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EXHIBIT 3(i).1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
CORAL SYSTEMS, INC.
Coral Systems, Inc., a corporation organized and existing under the laws
of the State of Delaware, hereby certifies as follows:
FIRST: The name of the corporation is Coral Systems, Inc.
SECOND: The date of filing of its original Certificate of
Incorporation with the Secretary of State of Delaware was April 6, 1995.
THIRD: The Certificate of Incorporation of said corporation shall be
amended and restated to read in full as follows:
"I.
The name of this Corporation is Coral Systems, Inc.
II.
The address of the registered office of the Corporation in the State of
Delaware is:
The Corporation Trust Company
1209 Orange Street
Wilmington, DE 19801
County of New Castle
The name of the Corporation's registered agent at such address is The
Corporation Trust Company.
III.
The purpose of the Corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
the State of Delaware.
IV.
This Corporation is authorized to issue two classes of stock to be
designated, respectively, "Common Stock" and "Preferred Stock." The total
number of shares the
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corporation is authorized to issue is Forty-five Million (45,000,000) shares,
(i) Thirty Million (30,000,000) shares of which shall be Common Stock (the
"Common Stock") and (ii) Fifteen Million (15,000,000) shares of which shall be
Preferred Stock (the "Preferred Stock"). The Common Stock and the Preferred
Stock shall have a par value of one-tenth of one cent ($.001) per share.
A. COMMON STOCK.
1. Voting Rights. Each holder of Common Stock of record
entitled to vote shall have one vote for each share of stock standing in his
name on the books of the Corporation, except that in the election of directors
he shall have the right to vote such number of shares for as many persons as
there are directors to be elected; provided, however, that the holders of
Common Stock shall not have the right to vote for the directors designated by
the Series A Preferred Stock, Series B Preferred Stock and Series C Preferred
Stock pursuant to Subsection C(3) of this Article IV. Cumulative voting shall
not be allowed in the election of directors.
B. PREFERRED STOCK. The Preferred Stock shall be divided into series.
The first series shall consist of 2,000,000 shares and is designated "Series A
Preferred Stock." The second series shall consist of 2,083,333 shares and is
designated "Series B Preferred Stock." The third series shall consist of
1,850,000 shares and is designated "Series C Preferred Stock." The remaining
shares of Preferred Stock may be divided into and issued in one or more series
as may be established and determined from time to time by resolution of the
board of directors. The board of directors shall have authority, within the
limitations set forth in the Delaware General Corporation Law and this
Certificate of Incorporation, to fix and determine the relative rights and
preferences of each series so established and the variations in the relative
rights and preferences as between series. Notwithstanding anything in this
Certificate of Incorporation, and in particular but without limitation Article
IV.C.3.d., to the contrary, the Board of Directors shall have the authority
without stockholder approval to designate a series of Preferred Stock
subsequent to the Series C Preferred Stock for issuance only to Cincinnati Bell
Information Systems Inc. or its successor or permitted assignee (the "Series C
Holder") with attributes substantially the same as the Series C Preferred Stock
but at a price and all associated price terms to be determined as set forth in
Article VI of that certain Amended and Restated Investor Rights Agreement,
dated as of March 15, 1996, by and among the Corporation, the Series C Holder
and the other parties set forth therein (the "Option").
Each series of Preferred Stock shall be so designated as to
distinguish it from the shares of all other series and classes. All shares of
any one series shall be identical in all respects with all other shares of the
same series. All series of Preferred Stock shall be identical with each other,
except that there may be variation as to the relative rights and preferences of
each series with respect to the following: (a) the number of shares initially
constituting such series and the distinctive designation of such series; (b)
the rate of dividend, time of payment of dividends, whether dividends are
cumulative and the date from which any dividends shall accrue; (c) whether
shares may be redeemed and, if so, the redemption price and the terms and
conditions of redemption; (d) the priority, if any, and the amount payable upon
shares in the
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event of liquidation (voluntary or involuntary); (e) sinking fund provisions,
if any, for the redemption or purchase of shares and the terms and amount of
any such fund; (f) the terms and conditions on which shares may be converted if
the shares of any series are issued with the privilege of conversion; and (g)
voting rights, if any, in addition to those provided by law.
Prior to the issuance of any shares of Preferred Stock of any
series authorized as hereinbefore provided, a statement setting forth a copy of
the resolution or resolutions with respect to such series adopted by the board
of directors of the Corporation pursuant to the foregoing authority vested in
said board shall be made and filed in accordance with the then applicable
requirements of the Delaware General Corporation Law.
The number of authorized shares of stock of any series may be
increased or decreased (but not below the number of shares thereof then
outstanding) by resolution or resolutions of the board of directors and the
filing of a statement complying with the foregoing requirements.
Subject to Section C.2 hereof, in the event of any liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
the holders of each series of Preferred Stock shall be entitled to such rights
as the Board of Directors in establishing such series shall determine. If the
assets of the Corporation distributable to the holders of the Preferred Stock
are not sufficient to pay the holders of each series in full in accordance with
the terms fixed for each series, holders of all shares of Preferred Stock shall
participate ratably in the distribution of assets in proportion to the full
amounts to which they are entitled, except that if any series, by the terms
fixed therefor, has a liquidation preference over any other series, the amount
distributable shall first be applied, on the same principle, to all such series
in order of preference.
C. RIGHTS AND PREFERENCES OF PREFERRED STOCK
1. Dividends. The holders of the Series A Preferred Stock, the
Series B Preferred Stock and the Series C Preferred Stock shall be entitled to
receive, out of funds legally available therefor, dividends at the same rate as
dividends (other than dividends paid in additional shares of Common Stock) are
paid with respect to the Common Stock (treating each share of Series A
Preferred Stock, Series B Preferred Stock and Series C Preferred Stock as being
equal to the number of shares of Common Stock into which each such share of
Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock
could be converted pursuant to the provisions of Subsection 4 of this Section
C, as applicable, with such number determined as of the record date for the
determination of holders of Common Stock entitled to receive such dividend).
Such dividends shall be payable only when, as and if declared by the Board of
Directors. So long as any shares of Series B Preferred Stock or Series C
Preferred Stock shall be outstanding no dividend, whether in cash or property,
shall be paid or declared, on the Common Stock or any series of Preferred Stock
unless comparable dividends are paid on all of the Series B Preferred Stock and
Series C Preferred Stock (treating each share of Preferred Stock as being equal
to the number of shares of Common Stock into which each share of such
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Preferred Stock could be converted pursuant to the provisions of Subsection 4
hereof with such number determined as of the record date for the determination
of holders of Common Stock entitled to receive such dividend).
2. Liquidation.
a. In the event of a liquidation, dissolution or winding
up of the Corporation, the Series C Holder shall have a right of first refusal
(the "Right of First Refusal") to purchase the Intellectual Property of the
Corporation at fair market value prior to the payment of any liquidation
preferences and the proceeds received by the Corporation pursuant to such
purchase shall be distributed as provided herein; provided, however, that none
of the events described in Section 2.c hereof shall be deemed to be a
liquidation, dissolution or winding up for purposes of this Right of First
Refusal. Upon the occurrence of an event of liquidation, dissolution or
winding up of the Corporation, the Corporation promptly shall provide written
notice of such event to the Series C Holder. The Series C Holder must provide
written notice of its intent to exercise the Right of First Refusal within
thirty (30) days of the date of the notice provided by the Corporation. As
used herein, "Intellectual Property" shall mean each domestic and foreign
letter patent, patent application, patent license, software license, trade
name, trademark, unpatented invention, service mark, trademark registration,
trademark application, service mark registration, service mark application,
registered copyright, copyright registrations applied for and all copyrights in
software (whether registered or not), as are owned by, registered in the name
of, or licensed to and used by the Corporation in its business. The fair
market value of the Intellectual Property shall be determined by the
Corporation and the Purchaser. If the Corporation and the Purchaser cannot
agree upon a fair market value within thirty (30) days of the date of the
notice provided by the Purchaser to the Corporation, the parties shall mutually
agree upon an independent third party appraiser with experience in valuing
intellectual property of software companies who shall determine the fair market
value within thirty (30) days. If the parties cannot agree within fifteen (15)
days upon such independent third party appraiser, such appraiser shall be
selected by the American Arbitration Association. If either party disagrees
with the fair market value as determined by such appraiser, then the
Corporation and the Purchaser shall mutually agree upon a second appraiser in
accordance with the foregoing procedure. If the two appraisers cannot agree
upon a fair market value within thirty (30) days, the two appraisers shall
appoint a third appraiser who shall determine the fair market value within
thirty (30) days. The decision of the third appraiser shall be final and
binding. The cost of the appraisal shall be borne by the Corporation. The
closing of the purchase of the Intellectual Property shall take place on the
thirtieth (30th) day following the determination of the fair market value as
provided above at a time and place mutually agreeable to the parties.
b. In the event of any liquidation, dissolution or winding
up of the Corporation, whether voluntary or involuntary, the holders of the
Series C Preferred Stock shall be entitled to be paid prior and in preference
to any distribution of any assets, capital, surplus or earnings of the
Corporation to the holders of the Common Stock of the Corporation or any other
class of capital stock of the Corporation (including without limitation, the
Series B Preferred
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Stock and Series A Preferred Stock) out of the assets of the Corporation
available for distribution to its shareholders, an amount equal to $2.3207 per
share for each share of the Series C Preferred Stock then held by them
(adjusted for any stock split, combination, consolidation, or stock
distributions or stock dividends with respect to such shares) together with an
amount equal to all accrued and unpaid dividends with respect to shares of the
Series C Preferred Stock.
If upon the occurrence of such event, the assets and funds thus
distributable among the holders of the Series C Preferred Stock shall be
insufficient to permit the payment to such holders of the full aforesaid
preferential amount, then the entire assets and funds of the Corporation
legally available for distribution shall be distributed ratably among the
holders of the Series C Preferred Stock in proportion to the amount of such
stock owned by each such holder. After the payment in full of the liquidation
preference on the Series C Preferred Stock, before any distribution or payment
shall be made to any holders of Series A Preferred Stock or any Common Stock,
the holders of the Series B Preferred Stock shall be entitled to be paid out
the assets of the Corporation available for distribution to its shareholders,
an amount equal to $2.16 per share for each share of Series B Preferred Stock
then held by them (adjusted for any stock split, combination, consolidation, or
stock distributions or stock dividends with respect to such shares), plus
accrued and unpaid dividends, if any, on such shares, and no more, before any
payment shall be made or any assets distributed to the holders of the Series A
Preferred Stock or the Common Stock. If upon the occurrence of such event, the
assets and funds thus distributable among the holders of the Series B Preferred
Stock shall be insufficient to permit the payment to such holders of the full
aforesaid preferential amounts, then, subject to the rights of series Preferred
Stock which 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 B Preferred Stock in
proportion to the amount of such stock owned by each such holder. Following
such distribution to the holders of the Series B Preferred Stock and Series C
Preferred Stock, the holders of the Series A Preferred Stock shall be entitled
to be paid out of the assets of the Corporation available for distribution to
its shareholders, an amount equal to $1.00 per share for each share of Series A
Preferred Stock then held by them (adjusted for any stock split, combination,
consolidation, or stock distributions or stock dividends with respect to such
shares), plus accrued and unpaid dividends, if any, on such shares, and no
more, before any payment shall be made or any assets distributed to the holders
of the Common Stock. If upon the occurrence of such event, the assets and
funds thus distributable among the holders of Series A 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 A Preferred Stock in proportion to the amount of such
stock owned by each such holder. Following such distribution to the holders of
the Series A Preferred Stock and Series B Preferred Stock and Series C
Preferred Stock, the holders of the Corporation's Common Stock shall be
entitled to receive out of the remaining assets of the Corporation available
for distribution an amount equal to $.33 per share. If upon the occurrence of
such event, the assets and funds thus distributable among the holders of the
Common 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 Common Stock in
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proportion to the amount of such stock owned by each such holder. After
payment in full of the above rights to the holders of the Series A Preferred
Stock, the Series B Preferred Stock, the Series C Preferred Stock and the
Common Stock, the entire remaining assets and funds of the Corporation legally
available for distribution, if any, shall be distributed among the holders of
the Common Stock, the Series A Preferred Stock, the Series B Preferred Stock
and the Series C Preferred Stock in proportion of the number shares of Common
Stock then held by them (treating each share of Series A Preferred Stock,
Series B Preferred Stock and Series C Preferred Stock as being equal to the
number of shares of Common Stock into which each such share of Series A
Preferred Stock, Series B Preferred Stock and Series C Preferred Stock, as
applicable, could be converted pursuant to the provisions of Subsection 4 of
this Section C, with such number determined as of the record date for the
determination of holders of Common Stock entitled to receive such amounts).
c. A consolidation or merger (other than a merger where
the Corporation is the surviving entity and at least a majority of the
aggregate outstanding capital stock (on a fully diluted basis) of the surviving
entity is owned immediately after such merger by shareholders of the
Corporation immediately prior to such merger) of this Corporation with or into
any other corporation or entity (other than a wholly-owned subsidiary), or the
sale, transfer or other disposition of all or substantially all of the assets
of this Corporation or the effectuation by the Corporation of a transaction or
series of related transactions in which more than 51% of the voting power of
the Corporation is disposed of shall be deemed to be a liquidation, dissolution
or winding up within the meaning of this Subsection 2.
3. Voting Rights.
a. Each holder of Series A Preferred Stock, Series B
Preferred Stock and Series C Preferred Stock shall have one vote for each share
(but not for any fractional share) of Common Stock that such holder would then
be entitled to receive if he were to convert his shares of Series A Preferred
Stock, Series B Preferred Stock or Series C Preferred Stock as applicable, into
shares of Common Stock pursuant to Subsection 4 of this Section C and shall
have the right to vote on all matters in like manner as the holders of the
Corporation's Common Stock, except for the election of directors. Except as
may be otherwise required by law or set forth herein, the holders of the Series
A Preferred Stock, Series B Preferred Stock, and Series C Preferred Stock and
the holders of the Common Stock shall at all times vote together as one class
and the Preferred Stock shall otherwise have the same voting rights of the
Common Stock. In addition to the foregoing voting rights, the holders of the
Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock
shall also have the special voting rights set forth in this Subsection 3.
Cumulative voting shall not be allowed in the election of directors or for any
other purpose.
b. So long as any shares of Series B Preferred Stock are
outstanding, the Corporation's Board of Directors shall consist of seven
members and the holders of the Series B Preferred Stock, voting separately as a
single class, shall be entitled to elect two directors. So long as any shares
of Series C Preferred Stock are outstanding, the Corporation's
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Board of Directors shall consist of seven members and the holders of Series C
Preferred Stock, voting separately as a class, shall be entitled to elect one
director. So long as any shares of Series A Preferred Stock are outstanding,
the holders of the Series A Preferred Stock, voting separately as a class,
shall be entitled to elect one director. The holders of the Common Stock, as a
class, shall be entitled to elect three members of the Board of Directors
provided, however, that one such director shall be an independent director with
no affiliation with the Corporation or any of its executive officers. Until
the Series C Preferred Qualified Public Offering (as defined in Subsection
4.b(2) hereof), in the event that (i) the Board of Directors shall consist of
greater than seven members and (ii) the Series C Holder shall have purchased
all of the shares of Preferred Stock that it is entitled to purchase under the
Option, the Series C Holder shall be entitled to elect that number of members
of the Board of Directors (the "Number of Series C Directors") equal to the
product obtained by multiplying (x) the number of Equity Securities On A Fully
Diluted Basis owned by the Series C Holder divided by the number of Equity
Securities On A Fully Diluted Basis both outstanding as of a certain date, by
(y) the total number of members of the Board of Directors as of such certain
date; provided that if the product of the foregoing clauses (x) and (y) shall
include a fractional number, the Number of Series C Directors shall be rounded
to the nearest whole number and provided further that if the resulting Number
of Series C Directors has the effect of reducing the number of directors
elected by stockholders other than elected hereunder by the Series C Holder,
then the number of directors shall be increased by that number of directors
necessary to enable the holders of the Series C Preferred Stock, the Series B
Preferred Stock, the Series A Preferred Stock and the Common Stock to elect
such number of directors as is set forth in this Subsection 3.b. The Number of
Series C Directors shall be calculated in accordance with the foregoing only
upon the date upon which the conditions set forth in clauses (i) and (ii) of
this paragraph are first met.
c. For purposes of Subsection 3.b hereof, the following
terms are defined as hereinafter set forth. "Equity Securities" shall mean (i)
any stock or similar security of the Corporation, (ii) any security
convertible, with or without consideration, into any stock or similar security
(including any option to purchase such a convertible security), (iii) any
security carrying any warrant or right to subscribe to or purchase any stock or
similar security or (iv) any such warrant or right. "On A Fully Diluted Basis"
shall refer to the number of shares of Common Stock of the Corporation which
would be outstanding and issued assuming that all shares of Common Stock which
are issuable (i) upon the conversion or exchange of the Corporation's
outstanding convertible or exchangeable securities, including notes and
debentures, and (ii) upon the exercise of the Corporation's outstanding options
and warrants for the purchase of Common Stock and rights to subscribe for or
purchase Common Stock, were in fact issued.
d. So long as any Series A Preferred Stock is outstanding
with respect to the vote of holders of Series A Preferred Stock, so long as any
Series B Preferred Stock is outstanding with respect to the vote of holders of
Series B Preferred Stock and so long as the Series C Preferred Stock is
outstanding with respect to the vote of holders of Series C Preferred Stock,
the Corporation shall not:
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(1) without the affirmative vote or written consent
of the holders of at least a majority of the then outstanding shares of Series
A Preferred Stock, the then outstanding shares of Series B Preferred Stock and
the then outstanding shares of Series C Preferred Stock (adjusted appropriately
for stock splits, stock dividends and the like and treating each share of
Preferred Stock as being equal to the number of shares of Common Stock into
which each such share of Preferred Stock could then be converted pursuant to
the provisions of Subsection 4 of this Section C), voting together as a single
class, authorize any (a) consolidation or merger of the Corporation with or
into any other corporation or entity (other than (A) a merger where at least a
majority of the aggregate outstanding capital stock (On A Fully Diluted Basis)
of the surviving entity is owned immediately after such merger by shareholders
of the Corporation immediately prior to such merger and (B) a merger into or
with a wholly-owned subsidiary of the Corporation with the requisite
shareholder approval); (b) the sale, lease or disposal of all or substantially
all of its assets, or any assets that are necessary for the conduct of the
Corporation's business; or (c) the dissolution, liquidation or winding up of
the Corporation;
(2) without the affirmative vote or written consent
of the holders of a majority of the of the then outstanding shares of Series A
Preferred Stock, voting separately as a class, (a) alter or change, the
preferences, special rights or powers given to the Series A Preferred Stock; or
(b) create any class of stock ranking equal or prior to the Series A Preferred
Stock as to dividends or upon liquidation;
(3) without the affirmative vote or written consent
of the holders of a majority of the then outstanding shares of the Series B
Preferred Stock, voting separately as a class, (adjusted appropriately for
stock splits, stock dividends and the like), authorize or issue any other
equity security senior to or on a parity with the Series B Preferred Stock as
to liquidation preferences, redemptions, or dividend rights or with any special
voting rights; or
(4) without the affirmative vote or written consent
of the holders of a majority of the then outstanding shares of the Series C
Preferred Stock, voting separately as a class (adjusted appropriately for stock
splits, stock dividends and the like), authorize or issue any other equity
security senior to or on a parity with the Series C Preferred Stock as to
liquidation preferences, redemptions, or dividend rights or with any special
voting rights.
4. Conversion.
a. Optional Conversion. The holders of the Series A
Preferred Stock, Series B Preferred Stock and Series C Preferred Stock shall
have the right, at their option, to convert shares of the Series A Preferred
Stock, Series B Preferred Stock or Series C Preferred Stock, as applicable,
into shares of the Common Stock of the Corporation at any time and from time to
time on the following terms and conditions:
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(1) Shares of the Series A Preferred Stock shall be
converted upon the written election of the holder thereof at the office of the
Corporation or any transfer agent for such stock, into shares of the Common
Stock at a conversion price equal to $1.00 per share of Common Stock, such that
as of February 16, 1995 each share of Series A Preferred Stock shall be
convertible into one share of Common Stock, which rate shall be adjusted as
hereinafter provided (and, as so adjusted, is hereinafter referred to as the
"Series A Conversion Rate").
(2) Each share of Series B Preferred Stock shall be
converted, at the written election 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 shares of Common Stock as is
determined by dividing $2.16 by the Series B Conversion Price applicable to
such share, determined as hereinafter provided, in effect on the date the
certificate is surrendered for conversion (the "Series B Conversion Rate").
The price at which shares of Common Stock shall be deliverable upon conversion
of shares of the Series B Preferred Stock (the "Series B Conversion Price")
shall initially be $1.08 per share of Common Stock. Such initial Series B
Conversion Price shall be adjusted as hereinafter provided.
(3) Each share of Series C Preferred Stock shall be
converted, at the written election of the holder thereof, at any time after the
date of the issuance of such share, at the office of the Corporation or any
transfer agent for such stock into such number of shares of Common Stock as is
determined by dividing $2.3207 by the Series C Conversion Price applicable to
such share, determined as hereinafter provided, in effect on the date the
certificate is surrendered for conversion (the "Series C Conversion Rate").
The Series C Conversion Price shall initially be $2.3207 per share of Common
Stock for purposes of determining the number of shares of Common Stock set
forth in the immediately preceding sentence. Such initial Series C Conversion
Price shall be adjusted as hereinafter provided.
b. Automatic Conversion. Each share of Series A Preferred
Stock, Series B Preferred Stock and Series C Preferred Stock shall
automatically be converted on the following terms and conditions:
(1) Each share of Series A Preferred Stock and Series
B Preferred Stock shall automatically be converted into shares of the
Corporation's Common Stock at the Series A Conversion Rate or Series B
Conversion Rate, as applicable, upon the earlier to occur of (i) the closing of
the sale of the Corporation's Common Stock in a firm commitment, underwritten
public offering registered under the Securities Act of 1933, as amended, (other
than a registration relating solely to a transaction under Rule 145 of such act
(or any successor thereto) or to an employee benefit plan of the Corporation),
at a public offering price, equal to or exceeding a price five times the then
applicable Series B Conversion Price and the aggregate gross proceeds to the
Corporation and/or any selling stockholders of which equal or exceed $7,500,000
(a "Qualified Public Offering"); and (ii) with respect to the Series A
Preferred Stock, the date specified by vote or written consent or agreement of
holders of a majority of the then outstanding shares of the Series A Preferred
Stock to exercise their conversion right and, with
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respect to the Series B Preferred Stock, the date specified by vote or written
consent or agreement by holders of a majority of the then outstanding shares of
the Series B Preferred Stock.
(2) Each share of Series C Preferred Stock shall
automatically be converted into shares of the Corporation's Common Stock at the
Series C Conversion Rate upon the earlier to occur of (i) the closing of the
sale of the Corporation's Common Stock in a firm commitment, underwritten
public offering registered under the Securities Act of 1933, as amended, (other
than a registration relating solely to a transaction under Rule 145 of such act
(or any successor thereto) or to an employee benefit plan of the Corporation),
at a public offering price with aggregate gross proceeds to the Corporation
and/or any selling stockholders which equal or exceed $15,000,000; provided,
however, that the number of shares sold in such public offering shall not be
less than fifteen percent (15%) of the Corporation's Equity Securities
outstanding immediately after such public offering (a "Series C Preferred
Qualified Public Offering") and (ii) the date specified by vote or written
consent or agreement of holders of a majority of the then outstanding shares of
the Series C Preferred Stock to exercise their conversion right.
c. Fractional Shares. The Corporation shall not issue, in
connection with the conversion of shares of the Series A Preferred Stock,
Series B Preferred Stock or Series C Preferred Stock, certificates for
fractions, but in lieu thereof shall pay to any person who would otherwise be
entitled thereto an amount of cash equal to such fraction multiplied by the
fair value of the Common Stock, as determined by the Board of Directors, whose
determination shall be conclusive.
d. Effective Date of Conversion. The issuance by the
Corporation of shares of Common Stock upon a conversion of Series A Preferred
Stock, Series B Preferred Stock or Series C Preferred Stock into shares of
Common Stock made at the option of the holder thereof pursuant to Subsection
4.a hereof shall be effective as of the date of the surrender of the
certificate or certificates for the Series A Preferred Stock, Series B
Preferred Stock, or Series C Preferred Stock to be converted, duly assigned or
endorsed for transfer to the Corporation (or accompanied by duly executed stock
powers relating thereto). The issuance by the Corporation of shares of Common
Stock upon a conversion of Series A Preferred Stock, Series B Preferred Stock
or Series C Preferred Stock into Common Stock pursuant to Subsection 4.b hereof
shall not be deemed to be effective until immediately prior to the closing of
the Qualified Public Offering or the Series C Preferred Qualified Public
offering, as the case may be. On and after the effective date of conversion,
the person or persons entitled to receive the Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or holders of
such shares of Common Stock. If surrendered certificates for the Series A
Preferred Stock, the Series B Preferred Stock or Series C Preferred Stock are
converted only in part, the Corporation will issue and deliver to the holder,
or to his nominee or nominees, a new certificate or certificates representing
the aggregate of the unconverted shares of Series A Preferred Stock, Series B
Preferred Stock or Series C Preferred Stock.
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e. Adjustments to Series A Conversion Rate. The Series A
Conversion Rate shall be subject to adjustment as follows:
(1) In case the Corporation shall (i) pay a dividend
or make a distribution on its Common Stock in shares of the Common Stock of the
Corporation, (ii) subdivide or split its outstanding Common Stock, or (iii)
combine the outstanding Common Stock into a smaller number of shares, the
Series A Conversion Rate following the effective date of such event shall be
equal to the product of the Series A Conversion Rate in effect immediately
prior to such adjustment multiplied by a fraction, the numerator of which is
the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares outstanding immediately
prior to such event. In the case of any such dividend or distribution that is
made in shares of capital stock other than Common Stock, there shall be no
adjustment in the Series A Conversion Rate at which the Series A Preferred
Stock is convertible into Common Stock, but a separate conversion rate shall be
established to express the number of shares of such other capital stock
issuable upon conversion of a share of Series A Preferred Stock and such
separate conversion rate shall thereafter be subject to adjustment as provided
in this Subsection 4.e, mutatis mutandis.
(2) Whenever the Series A Conversion Rate is adjusted
as herein provided, the Corporation shall prepare a certificate setting forth
such adjustment and showing in detail the facts upon which such adjustment is
based, and such certificate shall then be delivered to the holders of record of
the Series A Preferred Stock.
(3) The adjustments herein provided for shall become
effective immediately following the record date for any event for which a
record date is designated and on the effective date for any other event.
f. Adjustments to Series B Conversion Price. The Series B
Conversion Price in effect from time to time shall be subject to adjustment so
long as any shares of Series B Preferred Stock are then issued and outstanding
as follows:
(1) Stock Dividends, Subdivisions and Combinations.
Upon the issuance after the Original Issue Date of Additional Shares of Common
Stock as a dividend or other distribution on outstanding Common Stock, the
subdivision of outstanding shares of Common Stock into a greater number of
shares of Common Stock, or the combination of outstanding shares of Common
Stock into a smaller number of shares of the Common Stock, the Series B
Conversion Price shall, simultaneously with the happening of such dividend,
subdivision or split be adjusted by multiplying the then effective Series B
Conversion Price by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such event and the
denominator of which shall be the number of shares of Common Stock outstanding
immediately after such event. An adjustment made pursuant to this Subsection
4.f(1) shall be given effect, upon payment of such a dividend or distribution,
as of the record date for the determination of stockholders entitled to receive
such dividend or distribution
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(on a retroactive basis) and in the case of a subdivision or combination shall
become effective immediately as of the effective date thereof.
(2) Sale of Common Stock.
(a) Special Definitions. For purposes of this
Subsection 4.f(2), the following definitions shall apply:
(i) "Option" shall mean contractual
rights, options or warrants to subscribe for, purchase or otherwise acquire
either Common Stock or Convertible Securities.
(ii) "Original Issue Date" shall mean the
date on which shares of Series B Preferred Stock were first issued by the
Corporation.
(iii) "Convertible Securities" shall mean
any evidences of indebtedness, shares (other than Common Stock, Series B
Preferred Stock and Series C Preferred Stock) or other securities directly or
indirectly convertible into or exchangeable for Common Stock.
(iv) "Additional Shares of Common Stock"
shall mean all shares of Common Stock issued (or, pursuant to Subsection
4.f(2)(c), deemed to be issued) by the Corporation after the Original Issue
Date, other than shares of Common Stock issued or issuable:
(A) pursuant to Options (except
rights to stock granted pursuant to that certain letter agreement between the
Corporation and Thomas G. Washing dated as of 03/01/95) or Convertible
Securities (except that certain promissory note to CSC dated as of 12/13/92)
outstanding on the Original Issue Date;
(B) upon conversion of shares of
Series A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock
authorized herein;
(C) to directors, officers or
employees of, or consultants to, the Corporation pursuant to a stock grant or
option plan or other employee stock incentive program (collectively, the
"Plans") approved by the Board of Directors, subject to adjustment for all
subdivisions and combinations, up to a maximum of three hundred forty-seven
thousand, eight hundred seventy-four (347,874) shares of Common Stock (net of
any repurchases of such shares or cancellations or expirations of options);
(D) as a dividend or distribution on
the Series A Preferred Stock, Series B Preferred Stock or Series C Preferred
Stock, or upon any event for which adjustment is made pursuant to Subsection
4.f(1); or
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(E) by way of dividend or other
distribution on shares excluded from the definition of Additional Shares of
Common Stock by the foregoing clauses (A), (B), (C) or (D) or this clause (E)
or on shares of Common Stock so excluded; or
(F) pursuant to a merger or
acquisition approved by the Board of Directors.
(b) No Adjustment of Conversion Price. No
adjustment in the Series B Conversion Price shall be made in respect of the
issuance of Additional Shares of Common Stock unless the consideration per
share for an Additional Share of Common Stock issued or deemed to be issued by
the Corporation is less than the Series B Conversion Price in effect on the
date of, and immediately prior to, the issue of such Additional Shares.
(c) Issue of Securities 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 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
for a subsequent adjustment of such number) of Common Stock issuable upon the
exercise of such Options or, in the case of Convertible Securities and Options
therefor, the conversion or exchange of such Convertible Securities, shall be
deemed to be Additional Shares of Common Stock issued as of the time of such
issue or, in case such a record date shall have been fixed, as 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:
(i) no further adjustment in the
Series B Conversion Price shall be made upon the subsequent issue of
Convertible Securities or shares of Common Stock upon the exercise of such
Options or conversion or exchange of such Convertible Securities;
(ii) 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 in
the number of shares of Common Stock issuable upon the exercise, conversion or
exchange thereof, the applicable Series B Conversion Price computed upon the
original issue thereof (or upon the occurrence of a record date with respect
thereto), and any subsequent adjustments based thereon, shall, upon any such
increase or decrease becoming effective, be recomputed to reflect such increase
or decrease insofar as it affects such Options or the rights of conversion or
exchange under such Convertible Securities;
(iii) upon the expiration of any such
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Options or any rights of conversion or exchange under such Convertible
Securities which shall not have been exercised, the Series B Conversion Price
computed upon the original issue thereof (or upon the occurrence of a record
date with respect thereto), and any subsequent adjustments based thereon,
shall, upon such expiration, be recomputed as if:
(A) 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 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
were actually converted or exchanged, plus the additional consideration, if
any, actually received by the Corporation upon such conversion or exchange, and
(B) in the case of Options for
Convertible Securities, only the Convertible Securities, if any, actually
issued upon the exercise thereof were issued at the time of issue of such
Options, and the consideration received by the Corporation for the Additional
Shares of Common Stock actually 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 actually received by
the Corporation upon the issue of the Convertible Securities with respect to
which such Options were actually exercised;
(iv) no readjustment pursuant to
clause (ii) above shall have the effect of increasing the Series B Conversion
Price to an amount which exceeds the lower of (x) such Conversion Price on the
original adjustment date, or (y) such Conversion Price that would have resulted
from any issuance of Additional Shares of Common Stock between the original
adjustment date and such readjustment date.
(v) in the case of any Options which
expire by their terms not more than thirty (30) days after the date of issue
thereof, no adjustment of the Series B 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.f(2)(c)(iii).
(d) Adjustment of Conversion Price Upon Issuance
of Additional Shares of Common Stock. In the event this Corporation shall
issue Additional Shares of Common Stock (including Additional Shares of Common
Stock deemed to be issued pursuant to Subsection 4.f(2)(c) without
consideration or for a consideration per share less than the Series B
Conversion Price in effect on the date of and immediately prior to such issue,
then and in such event, such Series B Conversion Price, as applicable, shall be
reduced, concurrently with such issue, to a price (calculated to the nearest
cent) determined by multiplying the Series B Conversion Price then in effect by
a fraction, the numerator of which shall be the number of
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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 such Series B Conversion Price, as applicable; and the
denominator of which shall be the number of shares of Common Stock outstanding
immediately prior to such issue plus the number of such Additional Shares of
Common Stock so issued; and provided further that, for the purposes of this
Subsection 4.f(2)(d), all shares of Common Stock issuable upon exercise or
conversion of outstanding Options and Series A Preferred Stock, Series B
Preferred Stock and Series C Preferred Stock shall be deemed to be outstanding,
and immediately after any Additional Shares of Common Stock are deemed issued
pursuant to Subsection 4.f(2)(c), such Additional Shares of Common Stock shall
be deemed to be outstanding.
(e) Determination of Consideration. For
purposes of this Section 4.f(2), the consideration received by the Corporation
for the issue of any Additional Shares of Common Stock shall be computed as
follows:
(i) Cash and Property. Such consideration
shall:
(A) insofar as it consists of cash,
be computed at the aggregate amount of cash received by the Corporation
excluding amounts paid or payable for accrued interest or accrued dividends;
(B) insofar as it consists of
property other than cash, be computed at the fair value thereof at the time of
such issue, as determined in good faith by the Board of Directors; and
(C) 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, the proportion
of such consideration so received, computed as provided in clauses (A) and (B)
above, as determined in good faith by the Board of Directors.
(ii) 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.f(2)(c),
relating to Options and Convertible Securities, shall be determined by
dividing:
(A) the total amount, if any,
received or receivable by the Corporation as consideration for the issue of
such Options or Convertible Securities, plus the minimum aggregate amount of
additional consideration (as set forth in the instruments relating thereto,
without regard to any provision contained therein for a subsequent
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adjustment of such consideration) payable to the Corporation upon the exercise
of such Options or the conversion or exchange of such Convertible Securities,
or in the case of Options for Convertible Securities, the exercise of such
Options for Convertible Securities and the conversion or exchange of such
Convertible Securities, by
(B) the maximum number of shares of
Common Stock (as set forth in the instruments relating thereto, without regard
to any provision contained therein for a subsequent adjustment of such number)
issuable upon the exercise of such Options or the conversion or exchange of
such Convertible Securities.
g. Adjustments to Series C Conversion Price. The Series C
Conversion Price in effect from time to time shall be subject to adjustment so
long as any shares of Series C Preferred Stock are then issued and outstanding
as follows:
(1) Stock Dividends, Subdivisions and Combinations.
Upon the issuance after the Original Issue Date of Additional Shares of Common
Stock as a dividend or other distribution on outstanding Common Stock, the
subdivision of outstanding shares of Common Stock into a greater number of
shares of Common Stock, or the combination of outstanding shares of Common
Stock into a smaller number of shares of the Common Stock, the Series C
Conversion Price shall, simultaneously with the happening of such dividend,
subdivision or split be adjusted by multiplying the then effective Series C
Conversion Price by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such event and the
denominator of which shall be the number of shares of Common Stock outstanding
immediately after such event. An adjustment made pursuant to this Subsection
4.g(1) shall be given effect, upon payment of such a dividend or distribution,
as of the record date for the determination of stockholders entitled to receive
such dividend or distribution (on a retroactive basis) and in the case of a
subdivision or combination shall become effective immediately as of the
effective date thereof.
(2) Sale of Common Stock.
(a) Special Definitions. For purposes of this
Subsection 4.g(2), the following definitions shall apply:
(i) "Option" shall mean contractual
rights, options or warrants to subscribe for, purchase or otherwise acquire
either Common Stock or Convertible Securities.
(ii) "Original Issue Date" shall mean the
date on which shares of Series C Preferred Stock were first issued by the
Corporation.
(iii) "Convertible Securities" shall mean
any evidences of indebtedness, shares (other than Common Stock and Series C
Preferred Stock) or other securities directly or indirectly convertible into or
exchangeable for Common Stock.
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(iv) "Additional Shares of Common Stock"
shall mean all shares of Common Stock issued (or, pursuant to Subsection
4.g(2)(c), deemed to be issued) by the Corporation after the Original Issue
Date, other than shares of Common Stock issued or issuable:
(A) pursuant to Options or
Convertible Securities (except that certain promissory note to CSC dated as of
12/13/92) outstanding on the Original Issue Date;
(B) upon conversion of shares of
Series A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock
authorized herein;
(C) to directors, officers or
employees of, or consultants to, the Corporation pursuant to a stock grant or
option plan or other employee stock incentive program (collectively, the
"Plans") approved by the Board of Directors, subject to adjustment for all
subdivisions and combinations, up to a maximum of five hundred eighty-seven
thousand, four hundred sixty-four (587,464) shares of Common Stock (net of any
repurchases of such shares or cancellations or expirations of options);
(D) as a dividend or distribution on
the Series A Preferred Stock or Series B Preferred Stock or Series C Preferred
Stock, or upon any event for which adjustment is made pursuant to Subsection
4.g(1); or
(E) by way of dividend or other
distribution on shares excluded from the definition of Additional Shares of
Common Stock by the foregoing clauses (A), (B), (C) or (D) or this clause (E)
or on shares of Common Stock so excluded; or
(F) pursuant to a merger or
acquisition approved by the Board of Directors.
(b) No Adjustment of Conversion Price. 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 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, the issue of such Additional Shares.
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(c) Issue of Securities 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 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
for a subsequent adjustment of such number) of Common Stock issuable upon the
exercise of such Options or, in the case of Convertible Securities and Options
therefor, the conversion or exchange of such Convertible Securities, shall be
deemed to be Additional Shares of Common Stock issued as of the time of such
issue or, in case such a record date shall have been fixed, as 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:
(i) no further adjustment in the
Series C Conversion Price shall be made upon the subsequent issue of
Convertible Securities or shares of Common Stock upon the exercise of such
Options or conversion or exchange of such Convertible Securities;
(ii) 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 in
the number of shares of Common Stock issuable upon the exercise, conversion or
exchange thereof, the applicable Series C Conversion Price computed upon the
original issue thereof (or upon the occurrence of a record date with respect
thereto), and any subsequent adjustments based thereon, shall, upon any such
increase or decrease becoming effective, be recomputed to reflect such increase
or decrease insofar as it affects such Options or the rights of conversion or
exchange under such Convertible Securities;
(iii) 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
computed upon the original issue thereof (or upon the occurrence of a record
date with respect thereto), and any subsequent adjustments based thereon,
shall, upon such expiration, be recomputed as if:
(A) in the case of Convertible
Securities or Options for Common 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 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
were actually converted or exchanged, plus the additional consideration, if
any, actually received by the Corporation upon such conversion or exchange, and
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(B) in the case of Options for
Convertible Securities, only the Convertible Securities, if any, actually
issued upon the exercise thereof were issued at the time of issue of such
Options, and the consideration received by the Corporation for the Additional
Shares of Common Stock actually 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 actually received by
the Corporation upon the issue of the Convertible Securities with respect to
which such Options were actually exercised;
(iv) no readjustment pursuant to
clause (ii) above shall have the effect of increasing the Series C Conversion
Price to an amount which exceeds the lower of (x) such Conversion Price on the
original adjustment date, or (y) such Conversion Price that would have resulted
from any issuance of Additional Shares of Common Stock between the original
adjustment date and such readjustment date.
(v) in the case of any Options which
expire by their terms not more than thirty (30) days after the date of issue
thereof, no adjustment of the Series C 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(2)(c)(iii).
(d) Adjustment of Conversion Price Upon Issuance
of Additional Shares of Common Stock. In the event this Corporation shall
issue Additional Shares of Common Stock (including Additional Shares of Common
Stock deemed to be issued pursuant to Subsection 4.g(2)(c) without
consideration or for a consideration per share less than the Series C
Conversion Price in effect on the date of and immediately prior to such issue,
then and in such event, such Series C Conversion Price, as applicable, shall be
reduced, concurrently with such issue, to a price (calculated to the nearest
cent) determined by multiplying the Series C Conversion Price then in effect by
a fraction, 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 such Series C Conversion Price, as applicable; and the denominator of which
shall be the number of shares of Common Stock outstanding immediately prior to
such issue plus the number of such Additional Shares of Common Stock so issued;
and provided further that, for the purposes of this Subsection 4.g(2)(d), all
shares of Common Stock issuable upon exercise or conversion of outstanding
Options and Series A Preferred Stock, Series B Preferred Stock and Series C
Preferred Stock shall be deemed to be outstanding, and immediately after any
Additional Shares of Common Stock are deemed issued pursuant to Subsection
4.g(2)(c), such Additional Shares of Common Stock shall be deemed to be
outstanding.
(e) Determination of Consideration. For
purposes of this Section 4.g(2), the consideration received by the Corporation
for the issue of any Additional Shares of Common Stock shall be computed as
follows:
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(i) Cash and Property. Such consideration
shall:
(A) insofar as it consists of cash,
be computed at the aggregate amount of cash received by the Corporation
excluding amounts paid or payable for accrued interest or accrued dividends;
(B) insofar as it consists of
property other than cash, be computed at the fair value thereof at the time of
such issue, as determined in good faith by the Board of Directors; and
(C) 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
(A) and (B) above, as determined in good faith by the Board of Directors.
(ii) 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(2)(c),
relating to Options and Convertible Securities, shall be determined by
dividing:
(A) the total amount, if any,
received or receivable by the Corporation as consideration for the issue of
such Options or Convertible Securities, plus the minimum aggregate amount of
additional consideration (as set forth in the instruments relating thereto,
without regard to any provision contained therein for a subsequent adjustment
of such consideration) payable to the Corporation upon the exercise of such
Options or the conversion or exchange of such Convertible Securities, or in the
case of Options for Convertible Securities, the exercise of such Options for
Convertible Securities and the conversion or exchange of such Convertible
Securities, by
(B) the maximum number of shares of
Common Stock (as set forth in the instruments relating thereto, without regard
to any provision contained therein for a subsequent adjustment of such number)
issuable upon the exercise of such Options or the conversion or exchange of
such Convertible Securities.
h. Reservation of Shares. So long as any shares of the
Series A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock
remain outstanding, and the holders thereof have the right to convert them into
shares of Common Stock, the Corporation shall reserve from the authorized and
unissued shares of its Common Stock a sufficient number of shares to provide
for such conversion.
i. Status of Converted Shares. Shares of the Series A
Preferred Stock and Series B Preferred Stock and Series C Preferred Stock that
have been converted as
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provided herein shall revert to the status of authorized but unissued shares of
the Series A Preferred Stock or Series B Preferred Stock or Series C Preferred
Stock, as applicable.
j. Other Adjustments. In the event the Corporation shall
make or issue, or fix a record date for the determination of holders of Common
Stock entitled to receive, a dividend or other distribution payable in
securities of the Corporation other than shares of Common Stock, then and in
each such event lawful and adequate provision shall be made so that the holders
of Series A Preferred Stock, Series B Preferred Stock and Series C Preferred
Stock shall receive upon conversion thereof in addition to the number of
shares of Common Stock receivable thereupon, the number of securities of the
Corporation which they would have received had their Series A Preferred Stock,
Series B Preferred Stock or Series C Preferred Stock , as applicable, 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 effective
conversion date of their Series A Preferred Stock, Series B Preferred Stock or
Series C Preferred Stock, as applicable, retained such securities receivable by
them as aforesaid during such period, giving application to all adjustments
called for during such period under this Section 4 as applied to such
distributed securities.
If the Common Stock issuable upon the conversion of the
Series A Preferred Stock, Series B Preferred Stock, or Series C Preferred
Stock, shall be changed into the same or different number of shares of any
class or classes of stock, whether by reclassification or otherwise (other than
a subdivision or combination of shares or stock dividend provided for above, or
a reorganization, merger, consolidation or sale of assets provided for
elsewhere in this Section 4), then and in each such event the holder of each
share of Series A Preferred Stock, Series B Preferred Stock or Series C
Preferred Stock, as applicable, shall have the right thereafter to convert such
share into the kind and amount of shares of stock and other securities and
property receivable upon such reorganization, reclassification or other change,
by holders of the number of shares of Common Stock into which such shares of
Series A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock,
as applicable, might have been converted immediately prior to such
reorganization, reclassification or change, all subject to further adjustment
as provided herein.
k. Mergers and Other Reorganizations. If at any time or
from time to time there shall be a capital reorganization of the Common Stock
(other than a subdivision, combination, reclassification or exchange of shares
provided for elsewhere in this Section 4) or a merger or consolidation of the
Corporation with or into another corporation or the sale of all or
substantially all of the Corporation's properties and assets to any other
person, then, as a part of and as a condition to the effectiveness of such
reorganization, merger, consolidation or sale, lawful and adequate provision
shall be made so that the holders of the Series A Preferred Stock, Series B
Preferred Stock and Series C Preferred Stock shall thereafter be entitled to
receive upon conversion of the Series A Preferred Stock, Series B Preferred
Stock or Series C Preferred Stock, as applicable, the number of shares of stock
or other securities or property of the Corporation or of the successor
corporation resulting from such merger or consolidation or sale, to which a
holder of Common Stock deliverable upon conversion would have been entitled on
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such capital reorganization, merger, consolidation, or sale. In any such case,
appropriate provisions shall be made with respect to the rights of the holders
of the Series A Preferred Stock, Series B Preferred Stock and Series C
Preferred Stock after the reorganization, merger, consolidation or sale to the
end that the provisions of this Section 4 (including without limitation
provisions for adjustment of the Series A Conversion Rate, Series B Conversion
Rate and Series C Conversion Rate and the number of shares purchasable upon
conversion of the Series A Preferred Stock, Series B Preferred Stock and Series
C Preferred Stock) shall thereafter be applicable, as nearly as may be, with
respect to any shares of stock, securities or assets to be deliverable
thereafter upon the conversion of the Series A Preferred Stock, Series B
Preferred Stock and Series C Preferred Stock.
Each holder of Series A Preferred Stock and Series B
Preferred Stock and Series C Preferred Stock upon the occurrence of a capital
reorganization, merger or consolidation of the Corporation or the sale of all
or substantially all its assets and properties, as such events are more fully
set forth in the first paragraph of this Subsection 4.k, shall have the option
of electing treatment of his shares of Series A Preferred Stock or Series B
Preferred Stock or Series C Preferred Stock, as applicable, under either this
Subsection 4.k or Section 2 of this Section C.
l. Notices. In each case of an adjustment or readjustment
of the Series A Conversion Rate, Series B Conversion Rate, or Series C
Conversion Rate, the Corporation will furnish each holder of Series A Preferred
Stock, Series B Preferred Stock or Series C Preferred Stock, as applicable,
with a certificate, prepared by the chief financial officer of the Corporation,
showing such adjustment or readjustment, and stating in detail the facts upon
which such adjustment or readjustment is based.
m. Notices of Record Date. In the event (i) the
Corporation establishes a record date to determine the holders of any class of
securities who are entitled to receive any dividend or other distribution, or
(ii) there occurs any capital reorganization of the Corporation, any
reclassification or recapitalization of the capital stock of the Corporation,
any merger or consolidation of the Corporation, and any transfer of all or
substantially all of the assets of the Corporation to any other corporation, or
any other entity or person, or any voluntary or involuntary dissolution,
liquidation or winding up of the Corporation, the Corporation shall mail to
each holder of Series A Preferred Stock, Series B Preferred Stock and Series C
Preferred Stock, at least twenty (20) days prior to the record date specified
therein, a notice specifying (a) the date of such record date for the purpose
of such dividend or distribution and a description of such dividend or
distribution, (b) the date on which any such reorganization, reclassification,
transfer, consolidation, merger, dissolution, liquidation or winding up is
expected to become effective, and (c) the time, if any, that is to be fixed, as
to when the holders of record of Common Stock (or other securities) shall be
entitled to exchange their shares of Common Stock (or other securities) for
securities or other property deliverable upon such reorganization,
reclassification, transfer, consolidation, merger, dissolution, liquidation or
winding up.
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n. Waiver of Adjustment. If the holders of a majority of
the Series B Preferred Stock shall consent to limit or waive in its entirety
any anti-dilution adjustment to which the Series B Preferred Stock would
otherwise be entitled under Subsection 4.f hereof, the Corporation shall not be
required to make any adjustment whatsoever with respect to any shares of the
Series B Preferred Stock, or to make any adjustment with respect to any shares
of the Series B Preferred Stock in excess of such limit, as the terms of such
consent may dictate.
D. QUORUM. At all meetings of shareholders, one-third of the votes
entitled to be cast on any matter by each voting group to vote on a matter,
represented in person or by proxy, shall constitute a quorum of that voting
group for action on that matter.
E. PREEMPTIVE RIGHTS. Except as provided by law, no shareholder of
the Corporation shall have any preemptive or, unless expressly agreed to in
writing by the Company, any other right to subscribe for any additional
unissued or treasury shares of stock or for other securities of any class, or
for rights, warrants or options to purchase stock, or for scrip, or for
securities of any kind convertible into stock or carrying stock purchase
warrants or privileges.
V.
A director of the corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for any 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 an
improper personal benefit. If the Delaware General Corporation Law is amended
to authorize corporate action further eliminating or limiting the personal
liability of directors, then the liability of a director shall be eliminated or
limited to the fullest extent permitted by the Delaware General Corporation
Law, as so amended.
Any repeal or modification of this Article V shall be prospective
and shall not affect the rights under this Article V in effect at the time of
the alleged occurrence of any act or omission to act giving rise to liability
or indemnification.
VI.
For the management of the business and for the conduct of the affairs of
the Corporation, and in further definition, limitation and regulation of the
powers of the Corporation, of its directors and of its stockholders or any
class thereof, as the case may be, it is further provided that:
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A. The management of the business and the conduct of the affairs
of the Corporation shall be vested in its Board of Directors.
B. The Board of Directors may from time to time make, amend,
supplement or repeal the Bylaws; provided, however, that the stockholders may
change or repeal any Bylaw adopted by the Board of Directors by the affirmative
vote of the holders of a majority of the voting power of all of the then
outstanding shares of the Common, Series A Preferred, Series B Preferred and
Series C Preferred voting together as a single class; and, provided further,
that no amendment or supplement to the Bylaws adopted by the Board of Directors
shall vary or conflict with any amendment or supplement thus adopted by the
stockholders.
C. The directors of the Corporation need not be elected by
written ballot unless the Bylaws so provide.
VII.
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 the stockholders
herein are granted subject to this right."
FOURTH: This Amended and Restated Certificate of Incorporaiton was
duly adopted by the Board of Directors of this corporation.
FIFTH: This Amended and Restated Certificate of Incroporation was
duly adopted by written consent of the stockholders in accordance with Sections
228, 245 and 242 of the General Corporation Law of the State of Delaware, and
written notice of such action has been given as provided in Section 228.
IN WITNESS WHEREOF, said Coral Systems, Inc. has caused its corporate
seal to be hereunto affixed and this certificate to be signed by its President,
Chief Executive Officer and Chairman of the Board, Eric A. Johnson, and its
Secretary, Howard Kaushansky, this 15th day of March, 1996.
CORAL SYSTEMS, INC.
By: /s/ ERIC A. JOHNSON
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Eric A. Johnson
Attest:
/s/ HOWARD KAUSHANSKY
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Howard Kaushansky