<PAGE> 1
EXHIBIT 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
SITARA NETWORKS, INC.
SITARA NETWORKS, INC., a corporation organized and existing under the laws of
the State of Delaware, hereby certifies as follows:
1. The name of the Corporation is Sitara Networks, Inc. The original
certificate of Incorporation was filed with the Secretary of State on July
19, 1996 under the name K2 Net, Inc. A Restated Certificate of
Incorporation was filed with the Secretary of State on December 9, 1996, a
Certificate of Amendment changing the name of the Corporation to Sitara
Networks, Inc. was filed with the Secretary of State on June 24, 1997, a
Restated Certificate of Incorporation was filed with the Secretary of State
on September 9, 1997, a Restated Certificate of Incorporation was filed
with the Secretary of State on May 18, 1998, a Restated Certificate of
Incorporation was filed with the Secretary of State on December 21, 1998, a
Restated Certificate of Incorporation was filed with the Secretary of State
on July 9, 1999 and a Restated Certificate of Incorporation was filed with
the Secretary of State on January 13, 2000.
2. This Restated Certificate of Incorporation restates and integrates and
amends the Restated Certificate of Incorporation of this Corporation to
read in its entirety as follows:
FIRST: The name of the Corporation is Sitara Networks, Inc.
SECOND: The registered office of the Corporation in the State of Delaware is
located at 1209 Orange Street, Wilmington, County of New Castle, Delaware. The
name of its registered agent at such address is The Corporation Trust
Corporation.
THIRD: The nature of the business to be conducted or promoted and the
purposes of the Corporation are to engage in any lawful act or activity for
which corporations may be organized under the General Corporation Law of
Delaware.
FOURTH: The total number of shares of all classes of stock that the
Corporation shall have the authority to issue is 96,800,000 shares, $.00001 par
value, which shall consist of two classes of stock as follows:
Common Stock, $.00001 par value
("Common Stock") 70,000,000 shares
Preferred Stock, $.00001 par value
("Preferred Stock") 26,800,000 shares
At the time the filing of this Restated Certificate of Incorporation
with the Secretary of State of the State of Delaware becomes effective:
(a) Each outstanding share of the Common Stock, par value
$.00001 per share, of the Corporation (the "Old Common Stock") shall be
reclassified as and subdivided into one and one-half (1.5) shares of Common
Stock, par value $0.0001 per share, of the Corporation; and
<PAGE> 2
(b) All authorized but unissued shares of Old Common
Stock shall be eliminated and extinguished.
Upon the effective filing hereof with the Secretary of State of the
State of Delaware, the reclassification and subdivision of the issued and
outstanding shares of Old Common Stock into issued and outstanding shares of
Common Stock shall occur automatically without any further action by the holders
of such shares of Old Common Stock and whether or not the certificates
representing the shares of Old Common Stock are surrendered to the Corporation;
provided, however, that the Corporation shall not be obligated to issue
certificates evidencing the shares of Common Stock issuable upon such
reclassification and subdivision unless certificates evidencing such shares of
Old Common Stock which have been reclassified and subdivided are either
delivered to the Corporation as hereinafter provided or the holder notifies the
Corporation that such certificates have been lost, stolen or destroyed and
executes an agreement satisfactory to the Corporation to indemnify the
Corporation from any loss incurred by it in connection therewith.
Upon the occurrence of the automatic reclassification and subdivision
of the Old Common Stock, the holders of Old Common Stock shall surrender the
certificates representing such shares at the office of the Corporation.
Thereupon there shall be issued and delivered to such holder at such office and
in the name shown on such surrendered certificate or certificates(s), a
certificate for the number of shares of Common Stock into which the surrendered
shares of Old Common Stock have been reclassified and subdivided, dated as of
the date on which such automatic reclassification and subdivision occurs.
The rights, preferences, privileges and restrictions granted to and
imposed upon the various classes and series of stock of the Corporation are as
follows:
A. PREFERRED STOCK.
1. ISSUANCE IN SERIES, DESIGNATION, VOTING.
(a) AUTHORITY VESTED IN BOARD OF DIRECTORS. The Preferred
Stock may be divided into and issued in series from time to time. Authority is
vested in the Board of Directors, subject to the limitations and procedures set
forth in this Restated Certificate of Incorporation or prescribed by law, to
divide any part or all of such Preferred Stock into any number of series, to fix
and determine the relative rights and preferences of the shares of any series to
be established, and to amend the rights and preferences of the shares of any
series that has been established but is wholly unissued.
(b) DESIGNATION. The following series of Preferred Stock
are hereby designated: Six Million Five Hundred Thousand (6,500,000) shares of
Preferred Stock shall be designated and known as "Series A Convertible Preferred
Stock" ("Series A Preferred"); Five Million (5,000,000) shares of Preferred
Stock shall be designated and known as "Series B Convertible Preferred Stock"
("Series B Preferred"); One Million Three Hundred Fifty Thousand (1,350,000)
shares of Preferred Stock shall be designated and known as "Series C Convertible
Preferred Stock" ("Series C Preferred"); Eight Hundred Thousand (800,000) shares
of Preferred
-2-
<PAGE> 3
Stock shall be designated and known as "Series D Convertible Preferred Stock"
("Series D Preferred"); Six Million Five Hundred Thousand (6,500,000) shares of
Preferred Stock shall be designated and known as "Series E Convertible Preferred
Stock" ("Series E Preferred"); Two Million (2,000,000) shares of Preferred Stock
shall be designated and known as "Series F Convertible Preferred Stock" ("Series
F Preferred"); and Four Million Six Hundred and Fifty Thousand (4,650,000)
shares of Preferred Stock shall be designated and known as "Series G Convertible
Preferred Stock" ("Series G Preferred"). Except as otherwise provided in this
Restated Certificate of Incorporation, all shares of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock,
Series E Preferred Stock, Series F Preferred Stock and Series G Preferred Stock
shall be identical and shall entitle the holders thereof to the same rights and
privileges.
(c) AMENDMENT TO SERIES DECREASING SHARES. Within any
limits stated in this Restated Certificate of Incorporation or in the resolution
of the Board of Directors establishing a series, the Board of Directors, after
the issuance of shares of a series, may amend the resolution establishing the
series to decrease (but not below the number of shares of such series then
outstanding or reserved for issuance pursuant to the exercise of any outstanding
warrants) the number of shares of that series, and the number of shares
constituting the decrease shall thereafter constitute authorized but
undesignated shares.
(d) AUTHORITY LIMITED TO UNISSUED SHARES. The authority
herein granted to the Board of Directors to determine the relative rights and
preferences of the Preferred Stock shall be limited to unissued shares, and no
power shall exist to alter or change the rights and preferences of any shares
that have been issued.
(e) VOTING. Except as otherwise expressly provided
herein, or as required by law, the holders of shares of Preferred Stock shall
vote together with the Common Stock and all other classes and series of stock of
the Corporation entitled to vote as a single class on all actions to be taken by
the shareholders of the Corporation. Each share of Preferred Stock shall entitle
the holder thereof to such number of votes per share on each such action as
shall equal the largest number of whole shares of Common Stock into which such
shares of Preferred Stock could be converted, pursuant to the provisions of
paragraph 5 hereof, at the record date for the determination of shareholders
entitled to vote on such matter or, if no such record date is established, at
the date such vote is taken or any written consent of shareholders is solicited.
(f) AMENDMENTS, MERGER. At any time when shares of
Preferred Stock are outstanding, except where the vote or written consent of the
holders of a greater number of shares of the Corporation is required hereby or
by law, and in addition to any other vote required hereby or by law, without the
affirmative vote or consent of the holders of at least sixty (60%) percent of
the then outstanding shares of Preferred Stock, given in writing or by vote at a
meeting, consenting or voting (as the case may be) separately as a single class
on an as converted basis, the Corporation will not:
-3-
<PAGE> 4
(i) Amend this Restated Certificate of
Incorporation if such amendment would materially adversely affect in the same
manner any of the rights, preferences, privileges of or limitations provided for
herein of the Preferred Stock; or
(ii) Effect, or obligate itself to effect, any
merger, sale, lease, assignment, transfer, license or other conveyance of all or
substantially all of the assets of the Corporation (including the assets of any
subsidiary thereof), or any consolidation or merger involving the Corporation,
or any capital reorganization, reclassification, dissolution, liquidation or
winding up of the Corporation, except for (1) the consolidation or merger with,
or transfer of assets to, any wholly-owned subsidiary or (2) the merger into the
Corporation or transfer of assets to the Corporation from any wholly-owned
subsidiary.
(g) APPROVAL RIGHTS. At any time when shares of any
series of Preferred Stock are outstanding, except where the vote or written
consent of the holders of a greater number of shares of the Corporation is
required hereby or by law, without the written consent of the holders of at
least sixty (60%) percent of the then outstanding shares of any series of
Preferred Stock, given in writing or by vote at a meeting, consenting or voting
(as the case may be) as a single series, the Corporation will not:
(i) Change the dividend rights of the holders of
such series of Preferred Stock, or change the relative seniority rights of the
holders of such series of Preferred Stock as to the payment of dividends in
relation to the holders of any other class or series of capital stock of the
Corporation; or
(ii) Reduce the amount payable to the holders of
such series of Preferred Stock upon the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, or change the relative seniority
of the liquidation preferences of the holders of such series of Preferred Stock
in relation to the rights upon liquidation of the holders of any other class or
series of capital stock of the Corporation; or
(iii) Cancel or modify the conversion rights of
the holders of such series of Preferred Stock provided for in paragraph 5
herein; or
(iv) Increase the authorized number of shares of
such series of Preferred Stock or create or increase the authorized number of
shares of the Corporation's capital stock, including any security or obligation
convertible into such series of Preferred Stock or any other class or series of
stock, unless such class or series of capital stock ranks on a parity with or
junior to such series of Preferred Stock with respect to the distribution of
assets upon liquidation, dissolution or winding up of the Corporation, whether
such creation, authorization or increase shall be by means of amendment to this
Restated Certificate of Incorporation, or by merger, consolidation or otherwise.
2. NO IMPAIRMENT OF RIGHTS. The Corporation will not, without the
consent of the holders of Preferred Stock set forth in Section 1(g) above, by
amendment of this Restated Certificate of Incorporation or through any
reorganization, transfer of assets, consolidation,
-4-
<PAGE> 5
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 of the
Preferred Stock set forth herein, and will at all times in good faith assist in
the carrying out of all such terms and in the taking of all such action as may
be necessary or appropriate, subject to the terms hereof, in order to protect
the rights of the holders of the Preferred Stock against dilution or other
impairment. Without limiting the generality of the foregoing, the Corporation
(i) will not increase the par value of any shares of stock receivable on the
conversion of the Preferred Stock above the amount payable therefor on such
conversion, and (ii) will take all such action as may be necessary or
appropriate in order that the Corporation may validly and legally issue fully
paid and non-assessable shares of Common Stock upon the conversion of all
Preferred Stock from time to time outstanding under the terms hereof.
3. DIVIDEND RIGHTS. No cash dividends shall be declared or set
aside for any shares of Preferred Stock except as follows:
(a) SERIES A PREFERRED STOCK. From and after the date of
the original issuance of the shares of Series A Preferred Stock, the holders of
the Series A Preferred Stock shall be entitled to receive, out of funds legally
available therefor, cumulative dividends in the amount of $0.085 per share per
annum (as equitably adjusted by the Board of Directors for any stock split,
stock dividend, reclassification of shares or other similar event affecting
Series A Preferred Stock) (the "Series A Accruing Dividends"). The Series A
Accruing Dividends shall accrue annually whether or not earned or declared, and
shall be cumulative so that, if such dividends in respect of any previous or
current dividend period, at the aforesaid rate, shall not have been paid or
declared and a sum sufficient for the payment thereof set apart, the deficiency
shall first be paid before any dividend or other distribution shall be paid on
or declared and set apart for the Series A Preferred Stock; provided, however,
that the Corporation shall be under no obligation to pay any such Series A
Accruing Dividends (i) until and when so declared by the Board of Directors,
(ii) except upon the liquidation, dissolution or winding-up of the Corporation
as provided in paragraph 4 below, or (iii) except upon any redemption of the
Series A Preferred Stock;
(b) SERIES B PREFERRED STOCK. From and after the date of
the original issuance of the shares of Series B Preferred Stock, the holders of
the Series B Preferred Stock shall be entitled to receive, out of funds legally
available therefor, cumulative dividends in the amount of $0.12 per share per
annum (as equitably adjusted by the Board of Directors for any stock split,
stock dividend, reclassification of shares or other similar event affecting
Series B Preferred Stock) (the "Series B Accruing Dividends"). The Series B
Accruing Dividends shall accrue annually, whether or not earned or declared, and
shall be cumulative so that, if such dividends in respect of any previous or
current dividend period, at the aforesaid rate, shall not have been paid or
declared and a sum sufficient for the payment thereof set apart, the deficiency
shall first be paid before any dividend or other distribution shall be paid on
or declared and set apart for the Series B Preferred Stock; provided, however,
that the Corporation shall be under no obligation to pay any such Series B
Accruing Dividends (i) until and when so declared by the Board of Directors,
(ii) except upon the liquidation, dissolution or winding-up of the Corporation
-5-
<PAGE> 6
as provided in Section 4 below, or (iii) except upon any redemption of the
Series B Preferred Stock.
(c) SERIES C PREFERRED STOCK. From and after the date of
the original issuance of the shares of Series C Preferred Stock, the holders of
the Series C Preferred Stock shall be entitled to receive, out of funds legally
available therefor, cumulative dividends in the amount of $0.35 per share per
annum (as equitably adjusted by the Board of Directors for any stock split,
stock dividend, reclassification of shares or other similar event affecting
Series C Preferred Stock) (the "Series C Accruing Dividends"). The Series C
Accruing Dividends shall accrue annually, whether or not earned or declared, and
shall be cumulative so that, if such dividends in respect of any previous or
current dividend period, at the aforesaid rate, shall not have been paid or
declared and a sum sufficient for the payment thereof set apart, the deficiency
shall first be paid before any dividend or other distribution shall be paid on
or declared and set apart for the Series C Preferred Stock; provided, however,
that the Corporation shall be under no obligation to pay any such Series C
Accruing Dividends (i) until and when so declared by the Board of Directors,
(ii) except upon the liquidation, dissolution or winding-up of the Corporation
as provided in Section 4 below, or (iii) except upon any redemption of the
Series C Preferred Stock.
(d) SERIES D PREFERRED STOCK. From and after the date of
the original issuance of the shares of Series D Preferred Stock, the holders of
the Series D Preferred Stock shall be entitled to receive, out of funds legally
available therefor, cumulative dividends in the amount of $0.35 per share per
annum (as equitably adjusted by the Board of Directors for any stock split,
stock dividend, reclassification of shares or other similar event affecting
Series D Preferred Stock) (the "Series D Accruing Dividends"). The Series D
Accruing Dividends shall accrue annually, whether or not earned or declared, and
shall be cumulative so that, if such dividends in respect of any previous or
current dividend period, at the aforesaid rate, shall not have been paid or
declared and a sum sufficient for the payment thereof set apart, the deficiency
shall first be paid before any dividend or other distribution shall be paid on
or declared and set apart for the Series D Preferred Stock; provided, however,
that the Corporation shall be under no obligation to pay any such Series D
Accruing Dividends (i) until and when so declared by the Board of Directors,
(ii) except upon the liquidation, dissolution or winding-up of the Corporation
as provided in Section 4 below, or (iii) except upon any redemption of the
Series D Preferred Stock.
(e) SERIES E PREFERRED STOCK. From and after the date of
the original issuance of the shares of Series E Preferred Stock, the holders of
the Series E Preferred Stock shall be entitled to receive, out of funds legally
available therefor, cumulative dividends in the amount of $0.354 per share per
annum (as equitably adjusted by the Board of Directors for any stock split,
stock dividend, reclassification of shares or other similar event affecting
Series E Preferred Stock) (the "Series E Accruing Dividends"). The Series E
Accruing Dividends shall accrue annually, whether or not earned or declared, and
shall be cumulative so that, if such dividends in respect of any previous or
current dividend period, at the aforesaid rate, shall not have been paid or
declared and a sum sufficient for the payment thereof set apart, the deficiency
shall first be paid before any dividend or other distribution shall be paid on
or declared and set
-6-
<PAGE> 7
apart for the Series E Preferred Stock; provided, however, that the Corporation
shall be under no obligation to pay any such Series E Accruing Dividends (i)
until and when so declared by the Board of Directors, (ii) except upon the
liquidation, dissolution or winding-up of the Corporation as provided in Section
4 below, or (iii) except upon any redemption of the Series E Preferred Stock.
(f) SERIES F PREFERRED STOCK. From and after the date of
the original issuance of the shares of Series F Preferred Stock, the holders of
the Series F Preferred Stock shall be entitled to receive, out of funds legally
available therefor, cumulative dividends in the amount of $0.45 per share per
annum (as equitably adjusted by the Board of Directors for any stock split,
stock dividend, reclassification of shares or other similar event affecting
Series F Preferred Stock) (the "Series F Accruing Dividends"). The Series F
Accruing Dividends shall accrue annually, whether or not earned or declared, and
shall be cumulative so that, if such dividends in respect of any previous or
current dividend period, at the aforesaid rate, shall not have been paid or
declared and a sum sufficient for the payment thereof set apart, the deficiency
shall first be paid before any dividend or other distribution shall be paid on
or declared and set apart for the Series F Preferred Stock; provided, however,
that the Corporation shall be under no obligation to pay any such Series F
Accruing Dividends (i) until and when so declared by the Board of Directors,
(ii) except upon the liquidation, dissolution or winding-up of the Corporation
as provided in Section 4 below, or (iii) except upon any redemption of the
Series F Preferred Stock.
(g) SERIES G PREFERRED STOCK. From and after the date of
the original issuance of the shares of Series G Preferred Stock, the holders of
the Series G Preferred Stock shall be entitled to receive, out of funds legally
available therefor, cumulative dividends in the amount of $0.599 per share per
annum (as equitably adjusted by the Board of Directors for any stock split,
stock dividend, reclassification of shares or other similar event affecting
Series G Preferred Stock) (the "Series G Accruing Dividends"). The Series G
Accruing Dividends shall accrue annually, whether or not earned or declared, and
shall be cumulative so that, if such dividends in respect of any previous or
current dividend period, at the aforesaid rate, shall not have been paid or
declared and a sum sufficient for the payment thereof set apart, the deficiency
shall first be paid before any dividend or other distribution shall be paid on
or declared and set apart for the Series G Preferred Stock; provided, however,
that the Corporation shall be under no obligation to pay any such Series G
Accruing Dividends (i) until and when so declared by the Board of Directors,
(ii) except upon the liquidation, dissolution or winding-up of the Corporation
as provided in Section 4 below, or (iii) except upon any redemption of the
Series G Preferred Stock.
(h) CERTAIN DIVIDENDS ON COMMON STOCK. In the event the
Board of Directors of the Corporation shall declare a dividend (other than a
dividend payable in Common Stock or other securities of the Corporation) payable
upon the then outstanding shares of the Common Stock of the Corporation, the
Board of Directors shall declare at the same time a dividend upon the then
outstanding shares of the Preferred Stock, payable at the same time as the
dividend paid on the Common Stock, in an amount equal to the amount of
dividends, per share of Preferred Stock as would have been payable on the
largest number of whole shares of
-7-
<PAGE> 8
Common Stock into which each share of Preferred Stock would be convertible if
such Preferred Stock had been converted to Common Stock pursuant to the
provisions of paragraph 5 hereof as of the record date for the determination of
holders of Common Stock entitled to receive such dividends.
(i) CERTAIN OTHER DIVIDENDS. In the event the Board of
Directors of the Corporation shall declare a dividend (other than a dividend
payable in Common Stock or other securities of the Corporation) payable upon any
class or series of capital stock of the Corporation other than Common Stock, the
Board of Directors shall declare at the same time a dividend upon the then
outstanding shares of Preferred Stock, payable at the same time as such dividend
on such other class or series of capital stock in an amount equal to, (i) in the
case of any series or class convertible into Common Stock, that dividend, per
share of Preferred Stock, as would equal the dividend payable on such other
class or series determined as if all such shares of such class or series had
been converted to Common Stock and all shares of Preferred Stock had been
converted to Common Stock on the record date for the determination of holders
entitled to receive such dividend or (ii) if such class or series of capital
stock is not convertible into Common Stock, at a rate per share of each series
of Preferred Stock determined by dividing the amount of the dividend payable on
each share of such class or series of capital stock by the original issuance
price of such class or series of capital stock and multiplying such fraction by
the Original Purchase Price, as hereinafter defined, at which the shares of such
series of Preferred Stock were initially issued (as equitably adjusted by the
Board of Directors of the Corporation for any stock split, stock dividend,
reclassification of shares or other similar event affecting any such series of
Preferred Stock). As used herein, the Original Purchase Price of the Series A
Preferred Stock is $.85 per share; the Original Purchase Price of the Series B
Preferred Stock is $1.40 per share; the Original Purchase Price of the Series C
Preferred Stock; the Series D Preferred Stock is $3.81 per share; the Original
Purchase Price of the Series E Preferred Stock is $3.85 per share, the Original
Purchase Price of the Series F Preferred Stock is $5.00 per share; and the
Original Purchase Price of the Series G Preferred Stock is $6.51 per share.
(j) RESTRICTIONS ON DIVIDENDS. The Corporation shall not
declare an Accruing Dividend on any series of Preferred Stock unless it declares
at the same time the applicable Accruing Dividend on each outstanding series of
Preferred Stock. Except for the Series A Accruing Dividends, the Series B
Accruing Dividends, the Series C Accruing Dividends, the Series D Accruing
Dividends, the Series E Accruing Dividends, the Series F Accruing Dividends, the
Series G Accruing Dividends and dividends deliverable and payable in accordance
with paragraphs 3(h) and (i) above, the Corporation shall not declare and pay a
dividend on any outstanding series of Preferred Stock, unless the same dividend
is declared and paid on all outstanding series of Preferred Stock.
4. LIQUIDATION RIGHTS.
(a) LIQUIDATION AMOUNTS. In the event of a voluntary or
involuntary liquidation, dissolution or winding-up of the Corporation, before
any payment shall be made or any assets distributed to the holders of Common
Stock or any other class or series of stock which ranks, with respect to the
right to receive payments upon liquidation, junior to the Preferred
-8-
<PAGE> 9
Stock: (i) the holders of record of shares of Series A Preferred Stock shall be
entitled to receive, out of the assets of the Corporation legally available
therefor, an amount per share equal to the greater of (x) the Original Purchase
Price for such series, plus an amount equal to the unpaid Series A Accruing
Dividends, plus any other declared and unpaid dividends thereon, up to and
including the date of payment (the "Series A Base Amount"), or (y) the amount
which the holders of Series A Preferred Stock would have received under
paragraph 4(b) hereof had all such shares of Series A Preferred Stock been
converted into Common Stock immediately prior to the close of business on the
business day preceding the day fixed for such distribution; (ii) the holders of
record of shares of Series B Preferred Stock shall be entitled to receive, out
of the assets of the Corporation legally available therefor, an amount per share
equal to the greater of (x) the Original Purchase Price for such series, plus an
amount equal to the unpaid Series B Accruing Dividends, plus any other declared
and unpaid dividends thereon, up to and including the date of payment (the
"Series B Base Amount") or (y) the amount which the holders of Series B
Preferred Stock would have received under paragraph 4(b) hereof had all such
shares of Series B Preferred Stock been converted into Common Stock immediately
prior to the close of business on the business day preceding the day fixed for
such distribution; (iii) the holders of record of shares of Series C Preferred
Stock shall be entitled to receive, out of the assets of the Corporation legally
available therefor, an amount per share equal to greater of (x) the Original
Purchase Price for such series, plus an amount equal to the unpaid Series C
Accruing Dividends, plus any other declared and unpaid dividends thereon, up to
and including the date of payment (the "Series C Base Amount") or (y) the amount
which the holders of Series C Preferred Stock would have received under
paragraph 4(b) hereof had all such shares of Series C Preferred Stock been
converted into Common Stock immediately prior to the close of business on the
business day preceding the day fixed for such distribution; (iv) the holders of
record of shares of Series D Preferred Stock shall be entitled to receive, out
of the assets of the Corporation legally available therefor, an amount per share
equal to greater of (x) the Original Purchase Price for such series, plus an
amount equal to the unpaid Series D Accruing Dividends, plus any other declared
and unpaid dividends thereon, up to and including the date of payment (the
"Series D Base Amount") or (y) the amount which the holders of Series D
Preferred Stock would have received under paragraph 4(b) hereof had all such
shares of Series D Preferred Stock been converted into Common Stock immediately
prior to the close of business on the business day preceding the day fixed for
such distribution; (v) the holders of record of shares of Series E Preferred
Stock shall be entitled to receive, out of the assets of the Corporation legally
available therefor, an amount per share equal to greater of (x) the Original
Purchase Price for such series, plus an amount equal to the unpaid Series E
Accruing Dividends, plus any other declared and unpaid dividends thereon, up to
and including the date of payment (the "Series E Base Amount") or (y) the amount
which the holders of Series E Preferred Stock would have received under
paragraph 4(b) hereof had all such shares of Series E Preferred Stock been
converted into Common Stock immediately prior to the close of business on the
business day preceding the day fixed for such distribution; (vi) the holders of
record of shares of Series F Preferred Stock shall be entitled to receive, out
of the assets of the Corporation legally available therefor, an amount per share
equal to greater of (x) the Original Purchase Price for such series, plus an
amount equal to the unpaid Series F Accruing Dividends, plus any other declared
and unpaid dividends thereon, up to and including the date of payment (the
"Series F Base Amount") or (y) the amount which the holders of Series F
Preferred
-9-
<PAGE> 10
Stock would have received under paragraph 4(b) hereof had all such shares of
Series F Preferred Stock been converted into Common Stock immediately prior to
the close of business on the business day preceding the day fixed for such
distribution; and (vii) the holders of record of shares of Series G Preferred
Stock shall be entitled to receive, out of the assets of the Corporation legally
available therefor, an amount per share equal to the greater of (x) the Original
Purchase Price for such series, plus an amount equal to the unpaid Series G
Accruing Dividends, plus any other declared and unpaid dividends thereon, up to
and including the date of payment (the "Series G Base Amount") or (y) the amount
which the holders of Series G Preferred Stock would have received under
paragraph 4(b) hereof had all such shares of Series G Preferred Stock been
converted into Common Stock immediately prior to the close of business on the
business day preceding the day fixed for such distribution. The aggregate of
such amounts to be paid to the holders of the Series A Preferred Stock is
referred to as the "Series A Preferred Liquidation Amount." The aggregate of
such amounts to be paid to the holders of the Series B Preferred Stock is
referred to as the "Series B Preferred Liquidation Amount." The aggregate of
such amounts to be paid to the holders of the Series C Preferred Stock is
referred to as the "Series C Preferred Liquidation Amount." The aggregate of
such amounts to be paid to the holders of the Series D Preferred Stock is
referred to as the "Series D Preferred Liquidation Amount." The aggregate of
such amounts to be paid to the holders of the Series E Preferred Stock is
referred to as the "Series E Preferred Liquidation Amount." The aggregate of
such amounts to be paid to the holders of the Series F Preferred Stock is
referred to as the "Series F Preferred Liquidation Amount." The aggregate of
such amounts to be paid to the holders of the Series G Preferred Stock is
referred to as the "Series G Preferred Liquidation Amount." For the purposes
hereof, the Common Stock shall rank on liquidation junior to the Preferred Stock
with respect to the right to receive payments upon liquidation. If the funds
available upon liquidation are insufficient to satisfy in full the Series A Base
Amount, the Series B Base Amount, the Series C Base Amount, the Series D Base
Amount, the Series E Base Amount, the Series F Base Amount and the Series G Base
Amount, the entire assets of the Corporation available for such distribution
shall be allocated first to the aggregate Series E Base Amount, Series F Base
Amount and Series G Base Amount (or ratably among the holders of Series E
Preferred Stock, Series F Preferred Stock and Series G Preferred Stock in
proportion to the respective aggregate Base Amount of each such series of
Preferred Stock based on the number of shares held by each if the aggregate
Series E Base Amount, Series F Base Amount and Series G Base Amount is not paid
in full) and thereafter to each other series of Preferred Stock in proportion to
the respective aggregate Base Amount of such other series and such allocated
amounts shall be distributed ratably among the holders of each such series of
Preferred Stock based on the number of shares held by each.
(b) RATABLE DISTRIBUTIONS. Upon any such liquidation,
dissolution or winding up of the Corporation, immediately after the holders of
Preferred Stock shall have been paid in full their respective Series A Preferred
Liquidation Amount, Series B Preferred Liquidation Amount, Series C Preferred
Liquidation Amount, Series D Preferred Liquidation Amount, Series E Preferred
Liquidation Amount, Series F Preferred Liquidation Amount and Series G Preferred
Liquidation Amount, the holders of Common Stock shall share ratably in the
remaining assets of the Corporation available for distribution.
-10-
<PAGE> 11
(c) MERGER. The merger or consolidation of the
Corporation into or with another Corporation (other than a merger in which the
Corporation is the surviving Corporation and which will not result in more than
fifty (50%) percent of the capital stock of the Corporation outstanding
immediately after the effective date of such merger being owned of record or
beneficially by persons other than the holders of such capital stock immediately
prior to such merger), or the sale, conveyance or transfer of all or
substantially all of the assets of the Corporation shall be deemed to be a
liquidation, dissolution or winding up of the Corporation for purposes of this
paragraph 4, unless the holders of at least sixty (60%) percent of the then
outstanding shares of Series A, Series B, Series C, Series D, Series E, Series F
and Series G Preferred Stock, voting together as a single class on an as
converted basis, elect otherwise by giving notice to the Corporation at least
five (5) days before the effective date of such event. If no such notice is
given, such event shall be deemed to be liquidation, dissolution or winding up
for purposes of this paragraph 4(c) and the provisions of paragraph 5(h) shall
not apply. The amount deemed distributed in connection with a transaction
referred to in this paragraph 4(c) shall be the cash or the value of the
property, rights or other securities distributable by the acquiring person, firm
or other entity as part of such transaction. Wherever a distribution provided
for in this paragraph 4 is payable in property other than in cash, the value of
such distribution shall be the fair market value of such property as determined
in good faith by the Corporation's Board of Directors. Notwithstanding the
foregoing, when the consideration to be received by the holders of the capital
stock of the Corporation in connection with such a merger or consolidation
consists of cash, property and/or securities, and the amount to be received by
the holders of the Preferred Stock is the amount specified in item (i)(y),
(ii)(y), (iii)(y), (iv)(y), (v)(y), (vi)(y) or (vii)(y), as the case may be, of
the first sentence of paragraph 4(a), then the amount of cash, property and/or
securities to be received by the holders of the Preferred Stock shall be limited
to the amount of cash, property and/or securities that they would have received
had they converted their shares of Preferred Stock into shares of Common Stock
immediately prior to such merger or consolidation.
5. CONVERSION RIGHTS. The holders of the Preferred Stock shall
have the following conversion rights:
(a) CONVERSION.
(i) GENERAL. Subject to and in compliance with
the provisions of this paragraph 5, any shares of the Preferred Stock may, at
the option of the holder, be converted at any time or from time to time into
fully-paid and non-assessable shares (calculated as to each conversion to the
nearest smaller whole share) of Common Stock (except that upon any liquidation
of the Corporation or redemption of shares of Preferred Stock the right of
conversion thereof shall terminate at the close of business on the last business
day next preceding the date fixed for payment of the amount distributable with
respect to such shares of Preferred Stock). The number of shares of Common Stock
to which a holder of any series of Preferred Stock shall be entitled upon
conversion shall be the product obtained by multiplying the Applicable
Conversion Rate for such series of Preferred Stock (determined as provided in
paragraph 5(c)) by the number of shares of such series of Preferred Stock being
converted.
-11-
<PAGE> 12
(ii) CONVERSION UPON QUALIFIED PUBLIC OFFERING.
Notwithstanding anything to the contrary herein, all outstanding shares of
Preferred Stock shall be converted automatically without any further action by
the holders of such shares and whether or not the certificates representing such
shares are surrendered to the Corporation or a transfer agent designated by the
Corporation into the number of shares of Common Stock into which such Preferred
Stock is convertible pursuant to paragraph 5(a)(i) hereof, immediately prior to
the closing of the first underwritten public offering pursuant to an effective
registration statement under the Securities Act of 1933, as amended, covering
the offer and sale of Common Stock for the account of the Corporation in which
Common Stock is sold at a public offering price per share of not less than $9.77
and in which the aggregate net proceeds are at least $15,000,000 (a "Qualified
Public Offering"). Notice of any such Qualified Public Offering must be
delivered to each holder of Preferred Stock at least thirty (30) days in advance
of the proposed closing date for such Qualified Public Offering. As soon as
practicable following the automatic conversion of the Preferred Stock as a
result of a Qualified Public Offering the Corporation will give each holder
written notice of such conversion.
(iii) VOLUNTARY CONVERSION. All outstanding shares
of Preferred Stock shall, upon the vote or written consent of the holders of at
least eighty (80%) percent of the then outstanding shares of Preferred Stock,
voting together as a single class on an as converted basis, be automatically
converted into the number of shares of Common Stock into which such Preferred
Stock is then convertible pursuant to paragraph 5(a)(i) hereof without any
further action by the holders of such shares and whether or not the certificates
representing such shares are surrendered to the Corporation or its transfer
agent for the Common Stock. Notice hereof shall be given by the Corporation to
the holders of Preferred Stock within thirty (30) days of such vote or consent.
The effective date of conversion hereunder shall be the date specified in the
vote causing conversion, or if no such date is specified, the date the vote is
taken.
(iv) SPECIAL MANDATORY CONVERSION. In the event
any holder of Series A Preferred Stock, Series B Preferred Stock or Series C
Preferred Stock does not participate in a Financing (as defined below) by
purchasing within the time period specified by the Corporation its full Basic
Amount (as defined below), then paragraph 5(e)(i)(A) shall not apply to any
shares of Series A Preferred Stock, Series B Preferred Stock or Series C
Preferred Stock held by such holder and each share of Series A Preferred Stock,
Series B Preferred Stock or Series C Preferred Stock held by such holder shall,
upon consummation of such Financing, automatically be converted into that number
of share(s) of Common Stock into which such Preferred Stock was convertible
pursuant to paragraph 5(a)(i) hereof immediately prior to such Financing. This
Special Mandatory Conversion, however, shall not apply to the Series D, Series
E, Series F or Series G Preferred Stock. For the purposes of this paragraph:
(A) a holder's "Basic Amount" of a
Financing shall be (i) its pro rata share of the portion of such Financing set
aside by the Board of Directors of the Corporation (including a majority of the
Directors elected or designated by the holders of Preferred Stock) for purchase
by holders of outstanding Preferred Stock, such pro rata share to be determined
based on the ratio of the number of shares of Preferred Stock held by each
holder of Preferred Stock to the number of shares of Preferred Stock held by all
holders of Preferred Stock,
-12-
<PAGE> 13
on an as converted basis, or (ii) if less, the maximum amount such holder is
permitted to purchase in such Financing, after giving effect to any cutbacks or
limitations established by the Board of Directors of the Corporation (including
a majority of the Directors elected or designated by the holders of Preferred
Stock) or the exercise of any pre-emptive or similar rights then held by any
holders of capital stock of the Corporation; and
(B) a "Financing" shall mean any
transaction, designated as a "Financing" by the Board of Directors of the
Corporation (including a majority of the Directors elected or designated by the
holders of Preferred Stock) pursuant to which the Corporation shall issue any
shares of Common Stock, or other securities convertible into, exchangeable or
exercisable for shares of Common Stock, for cash or cash equivalent
consideration; however, a Financing does not include the issuance of any shares
of Common Stock or other securities of the Corporation, or options to purchase
shares of Common Stock or other securities of the Corporation, issued pursuant
to any stock option or stock purchase plans to the Corporation's employees,
officers, directors or consultants.
(b) CONVERSION PROCEDURES. Upon the occurrence of a
conversion specified in paragraph 5(a) hereof, each holder of Preferred Stock
shall surrender the certificates representing such shares at the principal
office of the Corporation or of its transfer agent, as designated by the
Corporation. Thereupon, there shall be issued and delivered to each such holder
a certificate or certificates for the number of shares of Common Stock, into
which the shares of Preferred Stock surrendered were convertible on the date on
which such conversion occurred. The Corporation shall not be obligated to issue
certificates evidencing the shares of Common Stock issuable upon such conversion
unless certificates evidencing such shares of the Preferred Stock being
converted are either delivered to the Corporation or any such transfer agent or
the holder notifies the Corporation or any such transfer agent that such
certificates have been lost, stolen or destroyed and executes an agreement and
an affidavit of loss satisfactory to the Corporation to indemnify the
Corporation (with surety, if requested) from any loss incurred by it in
connection therewith.
(c) APPLICABLE CONVERSION RATE. The conversion rate in
effect at any time (the "Applicable Conversion Rate") for each series of
Preferred Stock shall be the quotient obtained by dividing the Original Purchase
Price for such series, by the Applicable Conversion Value for such series,
calculated as provided in paragraph 5(d).
(d) APPLICABLE CONVERSION VALUE. The Applicable
Conversion Value for each series of Preferred Stock in effect from time to time
shall be the Original Purchase Price for such series, as adjusted from time to
time in accordance with paragraph 5(e) hereof.
(e) ADJUSTMENTS TO APPLICABLE CONVERSION VALUE.
(i) GENERAL.
(A) SALE OR ISSUANCE OF COMMON STOCK.
If the Corporation shall, while there are any shares of any series of Preferred
Stock outstanding, issue or sell shares
-13-
<PAGE> 14
of its Common Stock without consideration or at a price per share less than the
Applicable Conversion Value for such series in effect immediately prior to such
issuance or sale, then upon each such issuance or sale, except as hereinafter
provided, such Applicable Conversion Value shall be lowered so as to be equal to
an amount determined by multiplying the Applicable Conversion Value by a
fraction:
(x) the numerator of which
shall be (1) the number of shares of Common Stock outstanding immediately prior
to the issuance of such additional shares of Common Stock, plus (2) the number
of shares of Common Stock which the net aggregate consideration, if any,
received by the Corporation for the total number of such additional shares of
Common Stock so issued would purchase at the Applicable Conversion Value in
effect immediately prior to such issuance, and
(y) the denominator of which
shall be (1) the number of shares of Common Stock outstanding immediately prior
to the issuance of such additional shares of Common Stock plus (2) the number of
such additional shares of Common Stock so issued; provided, however, in no event
will any adjustment be made to the extent it would result in any shares of
Common Stock being issued for an amount which is less than the par value of such
shares.
(B) SALE OR ISSUANCE OF WARRANTS,
OPTIONS OR PURCHASE RIGHTS WITH RESPECT TO COMMON STOCK. For the purposes of
this paragraph 5(e)(i), the issuance of any warrants, options, subscriptions or
purchase rights with respect to shares of Common Stock and the issuance of any
securities convertible into or exchangeable for shares of Common Stock (or the
issuance of any warrants, options or any rights with respect to such convertible
or exchangeable securities) shall be deemed an issuance of such Common Stock at
such time if the Net Consideration Per Share (as hereinafter determined) which
may be received by the Corporation for any such Common Stock shall be less than
the Applicable Conversion Value(s) at the time of such issuance. Any obligation,
agreement or undertaking to issue warrants, options, subscriptions or purchase
rights or convertible or exchangeable securities at any time in the future shall
be deemed to be an issuance at the time such obligation, agreement or
undertaking is made or arises. No adjustment of the Applicable Conversion
Value(s) shall be made under this paragraph 5(e)(i) upon the issuance of any
shares of Common Stock which are issued pursuant to the exercise of any
warrants, options, subscriptions or purchase rights or pursuant to the exercise
of any conversion or exchange rights in any convertible securities if any
adjustment shall previously have been made upon the issuance of any such
warrants, options or subscriptions or purchase rights or upon the issuance of
any convertible securities (or upon the issuance of any warrants, options or any
rights therefor) as above provided. Any adjustment of the Applicable Conversion
Value(s) pursuant to this paragraph 5(e)(i)(B) which relates to warrants,
options, subscriptions or purchase rights with respect to shares of Common Stock
shall be recomputed if, as, and when such warrants, options, subscriptions or
purchase rights expire or are canceled without being exercised, so that the
Applicable Conversion Value(s) effective immediately upon such cancellation or
expiration shall be equal to the Applicable Conversion Value in effect
immediately prior to the time of the issuance of the expired or canceled
warrants,
-14-
<PAGE> 15
options, subscriptions or purchase rights, adjusted as if the expired or
canceled warrants, options, subscriptions or purchase rights had not been
issued.
For purposes of this paragraph 5(e)(i), the "Net Consideration Per
Share" which may be received by the Corporation shall mean the amount equal to
the total amount of consideration, if any, received by the Corporation for the
issuance of such warrants, options, subscriptions or other purchase rights or
convertible or exchangeable securities, plus the minimum amount of
consideration, if any, payable to the Corporation upon exercise or conversion
thereof, divided by the aggregate number of shares of Common Stock that would be
issued if all such warrants, options, subscriptions or other purchase rights or
convertible or exchangeable securities were exercised, exchanged or converted.
The "Net Consideration Per Share" which may be received by the Corporation shall
be determined in each instance as of the date of issuance of warrants, options,
subscriptions or other purchase rights or convertible or exchangeable securities
without giving effect to any possible future price adjustments or rate
adjustments which may be applicable with respect to such warrants, options,
subscriptions or other purchase rights or convertible or exchangeable
securities.
(C) CONSIDERATION: NON-CASH PROPERTY.
For purposes of this paragraph 5(e)(i), if a part or all of the consideration
received by the Corporation in connection with the issuance of shares of Common
Stock or any of the securities described in this paragraph 5(e)(i) consists of
property other than cash, the Board of Directors of the Corporation shall in its
good faith discretion value such property, whereupon such value shall be
recorded on the books of the Corporation as consideration for the property so
received.
This paragraph 5(e)(i) shall not apply and no adjustment in the
Applicable Conversion Value(s) shall be made hereunder upon an Extraordinary
Common Stock Event (as hereinafter defined in paragraph 5(e)(iii).
(ii) CERTAIN ISSUES OF COMMON STOCK EXCEPTED.
Anything in paragraph 5(e)(i) to the contrary notwithstanding, the Corporation
shall not be required to make any adjustment of the Applicable Conversion Value
as set forth in paragraph 5(e)(i), in the case of (x) the issuance of any shares
of Common Stock upon conversion of any shares of Preferred Stock or (y) the
issuance of, or grant of options, warrants or similar securities to purchase, up
to 7,200,000 shares of Common Stock pursuant to the Corporation's 1996 Incentive
Stock Plan, as amended from time to time (including in such number all options
outstanding on the date this Restated Certificate of Incorporation becomes
effective) or pursuant to any similar plan approved by the Board of Directors
for the purpose of using equity securities to provide incentives to persons or
entities whom the Board of Directors determines can help the Corporation achieve
its objective and the issuance of, or grant of options or warrants to purchase
up to 300,000 shares of Common Stock pursuant to routine equipment financing
transactions, or such greater number of shares as may be approved by the holders
of sixty (60%) percent of the Preferred Stock voting, consenting or acting as a
single class on an as converted basis, or the issuance of shares of Common Stock
upon the exercise of any such options (which number shall be equitably adjusted
on the occurrence of an Extraordinary Common Stock Event, as hereinafter
defined, a reclassification, reorganization or similar event affecting the
Common Stock) to officers,
-15-
<PAGE> 16
directors, employees of or consultants to the Corporation. Unless the Board of
Directors shall determine otherwise, the maximum number of shares under the
Corporation's 1996 Incentive Stock Plan excluded from adjustments pursuant to
the preceding sentence of this paragraph 5(e)(ii) shall be automatically
increased on January 1, 2001 and on the first calendar day of each year
thereafter by a number equal to the lesser of (i) 3,000,000 shares of Common
Stock (which number shall be equitably adjusted on the occurrence of an
Extraordinary Common Stock Event, as hereinafter defined, a reclassification,
reorganization or similar event affecting the Common Stock) and (ii) the number
of shares of Common Stock equal to five percent (5%) of the issued and
outstanding shares of Common Stock of the Corporation (calculated on a
fully-diluted (including all shares issuable under the Corporation's 1996
Incentive Stock Plan) and as-converted basis); provided, that the maximum number
of shares of Common Stock under the Corporation's 1996 Incentive Stock Plan
excluded from adjustments pursuant to the preceding sentence of this paragraph
5(e)(ii) shall not exceed a number of shares of Common Stock equal to
twenty-five percent (25%) of the issued and outstanding shares of Common Stock
of the Corporation (calculated on a fully-diluted (including all shares issuable
under the Corporation's 1996 Incentive Stock Plan) and as-converted basis).
(iii) EXTRAORDINARY COMMON STOCK EVENT. Upon the
happening of an Extraordinary Common Stock Event (as hereinafter defined), the
Applicable Conversion Value for each series of Preferred Stock shall,
simultaneously with the happening of such Extraordinary Common Stock Event, be
adjusted only under this paragraph 5(e)(iii) by multiplying the then effective
Applicable Conversion Value for such series by a fraction, (x) the numerator of
which shall be the number of shares of Common Stock outstanding immediately
prior to such Extraordinary Common Stock Event and (y) the denominator of which
shall be the number of shares of Common Stock outstanding immediately after such
Extraordinary Common Stock Event, and the product so obtained shall thereafter
be the Applicable Conversion Value for such series. The Applicable Conversion
Value, as so adjusted, shall be readjusted in the same manner upon the happening
of any successive Extraordinary Common Stock Event or Events.
"Extraordinary Common Stock Event" shall mean (x) the issue of
additional shares of Common Stock as a dividend or other distribution on
outstanding Common Stock, (y) the subdivision of outstanding shares of Common
Stock into a greater number of shares of Common Stock or (z) the combination of
outstanding shares of Common Stock into a smaller number of shares of Common
Stock; provided, that the reclassification and subdivision of each share of Old
Common Stock into one and one-half shares of Common Stock detailed in paragraphs
2 through 6 of this Article Fourth shall not be deemed an Extraordinary Common
Stock Event with respect to the Series G Preferred Stock.
(f) DIVIDENDS. In the event the Corporation 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 (other than a distribution
in liquidation or other distribution provided for herein) payable in securities
of the Corporation other than shares of Common Stock or in assets (excluding
ordinary cash dividends paid out of retained earnings), then and in each such
event, provision shall be made so that the holders of Preferred Stock shall
receive upon conversion of such Preferred Stock, in addition to the number of
shares of Common Stock receivable
-16-
<PAGE> 17
thereupon, the number of securities or such other assets of the Corporation
which they would have received had their Preferred Stock been converted into
Common Stock on the record date of such event and had they thereafter, during
the period from the date of such event to and including the Conversion Date (as
that term is hereafter defined in paragraph 5(j)), retained such securities or
such other assets receivable by them as aforesaid during such period, giving
application to all adjustments called for during such period under this
paragraph 5 with respect to the rights of the holders of the Preferred Stock.
(g) CAPITAL REORGANIZATION OR RECLASSIFICATION. If the
Common Stock issuable upon the conversion of any series of Preferred Stock shall
be changed into the same or different number of shares of any series or classes
of stock, whether by capital reorganization, reclassification or otherwise
(other than a subdivision or combination of shares or stock dividend provided
for elsewhere in this paragraph 5, or a reorganization, merger, consolidation or
sale of assets provided for elsewhere in this paragraph 5), then and in each
such event the holders of each share of such series of Preferred Stock shall
have the right thereafter to convert each such share into the kind and amount of
shares of stock and other securities and property receivable by such holders
upon such reorganization, reclassification or other change, equal to the number
or shares of Common Stock into which such shares of Preferred Stock might have
been converted immediately prior to such reorganization, reclassification or
change, all subject to further adjustment as provided herein.
(h) CAPITAL REORGANIZATION, MERGER OR SALE OF ASSETS. If
at any time or from time to time there shall be a capital reorganization of the
Common Stock (other than a subdivision, combination, reclassification or
exchange of shares provided for elsewhere in this paragraph 5) or a merger or
consolidation of the Corporation with or into another Corporation, or the sale
of all or substantially all of the Corporation's properties and assets to any
other person (other than an event described in paragraph 4(c), unless the
requisite number of holders of Preferred Stock have elected not to treat such
event as a liquidation for purposes of such paragraph), then, as a part of such
reorganization, merger, consolidation or sale, provision shall be made so that
the holders of the Preferred Stock shall be entitled to receive upon
consummation of such transaction, the number of shares of stock or other
securities or property of the Corporation, or of the successor Corporation
resulting from such merger, consolidation or sale, to which a holder of Common
Stock issuable upon conversion would have been entitled upon consummation of
such capital reorganization, merger, consolidation or sale had such holder's
Preferred Stock been converted into Common Stock prior to such capital
reorganization, merger, consolidation or sale, provided that no such provision
shall be deemed to constitute the consent of the holders of the Preferred Stock
to any such transaction if such consent is required by this Restated Certificate
of Incorporation or under applicable law.
(i) CERTIFICATE AS TO ADJUSTMENTS. In each case of an
adjustment or readjustment of the Applicable Conversion Rate for any series of
Preferred Stock, the Corporation will furnish each holder of shares of such
series of Preferred Stock with a certificate showing such adjustment or
readjustment, and stating in reasonable detail the facts upon which such
adjustment or readjustment is based.
-17-
<PAGE> 18
(j) EXERCISE OF CONVERSION PRIVILEGE. To exercise his
conversion privilege, a holder of Preferred Stock shall surrender the
certificate or certificates representing the shares being converted together
with a written notice of such conversion to the Corporation at its principal
office or to the transfer agent, if any, which has been designated by the
Corporation. Such notice shall also state the name or names (with address or
addresses) in which the certificate or certificates for shares of Common Stock
issuable upon such conversion shall be issued. The certificate or certificates
for shares of Preferred Stock surrendered for the conversion shall be duly
endorsed in blank or accompanied by proper assignment thereof to the Corporation
duly endorsed in blank. The date when such written notice is received by the
Corporation, together with the certificate or certificates representing the
shares of Preferred Stock being converted, shall be the "Conversion Date." As
promptly as practicable after the Conversion Date, the Corporation shall issue
and deliver to the holder of the shares of Preferred Stock being converted, (i)
such certificate or certificates as the holder may request for the number of
whole shares of Common Stock issuable upon the conversion of such shares of
Preferred Stock in accordance with the provisions of this paragraph 5, and (ii)
cash, as provided in paragraph 5(k), in respect of any fraction of a share of
Common Stock otherwise issuable upon such conversion. Such conversion shall be
deemed to have been effected immediately prior to the close of business on the
Conversion Date, and at such time the rights of the holder as holder of the
converted shares of Preferred Stock shall cease and the person or persons in
whose name or names any certificate or certificates for shares of Common Stock
shall be issuable upon such conversion shall be deemed to have become the bolder
or holders of record of the shares of Common Stock represented thereby.
(k) CASH IN LIEU OF FRACTIONAL SHARES. No fractional
shares of Common Stock or scrip representing fractional shares shall be issued
upon the conversion of shares of Preferred Stock. Instead of any fractional
shares of Common Stock which would otherwise be issuable upon conversion of
Preferred Stock, the Corporation shall pay to the holder of the shares of
Preferred Stock which were converted a cash adjustment in respect of such
fractional shares in an amount equal to the same fraction of the fair market
value per share of the Common Stock (as determined in good faith by the Board of
Directors) at the close of business on the Conversion Date. The determination as
to whether or not to make any cash payment in lieu of the issuance of fractional
shares shall be based upon the total number of shares of Preferred Stock being
converted at any one time by any holder thereof, not upon each share of
Preferred Stock being converted.
(l) PARTIAL CONVERSION. In the event some but not all of
the shares of Preferred Stock represented by a certificate or certificates
surrendered by a holder are converted, the Corporation shall execute and deliver
to or on the order of the holder, at the expense of the Corporation, a new
certificate representing the number of shares of Preferred Stock which were not
converted.
(m) RESERVATION OF COMMON STOCK. The Corporation shall at
all times reserve and keep available out of its authorized but unissued shares
of Common Stock, solely for the purpose of effecting the conversion of the
shares of the Preferred Stock, such number of its shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all
-18-
<PAGE> 19
outstanding shares of the Preferred Stock, and if at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the conversion of all then outstanding shares of the Preferred Stock, the
Corporation shall take such corporate action, subject to the terms of this
Restated Certificate of Incorporation and applicable law, as may be necessary to
increase its authorized but unissued shares of Common Stock at least to such
number of shares as shall be sufficient for such purpose.
(n) ISSUE TAX. The issuance of certificates for shares of
Common Stock upon conversion of Preferred Stock shall be made without charge to
the holders thereof for any issuance tax in respect thereof, provided that the
Corporation shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issuance and delivery of any certificate in a
name other than that of the holder of the Preferred Stock which is being
converted.
(o) CLOSING OF BOOKS. The Corporation will at no time
close its transfer books against the transfer of any series of Preferred Stock
or of any shares of Common Stock issued or issuable upon the conversion of any
shares of Preferred Stock in any manner which interferes with the timely
conversion of such series of Preferred Stock, except as may otherwise be
required to comply with applicable securities laws.
6. REDEMPTION.
(a) On or after August 1, 2002, the Corporation shall, at
the written election of the holders of at least sixty (60%) percent of the then
outstanding shares of Preferred Stock, voting together as a single class, upon
written notice delivered to the Corporation and specifying the first day on
which such shares are to be redeemed out of funds legally available therefor
(which shall be a date not fewer than thirty (30) days after such notice is
delivered to the Corporation), (i) redeem on the date specified by such holders
one-third of all the shares of each series of Preferred Stock outstanding on the
date of such election and (ii) redeem on the first and second anniversaries of
such date an additional one-third of the shares of each series of Preferred
Stock outstanding on the date of such initial election (each such date being
herein called a "Redemption Date").
(b) All shares of Preferred Stock which are to be
redeemed hereunder shall remain issued and outstanding until the Redemption
Price (as set forth below) therefore has been indefeasibly paid in full in cash.
If the Corporation for any reason fails to pay the Redemption Price for any
shares of Preferred Stock on or prior to the respective Redemption Date, then
the unpaid Redemption Price shall thereafter bear interest at the annual rate of
twelve and one half (12.5%) percent, compounded annually, until paid.
(c) The Redemption Price (the "Redemption Price") for
each share of Preferred Stock to be redeemed pursuant to this paragraph 6 shall
be the sum of the Original Purchase Price for such shares (subject to equitable
adjustment in the event of any stock dividend, stock split, reclassification of
shares or similar event affecting or relating to the
-19-
<PAGE> 20
Preferred Stock) plus the amount of the unpaid Accruing Dividends and all other
declared but unpaid dividends on such shares, up to and including the applicable
Redemption Date.
(d) After receipt of a notice of election pursuant to
paragraph 6(a), the Corporation will give written notice by mail, postage
prepaid, to the holders of record of Preferred Stock to be redeemed, such notice
to be delivered to each such holder at its post office address shown by the
records of the Corporation, specifying the number of shares to be redeemed, the
Redemption Price, and the place of such redemption and the Redemption Date,
(which date shall not be a day on which banks in the City of Boston are required
or authorized to close) and to be given at least twenty (20) days prior to the
Redemption Date; provided, however, that the Corporation's failure to give such
notice shall in no way affect its obligation to redeem the shares of Preferred
Stock as provided in this paragraph 6. If on or before the Redemption Date, the
funds necessary for redemption shall have been deposited with an independent
payment agent so as to be and continue to be available therefor, then,
notwithstanding that any certificate for shares of Preferred Stock to be
redeemed shall not have been surrendered for cancellation, from and after the
close of business on such Redemption Date, the shares so called for redemption
with respect to any holder shall no longer be deemed outstanding, any dividends
thereon shall cease to accrue, and all rights with respect to such shares,
including all conversion rights pursuant to paragraph 5 hereof, shall forthwith
cease, except only the right of the holders thereof to receive, upon
presentation of the certificates representing shares so called for redemption,
the Redemption Price applicable to such Preferred Stock without interest
thereon.
(e) If the funds of the Corporation legally available for
redemption of Preferred Stock on any Redemption Date are insufficient to redeem
the total number of outstanding shares of Preferred Stock to be redeemed on such
Redemption Date, the Corporation first shall redeem such number of shares of
Series E Preferred Stock, Series F Preferred Stock and Series G Preferred Stock
ratably from the holders thereof to the extent of any funds legally available
for the redemption of Series E Preferred Stock, Series F Preferred Stock and
Series G Preferred Stock and thereafter shall redeem such number of shares of
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and
Series D Preferred Stock ratably from the holders thereof to the extent of any
funds legally available for redemption of such series of Preferred Stock,
according to the respective amounts which will be payable with respect to the
full number of shares of Preferred Stock to be redeemed on such date, as if all
such Preferred Stock were redeemed in full. Any shares of Preferred Stock not
redeemed shall remain outstanding. At any time thereafter when additional funds
of the Corporation are legally available for the redemption of Preferred Stock,
such funds will be used, at the end of the next succeeding fiscal quarter, to
redeem the balance of such Preferred Stock to be redeemed on such prior
Redemption Date, or such portion thereof for which funds are then available, on
the basis set forth above.
(f) Subject to the terms of paragraph 6(d), any shares of
Preferred Stock may be converted by the holder thereof to Common Stock in
accordance with the provisions of this Restated Certificate of Incorporation, at
any time prior to the close of business on the last business day next preceding
the Redemption Date.
-20-
<PAGE> 21
(g) In the event the Corporation shall fail to redeem all
the shares of Preferred Stock on any Redemption Date hereunder, then thereafter
until the redemption or conversion of all such shares of Preferred Stock to be
redeemed at such Redemption Date, the holders of Preferred Stock, voting as a
single class, shall be entitled to elect a majority of the Board of Directors of
the Corporation, notwithstanding anything to the contrary set forth herein or in
any agreement among the Corporation and its shareholders.
(h) No shares of Preferred Stock acquired by the
Corporation by reason of redemption, purchase, conversion or otherwise shall be
reissued, and all such acquired Preferred Stock shall be canceled, retired and
eliminated from the shares which the Corporation shall be authorized to issue.
The Corporation shall from time to time take such appropriate corporate action
as may be necessary to reduce the authorized number of shares of Preferred Stock
accordingly.
7. NOTICES OF RECORD DATE. In the event of:
(a) any taking by the Corporation of a record of the
holders of any series of securities for the purpose of determining the holders
thereof who are entitled to receive any dividend or other distribution, or any
right to subscribe for, purchase or otherwise acquire any shares of stock of any
series or any other securities or property, or to receive any other right; or
(b) any capital reorganization of the Corporation, any
reclassification or recapitalization of the capital stock of the Corporation,
any merger or consolidation of the Corporation, or any transfer of all or
substantially all of the assets of the Corporation to any other Corporation, or
any other entity or person; or
(c) any voluntary or involuntary dissolution, liquidation
or winding-up of the Corporation, then and in each such event the Corporation
shall mail or cause to be mailed to each holder of Preferred Stock a notice
specifying (i) the date on which any such record is to be taken for the purpose
of such dividend, distribution or right and a description of such dividend,
distribution or right, (ii) the date on which any such reorganization,
reclassification, recapitalization, transfer, consolidation, merger,
dissolution, liquidation or winding-up is expected to become effective and (iii)
the time, if any, that is to be fixed, as to when the holders of record of
Common Stock (or other securities) shall be entitled to exchange their shares of
Common Stock (or other securities) for securities or other property deliverable
upon such reorganization, reclassification, recapitalization, transfer,
consolidation, merger, dissolution, liquidation or winding-up. Such notice shall
be mailed at least twenty (20) days prior to the date specified in such notice
on which such action is to be taken.
8. REPURCHASE OF SERIES D PREFERRED STOCK BY THE CORPORATION. Any
shares of Series D Preferred Stock repurchased by the Corporation shall not
thereafter be transferred on the books of the Corporation, shall be cancelled,
shall not receive any of the rights, preferences, privileges and restrictions
granted herein, shall not be voted by the Corporation and shall not be deemed to
be outstanding for any purpose whatsoever.
-21-
<PAGE> 22
B. COMMON STOCK.
1. RELATIVE RIGHTS OF PREFERRED STOCK AND COMMON STOCK. All
preferences, voting powers, relative, participating, optional or other special
rights and privileges, and qualifications, limitations, or restrictions of the
Common Stock are expressly made subject and subordinate to those that may be
fixed with respect to any shares of the Preferred Stock.
2. VOTING RIGHTS. Except as otherwise required by law or this
Restated Certificate of Incorporation, each holder of Common Stock shall have
one (1) vote in respect of each share of stock held by him of record on the
books of the Corporation for the election of directors and on all matters
submitted to a vote of stockholders of the Corporation.
3. DIVIDENDS. Subject to the preferential rights of the Preferred
Stock, if any, the holders of shares of Common Stock shall be entitled to
receive, when and as if declared by the Board of Directors, out of the assets of
the Corporation which are by law available therefor, dividends payable either in
cash, in property or in shares of capital stock.
4. DISSOLUTION, LIQUIDATION OR WINDING-UP. In the event of any
dissolution, liquidation or winding-up of the affairs of the Corporation, after
distribution in full of the preferential amounts, if any, to be distributed to
the holders of shares of the Preferred Stock, holders of Common Stock shall be
entitled, unless otherwise provided by law or this Restated Certificate of
Incorporation, to receive all of the remaining assets of the Corporation of
whatever kind available for distribution to stockholders ratably in proportion
to the number of shares of Common Stock held by them respectively.
FIFTH: The following provisions are inserted for the management of the
business and for the conduct of the affairs of the Corporation, and for
creating, defining, limiting and regulating the powers of the Corporation, the
Directors and the stockholders.
A. Directors need not be stockholders of the Corporation.
B. Subject to any limitation contained in the By-laws or herein, the Board
of Directors may make By-laws, and from time to time may alter, amend
or repeal any By-laws, but any By-laws made by the Board of Directors
may be altered, amended or repealed by the stockholders at any meeting
of stockholders by the affirmative vote of the holders of a majority of
the stock present and voting at such meeting, provided notice that an
amendment is to be considered and acted upon is inserted in the notice
or waiver of notice of such meeting.
C. The Board of Directors shall have power from time to time to fix and
determine and to vary the amount of the working capital of the
Corporation, to direct and determine the use and disposition thereof,
to set apart out of any funds of the Corporation available for
dividends a reserve or reserves for any proper purposes and to abolish
any such reserve in the manner in which it was created.
-22-
<PAGE> 23
D. The Board of Directors may from time to time determine whether and to
what extent and at which times and places and under what conditions and
regulations the accounts and books of the Corporation, or any of them,
shall be open to the inspection of the stockholders, and no stockholder
shall have any right to inspect any account, book or document of the
Corporation except as conferred by statute or as authorized by the
Board of Directors or as provided for in any agreement between such
stockholder and the Corporation.
E. No contract or other transaction between the Corporation and one or
more of its Directors or officers, or between the Corporation and any
other corporation, partnership, association or other organization in
which one or more of its Directors or officers are directors or
officers, or have a financial or other interest, shall be void or
voidable solely for this reason, or solely because the director or
officer is present at or participates in the meeting of the board or
committee thereof which authorized the contract or other transaction,
or solely because his or their votes are counted for such purpose,
provided that the material facts as to such relationship or interest
and as to the contract or other transaction are disclosed or are known
(a) to the Board of Directors or the committee, and the board or
committee in good faith authorizes the contract or other transaction by
the affirmative vote of a majority of the disinterested Directors, even
though the disinterested Directors be less than a quorum, or (b) to the
stockholders entitled to vote thereon, and the contract or other
transaction is specifically approved in good faith by vote of the
stockholders.
F. Any contract, act or transaction of the Corporation or of the Directors
may be ratified by a vote of a majority of the shares having voting
power, or such greater voting percentage and/or class vote as may be
required by this Restated Certificate of Incorporation, at any meeting
of stockholders, or at any special meeting called for such purpose, and
such ratification shall, so far as permitted by law and by this
Restated Certificate of Incorporation, be as valid and as binding as
though ratified by every stockholder of the Corporation.
G. Any vote or votes authorizing liquidation of the Corporation or
proceedings for its dissolution may provide, subject to (i) any
agreements among and between stockholders, (ii) the rights of creditors
and (iii) rights expressly provided for particular classes or series of
stocks, for the distribution pro rata among the stockholders of the
Corporation of the assets of the Corporation, wholly or in part in
kind, whether such assets be in cash or other property, and may
authorize the Board of Directors of the Corporation to determine the
value of the different assets of the Corporation for the purpose of
such liquidation and may divide or authorize the Board of Directors of
the Corporation to divide such assets or any part thereof among the
stockholders of the Corporation in such manner that every stockholder
will receive a proportionate amount in value (determined as aforesaid)
of cash or property of the Corporation upon such liquidation or
dissolution even though each stockholder may not receive a strictly
proportionate part of each such asset.
H. Elections of Directors need not be by ballot.
-23-
<PAGE> 24
I. The Corporation shall, to the maximum extent permitted from time to
time under the law of the State of Delaware, indemnify and upon request
shall advance expenses to any person who is or was a party or is
threatened to be made a party to any threatened, pending or completed
action, suit, proceeding or claim, whether civil, criminal,
administrative or investigative, by reason of the fact that he is or
was or has agreed to be a Director or officer of this Corporation or
while a Director or officer is or was serving at the request of the
Corporation as a director, officer, partner, trustee, employee or agent
of any corporation, partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans,
against expenses (including attorney's fees and expenses), judgments,
fines, penalties and amounts paid in settlement or incurred in
connection with the investigation, preparation to defend or defense of
such action, suit, proceeding, claim or counterclaim initiated by or on
behalf of such person. Such indemnification shall not be exclusive of
other indemnification rights arising under any By-law, agreement, vote
of Directors or stockholders or otherwise and shall inure to the
benefit of the heirs and legal representatives of such person. Any
repeal or modification of the foregoing provisions of this Section (I)
of Article FIFTH shall not adversely affect any right or protection of
a Director or officer of the Corporation existing at the time of such
repeal or modification.
J. A Director of this Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except that this Section (J) of Article
FIFTH shall not eliminate or limit a Director's 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
involve 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 amended after
approval by the stockholders of this Section (J) of Article FIFTH to
authorize corporate action further eliminating or limiting the personal
liability of Directors, 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 from
time to time.
Any repeal or modification of this Section (J) of Article FIFTH shall
not increase the personal liability of any Director of this Corporation for any
act or occurrence taking place prior to such repeal or modification, or
otherwise adversely affect any right or protection of a Director of the
Corporation existing at the time of such repeal or modification.
SIXTH: Except as expressly provided herein or in any agreement between such
stockholder and the Corporation, no holder of stock of the Corporation shall be
entitled as of right to purchase or subscribe for any part of any unissued stock
of the Corporation or any additional stock to be issued by reason of any
increase of the authorized capital stock of the Corporation, or any bonds,
certificates of indebtedness, debentures or other securities convertible into
stock or such additional authorized issued new stock, but rather such stock,
bonds, certificates of indebtedness, debentures and other securities may be
issued and disposed of pursuant to resolution of the Board of Directors to such
persons, firms, corporations or
-24-
<PAGE> 25
associations, and upon such terms as may be deemed advisable by the Board of
Directors in the exercise of their discretion.
SEVENTH: Meetings of stockholders may be held without the State of Delaware,
if the By-laws so provide. The books of the Corporation may be kept (subject to
the provisions of the Delaware General Corporation Law) outside of the State of
Delaware at such place or places as may be from time to time designated by the
Board of Directors.
EIGHTH: Subject to the restrictions set forth herein, the Corporation
reserves the right to amend, alter, change or repeal any provisions contained in
this Restated 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.
3. The Restated Certificate of Incorporation was duly adopted by unanimous
written consent of the Directors and by written consent of the
stockholders in accordance with the applicable provisions of Section
141, 228, 242 and 245 of the General Corporation Law of the State of
Delaware.
-25-
<PAGE> 26
IN WITNESS WHEREOF, said SITARA NETWORKS, INC. has caused this
certificate to be signed by its President as of the 16th day of June, 2000 and
attested to by its Secretary.
Attested: SITARA NETWORKS, INC.
/s/ Arthur I. Anderson By: /s/ Malik Z. Khan
----------------------------- -----------------------------
Arthur I. Anderson Malik Z. Khan
Secretary President
-26-
<PAGE> 27
CERTIFICATE OF CORRECTION FILED TO CORRECT
A CERTAIN ERROR IN THE
RESTATED CERTIFICATE OF INCORPORATION
OF
SITARA NETWORKS, INC.
FILED IN THE OFFICE OF THE SECRETARY OF STATE
OF DELAWARE ON JUNE 16, 2000.
Sitara Networks, Inc., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware:
DOES HEREBY CERTIFY:
1. The name of the corporation is Sitara Networks, Inc.
2. That a Restated Certificate of Incorporation was filed by the
Secretary of State of Delaware on June 16, 2000 and that said Certificate
requires correction as permitted by Section 103 of the General Corporation Law
of the State of Delaware.
3. The inaccuracy or defect of said Certificate to be corrected is as
follows:
One reference to the par value of the Common Stock was incorrect
and should have stated the par value to be $.00001 per share.
4. The third full paragraph in Article Fourth of the Certificate is
corrected to read as follows:
(a) Each outstanding share of the Common Stock, par value
$.00001 per share, of the Corporation (the "Old Common Stock")
shall be reclassified as and subdivided into one and one-half
(1.5) shares of Common Stock, par value $.00001 per share, of the
Corporation; and
IN WITNESS WHEREOF, said Sitara Networks, Inc. has caused this Certificate
to be signed by Arthur I. Anderson, its Secretary, this 29th day of August,
2000.
SITARA NETWORKS, INC.
By: /s/ Arthur I. Anderson
-----------------------
Arthur I. Anderson
Secretary
<PAGE> 28
CERTIFICATE OF AMENDMENT TO
THE
RESTATED CERTIFICATE OF INCORPORATION
OF
SITARA NETWORKS, INC.
SITARA NETWORKS, INC., a corporation organized and existing under the laws of
the State of Delaware, hereby certifies as follows:
1. The name of the Corporation is Sitara Networks, Inc. The original
certificate of Incorporation was filed with the Secretary of State on July
19, 1996 under the name K2 Net, Inc. A Restated Certificate of
Incorporation was filed with the Secretary of State on December 9, 1996, a
Certificate of Amendment changing the name of the Corporation to Sitara
Networks, Inc. was filed with the Secretary of State on June 24, 1997, a
Restated Certificate of Incorporation was filed with the Secretary of State
on September 9, 1997, a Restated Certificate of Incorporation was filed
with the Secretary of State on May 18, 1998, a Restated Certificate of
Incorporation was filed with the Secretary of State on December 21, 1998, a
Restated Certificate of Incorporation was filed with the Secretary of State
on July 9, 1999, a Restated Certificate of Incorporation was filed with the
Secretary of State on January 13, 2000 and a Restated Certificate of
Incorporation was filed with the Secretary of State on June 16, 2000.
2. This Certificate of Amendment amends and restates Article Fourth, Section
A.5(e)(ii) of the Restated Certificate of Incorporation of this Corporation
to read in its entirety as follows:
"(ii) CERTAIN ISSUES OF COMMON STOCK EXCEPTED. Anything in paragraph
5(e)(i) to contrary notwithstanding, the Corporation shall not be required
to make any adjustment to the Applicable Conversion Value as set forth in
paragraph 5(e)(i), in the case of (x) the issuance of any shares of Common
Stock upon conversion of any shares of Preferred Stock or (y) the issuance
of, or grant of options, warrants or similar securities to purchase, up to
9,200,000 shares of Common Stock pursuant to the Corporation's 1996 Stock
Incentive Program, as amended from time to time (including in such number
all options outstanding on the date this Restated Certificate of
Incorporation becomes effective) or pursuant to any similar plan approved
by the Board of Directors for the purpose of using equity securities to
provide incentives to persons or entities whom the Board of Directors
determines can help the Corporation achieve its objective (the "Stock
Plans") and the issuance of, or grant of options or warrants to purchase up
to 300,000 shares of Common Stock pursuant to routine equipment financing
transactions, or such greater number of shares as may be approved by the
holders of sixty (60%) percent of the Preferred Stock voting, consenting or
acting as a single class on an as converted basis, or the issuance of
shares of Common Stock upon the exercise of any such options (which number
shall be equitably adjusted on the occurrence of an Extraordinary Common
Stock Event, as hereinafter defined, a reclassification, reorganization or
similar event affecting the Common Stock) to officers, directors, employees
of or consultants to the Corporation. Unless the Board of Directors shall
determine otherwise, the maximum number of
<PAGE> 29
shares under the Corporation's Stock Plans excluded from adjustments
pursuant to the preceding sentence of this paragraph 5(e)(ii) shall be
automatically increased on January 1, 2001 and on the first calendar day
of each year thereafter by a number equal to the lesser of (i) 3,000,000
shares of Common Stock (which number shall be equitably adjusted on the
occurrence of an Extraordinary Common Stock Event, as hereinafter defined,
a reclassification, reorganization or similar event affecting the Common
Stock) and (ii) the number of shares of Common Stock equal to five percent
(5%) of the issued and outstanding shares of Common Stock of the
Corporation (calculated on a fully-diluted (including all shares issuable
under the Corporation's Stock Plans) and as-converted basis); provided,
that the maximum number of shares of Common Stock under the Corporation's
Stock Plans excluded from adjustments pursuant to the preceding sentence
of this paragraph 5(e)(ii) shall not exceed a number of shares of Common
Stock equal to twenty-five percent (25%) of the issued and outstanding
shares of Common Stock of the Corporation (calculated on a fully-diluted
(including all shares issuable under the Corporation's Stock Plans) and
as-converted basis).''
3. This Restated Certificate of Amendment was duly adopted by unanimous
written consent of the Directors and by written consent of the
stockholders in accordance with the applicable provisions of Section 141,
228, 242 and 245 of the General Corporation Law of the State of Delaware.
-2-
<PAGE> 30
IN WITNESS WHEREOF, said SITARA NETWORKS, INC. has caused this certificate
to be signed by its President as of the 19th day of October, 2000 and
attested to by its Secretary.
Attested: SITARA NETWORKS, INC.
/s/ Arthur I. Anderson By: /s/ Malik Z. Khan
---------------------- -----------------
Arthur I. Anderson Malik Z. Khan
Secretary President
-3-
