Certificate of Incorporation - Digimarc Corp.
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
DIGIMARC CORPORATION
DIGIMARC CORPORATION., a corporation organized and existing under and by virtue
of the General Corporation Law of the State of Delaware (the "Corporation"),
does hereby certify:
1. That the name of the Corporation is Digimarc Corporation. The
Corporation was originally incorporated under the same name; and the original
Certificate of Incorporation of the Corporation was filed with the Secretary of
State of the State of Delaware on the 27th day of September, 1999.
2. That by unanimous written consent of the Board of Directors of the
Corporation, filed with the minutes of the Corporation, resolutions were duly
adopted setting forth the proposed amendment and restatement of the Certificate
of Incorporation of the Corporation and declaring said amendment and restatement
to be advisable. The resolution setting forth the proposed amendment and
restatement is as follows:
RESOLVED, that the Certificate of Incorporation of the Corporation
be, and it hereby is, amended and restated in its entirety to read as set
forth in the attached Restated Certificate of Incorporation.
3. That thereafter, the Directors and the stockholders of the
Corporation took action by executing a written consent in lieu of a meeting in
accordance with Section 108(c) and Section 228(a), respectively, of the General
Corporation Law of the State of Delaware.
4. That said amendment and restatement was duly adopted in accordance
with the provisions of Sections 242 and 245 of the General Corporation Law of
the State of Delaware. This Restated Certificate of Incorporation restates and
integrates and further amends the provisions of the Certificate of Incorporation
of the Corporation as follows:
SECTION 1.
The name of the corporation is Digimarc Corporation (the "Corporation").
SECTION 2.
The address of the Corporation's registered office in the State of Delaware
is 1209 Orange Street, in the City of Wilmington, Delaware 19801, County of New
Castle. The name of its registered agent at such address is The Corporation
Trust Company.
SECTION 3.
The nature of the business or purposes to be conducted or promoted by the
Corporation is to engage in any lawful act or activity for which corporations
may be organized under the Delaware General Corporation Law.
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SECTION 4.
4.1 The aggregate number of shares of Capital Stock which the Corporation
shall have authority to issue is 46,199,000, consisting of 30,000,000 shares of
common stock, $.001 par value ("Common Stock"), and 16,199,000 shares of
preferred stock ("Preferred Stock"), $.001 par value.
4.2 Any of the shares of Preferred Stock may be issued from time to time
in one or more series. Subject to the limitations and restrictions in this
paragraph 4 set forth, the Board of Directors or a Committee of the Board of
Directors, to the extent permitted by law and the bylaws of the Corporation or a
resolution of the Board of Directors, by resolution or resolutions, is
authorized to create or provide for any such series, and to fix the
designations, preferences and relative, participating, optional or other special
rights, and qualifications, limitations or restrictions thereof, including,
without limitation, the authority to fix or alter the dividend rights, dividend
rates, conversion rights, exchange rights, voting rights, rights and terms of
redemption (including sinking and purchase fund provisions), the redemption
price or prices, the dissolution preferences and the rights in respect to any
distribution of assets of any wholly unissued series of Preferred Stock and the
number of shares constituting any such series, and the designation thereof, or
any of them and to increase or decrease the number of shares of any series so
created, subsequent to the issue of that series but not below the number of
shares of such series then outstanding. In case the number of shares of any
series shall be so decreased, the shares constituting such decrease shall resume
the status which they had prior to the adoption of the resolution originally
fixing the number of shares of such series.
There shall be no limitation or restriction on any variation between any of
the different series of Preferred Stock as to the designations, preferences and
relative, participating, optional or other special rights, and the
qualifications, limitations or restrictions thereof; and the several series of
Preferred Stock may, except as hereinafter in this paragraph 4 otherwise
expressly provided, vary in any and all respects as fixed and determined by the
resolution or resolutions of the Board of Directors or by Committee of the Board
of Directors, providing for the issuance of the various series; provided,
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however, that all shares of any one series of Preferred Stock shall have the
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same designation, preferences and relative, participating, optional or other
special rights and qualifications, limitations and restrictions.
Except as otherwise required by law, or as otherwise fixed by resolution or
resolutions of the Board of Directors with respect to one or more series of
Preferred Stock, the entire voting power and all voting rights shall be vested
exclusively in the Common Stock, and each stockholder of the Corporation who at
the time possesses voting power for any purpose shall be entitled to one vote
for each share of such stock standing in his name on the books of the
Corporation.
4.3 The Board of Directors, with the written consent of both the Series B
Preferred Stock Director and the Series C Preferred Stock Director (as defined
in Section 6.2.6 herein), is hereby authorized to fix or alter the rights,
preferences, privileges and restrictions granted to or imposed upon series of
Preferred Stock, and the number of shares constituting any such series and the
designation thereof, or of any of them. Subject to securing the written consent
of the holders of requisite majorities of Preferred Stock or series thereof that
would be required by this
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Certificate of Incorporation for issuance of new series of Preferred Stock
("Protective Provisions"), the rights privileges, preferences and restrictions
of any such series may be subordinated to, made pari passu with (including,
without limitation, inclusion in provisions with respect to liquidation and
acquisition preferences, redemption and /or approval of matters by vote or
written consent), or made senior to any of those of any present or future class
or series of Preferred Stock or Common Stock.
SECTION 5.
Common Stock
5.1 Common Stock. Except as expressly set forth in this Certificate, the
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shares of Common Stock have voting rights of one vote per share on all matters,
and are entitled to receive the net assets of the Corporation upon liquidation.
5.2 Repurchase of Shares. Subject to the Protective Provisions of Section
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6.2.7 and Delaware law, this Corporation is authorized to purchase shares of
Common Stock from holders thereof pursuant to arrangements approved by the Board
of Directors, without taking into account the preferential liquidation rights of
holders of Preferred Stock set forth herein when applying the provisions of the
Delaware General Corporation Law to determine the lawfulness of the purchase.
SECTION 6.
Preferred Stock
6.1 Designation of Preferred Stock Series.
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(a) Of the authorized Preferred Stock, 162,500 shares are
designated Series A-1 Preferred Stock, and 162,500 are designated Series A-N
Preferred Stock (collectively, the "Series A Preferred Stock"); 902,000 are
designated Series B-1 Preferred Stock, and 902,000 are designated Series B-N
Preferred Stock (collectively, the "Series B Preferred Stock"); and 2,035,000
are designated Series C-1 Preferred Stock and 2,035,000 are designated Series C-
N Preferred Stock (collectively, the "Series C Preferred Stock"); 1,400,000
shares are designated Series D Preferred Stock (the "Series D Preferred Stock");
and 300,000 shares are designated Series D-X Preferred Stock (the "Series D-X
Preferred Stock"). Collectively, these series are referred to as the "Preferred
Stock." The "Issue Price" applicable to Series A-1 Preferred Stock and Series A-
N Preferred Stock is $2.50 per share. The "Issue Price" applicable to Series B-1
Preferred Stock and Series B-N Preferred Stock is $5.00 per share. The "Issue
Price" applicable to Series C-1 Preferred Stock and Series C-N Preferred Stock
is $2.86 per share. The "Issue Price" applicable to Series D Preferred Stock is
$5.00 per share. The "Issue Price" applicable to Series D-X Preferred Stock is
$5.00 per share. Series A-N Preferred Stock, Series B-N Preferred Stock and
Series C-N Preferred Stock shall be identical in every respect to Series A-1
Preferred Stock, Series B-1 Preferred Stock and Series C-1 Preferred Stock,
respectively, except that Series A-N Preferred Stock, Series B-N Preferred Stock
and Series C-N Preferred Stock shall not be entitled to the weighted average
anti-dilution benefits described in Section 6.2.3(d)), from the date of original
issuance, and shall further be issuable only through conversion of the Series A-
1 Preferred Stock, Series B-1 Preferred Stock and Series C-1 Preferred Stock,
respectively, pursuant to Section 6.2.3(e).
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(b) Except as expressly noted in this Section 6.1, the
preferences, limitations and relative rights of the Series D Preferred Stock and
the Series D-X Preferred Stock shall be identical to and in pari passu with the
Series C-1 Preferred Stock, the Series D Preferred Stock, and the Series D-X
Preferred Stock shall act with the Series C Preferred Stock as a single class
(with relative weight of each share of Series C Preferred Stock, Series D
Preferred Stock, or Series D-X Preferred Stock determined on an "as converted to
Common Stock" basis) on all issues on which Series C Preferred Stock has a
designated right to separate vote or consent from the Common Stock, and all
issues with respect to which consent of or action by the majority of shares of
the class outstanding binds or commits the rest of the class.
6.1.2 Conversion Price Adjustments. The Conversion Price applicable
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to each share of Series D Preferred Stock and each share of Series D-X Preferred
Stock shall be $5.00 per share. Adjustments may be made to the Conversion Price
applicable to the Series D Preferred Stock only if the events giving rise to
such adjustments occurred after June 2, 1999, and not for events occurring
before that date. Adjustments may be made to the Conversion Price applicable to
the Series D-X Preferred Stock, only if the events giving rise to such
adjustments occurred after August 26, 1999 and not for events occurring before
that date.
6.1.3 Exclusion From Section 6.2.3(e). The Series D Preferred Stock
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and the Series D-X Preferred Stock shall not be covered by or subject to the
terms of Section 6.2.3(e) of this Certificate of Incorporation, as amended, but
shall retain rights analogous to those of Series C-1 Preferred Stock even under
conditions that would compel the conversion of Series C-1 Preferred Stock into
Series C-N Preferred Stock.
6.2 Rights, Preferences and Restrictions of Preferred Stock. Other than as
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set forth in Section 6.1 above, the rights, preferences, privileges, and
restrictions granted to and imposed on Preferred Stock are as follows:
6.2.1 Dividends. Holders of Preferred Stock shall be entitled to
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receive dividends at the rate of 10% per year, in preference to Common Stock,
when, as, and if declared by the Board of Directors. No dividends will be paid
on Common Stock until equal dividends have been declared and paid on Preferred
Stock. After payment of all dividends on Preferred Stock, the holders of
Preferred Stock shall be entitled to participate, on an as-converted basis, with
the outstanding Common Stock as to any dividends paid on such Common Stock.
6.2.2 Liquidation Preference.
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(a) In the event of any liquidation, dissolution or winding up
of this Corporation, including a Qualified Consolidation or Merger as defined
below (collectively, "Liquidation"), either voluntary or involuntary, each
holder of Preferred Stock shall be entitled to receive prior to any distribution
of any of the assets of this Corporation to the holders of Common Stock, upon
Liquidation of this Corporation, by reason of their ownership thereof, the Issue
Price applicable to that Series, per share (as adjusted to reflect any stock
splits, stock dividends or other recapitalizations) (that sum being referred to
herein as the "Preference"). If, upon Liquidation, the assets of this
Corporation available for distribution to its stockholders are insufficient to
pay the holders of Preferred Stock the full Preference, then the entire assets
and funds of this Corporation legally available for distribution to its
stockholders shall be distributed
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ratably among all holders of Preferred Stock in proportion to the full
Preference applicable to each holder.
(b) After setting apart or paying in full the Preference, any
assets of this Corporation remaining available for distribution to stockholders
upon Liquidation shall be distributed ratably among all holders of Common Stock
and all holders of Series B Preferred Stock and Series C Preferred Stock (after
full payment pursuant to subsection (a) above to the holders of the Preferred
Stock) in proportion to the amount of Common Stock each holder holds (treating
each holder of Series B Preferred Stock or Series C Preferred Stock as holding
that number of shares of Common Stock into which that holder's Series B
Preferred Stock or Series C Preferred Stock could then be converted pursuant to
the then Existing Conversion Price).
(c) A "Qualifying Consolidation or Merger" is (i) a consolidation
or merger of this Corporation with or into any other corporation or other entity
or person or any other corporate reorganization in which the holders of
Preferred Stock and Common Stock immediately prior to the consolidation or
merger own less than 50% of the voting securities of the Corporation or
successor entity by virtue of the securities received immediately following such
consolidation or merger or other corporate reorganization, (ii) any transaction
or series of transactions in which in excess of 50% of the Corporation's voting
power is transferred, or (iii) a sale, lease or disposition of all or
substantially all of the assets of the Corporation. If, assuming conversion of
all Preferred Stock into Common Stock and exercise of all outstanding options,
warrants or other rights to purchase Common Stock or Preferred Stock, each share
of Common Stock would receive, on a Qualifying Consolidation or Merger,
consideration whose fair market value is less than $10.00 per share (adjusted
for intervening stock splits, stock dividends or other recapitalizations of the
Common Stock and assuming no weighted average antidilution adjustments have
occurred pursuant to Section 6.2.3(d), then the Qualifying Consolidation or
Merger shall be treated as a Liquidation hereunder for purposes of determining
entitlement to the Preference for Series B Preferred Stock and Series C
Preferred Stock. If the fair market value of the consideration is $10.00 per
share or more (subject to the same adjustments), then the Qualifying
Consolidation or Merger shall be treated as a Designated IPO (defined below),
and all Preferred Stock shall automatically convert into Common Stock
immediately before the closing of the transaction.
6.2.3 Conversion. The holders of Preferred Stock shall have
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conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert.
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(1) The Conversion Price applicable to each share of
Series A Preferred Stock shall be $1.25 per share. The Conversion Price
applicable to each share of Series B Preferred Stock shall be $2.50 per share.
The Conversion Price applicable to each share of Series C Preferred Stock shall
be $2.86 per share. Such Conversion Prices shall be adjusted from time to time
in accordance with this Section 6.2.3.
(2) Each share of Preferred Stock shall be convertible,
at the option of its holder, at any time after the date it issues, into that
number of fully paid and
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nonassessable shares of Common Stock expressed by the Conversion Rate, which is
defined as the quotient obtained by dividing the Issue Price by the then
Existing Conversion Price (as defined below). Conversion will take place at the
office of the Corporation or any transfer agent for the Preferred Stock.
(3) Each share of Series A Preferred Stock shall
automatically be converted into that number of shares of Common Stock expressed
by the Conversion Rate applicable to that share, immediately upon (i) the
consummation of this Corporation's sale of its Common Stock in a bona fide, firm
commitment underwriting pursuant to an effective registration statement under
the Securities Act of 1933, as amended (the "Securities Act"), or (ii) the
approval of the conversion or election to convert by holders of a majority of
the originally issued shares of Series A Preferred Stock, or (iii) approval of
the conversion or election to convert by holders of 67% of the outstanding
shares of Preferred Stock. Each share of Series A Preferred Stock shall also
automatically be converted into Common Stock immediately prior to a Liquidation,
if as a result of the conversion, the consideration per share to be received
with respect to the Series A Preferred Stock would be larger than the Series A
Preferred Stock Preference. Each share of Series B Preferred Stock shall
automatically be converted into that number of shares of Common Stock expressed
by the Conversion Rate applicable to that share of Series B Preferred Stock,
immediately upon (i) the consummation of this Corporation's sale of its Common
Stock in a bona fide, firm commitment underwriting pursuant to an effective
registration statement under the Securities Act in which the price per share is
$5.00 or more (as adjusted for intervening stock splits, stock dividends or
recapitalizations, and assuming no weighted average antidilution adjustments
pursuant to Section 6.2.3(d) have occurred) and the total offering is for at
least $10,000,000 (a "Designated IPO"); or (ii) on the approval of the
conversion by holders of 67% of the outstanding shares of Preferred Stock. Each
share of Series C Preferred Stock shall automatically be converted into that
number of shares of Common Stock expressed by the Conversion Rate applicable to
that share of Series C Preferred Stock, immediately upon (i) the consummation of
a Designated IPO; or (ii) on the approval of the conversion by the holders of
67% of the outstanding shares of Preferred Stock. Each share of Series D
Preferred Stock and Series D-X Preferred Stock shall automatically be converted
into that number of shares of Common Stock expressed by the Conversion Rate
applicable to that share of Series D Preferred Stock, immediately upon (i) the
consummation of a Designated IPO; or (ii) on the approval of the conversion by
the holders of 67% of the outstanding shares of Preferred Stock.
(b) Mechanics of Conversion.
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(1) What the holder does. Before any holder of
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Preferred Stock shall be entitled to convert the holder's Preferred Stock into
shares of Common Stock, the holder shall (i) surrender the certificate or
certificates for the Preferred Stock, duly endorsed, at the office of this
Corporation or of any transfer agent for the Preferred Stock, (ii) give written
notice to this Corporation at its principal corporate office of the election to
convert the Preferred Stock, and (iii) state in the notice the name or names in
which the certificate or certificates for shares of Common Stock are to be
issued.
(2) What the Corporation does. This Corporation shall,
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as soon as practicable thereafter, issue and deliver to the holder or the
holder's nominee or nominees, a
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certificate or certificates for the number of shares of Common Stock to which
the holder shall be entitled.
(3) Effective date of Conversion. The conversion shall
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be deemed effective immediately prior to the close of business on the date the
Preferred Stock was surrendered to be converted. The person or persons entitled
to receive the shares of Common Stock issuable upon the conversion shall be
treated for all purposes as the record holder or holders of the Common Stock
shares as of the date conversion is deemed to have occurred.
(4) Offering Contingencies, Effective Date. If the
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conversion is in connection with an underwritten offer of securities registered
pursuant to the Securities Act, the conversion may, at the option of the holder
tendering Preferred Stock for conversion, be conditioned upon the closing with
the underwriter of the sale of securities pursuant to the offering. In that
case, the person(s) entitled to receive the Common Stock issuable upon such
conversion of the Preferred Stock shall not be deemed to have converted such
Preferred Stock until immediately prior to the closing of the sale of
securities.
(c) Conversion Adjustments.
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(1) Adjustments for Recapitalizations. If the
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Corporation shall at any time or from time to time after December 29, 1997 (the
"Filing Date") effect a recapitalization of the outstanding Common Stock without
corresponding changes being made to split the Preferred Stock to grant the
Preferred Stock the same percentage ownership as prior to the recapitalization,
the Conversion Price in effect immediately before that recapitalization shall be
proportionately adjusted as appropriate. Any adjustment under this Section
6.2.3(c)(1) shall become effective at the close of business on the date the
recapitalization becomes effective.
(2) Adjustments for Stock Splits and Combinations. If
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the Corporation shall at any time or from time to time after the Filing Date
effect a split of the outstanding Common Stock without a corresponding split of
the Preferred Stock, the Conversion Price for each series in effect immediately
before the split shall be proportionately decreased. Conversely, if the
Corporation shall at any time or from time to time after the Filing Date combine
the outstanding shares of Common Stock into a smaller number of shares without a
corresponding combination of the Preferred Stock, the Conversion Price in effect
immediately before the combination shall be proportionately increased. Any
adjustment under this Section 6.2.3(c)(2) shall become effective at the close of
business on the date the subdivision or combination becomes effective.
(3) Adjustments for Common Stock Dividends and
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Distributions. If the Corporation at any time or from time to time after the
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Filing Date makes, or fixes 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, in each such event the Conversion Price that
is then in effect shall be decreased as of the time of such issuance or, in the
event such record date is fixed, as of the close of business on such record
date, by multiplying the Conversion Price then in effect by a fraction (i) the
numerator of which is 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 (ii) the denominator of which is
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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; provided, however, that if such record date is fixed and such
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dividend is not fully paid or if such distribution is not fully made on the date
fixed therefor, the Conversion Price shall be recomputed accordingly as of the
close of business on such record date and thereafter the Conversion Price shall
be adjusted pursuant to this Section 6.2.3(c)(3) to reflect the actual payment
of such dividend or distribution.
(4) Adjustments for Other Dividends and Distributions.
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If the Corporation at any time or from time to time after the Filing Date makes,
or fixes 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, in each such event provision
shall be made so that the holders of the Preferred Stock shall receive upon
conversion thereof, in addition to the number of shares of Common Stock
receivable thereupon, the amount of other securities of the Corporation which
they would have received had their 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, subject to all
other adjustments called for during such period under this Section 6.2.3(c)(4)
with respect to the rights of the holders of the Preferred Stock or with respect
to such other securities by their terms.
(5) Adjustment for Reclassification, Exchange and
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Substitution. If at any time or from time to time after the Filing Date, the
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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 a
Qualifying Consolidation or Merger as defined in Section 6.2.2(c) or a split or
combination of shares or stock dividend or a reorganization, merger,
consolidation or sale of assets provided for elsewhere in this Section 6.2.3),
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 maximum number of shares of Common Stock into which such
shares of Preferred 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.
(6) Reorganizations, Mergers, Consolidations or Sales
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of Assets. If at any time or from time to time after the Filing Date, there is a
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capital reorganization of the Common Stock (other than a Qualifying
Consolidation or Merger as defined in Section 6.2.2(c)) or a recapitalization,
split, combination, reclassification, exchange or substitution of shares
provided for elsewhere in this Section 6.2.3, as a part of such capital
reorganization, provision shall be made so that the holders of the Preferred
Stock shall thereafter be entitled to receive upon conversion of the Preferred
Stock the number of shares of stock or other securities or property of the
Corporation to which a holder of the number of shares of Common Stock
deliverable upon conversion would have been entitled on such capital
reorganization, subject to adjustment in respect of such stock or securities by
the terms thereof. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Section 6.2.3 with respect to the rights
of the holders of Preferred Stock after the capital
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reorganization to the end that the provisions of this Section 6.2.3 (including
adjustment of the Conversion Price then in effect and the number of shares
issuable upon conversion of the Preferred Stock) shall be applicable after that
event and be as nearly equivalent as practicable.
(d) Weighted Average Antidilution Adjustment. If the Corporation at any
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time after the Filing Date shall issue any Additional Stock (as defined below)
without consideration or for a consideration per share less than the Conversion
Price for Series A-1 Preferred Stock, Series B-1 Preferred Stock or Series C-1
Preferred Stock then in effect (the "Existing Conversion Price" or "ECP"), the
Conversion Price applicable to that series (but not Series A-N Preferred Stock,
Series B-N Preferred Stock or Series C-N Preferred Stock) shall be adjusted or
readjusted, as follows. Multiply the Existing Conversion Price by a fraction
constructed as follows. The numerator of the fraction shall be the "Old Stock,"
defined as the number of shares of Common Stock outstanding immediately prior to
such issue or sale, "fully diluted," plus the number of shares of Common Stock
that the aggregate consideration received by the Corporation for the new
Additional Stock would purchase at the Existing Conversion Price (the "No
dilution additional stock" or "NDAS"). The denominator of the fraction shall be
the "Old Stock," plus the number of shares of new Additional Stock issued ("New
Stock"). "Fully diluted" for this purpose means assuming that all outstanding
Preferred Stock has been converted into Common Stock at conversion prices in
effect before the issuance or sale. The formula for determining the new
Conversion Price is thus:
New Conversion Price = ECP X (Old Stock plus NDAS) / (Old Stock plus New
Stock).
No adjustment of the Conversion Price for Preferred Stock shall be made in an
amount less than one cent per share, provided that any adjustments which are not
required to be made by reason of this sentence shall be carried forward and
taken into account in any subsequent adjustment.
(1) Determining Additional Stock Consideration. In the case of the
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issuance of Common Stock for cash, the consideration shall be deemed to be the
amount of cash paid therefor before deducting any reasonable discounts,
commissions or other expenses allowed, paid or incurred by the Corporation for
any underwriting or otherwise in connection with the issuance and sale thereof.
Non-cash consideration shall be treated as if it is cash, at the fair value
thereof as determined by the Board of Directors in good faith irrespective of
any accounting treatment.
(2) Additional Stock. "Additional Stock" shall mean any shares of
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Common Stock issued by the Corporation after the Filing Date other than
"Reserved Shares," defined as follows:
(A) Common Stock issued pursuant to a transaction described in
subsection 6.2.3(c), or upon conversion of Preferred Stock;
(B) Up to 1,521,400 shares of Common Stock issued to employees,
consultants, directors or advisory board members of the Corporation primarily
for the purpose of soliciting or retaining their employment directly or pursuant
to a stock option plan or restricted stock plan approved by the shareholders and
directors of the Corporation, or such higher number of shares as may be approved
from time to time by a majority of the Board of
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Directors including both the Series B Preferred Stock Director and the Series C
Preferred Stock Director (as each term is defined in Section 6.2.6), or shares
reissued after repurchase pursuant to any restricted stock purchase agreement
following a termination in status as an employee, consultant, director, or
advisory board member; and
(C) Common Stock issued in equipment lease financing or
otherwise issued or issuable in standard commercial line of credit transactions
approved by the Board of Directors in good faith.
(e) Conversion to Series A-N Preferred Stock, Series B-N Preferred
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Stock and Series C-N Preferred Stock on Failure to Participate in Future
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Financings on Call of Board. In case any subsequent financing is offered, the
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Board of Directors (including the Series B Preferred Stock Director and Series C
Preferred Stock Director) may establish in good faith the amount of funds
required to be invested in such financing by all holders of Preferred Stock
(collectively, the "Preferred Stock Contribution"). If a holder of Preferred
Stock is offered the opportunity to participate in such financing by at least
thirty (30) days notice, but declines or fails to participate at 100% of that
holder's proportionate share of the Preferred Stock Contribution
(proportionality to be determined on an as-converted-to-common-stock basis,
where each holder's Preferred Stock as so converted is expressed as a proportion
of all Preferred Stock so converted), then those shares of Series A-1 Preferred
Stock, Series B-1 Preferred Stock or Series C-1 Preferred Stock held by that
holder shall automatically convert into Series A-N Preferred Stock, Series B-N
Preferred Stock or Series C-N Preferred Stock, respectively, on a one-for-one
basis immediately prior to the close of the financing. Such conversion will be
effective whether or not certificates representing Series A-1 Preferred Stock,
Series B-1 Preferred Stock or Series C-1 Preferred Stock that has been converted
are tendered for exchange. The Corporation will notify each holder of such
converted stock of the conversion, and on request of the holder, certificates
representing Series A-1 Preferred Stock, Series B-1 Preferred Stock or Series C-
1 Preferred Stock that has been converted shall be exchanged for certificates
expressly representing Series A-N Preferred Stock, Series B-N Preferred Stock or
Series C-N Preferred Stock.
(f) No Impairment. This Corporation will not, by amendment of its
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Certificate of Incorporation or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by this
Corporation, but will at all times in good faith assist in the carrying out of
all the provisions of this Section 6.2.3 and in the taking of all such action as
may be necessary or appropriate in order to protect the Conversion Rights of the
holders of the Preferred Stock against impairment.
(g) No Fractional Shares. No fractional shares shall be issued upon
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any conversion of the Preferred Stock. Any fractional share determined on an
aggregate conversion basis shall be rounded down to the nearest whole share. If,
in the event of the aforementioned aggregation, in-the absence of such rounding
down the conversion would result in the issuance of any fractional share, the
Corporation shall pay in cash an amount equal to the product obtained by
multiplying such fraction by the Common Stock's fair market value (as determined
in good faith by the Board of Directors) on the date of such conversion.
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(h) Reservation of Stock Issuable Upon Conversion. This Corporation
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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 the 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. If at any time the number of authorized but
unissued shares of Common Stock shall be insufficient to effect the conversion
of all then outstanding shares of the Preferred Stock, in addition to other
remedies as shall be available to the holder of the Preferred Stock, this
Corporation will take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Common
Stock to the number of shares that shall be sufficient for the purpose.
(i) No Reissuance of Preferred Stock. No share or shares of
--------------------------------
Preferred Stock acquired by the Corporation by reason of redemption, purchase,
conversion or otherwise shall be reissued.
6.2.4 Right to Participate in Subsequent Financings. In case the
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Corporation proposes to issue any additional equity securities, or securities
convertible into equity securities, in exchange for cash consideration (other
than for Reserved Shares (as defined in Section 6.2.3(d), shares issued in the
acquisition of another company, or shares offered to the public pursuant to an
underwritten public offering), and unless waived in writing by the holder, each
holder of Preferred Stock shall have the right to participate in that subsequent
round. Each holder shall have the right to participate up to the percentage of
that offering equal to the percentage which the holder's Preferred Stock, on an
as-converted basis, represents of all outstanding equity of the Corporation,
assuming exercise of all warrants, conversion of all convertible debt, and
conversion of all Preferred Stock into Common Stock, and all options issued or
issuable under the Corporation's Stock Incentive Plan(s) but not yet exercised.
The Board of Directors shall have power to prescribe procedures to give effect
to the intent of this paragraph.
6.2.5 Series B and Series C Preferred Stock Redemption Rights. The
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holders of at least 60% of the outstanding shares of Series B Preferred Stock
and Series C Preferred Stock, acting together as a single class, may give notice
("Redemption Request") to the Corporation at any time after five (5) years from
the Filing Date, but no more often than one time per calendar year, that the
Corporation redeem all or any portion of the Series B Preferred Stock and Series
C Preferred Stock, as applicable, at a redemption price (each, a "Redemption
Price") equal to (i) in the case of the Series B Preferred Stock, the Issue
Price paid for each share of Series B Preferred Stock (as adjusted to account
for intervening stock splits or recapitalizations of the Series B Preferred
Stock) plus any accrued and unpaid dividends on such shares, or (ii) in the case
of the Series C Preferred Stock, the Issue Price paid for each share of Series C
Preferred Stock (as adjusted to account for intervening stock splits or
recapitalizations of the Series C Preferred Stock), plus any declared and unpaid
dividends on such shares. Upon receipt of such Redemption Request, the
Corporation, to the extent that it has funds legally available therefor and will
not otherwise violate any contracts or agreements to which it is a party, shall
be obligated to notify ("Redemption Notice") all Series B Preferred Stock and
Series C Preferred Stock holders of the Redemption Request and each holder may,
but is not obligated to, participate in such redemption up to that holder's pro
rata share of the total number of shares specified in the Redemption Request.
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(a) The Redemption Notice shall provide at least twenty days from the
Notice date within which holders of Series B Preferred Stock and Series C
Preferred Stock may exercise their redemption rights by delivery of the shares
they wish redeemed, together with such Letters of Transmittal as the Redemption
Notice may reasonably prescribe, to a bank or trust company the Redemption
Notice specifies (the final date for which is called the "Tender Date"), and
shall also specify a Redemption Date, which shall be not later than fifteen days
following the Tender Date, as of which the Redemption Price (or the first
installment thereof) is to be paid. The Redemption Notice shall also specify
whether the Redemption Price is to be paid all at once or in three equal annual
installments, shall specify a Redemption Date, and shall contain such other
provisions concerning the mechanics of redemption as may be necessary or useful
to assist the redemption to proceed.
(b) On or prior to the Redemption Date, the Corporation shall deposit
the Redemption Price (or, if to be made in three annual installments, the first
third of the Redemption Price) of all shares tendered for redemption (but not
more than the number specified in the Redemption Request) with the bank or trust
company specified in the Redemption Notice, as a trust fund, with irrevocable
instructions and authority to the bank or trust company to pay, on and after
such Redemption Date, the Redemption Price (or each third thereof as placed on
deposit) of the shares tendered by the Tender Date to their respective holders.
If the Corporation has elected to pay the Redemption Price in three equal annual
installments, then on or prior to the second and third anniversaries of the
Redemption Date, the Corporation shall deposit the second and third thirds of
the Redemption Price, respectively, with the same bank or trust company, with
irrevocable instructions and authority to the bank or trust company to pay, on
and after such anniversary date, that third of the Redemption Price to the
holders of the tendered shares.
(c) If more shares are tendered than are specified in the Redemption
Request, the Corporation may elect either to redeem all tendered shares, or to
redeem only so many of them as are specified in the Redemption Request. If the
Corporation has insufficient funds legally available to redeem all shares
specified in the Redemption Request, then that number of shares for which there
are insufficient funds shall be treated as an overtender of shares. The effects
of any overtender of shares shall be allocated among all holders submitting
shares such that the shares actually to be redeemed are, so nearly as possible,
in the same ratio as the Preferred Stock holdings of all redeeming shareholders
are to each other. Fractional shares to be redeemed shall in all cases be
rounded down to the nearest whole share.
(d) Tendered certificates shall be canceled following the final
payment of the Redemption Price. In the event less than all the shares
represented by such certificates are redeemed, a new certificate shall be issued
representing the unredeemed shares. From and after such Redemption Date, all
rights of the holder of such shares tendered for redemption as holder of
Preferred Stock (except the right to receive the Redemption Price without
interest) shall cease and terminate with respect to such shares, provided that
in the event that there is a default in payment of the Redemption Price by the
Corporation, or the Corporation is unable to pay the Redemption Price due to
insufficient legally available funds, those shares tendered by each holder for
which the payment actually made on the Redemption Date is insufficient shall be
treated as unredeemed shares hereunder, and shall remain outstanding and be
entitled to all of the rights and preferences provided herein.
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6.2.6 Voting Rights. With respect to the election of directors, the
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Series B Preferred Stock shall vote as a separate class for the election of one
director (the "Series B Preferred Stock Director"), and to remove such director
and to fill any vacancy caused by the resignation, death or removal of such
director, and the Series C Preferred Stock, the Series D Preferred Stock, and
the Series D-X Preferred Stock, voting together as a class, shall vote as a
separate class for the election of one director (the "Series C Preferred Stock
Director"), and to remove such director and to fill any vacancy caused by the
resignation, death or removal of such director. With respect to the election of
all remaining directors, Preferred Stock and Common Stock shall vote as a single
class. With respect to all other matters, the holders of Preferred Stock and
the holders of Common Stock shall vote as a single class, provided that the
holders of Preferred Stock must also approve, by the requisite majorities
specified, decisions specified in Section 6.2.7. The holder of each share of
Preferred Stock shall have the right to one vote for each share of Common Stock
into which the holder's Preferred Stock could then be converted (with any
fractional share determined on an aggregate conversion basis being rounded to
the nearest whole share). With respect to that vote, the holder 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 shareholders' meeting in
accordance with the Bylaws of this Corporation.
6.2.7 Protective Provisions. The consent of the holders of at least
---------------------
67% of the Preferred Stock, voting as a single class, shall be required for any
action which:
(1) amends or repeals any provision of the Corporation's
Certificate of Incorporation or Bylaws if such action would materially and
adversely alter or change the designations, preferences, and relative,
participating, optional and other special rights or the restrictions
provided for the benefit of the Preferred Stock;
(2) authorizes or issues shares of any class of stock having
any preference or priority as to dividends, liquidation, redemption,
voting, conversion or other preferences superior to or on a parity with any
such preference or priority of any series of the Preferred Stock (except
any issuance of Series A-N Preferred Stock, Series B-N Preferred Stock or
Series C-N Preferred Stock, which is issuable only upon conversion of
Series A-1 Preferred Stock, Series B-1 Preferred Stock or Series C-1
Preferred Stock pursuant to Section 6.2.3(e)); or
(3) pays or declares any dividend on any junior securities.
The consent of holders of a majority of the Series B Preferred Stock and Series
C Preferred Stock, each voting as a separate class, shall be required for
(4) any merger, sale of substantially all the assets,
consolidation, recapitalization, or reorganization of the Corporation, or
(5) any repurchase or other acquisition by the Corporation
of its own shares other than pursuant to this Certificate or stock
repurchase agreements approved by a majority of the Board of Directors,
including the Series B Preferred Stock Director and the Series C Preferred
Stock Director, or entered into with respect to
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Common Stock issued or to be issued pursuant to options issued under the
Corporation's Stock Incentive Plans.
6.2.8 Directors. Except as otherwise provided herein or the General
---------
Corporation Law of the State of Delaware, the business and affairs of the
Corporation shall be managed by or under the direction of a board of directors
consisting of one or more members. Directors need not be stockholders of the
Corporation. The number of directors shall be fixed from time to time, within
the limits specified in the Bylaws, by a Bylaw or amendment thereof duly adopted
by the vote of a majority of the shares entitled to vote represented at a duly
held meeting at which a quorum is present, or by the board of directors.
The directors shall be divided into three classes, designated Class I,
Class II and Class III, as nearly equal in number as the then total number of
directors permits, serving staggered terms so that the initial terms of each
such class will expire, respectively, at the first, second and third succeeding
annual meetings of the stockholders held following the initial public offering
of the Corporation's Common Stock. At each such succeeding annual meeting of
stockholders, directors elected to succeed those directors whose terms are
expiring at such meeting shall be elected for a term of office to expire at the
third succeeding annual meeting of stockholders following such election. If the
number of directors is changed, any increase or decrease shall be apportioned
among the classes so as to maintain the number of directors in each class as
nearly equal as possible, and any additional directors of any class elected to
fill a vacancy resulting from an increase in such class shall hold office for a
term that shall coincide with the remaining term of that class, but in no case
will a decrease in the number of directors shorten the term of any incumbent
director. Notwithstanding the foregoing, whenever the holders of any one or more
classes or series of preferred stock issued by the Corporation shall have the
right, voting separately by class or series, to elect directors at an annual or
special meeting of stockholders, the election, term of office, filling of
vacancies and other features of such directorships shall be governed by the
terms of this Certificate of Incorporation or the Bylaws applicable thereto, and
such directors so elected shall not be divided into classes pursuant to this
Section 6.2.8 unless expressly provided by such terms.
Any amendment, change or repeal of this Section 6.2.8, or any other
amendment to this Certificate of Incorporation that will have the effect of
permitting circumvention of or modifying this Section 6.2.8, shall require the
favorable vote, at a stockholders' meeting, of the holders of at least eighty
percent (80%) of the then-outstanding shares of stock of the Corporation
entitled to vote.
Except as provided below, the directors shall be elected by a plurality
vote of the shares represented in person or by proxy at the stockholders annual
meeting in each year and entitled to vote on the election of directors. Elected
directors shall hold office until the next annual meeting for the years in which
their terms expire and until their successors shall be duly elected and
qualified. If, for any cause, the board of directors shall not have been elected
at an annual meeting, they may be elected as soon thereafter as convenient at a
special meeting of the stockholders called for that purpose in the manner
provided in this Certificate of Incorporation or the Bylaws.
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Except as otherwise provided by the Certificate of Incorporation or any
amendments thereto, vacancies and newly created directorships resulting from any
increase in the number of authorized directors may be filled by a majority of
the directors then in office, although less than a quorum, or by a sole
remaining director, and each director so elected shall hold office for the
unexpired portion of the term of the director whose place shall be vacant, and
until his successor shall have been duly elected and qualified. A vacancy in
the board of directors shall be deemed to exist under this paragraph in the case
of the death, removal or resignation of any director, or if the stockholders
fail at any meeting of stockholders at which directors are to be elected to
elect the number of directors then constituting the whole board.
Any director may resign by delivering his written resignation to the
Corporation at its principal office, addressed to the president or secretary.
Such resignation shall be effective upon receipt unless it is specified to be
effective at some other time or upon the happening of some other event. When one
or more directors shall resign from the board, effective at a future date, a
majority of the directors then in office, including those who have so resigned,
shall have power to fill such vacancy or vacancies, the vote thereon to take
effect when such resignation or resignations shall become effective, and each
director so chosen shall hold office for the unexpired portion of the term of
the director whose place shall be vacated and until his successor shall have
been duly elected and qualified.
SECTION 7.
7.1 Number and Designation of Directors. For so long as there is Series B
-----------------------------------
Preferred Stock outstanding, the Bylaws shall provide that one of the directors
shall be the Series B Preferred Stock Director. For so long as there is Series
C Preferred Stock, Series D Preferred Stock, or Series D-X Preferred Stock
outstanding, the Bylaws shall provide that one of the directors shall be the
Series C Preferred Stock Director. As of the Filing Date, the Bylaws shall
provide that the number of directors shall be seven. The Bylaws may further
provide that the Directors shall have power to change the number of directors by
majority vote, provided that if there is then required to be a Series B
Preferred Stock Director or a Series C Preferred Stock Director, the vote of the
required Preferred Stock directors shall be required to change the size of the
Board.
7.2 Liability of Directors. No director of the Corporation shall be
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personally liable to the Corporation or its shareholders for monetary damages
for conduct as a director; provided that this Section 7 shall not eliminate the
liability of a director for any act or omission for which such elimination of
liability is not permitted under the Delaware General Corporation Law. No
amendment to the Delaware General Corporation Law that further limits the acts
or omissions for which elimination of liability is permitted shall affect the
liability of a director for any act or omission that occurs prior to the
effective date of such amendment.
SECTION 8.
8.1 Indemnification. To the fullest extent permitted by Delaware
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statutory or decisional law, as amended or interpreted, no director of this
Corporation shall be personally liable to the Corporation or its stockholders
for monetary damages for breach of fiduciary duty as
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a director. This Section 8.1 does not affect the availability of equitable
remedies for breach of fiduciary duties.
8.2 Amendments. Any amendment, change or repeal of this Section shall
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only be prospective and no repeal or modification hereof shall adversely affect
the rights under this Section in effect at the time of the alleged occurrence of
any action or omission to act that is the cause of any Proceeding.
SECTION 9.
The name and mailing address of the incorporator are as follows:
Misako Sack
c/o Morrison & Foerster llp
425 Market Street
San Francisco, California 94105-2482
SECTION 10.
The board of directors is expressly authorized to make, alter, or repeal
the bylaws of the Corporation.
SECTION 11.
Elections of directors need not be by written ballot unless the bylaws of
the Corporation shall so provide.
SECTION 12.
Whenever a compromise or arrangement is proposed between this Corporation
and its creditors or any class of them and/or between this Corporation and its
stockholders or any class of them, any court of equitable jurisdiction within
the State of Delaware may, on the application in a summary way of this
Corporation or of any creditor or stockholder thereof, or on the application of
any receiver or receivers appointed for this Corporation under the provisions of
Section 291 of Title 8 of the Delaware Code or on the application of trustees in
dissolution or of any receiver or receivers appointed for this Corporation under
the provisions of Section 279 of Title 8 of the Delaware Code order a meeting of
the creditors or class of creditors, and/or of the stockholders or class of
stockholders of this Corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority in number representing three-
fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this Corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of this
Corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of this Corporation, as the case may be, and also on this
Corporation.
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SECTION 13.
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
IN WITNESS WHEREOF, the Corporation has caused this Restated Certificate of
Incorporation to be signed by its duly authorized officer, this 5th day of
November, 1999.
By: /s/ Bruce Davis,
-----------------------
Bruce Davis, President
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