
------------------------------------
1. Voting Rights.
-------------
(a) General. Except as otherwise required by law or as otherwise
-------
set forth herein, each holder of Common Stock shall have one vote for
each share of Common Stock so held, and each holder of Preferred Stock
other than holders of Series F Non-Voting Preferred Stock with respect
to such shares shall be entitled to the number of votes equal to the
number of shares of Common Stock into which the shares of Preferred
Stock so held could be converted at the record date for determination
of the stockholders entitled to vote, or, if no such record date is
established, at the date such vote is taken or any written consent of
stockholders is solicited. Except as required by law and as set forth
in Article IV(E)(2)(f) below, the holders of Series F Non-Voting
Preferred Stock shall have no right to vote with respect to such
shares, and the holders of Series E Preferred Stock and Series E-1
Preferred Stock shall not have the right to vote with respect to such
shares for the election of directors of this corporation. Except as
required by law or as otherwise set forth herein, all shares of
Preferred Stock and all shares of Common Stock shall vote together as
a single class on all matters to come before the stockholders of this
corporation. Fractional votes by the holders of Preferred Stock shall
not, however, be permitted, and any fractional voting rights shall
(after aggregating all shares into which shares of Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock and, if applicable, Series E Preferred Stock, Series
E-1 Preferred Stock, and Series F Non-Voting Preferred Stock held by
each holder could be converted) be disregarded.
(b) Board of Directors. The Board of Directors shall be fixed at
------------------
seven (7) directors. For so long as not less than seventy-five percent
(75%) of the shares of Series B Preferred Stock outstanding as of June
18, 1999 remain outstanding, the holders of the Series B Preferred
Stock, voting as a separate class, shall be entitled to elect one (1)
director at each annual meeting of stockholders (the "Series B
Director"). Further, for so long as not less than seventy-five percent
(75%) of the shares of Series C Preferred Stock outstanding as of June
18, 1999 remain outstanding, the holders of the Series C Preferred
Stock, voting as a separate class, shall be entitled to elect one (1)
director at each annual meeting of stockholders (the "Series C
Director"). Further, for so long as not less than seventy-five percent
(75%) of the authorized shares of Series D Preferred Stock remain
outstanding, the holders of the Series D Preferred Stock, voting as a
separate class, shall be entitled to elect one (1) director at each
annual meeting of stockholders (the "Series D Director"). All other
members of the Board of Directors shall be elected by the holders of
the Common Stock and the Preferred Stock, other than the Series E
Preferred Stock, Series E-1 Preferred Stock and Series F
- 17 -
Non-Voting Preferred Stock, then issued and outstanding as a group. So
long as seventy-five percent (75%) of the shares of Series B Preferred
Stock and Series C Preferred Stock outstanding as of June 18, 1999 and
seventy-five percent (75%) of the authorized shares of Series D
Preferred Stock remain outstanding, as the case may be, the Series B
Director, the Series C Director and the Series D Director, as the case
may be, may be removed from the Board of Directors only by the
affirmative vote of the holders of a majority of the Series B
Preferred Stock, Series C Preferred Stock and Series D Preferred
Stock, as the case may be, voting separately as a single class; the
remaining directors may be removed from the Board of Directors only by
the affirmative vote of the holders of a majority of the Common Stock
and the Preferred Stock, other than the Series E Preferred Stock,
Series E-1 Preferred Stock and Series F Non-Voting Preferred Stock,
voting together as a group. If a vacancy on the Board of Directors is
to be filled by the Board of Directors, only a director or directors
elected by the same class or classes of stockholders as those who
would be entitled to vote to fill such vacancy, if any, shall vote to
fill such vacancy.
2. Protective Provisions.
---------------------
(a) This corporation shall not, without first obtaining the
approval of the holders of not less than a majority of the total
number of shares of Series A Preferred Stock then outstanding, voting
as a separate class:
(i) alter or change in any material respect the rights,
preferences or privileges of the Series A Preferred Stock;
(ii) amend this Certificate to increase the number of
authorized shares of Series A Preferred Stock;
(iii) issue any new equity security ranking senior or pari
passu with the Series A Preferred Stock with respect to rights,
preferences or privileges; or
(iv) declare or pay any dividends on any junior securities.
(b) This corporation shall not, without first obtaining the
approval of the holders of not less than sixty-six percent (66%) of
the total number of shares of Series B Preferred Stock then
outstanding, voting as a separate class:
(i) alter or change in any material respect the rights,
preferences or privileges of the Series B Preferred Stock;
(ii) issue any new equity security ranking senior or pari
passu with the Series B Preferred Stock with respect to any
rights, preferences or privileges of the Series B Preferred
Stock;
(iii) declare or pay any dividends on any junior securities;
(iv) except as set forth in Article IV(D), repurchase any
Common or Preferred Stock (this restriction shall not apply to
the repurchase of shares of Common Stock from
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employees, officers, directors, consultants or other persons
performing services for the corporation or any subsidiary
pursuant to agreements under which the corporation has the option
to repurchase such shares at cost upon the occurrence of certain
events, such as the termination of employment, or through the
exercise of any right of first refusal); or
(v) reclassify or recapitalize any equity securities of this
corporation.
(c) This corporation shall not, without first obtaining the
approval of the holders of not less than sixty-six percent (66%) of
the total number of shares of Series C Preferred Stock then
outstanding, voting as a separate class:
(i) alter or change in any material respect the rights,
preferences or privileges of the Series C Preferred Stock;
(ii) issue any new equity security ranking senior or pari
passu with the Series C Preferred Stock with respect to any
rights, preferences or privileges of the Series C Preferred
Stock;
(iii) declare or pay any dividends on any junior securities;
(iv) except as set forth in Article IV(D), repurchase any
Common or Preferred Stock (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 corporation or any subsidiary pursuant to
agreements under which the corporation has the option to
repurchase such shares at cost upon the occurrence of certain
events, such as the termination of employment, or through the
exercise of any right of first refusal);
(v) reclassify or recapitalize any equity securities of this
corporation; or
(vi) amend this Certificate to increase the number of
authorized shares of Series C Preferred Stock.
(d) This corporation shall not, without first obtaining the
approval of the holders of not less than sixty-six percent (66%) of
the total number of shares of Series D Preferred Stock then
outstanding, voting as a separate class:
(i) alter or change in any material respect the rights,
preferences or privileges of the Series D Preferred Stock;
(ii) issue any new equity security ranking senior or pari
passu with the Series D Preferred Stock with respect to any
rights, preferences or privileges of the Series D Preferred
Stock;
(iii) declare or pay any dividends on any junior securities;
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(iv) except as set forth in Article IV(D), repurchase any
Common or Preferred Stock (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 corporation or any subsidiary pursuant to
agreements under which the corporation has the option to
repurchase such shares at cost upon the occurrence of certain
events, such as the termination of employment, or through the
exercise of any right of first refusal);
(v) reclassify or recapitalize any equity securities of this
corporation; or
(vi) amend this Certificate to increase the number of
authorized shares of Series D Preferred Stock.
(e) This corporation shall not, without first obtaining the
approval of the holders of not less than sixty-six percent (66%) of
the total number of shares of Series E Preferred Stock and Series E-1
Preferred Stock then outstanding, voting together as a single series
on an as-converted basis but as a separate class:
(i) alter or change in any material respect the rights,
preferences or privileges of the Series E Preferred Stock or
Series E-1 Preferred Stock;
(ii) issue any new equity security ranking senior or pari
passu with the Series E Preferred Stock or Series E-1 Preferred
Stock with respect to any rights, preferences or privileges of
the Series E Preferred Stock or Series E-1 Preferred Stock;
(iii) declare or pay any dividends on any junior securities;
(iv) except as set forth in Article IV(D), repurchase any
Common or Preferred Stock (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 corporation or any subsidiary pursuant to
agreements under which the corporation has the option to
repurchase such shares at cost upon the occurrence of certain
events, such as the termination of employment, or through the
exercise of any right of first refusal);
(v) reclassify or recapitalize any equity securities of this
corporation; or
(vi) amend this Certificate to increase the number of
authorized shares of Series E Preferred Stock or Series E-1
Preferred Stock.
(f) This corporation shall not, without first obtaining the
approval of the holders of not less than a majority of the total
number of shares of Series F Non-Voting Preferred Stock then
outstanding, voting as a separate class:
(i) alter or change in any material respect the rights,
preferences or privileges of the Series F Non-Voting Preferred
Stock;
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(ii) except as set forth in Article IV(D), repurchase any
Common or Preferred Stock (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 corporation or any subsidiary pursuant to
agreements under which the corporation has the option to
repurchase such shares at cost upon the occurrence of certain
events, such as the termination of employment, or through the
exercise of any right of first refusal);
(iii) reclassify or recapitalize any equity securities of
this corporation pursuant to which the rights, preferences or
privileges of the Series F Non-Voting Preferred Stock are
adversely affected in a disproportionately greater manner than
the other series of Preferred Stock as reasonably determined by
the Board of Directors of the corporation; or
(iv) issue any Series F Non-Voting Preferred Stock to any
person other than (A) to a movie studio or other movie or DVD
distributor or any other person with whom the corporation has a
strategic business relationship, (B) for other than primarily
equity financing purposes and (C) as approved by the Board of
Directors.
(g) This corporation shall not, without first obtaining the
approval of the holders of not less than a majority of the total
number of shares of Preferred Stock (other than the Series F
Non-Voting Preferred Stock) then outstanding, voting as a separate
class on an as-converted basis:
(i) merge or consolidate with any other corporation in a
transaction in which (A) the holders of this corporation's
capital stock prior to the consummation of such event hold less
than 50% of the voting power of the surviving entity; and (B) the
consideration per share received by the holders of Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred
Stock, Series E Preferred Stock and Series E-1 Preferred Stock is
less than $4.32, $6.54, $13.04, $18.76 and $18.76, respectively;
or
(ii) sell, lease, convey, exchange, transfer or otherwise
dispose of all or substantially all of the assets of this
corporation in a transaction in which the consideration per share
received by the holders of Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock, Series E Preferred
Stock and Series E-1 Preferred Stock is less than $4.32, $6.54,
$13.04, $18.76 and $18.76, respectively.
(h) This corporation shall not, without first obtaining the
approval of the holders of not less than seventy-five percent (75%) of
the total number of shares of Preferred Stock (other than the Series F
Non-Voting Preferred Stock) then outstanding, voting as a separate
class on an as-converted basis, amend this Certificate to increase the
authorized number of shares of Preferred Stock other than additional
shares of Series F Non-Voting Preferred Stock.
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ARTICLE V
To the fullest extent permitted by the General Corporation Law as the same
exists or as may hereafter be amended, a director of this corporation shall not
be personally liable to this corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director.
This corporation shall indemnify to the fullest extent permitted by law any
person made or threatened to be made a party to an action or proceeding, whether
criminal, civil, administrative or investigative, by reason of the fact that he,
his testator or intestate is or was a director or officer of this corporation or
any predecessor of this corporation or serves or served at any other enterprise
as a director, officer or employee at the request of this corporation or any
predecessor to this corporation.
Neither any amendment nor repeal of this Article V, nor the adoption of any
provision of this Certificate inconsistent with this Article V, shall eliminate
or reduce the effect of this Article V, in respect of any matter occurring, or
any cause of action, suit, claim or proceeding that, but for this Article V,
would accrue or arise, prior to such amendment, repeal or adoption of an
inconsistent provision.
ARTICLE VI
This corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate, in the manner now or hereafter
prescribed by statute or this Certificate, and all rights conferred upon
stockholders herein are granted subject to this reservation.
ARTICLE VII
In furtherance and not in limitation of the powers conferred by statute,
the Board of Directors is expressly authorized to make, alter, amend or repeal
the Bylaws of this corporation.
ARTICLE VIII
Elections of directors need not be by written ballot unless the Bylaws of
this corporation shall so provide.
ARTICLE IX
Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws may provide. The books of this corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the Bylaws of this corporation.
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ARTICLE X
This corporation is to have perpetual existence.
I hereby further declare and certify under penalty of perjury under the
laws of the State of Delaware that the facts set forth in the foregoing
certificate are true and correct of my own knowledge and that this certificate
is my act and deed.
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IN WITNESS WHEREOF, NetFlix.com, Inc. has caused this Amended and Restated
Certificate of Incorporation to be executed by its President and attested by its
Secretary this 5th day of July, 2001.
NETFLIX.COM, INC.,
a Delaware corporation
/s/ Reed Hastings
-------------------------------------------
Reed Hastings
Chief Executive Officer
Attest:
By:/s/ W. Barry McCarthy
---------------------------------
W. Barry McCarthy, Secretary
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