EXHIBIT 3.1
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 05:00 PM 12/01/1999
991512488 - 2726078
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
IDEC PHARMACEUTICALS CORPORATION
PURSUANT TO THE GENERAL CORPORATION LAW
OF THE STATE OF DELAWARE
IDEC Pharmaceuticals Corporation (the "Corporation"), a corporation
organized and existing under the General Corporation Law of the State of
Delaware, does hereby certify:
FIRST: The original Certificate of Incorporation of IDEC
Pharmaceuticals Corporation was filed with the Secretary of State of Delaware
on April 1,1997.
SECOND: The Amended and Restated Certificate of Incorporation, as
herein amended, and the Rights, Preferences and Restrictions of the Series X
Junior Participating Preferred Stock of the Corporation are hereby restated and
integrated into the single instrument which is hereinafter set forth, and which
is entitled Amended and Restated Certificate of Incorporation of IDEC
Pharmaceuticals Corporation, without any further amendments other than the
amendments herein certified and without any discrepancy between the provisions
of the Amended and Restated Certificate of Incorporation, as herein amended, and
the Rights, Preferences and Restrictions of the Series X Junior Participating
Preferred Stock and the provisions of the said single instrument hereinafter set
forth.
THIRD: The amendment and the restatement of the Amended and Restated
Certificate of Incorporation set forth herein has been duly adopted in
accordance with the provisions of Sections 245, 242 and 211 of the General
Corporation Law of the State of Delaware by the directors and stockholders of
the Corporation.
FOURTH: Effective upon the filing of this Amended and Restated
Certificate of Incorporation, each issued and outstanding share of Common Stock
of the Corporation shall be split into two shares of Common Stock.
FIFTH: The text of the Corporation's Amended and Restated Certificate
of Incorporation so adopted reads in full as set forth in Exhibit A attached
hereto and is hereby incorporated herein by this reference.
IN WITNESS WHEREOF, IDEC Pharmaceuticals Corporation has caused this
Amended and Restated Certificate of Incorporation to be signed by the President
and the Secretary this 1st day of December, 1999.
IDEC PHARMACEUTICALS CORPORATION
By: /s/ William H. Rastetter, Ph.D.
-------------------------------------
William H. Rastetter, Ph.D.
President and Chief Executive Officer
ATTEST:
By: /s/ Kenneth J. Woolcott, Secretary
----------------------------------
Kenneth J. Woolcott, Secretary
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EXHIBIT A
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
IDEC PHARMACEUTICALS CORPORATION
ARTICLE I
The name of this corporation is IDEC Pharmaceuticals Corporation.
ARTICLE II
The address of the registered office of the corporation in the State of
Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle.
The name of its registered agent at such address is The Corporation Trust
Company.
ARTICLE III
The nature of the business or purposes to be conducted or promoted is
to engage in any lawful act or activity for which corporations may be organized
under the Delaware General Corporation Law.
ARTICLE IV
(A) Classes of Stock. This corporation is authorized to issue two
classes of stock to be designated, respectively, "Common Stock" and "Preferred
Stock." The total number of shares which the corporation is authorized to issue
is Two Hundred Eight Million (208,000,000) shares. Two Hundred Million
(200,000,000) shares shall be Common Stock, par value $0.0005 per share, and
Eight Million (8,000,000) shares shall be Preferred Stock, par value $0.001 per
share.
(B) Rights, Preferences and Restrictions of Preferred Stock. The
Preferred Stock authorized by this Certificate of Incorporation may be issued
from time to time in series. The rights, preferences, privileges, and
restrictions granted to and imposed on the Series A Preferred Stock, which
series shall consist of One Million Seven Hundred Fifty Thousand (1,750,000)
shares, which may be issued in seven subseries designated as (i) "Series A-l
Preferred Stock," consisting of One Hundred Thousand (100,000) authorized
shares; (ii) "Series A-2 Preferred Stock," consisting of One Hundred Fifty
Thousand (150,000) authorized shares; (iii) "Series A-3 Preferred Stock,"
consisting of Seven Hundred Thousand (700,000) authorized shares; (iv) "Series
A- 4 Preferred Stock," consisting of Two Hundred Fifty Thousand (250,000)
authorized shares; (v) "Series A-5 Preferred Stock," consisting of Three Hundred
Fifty Thousand (350,000) authorized shares; (vi) "Series A-6 Preferred Stock,"
consisting of One Hundred Thousand (100,000) authorized shares; and (vii)
"Series A-7 Preferred Stock," consisting of One Hundred Thousand (100,000)
authorized shares; and on the Series X Junior Participating Preferred Stock,
consisting of Fifty-Eight Thousand (58,000) authorized shares, are as set forth
below in this Article IV(B). The Board of Directors is hereby authorized to fix
or alter the rights, preferences, privileges and restrictions granted to or
imposed upon additional series of Preferred Stock, and the number of shares
constituting any such additional series and the designation thereof, or of any
of them. Subject to compliance with applicable protective voting rights which
have been or may be granted to the Preferred Stock or series thereof in the
Corporation's Certificate of Incorporation, as amended and restated from time to
time, and requirements and restrictions of applicable law ("Protective
Provisions"), the rights, privileges, preferences and restrictions of any such
additional series may be subordinated to, pari passu with (including, without
limitation, inclusion in provisions with respect to liquidation and acquisition
preferences, redemption and/or approval of matters by vote or written consent),
or senior to any of those of any present or future class or series of Preferred
or Common Stock. Subject to compliance with applicable Protective Provisions,
the Board of Directors is also authorized to increase the number of shares of
any series (other than the Series A Preferred Stock), or decrease the number of
shares of any series prior or subsequent to the issue of that series, but not
below the number of shares of such series then outstanding. In case the number
of shares of any series shall be so decreased, the shares constituting such
decrease shall resume the status which they had prior to the adoption of the
resolution originally fixing the number of shares of such series. The Series A
Preferred Stock and the subseries thereof shall have the relative rights,
preferences and restrictions set forth in Annex A hereto, which is incorporated
by reference herein and made a part hereof. The Series X Junior Participating
Preferred Stock shall have the relative rights, preferences and restrictions set
forth in Annex B hereto, which is incorporated by reference herein and made a
part hereof.
(C) Common Stock.
1. Dividend Rights. Subject to the prior rights of
holders of all classes of stock at the time outstanding having prior rights as
to dividends, the holders of the Common Stock shall be entitled to receive, when
and as declared by the Board of Directors, out of any assets of the Corporation
legally available therefor, such dividends as may be declared from time to time
by the Board of Directors.
2. Liquidation Rights. Upon the liquidation, dissolution
or winding up of the Corporation, the assets of the Corporation shall be
distributed to the holders of the Common Stock as provided in Annex A and Annex
B hereto.
3. Redemption. The Common Stock is not redeemable.
4. Voting Rights. The holder of each share of Common
Stock shall have the right to one vote, and shall be entitled to notice of any
stockholders' meeting in accordance with the Bylaws of the Corporation, and
shall be entitled to vote upon such matters and in such manner as may be
provided by law.
ARTICLE V
The Board of Directors may from time to time make, amend, supplement or
repeal the bylaws of the corporation by the requisite affirmative vote of
directors as set forth in the bylaws of the corporation; provided, however, that
the stockholders may change or repeal any bylaw adopted by the Board of
Directors by the requisite affirmative vote of stockholders as
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set forth in the bylaws of the corporation; and, provided further, that no
amendment or supplement to the bylaws of the corporation adopted by the Board of
Directors shall vary or conflict with any amendment or supplement thus adopted
by the stockholders.
ARTICLE VI
The number of directors of the corporation shall be fixed from time to
time by, or in the manner provided in, the bylaws or amendment thereof duly
adopted by the board of directors or by the stockholders of the corporation.
ARTICLE VII
Elections of directors need not be by written ballot unless the bylaws
of the corporation shall so provide. The directors shall be classified into
three classes, as nearly equal in number as possible as determined by the board
of directors, with (i) the term of office of the first class to expire at the
1998 Annual Meeting of Stockholders, (ii) the term of office of the second class
to expire at the 1999 Annual Meeting of Stockholders and (iii) the term of
office of the third class to expire at the 2000 Annual Meeting of Stockholders.
At each Annual Meeting of Stockholders, directors elected to succeed those
directors whose terms expire shall be elected for a term of office to expire at
the third succeeding Annual Meeting of Stockholders after their election.
Additional directorships resulting from an increase in the number of directors
shall be apportioned among the classes as equally as possible as determined by
the board of directors.
ARTICLE VIII
The Corporation is to have perpetual existence.
ARTICLE IX
Meetings of stockholders may be held within or without the State of
Delaware, as the bylaws of the corporation may provide. The books of the
corporation may be kept (subject to any provision contained in the statutes)
outside the State of Delaware at such place or places as may be designated from
time to time by the board of directors or in the bylaws of the corporation.
ARTICLE X
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 after
approval of this Article to authorize corporate action further eliminating or
limiting the personal liability of directors, then the liability of a director
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shall be eliminated or limited to the fullest extent permitted by the Delaware
General Corporation Law, as so amended. Any repeal or modification of the
foregoing provisions of this Article X shall not adversely affect any right or
protection of a director of the Corporation with respect to any acts or
omissions of such director occurring prior to such repeal or modification.
ARTICLE XI
To the fullest extent permitted by applicable law, the Corporation is
also authorized to provide indemnification of (and advancement of expenses to)
such agents (and any other persons to which Delaware law permits the Corporation
to provide indemnification) though bylaw provisions, agreements with such agents
or other persons, vote of stockholders or disinterested directors or otherwise,
in excess of the indemnification and advancement otherwise permitted by Section
145 of the Delaware General Corporation Law, subject only to limits created by
applicable Delaware law (statutory or non-statutory), with respect to actions
for breach of duty to the Corporation, its stockholders, and others. Any repeal
or modification of any of the foregoing provisions of this Article XI shall not
adversely affect any right or protection of a director, officer, agent or other
person existing at the time of, or increase the liability of any director of the
Corporation with respect to any acts or omissions of such director, officer or
agent occurring prior to such repeal or modification.
ARTICLE XII
The corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
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ANNEX A
RIGHTS, PREFERENCES AND RESTRICTIONS OF THE
SERIES A-1, A-2, A-3, A-4, A-5, A-6 AND A-7 PREFERRED STOCK
The rights, preferences, restrictions and other matters relating to the
Series A Preferred Stock are as follows:
1. Certain Definitions.
"Affiliate" means an entity that, directly or indirectly, through one
or more intermediaries, is controlled by IDEC or Genentech, As used herein, the
term "control" will mean the direct or indirect ownership of fifty percent (50%)
or more of the stock having the right to vote for directors thereof or the
ability to otherwise control the management of the corporation or other business
entity.
"Approval Process Event" means a determination by the Joint Development
Committee that the formulation of C2B8 and the process for C2B8 recovery are
commercially viable as more fully described in Appendix I to the Development
Plan.
"C2B8" means that certain monoclonal antibody to B cells more
particularly described on Exhibit B to the Collaboration Agreement.
"Co-Promotion Territory" means the United States and Canada.
"Collaboration Agreement" shall mean the Collaboration Agreement dated
the Effective Date between the Corporation and Genentech.
"Controlled," unless specified otherwise herein, means possession of
the ability to grant a license or sublicense as provided for herein without
violating the terms of any agreement or other arrangement with any entity other
than the Corporation or Genentech.
"Development Plan" means the comprehensive plan for the development of
C2B8, designed to generate the preclinical, process development/manufacturing
scale-up, clinical and regulatory information required to obtain Regulatory
Approval in the Co-Promotion Territory, and may be modified from time to time by
the JDC. Development shall refer to all activities related to preclinical
testing, toxicology, formulation, process development, manufacturing scale-up,
quality assurance/quality control, clinical studies and regulatory affairs for a
Licensed Product in connection with obtaining Regulatory Approvals of such
Products.
"Effective Date " means March 16, 1995.
"First Anniversary Date " means the date which is twelve (12) calendar
months following March 16, 1995.
A-1.
"FDA Approval Date " means the date on which the United States Food and
Drug Administration grants Regulatory Approval of C2B8 for manufacture and sale
in the United States.
"FDA Approval Event" means the FDA Approval Date occurs on or before
the Fifty-Four Month Anniversary Date.
"Fifty-Four Month Anniversary Date" means that date which is fifty-four
(54) calendar months following March 16,1995.
"Genentech" means Genentech, Inc., a Delaware corporation, and its
Affiliates.
"IDEC" means IDEC Pharmaceuticals Corporation, a Delaware corporation,
and its Affiliates.
"Joint Development Committee" or "JDC" means that committee established
pursuant to Section 3.2 of the Collaboration Agreement.
"Licensed Product(s)" means any compound or composition of matter whose
mechanism of action is initiated by interaction with the CD20 or CD19 B-cell
determinant (including C2B8, but excluding Y2B8 (as defined in Section 2.2. of
the Collaboration Agreement) and In2B8 (as defined in Section 2.2. of the
Collaboration Agreement) unless the option set forth in Section 2.3 of the
Collaboration Agreement is exercised) (a) developed by IDEC or (b) the
intellectual property rights to which are owned or Controlled, in whole or in
part, by IDEC, in either (a) or (b) as of the Effective Date or during the term
of the Collaboration Agreement.
"Major European Country" means the United Kingdom, Italy, Germany,
France or Spain.
"ML/MS Agreement" means the Preferred and Common Stock Purchase
Agreement dated March 16,1995 by and between ML/MS Associates, L.P. and IDEC,
whereby IDEC reacquired the rights to certain technologies for the treatment of
B-cell lymphomas funded and developed by ML/MS Partners pursuant to a
Development Agreement and related agreements, dated as of February 17,1988 and
October 27,1988.
"ML/MS Partners" shall mean ML Technology Ventures, L.P. and Morgan
Stanley Ventures, L.P., and any assignee or successor to ML/MS Partners.
"National Exchange" shall mean the Nasdaq National Market or any other
national exchange on which the Common Stock of the Corporation is listed.
"Option Agreement" means the Option Agreement to be dated as of the
Effective Date between Genentech and the Corporation.
"Patent Milestone Event" means the notice of grant in the European
Patent Office or issuance in a Major European Country of the first valid and
enforceable letters patent covering C2B8.
A-2.
"Preferred Stock Purchase Agreement" means the Preferred Stock Purchase
Agreement dated the Effective Date between the Corporation and Genentech.
"Regulatory Approval" means any approvals (including pricing and
reimbursement approvals), licenses, registrations or authorizations of any
federal, state or local regulatory agency, department, bureau or other
governmental entity, necessary for the manufacture and sale of a Licensed
Product in a regulatory jurisdiction.
"Registration Rights Agreement" means the 1995 Registration Rights
Agreement dated as of the Effective Date between Genentech, ML/MS Associates,
L.P. and the Corporation.
"Third Anniversary Date" means that date which is thirty-six months
following March 16, 1995.
2. Dividend Provisions.
a. Series A-1, A-2, A-3, A-4, A-5, and A-6 Preferred
Stock Dividend Provisions. No dividend or other distribution shall be paid, or
declared and set apart for payment (other than dividends of Common Stock on the
Common Stock of the Corporation and dividends payable on the Series A-7
Preferred Stock pursuant to Section 2(b) below), on the shares of any class or
series of capital stock of the Corporation unless and until a dividend of equal
or greater amount (calculated as if the shares of Series A-1, A-2, A-3, A-4, A-5
and A-6 Preferred Stock had been converted Common Stock on the date the dividend
is declared) is first declared and paid with respect to any series of Series A
Preferred Stock.
b. Series A-7 Preferred Stock Dividend Provisions.
Cumulative dividends shall accrue from the date of issuance of the Series A-7
Preferred Stock at a fluctuating rate per annum equal to the sum of two percent
(2%) plus the "Prime Rate" as announced by the Bank of America, San Francisco
Branch, from time to time. Accrued dividends shall be payable quarterly in
arrears on the first day of each quarter, commencing with the first day of the
first quarter following the earlier of the FDA Approval Date or the Fifty-Four
Month Anniversary Date. On the earlier of the FDA Approval Date or the
Fifty-Four Month Anniversary Date, all dividends accrued through such date shall
be paid. Any accumulation of dividends on the Series A-7 Preferred Stock shall
not bear interest. No dividend or other distribution shall be paid, or declared
and set apart for payment (other than dividends of Common Stock on the Common
Stock of the Corporation), on the shares of any class or series of capital stock
of the Corporation unless and until such dividends have been paid. The
Corporation shall take any and all corporate action necessary to declare and pay
such dividends described in this Section 2(b).
3. Liquidation Preference. The holders of Series A
Preferred Stock share a liquidation preference as follows:
a. Series A-1, A-2, A-3, A-4, A-5, A-6 and A-7 Preferred
Stock Liquidation Preference. In the event of any liquidation, dissolution or
winding up of this Corporation, either voluntary or involuntary, subject to the
rights of series of Series A Preferred Stock that may from time to time come
into existence, the holders of Series A-1, Series A-2, Series A-3, Series A-4,
Series A-5, Series A-6 and Series A-7 Preferred Stock, shall be entitled to
receive, prior and in preference to any distribution of any of the assets of
this Corporation to
A-3.
the holders of Common Stock and any other series of Series A Preferred Stock by
reason of their ownership thereof, an amount per share equal to the Original
Issue Price (defined below) for such subseries plus an amount equal to (i) the
declared but unpaid dividends and distributions on such share in the case of the
Series A-1, Series A-2, Series A-3, Series A-4, Series A-5 and Series A-6
Preferred Stock and (ii) the accrued but unpaid dividends and distributions on
such share in the case of the Series A-7 Preferred Stock. If upon the occurrence
of such event, the assets and funds thus distributed among the holders of the
Series A-1, Series A-2, Series A-3, Series A-4, Series A-5, Series A-6 and
Series A-7 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 of Series A Preferred Stock that may from time to time come into
existence, the entire assets and funds of the Corporation legally available for
distribution shall be distributed ratably among the holders of the Series A-1,
Series A-2, Series A-3, Series A-4, Series A-5, Series A-6 and Series A-7
Preferred Stock on an as-converted to Common Stock basis in proportion to the
amount of such stock owned by each such holder. The "Original Issue Price" for
each subseries shall mean the price at which the initial share of such subseries
is issued.
b. Upon the completion of the distribution required by
subparagraph (a) of this Section 3 and any other distribution that may be
required with respect to series of Series A Preferred Stock that may from time
to time come into existence, if assets remain in this Corporation, the holders
of the Common Stock of this Corporation, shall receive all of the remaining
assets of this Corporation.
c. If (i) a single shareholder or group of affiliated
shareholders, other than a holder of the Series A Preferred Stock, or a
Controlled Affiliate thereof, who would be required to file a Schedule 13D under
the Securities Exchange Act of 1934, as amended, acquires or obtains the right
to acquire voting stock of the Corporation so that its total holdings of such
stock equal or exceed fifty percent (50%) of the then outstanding voting stock
of the Corporation, or (ii) any third party (i.e., a party other than a holder
or a Controlled Affiliate) acquires or obtains the right to acquire all or
substantially all of the assets of the Corporation, then such event shall be
considered a liquidation under this Section 3. For purposes hereunder,
"Controlled Affiliate" shall mean a party that, directly or indirectly, through
one or more intermediaries, is controlled by such holder.
4. Series A Preferred Stock Conversion. The holders of
the Series A-1, Series A-2, Series A-3, Series A-4, Series A-5, Series A-6 and
Series A-7 Preferred Stock shall have conversion rights as follows (the
"Conversion Rights"):
a. Series A-1, Series A-2, Series A-3, Series A-4 and
Series A-5, Preferred Stock Conversion. Each share of Series A-1, Series A-2,
Series A-3, Series A-4 and Series A-5 Preferred Stock shall be convertible, at
the option of the holder thereof, at any time after the date of issuance of such
share at the office of this Corporation or any transfer agent for such stock,
into ten (10) fully paid and nonassessable shares of Common Stock (the
"Conversion Rate" for the Series A-1 Preferred Stock, Series A-2 Preferred
Stock, Series A-3 Preferred Stock, Series A-4 Preferred Stock and the Series A-5
Preferred Stock).
A-4.
b. [Intentionally omitted.]
c. Series A-6 Preferred Stock Conversion.
(1) "Series A-6 Conversion Number" means the
number calculated according to the following formulas: (i) If the FDA Approval
Date occurs prior to the Fifty-Four Month Anniversary Date, then the Series A-6
Conversion Number shall equal the average closing price for the Common Stock
during the period beginning on the FDA Approval Date and ending on the date
which is twenty (20) trading days following the FDA Approval Date, as reported
on the National Exchange; or (ii) if the Fifty-Four Month Anniversary Date
occurs prior to the FDA Approval Date, then the Series A-6 Conversion Number
shall equal the average closing price for the Common Stock during the period
beginning on the date which is twenty (20) trading days prior to the Fifty-Four
Month Anniversary Date and ending on the Fifty-Four Month Anniversary Date, as
reported on the National Exchange.
(2) The Series A-6 Preferred Stock shall not be
convertible until the earlier of (i) twenty (20) trading days following the FDA
Approval Date or (ii) the Fifty-Four Month Anniversary Date. Thereafter, each
share of Series A-6 Preferred Stock shall be convertible, at the option of the
holder thereof, into the number of shares of fully paid and nonassessable shares
of Common Stock as equals seventy-five (75) divided by the Series A-6 Conversion
Number (the "Conversion Rate" for the Series A-6 Preferred Stock).
d. Series. A-7 Preferred Stock Conversion.
(1) "Series A-7 Conversion Number" means the
average closing price for the Common Stock during the period beginning on the
twentieth (20th) trading day preceding the date on which the holder gives notice
of such holder's intention to convert (the "Notice Date") and ending on the
Notice Date, as reported on the National Exchange.
(2) Each share of Series A-7 Preferred Stock
shall be convertible, at the option of the holder thereof, at any time after the
Fifty-Four Month Anniversary Date at the office of this Corporation or any
transfer agent for such stock, into such number of shares of fully paid and
nonassessable shares of Common Stock as equals (A) one hundred (100) divided by
(B) the Series A-7 Conversion Number (the "Conversion Rate" for the Series A-7
Preferred Stock).
e. Automatic Conversion, (i) Each share of Series A-1,
Series A-2, Series A-3, Series A-4 and Series A-5 Preferred Stock; (ii) each
share of Series A-6 Preferred Stock that has become convertible at the option of
the holder pursuant to Section 4(c); and (iii) each share of Series A-7
Preferred Stock that has become convertible at the option of the holder pursuant
to Section 4(d), shall, in each case, automatically be converted into shares of
Common Stock at its then effective Conversion Rate immediately upon the transfer
of ownership by the initial holder to a third party which is not an Affiliate of
such holder. For purposes hereunder, "Affiliate" shall mean a party that,
directly or indirectly, through one or more intermediaries, controls or is
controlled by such holder.
f. Mechanics of Conversion of Series A Preferred Stock.
Before any holder of Series A Preferred Stock shall be entitled to convert the
same into shares of Common
A-5.
Stock, such holder shall surrender the certificate or certificates therefor,
duly endorsed, at the office of this Corporation or of any transfer agent for
the Series A Preferred Stock, and shall give written notice to this Corporation
at its principal corporate office, of the election to convert the same and shall
state therein the name or names in which the certificate or certificates for
shares of Common Stock are to be issued; provided, however, that in the event of
an automatic conversion pursuant to Section 4(e), the outstanding shares of
Series A Preferred Stock shall be converted automatically without any further
action by the holder of such shares and whether or not the certificates
representing such shares are surrendered to the Corporation or its transfer
agent, and provided further that the Corporation shall not be obligated to issue
certificates evidencing the shares of Common Stock issuable upon such automatic
conversion unless the certificates evidencing such shares of Series A Preferred
Stock are delivered to the Corporation or its transfer agent as provided herein.
This Corporation shall, as soon as practicable thereafter, issue and deliver at
such office to such holder of Preferred Stock, or to the nominee or nominees of
such holder, a certificate or certificates for the number of shares of Common
Stock to which such holder shall be entitled as aforesaid and shall promptly pay
in cash or, to the extent sufficient funds are not then legally available
therefor, in Common Stock (at the Common Stock's fair market value determined by
the Board of Directors as of the date of such conversion), any declared and
unpaid dividends on the shares of Series A-1, Series A-2, Series A-3, Series
A-4, Series A-5 and Series A-6 Preferred Stock being converted and any accrued
but unpaid dividends on the shares of Series A-7 Preferred Stock being
converted. 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, or in the case of automatic conversion pursuant
to Section 4(e), on the date of transfer to the new non-Affiliate holder; and
the person or persons entitled to receive the shares of Common Stock issuable
upon such conversion shall be treated for all purposes as the record holder or
holders of such shares of Common Stock as of such date.
g. Conversion Rate Adjustments of Series A Preferred
Stock for Splits and Combinations. The Conversion Rate of the Series A-1,
Series A-2, Series A-3, Series A-4, Series A-5, Series A-6 and Series A-7
Preferred Stock shall be subject to adjustment from time to time as follows:
(1) In the event the Corporation should at any
time or from time to time after the date upon which any shares of Series A
Preferred Stock were first issued (the "Purchase Date"), fix a record date for
the effectuation of a split or subdivision of the outstanding shares of Common
Stock or the determination of holders of Common Stock entitled to receive a
dividend or other distribution payable in additional shares of Common Stock or
other securities or rights convertible into, or entitling the holder thereof to
receive directly or indirectly, additional shares of Common Stock (hereinafter
referred to as "Common Stock Equivalents") without payment of any consideration
by such holder for the additional shares of Common Stock or the Common Stock
Equivalents (including the additional shares of Common Stock issuable upon
conversion or exercise thereof), then, as of such record date (or the date of
such dividend distribution, split or subdivision if no record date is fixed),
the Conversion Rate of the Series A Preferred Stock shall be appropriately
increased so that the number of shares of Common Stock issuable on conversion of
each share of such series shall be increased in proportion to such increase of
the aggregate of shares of Common Stock outstanding and those issuable with
respect to such Common Stock Equivalents.
A-6.
(2) If the number of shares of Common Stock
outstanding at any time after the Purchase Date is decreased by a combination of
the outstanding shares of Common Stock, then, following the record date of such
combination, the Conversion Rate for the applicable series of Series A Preferred
Stock shall be appropriately decreased so that the number of shares of Common
Stock issuable on conversion of each share of such series shall be decreased in
proportion to such decrease in outstanding shares. Any adjustment under Section
4(g)(l) or (2) shall become effective at the close of business on the date the
split, subdivision, stock dividend, other distribution or combination becomes
effective.
h. Distributions. In the event this Corporation shall
declare a distribution payable in securities of other persons, evidences of
indebtedness issued by this Corporation or other persons, assets (excluding cash
dividends), then, in each such case for the purpose of this subsection 4(h), the
holders of the Series A Preferred Stock shall be entitled to a proportionate
share of any such distribution as though they were the holders of the number of
shares of Common Stock of the Corporation into which their shares of Series A
Preferred Stock are convertible as of the record date fixed for the
determination of the holders of Common Stock of the Corporation entitled to
receive such distribution,
i. Recapitalizations. If at any time or from time to
time there shall be a recapitalization of the Common Stock (other than a
subdivision or combination provided for elsewhere in this Section 4 or a change
in control provided for in Section 3(c)) provision shall be made so that the
holders of the Series A-1, Series A-2, Series A-3, Series A-4, Series A-5,
Series A-6 and Series A-7 Preferred Stock shall thereafter be entitled to
receive upon conversion of the Series A Preferred Stock the number of shares of
stock or other securities or property of the Corporation or otherwise, to which
a holder of Common Stock deliverable upon conversion would have been entitled on
such recapitalization, all subject to further adjustment as provided herein or
with respect to such other securities or property by the terms thereof. In any
such case, appropriate adjustment shall be made in the application of the
provisions of this Section 4 with respect to the rights of the holders of the
Series A Preferred Stock after the recapitalization to the end that the
provisions of this Section 4 (including adjustment of the applicable Conversion
Rate then in effect and the number of shares purchasable upon conversion of the
Series A Preferred Stock) shall be applicable after that event as nearly
equivalent as may be practicable.
j. No Impairment. This Corporation will not, by
amendment of its Certificate of Incorporation or through any reorganization,
recapitalization, transfer of assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by this Corporation, but will at all times in good faith assist in the
carrying out of all the provisions of this Section 4 and in the taking of all
such action as may be necessary or appropriate in order to protect the
Conversion Rights of the holders of the Series A Preferred Stock against
impairment.
k. No Fractional Shares and Certificate as to
Adjustments.
(1) No fractional shares shall be issued upon
the conversion of any share or shares of the Series A Preferred Stock, and the
number of shares of Series A Preferred Stock or Common Stock to be issued shall
be rounded to the nearest whole share.
A-7.
Whether or not fractional shares are issuable upon such conversion shall be
determined on the basis of the total number of shares of Series A Preferred
Stock the holder is at the time converting into Series A Preferred Stock or
Common Stock and the number of shares of Series A Preferred Stock or Common
Stock issuable upon such aggregate conversion.
(2) Upon the occurrence of each adjustment or
readjustment of the Conversion Rate of Series A Preferred Stock pursuant to this
Section 4, this Corporation, at its expense, shall promptly compute such
adjustment or readjustment in accordance with the terms hereof and prepare and
furnish to each holder of Series A Preferred Stock a certificate setting forth
such adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. This 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 (a) such
adjustment and readjustment, (b) the Conversion Rate for such Series A Preferred
Stock at the time in effect, and (c) the number of shares of Common Stock and
the amount, if any, of other property which at the time would be received upon
the conversion of a share of Series A Preferred Stock.
1. Notices of Record Date. In the event of any taking by
this Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, this
Corporation shall mail to each holder of Series A Preferred Stock, at least 20
days prior to the date specified therein, a notice specifying the date on which
any such record is to be taken for the purpose of such dividend, distribution or
right, and the amount and character of such dividend, distribution or right.
m. Reservation of Stock Issuable Upon Conversion. This
Corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the shares of the Series A-1, Series A-2, Series A-3, Series A-4,
Series A-5, Series A-6 and Series A-7 Preferred Stock, respectively, such number
of its shares of Common Stock as shall from time to time be sufficient to effect
the conversion of all outstanding shares of the Series A-1, Series A-2, Series
A-3, Series A-4, Series A-5, Series A-6 and Series A-7 Preferred Stock,
respectively, and if at any time the number of authorized but unissued shares of
Common Stock shall not be sufficient to effect the conversion of all then
outstanding shares of the Series A-1, Series A-2, Series A-3, Series A-4, Series
A-5, Series A-6 and Series A-7 Preferred Stock, respectively, in addition to
such other remedies as shall be available to the holder of such Preferred Stock,
this Corporation will take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purposes,
including, without limitation, engaging in best efforts to obtain the requisite
shareholder approval of any necessary amendment to its Certificate of
Incorporation.
n. Notices. Any notice required to be given to the
holders of shares of Series A Preferred Stock shall be deemed given if deposited
in the United States mail, postage prepaid, and addressed to each holder of
record at his address appearing on the books of this Corporation.
A-8.
5. Voting Rights. The holders of shares of Series A
Preferred Stock shall not have any voting rights, except as required under the
General Corporation Law of Delaware.
6. Status of Unissued. Converted or Redeemed Stock. In
the event any shares shall be converted pursuant to Section 4 hereof, the shares
so converted shall be cancelled and shall not be issuable by the Corporation.
The Certificate of Incorporation of this Corporation shall be appropriately
amended to effect the corresponding reduction in the Corporation's authorized
capital stock. In the event the Corporation issues less than the number of
authorized shares of any subseries of Series A Preferred Stock, the Certificate
of Incorporation of this Corporation shall be appropriately amended to effect a
corresponding reduction in such subseries of Preferred Stock.
7. Cancellation of Series A-3 Preferred Stock. If the
Approval Process Event has not occurred on or before the First Anniversary Date
and if the Patent Milestone Event occurs prior to the Third Anniversary Date,
then this Corporation may, at its option, cancel that number of shares of Series
A-3 Preferred Stock (or if an insufficient number of shares of Series A-3
Preferred Stock are outstanding, then an equivalent number of outstanding shares
of other subseries of Series A Preferred Stock or Common Stock) equal to
$2,500,000 divided by the Series A-3 Cancellation Price, where the "Series A-3
Cancellation Price" equals the higher of the (i) price paid per share for the
Series A-3 Preferred Stock on the date of issuance, or (ii) fair market value of
the Series A-3 Preferred Stock calculated as (A) the average closing price for
the Corporation's Common Stock during the period beginning twenty- three (23)
trading days prior to the date of cancellation and ending three (3) trading days
prior to the date of cancellation, as reported on the National Exchange,
multiplied by (B) the Conversion Rate for the Series A-3 Preferred Stock.
8. Cancellation of Series A-7 Preferred Stock. If the
FDA Approval Date occurs on or before the Fifty-Four Month Anniversary Date, the
Corporation shall cancel all of the then outstanding shares of Series A-7
Preferred Stock by crediting therefor an amount equal to the liquidation
preference of such shares (including accrued but unpaid dividends) against the
milestone payments due the Corporation pursuant to the Collaboration Agreement,
such amount to be credited first to the milestone payment payable upon
Regulatory Approval in the United States (as described in Section 7.4 of the
Collaboration Agreement) and second, to the extent the aforesaid liquidation
preference remains unpaid, to the milestone payment then payable on the date of
regulatory approval in the first Major European Country (as described in Section
7.4 of the Collaboration Agreement) (collectively, the "Milestone Payments"). If
at any time there is a Default Event (defined below), the Corporation shall
immediately cancel all of the outstanding shares of Series A-7 Preferred Stock
by paying the holders in cash an amount equal to the liquidation preference of
such shares (including accrued but unpaid dividends) (an "Acceleration Event").
If the Corporation is unable to cancel such shares of Series A-7 Preferred Stock
within seven (7) calendar days from the occurrence of the Default Event, then
notwithstanding any provision herein to the contrary, the holder of such shares
may, at its sole election, convert such shares into shares of Common Stock of
the Corporation equal to the liquidation preference of such shares (including
accrued but unpaid dividends) divided by the Original Issue Price for such
subseries multiplied by the Conversion Rate for the Series A-7 Preferred Stock.
If there is an Acceleration Event and the holder receives cash or converts to
A-9.
Common Stock in exchange for cancellation of the outstanding shares of Series
A-7 Preferred Stock as described in the preceding sentence, the holder shall be
obligated to pay, in cash, to the Corporation, any and all Milestone Payments as
such payments become due under the Collaboration Agreement.
A "Default Event" shall mean the occurrence of any of the following
events:
(i) Distributions. Failure to make a required
payment or distribution hereunder;
(ii) Material Adverse Event. At the end of any
fiscal quarter, the total cash, cash equivalents and marketable debt investments
of the Corporation shall be valued at less than the sum of the principal of and
unpaid accrued interest on (i) all indebtedness of the Corporation to banks,
insurance companies or financial institutions regularly engaged in the business
of lending money, which is for money borrowed by the Corporation; (ii) all
purchase money security interests in an amount not to exceed $5,000,000 (as
defined in the California Uniform Commercial Code); and (iii) the liquidation
preference of the outstanding Series A-7 Preferred Stock. In such event, the
Corporation shall provide holder with written notice thereof within twenty-four
(24) hours of determining that such event has occurred.
(iii) Bankruptcy Commenced by the Corporation. If
the Corporation:
(a) shall commence any proceeding in
bankruptcy or seek reorganization, arrangement, readjustment of its debts,
dissolution, liquidation, winding-up, composition or any other relief under the
United States Bankruptcy Act, as amended, or under any other insolvency,
liquidation, dissolution, arrangement, composition, readjustment of debt or any
other similar act or law, of any jurisdiction, domestic or foreign, now or
hereafter existing;
(b) shall admit is inability to pay its
debts as they mature in any petition or pleading in connection with any such
proceeding;
(c) shall apply for, or, in writing,
consent to or acquiesce in, an appointment of a receiver, conservator, trustee
or similar officer for it or for all or substantially all of its assets;
(d) shall make a general assignment for
the benefit of creditors; or
(e) shall admit in writing its
inability to pay its debts as they mature;
(iv) Bankruptcy Commenced Against the
Corporation. If any proceedings are commenced or any other action is taken
against the Corporation in bankruptcy or seeking reorganization, arrangement,
readjustment of its debts, dissolution, liquidation, winding-up, composition or
any other relief under the United States Bankruptcy Act, as amended, or under
any other insolvency, reorganization, liquidation, dissolution, arrangement,
A-10.
composition, readjustment of debt or any other similar act or law, of any
jurisdiction, domestic or foreign, now or hereafter existing; or a receiver,
conservator, trustee or similar officer for the Corporation or for all or
substantially all of its assets is appointed; and in each such case, such event
continues for ninety (90) days undismissed, unbounded and undischarged; and
(v) Material Breach. (A) Any breach of any
material representation, warranty, covenant or obligation of the Corporation
under (i) the Collaboration Agreement, which breach is not cured within sixty
(60) days of written notice thereof from Genentech (or if such breach is not
susceptible of cure within such period, the Corporation is not making diligent
good faith efforts to cure such breach); (ii) the Preferred Stock Purchase
Agreement, the Option Agreement or the Registration Rights Agreement, which
breach is not cured within thirty (30) days after receipt of written notice of
such breach from Genentech to the Corporation; or (iii) the ML/MS Agreement, to
the extent such breach materially adversely affects the Corporation's ability to
perform its obligations under the Collaboration Agreement; or (B) if, at any
time, any of the Collaboration Agreement, the Series A Preferred Stock
Agreement, the Option Agreement or the Registration Rights Agreement ceases to
be in full force and effect.
A-11.
ANNEX B
RIGHTS, PREFERENCES AND RESTRICTIONS OF THE
SERIES X JUNIOR PARTICIPATING PREFERRED STOCK
The rights, preferences, restrictions and other matters
relating to the Series X Junior Participating Preferred Stock shall be as
follows:
Section 1. Designation and Amount. The shares of such
series shall be designated as "Series X Junior Participating Preferred Stock"
(the "Series X Preferred Stock") and the number of shares constituting the
Series X Preferred Stock shall be Fifty Eight Thousand (58,000). Such number of
shares may be increased or decreased by resolution of the Board of Directors;
provided, that no decrease shall reduce the number of shares of Series X
Preferred Stock to a number less than the number of shares then outstanding plus
the number of shares reserved for issuance upon the exercise of outstanding
options, rights or warrants or upon the conversion of any outstanding securities
issued by the Corporation which are convertible into Series X Preferred Stock.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of
any series of Preferred Stock (or any similar stock) ranking prior and
superior to the Series X Preferred Stock with respect to dividends, the
holders of shares of Series X Preferred Stock, in preference to the
holders of the Common Stock of the Corporation (the "Common Stock), and
of any other junior stock, shall be entitled to receive, when, as and
if declared by the Board of Directors out of funds legally available
for the purpose, quarterly dividends payable in cash on the first day
of March, June, September and December in each year (each such date
being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the first
issuance of a share or fraction of a share of Series X Preferred Stock,
in an amount per share (rounded to the nearest cent) equal to, subject
to the provision for adjustment hereinafter set forth, 1000 times the
aggregate per share amount of all cash dividends, and 1000 times the
aggregate per share amount (payable in kind) of all non-cash dividends
or other distributions, other than a dividend payable in shares of
Common Stock or a subdivision of the outstanding shares of Common Stock
(by reclassification or otherwise), declared on the Common Stock since
the immediately preceding Quarterly Dividend Payment Date or, with
respect to the first Quarterly Dividend Payment Date, since the first
issuance of any share or fraction of a share of Series X Preferred
Stock. In the event the Corporation shall at any time declare or pay
any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or
lesser number of shares of Common Stock, then in each such case the
amount to which holders of shares of Series X Preferred Stock were
entitled immediately prior to such event under the preceding sentence
shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares
B-1.
of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or
distribution on the Series X Preferred Stock as provided in paragraph
(A) of this Section immediately after it declares a dividend or
distribution on the Common Stock (other than a dividend payable in
shares of Common Stock).
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series X Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares,
unless the date of issue of such shares is prior to the record date for
the first Quarterly Dividend Payment Date, in which case dividends on
such shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly Dividend Payment
Date or is a date after the record date for the determination of
holders of shares of Series X Preferred Stock entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment Date, in
either of which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but
unpaid dividends shall not bear interest. Dividends paid on the shares
of Series X Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at
the time outstanding. The Board of Directors may fix a record date for
the determination of holders of shares of Series X Preferred Stock
entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be not more than 60 days prior to the
date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of
Series X Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter
set forth, each share of Series X Preferred Stock shall entitle the
holder thereof to 1000 votes on all matters submitted to a vote of the
stockholders of the Corporation. In the event the Corporation shall at
any time declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the number of votes per share to which
holders of shares of Series X Preferred Stock were entitled immediately
prior to such event shall be adjusted by multiplying such number 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 of Common Stock that were outstanding
immediately prior to such event.
(B) Except as otherwise provided herein, in any other
Certificate of Designation creating a series of Preferred Stock or any
similar stock, or by law, the holders of shares of Series X Preferred
Stock and the holders of shares of Common Stock
B-2.
and any other capital stock or the Corporation having general voting
rights shall vote together as one class on all matters submitted to a
vote of stockholders of the Corporation.
(C) Except as set forth herein, or as otherwise provided
by law, holders of Series X Preferred Stock shall have no special
voting rights and their consent shall not be required (except to the
extent they are entitled to vote with holders of Common Stock as set
forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series X Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on shares of
Series X Preferred Stock outstanding shall have been paid in full, the
Corporation shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding
up) to the Series X Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Series X Preferred Stock, except
dividends paid ratably on the Series X Preferred Stock and all
such parity stock on which dividends are payable or in arrears
in proportion to the total amounts to which the holders of all
such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to
the Series X Preferred Stock, provided that the Corporation
may at any time redeem, purchase or otherwise acquire shares
of any such junior stock in exchange for shares of any stock
of the Corporation ranking junior (either as to dividends or
upon dissolution, liquidation or winding up) to the Series X
Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Series X Preferred Stock, or any
shares of stock ranking on a parity with the Series X
Preferred Stock, except in accordance with a purchase offer
made in writing or by publication (as determined by the Board
of Directors) to all holders of such shares upon such terms as
the Board of Directors, after consideration of the respective
annual dividend rates and other relative rights and
preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of
the Corporation to purchase or otherwise acquire for consideration any
shares of stock of the Corporation
B-3.
unless the Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such
manner.
Section 5. Reacquired Shares. Any shares of Series X
Preferred Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and cancelled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock and may be reissued as part of a new series
of Preferred Stock subject to the conditions and restrictions on issuance set
forth herein, in the Certificate of Incorporation, or in any other Certificate
of Designation creating a series of Preferred Stock or any similar stock or as
otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up. Upon
any liquidation, dissolution or winding up of the Corporation, no distribution
shall be made (1) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series X
Preferred Stock unless, prior thereto, the holders of shares of Series X
Preferred Stock shall have received $1,000 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment, provided that the holders of shares of Series X
Preferred Stock shall be entitled to receive an aggregate amount per share,
subject to the provision for adjustment hereinafter set forth, equal to 1000
times the aggregate amount to be distributed per share to holders of shares of
Common Stock, or (2) to the holders of shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with the
Series X Preferred Stock, except distributions made ratably on the Series X
Preferred Stock and all such parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up. In the event the Corporation shall at any time
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the aggregate amount to which
holders of shares of Series X Preferred Stock were entitled immediately prior to
such event under the proviso in clause (1) of the preceding sentence shall be
adjusted by multiplying such amount 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 of Common Stock that were
outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the
Corporation shall enter into any consolidation, merger, combination or other
transaction in which the shares of Common Stock are exchanged for or changed
into other stock or securities, cash and/or any other property, then in any such
case each share of Series X Preferred Stock shall at the same time be similarly
exchanged or changed into an amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 1000 times the aggregate amount of
stock, securities, cash and/or any other property (payable in kind), as the case
may be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the amount set forth
B-4.
in the preceding sentence with respect to the exchange or change of shares of
Series X Preferred Stock shall be adjusted by multiplying such amount 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 of Common Stock that were outstanding immediately prior to such
event.
Section 8. No Redemption. The shares of Series X
Preferred Stock shall not be redeemable.
Section 9. Rank. The Series X Preferred Stock shall
rank, with respect to the payment of dividends and the distribution of assets,
junior to all series of any other class of the Corporation's Preferred Stock.
Section 10. Amendment. The Certificate of Incorporation
of the Corporation shall not be amended in any manner which would materially
alter or change the powers, preferences or special rights of the Series X
Preferred Stock so as to affect them adversely without the affirmative vote of
the holders of at least a majority of the outstanding shares of Series X
Preferred Stock, voting together as a single class.
B-5.