EXHIBIT 3.1
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF MJBC CORP.,
a Delaware corporation
MJBC CORP., a corporation organized and existing under the laws of the
State of Delaware (the "Corporation"), certifies as follows:
1. The name of the Corporation is MJBC CORP. The Corporation's original
Certificate of Incorporation was filed with the Secretary of State of the State
of Delaware on January 24, 2001. On March 21, 2001, the Corporation filed a
Certificate of Amendment to its Certificate of Incorporation.
2. Pursuant to Sections 242 and 245 of the General Corporation Law of
the State of Delaware, this Amended and Restated Certificate of Incorporation
was adopted by the Corporation's Board of Directors (the "Board") and
stockholders.
3. The text of the Corporation's Certificate of Incorporation is hereby
restated and amended to read in its entirety as follows:
ARTICLE I.
The name of the Corporation is Xcel Pharmaceuticals, Inc.
ARTICLE II.
The address of the registered office of the Corporation in the State of
Delaware is 1209 Orange Street, City of Wilmington, County of New Castle, 19801.
The name of its registered agent 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 a corporation may be organized under the Delaware General Corporation
Law.
ARTICLE IV.
A. Classes of Stock. The Corporation is authorized to issue two classes
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of stock to be designated, respectively, "Common Stock" and "Preferred Stock."
There shall be four series of Preferred Stock to be designated, respectively,
"Series A-1 Preferred Stock," "Series A-2 Preferred Stock," "Series A-3
Preferred Stock" and "Series A-4 Preferred Stock." The total number of shares
that the Corporation is authorized to issue is Seventy-Six Million (76,000,000).
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Forty-Three Million (43,000,000) shares shall be Common Stock, par value $0.0001
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per share; Fourteen Million (14,000,000) shares shall be Series A-1 Preferred
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Stock, par value $0.0001 per share; Two Million Five Hundred Thousand
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(2,500,000) shares shall be Series A-2 Preferred Stock, par value $0.0001 per
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share; Fourteen Million (14,000,000) shares shall be Series A-3 Preferred Stock,
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par value $0.0001 per share; and Two Million Five Hundred Thousand (2,500,000)
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shares shall be Series A-4 Preferred Stock, par value $0.0001 per share. The
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Series
A-1 Preferred Stock, Series A-2 Preferred Stock, Series A-3 Preferred Stock and
Series A-4 Preferred Stock are collectively referred to herein as "Series A
Preferred Stock."
Shares of Series A-2 Preferred Stock shall only be issued by the
Corporation as a payment of dividends on outstanding shares of Series A-1
Preferred Stock pursuant to Section B.1(a) of this Article IV. Shares of Series
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A-3 Preferred Stock shall only be issued by the Corporation upon the conversion
of shares of Series A-1 Preferred Stock into Series A-3 Preferred Stock pursuant
to Section B.4(d)(i)(A) of this Article IV. Shares of Series A-4 Preferred Stock
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shall only be issued by the Corporation as a payment of dividends on outstanding
shares of Series A-3 Preferred Stock pursuant to Section B.1(a) below of this
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Article IV.
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B. Rights, Preferences and Restrictions of Preferred Stock. The rights,
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preferences, restrictions and other matters relating to the Series A Preferred
Stock are as follows (note: Section references within this Article IV.B. are to
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other Sections within this Article IV.B. unless otherwise expressly provided):
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1. Dividend Provisions. Subject to the rights of series of Preferred
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Stock which, from time to time, may come into existence:
(a) The holders of shares of Series A-1 Preferred Stock and Series
A-3 Preferred Stock shall be entitled to receive dividends on a pari pasu basis
with the holders of the Common Stock, out of any assets legally available
therefor. Such dividends shall be payable when, as and if declared by the Board.
In addition, if the Series A-1 Preferred Stock and the Series A-3 Preferred
Stock have not been converted into Common Stock pursuant to Section 4 below on
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or before September 30, 2003, dividends on the Series A-1 Preferred Stock and
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the Series A-3 Preferred Stock shall begin to accumulate from such date at the
rate of Thirty-Five Cents ($0.35) per share (subject to appropriate adjustments
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for stock splits, stock dividends, combinations or other recapitalizations) per
annum, based on a 365 day year and the number of days actually elapsed. Any such
accumulated dividends on the Series A-1 Preferred Stock shall be payable in
shares of Series A-2 Preferred Stock, and any such accumulated dividends on the
Series A-3 Preferred Stock shall be payable in shares of Series A-4 Preferred
Stock, upon the earlier of (x) immediately prior to the effective time of a
Liquidation (defined below) or (y) immediately prior to the time of the
conversion of all of the outstanding shares of Series A-1 Preferred Stock and
Series A-3 Preferred Stock into Common Stock pursuant to Section 4(b) below (any
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such event, a "Payable Date"). The number of shares of Series A-2 Preferred
Stock or Series A-4 Preferred Stock, as the case may be, issuable to a holder in
payment of such accumulated dividends on such holder's Series A-1 Preferred
Stock or Series A-3 Preferred Stock, as the case may be, shall be equal to the
quotient obtained by dividing (1) the aggregate accumulated dividends as of the
Payable Date by (2) Five Dollars ($5.00) (subject to appropriate adjustments for
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stock splits, stock dividends, combinations or other recapitalizations);
provided, however, that (x) for purposes of clause (1) above, the term
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"aggregate accumulated dividends" shall include all dividends accumulated on all
shares of Series A-1 Preferred Stock or Series A-3 Preferred Stock, as
applicable, held by any holder and (y) any fraction resulting from the foregoing
calculation shall be rounded to the nearest whole share.
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(b) The holders of the shares of Series A-2 Preferred Stock and
Series A-4 Preferred Stock shall be entitled to receive, when and as declared by
the Board, out of any assets of the Corporation legally available therefor, such
dividends as may be declared from time to time by the Board.
2. Liquidation Preference. As used herein, the "Original Series A Issue
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Price" is equal to Five Dollars ($5.00) per share (subject to appropriate
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adjustments for stock splits, stock dividends, combinations or other
recapitalizations).
(a) In the event of any liquidation, dissolution or winding up of
the Corporation (each a "Liquidation"), either voluntary or involuntary, subject
to the rights of series of Preferred Stock that, from time to time, may come
into existence, the holders of the Series A-1 Preferred Stock and the holders of
the Series A-3 Preferred Stock shall be entitled to receive, on a pari pasu
basis, and prior and in preference to any distribution of any of the assets of
the Corporation to the holders of the Series A-2 Preferred Stock, the holders of
the Series A-4 Preferred Stock or the holders of the Common Stock by reason of
their ownership thereof, an amount per share equal to two (2) times the Original
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Series A Issue Price for each outstanding share of Series A-1 Preferred Stock or
Series A-3 Preferred Stock, as the case may be. If upon the occurrence of such
event, the assets and funds thus distributed among the holders of the Series A-1
Preferred Stock and the holders of the Series A-3 Preferred Stock shall be
insufficient to permit the payment to such holders of the full aforesaid
preferential amounts (the "Primary Series A Liquidation Preference"), then,
subject to the rights of series of Preferred Stock that may from time to time
come into existence, the entire assets and funds of the Corporation legally
available for distribution shall be distributed ratably among the holders of the
Series A-1 Preferred Stock and the Series A-3 Preferred Stock in proportion to
the amount of such stock owned by each such holder.
(b) Upon the completion of the distribution in full of the Primary
Series A Liquidation Preference to the holders of the Series A-1 Preferred Stock
and the holders of the Series A-3 Preferred Stock as contemplated by Section
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2(a) above, the remaining assets of the Corporation available for distribution
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to stockholders shall be distributed ratably among the holders of Common Stock
until such holders shall have received an aggregate distribution of Sixty
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Million Dollars ($60,000,000) (the "Common Liquidation Preference").
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(c) Upon the completion of the distribution in full of the Primary
Series A Liquidation Preference to the holders of the Series A-1 Preferred Stock
and the holders of the Series A-3 Preferred Stock as contemplated in Section
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2(a) above, and the completion of the distribution in full of the Common
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Liquidation Preference to the holders of the Common Stock as contemplated by
Section 2(b) above, all of the remaining assets and funds of the Corporation
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available for distribution shall be distributed ratably among the holders of the
Series A-1 Preferred Stock, the Series A-2 Preferred Stock, the Series A-3
Preferred Stock, the Series A-4 Preferred Stock and Common Stock based on the
number of shares of Common Stock held by each such holder, assuming conversion
of all such Series A Preferred Stock.
(d) For purposes of Section 1(a) above and this Section 2, a
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Liquidation shall be deemed to be occasioned by, or to include, a sale,
conveyance or other disposal or encumbrance of (other than pursuant to a credit
arrangement in the ordinary course of business)
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all or substantially all of the assets of the Corporation or a merger into or
consolidation with any other corporation (other than a wholly-owned subsidiary
corporation or a transaction in which the stockholders of the Corporation
immediately prior to such transaction hold more than fifty percent (50%) of the
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voting power of the entity surviving such transaction) or any transaction or
series of related transactions in which more than fifty percent (50%) of the
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voting power of the Corporation is disposed of.
(i) 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 shall be valued as follows:
(A) Securities not subject to investment letter or
other similar restrictions on free marketability:
(1) If traded on a securities exchange, 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
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the closing;
(2) 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
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prior to the closing; and
(3) If there is no active public market, the
value shall be the fair market value thereof as determined in good faith by the
Board.
(B) The method of valuation of securities subject to
investment letter or other restrictions on free marketability (other than
restrictions arising solely by virtue of a stockholder's status as an affiliate
or former affiliate) shall be to make an appropriate discount from the market
value determined as above in (A) (1), (2) or (3) above to reflect the
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approximate fair market value thereof, as determined in good faith by the Board.
(ii) In the event the requirements of this Section 2(d) are
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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
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(B) cancel such transaction, in which event the
rights, preferences and privileges of the holders of the Series A 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
Section 2(d)(iii) below.
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(iii) The Corporation shall give each holder of record of
Series A Preferred Stock written notice of such impending transaction not later
than twenty (20) days prior to the stockholders' meeting called to approve such
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transaction, or twenty (20) days prior to the closing of such transaction,
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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
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Corporation shall thereafter give such holders prompt notice of any material
changes. The transaction shall in no event take place sooner than twenty (20)
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days after the Corporation has given the first notice provided for herein or
sooner than ten (10) days after the Corporation has given notice of any material
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changes provided for herein; provided, however, that such periods may be
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shortened or waived upon the written consent of the holders of a majority of the
outstanding shares of Series A Preferred Stock.
(iv) Any notice required by the provisions of this Section 2
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to be given to the holders of shares of Series A Preferred Stock shall be deemed
given if deposited in the United States mail, postage prepaid, and addressed to
each holder of record at such holder's address appearing on the books of the
Corporation.
3. Redemption. The Series A Preferred Stock is not redeemable.
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4. Conversion. The holders of the Series A Preferred Stock shall have
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conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each outstanding share of Series A Preferred
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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 by dividing the Original
Series A Issue Price by the Conversion Price applicable to such share,
determined as hereafter provided, in effect on the date the certificate is
surrendered for conversion. The initial Conversion Price per share for shares of
Series A Preferred Stock shall be the Original Series A Issue Price; provided,
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however, that the Conversion Price for the Series A Preferred Stock shall be
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subject to adjustment as set forth in Section 4(d). Notwithstanding anything in
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this Amended and Restated Certificate of Incorporation to the contrary, (i) the
Conversion Price applicable to outstanding shares of Series A-2 Preferred Stock
shall, at any time such Conversion Price is to be determined, be deemed to be
equal to the Conversion Price then applicable to the shares of the Series A-1
Preferred Stock for which such shares of Series A-2 Preferred Stock are issuable
as a payment of dividends under Section 1(a) above, and (ii) the Conversion
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Price applicable to outstanding shares of Series A-4 Preferred Stock shall, at
any time such Conversion Price is to be determined, be deemed to be equal to the
Conversion Price then applicable to the shares of Series A-3 Preferred Stock for
which such shares of Series A-4 Preferred Stock are issuable as a payment of
dividends under Section 1(a) above.
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(b) Automatic Conversion. Each share of Series A Preferred Stock
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shall automatically be converted into shares of Common Stock at the Conversion
Price at the time in effect for such Series A Preferred Stock immediately upon
the earlier of (i) the Corporation's sale of its Common Stock in a firm
commitment underwritten public offering pursuant to a registration statement
under the Securities Act of 1933, as amended (the "Securities Act"), at the
public offering price of not less than two (2) times the Original Series A Issue
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Price per share (before deducting underwriting discounts and commissions and as
adjusted to reflect stock dividends, stock splits, combinations or other
recapitalizations) and Sixty Million Dollars ($60,000,000) in the aggregate
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(before deducting underwriters discounts and commissions) or (ii) the date
specified by written consent or agreement of the holders of a majority of the
then
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outstanding shares of Series A-1 Preferred Stock and Series A-3 Preferred Stock,
voting together as a single class.
(c) Mechanics of Conversion.
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(i) Before any holder of Series A Preferred Stock shall be
entitled to convert the same into shares of Common Stock pursuant to Section
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4(a) above, such holder shall surrender the certificate or certificates
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therefor, duly endorsed, at the office of the Corporation or of any transfer
agent for the Series A Preferred Stock, and shall give written notice to the
Corporation at its principal corporate office, of the election to convert the
same and shall state therein the name or names in which the certificate or
certificates for shares of Common Stock are to be issued. The Corporation shall,
as soon as practicable thereafter, issue and deliver at such office to such
holder of Series A Preferred Stock, or to the nominee or nominees of such
holder, a certificate or certificates for the number of shares of Common Stock
to which such holder shall be entitled as aforesaid. 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 Series A 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. If the conversion is in
connection with an underwritten offering of securities registered pursuant to
the Securities Act, the conversion may, at the option of any holder tendering
Series A Preferred Stock for conversion, be conditioned upon the closing with
the underwriters of the sale of securities pursuant to such offering, in which
event the person(s) entitled to receive the Common Stock upon conversion of the
Series A Preferred Stock shall not be deemed to have converted such Series A
Preferred Stock until immediately prior to the closing of such sale of
securities.
(ii) Before any holder of Series A Preferred Stock shall be
entitled to receive a certificate or certificates evidencing the shares of
Common Stock into which such holder's shares shall have converted pursuant to
the provisions of Section 4(b) above, such holder shall surrender the
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certificate or certificates therefor, duly endorsed, at the office of the
Corporation or of any transfer agent for the Series A Preferred Stock. The
Corporation shall, as soon as practicable thereafter, issue and deliver at such
office to such holder a certificate or certificates for the number of shares of
Common Stock to which such holder shall be entitled as aforesaid.
(d) Conversion Price Adjustments for Certain Dilutive Issuances,
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Splits and Combinations. The Conversion Price of the Series A-1 Preferred Stock
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shall be subject to adjustment from time to time as follows:
(i) (A) If the Corporation shall issue, after the date upon
which any shares of Series A-1 Preferred Stock were first issued (the "Purchase
Date"), any Additional Stock (as defined below) without consideration or for a
consideration per share less than the Conversion Price for the Series A-1
Preferred Stock in effect immediately prior to the issuance of such Additional
Stock (a "Dilutive Issuance"), the Conversion Price for the Series A-1 Preferred
Stock in effect immediately prior to each Dilutive Issuance shall forthwith
(except as otherwise provided in this clause (i)) be adjusted to a price
determined by multiplying the Conversion Price of the Series A-1 Preferred Stock
in effect immediately prior to the Dilutive
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Issuance by a fraction, the numerator of which shall be the number of shares of
Common Stock outstanding immediately prior to the Dilutive Issuance (including,
without limitation, the number of shares of Common Stock issuable upon
conversion of all outstanding Preferred Stock and all other convertible
securities and the exercise of all outstanding options, warrants or other rights
to purchase Common Stock) plus the number of shares of Common Stock which the
aggregate consideration received by the Corporation for the Dilutive Issuance
would purchase at the Conversion Price for the Series A-1 Preferred Stock in
effect immediately prior to such Dilutive Issuance; and the denominator of which
shall be the number of shares of Common Stock outstanding immediately prior to
such Dilutive Issuance (including, without limitation, the number of shares of
Common Stock issuable upon the conversion of all outstanding Preferred Stock and
all other convertible securities and the exercise of all outstanding options,
warrants or other rights to purchase Common Stock) plus the number of shares of
Additional Stock issued in the Dilutive Issuance. Notwithstanding any other
provision herein to the contrary, an adjustment with respect to the Conversion
Price of Series A-1 Preferred Stock held by any holder who is a Qualified
Investor (defined below) shall only be made pursuant to this Section 4(d)(i) if
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such Qualified Investor is a Fully-Exercising Investor (defined in Section 5(b)
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below) in connection with the Dilutive Issuance. If such holder is not a
Fully-Exercising Investor in connection with such Dilutive Issuance (a
"Non-Participating Investor"), then, effective immediately prior to the
consummation of such Dilutive Issuance, (i) all shares of Series A-1 Preferred
Stock held by such Non-Participating Investor shall automatically be converted
into an equal number of shares of Series A-3 Preferred Stock, and (ii) any
shares of Series A-2 Preferred Stock issuable upon payment of accrued dividends
as provided in Section 1(a) above to such Non-Participating Investor shall
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automatically become payable in an equal number of shares of Series A-4
Preferred Stock instead of Series A-2 Preferred Stock. The Conversion Price for
any shares of Series A-3 Preferred Stock or Series A-4 Preferred Stock held by a
Non-Participating Investor shall be equal to the Conversion Price in effect
immediately prior to the Dilutive Issuance relating to such conversion and
holders of Series A-3 Preferred Stock and Series A-4 Preferred Stock shall not
be entitled to any adjustment to the Conversion Price thereof pursuant to this
Section 4(d)(i)(A).
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(B) Upon the conversion of Series A-1 Preferred Stock held by a
Non-Participating Investor by reason of Section 4(d)(i)(A) above, each
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Non-Participating Investor shall surrender to the Company the certificate or
certificates representing its Series A-1 Preferred Stock, which shall be
exchanged by the Company for a certificate representing that holder's applicable
number of shares of Series A-3 Preferred Stock (as determined pursuant to the
provisions of Section 4(d)(i)(A) above). Shares of Series A-1 Preferred Stock
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which are converted into Series A-3 Preferred Stock pursuant to the terms of
Section 4(d)(i)(A) above shall no longer be outstanding on the books of the
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Company, and the Non-Participating Investor shall, to the extent of all
converted shares of Series A-1 Preferred Stock, be treated for all purposes as
the record holder of such shares of Series A-3 Preferred Stock into which such
shares of Series A-1 Preferred Stock were so converted on the date of closing of
the Dilutive Issuance. In the event that there are any Non-Participating
Investors in connection with any Dilutive Issuance and thus the issuance of
shares reserved for such an event (e.g., Series A-3 Preferred Stock),
concurrently with such issuance, the Company shall use its best efforts to take
all such actions as may be required (including amending this Amended and
Restated Certificate of Incorporation) to (i) create and reserve for issuance a
new series (the "Non-Adjusting Preferred Stock") of Preferred Stock (together
with a corresponding series of Preferred Stock to provide for the
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payment of any dividends provided by Section 1(a) above (the "Dividend Stock"))
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with a number of shares equal in number to the number of shares of Series A-1
Preferred that will remain outstanding immediately following the closing of the
Dilutive Issuance at issue (and a number of shares of corresponding Dividend
Stock sufficient to permit the payment of dividends on such Non-Adjusting
Preferred Stock); such new series of Non-Adjusting Preferred Stock shall be
designated Series A-5 Preferred Stock, Series A-7 Preferred Stock, and so on,
and such corresponding new series of Dividend Stock shall be designated Series
A-6 Preferred Stock, Series A-8 Preferred Stock, and so on, and such new series
of Non-Adjusting Preferred Stock and the corresponding Dividend Stock shall have
the rights, preferences and privileges identical to those then applicable to the
Series A-3 Preferred Stock, except that the Conversion Price for such new series
of Non-Adjusting Preferred Stock and Dividend Stock once initially issued shall
be the applicable Conversion Price for the Series A-1 Preferred Stock in effect
immediately prior to such Dilutive Issuance and (ii) amend the provisions of
this Section 4(d) to provide the conversion of the Series A-1 Preferred Stock
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for all Non-Participating Investors in the next Dilutive Issuance, if any, will
be into shares of such Non-Adjusting Preferred Stock and the conversion of the
Series A-2 Preferred Stock for all Non-Participating Investors in the next
Dilutive Issuance, if any, will be into shares of the corresponding Dividend
Stock.
(C) No adjustment of the Conversion Price for the Series A-1
Preferred Stock shall be made in an amount less than one cent ($0.01) per share,
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provided, however, that any adjustments which are not required to be made by
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reason of this sentence shall be carried forward and shall be either taken into
account in any subsequent adjustment made prior to three (3) years from the date
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of the event giving rise to the adjustment being carried forward, or shall be
made at the end of three (3) years from the date of the event giving rise to the
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adjustment being carried forward. Except to the limited extent provided for in
subsections (F)(3) and (F)(4) below, no adjustment of such Conversion Price
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pursuant to this Section 4(d)(i) shall have the effect of increasing the
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Conversion Price above the Conversion Price in effect immediately prior to such
adjustment.
(D) In the case of the issuance of Additional Stock for cash,
the consideration shall be deemed to be the amount of cash paid therefor before
deducting any reasonable discounts, commissions or other expenses allowed, paid
or incurred by the Corporation for any underwriting or otherwise in connection
with the issuance and sale thereof.
(E) In the case of the issuance of Additional Stock for a
consideration in whole or in part other than cash, the consideration other than
cash shall be deemed to be the fair value thereof as determined by the Board in
good faith irrespective of any accounting treatment.
(F) In the case of the issuance of options to purchase or
rights to subscribe for Additional Stock, securities by their terms convertible
into or exchangeable for Additional Stock or options to purchase or rights to
subscribe for such convertible or exchangeable securities, the following
provisions shall apply for all purposes of this Section 4(d)(i) and Section
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4(d)(ii) below:
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(1) The aggregate maximum number of shares of Additional
Stock deliverable upon exercise (assuming the satisfaction of any conditions to
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exercisability, including without limitation, the passage of time, but without
taking into account potential antidilution adjustments) of such options to
purchase or rights to subscribe for Additional Stock shall be deemed to have
been issued at the time such options or rights were issued and for a
consideration equal to the consideration (determined in the manner provided in
Sections 4(d)(i)(D) and (d)(i)(E)), if any, received by the Corporation upon the
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issuance of such options or rights plus the minimum exercise price provided in
such options or rights for the Additional Stock covered thereby.
(2) The aggregate maximum number of shares of Additional
Stock deliverable upon conversion of or in exchange (assuming the satisfaction
of any conditions to convertibility or exchangeability, including, without
limitation, the passage of time, but without taking into account potential
antidilution adjustments) for any such convertible or exchangeable securities or
upon the exercise of options to purchase or rights to subscribe for such
convertible or exchangeable securities and subsequent conversion or exchange
thereof shall be deemed to have been issued at the time such securities were
issued or such options or rights were issued and for a consideration equal to
the consideration, if any, received by the Corporation for any such securities
and related options or rights (excluding any cash received on account of accrued
interest or accrued dividends), plus the minimum additional consideration, if
any, to be received by the Corporation upon the conversion or exchange of such
securities or the exercise of any related options or rights and the subsequent
conversion or exercise of such securities (the consideration in each case to be
determined in the manner provided in Sections 4(d)(i)(D) and (d)(i)(E)).
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(3) In the event of any change in the number of shares of
Additional Stock deliverable or in the consideration payable to the Corporation
upon exercise of such options or rights or upon conversion of or in exchange for
such convertible or exchangeable securities, including, but not limited to, a
change resulting from the antidilution provisions thereof, the Conversion Price
of the Series A Preferred Stock, to the extent in any way affected by or
computed using such options, rights or securities or options or rights related
to such securities, shall be recomputed to reflect such change, but no further
adjustment shall be made for the actual issuance of Additional Stock or any
payment of such consideration upon the exercise of any such options or rights or
the conversion or exchange of such securities.
(4) Upon the expiration of any such options or rights,
the termination of any such rights to convert or exchange or the expiration of
any options or rights related to such convertible or exchangeable securities,
the Conversion Price of the Series A Preferred Stock, to the extent in any way
affected by or computed using such options, rights or securities or options or
rights related to such securities, shall be recomputed to reflect the issuance
of only the number of shares of Additional Stock (and convertible or
exchangeable securities which remain in effect) actually issued upon the
exercise of such options or rights, upon the conversion or exchange of such
securities or upon the exercise of the options or rights related to such
securities.
(5) The number of shares of Additional Stock deemed
issued and the consideration deemed paid therefor pursuant to Sections
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4(d)(i)(F)(1) and (2) shall be appropriately adjusted to reflect any change,
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termination or expiration of the type described in either Section 4(d)(i)(F)(3)
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or (4) above.
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(ii) "Additional Stock" shall mean any shares of Common Stock
issued (or deemed to have been issued pursuant to Section 4(d)(i)(F) above) by
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the Corporation after the Purchase Date other than the following:
(A) Common Stock issuable or issued pursuant to a
transaction described in Sections 4(d)(iii) or 4(f) below, or
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(B) Common Stock issued or issuable upon conversion of
shares of Series A Preferred Stock (including, without limitation, shares of
Common Stock deemed issued or issuable in connection with the conversion of
Series A-1 Preferred Stock and Series A-2 Preferred Stock pursuant to Section
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4(d)(i)(A) above); or
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(C) Common Stock issued or issuable to employees, directors,
consultants or service providers of the Corporation pursuant to stock option,
stock bonus or stock purchase plans or agreements or similar plans or agreements
so long as the total number of shares of Common Stock so issuable or issued (and
not repurchased by the Corporation in connection with the termination of
employment), together with the total number of shares of Common Stock
outstanding as of the Purchase Date hereof (and not repurchased by the
Corporation in connection with the termination of employment), does not exceed
Six Million (6,000,000); or
- ----------- ---------
(D) Common Stock issued or issuable in connection with any
corporate partnering, acquisition, strategic alliance, technology transfer,
equipment or debt financing or similar transaction; provided, however, that such
-------- -------
transaction is approved by a majority of the directors elected by holders of the
Series A Preferred Stock.
(iii) In the event the Corporation should at any time or from time
to time after the Purchase Date fix a record date for the effectuation of a
split or subdivision of the outstanding shares of Common Stock or the
determination of holders of Common Stock entitled to receive a dividend or other
distribution payable in additional shares of Common Stock or other securities or
rights convertible into, or entitling the holder thereof to receive directly or
indirectly, additional shares of Common Stock (hereinafter referred to as
"Common Stock Equivalents") without payment of any consideration by such holder
for the additional shares of Common Stock or the Common Stock Equivalents
(including the additional shares of Common Stock issuable upon conversion or
exercise thereof), then, as of such record date (or the date of such dividend
distribution, split or subdivision if no record date is fixed), the Conversion
Price of the Series A Preferred Stock shall be appropriately decreased so that
the number of shares of Common Stock issuable on conversion of each share of
such series shall be increased in proportion to such increase in outstanding
shares.
(iv) If the number of shares of Common Stock outstanding at any
time after the Purchase Date is decreased by a combination of the outstanding
shares of Common Stock, then, as of the record date of such combination (or the
date of such combination if no record date is fixed), the Conversion Price for
the Series A Preferred Stock shall be appropriately increased so that the number
of shares of Common Stock issuable on conversion of each share of such series
shall be decreased in proportion to such decrease in outstanding shares.
-10-
(e) Other Distributions. In the event the Corporation shall declare
-------------------
a distribution payable in securities of other persons, evidences of indebtedness
issued by the Corporation or other persons, assets (excluding cash dividends) or
options or rights not referred to in Section 4(d)(iii), then, in each such case
-----------------
for the purpose of this Section 4(e), the holders of the Series A Preferred
-----------
Stock shall be entitled to a proportionate share of any such distribution as
though they were the holders of the number of shares of Common Stock of the
Corporation into which their shares of Series A Preferred Stock are convertible
as of the record date fixed for the determination of the holders of Common Stock
of the Corporation entitled to receive such distribution.
(f) Recapitalizations. If at any time or from time to time there
-----------------
shall be a recapitalization of the Common Stock (other than a subdivision,
combination or merger or sale of assets transaction provided for elsewhere in
this Section 4 or Section 2), provision shall be made so that the holders of the
--------- ---------
Series A Preferred Stock shall thereafter be entitled to receive upon conversion
of the Series A Preferred Stock the number of shares of stock or other
securities or property of the Corporation or otherwise, to which a holder of
Common Stock deliverable upon conversion would have been entitled on such
recapitalization. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Section 4 with respect to the rights of
---------
the holders of the Series A Preferred Stock after the recapitalization to the
end that the provisions of this Section 4 (including adjustment of the
---------
Conversion Price then in effect and the number of shares issuable upon
conversion of the Series A Preferred Stock) shall be applicable after that event
as nearly equivalent as may be practicable.
(g) No Impairment. The Corporation will not, by amendment of its
-------------
Certificate of Incorporation or through any reorganization, recapitalization,
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 4 and in the taking of all such action as may
---------
be necessary or appropriate in order to protect the Conversion Rights of the
holders of the Series A Preferred Stock against impairment.
(h) No Fractional Shares and Certificate as to Adjustments.
------------------------------------------------------
(i) No fractional shares shall be issued upon the conversion
of any share or shares of the Series A Preferred Stock, and the number of shares
of Common Stock to be issued shall be rounded to the nearest whole share taking
into account the total number of shares of Series A Preferred Stock the holder
is at the time converting into Common Stock and the number of shares of Common
Stock issuable upon such aggregate conversion.
(ii) Upon the occurrence of each adjustment or readjustment of
the Conversion Price of Series A Preferred Stock 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 A 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 A Preferred Stock, furnish or cause to be furnished
to such holder a like
-11-
certificate setting forth (A) such adjustment and readjustment, (B) the
Conversion Price for the Series A Preferred Stock at the time in effect, and (C)
the number of shares of Common Stock and the amount, if any, of other property
which at the time would be received upon the conversion of a share of Series A
Preferred Stock.
(i) Notices of Record Date. In the event of any taking by the
----------------------
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or 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, the Corporation
shall mail to each holder of Series A Preferred Stock, at least twenty (20) days
------ --
prior to the date specified therein, a notice specifying the date on which any
such record is to be taken for the purpose of such dividend, distribution or
right, and the amount and character of such dividend, distribution or right.
(j) Reservation of Stock Issuable Upon Conversion. The Corporation
---------------------------------------------
shall (A) at all times reserve and keep available out of its authorized but
unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the shares of the Series A Preferred Stock, such number of its
shares of Common Stock as shall from time to time be sufficient to effect the
conversion of all outstanding shares of the Series A Preferred Stock, and (B) at
all times reserve and keep available out of its authorized but unissued shares
of: (i) Series A-2 Preferred Stock solely for the purpose of issuing such shares
to the holders of the Series A-1 Preferred Stock, such number of its shares of
Series A-2 Preferred Stock as shall from time to time be sufficient to pay the
accumulated dividends on the shares of Series A-1 Preferred Stock in accordance
with Article IV.B.1(a) above; and (ii) Series A-4 Preferred Stock solely for the
-----------------
purpose of issuing such shares to the holders of the Series A-3 Preferred Stock,
such number of its shares of Series A-4 Preferred Stock as shall from time to
time be sufficient to pay the accumulated dividends on the shares of Series A-3
Preferred Stock in accordance with Article IV.B.1(a) above. If at any time the
-----------------
number of authorized but unissued shares of Common Stock shall not be sufficient
to effect the conversion of all then outstanding shares of the Series A
Preferred Stock, or if at any time the number of authorized but unissued shares
of Series A-2 Preferred Stock or Series A-4 Preferred Stock shall not be
sufficient to effect the payment of such accumulated dividend, if any, then in
each of the foregoing cases, in addition to such other remedies as shall be
available to the holder of such Series A 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, Series A-2
Preferred Stock or Series A-4 Preferred Stock, as applicable, to such number of
shares as shall be sufficient for such purposes, including, without limitation,
engaging in best efforts to obtain the requisite stockholder approval of any
necessary amendment to this Certificate of Incorporation.
(k) Notices. Any notice required by the provisions of this Section 4
------- ---------
to be given to the holders of shares of Series A Preferred Stock shall be deemed
given if deposited in the United States mail, postage prepaid, and addressed to
each holder of record at such holder's address appearing on the books of the
Corporation.
5. Right of First Refusal. Subject to the terms and conditions specified
----------------------
in this Section 5, each holder of at least Five Hundred Thousand (500,000)
--------- --------------------- -------
shares of Common Stock issuable or issued upon conversion of the Series A-1
Preferred Stock or any Common Stock
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issued as (or issuable upon the conversion or exercise of any warrant, right or
other security which is issued as) a dividend or other distribution with respect
to, or in exchange for or in replacement of the shares of Series A-1 Preferred
Stock (except for Non-Adjusting Preferred Stock issued pursuant to Section
4(d)(i) above) (a "Qualified Investor") shall have a right of first refusal
("Right of First Refusal") with respect to future sales by the Corporation of
its Shares (defined below). A Qualified Investor shall be entitled to apportion
the Right of First Refusal hereby granted it among itself and its partners and
affiliates in such proportions as it deems appropriate.
Each time the Corporation proposes to offer any shares of, or securities
convertible into or exercisable for any shares of, any class of its capital
stock ("Shares"), the Corporation shall first make an offering of such Shares to
each Qualified Investor in accordance with the following provisions:
(a) The Corporation shall deliver a notice by certified mail
("Notice") to the Qualified Investors stating (i) its bona fide intention to
offer such Shares, (ii) the number of such Shares to be offered, and (iii) the
price and terms, if any, upon which it proposes to offer such Shares.
(b) Within thirty (30) calendar days after giving of the Notice,
------ --
each Qualified Investor may give written notice of its intention to purchase or
obtain, at the price and on the terms specified in the Notice, up to that
portion of such Shares which equals the proportion that the number of shares of
Common Stock issued and held, or issuable upon conversion of the Series A-1
Preferred Stock then held, by such Qualified Investor bears to the total number
of shares of Common Stock then outstanding (assuming full conversion of all
convertible securities). The Corporation shall promptly, in writing, inform each
Qualified Investor that purchases all the Shares available to it (each a
"Fully-Exercising Investor") pursuant to this Section 5(b) of any other party's
------------
failure to do likewise. During the thirty (30)-day period commencing after the
------ --
Corporation's giving of such notice, each Fully-Exercising Investor shall be
entitled to give notice of its intention to purchase that portion of the Shares
for which Qualified Investors were entitled to subscribe but which were not
subscribed for by the Qualified Investors which is equal to the proportion that
the number of shares of Common Stock issued and held, or issuable upon
conversion of Series A-1 Preferred Stock then held, by such Fully-Exercising
Investor bears to the total number of shares of Common Stock issued and held, or
issuable upon conversion of the Series A-1 Preferred Stock then held, by all
Fully-Exercising Investors who wish to purchase some of the unsubscribed Shares.
(c) If all Shares which Qualified Investors are entitled to obtain
pursuant to Section 5(b) above are not elected to be purchased or obtained as
------------
provided in Section 5(b) above, the Corporation may, during the ninety (90)-day
------------ ------ --
period following the expiration of the period provided in Section 5(b) above,
------------
offer the remaining unsubscribed portion of such Shares to any person or persons
at a price not less than, and upon terms no more favorable to the offeree than
those specified in the Notice. If the Corporation does not enter into an
agreement for the sale of the Shares within such period, or if such agreement is
not consummated within sixty (60) days of the execution thereof, the right
----- --
provided hereunder shall be deemed to be revived and such Shares shall not be
offered unless first reoffered to the Qualified Investors in accordance
-13-
herewith; provided, however, none of the elections to purchase Shares made by
-------- -------
Qualified Investors shall be of any force or effect if the Corporation
determines not to sell any Shares.
(d) The Right of First Refusal in this Section 5 shall not be
---------
applicable (i) to the issuance or sale after the date hereof of securities (or
options therefor) to employees, directors, officers, consultants or service
providers pursuant to plans or agreements approved by the Corporation's Board;
(ii) to or after consummation of the Corporation's initial firmly underwritten
public offering of shares of Common Stock at a per share price not less than Ten
---
Dollars ($10.00) (subject to appropriate adjustment for stock splits, stock
- ------- -----
dividends, combinations and other recapitalizations) and an aggregate offering
price of not less than Sixty Million Dollars ($60,000,000) (a "Qualifying IPO");
--------------------- ----------
(iii) to the issuance of securities in connection with any corporate partnering,
acquisition, strategic alliance, technology transfer, equipment or debt
financing or similar transactions, provided, however, that such transaction is
-------- -------
approved by the Corporation's Board of Directors, including a majority of the
directors elected by the holders of the Series A Preferred Stock; (iv) to the
issuance of securities pursuant to the conversion or exercise of convertible or
exercisable securities (including, without limitation, the conversion of Series
A-1 Preferred Stock into Series A-2 Preferred Stock or the conversion of Series
A-2 Preferred Stock into Series A-4 Preferred Stock pursuant to Section
-------
4(d)(i)(A) above); (v) to the issuance of securities in connection with any
- ----------
stock split, stock dividend or recapitalization; (vi) to the purchase by any
Qualified Investor pursuant to the Right of First Refusal set forth in this
Section 5; (vii) to the issuance of securities in connection with a bona fide
- ---------
business acquisition of or by the Corporation whether by merger, consolidation,
sale of assets, sale or exchange of stock or otherwise; or (viii) any issuance
of securities for which the holders of a majority of the Series A-1 Preferred
Stock determine to waive the Right of First Refusal granted pursuant to this
Section 5.
- ---------
(e) The Right of First Refusal in this Section 5 shall terminate
---------
upon the consummation of the Qualifying IPO.
6. Voting Rights.
-------------
(a) General. Except as provided in Section 6(b) below, the holder of
------- -----------
each outstanding share of Series A Preferred Stock shall have the right to one
---
(1) vote for each share of Common Stock into which such Series A Preferred Stock
-
could then be converted, and with respect to such vote, such holder shall have
full voting rights and powers equal to the voting rights and powers of the
holders of Common Stock, and shall be entitled, notwithstanding any provision
hereof, to notice of any stockholders' meeting in accordance with the
Corporation's Bylaws (the "Bylaws"), and shall be entitled to vote, together
with holders of Common Stock, with respect to any question upon which holders of
Common Stock have the right to vote. Fractional votes shall not, however, be
permitted and any fractional voting rights available on an as-converted basis
(after aggregating all shares into which shares of Series A Preferred Stock held
by each holder could be converted) shall be rounded to the nearest whole number
(with one-half being rounded upward).
(b) Approval of Merger, Acquisition or Change of Control. No merger,
----------------------------------------------------
acquisition, change of control or disposition of all or substantially all of the
assets of the Corporation shall be effected without the approval of the
outstanding shares of Series A
-14-
Preferred Stock and Common Stock, with each voting as a separate class. For
purposes of any such vote, all shares of Series A Preferred Stock shall vote
together as a single class. At any meeting held for the purpose of voting on any
merger, acquisition, change of control or disposition of all or substantially
all of the assets of the Corporation, the presence in person or by proxy of the
holders of a majority of the Series A Preferred Stock then outstanding shall
constitute a quorum of the Series A Preferred Stock for the purpose of the
separate class vote of the holders of the Series A Preferred Stock on such
transaction and the presence in person or by proxy of the holders of a majority
of the Common Stock then outstanding shall constitute a quorum of the Common
Stock for purposes of the separate class vote of the holders of Common Stock on
such transaction.
7. Protective Provisions. So long as at least Three Million Five Hundred
--------------------- --------------------------
Thousand (3,500,000) shares of Series A Preferred Stock are outstanding (subject
- -------- ---------
to appropriate adjustment for stock splits, stock dividends, combinations or
other recapitalizations), the Corporation shall not without first obtaining the
approval (by vote or written consent) of the holders of a majority of the then
outstanding shares of Series A Preferred Stock:
(a) amend or waive any provision of this Certificate of
Incorporation or the Bylaws that adversely alters or changes the rights,
preferences or privileges of the outstanding shares of Series A Preferred Stock;
(b) authorize or issue, or obligate itself to issue, any other
equity security, including any other security convertible into or exercisable
for any equity security, having a preference over, or being on a parity with,
the Series A Preferred Stock with respect to voting, dividends or upon
liquidation;
(c) sell, convey or otherwise dispose of or encumber (other than
pursuant to a credit arrangement in the ordinary course of business) all or
substantially all of its assets or merge into or consolidate with any other
corporation (other than a wholly-owned subsidiary corporation) or effect any
transaction or series of related transactions in which more than fifty percent
-------------
(50%) of the voting power of the Corporation is disposed of;
--
(d) redeem any shares of Common Stock (other than repurchases of
stock from any of the Corporation's employees, directors or consultants upon the
termination of service of such persons or repurchases of shares in connection
with the Corporation's stock option or compensation plans);
(e) declare or pay any dividend on any shares of Common Stock or
Preferred Stock;
(f) increase or decrease the authorized size of the Board;
(g) increase the number of shares of Common Stock subject to any of
the Corporation's stock option or issuance plans in excess of the sum of (i) One
---
Million Four Hundred Eighty Thousand (1,480,000) shares plus (ii) all Four
- ------------------------------------ --------- ----
Million Five Hundred Twenty Thousand (4,520,000) shares of Common Stock
- ------------------------------------ ---------
outstanding as of the date hereof that are repurchased by the Corporation in
connection with the termination of employment or service to the Corporation; or
-15-
(h) take any action that would result in the taxation of the holders
of Series A Preferred Stock under Section 305 of the Internal Revenue Code of
1986.
8. Status of Converted Stock. In the event any shares of Series A
-------------------------
Preferred Stock shall be converted pursuant to Section 4 above (including,
---------
without limitation, the conversion, if any, of shares of Series A-1 Preferred
Stock into shares of Series A-3 Preferred Stock pursuant to Section 4(d)(i)(A)),
the shares so converted shall be cancelled and shall not thereafter be issuable
by the Corporation. This Certificate of Incorporation shall be appropriately
amended to effect the corresponding reduction in the Corporation's authorized
capital stock.
9. Repurchase of Shares. In connection with any repurchases by the
--------------------
Corporation of its Common Stock pursuant to agreements with the holders thereof,
Section 502 and 503 of the California General Corporation Law shall not apply in
whole or part with respect to such repurchases.
C. Common Stock.
------------
1. Dividend Rights. Subject to the prior rights of holders of all classes
---------------
of stock at the time outstanding having prior rights as to dividends, the
holders of the Common Stock shall be entitled to receive, when and as declared
by the Board, out of any assets of the Corporation legally available therefor,
such dividends as may be declared from time to time by the Board.
2. Liquidation Rights. Upon the liquidation, dissolution or winding up of
------------------
the Corporation, the assets of the Corporation shall be distributed as provided
in Article IV.B.2.
3. Redemption. The Common Stock is not redeemable.
----------
4. Voting Rights. Without limiting the provision of Section 6(b) above,
------------- -----------
the holder of each share of Common Stock shall have the right to one vote, and
shall be entitled to notice of any stockholders' meeting in accordance with the
Bylaws, and shall be entitled to vote upon such matters and in such manner as
may be provided by law.
ARTICLE V.
A. Exculpation. 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 hereafter
amended to further reduce or to authorize, with the approval of the
Corporation's stockholders, further reductions in the liability of the
Corporation's directors for breach of fiduciary duty, then a director of the
Corporation shall not be liable for any such breach to the fullest extent
permitted by the Delaware General Corporation Law as so amended.
-16-
B. Indemnification. To the extent permitted by applicable law, the
---------------
Corporation is also authorized to provide indemnification of (and advancement of
expenses to) any director, officer or agent of the Corporation (and any other
persons to which Delaware law permits the Corporation to provide
indemnification) through bylaw provisions, agreements with such agents or other
persons, vote of stockholders or disinterested directors or otherwise, in excess
of the indemnification and advancement otherwise permitted by Section 145 of the
Delaware General Corporation Law, subject only to limits created by applicable
Delaware law (statutory or non-statutory), with respect to actions for breach of
duty to the Corporation, its stockholders, and others.
C. Effect of Repeal or Modification. Any repeal or modification of any of
--------------------------------
the foregoing provisions of this Article V shall not adversely affect any right
---------
or protection of a director, officer or agent of the Corporation (or any other
person to which Delaware law permits the Corporation to provide indemnification)
existing at the time of, or increase the liability of any director, officer or
agent of the Corporation (or other person) with respect to any acts or omissions
of such director, officer or agent (or other person) occurring prior to, such
repeal or modification.
ARTICLE VI.
The Corporation shall have perpetual existence.
ARTICLE VII.
Except as otherwise provided in this Certificate of Incorporation, in
furtherance and not in limitation of the powers conferred by statute, the Board
is expressly authorized to make, repeal, alter, amend and rescind any or all of
the Bylaws.
ARTICLE VIII.
Elections of directors need not be by written ballot except and to the
extent provided in the Bylaws.
ARTICLE IX.
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 upon stockholders
herein are granted subject to this reservation.
-17-
IN WITNESS WHEREOF, this Amended and Restated Certificate of
Incorporation has been executed as of this 29th day of March, 2001.
MJBC CORP.
By: /s/ MICHAEL T.BORER
------------------------------------
Michael T. Borer, President and
Chief Executive Officer
-18-