Exhibit 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
AVESTA TECHNOLOGIES, INC.
a Delaware Corporation
The undersigned, acting in their capacities as President and Secretary,
respectively, of Avesta Technologies, Inc., a corporation organized and existing
under the laws of the State of Delaware, hereby certify as follows:
1. The name of the corporation is Avesta Technologies, Inc. (the
"Corporation"). The original Certificate of Incorporation of the Corporation was
filed with the Secretary of State of the State of Delaware on February 9, 1996.
A Restated Certificate of Incorporation was filed with the Secretary of State of
the State of Delaware on December 16, 1996. Certificates of Amendment to the
Restated Certificate of Incorporation were filed with the Secretary of State of
the State of Delaware on February 26, 1997, September 17, 1997, December 24,
1997 and December 31, 1997. On March 19, 1998, the Corporation filed an Amended
and Restated Certificate of Incorporation with the Secretary of State of the
State of Delaware. A Certificate of Amendment of the Amended and Restated
Certificate of Incorporation was filed with the Secretary of State of the State
of Delaware on March 20, 1998. An Amended and Restated Certificate of
Incorporation was filed with the Secretary of State of Delaware on January 4,
1999. An Amended and Restated Certificate of Incorporation was filed on July 13,
1999.
2. The amendment and restatement to the Amended and Restated Certificate
of Incorporation set forth herein in full was authorized in the following
manner: This Amended and Restated Certificate of Incorporation was approved in
its entirety by the Board of Directors of the Corporation and consented to in
writing by the stockholders of the Corporation pursuant to Sections 228, 242 and
245 of the General Corporation Law of the State of Delaware ("Delaware Law").
3. The text of the Amended and Restated Certificate of Incorporation is
hereby amended and restated to read in its entirety as follows:
FIRST: The name of this corporation is Avesta Technologies, Inc.
SECOND: The address of the Corporation's registered office in the State of
Delaware is 1209 Orange Street, Wilmington, Delaware 19801, County of New
Castle. The name of its registered agent at such address is The Corporation
Trust Company.
THIRD: The nature of the business or purposes to be conducted or promoted
by the Corporation is to engage in any lawful act or activity for which
corporations may be organized under the Delaware Law.
FOURTH: This Corporation is authorized to issue two classes of shares to
be designated respectively Preferred Stock and Common Stock. The total number of
shares of Common Stock this Corporation shall have the authority to issue is
25,000,000 shares, with a par value of $0.01 per share ("Common"), and the total
number of shares of Preferred Stock this Corporation shall have authority to
issue is 8,829,997, with a par value of $0.01 per share ("Preferred"),
consisting of 1,767,243 shares of Preferred which shall be designated as Series
A Preferred Stock ("Series A Preferred"), 2,138,752 shares of Preferred which
shall be designated as Series B Preferred Stock ("Series B Preferred"),
3,096,335 shares of Preferred which shall be designated as Series C Preferred
Stock ("Series C Preferred"), and 1,827,667 shares of Preferred which shall be
designated as Series D Preferred ("Series D Preferred").
Each share of Preferred issued by the Corporation, if reacquired by the
Corporation (whether by redemption, repurchase, conversion to Common or other
means), shall upon such reacquisition resume the status of authorized and
unissued shares of Preferred, undesignated as to series and available for
designation and issuance by the Corporation in accordance with the immediately
preceding paragraph.
The Corporation shall from time to time in accordance with the laws of the
State of Delaware increase the authorized amount of its Common if at any time
the number of shares of Common remaining unissued and available for issuance
shall not be sufficient to permit conversion of the Preferred.
A description of the respective classes of stock and statement of the
designations, preferences, voting powers (or lack of voting powers), relative,
participating, optional or other special rights and privileges and the
qualifications, limitations and restrictions of the Series A Preferred, Series B
Preferred, Series C Preferred, and Common are as follows:
A. PREFERRED STOCK
Section 1. Liquidation Rights.
(a) Series D Liquidation Preference. In the event of any voluntary
or involuntary liquidation, dissolution or winding up of the affairs of the
Corporation (or the deemed occurrence of such event pursuant to subsection (e)
of this Section 1), the holders of each share of Series D Preferred shall be
entitled to receive, prior and in preference to any distribution of any of the
assets or property of the Corporation to the holders of the Series C Preferred,
the holders of the Series A Preferred, the holders of the Series B Preferred or
the holders of Common by reason of their ownership thereof, an amount equal to
the sum of $6.24 per share (subject to adjustments for stock splits, dividends
and recapitalizations) (the "Series D Purchase Price") and all dividends
previously declared but unpaid prior to the date fixed for distribution on each
share of Series D Preferred held by them (the "Series D Liquidation
Preference").
All of the preferential amount to be paid to the holders of the Series D
Preferred under this subsection 1(b) shall be paid or set apart for payment
before the payment or setting apart for payment of any amount for, or the
distribution of any assets of the Corporation the holders of the Series C
Preferred, the holders of the Series A Preferred, the holders of the Series B
Preferred and the holders of the Common in connection with any such liquidation,
dissolution or winding
up. After the payment or the setting apart for payment to the holders of the
Series D Preferred of the full preferential amounts so payable to them, the
remaining assets of the Corporation available for distribution shall be
distributed in accordance with the provisions of subsection (b), subsection (c)
and subsection (d) of this Section 1.
If the assets or property to be distributed are insufficient to permit the
payment to holders of the Series D Preferred of their full preferential amount,
the entire assets and property legally available for distribution shall be
distributed ratably among the holders of the Series D Preferred in proportion to
the full preferential amount each such holder is otherwise entitled to receive.
(b) Series C Liquidation Preference. In the event of any voluntary
or involuntary liquidation, dissolution or winding up of the affairs of the
Corporation (or the deemed occurrence of such event pursuant to subsection (e)
of this Section 1), following the amounts payable to holders of Series D
Preferred set forth in subsection (a) of this Section 1, the holders of each
share Series C Preferred shall be entitled to receive, prior and in preference
to any distribution of any of the assets or property of the Corporation to the
holders of the Series A Preferred, the holders of the Series B Preferred or the
holders of Common by reason of their ownership thereof, an amount equal to the
sum of (i) $4.06 per share (subject to adjustments for stock splits, dividends
and recapitalizations) (the "Series C Purchase Price") and (ii) all dividends
previously declared but unpaid prior to the date fixed for distribution on each
share of Series C Preferred held by them (the "Series C Liquidation Preference".
All of the preferential amount to be paid to the holders of the Series C
Preferred under this subsection 1(b) shall be paid or set apart for payment
before the payment or setting apart for payment of any amount for, or the
distribution of any assets of the Corporation to, the holders of the Series A
Preferred, the holders of the Series B Preferred and the holders of the Common
in connection with any such liquidation, dissolution or winding up. After the
payment or the setting apart for payment to the holders of the Series C
Preferred of the full preferential amounts so payable to them, the remaining
assets of the Corporation available for distribution shall be distributed in
accordance with the provisions of subsection (c) and subsection (d) of this
Section 1.
If the assets or property to be distributed are insufficient to permit the
payment to holders of the Series C Preferred of their full preferential amount,
the entire assets and property legally available for distribution shall be
distributed ratably among the holders of Series C Preferred in proportion to the
full preferential amount each such holder is otherwise entitled to receive.
(c) Series A Liquidation Preference and Series B Liquidation
Preference. In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation (or the deemed
occurrence of such event pursuant to subsection (e) of this Section 1),
following the amounts payable to the holders of the Series D Preferred set forth
in subsection (a) of this Section 1 and the holders of the Series C Preferred
set forth in subsection (b) of this Section 1, the holders of each share of
Series A Preferred and Series B Preferred, respectively, shall be entitled to
receive, prior and in preference to any distribution of any of the assets or
property of the Corporation to the holders of the Common by reason of their
ownership thereof, an amount equal to the sum of (i)(a) in the case of the
Series A Preferred, $2.2917 per share (subject to adjustments for stock splits,
dividends and recapitalizations) (the "Series A Purchase
Price") for each share of Series A Preferred then held by them, and (b) in the
case of the Series B Preferred, $4.34 per share (subject to adjustments for
stock splits, dividends and recapitalizations) (the "Series B Purchase Price")
for each share of Series B Preferred then held by them and (ii) all dividends
previously declared but unpaid prior to the date fixed for distribution on each
share of Series A Preferred or Series B Preferred held by them (the "Series A
Liquidation Preference" and the "Series B Liquidation Preference,"
respectively).
All of the preferential amount to be paid to the holders of the Series A
Preferred and Series B Preferred respectively, under this subsection 1(c) shall
be paid or set apart for payment before the payment or setting apart for payment
of any amount for, or the distribution of any assets of the Corporation to, the
holders of the Common in connection with any such liquidation, dissolution or
winding up. After the payment or the setting apart for payment to the holders of
the Series A Preferred and Series B Preferred of the full preferential amounts
so payable to them, the remaining assets of the Corporation available for
distribution shall be distributed in accordance with the provisions of
subsection (d) of this Section 1. The Series A Preferred and Series B Preferred
shall rank on parity as to the receipt of the respective preferential amount for
each such series.
If the assets or property to be distributed are insufficient to permit the
payment to holders of the Series A Preferred and Series B Preferred of their
full preferential amount, the entire remaining assets and property legally
available for distribution shall be distributed ratably among the holders of
Series A Preferred and Series B Preferred in proportion to the full preferential
amount each such holder is otherwise entitled to receive.
(d) Distributions after Payment of Liquidation Preference. After the
payment or setting apart for payment to the holders of Preferred of the
preferential amounts set forth in subsection (a), subsection (b) and subsection
(c) above, the remaining assets of the Corporation legally available for
distribution, if any, shall be distributed PRO RATA among the holders of the
outstanding Common, the outstanding Series A Preferred, the outstanding Series B
Preferred, the outstanding Series C Preferred, and the outstanding Series D
Preferred in a manner such that the remaining amount distributed to each holder
of the Series A Preferred, the Series B Preferred, the Series C Preferred, the
Series D Preferred and Common shall equal the amount obtained by multiplying the
entire assets and funds of the Corporation legally available for distribution
hereunder by a fraction, (x) the numerator of which shall be the number of
shares of Common then held by such holder plus the number of shares of Common
then issuable upon conversion of the shares of Series A Preferred, Series B
Preferred, Series C Preferred and Series D Preferred then held by such holder,
and (y) the denominator of which shall be the total number of shares of Common
then outstanding plus the total number of shares of Common issuable upon
conversion of the shares of Series A Preferred, Series B Preferred, Series C
Preferred, and Series D Preferred then outstanding.
(e) Effect of Merger. A merger, reorganization, acquisition or
consolidation of the Corporation with or into any other corporation or
corporations (except where a majority of the outstanding equity securities of
the surviving corporation immediately after the merger or consolidation is held
by persons who were stockholders of this Corporation immediately prior to the
merger or consolidation), or a sale or other transfer of all or substantially
all of the assets of the Corporation (or any series of related transactions
resulting in the sale or other transfer of all
or substantially all of the assets of the Corporation) (the foregoing
transactions are collectively referred to herein as the "Liquidation
Transactions") shall be treated as a liquidation, dissolution or winding up only
if the holders of at least fifty percent (50%) of the then outstanding shares of
Series A Preferred, the holders of at least fifty percent (50%) of the then
outstanding shares of Series B Preferred the holders of at least fifty percent
(50%) of the then outstanding shares of Series C Preferred and the holders of at
least fifty percent (50%) of the then outstanding shares of Series D Preferred
so elect by giving written notice thereof to the Corporation at least three (3)
days before the effective date of such event. The Corporation shall provide the
holders of Series A Preferred, the holders of Series B Preferred, the holders of
Series C Preferred and the holders of Series D Preferred with notice of all
transactions which may be treated as a liquidation, dissolution or winding up of
the Corporation pursuant to this Section 1(e) twenty (20) days prior to the
earlier of the vote relating to such transaction or the closing of such
transaction. In the event the holders of Series A Preferred, the holders of
Series B Preferred, the holders of Series C Preferred and the holders of Series
D Preferred so elect pursuant to the preceding sentence, the holders of
outstanding Series A Preferred, outstanding Series B Preferred, outstanding
Series C Preferred and the holders of outstanding Series D Preferred shall each
receive from the assets of the Corporation legally available for distribution
such amounts pursuant to the procedures and preferences set forth in (i) Section
1(a) (until the holders of outstanding Series D Preferred have received an
amount equal to the Series D Purchase Price), (ii) Section 1(b) (until the
holders of outstanding Series C Preferred Series received an amount equal to the
Series C Purchase Price), (iii) Section 1(c) (until the holders of outstanding
Series A Preferred and Series B Preferred have received amounts equal to the
Series A Purchase Price and the Series B Purchase Price, respectively) and (iv)
Section 1(d) (until, together with the amounts received by the holders of
Preferred pursuant to clauses (i), (ii) and (iii) of this sentence, the holders
of the outstanding Series D Preferred have received an amount equal to three (3)
times the Series D Purchase Price, the holders of the outstanding Series C
Preferred have received an amount equal to three (3) times the Series C Purchase
Price, the holders of the outstanding Series A Preferred have received an amount
equal to three (3) times the Series A Purchase Price, and the holders of the
outstanding Series B Preferred have received an amount equal to three (3) times
the Series B Purchase Price). After the payment or setting apart for such
amounts pursuant to the foregoing provisions of this Section 1(e) to the holders
of outstanding Preferred and Common, the holders of Common (which shall include
holders of Preferred who elect to convert such holder's shares of Preferred into
Common pursuant to the last sentence of this Section 1(e), but shall not include
holders of Preferred who receive distributions pursuant to the first sentence of
this Section 1(e)) shall be entitled to receive all remaining assets of the
Corporation available for distribution. Notwithstanding the foregoing, before
any distribution is made pursuant to this Section 1(e), the holders of Series A
Preferred, the holders of Series B Preferred, the holders of Series C Preferred,
and the holders of Series D Preferred acting pursuant to Section 2(a) may each
elect to convert such holder's shares of Preferred into Common; no distribution
shall be made pursuant to this Section 1(e) until the Corporation has received
from all holders of outstanding Series A Preferred, outstanding Series B
Preferred, outstanding Series C Preferred, and outstanding Series D Preferred
written notification stating whether or not such holders elect to convert such
holder's shares of Preferred into Common; provided the rights of any individual
holder shall be waived to the extent such rights are not exercised prior to the
date of the Liquidation Transaction.
(f) Consent. Each holder of an outstanding share of Preferred shall
be deemed to have consented, for purposes of Sections 151 and 160 of the
Delaware General Corporation Law,
to distributions made by the Corporation in connection with the repurchase of
shares of Common issued to or held by employees or consultants upon termination
of their employment or services pursuant to agreements between the Corporation
and such persons providing for the Corporation's right of said repurchase.
Section 2. Conversion Rights.
The holders of the Series A Preferred, Series B Preferred, Series C
Preferred, and Series D Preferred shall have conversion rights as follows (the
"Conversion Rights"):
(a) Right to Convert. Each share of Series A Preferred, Series B
Preferred, Series C Preferred, and Series D Preferred, respectively, shall be
convertible, without the payment of any additional consideration by the holder
thereof, at the option of the holder thereof, at any time after the date of
issuance of such shares, at the office of the Corporation or any transfer agent
for the Series A Preferred, Series B Preferred, Series C Preferred, or Series D
Preferred into such number of fully paid and nonassessable shares of Common as
is determined by dividing, in the case of the Series A Preferred, $2.2917 by the
Series A Conversion Price, in the case of the Series B Preferred, $4.34 by the
Series B Conversion Price, in the case of the Series C Preferred, $4.06 by the
Series C Conversion Price, and in the case of the Series D Preferred, $6.24 by
the Series D Conversion Price with such Conversion Price determined as
hereinafter provided, in effect on the date on which the certificate is
surrendered for conversion. The price at which shares of Common shall be
deliverable upon conversion of Series A Preferred (the "Series A Conversion
Price") shall initially be $1.145850 (which amount reflects a two-for-one Common
Stock split previously effected by the Company on March 20, 1998) per share of
Common, the price at which shares of Common shall be deliverable upon conversion
of Series B Preferred (the "Series B Conversion Price") shall initially be $2.17
(which amount reflects a two-for-one Common Stock split previously effected by
the Company on March 20, 1998) per share of Common, the price at which shares of
Common shall be deliverable upon conversion of Series C Preferred (the "Series C
Conversion Price") shall initially be $4.06 per share of Common, and the price
at which shares of Common shall be deliverable upon conversion of Series D
Preferred (the "Series D Conversion Price") shall initially be $6.24 per share
of Common (collectively, the "Conversion Prices"). Such initial Conversion
Prices shall be subject to adjustment, as hereinafter provided.
(b) Automatic Conversion. Each share of Series A Preferred, Series B
Preferred, Series C Preferred, and Series D Preferred, respectively, shall
automatically be converted into shares of Common at the then effective Series A
Conversion Price, the Series B Conversion Price, the Series C Conversion Price,
or the Series D Conversion Price, respectively:
(i) upon the closing of the sale of Common in a firm
commitment underwritten public offering pursuant to an effective registration
statement under the Securities Act of 1933, as amended (the "Securities Act")
(other than a registration relating solely to an employee benefit plan of the
Corporation) at a public offering price of at least $8.25 per share (as adjusted
for stock splits, stock dividends, reclassifications, and like events) and in
which the gross aggregate proceeds received by the Corporation in such offering
equal or exceed $15,000,000 (a "Qualified Public Offering"). In the event of a
Qualified Public Offering, the person(s) entitled to receive the Common issuable
upon such conversion of the Series A
Preferred, the Series B Preferred, the Series C Preferred, or the Series D
Preferred, respectively, shall not be deemed to have converted that Series A
Preferred, Series B Preferred, Series C Preferred, or Series D Preferred,
respectively, (x) until immediately prior to the closing of the Qualified Public
Offering or (y) in the case of the Series A Preferred, Series B Preferred,
Series C Preferred, and Series D Preferred, upon the receipt by the Corporation
of the affirmative vote at a duly noticed stockholders meeting or pursuant to a
duly solicited written consent of the holders of at least two-thirds (2/3) of
the then outstanding shares of Series A Preferred, the holders of at least
two-thirds (2/3) of the then outstanding shares of Series B Preferred, the
holders of at least two-thirds (2/3) of the then outstanding shares of Series C
Preferred, and the holders of at least two thirds (2/3) of the then outstanding
shares of Series D Preferred, each voting as a separate class, in favor of the
conversion of the shares of Series A Preferred, Series B Preferred, Series C
Preferred, and Series D Preferred respectively, into Common.
(c) Mechanics of Conversion. No fractional share of Common shall be
issued upon conversion of the Series A Preferred, the Series B Preferred, the
Series C Preferred, or the Series D Preferred. In lieu of any fractional shares
to which the holder would otherwise be entitled, after aggregating all shares of
Common (including fractional shares thereof) issuable upon the conversion of all
shares of Series A Preferred, Series B Preferred, Series C Preferred and Series
D Preferred respectively, held by the holder which are to be converted, the
Corporation shall pay cash equal to such fraction multiplied by the fair market
value of a share of Common at the time (as determined in good faith by the
Board).
Before any holder of Series A Preferred, Series B Preferred, Series C
Preferred, or Series D Preferred shall be entitled to convert the same into
shares of Common and before the Corporation shall be obligated to issue
certificates for shares of Common upon the automatic conversion of the Series A
Preferred, the Series B Preferred, Series C Preferred, or Series D Preferred as
set forth in Section 2(b) hereof, such holder shall surrender the certificate or
certificates therefor, duly endorsed, at the office of the Corporation or of any
transfer agent for the Series A Preferred, the Series B Preferred, the Series C
Preferred, or the Series D Preferred, as the case may be, and shall give written
notice to the Corporation at such office that such holder elects to convert the
same and shall state therein the name or names in which such holder wishes the
certificate or certificates for shares of Common to be issued (except that no
such written notice of intent to convert shall be necessary in the event of an
automatic conversion pursuant to Section 2(b) hereof). The Corporation shall use
reasonable commercial efforts to effectuate such conversion within five (5)
business days after receipt of such certificate or certificates and such notice
of conversion. In the event of the loss, theft or destruction of the holder's
certificate or certificates, the holder shall notify the Corporation or its
transfer agent that such certificate or certificates have been lost, stolen or
destroyed and shall execute an agreement satisfactory to the Corporation to
indemnify the Corporation from any loss incurred by it in connection with such
certificate or certificates. The Corporation shall, in the case of a lost,
stolen or destroyed certificate, as soon as practicable after the execution and
delivery of the agreement and indemnity, issue and deliver at such office to
such holder of Series A Preferred, Series B Preferred, Series C Preferred, or
the Series D Preferred as the case may be, or to such holder's nominee or
nominees, a certificate or certificates for the number of shares of Common to
which such holder shall be entitled as aforesaid together with cash in lieu of
any fraction of a share. 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 representing shares of Series A Preferred,
the Series B Preferred, the Series C Preferred, or the Series D Preferred, to be
converted (except that in the case of an automatic conversion pursuant to
Section 2(b) hereof, such conversion shall be deemed to have been made
immediately prior to the closing of the public offering (in the case of
automatic conversion pursuant to Section 2(b)(i) or immediately upon receipt by
the Corporation of the vote or written consent (in the case of automatic
conversion pursuant to Section 2(b)(ii), and the person or persons entitled to
receive the shares of Common issuable upon such conversion shall be treated for
all purposes as the record holder or holders of such shares of Common on such
date.
(d) Adjustments to Conversion Prices for Certain Diluting Issues.
(i) Special Definitions. For purposes of this Section 2(d),
the following definitions apply:
(1) "Options" shall mean rights, options, or warrants to
subscribe for, purchase or otherwise acquire either Common or Convertible
Securities.
(2) "Original Issue Date" shall mean the date on which a
share of Series A Preferred, Series B Preferred, or Series C Preferred, as
applicable, was first issued.
(3) "Convertible Securities" shall mean any evidence of
indebtedness, shares (other than Common) or other securities convertible into or
exchangeable for Common.
(4) "Additional Shares of Common" shall mean all shares
of Common issued (or, pursuant to Section 2(d)(iii), deemed to be issued) by the
Corporation after the Original Issue Date, other than shares of Common issued,
issuable or, pursuant to Section 2(d)(iii), deemed to be issued:
(A) upon conversion of shares of Series A
Preferred, Series B Preferred, or Series C Preferred;
(B) shares of Common issued to officers, directors
or employees of, or consultants to, the Corporation pursuant to any stock grant,
option or purchase plan or other employee stock incentive program or arrangement
approved by the Board up to a maximum of 3,700,000 shares of Common;
(C) upon exercise of warrants to purchase Series C
Preferred, upon exercise of warrants to purchase Series B Preferred outstanding
as of December 31, 1998, and upon exercise of warrants to purchase Common Stock
outstanding as of December 31, 1998;
(D) as a dividend or distribution on the Series A
Preferred, the Series B Preferred, the Series C Preferred, or the Series D
Preferred, respectively; and
(E) in connection with any transaction for which
adjustment is made pursuant to Section 2(e) or Section 2(f) hereof.
(ii) No Adjustment of Conversion Price. No adjustment in the
Conversion Price applicable to Series A Preferred, Series B Preferred, Series C
Preferred, or the Series D Preferred respectively, shall be made in respect of
the issuance of Additional Shares of Common unless the consideration per share
for an Additional Share of Common issued or deemed to be issued by the
Corporation is less than the Conversion Price for such series in effect on the
date of, and immediately prior to, such issue.
(iii) Options and Convertible Securities. In the event that
the Corporation at any time or from time to time after the Original Issue Date
shall issue any Options or Convertible Securities or shall fix a record date for
the determination of holders of any class of securities then entitled to receive
any such Options or Convertible Securities, then the maximum number of shares
(as set forth in the instrument relating thereto without regard to any provision
contained therein designed to protect against dilution) of Common issuable upon
the exercise of such Options or, in the case of Convertible Securities and
Options therefor, the conversion or exchange of such Convertible Securities,
shall be deemed to be Additional Shares of Common issued as of the time of such
issue or, in case such a record date shall have been fixed, as of the close of
business on such record date, provided that Additional Shares of Common shall
not be deemed to have been issued unless the consideration per share (determined
pursuant to Section 2(d)(v) hereof) of such Additional Shares of Common would be
less than the applicable Conversion Price in effect on the date of and
immediately prior to such issue, or such record date, as the case may be, and
provided further that in any such case in which Additional Shares of Common are
deemed to be issued:
(1) no further adjustments in the applicable Conversion
Price shall be made upon the subsequent issue of Convertible Securities or
shares of Common upon the exercise of such Options or conversion or exchange of
such Convertible Securities;
(2) if such Options or Convertible Securities by their
terms provide, with the passage of time or otherwise, for any increase in the
consideration payable to the Corporation, or decrease in the number of shares of
Common issuable, upon the exercise, conversion or exchange thereof, the
applicable Conversion Price computed upon the original issue thereof (or upon
the occurrence of a record date with respect thereto), and any subsequent
adjustments based thereon, shall, upon any such increase or decrease becoming
effective, be recomputed to reflect such increase or decrease insofar as it
affects such Options or the rights of conversion or exchange under such
Convertible Securities (provided, however, that no such adjustment of the
applicable Conversion Price shall affect Common previously issued upon
conversion of the Preferred);
(3) upon the expiration of any such Options or any
rights of conversion or exchange under such Convertible Securities which shall
not have been exercised, the Conversion Prices computed upon the original issue
thereof (or upon the occurrence of a record date with respect thereto), and any
subsequent adjustments based thereon, shall, upon such expiration, be recomputed
as if:
(A) in the case of Convertible Securities or
Options for Common, the only Additional Shares of Common issued were the shares
of Common, if any, actually issued upon the exercise of such Options or the
conversion or exchange of such
Convertible Securities and the consideration received therefor was the
consideration actually received by the Corporation for the issue of all such
exercised Options, plus the consideration actually received by the Corporation
upon such exercise, or for the issue of all such Convertible Securities which
were actually converted or exchanged, plus the additional consideration, if any,
actually received by the Corporation upon such conversion or exchange, and
(B) in the case of Options for Convertible
Securities, only the Convertible Securities, if any, actually issued upon the
exercise thereof were issued at the time of issue of such Options, and the
consideration received by the Corporation for the Additional Shares of Common
deemed to have been then issued was the consideration actually received by the
Corporation for the issue of such exercised Options, plus the consideration
deemed to have been received by the Corporation (determined pursuant to Section
2(d)(v)) upon the issue of the Convertible Securities with respect to which such
Options were actually exercised;
(4) no readjustment pursuant to clauses (2) or (3) above
shall have the effect of increasing the Conversion Price to an amount which
exceeds the lower of (i) the Conversion Price on the original adjustment date or
(ii) the Conversion Price that would have resulted from any issuance of
Additional Shares of Common between the original adjustment date and such
readjustment date; and
(5) in the case of any Options which expire by their
terms not more than 30 days after the date of issue thereof, no adjustment of
the Conversion Prices shall be made until the expiration or exercise of all such
Options.
(iv) Adjustment of Conversion Price Upon Issuance of
Additional Shares of Common. In the event that the Corporation shall issue
Additional Shares of Common (including Additional Shares of Common deemed to be
issued pursuant to Section 2(d)(iii)) without consideration or for a
consideration per share less than the Series A Conversion Price, the Series B
Conversion Price, the Series C Conversion Price, or the Series D Conversion
Price, as the case may be, in effect on the date of and immediately prior to
such issue, then and in such event, the Series A Conversion Price, the Series B
Conversion Price, the Series C Conversion Price, and/or the Series D Conversion
Price, as the case may be, shall be reduced, concurrently with such issue, to a
price (calculated to the nearest cent) determined by multiplying the Series A
Conversion Price, the Series B Conversion Price, the Series C Conversion Price,
or the Series D Conversion Price as the case may be, by a fraction, (x) the
numerator of which shall be the sum of the number of shares of Common
outstanding immediately prior to such issue plus the number of shares of Common
which the aggregate consideration received by the Corporation for the total
number of Additional Shares of Common so issued would purchase at such
Conversion Price; and (y) the denominator of which shall be the sum of the
number of shares of Common outstanding immediately prior to such issue plus the
number of such Additional Shares of Common so issued; provided that, for
purposes of calculating the number of shares of Common outstanding for this
Section 2(d)(iv), (1) all shares of Common issuable upon conversion or exercise
of outstanding Options (to the extent vested), Convertible Securities (to the
extent vested) and Series A Preferred, Series B Preferred, Series C Preferred
and Series D Preferred shall be deemed to be outstanding, (2) shares of Common
not received upon the exercise of an Option, whether or not subject to any
option of the Corporation to repurchase such shares at the
purchase price of such shares from the Company, shall be deemed outstanding, (3)
shares of Common Stock received upon the exercise of outstanding Options that
are subject to any option of the Corporation to repurchase such shares at the
purchase price of such shares from the Corporation shall NOT be deemed
outstanding, (4) shares of Common Stock reserved for issuance upon the exercise
of Options approved but not yet granted shall not be deemed outstanding, and (5)
immediately after any Additional Shares of Common are deemed issued pursuant to
Section 2(d)(iii), such Additional Shares of Common shall be deemed to be
outstanding to the extent vested as described in clause (1) above and not
subject to repurchase as described in clause (3) above.
(v) Determination of Consideration. For purposes of this
Section 2(d), the consideration received by the Corporation for the issue of any
Additional Shares of Common shall be computed as follows:
(1) Cash and Property. Such consideration shall:
(A) insofar as it consists of cash, be computed at
the aggregate amount of cash received by the Corporation excluding amounts paid
or payable for accrued interest or accrued dividends;
(B) insofar as it consists of property other than
cash, be computed at the fair value thereof at the time of such issue, as
determined in good faith by the Board; and
(C) in the event that Additional Shares of Common
are issued together with other shares or securities or other assets of the
Corporation for consideration which covers both, be the proportion of such
consideration so received, computed as provided in clauses (A) and (B) above, as
determined in good faith by the Board.
(2) Options and Convertible Securities: The
consideration per share received by the Corporation for Additional Shares of
Common deemed to have been issued pursuant to Section 2(d)(iii)(1), relating to
Options and Convertible Securities, shall be determined by dividing
(A) the total amount, if any, received or
receivable by the Corporation as consideration for the issue of such Options or
Convertible Securities, plus the minimum aggregate amount of additional
consideration (as set forth in the instruments relating thereto, without regard
to any provision contained therein designed to protect against dilution) payable
to the Corporation upon the exercise of such Options or the conversion or
exchange of such Convertible Securities, or in the case of Options for
Convertible Securities, the exercise of such Options for Convertible Securities
and the conversion or exchange of such Convertible Securities, by
(B) the maximum number of shares of Common (as set
forth in the instruments relating thereto, without regard to any provision
contained therein designed to protect against dilution) issuable upon the
exercise of such Options or the conversion or exchange of such Convertible
Securities.
(e) Adjustments for Subdivisions, Stock Dividends, Combinations or
Consolidation of Common. In the event that the Corporation at any time or from
time to time declares or pays, without consideration, any dividend on Common
payable in Common or in any right to acquire Common for no consideration, or
effects a subdivision or combination of its outstanding shares of Common into a
greater or smaller number of shares without a proportionate and corresponding
subdivision or combination of the outstanding shares of Series A Preferred,
Series B Preferred, Series C Preferred, or Series D Preferred, then and in each
such event the Series A Conversion Price, the Series B Conversion Price, the
Series C Conversion Price, or the Series D Conversion Price, as the case may be,
shall be appropriately increased or decreased proportionally.
(f) Adjustments for Other Dividends and Distributions. In the event
that the Corporation at any time or from time to time makes, or fixes a record
date for the determination of holders of Common entitled to receive, any
distribution payable in securities of the Corporation other than shares of
Common and other than as otherwise adjusted in this Section 2, then and in each
such event provision shall be made so that the holders of Series A Preferred,
Series B Preferred, Series C Preferred, and Series D Preferred, respectively,
shall receive upon conversion thereof, in addition to the number of shares of
Common receivable thereupon, the amount of securities of the Corporation which
they would have received had their shares of Series A Preferred, Series B
Preferred, Series C Preferred, or Series D Preferred respectively, been
converted into Common on the date of such event and had they thereafter, during
the period from the date of such event to and including the date of conversion,
retained such securities receivable by them as aforesaid during such period,
subject to all other adjustments called for during such period under this
Section 2 with respect to the rights of the holders of the Series A Preferred,
the Series B Preferred, and the Series C Preferred, and Series D Preferred,
respectively.
(g) No Impairment. Except as provided for in Sections 4 and 6, the
Corporation will not, by amendment of its Certificate of Incorporation or
through any reorganization, recapitalization, transfer of assets, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms to be observed
or performed hereunder by the Corporation, but will at all times in good faith
assist in the carrying out of all the provisions of this Section 2 and in the
taking of all such action as may be necessary or appropriate in order to protect
the Conversion Rights of the holders of the Series A Preferred, Series B
Preferred, Series C Preferred, and Series D Preferred against impairment.
(h) Certificate as to Adjustments. Within thirty (30) days following
the occurrence of each adjustment or readjustment of the applicable Conversion
Prices of a series of Preferred pursuant to this Section 2, the Corporation at
its expense shall promptly compute such adjustment or readjustment in accordance
with the terms hereof and prepare and furnish to each holder of Series A
Preferred, Series B Preferred, Series C Preferred, or Series D Preferred, as the
case may be, a certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment is based.
The Corporation shall, upon the written request at any time of any holder of
Series A Preferred, Series B Preferred, Series C Preferred, or Series D
Preferred, furnish or cause to be furnished to such holder a like certificate
setting forth (i) such adjustments and readjustments, (ii) the Conversion Prices
at the time in effect and (iii) the number of shares of Common and the amount,
if any, of other property which
at the time would be received upon the conversion of such holder's shares of
Series A Preferred, Series B Preferred, Series C Preferred, or Series D
Preferred.
(i) Notices of Record Date. In the event that the Corporation shall
propose at any time:
(i) to declare any dividend or distribution upon its Common,
whether in cash, property, stock or other securities, whether or not a regular
cash dividend and whether or not out of earnings or earned surplus;
(ii) to offer for subscription pro rata to the holders of any
class or series of its stock any additional shares of stock of any class or
series or other rights; or
(iii) to effect any reclassification or recapitalization of
its Common outstanding involving a change in the Common;
then, in connection with each such event, this Corporation shall send to the
holders of the Series A Preferred, Series B Preferred, Series C Preferred, and
Series D Preferred:
(A) at least 20 days' prior written notice of the
date on which a record shall be taken for such dividend, distribution or
subscription rights (and specifying the date on which the holders of Common
shall be entitled thereto) or for determining rights to vote in respect of the
matters referred to in (iii) above; and
(B) in the case of the matters referred to in
(iii) above, at least 20 days' prior written notice of the date on which the
same shall take place (and specifying the date on which the holders of Common
shall be entitled to exchange their Common for securities or other property
deliverable upon the occurrence of such event).
Reservation of Stock Issuable Upon Conversion. The Corporation shall
at all times reserve and keep available out of its authorized but unissued
shares of Common, solely for the purpose of effecting the conversion of the
shares of the Series A Preferred, Series B Preferred, Series C Preferred, and
Series D Preferred, such number of its shares of Common as shall from time to
time be sufficient to effect the conversion of all then outstanding shares of
the Series A Preferred, Series B Preferred, Series C Preferred, and Series D
Preferred; and if at any time the number of authorized but unissued shares of
Common shall not be sufficient to effect the conversion of all then outstanding
shares of the Series A Preferred, Series B Preferred, Series C Preferred, and
Series D Preferred, the Corporation will take such corporate action as may, in
the opinion of its counsel, be necessary to increase its authorized but unissued
shares of Common to such number of shares as shall be sufficient for such
purpose.
(j) Notices. All notices and other communications required or
permitted hereunder shall be in writing, shall be effective when given, and
shall in any event be deemed to be given upon receipt or, if earlier, (a) five
(5) days after deposit with the U.S. Postal Service or other applicable postal
service, if delivered by first class mail, postage prepaid, (b) upon delivery,
if delivered by hand, (c) one business day after the business day of deposit
with Federal Express or similar overnight courier, freight prepaid or (d) one
business day after the business day of facsimile transmission, if delivered by
facsimile transmission with copy by first class
mail, postage prepaid, and shall be addressed to each holder of record at his
address appearing on the books of the Corporation.
(k) Adjustments. Subject to Section 1(d) above, in case of any
reorganization or any reclassification of the capital stock of the Corporation
(other than a subdivision or combination of shares provided for above), any
merger of the Corporation with or into another corporation or corporations, or
the conveyance of all or substantially all of the assets of the Corporation to
another corporation, each share of Series A Preferred, Series B Preferred,
Series C Preferred, and Series D Preferred, respectively, shall thereafter be
convertible into the number of shares of stock or other securities or property
(including cash) to which a holder of the number of shares of Common deliverable
upon conversion of such share of Series A Preferred, Series B Preferred, Series
C Preferred, and Series D Preferred, respectively, would have been entitled upon
the record date of (or date of, if no record date is fixed) such reorganization,
reclassification, merger or conveyance; and, in any case, appropriate adjustment
(as determined by the Board) shall be made in the application of the provisions
herein set forth with respect to the rights and interests thereafter of the
holders of the Series A Preferred, Series B Preferred, the Series C Preferred,
and the Series D Preferred, respectively, to the end that the provisions set
forth herein shall thereafter be applicable, as nearly as equivalent as is
practicable, in relation to any shares of stock or the securities or property
(including cash) thereafter deliverable upon the conversion of the shares of
such Series A Preferred, Series B Preferred, Series C Preferred, and Series D
Preferred, respectively.
(l) Issue Taxes. The Corporation shall pay any and all issue and
other taxes that may be payable in respect of any issue or delivery of shares of
Common on conversion of shares of Series A Preferred, Series B Preferred, Series
C Preferred, and Series D Preferred, respectively, pursuant hereto; provided,
however, that the Corporation shall not be obligated to pay any transfer taxes
resulting from any transfer requested by any holder in connection with any such
conversion.
Section 3. Redemption Rights.
(a) In the event of an election at least sixty (60) days prior to
December 31, 2002, December 31, 2003, and December 31, 2004 (each, a "Redemption
Date") or no more than twenty (20) days after receiving a notice pursuant to
Section 3(d) below by any holder of outstanding shares of Series A Preferred,
Series B Preferred, Series C Preferred, or Series D Preferred to effect the
provisions of this Section 3, the Corporation shall redeem, out of and only to
the extent of funds legally available therefor, (i) on December 31, 2002, up to
one-third, as requested by such holder, of the issued, outstanding and
unconverted shares of Series A Preferred, Series B Preferred, Series C
Preferred, or Series D Preferred, held by such holder, (ii) on December 31,
2003, up to fifty percent, as requested by such holder, of the issued,
outstanding and unconverted shares of Series A Preferred, Series B Preferred,
Series C Preferred, or Series D Preferred, held by such holder, and (iii) on
December 31, 2004, up to all, as requested by such holder, of the issued,
outstanding and unconverted shares of Series A Preferred, Series B Preferred,
Series C Preferred, or Series D Preferred held by such holder.
(b) Notwithstanding Section 3(a) hereof, in the event of a
transaction which could be treated as a Liquidation Transaction (but which is
not treated as a Liquidation Transaction in accordance with the voting
procedures set forth in Section A.1.(d)) and pursuant to which the holders of
Series C Preferred or Series D Preferred would receive less than the Series C
Liquidation Preference for each share of Series C Preferred then outstanding or
the Series D Liquidation Preference for each share of Series D then outstanding
(the "Redemption Transaction"), any holder of outstanding shares of Series C
Preferred may redeem their shares of Series C Preferred and any holder of Series
D Preferred may redeem their shares of Series D Preferred in accordance with the
provisions of this Section 3(b). The Corporation will provide notice to the
holders of Series C Preferred and the holders of Series D Preferred at least
twenty (20) days before the proposed closing of any Redemption Transaction. No
less than ten (10) days prior to the proposed closing of the Redemption
Transaction, any holder of Series C Preferred or Series D Preferred shall have
the option to notify the Corporation of its intention to invoke its redemption
rights under this Section 3(b). Thereafter, on or before the closing of the
Redemption Transaction (the "Series C or Series D Redemption Date") the
Corporation shall redeem the shares of Series C Preferred or Series D Preferred,
as the case may be, out of and only to the extent of funds legally available
therefor, from the holders exercising such option under this Section 3(b). The
price for shares of Series C Preferred redeemed in accordance with this Section
3(b) shall be equal to the Series C Liquidation Preference per share of Series C
Preferred (the "Series C Redemption Price") and the price for shares of Series D
Preferred for redeemed in accordance with this Section 3(b) shall be equal to
the greater of the fair market value per share or the Series D Liquidation
Preference per share of Series D Preferred (the "Series D Redemption Price").
Nothing in this Section 3(b) is intended to limit a holder of Series C Preferred
or Series D Preferred from participating in the distributions set forth in
Section A.1.(d) in the event the Liquidation Transaction is to be treated as a
liquidation, dissolution or winding up of the Corporation. Notwithstanding
anything to the contrary contained in this Section 3(b), in the event that the
holders of Preferred Stock elect to treat the Redemption Transaction as a
liquidation pursuant to Section A.1.(d) after any holder of Series C Preferred
or Series D Preferred has invoked its redemption right pursuant to this Section
3(b), each holder of Series C Preferred or Series D Preferred shall receive the
benefits of Section A.1.(d) in lieu of a redemption under this Section 3(b).
(c) Each share of Series A Preferred, Series B Preferred, or Series
C Preferred, respectively, shall be redeemed at the Liquidation Preference
applicable to such series on the Redemption Date. Each share of Series D
Preferred shall be redeemed at a price equal to the greater of (i) fair market
value or (ii) the Series D Liquidation Preference on the Redemption Date. In no
event, shall a share of Series A Preferred, Series B Preferred, or Series C
Preferred be redeemed prior to a share of Series D Preferred.
(d) In the event of the election by any holder of outstanding shares
of Series A Preferred, Series B Preferred, Series C Preferred, or Series D
Preferred, as provided in Section 3(a) above, the Corporation shall send to each
holder of Series A Preferred, each holder of Series B Preferred, each holder of
Series C Preferred, and each holder of Series D Preferred respectively, not less
than forty (40) and not more than sixty (60) days before the Redemption Date, at
the address last shown on the records of the Corporation for such holder, the
audited financial statements of the Corporation for the prior fiscal year and
the most recent unaudited year-to-date financial statements of the Corporation,
together with a written notice (the
"Redemption Notice") advising such holders of the proposed redemption pursuant
to this Section 3, specifying the Redemption Date, the Redemption Price and the
place at which payment may be obtained.
(e) In the event that more than one holder of a series of Preferred
Stock requests redemption, shares of Series A Preferred, Series B Preferred,
Series C Preferred, or Series D Preferred, as the case may be, shall be redeemed
from each holder of Series A Preferred, Series B Preferred, Series C Preferred,
and Series D Preferred requesting redemption pursuant to this Section 3, pro
rata based on the number of shares of Series A Preferred, Series B Preferred, or
Series C Preferred, or Series D Preferred requested to be redeemed by such
holder to the extent that the Corporation does not have funds legally available
to effect such redemption. On or after the Redemption Date, each holder of
Series A Preferred, Series B Preferred, Series C Preferred or Series D Preferred
to be redeemed shall surrender to the Corporation the certificate or
certificates representing such shares, 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. As promptly as practicable thereafter the
Corporation shall issue and deliver to or upon the written order of such holder,
at such office or other place designated by the holder, a check for cash with
respect to the shares so redeemed.
(f) From and after the Redemption Date, or the Series C or Series D
Redemption Date, as applicable, unless there shall have been a default in
payment of the Redemption Price, the Series C Redemption Price, or Series D
Redemption Price all rights of the holders of the outstanding shares of Series A
Preferred, Series B Preferred, Series C Preferred, or Series D Preferred to be
redeemed shall cease as holders of such Series A Preferred, Series B Preferred,
Series C Preferred, or Series D Preferred as the case may be, (except the right
to receive the appropriate Redemption Price, Series C Redemption Price, or
Series D Redemption Price, as applicable, without interest upon surrender of
their certificate or certificates) and such shares shall not thereafter be
transferred on the books of the Corporation, be convertible into shares of
Common or be deemed to be outstanding for any purpose whatsoever. If the funds
of the Corporation legally available for redemption of shares of Series A
Preferred, Series B Preferred, Series C Preferred, or Series D Preferred
scheduled to be redeemed on a Redemption Date, Series C Redemption Date, or
Series D Redemption Date are insufficient to redeem the total number of shares
of Series A Preferred, Series B Preferred, Series C Preferred, or Series D
Preferred to be redeemed on such date, then those funds which are legally
available will be used to redeem the maximum possible number of such shares and
shares of Series A Preferred, Series B Preferred, Series C Preferred or Series D
Preferred, as the case may be, shall be redeemed from each holder of Series A
Preferred, Series B Preferred, Series C Preferred, or Series D Preferred
requesting redemption pursuant to this Section 3 pro rata based on the number of
shares of Series A Preferred, Series B Preferred, Series C Preferred or Series D
Preferred requested to be redeemed by such holder. In such event,
notwithstanding the first sentence of this Section 3(f), the shares of Series A
Preferred, Series B Preferred, Series C Preferred, or Series D Preferred not
redeemed shall remain outstanding and be entitled to all the rights and
preferences provided herein and a new certificate shall be issued representing
the unredeemed shares. At the end of any fiscal quarter of the Corporation at
which additional funds of the Corporation are legally available for the
redemption of the shares of Series A Preferred, Series B Preferred, Series C
Preferred, or Series D Preferred as the case may be, that remain outstanding,
such funds will within thirty (30) days thereafter be used to redeem the balance
of the shares which the Corporation has become obligated to redeem on the
Redemption Date, Series C Redemption Date or Series D Redemption Date but which
it has not redeemed. In the event that the Corporation shall not have redeemed
shares of Series A Preferred, Series B Preferred, Series C Preferred, or Series
D Preferred scheduled to be redeemed on a Redemption Date, Series C Redemption
Date or Series D Redemption Date, as applicable, the amount at which each such
share of Series A Preferred, Series B Preferred, Series C Preferred, or Series D
Preferred shall be redeemed shall be increased by twenty percent (20%) per annum
(compounded annually) for the period from the scheduled Redemption Date, Series
C Redemption Date or Series D Redemption Date, as applicable, to the date on
which such shares are actually redeemed.
Section 4. Voting Rights.
(a) General. Except as otherwise provided herein, or as required by
law, each issued and outstanding share of Common shall be entitled to one vote
on all matters. Except as required by law or by the provisions hereof, the
holders of the Series A Preferred, the holders of the Series B Preferred, the
holders of the Series C Preferred, and the holders of Series D Preferred shall
be entitled to vote on all matters with the holders of the Common on an as if
converted basis.
(b) Board of Directors and Observers. Notwithstanding the provisions
of Section 4(a) above, (i) so long as any shares of Series A Preferred are
outstanding, the holders of shares of the Series A Preferred, voting as a
separate series, shall have the right to elect two directors (the "Series A
Directors"), (ii) so long as any shares of Series B Preferred are outstanding,
the holders of shares of the Series B Preferred, voting as a separate series,
shall have the right to elect one director (the "Series B Director"), (iii) so
long as any shares of Series C Preferred are outstanding, the holders of shares
of the Series C Preferred, voting as a separate series, shall be entitled to
designate one (1) non-voting observer nominated by Pilgrim Baxter Hybrid
Partners I, L.P. (such right of Pilgrim Baxter Hybrid Partners I, L.P. to
nominate the observer on behalf of the holders of Series C Preferred to cease
when Pilgrim Baxter Hybrid Partners I, L.P. no longer owns any shares of Series
C Preferred) to attend all Board of Directors meetings (the "Series C Preferred
Observer"), subject to the obligation of the holders of Series C Preferred to
maintain the confidentiality of the discussions and resolutions of such meetings
and the materials distributed prior to, at or after such meetings, or in
connection therewith, (iv) so long as any shares of Series D Preferred are
outstanding, the holders of shares of Series D Preferred, voting as a separate
series, shall be entitled to elect one director (the "Series D Director"), and
(v) the holders of the shares of Common, voting as a separate class, shall have
the right to elect the remaining directors. A vacancy in directorship elected by
the holders of the Series A Preferred shall be filled only by vote or written
consent of the holders of the Series A Preferred as provided above. A vacancy in
the directorship elected by the holders of the Series B Preferred shall be
filled only by vote or written consent of the holders of the Series B Preferred
as provided above. A vacancy in the directorship elected by the holders of the
Series D Preferred shall be filled only by vote or written consent of the
holders of the Series D Preferred as provided above. A vacancy in any
directorship elected by the holders of Common shall be filled only by vote or
written consent of the holders of Common as provided above, provided that such
nominee is reasonably acceptable to a majority of the Preferred then
outstanding.
Section 5. Dividend Rights.
(a) The holders of outstanding Series A Preferred, the holders of
outstanding Series B Preferred, the holders of outstanding Series C Preferred,
and the holders of outstanding Series D Preferred shall be entitled to receive,
when and as declared by the Board of Directors and out of funds legally
available therefore, cash dividends at the annual rate of $0.1375 per share of
outstanding Series A Preferred, $0.2604 per share of outstanding Series B
Preferred, $0.2436 per share of outstanding Series C Preferred, and $.3744 per
of outstanding Series D Preferred (each as adjusted for stock splits, stock
dividends, reclassifications, and like events), payable in preference and
priority to any payment of any dividend on Common, when and as declared by the
Board of Directors in its discretion. The right to such dividends on shares of
Preferred shall not be cumulative, and no right shall accrue to holders of
Preferred by reason of the fact that dividends on said shares are not declared
or paid in any previous year. No dividends or other distributions shall be made
with respect to the Common in any fiscal year, other than dividends payable
solely in Common, until all such dividends on Preferred for that year have been
paid or set apart for payment. In the event that the Corporation shall have
declared and unpaid dividends outstanding immediately prior to, and in the event
of, conversion of Preferred, the Corporation shall, at its option, pay in cash
to the holder(s) of Preferred subject to conversion the full amount of any such
dividends or convert such dividends into Common at the then effective Conversion
Prices referred to in Section 2 or a combination thereof, together with cash in
lieu of any fractional shares of Common. The holders of Preferred will be
treated on a pari-passu basis for purposes of dividends and shall share pro-rata
based on the per share dividend amount set forth in this Section 5(a) in any
dividends to the extent such dividends are not in an amount to pay in full the
dividend amount set forth in this Section 5(a) with respect to each series.
(b) Dividends may be paid on the Common as and when declared by the
Board of Directors, subject to the prior dividend rights of the Preferred and
only if a dividend of equal or greater amount, on a per share and
as-if-converted basis, is paid at the same time on the Series A Preferred, the
Series B Preferred, the Series C Preferred, and the Series D Preferred.
Section 6. Covenants.
(a) Preferred. Except as set forth in Section 6(b), so long as
greater than 1,000,000 shares of Preferred shall be outstanding, the Corporation
shall not, without first obtaining the majority affirmative vote or written
consent of holders of such outstanding shares of Preferred voting together as a
class (except that for the purposes of Sections 6(a)(i) through 6(a)(iv) and
6(a)(vi), if one series of Preferred is affected in a manner different than
another, a majority vote of each series of Preferred so disproportionately
affected, voting as a series, shall be required, and except that with respect to
Section 6(v), where the Corporation shall first obtain the affirmative vote or
written consent of seventy-five percent (75%) of the Preferred then
outstanding):
(i) amend or repeal any provision of, or add any provision to,
the Corporation's Certificate of Incorporation or Bylaws if such action would
materially and adversely alter or change the preferences, rights, privileges or
powers of, or the restrictions provided for the benefit of, the Preferred;
(ii) reclassify any Common or other series of its capital
stock shares into shares having any preference or priority as to dividends,
liquidation, redemption, blocking rights, voting rights, conversion or otherwise
superior to or on a parity with any such preference or priority of the
Preferred;
(iii) pay or declare any dividend or distribution (other than
of shares of Common) on any shares of Preferred, Common or any other series of
its capital stock or apply any of its assets to the redemption, retirement,
purchase or other acquisition directly or indirectly, through subsidiaries or
otherwise, of any shares of Preferred, Common, or any other series of its
capital stock (or derivative instrument therefor) except from directors or
employees of, or consultants to, the Corporation upon termination of employment,
service as a director or consultancy pursuant to restricted stock purchase
agreements approved by the Board of Directors and except for redemption of
Preferred or dividends on Preferred in accordance with this Amended and Restated
Certificate of Incorporation;
(iv) create or issue any other class or classes of stock or
series of Preferred senior to or on parity with the Series A Preferred, the
Series B Preferred, the Series C Preferred, or the Series D Preferred with
respect to dividends, liquidation, redemption, blocking rights, voting rights,
conversion or otherwise increase the number of authorized shares of any series
of Preferred;
(v) merge or consolidate with or into, or acquire, any other
corporation (except where a majority of the outstanding equity securities of the
surviving corporation immediately after the merger or consolidation is held by
persons who were stockholders of this Corporation immediately prior to the
merger or consolidation), or sell or otherwise transfer in a single transaction
or a series of related transactions all or substantially all of the assets of
the Corporation (unless transferred to a wholly owned subsidiary of the Company)
Corporation (which shall require the affirmative vote or written consent of
seventy-five percent (75%) of the Preferred then outstanding);
(vi) authorize a liquidation, dissolution, recapitalization or
reorganization of the Corporation;
(vii) increase or decrease the authorized number of directors
of the Corporation;
(viii) transfer any material assets of the Corporation to any
person or entity other than a wholly-owned subsidiary of the Corporation;
(ix) permit any subsidiary to issue or sell, or sell or
obligate itself to issue or sell, except to the Corporation, a wholly-owned
subsidiary of the Corporation, any securities of such subsidiary; and
(x) materially change the Corporation's business as conducted
on the date of filing of this Restated Certificate of Incorporation or as
contemplated by the Corporation's most recently available Business Plan.
(b) Series D Preferred. So long as greater than 450,000 shares of
Series D Preferred remain outstanding, the Corporation shall not, without first
obtaining the majority affirmative vote or written consent of holders of the
outstanding Series D Preferred which majority shall include Financial Technology
Ventures, L.P. and Financial Technology Ventures (Q), L.P. so long as they in
aggregate hold 35% or more of the Series D Preferred outstanding:
(i) amend or repeal any provision of, or add any provision to,
the Corporation's Certificate of Incorporation or Bylaws if such action would
materially and adversely alter or change the preferences, rights, privileges or
powers of, or the restrictions provided for the benefit of, the Series D
Preferred;
(ii) reclassify any Common or other series of its capital
stock shares into shares having any preference or priority as to dividends,
liquidation, redemption, blocking rights, voting rights, conversion or otherwise
superior to any such preference or priority of the Series D Preferred;
(iii) create or issue any other class or classes of stock or
series of Preferred senior to the Series D Preferred with respect to dividends,
liquidation, redemption, blocking rights, voting rights, conversion or otherwise
increase the number of authorized shares of the Series D Preferred;
(iv) merge or consolidate with or into, or acquire, any other
corporation (except where a majority of the outstanding equity securities of the
surviving corporation immediately after the merger or consolidation is held by
persons who were stockholders of this Corporation immediately prior to the
merger or consolidation), or sell or otherwise transfer in a single transaction
or series of related transactions all or substantially all of the assets of the
Corporation (unless transferred to a wholly owned subsidiary of the Corporation)
at a valuation per share less than one and one-half (1.5) times the Series D
Purchase Price during the one year following July 13, 1999 and two (2) times the
Series D Purchase Price thereafter.
(c) Series B Preferred. The Corporation shall not, without first
obtaining the majority affirmative vote or written consent of the holders of a
majority of such outstanding shares of Series B Preferred voting together as a
class take any action which would alter the tax liability of the Series B
Preferred pursuant to Section 305 of the Internal Revenue Code of 1986, as
amended.
(d) Series C Preferred. The Corporation shall not, without first
obtaining the majority affirmative vote or written consent of the holders of a
majority of such outstanding shares of Series C Preferred voting together as a
class take any action which would alter the tax liability of the Series C
Preferred pursuant to Section 305 of the Internal Revenue Code of 1986, as
amended.
(e) Series D Preferred. The Corporation shall not, without first
obtaining the majority affirmative vote or written consent of the holders of a
majority of such outstanding shares of Series D Preferred voting together as a
class take any action which would alter the tax liability of the Series D
Preferred pursuant to Section 305 of the Internal Revenue Code of 1985 as
amended.
Section 7. Residual Rights.
All rights accruing to the outstanding shares of the Corporation not
expressly provided for to the contrary herein shall be vested in the Common.
Section 8. Partial Conversion or Redemption.
In the event that less than all of a holder's shares of Preferred shall be
converted at any time pursuant to Section 2 hereof or redeemed at any time
pursuant to Section 3 hereof, the Corporation shall promptly upon receipt of
such holder's certificate for shares to be converted or promptly after the later
of the date fixed for redemption or the receipt of such holder's certificate for
shares to be redeemed, issue a new certificate to such holder representing the
unconverted or unredeemed shares, as the case may be.
B. COMMON STOCK
1. Relative Rights of Preferred Stock and Common Stock. All preferences,
voting powers, relative, participating, optional or other special rights and
privileges, and qualifications, limitations, or restrictions of the Common Stock
are expressly made subject and subordinate to those that may be fixed with
respect to any shares of the Preferred Stock.
2. Voting Rights. Except as otherwise required by law or this Restated
Certificate of Incorporation, each holder of Common Stock shall have one vote in
respect of each share of stock held by him of record on the books of the
Corporation for the election of directors and on all matters submitted to a vote
of stockholders of the Corporation. The number of authorized shares of Common
Stock may be increased or decreased (but not below the number of shares then
outstanding) by the affirmative vote of the holders of a majority of the
outstanding shares of capital stock of the Corporation, with each such share
being entitled to such number of votes per shares as is provided in this Article
FOURTH.
3. Dividends. Subject to the preferential rights of the Preferred Stock,
if any, the holders of shares of Common Stock shall be entitled to receive, when
and if declared by the Board of Directors, out of the assets of the Corporation
which are by law available thereof, dividends payable either in cash, in
property or in shares of capital stock.
4. Dissolution, Liquidation or Winding Up. In the event of any
dissolution, liquidation or winding up of the affairs of the Corporation, after
distribution in full of the preferential amounts, if any, to be distributed to
the holders of shares of the Preferred, holders of Common Stock shall be
entitled, unless otherwise provided by law or this Restated Certificate of
Incorporation, to receive their PRO RATA share of the remaining assets pursuant
to Section A.1(c) of Article Fourth.
FIFTH: The Corporation is to have perpetual existence.
SIXTH: In furtherance and not in limitation of the powers conferred by the
laws of the State of Delaware:
a. The Board of Directors of the Corporation is expressly authorized to
adopt, amend or repeal the By-Laws of the Corporation.
b. Elections of directors need not be by written ballot unless the By-Laws
of the Corporation shall so provide.
c. The books of the Corporation may be kept at such place within or
without the State of Delaware as the By-Laws of the Corporation may provide or
as may be designated from time to time by the Board of Directors of the
Corporation.
SEVENTH: The Corporation eliminates the personal liability of each member
of its Board of Directors to the Corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, provided, however, that, to
the extent provided by applicable law, the foregoing shall not eliminate the
liability of a director (1) for any breach of such director's duty of loyalty to
the Corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) under Section 174 of Title 8 of the Delaware Code or (iv) for any
transaction from which such director derived an improper personal benefit. No
amendment to or repeal of this provision shall apply to or have any effect on
the liability or alleged liability of any director for or with respect to any
acts or omissions of such director occurring prior to such amendment or repeal.
EIGHTH: The Corporation reserves the right to amend or repeal any
provision contained in this Restated Certificate of Incorporation, in the manner
now or hereafter prescribed by statute, and all rights conferred upon a
stockholder herein are granted subject to this reservation.
NINTH: 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.
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IN WITNESS WHEREOF, the Corporation has caused its corporate seal to be
affixed hereto and this Restated Certificate of Incorporation to be signed by
its President and attested by its Secretary this 24th day of September, 1999.
AVESTA TECHNOLOGIES, INC.
By: /s/ Kam M. Saifi
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Kam M. Saifi
President and Chief Executive Officer
ATTEST:
By: /s/ Andrew C. Cooper
----------------------------
Andrew C. Cooper
Secretary