Exhibit 3.1
EIGHTH AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
INPHONIC, INC.
InPhonic, Inc., a corporation organized and existing under the laws of
the State of Delaware (the "Corporation"), by its Chief Executive Officer,
hereby certifies as follows:
1. The name of the Corporation is InPhonic, Inc. The Corporation was
originally incorporated under the name DASCOM PCS, Inc.
2. The original Certificate of Incorporation of the Corporation was
filed with the Secretary of State of the State of Delaware on January 27, 1997,
was amended and restated on February 4, 2000, was amended and restated on
October 13, 2000, was amended and restated on August 3, 2001, was amended and
restated on October 11, 2001, was amended and restated on December 3, 2001, was
amended and restated on January 30, 2002 and is in effect on the date of the
filing of this Eighth Amended and Restated Certificate of Incorporation (the
"Charter").
3. This Charter was duly adopted in accordance with the provisions of
Sections 242, 245 and 228 of the General Corporation Law of the State of
Delaware (the "DGCL") by resolution of the Board of Directors of the Corporation
and the written consent of the stockholders of the Corporation. This Charter
restates, integrates, amends and supercedes the provisions of the Charter, as
previously amended and restated.
4. The text of the Charter is hereby restated to read in its entirety
as follows:
ARTICLE I
Name
The name of the Corporation is InPhonic, Inc.
ARTICLE II
Period of Existence
The period of existence of the Corporation shall be perpetual.
ARTICLE III
Registered Office and Agent
The address of the registered office of the Corporation in the State of
Delaware is 2711 Centerville Road, Suite 400, Wilmington, County of New Castle,
Delaware 19808. The name of its registered agent at such address is Corporation
Service Company.
ARTICLE IV
Purpose
The nature of the business of the Corporation is to engage in any
lawful acts or activities for which corporations may be organized under the DGCL
and to possess and exercise all of the powers and privileges conferred by the
laws of the State of Delaware upon corporations formed under the DGCL.
ARTICLE V
Authorized Capital
1. Classes and Series of Stock. The total number of shares of all
classes of stock which the Corporation shall have authority to issue is
134,155,228 in the designated classes and series as follows:
Class Number of Shares
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Common Stock, 99,440,000
$0.01 par value per share
("Common Stock")
Preferred Stock,
$0.01 par value per share
("Preferred Stock") 34,715,228
Comprised of:
Series A Convertible Preferred Stock,
$0.01 par value per share
("Series A Preferred Stock") 668,782
Series B Convertible Preferred Stock,
$0.01 par value per share
("Series B Preferred Stock") 2,282,684
Series C Convertible Preferred Stock,
$0.01 par value per share
("Series C Preferred Stock") 7,273,762
Series D Convertible Preferred Stock,
$0.01 par value per share
("Series D Preferred Stock") 8,000,000
Series D-1 Convertible Preferred Stock,
$0.01 par value per share
("Series D-1 Preferred Stock") 12,000,000
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Series D-2 Convertible Preferred Stock,
$0.01 par value per share
("Series D-2 Preferred Stock") 550,000
Series D-3 Convertible Preferred Stock
$0.01 par value per share
("Series D-3 Preferred Stock") 2,000,000
Series D-4 Convertible Preferred Stock
$0.01 par value per share
("Series D-4 Preferred Stock") 1,940,000
2. Additional Classes and Series of Stock. In addition to, and not by
way of limitation of, the powers granted to boards of directors by Section 151
of the DGCL, the board of directors of the Corporation (the "Board of
Directors") shall have the power and authority to fix by resolution any
designation, class, series, voting power, preference, right, qualification,
limitation, restriction, dividend, time and price of redemption, and conversion
right with respect to any stock of the Corporation. Upon adoption of such
resolution, a statement shall be filed with the Secretary of State in compliance
with the DGCL, before the issuance of any shares for which the resolution
creates rights or preferences not set forth in this Charter; provided, however,
and subject to compliance with the next succeeding sentence, where the
stockholders have received notice of the creation of shares with rights or
preferences not set forth in this Charter before the issuance of the shares, the
statement may be filed any time within one (1) year after the issuance of the
shares. Subject to compliance with applicable protective voting rights that have
been or may be granted to the Preferred Stock in this Charter (the "Protective
Provisions"), but notwithstanding any other rights of the Preferred Stock or any
series thereof, the rights, privileges, preferences and restrictions of any such
additional series or class may be subordinated to, pari passu with (including,
without limitation, inclusion in provisions with respect to liquidation and
acquisition preferences, redemption and/or approval of matters by vote or
written consent), or senior to any of those of any present or future class or
series of Preferred Stock or Common Stock. Subject to compliance with applicable
Protective Provisions, the Board of Directors is also authorized to increase or
decrease the number of shares of any series, prior or subsequent to the issue 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 so decreased, 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.
ARTICLE VI
Terms of Capital Stock
The following is a statement of the rights, preferences, powers and
privileges, and the qualifications, limitations or restrictions thereof, in
respect of each class of capital stock of the Corporation.
A. COMMON STOCK.
l. General. The voting, dividend and liquidation rights of the
holders of shares of Common Stock are subject to, and qualified by, the rights
of the holders of the Preferred Stock of any series.
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2. Voting. The holders of the Common Stock are entitled to one (1) vote
for each share held at each meeting of stockholders of the Corporation (and all
written actions in lieu of meetings) with respect to any and all matters
presented to the stockholders of the Corporation for their action or
consideration. There shall be no cumulative voting and at any meeting held for
the purpose of electing directors, the presence in person or by proxy of the
holders of a majority of the shares of Common Stock then outstanding shall
constitute a quorum of the Common Stock for the purpose of electing directors by
holders of the Common Stock.
3. Dividends. Dividends may be paid on the Common Stock from funds
lawfully available therefor as, if and when declared by the Board of Directors,
subject to the preferential dividend rights of the holders of the then
outstanding shares of Preferred Stock.
4. Liquidation. Upon the voluntary or involuntary liquidation, sale,
merger, consolidation, dissolution or winding up of the Corporation, holders of
shares of Common Stock will be entitled to receive all assets of the Corporation
available for distribution to its stockholders, subject to the preferential
liquidation rights of the holders of the then outstanding Preferred Stock.
B. PREFERRED STOCK.
The Preferred Stock shall have the rights, preferences, powers, privileges,
restrictions, qualifications and limitations set forth below. Except as
otherwise specified herein, the Series D Preferred Stock and Series D-1
Preferred Stock have the same rights, preferences, powers, privileges,
restrictions, qualifications and limitations, and all references to Series D
Preferred Stock shall mean the Series D Preferred Stock and Series D-1 Preferred
Stock together.
1. Original Purchase Price; Original Issue Date and Rank.
(a) The issuance price of the Series A Preferred Stock shall be
$0.76084855991811 per share (subject to appropriate adjustment ("Adjustment") in
the event of any stock dividend, stock split, combination, or other similar
recapitalization affecting the capital stock of the Corporation) (the "Series A
Original Purchase Price"), the issuance price of the Series B Preferred Stock
shall be $1.117106003284 per share (subject to Adjustment) (the "Series B
Original Purchase Price"), the issuance price of the Series C Preferred Stock
shall be $1.039401493 per share (subject to Adjustment) (the "Series C Original
Purchase Price"), the issuance price of the Series D Preferred Stock shall be
$1.650286766 (subject to Adjustment) (the "Series D Original Purchase Price"),
the issuance price of the Series D-2 Preferred Stock shall be $2.52 (subject to
Adjustment) (the "Series D-2 Original Purchase Price"), the issuance price of
the Series D-3 Preferred Stock shall be $2.93294916 (subject to Adjustment) (the
"Series D-3 Original Purchase Price") and the issuance price of the Series D-4
Preferred Stock shall be $5.2053141 (the "Series D-4 Original Purchase Price")
(the Series A Original Purchase Price, the Series B Original Purchase Price, the
Series C Original Purchase Price, the Series D Original Purchase Price, the
Series D-2 Original Purchase Price, the Series D-3 Original Purchase Price and
the Series D-4 Original Purchase Price, sometimes referred to separately herein
as the "Original Purchase Price"). Any and all shares of Series D Preferred
Stock issued upon exercise of the preferred stock purchase warrants issued by
the Corporation pursuant to Sections 1.3, 1.4 and 2.6 of the Series D
Convertible Preferred Stock Purchase Agreement dated as of August 7, 2001 by and
among the Corporation and the purchasers set forth therein and the preferred
stock warrants to acquire up to 692,639 shares of Series D-1 Preferred Stock
issued pursuant to Section 1.3 of the Series D-1 Preferred Stock
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Purchase Agreement dated as of October 11, 2001 by and among the Corporation and
the purchasers set forth therein (together, the "Series D Warrants") shall be
deemed to have an issuance price equal to the Series D Original Purchase Price.
(b) The date on which the first share of Series A Preferred Stock was
issued shall hereinafter be referred to as the "Series A Original Issue Date,"
the date on which the first share of Series B Preferred Stock was issued shall
hereinafter be referred to as the "Series B Original Issue Date," the date on
which the first share of Series C Preferred Stock was issued shall hereinafter
be referred to as the "Series C Original Issue Date", the date on which the
first share of Series D Preferred Stock was issued shall hereinafter be referred
to as the "Series D Original Issue Date", the date on which the first share of
Series D-2 Preferred Stock was issued shall hereinafter be referred to as the
"Series D-2 Original Issue Date," the date on which the first share of Series
D-3 Preferred Stock was issued shall hereinafter be referred to as the "Series
D-3 Original Issue Date" and the date on which the first share of Series D-4
Preferred Stock was issued shall hereinafter be referred to as the "Series D-4
Original Issue Date" (the Series A Original Issue Date, the Series B Original
Issue Date, the Series C Original Issue Date, the Series D Original Issue Date,
the Series D-2 Original Issue Date, the Series D-3 Original Issue Date and the
Series D-4 Original Issue Date, sometimes referred to separately herein as the
"Original Issue Date").
(c) The Series A Preferred Stock shall rank senior to the Common
Stock and any other capital stock of the Corporation ranking junior to the
Series A Preferred Stock as to dividends and upon liquidation, dissolution or
winding up. The Series B Preferred Stock shall rank senior to the Common Stock,
the Series A Preferred Stock, and any other capital stock of the Corporation
ranking junior to the Series B Preferred Stock as to dividends and upon
liquidation, dissolution or winding up. The Series C Preferred Stock shall rank
senior to the Common Stock, the Series A Preferred Stock, the Series B Preferred
Stock, and any other capital stock of the Corporation ranking junior to the
Series C Preferred Stock as to dividends and upon liquidation, dissolution or
winding up. The Series D Preferred Stock, Series D-1 Preferred Stock, Series D-2
Preferred Stock, Series D-3 Preferred Stock and Series D-4 Preferred Stock shall
be pari passu and shall, as one series, rank senior to the Common Stock, the
Series A Preferred Stock, the Series B Preferred Stock, the Series C Preferred
Stock, and any other capital stock of the Corporation ranking junior to the
Series D Preferred Stock, the Series D-2 Preferred Stock, Series D-3 Preferred
Stock or the Series D-4 Preferred Stock as to dividends, upon liquidation,
dissolution, winding up and upon redemption.
2. Dividends.
(a) The holders of shares of the Series A Preferred Stock shall be
entitled to receive non-cumulative dividends (payable other than in Common Stock
or other securities convertible into or entitling the holder thereof to receive
directly or indirectly, additional shares of Common Stock), as, if and when
declared by the Board of Directors on the Common Stock or other securities
ranking junior to the Series A Preferred Stock of the Corporation, in an amount
that is equivalent to the amount that would have been paid to such holders, had
such holders converted the then outstanding Series A Preferred Stock into Common
Stock of the Corporation in accordance with Section 5 hereof as of the record
date for the declaration of such dividends.
(b) The holders of shares of Series B Preferred Stock shall be
entitled to receive as, if and when declared by the Board of Directors, out of
funds legally available for that purpose, prior and in preference to any
declaration or payment of any dividends (payable other than in Common Stock or
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other securities convertible into or entitling the holder thereof to receive
directly or indirectly, additional shares of Common Stock) on the Common Stock,
the Series A Preferred Stock, or other securities ranking junior to the Series B
Preferred Stock, cumulative dividends ("Series B Cumulative Dividends"), which
shall accrue at the rate per annum of $0.117106003284 per share of Series B
Preferred Stock (subject to Adjustment). The Series B Cumulative Dividends on
each share of Series B Preferred Stock shall begin to accrue as of the date of
issuance of such share, regardless of whether there are profits, surplus or
other funds of the Corporation legally available for the payment of dividends.
Dividends shall be payable pro rata for partial year periods. Series B
Cumulative Dividends shall be payable as, if, and when declared by the Board of
Directors. Series B Cumulative Dividends shall not be payable upon conversion of
the Series B Preferred Stock in accordance with the terms of Section 5 hereof.
(c) The holders of shares of Series C Preferred Stock shall be
entitled to receive as, if and when declared by the Board of Directors, out of
funds legally available for that purpose, prior and in preference to any
declaration or payment of any dividends (payable other than in Common Stock or
other securities convertible into or entitling the holder thereof to receive
directly or indirectly, additional shares of Common Stock) on the Common Stock,
the Series A Preferred Stock, the Series B Preferred Stock or other securities
ranking junior to the Series C Preferred Stock, cumulative dividends ("Series C
Cumulative Dividends"), which shall accrue at the rate per annum of
$0.1039401493 per share of Series C Preferred Stock (subject to Adjustment). The
Series C Cumulative Dividends on each share of Series C Preferred Stock shall
begin to accrue as of the date of issuance of such share, regardless of whether
there are profits, surplus or other funds of the Corporation legally available
for the payment of dividends. Dividends shall be payable pro rata for partial
year periods. Series C Cumulative Dividends shall be payable if, as and when
declared by the Board of Directors. Series C Cumulative Dividends shall not be
payable upon conversion of the Series C Preferred Stock in accordance with the
terms of Section 5 hereof.
(d) The holders of shares of Series D Preferred Stock shall be
entitled to receive as, if and when declared by the Board of Directors, out of
funds legally available for that purpose, prior and in preference to any
declaration or payment of any dividends (payable other than in Common Stock or
other securities convertible into or entitling the holder thereof to receive
directly or indirectly, additional shares of Common Stock) on the Common Stock,
the Series A Preferred Stock, the Series B Preferred Stock, the Series C
Preferred Stock or other securities ranking junior to the Series D Preferred
Stock, the Series D-2 Preferred Stock, Series D-3 Preferred Stock or the Series
D-4 Preferred Stock, cumulative dividends ("Series D Cumulative Dividends"),
which shall accrue at the rate per annum of $0.1650286766 per share of Series D
Preferred Stock (subject to Adjustment). The Series D Cumulative Dividends on
each share of Series D Preferred Stock shall begin to accrue as of the date of
issuance of such share, whether or not earned or declared and regardless of
whether there are profits, surplus or other funds of the Corporation legally
available for the payment of dividends. Dividends shall be payable pro rata for
partial year periods. When paid, Series D Cumulative Dividends shall be paid in
cash or, at the option of the Corporation, in shares of Series D Preferred Stock
to holders of Series D Preferred Stock and in shares of Series D-1 Preferred
Stock to holders of Series D-1 Preferred Stock. In the event the Corporation
elects to pay the Series D Cumulative Dividends in shares of Series D Preferred
Stock or Series D-1 Preferred Stock, as applicable, the per share value of the
Series D Preferred Stock or the Series D-1 Preferred Stock, as applicable, for
such purpose shall be deemed to be the Series D Original Purchase Price. In
addition, special dividend provisions may apply pursuant to Article
VI(B)6(h)(iii) below.
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(e) The holders of shares of Series D-2 Preferred Stock shall be
entitled to receive as, if and when declared by the Board of Directors, out of
funds legally available for that purpose, prior and in preference to any
declaration or payment of any dividends (payable other than in Common Stock or
other securities convertible into or entitling the holder thereof to receive
directly or indirectly, additional shares of Common Stock) on the Common Stock,
the Series A Preferred Stock, the Series B Preferred Stock, the Series C
Preferred Stock or other securities ranking junior to the Series D Preferred
Stock, the Series D-2 Preferred Stock, the Series D-3 Preferred Stock or the
Series D-4 Preferred Stock, cumulative dividends ("Series D-2 Cumulative
Dividends"), which shall accrue at the rate per annum of $0.252 per share of
Series D-2 Preferred Stock (subject to Adjustment). The Series D-2 Cumulative
Dividends on each share of Series D-2 Preferred Stock shall begin to accrue as
of the date of issuance of such share, whether or not earned or declared and
regardless of whether there are profits, surplus or other funds of the
Corporation legally available for the payment of dividends. Dividends shall be
payable pro rata for partial year periods. When paid, Series D-2 Cumulative
Dividends shall be paid in cash or, at the option of the Corporation, in shares
of Series D-2 Preferred Stock. In the event the Corporation elects to pay the
Series D-2 Cumulative Dividends in shares of Series D-2 Preferred Stock, the per
share value of the Series D-2 Preferred Stock for such purposes shall be deemed
to be the Series D-2 Original Purchase Price. Series D-2 Cumulative Dividends
shall not be payable upon conversion of the Series D-2 Preferred Stock in
accordance with the terms of Section 5 hereof.
(f) The holders of shares of Series D-3 Preferred Stock shall be
entitled to receive as, if and when declared by the Board of Directors, out of
funds legally available for that purpose, prior and in preference to any
declaration or payment of any dividends (payable other than in Common Stock or
other securities convertible into or entitling the holder thereof to receive
directly or indirectly, additional shares of Common Stock) on the Common Stock,
the Series A Preferred Stock, the Series B Preferred Stock, the Series C
Preferred Stock or other securities ranking junior to the Series D Preferred
Stock, the Series D-2 Preferred Stock, the Series D-3 Preferred Stock or the
Series D-4 Preferred Stock, cumulative dividends ("Series D-3 Cumulative
Dividends"), which shall accrue at the rate per annum of $0.293294916 per share
of Series D-3 Preferred Stock (subject to Adjustment). The Series D-3 Cumulative
Dividends on each share of Series D-3 Preferred Stock shall begin to accrue as
of the date of issuance of such share, whether or not earned or declared and
regardless of whether there are profits, surplus or other funds of the
Corporation legally available for the payment of dividends. Dividends shall be
payable pro rata for partial year periods. When paid, Series D-3 Cumulative
Dividends shall be paid in cash or, at the option of the Corporation, in shares
of Series D-3 Preferred Stock. In the event the Corporation elects to pay the
Series D-3 Cumulative Dividends in shares of Series D-3 Preferred Stock, the per
share value of the Series D-3 Preferred Stock for such purposes shall be deemed
to be the Series D-3 Original Purchase Price. Series D-3 Cumulative Dividends
shall not be payable upon conversion of the Series D-3 Preferred Stock in
accordance with the terms of Section 5 hereof.
(g) The holders of shares of Series D-4 Preferred Stock shall be
entitled to receive as, if and when declared by the Board of Directors, out of
funds legally available for that purpose, prior and in preference to any
declaration or payment of any dividends (payable other than in Common Stock or
other securities convertible into or entitling the holder thereof to receive
directly or indirectly, additional shares of Common Stock) on the Common Stock,
the Series A Preferred Stock, the Series B Preferred Stock, the Series C
Preferred Stock or other securities ranking junior to the Series D Preferred
Stock, the Series D-2 Preferred Stock, Series D-3 Preferred Stock or Series D-4
Preferred Stock, cumulative dividends ("Series D-4 Cumulative Dividends"), which
shall accrue at the rate per annum of $0.52053141 per share of Series D-4
Preferred Stock (subject to Adjustment). The Series D-4 Cumulative Dividends on
each share of Series D-4 Preferred Stock shall begin to accrue as of the date of
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issuance of such share, whether or not earned or declared and regardless of
whether there are profits, surplus or other funds of the Corporation legally
available for the payment of dividends. Dividends shall be payable pro rata for
partial year periods. When paid, Series D-4 Cumulative Dividends shall be paid
in cash or, at the option of the Corporation, in shares of Series D-4 Preferred
Stock. In the event the Corporation elects to pay the Series D-4 Cumulative
Dividends in shares of Series D-4 Preferred Stock, the per share value of the
Series D-4 Preferred Stock for such purposes shall be deemed to be the Series
D-4 Original Purchase Price.
(h) No dividends shall be declared or paid upon the Common Stock or
other securities ranking junior to the Series A Preferred Stock, unless
equivalent dividends, on an as-converted basis, are declared and paid
concurrently on the Series A Preferred Stock.
(i) No dividends shall be declared or paid upon the Common Stock,
Series A Preferred Stock, or other securities ranking junior to the Series B
Preferred Stock, unless the Series B Cumulative Dividends which shall have
accrued with respect to the Series B Preferred Stock as of the date of such
declaration or payment have first been paid in full.
(j) No dividends shall be declared or paid upon the Common Stock, the
Series A Preferred Stock, the Series B Preferred Stock, or other securities
ranking junior to the Series C Preferred Stock, unless the Series C Cumulative
Dividends which shall have accrued with respect to the Series C Preferred Stock
as of the date of such declaration or payment have first been paid in full.
(k) No dividends shall be declared or paid upon the Common Stock, the
Series A Preferred Stock, the Series B Preferred Stock, the Series C Preferred
Stock or other securities ranking junior to the Series D Preferred Stock, unless
the Series D Cumulative Dividends which shall have accrued with respect to the
Series D Preferred Stock as of the date of such declaration or payment have
first been paid in full, the Series D-2 Cumulative Dividends which shall have
accrued with respect to the Series D-2 Preferred Stock as of the date of such
declaration or payment have first been paid in full, the Series D-3 Cumulative
Dividends which shall have accrued with respect to the Series D-3 Preferred
Stock as of the date of such declaration or payment have first been paid in full
and the Series D-4 Cumulative Dividends which shall have accrued with respect to
the Series D-4 Preferred Stock as of the date of such declaration or payment
have first been paid in full.
3. Liquidation, Dissolution or Winding Up.
(a) In the event of any liquidation, dissolution or winding up of the
Corporation (a "Liquidation"), the funds and assets of the Corporation legally
available for distribution to its stockholders (the "Corporate Assets") shall be
distributed as follows:
(i) First, before any distribution of assets shall be made to
the holders of Common Stock, Series A Preferred Stock, Series B Preferred Stock
or Series C Preferred Stock and before any distribution of assets in respect of
the Series D-1 Additional Preference (defined below) shall be made to the
holders of the Series D-1 Preferred Stock, (A) the holders of each share of
Series D Preferred Stock then outstanding shall be entitled to be paid out of
the Corporate Assets an amount per share equal to the Series D Original Purchase
Price (subject to Adjustment), plus all dividends, including the Series D
Cumulative Dividend, accrued but unpaid on such shares up to the date of
distribution of the Corporate Assets (the "Series D Liquidation Preference"),
(B) the holders of each share of Series D-2 Preferred Stock then outstanding
shall be entitled to be paid out of the Corporate Assets an amount per
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share equal to the Series D-2 Original Purchase Price (subject to Adjustment),
plus all dividends, including the Series D-2 Cumulative Dividend, accrued but
unpaid on such shares up to the date of distribution of the Corporate Assets
(the "Series D-2 Liquidation Preference"), (C) the holders of each share of
Series D-3 Preferred Stock then outstanding shall be entitled to be paid out of
the Corporate Assets an amount per share equal to the Series D-3 Original
Purchase Price (subject to Adjustment), plus all dividends, including the Series
D-3 Cumulative Dividend, accrued but unpaid on such shares up to the date of
distribution of the Corporate Assets (the "Series D-3 Liquidation Preference")
and (D) the holders of each share of Series D-4 Preferred Stock then outstanding
shall be entitled to be paid out of the Corporate Assets an amount per share
equal to the Series D-4 Original Purchase Price (subject to Adjustment), plus
dividends, including the Series D-4 Cumulative Dividend, accrued but unpaid on
such shares up to the date of distribution of the Corporate Assets (the "Series
D-4 Liquidation Preference"). If, upon the occurrence of a Liquidation, the
Corporate Assets shall be insufficient to pay to the holders of shares of Series
D Preferred Stock the Series D Liquidation Preference, to pay to the holders of
shares of Series D-2 Preferred Stock the Series D-2 Liquidation Preference, to
pay to the holders of shares of Series D-3 Preferred Stock the Series D-3
Liquidation Preference or to pay to the holders of shares of Series D-4
Preferred Stock the Series D-4 Liquidation Preference, the holders of shares of
Series D Preferred Stock, Series D-2 Preferred Stock, Series D-3 Preferred Stock
and Series D-4 Preferred Stock shall share ratably in the distribution of the
entire Corporate Assets in proportion to the respective amounts (excluding
amounts payable in respect of the Series D-1 Additional Preference) which would
otherwise be payable in respect of the shares held by them upon such
distribution if all amounts (excluding amounts payable in respect of the Series
D-1 Additional Preference) payable on or with respect to such shares were paid
in full.
(ii) Second, before any distribution of assets shall be made to
the holders of Common Stock, Series A Preferred Stock, or Series B Preferred
Stock and before any distribution of assets in respect of the Series D-1
Additional Preference shall be made to the holders of the Series D-1 Preferred
Stock, the holders of each share of Series C Preferred Stock then outstanding
shall be entitled to be paid out of the Corporate Assets an amount per share
equal to the Series C Original Purchase Price (subject to Adjustment), plus all
dividends, including the Series C Cumulative Dividends, accrued but unpaid on
such shares up to the date of distribution of the Corporation Assets (the
"Series C Liquidation Preference"). If upon the occurrence of a Liquidation, the
Corporate Assets shall be insufficient to pay to the holders of shares of Series
C Preferred Stock the Series C Liquidation Preference, the holders of shares of
Series C Preferred Stock shall share ratably in the distribution of the entire
remaining Corporate Assets in proportion to the respective amounts which would
otherwise be payable in respect of the shares held by them upon such
distribution if all amounts payable on or with respect to such shares were paid
in full.
(iii) Third, before any distribution of assets shall be made to
the holders of Common Stock or the Series A Preferred Stock and before any
distribution of assets in respect of the Series D-1 Additional Preference shall
be made to the holders of the Series D-1 Preferred Stock, the holders of each
share of Series B Preferred Stock then outstanding shall be entitled to be paid
out of the Corporate Assets an amount per share equal to the Series B Original
Purchase Price (subject to Adjustment), plus all dividends, including the Series
B Cumulative Dividends, accrued but unpaid on such shares up to the date of
distribution of the Corporate Assets (the "Series B Liquidation Preference"). If
upon the occurrence of a Liquidation, the Corporate Assets shall be insufficient
to pay to the holders of shares of Series B Preferred Stock the Series B
Liquidation Preference, the holders of shares of Series B Preferred Stock shall
share ratably in the distribution of the entire remaining Corporate Assets in
proportion to the respective amounts which would otherwise be payable in respect
of the shares
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held by them upon such distribution if all amounts payable on or with respect to
such shares were paid in full.
(iv) Fourth, before any distribution of assets shall be made to
the holders of Common Stock and before any distribution of assets in respect of
the Series D-1 Additional Preference shall be made to the holders of the Series
D-1 Preferred Stock, the holders of each share of Series A Preferred Stock then
outstanding shall be entitled to be paid out of the Corporate Assets an amount
per share equal to the Series A Original Purchase Price (subject to Adjustment),
plus all dividends declared but unpaid on such shares up to the date of
distribution of the Corporate Assets (the "Series A Liquidation Preference"). If
upon the occurrence of a Liquidation, the Corporate Assets shall be insufficient
to pay the holders of shares of Series A Preferred Stock the Series A
Liquidation Preference, the holders of shares of Series A Preferred Stock shall
share ratably in the distribution of the entire remaining Corporate Assets in
proportion to the respective amounts which would otherwise be payable in respect
of the shares held by them upon such distribution if all amounts payable on or
with respect to such shares were paid in full.
(v) Fifth, before any distribution of assets shall be made to
the holders of Common Stock, the holders of each share of Series D-1 Preferred
Stock then outstanding shall be entitled to be paid out of the Corporate Assets
an amount per share equal to 20% of the Series D Original Purchase Price
(subject to Adjustment) (the "Series D-1 Additional Preference," and together
with the Series A Liquidation Preference, Series B Liquidation Preference, the
Series C Liquidation Preference, the Series D Liquidation Preference, the Series
D-2 Liquidation Preference, the Series D-3 Liquidation Preference and the Series
D-4 Liquidation Preference, the "Liquidation Preference"). If upon the
occurrence of a Liquidation, the Corporate Assets shall be insufficient to pay
the holders of the Series D-1 Preferred Stock the Series D-1 Additional
Preference, the holders of shares of Series D-1 Preferred Stock shall share
ratably in the distribution of the entire remaining Corporate Assets in
proportion to the respective amounts which would otherwise be payable in respect
of the Series D-1 Additional Preference upon such distribution if the Series D-1
Additional Preference with respect to the Series D-1 Preferred Stock were paid
in full.
(vi) Sixth, after distribution of the Liquidation Preference,
the remaining Corporate Assets shall be distributed among the holders of Common
Stock and the holders of the Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock, Series D-1 Preferred Stock,
Series D-2 Preferred Stock, Series D-3 Preferred Stock and Series D-4 Preferred
Stock on a pro rata basis, with the amount distributable computed on the basis
of the number of shares of Common Stock which would be held by such holders of
Preferred Stock if immediately prior to the Liquidation all of the shares of the
Preferred Stock had been converted into shares of Common Stock.
(b) Notwithstanding anything to the contrary contained in the
foregoing, (i) if as a result of receiving any distributions as described in
Section 3(a) above, the holders of the Series D-4 Preferred Stock would receive
an amount per share greater than the product obtained by multiplying the Series
D-4 Liquidation Preference by one (1) (the "Series D-4 Trigger Price"), then
such holders shall receive the greater of the Series D-4 Trigger Price or the
amount such holder would receive by sharing the Corporate Assets with the
holders of Common Stock on an as-converted basis upon Liquidation.
(c) Notwithstanding anything to the contrary contained in the
foregoing, (i) if as a result of receiving any distributions as described in
Section 3(a) above, the holders of the Series D-3 Preferred Stock would receive
an amount per share greater than the product obtained by multiplying the
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Series D-3 Liquidation Preference by one (1) (the "Series D-3 Trigger Price"),
then such holders shall receive the greater of the Series D-3 Trigger Price or
the amount such holder would receive by sharing the Corporate Assets with the
holders of Common Stock on an as-converted basis upon Liquidation.
(d) Notwithstanding anything to the contrary contained in the
foregoing, (i) if as a result of receiving any distributions as described in
Section 3(a) above, the holders of the Series D-2 Preferred Stock would receive
an amount per share greater than the product obtained by multiplying the Series
D-2 Liquidation Preference by one (1) (the "Series D-2 Trigger Price"), then
such holders shall receive the greater of the Series D-2 Trigger Price or the
amount such holder would receive by sharing the Corporate Assets with the
holders of Common Stock on an as-converted basis upon Liquidation.
(e) Notwithstanding anything to the contrary contained in the
foregoing, (i) if as a result of receiving any distributions as described in
Section 3(a) above, the holders of the Series D Preferred Stock would receive an
amount per share greater than the product obtained by multiplying the Series D
Liquidation Preference by three (3) (the "Series D Trigger Price"), then such
holders shall receive the greater of the Series D Trigger Price or the amount
such holder would receive by sharing the Corporate Assets with the holders of
Common Stock on an as-converted basis upon Liquidation.
(f) Notwithstanding anything to the contrary contained in the
foregoing, if as a result of receiving any distributions as described in Section
3(a) above, the holders of the Series C Preferred Stock would receive an amount
greater than $4.16 per share (the "Series C Trigger Price"), then such holders
shall receive the greater of the Series C Trigger Price or the amount such
holder would receive by sharing the Corporate Assets with the holders of Common
Stock on an as-converted basis upon Liquidation.
(g) Notwithstanding anything to the contrary contained in the
foregoing, if as a result of receiving any distributions as described in Section
3(a) above, the holders of the Series B Preferred Stock would receive an amount
per share greater than the product obtained by multiplying the Series B Original
Purchase Price by four (4) (the "Series B Trigger Price"), then such holders
shall receive the greater of the Series B Trigger Price or the amount such
holder would receive by sharing the Corporate Assets with the holders of Common
Stock on an as-if converted basis upon Liquidation.
(h) (i) The merger or consolidation of the Corporation with or into
any other entity, or other similar transaction or series of related
transactions, in which the holders of the Corporation's outstanding shares
immediately before such merger, or consolidation do not, immediately subsequent
to such merger or consolidation, retain stock or other equity interests
representing a majority of the voting power of the surviving entity of such
consolidation or merger; or (ii) a transaction or series of related transactions
whereby all or substantially all the assets of the Corporation are sold, leased,
transferred or otherwise disposed of (any of the foregoing events referred to in
this Section 3(h) a "Sale Transaction"), shall be deemed to be a Liquidation for
purposes of this Section 3, unless the holders of at least sixty-six and
two-thirds percent (66 2/3%) of the then outstanding shares of Preferred Stock
(on an as converted basis) elect otherwise by giving written notice thereof to
the Corporation at least three (3) days prior to the effective date of such
event. The amount deemed distributed for purposes of determining the Liquidation
Preference for the holders of shares of Preferred Stock upon any such
transaction deemed to be a Liquidation shall be the cash or the value of the
property, rights or securities distributed to such holders by the acquiring
person, firm or other entity. The value of such property, rights or other
securities shall be determined in good faith by the Board of Directors of the
Corporation (including at
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least two (2) Preferred Stock Directors (as defined in Section 4(j) of this
Charter,)) subject to Sections 3(i) and 3(j) below.
(i) The method of valuation of securities distributed to stockholders
on a Liquidation pursuant to this Section 3 that are not subject to investment
letter or other similar restrictions on free marketability shall be as follows:
(i) if the securities are then traded on a national securities
exchange or the NASDAQ National Market System (or a similar national quotation
system) or the NASDAQ Small Cap Market, then the value shall be deemed to be the
average of the closing prices of the securities over the thirty (30) day period
ending three (3) days prior to the distribution;
(ii) if actively traded over-the-counter, then the value shall
be deemed to be the average of the closing bid prices over the thirty (30) day
period ending three (3) days prior to the closing of such Liquidation; or
(iii) if there is no active public market, then the value shall
be the fair market value thereof, as determined in good faith by the Board of
Directors of the Corporation (including at least two (2) Preferred Stock
Directors).
(j) The method of valuation of securities distributed to stockholders
in a Liquidation pursuant to this Section 3 that are subject to investment
letter or other restrictions on free marketability shall be to make an
appropriate discount from the market value determined pursuant to Section
3(i)(i), (ii), or (iii) above to reflect the approximate fair market value
thereof, as determined in good faith by the Board of Directors of the
Corporation (including at least two (2) Preferred Stock Directors).
(k) Written notice of a Liquidation, stating a payment date, the
Liquidation Preference and the place where said Liquidation Preference shall be
payable, shall be delivered in person, mailed by certified or registered mail,
return receipt requested, or sent by telecopier or telex, not less than twenty
(20) days prior to the payment date stated therein, to the holders of record of
the Preferred Stock, such notice to be addressed to each such holder at its
address as shown by the records of the Corporation.
4. Voting.
(a) Each holder of outstanding shares of Preferred Stock shall be
entitled to the number of votes equal to the number of whole shares of Common
Stock into which the shares of Preferred Stock held of record by such holder are
convertible (as adjusted from time to time pursuant to Section 5 hereof), at
each meeting of stockholders of the Corporation (and written actions of
stockholders in lieu of meetings) with respect to any and all matters presented
to the stockholders of the Corporation for their action or consideration at the
record date for the determination of the stockholders entitled to vote on such
matters or, if no such record date is established, the date such vote is taken
or any written consent of stockholders is solicited. Except as provided by law
and by the provisions of Section 4(b), (c) (d), (e), (f), (g), (h) (i), (j) or
(k) below, the holders of shares of Preferred Stock shall vote together with the
holders of Common Stock as a single class.
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(b) So long as at least 100,000 shares of Series A Preferred Stock
remain outstanding (subject to Adjustment) the Corporation shall not, without
first obtaining the written consent or affirmative vote of the holders of at
least fifty-one percent (51%) of the then outstanding shares of Series A
Preferred Stock:
(i) amend, alter or repeal the rights, preferences, or
privileges of the Series A Preferred Stock;
(ii) increase the authorized number of shares of the Series A
Preferred Stock; or
(iii) authorize or issue any other class of stock on a parity
with the rights, powers or privileges of the Series A Preferred Stock.
Any such action taken without the required consent or affirmative vote of such
holders of Series A Preferred Stock shall be void ab initio.
(c) So long as at least 500,000 shares of Series B Preferred Stock
remain outstanding (subject to Adjustment), the Corporation shall not, without
first obtaining the written consent or affirmative vote of the holders of at
least fifty-one percent (51%) of the then outstanding shares of the Series B
Preferred Stock:
(i) amend, alter or repeal the rights, preferences, or
privileges of the Series B Preferred Stock;
(ii) increase the authorized number of shares of the Series B
Preferred Stock;
(iii) increase the authorized number of shares of any other class
of Preferred Stock which is on parity with or senior to the Series B Preferred
Stock; or
(iv) authorize or issue any other class or series of stock on
parity with or senior to the Series B Preferred Stock or take other actions
materially affecting the rights, powers or privileges of the Series B Preferred
Stock except with respect to an issuance for the purpose of paying dividends
pursuant to Article VI(B)(2)(d), Article VI(B)(2)(e) or Article VI(B)(2)(f);.
Any such action taken without the required consent or affirmative vote of such
holders of Series B Preferred Stock shall be void ab initio.
(d) So long as at least 500,000 shares of Series C Preferred Stock
remain outstanding (subject to Adjustment), the Corporation may not, without
first obtaining the written consent or affirmative vote of the holders of at
least fifty-one percent (51%) of the then outstanding shares of the Series C
Preferred Stock:
(i) amend, alter or repeal the rights, preferences or
privileges of the Series C Preferred Stock;
(ii) increase the authorized number of shares of the Series C
Preferred Stock; or
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(iii) authorize or issue any other class or series of stock on
parity with or senior to Series C Preferred Stock or take other actions
materially affecting the rights, powers or privileges of Series C Preferred
Stock except with respect to an issuance for the purpose of paying dividends
pursuant to Article VI(B)(2)(d), Article VI(B)(2)(e) or Article VI(B)(2)(f).
Any such action taken without the required consent or affirmative vote of such
holders of Series C Preferred Stock shall be void ab initio.
(e) So long as at least 500,000 shares of Series D Preferred Stock
and Series D-1 Preferred Stock remain outstanding (subject to Adjustment), the
Corporation may not, without first obtaining the written consent or affirmative
vote of the holders of at least sixty percent (60%) of the then outstanding
shares of the Series D Preferred Stock and Series D-1 Preferred Stock, voting
together as a class:
(i) subject to the proviso below, amend, alter or repeal the
rights, preferences or privileges of the Series D Preferred Stock or Series D-1
Preferred Stock;
(ii) increase the authorized number of shares of the Series D
Preferred Stock, Series D-1 Preferred Stock, Series D-2 Preferred Stock, Series
D-3 Preferred Stock or Series D-4 Preferred Stock, except with respect to an
increase for the purpose of paying dividends pursuant to Article VI(B)(2)(d),
Article VI(B)(2)(e) or Article VI(B)(2)(f), as applicable;
(iii) subject to the proviso below, authorize or issue any other
class or series of stock on parity with or senior to the Series D Preferred
Stock or Series D-1 Preferred Stock or take actions materially affecting the
rights, powers or privileges of Series D Preferred Stock or Series D-1 Preferred
Stock; or
(iv) subject to the proviso below, issue shares of Series D
Preferred Stock, Series D-1 Preferred Stock, Series D-2 Preferred Stock, Series
D-3 Preferred Stock or Series D-4 Preferred Stock other than pursuant to the
payment of dividends in accordance with Article VI(B)(2)(d), Article VI(B)(2)(e)
or Article VI(B)(2)(f) or upon the exercise of any of the Series D Warrants.
provided, however, that that in the case of any modifications to the Series D-1
Additional Preference, the holders of Series D-1 Preferred Stock shall vote as a
separate class apart from the holders of the Series D Preferred Stock, and the
Corporation may not effect any such modification without first obtaining the
written consent or affirmative vote of the holders of at least sixty percent
(60%) of the then outstanding shares of the Series D-1 Preferred Stock.
Any of the foregoing actions taken without the required consent or affirmative
vote of such holders of Series D Preferred Stock, or the holders of Series D-1
Preferred Stock, as the case may be, shall be void ab initio.
(f) So long as at least 250,000 shares of Series D-2 Preferred Stock
remain outstanding (subject to Adjustment), the Corporation may not, without
first obtaining the written consent or affirmative vote of the holders of at
least sixty percent (60%) of the then outstanding shares of the Series D-2
Preferred Stock, voting together as a class:
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(i) amend, alter or repeal the rights, preferences or
privileges of the Series D-2 Preferred Stock under Article VI(B)2(e), Article
VI(B)(3)(a)(i)(B) and Article VI(B)4(f);
(ii) increase the authorized number of shares of the Series D-2
Preferred Stock, except with respect to an increase for the purpose of paying
dividends pursuant to Article VI(B)(2)(e); or
(iii) issue shares of Series D-2 Preferred Stock other than
pursuant to the payment of dividends in accordance with Article VI(B)(2)(e).
Any of the foregoing actions taken without the required consent or affirmative
vote of such holders of Series D-2 Preferred Stock shall be void ab initio.
(g) So long as at least 150,000 shares of Series D-3 Preferred Stock
remain outstanding (subject to Adjustment), the Corporation may not, without
first obtaining the written consent or affirmative vote of the holders of at
least sixty percent (60%) of the then outstanding shares of the Series D-3
Preferred Stock, voting together as a class:
(i) amend, alter or repeal the rights, preferences or
privileges of the Series D-3 Preferred Stock under Article VI(B)2(f), Article
VI(B)(3)(a)(i)(C) and Article VI(B)4(g) whether by merger, consolidation or
otherwise;
(ii) increase the authorized number of shares of the Series D-3
Preferred Stock, except with respect to an increase for the purpose of paying
dividends pursuant to Article VI(B)(2)(f); or
(iii) issue shares of Series D-3 Preferred Stock other than
pursuant to the payment of dividends in accordance with Article VI(B)(2)(f).
Any of the foregoing actions taken without the required consent or affirmative
vote of such holders of Series D-3 Preferred Stock shall be void ab initio.
(h) So long as at least 150,000 shares of Series D-4 Preferred Stock
remain outstanding (subject to Adjustment), the Corporation may not, without
first obtaining the written consent or affirmative vote of the holders of at
least a majority of the then outstanding shares of the Series D-4 Preferred
Stock, voting together as a class:
(i) amend, alter or repeal the rights, preferences or
privileges of the Series D-4 Preferred Stock under Article VI(B)2(g), Article
VI(B)(3)(a)(i)(D) and Article VI(B)4(i) whether by merger, consolidation or
otherwise;
(ii) increase the authorized number of shares of the Series D-4
Preferred Stock, except with respect to an increase for the purpose of paying
dividends pursuant to Article VI(B)(2)(g); or
(iii) issue shares of Series D-4 Preferred Stock other than
pursuant to the payment of dividends in accordance with Article VI(B)(2)(g).
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Any of the foregoing actions taken without the required consent or affirmative
vote of such holders of Series D-4 Preferred Stock shall be void ab initio.
(i) So long as at least 500,000 shares of Series B Preferred Stock,
Series C Preferred Stock and/or Series D Preferred Stock remain outstanding
(each subject to Adjustment), the Corporation may not, without first obtaining
the written consent or affirmative vote of the holders of at least sixty percent
(60%) of the then outstanding shares of Series B Preferred Stock, Series C
Preferred Stock and Series D Preferred Stock (on an as converted basis),
together as a single class:
(i) amend, alter or repeal any provision of the Charter or the
Bylaws of the Corporation;
(ii) effectuate a Liquidation pursuant to Section 3(a);
(iii) effectuate a Sale Transaction pursuant to Section 3(g);
(iv) redeem, repurchase or acquire any shares of its capital
stock, other than pursuant to a "Redemption" provision set forth in Section 6
hereof (or in connection with the repurchase of shares of capital stock from
Corporation employees, officers, directors, consultants or other persons
performing services for the Corporation pursuant to the terms of a stock
restriction agreements, stock option agreements or similar type agreements
between the Corporation and such employees, officers, directors, consultants or
other such persons); or
(v) effect a reclassification, recapitalization or cancellation
of the outstanding capital stock of the Corporation.
Any such action taken without the required consent or affirmative vote of such
holders of Series B Preferred Stock, Series C Preferred Stock and Series D
Preferred Stock shall be void ab initio.
(j) Board of Directors. Effective with the date of filing of this
Charter, the Board of Directors shall consist of nine (9) directors, as follows:
(i) so long as 300,000 shares of Series B Preferred Stock remain outstanding,
the holders of the shares of Series B Preferred Stock, exclusively and as a
separate class, shall be entitled to designate two (2) directors of the
Corporation (the "Series B Designees"); (ii) so long as 300,000 shares of Series
C Preferred Stock remain outstanding, the holders of the shares of Series C
Preferred Stock, exclusively and as a separate class, shall be entitled to
designate one (1) director of the Corporation (the "Series C Designee"); (iii)
so long as 300,000 shares of Series D Preferred Stock remain outstanding, the
holders of the shares of Series D Preferred Stock, exclusively and as a separate
class, shall be entitled to designate one (1) director of the Corporation (the
"Series D Designee" and together with the Series B Designees and Series C
Designee, the "Preferred Stock Directors"); (iv) the holders of the shares of
Common Stock, exclusively and as a separate class, shall be entitled to
designate three (3) directors of the Corporation, one of whom shall be the
Corporation's Chief Executive Officer; and (v) the holders of the shares of
Common Stock and Preferred Stock, voting together as a class, shall be entitled
to designate two (2) directors of the Corporation.
(k) Special Meetings. Notwithstanding anything to the contrary
contained in the Bylaws of the Corporation, (i) any two (2) directors; (ii) the
Chairman of the Board of the Directors of
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the Corporation; or (iii) the holders of at least fifty-one percent (51%) of the
Series B Preferred Stock, the Series C Preferred Stock, the Series D Preferred
Stock, the Series D-2 Preferred Stock, the Series D-3 Preferred Stock and the
Series D-4 Preferred Stock (on an as converted basis) and Common Stock then
outstanding, voting together as a single class, shall be entitled to call a
special meeting of the Board of Directors.
(l) Termination. Notwithstanding anything contained herein to the
contrary, the provisions of Section 4 shall cease to be of any further force or
effect upon (i) the consummation of a Qualified Public Offering (as defined in
Section 5(b)(i)(A)); or (ii) the consummation of a Qualified Sale Transaction
(as defined in Section 5(b)(i)(C)).
5. Conversion. The holders of shares of Preferred Stock shall have
conversion rights as follows (the "Conversion Rights"):
(a) Optional Conversion. Each share of Preferred Stock shall be
convertible, at the option of the holder thereof, at any time and from time to
time.
(b) Automatic Conversion.
(i) Each share of Preferred Stock shall automatically be
converted at the then effective Conversion Price (subject to Adjustment) in the
manner provided herein into fully paid and nonassessable shares of Common Stock:
(A) Immediately prior to the closing of a firm commitment
underwritten public offering pursuant to a registration statement filed under
the Securities Act of 1933, as amended (the "Securities Act"), covering the
offer and sale of Common Stock for the account of the Corporation in which (i)
the public offering price is at least $3.300573532 (subject to Adjustment) and
(ii) the aggregate net proceeds (after deduction of underwriter's discounts and
commissions) to the Corporation are at least $20,000,000 (a "Qualified Public
Offering"); it being understood, that such conversion shall occur solely upon
closing of such offering and not at any time prior thereto including the time of
effectiveness of such registration statement;
(B) With the consent of the holders of sixty-six and
two-thirds percent (66-2/3%) of the issued and outstanding shares of the
Preferred Stock (on an as converted basis); or
(C) Immediately prior to the closing of a Sale Transaction
in which the cash or readily marketable securities of a publicly traded company
paid or issued to the holders of the Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock, the Series D-2 Preferred Stock, the
Series D-3 Preferred Stock and the Series D-4 Preferred Stock equals or exceeds
the Series D Trigger Price (as defined in Section 3(d)) (a "Qualifying Sale
Transaction").
(ii) In the case of an automatic conversion pursuant to this
Section 5(b), the outstanding shares of Preferred Stock shall be converted
automatically without any further action by the holders of such shares and
whether or not the certificates representing such shares are surrendered to the
Corporation or its transfer agent; provided, however, that the Corporation shall
not be obligated to issue to any holder certificates evidencing the shares of
Common Stock issuable upon such conversion, unless certificates evidencing such
shares of Preferred Stock are delivered either to the Corporation or any
transfer agent of the Corporation, as provided below, or the holder notifies the
Corporation or its transfer
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agent that such certificates have been lost, stolen or destroyed and executes an
agreement satisfactory to the Corporation to indemnify the Corporation from any
loss incurred by it in connection with such certificates. Upon the occurrence of
such automatic conversion of the Preferred Stock, the holders of Preferred Stock
shall surrender the certificates representing such shares at the office of the
Corporation or any transfer agent for the Preferred Stock or Common Stock.
Thereupon, there shall be issued and delivered to such holder promptly at such
office and in its name as shown on such surrendered certificate or certificates,
a certificate or certificates for the number of shares of Common Stock into
which the shares of Preferred Stock surrendered were convertible on the date on
which such automatic conversion occurred. All dividends will cease to accrue
upon conversion pursuant to this Section 5(b).
(iii) All certificates evidencing shares of Preferred Stock which
are required to be surrendered for conversion in accordance with the provisions
hereof shall, from and after the date such certificates are so required to be
surrendered, be deemed to have been retired and canceled and the shares of
Preferred Stock represented thereby converted into Common Stock for all
purposes, notwithstanding the failure of the holder or holders thereof to
surrender such certificates on or prior to such date. The Corporation may
thereafter take such appropriate action as may be necessary to reduce the
authorized Preferred Stock accordingly.
(c) Conversion Mechanism and Conversion Price. Upon conversion in
accordance with Sections 5(a) or 5(b), each share of Preferred Stock shall be
converted, without payment of additional consideration by the holder thereof,
into that number of fully paid and non-assessable shares of Common Stock equal
to the quotient obtained by dividing (i) the applicable Original Purchase Price
(without Adjustment) by (ii) the then applicable Conversion Price (as defined
below). The conversion price per share at which shares of Common Stock shall be
issuable upon conversion of shares of Preferred Stock (the "Conversion Price")
shall initially be the Original Purchase Price for such series of Preferred
Stock; provided, however, that it is acknowledged (i) that as a result of a 2:1
stock split on the Common Stock effective on October 13, 2000, the date of the
filing of the Corporation's Third Amended and Restated Certificate of
Incorporation, an Adjustment was made to the Conversion Price of the Series A
Preferred Stock and Series B Preferred Stock and (ii) that as a result of a 5:4
stock split on the Common Stock effective on October 23, 2001, an Adjustment was
made to the Conversion Price of the Series A Preferred Stock, the Series B
Preferred Stock, the Series C Preferred Stock and the Series D Preferred Stock.
Such Conversion Price, and the rate at which shares of Preferred Stock may be
converted into shares of Common Stock, shall be subject to adjustment as
provided below.
(d) Fractional Shares. No fractional shares of Common Stock shall be
issued upon conversion of the shares of Preferred Stock. In lieu of any
fractional shares to which the holder would otherwise be entitled, the
Corporation shall pay the holder cash equal to the product of such fraction
multiplied by the Common Stock's fair market value as determined in good faith
by the Board of Directors of the Corporation as of the date of conversion.
(e) Mechanics of Conversion.
(i) Subject to Section 5(b)(ii) and Section 5(b)(iii), in order
for a holder of shares of Preferred Stock to convert shares of Preferred Stock
into shares of Common Stock, such holder shall surrender the certificate or
certificates evidencing the ownership of such shares of Preferred Stock at the
office of the Corporation or any transfer agent for the Preferred Stock or
Common Stock of the transfer agent for the shares of Preferred Stock (or at the
principal office of the Corporation if the Corporation serves as its own
transfer agent), together with written notice that such holder elects to
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convert all or any number of the shares of the Preferred Stock represented by
such certificate or certificates. Such notice shall state such holder's name or
the names of the nominees in which such holder wishes the certificate or
certificates for shares of Common Stock to be issued. Notwithstanding Section
5(b)(ii), and if required by the Corporation, certificates surrendered for
conversion shall be endorsed or accompanied by a written instrument or
instruments of transfer, in form reasonably satisfactory to the Corporation,
duly executed by the registered holder or his or its attorney-in-fact duly
authorized in writing. The date of receipt of such certificates and notice by
the transfer agent (or by the Corporation if the Corporation serves as its own
transfer agent) shall be the conversion date (the "Conversion Date"). The
Corporation shall, as soon as practicable after the Conversion Date, issue and
deliver at such office to such holder of shares of Preferred Stock, or to his or
its nominees, a certificate or certificates for the number of shares of Common
Stock to which such holder shall be entitled, together with cash in lieu of any
fractional shares to which such holder would otherwise be entitled, 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 shares of Preferred Stock to be converted, and the person or
persons entitled to receive the shares of Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or holders of
such shares of Common Stock as of such date. Other than as set forth in this
Section 5, if the conversion is made in connection with an underwritten offering
of securities registered pursuant to the Securities Act, the conversion may, at
the option of any holder tendering shares of Preferred Stock for conversion, be
conditioned upon the closing of the sale of securities pursuant to such
offering, in which event the person entitled to receive the Common Stock
issuable upon such conversion of the shares of Preferred Stock shall not be
deemed to have converted such shares of Preferred Stock until immediately prior
to the closing of such sale of securities.
(ii) In the event of the conversion of the Series D Preferred
Stock or Series D-4 Preferred Stock pursuant to Sections 5(a) or 5(b), at the
option of the Corporation, (A) the applicable Conversion Price shall be adjusted
for any accrued but unpaid dividends on the Series D Preferred Stock and Series
D-4 Preferred Stock surrendered for conversion, (B) the Corporation shall pay
the holders of the Series D Preferred Stock and Series D-4 Preferred Stock an
amount in cash equal to the accrued but unpaid dividends on the Series D
Preferred Stock or Series D-4 Preferred Stock, as the case may be, surrendered
for conversion or (C) the Corporation may pay the holders of the Series D
Preferred Stock and Series D-4 Preferred Stock an amount in cash less than the
accrued but unpaid dividends on the Series D Preferred Stock and Series D-4
Preferred Stock, as the case may be, surrendered for conversion and the
applicable Conversion Price shall be adjusted by an amount equal to the
difference between the accrued but unpaid dividends and the amount of cash paid
to the holders of the Series D Preferred Stock and Series D-4 Preferred Stock,
as the case may be, pursuant to this clause (C).
(iii) All shares of Preferred Stock that shall have been
surrendered for conversion as herein provided shall no longer be deemed to be
outstanding and all rights with respect to such shares, including the rights, if
any, to receive notices and to vote, shall immediately cease and terminate on
the Conversion Date, except only the right of the holders thereof to receive
shares of Common Stock in exchange therefor. Any shares of Preferred Stock so
converted shall be retired and canceled and shall not be reissued, and the
Corporation may from time to time take such appropriate action as may be
necessary to eliminate the authorized Preferred Stock or reduce the authorized
number thereof as may be appropriate accordingly.
(f) Reservation of Stock Issuable Upon Conversion. The Corporation
shall, at all times when any shares of Preferred Stock shall be outstanding,
reserve and keep available out of its
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authorized but unissued shares of Common Stock, for the purpose of effecting the
conversion of the shares of Preferred Stock, such number of its duly authorized
shares of Common Stock as shall from time to time be sufficient to effect the
conversion of all outstanding shares of Preferred Stock. Before taking any
action that would cause an adjustment reducing the Conversion Price below the
then par value of the shares of Common Stock issuable upon conversion of the
shares of Preferred Stock, the Corporation will take any corporate action which
may, in the opinion of its counsel, be necessary in order that the Corporation
may validly and legally issue fully paid and nonassessable shares of Common
Stock at such adjusted Conversion Price. 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 Preferred Stock, in addition to
such other remedies as shall be available to the holder of such shares of
Preferred Stock, 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 Stock to such number of shares as shall be sufficient for such
purposes.
(g) Adjustments to Conversion Price for Diluting Issues:
(i) Special Definitions. For purposes of this Section 5(g), the
following definitions shall apply:
(A) "Option" shall mean rights, options or warrants to
subscribe for, purchase or otherwise acquire Common Stock or Convertible
Securities (as defined below) or restricted stock, excluding options granted to
or shares of restricted stock acquired by employees, directors or consultants of
the Corporation pursuant to an option plan or other compensation arrangement
approved by the Board of Directors to acquire up to 11,992,426 shares of Common
Stock (subject to Adjustment) and any shares issued upon exercise of such
options (such excluded options and shares, the "Reserved Option Shares").
(B) "Convertible Securities" shall mean any evidences of
indebtedness, shares or other securities directly or indirectly convertible into
or exchangeable for Common Stock, excluding the Series D Warrants (as defined in
Section 1(a)), warrants issued by the Corporation to acquire up to 697,516
shares of Series C Preferred Stock issued by the Corporation in connection with
the Bridge Loan Agreement dated as of July 21, 2000 by and among the Corporation
and the purchasers set forth therein, warrants to acquire up to 86,282 shares of
Common Stock issued pursuant to the Loan Agreement by and between the
Corporation and Imperial Bank dated May 2, 2000, warrants to acquire up to
36,058 shares of Common Stock issued pursuant to the Loan Agreement by and
between the Corporation and Imperial Bank dated January 18, 2001, warrants to
acquire up to 25,000 shares of Common Stock issued by the Board of Directors on
July 25, 2001, warrants to acquire up to 31,250 shares of Common Stock issued by
the Corporation on September 4, 2001, warrants to acquire shares of Common Stock
issued by the Corporation on September 12, 2001 pursuant to the Investment
Agreement by and among the Corporation, Spring Capital and Argosy Investment
Partners II, L.P., warrants to acquire up to 44,455 shares of Common Stock
issued by the Corporation to Comerica Bank on November 15, 2001, warrants to
acquire up to 20,000 shares of Common Stock issued to K3T Partners, LLC,
warrants to issue up to 250,000 shares of Common Stock issued to Appiant
Technologies, Inc., warrants to acquire up to 22,898 shares of Common Stock
issued by the Corporation to Russell Reynolds and warrants to acquire up to
960,556 shares of Common Stock issued (or issuable) pursuant to that certain
Series D-4 Convertible Preferred Stock and Warrant Purchase Agreement dated on
or about July 19, 2002 (such excluded warrants, the "Excluded Warrants"), and
shares of Common Stock, Series
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C Preferred Stock, Series D Preferred Stock or Series D-1 Preferred Stock
issuable upon exercise of the Excluded Warrants.
(C) "Additional Shares of Common Stock" shall mean all
shares of Common Stock issued (or, pursuant to Section 5(g)(iii) below, deemed
to be issued) by the Corporation after the Series D-4 Original Issue Date, other
than:
(I) shares of Common Stock issued or issuable upon
conversion of shares of Preferred Stock (subject to Adjustment);
(II) shares of Common Stock issued or issuable as a
dividend or distribution for which an adjustment to the Conversion Price occurs
pursuant to Section 5(g)(vii);
(III) the Reserved Option Shares;
(IV) shares of Company capital stock issued upon
exercise of the Excluded Warrants;
(V) shares of Common Stock issued or issuable upon
the conversion of the shares of Series C Preferred Stock, Series D Preferred
Stock and Series D-1 Preferred Stock underlying the Excluded Warrants; and
(VI) shares of Common Stock issued or issuable by
reason of a dividend, stock split, split-up or other distribution on shares of
Common Stock excluded from the definition of Additional Shares of Common Stock
by the foregoing clauses (I), (II), (III), (IV) (V) or this clause (VI).
(ii) No Adjustment of Conversion Price. No adjustment in the
number of shares of Common Stock into which the shares of Preferred Stock are
convertible shall be made, by adjustment in the applicable Conversion Price
thereof pursuant to Section 5(g)(iv) hereof, unless the consideration per share
(determined pursuant to Section 5(g)(v)) for an Additional Share of Common Stock
issued or deemed to be issued by the Corporation (a) is less than the applicable
Conversion Price in effect on the date of, and immediately prior to, the
issuance of such Additional Shares with respect to the Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock
or (b) is less than $1.650286766 per share, subject to Adjustment, immediately
prior to the issuance of such Additional Shares with respect to the Series D-2
Preferred Stock, the Series D-3 Preferred Stock and Series D-4 Preferred Stock.
(iii) Issuance of Options and Convertible Securities Deemed
Issuance of Additional Shares of Common Stock. If 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 entitled to receive any such Options or
Convertible Securities, then the maximum number of shares of Common Stock (as
set forth in the instrument relating thereto without regard to any provision
contained therein for a subsequent adjustment of such number) issuable upon the
exercise of such Options or, in the case of Convertible Securities and Options
therefor, the conversion or exchange of such Convertible Securities, shall be
deemed to be Additional Shares of Common Stock issued as of the time of such
issue or, in case such a record date shall have been fixed, as
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of the close of business on such record date, provided, however, that in any
such case in which Additional Shares of Common Stock are deemed to be issued:
(A) no further adjustment in the Conversion Price shall be
made upon the subsequent issue of Convertible Securities or shares of Common
Stock upon the exercise of such Options or conversion or exchange of such
Convertible Securities and, upon the expiration of any such Option or the
termination of any such right to convert or exchange such Convertible
Securities, the Conversion Price then in effect hereunder shall forthwith be
increased to the Conversion Price which would have been in effect at the time of
such expiration or termination had such Option or Convertible Securities, to the
extent outstanding immediately prior to such expiration or termination, never
been issued, and the Common Stock issuable thereunder shall no longer be deemed
to be outstanding; and
(B) if such Options or Convertible Securities by their
terms provide, with the passage of time or otherwise, for any increase in the
consideration payable to the Corporation, or decrease in the number of shares of
Common Stock issuable, upon the exercise, conversion or exchange thereof, the
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 readjustment pursuant to this
clause (B) 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 Stock between the original adjustment date and such
readjustment date.
(iv) Adjustment of Conversion Price Upon Issuance of Additional
Shares of Common Stock. In the event the Corporation shall issue Additional
Shares of Common Stock (including Additional Shares of Common Stock deemed to be
issued pursuant to Section 5(g)(iii) hereof), without consideration or for a
consideration per share that (a) is less than the applicable Conversion Price in
effect on the date of, and immediately prior to, the issuance of such Additional
Shares with respect to the Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock and Series D Preferred Stock or (b) is less than
$1.650286766 per share, subject to Adjustment, immediately prior to the issuance
of such Additional Shares with respect to the Series D-2 Preferred Stock, Series
D-3 Preferred Stock and Series D-4 Preferred Stock, then and in such event, the
applicable Conversion Price shall be reduced, concurrently with such issuance,
to a price (calculated to the nearest hundredth of a cent) computed, with
respect to Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock and Series D Preferred Stock, using the formula set forth below
in item (A) and, with respect to Series D-2 Preferred Stock, Series D-3
Preferred Stock and Series D-4 Preferred Stock, in accordance with item (B)
below.
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(A) The formula for reduction of the applicable Conversion
Price of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock and Series D Preferred Stock pursuant to this Section 5(g)(iv) is as
follows:
Adjusted Conversion Price = (P1xQ1) + (P2xQ2)
-----------------
Q1 + Q2
Where: Q1 = the number of outstanding shares of Common Stock deemed outstanding
immediately prior to the issuance of the Additional Shares of
Common Stock;
Q2 = the number of Additional Shares of Common Stock issued or deemed to
be issued by the Corporation without consideration or for a
consideration per share that is less than the Conversion Price then
in effect;
P1 = the Conversion Price in effect immediately prior to the issuance of
the Additional Shares of Common Stock; and
P2 = the Net Consideration Per Share (as hereinafter defined) received
by the Corporation as consideration for the issuance of such
Additional Shares of Common Stock.
For the purpose of this Section 5(g)(iv), (I) all shares of Common Stock
issuable upon conversion of shares of Preferred Stock outstanding immediately
prior to such issue shall be deemed to be outstanding, and (II) immediately
after any Additional Shares of Common Stock are deemed issued pursuant to
Section 5(g)(iii), such Additional Shares of Common Stock shall be deemed to be
outstanding.
(B) Each reduction to the Conversion Price of Series D-2
Preferred Stock, Series D-3 Preferred Stock and Series D-4 Preferred Stock
pursuant to this Section 5(g)(iv) shall be proportionate (i.e., equal to the
same percentage reduction) to each reduction to the Conversion Price of the
Series D Preferred Stock pursuant to this Section 5(g)(iv).
(C) Notwithstanding the foregoing provisions of this
Section 5(g)(iv), there shall be no adjustment to the Conversion Price in
connection with any particular issuance of Additional Shares of Common Stock in
the event that the holders of at least sixty percent (60%) of the Preferred
Stock (acting on an as converted basis as a single class) agree in writing that
such particular issuance of Additional Shares of Common Stock shall not trigger
an adjustment to the Conversion Price.
(v) Determination of Consideration. For purposes of this
Section 5(g), the "Net Consideration Per Share" shall mean the per share
consideration received by the Corporation for the issue of any Additional Shares
of Common Stock and shall be computed as follows:
(A) Cash and Property: Such consideration shall:
(I) insofar as it consists of cash, be computed at
the aggregate of cash received by the Corporation, excluding amounts paid or
payable for accrued interest or accrued dividends;
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(II) insofar as it consists of property other than
cash, be computed at the fair market value thereof at the time of such issue, as
determined in good faith by the Board of Directors; and
(III) in the event Additional Shares of Common Stock
are issued together with other shares or securities or other assets of the
Corporation for consideration which covers both, be the proportion of such
consideration so received, computed as provided in clauses (I) and (II) above,
as determined in good faith by the Board of Directors (including at least two
(2) Preferred Stock Directors.
(B) Options and Convertible Securities. The Net
Consideration Per Share received by the Corporation for Additional Shares of
Common Stock deemed to have been issued pursuant to Section 5(g)(iii), relating
to Options and Convertible Securities, shall be determined by dividing:
(I) the total amount, if any, received or receivable
by the Corporation as consideration for the issue of such Options or Convertible
Securities, plus the minimum aggregate amount of additional consideration (as
set forth in the instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such consideration) payable to
the Corporation upon the exercise of such Options or the conversion or exchange
of such Convertible Securities, or in the case of Options for Convertible
Securities, the exercise of such Options for Convertible Securities and the
conversion or exchange of such Convertible Securities, by
(II) the maximum number of shares of Common Stock (as
set forth in the instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such number) issuable upon the
exercise of such Options or the conversion or exchange of such Convertible
Securities.
(vi) Adjustment for Combinations or Consolidation of Common
Stock. If, at any time after the applicable Original Issue Date the number of
shares of Common Stock outstanding are decreased by a combination of the
outstanding shares of Common Stock, then following the record date fixed for
such combination (or the date of such combination, if no record date is fixed),
the applicable Conversion Price shall be increased so that the number of shares
of Common Stock issuable on conversion of each share of Preferred Stock shall be
decreased in proportion to such decrease in outstanding shares of Common Stock.
(vii) Adjustment for Stock Dividends, Splits, Etc. If the
Corporation shall at any time after the applicable Original Issue Date fix a
record date for the subdivision, split-up or stock dividend of shares of Common
Stock, then, following the record date fixed for the determination of holders of
shares of Common Stock entitled to receive such subdivision, split-up or
dividend (or the date of such subdivision, split-up or dividend, if no record
date is fixed), the applicable Conversion Price shall be appropriately decreased
so that the number of shares of Common Stock issuable on conversion of each
share of Preferred Stock shall be increased in proportion to such increase in
outstanding shares; provided, however, that the Conversion Price shall not be
decreased at such time if the amount of such reduction would be an amount less
than $.01, but any such amount shall be carried forward and reduction with
respect thereto made at the time of and together with any subsequent reduction
which, together with such amount and any other amount or amounts so carried
forward, shall aggregate $.01 or more.
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(viii) Adjustment for Merger or Reorganization, Etc. In case of
any consolidation, recapitalization or merger of the Corporation with or into
another corporation or the sale of all or substantially all of the assets of the
Corporation to another corporation (other than a subdivision or combination
provided for elsewhere in this Section 5 and other than a consolidation, merger
or sale which is treated as a Liquidation pursuant to Section 3), each share of
Preferred Stock shall thereafter be convertible into the kind and amount of
shares of stock or other securities or property to which a holder of the number
of shares of Common Stock of the Corporation deliverable upon conversion of such
shares of Preferred Stock would have been entitled upon such consolidation,
merger or sale; and, in such case, appropriate adjustment (as determined in good
faith by the Board of Directors, including at least two (2) Preferred Stock
Directors) shall be made in the application of the provisions in this Section 5
set forth with respect to the rights and interest thereafter of the holders of
the shares of the Preferred Stock, to the end that the provisions set forth in
this Section 5 (including provisions with respect to changes in and other
adjustments of the Conversion Price) shall thereafter be applicable, as nearly
as reasonably may be, in relation to any shares of stock or other property
thereafter deliverable upon the conversion of the shares of Preferred Stock.
(ix) Adjustments for Other Dividends and Distributions. If at
any time or from time to time after the applicable Original Issue Date the
Corporation pays a dividend or makes another distribution to the holders of the
Common Stock payable in securities of the Corporation other than shares of
Common Stock, then in each such event provision shall be made so that the
holders of the Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series D-2 Preferred Stock, Series D-3 Preferred Stock and
Series D-4 Preferred Stock shall receive upon conversion thereof, in addition to
the number of shares of Common Stock receivable upon conversion thereof, the
amount of securities of the Corporation which they would have received had their
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock,
Series D-2 Preferred Stock, Series D-3 Preferred Stock and Series D-4 Preferred
Stock been converted into Common Stock on the date of such event (or such record
date, as applicable) and had they thereafter, during the period from the date of
such event (or such record date, as applicable) to and including the conversion
date, retained such securities receivable by them as aforesaid during such
period, subject to all other adjustments called for during such period with
respect to the rights of the holders of the Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock, Series D-2 Preferred Stock, Series
D-3 Preferred Stock and Series D-4 Preferred Stock or with respect to such other
securities by their terms.
(h) No Impairment. The Corporation will not, by amendment of its
Charter or through any reorganization, transfer of assets, consolidation,
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 5
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 shares of Preferred Stock
against impairment.
(i) Notices. Any notice required by the provisions of this Section 5
to be given to the holders of shares of the Preferred Stock shall be deemed
given upon the earlier of actual receipt or deposit in the United States mail,
by certified or registered mail, return receipt requested, postage prepaid,
addressed to each holder of record at the address of such holder appearing on
the books of the Corporation.
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(j) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to this Section 5,
the Corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of
shares of Preferred Stock a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Corporation shall, upon the written request at any
time of any holder of Preferred Stock, furnish or cause to be furnished to such
holder a similar certificate setting forth (i) such adjustments and
readjustments, (ii) the Conversion Price then in effect, and (iii) the number of
shares of Common Stock and the amount, if any, of other property which then
would be received upon the conversion of the shares of Preferred Stock.
(k) Notice of Record Date. In the event:
(i) that the Corporation takes 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 (other than a cash dividend) or any other
distribution, any right to subscribe for, purchase or otherwise acquire any
shares of stock of any class or any other securities or property, or to receive
any other right;
(ii) that the Corporation subdivides or combines its outstanding
shares of Common Stock;
(iii) of any reclassification of the Common Stock of the
Corporation (other than a subdivision or combination of its outstanding shares
of Common Stock or a stock dividend or stock distribution thereon), or of any
Sales Transaction; or
(iv) of the involuntary or voluntary Liquidation of the
Corporation;
then the Corporation shall cause to be filed at its principal office or at the
office of the transfer agent of the Preferred Stock, and shall cause to be
mailed to the holders of the Preferred Stock at their last addresses as shown on
the records of the Corporation or such transfer agent, at least ten (10) days
prior to the record date specified in (A) below or twenty (20) days before the
date specified in (B) below, a notice stating:
(A) the record date of such dividend, distribution,
subdivision or combination, or, if a record is not to be taken, the date as of
which the holders of Common Stock of record to be entitled to such dividend,
distribution, subdivision or combination are to be determined, or
(B) the date on which such reclassification, Sale
Transaction or Liquidation is expected to become effective, and the date as of
which it is expected that holders of Common Stock of record shall be entitled to
exchange their shares of Common Stock for securities or other property
deliverable upon such reclassification, Sale Transaction or Liquidation.
6. Redemption.
(a) Mandatory Redemption of Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock and Series D-4 Preferred Stock.
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(i) Subject to the terms and conditions of this subsection, to
the extent that any outstanding shares of Series B Preferred Stock have not been
redeemed or converted into Common Stock prior to the fifth (5/th/) anniversary
of the Series D Original Issue Date, the Corporation shall, upon receiving at
any time thereafter one or more written requests (each a "Redemption Notice")
for the redemption of all or part of the outstanding Series B Preferred Stock
under this Section 6 (but not less than one-third (1/3) of the total number of
then-outstanding shares of Series B Preferred Stock ) signed by the holders of
at least sixty-six and two thirds percent (66-2/3%) of the then outstanding
shares of Series B Preferred Stock, redeem on the date or dates set forth below
(each a "Redemption Date") the number of shares of Series B Preferred Stock (the
"Series B Redemption Shares") specified in such Redemption Notice from any
source of funds legally available therefor at the Series B Redemption Price (as
defined in Section 6(b)(i)), until all outstanding Series B Redemption Shares
have been redeemed (or converted to Common Stock as provided in Section 5).
(ii) Subject to the terms and conditions of this subsection, to
the extent that any outstanding shares of Series C Preferred Stock have not been
redeemed or converted into Common Stock prior to the fifth (5/th/) anniversary
of the Series D Original Issue Date, the Corporation shall, upon receiving at
any time thereafter one or more Redemption Notices for the redemption of all or
part of the outstanding Series C Preferred Stock under this Section 6 (but not
less than one-third (1/3) of the total number of then-outstanding shares of
Series C Preferred Stock ) signed by the holders of at least sixty-six and two
thirds percent (66-2/3%) of the then outstanding shares of Series C Preferred
Stock (the date of receipt of such notice being a Redemption Notice Date),
redeem on the Redemption Date the number of shares of Series C Preferred Stock
(the "Series C Redemption Shares") specified in such Redemption Notice from any
source of funds legally available therefor at the Series C Redemption Price (as
defined in Section 6(b)(ii)), until all outstanding Series C Redemption Shares
have been redeemed (or converted to Common Stock as provided in Section 5).
(iii) Subject to the terms and conditions of this subsection, to
the extent that any outstanding shares of Series D Preferred Stock have not been
redeemed or converted into Common Stock prior to the fifth (5/th/) anniversary
of the Series D Original Issue Date, the Corporation shall, upon receiving at
any time thereafter one or more Redemption Notices for the redemption of all or
part of the outstanding Series D Preferred Stock under this Section 6 (but not
less than one-third (1/3) of the total number of then-outstanding shares of
Series D Preferred Stock ) signed by the holders of at least sixty percent (60%)
of the then outstanding shares of Series D Preferred Stock (the date of receipt
of such notice being a Redemption Notice Date), redeem on the Redemption Date
the number of shares of Series D Preferred Stock (the "Series D Redemption
Shares") and Series D-1 Preferred Stock (the "Series D-1 Redemption Shares")
specified in such Redemption Notice from any source of funds legally available
therefor at the Series D Redemption Price (as defined in Section 6(b)(iii)) or
the Series D-1 Redemption Price (as defined in Section 6(b)(iv)), as applicable,
until all outstanding Series D Redemption Shares and Series D-1 Redemption
Shares have been redeemed (or converted to Common Stock as provided in Section
5).
(iv) Subject to the terms and conditions of this subsection, to
the extent that any outstanding shares of Series D-4 Preferred Stock have not
been redeemed or converted into Common Stock prior to the fifth (5/th/)
anniversary of the Series D Original Issue Date, the Corporation shall, upon
receiving at any time thereafter one or more Redemption Notices for the
redemption of all or part of the outstanding Series D-4 Preferred Stock under
this Section 6 (but not less than one-third (1/3) of the total number of
then-outstanding shares of Series D-4 Preferred Stock ) signed by the holders of
at least sixty percent (60%) of the then outstanding shares of Series D-4
Preferred Stock (the date of receipt of such
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notice being a Redemption Notice Date), redeem on the Redemption Date the number
of shares of Series D-4 Preferred Stock (the "Series D-4 Redemption Shares")
specified in such Redemption Notice from any source of funds legally available
therefor at the Series D-4 Redemption Price (as defined in Section 6(b)(v)),
until all outstanding Series D-4 Redemption Shares have been redeemed (or
converted to Common Stock as provided in Section 5).
(v) Subject to the terms and conditions of this subsection, to
the extent that any outstanding shares of Series D-4 Preferred Stock have not
been redeemed or converted into Common Stock immediately prior to the
Corporation's consummation of its initial underwritten public offering (the
"IPO"), the Corporation shall, upon receiving at any time prior to the IPO one
or more Redemption Notices for the redemption of all or part of the outstanding
Series D-4 Preferred Stock under this Section 6 signed by any holder(s) of the
then outstanding shares of Series D-4 Preferred Stock redeem, immediately prior
to the consummation of the IPO (the "IPO Redemption Date"), the number of Series
D-4 Redemption Share specified in such Redemption Notice from any source of
funds legally available therefor at the Series D-4 Redemption Price (as defined
in Section 6(b)(v)).
(b) Redemption Price.
(i) The redemption price (the "Series B Redemption Price") for
each share of Series B Preferred Stock shall be the greater of (i) one hundred
ten percent (110%) of the Series B Original Issue Price plus all accrued and
unpaid dividends on such shares, including the Series B Cumulative Dividends,
through the Series B Redemption Date, (ii) the Corporation's book value (which
shall equal the Corporation's total assets minus its total liabilities, as
determined in accordance with generally accepted accounting principles, applied
in a manner consistent with the Corporation's annual financial statements) as of
the end of the fiscal quarter immediately preceding the Series B Redemption
Notice Date, divided by the number of shares of outstanding Common Stock on a
fully diluted basis (including all options and warrants exercisable at such
time, and all securities convertible at such time into shares of Common Stock)
or (iii) the fair market value of the Series B Preferred Stock as established by
a third party appraiser selected jointly by the Corporation and the holders of
at least fifty-one percent (51%) of the then outstanding Series B Preferred
Stock (the expenses of such third party appraiser to be shared equally by the
Corporation and the holders of Series B Preferred Stock).
(ii) The redemption price (the "Series C Redemption Price") for
each share of Series C Preferred Stock shall be the greater of (i) one hundred
ten percent (110%) of the Series C Original Issue Price plus all accrued and
unpaid dividends on such shares, including the Series C Cumulative Dividends,
through the Series C Redemption Date, (ii) the Corporation's book value (which
shall equal the Corporation's total assets minus its total liabilities, as
determined in accordance with generally accepted accounting principles, applied
in a manner consistent with the Corporation's annual financial statements) as of
the end of the fiscal quarter immediately preceding the Series C Redemption
Notice Date, divided by the number of shares of outstanding Common Stock on a
fully diluted basis (including all options and warrants exercisable at such
time, and all securities convertible at such time into shares of Common Stock)
or (iii) the fair market value of the Series C Preferred Stock as established by
a third party appraiser selected jointly by the Corporation and the holders of
at least fifty-one percent (51%) of the then outstanding Series C Preferred
Stock (the expenses of such third party appraiser to be shared equally by the
Corporation and the holders of Series C Preferred Stock).
(iii) The redemption price (the "Series D Redemption Price") for
each share of Series D Preferred Stock shall be the fair market value of the
Series D Preferred Stock as established
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by a third party appraiser selected jointly by the Corporation and the holders
of at least sixty percent (60%) of the then outstanding Series D Preferred
Stock, voting as a separate class apart from the holders of the Series D-1
Preferred Stock (the expenses of such third party appraiser to be shared equally
by the Corporation and the holders of Series D Preferred Stock, as a separate
class apart from the holders of the Series D-1 Preferred Stock).
(iv) The redemption price (the "Series D-1 Redemption Price")
for each share of Series D-1 Preferred Stock shall be the fair market value of
the Series D-1 Preferred Stock as established by a third party appraiser
selected jointly by the Corporation and the holders of at least sixty percent
(60%) of the then outstanding Series D-1 Preferred Stock, voting as a separate
class apart from the holders of the Series D Preferred Stock (the expenses of
such third party appraiser to be shared equally by the Corporation and the
holders of Series D-1 Preferred Stock).
(v) The redemption price (the "Series D-4 Redemption Price")
for each share of Series D-4 Preferred Stock shall be determined as follows: (i)
in the event that the redemption is pursuant to Section 6(a)(iv) above, then the
Series D-4 Redemption Price shall be one hundred percent (100%) of the Series
D-4 Original Issue Price plus all accrued and unpaid dividends on such shares,
including the Series D-4 Cumulative Dividends; through the Series D-4 Redemption
Date, (ii) in the event that the redemption is pursuant to Section 6(a)(v) above
and the IPO that triggers the redemption is consummated on or before December
31, 2002, then the Series D-4 Redemption Price shall be one hundred ten percent
(110%) of the Series D-4 Original Issue Price; (iii) in the event that the
redemption is pursuant to Section 6(a)(v) above and the IPO that triggers the
redemption is consummated on or before December 31, 2003, then the Series D-4
Redemption Price shall be one hundred twenty-five percent (125%) of the Series
D-4 Original Issue Price; and (iv) in the event that the redemption is pursuant
to Section 6(a)(v) above and the IPO that triggers the redemption is consummated
after December 31, 2003, then the Series D-4 Redemption Price shall be one
hundred thirty five percent (135%) of the Series D-4 Original Issue Price. For
purposes hereof, the portion of the Series D-4 Redemption Price payable pursuant
to items (ii), (iii) or (iv) above which is in excess of one hundred percent
(100%) of the Series D-4 Original Issue Price is referred to herein as the
"Series D-4 IPO Redemption Return Amount."
(c) Redemption Payment. Except as set forth in Section 6(i) below, in
the event of any redemption in accordance with Section 6(a), the Corporation
shall redeem, as applicable, the Series B Redemption Shares, the Series C
Redemption Shares, the Series D Redemption Shares, the Series D-1 Redemption
Shares or the Series D-4 Redemption Shares (sometimes referred to herein as the
"Redemption Shares") and make payment therefor in accordance with this Section
6(c). All of the Redemption Shares shall be redeemed by delivery to the holders
of the Redemption Shares:
(i) to the extent that the Corporation has funds legally
available for redemption, cash (by cashier's or certified check or by wire
transfer of immediately available funds to an account designated by the holders
of the Redemption Shares) in an amount equal to the Series B Redemption Price,
the Series C Redemption Price, the Series D Redemption Price, the Series D-1
Redemption Price or the Series D-4 Redemption Price, as applicable, multiplied
by the aggregate number of Redemption Shares specified in the Redemption Notice,
on or prior to the sixtieth (60/th/) day following the Redemption Notice Date
applicable to such Redemption Notice; and
(ii) to the extent that the funds legally available for
redemption are insufficient to redeem all of the Redemption Shares, one or more
promissory notes (each a "Redemption
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Note") payable to each holder of Series B Preferred Stock, Series C Preferred
Stock, Series D Preferred Stock and Series D-4 Preferred Stock electing to
redeem pursuant to Section 6(a) (excluding any redemption of Series D-4
Preferred Stock pursuant to Section 6(a)(v)), in form and substance reasonably
satisfactory to each such holder, which shall include the following terms:
(A) the principal amount (the "Principal") of each
Redemption Note shall be equivalent to the Series B, Series C, Series D, Series
D-1 or Series D-4 Redemption Price, as applicable, multiplied by the aggregate
number of Redemption Shares specified in the Redemption Notice;
(B) thirty-three and one-third percent (33 1/3%) of the
Principal shall be due and payable on or before the first (1/st/) anniversary of
the applicable Redemption Notice Date, thirty-three and one-third percent (33
1/3%) of the Principal shall be due and payable on or before the second (2nd)
anniversary of the applicable Redemption Notice Date, and thirty-three and
one-third percent (33 1/3%) of the Principal shall be due and payable on or
before the third (3/rd/) anniversary of the applicable Redemption Notice Date;
(C) interest shall be payable at the then-current prime
rate published by Citibank and shall be due and payable quarterly in arrears not
later than the first day of each calendar quarter for the preceding quarter;
(D) each Redemption Note shall be pre-payable at the
Corporation's option at any time without penalty or premium;
(E) the following events shall be an "Event of Default":
(I) the Corporation fails to pay timely any of the Principal due or any accrued
interest due on the date the same becomes due and payable, (II) the Corporation
files any petition or action for relief under any bankruptcy, reorganization,
insolvency or moratorium law or any other law for the relief of, or relating to,
debtors, now or hereafter in effect, or makes any assignment for the benefit of
creditors or takes any corporate action in furtherance of any of the foregoing;
or (III) an involuntary petition is filed against the Corporation (unless such
petition is dismissed or discharged within sixty (60) days) under any bankruptcy
statute now or hereafter in effect, or a custodian, receiver, trustee, or
assignee for the benefit of creditors (or other similar official) is appointed
to take possession, custody or control of any property of the Corporation; and
(F) Upon the occurrence of an Event of Default pursuant to
Section 6(c)(ii)(E)(I) above, all unpaid Principal, accrued interest and other
amounts owing under the Redemption Note shall, at the option of at least
sixty-six and two-thirds percent (66 2/3%) of the holders of Series B Preferred
Stock, Series C Preferred Stock, Series D Preferred Stock or Series D-4
Preferred Stock who are parties to the Redemption Note, and, in the case of an
Event of Default pursuant to Sections 6(c)(ii)(E)(II) or (III) above,
automatically, be immediately due, payable and collectible by such holders
pursuant to applicable law.
(d) Redemption Funds.
(i) In the event that the funds legally available for redemption
are insufficient to redeem all of the Redemption Shares, the Corporation shall
redeem the Redemption Shares in the following order of priority: (A) first, in
the event the redemption of the Series D-4 Redemption Shares is
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pursuant to Section 6(a)(v) above, the Series D-4 Redemption Shares and the
applicable Series D-4 IPO Redemption Return Amount, (B) second, (I) such number
of shares of Series D Preferred Stock as is equal to (x) a fraction, the
numerator of which is the Series D Original Purchase Price and the denominator
of which is the Series D Redemption Price multiplied by (y) the number of Series
D Redemption Shares, (II) such number of shares of Series D-1 Preferred Stock as
is equal to (x) a fraction, the numerator of which is the Series D Original
Purchase Price and the denominator of which is the Series D-1 Redemption Price
multiplied by (y) the number of Series D-1 Redemption Shares and (III) in the
event the redemption of the Series D-4 Redemption Shares is pursuant to Section
6(a)(iv) above, such number of shares of Series D-4 Preferred Stock as is equal
to (x) a fraction, the numerator of which is the Series D-4 Original Purchase
Price and the denominator of which is the Series D-4 Redemption Price multiplied
by (y) the number of Series D-4 Redemption Shares; (B) third, such number of
shares of Series C Preferred Stock as is equal to (x) a fraction, the numerator
of which is the Series C Original Purchase Price and the denominator of which is
the Series C Redemption Price multiplied by (y) the number of Series C
Redemption Shares; (C) fourth, such number of shares of Series B Preferred Stock
as is equal to (x) a fraction, the numerator of which is the Series B Original
Purchase Price and the denominator of which is the Series B Redemption Price
multiplied by (y) the number of Series B Redemption Shares; (D) fifth, (I) such
number of shares of Series D Preferred Stock as is equal to (x) a fraction, the
numerator of which is the amount of all accrued and unpaid dividends, including
Series D Cumulative Dividends with respect to one share of Series D Preferred
Stock and the denominator of which is the Series D Redemption Price multiplied
by (y) the number of Series D Redemption Shares, (II) such number of shares of
Series D-1 Preferred Stock as is equal to (x) a fraction, the numerator of which
is the amount of all accrued and unpaid dividends, including Series D Cumulative
Dividends, with respect to one share of Series D-1 Preferred Stock, and the
denominator of which is the Series D-1 Redemption Price, multiplied by (y) the
number of Series D-1 Redemption Shares and (III) in the event the redemption of
the Series D-4 Redemption Shares is pursuant to Section 6(a)(iv) above, such
number of shares of Series D-4 Preferred Stock as is equal to (x) a fraction,
the numerator of which is the amount of all accrued and unpaid dividends,
including Series D-4 Cumulative Dividends, with respect to one share of Series
D-4 Preferred Stock, and the denominator of which is the Series D-4 Redemption
Price, multiplied by (y) the number of Series D-4 Redemption Shares; (E) sixth,
such number of shares of Series C Preferred Stock as is equal to (x) a fraction,
the numerator of which is the amount of all accrued and unpaid dividends,
including Series C Cumulative Dividends with respect to one share of Series C
Preferred Stock and the denominator of which is the Series C Redemption Price
multiplied by (y) the number of Series C Redemption Shares; and (F) seventh,
such number of shares of Series B Preferred Stock as is equal to (x) a fraction,
the numerator of which is the amount of all accrued and unpaid dividends,
including Series B Cumulative Dividends with respect to one share of Series B
Preferred Stock and the denominator of which is the Series B Redemption Price
multiplied by (y) the number of Series B Redemption Shares. To the extent that
the Corporation redeems Redemption Shares by delivery of a Redemption Note, the
priority of payment provisions in the preceding sentence shall apply mutatis
mutandis to the priority of payment of such Redemption Note and such Redemption
Note shall contain such terms as are necessary to effect the same.
(ii) As among the holders of Series B Preferred Stock, the
holders of Series C Preferred Stock, the holders of Series D Preferred Stock and
the holders of the Series D-4 Preferred Stock, the shares to be redeemed shall
be selected pro rata such that there shall be redeemed from each holder
surrendering shares for redemption in whole shares, as nearly as practicable to
the nearest share, that number of shares equal to the product of the number of
shares of Series B Preferred Stock, Series C Preferred or, as the case may be,
Series D Preferred Stock to be redeemed multiplied by a fraction, the numerator
of which is the number of shares of Series B Preferred Stock, Series C Preferred
Stock or, as
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the case may be, Series D Preferred Stock held by such holder divided by the
total number of shares of Series B Preferred Stock, Series C Preferred Stock or,
as the case may be, Series D Preferred Stock surrendered for redemption.
(iii) Any holder of shares of Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock or Series D-4 Preferred Stock
may rescind the redemption with respect to any such shares at any time after the
applicable Redemption Notice Date up until any Redemption Closing Date (as
defined in Section 6(e)).
(e) Redemption Notice. At least twenty (20) but no more than sixty
(60) days prior to each Redemption Date (the "Redemption Closing Date"), written
notice shall be mailed by the Corporation, postage prepaid, to each holder of
record (at the close of business on the business day next preceding the day on
which notice is given) of the Redemption Shares, at the address last shown on
the records of the Corporation for such holder or given by the holder to the
Corporation for the purpose of notice or, if no such address appears or is
given, at the place where the principal executive office of the Corporation is
located, notifying such holder of the redemption to be effected, specifying the
subsection hereof under which such redemption is being effected, the Redemption
Date or Dates, the applicable Redemption Price, the number of such holder's
shares of Series B Preferred Stock, Series C Preferred Stock, Series D Preferred
Stock or Series D-4 Preferred Stock to be redeemed, the place at which payment
may be obtained and the date on which such holder's conversion rights (as set
forth in Section 5) as to such shares terminate (which date shall in no event be
earlier than three (3) days' prior to each such Redemption Date) and calling
upon such holder to surrender to the Corporation, in the manner and at the place
designated, the certificate or certificates representing the shares to be
redeemed (the "Redemption Notice").
(f) Surrender of Certificates. On or before each designated
Series B, Series C, Series D or Series D-4 Redemption Date, each holder of
Redemption Shares shall (unless such holder has previously exercised his right
to convert such shares into Common Stock as provided in Section 5), surrender
the certificate(s) representing such Redemption Shares to the Corporation, in
the manner and at the place designated in the Redemption Notice, and thereupon
the Series B, Series C, Series D, Series D-1 or Series D-4 Redemption Price for
such shares shall be payable to the order of the person whose name appears on
such certificate(s), and each surrendered certificate shall be canceled and
retired. If less than all of the shares represented by such certificate are
redeemed, then the Corporation shall promptly issue a new certificate
representing the unredeemed shares.
(g) Effect of Redemption. If a Redemption Notice shall have been
duly provided in accordance with Section 6(e), and if on the Redemption Date or
Dates the Series B, Series C, Series D, Series D-1 or Series D-4 Redemption
Price as the case may be, is either paid or made available for payment, then
notwithstanding that the certificates evidencing any of the shares of Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series D-1
Preferred Stock or Series D-4 Preferred Stock so called for redemption shall not
have been surrendered, all dividends with respect to such shares shall cease to
accrue as of each such Redemption Date, such shares shall not thereafter be
transferred on the Corporation's books and all rights of the holders of such
shares with respect to such shares shall terminate as of each such Redemption
Date, except only the right of the holders to receive the Series B, Series C,
Series D, Series D-1 or Series D-4 Redemption Price without interest upon
surrender of their certificate(s) therefor.
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(h) Provisions Upon Failure to Redeem. If any shares of Series D
Preferred Stock remain outstanding and the Corporation fails to promptly redeem
shares of Series D Preferred Stock as required by this Section 6, then, until
such time as the failure to redeem is cured (or unless waived by the holders of
at least sixty-six and two-thirds percent (66 2/3%) of the Series D Preferred
Stock), additional dividends shall accrue on the shares of Series D Preferred
Stock at the rate of ten percent (10%) per annum on the Series D Original
Purchase Price, which dividends shall be payable on a quarterly basis regardless
of whether or not declared by the Board of Directors, Holders of Series D
Preferred Stock will have the right to convert any such accrued and unpaid
dividends into shares of Common Stock at the Conversion Price.
7. Preemptive Rights. Pursuant to Section 102(b)(3) of the DGCL, the
holders of the Preferred Stock are hereby expressly granted the right to enter
into a separate agreement with the Corporation regarding preemptive rights to
subscribe to any additional issue of stock or other security convertible into
such stock, subject to the terms and conditions of such separate agreement.
ARTICLE VII
Board of Directors
In furtherance of and not in limitation of powers conferred by statute,
it is further provided:
1. The number of directors constituting the Board of Directors of
the Corporation shall be fixed by or in the manner provided herein. The election
of directors need not be by written ballot.
2. The Board of Directors is expressly authorized to adopt, amend or
repeal the Bylaws of the Corporation, subject to the right of the stockholders
entitled to vote with respect thereto.
3. In furtherance of, and not in limitation of the powers conferred
by statute, the Board of Directors shall have the power to adopt, and to alter,
amend or repeal any provision of this Charter, subject to the right of the
stockholders entitled to vote with respect thereto.
ARTICLE VIII
Limitation on Liability
No director of the Corporation shall be personally liable to the
Corporation or to any stockholder of the Corporation for monetary damages for
breach of fiduciary duty as a director, provided, however, that this provision
shall not limit the liability of a director (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involved intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the DGCL, or (iv) for any
transaction from which the director derived an improper personal benefit.
If the DGCL or any other statute of the State of Delaware hereafter is
amended to authorize the further elimination or limitation of the liability of
directors of the corporation, then the liability of a director of the
corporation shall be limited to the fullest extent permitted by the statutes of
the State of Delaware, as so amended, and such elimination or limitation of
liability shall be in addition to, and not in
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lieu of, the limitation on the liability of a director provided by the foregoing
provisions of this Sixth Article.
Any repeal of or amendment to this Article VIII shall be prospective
only and shall not adversely affect any limitation on the liability of a
director of the Corporation existing at the time of such repeal or amendment.
ARTICLE IX
Indemnification
To the extent permitted by law, the Corporation shall fully indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding (whether civil,
criminal, administrative or investigative) by reason of the fact that such
person is or was a director or officer of the Corporation, or is or was serving
at the request of the Corporation as a director or officer of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding.
To the extent permitted by law, the Corporation may fully indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding (whether civil,
criminal, administrative or investigative) by reason of the fact that such
person is or was an employee or agent of the Corporation, or is or was serving
at the request of the Corporation as an employee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding.
The Corporation may advance expenses (including attorneys' fees)
incurred by a director or officer in defending any action, suit, or proceeding
in advance of the final disposition of such action, suit or proceeding upon the
receipt of an undertaking by or on behalf of the director or officer to repay
such amount if it shall ultimately be determined that such director or officer
is not entitled to indemnification. The Corporation may advance expenses
(including attorneys' fees) incurred by an employee or agent in defending any
action, suit, or proceeding in advance of the final disposition of such action,
suit or proceeding upon such terms and conditions, if any, as the Board of
Directors deems appropriate.
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ARTICLE X
Miscellaneous
1. The books of the Corporation may (subject to statutory requirements)
be kept outside of the State of Delaware as may be designated by the Board of
Directors, or in the Bylaws of the Corporation.
2. This Corporation shall not be governed by Section 203 of the DGCL.
[SIGNATURE NEXT PAGE]
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IN WITNESS WHEREOF, the Corporation has caused its corporate seal to be
affixed hereto and this Eighth Amended and Restated Certificate of Incorporation
to be signed by its Chief Executive Officer this 18/th/ day of July, 2002.
INPHONIC, INC.
By: /s/ David Steinberg
---------------------------
Name: David Steinberg
Title: Chief Executive Officer