Exhibit 3.1
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
ARCHEMIX CORP.
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The undersigned, for the purpose of amending and restating the Certificate
of Incorporation of Archemix Corp., a corporation organized and existing under
the laws of the State of Delaware, hereby certifies as follows:
1. The name of the Corporation is Archemix Corp. The original Certificate
of Incorporation of the Corporation was filed with the Secretary of the State of
Delaware on April 5, 2000. A Restated Certificate of Incorporation was filed on
March 31, 2004. Amendments to the Restated Certificate of Incorporation were
filed on July 7, 2005, July 8, 2005 and December 22, 2005.
2. This Amended and Restated Certificate of Incorporation restates,
integrates and amends the said Restated Certificate of Incorporation, as
amended, of the Corporation and has been duly adopted in accordance with the
provisions of Section 242 and 245 of the General Corporation Law of the State of
Delaware, pursuant to a resolution adopted by the Board of Directors and the
written consent of stockholders in accordance with the provisions of Section 228
of the General Corporation Law of the State of Delaware.
3. The said Restated Certificate of Incorporation, as amended, is hereby
amended and restated to read as follows:
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
ARCHEMIX CORP.
FIRST. The name of the corporation is Archemix Corp.
SECOND. The address of the corporation's registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle
County, Delaware 19801. The name of its registered agent at such address is The
Corporation Trust Company.
THIRD. The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
FOURTH: The total number of shares of all classes of capital stock which
the Corporation shall have authority to issue is 294,873,075 consisting of
164,215,873 shares of Common Stock having a par value of $.001 per share (the
"Common Stock") and 130,657,202 shares of Preferred Stock having a par value of
$.01 per share (the "Preferred Stock"), which shall consist of series of
Preferred Stock as follows: 51,884,995 shares of Series A Convertible Preferred
Stock, par value $.01 per share (the "Series A Preferred Stock"), 53,850,000
shares of Series B Convertible Preferred Stock, par value $.01 per share (the
"Series B Preferred Stock"), 14,922,207 shares of Series C Convertible Preferred
Stock, par value $.01 per share (the "Series C Preferred Stock"), and 10,000,000
shares of undesignated Preferred Stock (the "Undesignated Preferred Stock"). The
Series A Preferred Stock and the Series B Preferred Stock are sometimes
collectively referred to as the "Senior Preferred Stock."
Except as otherwise restricted by this Restated Certificate of
Incorporation, the Corporation is authorized to issue, from time to time, all or
any portion of the capital stock of the Corporation which may have been
authorized but not issued, to such person or persons and for such lawful
consideration as it may deem appropriate, and generally in its absolute
discretion to determine the terms and manner of any disposition of such
authorized but unissued capital stock. Any and all such shares issued for which
the full consideration has been paid or delivered shall be deemed fully paid
shares of capital stock, and the holder of such shares shall not be liable for
any further call or assessment or any other payment thereon.
The following is a statement of the designations and the powers,
preferences and rights, and the qualifications, limitations and restrictions
thereof in respect of each class of capital stock of the Corporation.
A. COMMON STOCK
1. General. The voting, dividend and liquidation rights of the Common Stock
are subject to and qualified by those that may be now or hereafter fixed with
respect to any shares of the Preferred Stock.
2. Voting Rights. (a) Except as otherwise required by law or this Restated
Certificate of Incorporation, each holder of Common Stock shall have one vote in
respect of each share (and a proportionate vote for each fractional share) held
by him of record on the books of the Corporation for the election of directors
and on all matters submitted to a vote of stockholders of the Corporation. The
number of authorized shares of Common Stock may be increased or decreased (but
not below the number of shares then outstanding) only by the affirmative vote of
the holders of at least a majority of the outstanding shares of Common Stock and
Preferred Stock voting together as a single class, irrespective of the
provisions of Section 242(b)(2) of the General Corporation Law of Delaware. The
holders of Common Stock shall have the rights with respect to elections of
directors set forth in this Article IV B.1C below. There shall be no cumulative
voting.
3. Dividends. Subject to the rights of holders of Preferred Stock, the
holders of the shares of Common Stock shall be entitled to receive, when and if
declared by the Board of Directors, out of the assets of the Corporation which
are by law available therefor, dividends payable either in cash, in property or
in shares of capital stock.
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B. DESIGNATED PREFERRED STOCK
The Preferred Stock shall have the following rights, preferences, powers
and privileges and restrictions, qualifications and limitations.
1. Voting.
1A. General. Except as may be otherwise provided in these terms of the
Preferred Stock, in this Restated Certificate of Incorporation of the
Corporation or by law, the Preferred Stock shall vote together with all other
classes and series of stock of the Corporation as a single class on all actions
to be taken by the stockholders of the Corporation. Each share of Preferred
Stock shall entitle the holder thereof to such number of votes per share on each
such action as shall equal the number of shares of Common Stock (including
fractions of a share) into which such share of Preferred Stock is then
convertible.
1B. Board Size. Subject to the provisions of Section 1C below, the
Corporation shall not, without the written consent or affirmative vote of the
holders of at least a majority in interest of the then outstanding shares of
Senior Preferred Stock, given in writing or by vote at a meeting, consenting or
voting (as the case may be) separately as a single class, increase the maximum
number of directors constituting the Board of Directors of the Corporation to a
number in excess of eleven (11).
1C. Board Seats.
(a) The holders of a majority in interest of the Senior Preferred
Stock, voting together as a separate class, shall be entitled to elect four (4)
directors of the Corporation (the "Preferred Designees"), who shall include one
(1) individual designated by Atlas Venture Fund V (as defined in the
Shareholders Agreement), one (1) individual designated by Prospect Ventures (as
defined in the Shareholders Agreement) one (1) individual designated by Schroder
(as defined in the Shareholders Agreement) and one (1) individual designated by
Highland Capital (as defined in the Shareholders Agreement). The holders of a
majority in interest of the Preferred Stock and the Common Stock, voting
together as a class on an as-converted to Common Stock basis, shall be entitled
to elect the remaining number of directors of the Corporation, one of whom shall
be the Chief Executive Officer of the Corporation, or the President of the
Corporation if there is no Chief Executive Officer, and at least two (2) of the
others who shall be unaffiliated non-employee industry outsiders. At any meeting
(or in a written consent in lieu thereof) held for the purpose of electing
directors, the presence in person or by proxy (or the written consent) of the
holders of at least a majority in interest of the then outstanding shares of
Senior Preferred Stock, as calculated on an as-converted to Common Stock basis,
shall constitute a quorum of the Senior Preferred Stock for the election of
directors to be elected solely by the holders of the Senior Preferred Stock and
the presence in person or by proxy of the holders of a majority in interest of
the then outstanding shares of Preferred Stock and Common Stock, as calculated
on an as-converted to Common Stock basis, shall constitute a quorum for purposes
of electing the remaining directors. A vacancy in any directorship elected
solely by the holders of the Senior Preferred Stock shall be filled only by vote
or written consent
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of the holders of the Senior Preferred Stock (upon the designation of such
replacement by the holder of Senior Preferred Stock entitled to designate such
director pursuant to the first sentence of this Section 1C(a)) and a vacancy in
any directorship elected by the holders of the Preferred Stock and Common Stock
shall be filled only by vote or written consent of the holders of the Preferred
Stock and Common Stock.
(b) In addition to the rights specified in Section 1C(a) hereof,
the holders of at least two-thirds (66-2/3%) in interest of the then outstanding
shares of Preferred Stock shall have the exclusive and special right upon the
occurrence of an Event of Noncompliance (as defined in Section 8(c) hereof) to
elect the smallest number of directors which, when added to the number of
Preferred Designees then serving on the Board, shall constitute a majority of
the Board of Directors of the Corporation; and the number of directors
constituting the Board of Directors of the Corporation shall, if necessary, be
increased to provide a sufficient number of vacancies to permit the holders of
Preferred Stock to perfect their rights hereunder. In any election of directors
pursuant to this subparagraph (b), each holder of shares of Preferred Stock
shall be entitled to one vote for each share of Preferred Stock held and no
holder of Preferred Stock shall be entitled to cumulate his votes by giving one
candidate more than one vote per share. The special and exclusive voting right
contained in this subparagraph (b) may be exercised either at a special meeting
of the holders of Preferred Stock called as provided below, or at any annual or
special meeting of the stockholders of the Corporation, or by written consent of
such holders in lieu of a meeting. If at any time any directorship to be filled
by the holders of Preferred Stock, voting together as a class on an as-converted
to Common Stock basis, pursuant to Section 1C (a) or (b) hereof has been vacant
for a period of ten (10) days, the Secretary of the Corporation shall, upon the
written request of the holders of record of shares representing at least 25% of
the voting power of the Preferred Stock then outstanding, call a special meeting
of the holders of Preferred Stock for the purpose of electing a director or
directors to fill such vacancy or vacancies (provided, that any directorships
created pursuant to the first sentence of paragraph (a) shall be filled only
upon the designation of a replacement director by the holder of Preferred Stock
entitled to designate such director). Such meeting shall be held at the earliest
practicable date at such place as is specified in the By-laws of the
Corporation. If such meeting shall not be called by the Secretary of the
Corporation within ten (10) days after personal service of said written request
on him, then the holders of record of shares representing at least 25% of the
voting power of the Preferred Stock then outstanding may designate in writing
one of the holders of the Preferred Stock to call such meeting at the expense of
the Corporation, and such meeting may be called by such persons so designated
upon the notice required for annual meetings of stockholders and shall be held
at such specified place. Any holder of the Preferred Stock so designated shall
have access to the stock books of the Corporation for the purpose of calling a
meeting of the stockholders pursuant to these provisions.
At any meeting held for the purpose of electing directors at which the
holders of Preferred Stock shall have the special and exclusive right to elect
directors as provided in this subparagraph (b), the presence, in person or by
proxy, of the holders of record of shares representing a majority in interest of
the voting power of the Preferred Stock then outstanding shall be required to
constitute a quorum of the Preferred Stock for such election. A vacancy in the
directorships to be elected by the holders of the Preferred Stock pursuant to
this
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subparagraph (b) may be filled only by vote or written consent in lieu of a
meeting of (i) the holders of a majority in interest of the Preferred Stock,
acting together as a class on an as-converted to Common Stock basis, or (ii) the
remaining directors elected solely by the holders of the Preferred Stock.
2. Dividends.
(a) In preference over holders of all other equity securities of
the Corporation, the holders of the Series B Preferred Stock shall be entitled
to receive, out of funds legally available therefore, when and if declared by
the Board of Directors, dividends at the rate per annum of $0.08 per share
(appropriately adjusted to reflect stock splits, stock dividends, combinations
of shares and the like) (the "Series B Accruing Dividends"). Series B Accruing
Dividends shall accrue from day to day, whether or not earned or declared,
beginning as of the date the applicable shares of Series B Preferred Stock were
first issued by the Corporation and shall be cumulative. For avoidance of any
doubt, the holder of each share of Series B Preferred Stock issued on conversion
of a share of Series B-1 Convertible Preferred Stock, par value $.01 per share
(the "Series B-1 Preferred Stock") authorized under a preceding version of this
Restated Certificate of Incorporation and issued by the Corporation shall be
entitled to the Series B Accruing Dividend on such share of Series B Preferred
Stock beginning as of the date the share of Series B-1 Preferred Stock so
converted was first issued by the Corporation. Upon any conversion of the Series
B Preferred Stock into Common Stock pursuant to Section 5, all accrued and
unpaid Series B Accruing Dividends to and until the date of conversion shall be
forfeited and shall not be due and payable.
(b) If upon declaration of the Board of Directors of a dividend,
the funds legally available for distribution with respect to Series B Preferred
Stock and thus distributed among the holders of Series B Preferred Stock shall
be insufficient to permit the payment to such holders of their full Series B
Accruing Dividends, then the entire funds legally available for distribution
shall be distributed ratably among the holders of Series B Preferred Stock in
proportion to their respective holdings of Series B Preferred Stock. No cash
dividend or distribution may be paid to holders of Series A Preferred Stock,
Series C Preferred Stock or Common Stock unless the accrued and unpaid Series B
Accruing Dividends are paid in full to the holders of the Series B Preferred
Stock.
(c) The holders of Series A Preferred Stock shall be entitled to
receive, out of funds legally available therefore, when and if declared by the
Board of Directors, dividends at the rate per annum of $0.08 per share
(appropriately adjusted to reflect stock splits, stock dividends, combinations
of shares and the like) (the "Series A Accruing Dividends", and together with
the Series B Accruing Dividends referred to collectively as the "Accruing
Dividends"). Series A Accruing Dividends shall accrue from day to day, whether
or not earned or declared, beginning as of the date the applicable shares of
Series A Preferred Stock were first issued by the Corporation and shall be
cumulative. Upon conversion of the Series A Preferred Stock into Common Stock
pursuant to Section 5, all accrued and unpaid Series A Accruing Dividends to and
until the date of conversion shall be forfeited and shall not be due and
payable.
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(d) If upon declaration of the Board of Directors of a dividend,
the funds legally available for distribution and thus with respect to Series A
Preferred Stock distributed among the holders of Series A Preferred Stock shall
be insufficient to permit the payment to such holders of the full Series A
Accruing Dividends, then the entire funds legally available for distribution
shall be distributed ratably among the holders of Series A Preferred Stock in
proportion to their respective holdings of Series A Preferred Stock.
(e) No dividend or distribution, other than a dividend payable
solely in additional shares of Common Stock upon the issued and outstanding
shares of Common Stock (a "Common Stock Dividend"), may be declared or paid to
holders of Series C Preferred Stock, any other Series of Preferred Stock ranking
on liquidation junior to the Senior Preferred Stock, or Common Stock unless (i)
the accrued and unpaid Accruing Dividends are paid in full to the holders of the
Senior Preferred Stock and (ii) any dividends payable with respect to any other
Series of Preferred Stock expressly stated to be senior with respect to
dividends to the Series C Preferred Stock are paid in full in accordance with
this Certificate of Incorporation, as amended from time to time (the "Senior
Dividends"). Thereafter, the holders of Series C Preferred Stock and Common
Stock shall be entitled to receive, out of funds legally available therefore,
dividends when and if declared by the Board of Directors.
(f) For avoidance of any doubt, following the full payment of the
Accruing Dividends and any Senior Dividends, any dividends or distributions will
be payable to all shareholders of the Corporation (including the holders of the
Preferred Stock) pro rata to their holdings in the Corporation on an as-if
converted to Common Stock basis; provided, however, that the foregoing shall not
apply to a Common Stock Dividend (provision for which is made pursuant to
Section 5F.)
3. Liquidation, Dissolution and Winding-up.
(a) Upon any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary:
(i) the holders of the shares of Series B Preferred Stock
shall be entitled, before any distribution or payment is made upon any stock
ranking on liquidation junior to the Series B Preferred Stock, to be paid an
amount equal to the greater of (x) $1.00 per share (appropriately adjusted to
reflect stock splits, stock dividends, combinations of shares and the like) plus
an amount equal to all Series B Accruing Dividends accrued but unpaid on each
respective share of Series B Preferred Stock (whether or not declared) and any
other dividends declared but unpaid thereon (the "Series B Payment"), computed
to the date payment thereof is made; or (y) such amount per share as would have
been payable had each such share been converted to Common Stock pursuant to
Section 5 immediately prior to such liquidation, dissolution or winding up, such
amount payable in clause (x) or (y) above with respect to one share of Series B
Preferred Stock being sometimes referred to as the "Series B Liquidation
Preference Payment." If upon such liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, the assets to be distributed
among the holders of the shares of Series B Preferred Stock shall be
insufficient to permit payment to the holders of the shares of Series B
Preferred Stock of the amount distributable as aforesaid, then the entire assets
of the
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Corporation to be so distributed shall be distributed ratably among the holders
of the shares of Series B Preferred Stock;
(ii) after the holders of the shares of Series B Preferred
Stock shall have been paid in full the amounts to which they shall be entitled
pursuant to paragraph (i), the holders of the shares of Series A Preferred Stock
shall be entitled, before any distribution or payment is made upon any stock
ranking on liquidation junior to the Series A Preferred Stock, to be paid an
amount equal to the greater of (x) $1.00 per share (appropriately adjusted to
reflect stock splits, stock dividends, combination of shares and the like) plus
an amount equal to all Series A Accruing Dividends accrued but unpaid on each
share of Series A Preferred Stock (whether or not declared) and any other
dividends declared but unpaid thereon (the "Series A Payment"), computed to the
date payment thereof is made; or (y) such amount per share as would have been
payable had each such share been converted to Common Stock pursuant to Section 5
immediately prior to such liquidation, dissolution or winding up, such amount
payable in clause (x) or (y) above with respect to one share of Series A
Preferred Stock being sometimes referred to as the "Series A Liquidation
Preference Payment." If upon such liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, the assets to be distributed
among the holders of the shares of Series A Preferred Stock shall be
insufficient to permit payment to the holders of the shares of Series A
Preferred Stock of the amount distributable as aforesaid, then the entire assets
of the Corporation to be so distributed shall be distributed ratably among the
holders of the shares of Series A Preferred Stock;
(iii) after the holders of the shares of Series B Preferred
Stock, Series A Preferred Stock and any other Series of Preferred Stock
expressly stated to be senior in liquidation right to the Series C Preferred
Stock shall have been paid in full the amounts to which they shall be entitled
pursuant to paragraphs (i), (ii) and any other provision of this Certificate of
Incorporation the Corporation as amended from time to time, the holders of the
shares of Series C Preferred Stock shall be entitled, before any distribution or
payment is made upon any stock ranking on liquidation junior to the Series C
Preferred Stock, to be paid an amount equal to the greater of (x) $2.00 per
share (appropriately adjusted to reflect stock splits, stock dividends,
combination of shares and the like) plus any dividends declared but unpaid
thereon (the "Series C Payment"), computed to the date payment thereof is made;
or (y) such amount per share as would have been payable had each such share been
converted to Common Stock pursuant to Section 5 immediately prior to such
liquidation, dissolution or winding up, such amount payable in clause (x) or (y)
above with respect to one share of Series C Preferred Stock being sometimes
referred to as the "Series C Liquidation Preference Payment." The Series B
Liquidation Preference Payment, the Series A Liquidation Preference Payment and
the Series C Liquidation Preference Payment are referred to collectively as the
"Liquidation Preference Payments." The Series B Payment, the Series A Payment
and the Series C Payment are referred to collectively as the "Redemption
Payments." If upon such liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, the assets to be distributed
among the holders of the shares of Series C Preferred Stock shall be
insufficient to permit payment to the holders of the shares of Series C
Preferred Stock of the amount distributable as aforesaid, then the entire assets
of the Corporation to be so distributed shall be distributed ratably among the
holders of the shares of Series C Preferred Stock; and
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(iv) after the holders of the shares of Series B Preferred
Stock, Series A Preferred Stock and Series C Preferred Stock shall have been
paid in full the amounts to which they shall be entitled, the remaining net
assets of the Corporation shall be distributed ratably to the holders of stock
ranking on liquidation junior to the Series B Preferred Stock, Series A
Preferred Stock and Series C Preferred Stock.
(b) Written notice of such liquidation, dissolution or winding
up, stating a payment date, the amount of the Liquidation Preference Payments
and the place where said Liquidation Preference Payments shall be payable, shall
be delivered in person, mailed by certified or registered mail, return receipt
requested, or sent by telecopier or telex, not less than twenty (20) days prior
to the payment date stated therein, to the holders of record of Preferred Stock,
such notice to be addressed to each such holder at its address as shown by the
records of the Corporation. The consolidation or merger of the Corporation into
or with any other entity or entities which results in the exchange of
outstanding shares of the Corporation for securities or other consideration
issued or paid or caused to be issued or paid by any such entity or affiliate
thereof (other than a merger solely to reincorporate the Corporation in a
different jurisdiction or a merger, reorganization or consolidation of the
Corporation in which the capital stock of the Corporation immediately prior to
the transaction is converted into or exchanged for a majority of the capital
stock, both as to voting power and equity ownership, of the resulting or
surviving corporation (or its parent) immediately following the transaction),
and the sale, lease, abandonment, transfer or other disposition by the
Corporation of all or substantially all its assets, shall be deemed to be a
liquidation, dissolution or winding up of the Corporation within the meaning of
the provisions of this Section 3 (unless deemed otherwise for a liquidation,
dissolution or winding up of the Corporation by the holders of at least
two-thirds (66-2/3%) in interest of the then outstanding shares of Senior
Preferred Stock, in each such case given in writing or by vote at a meeting,
consenting or voting).
(c) For purposes hereof, (i) the Common Stock shall rank on
liquidation junior to the Preferred Stock, (ii) the Series C Preferred Stock
shall rank on liquidation junior to the Senior Preferred Stock and any other
Series of Preferred Stock expressly stated in this Certificate of Incorporation,
as amended from time to time, to be senior in liquidation right to the Series C
Preferred Stock, and (iii) the Series A Preferred Stock shall rank on
liquidation junior to the Series B Preferred Stock.
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4. Restrictions.
(a) At any time when at least twenty-five percent (25%) of the
aggregate number (appropriately adjusted to reflect stock splits, stock
dividends, combinations of shares and the like) of shares of Senior Preferred
Stock at any time issued remain outstanding, except where the affirmative vote
or written consent of the holders of a greater number of shares of the
Corporation is required by law or by this Restated Certificate of Incorporation,
and in addition to any other vote required by law or this Restated Certificate
of Incorporation, without the written consent of the holders of at least
two-thirds (66-2/3%) in interest of the then outstanding shares of Senior
Preferred Stock, voting together as a single class on an as-converted to Common
Stock basis, given in writing or by vote at a meeting, consenting or voting (as
the case may be), the Corporation shall not:
(i) Consent to or effect any liquidation, dissolution or
winding up of the Corporation or merge or consolidate with or into, or permit
any Subsidiary to merge or consolidate with or into, or otherwise acquire the
capital stock or assets of any other corporation, corporations, entity or
entities;
(ii) Sell, abandon, transfer, lease or otherwise dispose of
all or substantially all or any substantial portion of its properties or assets;
(iii) Enter into any agreement or agreements, including any
financing agreements, which, in the aggregate, would result in the Corporation
borrowing in excess of $250,000, unless such agreement or agreements shall be
first approved by the Board of Directors of the Corporation, including a
majority of the Preferred Designees;
(iv) Purchase or redeem, or set aside any sums for the
purchase or redemption of, or pay any dividend or make any distribution on, any
shares of stock other than the Senior Preferred Stock pursuant to this Restated
Certificate of Incorporation, except for (x) dividends or other distributions
payable solely in the form of additional shares of Common Stock or (y)
repurchases of shares of capital stock from officers, employees, directors or
consultants of the Corporation which are subject to agreements under which the
Corporation has the option to repurchase such shares upon the occurrence of
certain events, including termination of employment;
(v) Amend, alter or repeal any provision of its Restated
Certificate of Incorporation or By-laws (whether by merger, consolidation or
otherwise); or
(vi) Except in accordance with Section 5P, create or
authorize the creation of any additional class or series of shares of stock, or
increase the authorized amount of any class or series of shares of stock, or
create or authorize any obligation or security convertible into shares of any
class or series of stock, whether any such creation, authorization or increase
shall be by means of amendment to the Restated Certificate of Incorporation or
by merger, consolidation or otherwise.
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(b) At any time when at least twenty-five percent (25%) of the
aggregate number (appropriately adjusted to reflect stock splits, stock
dividends, combinations of shares and the like) of shares of Series A Preferred
Stock at any time issued remain outstanding, except where the affirmative vote
or written consent of the holders of a greater number of shares of the
Corporation is required by law or by this Restated Certificate of Incorporation,
and in addition to any other vote required by law or this Restated Certificate
of Incorporation, without the written consent or affirmative vote of the holders
of at least two-thirds (66-2/3%) in interest of the then outstanding shares of
Series A Preferred Stock, given in writing or by vote at a meeting, consenting
or voting (as the case may be), separately as a series, the Corporation shall
not:
(i) Amend, alter or repeal any provision of its Restated
Certificate of Incorporation or By-laws (whether by merger, consolidation or
otherwise) in a manner adverse to the Series A Preferred Stock; or
(ii) In any manner (whether by merger, consolidation or
otherwise) amend, alter or change the designations or the powers, preferences or
rights, privileges or the restrictions of the Series A Preferred Stock in a
manner adverse to the Series A Preferred Stock.
Notwithstanding the foregoing, the creation or authorization to create any
additional class or series of shares of stock, or increase in the authorized
amount of any class or series of shares of stock other than the Series A
Preferred Stock, or creation or authorization of any obligation or security
convertible into shares of any class or series of stock shall not, in and of
itself, be deemed adverse to the Series A Preferred Stock so long as such
creation or authorization does not amend, alter or change the designations or
the powers, preferences or rights, privileges or restrictions of the Series A
Preferred Stock.
(c) At any time when at least twenty-five percent (25%) of the
aggregate number (appropriately adjusted to reflect stock splits, stock
dividends, combinations of shares and the like) of shares of Series B Preferred
Stock at any time issued remain outstanding, except where the affirmative vote
or written consent of the holders of a greater number of shares of the
Corporation is required by law or by this Restated Certificate of Incorporation,
and in addition to any other vote required by law or this Restated Certificate
of Incorporation, without the written consent or affirmative vote of the holders
of at least two-thirds (66-2/3%) in interest of the then outstanding shares of
Series B Preferred Stock, given in writing or by vote at a meeting, consenting
or voting (as the case may be), separately as a series, the Corporation shall
not:
(i) Amend, alter or repeal any provision of its Restated
Certificate of Incorporation or By-laws (whether by merger, consolidation or
otherwise) in a manner adverse to the Series B Preferred Stock; or
(ii) In any manner (whether by merger, consolidation or
otherwise) amend, alter or change the designations or the powers, preferences or
rights,
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privileges or the restrictions of the Series B Preferred Stock in a manner
adverse to the Series B Preferred Stock; or
(iii) Declare or pay any dividend (excluding a Common Stock
Dividend) on, make a distribution on, or repurchase (except in accordance with
Section 4(a)(iv)(y)) or redeem (except in accordance with Section 6 hereof) any
capital stock of the Corporation junior to, or of equal seniority with, the
Series B Preferred Stock in liquidation or junior to, or of equal seniority
with, the Series B Preferred Stock with regard to the payment of dividends.
Notwithstanding the foregoing, the creation or authorization to create any
additional class or series of shares of stock, or increase in the authorized
amount of any class or series of shares of stock other than the Series B
Preferred Stock, or creation or authorization of any obligation or security
convertible into shares of any class or series of stock shall not, in and of
itself, be deemed adverse to the Series B Preferred Stock so long as such
creation or authorization does not amend, alter or change the designations or
the powers, preferences or rights, privileges or restrictions of the Series B
Preferred Stock.
(d) At any time when at least twenty-five percent (25%) of the
number of shares of Series C Preferred Stock originally issued remain issued
remain outstanding, except where the affirmative vote or written consent of the
holders of a greater number of shares of the Corporation is required by law or
by this Restated Certificate of Incorporation, and in addition to any other vote
required by law or this Restated Certificate of Incorporation, the Corporation
shall not, without the written consent or affirmative vote of the holders of at
least two-thirds (66-2/3%) in interest of the then outstanding shares of Series
C Preferred Stock, given in writing or by vote at a meeting, consenting or
voting (as the case may be), separately as a series:
(i) amend, alter or repeal any provision of its Restated
Certificate of Incorporation or By-laws (whether by merger, consolidation or
otherwise) in a manner adverse to the Series C Preferred Stock; or
(ii) in any manner (whether by merger, consolidation or
otherwise), amend, alter or change the powers, preferences or special rights of
the shares of Series C Preferred Stock in a manner so as to affect them
adversely; or
(iii) other than Preferred Stock to be offered to bona fide
venture capital funds, private equity funds or Qualified Investors (as defined
in Section 8) (collectively, "Permitted Senior Stock"), authorize any additional
series of Preferred Stock which is not parri passu or junior to the Series C
Preferred Stock with respect to dividends, liquidation, redemption and/or other
matters;
Notwithstanding the foregoing, the creation or authorization to create any
additional class or series of shares of stock, or increase in the authorized
amount of any class or series of shares of stock other than the Series C
Preferred Stock, or creation or authorization of any obligation or security
convertible into shares of any class or series of stock shall not, in and of
itself, be deemed adverse to the Series C Preferred Stock so long as such
creation or authorization does
11
not, except with respect to Permitted Senior Stock, amend, alter or change the
designations or the powers, preferences or rights, privileges or restrictions of
the Series C Preferred Stock.
5. Conversion. The holders of shares of Series A Preferred Stock, Series B
Preferred Stock and Series C Preferred Stock shall have the following conversion
rights:
5A. Right to Convert. Subject to the terms and conditions of this
Section 5, the holder of any share or shares of Series A Preferred Stock, Series
B Preferred Stock or Series C Preferred Stock shall have the right, at its
option at any time, to convert any such shares of Series A Preferred Stock,
Series B Preferred Stock or Series C Preferred Stock (except that upon any
liquidation of the Corporation the right of conversion shall terminate at the
close of business on the business day fixed for payment of the amounts
distributable on the Preferred Stock) into such number of fully paid and
nonassessable shares of Common Stock as is obtained by (i) multiplying the
number of shares of (x) Senior Preferred Stock so to be converted by $1.00, or
(y) Series C Preferred Stock so to be converted by $2.00 and (ii) dividing the
result by the applicable Conversion Price (as defined below) per share for such
series as last adjusted and then in effect when such shares of Preferred Stock
are surrendered for conversion. The initial "Conversion Price" for the Senior
Preferred Stock shall be $1.00 and for the Series C Preferred Stock shall by
$2.00; provided, however that each such Conversion Price shall be subject to
adjustment as set forth in this Section 5. Such rights of conversion shall be
exercised by the holder thereof by giving written notice that the holder elects
to convert a stated number of shares of Series A Preferred Stock, Series B
Preferred Stock or Series C Preferred Stock into Common Stock and by surrender
of a certificate or certificates for the shares so to be converted to the
Corporation at its principal office (or such other office or agency of the
Corporation as the Corporation may designate by notice in writing to the holders
of the Preferred Stock) at any time during its usual business hours on the date
set forth in such notice, together with a statement of the name or names (with
address) in which the certificate or certificates for shares of Common Stock
shall be issued.
5B. Issuance of Certificates; Time Conversion Effected. Promptly after
the receipt of the written notice referred to in Section 5A and surrender of the
certificate or certificates for the share or shares of Preferred Stock to be
converted, the Corporation shall issue and deliver, or cause to be issued and
delivered, to the holder, registered in such name or names as such holder may
direct, a certificate or certificates for the number of whole shares of Common
Stock issuable upon the conversion of such share or shares of Preferred Stock.
To the extent permitted by law, such conversion shall be deemed to have been
effected and the Conversion Price shall be determined as of the close of
business on the date on which such written notice shall have been received by
the Corporation and the certificate or certificates for such share or shares
shall have been surrendered as aforesaid, and at such time the rights of the
holder of such share or shares of Preferred Stock shall cease, and the person or
persons in whose name or names any certificate or certificates for shares of
Common Stock shall be issuable upon such conversion shall be deemed to have
become the holder or holders of record of the shares represented thereby.
5C. Fractional Shares; Dividends; Partial Conversion. No fractional
shares shall be issued upon conversion of Preferred Stock into Common Stock and
no payment or
12
adjustment shall be made upon any conversion on account of any cash dividends on
the Common Stock issued upon such conversion. Subject to the provisions of
Sections 2 and 3, at the time of each conversion, the Corporation shall: (i) if
cash is legally available, pay in cash an amount equal to all dividends,
excluding Accruing Dividends, declared and unpaid on the shares of Preferred
Stock surrendered for conversion to the date upon which such conversion is
deemed to take place as provided in Section 5B, or (ii) if cash is not legally
available, provide to such holder a certificate representing a number of shares
of Common Stock equal to the quotient of all dividends, excluding Accruing
Dividends, declared and unpaid on the shares of Preferred Stock so surrendered
divided by the applicable Conversion Price. In case the number of shares of
Preferred Stock represented by the certificate or certificates surrendered
pursuant to Section 5A exceeds the number of shares converted, the Corporation
shall, upon such conversion, execute and deliver to the holder, at the expense
of the Corporation, a new certificate or certificates for the number of shares
of Preferred Stock represented by the certificate or certificates surrendered
which are not to be converted. If any fractional share of Common Stock would,
except for the provisions of the first sentence of this Section 5C, be delivered
upon such conversion, the Corporation, in lieu of delivering such fractional
share, shall pay to the holder surrendering the Preferred Stock for conversion
an amount in cash equal to the current market price of such fractional share as
determined in good faith by the Board of Directors of the Corporation, and based
upon the aggregate number of shares of Preferred Stock surrendered by any one
holder.
5D. Adjustment of Conversion Price Upon Issuance of Common Stock.
(i) Series A Preferred Stock. Subject to Section 5P and except as
provided in Section 5E, if and whenever after March 31, 2004 the Corporation
shall issue or sell, or is, in accordance with subparagraphs 5D(1) through
5D(7), deemed to have issued or sold, any shares of Common Stock for a
consideration per share less than the Conversion Price for the Series A
Preferred Stock in effect immediately prior to the time of such actual or deemed
issue or sale, then, forthwith upon such actual or deemed issue or sale, the
Conversion Price for the Series A Preferred Stock shall be reduced to the price
determined by the formula set forth below.
N(0) = The shares of Common Stock outstanding immediately prior to the
time of such actual or deemed issue or sale (assuming the conversion of the
outstanding shares of Preferred Stock and the exercise of any outstanding
options, warrants, convertible debt instruments or other securities
convertible or exchangeable for Common Stock).
P(0) = The Conversion Price of the Series A Preferred Stock in effect
immediately prior to the time of such actual or deemed issue or sale.
N(1) = The shares of Common Stock issued or sold, or deemed to be
issued or sold in connection with such issuance (assuming the conversion of
any outstanding shares of Preferred Stock and the exercise of any
outstanding options, warrants, convertible debt instruments or other
securities convertible or exchangeable for Common Stock) for a
consideration per share less than the Conversion Price for the Series A
Preferred Stock in effect immediately prior to the time of such actual or
deemed issue or sale.
13
CP = The new Conversion Price of the Series A Preferred Stock in
effect immediately after such actual or deemed issue or sale.
F = The aggregate consideration received by the Corporation upon such
actual or deemed issue or sale.
CP = (N(0) x P(0)) + F
-----------------
N(0) + N(1)
For purposes of clarity in this Section 5D(i), the weighted average formula
above (i) shall not include any additional shares of Common Stock that become
issuable upon conversion of any series of Preferred Stock as a result of the
operation of this Section 5D in connection with an issuance or sale (or deemed
issuance or sale) of Common Stock for purposes of the anti-dilution adjustment
made in connection with such issuance or sale (or deemed issuance or sale), but
(ii) shall include any additional shares of Common Stock that have become
issuable upon conversion of any series of Preferred Stock as a result of any and
all prior applications of Section 5D.
(ii) Series B Preferred Stock. Subject to Section 5P and except as
provided in Section 5E, if and whenever after March 31, 2004 the Corporation
shall issue or sell, or is, in accordance with subparagraphs 5D(1) through
5D(7), deemed to have issued or sold, any shares of Common Stock for a
consideration per share less (the "Dilutive Financing Price") than the
Conversion Price for the Series B Preferred Stock in effect immediately prior to
the time of such actual or deemed issue or sale, then, forthwith upon such
actual or deemed issue or sale, the Conversion Price for the Series B Preferred
Stock shall be reduced to the Dilutive Financing Price.
(iii) Series C Preferred Stock. If there shall occur any adjustment in
the Conversion Price of the Corporation's Series A Preferred Stock pursuant to
Section 5D(i), then and in such event, the Conversion Price of the Series C
Preferred Stock shall be automatically adjusted by the same absolute amount
(rounded to the nearest cent) as the absolute amount of the adjustment to the
Conversion Price of the Corporation's Series A Preferred Stock.
For purposes of this Section 5D, and subject to the exceptions set
forth in Section 5E, the following subsections 5D(1) to 5D(8) shall also be
applicable:
5D(1) Issuance of Rights or Options. In case at any time the
Corporation shall in any manner grant (whether directly or by assumption in
a merger or otherwise) any warrants or other rights to subscribe for or to
purchase, or any options for the purchase of, Common Stock or any stock or
security convertible into or exchangeable for Common Stock (such warrants,
rights or options being called "Options" and such convertible or
exchangeable stock or securities being called "Convertible Securities")
whether or not such Options or the right to convert or exchange any such
Convertible Securities are immediately exercisable, and the price per share
for which Common Stock is issuable upon the exercise of such Options or
upon the conversion or exchange of such Convertible Securities (determined
by dividing (i) the total amount, if any, received or receivable by the
Corporation as
14
consideration for the granting of such Options, plus the minimum aggregate
amount of additional consideration payable to the Corporation upon the
exercise of all such Options, plus, in the case of such Options which
relate to Convertible Securities, the minimum aggregate amount of
additional consideration, if any, payable upon the issue or sale of such
Convertible Securities and upon the conversion or exchange thereof, by (ii)
the total maximum number of shares of Common Stock issuable upon the
exercise of such Options or upon the conversion or exchange of all such
Convertible Securities issuable upon the exercise of such Options) shall be
less than the applicable Conversion Price(s) in effect immediately prior to
the time of the granting of such Options, then the total maximum number of
shares of Common Stock issuable upon the exercise of such Options or upon
conversion or exchange of the total maximum amount of such Convertible
Securities issuable upon the exercise of such Options shall be deemed to
have been issued for such price per share as of the date of granting of
such Options or the issuance of such Convertible Securities and thereafter
shall be deemed to be outstanding. Except as otherwise provided in
subsection 5D(3), no adjustment of the applicable Conversion Price(s) shall
be made upon the actual issue of such Common Stock or of such Convertible
Securities upon exercise of such Options or upon the actual issue of such
Common Stock upon conversion or exchange of such Convertible Securities.
5D(2) Issuance of Convertible Securities. In case the Corporation
shall in any manner issue (whether directly or by assumption in a merger or
otherwise) or sell any Convertible Securities, whether or not the rights to
exchange or convert any such Convertible Securities are immediately
exercisable, and the price per share for which Common Stock is issuable
upon such conversion or exchange (determined by dividing (i) the total
amount received or receivable by the Corporation as consideration for the
issue or sale of such Convertible Securities, plus the minimum aggregate
amount of additional consideration, if any, payable to the Corporation upon
the conversion or exchange thereof, by (ii) the total maximum number of
shares of Common Stock issuable upon the conversion or exchange of all such
Convertible Securities) shall be less than the applicable Conversion
Price(s) in effect immediately prior to the time of such issue or sale,
then the total maximum number of shares of Common Stock issuable upon
conversion or exchange of all such Convertible Securities shall be deemed
to have been issued for such price per share as of the date of the issue or
sale of such Convertible Securities and thereafter shall be deemed to be
outstanding, provided that (a) except as otherwise provided in subsection
5D(3), no adjustment of the applicable Conversion Price(s) shall be made
upon the actual issue of such Common Stock upon conversion or exchange of
such Convertible Securities and (b) if any such issue or sale of such
Convertible Securities is made upon exercise of any Options to purchase any
such Convertible Securities for which adjustments of the applicable
Conversion Price(s) have been or are to be made pursuant to other
provisions of this Section 5D, no further adjustment of the applicable
Conversion Price(s) shall be made by reason of such issue or sale.
5D(3) Change in Option Price or Conversion Rate. Upon the happening of
any of the following events, namely, if the purchase price provided for in
any Option referred to in subsection 5D(1), the additional consideration,
if any, payable upon the conversion or exchange of any Convertible
Securities referred to in subsection 5D(1) or 5D(2), or the rate
15
at which Convertible Securities referred to in subsection 5D(1) or 5D(2)
are convertible into or exchangeable for Common Stock shall change at any
time (including, but not limited to, changes under or by reason of
provisions designed to protect against dilution), the applicable Conversion
Price(s) in effect at the time of such event shall forthwith be readjusted
to the applicable Conversion Price(s) which would have been in effect at
such time had such Options or Convertible Securities still outstanding
provided for such changed purchase price, additional consideration or
conversion rate, as the case may be, at the time initially granted, issued
or sold, but only if as a result of such adjustment the applicable
Conversion Price(s) then in effect hereunder is thereby reduced; and on the
expiration of any such Option or the termination of any such right to
convert or exchange such Convertible Securities, the applicable Conversion
Price(s) then in effect hereunder shall forthwith be increased to the
applicable Conversion Price(s) that would have been in effect at the time
of such expiration or termination had such Option or Convertible
Securities, to the extent outstanding immediately prior to such expiration
or termination, never been issued.
5D(4) Stock Dividends. In case the Corporation shall declare a
dividend or make any other distribution upon any stock of the Corporation
payable in Common Stock (except for the issue of stock dividends or
distributions upon the outstanding Common Stock for which adjustment is
made pursuant to Section 5F), Options or Convertible Securities, any Common
Stock, Options or Convertible Securities, as the case may be, issuable in
payment of such dividend or distribution shall be deemed to have been
issued or sold without consideration.
5D(5) Consideration for Stock. In case any shares of Common Stock,
Options or Convertible Securities shall be issued or sold for cash, the
consideration received therefor shall be deemed to be the amount received
by the Corporation therefor, without deduction therefrom of any expenses
incurred or any underwriting commissions or concessions paid or allowed by
the Corporation in connection therewith. In case any shares of Common
Stock, Options or Convertible Securities shall be issued or sold for
consideration other than cash, the amount of the consideration other than
cash received by the Corporation shall be deemed to be the fair value of
such consideration as determined in good faith by the Board of Directors of
the Corporation, without deduction of any expenses incurred or any
underwriting commissions or concessions paid or allowed by the Corporation
in connection therewith. In case any Options shall be issued in connection
with the issue and sale of other securities of the Corporation, together
comprising one integral transaction in which no specific consideration is
allocated to such Options by the parties thereto, such Options shall be
deemed to have been issued for such consideration as determined in good
faith by the Board of Directors of the Corporation.
5D(6) Record Date. In case the Corporation shall take a record of the
holders of its Common Stock for the purpose of entitling them (i) to
receive a dividend or other distribution payable in Common Stock, Options
or Convertible Securities or (ii) to subscribe for or purchase Common
Stock, Options or Convertible Securities, then such record date shall be
deemed to be the date of the issue or sale of the shares of Common Stock
deemed to have been issued or sold upon the declaration of such dividend or
the
16
making of such other distribution or the date of the granting of such right
of subscription or purchase, as the case may be.
5D(7) Treasury Shares. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or
for the account of the Corporation, and the disposition of any such shares
shall be considered an issue or sale of Common Stock for the purpose of
this Section 5D.
5D(8) Special Mandatory Conversion Adjustment. Upon the conversion of
a non-participating holder's shares of Series A Preferred Stock, Series B
Preferred Stock or Series C Preferred Stock into shares of a new series of
Preferred Stock created from the Undesignated Preferred Stock pursuant to
subparagraph 5P hereof, the applicable new series of Preferred Stock's
conversion price for such non-participating holder's shares of the new
series of Preferred Stock shall be equal to the applicable Conversion Price
in effect immediately prior to such conversion and such new series of
Preferred Stock's conversion price shall not be further reduced in
accordance with provisions comparable to subparagraph 5D hereof but shall
have the benefit of the other provisions contained in this Paragraph 5 with
respect to the conversion of and adjustment to the applicable Conversion
Price of any series of Preferred Stock and shall be re-adjusted upward
under Section 5D(3), when applicable.
5E. Certain Issues of Common Stock Excepted. Anything herein to the
contrary notwithstanding, the Corporation shall not be required to make any
adjustment of the applicable Conversion Price(s) in the case of the issuance of
(i) shares of Common Stock issuable upon conversion of the Preferred Stock, (ii)
Reserved Employee Shares, (as defined in Section 8), (iii) shares of Common
Stock issuable pursuant to subscriptions, warrants, options or other rights
which are listed in Schedule III of the Series C Purchase Agreement as being
outstanding on the date thereof (but excluding any modification to such
subscriptions, warrants, options or rights made after the date of such
agreement), and (iv) shares of Common Stock issued or issuable upon exercise of
warrants to purchase Common Stock that may be hereafter issued in connection
with debt financings, equipment line financings or real property leasing
transactions, provided the issuance of such securities and the underlying
transaction described in this clause (iv) shall be first approved by the Board
of Directors of the Corporation, including a majority of the Preferred
Designees.
5F. Subdivision or Combination of Common Stock. In case the
Corporation shall at any time subdivide (by any stock split, stock dividend or
otherwise) its outstanding shares of Common Stock into a greater number of
shares, the applicable Conversion Price(s) in effect immediately prior to such
subdivision shall be proportionately reduced, and, conversely, in case the
outstanding shares of Common Stock shall be combined into a smaller number of
shares, the applicable Conversion Price(s) in effect immediately prior to such
combination shall be proportionately increased.
5G. Reorganization or Reclassification. If any capital reorganization,
reclassification, recapitalization, consolidation, merger, sale of all or
substantially all of the Corporation's assets or other similar transaction (any
such transaction being referred to herein as
17
an "Organic Change") shall be effected in such a way that holders of Common
Stock shall be entitled to receive (either directly or upon subsequent
liquidation) stock, securities or assets with respect to or in exchange for
Common Stock, then, as a condition of such Organic Change, lawful and adequate
provisions shall be made whereby each holder of a share or shares of Preferred
Stock shall thereupon have the right to receive, upon the basis and upon the
terms and conditions specified herein and in lieu of or in addition to, as the
case may be, the shares of Common Stock immediately theretofore receivable upon
the conversion of such share or shares of Preferred Stock, such shares of stock,
securities or assets as may be issued or payable with respect to or in exchange
for a number of outstanding shares of such Common Stock equal to the number of
shares of such Common Stock immediately theretofore receivable upon such
conversion had such Organic Change not taken place, and in any case of a
reorganization or reclassification only appropriate provisions shall be made
with respect to the rights and interests of such holder to the end that the
provisions hereof (including without limitation provisions for adjustments of
the Conversion Prices(s)) shall thereafter be applicable, as nearly as may be,
in relation to any shares of stock, securities or assets thereafter deliverable
upon the exercise of such conversion rights.
5H. Notice of Adjustment. Upon any adjustment of the Conversion
Price(s), then and in each such case the Corporation shall give written notice
thereof, by first class mail, postage prepaid, or by facsimile transmission to
non-U.S. residents, addressed to each holder of shares of Preferred Stock at the
address of such holder as shown on the books of the Corporation, which notice
shall state the Conversion Price(s) resulting from such adjustment, setting
forth in reasonable detail the method upon which such calculation is based.
5I. Other Notices. In case at any time:
(1) the Corporation shall declare any dividend upon its Common
Stock payable in cash or stock or make any other distribution to the
holders of its Common Stock;
(2) the Corporation shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any class or
other rights;
(3) there shall be any capital reorganization or reclassification
of the capital stock of the Corporation, or a consolidation or merger of
the Corporation with or into, or a sale of all or substantially all its
assets to, another entity or entities; or
(4) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
then, in any one or more of said cases, the Corporation shall give, by first
class mail, postage prepaid, or by facsimile transmission to non-U.S. residents,
addressed to each holder of any shares of Preferred Stock at the address of such
holder as shown on the books of the Corporation, (a) at least twenty (20) days'
prior written notice of the date on which the books of the Corporation shall
close or a record shall be taken for such dividend, distribution or subscription
rights or for determining rights to vote in respect of any such reorganization,
reclassification,
18
consolidation, merger, sale, dissolution, liquidation or winding up and (b) in
the case of any such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding up, at least twenty (20) days' prior
written notice of the date when the same shall take place. Such notice in
accordance with the foregoing clause (a) shall also specify, in the case of any
such dividend, distribution or subscription rights, the date on which the
holders of Common Stock shall be entitled thereto and such notice in accordance
with the foregoing clause (b) shall also specify the date on which the holders
of Common Stock shall be entitled to exchange their Common Stock for securities
or other property deliverable upon such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up, as the case
may be.
5J. Stock to be Reserved. The Corporation will at all times reserve
and keep available out of its authorized Common Stock, solely for the purpose of
issuance upon the conversion of Preferred Stock as herein provided, such number
of shares of Common Stock as shall then be issuable upon the conversion of all
outstanding shares of Preferred Stock. The Corporation covenants that all shares
of Common Stock which shall be so issued shall be duly and validly issued and
fully paid and nonassessable and free from all taxes, liens and charges with
respect to the issue thereof, and, without limiting the generality of the
foregoing, the Corporation covenants that it will from time to time take all
such action as may be requisite to assure that the par value per share of the
Common Stock is at all times equal to or less than the Conversion Prices in
effect at the time. The Corporation will take all such action as may be
necessary to assure that all such shares of Common Stock may be so issued
without violation of any applicable law or regulation, or of any requirement of
any national securities exchange upon which the Common Stock may be listed. The
Corporation will promptly take any and all actions necessary to increase the
number of shares of Common Stock available and reserved for issuance upon the
conversion of the Preferred Stock or in the event of any adjustment to the
Conversion Price(s).
5K. No Reissuance of Preferred Stock. Shares of Preferred Stock which
are converted into shares of Common Stock as provided herein or a parallel
series of Preferred Stock pursuant to Section 5P shall not be reissued.
5L. Issue Tax. The issuance of certificates for shares of Common Stock
upon conversion of Preferred Stock shall be made without charge to the holders
thereof for any issuance tax in respect thereof, provided that the Corporation
shall not be required to pay any tax which may be payable in respect of any
transfer involved in the issuance and delivery of any certificate in a name
other than that of the holder of the Preferred Stock which is being converted.
5M. Closing of Books. The Corporation will at no time close its
transfer books against the transfer of any Preferred Stock or of any shares of
Common Stock issued or issuable upon the conversion of any shares of Preferred
Stock in any manner which interferes with the timely conversion of such
Preferred Stock, except as may otherwise be required to comply with applicable
securities laws.
19
5N. Mandatory Conversion. Shares of Preferred Stock shall
automatically convert into shares of Common Stock upon the earlier to occur of
the events described in subparagraphs 5(N)(1), 5(N)(2) and 5(N)(3).
5N(1) Public Offering. If at any time the Corporation shall effect a
firm commitment underwritten public offering of shares of Common Stock in which
(i) the net proceeds to the Corporation from the sale of such shares to the
public shall be at least $30,000,000 and (ii) the price per share paid by the
public for such shares shall be at least $2.00 (appropriately adjusted to
reflect the occurrence of any event described is subparagraph 5F) (a "Qualified
Public Offering"), then effective upon the closing of the sale of such shares by
the Corporation pursuant to such Qualified Public Offering, all outstanding
shares of Preferred Stock shall automatically convert to shares of Common Stock
at the then applicable Conversion Price.
5N(2) Qualified Financing. Upon the occurrence of both of the
following events: (a) the closing of a Qualified Financing (as defined below)
which has been approved by the vote or written consent of the holders of at
least sixty-six and two-thirds percent (66-2/3%) of the shares of Senior
Preferred Stock then outstanding, voting together as a single class on an
as-converted to Common Stock basis (the "Required Holders") and (b) the
affirmative election by the Required Holders to convert their shares of
Preferred Stock into Common Stock in connection with a Qualified Financing, all
outstanding shares of Series A Preferred Stock, Series B Preferred Stock and
Series C Preferred Stock shall automatically convert into shares of Common Stock
at the then applicable Conversion Price. For purposes of this subparagraph
5(N)(2), a "Qualified Financing" shall mean any equity financing of the
Corporation, other than pursuant to the Series C Purchase Agreement, which
closes initially on or after March 31, 2006 and pursuant to which (i) the
Corporation sells equity securities for an aggregate purchase price of at least
$20 million, (ii) securities representing at least thirty-five percent (35%) of
the aggregate purchase price of such securities are sold by the Corporation to
one or more persons that are not affiliated with any then existing or former
stockholder of the Corporation (a "New Investor"), (iii) the purchase price per
share of such securities is less than 50% of the then applicable Series B
Conversion Price and (iv) each holder of Senior Preferred Stock has the right to
purchase securities in such financing, in an amount equal to such holder's Pro
Rata Share (as defined below) of that portion of such securities that are not
sold to the New Investors. For purposes of this subparagraph 5(N)(2), the Pro
Rata Share of a holder of Series A Preferred Stock or Series B Preferred Stock
shall equal such holder's percentage ownership of the then outstanding Series A
Preferred Stock and Series B Preferred Stock, taken together and calculated on
an as-converted to Common Stock basis.
5N(3) At the Option of Holders.
(1) Upon the date specified by vote or written consent of holders
of at least sixty-six and two-thirds percent (66-2/3%) of the shares of the
Series C Preferred Stock then outstanding, voting together as a class on an
as-converted to Common Stock basis, all outstanding shares of Series C Preferred
Stock shall automatically convert to shares of Common Stock.
20
(2) Upon the date specified by vote or written consent of holders
of at least sixty-six and two-thirds percent (66-2/3%) of the shares of the
Series B Preferred Stock then outstanding, voting together as a class on an
as-converted to Common Stock basis, all outstanding shares of Series B Preferred
Stock shall automatically convert to shares of Common Stock.
(3) Upon the date specified by vote or written consent of holders
of at least sixty-six and two-thirds percent (66-2/3%) of the shares of the
Series A Preferred Stock then outstanding, voting together as a class on an
as-converted to Common Stock basis, all outstanding shares of Series A Preferred
Stock shall automatically convert to shares of Common Stock.
(4) Notwithstanding the foregoing, if at any time the Corporation
shall effect a firm commitment underwritten public offering of shares of Common
Stock that is not a Qualified Public Offering (a "Non-Qualified Public
Offering"), then by vote or written consent of holders of at least two-thirds
(66-2/3%) in interest of the shares of the Senior Preferred Stock then
outstanding, voting together as a class on an as-converted to Common Stock
basis, upon the closing of a Non-Qualified Public Offering, all outstanding
shares of Preferred Stock shall automatically convert to shares of Common Stock
at the then applicable Conversion Price.
5O. Procedures. Holders of shares of Preferred Stock converted in
accordance with subparagraph 5N(1), 5N(2) or 5(N)(3) shall promptly deliver to
the Corporation at its principal office (or such other office or agency of the
Corporation as the Corporation may designate by notice in writing to such
holders) during its usual business hours, the certificate or certificates for
the shares so converted. As promptly as practicable thereafter, the Corporation
shall issue and deliver to such holder a certificate or certificates for the
number of whole shares of Common Stock to which such holder is entitled,
together with any cash dividends and payment in lieu of fractional shares to
which such holder may be entitled pursuant to subparagraph 5C. Until such time
as a holder of shares of Preferred Stock shall surrender his or its certificates
therefor as provided above, such certificates shall be deemed to represent the
shares of Common Stock to which such holder shall be entitled upon the surrender
thereof.
5P. Special Mandatory Conversions.
(1) If at any time a holder of Preferred Stock fails to purchase the
minimum number of shares required to be purchased by it in a Required
Financing (provided that such minimum number of shares are offered to it by
the Corporation), such minimum number of shares being equal to at least (a)
such holder's percentage ownership of the Corporation's Preferred Stock
(assuming the conversion of the outstanding shares of Preferred Stock)
multiplied by (b) the number of shares sold in that Required Financing (or
such lesser amount as agreed by the Board of Directors of the Corporation,
including a majority of the Preferred Designees), then all of the shares of
Preferred Stock held by such non-participating holder shall automatically
and without further action on the part of such holder be converted into an
equivalent number of shares of a new parallel series of Preferred Stock,
having such distinctive designation and aggregate number of shares as the
Board of Directors of the Corporation, including a majority of the
Preferred
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Designees, may by resolution fix, effective upon the closing of such
Required Financing. Furthermore, any antidilution protection set forth in
Section 5D, including subparagraphs 5D(1) through (7) of this Restated
Certificate of Incorporation shall not apply in any Required Financing to
such non-participating holder's shares prior to their conversion to a new
series of Preferred Stock pursuant to this paragraph. Any new series of
Preferred Stock shall be identical in all respects to the series of
Preferred Stock from which it was converted, except (i) with respect to the
conversion features of the new series of Preferred Stock, which shall
implement the provisions of subparagraph 5D(8) of this Restated Certificate
of Incorporation, and (ii) with respect to voting shall vote together with
the series of Preferred Stock from which it was converted on all matters
(which for avoidance of doubt, shall not create a separate class vote of
such new series and the series from which it was converted), except as
provided by law.
(2) A "Required Financing" shall mean any equity financing of the
Corporation in which the Corporation issues or sells securities at a price
per share which is less than the Conversion Price for the Series B
Preferred Stock then in effect.
(3) The holder of any shares of Preferred Stock converted pursuant to
subparagraph 5P(1) shall deliver to the Corporation during regular business
hours at the office of any transfer agent of the Corporation for such
series of stock, or at such other place as may be designated by the
Corporation, the certificate or certificates for the shares so converted,
duly endorsed or assigned in blank to the Corporation. As promptly as
practicable thereafter, the Corporation shall issue and deliver to such
holder, at the place designated by such holder, a certificate or
certificates for the number of full shares of the new series of
Undesignated Preferred Stock (as defined hereafter) to which such holder is
entitled. The person in whose name the certificate for such shares of the
new series of Undesignated Preferred Stock is to be issued shall be deemed
to have become a stockholder of record of such Undesignated Preferred Stock
on the closing date of the applicable Required Financing unless the
transfer books of the Corporation are closed on that date, in which event
such person shall be deemed to have become a shareholder of record on the
next succeeding date on which the transfer books are open.
6. Redemption. The shares of Preferred Stock shall be redeemed as follows:
6A. Optional Redemption. The Corporation shall not have the right to
call or redeem at any time all or any shares of Preferred Stock. The holders of
two-thirds of the then outstanding shares of Preferred Stock, voting together as
a class on an as-converted to Common Stock basis, by giving notice (the
"Notice") to the Corporation may require the Corporation to redeem all of the
outstanding Preferred Stock in three equal installments, with one-third of the
shares of Preferred Stock redeemed on the First Redemption Date (as defined
below), one-third of the shares of Preferred Stock redeemed on the first
anniversary of the First Redemption Date (the "Second Redemption Date") and the
remainder redeemed on the second anniversary of the First Redemption Date (the
"Third Redemption Date"). Upon receipt of the Notice, the Corporation shall
notify all other persons holding Preferred Stock. After receipt of the Notice,
the Corporation shall fix the first date for redemption (which shall not be
prior to March 31, 2009) (the "First Redemption Date") no more than sixty (60)
days after receipt of the Notice. All
22
holders of Preferred Stock shall deliver to the Corporation during regular
business hours, at the office of any transfer agent of the Corporation for the
Preferred Stock, or at the principal office of the Corporation or at such other
place as may be designated by the Corporation, the certificate or certificates
for the Preferred Stock, duly endorsed for transfer to the Corporation (if
required by it) on or before the First Redemption Date. The First Redemption
Date, the Second Redemption Date and the Third Redemption Date are collectively
referred to as the "Redemption Dates."
6B. Redemption Price and Payment. The Preferred Stock to be redeemed
on the Redemption Dates shall be redeemed by paying for each share in cash an
amount equal to the applicable Redemption Payment (calculated to the date of
payment), such amount being referred to as the "Redemption Price." Such payment
shall be made in full, subject to the provisions of Section 6C, on each of the
Redemption Dates to the holders entitled thereto.
6C. Redemption Mechanics.
(i) At least twenty (20) but not more than thirty (30) days prior
to each Redemption Date, written notice (the "Redemption Notice") shall be given
by the Corporation by mail, postage prepaid, or by facsimile transmission to
non-U.S. residents, to each holder of record (at the close of business on the
business day next preceding the day on which the Redemption Notice is given) of
shares of Preferred Stock notifying such holder of the redemption and specifying
the Redemption Price, the Redemption Date and the place where said Redemption
Price shall be payable. The Redemption Notice shall be addressed to each holder
at his address as shown by the records of the Corporation. From and after the
close of business on the Redemption Date, unless there shall have been a default
in the payment of the Redemption Price, all rights of holders of shares of
Preferred Stock (except the right to receive the Redemption Price) shall cease
with respect to the shares thereby redeemed, and such shares shall not
thereafter be transferred on the books of the Corporation or be deemed to be
outstanding for any purpose whatsoever.
(ii) If the funds of the Corporation legally available for
redemption of shares of Preferred Stock on a Redemption Date are insufficient to
redeem the total number of shares of Preferred Stock to be redeemed on such
Redemption Date, the shares of Series B Preferred Stock to be redeemed on such
Redemption Date shall be redeemed first in their entirety prior to the
redemption of any shares of Series A Preferred Stock or Series C Preferred
Stock, and then the shares of Series A Preferred Stock (and any other Series of
Preferred Stock expressly stated in this Certificate of Incorporation, as
amended from time to time, to be senior to the Series C Preferred Stock with
respect to redemption) to be redeemed on such Redemption Date shall be redeemed
in their entirety prior to the redemption of any shares of Series C Preferred
Stock. If the funds of the Corporation legally available for redemption of
shares of a series of Preferred Stock on any Redemption Date are insufficient to
redeem the total number of outstanding shares of such series of Preferred Stock
to be redeemed on such Redemption Date, the holders of shares of such series of
Preferred Stock shall share ratably in any funds legally available for
redemption of such shares according to the respective amounts which would be
payable with respect to the full number of shares owned by them if all such
outstanding shares were redeemed in full.
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(iii) All shares of Preferred Stock not redeemed shall remain
outstanding and entitled to all rights and preferences provided herein;
provided, however, that such unredeemed shares shall be entitled to receive
interest accruing daily with respect to the applicable Redemption Price at the
rate of 8% per annum (which shall accrue in addition to any Accruing Dividend on
such shares). At any time thereafter when additional funds of the Corporation
are legally available for the redemption of such shares of Preferred Stock, such
funds will be used, at the end of the next succeeding fiscal quarter, to redeem
the balance of such shares, or such portion thereof for which funds are then
legally available, on the basis set forth above and the Corporation's obligation
to redeem such shares shall be prior and senior to the Corporation's obligation
to redeem additional shares of Preferred Stock at the next Redemption Date.
(iv) If the Corporation fails or refuses, for any reason or for
no reason, to redeem within ninety (90) days after any Redemption Date all of
the then outstanding shares of Preferred Stock subject to redemption in
accordance with the terms and provisions of this Section 6C, the holders of the
Preferred Stock, voting together as a class on an as-converted to Common Stock
basis, shall be entitled to elect a majority of the directors of the Corporation
as set forth in Section (d) hereof.
6D. Redeemed or Otherwise Acquired Shares to be Retired. The
certificate or certificates representing any shares of Preferred Stock redeemed
pursuant to this Section 6 or otherwise acquired by the Corporation in any
manner whatsoever shall be canceled and shall not under any circumstances be
reissued; and the Corporation may from time to time take such appropriate
corporate action as may be necessary to reduce accordingly the number of
authorized shares of Preferred Stock. In the event less than all of the shares
represented by such certificate or certificates are redeemed, a new certificate
representing the unredeemed shares shall be issued forthwith.
7. Amendments; Waivers. Except where the vote or written consent of the
holders of a greater number of shares of the Corporation is required by the
terms of the Preferred Stock, By-laws or by the Restated Certificate of
Incorporation, any provision of the terms of the Preferred Stock may be amended,
modified or waived only with the written consent or affirmative vote of the
holders of at least two-thirds (66-2/3/%) in interest of the then outstanding
shares of Preferred Stock.
8. Definitions. As used herein, the following terms shall have the
following meanings:
(a) "Series C Purchase Agreement" shall mean the Series C Convertible
Preferred Stock Purchase Agreement dated as of June 13, 2007 between the
Corporation and the Purchaser(s) parties thereto.
(b) "Reserved Employee Shares" shall mean shares of Common Stock
reserved by the Corporation from time to time for issuance to or upon the
exercise of options to purchase Common Stock granted to directors, officers,
employees or consultants of the
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Corporation in connection with their service as directors of the Corporation,
their employment by the Corporation or their retention as a consultant of the
Corporation pursuant to a stock option plan, employee stock purchase plan,
restricted stock plan or other stock plan or agreement approved by the
Corporation's Board of Directors, including a majority of the Preferred
Designees.
(c) "Event of Noncompliance" shall mean the failure, violation or
breach by the Corporation of its obligation to make full payment on any
Redemption Date with respect to a Redemption pursuant to Section 6 hereof, and
the Corporation fails to cure such, failure, violation or breach within ninety
(90) days after the violation or breach. No other, failure, violation or breach
by the Corporation of any obligation may be deemed an Event of Noncompliance.
(d) "Subsidiary" or "Subsidiaries" shall mean any corporation,
partnership, trust or other entity of which the Corporation and/or any of its
other subsidiaries directly or indirectly owns at the time a majority of the
outstanding shares of every class of equity security of such corporation,
partnership, trust or other entity.
(e) "Shareholders Agreement" shall mean the Third Amended and Restated
Shareholders Agreement dated as of June 13, 2007 between the Corporation and the
Shareholders as defined therein, as amended from time to time.
(f) "Qualified Investors" shall have the meaning set forth in Section
3(a)(54) of the Securities Exchange Act of 1934, as amended, with the exception
that the definition of Section 3(a)(54)(A)(xi) of such Act shall exclude any
company, corporation or partnership that is in direct or indirect competition or
directly or indirectly engaged in the business of the Purchaser in the Series C
Purchase Agreement.
9. Separate Rights as Shareholders. Notwithstanding anything to the
contrary in this Restated Certificate of Incorporation, in the event any holder
of the Corporation's capital stock holds, either alone or together with its
affiliates, more than one class or series of capital stock, its rights and
obligations hereunder shall be determined separately with respect to each such
class or series as if such shares were held by unrelated individuals or
entities.
C. UNDESIGNATED PREFERRED STOCK
1. Issuance of Preferred Stock in Series. Solely in order to satisfy the
provisions of subparagraph 5P(1) of Article IV, Section B, up to 10,000,000
shares of Undesignated Preferred Stock may be issued in one or more series at
such time or times and for such consideration or considerations as the Board of
Directors may determine. Each series shall be so designated as to distinguish
the shares thereof from the shares of all other series and classes. Except as to
the relative preferences, powers, qualifications, rights and privileges referred
to below, in respect of any or all of which there may be variations between
different series, all shares of Undesignated Preferred Stock shall be identical
in respect of the Preferred Stock from which it was converted. The different
series of Undesignated Preferred Stock shall not be construed to constitute
different series or classes of shares for the purpose of voting by holders of
Preferred Stock, and in all
25
events, the new Undesignated Preferred shall not vote as a separate class but
shall vote with such series of Preferred Stock from which it was converted.
2. Authority to Establish Variations Between Series of Preferred Stock. The
Board of Directors, solely to the extent required by and in order to satisfy the
provisions of subparagraph 5P(1) of Article IV, Section B, is expressly
authorized, subject to the limitations prescribed by law and the provisions of
this Restated Certificate of Incorporation, to provide by adopting a vote or
votes, a certificate which shall be filed in accordance with the Delaware
General Corporation Law, for the issuance of the Undesignated Preferred Stock in
one or more series, each with such designations, preferences, voting powers,
qualifications, special or relative rights and privileges as shall be stated in
the vote or votes creating such series and which shall be identical in all
respects to the Preferred Stock from which it was converted, except with respect
to the conversion features of such Undesignated Preferred Stock which shall
implement the provisions of subparagraph 5D(8) of Article IV, Section B.
FIFTH. The Corporation is to have perpetual existence.
SIXTH. Election of directors need not be by written ballot unless the
By-laws of the corporation so provide.
SEVENTH. The Board of Directors of the corporation is expressly authorized
to adopt, amend or repeal the By-laws of the corporation.
EIGHTH. The books of the corporation may be kept at such place within or
without the State of Delaware as the By-laws of the corporation may provide or
as may be designated from time to time by the Board of Directors of the
corporation.
NINTH. The Corporation eliminates the personal liability of each member of
its Board of Directors to the Corporation or its stockholders for monetary
damages for breach of fiduciary duty as director, provided, however, that, to
the extent required by applicable law, the foregoing shall not eliminate the
liability of a director (i) any breach of such 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 Title 8 of the Delaware Code, or (iv) for any transaction from
which such director derived an improper personal benefit. No amendment to or
repeal of this provision shall apply to or have any effect on the liability or
alleged liability of any director for or with respect to any acts or omissions
of such director occurring prior to such amendment or repeal.
TENTH. The corporation reserves the right to amend, alter, change or repeal
any provision contained in this Restated 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.
ELEVENTH. The Corporation shall indemnify to the fullest extent permitted
by law any person made or threatened to be made a party to an action or
proceeding, whether criminal, civil, administrative or investigative, by reason
of the fact that he, his testator or intestate is or was a
26
director of the Corporation or any predecessor of the Corporation, or serves or
served at any other enterprise as a director at the request of the Corporation
or any predecessor to the Corporation against all expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by or on behalf of such person in connection with such action or
proceeding and any appeal therefrom.
Neither any amendment nor repeal of this Article XI, nor the adoption of
any provision of the Corporation's Restated Certificate of Incorporation
inconsistent with this Article XI, shall eliminate or reduce the effect of this
Article XI in respect of any matter occurring, or any action or proceeding
accruing or arising or that, but for this Article XI, would accrue or arise,
prior to such amendment, repeal or adoption of an inconsistent provision.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, Archemix Corp. has caused this Restated Certificate of
Incorporation to be signed by its President and Chief Executive Officer, this
13th day of June, 2007.
ARCHEMIX CORP.
By: /s/ Errol B. De Souzza
------------------------------------
Errol B. De Souza, Ph.D.
President and
Chief Executive Officer
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