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Exhibit 3.1
CERTIFICATE OF INCORPORATION
OF INTEGRATED TELECOM EXPRESS, INC.
I.
The name of this Corporation is Integrated Telecom Express, Inc.
(the "Corporation").
II.
The address of the Corporation's registered office in the State of
Delaware is 1209 Orange Street, Wilmington, County of New Castle. The name of
its registered agent at such office is The Corporation Trust Company.
III.
The nature of the business or purposes to be conducted or promoted
by the Corporation is to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of Delaware.
IV.
(a) The total number of shares of all classes of stock which the
Corporation is authorized to issue is 36,900,000 consisting of 34,750,000
shares of Common Stock and 2,150,000 shares of Preferred Stock, all of which
are designated as Series A Preferred Stock.
(b) A statement of the rights, preferences, privileges and
restrictions granted to or imposed on the Preferred Stock and the holders
thereof is as follows:
(1) DIVIDENDS. The holders of Series A Preferred Stock
shall be entitled to receive, out of any funds legally available therefor,
dividends at a rate of $0.175 per share, per annum when and if declared by
the Board of Directors, payable in preference and priority to any dividend on
Common Stock when, if and as declared by the Board. The right to such
dividends on the Series A Preferred Stock or Common Stock shall not be
cumulative, and no right shall accrue to holders of Series A Preferred Stock
or Common Stock by reason of the fact that dividends or such shares are not
declared or paid in any prior year.
(2) LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or
winding up of the Corporation, either voluntary or involuntary, the holders
of the Series A Preferred Stock shall be entitled to receive, prior and in
preference to any distribution of any of the assets or surplus funds of the
Corporation to the holders of the Common Stock by reason of their ownership
thereof, on a pro rata basis, $3.50 per share, plus any declared but unpaid
dividends on the Series A Preferred Stock. All remaining assets of the
Corporation, if any, shall be distributed to the holders of Common Stock and
the Series A Preferred Stock on a pro rata basis (on an as-converted basis)
until the holders of
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Series A Preferred Stock shall have received a total of $10.50 per share, at
which time all remaining assets, if any, shall be distributed to the holders
of Common Stock.
(b) For purposes of this Section 2, a merger or
consolidation of the Corporation with or into any other corporation or
corporations, or the merger of any other corporation or corporations into the
Corporation (other than any merger or consolidation in which shareholders of
the Corporation immediately prior to such merger or consolidation
beneficially own a majority of the voting shares of the surviving corporation
immediately following such merger or consolidation), or a sale of all or
substantially all of the assets of the Corporation, shall be treated as a
liquidation, dissolution or winding up of the Corporation.
(3) CONVERSION. The holders of the Series A Preferred Stock
shall have conversion rights as follows (the "Conversion Rights"):
(a) RIGHT TO CONVERT.
Each share of Series A Preferred Stock shall be
convertible, at the option of the holder thereof, at any time into such
number of fully paid and nonassessable shares of Common Stock as is
determined by dividing $3.50 by the then applicable Series A Conversion
Price, determined as hereinafter provided, in effect at the time of
conversion. The price at which shares of Common Stock shall be deliverable
upon conversion (the "Series A Conversion Price") shall initially be $3.50
per share of Common Stock. Such initial Series A Conversion Price shall be
subject to adjustment as hereinafter provided.
Each share of Series A Preferred Stock shall automatically be
converted into one share of Common Stock upon the closing of a firm
underwritten public offering pursuant to an effective registration statement
under the Securities Act of 1933, as amended, (the "Act") covering the offer
and sale of Common Stock for the account of the Corporation to the public at
a price per share of not less than $10.50 (as adjusted for stock splits,
reverse stock splits, stock dividends or combination effected after the date
on which the first share of Series A Preferred Stock is issued (the "Original
Issue Date")) and with gross proceeds to the Company of more than
$10,000,000.00. In the event of such an offering, the person(s) entitled to
receive the Common Stock issuable upon such conversion of Series A Preferred
Stock shall not be deemed to have converted such Series A Preferred Stock
until immediately prior to the closing of such underwritten public offering.
(b) MECHANICS OF CONVERSION. No fractional shares
of Common Stock shall be issued upon conversion of Series A Preferred Stock.
In lieu of any fractional share to which a holder would otherwise be
entitled, the Corporation shall pay cash equal to such fraction multiplied by
the fair market value of the Common Stock as determined by the Board of
Directors. Before any holder of Series A Preferred Stock shall be entitled to
convert the same into full shares of Common Stock, he shall surrender the
certificate or certificates therefor, duly endorsed, at the office of the
Corporation or of any transfer agent for the Series A Preferred Stock, and
shall give written notice to the Corporation at such office that he elects to
convert the same. Such notice shall also state whether the holder elects,
pursuant to paragraph 1 hereof, to receive declared but unpaid dividends on
the Series A Preferred Stock proposed to be converted in cash, or to convert
such dividends into shares of Common Stock at their fair market value as
determined by the Board of Directors. The Corporation shall, as soon as
practicable thereafter, issue and deliver at such office to such holder of
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Series A Preferred Stock, a certificate or certificates for the number of
shares of Common Stock to which he shall be entitled as aforesaid and a check
payable to the holder in the amount of any cash amounts payable as the result
of a conversion into a fractional share of Common Stock, and any declared but
unpaid dividends on the converted Series A Preferred Stock which the holder
elected to receive in cash. Such conversion shall be deemed to have been made
immediately prior to the close of business on the date of such surrender of
the shares of Series A Preferred Stock to be converted, and the person or
persons entitled to receive the shares of Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or holders
of such shares of Common Stock on such date. If the conversion is in
connection with an underwritten public offering of securities registered
pursuant to the Act the conversion shall be conditioned upon the closing of
such public offering, in which event the person(s) entitled to receive the
Common Stock issuable upon such conversion of the Series A Preferred Stock
shall not be deemed to have converted such Series A Preferred Stock until
immediately prior to such closing.
(c) 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 Series A Preferred Stock, such number of
shares of its Common Stock as shall from time to time be sufficient to effect
the conversion of all outstanding shares of Series A 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 Series A Preferred Stock, in addition to such other remedies as
shall be available to the holders of Series A Preferred Stock, the
Corporation will take such corporate actions 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
purposes.
(d) ADJUSTMENTS TO SERIES A CONVERSION PRICE FOR
DILUTING ISSUES.
(i) SPECIAL DEFINITIONS. For purposes of this
section 3, the following definitions shall apply:
(1) "OPTIONS" shall mean rights, options
or warrants to subscribe for, purchase or otherwise acquire either Common
Stock or Convertible Securities.
(2) "CONVERTIBLE SECURITIES" shall mean
any evidences of indebtedness, shares (other than Common Stock and Series A
Preferred Stock) or other securities convertible into or exchangeable for
Common Stock.
(3) "ADDITIONAL SHARES OF COMMON STOCK"
shall mean all shares of Common Stock issued (or, pursuant to paragraph
3(d)(iii), deemed to be issued) by the Corporation after the Original Issue
Date, other than shares of Common Stock issued or issuable:
(A) upon conversion of shares of
Preferred Stock;
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(B) up to 25% of the fully-diluted
shares at the time of such sale, to directors or employees of, or consultants
to, the Corporation pursuant to a stock grant, option plan or purchase plan
or other employee stock incentive program approved by the Board of Directors;
(C) as a dividend or distribution on
the Preferred Stock and Common Stock;
(D) in connection with any
transaction in which more than fifty percent (50%) of the voting power of the
Corporation is disposed of, as approved by a majority of the outside
directors;
(E) in connection with corporate
partnerships as approved by a majority of the outside directors; or
(F) shares equal to up to 15% of the
total amount of bank or lease financings may be issued in connection with
such financing, unless such cap is waived by a majority of the outside
directors.
(ii) NO ADJUSTMENT OF SERIES A CONVERSION
PRICE: No adjustment in the applicable Series A Conversion Price of a
particular share of Series A Preferred Stock shall be made in respect of the
issuance of Additional Shares of Common Stock unless the consideration per
share for an Additional Share of Common Stock issued or deemed to be issued
by the Corporation is less than the Series A Conversion Price in effect on
the date of, and immediately prior to such issue, for such share of Series A
Preferred Stock.
(iii) DEEMED ISSUE OF ADDITIONAL SHARES OF
COMMON STOCK. In the event the Corporation at any time or from time to time
after the Original Issue Date shall issue any Options (except for Options
issued pursuant to paragraph (3)(d)(i)(3)(B) above) or Convertible Securities
or shall fix a record date for the determination of holders of any class of
securities entitled to receive any such Options or Convertible Securities,
then the maximum number of shares (as set forth in the instrument relating
thereto without regard to any provisions contained therein for a subsequent
adjustment of such number) of Common Stock issuable upon the exercise of such
Options or, in the case of Convertible Securities and Options therefor, the
conversion or exchange of such Convertible Securities, shall be deemed to be
Additional Shares of Common Stock issued as of the time of such issue or, in
case such a record date shall have been fixed, as of the close of business on
such record date, provided that Additional Shares of Common Stock shall not
be deemed to have been issued unless the consideration per share (determined
pursuant to paragraph 3(d)(iv) hereof) of such Additional Shares of Common
Stock would be less than the Series A Conversion Price in effect on the date
of and immediately prior to such issue, or such record date, as the case may
be, and provided further that in any such case in which Additional Shares of
Common Stock are deemed to be issued:
(1) no further adjustment in the Series A
Conversion Price shall be made upon the subsequent issue of Convertible
Securities or shares of Common Stock upon the exercise of such Options or
conversion or exchange of such Convertible Securities;
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(2) if such Options or Convertible
Securities by their terms provide, with the passage of time or otherwise, for
any increase in the consideration payable to the Corporation, or decrease in
the number of shares of Common Stock issuable, upon the exercise, conversion
or exchange thereof, the Series A Conversion Price computed upon the original
issue thereof (or upon the occurrence of a record date with respect thereto),
and any subsequent adjustments based thereon, shall, upon any such increase
or decrease becoming effective, be recomputed to reflect such increase or
decrease insofar as it affects such Options or the rights of conversion or
exchange under such Convertible Securities; and
(3) no readjustment pursuant to clause (2)
above shall have the effect of increasing the Series A Conversion Price to an
amount which exceeds the lower of (i) the Series A Conversion Price on the
original adjustment date, or (ii) the Series A Conversion Price that would
have resulted from any issuance of Additional Shares of Common Stock between
the original adjustment date and such readjustment date.
(iv) ADJUSTMENT OF CONVERSION PRICE UPON
ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK. In the event this Corporation
shall issue, at any time after the Original Issue Date Additional Shares of
Common Stock (including Additional Shares of Common Stock deemed to be issued
pursuant to paragraph (3)(d)(iii)) without consideration or for a
consideration per share less than the Series A Conversion Price in effect on
the date of and immediately prior to such issue, then and in such event, such
Series A Conversion Price shall be reduced, concurrently with such issue, as
follows:
(1) if the Corporation issues Additional
Shares of Common Stock during the twelve (12) month period following the
Original Issue Date, to a price determined by dividing the aggregate
consideration received by the Corporation for the total number of Additional
Shares of Common Stock so issued by the total number of Additional Shares of
Common Stock so issued; or
(2) if the Corporation issues Additional
Shares of Common Stock subsequent to the twelve (12) month period following
the Original Issue Date, to a price determined by multiplying such Series A
Conversion Price by a fraction, the numerator of which shall be the number of
shares of Common Stock, Series A Preferred Stock, Options and Convertible
Securities outstanding immediately prior to such issue plus the number of
shares of Common Stock which the aggregate consideration received by the
Corporation for the total number of Additional Shares of Common Stock so
issued would purchase at such Series A Conversion Price; and the denominator
of which shall be the number of shares of Common Stock, Series A Preferred
Stock, Options and Convertible Securities outstanding immediately prior to
such issue plus the number of such Additional Shares of Common Stock so
issued.
(v) DETERMINATION OF CONSIDERATION. For
purposes of this section 3(d), the consideration received by the Corporation
for the issue of any Additional Shares of Common Stock shall be computed as
follows:
(1) CASH AND PROPERTY: Such consideration
shall:
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(A) insofar as it consists of cash,
be computed at the aggregate amount of cash received by the Corporation
excluding amounts paid or payable for accrued interest or accrued dividends;
(B) insofar as it consists of
property other than cash, be computed at the fair value thereof at the time
of such issue, as determined by the Board of Directors in the good faith
exercise of its reasonable business judgment; and
(C) in the event Additional Shares of
Common Stock are issued together with other shares or securities or other
assets of the Corporation for consideration which covers both, be the
proportion of such consideration so received, computed as provided in clauses
(A) and (B) above, as determined in good faith by the Board of Directors.
(2) OPTIONS AND CONVERTIBLE SECURITIES.
The consideration per share received by the Corporation for Additional Shares
of Common Stock deemed to have been issued pursuant to paragraph (3)(d)(iii),
relating to Options and Convertible Securities, shall be determined by
dividing (x) the total amount, if any, received or receivable by the
Corporation as consideration for the issue of such Options or Convertible
Securities, plus the minimum aggregate amount of additional consideration (as
set forth in the instruments relating thereto, without regard to any
provision contained therein for a subsequent adjustment of such
consideration) payable to the Corporation upon the exercise of such Options
or the conversion or exchange of such Convertible Securities, or in the case
of Options for Convertible Securities, the exercise of such Options for
Convertible Securities and the conversion or exchange of such Convertible
Securities by (y) the maximum number of shares of Common Stock (as set forth
in the instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such number) issuable upon
the exercise of such Options or the conversion or exchange of such
Convertible Securities.
(vi) ADJUSTMENTS FOR SUBDIVISIONS,
COMBINATIONS, OR CONSOLIDATIONS OF COMMON STOCK. In the event the outstanding
shares of Common Stock shall be subdivided or combined, by reclassification
or otherwise, into a greater or lesser number of shares of Common Stock, the
Series A Conversion Price in effect immediately prior to such subdivision or
combination shall, concurrently with the effectiveness of such subdivision,
combination or consolidation, be proportionately adjusted.
(vii) STOCK SPLITS AND DIVIDENDS. In the event
the Corporation should at any time or from time to time after the Original
Issue Date fix a record date for the effectuation of a split or subdivision
of the outstanding shares of Common Stock or the determination of holders of
Common Stock entitled to receive a dividend or other distribution payable in
additional shares of Common Stock or other securities or rights convertible
into, or entitling the holder thereof to receive directly or indirectly,
additional shares of Common Stock (hereinafter referred to as "Common Stock
Equivalents") without payment of any consideration by such holder for the
additional shares of Common Stock or the Common Stock Equivalents (including
the additional shares of Common Stock issuable upon conversion or exercise
thereof), then, as of such record date (or the date of such dividend
distribution, split or subdivision if no record date is fixed), the
Conversion Price of the Series A Preferred Stock shall be appropriately
decreased so that
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the number of shares of Common Stock issuable on conversion of each share of
such series shall be increased in proportion to such increase of the
aggregate of shares of Common Stock outstanding.
(viii) REVERSE STOCK SPLITS. If the number of
shares of Common Stock outstanding at any time after the Original Issue Date
is decreased by a combination of the outstanding shares of Common Stock,
then, following the record date of such combination, the Conversion Price for
the Series A Preferred Stock shall be appropriately increased so that the
number of shares of Common Stock issuable on conversion of each share of such
series shall be decreased in proportion to such decrease in outstanding
shares.
(e) NO IMPAIRMENT. The Corporation will not, by
amendment of its Articles of Incorporation or through any reorganization,
transfer of assets, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms to be observed or performed hereunder by the Corporation
but will at all times in good faith assist in the carrying out of all the
provisions of this section 3 and in the taking of all such action as may be
necessary or appropriate in order to protect the Conversion Rights of the
holders of the Series A Preferred Stock against impairment.
(f) CERTIFICATE AS TO ADJUSTMENTS. Upon the
occurrence of each adjustment or readjustment of the Series A Conversion
Price pursuant to this section 3, the Corporation, at its expense, shall
promptly compute such adjustment or readjustment in accordance with the terms
hereof and furnish to each holder of Series A Preferred Stock a certificate
setting forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based. The Corporation shall,
upon the written request at any time of any holder of Series A Preferred
Stock, furnish or cause to be furnished to such holder a like certificate
setting forth (i) such adjustments and readjustments, (ii) the Series A
Conversion Price at the time in effect, and (iii) the number of shares of
Common Stock and the amount, if any, of other property which at the time
would be received upon the conversion of Series A Preferred Stock.
(4) VOTING RIGHTS. Except as otherwise required by law, the
holders of Series A Preferred Stock and the holders of Common Stock shall be
entitled to notice of any shareholders' meeting and to vote as a single class
upon any matter submitted to the shareholders for a vote, as follows: (i)
each holder of Series A Preferred Stock shall have one vote for each full
share of Common Stock into which its respective shares of Series A Preferred
Stock would be convertible on the record date for the vote and (ii) each
holder of Common Stock shall have one vote per share of Common Stock.
(5) PROTECTIVE PROVISIONS FOR THE SERIES A PREFERRED. In
addition to any other rights provided by law, so long as any Series A
Preferred Stock shall be outstanding, this Corporation shall not, without
first obtaining the written consent of the holders of greater than fifty
percent (50%) of such outstanding shares of Series A Preferred Stock voting
as a class:
(a) amend or repeal any provision of, or add any
provision to, this Corporation's Certificate of Incorporation if such action
would alter or change the preferences, rights, privileges or powers of, or
the restrictions provided for the benefit of, the Series A Preferred Stock
(including but not limited to adversely altering or changing the rights,
preferences or
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privileges of the Series A Preferred Stock, reclassifying or recapitalizing
any of the capital stock, or increasing or decreasing the number of
authorized shares of Series A Preferred Stock);
(b) authorize or issue shares of any class of stock
having any preference or priority as to dividends or assets superior to the
Series A Preferred Stock, or authorize or issue shares of stock of any class
or any bonds, debentures, notes or other obligations convertible into or
exchangeable for, or having option rights to purchase, any shares of stock of
this Corporation having any preference or priority as to dividends or assets
superior to the Series A Preferred Stock;
(c) reclassify or recapitalize any Common Stock into
shares having any preference or priority as to dividends or assets superior
to or on a parity with any such preference or priority of the Series A
Preferred Stock; or
(d) amend the Corporation's Certificate of
Incorporation if such action would adversely affect the rights of the Series
A Preferred.
(6) PROTECTIVE PROVISIONS FOR THE PREFERRED. In addition to
any other rights provided by law, so long as any Preferred Stock shall be
outstanding, this Corporation shall not, without first obtaining the written
consent of the holders of greater than fifty percent (50%) of such
outstanding shares of Preferred Stock voting together as a class:
(a) effect any sale or other conveyance of all or
substantially all of the assets of the Corporation, including any transaction
in which more than fifty percent (50%) of the voting power of the Corporation
is disposed of, or any consolidation or merger involving the Corporation that
results in the exchange of outstanding shares of this Corporation for
securities or consideration issued, or caused to be issued, by the acquiring
corporation or its subsidiary (except for a merger or consolidation in which
the shareholders of this Corporation do not receive cash or securities and
after the consummation of which the shareholders of this Corporation own more
than five-sixths of the voting power of the surviving or acquiring
corporation or parent party);
(b) authorize a liquidation or dissolution of the
Corporation;
(c) declare or pay a dividend on the Common Stock
(other than a dividend payable solely in shares of Common Stock); or
(d) materially change the Corporation's business
focus on developing and marketing telecommunications integrated circuits.
V.
The Corporation is to have perpetual existence.
VI.
A. The management of the business and the conduct of the affairs of
the Corporation shall be vested in the Board of Directors.
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B. In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, alter, amend
or repeal the Bylaws of the Corporation.
C. Elections of directors need not be by written ballot unless a
stockholder demands election by written ballot at the meeting and before
voting begins or unless the Bylaws of the Corporation shall so provide.
VII.
A. To the fullest extent permitted by the Delaware General
Corporation Law as the same exists or as may hereafter be amended, a director
of the Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director.
B. The Corporation may indemnify to the fullest extent permitted by
law any person made or threatened to be made a party to an action or
proceeding, whether criminal, civil, administrative or investigative, by
reason of the fact that he, his testator or intestate is or was a director,
officer, employee or agent of the Corporation or any predecessor of the
Corporation or serves or served at any other enterprise as a director,
officer, employee or agent at the request of the Corporation or any
predecessor to the Corporation.
C. Neither any amendment nor repeal of this Article VII, nor the
adoption of any provision of this Corporation's Certificate of Incorporation
inconsistent with this Article VII, shall eliminate or reduce the effect of
this Article VII, in respect of any matter occurring, or any action or
proceeding accruing or arising or that, but for this Article VII, would
accrue or arise, prior to such amendment, repeal or adoption of an
inconsistent provision.
VIII.
Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws may provide. The books of the Corporation may be kept
(subject to any provision contained in the statutes) outside of the State of
Delaware at such place or places as may be designated from time to time by
the Board of Directors or in the Bylaws of the Corporation.
IX.
Vacancies created by newly created directorships, created in
accordance with the Bylaws of this Corporation, may be filled by the vote of
a majority, although less than a quorum, of the directors then in office, or
by a sole remaining director.
X.
A. Following the closing of the first sale of Common Stock of the
Corporation pursuant to a registration statement declared effective by the
Securities and Exchange Commission pursuant to the Securities Act of 1933, as
amended, stockholders of the Corporation may not take any action by written
consent in lieu of a meeting and any action contemplated by stockholders
after such time must be taken at a duly called annual or special meeting of
stockholders.
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B. The number of directors which constitute the whole Board of
Directors of the Corporation shall be fixed exclusively by one or more
resolutions adopted from time to time by the Board of Directors. Upon the
closing of the first sale of Common Stock of the Corporation pursuant to a
registration statement declared effective by the Securities and Exchange
Commission pursuant to the Securities Act of 1933, as amended, the Board of
Directors shall be divided into two classes designated as Class I and Class
II, respectively. Directors shall be assigned to each class in accordance
with a resolution or resolutions adopted by the Board of Directors. At the
first annual meeting of stockholders following the date thereof, the term of
office of the Class I directors shall expire and Class I directors shall be
elected for a full term of two years. At the second annual meeting of
stockholders following the date thereof, the term of office of the Class II
directors shall expire and Class II directors shall be elected for a full
term of two years. At each succeeding annual meeting of stockholders,
directors shall be elected for a full term of two years to succeed the
directors of the class whose terms expire at such annual meeting.
C. Advance notice of new business and stockholder nominations for
the election of directors shall be given in the manner and to the extent
provided in the Bylaws of the Corporation.
XI.
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner
now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
XII.
The name and mailing address of the incorporator are as follows:
John K. Liu, Esq.
Wilson Sonsini Goodrich & Rosati
650 Page Mill road
Palo Alto, CA 94304
The undersigned incorporator hereby acknowledges that the foregoing
Certificate of Incorporation is the act and deed of such incorporator and
that the facts stated therein are true.
/s/ John K. Liu
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John K. Liu, Incorporator
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