Exhibit 10.7
THE SECURITIES TO WHICH THIS STOCK PURCHASE AGREEMENT RELATES HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR UNDER ANY STATE SECURITIES LAWS ("BLUE SKY LAWS"), AND MAY NOT BE OFFERED OR
SOLD WITHOUT REGISTRATION UNDER THE SECURITIES ACT, AND AS REQUIRED BY BLUE SKY
LAWS IN EFFECT AS TO SUCH OFFER AND SALE, UNLESS AN EXEMPTION FROM SUCH
REGISTRATION UNDER FEDERAL AND STATE LAW IS AVAILABLE.
PHASECOM, INC.
FORM OF D97A STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is entered into as of the
date set forth on the signature page to this Agreement, by and between PHASECOM,
INC., a Delaware corporation (the "Corporation" or "PhaseCom"), and the
purchaser whose name and address are shown on the signature page to this
Agreement (the "Purchaser").
RECITALS
A. PhaseCom has duly authorized the issuance, sale and delivery of up to
one hundred thirty-nine thousand five hundred five (139,505) units (the
"Units"), each Unit consisting of one (1) share (the "Common Share") of its
common stock, par value $0.0001 per share (the "Common Stock"), and one (1)
share (the "Preferred Share") of its preferred stock, par value $0.001 per
share, designated as the Series A Convertible Preferred Stock (the "Series A
Preferred Stock") and having such rights, privileges and preferences as set
forth in the Certificate of Incorporation of PhaseCom attached hereto as Exhibit
A (the "Certificate").
B. The Units are being offered and sold by PhaseCom to Purchaser in
reliance upon and in conformity with an exemption from the registration
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
pursuant to Regulation D under the Securities Act ("Regulation D").
C. PhaseCom desires to offer and sell to Purchaser, and Purchaser desires
to buy from PhaseCom, the aggregate number of Units set out opposite Purchaser's
address on the signature page to this Agreement for delivery in accordance with
this Agreement.
D. Contemporaneously with the offer and sale of the Units, PhaseCom intends
to offer and sell up to sixty thousand two hundred sixty-one (60,261) additional
units to other investors who are not U.S. Persons (as defined in Regulation S
under the Securities Act) in reliance upon an exemption from registration
pursuant to Regulation S.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual agreements, covenants,
representations and warranties contained in this Agreement, the parties agree as
follows:
1. AGREEMENT TO SELL AND PURCHASE THE UNITS.
a. SALE AND PURCHASE OF UNITS. On the basis of the representations,
warranties and agreements contained in this Agreement, but subject to the terms
and conditions hereof, the Corporation agrees to issue and sell to Purchaser,
and Purchaser agrees to purchase from the Corporation, on the scheduled date set
forth on the signature page to this Agreement or on such other date as shall be
mutually agreed upon by the Corporation and Purchaser (the "Closing Date"), the
aggregate number of Units set out opposite Purchaser's address on the signature
page to this Agreement (the "Designated Units"). The price for the Designated
Units shall be Nine and 77/100 Dollars ($9.77) per Designated Unit ($0.98
allocable to the Common Share and $8.79 allocable to the Preferred Share
comprising each Designated Unit), and Purchaser shall pay to the Corporation the
aggregate amount set out opposite Purchaser's address on the signature page to
this Agreement (the "Purchase Price").
b. PAYMENT. Payment of the Purchase Price shall be made by Purchaser
to the Corporation on the Closing Date by wire transfer of immediately available
funds in United States dollars to the account of PhaseCom, Inc., Account No.
011-129635, ABA No. 121141152, at Cupertino National Bank & Trust, 20230 Stevens
Creek Boulevard, Cupertino, California 95014, or by such other means as shall be
mutually agreed upon by the Corporation and Purchaser.
c. OTHER UNITS. The Corporation intends to offer and sell other Units
to other investors (together with Purchaser, the "Purchasers") pursuant to
separate substantially identical purchase agreements (together with this
Purchase Agreement, the "Purchase Agreements").
d. CLOSING. The closing of the sale and purchase of the Units (the
"Closing") shall be held at the offices of the Corporation's counsel, Pezzola &
Reinke, APC ("P&R"), located at 1999 Harrison Street, Suite 1300, Oakland,
California 94612 at 2:00 p.m. local time on the Closing Date.
e. DELIVERY. Within twenty (20) days after the Closing, the
Corporation shall deliver to Purchaser one or more certificate representing the
Common Shares and one or more certificates representing the Preferred Shares
comprising the Designated Units, each registered in the name of Purchaser, or
its nominee, against payment of the Purchase Price therefor in immediately
available funds to the account of the Corporation designated in Section 2(b) of
this Agreement.
2. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION. The Corporation
hereby represents and warrants to Purchaser as follows:
a. CORPORATE ORGANIZATION AND STANDING. The Corporation is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite power and authority to carry on
its business as presently conducted. The Corporation is duly qualified to do
business as a foreign corporation in every jurisdiction where such qualification
is required by controlling law and where the failure to so qualify would have a
material adverse effect on the Corporation and its subsidiaries, taken as a
whole.
b. AUTHORIZED CAPITAL STOCK. The Corporation has an authorized capital
stock consisting of ten million (10,000,000) shares of Common Stock and four
million five hundred thousand (4,500,000) shares of Preferred Stock, of which
two million five hundred
thousand (2,500,000) shares are designated as Series A Preferred Stock.
Immediately prior to the Closing, the Corporation will have a total of not more
than one million four hundred two thousand eight hundred twenty-four (1,402,824)
shares of Common Stock outstanding; not more than one million four hundred two
thousand eight hundred twenty-four (1,402,824) shares of Series A Preferred
Stock outstanding; up to five hundred fifty thousand (550,000) shares of Common
Stock reserved for issuance under the Corporation's 1996 Equity Incentive Plan;
and up to an aggregate of one million nine thousand one hundred four (1,009,104)
shares of Common Stock issuable pursuant to warrants of the Corporation.
c. ISSUANCE AND DELIVERY OF THE UNITS. As of the Closing, the offer,
issuance, sale and delivery of the Units in accordance with the Purchase
Agreements will have been duly authorized by all requisite corporate action of
the Corporation. The Common Shares and the Preferred Shares comprising the
Designated Units, as and when issued and sold to Purchaser pursuant to this
Agreement, and upon receipt by the Corporation of the Purchase Price therefor,
will be duly and validly issued and outstanding, fully paid and non-assessable,
and will be free and clear of any liens or other encumbrances, except such as
may have been created by Purchaser and except for such restrictions on transfer
created hereunder and under federal and/or state securities laws. This
Agreement, when executed and delivered by the Corporation, shall constitute a
valid and binding obligation of the Corporation, enforceable in accordance with
its terms, except as the enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization or other similar laws relating to or
affecting creditors' rights generally and by general equitable principles,
regardless of whether such enforceability is considered in a proceeding in
equity or at law.
d. LITIGATION. There are no actions, proceedings or investigations
pending to which the Corporation is a party before or by any court or
governmental agency or body, which in the opinion of management of the
Corporation would result, individually or in the aggregate, in any material
adverse change in the financial condition or results of operations of the
Corporation and its subsidiaries, taken as a whole; and to the best knowledge of
the Corporation's management, no such actions, proceedings or investigations are
threatened by any person, corporation or governmental agency or body.
e. GOVERNMENTAL CONSENTS. No consent, approval, order, authorization
or registration, qualification, designation, license, declaration or filing with
any governmental authority is required on the part of the Corporation in
connection with the consummation of the transactions contemplated herein, except
for such applicable federal and state securities filings.
f. REPRESENTATIONS AND WARRANTIES AT THE CLOSING. Each of the
representations and warranties contained in this Section 2 is true and correct
as of the date of this Agreement. The Corporation will make the same
representations and warranties on the Closing Date and such representations and
warranties when so made shall be true and correct as of the Closing Date.
3. CERTAIN AGREEMENTS OF THE CORPORATION.
a. ADDITIONAL INFORMATION. The Corporation will make available to
Purchaser prior to the Closing Date the opportunity to ask questions and receive
answers
concerning the terms and conditions of the offering of the Units and to
obtain any additional information that the Corporation possesses or can acquire
without unreasonable effort or expense that is necessary to verify the accuracy
of the information furnished in accordance herewith.
b. AUTHORIZED SHARES. If at any time the number of authorized by
unissued shares of Common Stock shall not be sufficient to effect the conversion
of all then outstanding shares of Series A Preferred Stock, the Corporation
shall request its shareholders to take such action as may, in the opinion of
counsel to the Corporation, be necessary to increase the Corporation's
authorized by unissued shares of Common Stock to such a number as shall be
sufficient for such purposes.
c. NOTICE TO HOLDERS OF SERIES A PREFERRED STOCK.
i. NOTICE OF MATERIAL EVENT. So long as Purchaser holds Preferred
Shares, in the event of any voluntary or involuntary liquidation, dissolution,
or winding up of the Corporation, any merger, consolidation, or sale, transfer
or lease of all or substantially all of the assets of the Corporation, or in the
event of any corporate reorganization, or of the setting of any record date of
shareholders for the purpose of entitling shareholders to receive any dividend
or other distribution, or for the purpose of establishing a date for a
shareholders meeting, the Corporation shall, within ten (10) days after the date
the Board of Directors approves such action, or within ten (10) days prior to
any date for any shareholders meeting (or the effective date of any matter
adopted by the consent of shareholders) or distribution, or within ten (10) days
after the commencement of any involuntary proceeding, as the case may be, give
each holder of shares of Series A Preferred Stock written notice of the proposed
action. If applicable, such written notice shall describe the material terms and
conditions of such proposed action, including a description of the stock, cash,
and property to be received by the holders of shares of Series A Preferred Stock
upon consummation of the proposed action and the date of delivery thereof. If
any material change in the facts set forth in the initial notice shall occur,
the Corporation shall promptly give written notice to each holder of Series A
Preferred Stock of such material change.
ii. CONSUMMATION OF MATERIAL EVENT. The Corporation shall not
consummate any voluntary or involuntary liquidation, dissolution, or winding up
of the Corporation or any merger, consolidation or sale, lease or transfer of
all or substantially all of the assets of the Corporation before the expiration
of ten (10) days after the mailing of the initial notice or any subsequent
written notice, whichever is later; PROVIDED that any such ten (10) day period
may be shortened upon the written consent of the holders of the majority of the
outstanding shares of Series A Preferred Stock.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER. Purchaser hereby
represents, warrants and covenants to the Corporation as follows:
a. COMPLIANCE WITH SECURITIES LAWS. Purchaser understands and
acknowledges that the Common Shares and the Preferred Shares have not been
registered under the Securities Act by reason of a specific exemption from the
registration provisions thereof which depends upon, among other things, the bona
fide nature of the investment as expressed herein.
b. STATUS OF PURCHASER.
i. ACCREDITED INVESTOR. To the extent that Purchaser is an
"accredited investor" (as defined in Regulation D, which definition is set out
in Exhibit B hereto), Purchaser shall so represent, warrant and certify on the
signature page to this Agreement.
ii. INVESTMENT. Purchaser is purchasing the Designated Units
for its own account for investment purposes and not with a view to, or for
resale in connection with, any distribution thereof.
iii. KNOWLEDGE AND EXPERIENCE. Purchaser has such knowledge and
experience in financial and business matters, including investments in companies
in the development stage, that it is qualified to make decisions with respect to
investments is restricted securities such as this Agreement and the Designated
Units, and has requested, received, reviewed and considered all information it
deems relevant in making a decision to execute this Agreement and to purchase
the Designated Units. Purchaser acknowledges that it is capable of evaluating
the merits and risks of the investment in the Designated Units and it is able to
bear the economic risk of such investment.
iv. ACCESS TO INFORMATION. Purchaser acknowledges that the
Corporation has made available to Purchaser the opportunity to (A) discuss the
Corporation's business, management and financial affairs with its management,
(B) ask questions and receive answers concerning the terms and conditions of the
offering of the Units, and (C) obtain any additional information that the
Corporation possesses or can acquire without unreasonable effort or expense that
is necessary to verify the accuracy of the information furnished in accordance
herewith or to decide whether or not to purchase the Designated Units. Purchaser
acknowledges that no other representation or warranty has been made by the
Corporation or any agent thereof except as set forth in this Agreement.
v. RISK OF INVESTMENT. Purchaser understands that an investment
in the Corporation involves a high degree of risk and is suitable only for
investors who can afford a loss of their entire investment and who have no need
for liquidity from their investment.
vi. SUITABILITY. Purchaser has carefully considered and has, to
the extent Purchaser deems necessary, discussed with Purchaser's own
professional legal, tax and financial advisers the suitability of an investment
in the Designated Units for Purchaser's particular tax and financial situation,
and Purchaser has determined that the Units are a suitable investment.
vii. NO PUBLIC MARKET. Purchaser understands that no public
market now exists for the Common Shares or the Preferred Shares and that it is
uncertain whether a public market will ever exist for any such securities.
c. RESTRICTIONS ON RE-SALE.
i. RESTRICTIONS ON RE-SALES. Purchaser understands and
acknowledges that because the Common Shares and the Preferred Shares comprising
the Designated Units have not been registered under the Securities Act, such
Common Shares and Preferred Shares must be held indefinitely unless subsequently
registered under the
Securities Act or an exemption from such registration is available. Purchaser
further understands and acknowledges that the Securities Act prohibits resales
of securities except pursuant to an effective registration statement or an
exemption from registration for which such securities and Purchaser qualifies.
Purchaser understands and acknowledges that there can be no assurance that
Purchaser will be able to qualify for such an exemption from registration.
ii. COMPLIANCE WITH SECURITIES ACT. Purchaser will not, directly
or indirectly, voluntarily offer, sell, pledge, transfer or otherwise dispose of
(or solicit any offers to buy, purchase or otherwise acquire or take a pledge
of) its rights under this Agreement and the Common Shares and Preferred Shares
comprising the Designated Units or any interest therein otherwise than in
compliance with the Securities Act, any applicable state securities or blue sky
laws, and the rules and regulations promulgated thereunder.
d. PUBLIC OFFERING LOCK-UP. In connection with any underwritten public
registration of the Corporation's securities, Purchaser (and any transferee of
Purchaser) agrees, upon the request of the Corporation or the underwriters
managing such underwritten offering of the Corporation's securities, not to
sell, make any short sale of, loan, grant any option for the purchase of, or
otherwise dispose of any Common Shares or Preferred Shares comprising the
Designated Units or any other securities of the Corporation heretofore or
hereafter acquired by Purchaser (other than those included in the registration)
without the prior written consent of the Corporation and such underwriters, as
the case may be, for a period of time, not to exceed one hundred eighty (180)
days from the effective date of such registration. Upon request by the
Corporation, Purchaser shall enter into any further agreement in writing in a
form reasonably satisfactory to the Corporation and such underwriter. The
Corporation may impose stop-transfer instructions with respect to the securities
subject to the foregoing restrictions until the end of said 180-day period.
e. LEGENDS. Purchaser agrees that the certificates (the "Stock
Certificates") representing the Common Shares and the Preferred Shares
comprising the Designated Units shall bear the legends set forth below:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER ANY
STATE SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED
OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR
SUCH SECURITIES UNDER THE ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE
CORPORATION THAT AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER SET FORTH IN THAT CERTAIN D97A STOCK PURCHASE
AGREEMENT BETWEEN THE CORPORATION AND THE ORIGINAL HOLDER HEREOF.
f. DUE AUTHORIZATION, DELIVERY AND PERFORMANCE OF THIS AGREEMENT.
Purchaser has full right, power, authority and capacity to enter into this
Agreement and to
consummate the transactions contemplated hereby; if Purchaser is a company or
corporation, the execution, delivery and performance of this Agreement by
Purchaser have been duly authorized by all requisite corporate action of
Purchaser. This Agreement, when executed and delivered by Purchaser, shall
constitute a valid and binding obligation of Purchaser, enforceable in
accordance with its terms, except as the enforceability thereof may be limited
by applicable bankruptcy, insolvency, reorganization or other similar laws
relating to or affecting creditors' rights generally and by general equitable
principles, regardless of whether such enforceability is considered in a
proceeding in equity or at law.
g. GOVERNMENTAL CONSENTS. No consent, approval, order, authorization
or registration, qualification, designation, license, declaration or filing with
any governmental authority is required on the part of Purchaser in connection
with the consummation of the transactions contemplated herein.
h. RELIANCE. Purchaser understands and acknowledges that the
Corporation is relying on the accuracy of the representations and warranties of
Purchaser contained herein to establish compliance with federal and state
securities laws. Purchaser agrees that if any such representation or warranty is
not true and accurate in any respect as of the Closing Date or at any time
thereafter, Purchaser shall immediately notify the Corporation in writing and
shall be cause for recision by the Corporation, at its sole election.
i. REPRESENTATIONS AND WARRANTIES AT THE CLOSING. Each of the
representations and warranties contained in this Section 4 is true and correct
as of the date of this Agreement. Purchaser will make the same representations
and warranties on the Closing Date and such representations and warranties when
so made shall be true and correct as of the Closing Date.
5. MISCELLANEOUS.
a. SURVIVAL. The representations, warranties, covenants and
agreements made herein shall survive the closing of the transactions
contemplated hereby.
b. EXECUTION AND DELIVERY OF OTHER DOCUMENTS. Purchaser agrees that it
will execute and deliver such other documents as may be reasonably requested by
the Corporation to complete the transactions contemplated hereby.
c. SEVERABILITY. The invalidity or unenforceability of any particular
provision of this Agreement shall not affect or limit the validity or
enforceability of the remaining provisions of this Agreement.
d. SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
e. ENTIRE AGREEMENT. This Agreement and the exhibits attached hereto
and the other documents delivered pursuant hereto constitute the full and entire
understanding and agreement between and among the parties with regard to the
subjects hereof and thereof.
f. NOTICE. Any notice, demand, consent or other communication under
this Agreement shall be in writing addressed to the other party at its address
on the signature page to this Agreement, or to such other address as such party
shall have theretofore furnished by like notice and either served personally,
sent by express, registered or certified first class mail, postage prepaid, sent
by facsimile transmission, or delivered by reputable commercial courier. Such
notice shall be deemed given (i) when so personally delivered, or (ii) if mailed
as aforesaid, seven (7) days after the same shall have been posted, or (iii) if
sent by facsimile transmission, as soon as written or telephonic confirmation is
received from the party to whom it was sent that the message has been received,
or (iv) if delivered by commercial courier, upon receipt.
g. FINDER'S AND BROKER'S FEES. Each party hereto represents and
warrants that it has retained no finder or broker in connection with the
transactions contemplated by this Agreement, and hereby agrees to indemnify and
to hold the other harmless from any liability for any finder's or broker's fee
to any broker or other person or firm (and the costs and expenses of defending
against such liability or asserted liability) for which such indemnifying
person, or any of its employees or representatives, are responsible.
h. CONFLICT OF INTEREST. PURCHASER ACKNOWLEDGES THAT P&R IS THE
GENERAL CORPORATE COUNSEL TO THE CORPORATION AND WAIVES ANY CONFLICTS ASSOCIATED
THEREWITH, AND HEREBY CONSENTS TO P&R'S ROLE HEREUNDER NOTWITHSTANDING ITS
POSITION AS THE CORPORATION'S LAW FIRM IN NEGOTIATING THE TERMS AND CONDITIONS
OF THIS AGREEMENT AND ALL OTHER ANCILLARY DOCUMENTS IN CONNECTION HEREWITH.
i. HEADINGS. The headings of the Sections and subsections of this
Agreement are for convenience of reference only and shall not affect the meaning
or interpretation of the contents of this Agreement.
j. APPLICABLE LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of California applicable to contracts
between California residents entered into and to be performed entirely within
the State of California, except with respect to matters that by their nature
would be governed by Israeli Company Law, in which case, Israeli Company Law
shall apply.
k. ARBITRATION. Any dispute between the parties arising out of this
Agreement shall be submitted to final and binding arbitration in the City of
Santa Clara, County of Santa Clara, State of California, under the Commercial
Arbitration Rules of the American Arbitration Association then in effect, upon
written notification and demand of either party therefor. In the event either
party demands such arbitration, the American Arbitration Association shall be
requested to submit a list of prospective arbitrators consisting of persons
experienced in matters involving securities offerings. The provisions of
California Code of Civil Procedure Section 1283.05 and the laws of the State of
California are incorporated herein and shall be applicable to the arbitration.
In making the award, the arbitrator shall award recovery of costs and expenses
of the arbitration and reasonable attorneys' fees to the prevailing party. Any
award may be entered as a judgment in any court of competent jurisdiction.
Should judicial proceedings be commenced to enforce or carry out this provision
or any arbitration award, the prevailing party in such proceedings shall be
entitled to reasonable attorneys' fees and costs in addition to other relief.
Either party shall have the right, prior to receiving an arbitration award, to
obtain preliminary relief from a court of competent jurisdiction to avoid injury
or prejudice to that party.
l. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
m. FACSIMILE SIGNATURES. The parties shall be entitled to rely upon
and enforce a facsimile of any authorized signature as if it were the original.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.)
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
April 1, 1997.
PHASECOM, INC. PURCHASER'S NAME:
a Delaware corporation
By:
----------------------------- ----------------------------------
Shaul Berger, President
----------------------------------------
20700 Valley Green Drive
----------------------------------------
Cupertino, CA 95014
Duly executed by:
----------------------------------------
(Signature)
----------------------------------------
(Print Name & Title)
PURCHASER HEREBY REPRESENTS, WARRANTS AND CERTIFIES TO THE CORPORATION THAT
PURCHASER IS AN "ACCREDITED INVESTOR" AS SUCH TERM IS DEFINED IN REGULATION D.
----------------------------------------
(Signature)
Scheduled Closing Date: April 1, 1997
Aggregate Number of PURCHASER'S ADDRESS:
Designated Units:
- -------------------------------- ----------------------------------
Total Purchase Price: ---------------------------------------
---------------------------------------
- -------------------------------
Stock Certificate registration instructions:
Name of Holder:
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Address of Holder:
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EXHIBIT A
TO
STOCK PURCHASE AGREEMENT
CERTIFICATE OF INCORPORATION
The Certificate of Incorporation of PhaseCom, Inc. is set forth on the following
pages.
EXHIBIT A
CERTIFICATE OF INCORPORATION
OF
PHASECOM, INC.
I, the undersigned, for the purpose of incorporating a corporation under
the General Corporation Law of the State of Delaware, do execute this
Certificate of Incorporation and do hereby certify as follows:
I.
The name of the corporation is PhaseCom, Inc. (this "Corporation").
II.
The registered office of this Corporation in the State of Delaware and New
Castle County shall be 1201 Market Street, Suite 1401, Wilmington, Delaware
19801. The registered agent at such address shall be PHS Corporate Services,
Inc.
III.
The nature of the business or purposes to be conducted or promoted is to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware.
IV.
A. AUTHORIZED SHARES. This Corporation is authorized to issue two classes
of shares, to be designated Common Stock and Preferred Stock, respectively. This
Corporation is authorized to issue 10,000,000 shares of Common Stock with a par
value of $0.0001 per share and 4,500,000 shares of Preferred Stock with a par
value of $0.001 per share. The Preferred Stock authorized by this Certificate of
Incorporation shall be issued from time to time in one or more series.
B. AUTHORIZED SHARES - PREFERRED STOCK. Within the limits and restrictions
stated in any resolution or resolutions of the Board of Directors originally
fixing the number of shares constituting any series of Preferred Stock, the
Board of Directors may increase or decrease (but neither above the total number
of authorized shares of the class, nor below the number of shares of such
series, then outstanding) the number of shares of any such series subsequent to
the issue of shares of that series. In addition, the Board of Directors is
authorized, subject to limitations prescribed by law and the provisions of
Article IV, 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 the qualifications,
limitations or restrictions thereof.
The authority of the Board with respect to each series shall include, but
not be limited to, determination of the following:
i) The number of shares constituting that series and the
distinctive designation of that series;
ii) The dividend rate on the shares of that series, whether dividends
shall be cumulative, and, if so, from which date or dates, and the
relative rights of priority, if any, of payment of dividends on shares of that
series;
iii) Whether that series shall have voting rights, in addition to the
voting rights provided by law, and, if so, the terms of such voting rights;
iv) Whether that series shall have conversion privileges, and, if so,
the terms and conditions of such conversion, including provision for adjustment
of the conversion rate in such events as the Board of Directors shall determine;
v) Whether or not shares of that series shall be redeemable, and, if
so, the terms and conditions of such redemption, including the date or date upon
or after which they shall be redeemable, and the amount per share payable in
case of redemption, which amount may vary under different conditions and at
different redemption dates;
vi) Whether that series shall have a sinking fund for the redemption
or purchase of shares of that series, and, if so, the terms and amount of such
sinking fund;
vii) The rights of the shares of that series in the event of voluntary
or involuntary liquidation, dissolution or winding up of this Corporation, and
the relative rights or priority, if any, of payment of shares of that series;
and
viii) Any other relative rights, preferences and limitations of that
series.
C. AUTHORIZED SHARES - SERIES A PREFERRED STOCK. The initial series of
Preferred Stock shall be comprised of an aggregate total of 2,500,000 shares all
to be designated "Series A Convertible Preferred Stock" ("Series A Stock").
D. ATTRIBUTES OF SERIES A STOCK. The rights, preferences, privileges and
restrictions of the Series A Stock and of the holders thereof shall be as
follows:
1. DIVIDENDS.
a. SERIES A STOCK-LIMITED RIGHT TO DIVIDENDS. Each holder of
outstanding shares of Series A Stock shall be entitled to receive, when and if
declared by
the Board of Directors and out of any funds legally available therefor,
non-cumulative dividends at the annual rate of $0.0432 per share (the "Series A
Preferential Dividend"), payable during each fiscal year of this Corporation and
in preference to any declaration or payment (payable other than in Common Stock)
on the Common Stock.
b. PARTIAL PAYMENT. If the Board of Directors shall declare a
dividend on the outstanding shares of Series A Stock and the amount available
for payment thereof is insufficient to permit the payment of the full
preferential amounts required to be paid to the holders of the outstanding
shares of Series A Stock, then the amount available for such dividend payments
shall be distributed ratably among the holders of the outstanding shares of
Series A Stock. After the holders of Series A Preferred Stock receive their
preferential dividend in full in any one fiscal year, the holders of Series A
Preferred Stock shall participate ratably with the Common Stock on any other
dividends, as if such holders had converted their Series A Stock shares into the
number of shares of Common Stock into which outstanding shares of Series A Stock
are convertible pursuant to this Article IV, as of the record date of the
dividend.
c. DEFINITION OF DIVIDENDS. Dividends shall be deemed to include
payments by this Corporation, including, without limitation, any distribution of
assets, evidences of indebtedness, warrants, rights, options and other
securities, and excluding only the distribution of Common Stock to the holders
of Common Stock and the distribution of stock of a subsidiary in a spin-
off where the net asset value, the net income, and the revenues, of the
subsidiary spun-off is less than fifty percent (50%) of the net asset value, the
net income, and the revenues, as the case may be, of this Corporation before the
spin-off; provided, however, that the shares of the spun-off company are
distributed to the holders of the Series A Stock, as if such holders had
converted their Series A Stock into the number of shares of Common Stock into
which outstanding shares of Series A Stock are convertible pursuant to this
Article IV, as of the record date of the dividend.
2. PREFERENCE ON LIQUIDATION.
a. PREFERENCE PRICE. In the event of any liquidation, dissolution
or winding up of this Corporation, whether voluntary or involuntary, the holders
of the outstanding shares of Series A Stock shall be entitled to be paid out of
the assets of this Corporation available for distribution to its shareholders,
whether from capital, surplus or earnings, before any payment is made in respect
of the outstanding shares of Common Stock or any other equity security of this
Corporation of a lesser priority than the Series A Stock in an amount equal to
$5.40 per share in the case of the Series A Stock plus any declared but unpaid
dividends on each such share (the "Preference Price"). After distribution of the
Preference Price to the holders of the outstanding shares of Series A Stock, the
holders of the outstanding shares of Common Stock shall be entitled to an amount
per share equal to the Preference Price paid to the holders of the outstanding
shares of Series A Stock. Thereafter, any remaining assets of this Corporation
shall be distributed pro rata among the holders of the outstanding shares of
Common Stock and Series A Stock based on the number of shares of Common Stock
into which outstanding shares of Series A Stock are convertible pursuant to this
Article IV as of the date of distribution.
b. PARTIAL PAYMENT. If, upon any liquidation, dissolution or
winding up of this Corporation, whether voluntary or involuntary, the assets of
this Corporation available for distribution to its shareholders shall be
insufficient to pay the full Preference Prices required to be paid to the
holders of the outstanding shares of Series A Stock, then all of the assets of
this Corporation legally available for distribution to the holders of equity
securities shall be distributed ratably among the holders of the outstanding
shares of Series A Stock.
3. CERTAIN TRANSACTIONS. The sale, transfer or other conveyance of all
or substantially all of the assets of this Corporation, in any transaction or
related series of transactions whether by merger or consolidation or otherwise,
shall not be deemed to be a liquidation, dissolution or winding up of this
Corporation, as those terms are used in this Article IV.D, unless elected to be
treated as such by a majority of this Corporation's Board of Directors.
4. CONSENT TO CERTAIN DISTRIBUTIONS. Each holder of outstanding shares
of Series A Stock, shall by virtue of its acceptance of a stock certificate
evidencing such shares, be treated as having consented to distributions made, or
to be made, by this Corporation for the repurchase of shares of Common Stock
from directors or employees of, or consultants or advisers to, this Corporation
upon the termination of employment by, or service to, this Corporation or any
subsidiary of this Corporation or otherwise, if such repurchase is made in
accordance with an agreement authorizing the right of said repurchase.
5. LIQUIDATION ADJUSTMENT. Notwithstanding anything to the contrary in
this Article IV, the Preference Price shall be adjusted downwards upon the
receipt by the holder of Preferred Stock of any non-cash dividends or
distributions (other than distributions of this Corporation's capital stock), by
the "cash value" of any such non-cash dividends or distributions made on Series
A Stock at any time since the issuance of such series. The "cash value" shall be
determined by this Corporation's Board of Directors in its sole discretion, or,
if the distribution is a stock dividend (other than this Corporation's capital
stock) whereby within 180 days after such distribution and prior to a
"liquidating" event such company's stock is publicly traded, then the initial
public offering price of such company's stock shall be the "cash value" whether
or not the distributed stock is itself publicly traded.
E. VOTING. The holders of the outstanding shares of Common Stock shall each
have one (1) vote per each share owned of Common Stock owned by such
stockholder. The holders of the outstanding shares of Series A Preferred Stock
shall be entitled to cast that number of votes equal to the number of shares of
Common Stock into which such holder's shares of Series A Stock are convertible
immediately after the close of business on the record date fixed for such
meeting or, if no such record date is established, the date such vote is taken
or the effective date of such written consent.
F. CONVERSION. The holders of the outstanding shares of Series A Stock
shall have the conversion rights set forth below (the "Conversion Rights"):
1. RIGHT TO CONVERT. Each share of Series A Stock shall be
convertible, at the option of the holder thereof, at any time after the date of
issuance of such shares, at the office of this Corporation or any transfer agent
for the shares of Series A Stock, or Common Stock, into that number of shares of
Common Stock which is equal to the
quotient obtained by dividing (A) $5.40 for each share of Series A Stock, by (B)
the Series A Conversion Price, immediately prior to the time of such conversion.
The "Series A Conversion Price" shall be $5.40 (as adjusted from time to time as
herein provided).
2. MECHANICS OF CONVERSION. Each holder of outstanding shares of
Series A Stock, shall convert when forced to by the terms of the mandatory
conversion as set forth in Article IV.F.9 (below), or at the option of the
holders of Series A Stock, by surrendering the certificate or certificates
therefor, duly endorsed, at the office of this Corporation or of any transfer
agent for the shares of Series A Stock or Common Stock and shall give written
notice to this Corporation at such office that such holder elects to convert the
same and shall state therein the number of shares of Series A Stock being
converted. Thereupon, this Corporation shall 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 all declared but
unpaid dividends on the shares being converted in cash or, if this Corporation
so elects or is legally or financially unable to, pay in cash, shares of Common
Stock (valued at the Common Stock's fair market value at the time of surrender
as determined in good faith by the Board of Directors). Such conversion shall be
deemed to have been made immediately prior to the close of business on the date
of such surrender of the certificate or certificates representing the shares 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.
3. ADJUSTMENT FOR STOCK SPLITS AND COMBINATIONS. If this Corporation
at any time or from time to time after the date these Articles are filed with
the Secretary of State of the State of Delaware (the "Filing Date") effects a
division of the outstanding shares of Common Stock, then the Series A Conversion
Price shall be proportionately decreased and, conversely, if this Corporation at
any time, or from time to time, after the Filing Date combines the outstanding
shares of Common Stock, then the Series A Conversion Price shall be
proportionately increased. Any adjustment under this Article IV.F.3 shall be
effective on the close of business on the date such division or combination
becomes effective.
4. ADJUSTMENT FOR CERTAIN DIVIDENDS AND DISTRIBUTIONS. If this
Corporation at any time or from time to time after the Filing Date pays or fixes
a record date for the determination of holders of shares of Common Stock
entitled to receive a dividend or other distribution in the form of shares of
Common Stock, or rights or options for the purchase of, or securities
convertible into, Common Stock, then in each such event the Series A Conversion
Price shall be decreased, as of the time of such payment or, in the event a
record date is fixed, as of the close of business on such record date, by
multiplying the Series A Conversion Price by a fraction (i) the numerator of
which shall be the total number of shares of Common Stock outstanding
immediately prior to the time of such payment or the close of business on such
record date, as the case may be, and (ii) the denominator of which shall be (a)
the total number of shares of Common Stock outstanding immediately prior to the
time of such payment or the close of business on such record date, as the case
may be, plus (b) the number of shares of Common Stock issuable in payment of
such dividend or distribution or upon exercise of such option or right of
conversion; provided, however, that if a record date is fixed and such dividend
is not fully paid or such other distribution is not fully made on the date fixed
therefor, then the Series A Conversion Price shall not be decreased as of the
close of business on such record
date as hereinabove provided as to the portion not fully paid or distributed and
thereafter the Series A Conversion Price shall be decreased pursuant to this
Article IV.F.4 as of the date or dates of actual payment of such dividend or
distribution.
5. ADJUSTMENTS FOR OTHER DIVIDENDS AND DISTRIBUTIONS. If this
Corporation at any time or from time to time after the Filing Date pays, or
fixes a record date for the determination of holders of shares of Common Stock
entitled to receive, a dividend or other distribution in the form of securities
of this Corporation other than shares of Common Stock or rights or options for
the purchase of, or securities convertible into, Common Stock, then in each such
event provision shall be made so that the holders of outstanding shares of
Series A Stock shall receive upon conversion thereof, in addition to the number
of shares of Common Stock receivable thereupon, the amount of securities of this
Corporation which they would have received had their respective shares of Series
A Stock been converted into shares of Common Stock on the date one day before
such event and had such holders thereafter, from the date of such event to and
including the actual date of conversion of their shares, retained such
securities, subject to all other adjustments called for during such period under
this Article IV.F.5 with respect to the rights of the holders of the outstanding
shares of Series A Stock.
6. ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE AND SUBSTITUTION. If at
any time or from time to time after the Filing Date the number of shares of
Common Stock issuable upon conversion of the shares of Series A Stock, is
changed into the same or a different number of shares of any other class or
classes of Stock or other securities, whether by recapitalization,
reclassification or otherwise (other than a recapitalization, division or
combination of shares or a stock dividend, or a reorganization, merger,
consolidation or sale of assets provided for elsewhere in this Article IV.F.6,
then in any such event each holder of outstanding shares of Series A Stock shall
have the right thereafter to convert such shares of Series A Stock into the same
kind and amount of Stock and other securities receivable upon such
recapitalization, reclassification or other change, as the maximum number of
shares of Common Stock into which such shares of Series A Stock, could have been
converted immediately prior to such recapitalization, reclassification or
change, all subject to further adjustment as provided herein.
7. REORGANIZATIONS, MERGERS, CONSOLIDATIONS OR SALES OF ASSETS. If at
any time or from time to time after the Filing Date there is a capital
reorganization of the Common Stock (other than a recapitalization, division,
combination, reclassification or exchange of shares provided for elsewhere in
this Article IV.F or a merger or consolidation of this Corporation into or with
another corporation or a sale of all or substantially all of this Corporation's
properties and assets to any other person, then, as a part of such capital
reorganization, merger, consolidation or sale, provision shall be made so that
the holders of outstanding shares of Series A Stock shall thereafter receive
upon conversion thereof the number of shares of Stock or other securities or
property of this Corporation, or of the successor corporation resulting from
such merger or consolidation or sale, to which a holder of the number of shares
of Common Stock into which their shares of Series A Stock were convertible would
have been entitled on such capital reorganization, merger, consolidation or
sale. In any such case, appropriate adjustment shall be made in the application
of the provisions of this Article IV.F with respect to the rights of the holders
of
the outstanding shares of Series A Stock after such capital reorganization,
merger, consolidation, or sale. The provisions of this Article IV.F (including
adjustment of the Series A Conversion Price and the number of shares into which
the outstanding shares of Series A Stock may be converted) shall be applicable
after that event and be as nearly equivalent to such Conversion Prices and
number of shares as may be practicable.
8. CERTIFICATE OF ADJUSTMENT. On each adjustment of the Series A
Conversion Price, or the number of shares of Common Stock or other securities
issuable upon conversion of the shares of Series A Stock, this Corporation shall
promptly compute such adjustment or readjustment in accordance with the terms
hereof and furnish to each holder of Series A Stock, a certificate setting forth
such adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based.
9. AUTOMATIC CONVERSION.
a. Each outstanding share of Series A Stock shall automatically
be converted into shares of Common Stock based upon the Series A Conversion
Price upon (i) the closing of an underwritten public offering pursuant to an
effective registration statement under the Securities Act of 1933, as amended,
covering the offering and sale of shares of Common Stock for the account of this
Corporation (other than a registration statement effected solely to implement an
employee benefit plan, a transaction in which Rule 145 of the Securities and
Exchange Commission is applicable or any other form or type of registration in
which the shares of Common Stock issuable upon conversion of the shares of
Series A Stock cannot be included pursuant to the Securities and Exchange
Commission rules or practices) resulting in aggregate proceeds to this
Corporation (before the payment of underwriting discounts and commissions and
the expense of the offering) in excess of $7,500,000; or (ii) a merger or
consolidation with or into another corporation or a sale of the shares of Common
Stock or a sale of all or substantially all of this Corporation's properties and
assets in which the aggregate gross cash proceeds received by the shareholders
of this Corporation is at least $7,500,000 in cash or marketable securities
("Qualified Public Offering").
b. Upon the occurrence of an event specified in Article IV.F.9.a.
above, the outstanding shares of Series A Stock shall be converted into shares
of Common Stock, whether or not the certificates representing such shares are
surrendered to this Corporation or its transfer agent; provided, however, that
this Corporation shall not be obligated to issue certificates evidencing the
shares of Common Stock issuable upon such conversion unless the certificates
evidencing such shares are either delivered to this Corporation or its transfer
agent as provided below or the holder notifies this Corporation or its transfer
agent that such certificates have been lost, stolen or destroyed and executes an
agreement satisfactory to this Corporation indemnifying this Corporation from
any loss incurred by it in connection with the issuance of such certificate.
Upon the occurrence of such automatic conversion of the outstanding shares of
Series A Stock, the holders of the outstanding shares of Series A Stock shall
surrender the certificates representing such shares at the office of this
Corporation or to any transfer agent for the shares of Series A Stock or Common
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 surrendered shares of Series A Stock of such holder were
convertible on the date on which such automatic conversion occurred, and this
Corporation shall promptly,
pay in cash all declared but unpaid dividends on the shares of Series A Stock so
converted.
10. FRACTIONAL SHARES. No fractional shares of Common Stock shall be
issued upon conversion of the shares of Series A Stock. In lieu of any
fractional share to which the holder of such shares would otherwise be entitled,
this Corporation shall pay cash equal to the product of (a) such fraction
multiplied by (b) the fair market value of one share of the Common Stock on the
date of conversion. The fair market value shall be determined by the average
trading price of the Common Stock over the past five (5) trading days, if such a
price is available, otherwise it shall be as determined in good faith by the
Board of Directors.
11. RESERVATION OF STOCK ISSUABLE UPON CONVERSION. This 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 Series A Stock, such number of shares of Common Stock as shall
from time to time be sufficient to effect the conversion of all outstanding
shares of Series A Stock.
12. NOTICES. Any notice required by the provisions of this Article
IV.F to be given to a holder of shares of Series A Stock, shall be deemed given
upon the earlier of actual receipt or seventy-two (72) hours after the same has
been deposited in the United States mail, certified or registered mail, return
receipt requested, postage prepaid, addressed to the holder at the address of
such holder appearing on the books of this Corporation.
G. RESTRICTIONS AND LIMITATIONS.
1. CORPORATE ACTION. Except as otherwise required by law, so long as
at least 680,000 shares of Series A Stock remain outstanding (adjusted for stock
splits and combinations), this Corporation shall not, without the vote or
written consent of the holders of a majority of the shares of Series A Stock,
voting as a separate class:
a. increase the authorized number of shares of Series A Stock,
b. increase the authorized number of shares of Preferred Stock,
c. create any new class or series of shares having preference
over the Series A Stock,
d. merge, consolidate, or reorganize, where such merger,
consolidation, or reorganization would result, directly or
indirectly, in the change of a majority of the members of
the Board of Directors; or
e. sell all, or substantially all, of its assets or issue more
than 50% of this Corporation's Common Stock in one
transaction or series of related transactions.
2. DIVIDENDS. This Corporation shall not without the vote or written
consent of the holders of a majority of the shares of Series A Stock take any
action that would constitute the declaring of a dividend for holders of Series A
Stock or Common
Stock.
H. REPLACEMENT OF CERTIFICATES. Upon receipt of evidence reasonably
satisfactory to this Corporation of the loss, theft, destruction, or mutilation
of a certificate representing any of the outstanding shares of Preferred Stock
or Common Stock, and, in the case of loss, theft, or destruction, the execution
of an agreement satisfactory to this Corporation to indemnify this Corporation
from any loss incurred by it in connection therewith, this Corporation will
issue a new certificate representing such shares of Preferred Stock or Common
Stock in lieu of such lost, stolen, destroyed or mutilated certificate.
I. RESTATED CERTIFICATE OF INCORPORATION. Upon the conversion of all
outstanding shares of the Series A Stock, Sections C, D, E, F, G, H, I and J of
this Article IV (the "Deleted Provisions") shall be of no further force or
effect, and this Certificate of Incorporation may be restated by a resolution of
the Board of Directors (and without further action by the stockholders) to
delete the Deleted Provisions and renumber or restate the remaining provisions.
V.
A. ELECTION OF DIRECTORS. The election of the Directors of this
Corporation need not be by written ballot, unless the Bylaws of this Corporation
shall so provide.
B. ARRANGEMENT WITH CREDITORS. Whenever a compromise or arrangement is
proposed between this Corporation and its creditors or any class of them and/or
between this Corporation and its stockholders or any class of them any court of
equitable jurisdiction within the State of Delaware may, on the application in a
summary way of this Corporation or of any creditor or stockholder thereof or on
the application of any receiver or receivers appointed for this Corporation
under the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of Section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors and/or of
the stockholders or class of stockholders of this Corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as a consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this Corporation, as the case may be,
and also on this Corporation.
C. FIDUCIARY DUTY. A director of this Corporation shall not be personally
liable to this Corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to this Corporation or its stockholders; (ii) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of the law; (iii) under Section 174 of the Delaware General
Corporation Law; or (iv) for any transaction from which the director derived an
improper personal benefit. If the Delaware General Corporation Law is amended
after the filing of the Certificate of Incorporation of which this Article is a
part to authorize corporate action further eliminating or limiting the personal
liability of directors, then the liability of a director of this Corporation
shall be eliminated or limited to the fullest extent permitted by the Delaware
General Corporation Law, as so amended. Any repeal or modification of the
foregoing paragraph by the stockholders of this Corporation shall not adversely
affect any right or protection of a director of this Corporation existing at the
time of such repeal or modification.
VI.
A. INDEMNIFICATION.
1. RIGHT TO INDEMNIFICATION. Each person who was or is made a
party, or is threatened to be made a party to, or is involved in, any action,
suit or proceeding, whether civil, criminal, administrative or investigative
("Proceeding"), including, without limitation, Proceedings by or in the right of
this Corporation to procure a judgment in its favor, by reason of the fact that
he or she, or a person for whom he or she is the legal representative, is or was
a director or officer, employee or agent of this Corporation, or is or was
serving at the request of this Corporation as a director or officer, employee or
agent of another corporation, or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans, whether
the basis of such Proceeding is alleged action in an official capacity as a
director, officer, employee or agent, or in any other capacity while serving as
a director, officer, employee or agent, shall be indemnified and held harmless
by this Corporation to the fullest extent authorized by the General Corporation
Law of the State of Delaware, as the same exists or may hereafter be amended
(but, in the case of any such amendment, only to the extent such amendment
permits this Corporation to provide broader indemnification rights than said law
permitted this Corporation to provide prior to such amendment) against all
expenses, liability and loss (including attorneys' fees, judgments, fines, ERISA
excise taxes or penalties and amount paid or to be paid in settlement)
reasonably incurred or suffered by such person in connection therewith. Such
right shall be a contract right and shall include the right to be paid by this
Corporation for expenses incurred in defending any such Proceeding in advance of
its final disposition; provided, however, that the payment of such expenses
incurred by a director or officer of this Corporation in his or her capacity as
a director or officer (and not in any other capacity in which service was or is
rendered by such person while a director or officer, including, without
limitation, service to an employee benefit plan) in advance of the final
disposition of such Proceeding, shall be made only upon delivery to this
Corporation of an undertaking, by or on behalf of such director or officer, to
repay all amounts so advanced if it should be determined ultimately that such
director or officer is not entitled to be indemnified under this section, or
otherwise.
2. RIGHT OF CLAIMANT TO BRING SUIT. If a claim under Section 1 (above)
is not paid in full by this Corporation within ninety (90) days after a written
claim has been received by this Corporation, the claimant may at any time
thereafter bring suit against this Corporation to recover the unpaid amount of
the claim, and, if successful in whole or in part, the claimant shall be
entitled to be paid also the expense of prosecuting such claim.
It shall be a defense to any such action (other than an action brought to
enforce a claim for expenses incurred in defending any Proceeding in advance of
its final disposition where the required undertaking has been tendered to this
Corporation), that the claimant has not met the standards of conduct which make
it permissible under the General Corporation Law of the State of Delaware for
this Corporation to indemnify the claimant for the amount claimed, but the
burden of proving such defense shall be on this Corporation. Neither the failure
of this Corporation (including its Board of Directors, independent legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he or she has met the applicable standard of conduct
set forth in the General Corporation Law of the State of Delaware, nor an actual
determination by this Corporation (including its Board of Directors, independent
legal counsel, or its stockholders) that the claimant has not met such
applicable standard of conduct, shall be a defense to the action or create a
presumption that claimant had not met the applicable standard of conduct.
B. NON-EXCLUSIVITY OF RIGHTS. The rights conferred by Section A.1 and A.2
(above) shall not be exclusive of any other right which such person may have or
hereafter acquire under any statute, provision of the Certificate of
Incorporation, Bylaws, agreement, vote of stockholders or disinterested
directors, or otherwise.
C. AMENDMENT OR REPEAL. Neither any amendment nor repeal of this Article
VI, nor the adoption of any provision of this Corporation's Certificate of
Incorporation inconsistent with this Article VI, shall eliminate or reduce the
effect of this Article VI, in respect of any matter occurring, or any action or
Proceeding accruing or arising, or that, but for this Article VI would accrue or
arise, prior to such amendment, repeal or adoption of an inconsistent provision.
VII.
A. DIRECTORS' POWERS. The Directors of this Corporation shall have the
power to adopt, amend or repeal the Bylaws of this Corporation. The management
of the business and the conduct of the affairs of this Corporation shall be
vested in its Board of Directors. The number of directors which shall constitute
the whole Board of Directors shall be fixed exclusively by, or in the manner
provided in, the Bylaws of this Corporation.
B. CORPORATION EXISTENCE. This Corporation is to have perpetual existence.
VIII.
A. QUALIFIED PUBLIC OFFERING. For the management of the business, and for
the conduct of the affairs of this Corporation, and in further definition,
limitation and regulation of the powers of this Corporation, of its directors
and of its stockholders or any class thereof, as the case may be, it is further
provided that, effective upon the closing of a Qualified Public Offering:
1. BOARD CLASSES AND TERMS. The Board of Directors shall be divided
into three classes, designated as Class I, Class II, and Class III,
respectively. Directors shall be assigned to each class in accordance with a
resolution or resolutions adopted by the Board of Directors. At the first annual
meeting of stockholders following the date of the Qualified Public Offering, the
term of office of the Class I directors shall expire, and Class I directors
shall be elected for a full term of three (3) years. At the second annual
meeting of stockholders following the date of the Qualified Public Offering, the
term of office of the Class II directors shall expire, and Class II directors
shall be elected for a full term of three (3) years). At the third annual
meeting of stockholders following the date of the Qualified Public Offering, the
term of office of the Class III directors shall expire, and Class III directors
shall be elected for a full term of three (3) years). At each succeeding annual
meeting of stockholders, directors shall be elected for a full term of three (3)
years to succeed the directors of the class whose terms expire at such annual
meeting.
Notwithstanding the foregoing provisions of this Article, each
director shall serve until his or her successor is duly elected and qualified,
or under his or her death, resignation or removal. No decrease in the number of
directors constituting the Board of Directors shall shorten the term of any
incumbent director.
2. BOARD VACANCIES. Any vacancies on the Board of Directors resulting
from death, resignation, disqualification, removal, or other causes shall be
filled by either (i) the affirmative vote of the holders of a majority of the
voting power of the then-outstanding shares of voting stock of this Corporation
entitled to vote generally in the election of directors (the "Voting Stock"),
voting together as a single class; or (ii) by the affirmative vote of a majority
of the remaining directors then in office, even though less than a quorum of the
Board of Directors. Newly created directorships resulting from any increase in
the number of directors shall, unless the Board of Directors determines by
resolution that any such newly-created directorship shall be filled by the
stockholders, be filled only by the affirmative vote of the directors then in
office, even though less than a quorum of the Board of Directors. Any director
elected in accordance with the preceding sentence shall hold office for the
remainder of the full term of the class of directors in which the new
directorship was created or the vacancy occurred and until such director's
successor shall have been elected and qualified.
B. BYLAWS. In furtherance, and not in limitation, of the powers conferred
by statute, the Board of Directors is expressly authorized to make, alter,
amend, or repeal the Bylaws of this Corporation.
C. VOTE.
1. The affirmative vote of sixty-six and two-thirds percent (66-2/3%)
of the voting power of the then-outstanding shares of Voting Stock, voting
together as a
single class, shall be required for the adoption, amendment or repeal of
Sections 2.2 (Annual Meeting) and 2.3 (Special Meeting) of this Corporation's
Bylaws.
2. Any director, or the entire Board of Directors, may be removed from
office at any time (i) with cause by the affirmative vote of the holders of at
least a majority of the voting power of all of the then-outstanding shares of
the voting stock, voting together as a single class; or (ii) without cause by
the affirmative vote of the holders of at least sixty-six and two-thirds percent
(66-2/3%) of the voting power of all of the then-outstanding shares of the
Voting Stock.
D. NO ACTION. No action shall be taken by the stockholders of this
Corporation, except at an annual or special meeting of the stockholders called
in accordance with the Bylaws. The Stockholders shall not take any action by
written consent.
E. STOCKHOLDER NOMINATION. Advance notice of stockholder nomination for the
election of directors and of business to be brought by stockholders before any
meeting of the stockholders of this Corporation shall be given in the manner
provided in the Bylaws of this Corporation.
F. AMENDMENT. Notwithstanding any other provisions of this Certificate of
Incorporation, or any provision of law which might otherwise permit a lesser
vote or no vote, but in addition to any affirmative vote of the holders of any
particular class or series of the Voting Stock required by law, this Certificate
of Incorporation or any Preferred Stock Designation, the affirmative vote of the
holders of at least sixty-six and two-thirds percent (66-2/3%) of the voting
power of all of the then-outstanding shares of the Voting Stock, voting together
as a single class, shall be required to alter, amend or repeal this Article
VIII.
IX.
This 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, except as provided in Article VIII of this
Certificate, and all rights conferred upon the stockholders herein are granted
subject to this right.
CERTIFICATE OF INCORPORATOR
I, THE UNDERSIGNED, being the Incorporator hereinafter named, for the
purpose of forming a corporation pursuant to the General Corporation Law of the
State of Delaware, do make this Certificate, hereby declaring and certifying,
under penalties of perjury, that this is my act and deed, and that the facts
herein stated are true, and accordingly have hereunto set my hand this 21st day
of March, 1996.
/s/ Stephen P. Pezzola
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STEPHEN P. PEZZOLA, Incorporator
EXHIBIT B
TO
STOCK PURCHASE AGREEMENT
DEFINITION OF ACCREDITED INVESTOR
ACCREDITED INVESTOR. "Accredited investor" shall mean any person who comes
within any of the following categories as at the Closing Date:
(1) Any bank as defined in section 3(a)(2) of the Securities Act, or any
savings and loan association or other institution as defined in section
3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary
capacity; any broker or dealer registered pursuant to section 15 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"); any insurance
company as defined in section 2(13) of the Securities Act; any investment
company registered under the Investment Company Act of 1940 or a business
development company as defined in section 2(a)(48) of that Act; Small Business
Investment Company licensed by the U.S. Small Business Administration under
section 301(c) or (d) of the Small Business Investment Act of 1958; any plan
established and maintained by a state, its political subdivisions, or any agency
or instrumentality of a state or its political subdivisions for the benefit of
its employees, if such plan has total assets in excess of $5,000,000; employee
benefit plan within the meaning of the Employee Retirement Income Security Act
of 1974 if the investment decision is made by a plan fiduciary, as defined in
Section 3(21) of such Act, which is either a bank, savings and loan association,
insurance company, or registered investment adviser, or if the employee benefit
plan has total assets in excess of $5,000,000 or, if a self-directed plan, with
investment decision made solely by persons that are accredited investors;
(2) Any private business development company as defined in section
202(a)(22) of the Investment Advisers Act of 1940;
(3) Any organization described in section 501(c)(3) of the Internal Revenue
Code, corporation, Massachusetts or similar business trust, or partnership, not
formed for the specific purpose of acquiring the securities offered, with total
assets in excess of $5,000,000;
(4) Any director or executive officer of the Corporation;
(5) Any natural person whose individual net worth, or joint net worth with
that person's spouse, at the time of his purchase exceeds $1,000,000;
(6) Any natural person who had an individual income in excess of $200,000
in each of the two most recent years or joint income with that person's spouse
in excess of $300,000 in each of those years and has a reasonable expectation of
reaching the same income level in the current year;
(7) Any trust, with total assets in excess of $5,000,000, not formed for
the specific purpose of acquiring the securities offered, whose purchase is
directed by a person who has such knowledge and experience in financial and
business matters that he is
capable of evaluating the merits and risks of the prospective investment; and
(8) Any entity in which all of the equity owners are accredited investors.