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EXHIBIT 4.2
CERTIFICATE OF AMENDMENT TO
THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF
OF
AMERICAN BIOGENETIC SCIENCES, INC.
FOR THE PURPOSE OF AMENDING THE VOTING POWERS,
PREFERENCES AND RIGHTS OF THE EXISTING SERIES A
PREFERRED STOCK
AND
DESIGNATING THE VOTING POWERS,
PREFERENCES AND RIGHTS OF A NEW SERIES OF
PREFERRED STOCK
TO BE DESIGNATED
SERIES B CONVERTIBLE PREFERRED STOCK
American Biogenetic Sciences, Inc., a Delaware corporation (the
"Corporation"), in accordance with the provisions of Section 242 of the General
Corporation Law of the State of Delaware, certifies that:
1. Pursuant to authority conferred on the Board of Directors of the
Corporation by the Restated Certificate of Incorporation, the Board of Directors
of the Corporation, by written consent dated August 17, 2001, duly adopted the
following resolution providing for the amendment of the preferences and rights
of the Corporation's Series A Convertible Preferred Stock previously established
by Certificate of Designation filed on March 3, 2000, and providing for the
establishment and issuance of a series of Preferred Stock to be designated
"Series B Convertible Preferred Stock" and to consist of 3,333 shares, as
follows:
RESOLVED: that upon approval of the proposed amendment to the Restated
Certificate of Incorporation by the Affected Stockholders, and
filing of the same with the Secretary of State of the State of
Delaware, the Board of Directors does hereby (i) amend the powers,
preferences and rights, qualifications, limitations and
restrictions of the existing Series A Preferred Stock and (ii)
designate 3,333 shares of the Preferred Stock as Series B
Convertible Preferred Stock, having the designations, powers,
preferences and rights and the qualifications, limitations or
restrictions, in each case, as set forth in the Amendment to the
Restated Certificate of Incorporation substantially in the form
set forth in EXHIBIT A attached hereto
Terms of Preferred Stock
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(the "Certificate of Designation"); and that the Authorized
Officers be, and each of them acting singly hereby is, authorized
to execute and file with the Secretary of State of the State of
Delaware the Certificate of Designation, with such changes therein
as the officer executing the same deems necessary or appropriate
in the best interests of the Company, such officer's execution and
delivery thereof to be conclusive evidence of such officer's
approval thereof and authority hereunder;
2. The foregoing Amendment to the Restated Certificate of Incorporation
(as amended by the Certificate of Designation of the Series A Preferred Stock)
was unanimously adopted by the stockholders entitled to vote thereon (the
holders of outstanding Series A Preferred Stock) by written consent dated August
28, 2001 in accordance with the provisions of Section 242 of the General
Corporation Law of the State of Delaware.
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IN WITNESS WHEREOF, the corporation has caused its corporate seal to be
affixed hereto and this Certificate of Amendment to be signed by its Chairman of
the Board and attested to by its Secretary this __ day of August, 2001.
AMERICAN BIOGENETIC SCIENCES, INC.
By:
---------------------------------
Alfred J. Roach
Chairman of the Board and
Chief Executive Officer
ATTEST:
---------------------------------
Timothy J. Roach
Secretary
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EXHIBIT A TO
RESOLUTIONS OF BOARD OF DIRECTORS
Article 4 of the Corporation's Restated Certificate of Incorporation,
as previously amended by the Certificate of Amendment and the Certificate of
Designation related to the Series A Convertible Stock both filed March 3, 2000,
is hereby amended as follows:
1. The description of the voting powers, preferences and relative
participating, optional and other special rights, qualifications, limitations or
restrictions of the Series A Preferred Stock as established by the Certificate
of Designation filed March 3, 2000 are superceded in their entirety by the
provisions set forth below with respect to the Series A Convertible Preferred
Stock and the newly designated Series B Convertible Preferred Stock.
2. The other provisions of Article 4, as amended by the Certificate of
Amendment dated March 3, 2001, remain in effect.
TERMS OF PREFERRED STOCK
Of the 10,000,000 shares of preferred stock authorized hereunder: (i)
7,000 shares have previously been designated as Series A Convertible Preferred
Stock (the "Series A Preferred Stock"), (ii) 3,333 shares are hereby designated
as Series B Convertible Preferred Stock (the "Series B Preferred Stock"), and
(iii) 9,989,667 remain undesignated as to series. The voting powers, preferences
and relative participating, optional or other special rights, and
qualifications, limitations or restrictions of the Series A Preferred Stock and
the Series B Preferred Stock are hereby established as follows:
PART A. PROVISIONS APPLICABLE TO SERIES A PREFERRED STOCK AND SERIES B
PREFERRED STOCK.
SECTION 1. DEFINITIONS. For the purposes hereof, the following
definitions shall apply:
"Abbott License Agreement" means the Exclusive License Agreement for
ABS 103, dated January 27, 2000 between the Corporation and Abbott Laboratories.
"Additional Shares of Common Stock" means, for purposes of determining
certain anti-dilution adjustments under Part B, Section 4 and Part C, Section 4,
all shares of Common Stock
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or Junior Shares issued (or, pursuant to Part B, Section 4 and Part C, Section
4, deemed to be issued) by the Corporation after the Original Issue Date, other
than shares of Common Stock or Junior Shares issued or issuable:
(a) upon conversion of shares of Series A Preferred Stock or Series B
Preferred Stock; or
(b) as a dividend or distribution on Series A Preferred Stock or
Series B Preferred Stock; or
(c) by way of a dividend or other distribution on shares of Common
Stock excluded from the definition of Additional Shares of Common Stock
by the foregoing clauses (a), (b) or this clause (c); or
(d) upon exercise of the Warrants; or
(e) to directors, officers, employees or consultants of the Corporation
as bona fide compensation for services or pursuant to any employee
stock benefit, option, purchase or similar plan approved by the Board
of Directors; or
(f) to investment banking firms in payment for investment banking
services rendered (but not securities issued for distribution to
purchasers); or
(g) in consideration for the acquisition (whether by merger, purchase
of assets, purchase or stock, or otherwise) by the Corporation of a
business, provided such business transaction is an arm's length
transaction with an unaffiliated person; or
(h) to unaffiliated creditors as payment for goods or services
actually received; or
(i) solely in consideration for the grant by the Corporation or to the
Corporation of marketing rights, distribution rights, license rights or
similar rights granted by or to the Corporation in consideration of the
exchange of proprietary technology, whether of the Corporation or any
other entity, provided that such transaction is an arm's length
transaction with an unaffiliated person;
provided, that no more than an aggregate of 1,500,000 shares of Common Stock
issued or deemed issued under clauses (e) - (i) hereof shall be excluded from
the definition of Additional Shares of Common Stock, of which not more than
1,000,000 shares shall be excluded under clause (e).
"Adjusted Volume" means the sum of trading volume for a period of 20
consecutive trading days ending on the trading day preceding the date of
determination; provided, however, that the day with the highest volume and the
day with the lowest volume shall be eliminated and only the remaining 18 days
summed.
"Board of Directors" means the Board of Directors of the Corporation.
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"Common Stock" means the Class A Common Stock of the Corporation.
"Call Option Agreement" means that certain Call Option Agreement dated
August __, 2001 among the Corporation and certain holders of its Series A
Preferred Stock and Series B Preferred Stock.
"Conversion Price" means with respect to the Series A Preferred Stock,
the amount set forth in Part B, Section 3(a), as adjusted pursuant to Part B,
Section 4, and with respect to the Series B Preferred Stock, the amount set
forth in Part C, Section 3, as adjusted pursuant to such Part C, Section 4.
"Convertible Securities" means any evidences of indebtedness, equity
securities (other than Common Stock, the Series A Preferred Stock, Series B
Preferred Stock or Revenue Participation Notes) or other securities convertible
into or exchangeable for Common Stock.
"Corporation" means American Biogenetic Sciences, Inc., a Delaware
corporation.
"Junior Shares" means all shares of Common Stock or Convertible
Securities or any other stock of the Corporation ranking junior to the Series A
Preferred Stock and Series B Preferred Stock in dividends or liquidation rights.
"Market Price" means for any particular date, the closing bid price of
the Class A Common Stock on any national securities exchange, the Nasdaq
National Market, Small Cap Market or OTC Bulletin Board if then traded on said
exchange or market, on that date.
"Options" means rights, options or warrants to subscribe for, purchase
or otherwise acquire either Common Stock or Convertible Securities.
"Original Issue Date" means for each series of Preferred Stock the date
on which a share of that series is first issued.
"Original Purchase Price" means with respect to the Series A Preferred
Stock $500.00 per share and with respect to the Series B Preferred Stock $600.06
per share.
"Preferred Stock" means the Series A Preferred Stock and the Series B
Preferred Stock.
"Revenue Participation Note" means any one of the series of Revenue
Participation Notes issued by the Corporation to certain holders of Series A
Preferred Stock or of Series B Preferred Stock pursuant to the Securities
Purchase Agreement.
"Securities Act" means the Securities Act of 1933, as amended.
"Series B Securities Purchase Agreement" means that certain Securities
Purchase Agreement dated as of August 23, 2001 among the Corporation and certain
holders of the Series A and the Series B Preferred Stock.
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"Warrants" means the Warrants to purchase an aggregate of 10,333,000
shares of Common Stock issued or to be issued in conjunction with the issuance
of the Series A Preferred Stock and the Series B Preferred Stock; and "Series A
Warrants" means the 7,000,000 Warrants issued in conjunction with issuance of
Series A Preferred Stock, as amended, and "Series B Warrants" means the
3,333,000 Warrants issued in conjunction with issuance of Series B Preferred
Stock.
SECTION 2. VOTING RIGHTS OF PREFERRED STOCK.
(a) GENERAL. Except as expressly set forth in this Section and except
as otherwise required by law, the Preferred Stock shall have no voting rights.
With respect to matters as to which the Preferred Stock shall have the right to
vote, each share of Preferred Stock shall vote that number of votes equal to the
number of shares of Common Stock issuable upon conversion of the Preferred Stock
on the record date of the vote.
(b) MATTERS AFFECTING PREFERRED STOCK. So long as any Preferred Stock
shall be outstanding, the Corporation shall not, without first obtaining the
affirmative vote or written consent of the holders of not less than a majority
of the votes of Preferred Stock, voting together as a single class and separate
from Common Stock, take any of the following actions:
(i) amend or repeal any provision of, or add any
provision to, the Corporation's Restated Certificate
of Incorporation, as amended, or By-laws if such
action would alter or change the preferences, rights,
privileges or powers of, or the restrictions provided
for the benefit of, such Preferred Stock; or
(ii) authorize or issue shares of any class of stock
having any preference or priority as to dividends or
assets superior to or on a parity with any such
preference or priority of the Preferred Stock;
provided, however, that the Corporation may issue new
shares of preferred stock (other than the Preferred
Stock) which are pari passu with the Preferred Stock
as to dividends and liquidation without consent of
the holders of the Preferred Stock; and further
provided that with respect to any matters affecting
the Preferred Stock which require the vote of the
holders of the Preferred Stock, the holders of such
new shares of preferred stock that were issued by the
Corporation without the vote of the holders of
Preferred Stock shall either have no voting rights or
not vote together with the Preferred Stock or any
matter; or
(iii) reclassify any Junior Shares into shares having any
preference or priority as to dividends or assets
superior to or on a parity with any such preference
or priority of the Preferred Stock; or
(iv) declare any dividend or distribution upon any class
of its stock (other than a stock split or reverse
stock split of the Common Stock into a greater or
lesser number of shares of the same class), whether
in cash, property, stock
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or other securities, whether or not a regular cash
dividend and whether or not out of earnings or
earned surplus; or
(v) repurchase or redeem any class of its stock (other
than the Series A Preferred Stock or Series B
Preferred Stock as expressly contemplated herein);
or
(vi) liquidate, dissolve or wind up if the assets of the
Corporation then available for distribution to its
stockholders shall be insufficient to pay the holders
of Preferred Stock the full amount to which they are
entitled upon such liquidation, dissolution or
winding up; or
(vii) agree to any merger, consolidation, acquisition,
recapitalization, reorganization or similar
transaction of the Corporation with one or more other
entities or persons in which the shareholders of the
Corporation immediately prior to such transaction, or
series of transactions, would hold stock representing
less than a majority of the outstanding capital stock
(calculated on a fully converted basis) of the
surviving entity immediately after such transaction
or series of transactions, unless after that
transaction or series of transactions (i) the holders
of Preferred Stock continue to possess equivalent
rights, preferences, privileges, and restrictions in
the surviving entity, (ii) the surviving entity
assumes the Corporation's obligations under the
Revenue Participation Notes, and (iii) the Abbott
License Agreement remains substantively unchanged and
in effect; or
(viii) sell all or substantially all the Corporation's
assets; or
(ix) agree to any assignment, transfer, conveyance or
other disposition of any beneficial interest of any
nature in the Abbott License Agreement; or
(x) amend or modify the Abbott License Agreement in any
way or manner which changes the amount, timing or
other provision regarding the royalties to be
received by Corporation under the Abbott License
Agreement or the interests of the holders of
Preferred Stock under the Revenue Participation Notes
in any significant way (other than in connection with
the grant of a junior security interest in connection
with a financing by a financial or investment
institution); or
(xi) adopt, or amend in such manner as to materially
increase the number of shares issuable under, any
Corporation stock option plan.
SECTION 3. RIGHTS OF PARTICIPATION. In the event that the Corporation
offers to an unrelated party any type of equity security for conventional
financing purposes, then each holder of Series B Preferred Stock shall have the
right, pursuant to the Series B Securities Purchase Agreement, to participate in
such purchase on the same price and terms and conditions as the Corporation
offers to any other potential investor.
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SECTION 4. NOTICES. Except as otherwise expressly provided herein, any
notices or other communications required to be given hereunder to the holders of
Preferred Stock or the Corporation may be given by (i) hand delivery, (ii) by
facsimile transmission in the manner provided in Section 232 of the Delaware
General Corporation Law, (iii) by nationally recognized overnight courier
service, or (iv) by registered mail. Such notice shall be deemed to have been
duly given if given (i) if by hand, at the time of the delivery thereof to the
receiving party at the address of such party set forth above, (ii) if by
facsimile transmission, one business day after the time that receipt thereof has
been acknowledged by electronic confirmation or otherwise, (iii) if by
nationally recognized overnight courier, on the next business day following the
day such notice is delivered to the courier service, or (iv) if by registered
mail, on the fifth business day following the day such mailing is made.
PART B. RIGHTS OF SERIES A PREFERRED STOCK
SECTION 1. DIVIDEND RIGHTS FOR SERIES A PREFERRED STOCK. The holders of
shares of Series A Preferred Stock shall be entitled to receive, out of funds
legally available therefor, if, as and when declared by the Board of Directors,
but before any dividends are paid on or set aside for Junior Shares and pari
passu with dividends paid on or set aside for the Series B Preferred Stock and
any other series of preferred stock ranking on parity with the Series A
Preferred Stock, dividends equal to the product of (a) the per share amount, if
any, of the dividend declared, paid or set aside for the Junior Shares,
multiplied by (b) the number of shares of Common Stock into which each such
share of Series A Preferred Stock is then convertible.
SECTION 2. SERIES A PREFERRED STOCK LIQUIDATION PREFERENCE.
(a) PREFERENCE. In the event of any liquidation, dissolution or winding
up of the affairs of the Corporation, voluntarily or involuntarily, the holders
of each share of Series A Preferred Stock, prior to any distribution to the
holders of Junior Shares, but pari passu with the holders of Series B Preferred
Stock, shall be entitled to receive pro rata a preferential amount equal to
$500.00 per share (adjusted to reflect any stock split, stock dividend,
combination, recapitalization or reorganization) of Series A Preferred Stock
held by them, plus an amount equal to five percent (5%) per annum simple
interest on the Series A Preferred Stock Original Purchase Price, plus any
declared and unpaid dividends (the "Series A Preferred Stock Liquidation
Preference"). After payment or setting apart for payment of the Series A
Preferred Stock Liquidation Preference and the Series B Preferred Stock
Liquidation Preference, the remaining assets of the Corporation, if any, shall
be distributed among the holders of the Junior Shares. If, upon such
liquidation, dissolution or winding up, the assets of the Corporation are
insufficient (after payment of the liquidation preference of any class of
preferred stock ranking senior on liquidation to the Series A Preferred Stock)
to provide for the payment in full of the Series A Preferred Stock Liquidation
Preference and Series B Preferred Stock Liquidation Preference for each share of
Series A Preferred Stock and Series B Preferred Stock outstanding, such assets
as are available shall be paid out pro rata among the shares of Series A
Preferred Stock and Series B Preferred Stock in proportion to the dollar amount
owed to each.
(b) MERGER OR ACQUISITION. A merger or consolidation of the Corporation
with or into another corporation or entity (whether or not the Corporation is
the surviving entity if, after the
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merger or consolidation, more than 50% of the voting stock of the surviving
corporation is owned by persons who were not holders of voting stock of the
Corporation immediately prior to the merger or consolidation), or the sale of
all or substantially all the assets of the Corporation, shall be deemed to be a
liquidation, dissolution or winding up the Corporation for purposes of this Part
B, Section 3 if the holders of at least a majority of the then outstanding
shares of Series A Preferred Stock and outstanding Series B Preferred Stock,
voting together as a single class, so elect by giving written notice thereof to
the Corporation at least three days before the effective date of such event. If
no such notice is given by said holders, the provisions of Part B, Section 3(c)
shall apply. The amount deemed distributed to the holders of Series A Preferred
Stock upon any such merger or consolidation shall be the cash or the value of
the property, rights or other securities received in the merger or consolidation
which shall be determined in good faith by the Board of Directors of the
Corporation.
SECTION 3. CONVERSION OF SERIES A PREFERRED STOCK.
The Series A Preferred Stock shall be convertible in accordance with
the following provisions:
(a) RIGHT TO CONVERT. Each share of Series A Preferred Stock shall be
convertible, at the option of the holder thereof, at any time and from time to
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
non-assessable shares of Class A Common Stock as is determined by dividing $500
(the "Original Series A Issue Price") by the Series A Conversion Price,
determined and adjusted as hereafter provided, in effect at the time of
conversion and multiplying the result by the number of shares of Series A
Preferred Stock that are being converted. The initial Series A Conversion Price
shall be $0.50 per share, and it shall be subject to adjustment upon certain
events as provided in Part B, Section 4.
(b) STOCKHOLDER RIGHT TO CONVERT AND CONVERSION PRICE. If the holders
of at least a majority of the Preferred Stock so elect at any time after the
Original Issue Date, all shares Series A Preferred Stock shall be converted, at
the office of the Corporation or any transfer agent for the Series A Preferred
Stock, into such number of fully paid and non-assessable shares of Class A
Common Stock as is determined by dividing the Original Series A Issue Price by
the Series A Conversion Price in effect at the time of conversion, and
multiplying the result by the number of shares of Series A Preferred Stock that
are being converted.
(c) CORPORATION RIGHT TO REQUIRE MANDATORY CONVERSION. Subject to
paragraph (d), if the numeric average of the Market Price of Class A Common
Stock for 20 consecutive trading days at any time exceeds $5.00 (adjusted to
reflect any stock split, stock dividend, combination, recapitalization or
reorganization), the Corporation may, at its option exercised at any time within
15 calendar days after such time, elect to require shares of Series A Preferred
Stock to be automatically converted into shares of Class A Common Stock at the
then effective Conversion Price by giving written notice of such election to all
holders of record of shares of Series A Preferred Stock (the "Mandatory
Conversion Notice"), indicating the number of shares of Series A Preferred Stock
so converted and of the date and place for surrender of certificates
representing Series A Preferred Stock in exchange for the number of shares of
Class A Common Stock to
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which such holder is entitled. All conversions under this Section 3(b) shall be
made ratably among the holders of Series A Preferred Stock, based upon the
number of shares of Series A Preferred Stock held by each holder on the date of
the Mandatory Conversion Notice. Such Mandatory Conversion Notice shall be sent
to each record holder of Series A Preferred Stock at such holder's address
appearing on the stock register of the Corporation. On or before the date fixed,
each holder of shares of Series A Preferred Stock shall surrender such holder's
certificate or certificates for all such shares to the Corporation at the place
designated in exchange for the number of shares of Class A Common Stock to which
such holder is entitled. Except as otherwise expressly provided herein, the
other provisions relating to conversion of Series A Preferred Stock into Class A
Common Stock and payments in lieu of fractions set forth elsewhere in this Part
B, Section 3 shall apply to the mandatory conversion of the Series A Preferred
Stock.
(d) LIMITATIONS ON CORPORATION'S MANDATORY CONVERSION RIGHT. The
Corporation's rights to force conversion under paragraph (c) above shall be
subject to the following limitations:
(i) The maximum number of shares of Preferred Stock which
the Corporation can elect to convert into shares of
Class A Common Stock under any Mandatory Conversion
Notice shall be the lesser of (A) 20% of the Adjusted
Volume, or (B) 1,866,600 shares (adjusted to reflect
any stock split, stock dividend, combination,
recapitalization or reorganization).
(ii) All shares of Series A Preferred Stock then
outstanding shall be converted under this Section
before any shares of Series B Preferred Stock are
converted under this Section.
(iii) The Corporation may not make another election to
force conversion of any Preferred Stock (or
repurchase of any Warrants under the corresponding
provisions of the Warrants) unless all shares of
Common Stock issued or issuable as a result of any
prior mandatory conversion under this Section (and
all shares issuable upon exercise of the Warrants in
response to a mandatory repurchase notice) have been
registered under the Securities Act and such
registration is then effective.
(iv) After it has once converted shares under paragraph
(c) above, the Corporation may not make a second
election and give another Mandatory Conversion Notice
until such time as the numeric average of the Market
Price of Common Stock for 20 consecutive trading days
again exceeds $5.00, where the trading days included
in the second election do not include any trading
days prior to the first day after the date of the
last Mandatory Conversion Notice.
(e) EFFECT OF ACQUISITION ON SERIES A PREFERRED STOCK. In the event of
a merger or consolidation of the Corporation with or into another corporation or
entity or a sale by the Corporation of all or substantially all of its assets,
and in the case of successive such mergers, consolidations or sales except for
any such transactions as are treated as a liquidation under Part
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B, Section 2(b) hereof, thereafter the shares of Series A Preferred Stock then
outstanding shall be convertible into the number and kind of securities of the
acquiring or surviving corporation (or such other entity whose securities are
delivered in exchange for the Class A Common Stock of the Corporation) to which
the holders of the Series A Preferred Stock would have been entitled if such
holders had converted their Series A Preferred Stock into Class A Common Stock
or the common stock of any successor to the Corporation upon the consummation of
such sale, merger or consolidation; and, in such case, appropriate adjustment
(as determined in good faith by the Board of Directors) shall be made in the
application of the provisions in this Part B, Sections 3 and 4 with respect to
the rights and interest thereafter of the holders of the Series A Preferred
Stock, to the end that the provisions set forth in such sections (including the
provisions with respect to changes and other adjustments of the Conversion
Price) shall thereafter be applicable, as nearly as reasonably may be, in
relation to any shares of stock or other property thereafter deliverable upon
the conversion of the Series A Preferred Stock.
(f) MECHANICS OF CONVERSION. No fractional shares of Class A Common
Stock shall be issued upon conversion of Series A Preferred Stock. All shares of
Common Stock, including fractions thereof, issuable upon conversion of more than
one share of Series A Preferred Stock by a holder thereof shall be aggregated
for purposes of determining whether the conversion would result in the issuance
of any fractional share. If, after the aforementioned aggregation, the
conversion would result in the issuance of a fraction of a share of Common
Stock, the Corporation shall, in lieu of any fractional share to which a holder
of Series A Preferred Stock would otherwise be entitled, pay cash equal to such
fraction multiplied by the then effective Conversion Price. Before any holder of
Series A Preferred Stock shall be entitled to convert the same into full shares
of Class A Common Stock, the holder shall surrender the certificate or
certificates therefor, duly endorsed for transfer, 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 such office that he elects to convert
the same and shall state therein the number of shares to be converted and the
name or names in which he wishes the certificate or certificates for shares of
Common Stock to be issued. The Corporation shall, as soon as practicable
thereafter, issue and deliver at such office to such holder of Series A
Preferred Stock a certificate or certificates for the number of shares of Class
A Common Stock to which such holder shall be entitled as aforesaid and a check
payable to the holder in the amount of any cash amounts payable in order to
avoid a conversion into fractional shares of Class A Common Stock. Except as
provided in paragraphs (b) and (d), 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 Class A Common Stock issuable upon
such conversion shall be treated for all purposes as the record holder or
holders of such shares of Class A Common Stock on such date.
(g) NO IMPAIRMENT. The Corporation will not, by amendment of its
Restated Certificate of Incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed hereunder by the Corporation, but
will at all times in good faith assist in the carrying out of all the provisions
of this Part B, Sections 3 and 4, and in the taking of all such action as may be
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necessary or appropriate in order to protect the conversion rights of the
holders of the Series A Preferred Stock against impairment.
(h) NOTICES OF RECORD DATE, ETC. In the event that the
Corporation shall propose at any time:
(i) to declare any dividend or distribution upon its
Common Stock or other Junior Shares, whether in cash,
property, stock or other securities, whether or not a
regular cash dividend and whether or not out of
earnings or earned surplus;
(ii) to offer for subscription pro rata to the holders of
any class or series of its stock any additional
shares of stock of any class or series or other
rights;
(iii) to subdivide or combine its outstanding Common Stock
or other Junior Shares;
(iv) to effect any reclassification or recapitalization
of its Junior Shares outstanding involving a change
in the Junior Shares; or
(v) to merge or consolidate with or into any other
entity, or sell, lease or convey all or substantially
all its property or business, or to liquidate,
dissolve or wind up;
then, in connection with each such event, the Corporation shall send to the
holders of the Series A Preferred Stock:
(A) at least 20 days' prior written notice of
the date on which a record shall be taken
for such dividend, distribution,
subscription rights, subdivision or
combination (and specifying the date on
which the holders of Common Stock shall be
entitled thereto) or for determining rights
to vote in respect of the matters referred
to in clauses (iv) and (v) above; and
(B) in the case of the matters referred to in
clauses (iv) and (v) above, at least 20
days' prior written notice of the date when
the same shall take place (specifying the
date on which the holders of Common Stock
shall be entitled to exchange their Common
Stock for securities or other property
deliverable upon the occurrence of such
event).
Each such written notice shall be given to the holders of Series A
Preferred Stock at the address for each such holder as shown on the books of the
Corporation.
(h) RESERVATION OF COMMON STOCK. The Corporation shall, at all times
when the Series A Preferred Stock shall be outstanding, reserve and keep
available out of its authorized but unissued stock, for the purpose of effecting
the conversion of the Series A Preferred Stock, such
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number of its duly authorized shares of Class A Common Stock as shall from time
to time be sufficient to effect the conversion of all outstanding Series A
Preferred Stock. Before taking any action which would cause an adjustment
reducing the Conversion Price below the then par value of the shares of Class A
Common Stock issuable upon conversion of the Series A Preferred Stock, the
Corporation will take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Corporation may validly and legally
issue fully paid and nonassessable shares of such Class A Common Stock at such
adjusted Series A Conversion Price.
(i) CANCELLATION OF SERIES A PREFERRED STOCK. All shares of Series A
Preferred Stock which shall have been surrendered for conversion as herein
provided or redeemed or repurchased shall no longer be deemed to be outstanding
and all rights with respect to such shares, including the rights, if any, to
receive notices and to vote, shall forthwith cease and terminate except only the
right of the holders thereof to receive shares of Class A Common Stock in
exchange therefor and payment of any accrued and unpaid dividends thereon. Any
shares of Series A Preferred Stock so converted or redeemed or repurchased shall
be retired and cancelled, and shall not be reissued, and the Corporation may
from time to time take such appropriate action as may be necessary to reduce the
authorized Series A Preferred Stock accordingly.
SECTION 4. ADJUSTMENT OF CONVERSION PRICE.
(a) ADJUSTMENT OF CONVERSION PRICE. The Conversion Price on Series A
Preferred Stock shall be adjusted as set forth in this Part B, Section 4 with
the intent that the rights of holders of such Series A Preferred Stock to
convert shall not be impaired.
(b) SITUATIONS WHERE NO ADJUSTMENT REQUIRED. No adjustment in the
Conversion Price of a particular share of Series A Preferred Stock 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 A Conversion Price in
effect on the date of, and immediately prior to, such issue.
(c) ADJUSTMENT FOR COMBINATION OR CONSOLIDATION OF COMMON STOCK. In the
event the outstanding shares of Common Stock shall be combined or consolidated,
by reclassification or otherwise, into a lesser number of shares of Common
Stock, the Series A Conversion Price in effect immediately prior to such
combination or consolidation shall, concurrently with the effectiveness of such
combination or consolidation, be proportionately increased.
(d) ADJUSTMENT FOR STOCK DIVIDEND OR SUBDIVISION. In the event the
Corporation at any time or from time to time after the Original Issue Date of
the Series B Preferred Stock shall declare or pay any dividend on the Common
Stock payable in Common Stock (or in any right to acquire Common Stock), or
effect a subdivision of the outstanding shares of Common Stock into a greater
number of shares of Common Stock by reclassification or otherwise than by
payment of a dividend in Common Stock, then and in any such event, the Series A
Conversion Price in effect immediately prior to such subdivision or stock
dividend shall forthwith be proportionately reduced.
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(e) ADJUSTMENT UPON ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK. In
the event the corporation shall issue Additional Shares of Common Stock
(including Additional Shares of Common Stock deemed to be issued pursuant to
paragraph (f) hereof but excluding any issued as a stock split or combination as
provided in paragraph (c) or upon a dividend or distribution as provided in
paragraph (d)) without consideration or for a consideration per share less than
the Series A Conversion Price in effect on the date of and immediately prior to
such issue, then and in such event, such Series A Conversion Price shall be
reduced, concurrently with such issue, to a price (calculated to the nearest
cent) equal to the consideration per share paid in connection with issuance of
such Additional Shares of Common Stock.
(f) ADJUSTMENT UPON DEEMED ISSUE OF ADDITIONAL SHARES OF COMMON STOCK.
In the event the Corporation at any time or from time to time after the Series B
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 designed to protect against anti-dilution)
of Common Stock issuable upon the exercise of such Options in accordance with
clause (ii) below, or in the case of Convertible Securities, the maximum number
of shares of Common Stock into which they are convertible or exchangeable in
accordance with clause (ii) below, 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 Additional Shares of Common Stock shall not be deemed to have been issued
unless the consideration per share (determined pursuant to paragraph (g) hereof)
of such Additional Shares of Common Stock would be less than the Series A
Conversion Price in effect on the date of and immediately prior to such issue,
or such record date, as the case may be, and provided further that in any such
case in which Additional Shares of Common Stock are deemed to be issued:
(i) except as provided in clause (ii) below, no further
adjustment in the Conversion Price shall be made upon
the subsequent issue of Convertible Securities or
shares of Common Stock upon the exercise of such
Options or conversion or exchange of such Convertible
Securities; and
(ii) if such Options or Convertible Securities by their
terms provide, with the passage of time or otherwise,
for any increase in the consideration payable to the
Corporation, or for the termination of the right to
exercise or convert such Options or Convertible
Securities, or if all Options and Convertible
Securities issued at a certain price in fact expire
or are terminated unexercised, then in each such case
the Series A 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 termination becoming effective, be
recomputed to reflect such increase, or termination
insofar as it affects such Options or the rights of
conversion or exchange under such Convertible
Securities; provided, however, that no such
adjustment of the Series A Conversion Price shall
affect Common Stock previously issued upon conversion
of any such Series A Preferred Stock.
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(g) DETERMINATION OF CONSIDERATION. For purposes of this Part B,
Section 4, 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 of securities
or other assets of the Corporation for consideration
which covers both, be the proportion of such
consideration so received, computed as provided in
sub-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 paragraph (f), relating to Options and
Convertible Securities, shall be determined by
dividing (A) the total amount, if any, received or
receivable by the Corporation as consideration for
the issue of such Options or Convertible Securities,
plus the minimum aggregate amount of additional
consideration (as set forth in the instruments
relating thereto, without regard to any provision
contained therein designed to protect against
anti-dilution) payable to the Corporation upon the
exercise of such Options or the conversion or
exchange of such Convertible Securities, or in the
case of Options for Convertible Securities, the
exercise of such Options for Convertible Securities
and the conversion or exchange of such Convertible
Securities, by (B) the maximum number of shares of
Common Stock (as set forth in the instruments
relating thereto, without regard to any provision
contained therein designed to protect against
anti-dilution) issuable upon the exercise of such
Options or the conversion or exchange of such
Convertible Securities.
(iii) STOCK DIVIDENDS AND STOCK SUBDIVISIONS. Any
Additional Shares of Common Stock deemed to have been
issued, relating to stock dividends on and stock
subdivisions of the Common Stock, shall be deemed to
have been issued for no consideration and the Series
A Conversion Price shall be adjusted in accordance
with paragraph (d) of this Section.
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(h) CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to this Part B,
Section 4, the Corporation at its expense shall promptly compute such adjustment
or readjustment in accordance with the terms hereof 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 certificate setting forth (i) such adjustments and
readjustments, (ii) the Series A Conversion Price at the time in effect, and
(iii) 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 Series A
Preferred Stock.
SECTION 5. REDEMPTION AT OPTION OF COMPANY.
(a) RIGHT TO REDEEM. Following any payment by the Corporation of any
royalty payment under the Abbott License Agreement, the Series A Preferred Stock
may be redeemable at the Corporation's option pursuant to the terms of the Call
Option Agreement.
(b) RETIREMENT OF SERIES A PREFERRED STOCK. All Series A Preferred
Stock redeemed or repurchased pursuant to the Call Option Agreement shall be
retired and cancelled and shall not be reissued, and the Corporation may from
time to time take appropriate action as may be necessary to reduce the
authorized Series A Preferred Stock accordingly.
PART C RIGHTS OF SERIES B PREFERRED STOCK
SECTION 1. DIVIDEND RIGHTS FOR SERIES B PREFERRED STOCK. The holders of
shares of Series B Preferred Stock shall be entitled to receive, out of funds
legally available therefor, if, as and when declared by the Board of Directors,
but before any dividends are paid on or set aside for Junior Shares and pari
passu with dividends paid on or set aside for the Series A Preferred Stock and
any other series of preferred stock ranking on parity with the Series B
Preferred Stock, dividends equal to the product of (a) the per share amount, if
any, of the dividend declared, paid or set aside for the Junior Shares,
multiplied by (b) the number of shares of Common Stock into which each such
share of Series B Preferred Stock is then convertible.
SECTION 2. SERIES B PREFERRED STOCK LIQUIDATION PREFERENCE.
(a) PREFERENCE. In the event of any liquidation, dissolution or winding
up of the affairs of the Corporation, voluntarily or involuntarily, the holders
of each share of Series B Preferred Stock, prior to any distribution to the
holders of Junior Shares but pari passu with the holders of Series A Preferred
Stock, shall be entitled to receive pro rata a preferential amount equal to
$600.06 per share (adjusted to reflect any stock split, stock dividend,
combination, recapitalization or reorganization) of Series B Preferred Stock
held by them, plus an amount equal to five percent (5%) per annum simple
interest on the Original Purchase Price, plus any declared and unpaid dividends
(the "Series B Preferred Stock Liquidation Preference"). After payment or
setting apart for payment of the Series A Preferred Stock Liquidation Preference
and the Series B Preferred Stock Liquidation Preference, the remaining assets of
the Corporation, if
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any, shall be distributed among the holders of the Junior Shares. If, upon
such liquidation, dissolution or winding up, the assets of the Corporation
are insufficient (after payment of the liquidation preference of any class of
preferred stock ranking senior on liquidation to the Series B Preferred Stock)
to provide for the payment in full of the Series B Preferred Stock Liquidation
Preference for each share of Series B Preferred Stock outstanding, such assets
as are available shall be paid out in accordance with the last sentence of Part
B, Section 2(a).
(b) MERGER OR ACQUISITION. A merger or consolidation of the Corporation
with or into another corporation or entity (whether or not the Corporation is
the surviving entity if, after the merger or consolidation, more than 50% of the
voting stock of the surviving corporation is owned by persons who were not
holders of voting stock of the Corporation immediately prior to the merger or
consolidation), or the sale of all or substantially all the assets of the
Corporation, shall be deemed to be a liquidation, dissolution or winding up the
Corporation for purposes of this Part C, Section 2(b) if the holders of at least
a majority of the then outstanding shares of Series A Preferred Stock and Series
B Preferred Stock, voting together as a single class, so elect by giving written
notice thereof to the Corporation at least three days before the effective date
of such event. If no such notice is given by said holders, the provisions of
Part C, Section 3(c) shall apply. The amount deemed distributed to the holders
of Series A Preferred Stock upon any such merger or consolidation shall be the
cash or the value of the property, rights or other securities received in the
merger or consolidation which shall be determined in good faith by the Board of
Directors of the Corporation.
SECTION 3. CONVERSION OF SERIES B PREFERRED STOCK.
The Series B Preferred Stock shall be convertible in accordance with
the following provisions:
(a) RIGHT TO CONVERT. Each share of Series B Preferred Stock shall be
convertible, at the option of the holder thereof, at any time and from time to
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
non-assessable shares of Class A Common Stock as is determined by dividing $600
(the "Original Series B Issue Price") by the Series B Conversion Price,
determined and adjusted as hereafter provided, in effect at the time of
conversion and multiplying the result by the number of shares of Series B
Preferred Stock that are being converted. The initial Series B Conversion Price
shall be $0.60 per share, and it shall be subject to adjustment upon certain
events as provided in Part C, Section 4.
(b) STOCKHOLDER RIGHT TO CONVERT AND CONVERSION PRICE. If the holders
of at least a majority of the Preferred Stock so elect at any time after the
Original Issue Date, all shares Series B Preferred Stock shall be converted, at
the office of the Corporation or any transfer agent for the Series B Preferred
Stock, into such number of fully paid and non-assessable shares of Class A
Common Stock as is determined by dividing the Original Series B Issue Price by
the Series B Conversion Price in effect at the time of conversion and
multiplying the result by the number of shares of Series B Preferred Stock that
are being converted.
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(c) CORPORATION RIGHT TO REQUIRE MANDATORY CONVERSION. Subject to
paragraph (d), if the numeric average of the Market Price of Class A Common
Stock for 20 consecutive trading days at any time exceeds $5.00 (adjusted to
reflect any stock split, stock dividend, combination, recapitalization or
reorganization), the Corporation may, at its option exercised at any time within
15 calendar days after such time, elect to require shares of Series B Preferred
Stock to be automatically converted into shares of Class A Common Stock at the
then effective Conversion Price by giving written notice of such election to all
holders of record of shares of Series B Preferred Stock (the "Mandatory
Conversion Notice"), indicating the number of shares of Series B Preferred Stock
so converted and of the date and place for surrender of certificates
representing Series B Preferred Stock in exchange for the number of shares of
Class A Common Stock to which such holder is entitled. All conversions under
this Section 3(c) shall be made ratably among the holders of Series B Preferred
Stock, based upon the number of shares of Series B Preferred Stock held by each
holder on the date of the Mandatory Conversion Notice. Such Mandatory Conversion
Notice shall be sent to each record holder of Series B Preferred Stock at such
holder's address appearing on the stock register of the Corporation. On or
before the date so fixed, each holder of shares of Series B Preferred Stock
shall surrender such holder's certificate or certificates for all such shares to
the Corporation at the place designated in exchange for the number of shares of
Class A Common Stock to which such holder is entitled. Except to the extent
expressly provided herein, the other provisions relating to conversion of Series
B Preferred Stock into Class A Common Stock and payments in lieu of fractions
set forth elsewhere in this Part C, Section 3 shall apply to the mandatory
conversion of the Series B Preferred Stock.
(d) LIMITATIONS ON CORPORATION'S MANDATORY CONVERSION RIGHT. The
Corporation's right to force conversion under paragraph (c) above shall be
subject to the following limitations:
(i) The maximum number of shares of Preferred Stock which
the Corporation can elect to convert into shares of
Class A Common Stock under any Mandatory Conversion
Notice shall be the lesser of (A) 20% of the Adjusted
Volume, or (B) 1,866,600 shares (adjusted to reflect
any stock split, stock dividend, combination,
recapitalization or reorganization).
(ii) No shares of Series B Preferred Stock shall be
converted under this Section unless all then
outstanding shares of Series A Preferred Stock have
first been converted.
(iii) The Corporation may not make another election to
force conversion of any Preferred Stock (or
repurchase of any Warrants under the corresponding
provisions of the Warrants) unless all shares of
Common Stock issued or issuable as a result of any
prior mandatory conversion under this Section ( and
all shares issuable upon exercise of the Warrants in
response to a mandatory repurchase notice) have been
registered under the Securities Act and such
registration is then effective.
(iv) After it has once converted shares under paragraph
(c) above, the Corporation may not make a second
election and give another Mandatory
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Conversion Notice until such time as the numeric
average of the Market Price of Class A Common Stock
for 20 consecutive trading days again exceeds $5.00,
where the trading days included in the second
election do not include any trading days prior to
the first day after the date of the last Mandatory
Conversion Notice.
(e) EFFECT OF ACQUISITION ON SERIES B PREFERRED STOCK. In the event of
a merger or consolidation of the Corporation with or into another corporation or
entity or a sale by the Corporation of all or substantially all of its assets,
and in the case of successive such mergers, consolidations or sales except for
any such transactions as are treated as a liquidation under Part C, Section 2(b)
hereof, thereafter the shares of Series B Preferred Stock then outstanding shall
be convertible into the number and kind of securities of the acquiring or
surviving corporation (or such other entity whose securities are delivered in
exchange for the Class A Common Stock of the Corporation) to which the holders
of the Series A Preferred Stock would have been entitled if such holders had
converted their Series A Preferred Stock into Class A Common Stock or the common
stock of any successor to the Corporation upon the consummation of such sale,
merger or consolidation; and, in such case, appropriate adjustment (as
determined in good faith by the Board of Directors) shall be made in the
application of the provisions in this Part C, Sections 3 and 4 with respect to
the rights and interest thereafter of the holders of the Series B Preferred
Stock, to the end that the provisions set forth in such sections (including the
provisions with respect to changes and other adjustments of the Conversion
Price) shall thereafter be applicable, as nearly as reasonably may be, in
relation to any shares of stock or other property thereafter deliverable upon
the conversion of the Series B Preferred Stock.
(f) MECHANICS OF CONVERSION. No fractional shares of Class A Common
Stock shall be issued upon conversion of Series B Preferred Stock. All shares of
Common Stock, including fractions thereof, issuable upon conversion of more than
one share of Series A Preferred Stock by a holder thereof shall be aggregated
for purposes of determining whether the conversion would result in the issuance
of any fractional share. If, after the aforementioned aggregation, the
conversion would result in the issuance of a fraction of a share of Common
Stock, the Corporation shall, in lieu of any fractional share to which a holder
of Series B Preferred Stock would otherwise be entitled, pay cash equal to such
fraction multiplied by the then effective Conversion Price. Before any holder of
Series B Preferred Stock shall be entitled to convert the same into full shares
of Class A Common Stock, the holder shall surrender the certificate or
certificates therefor, duly endorsed for transfer, at the office of the
Corporation or of any transfer agent for the Series B Preferred Stock, and shall
give written notice to the Corporation at such office that he elects to convert
the same and shall state therein the number of shares to be converted and the
name or names in which he wishes the certificate or certificates for shares of
Common Stock to be issued. The Corporation shall, as soon as practicable
thereafter, issue and deliver at such office to such holder of Series B
Preferred Stock a certificate or certificates for the number of shares of Class
A Common Stock to which such holder shall be entitled as aforesaid and a check
payable to the holder in the amount of any cash amounts payable in order to
avoid a conversion into fractional shares of Class A Common Stock. Except as
provided in paragraphs (b) and (d), 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 B Preferred Stock to be converted, and the person or
persons entitled to receive the shares of Class A Common Stock issuable upon
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such conversion shall be treated for all purposes as the record holder or
holders of such shares of Class A Common Stock on such date.
(g) NO IMPAIRMENT. The Corporation will not, by amendment of its
Amended Restated Certificate of Incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Corporation, but will at all times in good faith assist in the carrying out of
all the provisions of this Part C, Sections 3 and 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 B Preferred Stock against
impairment.
(h) NOTICES OF RECORD DATE, ETC. In the event that the Corporation
shall propose at any time:
(i) to declare any dividend or distribution upon its
Common Stock or other Junior Shares, whether in cash,
property, stock or other securities, whether or not a
regular cash dividend and whether or not out of
earnings or earned surplus;
(ii) to offer for subscription pro rata to the holders of
any class or series of its stock any additional
shares of stock of any class or series or other
rights;
(iii) to subdivide or combine its outstanding Common Stock
or other Junior Shares;
(iv) to effect any reclassification or recapitalization
of its Junior Shares outstanding involving a change
in the Junior Shares; or
(v) to merge or consolidate with or into any other
entity, or sell, lease or convey all or substantially
all its property or business, or to liquidate,
dissolve or wind up;
then, in connection with each such event, the Corporation shall send to the
holders of the Series B Preferred Stock:
(A) at least 20 days' prior written notice of
the date on which a record shall be taken
for such dividend, distribution,
subscription rights, subdivision or
combination (and specifying the date on
which the holders of Common Stock shall be
entitled thereto) or for determining rights
to vote in respect of the matters referred
to in clauses (iv) and (v) above; and
(B) in the case of the matters referred to in
clauses (iv) and (v) above, at least 20
days' prior written notice of the date when
the same shall take place (specifying the
date on which the holders of Common Stock
shall be entitled to exchange their Common
Stock
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for securities or other property
deliverable upon the occurrence of such
event).
Each such written notice shall be given to the holders of Series B
Preferred Stock at the address for each such holder as shown on the books of the
Corporation.
(h) RESERVATION OF COMMON STOCK. The Corporation shall, at all times
when the Series B Preferred Stock shall be outstanding, reserve and keep
available out of its authorized but unissued stock, for the purpose of effecting
the conversion of the Series B Preferred Stock, such number of its duly
authorized shares of Class A Common Stock as shall from time to time be
sufficient to effect the conversion of all outstanding Series B Preferred Stock.
Before taking any action which would cause an adjustment reducing the Series B
Conversion Price below the then par value of the shares of Class A Common Stock
issuable upon conversion of the Series B Preferred Stock, the Corporation will
take any corporate action which may, in the opinion of its counsel, be necessary
in order that the Corporation may validly and legally issue fully paid and
nonassessable shares of such Class A Common Stock at such adjusted Conversion
Price.
(i) CANCELLATION OF SERIES B PREFERRED STOCK. All shares of Series B
Preferred Stock which shall have been surrendered for conversion as herein
provided or redeemed or repurchase shall no longer be deemed to be outstanding
and all rights with respect to such shares, including the rights, if any, to
receive notices and to vote, shall forthwith cease and terminate except only the
right of the holders thereof to receive shares of Class A Common Stock in
exchange therefor and payment of any accrued and unpaid dividends thereon. Any
shares of Series B Preferred Stock so converted or redeemed or repurchased shall
be retired and cancelled, and shall not be reissued, and the Corporation may
from time to time take such appropriate action as may be necessary to reduce the
authorized Series B Preferred Stock accordingly.
SECTION 4. ADJUSTMENT OF CONVERSION PRICE.
(a) ADJUSTMENT OF CONVERSION PRICE. The Conversion Price on Series B
Preferred Stock shall be adjusted as set forth in this Part C, Section 4 with
the intent that the rights of holders of such Series B Preferred Stock to
convert shall not be impaired.
(b) SITUATIONS WHERE NO ADJUSTMENT REQUIRED. No adjustment in the
Conversion Price of a particular share of Series B Preferred Stock 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, such issue.
(c) ADJUSTMENT FOR COMBINATION OR CONSOLIDATION OF COMMON STOCK. In the
event the outstanding shares of Common Stock shall be combined or consolidated,
by reclassification or otherwise, into a lesser number of shares of Common
Stock, the Series B Conversion Price in effect immediately prior to such
combination or consolidation shall, concurrently with the effectiveness of such
combination or consolidation, be proportionately increased.
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(d) ADJUSTMENT FOR STOCK DIVIDEND OR SUBDIVISION. In the event the
Corporation at any time or from time to time after the Original Issue Date of
the Series B Preferred Stock shall declare or pay any dividend on the Common
Stock payable in Common Stock (or in any right to acquire Common Stock), or
effect a subdivision of the outstanding shares of Common Stock into a greater
number of shares of Common Stock by reclassification or otherwise than by
payment of a dividend in Common Stock, then and in any such event, the Series B
Conversion Price in effect immediately prior to such subdivision or stock
dividend shall forthwith be proportionately reduced.
(e) ADJUSTMENT UPON ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK. In
the event the Corporation shall issue Additional Shares of Common Stock
(including Additional Shares of Common Stock deemed to be issued pursuant to
paragraph (f) hereof but excluding any issued as a stock split or combination as
provided in paragraph (c) or upon a dividend or distribution as provided in
paragraph (d)) 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 shall be
reduced, concurrently with such issue, to a price (calculated to the nearest
cent) equal to the consideration per share paid in connection with issuance of
such Additional Shares of Common Stock.
(f) ADJUSTMENT UPON DEEMED ISSUE OF ADDITIONAL SHARES OF COMMON STOCK.
In the event the Corporation at any time or from time to time after the Series B
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 designed to protect against anti-dilution)
of Common Stock issuable upon the exercise of such Options in accordance with
clause (ii) below or, in the case of Convertible Securities, the maximum number
of shares of Common Stock into which they are convertible or exchangeable in
accordance with clause (ii) below, 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 Additional Shares of Common Stock shall not be deemed to have been issued
unless the consideration per share (determined pursuant to paragraph (g) hereof)
of such Additional Shares of Common Stock would be less than the Series B
Conversion Price in effect on the date of and immediately prior to such issue,
or such record date, as the case may be, and provided further that in any such
case in which Additional Shares of Common Stock are deemed to be issued:
(i) except as provided in clause (ii) below, no further
adjustment in the Conversion Price shall be made upon
the subsequent issue of Convertible Securities or
shares of Common Stock upon the exercise of such
Options or conversion or exchange of such Convertible
Securities; and
(ii) if such Options or Convertible Securities by their
terms provide, with the passage of time or otherwise,
for any increase in the consideration payable to the
Corporation, or for the termination of the right to
exercise or convert such Options or Convertible
Securities, or if all Options and Convertible
Securities issued at, certain price in fact expire or
are terminated
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unexercised, then in each such case 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 any such increase, or
termination becoming effective, be recomputed to
reflect such increase, or termination insofar as it
affects such Options or the rights of conversion or
exchange under such Convertible Securities; provided,
however, that no such adjustment of the Series B
Conversion Price shall affect Common Stock previously
issued upon conversion of any such Series B Preferred
Stock.
(g) DETERMINATION OF CONSIDERATION. For purposes of this Part C,
Section 4, 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 of securities
or other assets of the Corporation for consideration
which covers both, be the proportion of such
consideration so received, computed as provided in
sub-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 paragraph (f), relating to Options and
Convertible Securities, shall be determined by
dividing (A) the total amount, if any, received or
receivable by the Corporation as consideration for
the issue of such Options or Convertible Securities,
plus the minimum aggregate amount of additional
consideration (as set forth in the instruments
relating thereto, without regard to any provision
contained therein designed to protect against
anti-dilution) payable to the Corporation upon the
exercise of such Options or the conversion or
exchange of such Convertible Securities, or in the
case of Options for Convertible Securities, the
exercise of such Options for Convertible Securities
and the conversion or exchange of such Convertible
Securities, by the maximum number of shares of Common
Stock (as set forth in the instruments relating
thereto, without regard to any provision contained
therein designed to protect against anti-dilution)
issuable upon the exercise
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of such Options or the conversion or exchange of such
Convertible Securities.
(iii) STOCK DIVIDENDS AND STOCK SUBDIVISIONS. Any
Additional Shares of Common Stock deemed to have been
issued, relating to stock dividends on and stock
subdivisions of the Common Stock shall be deemed to
have been issued for no consideration and the Series
B Conversion Price shall be adjusted in accordance
with paragraph (d) of this Section.
(h) CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to this Part C,
Section 4, the Corporation at its expense shall promptly compute such adjustment
or readjustment in accordance with the terms hereof and furnish to each holder
of Series B Preferred Stock a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Corporation shall, upon the written request at any
time of any holder of Series B Preferred Stock, furnish or cause to be furnished
to such holder a like certificate setting forth (i) such adjustments and
readjustments, (ii) the Series B Conversion Price at the time in effect, and
(iii) 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 Series B
Preferred Stock.
SECTION 5. REDEMPTION AT OPTION OF COMPANY.
(a) RIGHT TO REDEEM. Following any payment by the Corporation of any
royalty payment under the Abbott License Agreement, the Series B Preferred Stock
may be redeemable at the Corporation's option pursuant to the terms of the Call
Option Agreement.
(b) RETIREMENT OF SERIES B PREFERRED STOCK. All Series B Preferred
Stock redeemed or repurchased pursuant to the Call Option Agreement shall be
retired and cancelled and shall not be reissued, and the Corporation may from
time to time take appropriate action as may be necessary to reduce the
authorized Series B Preferred Stock accordingly.
* * *
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