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EXHIBIT 3.1
RESTATED
CERTIFICATE OF INCORPORATION
OF
TURBOLINUX, INC.
Robert P. Bowe and Toni Sutliff hereby certify that:
ONE: The original name of this corporation is TurboLinux, Inc. and the
date of filing the original Certificate of Incorporation of this corporation
with the Secretary of State of the State of Delaware is May 19, 1999.
TWO: They are the duly elected and acting Chief Financial Officer and
Assistant Secretary, respectively, of TurboLinux, Inc., a Delaware corporation.
THREE: The Amended and Restated Certificate of Incorporation of this
corporation is hereby amended and restated to read in full as follows:
I.
The name of the corporation is TurboLinux, Inc. (the "Corporation").
II.
The address of the registered office of the Corporation in the State of
Delaware is:
9 East Loockerman Street
Dover, DE 19901
County of Kent
The name of the Corporation's registered agent at said address is National
Corporate Research, Ltd.
III.
The purpose of the Corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
the State of Delaware (the "DGCL").
IV.
This Corporation is authorized to issue two classes of stock to be designated,
respectively, "Common Stock" and "Preferred Stock." The total number of shares
which the Corporation is authorized to issue is one hundred thirty-five million
(135,000,000) shares, ninety- five million five hundred thousand (95,500,000)
shares of which shall be Common Stock (the "Common Stock") and thirty-nine
million five hundred thousand (39,500,000) shares of which shall be
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Preferred Stock (the "Preferred Stock"). The Preferred Stock and the Common
Stock shall each have a par value of one-tenth of one cent ($0.001) per share.
The number of authorized shares of Common Stock may be increased or decreased
(but not below the number of shares of Common Stock then outstanding) by the
affirmative vote of the holders of a majority of the stock of the Corporation
(voting together on an as-if-converted basis).
The Preferred Stock may be issued from time to time in one or more series. The
Board of Directors is hereby authorized, within the limitations and restrictions
stated in this Restated Certificate of Incorporation, to fix or alter the
rights, preferences, privileges and restrictions granted to or imposed upon 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 prior or subsequent to the issue of
shares 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.
Ten million five hundred thousand (10,500,000) of the authorized shares of
Preferred Stock are hereby designated "Series A Preferred Stock" (the "Series A
Preferred"). Twenty-nine million (29,000,000) of the authorized shares of
Preferred Stock are hereby designated "Series B Preferred Stock" (the "Series B
Preferred", and together with the Series A Preferred, the "Series Preferred").
The rights, preferences, privileges, restrictions and other matters relating to
the Series Preferred are as follows:
1. Dividend Rights.
(a) Holders of Series B Preferred, in preference to the
holders of Series A Preferred and to the holders of any other stock of the
Corporation ("Junior Stock"), shall be entitled to receive, when and as declared
by the Board of Directors, but only out of funds that are legally available
therefor, cash or property dividends at the rate of eight percent (8%) of the
Original Issue Price (as defined below) per annum on each outstanding share of
Series B Preferred (as adjusted for any stock dividends, combinations, splits,
recapitalizations and the like with respect to such shares) (the "Series B
Dividend Preference"). After the Series B Preferred Dividend Preference has been
paid or declared and set apart, holders of Series A Preferred, in preference to
the holders of Junior Stock, shall be entitled to receive, when and as declared
by the Board of Directors, but only out of funds legally available therefor,
cash or property dividends at the rate of eight percent (8%) of the Original
Issue Price per annum on each outstanding share of Series A Preferred (as
adjusted for any stock dividends, combinations, splits, recapitalizations, and
the like with respect to such shares). The "Original Issue Price" of the Series
A Preferred shall be seventy-four cents ($0.74). The "Original Issue Price" of
the Series B Preferred shall be three dollars and sixty-five cents ($3.65). Such
dividends shall be payable only when, as and if declared by the Board of
Directors and shall be non-cumulative.
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(b) So long as any shares of Series Preferred shall be
outstanding, no dividend, whether in cash or property, shall be paid or
declared, nor shall any other distribution be made, on any Junior Stock, nor
shall any shares of any Junior Stock of the Corporation be purchased, redeemed,
or otherwise acquired for value by the Corporation (except for acquisitions of
Common Stock by the Corporation pursuant to agreements which permit the
Corporation to repurchase such shares upon termination of services to the
Corporation or in exercise of the Corporation's right of first refusal upon a
proposed transfer) until all dividends (set forth in Section 1(a) above) on the
Series A Preferred and Series B Preferred shall have been paid or declared and
set apart. In the event dividends are paid on any share of Common Stock, an
additional dividend shall be paid with respect to all outstanding shares of
Series Preferred in an amount equal per share (on an as-if-converted to Common
Stock basis) to the amount paid or set aside for each share of Common Stock. In
the event dividends are paid on any share of Series A Preferred, an additional
dividend shall be paid with respect to all outstanding shares of Series B
Preferred in an amount equal per share (on an as-converted to Common Stock
basis) to the amount paid or set aside for each share of Series A Preferred. The
provisions of this Section 1(b) shall not, however, apply to (i) a dividend
payable in Common Stock, (ii) the acquisition of shares of any Junior Stock in
exchange for shares of any other Junior Stock, or (iii) any repurchase of any
outstanding securities of the Corporation that is unanimously approved by the
Corporation's Board of Directors.
2. Voting Rights.
(a) General Rights. Except as otherwise provided herein or
as required by law, the Series Preferred shall be voted equally with the shares
of the Common Stock of the Company and not as a separate class, at any annual or
special meeting of stockholders of the Company, and may act by written consent
in the same manner as the Common Stock, in either case upon the following basis:
each holder of shares of Series Preferred shall be entitled to such number of
votes as shall be equal to the whole number of shares of Common Stock into which
such holder's aggregate number of shares of Series Preferred are convertible
(pursuant to Section 4 hereof) immediately after the close of business on the
record date fixed for such meeting or the effective date of such written
consent.
(b) Separate Vote of Series A Preferred. For so long as at
least fifty percent (50%) of the shares of Series A Preferred outstanding on the
date hereof (as adjusted for any stock dividends, combinations, splits,
recapitalizations and the like with respect to such shares) remain outstanding,
in addition to any other vote or consent required herein or by law, the vote or
written consent of the holders of at least a majority of the outstanding Series
A Preferred shall be necessary for effecting or validating the following
actions:
(i) Any amendment, alteration, or repeal of any
provision of the Restated Certificate of Incorporation of the Corporation
(including any filing of a Certificate of Designation) or the Amended and
Restated Bylaws of the Company, or any agreement that alters or changes the
voting powers, preferences, or other special rights or privileges, or
restrictions of the Series A Preferred;
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(ii) Any increase or decrease in the authorized number
of shares of Series A Preferred;
(iii) Any authorization or any designation, whether by
reclassification or otherwise, of any new class or series of stock or any other
securities convertible into equity securities of the Corporation ranking on a
parity with or senior to the Series A Preferred in any rights, preferences, or
privileges including but not limited to right of redemption, liquidation
preference, voting or dividends or any increase in the authorized or designated
number of any such new class or series;
(iv) Any redemption, repurchase, payment of dividends or
other distributions with respect to Preferred Stock or Junior Stock (except for
acquisitions of Common Stock by the Corporation pursuant to agreements which
permit the Corporation to repurchase such shares upon termination of services to
the Corporation or in exercise of the Company's right of first refusal upon a
proposed transfer);
(v) Any agreement by the Corporation or its stockholders
regarding an Asset Transfer or Acquisition (each as defined in Section 3(c)); or
(vi) Any action that results in the payment or
declaration of a dividend on any shares of Common Stock or Preferred Stock.
(c) Separate Vote of Series B Preferred. For so long as one
million (1,000,000) shares of Series B Preferred (as adjusted for any stock
dividends, comfinations, splits, recepitalizations and the like with respect to
such shares) remain outstanding, in addition to any other vote or consent
required herein or by law, the vote or written consent of the holders of a least
a majority of the outstanding Series B Preferred shall be necessary for
effecting or validatng the following actions:
(i) Any amemdment, alteration, or repeal of any provision
of the Restated Certificate of Incorporation of the Corporation (including any
filing of a Certificate of Designation) or the Amended and Restated Bylaws of
the Corporation, or any other agreement that alters or changes the voting
powers, preferences, or other special rights or priviledges, or restrictions of
the Series B Preferred;
(ii) Any increase or decrease in the authorized number
of shares of Series A Preferred;
(iii) Any authorization or any designation, whether by
reclassification or otherwise, of any new class or series of stock or any other
securities convertible into equity securities of the Corporation ranking on a
parity with or senior to the Series A Preferred in any rights, preferences, or
privileges including but not limited to right of redemption, liquidation
preference, voting or dividends or any increase in the authorized or designated
number of any such new class or series;
(iv) Any redemption, repurchase, payment of dividends or
other distributions with respect to Preferred Stock or Junior Stock (except for
acquisitions of Common
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Stock by the Corporation pursuant to agreements which permit the Corporation to
repurchase such shares upon termination of services to the Corporation or in
exercise of the Company's right of first refusal upon a proposed transfer);
(v) Any agreement by the Corporation or its stockholders
regarding an Asset Transfer or Acquisition (each as defined in Section 3(c))
which results in payment to the holders of the Series B Preferred of an amount
less than the liquidation payment specified in Section 3(a) herein; or
(vi) Any action that results in the payment or
declaration of a dividend on any shares of Common Stock or Preferred Stock.
(d) Election of Board of Directors. (i) For so long as at
least five million (5,000,000) shares of Series A Preferred remain outstanding
(as adjusted for any stock dividends, combinations, splits, recapitalizations
and the like with respect to such shares) the holders of Series A Preferred,
voting as a separate class, shall be entitled to elect one (1) member of the
Corporation's Board of Directors at each meeting or pursuant to each consent of
the Corporation's stockholders for the election of directors, and to remove from
office such director and to fill any vacancy caused by the resignation, death or
removal of such director; (ii) for so long as at least one million (1,000,000)
shares of Series B Preferred remain outstanding (as adjusted for any stock
dividends, combinations, splits, recapitalizations and the like with respect to
such shares) the holders of the Series B Preferred, voting as a separate class,
shall be entitled to elect one (1) member of the Corporation's Board of
Directors (the "Series B Preferred Designee") at each meeting or pursuant to
each consent of the Corporation's stockholders for the election of directors,
and to remove from office such director and to fill any vacancy cause by the
resignation, death or removed of such director; (iii) the holders of Common
Stock, voting as a separate class, shall be entitled to elect two (2) members of
the Board of Directors at each meeting or pursuant to each consent of the
Corporation's stockholders for the election of directors, and to remove from
office such directors and to fill any vacancy caused by the resignation, death
or removal of such directors; and (iv) the holders of Common Stock, Series A
Preferred and Series B Preferred, voting as a single class on an as-converted to
Common Stock basis (provided the approval of the Common Stock, Series A
Preferred and Series B Preferred, each voting as a separate class, also has been
obtained), shall be entitled (a) to elect an aggregate of no more than three (3)
members ("Additional Directors") of the Board of Directors at each meeting or
--------------------
pursuant to each consent of the Corporation's stockholders for the election of
directors, and (b) to remove from office such Additional Directors and (c) to
fill any vacancy caused by the resignation, death or removal of such Additional
Directors. No person entitled to vote at an election for directors may cumulate
votes to which such person is entitled, unless, at the time of such election,
the Corporation is subject to Section 2115 of the California General Corporation
Law ("CGCL"). During such time or times that the Corporation is subject to
Section 2115(b) of the CGCL, every stockholder entitled to vote at an election
for directors may cumulate such stockholder's votes and give one candidate a
number of votes equal to the number of directors to be elected multiplied by the
number of votes to which such stockholder's shares are otherwise entitled, or
distribute the stockholder's votes on the same principle among as many
candidates as such stockholder desires. No stockholder, however, shall be
entitled to so cumulate such stockholder's votes unless (i) the names of such
candidate or candidates have
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been placed in nomination prior to the voting and (ii) the stockholder has given
notice at the meeting, prior to the voting, of such stockholder's intention to
cumulate such stockholder's votes. If any stockholder has given proper notice to
cumulate votes, all stockholders may cumulate their votes for any candidates who
have been properly placed in nomination. Under cumulative voting, the candidates
receiving the highest number of votes, up to the number of directors to be
elected, are elected.
(e) Removal
(i) During such time or times that the Corporation is
subject to Section 2115(b) of the CGCL, the Board of Directors or any individual
director may be removed from office at any time without cause by the affirmative
vote of the holders of at least a majority of the outstanding shares entitled to
vote on such removal; provided, however, that unless the entire Board of
Directors is removed, no individual director may be removed when the votes cast
against such director's removal, or not consenting in writing to such removal,
would be sufficient to elect that director if voted cumulatively at an election
which the same total number of votes were cast (or, if such action is taken by
written consent, all shares entitled to vote were voted) and the entire number
of directors authorized at the time of such director's most recent election were
then being elected.
(ii) At any time or times that the corporation is not
subject to Section 2115(b) of the CGCL and subject to any limitations imposed by
law, Section 2(d)(i) above shall not apply and the Board of Directors or any
director may be removed from office at any time (a) with cause by the
affirmative vote of the holders of a majority of the voting power of all then-
outstanding shares of voting stock of the corporation entitled to vote at an
election of directors or (b) without cause by the affirmative vote of the
holders of sixty-six and two-thirds percent (662/3%) of the voting power of all
then-outstanding shares of voting stock of the corporation, entitled to vote at
an election of directors.
3. Liquidation Rights.
(a) Upon any liquidation, dissolution, or winding up of the
Corporation, whether voluntary or involuntary, before any distribution or
payment shall be made to the holders of any Junior Stock, the holders of Series
Preferred shall be entitled to be paid out of the assets of the Corporation an
amount per share of Series Preferred equal to the Original Issue Price plus all
declared and unpaid dividends on such Series Preferred (as adjusted for any
stock dividends, combinations, splits, recapitalizations and the like with
respect to such shares) for each share of Series Preferred held by them. If,
upon any such liquidation, distribution, or winding up, the assets of the
Corporation shall be insufficient to make payment in full to all holders of
Series Preferred of the liquidation preference set forth in this Section 3(a),
then such assets shall be distributed among the holders of Series Preferred at
the time outstanding, ratably in proportion to the full amounts to which they
would otherwise be respectively entitled.
(b) After the payment of the full liquidation preference of
the Series Preferred as set forth in Section 3(a) above, the assets of the
Corporation legally available for distribution, if any, shall be distributed
ratably to the holders of the Common Stock.
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(c) The following events shall be considered a liquidation
under this Section:
(i) any consolidation or merger of the Corporation with
or into any other corporation or other entity or person, or any other corporate
reorganization, in which the stockholders of the Corporation immediately prior
to such consolidation, merger or reorganization, own less than fifty percent
(50%) of the Corporation's voting power immediately after such consolidation,
merger or reorganization, or any transaction or series of related transactions
to which the Corporation is a party in which in excess of fifty percent (50%) of
the Corporation's voting power is transferred, excluding any consolidation or
merger effected exclusively to change the domicile of the Corporation (an
"Acquisition"); or
(ii) a sale, lease or other disposition of all or
substantially all of the assets of the Company (an "Asset Transfer").
(iii) In any of such events, if the consideration
received by the Corporation is other than cash, its value will be deemed its
fair market value as determined in good faith by the Board of Directors and the
holders of at least a majority of the voting power of all then outstanding
shares of Preferred Stock. Any securities shall be valued as follows:
(A) Securities not subject to investment letter
or other similar restrictions on free marketability covered by (B) below:
(1) If traded on a securities exchange or
through the Nasdaq National Market, the value shall be deemed to be the average
of the closing prices of the securities on such quotation system over the thirty
(30) day period ending three (3) days prior to the closing;
(2) If actively traded over-the-counter, the
value shall be deemed to be the average of the closing bid or sale prices
(whichever is applicable) over the thirty (30) day period ending three (3) days
prior to the closing; and
(3) If there is no active public market, the
value shall be the fair market value thereof, as mutually determined by the
Board of Directors and the holders of at least a majority of the voting power of
all then outstanding shares of Preferred Stock.
(B) The method of valuation of securities subject
to investment letter or other restrictions on free marketability (other than
restrictions arising solely by virtue of a stockholder's status as an affiliate
or former affiliate) shall be to make an appropriate discount from the market
value determined as above in (A) (1), (2) or (3) to reflect the approximate fair
market value thereof, as determined by the Board of Directors.
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4. Conversion Rights.
The holders of the Series Preferred shall have the following
rights with respect to the conversion of the Series Preferred into shares of
Common Stock (the "Conversion Rights"):
(a) Optional Conversion.
(i) Subject to and in compliance with the provisions of
this Section 4, any shares of Series A Preferred may, at the option of the
holder, be converted at any time into validly issued fully-paid and
nonassessable shares of Common Stock. The number of shares of Common Stock to
which a holder of Series A Preferred shall be entitled upon conversion shall be
the product obtained by multiplying the "Series A Preferred Conversion Rate"
then in effect (determined as provided in Section 4(b)) by the number of shares
of Series A Preferred being converted.
(ii) Subject to and in compliance with the provisions of
this Section 4, any shares of Series B Preferred may, at the option of the
holder, be converted at any time into validly issued, fully-paid and
nonassessable shares of Common Stock. The number of shares of Common Stock to
which a holder of Series B Preferred shall be entitled upon conversion shall be
the product obtained by multiplying the "Series B Preferred Conversion Rate"
then in effect (determined as provided in Section 4(b)) by the number of shares
of Series B Preferred being converted.
(b) Series Preferred Conversion Rate. The conversion rate
in effect at any time for conversion of the Series A Preferred (the "Series A
Preferred Conversion Rate") shall be the quotient obtained by dividing the
Original Issue Price of the Series A Preferred by the "Series A Preferred
Conversion Price," calculated as provided in Section 4(c). The conversion rate
in effect at any time for conversion of the Series B Preferred (the "Series B
Preferred Conversion Rate") shall be the quotient obtained by dividing the
Original Issue Price of the Series B Preferred by the "Series B Preferred
Conversion Price," calculated as provided in Section 4(c).
(c) Series Preferred Conversion Price. The conversion price
for the Series A Preferred shall initially be the Original Issue Price of the
Series A Preferred (the "Series A Preferred Conversion Price"). Such initial
Series A Preferred Conversion Price shall be adjusted from time to time in
accordance with this Section 4. All references to the Series A Preferred
Conversion Price herein shall mean the Series A Preferred Conversion Price as so
adjusted. The conversion price for the Series B Preferred shall initially be the
Original Issue Price of the Series B Preferred (the "Series B Preferred
Conversion Price"). Such initial Series B Preferred Conversion Price shall be
adjusted from time to time in accordance with this Section 4. All references to
the Series B Preferred Conversion Price herein shall mean the Series B Preferred
Conversion Price as so adjusted.
(d) Mechanics of Conversion. Each holder of Series
Preferred who desires to convert the same into shares of Common Stock pursuant
to this Section 4 shall surrender the certificate or certificates therefor, duly
endorsed, at the office of the Corporation or
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any transfer agent for the Series Preferred, and shall give written notice to
the Corporation at such office that such holder elects to convert the same. Such
notice shall state the number of shares of Series Preferred being converted.
Thereupon, the Corporation shall promptly issue and deliver at such office to
such holder a certificate or certificates for the number of shares of Common
Stock to which such holder is entitled and shall promptly pay (i) in cash or, to
the extent sufficient funds are not then legally available therefor, in Common
Stock (at the Common Stock's fair market value determined by the Board of
Directors as of the date of such conversion), any declared and unpaid dividends
on the shares of Series Preferred being converted and (ii) in cash (at the
Common Stock's fair market value determined by the Board of Directors as of the
date of conversion) the value of any fractional share of Common Stock otherwise
issuable to any holder of Series Preferred. Such conversion shall be deemed to
have been made at the close of business on the date of such surrender of the
certificates representing the shares of Series Preferred to be converted, and
the person entitled to receive the shares of Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder of such shares
of Common Stock on such date.
(e) Adjustment for Stock Splits and Combinations. If the
Company shall at any time or from time to time after the date that the first
share of Series A Preferred (the "Series A Preferred Original Issue Date") or
that the first share of Series B Preferred is issued (the "Series B Preferred
Original Issue Date") effect a subdivision of the outstanding Common Stock
without a corresponding subdivision of the Preferred Stock, the Series A
Preferred Conversion Price and the Series B Preferred Conversion Price,
respectively, in effect immediately before that subdivision shall be
proportionately decreased. Conversely, if the Company shall at any time or from
time to time after the Series A Preferred Original Issue Date or the Series B
Preferred Original Issue Date, respectively, combine the outstanding shares of
Common Stock into a smaller number of shares without a corresponding combination
of the Preferred Stock, the Series A Preferred Conversion Price and the Series B
Preferred Conversion Price, respectively, in effect immediately before the
combination shall be proportionately increased. Any adjustment under this
Section 4(e) shall become effective at the close of business on the date the
subdivision or combination becomes effective.
(f) Adjustment for Common Stock Dividends and Distributions.
If the Company at any time or from time to time after the Series A Preferred
Original Issue Date with respect to the Series A Preferred or the Series B
Preferred Original Issue Date with respect to the Series B Preferred, 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 Series A Preferred Conversion Price or Series B
Preferred 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 Series A Preferred
Conversion Price or Series B Preferred Conversion Price, respectively, 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 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
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and such dividend is not fully paid or if such distribution is not fully made on
the date fixed therefor, the Series A Preferred Conversion Price or Series B
Preferred Conversion Price shall be recomputed accordingly as of the close of
business on such record date and thereafter the Series A Preferred Conversion
Price or Series B Preferred Conversion Price shall be adjusted pursuant to this
Section 4(f) to reflect the actual payment of such dividend or distribution;
provided further, however, no such adjustment shall be made to the Series A
Preferred Conversion Price or Series B Preferred Conversion Price, respectively,
if the holders of Series A Preferred or Series B Preferred simultaneously
receive a dividend or other distribution of shares of Common Stock in a number
equal to the number of shares of Common Stock as they would have received if all
outstanding shares of Series Preferred had been converted into Common Stock on
the date of such event.
(g) Adjustment for Reclassification, Exchange and
Substitution. If at any time or from time to time after the Series A Preferred
Original Issue Date with respect to the Series A Preferred or the Series B
Preferred Original Issue Date with respect to the Series B Preferred, the Common
Stock issuable upon the conversion of the Series Preferred 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 an Acquisition or
Asset Transfer as defined in Section 3(c) or a subdivision or combination of
shares or stock dividend or a reorganization, merger, consolidation or sale of
assets provided for elsewhere in this Section 4), in any such event each holder
of Series Preferred shall have the right thereafter to convert such stock into
the kind and amount of stock and other securities and property receivable, upon
such recapitalization, reclassification or other change, by holders of the
number of shares of Common Stock into which such shares of Series Preferred
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.
(h) Reorganizations, Mergers or Consolidations. If at any
time or from time to time after the Series A Preferred Original Issue Date with
respect to the Series A Preferred or the Series B Preferred Original Issue Date
with respect to the Series B Preferred, there is a capital reorganization of the
Common Stock or the merger or consolidation of the Corporation with or into
another corporation or another entity or person (other than an Acquisition or
Asset Transfer as defined in Section 3(c) or a recapitalization, subdivision,
combination, reclassification, exchange or substitution of shares provided for
elsewhere in this Section 4), as a part of such capital reorganization,
provision shall be made so that the holders of the Series Preferred shall
thereafter be entitled to receive upon conversion of the Series Preferred 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 4 with respect to the rights of the holders of Series
Preferred after the capital reorganization to the end that the provisions of
this Section 4 (including adjustment of the Series Preferred Conversion Price
then in effect and the number of shares issuable upon conversion of the Series
Preferred) shall be applicable after that event and be as nearly equivalent as
practicable.
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(i) Sale of Shares Below Series Preferred Conversion Price.
(i) If at any time or from time to time after the Series
A Preferred Original Issue Date with respect to the Series A Preferred or the
Series B Preferred Original Issue Date with respect to the Series B Preferred,
the Corporation issues or sells, or is deemed by the express provisions of this
subsection (i) to have issued or sold, Additional Shares of Common Stock (as
defined in subsection (i)(iv) below), other than as a dividend or other
distribution on any class of stock as provided in Section 4(f) above, and other
than a subdivision or combination of shares of Common Stock as provided in
Section 4(e) above, for an Effective Price (as defined in subsection (i)(iv)
below) less than the then effective Series A Preferred Conversion Price or
Series B Preferred Conversion Price, as the case may be, then and in each such
case the then existing Series A Preferred Conversion Price or Series B Preferred
Conversion Price shall be reduced, as of the opening of business on the date of
such issue or sale, to a price determined by, as the case may be, multiplying
the Series A Preferred Conversion Price or Series B Preferred Conversion Price
by a fraction (i) the numerator of which shall be (A) the number of shares of
Common Stock deemed outstanding (as defined below) immediately prior to such
issue or sale, plus (B) the number of shares of Common Stock which the aggregate
consideration received (as defined in subsection (i)(ii) below) by the Company
for the total number of Additional Shares of Common Stock so issued would
purchase at such Series A Preferred Conversion Price or Series B Preferred
Conversion Price, and (ii) the denominator of which shall be the number of
shares of Common Stock deemed outstanding (as defined below) immediately prior
to such issue or sale plus the total number of Additional Shares of Common Stock
so issued. For the purposes of the preceding sentence, the number of shares of
Common Stock deemed to be outstanding as of a given date shall be the sum of (A)
the number of shares of Common Stock actually outstanding, (B) the number of
shares of Common Stock into which the then outstanding shares of Series A
Preferred and Series B Preferred could be converted if fully converted on the
day immediately preceding the given date, and (C) the number of shares of Common
Stock which could be obtained through the exercise or conversion of all other
rights, options and convertible securities outstanding on the day immediately
preceding the given date.
(ii) For the purpose of making any adjustment required under
this Section 4(i), the consideration received by the Corporation for any issue
or sale of securities shall (A) to the extent it consists of cash, be computed
at the net amount of cash received by the Corporation after deduction of any
underwriting or similar commissions, compensation or concessions paid or allowed
by the Corporation in connection with such issue or sale but without deduction
of any expenses payable by the Corporation, (B) to the extent it consists of
property other than cash, be computed at the fair value of that property as
determined in good faith by the Board of Directors, including the vote of the
Series B Preferred Designee, and (C) if Additional Shares of Common Stock,
Convertible Securities (as defined in subsection (i)(iii)) or rights or options
to purchase either Additional Shares of Common Stock or Convertible Securities
are issued or sold together with other stock or securities or other assets of
the Corporation for a consideration which covers both, be computed as the
portion of the consideration so received that may be reasonably determined in
good faith by the Board of Directors to be allocable to such Additional Shares
of Common Stock, Convertible Securities or rights or options.
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(iii) For the purpose of the adjustment required under this
Section 4(i), if the Corporation issues or sells (i) stock or other securities
convertible into, Additional Shares of Common Stock (such convertible stock or
securities being herein referred to as "Convertible Securities") or (ii) rights
or options for the purchase of Additional Shares of Common Stock or Convertible
Securities and if the Effective Price (as defined in subsection (i)(iv) below)
of such Additional Shares of Common Stock is less than the Series A Preferred
Conversion Price or Series B Preferred Conversion Price, in each case the
Corporation shall be deemed to have issued at the time of the issuance of such
rights or options or Convertible Securities the maximum number of Additional
Shares of Common Stock issuable upon exercise or conversion thereof and to have
received as consideration for the issuance of such shares an amount equal to the
total amount of the consideration, if any, received by the Corporation for the
issuance of such rights or options or Convertible Securities, plus, in the case
of such rights or options, the minimum amounts of consideration, if any, payable
to the Corporation upon the exercise of such rights or options, plus, in the
case of Convertible Securities, the minimum amounts of consideration, if any,
payable to the Corporation (other than by cancellation of liabilities or
obligations evidenced by such Convertible Securities) upon the conversion
thereof; provided that if in the case of Convertible Securities the minimum
amounts of such consideration cannot be ascertained, but are a function of
antidilution or similar protective clauses, the Corporation shall be deemed to
have received the minimum amounts of consideration without reference to such
clauses; provided further that if the minimum amount of consideration payable to
the Corporation upon the exercise or conversion of rights, options or
Convertible Securities is reduced over time or on the occurrence or non-
occurrence of specified events other than by reason of antidilution adjustments,
the Effective Price shall be recalculated using the figure to which such minimum
amount of consideration is reduced; provided further that if the minimum amount
of consideration payable to the Corporation upon the exercise or conversion of
such rights, options or Convertible Securities is subsequently increased, the
Effective Price shall be again recalculated using the increased minimum amount
of consideration payable to the Corporation upon the exercise or conversion of
such rights, options or Convertible Securities. No further adjustment of the
Series A Preferred Conversion Price or Series B Preferred Conversion Price, as
adjusted upon the issuance of such rights, options or Convertible Securities,
shall be made as a result of the actual issuance of Additional Shares of Common
Stock on the exercise of any such rights or options or the conversion of any
such Convertible Securities. If any such rights or options or the conversion
privilege represented by any such Convertible Securities shall expire without
having been exercised, the Series A Preferred Conversion Price or Series B
Preferred Conversion Price as adjusted upon the issuance of such rights, options
or Convertible Securities shall be readjusted to the Series A Preferred
Conversion Price or Series B Preferred Conversion Price which would have been in
effect had an adjustment been made on the basis that the only Additional Shares
of Common Stock so issued were the Additional Shares of Common Stock, if any,
actually issued or sold on the exercise of such rights or options or rights of
conversion of such Convertible Securities, and such Additional Shares of Common
Stock, if any, were issued or sold for the consideration actually received by
the Corporation upon such exercise, plus the consideration, if any, actually
received by the Company for the granting of all such rights or options, whether
or not exercised, plus the consideration received for issuing or selling the
Convertible Securities actually converted, plus the consideration, if any,
actually received by the Corporation (other than by cancellation of liabilities
or obligations evidenced by
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such Convertible Securities) on the conversion of such Convertible Securities,
provided that such readjustment shall not apply to prior conversions of Series A
Preferred or Series B Preferred.
(iv) "Additional Shares of Common Stock" shall mean all shares
of Common Stock issued by the Company or deemed to be issued pursuant to this
Section 4(i), other than (A) shares of Common Stock issued upon conversion of
the Series A Preferred and Series B Preferred; (B) shares of Common Stock and/or
options, warrants or other Common Stock purchase rights, and the Common Stock
issued pursuant to such options, warrants or other rights (as adjusted for any
stock dividends, combinations, splits, recapitalizations and the like) after the
Series B Preferred Original Issue Date, to employees, officers or directors of,
or consultants or advisors to the Company or any subsidiary pursuant to stock
purchase or stock option plans or other arrangements that are approved by the
Board; (C) shares of Common Stock issued pursuant to the exercise of options,
warrants or convertible securities outstanding as of the Series B Preferred
Original Issue Date, (D) three million seven hundred fifty thousand (3,750,000)
shares of Common Stock reserved for issuance, and options and warrants to
purchase such shares, in connection with the acquisition of Active Tools, Pty.
and (E) shares of Common Stock issued pursuant to any equipment leasing
arrangement, or debt financing from a bank or similar financial institution
approved by the Board. References to Common Stock in the subsections of this
clause (iv) above shall mean all shares of Common Stock issued by the Company or
deemed to be issued pursuant to this Section 4(i). The "Effective Price" of
Additional Shares of Common Stock shall mean the quotient determined by dividing
the total number of Additional Shares of Common Stock issued or sold, or deemed
to have been issued or sold by the Company under this Section 4(i), into the
aggregate consideration received, or deemed to have been received by the Company
for such issue under this Section 4(i), for such Additional Shares of Common
Stock.
(j) Certificate of Adjustment. In each case of an adjustment
or readjustment of the Series A Preferred Conversion Price or Series B Preferred
Conversion Price for the number of shares of Common Stock or other securities
issuable upon conversion of the Series A Preferred or Series B Preferred,
respectively, if such Series A Preferred or Series B Preferred is then
convertible pursuant to this Section 4, the Corporation, at its expense, shall
compute such adjustment or readjustment in accordance with the provisions hereof
and prepare a certificate showing such adjustment or readjustment, and shall
mail such certificate, by first class mail, postage prepaid, to each registered
holder of Series Preferred at the holder's address as shown in the Corporation's
books. The certificate shall set forth such adjustment or readjustment, showing
in detail the facts upon which such adjustment or readjustment is based,
including a statement of (i) the consideration received or deemed to be received
by the Corporation for any Additional Shares of Common Stock issued or sold or
deemed to have been issued or sold, (ii) the Series A Preferred Conversion Price
or Series B Preferred Conversion Price at the time in effect, (iii) the number
of Additional Shares of Common Stock and (iv) the type and amount, if any, of
other property which at the time would be received upon conversion of such
Series Preferred.
(k) Notices of Record Date. Upon (i) any taking by the
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend or other distribution, or (ii) any Acquisition (as
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defined in Section 3(c)) or other capital reorganization of the Corporation, any
reclassification or recapitalization of the capital stock of the Corporation,
any merger or consolidation of the Corporation with or into any other
corporation, or any Asset Transfer (as defined in Section 3(c)), or any
voluntary or involuntary dissolution, liquidation or winding up of the
Corporation, the Corporation shall mail to each holder of Series Preferred at
least ten (10) days prior to the record date specified therein (or such shorter
period approved by a majority of the outstanding Series Preferred) a notice
specifying (A) the date on which any such record is to be taken for the purpose
of such dividend or distribution and a description of such dividend or
distribution, (B) the date on which any such Acquisition, reorganization,
reclassification, transfer, consolidation, merger, Asset Transfer, dissolution,
liquidation or winding up is expected to become effective, and (C) the date, 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
Acquisition, reorganization, reclassification, transfer, consolidation, merger,
Asset Transfer, dissolution, liquidation or winding up.
(l) Automatic Conversion.
(i) Each share of Series Preferred shall automatically
be converted into shares of Common Stock, based on the then-effective Series
Preferred Conversion Price, (A) at any time upon the affirmative election of the
holders of at least a majority of the outstanding shares of the Series
Preferred, or (B) immediately upon the closing of a firmly 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 the gross cash proceeds to the Corporation
(before underwriting discounts, commissions and fees) are at least ten million
dollars ($10,000,000). Upon such automatic conversion, any declared and unpaid
dividends shall be paid in accordance with the provisions of Section 4(d).
(ii) The foregoing notwithstanding, each share of Series
B Preferred shall automatically be converted into shares of Common Stock, based
on the then-effective Series B Preferred Conversion Price, (A) at any time upon
the affirmative election of the holders of at least a majority of the
outstanding shares of the Series B Preferred, or (B) immediately upon the
closing of a firmly 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
the price to the public is equal to or greater than seven dollars and thirty
cents ($7.30) per share (before underwriting discounts, commissions and fees).
Upon such automatic conversion, any declared and unpaid dividends shall be paid
in accordance with the provisions of Section 4(d).
(iii) Upon the occurrence of any of the events specified
in Section 4(l)(i) and (ii) above, the outstanding shares of Series Preferred
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 its transfer agent; provided, however, that
the Corporation shall not be obligated to issue certificates evidencing the
shares of Common Stock issuable upon such conversion unless the certificates
evidencing such
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shares of Series Preferred are either delivered to the Corporation or its
transfer agent as provided below, or the holder notifies the Corporation or its
transfer agent 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 with such certificates.
Upon the occurrence of such automatic conversion of the Series Preferred, the
holders of Series Preferred shall surrender the certificates representing such
shares at the office of the Corporation or any transfer agent for the Series
Preferred. Thereupon, there shall be issued and delivered to such holder
promptly at such office and in its name as shown on such surrendered certificate
or certificates, a certificate or certificates for the number of shares of
Common Stock into which the shares of Series Preferred surrendered were
convertible on the date on which such automatic conversion occurred, and any
declared and unpaid dividends shall be paid in accordance with the provisions of
Section 4(d).
(m) Fractional Shares. No fractional shares of Common Stock
shall be issued upon conversion of Series Preferred. All shares of Common Stock
(including fractions thereof) issuable upon conversion of more than one share of
Series Preferred by a holder thereof shall be aggregated for purposes of
determining whether the conversion would result in the issuance of any
fractional share. If, after the aforementioned aggregation, the conversion would
result in the issuance of any fractional share, the Company shall, in lieu of
issuing any fractional share, pay cash equal to the product of such fraction
multiplied by the Common Stock's fair market value (as determined by the Board
of Directors) on the date of conversion.
(n) Reservation of Stock Issuable Upon Conversion. 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 Series Preferred, such number of its shares of
fully-paid and nonassessable Common Stock as shall from time to time be
sufficient to effect the conversion of all outstanding shares of the Series
Preferred. If at any time the number of authorized but unissued shares of Common
Stock shall not be sufficient to effect the conversion of all then outstanding
shares of the Series Preferred, the Company will take such corporate action as
may, in the opinion of its counsel, be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be sufficient
for such purpose.
(o) Notices. Any notice required by the provisions of this
Section 4 shall be in writing and shall be deemed effectively given: (i) upon
personal delivery to the party to be notified, (ii) when sent by confirmed telex
or facsimile if sent during normal business hours of the recipient; if not, then
on the next business day, (iii) five (5) days after having been sent by
registered or certified mail, return receipt requested, postage prepaid, or (iv)
one (1) business day after deposit with a nationally recognized overnight
courier, specifying next day delivery, with written verification of receipt. All
notices shall be addressed to each holder of record at the address of such
holder appearing on the books of the Corporation.
(p) Payment of Taxes. The Corporation will pay all taxes
(other than taxes based upon income) and other governmental charges that may be
imposed with respect to the issue or delivery of shares of Common Stock upon
conversion of shares of Series Preferred, excluding any tax or other charge
imposed in connection with any transfer involved in the issue
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<PAGE>
and delivery of shares of Common Stock in a name other than that in which the
shares of Series Preferred so converted were registered.
(q) No Dilution or Impairment. Without the consent of the
holders of then outstanding Series Preferred as required under Sections 2(b) and
2(c), the Corporation shall not amend its Restated Certificate of Incorporation
or participate in any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or take any other voluntary action, for
the purpose of avoiding or seeking to avoid the observance or performance of any
of the terms to be observed or performed hereunder by the Corporation, but shall
at all times in good faith assist in carrying out all such action as may be
reasonably necessary or appropriate in order to protect the conversion rights of
the holders of the Series Preferred against dilution or other impairment.
5. Redemption.
(a) The Corporation shall be obligated to redeem the Series
Preferred as follows:
(i) The holders of at least a majority of the then
outstanding shares of Series A Preferred, voting together as a separate class,
may require the Corporation, to the extent it may lawfully do so, to redeem the
Series A Preferred in three (3) equal annual installments beginning on the fifth
anniversary of the Series A Preferred Original Issue Date, and ending on the
date two (2) years from such first redemption date (each a "Series A Preferred
Redemption Date"); provided that the Corporation shall receive at least sixty
(60) days prior to such fifth anniversary written notice of such consent of the
Series A Preferred. The Corporation shall effect such redemptions on the
applicable Series A Preferred Redemption Date by paying in cash in exchange for
the shares of Series A Preferred to be redeemed a sum equal to the Original
Issue Price per share of Series A Preferred (as adjusted for any stock
dividends, combinations, splits, recapitalizations and the like) plus declared
and unpaid dividends with respect to such shares. The total amount to be paid
for the Series A Preferred is hereinafter referred to as the "Series A Preferred
Redemption Price." The number of shares of Series A Preferred that the
Corporation shall be required to redeem on any one Series A Preferred Redemption
Date shall be equal to the amount determined by dividing (A) the aggregate
number of shares of Series A Preferred outstanding immediately prior to the
Series A Preferred Redemption Date by (B) the number of remaining Series A
Preferred Redemption Dates (including the Series A Preferred Redemption Date to
which such calculation applies). Shares subject to redemption pursuant to this
Section 5(a) shall be redeemed from each holder of Series A Preferred on a pro
rata basis.
(ii) The holders of at least a majority of the then
outstanding shares of Series B Preferred, voting together as a separate class,
may require the Corporation, to the extent it may lawfully do so, to redeem the
Series B Preferred in three (3) equal annual installments beginning on the fifth
anniversary of the Series B Preferred Original Issue Date, and ending on the
date two (2) years from such first redemption date (each a "Series B Preferred
Redemption Date"); provided that the Company shall receive at least sixty (60)
days prior to such fifth anniversary written notice of such consent of the
Series B Preferred. The Corporation shall effect such redemptions on the
applicable Series B Preferred Redemption Date by paying in
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<PAGE>
cash in exchange for the shares of Series B Preferred to be redeemed a sum equal
to the Original Issue Price per share of Series B Preferred (as adjusted for any
stock dividends, combinations, splits, recapitalizations and the like) plus
declared and unpaid dividends with respect to such shares. The total amount to
be paid for the Series B Preferred is hereinafter referred to as the "Series B
Preferred Redemption Price." The number of shares of Series B Preferred that the
Corporation shall be required to redeem on any one Series B Preferred Redemption
Date shall be equal to the amount determined by dividing (A) the aggregate
number of shares of Series B Preferred outstanding immediately prior to the
Series B Preferred Redemption Date by (B) the number of remaining Series B
Preferred Redemption Dates (including the Series B Preferred Redemption Date to
which such calculation applies). Shares subject to redemption pursuant to this
Section 5(a) shall be redeemed from each holder of Series B Preferred on a pro
rata basis.
(iii) At least thirty (30) days but no more than sixty
(60) days prior to the first Series A Preferred Redemption Date or Series B
Preferred Redemption Date, the Corporation shall send a notice (a "Redemption
Notice") to all holders of Series A Preferred or Series B Preferred to be
redeemed setting forth (A) the Series A Preferred Redemption Price or Series B
Preferred Redemption Price for the shares to be redeemed; and (B) the place at
which such holders may obtain payment of the Series A Preferred Redemption Price
or Series B Preferred Redemption Price upon surrender of their share
certificates. If the Corporation does not have sufficient funds legally
available to redeem all shares to be redeemed at the Series A Preferred
Redemption Date or Series B Preferred Redemption Date (including, if applicable,
those to be redeemed at the option of the Company), then it shall redeem such
shares pro rata (based on the portion of the aggregate Series A Preferred
Redemption Price or Series B Preferred Redemption Price payable to them) to the
extent possible and shall redeem the remaining shares to be redeemed as soon as
sufficient funds are legally available.
(b) On or prior to the Series A Preferred Redemption Date or
Series B Preferred Redemption Date, the Company shall deposit the Series A
Preferred Redemption Price or Series B Preferred Redemption Price of all shares
to be redeemed with a bank or trust company having aggregate capital and surplus
in excess of one hundred million dollars ($100,000,000), as a trust fund, with
irrevocable instructions and authority to the bank or trust company to pay, on
and after such Series A Preferred Redemption Date or Series B Preferred
Redemption Date, as the case may be, the Series A Preferred Redemption Price or
Series B Preferred Redemption Price of the shares to their respective holders
upon the surrender of their share certificates. Any moneys deposited by the
Corporation pursuant to this Section 5(b) for the redemption of shares
thereafter converted into shares of Common Stock pursuant to Section 4 hereof no
later than the business day preceding the Series A Preferred Redemption Date or
Series B Preferred Redemption Date, as the case may be, shall be returned to the
Corporation forthwith upon such conversion. The balance of any funds deposited
by the Corporation pursuant to this Section 5(b) remaining unclaimed at the
expiration of one (1) year following such Series A Preferred Redemption Date or
Series B Preferred Redemption Date, as the case may be, shall be returned to the
Corporation promptly upon its written request.
(c) On or after such Series A Preferred Redemption Date or
Series B Preferred Redemption Date, each holder of shares of Series A Preferred
or Series B Preferred to be redeemed shall surrender such holder's certificates
representing such shares to the
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Corporation in the manner and at the place designated in the Redemption Notice,
and thereupon the Series A Preferred Redemption Price or Series B Preferred
Redemption Price of such shares shall be payable to the order of the person
whose name appears on such certificate or certificates as the owner thereof and
each surrendered certificate shall be canceled. 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 Series A
Preferred Redemption Date or Series B Preferred Redemption Date, as the case may
be, unless there shall have been a default in payment of the Series A Preferred
Redemption Price or Series B Preferred Redemption Price or the Corporation is
unable to pay the Series A Preferred Redemption Price or Series B Preferred
Redemption Price due to not having sufficient legally available funds, all
rights of the holder of such shares as holder of Series A Preferred or Series B
Preferred (except the right to receive the Series A Preferred Redemption Price
or Series B Preferred Redemption Price, respectively, without interest upon
surrender of their certificates), shall cease and terminate with respect to such
shares; provided that in the event that shares of Series A Preferred or Series B
Preferred are not redeemed due to a default in payment by the Corporation or
because the Corporation does not have sufficient legally available funds, such
shares of Series A Preferred or Series B Preferred shall remain outstanding and
shall be entitled to all of the rights and preferences provided herein.
(d) In the event of a call for redemption of any shares of
Series A Preferred or Series B Preferred, the Conversion Rights (as defined in
Section 4) for such Series A Preferred or Series B Preferred shall terminate as
to the shares designated for redemption at the close of business on the business
day preceding the Series A Preferred Redemption Date or Series B Preferred
Redemption Date, unless default is made in payment of the Series A Preferred
Redemption Price or Series B Preferred Redemption Price, as the case may be.
6. No Reissuance of Series Preferred.
No share or shares of Series Preferred acquired by the
Corporation by reason of redemption, purchase, conversion or otherwise shall be
reissued.
V.
The liability of the directors for monetary damages shall be eliminated to
the fullest extent under applicable law.
The Corporation is authorized to provide indemnification of agents (as
defined in Section 317 of the CGCL) for breach of duty to the Corporation and
its stockholders through bylaw provisions or through agreements with the agents,
or through stockholder resolutions, or otherwise, in excess of the
indemnification otherwise permitted by Section 317 of the CGCL, subject, at any
time or times that the Corporation is subject to Section 2115(b) of the CGCL, to
the limits on such excess indemnification set forth in Section 204 of the CGCL.
Subject to the provisions of the second paragraph of this Article V, a
director of the Corporation shall, to the fullest extent permitted by the DGCL
as it now exists or as it may hereafter be amended, not be personally liable to
the Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any
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<PAGE>
breach of the director's duty of loyalty to this corporation or its
stockholders, (ii) for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the DGCL, or (iv) for any transaction from which the director derived any
improper personal benefit. If the DGCL is amended, after approval by the
stockholders of this Article V to authorize corporation action further
eliminating or limiting the personal liability of directors, then the liability
of a director of this corporation shall be eliminated or limited to the fullest
extent permitted by the DGCL, as so amended.
Subject to the provisions of the second paragraph of this Article V, to the
fullest extent permitted by applicable law, the Corporation is authorized to
provide indemnification of (and advancement of expenses to) agents of the
Corporation (and any other persons to which the DGCL permits the Corporation to
provide indemnification) through bylaw provisions, agreements with such agents
or other persons, vote of stockholders or disinterested directors or otherwise,
in excess of the indemnification and advancement otherwise permitted by Section
145 of the DGCL, subject only to limits created by applicable DGCL (statutory or
non-statutory), with respect to actions for breach of duty to the Corporation,
its stockholders, and others.
The holders of the Series Preferred expressly waive their rights, if any,
as described in California Code Sections 502, 503 and 506 as they relate to
repurchases of shares upon termination of employment or service as a consultant
or director.
Any repeal or modification of this Article V shall only be prospective and
shall not effect the rights under this Article V in effect at the time of the
alleged occurrence of any action or omission to act giving rise to liability.
VI.
For the management of the business and for the conduct of the affairs of
the Corporation, and in further definition, limitation and regulation of the
powers of the Corporation, of its directors and of its stockholders or any class
thereof, as the case may be, it is further provided that:
The management of the business and the conduct of the affairs of the Corporation
shall be vested in its Board of Directors. The number of directors which shall
constitute the whole Board of Directors shall be fixed by the Board of Directors
in the manner provided in the Amended and Restated Bylaws.
Subject to the indemnification provisions in the Amended and Restated Bylaws,
the Board of Directors may from time to time make, amend, supplement or repeal
the Amended and Restated Bylaws; provided, however, that the stockholders may
change or repeal any Bylaw adopted by the Board of Directors by the affirmative
vote of the percentage of holders of capital stock as provided therein; and,
provided further, that no amendment or supplement to the Amended and Restated
Bylaws adopted by the Board of Directors shall vary or conflict with any
amendment or supplement thus adopted by the stockholders.
The directors of the Corporation need not be elected by written ballot unless
the Amended and Restated Bylaws so provide.
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* * * *
FOUR: This Restated Certificate of Incorporation has been duly approved by
the Board of Directors of this corporation.
FIVE: This Restated Certificate of Incorporation has been duly adopted in
accordance with the provisions of Sections 228, 242 and 245 of the DGCL by the
Board of Directors and the stockholders of this corporation. The total number
of outstanding shares entitled to vote or act by written consent was twenty-
seven million eight hundred eighty-two thousand and two hundred seventy six
(27,882,276) shares of Common Stock, ten million one hundred thirty-five
thousand one hundred thirty-eight (10,135,138) shares of Series A Preferred
Stock and fifteen million six hundred nineteen thousand eight hundred three
(15,619,803) shares of Series B Preferred Stock. This Restated Certificate of
Incorporation has been approved by written consent in accordance with Section
228 of the DGCL by (i) a majority of the outstanding shares of Common Stock,
Series A Preferred Stock and Series B Preferred Stock, voting as a single class
on an as-converted to Common Stock basis; (ii) a majority of the outstanding
shares of Series A Preferred Stock voting as a single class; and (iii) a
majority of the outstanding shares of Series B Preferred Stock voting as a
single class. Written notice of the foregoing approval was given by this
corporation in accordance with said Section 228.
In Witness Whereof, TurboLinux, Inc. has caused this Restated Certificate
of Incorporation to be signed by the President and the Secretary in Brisbane,
California this 28th day of August, 2000.
TurboLinux, Inc.
By: /s/ Robert P. Bowe
---------------------------------------
Robert P. Bowe, Chief Financial Officer
Attest:
By: /s/ Toni Sutliff
--------------------------------
Toni Sutliff, Assitant Secretary
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