RESTATED CERTIFICATE OF INCORPORATION
OF
ELITRA PHARMACEUTICALS INC.
Dr. Harry F. Hixson, Jr. and Alana B. McNulty hereby certify that:
ONE: The present name of this corporation is Elitra Pharmaceuticals
Inc. The corporation was originally incorporated under the name of Rajyabiotics
Corporation, and the date of filing the original Certificate of Incorporation of
this corporation with the Secretary of State of the State of Delaware is
February 19, 1998.
TWO: They are the duly elected and acting President and Secretary,
respectively, of Elitra Pharmaceuticals, a Delaware corporation.
THREE: The Certificate of Incorporation of this corporation is hereby
amended and restated to read as follows:
I.
The name of the corporation is ELITRA PHARMACEUTICALS INC. (the
"Corporation" or the "Company").
II.
The address of the registered office of the Corporation in the State of
Delaware is:
National Registered Agents, Inc.
9 East Loockerman Street
Dover, DE 19901
County of Kent
The name of the Corporation's registered agent at said address is
National Registered Agents.
III.
The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of the State of Delaware ("DGCL").
IV.
A. This Corporation is authorized to issue two classes of
stock to be designated, respectively, "Common Stock" and "Preferred Stock."
The total number of shares which the Corporation is authorized to issue is
one hundred seven million five hundred seventy-six thousand six hundred
forty-eight (107,576,648) shares, seventy million (70,000,000) shares of
which shall be Common Stock (the "Common Stock") and thirty-seven million
five hundred seventy-six
1.
thousand six hundred forty-eight (37,576,648) shares of which shall be
Preferred Stock (the "Preferred Stock"). The Preferred Stock shall have a par
value of one-tenth of one cent ($0.001) per share and the Common Stock shall
have a par value of one-tenth of one cent ($0.001) per share.
B. The Preferred Stock may be issued from time to time in one or
more series. The Board of Directors is hereby authorized, by filing a
certificate (a "Preferred Stock Designation") pursuant to the DGCL, to fix or
alter from time to time the designation, powers, preferences and rights of the
shares of each such series and the qualifications, limitations or restrictions
of any wholly unissued series of Preferred Stock, and to establish from time to
time the number of shares constituting any such series or any of them; and to
increase or decrease the number of shares of any series subsequent to the
issuance of shares of that series, but not below the number of shares of such
series then outstanding. In case the number of shares of any series shall be
decreased in accordance with the foregoing sentence, the shares constituting
such decrease shall resume the status that they had prior to the adoption of the
resolution originally fixing the number of shares of such series.
C. Four million five hundred forty-five thousand four hundred
fifty-six (4,545,456) of the authorized shares of Preferred Stock are hereby
designated "Series A Preferred Stock" (the "Series A Preferred"), twenty-one
million six hundred fifty-one thousand sixty-three (21,651,063) of the
authorized shares of Preferred Stock are hereby designated "Series B
Preferred Stock" (the "Series B Preferred"), one million forty-one thousand
six hundred sixty-seven (1,041,667) of the authorized shares of Preferred
Stock are hereby designated "Series C Preferred Stock" (the "Series C
Preferred"), one million five hundred thirty-eight thousand four hundred
sixty-two (1,538,462) of the authorized shares of Preferred Stock are hereby
designated "Series D Preferred Stock" (the "Series D Preferred") and eight
million eight hundred thousand (8,800,000) shares of the authorized shares
of Preferred Stock are hereby designated "Series E Preferred Stock" (the
"Series E Preferred").
D. The rights, preferences, privileges, restrictions and other
matters relating to the Series A Preferred, Series B Preferred, Series C
Preferred, Series D Preferred and Series E Preferred are as follows:
1. DIVIDEND RIGHTS.
a. Holders of Series A Preferred, Series B
Preferred and Series E Preferred, in preference to the holders of Series C
Preferred, Series D Preferred and the holders of any other stock of the Company
("Junior Stock"), shall be entitled to receive, when and as declared by the
Board of Directors, but only out of funds that are legally available therefor,
cash dividends at the rate of eight percent (8%) of the applicable "Original
Issue Price" per annum on each outstanding share of Series A Preferred, Series B
Preferred and Series E Preferred (as adjusted for any stock dividends,
combinations, splits, recapitalizations and the like with respect to such
shares). After payment of any dividends required to be paid to the holders of
Series A Preferred, Series B Preferred and Series E Preferred, holders of Series
C Preferred and Series D Preferred, in preference to the holders of any Junior
Stock, shall be entitled to receive, when and as declared by the Board of
Directors, but only out of funds that are legally available therefor, cash
dividends at the rate of eight percent (8%) of the applicable "Original Issue
Price" per
2.
annum on each outstanding share of Series C Preferred and Series D Preferred (as
adjusted for any stock dividends, combinations, splits, recapitalizations and
the like with respect to such shares). The Original Issue Price of the Series A
Preferred shall be sixty-six cents ($0.66) (the "Series A Original Issue
Price"). The Original Issue Price of the Series B Preferred shall be
seventy-five cents ($0.75) (the "Series B Original Issue Price"). The Original
Issue Price of the Series C Preferred shall be four dollars and eighty cents
($4.80) (the "Series C Original Issue Price"). The Original Issue Price of the
Series D Preferred shall be three dollars and twenty-five cents ($3.25) (the
"Series D Original Issue Price"). The Original Issue Price of the Series E
Preferred shall be three dollars and twenty-five cents ($3.25) (the "Series E
Original Issue Price"). Such dividends shall be payable only when, as and if
declared by the Board of Directors and shall be non-cumulative.
b. So long as any shares of Series A Preferred,
Series B Preferred, Series C Preferred, Series D Preferred or Series E Preferred
shall be outstanding, no dividend, whether in cash or property, shall be paid or
declared, nor shall any other distribution be made, on any Junior Stock, nor
shall any shares of any Junior Stock of the Company be purchased, redeemed, or
otherwise acquired for value by the Company (except for acquisitions of Common
Stock by the Company pursuant to agreements which permit the Company to
repurchase such shares upon termination of services to the Company or in
exercise of the Company's right of first refusal upon a proposed transfer) until
all dividends (set forth in Section 1(a) above) on the Series A Preferred,
Series B Preferred, Series C Preferred, Series D Preferred and Series E
Preferred shall have been paid or declared and set apart. In the event dividends
are paid on any share of Common Stock, an additional dividend shall be paid with
respect to all outstanding shares of Series A Preferred, Series B Preferred,
Series C Preferred, Series D Preferred and Series E Preferred in an amount equal
per share (on an as-if-converted to Common Stock basis) to the amount paid or
set aside for each share of Common Stock. The provisions of this Section 1(b)
shall not, however, apply to (i) a dividend payable in Common Stock, (ii) the
acquisition of shares of any Junior Stock in exchange for shares of any other
Junior Stock, or (iii) any repurchase of any outstanding securities of the
Company that is unanimously approved by the Company's Board of Directors.
2. VOTING RIGHTS.
a. GENERAL RIGHTS. Except as otherwise provided
herein or as required by law, the Series A Preferred, the Series B Preferred,
the Series C Preferred, the Series D Preferred and the Series E Preferred shall
be voted equally with the shares of the Common Stock of the Company and not as a
separate class, at any annual or special meeting of stockholders of the Company,
and may act by written consent in the same manner as the Common Stock, in either
case upon the following basis: each holder of shares of Series A Preferred,
Series B Preferred, Series C Preferred, Series D Preferred or Series E Preferred
shall be entitled to such number of votes as shall be equal to the whole number
of shares of Common Stock into which such holder's aggregate number of shares of
Series A Preferred, Series B Preferred, Series C Preferred, Series D Preferred
or Series E Preferred, as applicable, are convertible (pursuant to Section 4
hereof) immediately after the close of business on the record date fixed for
such meeting or the effective date of such written consent.
3.
b. SEPARATE VOTE OF SERIES A PREFERRED, SERIES
B PREFERRED AND SERIES E Preferred. For so long as at least seven million five
hundred eighteen thousand five hundred seven (7,518,507) shares of Series A
Preferred, Series B Preferred and/or Series E Preferred (subject to adjustment
for any stock split, reverse stock split or other similar event affecting the
Series A Preferred, Series B Preferred or Series E Preferred) 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 sixty-six and two-thirds
percent (66 2/3%) of the outstanding Series A Preferred, Series B Preferred and
Series E Preferred, voting together as a single class, shall be necessary for
effecting or validating the following actions:
(i) Any amendment, alteration, or
repeal of any provision of the Certificate of Incorporation or the Bylaws of the
Company (including any filing of a Certificate of Designation);
(ii) Any increase or decrease in the
authorized number of shares of Common Stock or Preferred Stock;
(iii) Any redemption, repurchase, payment
of dividends or other distributions with respect to Junior Stock (except for
acquisitions of Common Stock by the Company pursuant to agreements which permit
the Company to repurchase such shares upon termination of services to the
Company or in exercise of the Company's right of first refusal upon a proposed
transfer);
(iv) Any agreement by the Company or its
stockholders regarding an Acquisition or Asset Transfer (each as defined in
Section 3(d));
(v) Any voluntary dissolution or
liquidation of the Company; or
(vi) Any increase or decrease in the
authorized number of members of the Company's Board of Directors.
c. SEPARATE VOTE OF SERIES A PREFERRED. For so
long as at least one million (1,000,000) shares of Series A Preferred (subject
to adjustment for any stock split, reverse stock split or other similar event
affecting the Series A Preferred) remain outstanding, in addition to any other
vote or consent required herein or by law, the vote or written consent of the
holders of at least a majority of the outstanding Series A Preferred shall be
necessary for effecting or validating the following actions:
(i) Any amendment, alteration, or
repeal of any provision of the Certificate of Incorporation or the Bylaws of the
Company (including any filing of a Certificate of Designation) that alters or
changes the voting powers, preferences, or other special rights or privileges,
or restrictions of the Series A Preferred so as to affect them adversely; or
(ii) 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 Company ranking senior to the Series A Preferred in
4.
right of redemption, liquidation preference, voting or dividends or any increase
in the authorized or designated number of any such new class or series.
d. SEPARATE VOTE OF SERIES B PREFERRED. For so
long as at least four million seven hundred forty-one thousand five hundred
eighty-three (4,741,583) shares of Series B Preferred (subject to adjustment for
any stock split, reverse stock split or other similar event affecting the Series
B Preferred) remain outstanding, in addition to any other vote or consent
required herein or by law, the vote or written consent of the holders of at
least a majority of the outstanding Series B Preferred shall be necessary for
effecting or validating the following actions:
(i) Any amendment, alteration, or
repeal of any provision of the Certificate of Incorporation or the Bylaws of the
Company (including any filing of a Certificate of Designation) that alters or
changes the voting powers, preferences, or other special rights or privileges,
or restrictions of the Series B Preferred so as to affect them adversely; or
(ii) 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 Company ranking senior to the Series B Preferred 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.
e. SEPARATE VOTE OF SERIES D PREFERRED. For so
long as at least one million (1,000,000) shares of Series D Preferred (subject
to adjustment for any stock split, reverse stock split or other similar event
affecting the Series D Preferred) remain outstanding, in addition to any other
vote or consent required herein or by law, the vote or written consent of the
holders of at least a majority of the outstanding Series D Preferred shall be
necessary for affecting or validating any amendment, alteration, or repeal of
any provision of the Certificate of Incorporation or the Bylaws of the Company
(including any filing of a Certificate of Designation) that alters or changes
the voting powers, preferences, or other special rights or privileges, or
restrictions of the Series D Preferred so as to affect them adversely in a
manner different from that of the other series of Preferred Stock.
Notwithstanding the foregoing, no separate vote or written consent of the
holders of the outstanding Series D Preferred shall be necessary for any
authorization or any designation, whether by reclassification or otherwise, or
any issuance, of any class or series of stock or any other securities
convertible into equity securities of the Company ranking PARI PASSU with or
senior to the Series D Preferred in right of redemption, liquidation preference,
voting or dividends or any increase in the authorized or designated number of
any such class or series.
f. SEPARATE VOTE OF SERIES E PREFERRED. For so
long as at least one million seven hundred seventy-six thousand nine hundred
twenty-four (1,776,924) shares of Series E Preferred (subject to adjustment for
any stock split, reverse stock split or other similar event affecting the Series
E Preferred) remain outstanding, in addition to any other vote or consent
required herein or by law, the vote or written consent of the holders of at
least a majority of the outstanding Series E Preferred shall be necessary for
effecting or validating the following actions:
5.
(i) Any amendment, alteration, or
repeal of any provision of the Certificate of Incorporation or the Bylaws of the
Company (including any filing of a Certificate of Designation) that alters or
changes the voting powers, preferences, or other special rights or privileges,
or restrictions of the Series E Preferred so as to affect them adversely; or
(ii) 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 Company ranking senior to the Series E Preferred 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.
g. ELECTION OF BOARD OF DIRECTORS. For so long
as at least one million (1,000,000) shares of Series A Preferred remain
outstanding (subject to adjustment for any stock split, reverse stock split or
similar event affecting the Series A Preferred), the holders of Series A
Preferred, voting as a separate class, shall be entitled to elect two (2)
members of the Company's Board of Directors at each meeting or pursuant to each
consent of the Company's stockholders for the election of directors, and to
remove from office such directors and to fill any vacancy caused by the
resignation, death or removal of such directors. For so long as at least four
million seven hundred forty-one thousand five hundred eighty-three (4,741,583)
shares of Series B Preferred remaining outstanding the holders of Series B
Preferred, voting as a separate class, shall be entitled to elect two (2)
members of the Company's Board of Directors at each meeting or pursuant to each
consent of the Company's stockholders for the election of directors, and to
remove from office such directors and to fill any vacancy caused by the
resignation, death or removal of such directors. The holders of Common Stock,
Series A Preferred, Series B Preferred, Series C Preferred, Series D Preferred
and Series E Preferred, voting together as a single class, shall be entitled to
elect up to three (3) additional members of the Board of Directors at each
meeting or pursuant to each consent of the Company's stockholders for the
election of directors, and to remove from office such directors and to fill any
vacancy caused by the resignation, death or removal of such directors.
3. LIQUIDATION RIGHTS.
a. Upon any liquidation, dissolution, or
winding up of the Company, whether voluntary or involuntary, before any
distribution or payment shall be made to the holders of any Series C Preferred,
Series D Preferred or the holders of any Junior Stock, the holders of Series A
Preferred, Series B Preferred and Series E Preferred shall be entitled to be
paid out of the assets of the Company an amount per share of Series A Preferred,
Series B Preferred or Series E Preferred, as the case may be, equal to the
applicable Original Issue Price plus all declared and unpaid dividends on the
Series A Preferred, Series B Preferred or Series E Preferred Stock (as adjusted
for any stock dividends, combinations, splits, recapitalizations and the like
with respect to such shares) for each share of Series A Preferred, Series B
Preferred or Series E Preferred held by them.
b. After the payment of the full liquidation
preference of the Series A Preferred, Series B Preferred and Series E Preferred
as set forth in Section 3(a) above, before any distribution or payment shall be
made to the holders of any Junior Stock the holders of Series C Preferred and
Series D Preferred shall be entitled to be paid out of the assets of the Company
an
6.
amount per share of Series C Preferred or Series D Preferred, as the case may
be, equal to the applicable Original Issue Price plus all declared and unpaid
dividends on the Series C Preferred or Series D Preferred (as adjusted for any
stock dividends, combinations, splits, recapitalizations and the like with
respect to such shares) for each share of Series C Preferred or Series D
Preferred held by them.
c. After the payment of the full liquidation
preference of the Series A Preferred, Series B Preferred, Series C Preferred,
Series D Preferred and Series E Preferred as set forth in Sections 3(a) and 3(b)
above, the assets of the Company legally available for distribution, if any,
shall be distributed ratably to the holders of the Common Stock, Series A
Preferred, Series B Preferred, Series C Preferred, Series D Preferred and Series
E Preferred on an as-if-converted to Common Stock basis.
d. The following events shall be considered a
liquidation under this Section unless such event results in automatic conversion
of the Series A Preferred, Series B Preferred, Series C Preferred, Series D
Preferred and Series E Preferred pursuant to Section 4(b)(i)(C):
(i) any consolidation or merger of the
Company with or into any other corporation or other entity or person, or any
other corporate reorganization, in which the stockholders of the Company
immediately prior to such consolidation, merger or reorganization own less than
fifty percent (50%) of the Company's voting power immediately after such
consolidation, merger or reorganization, or any transaction or series of related
transactions to which the Company is a party in which in excess of fifty percent
(50%) of the Company's voting power is transferred (an "Acquisition"); or
(ii) a sale, lease or other disposition
of all or substantially all of the assets of the Company (an "Asset Transfer").
e. If, upon any liquidation, distribution, or
winding up, the assets of the Company shall be insufficient to make payment in
full to all holders of Series A Preferred, Series B Preferred and Series E
Preferred of the liquidation preference set forth in Section 3(a), then such
assets shall be distributed among the holders of Series A Preferred, Series B
Preferred and Series E Preferred at the time outstanding, ratably in proportion
to the full amounts to which they would otherwise be respectively entitled.
f. If, upon any liquidation, distribution, or
winding up, after making payment in full to all holders of Series A Preferred,
Series B Preferred and Series E Preferred, the assets of the Company shall be
insufficient to make payment in full to all holders of Series C Preferred and
Series D Preferred of the liquidation preference set forth in Section 3(b), then
such assets shall be distributed among the holders of Series C Preferred and
Series D Preferred at the time outstanding, ratably in proportion to the full
amounts to which they would otherwise be respectively entitled.
4. CONVERSION RIGHTS.
The holders of the Series A Preferred, Series B
Preferred, Series C Preferred, Series D Preferred and Series E Preferred shall
have the following rights with respect
7.
to the conversion of the Series A Preferred, Series B Preferred, Series C
Preferred, Series D Preferred and Series E Preferred into shares of Common Stock
(the "Conversion Rights"):
a. OPTIONAL CONVERSION. Subject to and in
compliance with the provisions of this Section 4 (and in particular Section
4(d)), any shares of Series A Preferred, Series B Preferred, Series C Preferred,
Series D Preferred and Series E Preferred 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,
Series B Preferred, Series C Preferred, Series D Preferred or Series E Preferred
shall be entitled upon conversion shall be the product obtained by multiplying
the "Series A Preferred Conversion Rate," "Series B Preferred Conversion Rate,"
"Series C Preferred Conversion Rate," "Series D Preferred Conversion Rate," or
"Series E Preferred Conversion Rate," as applicable, then in effect (determined
as provided in Section 4(c)) by the respective number of shares of Series A
Preferred, Series B Preferred, Series C Preferred, Series D Preferred or Series
E Preferred being converted.
b. AUTOMATIC CONVERSION.
(i) Each share of Series A Preferred,
Series B Preferred, Series C Preferred, Series D Preferred and Series E
Preferred shall automatically be converted into shares of Common Stock, based on
the then-effective Series A Preferred Conversion Price, Series B Preferred
Conversion Price, Series C Preferred Conversion Price, Series D Preferred
Conversion Price or Series E Preferred Conversion Price, (A) at any time upon
the affirmative election of the holders of at least sixty-six and two thirds
percent (66 2/3%) of the outstanding shares of the Series A Preferred, the
Series B Preferred, the Series C Preferred, the Series D Preferred and the
Series E Preferred, voting together as a single class, or (B) immediately upon
the closing of a firmly underwritten public offering pursuant to an effective
registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), covering the offer and sale of Common Stock, at a public
offering price (prior to any underwriters' discounts or commissions) equal to or
greater than [$3.25] per share (as adjusted for stock splits, dividends,
recapitalizations and the like) for the account of the Company in which the
equity of the Company is valued at no less than $120,000,000 in the aggregate
(the "Minimum Transaction Value"); or (C) immediately prior to the closing of
any Acquisition in which (i) the equity of the Company is valued at no less than
the Minimum Transaction Value and (ii) the Stockholders of the Company
immediately prior to such transaction receive cash or securities that are not
restricted stock for purposes of the Securities Act and are tradable on a
national securities exchange or automated quotation system having a value at the
time of such closing of at least [$3.25] per share of Common Stock of the
Company (as adjusted for stock splits, dividends, recapitalizations and the
like). Upon such automatic conversion, any declared and unpaid dividends shall
be paid in accordance with the provisions of Section 4(e). The number of shares
of Common Stock to which a holder of Series A Preferred, Series B Preferred,
Series C Preferred, Series D Preferred or Series E Preferred shall be entitled
upon conversion shall be the product obtained by multiplying the "Series A
Preferred Conversion Rate," the "Series B Preferred Conversion Rate," the
"Series C Preferred Conversion Rate," the "Series D Preferred Conversion Rate,"
or the "Series E Preferred Conversion Rate" then in effect (determined as
provided in Section 4(c)) by the respective number of shares of Series A
Preferred, Series B Preferred, Series C Preferred, Series D Preferred or Series
E Preferred being converted.
8.
(ii) Upon the occurrence of an event
specified in paragraph (i) above, the outstanding shares of Series A Preferred,
Series B Preferred, Series C Preferred, Series D Preferred and Series E
Preferred shall be converted automatically without any further action by the
holders of such shares and whether or not the certificates representing such
shares are surrendered to the Company or its transfer agent; PROVIDED, HOWEVER,
that the Company 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, Series B Preferred, Series C
Preferred, Series D Preferred or Series E Preferred are either delivered to the
Company or its transfer agent as provided below, or the holder notifies the
Company or its transfer agent that such certificates have been lost, stolen or
destroyed and executes an agreement satisfactory to the Company to indemnify the
Company from any loss incurred by it in connection with such certificates. Upon
the occurrence of such automatic conversion of the Series A Preferred, Series B
Preferred, Series C Preferred, Series D Preferred or Series E Preferred, the
holders of Series A Preferred, Series B Preferred, Series C Preferred, Series D
Preferred or Series E Preferred shall surrender the certificates representing
such shares at the office of the Company or any transfer agent for the Series A
Preferred, Series B Preferred, Series C Preferred, Series D Preferred or Series
E Preferred. Thereupon, there shall be issued and delivered to such holder
promptly at such office and in its name as shown on such surrendered certificate
or certificates, a certificate or certificates for the number of shares of
Common Stock into which the shares of Series A Preferred, Series B Preferred,
Series C Preferred, Series D Preferred or Series E Preferred surrendered were
convertible on the date on which such automatic conversion occurred, and any
declared and unpaid dividends shall be paid in accordance with the provisions of
Section 4(e).
c. SERIES A PREFERRED, SERIES B PREFERRED,
SERIES C PREFERRED, SERIES D PREFERRED AND SERIES E PREFERRED CONVERSION RATE.
The conversion rate in effect at any time for conversion of the Series A
Preferred (the "Series A Preferred Conversion Rate") shall be the quotient
obtained by dividing the Series A Original Issue Price by the "Series A
Preferred Conversion Price," calculated as provided in Section 4(d). The
conversion rate in effect at any time for conversion of the Series B Preferred
(the "Series B Preferred Conversion Rate") shall be the quotient obtained by
dividing the Series B Original Issue Price by the "Series B Preferred Conversion
Price," calculated as provided in Section 4(d). The conversion rate in effect at
any time for conversion of the Series C Preferred (the "Series C Preferred
Conversion Rate") shall be the quotient obtained by dividing the Series C
Original Issue Price by the "Series C Preferred Conversion Price," calculated as
provided in Section 4(d). The conversion rate in effect at any time for
conversion of the Series D Preferred (the "Series D Preferred Conversion Rate")
shall be the quotient obtained by dividing the Series D Original Issue Price by
the "Series D Preferred Conversion Price," calculated as provided in Section
4(d). The conversion rate in effect at any time for conversion of the Series E
Preferred (the "Series E Preferred Conversion Rate") shall be the quotient
obtained by dividing the Series E Original Issue Price by the "Series E
Preferred Conversion Price," calculated as provided in Section 4(d).
d. SERIES A PREFERRED, SERIES B PREFERRED,
SERIES C PREFERRED, SERIES D PREFERRED AND SERIES E PREFERRED CONVERSION PRICE.
The conversion price for the Series A Preferred shall initially be the Series A
Original Issue Price (the "Series A Preferred Conversion Price"). The conversion
price for the Series B Preferred shall initially be the Series B Original Issue
Price (the "Series B Preferred Conversion Price"). The conversion price
9.
for the Series C Preferred shall initially be the Series C Preferred Conversion
Price (the "Series C Preferred Conversion Price"). The conversion price for the
Series D Preferred shall initially be the Series D Preferred Conversion Price
(the "Series D Preferred Conversion Price"). The conversion price for the Series
E Preferred shall initially be the Series E Preferred Conversion Price. Such
initial Series A Preferred, Series B Preferred, Series C Preferred, Series D
Preferred or Series E Preferred Conversion Prices shall be adjusted from time to
time in accordance with this Section 4. All references to the Series A Preferred
Conversion Price, the Series B Preferred Conversion Price, the Series C
Preferred Conversion Price, the Series D Preferred Conversion Price or the
Series E Preferred Conversion Price herein shall mean the Series A Preferred
Conversion Price as so adjusted, the Series B Preferred Conversion Price as so
adjusted, the Series C Preferred Conversion Price as so adjusted, the Series D
Preferred Conversion Price as so adjusted, and the Series E Preferred Conversion
Price as so adjusted, respectively.
e. MECHANICS OF CONVERSION. Each holder of
Series A Preferred, Series B Preferred, Series C Preferred, Series D Preferred
or Series E Preferred who desires to convert the same into shares of Common
Stock pursuant to this Section 4 shall surrender the certificate or certificates
therefor, duly endorsed, at the office of the Company or any transfer agent for
the Series A Preferred, Series B Preferred, Series C Preferred, Series D
Preferred or Series E Preferred and shall give written notice to the Company at
such office that such holder elects to convert the same. Such notice shall state
the number of shares of Series A Preferred, Series B Preferred, Series C
Preferred, Series D Preferred or Series E Preferred being converted. Thereupon,
the Company 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 in cash or, to the extent
sufficient funds are not then legally available therefor, in Common Stock (at
the Common Stock's fair market value determined by the Board of Directors as of
the date of such conversion), any declared and unpaid dividends on the shares of
Series A Preferred, Series B Preferred, Series C Preferred, Series D Preferred
or Series E Preferred being converted. 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, Series B Preferred,
Series C Preferred, Series D Preferred or Series E Preferred to be converted,
and the person entitled to receive the shares of Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder of such shares
of Common Stock on such date.
f. ADJUSTMENT FOR STOCK SPLITS AND
COMBINATIONS. If the Company shall at any time or from time to time after the
date that the first share of Series E Preferred is issued (the "Original Issue
Date") effect a subdivision of the outstanding Common Stock without a
corresponding subdivision of the Preferred Stock, the Series A Preferred
Conversion Price, the Series B Preferred Conversion Price, the Series C
Preferred Conversion Price, the Series D Preferred Conversion Price and the
Series E Preferred Conversion Price in effect immediately before that
subdivision shall be proportionately decreased. Conversely, if the Company shall
at any time or from time to time after the Original Issue Date combine the
outstanding shares of Common Stock into a smaller number of shares without a
corresponding combination of the Preferred Stock, the Series A Preferred
Conversion Price, the Series B Preferred Conversion Price, the Series C
Preferred Conversion Price, the Series D Preferred Conversion Price and the
Series E Preferred Conversion Price in effect immediately before the combination
shall be proportionately increased. Any adjustment under this Section 4(f) shall
10.
become effective at the close of business on the date the subdivision or
combination becomes effective.
g. ADJUSTMENT FOR COMMON STOCK DIVIDENDS AND
DISTRIBUTIONS. If the Company at any time or from time to time after the
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 Conversion Price, the Series B Preferred Conversion Price, the Series
C Preferred Conversion Price, the Series D Preferred Conversion Price and the
Series E Preferred Conversion Price that is then in effect shall be decreased as
of the time of such issuance or, in the event such record date is fixed, as of
the close of business on such record date, by multiplying the Series A Preferred
Conversion Price, the Series B Preferred Conversion Price, the Series C
Preferred Conversion Price, the Series D Preferred Conversion Price or the
Series E Preferred 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 A Preferred Conversion Price, the Series B Preferred
Conversion Price, the Series C Preferred Conversion Price, the Series D
Preferred Conversion Price and the Series E Preferred Conversion Price shall be
recomputed accordingly as of the close of business on such record date and
thereafter the Series A Preferred Conversion Price, the Series B Preferred
Conversion Price, the Series C Preferred Conversion Price, the Series D
Preferred Conversion Price and the Series E Preferred Conversion Price shall be
adjusted pursuant to this Section 4(g) to reflect the actual payment of such
dividend or distribution.
h. ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE
AND SUBSTITUTION. If at any time or from time to time after the Original Issue
Date, the Common Stock issuable upon the conversion of the Series A Preferred,
Series B Preferred, Series C Preferred, Series D Preferred or Series E Preferred
is changed into the same or a different number of shares of any class or classes
of stock, whether by recapitalization, reclassification or otherwise (other than
an Acquisition or Asset Transfer as defined in Section 3(c) or a subdivision or
combination of shares or stock dividend or a reorganization, merger,
consolidation or sale of assets provided for elsewhere in this Section 4), in
any such event each holder of Series A Preferred, Series B Preferred, Series C
Preferred, Series D Preferred or Series E Preferred shall have the right
thereafter to convert such stock into the kind and amount of stock and other
securities and property receivable upon such recapitalization, reclassification
or other change by holders of the maximum number of shares of Common Stock into
which such shares of Series A Preferred, Series B Preferred, Series C Preferred,
Series D Preferred or Series E Preferred could have been converted immediately
prior to such recapitalization, reclassification or change, all subject to
further adjustment as provided herein or with respect to such other securities
or property by the terms thereof.
11.
i. REORGANIZATIONS, MERGERS, CONSOLIDATIONS OR
SALES OF ASSETS. If at any time or from time to time after the Original Issue
Date, there is a capital reorganization of the Common Stock (other than an
Acquisition or Asset Transfer as defined in Section 3(c) or a recapitalization,
subdivision, combination, reclassification, exchange or substitution of shares
provided for elsewhere in this Section 4, as a part of such capital
reorganization, provision shall be made so that the holders of the Series A
Preferred, Series B Preferred, Series C Preferred, Series D Preferred and Series
E Preferred shall thereafter be entitled to receive upon conversion of the
Series A Preferred, Series B Preferred, Series C Preferred, Series D Preferred
or Series E Preferred the number of shares of stock or other securities or
property of the Company to which a holder of the number of shares of Common
Stock deliverable upon conversion would have been entitled on such capital
reorganization, subject to adjustment in respect of such stock or securities by
the terms thereof. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Section 4 with respect to the rights of
the holders of Series A Preferred, Series B Preferred, Series C Preferred,
Series D Preferred and Series E Preferred after the capital reorganization to
the end that the provisions of this Section 4 (including adjustment of the
Series A Preferred Conversion Price, Series B Preferred Conversion Price, Series
C Preferred Conversion Price, Series D Preferred Conversion Price or Series E
Preferred Conversion Price then in effect and the number of shares issuable upon
conversion of the Series A Preferred, Series B Preferred, Series C Preferred,
Series D Preferred or Series E Preferred) shall be applicable after that event
and be as nearly equivalent as practicable.
j. SALE OF SHARES BELOW SERIES A PREFERRED,
SERIES B PREFERRED, SERIES D PREFERRED AND SERIES E PREFERRED CONVERSION PRICE.
(i) If at any time or from time to time
after the Original Issue Date, the Company issues or sells, or is deemed by the
express provisions of this Section 4(j) to have issued or sold, Additional
Shares of Common Stock (as defined in Section 4(j)(v) below), other than as a
dividend or other distribution on any class of stock as provided in Section 4(g)
above, and other than a subdivision or combination of shares of Common Stock as
provided in Section 4(f) above, for an Effective Price (as defined in Section
4(j)(v) below) less than the then effective Series A Preferred Conversion Price,
Series B Preferred Conversion Price or Series E Preferred Conversion Price, then
and in each such case the then existing Series A Preferred Conversion Price,
Series B Preferred Conversion Price or Series E Preferred 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
Conversion Price, Series B Preferred Conversion Price or Series E Preferred
Conversion Price, as the case may be, by a fraction (i) the numerator of which
shall be (A) the number of shares of Common Stock deemed outstanding (as defined
below) immediately prior to such issue or sale, plus (B) the number of shares of
Common Stock which the aggregate consideration received (as defined in Section
4(j)(iii)) by the Company for the total number of Additional Shares of Common
Stock so issued would purchase at such Series A Preferred Conversion Price,
Series B Preferred Conversion Price or Series E Preferred Conversion Price, and
(ii) the denominator of which shall be the number of shares of Common Stock
deemed outstanding (as defined below) immediately prior to such issue or sale
plus the total number of Additional Shares of Common Stock so issued. For the
purposes of the preceding sentence, the number of shares of Common Stock deemed
to be outstanding as of a given date shall be the sum of (A) the number of
shares of Common Stock actually outstanding, (B) the number of shares of Common
Stock into which the
12.
then outstanding shares of Series A Preferred, Series B Preferred, Series C
Preferred, Series D Preferred and Series E Preferred could be converted if fully
converted on the day immediately preceding the given date, and (C) the number of
shares of Common Stock which could be obtained through the exercise or
conversion of all other rights, options and convertible securities on the day
immediately preceding the given date.
(ii) If at any time after the Original
Issue Date and prior to January 1, 2001, the Company shall issue or be deemed to
have issued Additional Shares of Common Stock for an Effective Price per share
of less than the then effective Series D Preferred Conversion Price, then the
Series D Preferred Conversion Price then in effect shall be adjusted to equal
the Effective Price per share for which such Additional Shares of Common Stock
were issued or deemed to have been issued. This Section 4(j)(ii) shall terminate
and be of no further force or effect from and after January 1, 2001.
(iii) For the purpose of making any
adjustment required under this Section 4(j), the consideration received by the
Company for any issue or sale of securities shall (A) to the extent it consists
of cash, be computed at the net amount of cash received by the Company after
deduction of any underwriting or similar commissions, compensation or
concessions paid or allowed by the Company in connection with such issue or sale
but without deduction of any expenses payable by the Company, (B) to the extent
it consists of property other than cash, be computed at the fair value of that
property as determined in good faith by the Board of Directors, and (C) if
Additional Shares of Common Stock, Convertible Securities (as defined in Section
4(j)(iv)) 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 Company 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.
(iv) For the purpose of the adjustment
required under this Section 4(j), if the Company issues or sells (A) stock or
other securities convertible into, Additional Shares of Common Stock (such
convertible stock or securities being herein referred to as "Convertible
Securities") or (B) 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 Conversion
Price, Series B Preferred Conversion Price, Series D Preferred Conversion Price
or Series E Preferred Conversion Price, in each case the Company 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 Company 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
Company 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 Company (other than by cancellation of liabilities or obligations evidenced
by such Convertible Securities) upon the conversion thereof; PROVIDED that if in
the case of Convertible Securities the minimum amounts of such consideration
cannot be ascertained, but are a function
13.
of antidilution or similar protective clauses, the Company 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 Company 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 Company 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 Company upon the exercise or conversion of such
rights, options or Convertible Securities. No further adjustment of the Series A
Preferred Conversion Price, Series B Preferred Conversion Price, Series D
Preferred Conversion Price or Series E Preferred Conversion Price, as adjusted
upon the issuance of such rights, options or Convertible Securities, shall be
made as a result of the actual issuance of Additional Shares of Common Stock on
the exercise of any such rights or options or the conversion of any such
Convertible Securities. If any such rights or options or the conversion
privilege represented by any such Convertible Securities shall expire without
having been exercised, the Series A Preferred Conversion Price, Series B
Preferred Conversion Price, Series D Preferred Conversion Price or Series E
Preferred Conversion Price as adjusted upon the issuance of such rights, options
or Convertible Securities shall be readjusted to the Series A Preferred
Conversion Price, Series B Preferred Conversion Price, Series D Preferred
Conversion Price or Series E Preferred Conversion Price which would have been in
effect had an adjustment been made on the basis that the only Additional Shares
of Common Stock so issued were the Additional Shares of Common Stock, if any,
actually issued or sold on the exercise of such rights or options or rights of
conversion of such Convertible Securities, and such Additional Shares of Common
Stock, if any, were issued or sold for the consideration actually received by
the Company upon such exercise, plus the consideration, if any, actually
received by the Company for the granting of all such rights or options, whether
or not exercised, plus the consideration received for issuing or selling the
Convertible Securities actually converted, plus the consideration, if any,
actually received by the Company (other than by 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 A Preferred, Series B Preferred, Series D Preferred or
Series E Preferred.
(v) "Additional Shares of Common Stock"
shall mean all shares of Common Stock issued by the Company or deemed to be
issued pursuant to this Section 4(j), whether or not subsequently reacquired or
retired by the Company other than (A) shares of Common Stock issued or issuable
upon conversion of the Series A Preferred, Series B Preferred, Series C
Preferred, Series D Preferred or Series E Preferred; (B) shares of Common Stock
and/or options, warrants or other Common Stock purchase rights, and the Common
Stock issued or issuable pursuant to such options, warrants or other rights to
employees, officers or directors of, or consultants or advisors to the Company
or any subsidiary pursuant to stock purchase or stock option plans or other
arrangements that are approved by the Board; (C) shares of Common Stock issued
or issuable for consideration other than cash pursuant to a merger,
consolidation, acquisition or similar business combination; (D) shares of Common
Stock issued or issuable pursuant to any equipment loan or leasing arrangement,
or debt financing from a bank or similar financial institution; and (E) shares
of Common Stock issued or
14.
issuable in connection with licensing transactions involving the Company and
other entities, including (1) joint ventures, manufacturing, marketing or
distribution arrangements or (2) technology transfer or development
arrangements; PROVIDED that such transactions in (1) and (2) and the issuance of
shares therein has been approved by at least five of the nine members of the
Company's Board of Directors. The "Effective Price" of Additional Shares of
Common Stock shall mean the quotient determined by dividing the total number of
Additional Shares of Common Stock issued or sold, or deemed to have been issued
or sold by the Company under this Section 4(j), into the aggregate consideration
received, or deemed to have been received by the Company for such issue under
this Section 4(j), for such Additional Shares of Common Stock.
k. CERTIFICATE OF ADJUSTMENT. In each case of
an adjustment or readjustment of the Series A Preferred Conversion Price, Series
B Preferred Conversion Price, Series C Preferred Conversion Price, Series D
Preferred Conversion Price or Series E Preferred Conversion Price for the number
of shares of Common Stock or other securities issuable upon conversion of the
Series A Preferred, Series B Preferred, Series C Preferred, Series D Preferred
or Series E Preferred, if the Series A Preferred, Series B Preferred, Series C
Preferred, Series D Preferred or Series E Preferred is then convertible pursuant
to this Section 4, the Company, 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, Series B Preferred, Series C Preferred, Series D Preferred or Series
E Preferred at the holder's address as shown in the Company's books. The
certificate shall set forth such adjustment or readjustment, showing in detail
the facts upon which such adjustment or readjustment is based, including a
statement of (i) the consideration received or deemed to be received by the
Company for any Additional Shares of Common Stock issued or sold or deemed to
have been issued or sold, (ii) the Series A Preferred Conversion Price, the
Series B Preferred Conversion Price, the Series C Preferred Conversion Price,
the Series D Preferred Conversion Price or the Series E Preferred Conversion
Price, as the case may be, at the time in effect, (iii) the number of Additional
Shares of Common Stock and (iv) the type and amount, if any, of other property
which at the time would be received upon conversion of the Series A Preferred,
Series B Preferred, Series C Preferred, Series D Preferred or Series E
Preferred.
l. NOTICES OF RECORD DATE. Upon (i) any taking
by the Company of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend or other distribution, or (ii) any Acquisition (as defined in Section
3(d)) or other capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company, any merger or
consolidation of the Company with or into any other corporation, or any Asset
Transfer (as defined in Section 3(d)), or any voluntary or involuntary
dissolution, liquidation or winding up of the Company, the Company shall mail to
each holder of Series A Preferred, Series B Preferred, Series C Preferred,
Series D Preferred or Series E Preferred at least twenty (20) days prior to the
record date specified therein a notice specifying (A) the date on which any such
record is to be taken for the purpose of such dividend or distribution and a
description of such dividend or distribution, (B) the date on which any such
Acquisition, reorganization, reclassification, transfer, consolidation, merger,
Asset Transfer, dissolution, liquidation or winding up is expected to become
effective, and (C) the date, if any, that is to be fixed as to when the holders
of record of Common Stock (or other securities) shall be entitled to exchange
their shares of Common Stock (or other securities)
15.
for securities or other property deliverable upon such Acquisition,
reorganization, reclassification, transfer, consolidation, merger, Asset
Transfer, dissolution, liquidation or winding up.
m. FRACTIONAL SHARES. No fractional shares of
Common Stock shall be issued upon conversion of Series A Preferred, Series B
Preferred, Series C Preferred, Series D Preferred or Series E Preferred. All
shares of Common Stock (including fractions thereof) issuable upon conversion of
more than one share of Series A Preferred, Series B Preferred, Series C
Preferred, Series D Preferred or Series E Preferred by a holder thereof shall be
aggregated for purposes of determining whether the conversion would result in
the issuance of any fractional share. If, after the aforementioned aggregation,
the conversion would result in the issuance of any fractional share, the Company
shall, in lieu of issuing any fractional share, pay cash equal to the product of
such fraction multiplied by the Common Stock's fair market value (as determined
by the Board of Directors) on the date of conversion.
n. RESERVATION OF STOCK ISSUABLE UPON
CONVERSION. The Company shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock, solely for the purpose of
effecting the conversion of the shares of the Series A Preferred, Series B
Preferred, Series C Preferred, Series D Preferred or Series E Preferred, such
number of its shares of Common Stock as shall from time to time be sufficient to
effect the conversion of all outstanding shares of the Series A Preferred,
Series B Preferred, Series C Preferred, Series D Preferred and Series E
Preferred. If at any time the number of authorized but unissued shares of Common
Stock shall not be sufficient to effect the conversion of all then outstanding
shares of the Series A Preferred, Series B Preferred, Series C Preferred, Series
D Preferred and Series E Preferred, the Company will take such corporate action
as may, in the opinion of its counsel, be necessary to increase its authorized
but unissued shares of Common Stock to such number of shares as shall be
sufficient for such purpose.
o. NOTICES. Any notice required by the
provisions of this Section 4 shall be in writing and shall be deemed effectively
given: (i) upon personal delivery to the party to be notified, (ii) when sent by
confirmed telex or facsimile if sent during normal business hours of the
recipient; if not, then on the next business day, (iii) five (5) days after
having been sent by registered or certified mail, return receipt requested,
postage prepaid, or (iv) one (1) day after deposit with a nationally recognized
overnight courier, specifying next day delivery, with written verification of
receipt. All notices shall be addressed to each holder of record at the address
of such holder appearing on the books of the Company.
P. PAYMENT OF TAXES. The Company will pay all
taxes (other than taxes based upon income) and other governmental charges that
may be imposed with respect to the issue or delivery of shares of Common Stock
upon conversion of shares of Series A Preferred, Series B Preferred, Series C
Preferred, Series D Preferred or Series E Preferred, 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 Series A Preferred, Series B Preferred, Series C Preferred, Series D
Preferred or Series E Preferred so converted were registered.
16.
q. NO DILUTION OR IMPAIRMENT. Without the
consent of the holders of then outstanding Series A Preferred, Series B
Preferred, Series C Preferred, Series D Preferred and Series E Preferred as
required under Section 2, the Company shall not amend its Restated Certificate
of Incorporation or participate in any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or take any
other voluntary action, for the purpose of avoiding or seeking to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Company, but shall at all times in good faith assist in
carrying out all such action as may be reasonably necessary or appropriate in
order to protect the conversion rights of the holders of the Series A Preferred,
Series B Preferred, Series C Preferred, Series D Preferred and Series E
Preferred against dilution or other impairment.
5. REDEMPTION.
a. The Series A Preferred, Series C Preferred,
Series D Preferred and Series E Preferred shall not be redeemable by the
Company.
b. The Company shall be obligated to redeem the
Series B Preferred as follows:
(i) At the individual option of each
holder of the then outstanding shares of Series B Preferred, the Company, to the
extent it may lawfully do so, shall redeem the number of shares of Series B
Preferred held by such holder that is specified in a written request for
redemption (a "Redemption Request") delivered to the Company by the holder on or
prior to the date that is sixty (60) days before the fifth anniversary of the
Original Issue Date, which redemption shall occur in three (3) equal annual
installments beginning on the fifth anniversary of the Original Issue Date, and
ending on the date three (3) years from such first redemption date (each a
"Redemption Date"). The Company shall effect such redemptions on the applicable
Redemption Date by paying in cash in exchange for the shares of Series B
Preferred to be redeemed a sum equal to the Series B Original Issue Price per
share of Series B Preferred (as adjusted for any stock dividends, combinations,
splits, recapitalizations and the like) plus declared and unpaid dividends with
respect to such shares plus an amount equal to 8% of the Series B Original Issue
Price per share of Series B Preferred (as adjusted for any stock dividends,
combinations, splits, recapitalizations and the like) compounded annually from
the second anniversary of the Original Issue Date through the applicable
Redemption Date. The total amount to be paid for the Series B Preferred to be
redeemed is hereinafter referred to as the "Redemption Price." The number of
shares of Series B Preferred that the Company shall be required to redeem on any
one Redemption Date shall be equal to the amount determined by dividing (A) the
aggregate number of shares of Series B Preferred for which the Company timely
received a Redemption Request that are outstanding immediately prior to the
Redemption Date by (B) the number of remaining Redemption Dates (including the
Redemption Date to which such calculation applies). Shares subject to redemption
pursuant to this Section 5(b) shall be redeemed from each holder of Series B
Preferred who has timely submitted a Redemption Request on a pro rata basis.
(ii) At least thirty (30) days but no
more than sixty (60) days prior to the first Redemption Date, the Company shall
send a notice (a "Redemption Notice") to all holders of Series B Preferred to be
redeemed setting forth (A) the Redemption Price for the
17.
shares to be redeemed; and (B) the place at which such holders may obtain
payment of the Redemption Price upon surrender of their share certificates. If
the Company does not have sufficient funds legally available to redeem all
shares to be redeemed at the Redemption Date, then it shall redeem such shares
pro rata (based on the portion of the aggregate 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 after such Redemption Date,
each holder of shares of Series B Preferred to be redeemed shall surrender such
holder's certificates representing such shares to the Company in the manner and
at the place designated in the Redemption Notice, and thereupon the 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 Redemption Date, unless
there shall have been a default in payment of the Redemption Price or the
Company is unable to pay the Redemption Price due to not having sufficient
legally available funds, all rights of the holder of such shares as a holder of
Series B Preferred (except the right to receive the 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 B
Preferred are not redeemed due to a default in payment by the Company or because
the Company does not have sufficient legally available funds, such shares of
Series B Preferred shall remain outstanding and shall be entitled to all of the
rights and preferences provided herein.
(iv) In the event of a call for
redemption of any shares of Series B Preferred, the Conversion Rights (as
defined in Section 4) for such Series B Preferred shall terminate as to the
shares designated for redemption at the close of business on the fifth (5th) day
preceding the Redemption Date, unless default is made in payment of the
Redemption Price.
6. NO REISSUANCE OF SERIES A PREFERRED, SERIES B
PREFERRED, SERIES C PREFERRED, SERIES D PREFERRED OR SERIES E PREFERRED.
No share or shares of Series A Preferred, Series B
Preferred, Series C Preferred, Series D Preferred or Series E Preferred acquired
by the Corporation by reason of redemption, purchase, conversion or otherwise
shall be reissued.
V.
For the management of the business and for the conduct of the affairs
of the Corporation, and in further definition, limitation and regulation of the
powers of the Corporation, of its directors and of its stockholders or any class
thereof, as the case may be, it is further provided that:
18.
A. BOARD OF DIRECTORS
1. POWERS AND NUMBER OF DIRECTORS
The management of the business and the conduct of the
affairs of the Corporation shall be vested in its Board of Directors. The number
of directors which shall constitute the whole Board of Directors shall be fixed
exclusively by one or more resolutions adopted by the Board of Directors in the
manner provided in the Bylaws and pursuant to Article IVD.2.g. herein.
2. ELECTION OF DIRECTORS
Subject to the rights of the holders of any series of
Preferred Stock to elect additional directors under specified circumstances,
following the closing of the initial public offering pursuant to an effective
registration statement under the Securities Act, covering the offer and sale of
Common Stock to the public (the "Initial Public Offering"), the 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 closing of the Initial 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 years. At the second annual meeting of
stockholders following the Initial 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 years. At the third annual meeting of stockholders following
the Initial 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 years.
At each succeeding annual meeting of stockholders, directors shall be elected
for a full term of three years to succeed the directors of the class whose terms
expire at such annual meeting. During such time or times that the Corporation is
subject to Section 2115(b) of the California General Corporation Law ("CGCL"),
this Section A.2.a of this Article V shall become effective and be applicable
only when the Corporation is a "listed" Corporation within the meaning of
Section 301.5 of the CGCL.
a. In the event that the Corporation is unable
to have a classified board under applicable law, Section 301.5 of the CGCL,
Section A. 2. a. of this Article V shall not apply and all directors shall be
elected at each annual meeting of stockholders to hold office until the next
annual meeting.
b. No stockholder entitled to vote at an
election for directors may cumulate votes to which such stockholder is entitled,
unless, at the time of such election, the Corporation (i) is subject to Section
2115(b) of the CGCL and (ii) is not or ceases to be a "listed" Corporation under
Section 301.5 of the CGCL. During this time, every stockholder entitled to vote
at an election for directors may cumulate such stockholder's votes and give one
candidate a number of votes equal to the number of directors to be elected
multiplied by the number of votes to which such stockholder's shares are
otherwise entitled, or distribute the stockholder's votes on the same principle
among as many candidates as such stockholder thinks fit. No stockholder,
however, shall be entitled to so cumulate such stockholder's votes unless (i)
the names of such candidate or candidates have been placed in nomination prior
to the voting and (ii) the
19.
stockholder has given notice at the meeting, prior to the voting, of such
stockholder's intention to cumulate such stockholder's votes. If any stockholder
has given proper notice to cumulate votes, all stockholders may cumulate their
votes for any candidates who have been properly placed in nomination. Under
cumulative voting, the candidates receiving the highest number of votes, up to
the number of directors to be elected, are elected.
Notwithstanding the foregoing provisions of this section, each director shall
serve until his successor is duly elected and qualified or until his death,
resignation or removal. No decrease in the number of directors constituting the
Board of Directors shall shorten the term of any incumbent director.
3. REMOVAL OF DIRECTORS
a. During such time or times that the
Corporation is subject to Section 2115(b) of the CGCL, the Board of Directors or
any individual director may be removed from office at any time without cause by
the affirmative vote of the holders of at least a majority of the outstanding
shares entitled to vote on such removal; provided, however, that unless the
entire Board is removed, no individual director may be removed when the votes
cast against such director's removal, or not consenting in writing to such
removal, would be sufficient to elect that director if voted cumulatively at an
election which the same total number of votes were cast (or, if such action is
taken by written consent, all shares entitled to vote were voted) and the entire
number of directors authorized at the time of such director's most recent
election were then being elected.
b. At any time or times that the Corporation is
not subject to Section 2115(b) of the CGCL and subject to any limitations
imposed by law, Section A. 3. a. above shall no longer apply and removal shall
be as provided in Section 141(k) of the DGCL.
4. VACANCIES
a. Subject to the rights of the holders of any
series of Preferred Stock, any vacancies on the Board of Directors resulting
from death, resignation, disqualification, removal or other causes and any newly
created directorships resulting from any increase in the number of directors,
shall, unless the Board of Directors determines by resolution that any such
vacancies or newly created directorships shall be filled by the stockholders,
except as otherwise provided by law, be filled only by the affirmative vote of a
majority of the directors then in office, even though less than a quorum of the
Board of Directors, and not by the stockholders. Any director elected in
accordance with the preceding sentence shall hold office for the remainder of
the full term of the director for which the vacancy was created or occurred and
until such director's successor shall have been elected and qualified.
b. If at the time of filling any vacancy or any
newly created directorship, the directors then in office shall constitute less
than a majority of the whole board (as constituted immediately prior to any such
increase), the Delaware Court of Chancery may, upon application of any
stockholder or stockholders holding at least ten percent (10%) of the total
number of the shares at the time outstanding having the right to vote for such
directors, summarily order an election to be held to fill any such vacancies or
newly created directorships,
20.
or to replace the directors chosen by the directors then in offices as
aforesaid, which election shall be governed by Section 211 of the DGCL.
c. At any time or times that the Corporation is
subject to Section 2115(b) of the CGCL, if, after the filling of any vacancy by
the directors then in office who have been elected by stockholders shall
constitute less than a majority of the directors then in office, then:
(i) Any holder or holders of an
aggregate of five percent (5%) or more of the total number of shares at the time
outstanding having the right to vote for those directors may call a special
meeting of stockholders; or
(ii) The Superior Court of the proper
county shall, upon application of such stockholder or stockholders, summarily
order a special meeting of stockholders, to be held to elect the entire board,
all in accordance with Section 305(c) of the CGCL. The term of office of any
director shall terminate upon that election of a successor.
B. BYLAWS
1. Subject to paragraph (h) of Section 43 of the Bylaws,
the Bylaws may be altered or amended or new Bylaws adopted by the affirmative
vote 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 of the Corporation
entitled to vote. The Board of Directors shall also have the power to adopt,
amend, or repeal Bylaws.
2. The directors of the Corporation need not be elected
by written ballot unless the Bylaws so provide.
3. No action shall be taken by the stockholders of the
Corporation except at an annual or special meeting of stockholders called in
accordance with the Bylaws or by written consent of stockholders in accordance
with the Bylaws prior to the closing of the Initial Public Offering, and,
following the closing of the Initial Public Offering, no action shall be taken
by the stockholders by written consent.
4. Advance notice of stockholder nominations for the
election of directors and of business to be brought by stockholders before any
meeting of the stockholders of the Corporation shall be given in the manner
provided in the Bylaws of the Corporation.
VI.
A. The liability of the directors for monetary damages shall be
eliminated to the fullest extent under applicable law.
B. This Corporation is authorized to provide indemnification of
agents (as defined in Section 317 of the CGCL) for breach of duty to the
Corporation and its shareholders through bylaw provisions or through agreements
with the agents, or through shareholder resolutions, or otherwise, in excess of
the indemnification otherwise permitted by Section 317 of the CGCL,
21.
subject, at any time or times the Corporation is subject to Section 2115(b) to
the limits on such excess indemnification set forth in Section 204 of the CGCL.
C. Any repeal or modification of this Article VI shall be
prospective and shall not affect the rights under this Article VI in effect at
the time of the alleged occurrence of any act or omission to act giving rise to
liability or indemnification.
VII.
A. 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, except as provided in paragraph
B. of this Article VII, and all rights conferred upon the stockholders herein
are granted subject to this reservation.
B. 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 Articles V, VI,
and VII.
* * * *
FOUR: This Amended and Restated Certificate of Incorporation has
been duly approved by the Board of Directors of this Corporation.
FIVE: This Restated Certificate of Incorporation has been duly
adopted in accordance with the provisions of Sections 228 and 245 of the General
Corporation Law of the State of Delaware by the Board of Directors and the
stockholders of the Corporation. The total number of outstanding shares entitled
to vote or act by written consent was _________ shares of Common Stock,
4,545,456 shares of Series A Preferred, 21,333,334 shares of Series B Preferred,
1,041,667 shares of Series C Preferred, 1,538,462 shares of Series D Preferred
and 6,722,327 shares of Series E Preferred. A majority of the outstanding shares
of Common Stock, a majority of the outstanding shares of Series A Preferred, a
majority of the outstanding shares of Series B Preferred, a majority of the
outstanding shares of Series D Preferred, a majority of the outstanding shares
of Series E Preferred and 66 2/3% of the outstanding Series A Preferred, Series
B Preferred and Series E Preferred voting together as a single class approved
this Restated Certificate of Incorporation by written consent in accordance with
Section 228 of the General Corporation Law of the State of Delaware and written
notice of such was given by the Corporation in accordance with said Section 228.
22.
IN WITNESS WHEREOF, Elitra Pharmaceuticals Inc. has caused this Amended and
Restated Certificate of Incorporation to be signed by the President and the
Secretary in San Diego, California this _______ day of _____, 2000.
ELITRA PHARMACEUTICALS INC.
By:
---------------------------------
Dr. Harry F. Hixson, Jr.,
President
ATTEST:
By:
--------------------------
Alana B. McNulty,
Secretary