Exhibit 3.1
FIFTH AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
APPLIED SCIENCE FICTION, INC.
ARTICLE I
The name of this Corporation is Applied Science Fiction, Inc. (the
"Corporation").
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ARTICLE II
The address of the registered office of the Corporation in the State of
Delaware is The Corporation Trust Center, 1209 Orange Street, City of
Wilmington, County of New Castle, Delaware, and the name of the registered agent
of the corporation in the State of Delaware at such address is The Corporation
Trust Company.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
ARTICLE IV
4.1 Prior to a Qualified IPO (as defined in Section 4(b) of Article V
below), the Corporation's capital stock shall be comprised as set forth in this
Section 4.1 and Article V as follows:
A. Classes of Stock. The Corporation is authorized to issue two classes
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of capital stock to be designated, respectively, "Common Stock" and "Preferred
Stock." The total number of shares of capital stock authorized to be issued is
Fifty Million (50,000,000) shares. Thirty-Five Million (35,000,000) shares shall
be Common Stock, par value $0.001 per share, and Fifteen Million (15,000,000)
shares shall be Preferred Stock, par value $0.001 per share. Concurrently with
the filing of this Fourth Restated Certificate of Incorporation of the
Corporation with the Secretary of State of the State of Delaware, each share of
Common Stock of the Corporation issued and outstanding on the date of such
filing shall be divided into three (3) shares of Common Stock of the Corporation
authorized hereunder, without any further action on the part of the Corporation
or the holder thereof.
B. Rights, Preferences and Restrictions of Preferred Stock. The
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Preferred Stock authorized under this Fourth Restated Certificate of
Incorporation of the Corporation (this "Restated Certificate") may be issued
from time to time in one or more series. The first series shall consist of
101,662 shares and is designated "Series B Preferred Stock." The second series
shall consist of 1,471,500 shares and is designated "Series C Preferred Stock."
The third series
shall consist of 4,080,000 shares and is designated "Series D Preferred Stock."
Shares of the Corporation's authorized but undesignated Preferred Stock may be
issued from time to time in one or more series. The Board of Directors of the
Corporation is hereby authorized, subject to the provisions of Section 5 of
Article V hereof, by filing a certificate pursuant to the Delaware General
Corporation Law, to fix or alter from time to time the designation, powers,
preferences and rights of the shares of each such series and the qualifications,
limitations and restrictions thereof, including without limitation, the dividend
rights, dividend rate, conversion rights, voting rights, rights and terms of
redemption (including sinking fund provisions), redemption price or prices, and
the liquidation preferences of any wholly unissued series of Preferred Stock,
and to establish from time to time the number of shares constituting any such
series and the designation thereof, or any of them (a "Preferred Stock
Designation"); and to increase or decrease the number of shares of any series
(including without limitation the series designated in Article V hereof to the
extent provided by Article V hereof) subsequent to the issuance of shares of
that series, but not below the number of shares of such series then outstanding.
In case the number of shares of any series shall be decreased in accordance with
the foregoing sentence or be converted pursuant to the Preferred Stock
Designation or Section 4 of Article V hereunder, the shares constituting such
decrease or so converted shall resume the status of authorized but unissued and
undesignated Preferred Stock. If at any time subsequent to the issuance of
shares of a particular series, there are no shares of such series remaining
outstanding, such series thereupon shall constitute a wholly unissued series and
may be altered (including without limitation the elimination of such series) to
the full extent as hereinabove provided, except as otherwise provided herein.
The foregoing authority of the Corporation's Board of Directors expressly
includes the authority to designate, in accordance with Section 5 of Article V
hereof, series of Preferred Stock with designations, powers, preferences,
rights, qualifications, limitations and restrictions senior to, junior to, or on
parity with, the designations, powers, preferences, rights, qualifications,
limitations and restrictions of the Series B Preferred Stock, Series C Preferred
Stock and Series D Preferred Stock defined and designated below.
C. Common Stock.
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1. Dividend Rights. Subject to the provisions of Section 1 of Article
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V, the holders of the Common Stock shall be entitled to receive, when and as
declared by the Board of Directors of the Corporation, out of any funds of the
Corporation legally available therefor, such dividends as may be declared from
time to time by the Board of Directors of the Corporation.
2. Liquidation Rights. Upon the liquidation, dissolution or winding
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up of the Corporation, the assets of the Corporation shall be distributed as
provided in Section 2 of Article V hereof.
3. Redemption. The Common Stock is not redeemable.
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4. Voting Rights. The holder of each share of Common Stock shall have
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the right to one vote, and shall be entitled to notice of any stockholders'
meeting in accordance with the Bylaws of the Corporation, and shall be entitled
to vote upon such matters and in such manner as may be provided by law.
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4.2 Effective immediately (as defined in Section 4(b) of Article V below),
the Corporation's capital stock shall be comprised as follows:
A. Authorized Shares. The aggregate number of shares that the Corporation
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shall have authority to issue is 125,000,000, (a) 100,000,000 shares of which
shall be Common Stock, par value $0.001 per share, and (b) 25,000,000 of which
shall be Preferred Stock, par value $0.001 per share.
B. Common Stock. Each share of Common Stock shall have one vote on each
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matter submitted to a vote of the stockholders of the Corporation. Subject to
the provisions of applicable law and the rights of the holders of the
outstanding shares of Preferred Stock, if any, the holders of the Common Stock
shall be entitled to receive, when and as declared by the Board of Directors of
the Corporation, out of the assets of the Corporation legally available
therefor, dividends or other distributions, whether payable in cash, property or
securities of the Corporation. The holders of shares of Common Stock shall be
entitled to receive, in proportion to the number of shares of Common Stock held,
the net assets of the Corporation upon dissolution after any preferential
amounts required to be paid or distributed to holders of outstanding shares of
Preferred Stock, if any, are so paid or distributed.
C. Preferred Stock.
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1. Series. The Preferred Stock may be issued from time to time by the
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Board of Directors as shares of one or more series. The description of shares of
each additional series of Preferred Stock, including any designations,
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and conditions of
redemption shall be as set forth in resolutions adopted by the Board of
Directors.
2. Rights and Preferences. The Board of Directors is expressly
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authorized, at any time, by adopting resolutions providing for the issuance of,
or providing for a change in the number of any particular series of Preferred
Stock and, if and to the extent from time to time required by law, by filing
certificates of amendment or designation which are effective without stockholder
action, to increase or decrease the number of shares included in each series of
Preferred Stock, but not below the number of shares then issued, and to set in
any one or more respects the designations, preferences, conversion or other
rights, voting powers, restrictions, limitations as to dividends,
qualifications, or terms and conditions of redemption relating to the shares of
each such series. The authority of the Board of Directors with respect to each
series of Preferred Stock shall include, but not be limited to, setting or
changing the following:
(a) the dividend rate, if any, on shares of such series, the times of
payment and the date from which dividends shall be accumulated, if dividends are
to be cumulative;
(b) whether the shares of such series shall be redeemable and, if so,
the redemption price and the terms and conditions of such redemption;
(c) the obligation, if any, of the Corporation to redeem shares of
such series pursuant to a sinking fund;
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(d) whether shares of such series shall be convertible into, or
exchangeable for, shares of stock of any other class of classes and, if so, the
terms and conditions of such conversion or exchange, including the price or
prices or the rate or rates of conversion or exchange and the terms of
adjustment, if any;
(e) whether the shares of such series shall have voting rights, in
addition to the voting rights provided by law, and, if so, the extent of such
voting rights;
(f) the rights of the shares of such series in the event of voluntary
or involuntary liquidation, dissolution or winding-up of the Corporation; and
(g) any other relative rights, powers, preferences, qualifications,
limitations or restrictions thereof relating to such series.
ARTICLE V
The respective rights, preferences, privileges and restrictions granted to
and imposed on the Series B Preferred Stock, Series C Preferred Stock and Series
D Preferred Stock of the Corporation are as set forth below in this Article V.
1. Dividend Provisions.
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(a) The holders of shares of Series B Preferred Stock, Series C
Preferred Stock and Series D Preferred Stock shall be entitled to receive
dividends, out of any assets legally available therefor, prior and in preference
to any declaration or payment of any dividend (payable other than in Common
Stock or other securities and rights convertible into or entitling the holder
thereof to receive, directly or indirectly, additional shares of Common Stock of
the Corporation) on the Common Stock of the Corporation, in such amounts and at
such times as the Board of Directors of the Corporation deems advisable with
respect to the Series B Preferred Stock (provided, however, in no event shall
such amount exceed $0.18 per share) and at the rate of $0.37 and $0.774 per
share (as adjusted for any stock dividends, combinations or splits with respect
to such shares) per annum, with respect to the Series C Preferred Stock and the
Series D Preferred Stock, respectively, payable quarterly when, as and if
declared by the Board of Directors. Declared dividends with respect to each
share of Series B Preferred Stock, each share of Series C Preferred Stock and
each share of Series D Preferred Stock which are payable shall, upon conversion
of such share to Common Stock, be paid in shares of Common Stock (valued at the
fair market value on the date of payment as determined in the manner provided in
subsection 2(b)(ii) of this Article V). Dividends on the Series B Preferred
Stock, Series C Preferred Stock and Series D Preferred Stock shall not be
cumulative.
(b) So long as any shares of Series B Preferred Stock, Series C
Preferred Stock or Series D Preferred Stock are issued and outstanding, the
Corporation shall not declare and distribute any cash dividends among the
holders of Common Stock, nor shall the Corporation purchase, redeem or acquire
any shares of Common Stock or pay funds into or set aside or make available a
sinking fund for the purchase, redemption or acquisition of shares of Common
Stock, unless, in each case, such declaration, distribution, purchase,
redemption or acquisition is approved by the holders of at least two thirds
(2/3rds) of the voting power (as determined on an as-converted basis) of all
then outstanding shares of Series B Preferred Stock,
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Series C Preferred Stock and Series D Preferred Stock, each voting as a distinct
and separate class; provided, however, that the foregoing restriction shall not
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apply to the repurchase of shares of Common Stock held by employees, officers,
directors, consultants or other persons performing services for the Corporation
or any wholly-owned subsidiary of the Corporation (including, but not by way of
limitation, distributors and sales representatives) pursuant to restrictive
stock purchase agreements under which the Corporation has the option to
repurchase such shares at cost (or other fixed price intended to be
representative of the cost of such shares of Common Stock) upon the occurrence
of certain events such as the termination of employment.
(c) Any dividend or distribution which is declared by the Corporation
and payable with assets of the Corporation other than cash shall be valued in
accordance with the provisions of subsection 2(b)(ii) of this Article V.
2. Liquidation Preference.
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(a) In the event of any liquidation, dissolution or winding up of the
Corporation, either voluntary or involuntary, the holders of Series B Preferred
Stock, Series C Preferred Stock and Series D Preferred Stock shall be entitled
to receive, prior and in preference to any distribution of any of the assets of
the Corporation to the holders of Common Stock by reason of their ownership
thereof, an amount per share equal to the sum of (i) $1.8382353 for each
outstanding share of Series B Preferred Stock (the "Original Series B Issue
Price"), $3.70 for each outstanding share of Series C Preferred Stock (the
"Original Series C Issue Price") and $7.74 for each outstanding share of Series
D Preferred Stock (the "Original Series D Issue Price") (in each case, as
adjusted for any stock dividends, combinations or splits with respect to such
shares) held by such holder and (ii) an amount equal to all declared but unpaid,
dividends on such shares of Series B Preferred Stock, Series C Preferred Stock
and Series D Preferred Stock, as the case may be, held by such holder. The
Original Series B Issue Price, Original Series C Issue Price and Original Series
D Issue Price are sometimes referred to herein collectively as the "Original
Issue Price". If upon the occurrence of such event, the assets and funds thus
distributed among the holders of the Series B Preferred Stock, Series C
Preferred Stock and Series D Preferred Stock shall be insufficient to permit the
payment to such holders of the full aforesaid preferential amounts, then the
entire assets and funds of the Corporation legally available for distribution
shall be distributed ratably among the holders of the Series B Preferred Stock,
Series C Preferred Stock and Series D Preferred Stock in proportion to the
preferential amount each such holder is otherwise entitled to receive pursuant
to this subsection (a).
(b) After the distribution described in subsection (a) above has been
paid and in addition to any amounts so paid, the remaining assets of the
Corporation available for distribution to stockholders shall be distributed
among the holders of Common Stock pro rata based on the number of shares of
Common Stock held by each of them.
(i) For purposes of this Section 2, a liquidation, dissolution or
winding up of the Corporation shall be deemed to be occasioned by, or to
include, (A) the acquisition of the Corporation by another entity by means of
any transaction or series of related transactions (including, without
limitation, any reorganization, merger or consolidation) that results in the
transfer of 50% or more of the outstanding voting power of the Corporation or
(B) a sale of all or substantially all of the assets of the Corporation; unless,
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in either event, such sale or
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other transaction or related transactions is determined not to be a liquidation,
dissolution or winding up of the Corporation by (x) the holders of a majority of
the Series B Preferred Stock and Series C Preferred Stock, voting together as a
single class and on an as-converted basis, and (y) the holders of a majority of
the Series D Preferred Stock, voting as a single and separate class.
(ii) In any of such events, if the consideration received by the
Corporation is other than cash, its value will be deemed its fair market value.
Any securities to be delivered to the holders of Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock or Common Stock, as the case
may be, shall be valued as follows:
(A) If traded on a securities exchange or through the Nasdaq
National Market, the value shall be deemed to be the average of the closing
prices of the securities on such exchange over the thirty (30) day period ending
three (3) days prior to the closing;
(B) If actively traded over-the-counter, the value shall be
deemed to be the average of the closing bid or sale prices (whichever is
applicable) over the thirty (30) day period ending three (3) days prior to the
closing; and
(C) If there is no active public market, the value shall be
the fair market value thereof, as mutually determined by the Corporation and the
holders of at least two thirds (2/3rds) of the voting power (as determined on an
as-converted basis) of all then outstanding shares of Series B Preferred Stock,
Series C Preferred Stock and Series D Preferred Stock.
(iii) In the event the requirements of this Section 2 are not
complied with, the Corporation shall forthwith either:
(A) cause such closing to be postponed until such time as
the requirements of this Section 2 have been complied with; or
(B) cancel such transaction, in which event the respective
rights, preferences and privileges of the holders of the Series B Preferred
Stock, Series C Preferred Stock and Series D Preferred Stock shall revert to and
be the same as such rights, preferences and privileges existing immediately
prior to the date of the first notice referred to in subsection 2(b)(iv) hereof.
(iv) The Corporation shall give each holder of record of Series B
Preferred Stock, each holder of record of Series C Preferred Stock and each
holder of record of Series D Preferred Stock written notice of such impending
transaction not later than twenty (20) days prior to the stockholders' meeting
called to approve such transaction, or twenty (20) days prior to the closing of
such transaction, whichever is earlier, and shall also notify such holders in
writing of the final approval of such transaction. The first of such notices
shall describe the material terms and conditions of the impending transaction
and the provisions of this Section 2, and the Corporation shall thereafter give
such holders prompt notice of any material changes. The transaction shall in no
event take place sooner than twenty (20) days after the Corporation has given
the first notice provided for herein or sooner than ten (10) days after the
Corporation
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has given notice of any material changes provided for herein; provided, however,
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that such periods may be shortened upon the Corporation's receipt of written
consent of the holders of at least two thirds (2/3rds) of the outstanding shares
of Series B Preferred Stock, Series C Preferred Stock and Series D Preferred
Stock, each voting separately and not as a single class, entitled to such notice
rights or similar notice rights.
3. Redemption. None of the Series B Preferred Stock, Series C Preferred
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Stock or Series D Preferred Stock is redeemable.
4. Conversion. The holders of the Series B Preferred Stock, Series C
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Preferred Stock and Series D Preferred Stock shall have the following respective
conversion rights (the "Conversion Rights"):
(a) Right to Convert. Each share of Series B Preferred Stock shall be
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convertible, at the option of the holder thereof, at any time after the date of
issuance of such share, at the office of the Corporation or any transfer agent
for such stock, into such number of fully paid and nonassessable shares of
Common Stock as is determined, with respect to each share of Series B Preferred
Stock, by dividing the Original Series B Issue Price plus all declared but
unpaid dividends on the Series B Preferred Stock by the Series B Conversion
Price, determined as hereinafter provided, in effect on the date the certificate
is surrendered for conversion (the result of such division is hereinafter
referred to as the "Series B Conversion Rate"). The initial Series B Conversion
Price per share for the Series B Preferred Stock shall be $1.8382353; provided,
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however, that such Series B Conversion Price shall be subject to adjustment as
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set forth in subsections 4(d), 4(e) and 4(f). Each share of Series C Preferred
Stock shall be convertible, at the option of the holder thereof, at any time
after the date of issuance of such share, at the office of the Corporation or
any transfer agent for such stock, into such number of fully paid and
nonassessable shares of Common Stock as is determined, with respect to each
share of Series C Preferred Stock, by dividing the Original Series C Issue Price
plus all declared but unpaid dividends on the Series C Preferred Stock by the
Series C Conversion Price, determined as hereinafter provided, in effect on the
date the certificate is surrendered for conversion (the result of such division
is hereinafter referred to as the "Series C Conversion Rate"). The initial
Series C Conversion Price per share for the Series C Preferred Stock shall be
$3.70; provided, however, that such Series C Conversion price shall be subject
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to adjustment as set forth in subsections 4(d), 4(e), 4(f) and 4(g). Each share
of Series D Preferred Stock shall be convertible, at the option of the holder
thereof, at any time after the date of issuance of such share, at the office of
the Corporation or any transfer agent for such stock, into such number of fully
paid and nonassessable shares of Common Stock as is determined, with respect to
each share of Series D Preferred Stock, by dividing the Original Series D Issue
Price plus all declared but unpaid dividends on the Series D Preferred Stock, by
the Series D Conversion Price in effect on the date the certificate is
surrendered for conversion (the result of such division is hereinafter referred
to as the "Series D Conversion Rate"). The initial Series D Conversion Price per
share for the Series D Preferred Stock shall be $7.74; provided, however, that
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such Series D Conversion Price shall be subject to adjustment as set forth in
subsections 4(d), 4(e), 4(f) and 4(g).
(b) Mandatory Conversion. Each share of Series B Preferred Stock shall
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automatically be converted into shares of Common Stock at the then effective
Series B
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Conversion Rate immediately upon the closing with an underwriter or underwriters
of the sale of Common Stock pursuant to an underwritten offer of securities
under the Securities Act of 1933, as amended (the "Securities Act"). Each share
of Series C Preferred Stock shall automatically be converted into shares of
Common Stock at the then effective Series C Conversion Rate immediately upon the
earlier of (i) the date specified by vote or written consent of the holders of
at least two-thirds (2/3) of the shares of Series C Preferred Stock then
outstanding or (ii) the closing of the Corporation's sale of its Common Stock in
a firm commitment underwritten public offering pursuant to a registration
statement under the Securities Act in which the aggregate proceeds to the
Corporation and any selling stockholders participating therein is at least $20
million (a "Qualified IPO"). Each share of Series D Preferred Stock shall
automatically be converted into shares of Common Stock at the then effective
Series D Conversion Rate immediately upon the earlier of (i) the date specified
by vote or written consent of the holders of at least a majority of the shares
of Series D Preferred Stock then outstanding or (ii) the closing of a Qualified
IPO wherein the initial price at which shares of Common Stock are sold to the
public is at least (x) $10.06 if the Qualified IPO occurs within twelve (12)
months of the first issuance of shares of Series D Preferred Stock or (y) $13.16
if the Qualified IPO occurs more than twelve (12) months following the first
issuance of shares of the Series D Preferred Stock (in each case as such minimum
per share price is adjusted to reflect stock dividends, stock splits,
combinations, recapitalizations or the like after the date of the filing of this
Restated Certificate with the Secretary of State of the State of Delaware).
(c) Mechanics of Conversion. Prior to the conversion of any shares of
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Series B Preferred Stock, Series C Preferred Stock or Series D Preferred Stock,
as the case may be, into shares of Common Stock (other than pursuant to a
mandatory conversion under subsection 4(b)), such holder shall surrender the
certificate or certificates thereof, duly endorsed, at the office of the
Corporation or of any transfer agent for such stock, and shall give written
notice by mail, postage prepaid, to the Corporation at such office that such
holder elects to convert the same and shall state therein the name or names in
which the holder wishes the certificate or certificates for shares of Common
Stock to be issued. The Corporation shall, as soon as practicable thereafter,
issue and deliver at such office to such holder of Series B Preferred Stock,
Series C Preferred Stock or Series D Preferred Stock, or to the nominee or
nominees of such holder, as the case may be, a certificate or certificates for
the number of shares of Common Stock to which the holder shall be entitled as
aforesaid and a check payable to the holder in the amount of any cash amounts
payable as the result of a conversion into fractional shares of Common Stock
pursuant to subsection 4(m) hereunder and any declared but unpaid dividends on
such fractional shares of the converted Series B Preferred Stock, Series C
Preferred Stock or Series D Preferred Stock to which the holder may be entitled.
Except for a conversion in connection with an underwritten offering of
securities under the Securities Act pursuant to subsection 4(b) hereof, such
conversion shall be deemed to have been made immediately prior to the close of
business on the date of surrender of the shares of Series B Preferred Stock,
Series C Preferred Stock or Series D 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 on such date. In the case of a conversion
pursuant to subsection 4(b) hereof in connection with an underwritten offering
of securities under the Securities Act, the conversion shall be conditioned upon
the closing with the underwriter or underwriters of the sale of securities
pursuant to such offering, and such conversion shall then be deemed to occur
immediately prior to the closing of such sale
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of securities. In the event of a conversion pursuant to subsection 4(b) hereof,
the outstanding shares of Series B Preferred Stock, Series C Preferred Stock and
Series D 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; and provided further that the Corporation shall not be obligated to issue
certificates evidencing the shares of Common Stock issuable upon such automatic
conversion unless and until the certificates evidencing such shares of Series B
Preferred Stock, Series C Preferred Stock or Series D Preferred Stock, as the
case may be, are either delivered to the Corporation or its transfer agent as
provided above, or the holder notifies the Corporation or its transfer agent
that such certificates have been lost, stolen or destroyed and executes an
agreement satisfactory to the Corporation to indemnify the Corporation from any
loss incurred by it in connection with such certificates.
(d) Adjustment for Subdivisions. Combinations or Consolidations of
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Common Stock and Stock Dividend. In the event that, after the date that the
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Series C Preferred Stock was first issued and prior to the date on which shares
of Series D Preferred Stock were first issued, the outstanding shares of Common
Stock shall be subdivided (by stock split or otherwise) into a greater number of
shares of Common Stock, or a dividend or distribution of Common Stock payable to
all holders of Common Stock shall be made (or a record date for such dividend
declared), each of the Series B Conversion Price and Series C Conversion Price
then in effect shall, concurrently with the effectiveness (or record date) of
such subdivision or dividend, be proportionately decreased. In the event that,
after the date on which the Series D Preferred Stock was first issued, the
outstanding shares of Common Stock shall be subdivided (by stock split or
otherwise) into a greater number of shares of Common Stock, or a dividend or
distribution of Common Stock payable to all holders of Common Stock shall be
made (or a record date for such dividend declared), each of the Series B
Conversion Price, Series C Conversion Price and Series D Conversion Price then
in effect shall, concurrently with the effectiveness (or record date) of such
subdivision or dividend, be proportionately decreased. In the event that, after
the date on which shares of the Series D Preferred Stock were first issued, the
outstanding shares of Common Stock shall be combined or consolidated, by
reclassification or otherwise, into a lesser number of shares of Common Stock,
each of the Series B Conversion Price, Series C Conversion Price and Series D
Conversion Price then in effect shall, concurrently with the effectiveness of
such combination or consolidation, be proportionately increased. In each case,
the proportionate decrease or increase, respectively, of the Series B Conversion
Price, Series C Conversion Price and/or Series D Conversion Price shall be equal
to the number of shares of Common Stock outstanding immediately prior to the
event giving rise to the adjustment divided by the number of shares of Common
Stock outstanding immediately after such event.
(e) Adjustments for Other Distributions. In the event the Corporation at
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any time or from time to time after the date on which shares of Series D
Preferred Stock were first issued makes, or fixes a record date for the
determination of holders of Common Stock entitled to receive, any distribution
payable in securities of the Corporation other than Common Stock or otherwise,
then in each such event, provision shall be made so that the holders of Series B
Preferred Stock, Series C Preferred Stock and Series D Preferred Stock shall
receive upon conversion thereof, in addition to the number of shares of Common
Stock receivable thereupon, the amount of securities of the Corporation or
portion of any other distribution which they would have received had their
Series B Preferred Stock, Series C Preferred Stock and Series D
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Preferred Stock, as the case may be, been converted into Common Stock on the
date of such event and had they thereafter, during the period from the date of
such event to and including the date of conversion, retained such securities
receivable by them as aforesaid during such period, subject to all other
adjustments called for during such period under this Section 4 of Article V with
respect to the rights of the holders of the Series B Preferred Stock, Series C
Preferred Stock and Series D Preferred Stock.
(f) Adjustments for Reorganization, Reclassification, Exchange and
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Substitution. If the Common Stock issuable upon conversion of the Series B
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Preferred Stock, Series C Preferred Stock and Series D Preferred Stock shall be
changed into the same or a different number of shares of any other class or
classes of stock or other securities or property, whether by reorganization
(unless such reorganization is deemed a liquidation under subsection 2(b)(i) of
this Article V), reclassification or otherwise (other than a subdivision or
combination of shares provided for above), each of the Series B Conversion
Price, Series C Conversion Price and Series D Conversion Price then in effect
shall, concurrently with the effectiveness of such reorganization or
reclassification, be proportionately adjusted such that the Series B Preferred
Stock, Series C Preferred Stock and Series D Convertible Stock, respectively,
shall be convertible into, in lieu of the number of shares of Common Stock which
the holders would otherwise have been entitled to receive, a number of shares of
such other class or classes of stock or other securities or property equivalent
to the number of shares of Common Stock that would have been subject to receipt
by the holders upon conversion of the Series B Preferred Stock, Series C
Preferred Stock and Series D Preferred Stock, as the case may be, immediately
before such event; and, in any such case, appropriate adjustment (as determined
by the Board of Directors of the Corporation) shall be made in the application
of the provisions herein set forth with respect to the rights and interest
thereafter of the holders of the Series B Preferred Stock, Series C Preferred
Stock and Series D Preferred Stock, to the end that the provisions set forth
herein (including provisions with respect to changes in and other adjustments of
the Series B Conversion Price, Series C Conversion Price and Series D 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 Series B Preferred Stock, Series C Preferred Stock and
Series D Preferred Stock, as the case may be.
(g) Adjustments to Series C Conversion Price and Series D Conversion
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Price for Certain Diluting Issues.
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(i) Special Definitions. For purposes of this subsection 4(g), the
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following definitions apply:
(A) "Options" shall mean rights, options, or warrants to
subscribe for, purchase or otherwise acquire either Common Stock or Convertible
Securities (defined below).
(B) "Original Issue Date" shall mean the date on which a share
of Series D Preferred Stock was first issued by the Corporation.
(C) "Convertible Securities" shall mean any evidences of
indebtedness, shares (other than Common Stock, Series B Preferred Stock, Series
C Preferred
10
Stock and Series D Preferred Stock) or other securities convertible into or
exchangeable for Common Stock.
(D) "Additional Shares of Common Stock" shall mean, all shares
of Common Stock issued (or, pursuant to subsection 4(g)(iii), deemed to be
issued) by the Corporation after the Original Issue Date, other than shares of
Common Stock issued or issuable:
(w) to employees or directors of, or consultants to, the
Corporation under stock option, stock bonus or stock purchase plans or
agreements or similar plans or agreements approved by the Board of Directors or
an authorized committee thereof; provided, however, that this subsection
-------- -----
4(g)(i)(D)(w) shall only apply to 3,000,000 shares (notwithstanding anything
herein to the contrary, including without limitation in Section 4(g)(ii), such
amount including both Options outstanding on the Original Issue Date and Options
reserved for issuance under the Company's stock option plan on the Original
Issue Date) (as adjusted for any stock dividends, combinations or splits and net
of any repurchases of shares or cancellations or expirations of options) issued
(or deemed to be issued) to such employees, directors or consultants;
(x) as a dividend or distribution on Series B
Preferred Stock, Series C Preferred Stock and Series D Preferred Stock;
(y) for which adjustment of the Series B Conversion Price,
Series C Conversion Price and Series D Conversion Price is made pursuant to
subsections 4(d), 4(e) or 4(f); or
(z) upon issuance of warrants or options to subscribe
for, purchase or otherwise acquire Common Stock or convertible
Securities issued to financial institutions or other lenders, lessors or
guarantors in connection with current or potential borrowings, indebtedness or
leases of real or personal property by the Corporation, so long as the
principal purpose of such issuance is not equity financing and so long as such
issuance is approved by the Board of Directors of the Corporation.
(ii) No Adjustment of Conversion Price. Any provision herein to
---------------------------------
the contrary notwithstanding, no adjustment in the Series C Conversion Price
shall be made in respect of the issuance of Additional Shares of Common Stock
unless the consideration per share (determined pursuant to subsection 4(g)(v)
hereof) for an Additional Share of Common Stock issued or deemed to be issued by
the Corporation is less than the Series C Conversion Price in effect on the date
of, and immediately prior to, such issue. Any provision herein to the contrary
notwithstanding, no adjustment in the Series D Conversion Price shall be made in
respect of the issuance of Additional Shares of Common Stock unless the
consideration per share (determined pursuant to subsection 4(g)(v) hereof) for
an Additional Share of Common Stock issued or deemed to be issued by the
Corporation is less than the Series D Conversion Price in effect on the date of,
and immediately prior to, such issue.
11
(iii) Deemed Issue of Additional Shares of Common Stock. In the
-------------------------------------------------
event the Corporation at any time or from time to time after the Original Issue
Date shall issue any Options or Convertible Securities or shall fix a record
date for the determination of holders of any class of securities then entitled
to receive any such Options or Convertible Securities, then the maximum number
of shares (as set forth in the instrument relating thereto without regard to any
provisions contained therein designed to protect against dilution) of Common
Stock issuable upon the exercise of such Options or, in the case of Convertible
Securities and Options therefor, the exercise and conversion or exchange of such
Options for Convertible Securities and the conversion or exchange of such
Convertible Securities, shall be deemed to be Additional Shares of Common Stock
(unless excluded from the definition thereof pursuant to subsection 4(g)(i)(D))
issued as of the time of such issue or, in case such a record date shall have
been fixed, as of the close of business on such record date, provided that in
any such case in which Additional Shares of Common Stock are deemed to be
issued:
(A) no further adjustments in the Series C Conversion Price or
the Series D Conversion Price, as the case may be, 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;
(B) if such Options or Convertible Securities by their terms
provide, with the passage of time or otherwise, for any increase or decrease in
the consideration payable to the Corporation, or decrease or increase in the
number of shares of Common Stock issuable, upon the exercise, conversion or
exchange thereof, the Series C Conversion Price and the Series D Conversion
Price, as the case may be, computed upon the original issue thereof (or upon the
occurrence of a record date with respect thereto), and any subsequent
adjustments based thereon, shall, upon any such increase or decrease becoming
effective, be recomputed to reflect such increase or decrease insofar as it
affects such Options or the rights of conversion or exchange under such
Convertible Securities (provided, however, that no such adjustment of the Series
-------- -------
C Conversion Price or Series D Conversion Price shall affect Common Stock
previously issued upon conversion of the Series C Preferred Stock or the Series
D Preferred Stock, as the case may be);
(C) upon the expiration of any such Options or any rights of
conversion or exchange under such Convertible Securities which shall not have
been exercised, the Series C Conversion Price and the Series D Conversion Price,
as the case may be, computed upon the original issue thereof (or upon the
occurrence of a record date with respect thereto), and any subsequent
adjustments based thereon, shall, upon such expiration, be recomputed as if:
(x) in the case of Convertible Securities or Options for
Common Stock, the only Additional Shares of Common Stock issued were the shares
of Common Stock, if any, actually issued upon the exercise of such Options or
the conversion or exchange of such Convertible Securities and the consideration
received therefor was the consideration actually received by the Corporation for
the issue of all such Options, whether or not exercised, plus the consideration
actually received by the Corporation upon such exercise, or for the issue of all
such Convertible Securities which
12
were actually converted or exchanged, plus the additional consideration, if any,
actually received by the Corporation upon such conversion or exchange, and
(y) in the case of Options for Convertible Securities, only
the Convertible Securities, if any, actually issued upon the exercise thereof
were issued at the time of issue of such Options, and the consideration received
by the Corporation for the Additional Shares of Common Stock deemed to have been
then issued was the consideration actually received by the Corporation for the
issue of all such Options, whether or not exercised, plus the consideration
deemed to have been received by the Corporation (determined pursuant to
subsection 4(g)(v) hereof) upon the issue of the Convertible Securities with
respect to which such Options were actually exercised;
(D) no readjustment pursuant to subsection 4(g)(iii)(B) or (C)
above shall have the effect of increasing the Series C Conversion Price or the
Series D Conversion Price to an amount which exceeds the lower of (x) the Series
C Conversion Price or the Series D Conversion Price, as the case may be, on the
original adjustment date, or (b) the Series C Conversion Price or the Series D
Conversion Price, as the case may be, that would have resulted from any issuance
or issuances of Additional Shares of Common Stock between the original
adjustment date and such readjustment date;
(E) in the case of any Options or Convertible Securities which
expire by their terms not more than 30 days after the date of issue thereof, no
adjustment of the Series C Conversion Price or Series D Conversion Price shall
be made until the expiration or exercise of all such Options, whereupon such
adjustment shall be made in the same manner provided in subsection 4(g)(iii)(C)
above; and
(F) in the case of any Options or Convertible Securities with
respect to which the maximum number of shares of Common Stock issuable upon
exercise or conversion or exchange thereof is not determinable, no adjustment to
the Series C Conversion Price or the Series D Conversion Price shall be made
until such number becomes determinable.
(iv) Adjustment of Conversion Price Upon Issuance of Additional
----------------------------------------------------------
Shares of Common Stock. In the event the Corporation, at any time after the
- ----------------------
Original Issue Date, shall issue Additional Shares of Common Stock (including
Additional Shares of Common Stock deemed to be issued pursuant to subsection
4(g)(iii)) without consideration or for a consideration per share less than the
Series C Conversion Price or the Series D Conversion Price, as the case may be,
in effect on the date of, and immediately prior to, such issue, then and in such
event, the Series C Conversion Price or the Series D Conversion Price, as the
case may be, shall be reduced, concurrently with such issue, to a price
(calculated in accordance with subsection 4(g)(vi)(b)) determined by multiplying
the Series C Conversion Price or the Series D Conversion Price, as the case may
be, by a fraction, (x) the numerator of which shall be the number of shares of
Common Stock outstanding immediately prior to such issue plus the number of
shares of Common Stock which the aggregate consideration received by the
Corporation for the total number of Additional Shares of Common Stock so issued
would purchase at the Series C Conversion Price or the Series D Conversion
Price, as the case may be, in effect immediately prior to such issuance, and (y)
the denominator of which shall be the number of shares of
13
Common Stock outstanding immediately prior to such issue plus the number of such
Additional Shares of Common Stock so issued. For the purpose of the above
calculation, the number of shares of Common Stock outstanding immediately prior
to such issue shall be calculated on a fully-diluted basis, as if all shares of
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and
all Convertible Securities had been fully converted into shares of Common Stock
immediately prior to such issuance and any outstanding warrants, options or
other rights for the purchase of shares of stock or convertible securities had
been fully exercised immediately prior to such issuance (and the resulting
securities fully converted into shares of Common Stock, if so convertible) as of
such date, but not including in such calculation any additional shares of Common
Stock issuable with respect to shares of Series C Preferred Stock, Series D
Preferred Stock and Convertible Securities, or outstanding options, warrants or
other rights for the purchase of shares of stock or convertible securities,
solely as a result of the adjustment of the Series C Conversion Price or Series
D Conversion Price (or other conversion ratios) resulting from the issuance of
Additional Shares of Common Stock causing such adjustment.
(v) Determination of Consideration. For purposes of this subsection
------------------------------
4(g), the consideration received by the Corporation for the issue of any
Additional Shares of Common Stock shall be computed as follows:
(A) Cash and Property. Such consideration shall:
-----------------
(x) insofar as it consists of cash, be computed at the
aggregate amount of cash received by the Corporation excluding amounts paid or
payable for accrued interest or accrued dividends;
(y) insofar as it consists of property other than cash, be
computed at the fair value thereof at the time of such issue, as determined in
good faith by the Board of Directors; and
(z) 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 (x) and (y) above, as
determined in good faith by the Board of Directors.
(B) Options and Convertible Securities. The consideration per
----------------------------------
share received by the Corporation for Additional Shares of Common Stock deemed
to have been issued pursuant to subsection 4(g) relating to Options and
Convertible Securities shall be equal to the quotient determined by dividing:
(x) the total amount, if any, received or receivable by the
Corporation as consideration for the issue of such Options or Convertible
Securities, plus the minimum aggregate amount of additional consideration (as
set forth in the instruments relating thereto, without regard to any provision
contained therein designed to protect against dilution) payable to the
Corporation upon the exercise of such Options or the conversion or exchange of
such Convertible Securities, or in the
14
case of Options for Convertible Securities, the exercise of such Options for
Convertible Securities and the conversion or exchange of such Convertible
Securities, by
(y) the maximum number of shares of Common Stock (as set
forth in the instruments relating thereto, without regard to any provision
contained therein designed to protect against the dilution) issuable upon the
exercise of such Options or 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.
(vi) Miscellaneous.
-------------
(A) All calculations under this subsection 4(g) shall be made to
the nearest cent or to the nearest one hundredth (1/100) of a share, as the case
may be.
(B) No adjustment in the Series C Conversion Price or the Series
D Conversion Price need be made if such adjustment would result in a change in
such Series C Conversion Price or Series D Conversion Price, as the case may be,
of less than $0.01. Any adjustment of less than $0.01 which is not made shall be
carried forward and shall be made at the time of and together with any
subsequent adjustment made prior to three (3) years from the date of the event
giving rise to the adjustment being carried forward which, on a cumulative
basis, amounts to an adjustment of $0.01 or more in such Series C Conversion
Price or Series D Conversion Price, as the case may be, or shall be made at the
end of three (3) years from the date of the event giving rise to the adjustment
being carried forward.
(h) No Impairment. The Corporation will not, by amendment of this
-------------
Restated Certificate or through any reorganization, recapitalization, transfer
of assets, consolidation, merger, dissolution, issuance or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms to be observed or performed hereunder by the Corporation,
but will at all times in good faith assist in the carrying out of all the
provisions of this Section 4 of this Article V and in the taking of all such
action as may be necessary or appropriate in order to protect the respective
conversion rights of the holders of the Series B Preferred Stock, Series C
Preferred Stock and Series D Preferred Stock against impairment.
(i) Certificates as to Adjustments. Upon the occurrence of each
------------------------------
adjustment or readjustment of the Series B Conversion Price, Series C Conversion
Price or Series D Conversion Price pursuant to this Section 4, the Corporation,
at its expense, shall promptly compute such adjustment or readjustment in
accordance with the terms hereof and prepare and furnish to each holder of
Series B Preferred Stock, Series C Preferred Stock and Series D 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 Series
B Preferred Stock, Series C Preferred Stock or Series D Preferred Stock, furnish
or cause to be furnished to such holder a like certificate setting forth (i)
such applicable adjustments and readjustments, (ii) the applicable Series B
Conversion Price, Series C Conversion Price and Series D Conversion Price at the
time in effect, and (iii) the number of shares of Common Stock and the amount,
if any, of other
15
property which at the time would be received upon the conversion of Series B
Preferred Stock, Series C Preferred Stock and Series D Preferred Stock. Any
certificate sent to the holders of Series B Preferred Stock, Series C Preferred
Stock and Series D Preferred Stock pursuant to this subsection 4(i) shall be
certified by the President or Chief Financial Officer of the Corporation.
(j) Notices of Record Date. In the event that this Corporation shall
----------------------
propose at any time:
(i) to declare any dividend or distribution upon its Common Stock,
whether in cash, property, stock or other securities, whether or not a regular
cash dividend and whether or not out of earnings or earned surplus;
(ii) to offer for subscription pro rata to the holders of any class
or series of its stock any additional shares of stock of any class or series or
other rights; or
(iii) to effect any reclassification or recapitalization of its
Common Stock outstanding involving a change in the Common Stock; then, in
connection with each such event, the Corporation shall send to the holders
of the Series B Preferred Stock, Series C Preferred Stock and Series D
Preferred Stock:
(A) at least twenty (20) days prior written notice of the date
on which a record shall be taken for such dividend, distribution or subscription
rights (and specifying the date on which holders of Common Stock shall be
entitled thereto and the approximate amount and character of such dividend,
distribution or right) or for determining rights to vote in respect of the
matters referred to in (i) and (ii) above; and
(B) in the case of the matters referred to in (iii) above, at
least twenty (20) days prior written notice of the date when the same shall take
place (and specifying the date on which the holders of Common Stock shall be
entitled to exchange their Common Stock for securities or other property
deliverable upon the occurrence of such event and the approximate amount and
character of such dividend, distribution or right).
(k) Issue Taxes. The Corporation shall pay any and all issue and
-----------
other taxes that may be payable in respect of any issue or delivery of shares of
Common Stock on conversion of shares of Series B Preferred Stock, Series C
Preferred Stock and Series D Preferred Stock pursuant hereto; provided, however,
-------- -------
that the Corporation shall not be obligated to pay any transfer taxes or income
taxes payable by the stockholder and resulting from any transfer requested by
any holder in connection with any such conversion.
(l) Reservation of Stock Issuable Upon Conversion. There is hereby
---------------------------------------------
reserved out of the presently authorized but unissued shares of Common Stock
304,986, 4,414,500 shares and 4,080,000 shares for the sole purpose of issuance
pursuant to conversions of the Series B Preferred Stock, Series C Preferred
Stock and Series D Preferred Stock, respectively, as provided herein. The
Corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the shares of the Series B Preferred Stock, Series C Preferred
Stock and Series D Preferred Stock, such number of its shares of Common Stock as
shall from time to time be
16
sufficient to effect the conversion of all outstanding shares of the Series B
Preferred Stock, Series C Preferred Stock and Series D Preferred Stock; and if
at any time the number of authorized but unissued shares of Common Stock shall
not be sufficient to effect the conversion of all then outstanding shares of the
Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock,
in addition to such other remedies as shall be available to the holders of such
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
purpose.
(m) Fractional Shares. No fractional share shall be issued upon the
-----------------
conversion of any share or shares of Series B Preferred Stock, Series C
Preferred Stock and Series D Preferred Stock. Whether or not fractional shares
are issuable upon such conversion shall be determined on the basis of the total
number of shares of Series B Preferred Stock, Series C Preferred Stock and
Series D Preferred Stock that the holder is at the time converting into Common
Stock and the number of shares of Common Stock issuable upon such aggregate
conversion. If the conversion would result in the issuance of a fraction of a
share of Common Stock, the Corporation shall, in lieu of issuing any fractional
share, pay the holder otherwise entitled to such fraction a sum in cash equal to
the fair market value of such fraction on the date of conversion (as determined
in good faith by the Board of Directors of the Corporation).
(n) Notices. Any notice required by the provisions of this Section 4
-------
to be given to the holders of shares of Series B Preferred Stock, Series C
Preferred Stock or Series D Preferred Stock shall be deemed given if delivered
personally or three days after being deposited in the United States mail, first
class postage prepaid, and addressed to each holder of record at his address
appearing on the books of the Corporation.
5. Restrictions and Limitations.
-----------------------------
(a) Actions Requiring Approval of Holders of Series B Preferred
-----------------------------------------------------------
Stock. In addition to any other rights provided by law, so long as any Series B
- -----
Preferred Stock shall be outstanding, the Corporation shall not, without the
vote or written consent by the holders of at least a majority of the then
outstanding shares of the Series B Preferred Stock:
(i) Purchase, redeem or otherwise acquire (or pay into or set
aside for a sinking fund for such purpose), any of the Common Stock or any other
series of preferred stock of the Corporation (other than by conversion);
provided, however, that this restriction shall not apply to the repurchase of
- -------- -------
shares of Common Stock from employees, officers, directors, consultants or other
persons performing services for the Corporation or any subsidiary of the
Corporation, in accordance with written plans or agreements; or
(ii) Increase or decrease (other than by conversion) the total
number of authorized shares of Series B Preferred Stock of the Corporation; or
(iii) Authorize or issue, or obligate itself to issue, any other
equity security senior to the Series B Preferred Stock as to liquidation
preferences without contemporaneously amending the liquidation preference of the
Series B Preferred Stock such that it is pari passu to such equity security, or
create any obligation or security convertible into or
17
exchangeable for, or having any option rights to purchase, any such equity
security which is senior to the Series B Preferred Stock with respect to
liquidation preferences without contemporaneously amending the liquidation
preference of the Series B Preferred Stock such that it is pari passu to such
equity security.
(b) Actions Requiring Approval of Holders of Each of the Series C
-------------------------------------------------------------
Preferred Stock and Series D Preferred Stock. In addition to any other rights
- --------------------------------------------
provided by law, so long as any Series C Preferred Stock or Series D Preferred
Stock shall be outstanding, the Corporation shall not, without the vote or
written consent by the holders of at least a majority of the then outstanding
shares of the Series C Preferred Stock and Series D Preferred Stock,
respectively, each voting or acting, as the case may be, as a single and
separate class:
(i) Amend this Restated Certificate or the Corporation's
Bylaws, or waive any provision thereof, if such amendment or waiver would
adversely affect the powers, privileges, preferences or rights of the
outstanding shares of such series of the Preferred Stock provided for herein; or
(ii) Authorize or issue, or obligate itself to issue, any other
equity security senior to such series of the Preferred Stock as to liquidation
preferences, voting rights, redemption, conversion or dividends, or create any
obligation or security convertible into, or exercisable or exchangeable for, any
such equity security which is senior to such series of the Preferred Stock with
respect to liquidation preferences, voting rights, redemption, conversion or
dividends; or
(iii) Effect any sale, lease, assignment, transfer or other
conveyance of all or substantially all of the assets of the Corporation, or any
acquisition of the Corporation by another entity by means of any transaction or
series of related transactions (including, without limitation, any
reorganization, merger or consolidation) that results in the transfer of 50% or
more of the outstanding voting power of the Corporation, other than any such
sale, lease, assignment, transfer, conveyance, acquisition, reorganization,
merger or consolidation in which holders of such series of the Preferred Stock
receive consideration, as a result of their ownership thereof, with a fair
market value (as determined in accordance with Section 2(b)(ii)) at least equal
to two (2) times the Original Issue Price of such series of the Preferred Stock
(as such Original Issue Price may be adjusted for any stock splits, reverse
stock splits or stock dividends, and the like); or
(iv) Purchase, redeem or otherwise acquire (or pay into or set
aside for a sinking fund for such purpose), any of the Common Stock or any other
series of Preferred Stock of the Corporation (other than by conversion);
provided, however, that this restriction shall not apply to the repurchase of
- -------- -------
shares of Common Stock at cost from employees, officers, directors, consultants
or other persons performing services for the Corporation or any subsidiary of
the Corporation, in accordance with written plans or agreements, except for any
such repurchase as would adversely affect the rights of a holder of Series C
Preferred Stock or Series D Preferred Stock under Section 1202 of the Internal
Revenue Code of 1986, as amended; or
18
(v) Increase or decrease (other than by conversion) the total
number of authorized shares of such series of the Preferred Stock of the
Corporation; or
(vi) Amend this Section 5(b).
(c) Actions Requiring Approval of Holders of Two-Thirds of the
----------------------------------------------------------
Series C Preferred Stock and Series D Preferred Stock. In addition to any other
- -----------------------------------------------------
rights provided by law, so long as any Series C Preferred Stock or Series D
Preferred Stock shall be outstanding, the Corporation shall not, without the
vote or written consent by the holders of at least two-thirds (2/3) of the then
outstanding shares of the Series C Preferred Stock and Series D Preferred Stock
(as determined on an as-converted basis), voting or acting, as the case may be,
together as a single, and not as a separate, class:
(i) Authorize or issue, or obligate itself to issue, any other
equity security senior to such series of the Preferred Stock as to liquidation
preferences, voting rights, redemption, conversion or dividends, or create any
obligation or security convertible into, or exercisable or exchangeable for, any
such equity security which is senior to such series of the Preferred Stock with
respect to liquidation preferences, voting rights, redemption, conversion or
dividends; or
(ii) Increase or decrease (other than by conversion) the total
number of authorized shares of the Series C Preferred Stock or Series D
Preferred Stock; or
(iii) Declare or pay dividends on any shares of Common Stock
(other than dividends payable solely in shares of Common Stock); or
(iv) Purchase, redeem or otherwise acquire (or pay into or set
aside for a sinking fund for such purpose), any of the Common Stock or any other
series of Preferred Stock of the Corporation (other than by conversion);
provided, however, that this restriction shall not apply to the repurchase of
- -------- -------
shares of Common Stock at cost from employees, officers, directors, consultants
or other persons performing services for the Corporation or any subsidiary of
the Corporation, in accordance with written plans or agreements, except for any
such repurchase as would adversely affect the rights of a holder of Series C
Preferred Stock or Series D Preferred Stock under Section 1202 of the Internal
Revenue Code of 1986, as amended; or
(v) Own, or permit any subsidiary company to own, any stock
or other securities of any subsidiary company or other corporation, partnership
or entity unless it is wholly-owned by the Corporation; or
(vi) Increase or decrease the number of authorized members of
the Board of Directors from the authorized number of nine (9) directors; or
(vii) Increase the total number of shares reserved for issuance
under the Corporation's employee stock option, stock incentive or other
compensation plans or arrangements to more than 3,000,000 shares of Common
Stock; or
(viii) Amend this Section 5(c).
19
6. Voting Rights.
-------------
(a) Each holder of shares of the Series C Preferred Stock or Series D
Preferred Stock shall be entitled to the number of votes equal to the whole
number of shares of Common Stock into which such holder's shares of Series C
Preferred Stock and/or Series D Preferred Stock could be converted immediately
prior to the close of business on the record date fixed for such meeting or, if
no record date is established, at the date such vote is taken, or on the date
any such written consent is executed by such holder, and shall have voting
rights and powers equal to the voting rights and powers of the Common Stock
(except as otherwise expressly provided herein or as required by law, voting
together with the Common Stock as a single class) and shall be entitled to
notice of any stockholders' meeting in accordance with the Bylaws of the
Corporation. Fractional votes shall not, however, be permitted and any
fractional voting rights resulting from the above formula (after aggregating all
shares into which shares of Series C Preferred Stock and Series D Preferred
Stock held by each holder could be converted) shall be rounded to the nearest
whole number (with one-half being rounded upward).
(b) Until the closing of the Corporation's initial sale of securities
pursuant to an underwritten public offering registered under the Securities Act,
other than a registration relating solely to a transaction under Rule 145 under
the Securities Act (or any successor thereto) or to an employee benefit plan of
the Corporation, (i) the holders of Series C Preferred Stock, voting together as
a single class, shall be entitled to elect three (3) members of the Board of
Directors, (ii) the holders of Series D Preferred Stock, voting together as a
single class, shall be entitled to elect one (1) member of the Board of
Directors and (iii) the holders of the Common Stock, voting together as a single
class, shall be entitled to elect the remaining members of the Board of
Directors; provided, however, that one such director to be elected by the
-------- -------
holders of the Common Stock shall be nominated upon the advice and consent of
the Board of Directors. Promptly following the closing of the Corporation's
initial public offering of securities, the Board of Directors shall promptly
call a special meeting of the stockholders at which all directors will be
elected by the holders of Common Stock, and the terms of office of all persons
who are then directors of the Corporation shall terminate immediately upon, the
election of their successors.
(c) In the case of any vacancy in the office of a director occurring
among the directors elected by the holders of the Series C Preferred Stock,
Series D Preferred Stock or Common Stock pursuant to subsection 6(b) of this
Article V, the remaining director or directors so elected by the holders of the
Series C Preferred Stock or Common Stock (as the case may be) may, by
affirmative vote of a majority of such remaining directors (or the remaining
director so elected if there is but one, or if there is no such director
remaining (as would be the case in the event of a vacancy in the director seat
to be filled by the Series D Preferred Stock), by the affirmative vote of the
holders of a majority of the shares of that class) elect a successor or
successors to hold the office for the unexpired term of the director or
directors whose place or places shall be vacant. Any director who shall have
been elected by the holders of the Series C Preferred Stock, Series D Preferred
Stock or Common Stock or any director so elected as provided in the preceding
sentence hereof, may be removed during the aforesaid term of office, whether
with or without cause, only in accordance with the provisions of the Delaware
General Corporation Law and by the affirmative vote of the holders of a majority
of the Series C Preferred Stock, Series D Preferred Stock or Common Stock, as
the case may be.
20
(d) Except as specified in subsection 5(a) hereof, prior to conversion
of the Series B Preferred Stock, the holders of Series B Preferred Stock shall
not be entitled to vote on any matters pertaining to the governance or
management of the Corporation and shall not be entitled to notice of any
stockholders' meeting.
7. Status of Converted or Redeemed Stock. In the event any shares of
-------------------------------------
Series B Preferred Stock, Series C Preferred Stock or Series D Preferred Stock
shall be converted pursuant to Section 4 above, or in the event any shares of
Series B Preferred Stock, Series C Preferred Stock or Series D Preferred Stock
shall be redeemed pursuant to Section 3 above, the shares so converted or
redeemed shall be cancelled and shall not be issuable by the Corporation. The
Restated Certificate shall be amended at such time or times as the Corporation
deems it reasonably practicable to effect the corresponding reduction in the
Corporation's authorized capital stock.
ARTICLE VI
A Director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (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 involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived any improper
personal benefit. If the Delaware General Corporation Law is amended after
approval by the stockholders of this Article VI to authorize corporate action
further eliminating or limiting the personal liability of directors then the
liability of a Director of the Corporation shall be eliminated or limited to the
fullest extent permitted by the Delaware General Corporation Law as so amended.
ARTICLE VII
The management of the business and the conduct of the affairs of the
Corporation shall be vested in its Board of Directors. The numbers of directors
which shall constitute the whole Board of Directors of the Corporation shall be
fixed by, or in the manner provided in, the Bylaws of the Corporation.
ARTICLE VIII
Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws may provide. The books of the Corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the Bylaws of the Corporation.
ARTICLE IX
Election of directors at an annual or special meeting of stockholders need
not be by written ballot unless the Bylaws of the Corporation shall so provide.
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ARTICLE X
A. At each annual meeting of stockholders, directors of the Corporation
shall be elected to hold office until the expiration of the term for which they
are elected, and until their successors have been duly elected and qualified. At
the first annual meeting of stockholders following the closing of the initial
public offering (the "First Public Company Annual Meeting") of the Corporation's
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capital stock pursuant to an effective registration statement filed under the
Securities Act of 1933, as amended (the "Initial Public Offering"), the
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directors of the Corporation shall be divided into three classes as nearly equal
in size as is practicable, hereby designated as Class I, Class II and Class III.
The term of office of the initial Class I directors shall expire at the next
succeeding annual meeting of stockholders, the term of office of the initial
Class II directors shall expire at the second succeeding annual meeting of
stockholders and the term of office of the initial Class III directors shall
expire at the third succeeding annual meeting of stockholders. For the purposes
hereof, the initial Class I, Class II and Class III directors shall be those
directors designated and elected at the First Public Company Annual Meeting. At
each annual meeting after the First Public Company Annual Meeting, directors to
replace those of a Class whose terms expire at such annual meeting shall be
elected to hold office until the third succeeding annual meeting and until their
respective successors shall have been duly elected and qualified. If the number
of directors is hereafter changed, any newly created directorships or decrease
in directorships shall be so apportioned among the classes as to make all
classes as nearly equal in number as is practicable.
B. Vacancies occurring on the Board of Directors for any reason may be
filled by vote of a majority of the remaining members of the Board of Directors,
although less than a quorum, at a meeting of the Board of Directors. A person so
elected by the Board of Directors to fill a vacancy shall hold office until the
next succeeding annual meeting of stockholders of the Corporation and until his
or her successor shall have been duly elected and qualified.
ARTICLE XI
In furtherance and not in limitation of the powers conferred by statute,
the Board of Directors is expressly authorized to make, alter, amend or repeal
the Bylaws of the Corporation.
ARTICLE XII
Effective upon the closing of the Initial Public Offering, stockholders of
the Corporation may not take action be written consent in lieu of a meeting but
must take any actions at a duly called annual or special meeting.
ARTICLE XIII
Notwithstanding any other provision of this Certificate of Incorporation
or any provision of law which might otherwise permit a lesser vote or no vote,
but in addition to any affirmative vote of the holders of the capital stock
required by law of this Certificate of Incorporation, the affirmative vote of
the holders of at least two-thirds (2/3) of the combined
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voting power of all of the then-outstanding shares of the Corporation entitled
to vote shall be required to alter, amend or repeal Articles X, XII or XIII, or
any provisions thereof.
ARTICLE XIV
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred on stockholders herein
are granted subject to this reservation.
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