Exhibit 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
NETFLIX, INC.
a Delaware corporation
Netflix, 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, 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-seven million nine hundred twenty-five thousand fourteen
(137,925,014), each with a par value of $0.001 per share. The number of shares
of Preferred Stock authorized to be issued is thirty-seven million nine hundred
twenty-five thousand fourteen (37,925,014), 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 six million (6,000,000) 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).
Immediately upon the filing of this Certificate (the "Filing Date"), each
three (3) outstanding shares of the corporation's Common Stock will be exchanged
and combined, automatically and without further action, into one (1) share of
Common Stock. Such combination shall be effected on a holder-by-holder basis. In
lieu of issuing any fractional shares to which the holders of Common Stock would
otherwise be entitled as a result of the combination, this corporation shall pay
cash equal to such fraction multiplied by the fair value of one share of Common
Stock, as determined in good faith by the Board of Directors.
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
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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 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
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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 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
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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).
3. Noncash Distributions. If any of the assets of this corporation are
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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
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(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 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. Subject to such adjustment as is appropriate due to
the effectiveness of the three-for-one combination of the corporation's Common
Stock, (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
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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, prior to deduction of underwriting commissions and offering
expenses, at a per share offering price of at least $4.00 (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.
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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 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
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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
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, Series
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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
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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.
(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
-10-
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 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:
-11-
(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 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:
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(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 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
-13-
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.
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
-14-
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.
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.
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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 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
-16-
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 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
-17-
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 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:
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(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 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.
-19-
(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;
(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);
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(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;
(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 (subject to any adjustments for
splits, dividends, combinations and the like applicable to such shares); 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
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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 (subject to any
adjustments for splits, dividends, combinations and the like applicable to such
shares).
(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.
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.
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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.
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, the corporation has caused this Amended and Restated
Certificate of Incorporation to be executed by its Chief Executive Officer and
President and attested by its Secretary this 17th day of May, 2002.
NETFLIX, INC.,
a Delaware corporation
/s/ Reed Hastings
---------------------------------------------
Reed Hastings
Chief Executive Officer and President
Attest:
By: /s/ W. Barry McCarthy, Jr.
----------------------------------
W. Barry McCarthy, Jr., Secretary
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