Exhibit 3.1
FOURTH AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
IMARX THERAPEUTICS, INC.
----------
ImaRx Therapeutics, Inc. a Delaware corporation (the "Corporation"), does
hereby certify that:
FIRST: The present name of the Corporation is "ImaRx Therapeutics, Inc."
The Corporation was incorporated by the filing of its original Certificate of
Incorporation with the Secretary of State of the State of Delaware on June 23,
2000, and filed a Certificate of Designation of Rights, Preferences and
Privileges of Series A Convertible Preferred Stock with the Secretary of State
of the State of Delaware on August 8, 2000, filed an amendment to the
Certificate of Designation of Rights, Preferences and Privileges of Series A
Convertible Preferred Stock with the Secretary of State of the State of Delaware
on January 18, 2001, filed a Certificate of Designation of Rights, Preferences
and Privileges of Series B Convertible Preferred Stock with the Secretary of
State of the State of Delaware on January 19, 2001, filed a of Designation of
Rights, Preferences and Privileges of Series C Convertible Preferred Stock with
the Secretary of State of the State of Delaware on January 19, 2001, filed a
Certificate of Amendment to the Certificate of Incorporation with the Secretary
of State of the State of Delaware on April 12, 2001, filed an Amended and
Restated Certificate of Incorporation with the Secretary of State of the State
of Delaware on October 8, 2002, filed a Second Amended and Restated Certificate
of Incorporation with the Secretary of State of the State of Delaware on January
22, 2003, filed a Third Amended and Restated Certificate of Incorporation with
the Secretary of State of the State of Delaware on March 26, 2004, filed a
Certificate of Designation of Rights, Preferences and Privileges of Series E
Preferred Stock with the Secretary of State of the State of Delaware on
September 30, 2005, and filed a Certificate of Amendment to Third Amended and
Restated Certificate of Incorporation with the Secretary of State of the State
of Delaware on January 25, 2006.
SECOND: This Fourth Amended and Restated Certificate of Incorporation (the
"Fourth Restated Certificate") amends and restates in its entirety the present
Certificate of Incorporation and all Certificates of Designation of the
Corporation in accordance with Sections 228, 242 and 245 of the General
Corporation Law of the State of Delaware.
THIRD: This Fourth Restated Certificate shall become effective immediately
upon its filing with the Secretary of State of the State of Delaware.
FOURTH: Upon the filing with the Secretary of State of the State of
Delaware of this Fourth Restated Certificate, the Certificate of Incorporation
of the Corporation shall be amended and restated in its entirety to read as set
forth on Exhibit A attached hereto.
IN WITNESS WHEREOF, the undersigned, being an officer of the Corporation
hereinabove named, DOES HEREBY CERTIFY, under penalties of perjury, that the
facts hereinabove stated are truly set forth and, accordingly, such officer has
hereunto set his hand as of March 11, 2006.
/s/ Evan C. Unger
----------------------------------------
Evan C. Unger, M.D.
Chief Executive Officer
2
FOURTH AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
IMARX THERAPEUTICS, INC.
I. The name of the Corporation is ImaRx Therapeutics, Inc. (the
"Corporation").
II. The address of the registered office of the Corporation in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle. The name of its registered agent at that
address is The Corporation Trust Corporation.
III. The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware (the "DGCL").
IV. The total number of shares which the Corporation will have authority to
issue is 100,000,000 shares, consisting of 70,000,000 shares of common stock,
par value $.0001 per share (the "Common Stock") and 30,000,000 shares of
preferred stock, par value $.0001 per share (the "Preferred Stock").
The Board of Directors of the Corporation (the "Board of Directors") is
authorized, subject to any limitations prescribed by law, to provide for the
issuance of the shares of Preferred Stock in series, and by filing a certificate
pursuant to the applicable law of the State of Delaware, to establish from time
to time the number of shares to be included in each such series, and to fix the
designation, powers, preferences, and rights of the shares of each such series
and any qualifications, limitations or restrictions thereon. The number of
authorized shares of Preferred Stock may be increased or decreased (but not
below the number of shares thereof then outstanding) by the affirmative vote of
the holders of a majority of the Common Stock, without a vote of the holders of
Preferred Stock, or of any series thereof, unless a vote of any such holders is
required pursuant to the certificate or certificates establishing the series of
Preferred Stock.
A. Common Stock. Each share of Common Stock shall be identical in all
respects and for all purposes and entitled to: one vote in all proceedings in
which action may or is required to be taken by shareholders of the Corporation;
participate equally in all dividends payable with respect to the Common Stock,
as, if and when declared by the Board of Directors of the Corporation subject to
any dividend preference in favor of Preferred Stock; and share ratably in all
distributions of assets of the Corporation in the event of any voluntary or
involuntary liquidation, or winding up of the affairs of the Corporation,
subject to any liquidation rights and preferences in favor of Preferred Stock.
B. Preferred Stock.
1. Establishment and Designation of Series. There is hereby established (a)
a series of Preferred Stock designated "Series A Convertible Preferred Stock"
(the "Series A Preferred Stock"), to consist of an aggregate of Two Million
Three Hundred Two Thousand Fifty-Three
1
(2,302,053) shares, with $0.0001 par value, (b) a series of Preferred Stock
designated "Series B Convertible Preferred Stock" (the "Series B Preferred
Stock") to consist of an aggregate of Five Hundred Ninety-Three Thousand Two
Hundred Twenty-Six (593,226) shares, with $0.0001 par value, (c) a series of
Preferred Stock designated "Series C Convertible Preferred Stock" (the "Series C
Preferred Stock") to consist of an aggregate of Two Hundred Eighty-Five Thousand
Seven Hundred Fourteen (285,714) shares, with $0.0001 par value, (d) a series of
Preferred Stock designated "Series D Preferred Stock" (the "Series D Preferred
Stock"), to consist of Four Hundred Thirty-Eight Thousand Two Hundred Thirty-Two
(438,232) shares, with $0.0001 par value, (e) a series of Preferred Stock
designated "Series E Preferred Stock" (the "Series E Preferred Stock"), to
consist of One Million (1,000,000) shares, with $0.0001 par value, and (f) a
series of Preferred Stock designated "Series F Preferred Stock" (the "Series F
Preferred Stock"), to consist of Four Million (4,000,000) shares, with $0.0001
par value, in each case to have the preferences, limitations and relative
rights, including voting rights, as set forth herein.
2. Dividends.
(a) Series A Preferred Stock, Series D Preferred Stock and Series F
Preferred Stock. From and after the date of the issuance of any share of Series
A Preferred Stock, Series D Preferred Stock or Series F Preferred Stock,
dividends at the rate of 8% per annum of the Series A/D Original Issue Price (as
defined below), in the case of the Series A Preferred Stock and Series D
Preferred Stock, and at the rate of 8% per annum of the Series F Original Issue
Price (as defined below) in the case of Series F Preferred Stock, shall accrue
on each outstanding share of Series A Preferred Stock, Series D Preferred Stock
and Series F Preferred Stock (in each case subject to appropriate adjustment in
the event of any stock dividends, combinations, splits, recapitalizations and
the like with respect to such shares)(collectively, the "Accruing Dividends") in
preference to the holders of any other stock of the Corporation (the "Junior
Stock"). The "Series A/D Original Issue Price" of each share of the Series A
Preferred Stock and Series D Preferred Stock shall be Two Dollars and
Seventy-Five Cents ($2.75)(as adjusted for any stock dividends, combinations,
splits, recapitalizations and the like with respect to such shares). The "Series
F Original Issue Price" of each share of the Series F Preferred Stock shall be
Five Dollars ($5.00) (as adjusted for any stock dividends, combinations, splits,
recapitalizations and the like with respect to such shares). Accruing Dividends
on each share of Series A Preferred Stock, Series D Preferred Stock and Series F
Preferred Stock shall begin to accrue as of the first calendar quarter following
the issue date for such share, whether or not declared, and whether or not there
are profits, surplus or other funds of the Corporation legally available for the
payment of dividends, and shall be cumulative; provided, however, that except as
set forth in Section 4(e), the Corporation shall be under no obligation to pay
such Accruing Dividends. No accumulation of Accruing Dividends shall bear any
interest.
(b) Series E Preferred Stock. The holders of the Series E Preferred
Stock will be entitled to participate equally in all dividends payable with
respect to the Common Stock, as, if and when declared by the Board of Directors,
subject to the dividend preference of any series of Preferred Stock, on an as-if
converted to Common Stock basis. The provisions of this Section 2(c) shall not,
however, apply to a dividend payable in Common Stock.
(c) Restrictions on Dividends. So long as any shares of Series A
Preferred Stock, Series D Preferred Stock or Series F Preferred Stock shall be
outstanding, no dividend,
2
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 (i) redemptions described in Sections 6(b), (c)
and (d) below, (ii) acquisitions of the Common Stock by the Corporation pursuant
to agreements approved by the Board of Directors which permit the Corporation to
repurchase such shares at cost upon termination of services to the Corporation
as a consultant, director or employee and (iii) acquisitions of Common Stock
approved by the Board of Directors, until all dividends (set forth in Section
2(a) above) on the Series A Preferred Stock, Series D Preferred Stock and Series
F Preferred Stock 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 Preferred Stock 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. The provisions of this Section 2(c)
shall not, however, apply to (i) a dividend payable in Common Stock or (ii) the
acquisition of shares of any Junior Stock in exchange for shares of any other
Junior Stock.
3. Voting Rights.
(a) Series B Preferred Stock Is Non-Voting. Subject to Section 3(d)
below (Separate Vote of Series B Preferred Stock), holders of Series B Preferred
Stock shall not be entitled to vote, including with respect to the election of
directors of the Corporation.
(b) General Rights. Except as otherwise provided herein or as required
by law, the Preferred Stock shall be voted equally with the shares of the Common
Stock and not as a separate class, at any annual or special meeting of
stockholders of the Corporation, 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 Preferred Stock 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 Preferred Stock are convertible (pursuant to
Section 5 hereof) immediately after the close of business on the record date
fixed for such meeting or the effective date of such written consent.
(c) Separate Vote of Series A Preferred Stock, Series D Preferred
Stock and Series F Preferred Stock. For so long as any shares of Series A
Preferred Stock, Series D Preferred Stock or Series F Preferred Stock 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 seventy-five percent
(75%) of the outstanding Series A Preferred Stock, Series D Preferred Stock and
Series F Preferred Stock (voting together as a single class on an
as-if-converted to Common Stock basis) shall be necessary for effecting or
validating the following actions:
(i) Any amendment, alteration, waiver or repeal of any provision
of the Certificate of Incorporation or the Bylaws of the Corporation (including
any filing of a Certificate of Designation), that is adverse to the voting or
other powers, preferences, or other special rights or privileges, or
restrictions of the Series A Preferred Stock, Series D Preferred Stock or Series
F Preferred Stock;
3
(ii) any change in the rights of the holders of Series A
Preferred Stock, Series D Preferred Stock or Series F Preferred Stock in any
other respect;
(iii) Any increase or decrease in the authorized number of shares
of Series A Preferred Stock, Series D Preferred Stock or Series F Preferred
Stock;
(iv) 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 Stock, Series D Preferred Stock
or Series F Preferred Stock in right of redemption, liquidation preference,
voting or dividends or any increase in the authorized or designated number of
any such new class or series;
(v) Any redemption or repurchase with respect to Junior Stock
(except for (A) redemptions described in Sections 6(b), (c) and (d) below, (B)
acquisitions of Common Stock by the Corporation pursuant to agreements approved
by the Board of Directors which permit the Corporation to repurchase such shares
at cost upon termination of services to the Corporation as a consultant,
director or employee and (C) acquisitions of Common Stock approved by the Board
of Directors);
(vi) Any Asset Transfer or Acquisition (each as defined in
Section 4(e));
(vii) Any redemption of any shares of Series A Preferred Stock,
Series D Preferred Stock or Series F Preferred Stock, except pursuant to Section
6 below;
(viii) Any bankruptcy, insolvency, dissolution or liquidation of
the Corporation;
(ix) Any action that causes the Corporation to become a reporting
company under the Securities Exchange Act of 1934;
(x) Any decrease in the authorized size of the Board of Directors
to a number of directors less than five (5); or
(xi) Any appointment of any director to the Board of Directors if
such director is or within the prior three years was an officer or employee of
the Corporation.
(d) Separate Vote of Series B Preferred Stock. Subject to the rights
of any series of preferred stock that may from time to time come into existence,
so long as any shares of Series B Preferred Stock are outstanding, the
Corporation shall not without first obtaining the approval (by vote or written
consent, as provided by law) of the holders of at least a majority of the
then-outstanding shares of Series B Preferred Stock, voting separately as a
series:
(i) amend its Certificate of Incorporation so as to affect
adversely the shares of Series B Preferred Stock or any holder thereof
(including by creating any additional classes or series of preferred stock with
a liquidation preference, dividend or other rights senior or pari passu to the
Series B Preferred Stock); or
4
(ii) change the rights of the holders of Series B Preferred Stock
in any other respect.
(e) Separate Vote of Series C Preferred Stock. Subject to the rights
of any series of preferred stock that may from time to time come into existence,
so long as any shares of Series C Preferred Stock are outstanding, the
Corporation shall not without first obtaining the approval (by vote or written
consent, as provided by law) of the holders of at least a majority of the
then-outstanding shares of Series C Preferred Stock, voting separately as a
series:
(i) amend its Certificate of Incorporation so as to affect
adversely the shares of Series C Preferred Stock or any holder thereof
(including by creating any additional classes or series preferred stock with a
liquidation preference, dividend or other rights senior or pari passu to the
Series C Preferred Stock); or
(ii) change the rights of the holders of Series C Preferred Stock
in any other respect.
(f) Separate Vote of Series E Preferred Stock. Subject to the rights
of any series of Preferred Stock that may from time to time come into existence,
so long as any shares of Series E Preferred Stock are outstanding, the
Corporation shall not, without first obtaining the approval (by vote or written
consent) of the holders of at least 66 2/3% of the outstanding shares of Series
E Preferred Stock (voting together as a separate class on an as-if-converted to
Common Stock basis):
(i) alter or change the rights, preferences, or privileges of the
Series E Preferred Stock in a manner that adversely affects the Series E
Preferred Stock;
(ii) increase the authorized number of shares of Common Stock
above 70,000,000 shares or the authorized number of shares of Preferred Stock
above 30,000,000, or decrease the number of authorized shares of Series E
Preferred Stock; or
(iii) amend or waive any provision of the Certificate of
Incorporation or Bylaws of the Corporation in a manner that adversely affects
the Series E Preferred Stock.
4. Liquidation Rights.
(a) Series A Preferred Stock, Series D Preferred Stock and Series F
Preferred Stock. 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
A Preferred Stock, Series D Preferred Stock and Series F Preferred Stock shall
be entitled to receive out of the assets of the Corporation legally available
for distribution to its shareholders an amount per share equal to: (i) in the
case of the Series A Preferred Stock and Series D Preferred Stock, the Series
A/D Original Issue Price plus all Accruing Dividends accrued but unpaid thereon,
whether or not declared, together with any other dividends declared but unpaid
thereon, for each share of Series A Preferred Stock and Series D Preferred Stock
held by them (the "Series A/D Liquidation Preference"); and (ii) in the case of
the Series F Preferred Stock, the Series F Original Issue Price plus all
Accruing Dividends accrued but unpaid thereon, whether or not declared, together
with any other dividends declared
5
but unpaid thereon, for each share of Series F Preferred Stock held by them (the
"Series F Liquidation Preference"). If, upon any such liquidation, dissolution,
or winding up, the assets of the Corporation available for distribution to its
shareholders shall be insufficient to pay the holders of Series A Preferred
Stock, Series D Preferred Stock and Series F Preferred Stock the full amounts to
which they shall be entitled under this Section 4(a), the holders of Series A
Preferred Stock, Series D Preferred Stock and Series F Preferred Stock shall
share ratably in any distribution of assets in proportion to the full amounts to
which they would otherwise be respectively entitled.
(b) Series B Preferred Stock. Upon any liquidation, dissolution or
winding-up of the Corporation, whether voluntary or involuntary, after payment
or provision for payment in full of the Series A/D Liquidation Preference and
the Series F Liquidation Preference, but before any payment of cash or
distribution of other property shall be made to the holders of the Common Stock
or any other class or series of stock subordinate in liquidation preference to
the Series B Preferred Stock, the holders of Series B Preferred Stock shall be
entitled to receive out of the assets of the Corporation legally available for
distribution to its shareholders, an amount per share equal to the Series B
Original Issue Price plus dividends declared but unpaid thereon (the "Series B
Liquidation Preference"). As used herein, the "Series B Original Issue Price"
shall be Sixteen Dollars ($16.00) for each share of Series B Preferred Stock (as
adjusted for any stock dividends, splits, recapitalizations and the like with
respect to such shares). If, upon any such liquidation, dissolution or
winding-up, the assets of the Corporation available for distribution to its
shareholders shall be insufficient to pay the holders of Series B Preferred
Stock the full amounts to which they shall be entitled under this Section 4(b),
the holders of Series B Preferred Stock shall share ratably in any distribution
of assets in proportion to the full amounts to which they would otherwise be
respectively entitled.
(c) Series C Preferred Stock. Upon any liquidation, dissolution or
winding-up of the Corporation, whether voluntary or involuntary, after payment
or providing for payment in full of the Series A/D Liquidation Preference, the
Series F Liquidation Preference and the Series B Liquidation Preference, but
before any payment of cash or distribution of other property shall be made to
the holders of the Common Stock or any other class or series of stock
subordinate in liquidation preference to the Series C Preferred Stock, the
holders of Series C Preferred Stock shall be entitled to receive out of the
assets of the Corporation legally available for distribution to its
shareholders, an amount equal to the Series C Original Issue Price plus
dividends declared but unpaid thereon (the "Series C Liquidation Preference").
As used herein, the "Series C Original Issue Price" shall be Seven Dollars
($7.00) for each share of Series C Preferred Stock (as adjusted for any stock
dividends, splits, recapitalizations and the like with respect to such shares).
If, upon any such liquidation, dissolution or winding-up, the assets of the
Corporation available for distribution to its shareholders shall be insufficient
to pay the holders of Series C Preferred Stock the full amounts to which they
shall be entitled under this Section 4(c), the holders of Series C Preferred
Stock shall share ratably in any distribution of assets in proportion to the
full amounts to which they would otherwise be respectively entitled.
(d) Common Stock. After the payment of the full liquidation preference
of the Preferred Stock as set forth in Sections 4(a), (b) and (c) above, the
assets of the Corporation legally available for distribution, if any, shall be
distributed ratably to the holders of the Common Stock and Preferred Stock on an
as-if-converted to Common Stock basis.
6
(e) Liquidation. 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 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");
(ii) a sale, lease or other disposition of all or substantially
all of the assets of the Corporation (an "Asset Transfer");
(iii) the sale or disposition (whether by merger or otherwise) of
one or more subsidiaries of the Corporation if substantially all of the assets
of the Corporation and its subsidiaries taken as a whole are held by such
subsidiary or subsidiaries; or
(iv) a sale or exclusive licensing of all or substantially all of
the intellectual property assets of the Corporation (other than in the ordinary
course of business).
(f) Valuation of Securities. In the event of any liquidation event
described in Section 4(e), 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. Any securities shall be valued as follows:
(i) Securities not subject to investment letter or other similar
restrictions on free marketability covered by subsection (f)(ii) below:
(A) If traded on a securities exchange or through the Nasdaq
National Market, the value shall be deemed to be the average closing price of
the securities on such quotation system for the ten days prior to and including
the date of closing;
(B) If actively traded over-the-counter, the value shall be
deemed to be the closing bid or sale price (whichever is applicable) as of the
date of closing; and
(C) If there is no active public market, the value shall be
the fair market value thereof, as determined by the Board of Directors.
(ii) 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 subsections (f)(i)(A), (B) or (C) to reflect the
approximate fair market value thereof, as determined by the Board of Directors.
7
5. Conversion. The holders of the Preferred Stock shall have the following
rights with respect to the conversion of the Preferred Stock into shares of
Common Stock (the "Conversion Rights"):
(a) Series A Preferred Stock, Series D Preferred Stock and Series F
Preferred Stock.
(i) Optional Conversion. Subject to and in compliance with the
provisions of this Section 5, any shares of Series A Preferred Stock, Series D
Preferred Stock and Series F Preferred Stock may, at the option of the holder,
be converted at any time into fully-paid and nonassessable shares of Common
Stock. The number of shares of Common Stock to which a holder of Series A
Preferred Stock, Series D Preferred Stock or Series F Preferred Stock shall be
entitled upon conversion shall be the product obtained by multiplying the then
effective "Series A Preferred Stock Conversion Rate," "Series D Preferred Stock
Conversion Rate" or "Series F Preferred Stock Conversion Rate," as the case may
be (determined as provided in Section 5(a)(ii)), by the number of shares of
Series A Preferred Stock, Series D Preferred Stock and Series F Preferred Stock
being converted.
(ii) Series A/D/F Preferred Stock Conversion Rate. The conversion
rate in effect at any time for conversion of the Series A Preferred Stock,
Series D Preferred Stock and Series F Preferred Stock (the "Series A Preferred
Stock Conversion Rate," "Series D Preferred Stock Conversion Rate" or "Series F
Preferred Stock Conversion Rate") shall be the quotient obtained by dividing the
Series A/D Original Issue Price or the Series F Original Issue Price, as the
case may be, by the then effective "Series A Preferred Stock Conversion Price,"
"Series D Preferred Stock Conversion Price" or "Series F Preferred Stock
Conversion Price," as the case may be, calculated as provided in Section
5(a)(iii).
(iii) Series A/D/F Preferred Stock Conversion Price. The
conversion price for the Series A Preferred Stock shall initially be $2.63 (the
"Series A Preferred Stock Conversion Price"), the conversion price for the
Series D Preferred Stock shall initially be $2.00 (the "Series D Preferred Stock
Conversion Price") and the conversion price for the Series F Preferred Stock
shall initially be $5.00 (the "Series F Preferred Stock Conversion Price"). Such
initial Series A Preferred Stock Conversion Price, Series D Preferred Stock
Conversion Price or Series F Preferred Stock Conversion Price, as the case may
be, shall be adjusted from time to time in accordance with this Section 5(a).
Notwithstanding the foregoing, in the event of an automatic conversion of the
Series F Preferred Stock in connection with an initial public offering pursuant
to Section 5(a)(xiii), the Series F Preferred Stock Conversion Price shall be
the lesser of (A) the Series F Preferred Stock Conversion Price determined in
accordance with this Section 5(a), or (B) eighty-five percent (85%) of the price
per share paid in the initial public offering.
(iv) Mechanics of Conversion. Each holder of Series A Preferred
Stock, Series D Preferred Stock and Series F Preferred Stock who desires to
convert the same into shares of Common Stock pursuant to this Section 5 shall
surrender the certificate or certificates therefor, duly endorsed, at the office
of the Corporation or any transfer agent for the Series A Preferred Stock,
Series D Preferred Stock and Series F Preferred Stock, 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 A Preferred Stock,
Series D Preferred Stock and
8
Series F Preferred Stock 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 in good faith as of the
date of such conversion), any declared and unpaid dividends on the shares of
Series A Preferred Stock, Series D Preferred Stock and Series F Preferred Stock
being converted and (ii) in cash (at the Common Stock's fair market value
determined by the Board of Directors in good faith as of the date of conversion)
the value of any fractional share of Common Stock otherwise issuable to any
holder of Series A Preferred Stock, Series D Preferred Stock and Series F
Preferred Stock. 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 A Preferred Stock, Series D Preferred Stock and Series F
Preferred Stock 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.
(v) Adjustment for Stock Splits and Combinations. If the
Corporation shall at any time or from time to time after the date that the first
share of Series F Preferred Stock is issued (the "Series F Original Issue Date")
effect a subdivision of the outstanding Common Stock without a corresponding
subdivision of the Series A Preferred Stock, Series D Preferred Stock and Series
F Preferred Stock, the Series A Preferred Stock Conversion Price, Series D
Preferred Stock Conversion Price or Series F Preferred Stock Conversion Price,
as the case may be, in effect immediately before that subdivision shall be
proportionately decreased. Conversely, if the Corporation shall at any time or
from time to time after the Series F Original Issue Date combine the outstanding
shares of Common Stock into a smaller number of shares without a corresponding
combination of the Series A Preferred Stock, Series D Preferred Stock and Series
F Preferred Stock, the Series A Preferred Stock Conversion Price, Series D
Preferred Stock Conversion Price or Series F Preferred Stock Conversion Price,
as the case may be, in effect immediately before the combination shall be
proportionately increased. Any adjustment under this Section 5(a)(v) shall
become effective at the close of business on the date the subdivision or
combination becomes effective.
(vi) Adjustment for Common Stock Dividends and Distributions. If
the Corporation at any time or from time to time after the Series F Original
Issue Date makes, or fixes a record date for the determination of holders of
Common Stock entitled to receive, a dividend or other distribution payable in
additional shares of Common Stock, in each such event the Series A Preferred
Stock Conversion Price, Series D Preferred Stock Conversion Price or Series F
Preferred Stock Conversion Price, as the case may be, 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 Stock Conversion Price, Series D Preferred Stock
Conversion Price or Series F Preferred Stock Conversion Price, as the case may
be, 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
9
and such dividend is not fully paid or if such distribution is not fully made on
the date fixed therefor, the Series A Preferred Stock Conversion Price, Series D
Preferred Stock Conversion Price or Series F Preferred Stock Conversion Price,
as the case may be, shall be recomputed accordingly as of the close of business
on such record date and thereafter the Series A Preferred Stock Conversion
Price, Series D Preferred Stock Conversion Price or Series F Preferred Stock
Conversion Price, as the case may be, shall be adjusted pursuant to this Section
5(a)(vi) to reflect the actual payment of such dividend or distribution.
(vii) Adjustment for Reclassification, Exchange and Substitution.
If at any time or from time to time after the Series F Original Issue Date, the
Common Stock issuable upon the conversion of the Series A Preferred Stock,
Series D Preferred Stock and Series F Preferred Stock is changed into the same
or a different number of shares of any class or classes of stock, whether by
recapitalization, reclassification or otherwise (other than an Acquisition or
Asset Transfer as defined in Section 4(e) 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 5(a)), in any such event each
holder of Series A Preferred Stock, Series D Preferred Stock and Series F
Preferred Stock shall have the right thereafter to convert such stock into the
kind and amount of stock and other securities and property receivable upon such
recapitalization, reclassification or other change by holders of the maximum
number of shares of Common Stock into which such shares of Series A Preferred
Stock, Series D Preferred Stock and Series F Preferred Stock could have been
converted immediately prior to such recapitalization, reclassification or
change, all subject to further adjustment as provided herein or with respect to
such other securities or property by the terms thereof.
(viii) Reorganizations, Mergers or Consolidations. If at any time
or from time to time after the Series F Original Issue Date, 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 4(e) or a
recapitalization, subdivision, combination, reclassification, exchange or
substitution of shares provided for elsewhere in this Section 5), as a part of
such capital reorganization, provision shall be made so that the holders of the
Series A Preferred Stock, Series D Preferred Stock and Series F Preferred Stock
shall thereafter be entitled to receive upon conversion of the Series A
Preferred Stock, Series D Preferred Stock and Series F Preferred Stock the
number of shares of stock or other securities or property of the Corporation to
which a holder of the number of shares of Common Stock deliverable upon
conversion would have been entitled on such capital reorganization, subject to
adjustment in respect of such stock or securities by the terms thereof. In any
such case, appropriate adjustment shall be made in the application of the
provisions of this Section 5 with respect to the rights of the holders of Series
A Preferred Stock, Series D Preferred Stock and Series F Preferred Stock after
the capital reorganization to the end that the provisions of this Section 5
(including adjustment of the Series A Preferred Stock Conversion Price, Series D
Preferred Stock Conversion Price or Series F Preferred Stock Conversion Price,
as the case may be, then in effect and the number of shares issuable upon
conversion of the Series A Preferred Stock, Series D Preferred Stock and Series
F Preferred Stock) shall be applicable after that event and be as nearly
equivalent as practicable.
10
(ix) Sale of Shares Below $2.00 and Series A/D Preferred Stock
Conversion Price.
(A) If at any time or from time to time after the date this
Fourth Amended and Restated Certificate of Incorporation is filed with the
Delaware Secretary of State, the Corporation issues or sells, or is deemed by
the express provisions of this subsection 5(a)(ix) to have issued or sold,
Additional Shares of Common Stock (as defined in subsection 5(a)(ix)(D) below),
other than as provided in Sections 5(a)(v), (vi), (vii) and (viii) above, for an
Effective Price (as defined in subsection 5(a)(ix)(D) below) below both $2.00
and the then effective Series A Preferred Stock Conversion Price or Series D
Preferred Stock Conversion Price, as the case may be, then and in each such
case, the then existing Series A Preferred Stock Conversion Price or Series D
Preferred Stock Conversion Price, as the case may be, shall be reduced, as of
the opening of business on the date of such issue or sale, to a price determined
by multiplying the Series A Preferred Stock Conversion Price or Series D
Preferred Stock Conversion Price, as the case may be, by a fraction (I) the
numerator of which shall be (1) the number of shares of Common Stock deemed
outstanding (as defined below) immediately prior to such issue or sale, plus (2)
the number of shares of Common Stock which the aggregate consideration received
(as defined in subsection 5(a)(ix)(B)) by the Corporation for the total number
of Additional Shares of Common Stock so issued would purchase at such Series A
Preferred Stock Conversion Price or Series D Preferred Stock Conversion Price,
as the case may be, 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 (x)
the number of shares of Common Stock actually outstanding, (y) the number of
shares of Common Stock into which the then outstanding shares of Preferred Stock
could be converted if fully converted on the day immediately preceding the given
date, and (z) 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.
(B) For the purpose of making any adjustment required under
this Section 5(a)(ix), the consideration received by the Corporation for any
issue or sale of securities shall (I) 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, (II) 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, and (III) if
Additional Shares of Common Stock, Convertible Securities (as defined in
subsection 5(a)(ix)(C)), 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.
(C) For the purpose of the adjustment required under this
Section 5(a)(ix), if the Corporation issues or sells (I) stock or other
securities convertible into,
11
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 of such Additional Shares of Common Stock is less than
the Series A Preferred Stock Conversion Price or Series D Preferred Stock
Conversion Price, as the case may be, 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 (including, without duplication, 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 Stock Conversion Price or Series D
Preferred Stock Conversion Price, as the case may be, 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 Stock Conversion Price or Series D Preferred
Stock Conversion Price, as the case may be, as adjusted upon the issuance of
such rights, options or Convertible Securities shall be readjusted to the Series
A Preferred Stock Conversion Price or Series D Preferred Stock Conversion Price,
as the case may be, 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 Corporation
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 (including, without duplication, cancellation of liabilities or
obligations evidenced by such Convertible Securities) on the
12
conversion of such Convertible Securities, provided that such readjustment shall
not apply to prior conversions of Series A Preferred Stock and Series D
Preferred Stock.
(D) "Additional Shares of Common Stock" shall mean all
shares of Common Stock issued by the Corporation or deemed to be issued pursuant
to this Section 5(a)(ix), other than (I) shares of Common Stock issued upon
conversion of Preferred Stock, (II) 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 to employees, officers or
directors of, or consultants, advisors, strategic partners, lenders or creditors
to the Corporation or any subsidiary pursuant to stock purchase or stock option
plans or other arrangements that are approved by the Board of Directors;
provided, that issuances to Evan C. Unger M.D. before or after the Series F
Original Issue Date may not exceed an aggregate of 300,000 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), except with the approval by the Board of Directors, and (III) up to
150,000 shares of Common Stock issued to third parties in connection with
license arrangements or other strategic transactions unanimously approved by the
Board of Directors; provided, that if such 150,000 shares of Common Stock have
been issued, additional shares of Common Stock may be issued to third parties in
connection with license arrangements or other strategic transactions upon the
unanimous consent of the Board of Directors and the vote or written consent of
the holders of at least seventy-five percent (75%) of the outstanding shares of
Series A Preferred Stock and Series D Preferred Stock (voting together as a
single class on an as-if-converted to Common Stock basis). References to Common
Stock in this clause (D) shall mean all shares of Common Stock issued by the
Corporation or deemed to be issued pursuant to this Section 5(a)(ix). 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 Corporation under
this Section 5(a)(ix), into the aggregate consideration received, or deemed to
have been received by the Corporation for such issue under this Section
5(a)(ix), for such Additional Shares of Common Stock.
(x) Sale of Shares Below $5.00 and Series F Preferred Stock
Conversion Price.
(A) If at any time or from time to time after the date this
Fourth Amended and Restated Certificate of Incorporation is filed with the
Delaware Secretary of State, the Corporation issues or sells, or is deemed by
the express provisions of this subsection 5(a)(x) to have issued or sold,
Additional Shares of Common Stock (as defined in subsection 5(a)(x)(D) below),
other than as provided in Sections 5(a)(v), (vi), (vii) and (viii) above, for an
Effective Price (as defined in subsection 5(a)(ix)(D) above) below both $5.00
and the then effective Series F Preferred Stock Conversion Price, then and in
each such case, the then existing Series F Preferred Stock Conversion Price
shall be reduced, as of the opening of business on the date of such issue or
sale, to a price determined by multiplying the Series F Preferred Stock
Conversion Price by a fraction (I) the numerator of which shall be (1) the
number of shares of Common Stock deemed outstanding (as described in subsection
5(a)(ix)(A)) immediately prior to such issue or sale, plus (2) the number of
shares of Common Stock which the aggregate consideration received (as defined in
subsection 5(a)(ix)(B)) by the Corporation for the total number of
13
Additional Shares of Common Stock so issued would purchase at such Series F
Preferred Stock Conversion Price, and (II) the denominator of which shall be the
number of shares of Common Stock deemed outstanding (as described in subsection
5(a)(ix)(A)) immediately prior to such issue or sale plus the total number of
Additional Shares of Common Stock so issued.
(B) For the purpose of making any adjustment required under
this Section 5(a)(x), the consideration received by the Corporation for any
issue or sale of securities shall be computed as set forth in subsection
5(a)(ix)(B) above.
(C) For the purpose of the adjustment required under this
Section 5(a)(x), if the Corporation issues or sells (I) Convertible Securities
or (II) rights or options for the purchase of Additional Shares of Common Stock
or Convertible Securities and if the Effective Price of such Additional Shares
of Common Stock is less than the Series F Preferred Stock 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 (including, without
duplication, 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 F Preferred Stock
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 F Preferred
Stock Conversion Price as adjusted upon the issuance of such rights, options or
Convertible Securities shall be readjusted to the Series F Preferred Stock
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
14
exercise, plus the consideration, if any, actually received by the Corporation
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 (including, without duplication, cancellation of liabilities or
obligations evidenced by such Convertible Securities) on the conversion of such
Convertible Securities, provided that such readjustment shall not apply to prior
conversions of Series F Preferred Stock.
(D) "Additional Shares of Common Stock" shall mean all
shares of Common Stock issued by the Corporation or deemed to be issued pursuant
to this Section 5(a)(ix), other than (I) shares of Common Stock issued upon
conversion of Preferred Stock, (II) 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 to employees, officers or
directors of, or consultants, advisors, strategic partners, lenders or creditors
to the Corporation or any subsidiary pursuant to stock purchase or stock option
plans or other arrangements that are approved by the Board of Directors;
provided, that issuances 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 after the Series F Original Issue Date may not
exceed the number of shares of Common Stock reserved for issuance pursuant to
the Corporation's 2000 Stock Option Plan as of such date (as adjusted for any
stock dividends, combinations, splits, recapitalizations and the like), except
with the approval by the Board of Directors (including a majority of the
independent, non-employee directors then serving), (III) 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 to equipment
lessors other than an Affiliate or bank lenders as approved by the Board of
Directors, (IV) 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 to corporate partners or in connection with other
strategic transactions approved by the Board of Directors; provided, no
Affiliate is a corporate partner or party to the strategic transaction, and (V)
additional shares of Common Stock that are issued or become issuable upon
conversion or exercise of other outstanding securities of the Corporation as a
result of the operation of anti-dilution provisions which are contained in the
original terms of such securities. "Affiliate" means with respect to an
equipment lessor, corporate partner or party to a strategic transaction any
person or entity ("Person") that directly or indirectly controls, is controlled
by, or is under common control with an officer, director or Significant
Stockholder of the Corporation including, without limitation, any partner,
officer, director or member of such Person, any spouse, parent, sibling, child,
stepchild or grandchild of such Person and any venture capital or angel investor
fund now or hereafter existing which is controlled by or under common control
with one or more general partners or shares the same management company with
such Person. "Significant Stockholder" means any Person who directly or
indirectly owns five percent (5%) or more of the outstanding shares of Common
Stock and Preferred Stock of the Corporation. References to Common Stock in this
clause (D) shall mean all shares of Common Stock issued by the Corporation or
deemed to be issued pursuant to this Section 5(a)(x). 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 Corporation under this Section 5(a)(x), into
the aggregate consideration
15
received, or deemed to have been received by the Corporation for such issue
under this Section 5(a)(x), for such Additional Shares of Common Stock.
(xi) Certificate of Adjustment. In each case of an adjustment or
readjustment of the Series A Preferred Stock Conversion Price, Series D
Preferred Stock Conversion Price or Series F Preferred Stock Conversion Price,
as the case may be, or the number of shares of Common Stock or other securities
issuable upon conversion of the Series A Preferred Stock, Series D Preferred
Stock and Series F Preferred Stock, if the Series A Preferred Stock, Series D
Preferred Stock and Series F Preferred Stock is then convertible pursuant to
this Section 5, 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 A Preferred Stock, Series D Preferred Stock and Series F Preferred Stock
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
(A) 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, (B) the Series A Preferred Stock Conversion Price, Series D
Preferred Stock Conversion Price or Series F Preferred Stock Conversion Price,
as the case may be, at the time in effect, (C) the number of Additional Shares
of Common Stock and (D) the type and amount, if any, of other property which at
the time would be received upon conversion of the Series A Preferred Stock,
Series D Preferred Stock and Series F Preferred Stock.
(xii) Notices of Record Date. Upon (A) 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 (B) any Acquisition (as defined in Section
4(e)) 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 4(e)), or any voluntary or involuntary
dissolution, liquidation or winding up of the Corporation, the Corporation shall
mail to each holder of Series A Preferred Stock, Series D Preferred Stock and
Series F Preferred Stock at least ten (10) days prior to the record date
specified therein (or such shorter period approved by a vote or written consent
of a majority of the outstanding Series A Preferred Stock, Series D Preferred
Stock and Series F Preferred Stock, voting together as a single class on an
as-if-converted to Common Stock basis) a notice specifying (I) 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, (II) 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 (III) 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.
16
(xiii) Automatic Conversion.
(A) Each share of Series A Preferred Stock, Series D
Preferred Stock and Series F Preferred Stock shall automatically be converted
into shares of Common Stock, based on the then-effective Series A Preferred
Stock Conversion Price, Series D Preferred Stock, Conversion Price or Series F
Preferred Stock Conversion Price, as the case may be, (I) at any time upon the
affirmative vote or written consent of the holders of at least seventy-five
percent (75%) of the outstanding shares of the Series A Preferred Stock, Series
D Preferred Stock and Series F Preferred Stock (voting together as a single
class on an as-if-converted to Common Stock basis), or (II) immediately upon the
closing of an underwritten initial public offering of the Corporation's Common
Stock pursuant to an effective registration statement under the Securities Act
of 1933, as amended. Upon such automatic conversion, any declared and unpaid
dividends shall be paid in accordance with the provisions of Section 5(a)(iv).
(B) Upon the occurrence of either of the events specified in
Section 5(a)(xiii)(A) above, the outstanding shares of Series A Preferred Stock,
Series D Preferred Stock and Series F Preferred Stock shall be converted
automatically without any further action by the holders of such shares and
whether or not the certificates representing such shares are surrendered to the
Corporation or 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 shares of
Series A Preferred Stock, Series D Preferred Stock and Series F Preferred Stock
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 A Preferred Stock, Series D Preferred Stock
and Series F Preferred Stock, the holders of Series A Preferred Stock, Series D
Preferred Stock and Series F Preferred Stock shall surrender the certificates
representing such shares at the office of the Corporation or any transfer agent
for the Series A Preferred Stock, Series D Preferred Stock and Series F
Preferred Stock. 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 A Preferred Stock, Series D
Preferred Stock and Series F Preferred Stock 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 5(a)(iv).
(b) Series B Preferred Stock.
(i) Optional Conversion. Each share of Series B Preferred Stock
shall be convertible, at the option of the holder thereof, at any time prior to
redemption, at the office of the Corporation or any transfer agent for such
stock, into such number of fully paid and non-assessable shares of Common Stock
(whether or not the Corporation shall have registered any shares of its Common
Stock with the U.S. Securities and Exchange Commission (a "Registration")) as is
determined by dividing (A) the Series B Original Issue Price by (B) the Series B
Conversion Price (as defined below). The "Series B Conversion Price" shall be
$9.17 per share, subject to adjustment as set forth below in this Section 5(b).
17
(ii) Required Conversion. Notwithstanding the above, in the event
that there shall occur a merger or consolidation of the Corporation with or into
another entity as a consequence of which the holders of Series B Preferred Stock
shall own 50% or less of the equity (on a fully diluted basis) of the surviving
entity of such merger or consolidation than the holders of Series B Preferred
Stock did of the Corporation prior thereto, or the consummation of an initial
public offering of the Corporation's Common Stock, then, in any such event, the
outstanding shares of the Series B Preferred Stock then held by the holders of
Series B Preferred Stock shall, immediately prior to the consummation thereof be
converted into the same number of shares of Common Stock into which such shares
are convertible pursuant to this Section 5(b).
(iii) Mechanics of Conversion. Before any holder shall be
entitled to convert shares of Series B Preferred Stock into shares of Common
Stock, such holder shall surrender the certificate or certificates therefor,
duly endorsed and free and clear of any encumbrances of any type or nature, at
the office of the Corporation or of any transfer agent for the Series B
Preferred Stock, and shall give written notice to the Corporation at its
principal corporate office, of the election to convert the same. Such notice
shall state the number of shares of Series B Preferred Stock being converted,
the name or names in which the certificate or certificates for shares of Common
Stock are to be issued and the proposed date for such exercise (the "Conversion
Date"), which shall be between 10 and 30 days after the date of such notice;
provided, however, that if the Corporation shall deliver to such holder a
written request to delay the date for such exercise by no more than 45 days, the
Conversion Date will be as set forth in that request. The Corporation shall, as
soon as practicable thereafter, issue and deliver at such office to such holder,
or to the nominee or nominees of such holder, a certificate or certificates for
the number of shares of Common Stock to which such holder shall be entitled as
set forth above. Such conversion shall be deemed to have been made immediately
prior to the close of business on the Conversion Date, 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 as of the Conversion Date.
(iv) Sale of Shares Below Fair Market Value and Series B
Conversion Price. If the Corporation shall issue any additional shares of Common
Stock or Common Stock Equivalents (as defined in Section 5(b)(v) below) at a
price below both Fair Market Value (as defined below) and the Series B
Conversion Price in effect immediately prior to such issuance, the Series B
Conversion Price for such series in effect immediately prior to each such
issuance, upon such issuance or sale (except as otherwise provided in this
clause (iv)) shall be reduced to the price determined by dividing (I) an amount
equal to the sum of (1) the number of shares of Common Stock and Common Stock
Equivalents outstanding immediately prior to such issuance multiplied by the
then existing Series B Conversion Price and (2) the consideration, if any,
received by the Corporation upon such issuance or sale by (II) the total number
of shares of Common Stock and Common Stock Equivalents outstanding immediately
prior to such issuance or sale plus the number of shares of Common Stock and/or
Common Stock Equivalents so issued or sold; provided, however, that the
Corporation may (x) issue shares of Common Stock in connection with the
conversion of Preferred Stock in accordance with this Section 5, (y) issue
shares of Common Stock in connection with any transaction for which adjustment
is made pursuant to Sections 5(b)(v), (vi) and (vii) below and (z) establish,
and issue securities pursuant to, an incentive stock option or similar plan for
the benefit of its officers, directors, employees and consultants, without
triggering the anti-dilution provisions of the Series B Preferred Stock.
18
The "Fair Market Value" of one share of Common Stock shall be determined by the
Board of Directors in good faith and certified in a Board of Directors
resolution (taking into account the most recently or concurrently completed
arm's length transaction between the Corporation and an unaffiliated third party
the closing of which occurs within the six months preceding or on the date of
such calculation, if any); provided, however, that in the event the Common Stock
is traded on a securities exchange, the Nasdaq National Market or the Nasdaq
SmallCap Market, the Fair Market Value shall be deemed to be the average of the
closing sale prices for the Common Stock over the 30-day period (or such shorter
period for which closing sale prices are available if the Common Stock commenced
trading during such period) ending three (3) days prior to the date of exercise
of (y) conversion pursuant to this Section 5(b) or (z) redemption pursuant to
Section 6 hereof, as the case may be.
(v) Adjustment for Stock Splits. In the event the Corporation
should at any time 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 property or
rights convertible into, or entitling the holder thereof to receive directly or
indirectly, any of the foregoing (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 or other securities or property issuable upon
conversion or exercise thereof) or with payment that is less than the lower of
(A) the then-Fair Market Value price of the Common Stock (including, in the case
of Common Stock Equivalents, on an as-converted basis) and (B) the Series B
Conversion Price then in effect, then and in each case with respect to each
share of Series B Preferred Stock, the Conversion Right shall be for, in
addition to the number of shares of the Common Stock otherwise deliverable upon
exercise of the Conversion Right, and without adjustment to the Series B
Conversion Price, the amount of such additional shares of Common Stock and any
Common Stock Equivalents that the holder of such share of Series B Preferred
Stock would have received or become entitled to receive on the same terms and
conditions as if such holder had been a holder of record of such Common Stock as
shall have been deliverable immediately prior to such record date pursuant to
the terms of this Section 5(b).
(vi) Adjustment for Subdivisions and Combinations. If the
Corporation at any time during which any share of Series B Preferred Stock
remains outstanding shall subdivide or combine its Common Stock without a
corresponding subdivision or combination of the Series B Preferred Stock, (A) in
the case of a subdivision, the Series B Conversion Price shall be
proportionately decreased and the number of shares of Common Stock purchasable
thereunder shall be proportionately increased, and (B) in the case of a
combination, the Series B Conversion Price shall be proportionately increased
and the number of shares of Common Stock purchasable thereunder shall be
proportionately decreased.
(vii) Adjustment for Reclassification, Reorganization, Change or
Conversion. Other than in connection with an Acquisition or Asset Transfer as
defined in Section 4(e), in case of (A) any reclassification, reorganization,
change or conversion of securities of the class issuable upon conversion of the
Series B Preferred Stock (other than a change in par value, or from par value to
no par value) into other shares or securities of the Corporation, or (B) any
consolidation of the Corporation with or into another entity (other than a
19
merger or consolidation with another entity in which the Corporation is the
acquiring and the surviving entity and that does not result in any
reclassification or change of outstanding securities issuable upon conversion of
the Series B Preferred Stock), or (C) any sale of all or substantially all the
assets of the Corporation, each holder of Series B Preferred Stock shall have
the right to receive, in lieu of the shares of Common Stock otherwise issuable
upon the conversion of its shares of Series B Preferred Stock and accumulated
and unpaid dividends then-outstanding thereunder, the kind and amount of shares
of stock and other securities, money and property receivable upon such
reclassification, reorganization, change, merger, consolidation or conversion by
a holder of the number of shares of Common Stock then issuable upon conversion
of the Series B Preferred Stock. The provisions of this Section 5(b)(vii) shall
similarly attach to successive reclassifications, reorganizations, changes, and
conversions.
(viii) General Provisions for Conversion. The following
provisions shall apply for purposes of this Section 5(b):
(A) The aggregate maximum number of shares of Common Stock
or other securities or property deliverable upon conversion or exercise of
Common Stock Equivalents (assuming the satisfaction of any conditions to
convertibility or exercisability, including, without limitation, the passage of
time, but without taking into account potential antidilution adjustments) shall
be deemed to have been issued at the time such Common Stock Equivalents were
issued.
(B) In the event of any change in the number of shares of
Common Stock deliverable or in the consideration payable to the Corporation upon
conversion or exercise of such Common Stock Equivalents including, but not
limited to, a change resulting from the antidilution provisions thereof, the
Series B Conversion Price of the Series B Preferred Stock, to the extent in any
way affected by or computed using such Common Stock Equivalents, shall be
recomputed to reflect such change, but no further adjustment shall be made for
the actual issuance of Common Stock or any payment of such consideration upon
the exercise of any such options or rights or the conversion or exchange of such
securities.
(C) Upon the termination or expiration of the convertibility
or exercisability of any such Common Stock Equivalents, the Series B Conversion
Price of the Series B Preferred Stock, to the extent in any way affected by or
computed using such Common Stock Equivalents, shall be recomputed to reflect the
issuance of only the number of shares of Common Stock (and Common Stock
Equivalents which remain convertible or exercisable) actually issued upon the
conversion or exercise of such Common Stock Equivalents.
(c) Series C Preferred Stock.
(i) Optional Conversion. Each share of Series C Preferred Stock
shall be convertible, at the option of the holder thereof, at any time prior to
redemption, at the office of the Corporation or any transfer agent for such
stock, into such number of fully paid and non-assessable shares of Common Stock
(whether or not the Corporation shall have registered any shares of its Common
Stock with the U.S. Securities and Exchange Commission (a "Registration")), as
is determined by dividing (A) the Series C Original Issue Price by (B) the
20
Series C Conversion Price (as defined below). The "Series C Conversion Price"
shall be $6.76 per share; subject to adjustment as set forth below in this
Section 5(c).
(ii) Required Conversion. Notwithstanding the above, in the event
that there shall occur a merger or consolidation of the Corporation with or into
another entity as a consequence of which the holders of Series C Preferred Stock
shall own 50% or less of the equity (on a fully diluted basis) of the surviving
entity of such merger or consolidation than the holders of Series C Preferred
Stock did of the Corporation prior thereto, or the consummation of an initial
public offering of the Corporation's Common Stock, then, in any such event, the
outstanding shares of the Series C Preferred Stock then held by the holders of
Series C Preferred Stock shall, immediately prior to the consummation thereof be
converted into the same number of shares of Common Stock into which such shares
are convertible pursuant to this Section 5(c).
(iii) Mechanics of Conversion. Before any holder shall be
entitled to convert shares of Series C Preferred Stock into shares of Common
Stock, such holder shall surrender the certificate or certificates therefor,
duly endorsed and free and clear of any encumbrances of any type or nature, at
the office of the Corporation or of any transfer agent for the Series C
Preferred Stock, and shall give written notice to the Corporation at its
principal corporate office, of the election to convert the same. Such notice
shall state the number of shares of Series C Preferred Stock being converted,
the name or names in which the certificate or certificates for shares of Common
Stock are to be issued and the proposed date for such exercise (the "Conversion
Date"), which shall be between 10 and 30 days after the date of such notice;
provided, however, that if the Corporation shall deliver to such holder a
written request to delay the date for such exercise by no more than 45 days, the
Conversion Date will be as set forth in that request. The Corporation shall, as
soon as practicable thereafter, issue and deliver at such office to such holder,
or to the nominee or nominees of such holder, a certificate or certificates for
the number of shares of Common Stock to which such holder shall be entitled as
set forth above. Such conversion shall be deemed to have been made immediately
prior to the close of business on the Conversion Date, 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 as of the Conversion Date.
(iv) Sale of Shares Below Fair Market Value and Series C
Conversion Price. If the Corporation shall issue any additional shares of Common
Stock or Common Stock Equivalents (as defined in Section 5(c)(v) below) at a
price below both Fair Market Value (as defined below) and the Series C
Conversion Price in effect immediately prior to such issuance, the Series C
Conversion Price for such series in effect immediately prior to each such
issuance, upon such issuance or sale (except as otherwise provided in this
clause (iv)) shall be reduced to the price determined by dividing (I) an amount
equal to the sum of (1) the number of shares of Common Stock and Common Stock
Equivalents outstanding immediately prior to such issuance multiplied by the
then existing Series C Conversion Price and (2) the consideration, if any,
received by the Corporation upon such issuance or sale by (II) the total number
of shares of Common Stock and Common Stock Equivalents outstanding immediately
prior to such issuance or sale plus the number of shares of Common Stock and/or
Common Stock Equivalents so issued or sold; provided, however, that the
Corporation may (x) issue shares of Common Stock and Series C Preferred Stock in
connection with the conversion of Preferred Stock in accordance with this
Section 5, (y) issue shares of Common Stock in connection with any transaction
for
21
which adjustment is made pursuant to Sections 5(c)(v), (vi) and (vii) below, and
(z) establish, and issue securities pursuant to, an incentive stock option or
similar plan for the benefit of its officers, directors, employees and
consultants, without triggering the anti-dilution provisions of the Series C
Preferred Stock. The "Fair Market Value" of one share of Common Stock shall be
determined by the Board of Directors in good faith and certified in a Board of
Directors resolution (taking into account the most recently or concurrently
completed arm's length transaction between the Corporation and an unaffiliated
third party the closing of which occurs within the six months preceding or on
the date of such calculation, if any); provided, however, that in the event the
Common Stock is traded on a securities exchange, the Nasdaq National Market or
the Nasdaq SmallCap Market, the Fair Market Value shall be deemed to be the
average of the closing sale prices for the Common Stock over the 30-day period
(or such shorter period for which closing sale prices are available if the
Common Stock commenced trading during such period) ending three (3) days prior
to the date of exercise of (y) conversion pursuant to this Section 5(c), or (z)
redemption pursuant to Section 6 hereof, as the case may be.
(v) Adjustment for Stock Splits. In the event the Corporation
should at any time 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 property or
rights convertible into, or entitling the holder thereof to receive directly or
indirectly, any of the foregoing (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 or other securities or property issuable upon
conversion or exercise thereof) or with payment that is less than the lower of
(A) the then-Fair Market Value price of the Common Stock (including, in the case
of Common Stock Equivalents, on an as-converted basis) and (B) the Series C
Conversion Price then in effect, then and in each case with respect to each
share of Series C Preferred Stock, the Conversion Right shall be for, in
addition to the number of shares of the Common Stock otherwise deliverable upon
exercise of the Conversion Right, and without adjustment to the Series C
Conversion Price, the amount of such additional shares of Common Stock and any
Common Stock Equivalents that the holder of such share of Series C Preferred
Stock would have received or become entitled to receive on the same terms and
conditions as if such holder had been a holder of record of such Common Stock as
shall have been deliverable immediately prior to such record date pursuant to
the terms of this Section 5(c).
(vi) Adjustment for Subdivisions and Combinations. If the
Corporation at any time during which any share of Series C Preferred Stock
remains outstanding shall subdivide or combine its Common Stock without a
corresponding subdivision or combination of Series C Preferred Stock, (A) in the
case of a subdivision, the Series C Conversion Price shall be proportionately
decreased and the number of shares of Common Stock purchasable thereunder shall
be proportionately increased, and (B) in the case of a combination, the Series C
Conversion Price shall be proportionately increased and the number of shares of
Common Stock purchasable thereunder shall be proportionately decreased.
(vii) Adjustment for Reclassification, Reorganization, Change or
Conversion. Other than in connection with an Acquisition or Asset Transfer as
defined in Section 4(e), in case of (A) any reclassification, reorganization,
change or conversion of
22
securities of the class issuable upon conversion of the Series C Preferred Stock
(other than a change in par value, or from par value to no par value) into other
shares or securities of the Corporation, or (B) any consolidation of the
Corporation with or into another entity (other than a merger or consolidation
with another entity in which the Corporation is the acquiring and the surviving
entity and that does not result in any reclassification or change of outstanding
securities issuable upon conversion of the Series C Preferred Stock), or (C) any
sale of all or substantially all the assets of the Corporation, each holder of
Series C Preferred Stock shall have the right to receive, in lieu of the shares
of Common Stock otherwise issuable upon the conversion of its shares of Series C
Preferred Stock and accumulated and unpaid dividends then-outstanding
thereunder, the kind and amount of shares of stock and other securities, money
and property receivable upon such reclassification, reorganization, change,
merger, consolidation or conversion by a holder of the number of shares of
Common Stock then issuable upon conversion of the Series C Preferred Stock. The
provisions of this Section 5(c)(vii) shall similarly attach to successive
reclassifications, reorganizations, changes, and conversions.
(viii) General Provisions for Conversion. The following
provisions shall apply for purposes of this Section 5(c):
(A) The aggregate maximum number of shares of Common Stock
or other securities or property deliverable upon conversion or exercise of
Common Stock Equivalents (assuming the satisfaction of any conditions to
convertibility or exercisability, including, without limitation, the passage of
time, but without taking into account potential antidilution adjustments) shall
be deemed to have been issued at the time such Common Stock Equivalents were
issued.
(B) In the event of any change in the number of shares of
Common Stock deliverable or in the consideration payable to the Corporation upon
conversion or exercise of such Common Stock Equivalents including, but not
limited to, a change resulting from the antidilution provisions thereof, the
Series C Conversion Price of the Series C Preferred Stock, to the extent in any
way affected by or computed using such Common Stock Equivalents, shall be
recomputed to reflect such change, but no further adjustment shall be made for
the actual issuance of Common Stock or any payment of such consideration upon
the exercise of any such options or rights or the conversion or exchange of such
securities.
(C) Upon the termination or expiration of the convertibility
or exercisability of any such Common Stock Equivalents, the Series C Conversion
Price of the Series C Preferred Stock, to the extent in any way affected by or
computed using such Common Stock Equivalents, shall be recomputed to reflect the
issuance of only the number of shares of Common Stock (and Common Stock
Equivalents which remain convertible or exercisable) actually issued upon the
conversion or exercise of such Common Stock Equivalents.
(d) Series E Preferred Stock.
(i) Optional Conversion. Subject to and in compliance with the
provisions of this Section 5(d), any shares of Series E Preferred Stock may, at
the option of the holder, be converted at any time into fully-paid and
nonassessable shares of Common Stock. The number of shares of Common Stock to
which a holder of Series E Preferred Stock will be
23
entitled upon conversion shall be the product obtained by multiplying the then
effective "Series E Preferred Stock Conversion Rate" (determined as provided in
Section 5(d)(ii)), by the number of shares of Series E Preferred Stock being
converted.
(ii) Series E Preferred Stock Conversion Rate. The "Series E
Original Issue Price" will be $4.00 for each share of Series E Preferred Stock
(as adjusted for any stock dividends, combinations, splits, recapitalizations
and the like with respect to such shares). The conversion rate in effect at any
time for conversion of the Series E Preferred Stock (the "Series E Preferred
Stock Conversion Rate") shall be the quotient obtained by dividing the Series E
Original Issue Price by the then effective "Series E Preferred Stock Conversion
Price", calculated as provided in this Section 5(d).
(iii) Series E Preferred Stock Conversion Price. The conversion
price for the Series E Preferred Stock will initially be $4.00 (the "Series E
Preferred Stock Conversion Price"). Such initial Series E Preferred Stock
Conversion Price will be adjusted from time to time in accordance with this
Section 5(d).
(iv) Mechanics of Conversion. Each holder of Series E Preferred
Stock who desires to convert the same into shares of Common Stock pursuant to
this Section 5(d) shall surrender the certificate or certificates therefor, duly
endorsed, at the office of the Corporation or of any transfer agent for the
Series E Preferred Stock, 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 E Preferred Stock 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 (at the Common
Stock's fair market value determined by the Board of Directors in good faith as
of the date of conversion) the value of any fractional share of Common Stock
otherwise issuable to any holder of Series E Preferred Stock. 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 E Preferred
Stock 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 or holders of such shares of Common Stock on such date.
(v) Adjustment for Stock Splits and Combinations. If the
Corporation shall at any time or from time to time after the date that the first
share of Series E Preferred Stock is issued (the "Series E Original Issue Date")
effect a subdivision of the outstanding Common Stock without a corresponding
subdivision of the Series E Preferred Stock, the Series E Preferred Stock
Conversion Price in effect immediately before that subdivision shall be
proportionately decreased. Conversely, if the Corporation shall at any time or
from time to time after the Series E Original Issue Date combine the outstanding
shares of Common Stock into a smaller number of shares without a corresponding
combination of the Series E Preferred Stock, the Series E Preferred Stock
Conversion Price in effect immediately before the combination will be
proportionately increased. Any adjustment under this Section 5(d)(v) shall
become effective at the close of business on the date the subdivision or
combination becomes effective.
(vi) Adjustment for Common Stock Dividends and Distributions. If
the Corporation at any time or from time to time after the Series E Original
Issue Date makes, or
24
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 E Preferred Stock 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 E Preferred Stock Conversion Price then in
effect by a fraction (i) the numerator of which is the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date, and (ii) the denominator
of which is the total number of shares of Common Stock issued and outstanding
immediately prior to the time of such issuance or the close of business on such
record date plus the number of shares of Common Stock issuable in payment of
such dividend or distribution; provided, however, that if such record date is
fixed and such dividend is not fully paid or if such distribution is not fully
made on the date fixed therefor, the Series E Preferred Stock Conversion Price
shall be recomputed accordingly as of the close of business on such record date
and thereafter the Series E Preferred Stock Conversion Price shall be adjusted
pursuant to this Section 5(f) to reflect the actual payment of such dividend or
distribution.
(vii) Adjustment for Reclassification, Exchange and Substitution.
If at any time or from time to time after the Series E Original Issue Date, the
Common Stock issuable upon the conversion of the Series E Preferred Stock is
changed into the same or different number of shares of any class or classes of
stock, whether by recapitalization, reclassification or otherwise (other than an
Acquisition or Asset Transfer (each as defined in Section 4(e)) 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 5(d)), in
any such event each holder of Series E Preferred Stock shall have the right
thereafter to convert such stock into the kind and amount of stock and other
securities and property that would have been receivable upon such
recapitalization, reclassification or other change by holders of the maximum
number of shares of Common Stock into which such shares of Series E Preferred
Stock could have been converted immediately prior to such recapitalization,
reclassification or change, all subject to further adjustment as provided herein
or with respect to such other securities or property by the terms thereof.
(viii) Reorganizations, Mergers or Consolidations. If at any time
or from time to time after the Series E Original Issue Date, 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 or a recapitalization, subdivision,
combination, reclassification, exchange or substitution of shares provided for
elsewhere in this Section 5(d)), as a part of such capital reorganization,
provision shall be made so that the holders of the Series E Preferred Stock
shall thereafter be entitled to receive upon conversion of the Series E
Preferred Stock the number of shares of stock or other securities or property of
the Corporation to which a holder of the number of shares of Common Stock
deliverable upon conversion would have been entitled on such capital
reorganization, subject to adjustment in respect of such stock or securities by
the terms thereof. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Section 5(d) with respect to the rights of
the holders of Series E Preferred Stock after the capital reorganization to the
end that the provisions of this Section 5(d) (including adjustment of the Series
E Preferred Stock Conversion Price then in effect and the number of shares
issuable upon
25
conversion of the Series E Preferred Stock) shall be applicable after that event
and be as nearly equivalent as practicable.
(ix) Sale of Shares Below $4.00 and Series E Preferred Stock
Conversion Price.
(A) If at any time or from time to time after the Series E
Original Issue Date the Corporation issues or sells, or is deemed by the express
provisions of this subsection 5(d)(ix) to have issued or sold, Additional Shares
of Common Stock (as defined in subsection 5(d)(i)(D) below), other than as
provided in Sections 5(d)(v), (vi), (vii) and (viii) above, for an Effective
Price (as defined in subsection 5(d)(ix)(D) below) below both $4.00 and the then
effective Series E Preferred Stock Conversion Price, then the then existing
Series E Preferred Stock Conversion Price shall be reduced, as of the opening of
business on the date of such issue or sale, to a price determined by multiplying
the then effective Series E Preferred Stock Conversion Price by a fraction (I)
the numerator of which shall be (1) the number of shares of Common Stock deemed
outstanding (as defined below) immediately prior to such issue or sale, plus (2)
the number of shares of Common Stock which the aggregate consideration received
(as defined in subsection 5(i)(B)) by the Corporation for the total number of
Additional Shares of Common Stock so issued would purchase at such Series E
Preferred Stock 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 (x) the number of shares of Common Stock actually
outstanding, (y) the number of shares of Common Stock into which the then
outstanding shares of Preferred Stock could be converted if fully converted on
the day immediately preceding the given date, and (z) 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.
(B) For the purpose of making any adjustment required under
this Section 5(d)(ix), the consideration received by the Corporation for any
issue or sale of securities shall (I) to the extent it consists of cash, be
computed at the aggregate amount of cash received by the Corporation, (II) 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,
and (III) if Additional Shares of Common Stock, Convertible Securities (as
defined in subsection 5(d)(ix)(C)), 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.
(C) For the purpose of the adjustment required under this
Section 5(d)(ix), if the Corporation issues or sells (I) stock or Convertible
Securities or (II) rights or options for the purchase of Additional Shares of
Common Stock or Convertible Securities and if the Effective Price of such
Additional Shares of Common Stock is less than the then effective Series E
Preferred Stock Conversion Price, the Corporation shall be deemed to have issued
at the
26
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 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 (including,
without duplication, 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 amount 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 reconsideration payable to
the Corporation upon the exercise or conversion of such rights, options or
Convertible Securities. No further adjustment of the Series E Preferred Stock
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 E Preferred
Stock Conversion Price as adjusted upon the issuance of such rights, options or
Convertible Securities shall be readjusted to the Series E Preferred Stock
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 Corporation
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 (including, without duplication, cancellation of liabilities or
obligations evidenced by such Convertible Securities) on the conversion of such
Convertible Securities, provided, that such readjustment shall not apply to
prior conversions of Series E Preferred Stock.
(D) "Additional Shares of Common Stock" shall mean all
shares of Common Stock issued by the Corporation or deemed to be issued pursuant
to this Section 5(d)(ix), other than (I) shares of Common Stock issued upon
conversion of Preferred Stock, (II) 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, and net of
27
any repurchases of such shares or cancellations or exemptions of such options,
warrants or other rights) before or after the Series E Original Issue Date to
employees, officers or directors of, or consultants, advisors, strategic
partners, lenders or creditors to the Corporation or any subsidiary pursuant to
stock purchase or stock option plans or other arrangements that are approved by
the Board of Directors; and (III) shares of Common Stock issued to third parties
in connection with license arrangements or other strategic transactions
unanimously approved by the Board of Directors of Directors. References to
Common Stock in this clause (D) shall mean all shares of Common Stock issued by
the Corporation or deemed to be issued pursuant to this Section 5(d)(ix). 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 Corporation under
this Section 5(d)(ix), into the aggregate consideration received, or deemed to
have been received by the Corporation for such issue under this Section
5(d)(ix), for such Additional Shares of Common Stock.
(x) Certificate of Adjustment. In each case of an adjustment or
readjustment of the Series E Preferred Stock Conversion Price or the number of
shares of Common Stock or other securities issuable upon conversion of the
Series E Preferred Stock, if the Series E Preferred Stock is then convertible
pursuant to this Section 5(d), 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 E Preferred Stock 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 (A) 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, (B) the Series E
Preferred Stock Conversion Price at the time in effect, (C) the number of
Additional Shares of Common Stock and (D) the type and amount, if any, of other
property which at the time would be received upon conversion of the Series E
Preferred Stock.
(xi) Notices of Record Date. Upon (A) 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 (B) any Acquisition 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, or any
voluntary or involuntary dissolution, liquidation or winding up of the
Corporation, the Corporation shall mail to each holder of Series E Preferred
Stock at least ten (10) days prior to the record date specified therein (or such
shorter period approved by a vote or written consent of a majority of the
outstanding Series E Preferred Stock a notice specifying (I) 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, (II) 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 (III) 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.
28
(xii) Automatic Conversion.
(A) Each share of Series E Preferred Stock shall
automatically be converted into shares of Common Stock, based on the
then-effective Series E Preferred Stock Conversion Price (I) at any time upon
the affirmative vote or written consent of the holders of at least fifty percent
(50%) of the outstanding shares of the Series E Preferred Stock, (II) in the
event that there shall occur a merger or consolidation of the Corporation with
or into another entity as a consequence of which the holder of the Series E
Preferred Stock shall own 50% or less of the equity (on a fully diluted basis)
of the surviving entity of such merger or consolidation than the holders of the
Series E Preferred Stock did of the Corporation prior thereto, or (III)
immediately upon the closing of an initial public offering of the Corporation's
Common Stock pursuant to an effective registration statement under the
Securities Act of 1933, as amended.
(B) Upon the occurrence of any of the events specified in
Section 5(d)(xii)(A) above, the outstanding shares of Series E Preferred Stock
shall be converted automatically without any further action by the holders of
such shares and whether or not the certificates representing such shares are
surrendered to the Corporation or 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 shares of Series E Preferred Stock 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 E
Preferred Stock, the holders of Series E Preferred Stock shall surrender the
certificates representing such shares at the office of the Corporation or any
transfer agent for the Series E Preferred Stock. 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 E Preferred Stock 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 2(b).
(e) No Fractional Shares and Certificate as to Adjustments.
(i) No fractional shares shall be issued upon the conversion of
any share or shares of Preferred Stock, and the number of shares of Common Stock
to be issued on conversion shall be rounded to the nearest whole share. Whether
or not fractional shares are issuable upon such conversion shall be determined
on the basis of the aggregate number of shares of Preferred Stock each holder is
at the time converting into Common Stock, and the aggregate number of shares of
Common Stock issuable to each such holder upon such conversion.
(ii) Upon the occurrence of each adjustment or readjustment of
the Conversion Price for any series of Preferred Stock pursuant to Section 5,
the Corporation, at its expense, shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and prepare and furnish to each
holder a certificate setting forth such adjustment or
29
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, furnish or cause to be furnished to such holder a like
certificate setting forth (A) such adjustment and readjustment, (B) the
Conversion Price at the time in effect, and (C) 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 a share of Preferred Stock.
(f) 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 Preferred Stock, such number of its shares of Common Stock that
shall from time to time be sufficient to effect the conversion of all
outstanding shares of the Preferred Stock; and if at any time the number of
authorized but unissued shares of Common Stock not otherwise reserved for
issuance shall not be sufficient to effect the conversion of all then
outstanding shares of the Preferred Stock, the Corporation will take such
corporate action that 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, including without limitation,
engaging in best efforts to obtain the requisite shareholder approval of any
necessary amendment to its Certificate of Incorporation.
(g) Notices. Any notice required by the provisions of this Certificate
of Incorporation 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
electronic mail 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) day after deposit with a nationally recognized
overnight courier, specifying next day delivery, with 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.
(h) 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 Preferred Stock, excluding any tax or other charge imposed in
connection with any transfer involved in the issue and delivery of shares of
Common Stock in a name other than that in which the shares of Preferred Stock so
converted were registered.
(i) Stock Fully Paid. All shares of Common Stock that may be issued
upon conversion of the Preferred Stock will, upon issuance, be fully paid and
nonassessable, and free from all taxes, liens and charges with respect to the
issue thereof (other than restrictions under federal and state securities laws).
(j) Waiver of Antidilution Adjustment. The antidilution adjustment
provisions in any of Sections 5(a)(ix), 5(a)(x), 5(b)(iv), 5(c)(iv) and 5(d)(ix)
may be waived with respect to any issuance by the Corporation of its Common
Stock, or options, warrants or other rights to purchase its Common Stock, upon
the vote or written consent of the Corporation and (A) holders of at least
seventy-five percent (75%) of the outstanding Series A Preferred Stock and
Series D Preferred Stock (voting together as a single class on an
as-if-converted to Common Stock basis) with respect to Sections 5(a)(ix), (B)
holders of at least a majority of the outstanding
30
shares of Series F Preferred Stock with respect to Section 5(a)(x), (C) holders
of at least a majority of the outstanding Series B Preferred Stock with respect
to Section 5(b)(iv), (D) holders of at least a majority of the outstanding
Series C Preferred Stock with respect to Section 5(c)(iv), and (E) holders of at
least fifty percent (50%) of the outstanding Series E Preferred Stock with
respect to Section 5(d)(ix). Any waiver obtained in compliance with this Section
5(j) shall be binding on the Corporation and all holders of the class and series
of stock referenced in (A), (B), (C), (D) and/or (E) above, as the case may be.
6. Redemption.
(a) Series A Preferred Stock and Series D Preferred Stock. The
Corporation shall be obligated to redeem the Series A Preferred Stock and Series
D Preferred Stock as follows:
(i) The holders of at least a majority of the then outstanding
shares of Series A Preferred Stock and Series D Preferred Stock, voting together
as a separate class on an as-if-converted to Common Stock basis, may require the
Corporation, to the extent it may lawfully do so, to redeem all, but not less
than all, of the Series A Preferred Stock and Series D Preferred Stock in three
(3) equal annual installments beginning on December 31, 2008 and ending on the
date two (2) years from such first redemption date (each a "Series A/D
Redemption Date"). The Corporation shall effect such redemptions on the
applicable Series A/D Redemption Date by paying in cash in exchange for the
shares of Series A Preferred Stock and Series D Preferred Stock to be redeemed a
sum equal to twice the Series A/D Original Issue Price per share of Series A
Preferred Stock and Series D Preferred Stock plus all Accruing Dividends accrued
but unpaid thereon, whether or not declared, with respect to such shares. The
total amount to be paid for the Series A Preferred Stock and Series D Preferred
Stock is hereinafter referred to as the "Series A/D Redemption Price." The
number of shares of Series A Preferred Stock and Series D Preferred Stock that
the Corporation shall be required to redeem on any one Series A/D Redemption
Date shall be equal to the amount determined by dividing (A) the aggregate
number of shares of Series A Preferred Stock and Series D Preferred Stock
outstanding immediately prior to such Series A/D Redemption Date by (B) the
number of remaining Series A/D Redemption Dates (including the Series A/D
Redemption Date to which such calculation applies). Shares subject to redemption
pursuant to this Section 6(a) shall be redeemed from each holder of Series A
Preferred Stock and Series D Preferred Stock on a pro rata basis.
(ii) At least thirty (30) days but no more than sixty (60) days
prior to the first Series A/D Redemption Date, the Corporation shall send a
notice in accordance with Section 5(g) (a "Series A/D Redemption Notice") to all
holders of Series A Preferred Stock and Series D Preferred Stock to be redeemed
setting forth (A) the Series A/D Redemption Price for the shares to be redeemed;
and (B) the place at which such holders may obtain payment of the Series A/D
Redemption Price upon surrender of their share certificates. The redemption
shall proceed unless, at least fifteen (15) days prior to the Series A/D
Redemption Date, the holders of at least a majority of the then outstanding
shares of Series A Preferred Stock and Series D Preferred Stock provide notice
in writing to the Corporation that the redemption not occur. If the Corporation
does not have sufficient funds legally available to redeem all shares to be
redeemed at the Series A/D Redemption Date (including, if applicable, those to
be redeemed at the option
31
of the Corporation), then it shall redeem such shares pro rata (based on the
portion of the aggregate Series A/D 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.
(iii) On or prior to each Series A/D Redemption Date, the
Corporation shall deposit the Series A/D Redemption Price of all shares to be
redeemed with a bank or trust company having aggregate capital and surplus in
excess of $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/D
Redemption Date, the Series A/D 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 6(a) for the redemption of
shares thereafter converted into shares of Common Stock pursuant to Section 5(a)
hereof no later than the fifth (5th) day preceding the Series A/D Redemption
Date shall be returned to the Corporation forthwith upon such conversion. The
balance of any funds deposited by the Corporation pursuant to this Section 6(a)
remaining unclaimed at the expiration of one (1) year following such Series A/D
Redemption Date shall be returned to the Corporation promptly upon its written
request.
(iv) On or after such Series A/D Redemption Date, each holder of
shares of Series A Preferred Stock and Series D Preferred Stock to be redeemed
shall surrender such holder's certificates representing such shares to the
Corporation in the manner and at the place designated in the Series A/D
Redemption Notice, and thereupon the Series A/D 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/D Redemption
Date, unless there shall have been a default in payment of the Series A/D
Redemption Price or the Corporation is unable to pay the Series A/D Redemption
Price due to not having sufficient legally available funds, all rights of the
holder of such shares as holder of Series A Preferred Stock and Series D
Preferred Stock (except the right to receive the Series A/D Redemption Price
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 Stock and Series D Preferred Stock 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 Stock and
Series D Preferred Stock shall remain outstanding and shall be entitled to all
of the rights and preferences provided herein.
(v) In the event of a call for redemption of any shares of Series
A Preferred Stock and Series D Preferred Stock, the Conversion Rights (as
defined in Section 5) for such Series A Preferred Stock and Series D Preferred
Stock shall terminate as to the shares designated for redemption at the close of
business on the fifth (5th) day preceding the Series A/D Redemption Date, unless
default is made in payment of the Series A/D Redemption Price.
(b) Series B Preferred Stock. The Series B Preferred Stock shall be
redeemable as follows:
(i) To the extent the Corporation shall have funds legally
available for such payment, on December 31, 2008, if any shares of the Series B
Preferred Stock shall be
32
outstanding, the Corporation shall redeem all outstanding shares of the Series B
Preferred Stock, at a redemption price equal to the aggregate Series B
Liquidation Preference, in cash, with any accrued and unpaid dividends thereon
to the date fixed for redemption, without interest.
(ii) In the event the Corporation shall redeem shares of Series B
Preferred Stock pursuant to Section 6(b), notice of such redemption shall be
given by first class mail, postage prepaid, mailed not less than 10 days nor
more than 20 days prior to the redemption date, to each holder of record of the
shares to be redeemed at such holder's address as the same appears on the stock
register of the Corporation; provided that neither the failure to give such
notice nor any defect therein shall affect the validity of the giving of notice
for the redemption of any share of Series B Preferred Stock to be redeemed
except as to the holder to whom the Corporation has failed to give said notice
or except as to the holder whose notice was defective. Each such notice shall
state: (A) the redemption date; (B) the number of shares of Series B Preferred
Stock to be redeemed; (C) the redemption price and the Fair Market Value of the
Common Stock or the Series C Preferred Stock, if applicable; (D) the place or
places where certificates for such shares are to be surrendered for payment of
the redemption price; and (E) that dividends on the shares to be redeemed will
cease to accrue on such redemption date.
(iii) In the case of any redemption pursuant to Section 6(b)
hereof, notice having been mailed as provided in Section 6(b)(ii) hereof, from
and after the redemption date (unless default shall be made by the Corporation
in providing money for the payment of the redemption price of the shares called
for redemption), dividends on the shares of Series B Preferred Stock so called
for redemption shall cease to accrue, and all rights of the holders thereof as
stockholders of the Corporation (except the right to receive from the
Corporation the redemption price) shall cease. Upon surrender in accordance with
said notice of the certificates for any shares so redeemed (properly endorsed or
assigned for transfer, if the Board of Directors shall so require and the notice
shall so state), such share shall be redeemed by the Corporation at the
redemption price aforesaid. In case fewer than all the shares represented by any
such certificate are redeemed, a new certificate shall be issued representing
the unredeemed shares without cost to the holder thereof.
(c) Series C Preferred Stock. The Series C Preferred Stock shall be
redeemable as follows:
(i) To the extent the Corporation shall have funds legally
available for such payment, on December 31, 2008, if any shares of the Series C
Preferred Stock shall be outstanding, the Corporation shall redeem all
outstanding shares of the Series C Preferred Stock, at a redemption price equal
to the aggregate Series C Liquidation Preference, in cash, together with any
accrued and unpaid dividends thereon to the date fixed for redemption, without
interest.
(ii) In the event the Corporation shall redeem shares of Series C
Preferred Stock pursuant to Section 6(c), notice of such redemption shall be
given by first class mail, postage prepaid, mailed not less than 10 days nor
more than 20 days prior to the redemption date, to each holder of record of the
shares to be redeemed at such holder's address as the same appears on the stock
register of the Corporation; provided that neither the failure to give such
notice nor any defect therein shall affect the validity of the giving of notice
for the redemption of any share of Series C Preferred Stock to be redeemed
except as to the holder to
33
whom the Corporation has failed to give said notice or except as to the holder
whose notice was defective. Each such notice shall state: (A) the redemption
date; (B) the number of shares of Series C Preferred Stock to be redeemed; (C)
the redemption price and the Fair Market Value of the Common Stock; (D) the
place or places where certificates for such shares are to be surrendered for
payment of the redemption price; and (E) that dividends on the shares to be
redeemed will cease to accrue on such redemption date.
(iii) In the case of any redemption pursuant to Section 6(c)
hereof, notice having been mailed as provided in Section 6(c)(ii) hereof, from
and after the redemption date (unless default shall be made by the Corporation
in providing money for the payment of the redemption price of the shares called
for redemption), and all rights of the holders thereof as stockholders of the
Corporation (except the right to receive from the Corporation the redemption
price) shall cease. Upon surrender in accordance with said notice of the
certificates for any shares so redeemed (properly endorsed or assigned for
transfer, if the Board of Directors shall so require and the notice shall so
state), such share shall be redeemed by the Corporation at the redemption price
aforesaid. In case fewer than all the shares represented by any such certificate
are redeemed, a new certificate shall be issued representing the unredeemed
shares without cost to the holder thereof.
(d) Series E Preferred Stock. The Corporation shall be obligated to
redeem the Series E Preferred Stock as follows:
(i) The holders of at least a majority of the then outstanding
shares of Series E Preferred Stock may require the Corporation, to the extent it
may lawfully do so, to redeem all, but not less than all, of the outstanding
shares of Series E Preferred Stock if within two (2) years after the Series E
Original Issue Date, the Corporation (x) has not become subject to the public
reporting requirements of Section 12(g) or Section 15(d) of the Securities
Exchange Act of 1934, as amended, and (y) sells all or substantially all of the
assets of the Corporation purchased from the original holders of the Series E
Preferred Stock under the terms of that certain "Asset Purchase Agreement" dated
September 30, 2005 (the "Series E Redemption Sale"). The Corporation shall
effect the redemption by paying in cash in exchange for the shares of Series E
Preferred Stock a sum equal to $10 per share of Series E Preferred Stock. The
total amount to be paid for the Series E Preferred Stock is hereafter referred
to as the "Series E Redemption Price."
(ii) At least ten (10) business days but no more than sixty (60)
business days prior to the anticipated closing of the Series E Redemption Sale,
the Corporation shall send a notice in accordance with Section 5(g) (a "Series E
Redemption Notice") to all holders of Series E Preferred Stock notifying them of
the proposed Series E Redemption Sale (including its basis terms and anticipated
closing date) and of their right to require redemption of their shares of Series
E Preferred Stock under this Section 6(d). If the anticipated closing date of
the Series E Redemption Sale shall be delayed, the Corporation shall promptly
notify all holders of Series E Preferred Stock of the new anticipated closing
date. If holders of at least a majority of the then outstanding shares of Series
E Preferred Stock deliver to the Corporation, no later than three (3) business
days prior to closing of the Series E Redemption Sale, a written notice election
to require redemption of all of the outstanding shares of Series E Preferred
Stock hereunder, then the Corporation shall, promptly after closing of the
Series E Redemption Sale, send notice to all
34
such holders setting forth the date on which the Corporation intends to effect
the redemption of the shares of Series E Preferred Stock (which shall not be
more than thirty (30) business days after the closing of the Redemption Sale
(the "Series E Redemption Date"), and information as to the place at which such
holders may obtain payment of the Series E Redemption Price upon surrender of
their share certificates. The redemption shall proceed unless, at least five (5)
business days prior to the Series E Redemption Date, the holders of at least a
majority of the then outstanding shares of Series E Preferred Stock provide
notice in writing to the Corporation that the redemption will not occur.
(iii) On or after the Series E Redemption Date, each holder of
shares of Series E Preferred Stock shall surrender such holder's certificates
representing such shares to the Corporation at the place designated in the
Series E Redemption Notice, and thereupon the Series E 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 cancelled. If the Corporation does not have sufficient
funds legally available to redeem all shares to be redeemed at the Series E
Redemption Date, then it shall redeem such shares pro rata (based on the portion
of the aggregate Series E Redemption Price payable to each holder) to the extent
possible and shall redeem the remaining shares to be redeemed as soon as
sufficient funds are legally available. From and after such Series E Redemption
Date, unless there shall have been a default in payment of the Series E
Redemption Price or the Corporation is unable to pay the Series E Redemption
Price due to not having sufficient legally available funds, all rights of the
holder of such shares as a holder of Series E Preferred Stock (except the right
to receive the Series E Redemption Price without interest upon surrender of the
holder's certificates) shall cease and terminate with respect to such shares;
provided that in the event that shares of Series E Preferred Stock are not
redeemed due to default in payment by the Corporation or because the Corporation
does not have sufficient legally available funds, such shares of Series E
Preferred Stock shall remain outstanding to the extent not paid for, and shall
be entitled to all of the rights and preferences provided herein.
(e) Series F Preferred Stock. The Corporation shall be obligated to
redeem the Series F Preferred Stock as follows:
(i) The holders of at least a majority of the then outstanding
shares of Series F Preferred Stock, voting together as a separate class on an
as-if-converted to Common Stock basis, may require the Corporation, to the
extent it may lawfully do so, to redeem all, but not less than all, of the
Series F Preferred Stock in three (3) equal annual installments beginning on
December 31, 2008 and ending on the date two (2) years from such first
redemption date (each a "Series F Redemption Date"). The Corporation shall
effect such redemptions on the applicable Series F Redemption Date by paying in
cash in exchange for the shares of Series F Preferred Stock to be redeemed a sum
equal to one and one-half (1.5) times the Series F Original Issue Price plus all
Accruing Dividends accrued but unpaid thereon, whether or not declared, with
respect to such shares. The total amount to be paid for the Series F Preferred
Stock is hereinafter referred to as the "Series F Redemption Price." The number
of shares of Series F Preferred Stock that the Corporation shall be required to
redeem on any one Series F Redemption Date shall be equal to the amount
determined by dividing (A) the aggregate number of shares of Series F Preferred
Stock outstanding immediately prior to such Series F Redemption Date by (B) the
number of remaining Series F Redemption Dates (including the Series F Redemption
35
Date to which such calculation applies). Shares subject to redemption pursuant
to this Section 6(e) shall be redeemed from each holder of Series F Preferred
Stock on a pro rata basis.
(vi) At least thirty (30) days but no more than sixty (60) days
prior to the first Series F Redemption Date, the Corporation shall send a notice
in accordance with Section 5(f) (a "Series F Redemption Notice") to all holders
of Series F Preferred Stock to be redeemed setting forth (A) the Series F
Redemption Price for the shares to be redeemed; and (B) the place at which such
holders may obtain payment of the Series F Redemption Price upon surrender of
their share certificates. The redemption shall proceed unless, at least fifteen
(15) days prior to the Series F Redemption Date, the holders of at least a
majority of the then outstanding shares of Series F Preferred Stock provide
notice in writing to the Corporation that the redemption not occur. If the
Corporation does not have sufficient funds legally available to redeem all
shares to be redeemed at the Series F Redemption Date (including, if applicable,
those to be redeemed at the option of the Corporation), then it shall redeem
such shares pro rata (based on the portion of the aggregate Series F 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.
(vii) On or prior to each Series F Redemption Date, the
Corporation shall deposit the Series F Redemption Price of all shares to be
redeemed with a bank or trust company having aggregate capital and surplus in
excess of $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 F
Redemption Date, the Series F 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 6(e) for the redemption of shares
thereafter converted into shares of Common Stock pursuant to Section 5(a) hereof
no later than the fifth (5th) day preceding the Series F Redemption Date shall
be returned to the Corporation forthwith upon such conversion. The balance of
any funds deposited by the Corporation pursuant to this Section 6(e) remaining
unclaimed at the expiration of one (1) year following such Series F Redemption
Date shall be returned to the Corporation promptly upon its written request.
(viii) On or after such Series F Redemption Date, each holder of
shares of Series F Preferred Stock to be redeemed shall surrender such holder's
certificates representing such shares to the Corporation in the manner and at
the place designated in the Series F Redemption Notice, and thereupon the Series
F 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 F
Redemption Date, unless there shall have been a default in payment of the
Redemption Price or the Corporation is unable to pay the Series F Redemption
Price due to not having sufficient legally available funds, all rights of the
holder of such shares as holder of Series F Preferred Stock (except the right to
receive the Series F Redemption Price 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 F Preferred Stock 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 F Preferred
36
Stock shall remain outstanding and shall be entitled to all of the rights and
preferences provided herein.
(ii) In the event of a call for redemption of any shares of
Series F Preferred Stock, the Conversion Rights (as defined in Section 5) for
such Series F Preferred Stock shall terminate as to the shares designated for
redemption at the close of business on the fifth (5th) day preceding the Series
F Redemption Date, unless default is made in payment of the Series F Redemption
Price.
7. No Reissuance of Preferred Stock. No share or shares of Preferred Stock
acquired by the Corporation by reason of redemption, purchase, conversion or
otherwise shall be reissued.
8. Other Distributions. In the event the Corporation shall declare a
distribution payable in securities of other persons, evidences of indebtedness
issued by the Corporation or other persons, assets, cash (excluding cash
dividends declared out of retained earnings) or options or rights not referred
to in Section 5, then, in each such case for the purpose of this Section 8, the
holders of Preferred Stock shall be entitled to a proportionate share of any
such distribution as though they were the holders of the number of shares of
Common Stock of the Corporation into which their shares of Preferred Stock would
be convertible as of the record date fixed for the determination of the holders
of Common Stock of the Corporation entitled to receive such distribution.
9. Recapitalizations. If at any time or from time to time there shall be a
recapitalization of the Common Stock (other than a subdivision, combination or
merger or sale of assets provided for in Section 5 hereof or in connection with
an Acquisition or Asset Transfer as defined in Section 4(e)), provision shall be
made so that the holders shall thereafter be entitled to receive upon conversion
of the Preferred Stock the number of shares of stock or other securities or
property of the Corporation or otherwise, to which a holder of Common Stock
deliverable upon conversion would have been entitled on such recapitalization.
In any such case, appropriate adjustment shall be made in the application of the
provisions of Section 5 with respect to the rights of the holders after the
recapitalization to the end that the provisions of Section 5 (including
adjustment of the applicable Conversion Price then in effect and the number of
shares purchasable upon conversion of the Preferred Stock) shall be applicable
after that event as nearly equivalent as may be practicable.
10. No Impairment.
(a) The Corporation will not, by amendment of its Certificate of
Incorporation or through any reorganization, recapitalization, transfer of
assets, consolidation, merger, dissolution, issuance 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 hereof and in the taking of all such action as may be necessary or
appropriate in order to protect the applicable Conversion Rights and redemption
rights of the holders against impairment.
(b) If the Corporation is unable or shall fail to discharge its
obligations under Section 5 or Section 6 (an "Obligation"), such Obligation
shall be discharged as soon as the
37
Corporation is able to discharge such Obligation. If and so long as any
Obligation with respect to the Preferred Stock shall not be fully discharged,
the Corporation shall not (i) directly or indirectly, redeem, purchase, or
otherwise acquire any classes or series of preferred stock with a liquidation
preference, dividend or other rights senior or pari passu to the Preferred Stock
or discharge any mandatory or optional redemption, sinking fund or other similar
obligation in respect of any such senior and/or parity stock (except in
connection with a redemption, sinking fund or other similar obligation to be
satisfied pro rata with the Preferred Stock) or (ii) declare or make any
distribution to any classes or series of preferred stock with a liquidation
preference, dividend or other rights junior to the Preferred Stock or any other
securities which rank junior to the Preferred Stock, or, directly or indirectly,
discharge any mandatory or optional redemption, sinking fund or other similar
obligation in respect of such junior securities.
11. Provisions Respecting the Board of Directors.
(a) The number of directors of the Corporation shall be fixed as
provided in the Bylaws and may be changed from time to time by amending the
Bylaws.
(b) The Board of Directors may from time to time make, amend,
supplement or repeal the 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 Bylaws adopted by the
Board of Directors shall vary or conflict with any amendment or supplement thus
adopted by the stockholders.
(c) The directors of the Corporation need not be elected by written
ballot unless the Bylaws so provide.
V. 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.
VI. A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except to the extent that the elimination or limitation of
liability is prohibited under the DGCL as in effect when such liability is
determined. No amendment or repeal of this provision shall deprive a director of
the benefits hereof with respect to any act or omission occurring prior to such
amendment or repeal.
VII. The Corporation shall, to the fullest extent permitted by Section 145
of the DGCL, as amended from time to time, or any successor section, indemnify
each person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he is or
was a director or officer of the Corporation, or is or was serving at the
request of the Corporation, as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding and any appeal therefrom.
38
Indemnification may include payment by the Corporation of expenses in
defending an action or proceeding in advance of the final disposition of such
action or proceeding upon receipt of an undertaking by the person indemnified to
repay such payment if it is ultimately determined that such person is not
entitled to indemnification under this Article, which undertaking may be
accepted without reference to the financial ability of such person to make such
repayments.
The Corporation shall not indemnify any such person seeking indemnification
in connection with a proceeding (or part thereof) initiated by such person
unless the initiation thereof was approved by the Board of Directors of the
Corporation.
The indemnification rights provided in this Article (i) shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any law, agreement or vote of stockholders of disinterested directors or
otherwise, and (ii) shall inure to the benefit of the heirs, executors and
administrators of such persons. The Corporation may, to the extent authorized
from time to time by its Board of Directors, grant indemnification rights to
other employees or agents of the Corporation or other persons serving the
Corporation and such rights may be equivalent to, or greater or less than, those
set forth in this Article.
VIII. Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the Corporation or of any creditor or stockholder thereof, or on the
application of any receiver or receivers appointed for the Corporation under the
provisions of Section 291 of Title 8 of the Delaware Code or on the application
of trustees in dissolution or of any receiver or receivers appointed for the
Corporation under the provisions of Section 279 of Title 8 of the Delaware Code,
order a meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the Corporation, as the case may be, to
be summoned in such manner as the said court directs. If a majority in number
representing three-fourths in value of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of the Corporation, as the
case may be, agree to any compromise or arrangement and to any reorganization of
the Corporation, as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of the Corporation, as the case may be, and also on the
Corporation.
39