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EXHIBIT 3.2
FIRST AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
HANDSPRING, INC. (DELAWARE)
Handspring, Inc. (Delaware), a Delaware corporation (the
"Corporation"), which was originally incorporated on March 27, 2000, hereby
certifies that the First Amended and Restated Certificate of Incorporation of
the Corporation attached hereto as Exhibit A, which is incorporated herein by
this reference, has been duly adopted by the Board of Directors and stockholders
of the Corporation in accordance with Sections 242 and 245 of the Delaware
General Corporation Law, with the approval of the stockholders having been given
by written consent without a meeting in accordance with Section 228 of the
Delaware General Corporation Law.
IN WITNESS WHEREOF, said Corporation has caused this First Amended and
Restated Certificate of Incorporation to be signed by its duly authorized
officer.
Dated: May 16, 2000
HANDSPRING, INC. (DELAWARE)
/s/ DONNA L. DUBINSKY
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Donna L. Dubinsky, President and Chief
Executive Officer
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EXHIBIT A
FIRST AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
HANDSPRING, INC.
ARTICLE I
The name of the corporation is Handspring, Inc.
ARTICLE II
The address of the registered office of the corporation in the State of
Delaware is 15 East North Street, City of Dover, County of Kent. The name of its
registered agent at that address is Incorporating Services, Ltd.
ARTICLE III
The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
ARTICLE IV
The total number of shares of all classes of capital stock which the
corporation has authority to issue is 114,300,000 shares, consisting of two
classes: (i) 105,000,000 shares of Common Stock, par value $0.001 per share and
(ii) 9,300,000 shares of Preferred Stock, par value $0.001 per share. Of the
9,300,000 shares of Preferred Stock authorized to be issued by the corporation,
(i) 8,300,000 shares are hereby designated "Series A Preferred Stock" and (ii)
1,000,000 shares are hereby designated "Series B Preferred Stock." The rights,
preferences, privileges and restrictions granted to and imposed upon the Series
A Preferred Stock, the Series B Preferred Stock, and the Common Stock are set
forth below.
1. DEFINITIONS. For purposes of this Article IV, the following
definitions apply:
1.1 "BOARD" shall mean the Board of Directors of the Company.
1.2 "COMPANY" shall mean this corporation.
1.3 "COMMON STOCK" shall mean the Common Stock, $0.001 par
value, of the Company.
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1.4 "COMMON STOCK DIVIDEND" shall mean a stock dividend
declared and paid on the Common Stock that is payable in shares of
Common Stock.
1.5 "DIVIDEND RATE" shall mean $0.0892 per share per annum for
the Series A Preferred Stock (as adjusted for any stock splits, stock
dividends, recapitalizations or the like, with respect to the Series A
Preferred Stock) and $0.4308 per share per annum for the Series B
Preferred Stock (as adjusted for any stock splits, stock dividends,
recapitalizations or the like, with respect to the Series B Preferred
Stock).
1.6 "ORIGINAL ISSUE DATE" shall mean the date on which the
first share of Series B Preferred Stock was issued by the Company's
predecessor, Handspring, Inc., a California corporation.
1.7 "ORIGINAL ISSUE PRICE" shall mean $2.23 per share for the
Series A Preferred Stock (as adjusted for any stock splits, stock
dividends, recapitalizations or the like, with respect to the Series A
Preferred Stock) and $10.77 per share for the Series B Preferred Stock
(as adjusted for any stock splits, stock dividends, recapitalizations
or the like, with respect to the Series B Preferred Stock).
1.8 "PERMITTED REPURCHASES" shall mean the repurchase by the
Company of shares of Common Stock held by employees, officers,
directors, consultants, independent contractors, advisors, or other
persons performing services for the Company or a subsidiary (if in
transactions that are primarily for non-financing purposes) that are
subject to restricted stock purchase agreements or stock option
exercise agreements under which the Company has the option to
repurchase such shares: (i) at cost, upon the occurrence of certain
events, such as the termination of employment or services; or (ii) at
any price pursuant to the Company's exercise of a right of first
refusal to repurchase such shares.
1.9 "PREFERRED STOCK" shall mean the Series A Preferred Stock
and the Series B Preferred Stock.
1.10 "SERIES A PREFERRED STOCK" shall mean the Series A
Preferred Stock, $0.001 par value, of the Company.
1.11 "SERIES B PREFERRED STOCK" shall mean the Series B
Preferred Stock, $0.001 par value, of the Company.
1.12 "SUBSIDIARY" shall mean any corporation of which at least
fifty percent (50%) of the outstanding voting stock is at the time
owned directly or indirectly by the Company or by one or more of such
subsidiary corporations.
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2. DIVIDEND RIGHTS.
2.1 Dividend Preference. In each calendar year, the holders of
the then outstanding Series A Preferred Stock and Series B Preferred Stock shall
be entitled to receive, when, as and if declared by the Board, out of any funds
and assets of the Company legally available therefor, noncumulative dividends at
the annual Dividend Rate for each series of Preferred Stock, prior and in
preference to the payment of any dividends on the Common Stock in such calendar
year (other than a Common Stock Dividend). No dividends (other than a Common
Stock Dividend) shall be paid with respect to the Common Stock during any
calendar year unless dividends in the total amount of the annual Dividend Rate
for the Series A Preferred Stock and Series B Preferred Stock, respectively,
shall have first been paid or declared and set apart for payment to the holders
of the Series A Preferred Stock and Series B Preferred Stock, respectively,
during that calendar year; provided, however, that this restriction shall not
apply to Permitted Repurchases. Payments of any dividends to the holders of
Series A Preferred Stock and Series B Preferred Stock shall be paid pro rata, on
an equal priority, pari passu basis according to their respective Dividend Rate
as set forth herein. Dividends on the Preferred Stock shall not be mandatory or
cumulative, and no rights or interest shall accrue to the holders of the
Preferred Stock by reason of the fact that the Company shall fail to declare or
pay dividends on the Series A Preferred Stock or Series B Preferred Stock,
respectively, in the amount of the annual Dividend Rate for the Series A
Preferred Stock or Series B Preferred Stock, respectively, or in any other
amount in any calendar year or any fiscal year of the Company, whether or not
the earnings of the Company in any calendar year or fiscal year were sufficient
to pay such dividends in whole or in part.
2.2 Participation Rights. If, after dividends in the full
preferential amount specified in this Section 2 for the Preferred Stock have
been paid or declared and set apart in any calendar year of the Company, the
Board shall declare additional dividends out of funds legally available therefor
in that calendar year, then such additional dividends shall be declared pro rata
on the Common Stock and the Preferred Stock on a pari passu basis according to
the number of shares of Common Stock held by such holders, where each holder of
shares of Preferred Stock is to be treated for this purpose as holding the
greatest whole number of shares of Common Stock then issuable upon conversion of
all shares of Preferred Stock held by such holder pursuant to Section 5.
2.3 Non-Cash Dividends. Whenever a dividend provided for in
this Section 2 shall be payable in property other than cash, the value of such
dividend shall be deemed to be the fair market value of such property as
determined in good faith by the Board.
3. LIQUIDATION RIGHTS. In the event of any liquidation, dissolution or
winding up of the Company, whether voluntary or involuntary, the funds and
assets that may be legally distributed to the Company's stockholders (the
"AVAILABLE FUNDS AND ASSETS") shall be distributed to stockholders in the
following manner:
3.1 Liquidation Preferences. The holders of each share of
Preferred Stock then outstanding shall be entitled to be paid, out of the
Available Funds and Assets, and prior and in preference to any payment or
distribution (or any setting apart of any payment or distribution) of any
Available Funds and Assets on any shares of Common Stock, an amount per share
equal
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to the Original Issue Price for each series of Preferred Stock plus all declared
but unpaid dividends thereon. If upon any liquidation, dissolution or winding up
of the Company, the Available Funds and Assets shall be insufficient to permit
the payment to holders of the Preferred Stock of their full preferential amount
described in this subsection, then the entire Available Funds and Assets shall
be distributed among the holders of the then outstanding Preferred Stock pro
rata, on an equal priority, pari passu basis, according to their respective
liquidation preferences as set forth herein.
3.2 Remaining Assets. If there are any Available Funds and
Assets remaining after the payment or distribution (or the setting aside for
payment or distribution) to the holders of the Preferred Stock of their full
preferential amounts described above in this Section 3, then all such remaining
Available Funds and Assets shall be distributed among the holders of the then
outstanding Common Stock pro rata according to the number of shares of Common
Stock held by each holder thereof.
3.3 Merger or Sale of Assets. A (i) reorganization,
consolidation or merger (or similar transaction or series of transactions) of
the Company with or into any other corporation or corporations in which the
holders of the Company's outstanding shares immediately before such transaction
or series of transactions do not, immediately after such transaction or series
of transactions, retain stock representing a majority of the voting power of the
surviving corporation (or its parent corporation if the surviving corporation is
wholly owned by the parent corporation) of such transaction or series of
transactions; or (ii) a sale of all or substantially all of the assets of the
Company, shall each be deemed to be a liquidation, dissolution or winding up of
the Company as those terms are used in this Section 3.
3.4 Non-Cash Consideration. If any assets of the Company
distributed to stockholders in connection with any liquidation, dissolution, or
winding up of the Company are other than cash, then the value of such assets
shall be their fair market value as determined by the Board, except that any
securities to be distributed to stockholders in a liquidation, dissolution, or
winding up of the Company shall be valued as follows:
(a) The method of valuation of securities not subject
to investment letter or other similar restrictions on free marketability shall
be as follows:
(i) if the securities are then traded on a
national securities exchange or the Nasdaq National Market (or a
similar national quotation system), then the value shall be deemed to
be the average of the closing prices of the securities on such exchange
or system over the 30-day period ending three (3) days prior to the
distribution; and
(ii) if actively traded over-the-counter,
then the value shall be deemed to be the average of the closing bid
prices over the 30-day period ending three (3) days prior to the
distribution; and
(iii) if there is no active public market,
then the value shall be the fair market value thereof, as determined in
good faith by the Board of Directors of the Company.
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(b) The method of valuation of securities subject to
investment letter or other restrictions on free marketability shall be to make
an appropriate discount from the market value determined as above in
subparagraphs (a)(i), (ii) or (iii) of this subsection to reflect the
approximate fair market value thereof, as determined in good faith by the Board.
3.5 Notice and Waiver. The Company shall give each holder of
record of Preferred Stock written notice of an impending liquidation,
dissolution or winding up of the Company not later than ten (10) days prior to
the stockholders' meeting, if any, called to approve such transaction, or twenty
(20) days prior to the closing of such transaction, whichever is earlier. The
notice shall describe the nature of the impending transaction. The transaction
shall in no event take place sooner than twenty (20) days after the Company has
given the notice provided for herein. Notwithstanding the foregoing provisions
of this subsection 3.5, the periods and provisions specified herein may be
shortened or waived upon the written consent of the holders of Preferred Stock
that are entitled to such notice rights and that represent at least a majority
of the voting power of all then outstanding shares of Preferred Stock.
4. VOTING RIGHTS.
4.1 Common Stock. Each holder of shares of Common Stock shall
be entitled to one (1) vote for each share thereof held.
4.2 Preferred Stock. Each holder of shares of Preferred Stock
shall be entitled to the number of votes equal to the number of whole shares of
Common Stock into which such shares of Preferred Stock could be converted
pursuant to the provisions of Section 5 below at the record date for the
determination of the stockholders entitled to vote on such matters or, if no
such record date is established, the date such vote is taken or any written
consent of stockholders is solicited.
4.3 General. Subject to the foregoing provisions of this
Section 4, each holder of Preferred Stock shall have full voting rights and
powers equal to the voting rights and powers of the holders of Common Stock, and
shall be entitled to notice of any stockholders' meeting in accordance with the
bylaws of the Company (as in effect at the time in question) and applicable law,
and shall be entitled to vote, together with the holders of Common Stock, with
respect to any question upon which holders of Common Stock have the right to
vote, except as may be otherwise provided by applicable law. Except as otherwise
expressly provided herein or as required by law, the holders of Preferred Stock
and the holders of Common Stock shall vote together and not as separate classes.
4.4 Board Size. The authorized number of directors of the
Company's Board shall be seven (7). The Company shall not alter the authorized
number of directors in its Certificate of Incorporation, Bylaws or otherwise,
without first obtaining the written consent, or affirmative vote at a meeting,
of the holders of at least a majority of the then outstanding shares of Series A
Preferred Stock, consenting or voting (as the case may be) separately as a
class.
4.5 Board of Directors Election and Removal.
(a) Election. So long as at least 2,000,000 shares of
Series A Preferred Stock are outstanding (such number of shares being subject to
proportional adjustment to reflect
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combinations or subdivisions of such Series A Preferred Stock or dividends
declared in shares of such stock), (i) the holders of the Preferred Stock,
voting together as a separate class, shall be entitled to elect two (2)
directors of the Company; (ii) the holders of the Common Stock, voting as a
separate class, shall be entitled to elect two (2) directors of the Company; and
(iii) the holders of the Series A Preferred Stock, the Series B Preferred Stock
and the Common Stock, voting together as a single class shall be entitled to
elect the remaining directors of the Company.
(b) Quorum; Required Vote.
(i) Quorum. At any meeting held for the
purpose of electing directors, the presence in person or by proxy (A) of the
holders of a majority of the shares of the Preferred Stock or Common Stock then
outstanding, respectively, shall constitute a quorum of the Preferred Stock or
Common Stock, as the case may be, for the election of directors to be elected
solely by the holders of the Preferred Stock or Common Stock, respectively, and
(B) of holders of Preferred Stock and Common Stock representing a majority of
each of the voting power of all the then-outstanding shares (1) of Preferred
Stock and (2) of Common Stock shall constitute a quorum for the election of the
directors to be elected jointly by the holders of the Preferred Stock and the
Common Stock.
(ii) Required Vote. With respect to the
election of any director or directors by the holders of the outstanding shares
of a specified series, class or classes of stock given the right to elect such
director or directors pursuant to subsection 4.5(a) above ("SPECIFIED STOCK"),
that candidate or those candidates (as applicable) shall be elected who either:
(i) in the case of any such vote conducted at a meeting of the holders of such
Specified Stock, receive the highest number of affirmative votes of the
outstanding shares of such Specified Stock, up to the number of directors to be
elected by such Specified Stock; or (ii) in the case of any such vote taken by
written consent without a meeting, are elected by the written consent of the
holders of a majority of the outstanding shares of such Specified Stock entitled
to vote.
(c) Vacancy. If there shall be any vacancy in the
office of a director elected by the holders of any Specified Stock pursuant to
subsection 4.5(a), then a successor to hold office for the unexpired term of
such director may be elected by either: (i) the remaining director or directors
(if any) in office that were so elected by the holders of such Specified Stock,
by the affirmative vote of a majority of such directors (or by the sole
remaining director elected by the holders of such Specified Stock if there be
but one), or if such vacancy is not filled by such directors (ii) the required
vote of holders of the shares of such Specified Stock specified in subsection
4.5(b)(ii) above that are entitled to elect such director under subsection
4.5(a).
(d) Removal. Subject to Section 141(k) of the
Delaware General Corporation Law, any director who shall have been elected to
the Board by the holders of any Specified Stock pursuant to subsection 4.5(a) or
by any director or directors elected by holders of any Specified Stock as
provided in subsection 4.5(c), may be removed during his or her term of office,
either with or without cause, by, and only by, the affirmative vote of shares
representing a majority of the voting power of all the outstanding shares of
such Specified Stock entitled to vote, given either at a meeting of such
stockholders duly called for that purpose or pursuant to a
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written consent of stockholders without a meeting, and any vacancy created by
such removal may be filled only in the manner provided in subsection 4.5(c).
(e) Procedures. Any meeting of the holders of any
Specified Stock, and any action taken by the holders of any Specified Stock by
written consent without a meeting, in order to elect or remove a director under
this subsection 4.5, shall be held in accordance with the procedures and
provisions of the Company's Bylaws, the Delaware General Corporation law and
applicable law regarding stockholder meetings and stockholder actions by written
consent, as such are then in effect (including but not limited to procedures and
provisions for determining the record date for shares entitled to vote).
(f) Termination. Notwithstanding anything in this
subsection 4.5 to the contrary, the provisions of this subsection 4.5 shall
cease to be of any further force or effect upon the earlier to occur of: (i) the
first date on which the total number of outstanding shares of Series A Preferred
Stock is less than 2,000,000 shares (such number of shares being subject to
proportional adjustment to reflect combination or subdivisions of such Series A
Preferred Stock or dividends declared in shares of such stock); or (ii) upon the
merger or consolidation of the Company with or into any other corporation or
corporations if such consolidation or merger is approved by the stockholders of
the Company in compliance with applicable law and the Certificate of
Incorporation and Bylaws of the Company in which the holders of the Company's
outstanding shares immediately before such consolidation or merger do not,
immediately after such consolidation or merger, retain stock representing a
majority of the voting power of the surviving corporation (or its parent
corporation if the surviving corporation is wholly owned by the parent
corporation); or (iii) a sale of all or substantially all of the Company's
assets.
5. CONVERSION RIGHTS. The outstanding shares of Preferred Stock shall
be convertible into Common Stock as follows:
5.1 Optional Conversion.
(a) At the option of the holder thereof, each share
of Preferred Stock shall be convertible, at any time or from time to time prior
to the close of business on the business day before any date fixed for
redemption of such share, into fully paid and nonassessable shares of Common
Stock as provided herein.
(b) Each holder of Preferred Stock who elects to
convert the same into shares of Common Stock shall surrender the certificate or
certificates therefor, duly endorsed, at the office of the Company or any
transfer agent for the Preferred Stock or Common Stock, and shall give written
notice to the Company at such office that such holder elects to convert the same
and shall state therein the number of shares of Preferred Stock being converted.
Thereupon the Company shall promptly issue and deliver at such office to such
holder a certificate or certificates for the number of shares of Common Stock to
which such holder is entitled upon such conversion. Such conversion shall be
deemed to have been made immediately prior to the close of business on the date
of such surrender of the certificate or certificates representing the shares of
Preferred Stock to be converted, and the person entitled to receive the shares
of Common Stock issuable upon such conversion shall be treated for all purposes
as the record holder of such shares of Common Stock on such date. If a
conversion election under this
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subsection 5.1 is made in connection with an underwritten offering of the
Company's securities pursuant to the Securities Act of 1933, as amended, (which
underwritten offering does not cause an automatic conversion pursuant to
subsection 5.2 to take place) the conversion may, at the option of the holder
tendering shares of Preferred Stock for conversion, be conditioned upon the
closing with the underwriters of the sale of the Company's securities pursuant
to such offering, in which event the holders making such elections who are
entitled to receive Common Stock upon conversion of their Preferred Stock shall
not be deemed to have converted such shares of Preferred Stock until immediately
prior to the closing of such sale of the Company's securities in the offering.
5.2 Automatic Conversion.
(a) Each share of Preferred Stock shall automatically
be converted into fully paid and nonassessable shares of Common Stock, as
provided herein: (i) immediately prior to the closing of a firm commitment
underwritten public offering pursuant to an effective registration statement
filed under the Securities Act of 1933, as amended, covering the offer and sale
of Common Stock for the account of the Company in which the aggregate public
offering price (before deduction of underwriters' discounts and commissions)
equals or exceeds $20,000,000 and the public offering price per share of which
equals or exceeds $10.77 per share before deduction of underwriters' discounts
and commissions (such price per share of Common Stock to be appropriately
adjusted to reflect Common Stock Events (as defined in Section 5.4)); or (ii)
upon the Company's receipt of the written consent of the holders of not less
than a majority of the then outstanding shares of Preferred Stock to the
conversion of all then outstanding Preferred Stock under this Section 5.
(b) Upon the occurrence of any event specified in
subparagraph 5.2(a) (i) or (ii) above, the outstanding shares of Preferred Stock
shall be converted into Common Stock automatically without the need for any
further action by the holders of such shares and whether or not the certificates
representing such shares are surrendered to the Company or its transfer agent;
provided, however, that the Company shall not be obligated to issue certificates
evidencing the shares of Common Stock issuable upon such conversion unless the
certificates evidencing such shares of Preferred Stock are either delivered to
the Company or its transfer agent as provided below, or the holder notifies the
Company or its transfer agent that such certificates have been lost, stolen or
destroyed and executes an agreement satisfactory to the Company to indemnify the
Company from any loss incurred by it in connection with such certificates. Upon
the occurrence of such automatic conversion of the Preferred Stock, the holders
of Preferred Stock shall surrender the certificates representing such shares at
the office of the Company or any transfer agent for the Preferred Stock or
Common Stock. Thereupon, there shall be issued and delivered to such holder
promptly at such office and in its name as shown on such surrendered certificate
or certificates, a certificate or certificates for the number of shares of
Common Stock into which the shares of Preferred Stock surrendered were
convertible on the date on which such automatic conversion occurred.
5.3 Conversion Price. Each share of Preferred Stock shall be
convertible in accordance with subsection 5.1 or subsection 5.2 above into the
number of shares of Common Stock which results from dividing the Original Issue
Price for such series of Preferred Stock by the conversion price for such series
of Preferred Stock that is in effect at the time of conversion
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(the "CONVERSION PRICE"). The initial Conversion Price for the Series A
Preferred Stock shall be the Original Issue Price for the Series A Preferred
Stock and the initial Conversion Price for the Series B Preferred Stock shall be
the Original Issue Price for the Series B Preferred Stock. The Conversion Price
of each series of Preferred Stock shall be subject to adjustment from time to
time as provided below.
5.4 Adjustment Upon Common Stock Event. Upon the happening of
a Common Stock Event (as hereinafter defined) at any time after the Original
Issue Date, the Conversion Price of the Series A Preferred Stock and the
Conversion Price of the Series B Preferred Stock shall, simultaneously with the
happening of such Common Stock Event, be adjusted by multiplying the Conversion
Price of such series of Preferred Stock in effect immediately prior to such
Common Stock Event by a fraction, (i) the numerator of which shall be the number
of shares of Common Stock issued and outstanding immediately prior to such
Common Stock Event, and (ii) the denominator of which shall be the number of
shares of Common Stock issued and outstanding immediately after such Common
Stock Event, and the product so obtained shall thereafter be the Conversion
Price for such series of Preferred Stock. The Conversion Price for a series of
Preferred Stock shall be readjusted in the same manner upon the happening of
each subsequent Common Stock Event. As used herein, the term "COMMON STOCK
EVENT" shall mean, at any time or from time to time after the Original Issue
Date, (i) the issue by the Company of additional shares of Common Stock as a
dividend or other distribution on outstanding Common Stock, (ii) a subdivision
of the outstanding shares of Common Stock into a greater number of shares of
Common Stock, or (iii) a combination of the outstanding shares of Common Stock
into a smaller number of shares of Common Stock.
5.5 Adjustments for Other Dividends and Distributions. If at
any time or from time to time after the Original Issue Date the Company pays a
dividend or makes another distribution to the holders of the Common Stock
payable in securities of the Company other than shares of Common Stock, then in
each such event provision shall be made so that the holders of the Series A
Preferred Stock and Series B Preferred Stock shall receive upon conversion
thereof, in addition to the number of shares of Common Stock receivable upon
conversion thereof, the amount of securities of the Company which they would
have received had their Preferred Stock been converted into Common Stock on the
date of such event (or such record date, as applicable) and had they thereafter,
during the period from the date of such event (or such record date, as
applicable) to and including the conversion date, retained such securities
receivable by them as aforesaid during such period, subject to all other
adjustments called for during such period under this Section 5 with respect to
the rights of the holders of the Preferred Stock or with respect to such other
securities by their terms.
5.6 Adjustment for Reclassification, Exchange and
Substitution. If at any time or from time to time after the Original Issue Date
the Common Stock issuable upon the conversion of the Preferred Stock is changed
into the same or a different number of shares of any class or classes of stock,
whether by recapitalization, reclassification or otherwise (other than by a
Common Stock Event or a stock dividend, reorganization, merger, consolidation or
sale of assets provided for elsewhere in this Section 5), then in any such event
each holder of Preferred Stock shall have the right thereafter to convert such
stock into the kind and amount of stock and other securities and property
receivable upon such recapitalization, reclassification or other change by
holders of the number of shares of Common Stock into which such shares of
Preferred
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Stock could have been converted immediately prior to such recapitalization,
reclassification or change, all subject to further adjustment as provided herein
or with respect to such other securities or property by the terms thereof.
5.7 Reorganizations, Mergers and Consolidations. If at any
time or from time to time after the Original Issue Date there is a capital
reorganization of the Company (other than a recapitalization, subdivision,
combination, reclassification or exchange of shares provided for elsewhere in
this Section 5) or a merger or consolidation of the Company with or into another
corporation (except an event which is governed under subsection 3.3), then, as a
part of such reorganization, merger or consolidation, provision shall be made so
that the holders of the Preferred Stock thereafter shall be entitled to receive,
upon conversion of the Preferred Stock, the number of shares of stock or other
securities or property of the Company, or of such successor corporation
resulting from such reorganization, merger or consolidation, to which a holder
of Common Stock deliverable upon conversion would have been entitled on such
reorganization, merger or consolidation. In any such case, appropriate
adjustment shall be made in the application of the provisions of this Section 5
with respect to the rights of the holders of the Preferred Stock after the
reorganization, merger or consolidation to the end that the provisions of this
Section 5 (including adjustment of the Conversion Price then in effect and
number of shares issuable upon conversion of each series of Preferred Stock)
shall be applicable after that event and be as nearly equivalent to the
provisions hereof as may be practicable. This subsection 5.7 shall similarly
apply to successive reorganizations, mergers and consolidations.
5.8 Sale of Shares Below Conversion Price.
(a) Adjustment Formula. If at any time or from time
to time after the Original Issue Date the Company issues or sells, or is deemed
by the provisions of this subsection 5.8 to have issued or sold, Additional
Shares of Common Stock (as hereinafter defined), otherwise than in connection
with a Common Stock Event as provided in subsection 5.4, a dividend or
distribution as provided in subsection 5.5 or a recapitalization,
reclassification or other change as provided in subsection 5.6, or a
reorganization, merger or consolidation as provided in subsection 5.7, for an
Effective Price (as hereinafter defined) that is less than the Conversion Price
for the Series A Preferred Stock or Series B Preferred Stock, as the case may
be, in effect immediately prior to such issue or sale (or deemed issue or sale),
then, and in each such case, the Conversion Price for such series of Preferred
Stock shall be reduced, as of the close of business on the date of such issue or
sale, to the price obtained by multiplying such Conversion Price by a fraction:
(i) The numerator of which shall be the sum
of (A) the number of Common Stock Equivalents Outstanding (as hereinafter
defined) immediately prior to such issue or sale of Additional Shares of Common
Stock plus (B) the quotient obtained by dividing the Aggregate Consideration
Received (as hereinafter defined) by the Company for the total number of
Additional Shares of Common Stock so issued or sold (or deemed so issued and
sold) by the Conversion Price for such series of Preferred Stock in effect
immediately prior to such issue or sale; and
(ii) The denominator of which shall be the
sum of (A) the number of Common Stock Equivalents Outstanding immediately prior
to such issue or sale plus
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(B) the number of Additional Shares of Common Stock so issued or sold (or deemed
so issued and sold).
(b) Certain Definitions. For the purpose of making
any adjustment required under this subsection 5.8:
(i) "ADDITIONAL SHARES OF COMMON STOCK"
shall mean all shares of Common Stock issued by the Company, whether or not
subsequently reacquired or retired by the Company, other than: (A) shares of
Common Stock issued or issuable upon conversion of Preferred Stock; (B) shares
of Common Stock (or options, warrants or other rights therefor) issued or
issuable to employees, officers, or directors of, or contractors, consultants or
advisers to, the Company or any Subsidiary (if in transactions with primarily
non-financing purposes) pursuant to stock purchase or stock option plans, stock
bonuses or awards, warrants, contracts or other arrangements that are approved
by the Board; and (C) shares of Common Stock or Preferred Stock (or options,
warrants or other rights therefor) issued or issuable to parties providing the
Company with equipment leases, real property leases, loans, credit lines,
guaranties of indebtedness, cash price reductions or similar transactions
(provided such issuances are pursuant to transactions with primarily non-equity
financing purposes), including, without limitation, shares of Series A Preferred
Stock (and shares of Common Stock issued or issuable upon conversion thereof)
issued or issuable to Comdisco, Inc. pursuant to that certain Subordinated Loan
and Security Agreement; and (D) up to 50,000 shares of Common Stock issued or
issuable to charitable organizations pursuant to stock issuance agreements or
other arrangements approved by the Board.
(ii) The "AGGREGATE CONSIDERATION RECEIVED"
by the Company for any issue or sale (or deemed issue or sale) of securities
shall (A) to the extent it consists of cash, be computed at the gross amount of
cash received by the Company before deduction of any underwriting or similar
commissions, compensation or concessions paid or allowed by the Company in
connection with such issue or sale and without deduction of any expenses payable
by the Company; (B) to the extent it consists of property other than cash, be
computed at the fair value of that property as determined in good faith by the
Board; and (C) if Additional Shares of Common Stock, Convertible Securities or
Rights or Options to purchase either Additional Shares of Common Stock or
Convertible Securities are issued or sold together with other stock or
securities or other assets of the Company for a consideration which covers both,
be computed as the portion of the consideration so received that may be
reasonably determined in good faith by the Board to be allocable to such
Additional Shares of Common Stock, Convertible Securities or Rights or Options.
(iii) "COMMON STOCK EQUIVALENTS OUTSTANDING"
shall mean the number of shares of Common Stock that is equal to the sum of (A)
all shares of Common Stock of the Company that are outstanding at the time in
question, plus (B) all shares of Common Stock of the Company issuable upon
conversion of all shares of Preferred Stock or other Convertible Securities that
are outstanding at the time in question, plus (C) all shares of Common Stock of
the Company that are issuable upon the exercise of Rights or Options (excluding
any shares of Common Stock excluded from the definition of "Additional Shares of
Common Stock" pursuant to subsection 5.8(b)(i)(B), after the Original Issue
Date) that are outstanding at the time in question assuming the full conversion
or exchange into Common Stock of all such Rights or Options that are Rights or
Options to purchase or acquire Convertible Securities into or for Common Stock.
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(iv) "CONVERTIBLE SECURITIES" shall mean
stock or other securities convertible into or exchangeable for shares of Common
Stock.
(v) The "EFFECTIVE PRICE" of Additional
Shares of Common Stock shall mean the quotient determined by dividing the total
number of Additional Shares of Common Stock issued or sold, or deemed to have
been issued or sold, by the Company under this subsection 5.8, into the
Aggregate Consideration Received, or deemed to have been received, by the
Company under this subsection 5.8, for the issue of such Additional Shares of
Common Stock; and
(vi) "RIGHTS OR OPTIONS" shall mean
warrants, options or other rights to purchase or acquire shares of Common Stock
or Convertible Securities.
(c) Deemed Issuances. For the purpose of making any
adjustment to the Conversion Price of the Series A Preferred Stock or Series B
Preferred Stock required under this subsection 5.8, if the Company issues or
sells any Rights or Options or Convertible Securities and if the Effective Price
of the shares of Common Stock issuable upon exercise of such Rights or Options
and/or the conversion or exchange of Convertible Securities (computed without
reference to any additional or similar protective or antidilution clauses) is
less than the Conversion Price then in effect for a series of Preferred Stock,
then the Company shall be deemed to have issued, at the time of the issuance of
such Rights, Options or Convertible Securities, that number of Additional Shares
of Common Stock (as defined above) that is equal to the maximum number of shares
of Common Stock issuable upon exercise or conversion of such Rights, Options or
Convertible Securities upon their issuance and to have received, as the
Aggregate Consideration Received for the issuance of such shares, an amount
equal to the total amount of the consideration, if any, received by the Company
for the issuance of such Rights or Options or Convertible Securities, plus, in
the case of such Rights or Options, the minimum amounts of consideration, if
any, payable to the Company upon the exercise in full of such Rights or Options,
plus, in the case of Convertible Securities, the minimum amounts of
consideration, if any, payable to the Company (other than by cancellation of
liabilities or obligations evidenced by such Convertible Securities) upon the
conversion or exchange thereof; provided that:
(i) if the minimum amounts of such
consideration cannot be ascertained, but are a function of antidilution or
similar protective clauses, then the Company shall be deemed to have received
the minimum amounts of consideration without reference to such clauses;
(ii) if the minimum amount of consideration
payable to the Company upon the exercise of Rights or Options or the conversion
or exchange of Convertible Securities is reduced over time or upon the
occurrence or non-occurrence of specified events other than by reason of
antidilution or similar protective adjustments, then the Effective Price shall
be recalculated using the figure to which such minimum amount of consideration
is reduced; and
(iii) if the minimum amount of consideration
payable to the Company upon the exercise of such Rights or Options or the
conversion or exchange of Convertible Securities is subsequently increased, then
the Effective Price shall again be
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recalculated using the increased minimum amount of consideration payable to the
Company upon the exercise of such Rights or Options or the conversion or
exchange of such Convertible Securities.
No further adjustment of the Conversion Price, adjusted upon the issuance of
such Rights or Options or Convertible Securities, shall be made as a result of
the actual issuance of shares of Common Stock on the exercise of any such Rights
or Options or the conversion or exchange of any such Convertible Securities. If
any such Rights or Options or the conversion rights represented by any such
Convertible Securities shall expire without having been fully exercised, then
the Conversion Price as adjusted upon the issuance of such Rights or Options or
Convertible Securities shall be readjusted to the Conversion Price which would
have been in effect had an adjustment been made on the basis that the only
shares of Common Stock so issued were the shares of Common Stock, if any, that
were actually issued or sold on the exercise of such Rights or Options or rights
of conversion or exchange of such Convertible Securities, and such shares of
Common Stock, if any, were issued or sold for the consideration actually
received by the Company upon such exercise, plus the consideration, if any,
actually received by the Company for the granting of all such Rights or Options,
whether or not exercised, plus the consideration received for issuing or selling
all such Convertible Securities actually converted or exchanged, plus the
consideration, if any, actually received by the Company (other than by
cancellation of liabilities or obligations evidenced by such Convertible
Securities) on the conversion or exchange of such Convertible Securities,
provided that such readjustment shall not apply to prior conversions of
Preferred Stock.
5.9 Certificate of Adjustment. In each case of an adjustment
or readjustment of the Conversion Price for a series of Preferred Stock, the
Company, at its expense, shall cause its Chief Financial Officer to compute such
adjustment or readjustment in accordance with the provisions hereof and prepare
a certificate showing such adjustment or readjustment, and shall mail such
certificate, by first class mail, postage prepaid, to each registered holder of
the Preferred Stock at the holder's address as shown in the Company's books.
5.10 Fractional Shares. No fractional shares of Common Stock
shall be issued upon any conversion of Preferred Stock. In lieu of any
fractional share to which the holder would otherwise be entitled, the Company
shall pay the holder cash equal to the product of such fraction multiplied by
the Common Stock's fair market value as determined in good faith by the Board as
of the date of conversion.
5.11 Reservation of Stock Issuable Upon Conversion. The
Company shall at all times reserve and keep available out of its authorized but
unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the shares of the Preferred Stock, such number of its shares of
Common Stock as shall from time to time be sufficient to effect the conversion
of all outstanding shares of the Preferred Stock; and if at any time the number
of authorized but unissued shares of Common Stock shall not be sufficient to
effect the conversion of all then outstanding shares of the Preferred Stock, the
Company 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.
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5.12 Notices. Any notice required by the provisions of this
Section 5 to be given to the holders of shares of the Preferred Stock shall be
deemed given upon the earlier of actual receipt or deposit in the United States
mail, by certified or registered mail, return receipt requested, postage
prepaid, addressed to each holder of record at the address of such holder
appearing on the books of the Company.
5.13 No Impairment. The Company shall not avoid or seek to
avoid the observance or performance of any of the terms to be observed or
performed hereunder by the Company, but shall at all times in good faith assist
in carrying out all such action as may be reasonably necessary or appropriate in
order to protect the conversion rights of the holders of the Preferred Stock
against impairment.
6. RESTRICTIONS AND LIMITATIONS.
6.1 Class Protective Provisions. So long as any shares of
Preferred Stock remain outstanding, the Company shall not, without the approval,
by vote or written consent, of the holders of a majority of the Preferred Stock
then outstanding, voting as a single class:
(1) amend its Certificate of Incorporation or Bylaws
in any manner that would alter, change or affect any of the rights, preferences,
privileges or restrictions of the Preferred Stock;
(2) authorize any other equity security, including
any other security convertible into or exercisable for any equity security
having rights or preferences senior to or on a parity with the Preferred Stock
as to dividend rights, liquidation preferences, redemption or voting;
(3) merge or consolidate with or into any corporation
or effect any transaction or series of related transactions if such merger,
consolidation or transaction or series of transactions would result in the
stockholders of the Company immediately prior to such merger, consolidation or
transaction or series of transactions holding less than a majority of the voting
power of the stock of the surviving corporation (or its parent corporation if
the surviving corporation is wholly owned by the parent corporation) immediately
after such merger, consolidation or transaction or series of transactions;
(4) sell all or substantially all the Company's
assets in a single transaction or series of related transactions;
(5) liquidate or dissolve; or
(6) declare or pay any dividends (other than
dividends payable solely in shares of its own Common Stock) on or declare or
make any other distribution, purchase, redemption or acquisition (other than
Permitted Repurchases), directly or indirectly, on account of any shares of
Preferred Stock or Common Stock now or hereafter outstanding.
6.2 Series Protective Provisions. So long as any shares of
Series A Preferred Stock or Series B Preferred Stock remain outstanding, as the
case may be, the Company shall not, without the approval, by vote or written
consent, of the holders of a majority of the Series A
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Preferred Stock then outstanding and/or the Series B Preferred Stock then
outstanding, as applicable, each voting as a separate class, take any of the
following actions to the extent it effects such series of Preferred Stock:
(1) with respect to the holders of Series A Preferred
Stock, authorize additional shares of Series A Preferred Stock, and with respect
to the holders of Series B Preferred Stock, authorize additional shares of
Series B Preferred Stock;
(2) reclassify any outstanding shares of securities
of the Company into shares having rights, preferences or privileges senior to or
on a parity with such series of Preferred Stock;
(3) authorize any other equity security, including
any other security convertible into or exercisable for any equity security
having rights or preferences senior to such series of Preferred Stock as to
dividend rights or liquidation preferences.
7. MISCELLANEOUS
7.1 No Reissuance of Preferred Stock. No share or shares of
Preferred Stock acquired by the Company by reason of redemption, purchase,
conversion or otherwise shall be reissued, and all such shares shall be
cancelled, retired and eliminated from the shares which the Company shall be
authorized to issue.
7.2 Consent to Certain Transactions. Each holder of shares of
Preferred Stock shall, by virtue of its acceptance of a stock certificate
evidencing Preferred Stock, be deemed to have consented, for purposes of
Sections 502, 503 and 506 of the California Corporations Code, to all Permitted
Repurchases.
ARTICLE V
In furtherance of and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to adopt, amend or
repeal the Bylaws of this corporation, subject to the right of the stockholders
entitled to vote with respect thereto, in accordance with the provisions of such
Bylaws, to alter and repeal the Bylaws adopted or amended by the Board of
Directors. Notwithstanding any other provisions of law, this First Amended and
Restated Certificate of Incorporation or the Bylaws, each as amended, and
notwithstanding the fact that a lesser percentage may be specified by law, this
First Amended and Restated Certificate of Incorporation or the Bylaws, the
affirmative vote of the holders of at least sixty six and two-thirds percent (66
2/3%) of the outstanding voting stock then entitled to vote at an election of
directors, voting together as a single class, shall be required to alter,
change, amend, repeal or adopt any provision inconsistent with this Article V.
ARTICLE VI
To the fullest extent permitted by law, no director of the corporation
shall be personally liable to the corporation or its stockholders for monetary
damages for any breach of fiduciary duty as a director, notwithstanding any
provision of law imposing such liability. Without limiting the effect of the
preceding sentence, if the Delaware General Corporation Law is
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hereafter amended to authorize the further elimination or limitation of the
liability of a director, then the liability of a director of the corporation
shall be eliminated or limited to the fullest extent permitted by the Delaware
General Corporation Law, as so amended. No amendment to or repeal of this
provision, nor the adoption of any provision of this First Amended and Restated
Certificate of Incorporation inconsistent with this Article VI, shall apply to
or have any effect on the liability or alleged liability of any director of the
corporation for or with respect to any acts or omissions of such director
occurring prior to such amendment or repeal.
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