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EXHIBIT 3.1
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF NETGEAR, INC.
(Pursuant to Sections 242 and 245 of the General
Corporation Law of the State of Delaware)
NETGEAR, Inc., a corporation organized and existing under the General
Corporation Law of the State of Delaware on January 8, 1996 (the "Corporation"),
certifies as follows:
1. The Corporation's Amended and Restated Certificate of Incorporation
was duly adopted by the Board of Directors and stockholders by written consent
in accordance with Sections 242 and 245 of the Delaware General Corporation Law.
2. The Corporation's Amended and Restated Certificate of Incorporation
is further amended and restated to read in full as follows:
FIRST: The name of the Corporation is NETGEAR, Inc. (hereinafter
sometimes referred to as the "Corporation").
SECOND: The address of the registered office of the Corporation in the
State of Delaware is 15 East North Street in the City of Dover, County of Kent.
The name of the registered agent at that address is Incorporating Services, Ltd.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of Delaware.
FOURTH: The total number of shares of all classes of stock which the
Corporation shall have authority to issue is forty six million eight hundred
ninety seven thousand four hundred and fifty two (46,897,452) shares consisting
of: thirty million (30,000,000) shares of Common Stock, par value one-tenth of
one cent ($.001) per share (the "Common Stock"); and sixteen million eight
hundred ninety seven thousand four hundred and fifty two (16,897,452) shares of
Preferred Stock, par value one-tenth of one cent ($.001) per share (the
"Preferred Stock").
A. COMMON STOCK.
1. General. The voting, dividend and liquidation rights of the holders
of the Common Stock are subject to and qualified by the rights of the holders of
the Preferred Stock of any series as may be designated by the Board of Directors
upon any issuance of the Preferred Stock of any series.
2. Voting. The holders of the Common Stock are entitled to one vote for
each share held at all meetings of stockholders (and written actions in lieu of
meetings). There shall be no cumulative voting.
The number of authorized shares of Common Stock may be increased or
decreased (but not below the number of shares thereof then outstanding) by the
affirmative vote
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of the holders of a majority of the stock of the Corporation entitled to vote,
irrespective of the provisions of Section 242(b)(2) of the General Corporation
Law of Delaware.
3. Dividends. Dividends may be declared and paid on the Common Stock
from funds lawfully available therefor as and when determined by the Board of
Directors and subject to any preferential dividend rights of any then
outstanding Preferred Stock.
4. Liquidation. Upon the dissolution or liquidation of the Corporation,
whether voluntary or involuntary, holders of Common Stock will be entitled to
receive all assets of the Corporation available for distribution to its
stockholders, subject to any preferential and participation rights of any then
outstanding Preferred Stock.
B. PREFERRED STOCK.
Fifteen million (15,000,000) shares of the authorized and unissued
Preferred Stock of the Corporation are hereby designated "Series A Convertible
Participating Preferred Stock" (the "Series A Preferred Stock") and one million
eight hundred ninety seven thousand four hundred fifty (1,897,450) shares of the
authorized and unissued Preferred Stock of the Corporation are hereby designated
"Series B Convertible Participating Preferred Stock" (the "Series B Preferred
Stock"), each with the following rights, preferences, powers, privileges and
restrictions, qualifications and limitations.
1. Dividends. The Corporation shall not declare or pay any cash
dividends or other distributions on shares of Common Stock until the holders of
the Series A Preferred Stock and Series B Preferred Stock then outstanding shall
have first received, or simultaneously receive, a cash dividend on each
outstanding share of Series A Preferred Stock and Series B Preferred Stock in an
amount at least equal to the product of (i) the per share amount, if any, of the
dividends or other distributions to be declared, paid or set aside for the
Common Stock, multiplied by (ii) the number of whole shares of Common Stock into
which such share of Series A Preferred Stock or Series B Preferred Stock is then
convertible. Dividends, if paid, must be paid on, or, if declared and set apart
for payment on, all outstanding series of Preferred Stock simultaneously, and,
if less than the full dividends are paid on or declared and set apart on all
outstanding series of Preferred Stock, the same percentage of the dividend rate
on each outstanding series of Preferred Stock shall be paid or declared and set
apart.
2. Liquidation, Dissolution or Winding Up; Certain Mergers,
Consolidations and Asset Sales.
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation (a "Liquidation"), or the closing
or consummation of any merger or consolidation of the Corporation into or with
another corporation (except one in which the holders of capital stock of the
Corporation immediately prior to such merger or consolidation continue to hold
at least 50% by voting power of the capital stock of the surviving or acquiring
corporation), or sale of all or substantially all the stock or assets of the
Corporation (a "Sale of the Corporation")(a Liquidation or Sale of the
Corporation being called herein a "Liquidation Event"), the holders of shares of
Series A Preferred Stock and Series B Preferred Stock then outstanding shall be
entitled to be paid out of the assets and funds of the Corporation available
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for distribution to its stockholders, but before any payment shall be made to
the holders of Common Stock or any other class or series of stock ranking on
liquidation junior to the Series A Preferred Stock or Series B Preferred Stock
(such Common Stock and other stock being collectively referred to as "Junior
Stock") by reason of their ownership thereof, an amount equal to $7.90 per share
of Series A Preferred Stock or $7.90 per share of Series B Preferred Stock (in
each case subject to appropriate adjustment in the event of any stock dividend,
stock split, combination or other similar recapitalization affecting such
shares), plus any dividends declared but unpaid thereon. If upon any such
Liquidation Event the assets and funds of the Corporation available for
distribution to its stockholders shall be insufficient to pay the holders of
shares of Series A Preferred Stock and Series B Preferred Stock the full amount
to which they shall be entitled pursuant to the previous sentence, the holders
of shares of Series A Preferred Stock and Series B Preferred Stock and any class
or series of stock ranking on liquidation on a parity with the Series A
Preferred Stock and Series B Preferred Stock shall share ratably in any
distribution of the assets and funds of the Corporation in proportion to the
respective amounts which would otherwise be payable in respect of the shares
held by them upon such distribution if all amounts payable on or with respect to
such shares were paid in full. After the payment of all preferential amounts
required to be paid to the holders of Series A Preferred Stock and Series B
Preferred Stock and any other class or series of stock of the Corporation
ranking on liquidation on a parity with the Series A Preferred Stock and Series
B Preferred Stock upon a Liquidation Event, the remaining assets and funds of
the Corporation available for distribution to its stockholders (the "Remaining
Assets") shall be distributed among the holders of shares of Series A Preferred
Stock and Series B Preferred Stock, Common Stock and any other class or series
of stock entitled to participate in liquidation distributions with the holders
of Common Stock, pro rata based on the number of shares of Common Stock held by
each (as if conversion into Common Stock of all such shares had occurred).
3. Voting.
(a) Each holder of outstanding shares of Series A Preferred Stock
and Series B Preferred Stock shall be entitled to the number of votes equal to
the number of whole shares of Common Stock into which the shares of Series A
Preferred Stock and Series B Preferred Stock held by such holder are then
convertible (as adjusted from time to time pursuant to Section 4 hereof), at
each meeting of stockholders of the Corporation (and written actions of
stockholders in lieu of meetings) with respect to any and all matters presented
to the stockholders of the Corporation for their action or consideration. Except
as provided by law, by the provisions of this Section 3 or by the provisions
establishing any other series of Preferred Stock, holders of Series A Preferred
Stock and Series B Preferred Stock and of any other outstanding series of
Preferred Stock shall vote together with the holders of Common Stock as a single
class.
(b) The Corporation shall not amend, alter or repeal the
preferences, special rights or other powers of the Series A Preferred Stock so
as to affect adversely the Series A Preferred Stock, without the written consent
or affirmative vote of the holders of a majority of the then outstanding shares
of Series A Preferred Stock, given in writing or by vote at a meeting,
consenting or voting (as the case may be) separately as a class. For this
purpose, without limiting the generality of the foregoing, the authorization of
any shares of capital stock with preference or priority over the Series A
Preferred Stock as to the right to receive either dividends or amounts
distributable upon liquidation, dissolution or winding up of the Corporation
shall be
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deemed to affect adversely the Series A Preferred Stock, and the authorization
of any shares of capital stock on a parity with Series A Preferred Stock,
including additional shares of Series A Preferred Stock or Series B Preferred
Stock, as to the right to receive either dividends or amounts distributable upon
a Liquidation shall also be deemed to affect adversely the Series A Preferred
Stock.
(c) The Corporation shall not amend, alter or repeal the
preferences, special rights or other powers of the Series B Preferred Stock so
as to affect adversely the Series B Preferred Stock, without the written consent
or affirmative vote of the holders of a majority of the then outstanding shares
of Series B Preferred Stock, given in writing or by vote at a meeting,
consenting or voting (as the case may be) separately as a class. For this
purpose, without limiting the generality of the foregoing, the authorization of
any shares of capital stock with preference or priority over the Series B
Preferred Stock as to the right to receive either dividends or amounts
distributable upon liquidation, dissolution or winding up of the Corporation
shall be deemed to affect adversely the Series B Preferred Stock, and the
authorization of any shares of capital stock on a parity with Series B Preferred
Stock, including additional shares of Series A Preferred Stock or Series B
Preferred Stock, as to the right to receive either dividends or amounts
distributable upon a Liquidation shall also be deemed to affect adversely the
Series B Preferred Stock.
(d) In addition to any other rights provided by law, so long as
at least fifty percent (50%) of the original number of shares of Series A
Preferred Stock shall be outstanding (subject to appropriate adjustment in the
event of any stock dividend, stock split, combination or other similar
recapitalization affecting such shares), the Corporation shall not, without
first obtaining the affirmative vote or written consent of the holders of not
less than two-thirds of the then outstanding shares of Series A Preferred Stock,
voting as a separate class:
(i) pay or declare any dividend or distribution on any
shares of its Common Stock, provided, however, that such provision shall not
apply to the repurchase of shares of Common Stock or Preferred Stock issued to
employees, officers, directors or consultants pursuant to agreements or plans
under which the Corporation has the option to repurchase shares upon the
occurrence of certain events such as the termination of employment;
(ii) a Sale of the Corporation in which the gross valuation
or proceeds to the stockholders of the Corporation is less than $300,000,000
proceeds in the aggregate;
(iii) Liquidate, dissolve or wind up the Corporation;
(iv) acquire (in any one transaction or a series of related
transactions) all or a portion of the properties, assets or capital stock of any
other corporation or entity for consideration greater than $10,000,000; or
(v) incur indebtedness for borrowed funds in excess of
$2,000,000 in aggregate principal amount at any time outstanding.
(e) In addition to any other rights provided by law, so long as
at least fifty percent (50%) of the original number of shares of Series B
Preferred Stock shall be outstanding (subject to appropriate adjustment in the
event of any stock dividend, stock split, combination or
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other similar recapitalization affecting such shares), the Corporation shall
not, without first obtaining the affirmative vote or written consent of the
holders of not less than two-thirds of the then outstanding shares of Series B
Preferred Stock, voting as a separate class:
(i) pay or declare any dividend or distribution on any
shares of its Common Stock, provided, however, that such provision shall not
apply to the repurchase of shares of Common Stock or Preferred Stock issued to
employees, officers, directors or consultants pursuant to agreements or plans
under which the Corporation has the option to repurchase shares upon the
occurrence of certain events such as the termination of employment;
(ii) a Sale of the Corporation in which the gross valuation
or proceeds to the stockholders of the Corporation is less than $300,000,000
proceeds in the aggregate;
(iii) Liquidate, dissolve or wind up the Corporation;
(iv) acquire (in any one transaction or a series of related
transactions) all or a portion of the properties, assets or capital stock of any
other corporation or entity for consideration greater than $10,000,000; or
(v) incur indebtedness for borrowed funds in excess of
$2,000,000 in aggregate principal amount at any time outstanding.
4. Optional Conversion. The holders of the Series A Preferred Stock and
Series B Preferred Stock shall have conversion rights as follows (the
"Conversion Rights"):
(a) Right to Convert. Each share of Series A Preferred Stock
shall be convertible, at the option of the holder thereof, at any time and from
time to time, and without the payment of additional consideration by the holder
thereof, into such number of fully paid and nonassessable shares of Common Stock
as is determined by dividing $7.90 by the Series A Conversion Price (as defined
below) in effect at the time of conversion. The "Series A Conversion Price"
shall initially be $7.90 Such initial Series A Conversion Price, and the rate at
which shares of Series A Preferred Stock and Series B Preferred Stock may be
converted into shares of Common Stock, shall be subject to adjustment as
provided below. Each share of Series B Preferred Stock shall be convertible, at
the option of the holder thereof, at any time and from time to time, and without
the payment of additional consideration by the holder thereof, into such number
of fully paid and nonassessable shares of Common Stock as is determined by
dividing $7.90 by the Series B Conversion Price (as defined below) in effect at
the time of conversion. The "Series B Conversion Price" shall initially be
$7.90. Such initial Series B Conversion Price, and the rate at which shares of
Series B Preferred Stock may be converted into shares of Common Stock, shall be
subject to adjustment as provided below.
(b) Fractional Shares. No fractional shares of Common Stock shall
be issued upon conversion of the Series A Preferred Stock or Series B Preferred
Stock. In lieu of any fractional shares to which the holder would otherwise be
entitled, the Corporation shall pay cash equal to such fraction multiplied by
the then effective Series A Conversion Price or Series B Conversion Price.
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(c) Mechanics of Conversion.
(i) In order for a holder of Series A Preferred Stock or
Series B Preferred Stock to convert shares of Series A Preferred Stock or Series
B Preferred Stock into shares of Common Stock, such holder shall surrender the
certificate or certificates for such shares of Series A Preferred Stock or
Series B Preferred Stock, at the office of the transfer agent for the Series A
Preferred Stock and Series B Preferred Stock (or at the principal office of the
Corporation if the Corporation serves as its own transfer agent), together with
written notice that such holder elects to convert all or any number of the
shares of the Series A Preferred Stock or Series B Preferred Stock represented
by such certificate or certificates. Such notice shall state such holder's name
or the names of the nominees in which such holder wishes the certificate or
certificates for shares of Common Stock to be issued. If required by the
Corporation, certificates surrendered for conversion shall be endorsed or
accompanied by a written instrument or instruments of transfer, in form
satisfactory to the Corporation, duly executed by the registered holder or his
or its attorney duly authorized in writing. The date of receipt of such
certificates and notice by the transfer agent (or by the Corporation if the
Corporation serves as its own transfer agent) shall be the conversion date
("Conversion Date"), and the shares of Common Stock issuable upon conversion of
the shares represented by such certificate shall be deemed to be outstanding of
record as of such date. The Corporation shall, as soon as practicable after the
Conversion Date, issue and deliver at such office to such holder of Series A
Preferred Stock or Series B Preferred Stock, or to his or its nominees, a
certificate or certificates for the number of shares of Common Stock to which
such holder shall be entitled, together with cash in lieu of any fraction of a
share.
(ii) The Corporation shall at all times when the Series A
Preferred Stock or Series B Preferred Stock shall be outstanding, reserve and
keep available out of its authorized but unissued Common Stock, for the purpose
of effecting the conversion of the Series A Preferred Stock or Series B
Preferred Stock, such number of its duly authorized shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all
outstanding Series A Preferred Stock or Series B Preferred Stock. Before taking
any action which would cause an adjustment reducing the Series A Conversion
Price or Series B Conversion Price below the then par value of the shares of
Common Stock issuable upon conversion of the Series A Preferred Stock or Series
B Preferred Stock, the Corporation will take any corporate action which may, in
the opinion of its counsel, be necessary in order that the Corporation may
validly and legally issue fully paid and nonassessable shares of Common Stock at
such adjusted Series A Conversion Price or Series B Conversion Price.
(iii) Upon any such conversion, no adjustment to the Series
A Conversion Price or Series B Conversion Price shall be made for any declared
but unpaid dividends on the Series A Preferred Stock or Series B Preferred Stock
surrendered for conversion or on the Common Stock delivered upon conversion,
provided, however, that dividends shall be promptly paid pursuant to
subparagraph (iv) below to the holders surrendering such shares for conversion.
(iv) All shares of Series A Preferred Stock or Series B
Preferred Stock which shall have been surrendered for conversion as herein
provided shall no longer be deemed to be outstanding and all rights with respect
to such shares, including the rights, if any, to receive
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notices and to vote, shall immediately cease and terminate on the Conversion
Date, except only the right of the holders thereof to receive shares of Common
Stock in exchange therefor and payment of any dividends declared but unpaid
thereon. Any shares of Series A Preferred Stock or Series B Preferred Stock so
converted shall be retired and cancelled and shall not be reissued, and the
Corporation (without the need for stockholder action) may from time to time take
such appropriate action as may be necessary to reduce the authorized number of
shares of Series A Preferred Stock or Series B Preferred Stock accordingly.
(v) The Corporation shall pay any and all issue, stamp and
other taxes that may be payable in respect of any issuance or delivery of shares
of Common Stock upon conversion of shares of Series A Preferred Stock or Series
B Preferred Stock pursuant to this Section 4. The Corporation shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issuance and delivery of shares of Common Stock in a
name other than that in which the shares of Series A Preferred Stock or Series B
Preferred Stock so converted were registered, and no such issuance or delivery
shall be made unless and until the person or entity requesting such issuance has
paid to the Corporation the amount of any such tax or has established, to the
satisfaction of the Corporation, that such tax has been paid.
(d) Adjustments to Series A Conversion Price and Series B
Conversion Price for Diluting Issues:
(i) Special Definitions. For purposes of this Section 4, the
following definitions shall apply:
(A) "Option" shall mean rights, options or warrants to
subscribe for, purchase or otherwise acquire Common Stock or Convertible
Securities.
(B) "Series B Original Issue Date" shall mean the date
on which a share of Series B Preferred Stock was first issued.
(C) "Convertible Securities" shall mean any evidences
of indebtedness, shares or other securities directly or indirectly convertible
into or exchangeable for Common Stock, but excluding Options.
(D) "Additional Shares of Common Stock" shall mean all
shares of Common Stock issued (or, pursuant to Subsection 4(d)(iii) below,
deemed to be issued) by the Corporation after the Series B Original Issue Date,
other than:
(I) shares of Common Stock issued or issuable upon
conversion or exchange of any Convertible Securities or exercise of any Options
outstanding on the Series B Original Issue Date;
(II) shares of Common Stock issued or issuable as
a dividend or distribution on Series A Preferred Stock or Series B Preferred
Stock;
(III) shares of Common Stock issued or issuable by
reason of a dividend, stock split, split-up or other distribution on shares of
Common Stock that is covered by Subsection 4(e) or 4(f) below;
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(IV) shares of Common Stock (or Options with
respect thereto) issued or issuable to employees or directors of, or consultants
to, the Corporation pursuant to a plan or arrangement approved by a majority of
the Board of Directors of the Corporation;
(V) shares of Common Stock issued in connection
with any business combinations, debt or equipment financings approved by a
majority of the Board of Directors of the Corporation; or
(VI) securities issued solely in consideration for
the acquisition (whether by merger or otherwise) by the Corporation of all or
substantially all of the stock or assets of any other entity in a transaction
approved by a majority of the Board of Directors of the Corporation.
(ii) No Adjustment of Series A Conversion Price or Series B
Conversion Price. No adjustment in the number of shares of Common Stock into
which the Series A Preferred Stock or Series B Preferred Stock is convertible
shall be made, by adjustment in the applicable Series A Conversion Price or
Series B Conversion Price thereof: (a) unless the consideration per share
(determined pursuant to Subsection 4(d)(v)) for an Additional Share of Common
Stock issued or deemed to be issued by the Corporation is less than the
applicable Series A Conversion Price or Series B Conversion Price in effect
immediately prior to the issue of such Additional Shares, or (b) if prior to
such issuance, the Corporation receives written notice from the holders of at
least a majority of the then outstanding shares of Series A Preferred Stock and
the holders of at least a majority of the then outstanding shares of Series B
Preferred Stock, agreeing that no such adjustment shall be made as the result of
the issuance of Additional Shares of Common Stock.
(iii) Issue of Securities Deemed Issue of Additional Shares
of Common Stock.
If the Corporation at any time or from time to time after the Series B
Original Issue Date shall issue any Options (excluding Options covered by
Subsection 4(d)(i)(D)(IV) above) or Convertible Securities or shall fix a record
date for the determination of holders of any class of securities entitled to
receive any such Options or Convertible Securities, then the maximum number of
shares of Common Stock (as set forth in the instrument relating thereto without
regard to any provision contained therein for a subsequent adjustment of such
number) issuable upon the exercise of such Options or, in the case of
Convertible Securities and Options therefor, the conversion or exchange of such
Convertible Securities, shall be deemed to be Additional Shares of Common Stock
issued as of the time of such issue or, in case such a record date shall have
been fixed, as of the close of business on such record date, provided that
Additional Shares of Common Stock shall not be deemed to have been issued unless
the consideration per share (determined pursuant to Subsection 4(d)(v) hereof)
of such Additional Shares of Common Stock would be less than the applicable
Series A Conversion Price or Series B Conversion Price in effect on the date of
and immediately prior to such issue, or such record date, as the case may be,
and provided further that in any such case in which Additional Shares of Common
Stock are deemed to be issued:
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(A) No further adjustment in the Series A Conversion
Price or Series B Conversion Price shall be made upon the subsequent issue of
Convertible Securities or shares of Common Stock upon the exercise of such
Options or conversion or exchange of such Convertible Securities;
(B) If such Options or Convertible Securities by their
terms provide, with the passage of time or otherwise, for any increase or
decrease in the consideration payable to the Corporation, then upon the
exercise, conversion or exchange thereof, the Series A Conversion Price or
Series B Conversion Price computed upon the original issue thereof (or upon the
occurrence of a record date with respect thereto), and any subsequent
adjustments based thereon, shall, upon any such increase or decrease becoming
effective, be recomputed to reflect such increase or decrease insofar as it
affects such Options or the rights of conversion or exchange under such
Convertible Securities;
(C) Upon the expiration or termination of any such
unexercised Option, the Series A Conversion Price or Series B Conversion Price
shall not be readjusted, but the Additional Shares of Common Stock deemed issued
as the result of the original issue of such Option shall not be deemed issued
for the purposes of any subsequent adjustment of the Series A Conversion Price
or Series B Conversion Price;
(D) In the event of any change in the number of shares
of Common Stock issuable upon the exercise, conversion or exchange of any such
Option or Convertible Security, including, but not limited to, a change
resulting from the anti-dilution provisions thereof, the Series A Conversion
Price or Series B Conversion Price then in effect shall forthwith be readjusted
to such Series A Conversion Price or Series B Conversion Price as would have
obtained had the adjustment which was made upon the issuance of such Option or
Convertible Security not exercised, converted or exchanged prior to such change
been made upon the basis of such change; and
(E) No readjustment pursuant to clause (B) or (D) above
shall have the effect of increasing the Series A Conversion Price or Series B
Conversion Price to an amount which exceeds the lower of (i) the Series A
Conversion Price or Series B Conversion Price on the original adjustment date,
or (ii) the Series A Conversion Price or Series B Conversion Price that would
have resulted from any issuances of Additional Shares of Common Stock between
the original adjustment date and such readjustment date.
In the event the Corporation, after the Series B Original Issue Date,
amends the terms of any such Options or Convertible Securities (whether such
Options or Convertible Securities were outstanding on the Series B Original
Issue Date or were issued after the Series B Original Issue Date), then such
Options or Convertible Securities, as so amended, shall be deemed to have been
issued after the Series B Original Issue Date and the provisions of this
Subsection 4(d)(iii) shall apply.
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(iv) Adjustment of Series A Conversion Price or Series B
Conversion Price Upon Issuance of Additional Shares of Common Stock.
In the event the Corporation shall at any time after the Series B
Original Issue Date issue Additional Shares of Common Stock (including
Additional Shares of Common Stock deemed to be issued pursuant to Subsection
4(d)(iii)), without consideration (in such case, for purposes of the calculation
below, such consideration shall be deemed the par value of the Common Stock) or
for a consideration per share less than the applicable Series A Conversion Price
or Series B Conversion Price in effect immediately prior to such issue, then and
in such event, such Series A Conversion Price or Series B Conversion Price shall
be reduced, concurrently with such issue, to a price (calculated to the nearest
cent) determined by multiplying such Series A Conversion Price or Series B
Conversion Price by a fraction, (A) the numerator of which shall be (1) the
number of shares of Common Stock outstanding immediately prior to such issue
plus (2) the number of shares of Common Stock which the aggregate consideration
received or to be received by the Corporation for the total number of Additional
Shares of Common Stock so issued would purchase at such Series A Conversion
Price or Series B Conversion Price; and (B) the denominator of which shall be
the number of shares of Common Stock outstanding immediately prior to such issue
plus the number of such Additional Shares of Common Stock so issued; provided
that, (i) for the purpose of this Subsection 4(d)(iv), all shares of Common
Stock issuable upon exercise, conversion or exchange of Options or Convertible
Securities outstanding immediately prior to such issue shall be deemed to be
outstanding, and (ii) the number of shares of Common Stock deemed issuable upon
exercise, conversion of exchange of such outstanding Options and Convertible
Securities shall not give effect to any adjustments to the exercise, conversion
or exchange price or exercise, conversion or exchange rate of such Options or
Convertible Securities resulting from the issuance of Additional Shares of
Common Stock that is the subject of this calculation.
(v) Determination of Consideration. For purposes of this
Subsection 4(d), the consideration received by the Corporation for the issue of
any Additional Shares of Common Stock shall be computed as follows:
(A) Cash and Property. Such consideration shall:
(I) insofar as it consists of cash, be computed at
the aggregate of cash received by the Corporation, excluding amounts paid or
payable for accrued interest and underwriters' discounts and commissions;
(II) insofar as it consists of property other than
cash, be computed at the fair market value thereof at the time of such issue, as
determined in good faith by the Board of Directors; and
(III) in the event Additional Shares of Common
Stock are issued together with other shares or securities or other assets of the
Corporation for consideration which covers both, be the proportion of such
consideration so received, computed as provided in clauses (I) and (II) above,
as determined in good faith by the Board of Directors.
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(B) Options and Convertible Securities. The
consideration per share received by the Corporation for Additional Shares of
Common Stock deemed to have been issued pursuant to Subsection 4(d)(iii),
relating to Options and Convertible Securities, shall be determined by dividing
(x) the total amount, if any, received or
receivable by the Corporation as consideration for the issue of such Options or
Convertible Securities, plus the minimum aggregate amount of additional
consideration (as set forth in the instruments relating thereto, without regard
to any provision contained therein for a subsequent adjustment of such
consideration) payable to the Corporation upon the exercise of such Options or
the conversion or exchange of such Convertible Securities, or in the case of
Options for Convertible Securities, the exercise of such Options for Convertible
Securities and the conversion or exchange of such Convertible Securities, by
(y) the maximum number of shares of Common Stock
(as set forth in the instruments relating thereto, without regard to any
provision contained therein for a subsequent adjustment of such number) issuable
upon the exercise of such Options or the conversion or exchange of such
Convertible Securities.
(e) Adjustment for Stock Splits and Combinations. If the
Corporation shall at any time or from time to time after the Series B Original
Issue Date effect a subdivision of the outstanding Common Stock, the Series A
Conversion Price or Series B Conversion Price then in effect immediately before
that subdivision shall be proportionately decreased. If the Corporation shall at
any time or from time to time after the Series B Original Issue Date combine the
outstanding shares of Common Stock, the Series A Conversion Price or Series B
Conversion Price then in effect immediately before the combination shall be
proportionately increased. Any adjustment under this paragraph shall become
effective at the close of business on the date the subdivision or combination
becomes effective.
(f) Adjustment for Certain Dividends and Distributions. In the
event the Corporation at any time, or from time to time after the Series B
Original Issue Date, shall make or issue, or fix a record date for the
determination of holders of Common Stock entitled to receive, a dividend or
other distribution payable in additional shares of Common Stock, then and in
each such event the Series A Conversion Price or Series B Conversion Price then
in effect immediately before such event shall be decreased as of the time of
such issuance or, in the event such a record date shall have been fixed, as of
the close of business on such record date, by multiplying the Series A
Conversion Price or Series B Conversion Price then in effect by a fraction:
(1) the numerator of which shall be the total number of
shares of Common Stock issued and outstanding immediately prior
to the time of such issuance or the close of business on such
record date, and
(2) the denominator of which shall be the total number
of shares of Common Stock issued and outstanding immediately
prior to the time of such issuance or the close of business on
such record date plus the number of shares of Common Stock
issuable in payment of such dividend or distribution;
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provided, however, if such record date shall have been fixed and such dividend
is not fully paid or if such distribution is not fully made on the date fixed
therefor, the Series A Conversion Price or Series B Conversion Price shall be
recomputed accordingly as of the close of business on such record date and
thereafter the Series A Conversion Price or Series B Conversion Price shall be
adjusted pursuant to this paragraph as of the time of actual payment of such
dividends or distributions; and provided further, however, that no such
adjustment shall be made if the holders of Series A Preferred Stock and Series B
Preferred Stock simultaneously receive (i) a dividend or other distribution of
shares of Common Stock in a number equal to the number of shares of Common Stock
as they would have received if all outstanding shares of Series A Preferred
Stock or Series B Preferred Stock had been converted into Common Stock on the
date of such event or (ii) a dividend or other distribution of shares of Series
A Preferred Stock or Series B Preferred Stock which are convertible, as of the
date of such event, into such number of shares of Common Stock as is equal to
the number of additional shares of Common Stock being issued with respect to
each share of Common Stock in such dividend or distribution.
(g) Adjustments for Other Dividends and Distributions. In the
event the Corporation at any time or from time to time after the Series B
Original Issue Date shall make or issue, or fix a record date for the
determination of holders of Common Stock entitled to receive, a dividend or
other distribution payable in securities of the Corporation (other than shares
of Common Stock) or in cash or other property (other than cash out of earnings
or earned surplus, determined in accordance with generally accepted accounting
principles), then and in each such event provision shall be made so that the
holders of the Series A Preferred Stock or Series B Preferred Stock shall
receive upon conversion thereof in addition to the number of shares of Common
Stock receivable thereupon, the amount of securities of the Corporation that
they would have received had the Series A Preferred Stock or Series B Preferred
Stock been converted into Common Stock on the date of such event and had they
thereafter, during the period from the date of such event to and including the
conversion date, retained such securities receivable by them as aforesaid during
such period, giving application to all adjustments called for during such period
under this paragraph with respect to the rights of the holders of the Series A
Preferred Stock or Series B Preferred Stock; and provided further, however, that
no such adjustment shall be made if the holders of Series A Preferred Stock or
Series B Preferred Stock simultaneously receive a dividend or other distribution
of such securities in an amount equal to the amount of such securities as they
would have received if all outstanding shares of Series A Preferred Stock or
Series B Preferred Stock had been converted into Common Stock on the date of
such event.
(h) Adjustment for Merger or Reorganization, etc. Subject to the
provisions of Section 2, if there shall occur any reorganization,
recapitalization, consolidation or merger involving the Corporation in which the
Common Stock is converted into or exchanged for securities, cash or other
property (other than a transaction covered by paragraphs (e), (f) or (g) of this
Section 4), then, following any such reorganization, recapitalization,
consolidation or merger, each share of Series A Preferred Stock or Series B
Preferred Stock shall be convertible into the kind and amount of securities,
cash or other property which a holder of the number of shares of Common Stock of
the Corporation issuable upon conversion of one share of Series A Preferred
Stock or Series B Preferred Stock immediately prior to such reorganization,
recapitalization, consolidation or merger would have been entitled to receive
pursuant to such transaction; and, in such case, appropriate adjustment (as
determined in good faith by the Board
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of Directors) shall be made in the application of the provisions in this Section
4 set forth with respect to the rights and interest thereafter of the holders of
the Series A Preferred Stock or Series B Preferred Stock, to the end that the
provisions set forth in this Section 4 (including provisions with respect to
changes in and other adjustments of the Series A Conversion Price or Series B
Conversion Price) shall thereafter be applicable, as nearly as reasonably may
be, in relation to any shares of stock or other property thereafter deliverable
upon the conversion of the Series A Preferred Stock or Series B Preferred Stock.
(i) No Impairment. The Corporation will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Corporation, but will at
all times in good faith assist in the carrying out of all the provisions of this
Section 4 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 or Series B Preferred Stock against impairment.
(j) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Series A Conversion Price or Series B
Conversion Price pursuant to this Section 4, the Corporation at its expense
shall promptly compute such adjustment or readjustment in accordance with the
terms hereof and furnish to each holder of Series A Preferred Stock or Series B
Preferred Stock a certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment is based.
The Corporation shall, upon the written request at any time of any holder of
Series A Preferred Stock or Series B Preferred Stock, furnish or cause to be
furnished to such holder a certificate setting forth (i) such adjustments and
readjustments, (ii) the Series A Conversion Price or Series B Conversion Price
then in effect, and (iii) the number of shares of Common Stock and the amount,
if any, of other securities, cash or property which then would be received upon
the conversion of Series A Preferred Stock or Series B Preferred Stock.
(k) Notice of Record Date. In the event:
(i) the Corporation shall take a record of the holders of
its Common Stock (or other stock or securities at the time issuable upon
conversion of the Series A Preferred Stock or Series B Preferred Stock) for the
purpose of entitling or enabling them to receive any dividend or other
distribution, or to receive any right to subscribe for or purchase any shares of
stock of any class or any other securities, or to receive any other right; or
(ii) of any capital reorganization of the Corporation, any
reclassification of the Common Stock of the Corporation, or any Sale of the
Corporation;
(iii) of the voluntary or involuntary Liquidation of the
Corporation; or
(iv) that the Corporation subdivides or combines its
outstanding shares of Common Stock,
then, and in each such case, the Corporation will mail or cause to be mailed to
the holders of the Series A Preferred Stock or Series B Preferred Stock a notice
specifying, as the case may be,
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(i) the record date for such dividend, distribution or right, and the amount and
character of such dividend, distribution or right, or (ii) the effective date on
which such reorganization, reclassification, Sale of the Corporation or
Liquidation is to take place, and the time, if any is to be fixed, as of which
the holders of record of Common Stock (or such other stock or securities at the
time issuable upon the conversion of the Series A Preferred Stock or Series B
Preferred Stock) shall be entitled to exchange their shares of Common Stock (or
such other stock or securities) for securities or other property deliverable
upon such reorganization, reclassification, Sale of the Corporation or
Liquidation. Such notice shall be mailed at least 10 days prior to the record
date or effective date for the event specified in such notice.
5. Mandatory Conversion.
(a) Upon the closing (the "Mandatory Conversion Date") of the
sale of shares of Common Stock in a firm commitment underwriting, in a public
offering pursuant to an effective registration statement under the Securities
Act of 1933, as amended, resulting in at least $25,000,000 of gross proceeds to
the Corporation at a valuation as herein determined of the Corporation of
$300,000,000 (a "Qualified Initial Public Offering"), then:
(i) all outstanding shares of Series A Preferred Stock and
Series B Preferred Stock shall automatically be converted into shares of Common
Stock, at the then effective Series A Conversion Price or Series B Conversion
Price as the case may be; and
(ii) the number of authorized shares of Preferred Stock
shall be automatically reduced by the number of shares of Preferred Stock that
had been designated as Series A Preferred Stock and Series B Preferred Stock,
and all provisions included under the caption "Preferred Stock", and all
references to the Series A Preferred Stock and Series B Preferred Stock, shall
be deleted and shall be of no further force or effect, except that all accrued
and unpaid dividends on the Series A Preferred Stock and Series B Preferred
Stock shall become immediately payable by the Corporation to the holders of such
shares outstanding immediately prior to such Mandatory Conversion.
For purposes of this Section 5(a) the valuation of the Corporation shall
be determined by multiplying the number of shares of Common Stock outstanding as
of the closing of the public offering (including the shares of Common Stock
issuable upon conversion of the Preferred Stock) by the per share price at which
shares are sold to the public in such public offering.
(b) All holders of record of shares of Series A Preferred Stock
or Series B Preferred Stock shall be given written notice of the Mandatory
Conversion Date and the place designated for mandatory conversion of all such
shares of Series A Preferred Stock and Series B Preferred Stock pursuant to this
Section 5. Such notice need not be given in advance of the occurrence of the
Mandatory Conversion Date. Such notice shall be sent by first class or
registered mail, postage prepaid, to each record holder of Series A Preferred
Stock or Series B Preferred Stock at such holder's address last shown on the
records of the transfer agent for the Series A Preferred Stock and Series B
Preferred Stock (or the records of the Corporation, if it serves as its own
transfer agent). Upon receipt of such notice, each holder of shares of Series A
Preferred Stock or Series B Preferred Stock shall surrender his or its
certificate or certificates for all such shares to the Corporation at the place
designated in such notice, and shall thereafter
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receive certificates for the number of shares of Common Stock to which such
holder is entitled pursuant to this Section 5. On the Mandatory Conversion Date,
all outstanding shares of Series A Preferred Stock and Series B Preferred Stock
shall be deemed to have been converted into shares of Common Stock, which shall
be deemed to be outstanding of record, and all rights with respect to the Series
A Preferred Stock and Series B Preferred Stock so converted, including the
rights, if any, to receive notices and vote (other than as a holder of Common
Stock) will terminate, except only the rights of the holders thereof, upon
surrender of their certificate or certificates therefor, to receive certificates
for the number of shares of Common Stock into which such Series A Preferred
Stock and Series B Preferred Stock have been converted, and payment of any
declared but unpaid dividends thereon. If so required by the Corporation,
certificates surrendered for conversion shall be endorsed or accompanied by
written instrument or instruments of transfer, in form satisfactory to the
Corporation, duly executed by the registered holder or by his or its attorney
duly authorized in writing. As soon as practicable after the Mandatory
Conversion Date and the surrender of the certificate or certificates for Series
A Preferred Stock and Series B Preferred Stock, the Corporation shall cause to
be issued and delivered to such holder, or on his or its written order, a
certificate or certificates for the number of full shares of Common Stock
issuable on such conversion in accordance with the provisions hereof and cash as
provided in Subsection 4(b) in respect of any fraction of a share of Common
Stock otherwise issuable upon such conversion.
(c) All certificates evidencing shares of Series A Preferred
Stock or Series B Preferred Stock which are required to be surrendered for
conversion in accordance with the provisions hereof shall, from and after the
Mandatory Conversion Date, be deemed to have been retired and cancelled and the
shares of Series A Preferred Stock or Series B Preferred Stock represented
thereby converted into Common Stock for all purposes, notwithstanding the
failure of the holder or holders thereof to surrender such certificates on or
prior to such date. Such converted Series A Preferred Stock or Series B
Preferred Stock may not be reissued, and the Corporation may thereafter take
such appropriate action (without the need for stockholder action) as may be
necessary to reduce the authorized number of shares of Series A Preferred Stock
or Series B Preferred Stock accordingly.
(d) The Corporation shall pay any and all issue, stamp and other
taxes that may be payable in respect of any issuance or delivery of shares of
Common Stock upon conversion of shares of Series A Preferred Stock or Series B
Preferred Stock pursuant to this Section 5. The Corporation shall not, however,
be required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of shares of Common Stock in a name other
than that in which the shares of Series A Preferred Stock or Series B Preferred
Stock so converted were registered, and no such issuance or delivery shall be
made unless and until the person or entity requesting such issuance has paid to
the Corporation the amount of any such tax or has established, to the
satisfaction of the Corporation, that such tax has been paid.
6. Waiver. Except with respect to the voting provisions set forth
herein, any of the rights of the holders of Series A Preferred Stock or Series B
Preferred Stock set forth herein may be waived upon the written consent of the
holders of more than 50% of the shares of Series A Preferred Stock or, with the
written consent of the holders of more than 50% of the shares of Series B
Preferred Stock then outstanding, as the case may be; provided, however, that no
waiver pursuant to this Section 6 shall be valid without the written consent of
the holders of less than all
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the shares of Series A Preferred Stock then outstanding, or without the written
consent of the holders of less than all the shares of Series B Preferred Stock
then outstanding, unless such waiver affects all the shares of Series A
Preferred Stock or Series B Preferred Stock, as the case may be, then
outstanding in the same fashion.
FIFTH: The following provisions are inserted for the management of the
business and the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and stockholders:
A. The business and affairs of the Corporation shall be managed by or
under the direction of the Board of Directors. In addition to the powers and
authority expressly conferred upon them by statute or by this Certificate of
Incorporation or the By-laws of the Corporation, the directors are hereby
empowered to exercise all such powers and do all such acts and things as may be
exercised or done by the Corporation.
B. The directors of the Corporation need not be elected by written
ballot unless the By-laws so provide.
C. Any action required or permitted to be taken by the stockholders of
the Corporation must be effected at a duly called annual or special meeting of
stockholders of the Corporation and may not be effected by any consent in
writing by such stockholders.
D. Special meetings of stockholders of the Corporation may be called
only by the Board of Directors pursuant to a resolution adopted by a majority of
the total number of authorized directors (whether or not there exist any
vacancies in previously authorized directorships at the time such resolution is
presented to the Board for adoption), the Chairman of the Board of Directors,
the President and Chief Executive Officer or the holders of shares entitled to
cast not less than ten percent (10%) of the votes at the meeting.
SIXTH:
A. The number of directors shall initially be seven (7) and thereafter
shall be fixed from time to time exclusively by the Board of Directors pursuant
to a resolution adopted by the holders of a majority of the voting power of all
of the then outstanding shares of Series A Preferred Stock and Series B
Preferred Stock, voting as separate classes. All directors shall hold office
until the expiration of the term for which elected, and until their respective
successors are elected, except in the case of the death, resignation, or removal
of any director.
B. Subject to the rights of the holders of any series of Preferred Stock
then outstanding, newly created directorships resulting from any increase in the
authorized number of directors or any vacancies in the Board of Directors
resulting from death, resignation or other cause (including removal from office
by a vote of the stockholders) may be filled only by a majority vote of the
directors then in office, though less than a quorum, and directors so chosen
shall hold office for a term expiring at the next annual meeting of
stockholders, and until their respective successors are elected, except in the
case of the death, resignation, or removal of any director. No decrease in the
number of directors constituting the Board of Directors shall shorten the term
of any incumbent director.
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C. Subject to the rights of the holders of any series of Preferred Stock
then outstanding, any directors, or the entire Board of Directors, may be
removed from office at any time, with or without cause, but only by the
affirmative vote of the holders of at least a majority of the voting power of
all of the then outstanding shares of capital stock of the Corporation entitled
to vote generally in the election of directors, voting together as a single
class.
SEVENTH: The Board of Directors is expressly empowered to adopt, amend
or repeal By-laws of the Corporation. The stockholders shall also have power to
adopt, amend or repeal the By-laws of the Corporation. Any adoption, amendment
or repeal of By-laws of the Corporation by the stockholders shall require, in
addition to any vote of the holders of any class or series of stock of the
Corporation required by law or by this Certificate of Incorporation, the
affirmative vote of the holders of at least sixty-six and two-thirds percent (66
2/3%) of the voting power of all of the then outstanding shares of the capital
stock of the Corporation entitled to vote generally in the election of
directors, voting together as a single class.
EIGHTH: A director of the Corporation shall not be personally liable to
the Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involved intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which the director derived an
improper personal benefit.
If the Delaware General Corporation Law is 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.
Any repeal or modification of the foregoing provisions of this Article
EIGHTH by the stockholders of the Corporation shall not adversely affect any
right or protection of a director of the Corporation existing at the time of
such repeal or modification.
NINTH: The Corporation reserves the right to amend or repeal any
provision contained in this Certificate of Incorporation in the manner
prescribed by the laws of the State of Delaware and all rights conferred upon
stockholders are granted subject to this reservation; provided, however, that,
notwithstanding any other provision of this Certificate of Incorporation or any
provision of law which might otherwise permit a lesser vote or no vote, but in
addition to any vote of the holders of any class or series of the stock of this
Corporation required by law or by this Certificate of Incorporation, the
affirmative vote of the holders of at least ninety one percent (91%) of the
voting power of all of the then outstanding shares of the capital stock of the
Corporation entitled to vote generally in the election of directors, voting
together as a single class, shall be required to amend or repeal this Article
NINTH, Article FOURTH, Article FIFTH, Article SIXTH, Article SEVENTH or Article
EIGHTH, provided, however, that the affirmative vote of the holders of at least
fifty one percent (51%) of the voting power of all of the then outstanding
shares of Series A Preferred Stock and Series B Preferred Stock, voting together
as a single class, shall be required to authorize any shares of capital stock
with preference or priority less than the Series A Preferred Stock or Series B
Preferred Stock as to the right to receive either
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dividends or amounts distributable upon liquidation, dissolution or winding up
of the Corporation.
(Remainder of page intentionally left blank)
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IN WITNESS WHEREOF, the Corporation has caused this Restated Certificate to be
signed by a duly authorized officer on this ____ day of September, 2000.
NETGEAR, INC.
By:
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Patrick Lo
President and Chief Executive Officer
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